FEDERAL COURT OF AUSTRALIA
Beck v Corrs Chambers Westgarth [2010] FCA 552
Citation: Beck v Corrs Chambers Westgarth [2010] FCA 552 Parties: ANTHONY PATRICK SPALLA, ANDREW DAVID BENTLEY STILL, IRLMOND PTY LTD (ACN 066 314 870) (RECEIVER AND MANAGERS APPOINTED, IN LIQUIDATION) v ST GEORGE MOTOR FINANCE LTD (ACN 007 656 555), ST GEORGE WHOLESALE FINANCE PTY LTD (ACN 001 834 886), ANDREW WILLIAM BECK, ANDREW STEWART HOME, DELOITTE TOUCHE TOHMATSU, AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION, SIMON ALEXANDER WALLACE-SMITH
ANDST GEORGE MOTOR WHOLESALE PTY LTD (ACN 007 664 217), ST GEORGE WHOLESALE FINANCE PTY LTD (ACN 001 834 886), ANDREW WILLIAM BECK, ANDREW STEWART HOME v CORRS CHAMBERS WESTGARTH (A FIRM)
File number(s): VID 3203 of 2002 Judge: RYAN J Date of judgment: 2 June 2010 Date of hearing: 31 July 2009 Date of last submissions: 21 August 2009 Place: Melbourne Division: GENERAL DIVISION Category: No Catchwords Number of paragraphs: 36 Counsel for the Third Cross-Claimant: Ms C Button Solicitor for the Third Cross-Claimant: Mills Oakley Counsel for the Cross-Respondent: Mr D Collins SC with Mr K Lyons Solicitor for the Cross-Respondent: TressCox
IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
GENERAL DIVISION
VID 3203 of 2002
BETWEEN: ANTHONY PATRICK SPALLA
First ApplicantANDREW DAVID BENTLEY STILL
Second ApplicantIRLMOND PTY LTD (ACN 066 314 870) (RECEIVER AND MANAGERS APPOINTED, IN LIQUIDATION)
Third ApplicantAND: ST GEORGE MOTOR FINANCE LTD (ACN 007 656 555)
First RespondentST GEORGE WHOLESALE FINANCE PTY LTD (ACN 001 834 886)
Second RespondentANDREW WILLIAM BECK
Third RespondentANDREW STEWART HOME
Fourth RespondentDELOITTE TOUCHE TOHMATSU
Fifth RespondentAUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION
Sixth RespondentSIMON ALEXANDER WALLACE-SMITH
Seventh RespondentST GEORGE MOTOR WHOLESALE PTY LTD (ACN 007 664 217)
First Cross-claimantST GEORGE WHOLESALE FINANCE PTY LTD (ACN 001 834 886)
Second Cross-claimantANDREW WILLIAM BECK
Third Cross-claimantANDREW STEWART HOME
Fourth Cross-claimantCORRS CHAMBERS WESTGARTH (A FIRM)
Cross-Respondent
JUDGE:
RYAN J
DATE OF ORDER:
2 JUNE 2010
WHERE MADE:
MELBOURNE
THE COURT ORDERS THAT:
1.The motion by the third cross-claimant on notice dated 18 June 2009 be dismissed.
2.On the motion by the cross-respondent on notice dated 15 June 2009, that the cross-claim herein by the third cross-claimant be dismissed with no order as to costs save for the costs referred to in paragraph 3 of this order.
3.The third cross-claimant pay the cross-respondent’s costs of and incidental to the motions on notice referred to in paragraphs 1 and 2 of this order, such costs to be taxed in default of agreement.
Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
The text of entered orders can be located using Federal Law Search on the Court’s website.
IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
GENERAL DIVISION
VID 3203 of 2002
BETWEEN: ANTHONY PATRICK SPALLA
First ApplicantANDREW DAVID BENTLEY STILL
Second ApplicantIRLMOND PTY LTD (ACN 066 314 870) (RECEIVER AND MANAGERS APPOINTED, IN LIQUIDATION)
Third ApplicantAND: ST GEORGE MOTOR FINANCE…
Continue reading Beck v Corrs Chambers Westgarth
Sign in free to access the full text
Details
- AGLC
- Beck v Corrs Chambers Westgarth [2010] FCA 552
- Case
- [2010] FCA 552
- Decision Date
CaseChat Overview and Summary
Beck and his former colleague, Mr Home, filed a cross-claim against Corrs Chambers Westgarth, a firm of solicitors, seeking indemnity against any liability. Corrs Chambers Westgarth has contested the claim and filed a defence. The matter has proceeded through various interlocutory proceedings and appeals. Beck sought to reactivate the claim, alleging that he suffered significant loss and damage due to Corrs Chambers Westgarth's actions in the receivership. The court was required to determine whether Beck should be granted leave to prosecute his claim in its current form, in an amended form, or at all, given the significant lapse of time and potential prejudice to Corrs Chambers Westgarth.
The court considered the significant lapse of time since the advice was given in 1999 and the potential prejudice to Corrs Chambers Westgarth, including the erosion of memory, loss of documents, and the unavailability of witnesses. The court also noted that much of the proposed pleading depended on oral advice given almost ten years ago. The court found that the possibility of a fair trial of the issues raised by the proposed pleading had been eroded to such an extent that it would not be an appropriate exercise of discretion to allow Beck to file the proposed pleading. The court concluded that Beck's cross-claim was not maintainable without being amended in the manner proposed.
The court dismissed Beck's cross-claim and ordered that the costs of the two motions currently before the court should follow the event and be paid by Beck. The court did not consider it appropriate to make any further order for costs in consequence of the dismissal of the cross-claim, as it appeared that the only other step taken by Corrs in relation to Beck's cross-claim had been the filing of a defence in March 2004.
The court considered the significant lapse of time since the advice was given in 1999 and the potential prejudice to Corrs Chambers Westgarth, including the erosion of memory, loss of documents, and the unavailability of witnesses. The court also noted that much of the proposed pleading depended on oral advice given almost ten years ago. The court found that the possibility of a fair trial of the issues raised by the proposed pleading had been eroded to such an extent that it would not be an appropriate exercise of discretion to allow Beck to file the proposed pleading. The court concluded that Beck's cross-claim was not maintainable without being amended in the manner proposed.
The court dismissed Beck's cross-claim and ordered that the costs of the two motions currently before the court should follow the event and be paid by Beck. The court did not consider it appropriate to make any further order for costs in consequence of the dismissal of the cross-claim, as it appeared that the only other step taken by Corrs in relation to Beck's cross-claim had been the filing of a defence in March 2004.
Orders
Orders of the court
Full text does not contain this section.
Background
Background to the litigation
The central issue to be decided is, thus, whether Beck should have leave to prosecute a claim, in the form in which it currently stands, in an amended form, or at all. Background The history of this proceeding is far from straightforward. Its background having been set out several times before, however, it is unnecessary to advert to it in detail. Beck and his colleague, Mr Home (“Home”), were appointed, in 1999, by the first and second respondents, St George Motor Finance Ltd and St George Wholesale Finance Pty Ltd, to be the receivers of two companies, Irlmond and APS. The cross-claim currently at issue was issued by Beck and Home against Corrs, a firm of solicitors, in February 2004, and sought from Corrs an indemnity against any liability to the applicants. Corrs’ defence to the cross-claim was filed in March 2004. That, as Mr Collins SC, who appeared with Mr Lyons of Counsel for Corrs on the present motions, pointed out, was the last step taken in relation to the cross-claim. Meanwhile, a series of interlocutory proceedings between the applicants and the respondents going to the strike-out of the proceedings had been heard and determined (see Spalla v St George Motor Finance Ltd [2004] FCA 1262 and Spalla v St George Motor Finance Ltd [2004] FCA 1699) as had an appeal from certain of the orders made in those proceedings (see Beck v Spalla [2005] FCAFC 82). “As a consequence of the appeal”, Counsel for Corrs pointed out in writing, “the issues between the applicants and the respondents in so far as they related to the cross claim settled in 2005”. In his affidavit filed 15 June 2009, Mr Watson of TressCox Lawyers, the firm of solicitors on the record for Corrs in this proceeding, has deposed that, by letter dated 21 December 2007, Beck’s solicitors had written to him “seeking to reactivate the Receivers cross-claim”. The relevant parts of that letter were as follows: “Our client now wishes to reactivate the proceeding as he believes that he has suffered loss and damage as a direct result of the actions of Corrs Chambers Westgarth in relation to the Receivership. As your client will be aware our client was sanctioned by ASIC arising out of the Receivership, in particular the application of monies for which Corrs Chambers Westgarth had provided specific advice in the matter. As a result of the actions taken by ASIC his partnership status at Deloittes was altered, his share of the profit was reduced and he was required to resign from positions within Deloittes including the Deloittes Board and his leadership role within the insolvency and reconstruction group of Deloittes. This ultimately lead to his resignation from the partnership. Having reviewed a part of the file in relation to this matter we note that your client acted on behalf of St George and also provided advice to our client. One of the principal issues in the matter was the cross collateralisation of securities and the question as to whether or not funds could be applied in such a way as to maximise the benefit for St George”Having referred to advice allegedly given about the correctness of Finkelstein J’s decision of 30 April 1999 (Spalla v St George Wholesale Finance Pty Ltd [1999] FCA 513), the letter from Beck’s solicitors continued; DamagesIn August 2003 the Companies, Auditors and Liquidators Disciplinary Board (CALDB) ordered that: 1.[Beck] resign all current appointments2.[Beck] not accept any other appointment as an external Administrator for 12 months3.[Beck] not accept appointment as a sole external Administrator for the 12 month period commencing 9 August, 20044.[Beck] attend 10 hours of continuing professional development in relation to insolvency practice and procedures for three consecutive 12 month periods from 8 August, 20035.[Beck] pay ASIC’s costs fixed at $50,000.00The effect of the decision had a significant impact upon [Beck]’s reputation, his ability to attract work and to continue to operate on what is an extremely competitive field. As a result of the decision his equity points were reduced having a direct impact upon his earning capacity. A comparison of what he did earn as against what he would have earned had he remained on the same points as originally held shows a loss of income in the order of $200,000.00. Ultimately the whole process resulted in [Beck] having to resign as a Partner and leave the insolvency market which has ultimately reduced his earning capacity. His reputation has also suffered significantly as a result of the findings and publication of the matter. It is the intention to reactivate the proceedings if a negotiated settlement cannot be reached.
Evidence
Evidence Before The Court
The specific prejudice which Corrs claim they would suffer if leave were granted in this case arises from the significant lapse of time, said to be akin to that discussed by McHugh J in considering, in Brisbane South Regional Health Authority v Taylor (1996) 186 CLR 541 at 551ff, whether a statutory limitation period should be extended. The same point was made by Kirby J, at 566, where his Honour referred to “the erosion of memory; the loss of documents; and the death, departure or disappearance of witnesses”. It was to prejudice of that kind that Counsel for Corrs directed their submissions, the advice at issue having been given, as mentioned, in 1999. It should not be forgotten, however, that McHugh J also emphasised that it is important for the of the court to identify on the evidence what prejudice would be caused by a grant of leave or an extension of time, rather than to make its assessment on: the basis of judicial generalities about time, the importance of finality and the usual desirability of prompt action for the fair trial of contested issues. It may be accepted that prejudice of this type can be particularly acute where the claim sought to be raised impinges on the professional reputation, competence and probity of the party (see Australian Securities and Investments Commission v Lindberg [2009] VSC 70 per Robson J at [28]-[34]). At the hearing of these motions, however, counsel for Corrs did not point to any specific type of loss or erosion of evidence; it was merely put, as a hypothesis, that the memories of key witnesses will have faded. This is particularly significant here, as I mentioned, because much of what is alleged in the proposed pleading depends upon oral advice, some of it given almost ten years ago. Where the facts are as clear as those in the present case I consider it open – and appropriate – to the Court to draw obvious inferences about the effect of the effluxion of time on a party’s ability to defend or to respond to claims made against it. That approach finds support in Bishopsgate Insurance Australia Ltd (in liq) v Deloitte Haskins & Sells [1999] 3 VR 863, where Tadgell and Ormiston JJ, with whom Brooking J agreed, said, at 875;Although there are many cases in which the necessity to establish prejudice has been stated as a condition precedent to the exercise of the power to dismiss for want of prosecution on the basis of delay, it is not correct, in our opinion, to say that the defendant is obliged to allege that prejudice upon affidavit as opposed to asking the court to infer from all the circumstances of the case that prejudice has been or will be likely to be suffered. This is not to deny that prejudice, actual and potential, must be established: it is merely a reminder that proof of any issue can be established by circumstantial evidence and of the necessary process of inference from such evidence. Nor are we suggesting, for it would be contrary to authority, that it is for the plaintiff to disprove prejudice; but the defendant is entitled to point to undisputed facts and ask the court to draw necessary logical inferences from them for this purpose.
Decision
Reasons for decision
That is not to say that Beck’s claim has never been tenable or that, were he to be granted the necessary leave, he would not now be able to mount a reasonably arguable case. It is merely to say that he has not prosecuted the claim with sufficient diligence, and, that, whatever be its underlying merits, he does not have anything “approaching a right”, as the High Court said in Aon, to bring it at this late stage, in the circumstances in which he has sought to do so. The possibility of a fair trial of the issues raised by the proposed pleading has, I consider, been eroded to such an extent, that it would not now be an appropriate exercise of discretion to allow him to a file a pleading in the terms exhibited to Mr Hagar’s affidavit of 18 June 2009.Conclusion For the reasons which I have endeavoured to explain, the circumstances attending Beck’s application for leave when viewed in light of the authorities as they now stand militate against his being allowed to file the proposed pleading. As I perceive it, Beck’s cross-claim is not maintainable without being amended in the manner proposed. It follows that I should accede to Cross’ motion that Beck’s cross-claim should be dismissed. The costs of the two motions currently before the Court should follow the event and be paid by Beck. However, as it appears that the only other step taken by Corrs in relation to Beck’s cross-claim has been the filing of a defence in March 2004, I do not consider it appropriate to make any further order for costs in consequence of the dismissal of the cross-claim.
Ratio Decidendi
Legal Principle Established
Full text does not contain this section.