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[2014] VSC 665
General information, not legal advice.
Supreme Court of Victoria
2014-12-22
CROFT J
Original judgment source is linked above.
The application of this proposition to the present case is obvious; for the giving of advice about loans to companies was certainly within the class of acts that formed part of the business of Capricorn, as a dealer in securities. Lord Macnaghten made it clear (at 736) that the expressions "acting within his authority," "acting in the course of his employment," and "acting within the scope of his agency" are expressions which "must be construed liberally".
In this present case, the Plaintiffs say, the Liquidators could have, but chose not to, verify the accuracy of the information provided to them by Philistin.
60 In these circumstances, again, it simply cannot be said the Plaintiffs' claim can be seen to have no real prospect of success.
61 By the amended statement of claim dated 15 October 2014, the Plaintiffs added a claim for a breach of contract, in that the Liquidators failed to perform their obligations with the degree of skill, care and attention reasonably to be expected from competent and professional liquidators, and would not misrepresent or incorrectly state any amounts owing, the value or performance of the loans, nor the nature or amount of security in place in respect of the loans
62 The Plaintiffs submit that where one is engaged to do a job involving essentially collecting moneys due under various contracts, it is implicit that one ought to, at the very least, make enquiry as to whether the money said to be being collected is in fact being collected, and as to appropriate amounts.[72] The Liquidators contend that no such implied term should exist, as it could not possibly be the case that a person would necessarily agree to a term in a contract which would effectively mean they would be in breach of that contract should they make an incorrect statement, for any reason. Despite any force that may be present in the Liquidators' submission in this respect, again it is impossible to make any proper assessment at this stage of the proceeding of the prospects with respect to this claim.
63 For the preceding reasons there is no basis for a finding under s 63 of the Civil Procedure Act or under s 23.03 of the Rules that any of the Plaintiffs' claims are open to being disposed of summarily. Moreover, even if I were of the view that some or all of these claims were, in general terms, open to summary disposal, I am of the opinion that the nature of the facts and circumstances of each of these claims is such that it is in the interests of justice - particularly having regard to the position that the allegations include obligations imposed upon liquidators - and that only a full hearing on the merits is appropriate. Hence, applying s 64 of the Civil Procedure Act I am of the view that neither this proceeding nor any part of it should be disposed of summarily.
64 The parties are to bring in orders to give effect to these reasons. The question of costs is reserved.
[1] Liquidators' Summons dated 22 August 2014.
[2] Plaintiffs' Summons dated 19 September 2014.
[3] Handberg Affidavit sworn 11 September 2014, [2], [32].
[4] Handberg Affidavit sworn 11 September 2014, [11].
[5] Handberg Affidavit sworn 11 September 2014, [4].
[7] Handberg Affidavit sworn 11 September 2014, [4].
[8] Handberg Affidavit sworn 11 September 2014, [12].
[9] Handberg Affidavit sworn 11 September 2014, [11].
[10] Handberg Affidavit sworn 11 September 2014, [16].
[11] Handberg Affidavit sworn 11 September 2014, [21] - [28]; Defendants' Submissions [15].
[12] Handberg Affidavit sworn 11 September 2014, [39].
[13] Handberg Affidavit sworn 11 September 2014, [42].
[14] Handberg Affidavit sworn 11 September 2014, [44].
[15] Handberg Affidavit sworn 11 September 2014, [46].
[16] Handberg Affidavit sworn 11 September 2014, [53].
[17] Handberg Affidavit sworn 11 September 2014, 60].
[18] Handberg Affidavit sworn 11 September 2014, [62].
[19] Re Siromath Pty Ltd (No 1) (1991) 9 ACLC 1580; Re Siromath Pty Ltd (No 3) (1991) 25 NSWLR 25; Bolton v Nathan Nominees Pty Ltd (1992) 10 ACLC 1102; Re Biposo Pty Ltd; Condon v Rodgers (Unreported, Supreme Court of New South Wales, Young J, 2 August 1995); Sydlow Pty Ltd (in liq) v T G Kotselas Pty Ltd & Ors [1996] FCA 1384; (1996) 65 FCR 234; Mamone v Pantzer [2001] NSWSC 26; (2001) 36 ACSR 743; Searle v Kearns [2001] NSWSC 679; McDonald v Dare [2001] QSC 405; Sullivan v Energy Services International Pty Ltd (in liq) [2002] NSWSC 937; (2002) 43 ACSR 179; Baxter v Hamilton [2005] TASSC 64; Merhi v Green [2007] NSWSC 722.
[20] Aston v Heron [1834] EngR 631; (1834) 2 My & K 390 at 396-7; [1834] EngR 631; 39 ER 993 at 995.
[21] Australian Securities and Investment Commission v Edge [2007] VSC 170; (2007) 211 FLR 137.
[22] [2007] VSC 170; (2007) 211 FLR 137 at 150 [39] (Dodds-Streeton J).
[23] Commissioner for Corporate Affairs v Harvey [1980] VicRp 64; [1980] VR 669 at 696.
[24] Fortress Credit Corp (Australia) II Pty Ltd v Fletcher (as liquidator of Octaviar Administration Pty Ltd) (in liq) (No 2) [2013] NSWSC 1625.
[26] [1996] FCA 1384; (1996) 65 FCR 234 at 241 (Tamberlin J).
[27] [2007] VSC 170; (2007) 211 FLR 137 at 151 [40] - [42] (Dodds-Streeton J).
[28] (1995) 120 FLR 399 at 403.
[30] [2001] NSWSC 791; (2001) 39 ACSR 622 at [63] (Austin J).
[32] [2001] QSC 405 at [25] (Mullins J).
[33] [2007] NSWSC 676; (2007) 64 ACSR 31 at 48.
[34] [2007] NSWSC 676; (2007) 64 ACSR 31 at 48 [179] (Young CJ in eq).
[35] Liquidators' Submissions, [25].
[36] Plaintiffs' Submissions, [20] - [21].
[37] [1996] FCA 1384; (1996) 65 FCR 234 at 241 (Tamberlin J).
[38] Liquidators' Submissions, [33].
[40] (1995) 120 FLR 399 at 403 (Young J).
[42] [1996] FCA 1384; (1996) 65 FCR 234 at 242 (Tamberlin J).
[43] [2001] NSWSC 26; (2001) 36 ACSR 743 at 746 [4] (Santow J).
[44] (2012) 92 ACSR 588 at 612 [112] (Brereton J).
[46] [2013] VSCA 158 at [30] (Warren CJ and Nettle JA (Neave JA concurring)).
[49] [2012] VSCA 97, [28].
[50] [2011] VSC 15, [8]-[10].
[52] [1990] HCA 17; (1990) 169 CLR 594 at 603-4 (Mason CJ, Deane, Dawson and Gaudron JJ).
[54] (2014) 313 ALR 546 at 569 [77] (Nettle AP, Santamaria, Beach JJA).
[56] [2005] FASSC 64 at [65] - [66] (Tennent J).
[57] Plaintiffs' Submissions, [39].
[58] Wardley Australia Ltd v Western Australia (1992) 176 CLR 514.
[59] Plaintiffs' Submissions, [57].
[60] Ronex Properties Ltd v John Lain Construction (1983) 1 QB 398 at 404.
[61] Amended Statement of Claim dated 15 October 2014, [92].
[62] Defendant's Submissions, [62].
[63] Hasumann v Smith [2006] NSWSC 682.
[64] [2006] NSWSC 682, [12].
[65] Plaintiffs' Submissions, [46].
[66] Liquidators' Submissions, [67].
[68] Barrick v Qantas Flight Catering [2007] FCA 835.
[69] [2007] FCA 835, [102]-[103].
[70] Capricorn Financial Planners Pty Ltd v Australian Securities and Investments Commission [1999] FCA 558; (1999) 31 ACSR 46.
[71] [1999] FCA 558; 1999) 31 ACSR 46, [10].
[72] Transcript, p 109, line 17 to p 110, line 13.
Eighty Second Agenda Pty Ltd (in its capacity as trustee of the Rice Family Trust)
Handberg [2014] VSC 665
PRACTICE AND PROCEDURE - Leave to proceed against a liquidator - Is the test different against a court-appointed liquidator as opposed to a voluntary liquidator - Aston v Heron [1834] EngR 631; (1934) 2 My & K 390; 39 ER 993 - Australian Securities and Investment Commission v Edge [2007] VSC 170; (2007) 211 FLR 137 - Sydlow Pty Ltd (in liq) v T G Kotselas Pty Ltd [1996] FCA 1384; (1996) 65 FCR 234 - Re Biposo Pty Ltd (1995) 120 FLR 399 - McDonald v Dare [2001] QSC 405.
SUMMARY JUDGMENT - No real prospects of success - Lysaght Building Solutions Pty Ltd v Blanalko Pty Ltd [2013] VSCA 158 - Supreme Court (General Civil Procedure) Rules 2005, Rule 23.03 - Civil Procedure Act 2010, ss 63 & 64.
Another problem with the Supreme Court proceeding is that it seeks relief against the respondents for alleged breaches of duty arising in the course of performing their duties as liquidators, the leave of the court is required before such a proceeding is commenced: Sydlow Pty Ltd (in liquidation) v TG Kotselas Pty Ltd [1996] FCA 1384; (1996) 65 FCR 234, 241 and Mamone v Pantzer [2001] NSWSC 26; (2001) 36 ACSR 743, 746.
only to conduct which is itself an aspect or element of activities or transactions which, of their nature, bear a trading or commercial character. So construed, to borrow and adapt words used by Dixon J in a different context in Bank of NSW v Commonwealth [1948] HCA 7; (1948) 76 CLR 1 at 381, the words "in trade or commerce" refer to "the central conception" of trade or commerce and not to the "immense field of activities" in which corporations may engage in the course of, or for the purposes of, carrying on some overall trading or commercial business.
The second point is that the duties owed by administrators and liquidators are not duties owed to shareholders or to creditors. Reference was made to Kinsela v Russel Kinsela Pty Ltd [1983] 2 NSWLR 452. That case is part of a line of decisions the most recent authoritative element of which is, I think, Spies v R [2000] HCA 43; (2000) 201 CLR 603 in which it is recognised that directors duties are owed to the company, even though due performance of those duties may require directors to pay attention to the interests of creditors. There is a difference between the beneficiary of a duty and the delineation of the interests to be taken account of in performing the duty. In my opinion, the same analysis holds good in relation to the duties of administrators and liquidators.
The leading case is Lloyd v Grace, Smith & Co [1912] UKHL 1; [1912] AC 716. There, a client sought advice from a firm of solicitors with a view to the augmentation of the return she was getting from some houses she owned. The managing clerk with whom she dealt persuaded her to bring in the deeds and to sign some documents, the nature of which she did not understand, which were in fact a transfer of a mortgage and a conveyance. Thereby, he defrauded her for his own benefit. Lord Macnaghten said (at 731):
(2007) 211 FLR 137
(1996) 65 FCR 234
(1995) 120 FLR 399
(1948) 76 CLR 1
(2000) 201 CLR 603
(1991) 25 NSWLR 25
(1983) 154 CLR 87
(1990) 169 CLR 594
(2014) 313 ALR 546
(1992) 176 CLR 514