The plaintiff, Gunns Finance Pty Ltd (Receivers and Managers Appointed) (in Liquidation) (Gunns Finance), commenced these proceedings by filing a statement of claim on 9 October 2013. It claimed an amount of $74,515.24 from Mr Sukatharan Sithiravel plus interest, filing fees and solicitor's costs. I delivered judgment in its favour on 2 November 2016: see Gunns Finance Pty Ltd v Sithiravel [2016] NSWSC 1543.
Mr Sithiravel had borrowed money from Gunns Finance to assist in the acquisition of lots in three agricultural projects. I referred to these agricultural projects in my judgment as the "Woodlots Project 2006", the "Winegrape Project 2007" and the "Walnut Project No 3". Mr Sithiravel filed a cross claim in which he claimed that Guardian Royal Financial Services Pty Ltd (Guardian), the financial adviser and planner that had provided him with advice and assistance in relation to the Woodlots Project 2006 and the Winegrape Project 2007, had made misrepresentations in relation to those projects and therefore caused him to suffer loss and damage.
Guardian did not appear in the proceedings and did not contest the claim against it at the hearing. As a result, Mr Sithiravel sought to have judgment by default entered against Guardian. At par 70 of my judgment, I noted that it would be premature for the court to make an order against Guardian in default of its appearance because Mr Sithiravel had not provided any evidence to support his cross-claim as it related to Guardian. I also invited the parties to prepare short minutes of order to give effect to my reasons for judgment.
On 16 December 2016, I made an order in favour of Mr Sithiravel as against Guardian, but also ordered Mr Sithiravel to submit within 28 days any further evidence and a schedule of damages to identify the judgment amount that the court should order. Mr Sithiravel provided a document called "Schedule of Damages on Behalf of Cross Claimant" to the court but did not provide further evidence to support the amount claimed in his cross claim and outlined in that document.
In response, I set the matter down for a directions hearing on 16 May 2017, and on that date made orders directing Mr Sithiravel to deliver further evidence and submissions on the quantification of his claim against Guardian to the court within 28 days. I also requested Mr Sithiravel to provide proof that Guardian was properly served with his amended statement of cross claim.
The court received the submissions and further evidence on 14 June 2017.
[3]
Proof of service of Guardian
Rule 9.7 of the Uniform Civil Procedure Rules 2005 (NSW) (UCPR) sets out the procedure that must be followed for service of a cross claim on a new party. It provides:
(1) This rule applies to the service of a statement of cross-claim or cross-summons on a person who is not already a party to the proceedings from which the cross-claim arises.
(2) When serving the statement of cross-claim or cross-summons, the cross-claimant must serve on the cross-defendant both the originating process in the proceedings from which the cross-claim arises and such of the following documents as have been filed by or served on the cross-claimant:
(a) in proceedings commenced by statement of claim or in which a statement of claim has been filed, any other pleadings,
(b) in proceedings commenced by summons, any other cross-summonses,
(c) any notices of motion not finally disposed of,
(d) any affidavits, other than affidavits that are not relevant to the questions arising on the cross-claim,
(e) any other documents that have been served by the plaintiff on the defendant, or by the defendant on the plaintiff, and are intended to be relied on,
(f) any amendments to any of the documents referred to in paragraphs (a)-(e).
(3) Service of a statement of cross-claim or cross-summons must be effected in accordance with the provisions of these rules with respect to service of originating process.
Sub-rule 9.7(3) required Mr Sithiravel to serve the amended statement of cross claim in accordance with the provisions of the UCPR that relate to service of an originating process. Relevantly, sub-r 10.20(2)(a) required Mr Sithiravel to personally serve the amended statement of cross claim upon Guardian, and because Guardian was located outside of New South Wales, sub-r 10.3(3) required the amended statement of cross claim to bear a statement that Mr Sithiravel either intended to proceed under the Service and Execution of Process Act 1992 (Cth) (Service and Execution of Process Act) or under the UCPR.
Rule 10.22 of the UCPR states that personal service of a document on a corporation may be effected by personally serving the document on a principal officer of the corporation or 'by serving the document on the corporation in any other manner in which service of such a document may, by law, be served on the corporation'. Subsection 109X(1)(a) of the Corporations Act 2001 (Cth) states that, for the purpose of any law, a document may be served on a company by leaving it at or posting it to the company's registered office.
Mr Sithiravel relied upon two affidavits as proof of service, the first affirmed by Amjad Samakeh on 19 January 2016 and the second sworn by Richard Louis Mitry on 13 June 2017, each filed respectively on 19 January 2016 and 13 June 2017. Mr Samakeh gave evidence of the steps he took to post the amended statement of cross claim to Guardian's registered office and supported his evidence by annexing a copy of a company search as proof of the location of Guardian's registered office. Mr Samakeh said that the envelope was returned, having been opened and resealed, bearing a sticker stating: 'Return to Sender: Unclaimed'. Mr Samakeh gave evidence that he then posted two copies of the amended statement of cross claim in two separate envelopes, the first addressed to the Proper Officer of Guardian and the second addressed to the person named as the sole director of Guardian in the company search, to Guardian's registered office, but that both were returned marked: 'Return to Sender: Unknown'.
Mr Samakeh did not give evidence that he sent the amended statements of cross claim with a statement that Mr Sithiravel intended to proceed under either the Service and Execution of Process Act or the UCPR, or that the statements of cross claim were accompanied by the originating process and other relevant documents included in sub-r 9.7(2) of the UCPR. Mr Mitry partially cured Mr Samakeh's evidence by giving evidence that he instructed Mr Samakeh to affix a form stating that the matter was to proceed under the UCPR and observed him attaching the form to the amended statement of cross claim. But Mr Mitry did not give evidence that the statements of cross claim were accompanied by the originating process and other relevant documents included in sub-r 9.7(2) of the UCPR.
As there is no evidence as to whether or not Mr Samakeh sent the amended statements of cross claim to Guardian accompanied by the documents referred to in r 9.7 of the UCPR, it is possible that he either failed to send those documents to Guardian as he was required to, or failed to give evidence that the amended statements of cross claim were accompanied by the documents, in the same manner that he failed to give evidence that he affixed the statement that Mr Sithiravel intended to proceed under the UCPR. This means that there is a possibility that the amended statements of cross claim were not served in accordance with the requirements of r 9.7 of the UCPR.
Nevertheless, I do not consider the possible failure to serve the amended statements of cross claim with the documents referred to in r 9.7 of the UCPR to be a significant enough defect to warrant refusing to grant Mr Sithiravel default judgment against Guardian. Section 63 of the Civil Procedure Act 2005 (NSW) (Civil Procedure Act) provides:
(1) This section applies to proceedings in connection with which there is, by reason of anything done or omitted to be done, a failure to comply with any requirement of this Act or of rules of court, whether in respect of time, place, manner, form or content or in any other respect.
(2) Such a failure:
(a) is to be treated as an irregularity, and
(b) subject to subsection (3), does not invalidate the proceedings, any step taken in the proceedings or any document, judgment or order in the proceedings.
…
If the amended statements of cross claim were sent unaccompanied by the documents referred to in rule 9.7 of the UCPR, I would regard the failure to serve copies of those documents as an irregularity of the kind contemplated by s 63 of the Civil Procedure Act. In Bobolas v Waverley Council (2016) 92 NSWLR 406; [2016] NSWCA 139, McColl JA, with whom Simpson JA and Sackville AJA agreed, said in relation to s 63:
108. Section 63 gives a court power to deal with irregularities. It requires a court to treat a failure to comply with any requirement of the CPA or of rules of court, whether in respect of time, place, manner, form or content or in any other respect, as an irregularity which, subject to s 63(3), does not invalidate the proceedings, any step taken in the proceedings or any document, judgment or order in the proceedings.
109. Provisions such as s 63 do away with the old distinction between nullities and irregularities. Every omission or mistake in practice or procedure is now regarded as an irregularity which the court can and should rectify so long as it can do so without injustice.
(references omitted)
The amended statement of cross claim was posted to Guardian's registered office three times. It set out fully Mr Sithiravel's case against Guardian. This meant that Guardian, whilst it would have required copies of the other documents referred to in r 9.7 of the UCPR to properly defend itself in the proceedings, would have been made aware of and able to understand the nature of the claim made against it from service of the amended statement of cross claim alone. In these circumstances, and where there is no reason to suspect that Guardian would have been any more likely to appear or defend itself in the proceedings had the documents referred to in r 9.7 of the UCPR been served with the amended statements of cross claim, a failure to serve those documents could not have caused any injustice to Guardian.
I am therefore satisfied that Mr Sithiravel adequately served the amended statement of cross claim on Guardian.
[4]
Mr Sithiravel's claim for damages
In his submissions, Mr Sithiravel claimed $106,494.58 from Guardian comprising:
1. $58,245 in damages that he had been ordered to pay Gunns Finance in respect of the Woodlots Project 2006 and the Winegrape Project 2007.
2. $12,493.66 in interest that he had been ordered to pay Gunns Finance in respect of the Woodlots Project 2006 and the Winegrape Project 2007.
3. $639.69 in insurance fees for the Woodlots Project 2006.
4. $26,282.70 in repayments that he had already made for the Woodlots Project 2006.
5. $24.07 in insurance fees for the Winegrape Project 2007.
6. $8,809.46 in repayments that he had already made for the Winegrape Project 2007.
Mr Sithiravel abandoned the claim against Guardian insofar as it related to the Walnut Project No 3, as he had conceded at the hearing that Guardian did not assist him in his dealings in relation to that project.
Mr Sithiravel supported his application with an affidavit filed on 13 June 2017. Exhibited to this affidavit was a schedule of payments made in respect of each of the projects supported by statements produced by Gunns Finance in respect of each project and statements of Mr Sithiravel's Virgin MasterCard and Commonwealth Bank Credit Card accounts.
Upon review of the material I have found a small number of payments (which total $1,485.79) that were not supported by the evidence:
1. The claim for an insurance payment of $196.47 in respect of the Woodlots Project 2006 was supported by a tax invoice dated 9 June 2011 but not by a receipt for payment in respect of that invoice.
2. The payments of $453.15 to Gunns Finance that the schedule relating to the Woodlots Project 2006 lists as having occurred on 31 October 2011 and 30 November 2011 are not contained in the statement produced by Gunns Finance and there is no evidence of those payments contained in Mr Sithiravel's bank statements.
3. The payments of $191.51 to Gunns Finance that the schedule relating to the Winegrape Project 2007 lists as having occurred on 31 October 2011 and 31 December 2011 are not contained in the statement produced by Gunns Finance and there is no evidence of those payments contained in Mr Sithiravel's bank statements.
With the exception of each of these payments, I am satisfied that Mr Sithiravel has made the payments in respect of each project that he has claimed.
The measure of the damages to which Mr Sithiravel is entitled against Guardian is the amount of money necessary to put him in the position he would have been in had he not made the investments recommended by Guardian. He is therefore entitled to the amount that will reimburse him for all of the liabilities that he incurred and the payments that he made in respect of those investments.
I will therefore order judgment against Guardian in the amount claimed by Mr Sithiravel in his submissions, minus each of the amounts that were not properly supported by evidence. This amount is $105,008.79.
As there has been some delay in delivering this judgment I will add pre-judgment interest at the prescribed rate for the period from the date when Mr Sithiravel provided the evidence quantifying his loss, being 14 June 2017, and the date this judgment is published. I have calculated the amount as being $2,927.30. The total amount of the judgment will therefore be $107,936.09.
I therefore make the following orders:
1. Order that judgment be entered in favour of the cross claimant, Suthakaran Sithiravel, against the second cross defendant, Guardian Royal Financial Services Pty Ltd, for the amount of $107,936.09.
2. Order that Guardian Royal Financial Services Pty Ltd pay to Suthakaran Sithiravel his costs of the cross claim in respect of the claim against Guardian Royal Financial Services Pty Ltd.
[5]
DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.
Decision last updated: 18 December 2017