Bill Express Ltd v Pitcher Partners (a Firm) - [2014] VSC 482

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMON LAW DIVISION

PROFESSIONAL LIABILITY LIST

S CI 2011 5152

BILL EXPRESS LIMITED (IN LIQUIDATION)	Plaintiff
v
PITCHER PARTNERS (A FIRM) & ORS	Defendants

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JUDGE:	MACAULAY J
WHERE HELD:	Melbourne
DATE OF HEARING:	15 September 2014
DATE OF RULING:	26 September 2014
CASE MAY BE CITED AS:	Bill Express Ltd v Pitcher Partners (a Firm) & Ors
MEDIUM NEUTRAL CITATION:	[2014] VSC 482

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PRACTICE AND PROCEDURE – opposed application for reference of questions to a special referee in a claim against auditors – proposed questions involving construction of Australian Accounting Standards – whether appropriate to refer questions that involve questions of law – whether risk of re-litigation – whether proposed procedure for the conduct of the reference would be unfair - consideration of justice, efficiency, timeliness and cost effectiveness – Supreme Court (General Civil Procedure) Rules2005 (Vic) r 50.01 – Civil Procedure Act 2010 (Vic) ss 7, 8 - Talacko v Talacko [2009] VSC 98 - Matthews v SPI Electricity & Ors (Ruling No 19) [2013] VSC 180.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr M B J Lee SC with Mr W A D Edwards	Johnson Winter Slattery
For the First Defendant	Mr P D Crutchfield QC with Mr R G Craig	Arnold Bloch Leibler
For the Eighth Defendant	Mr C M Scerri QC with Ms P A Neskovcin	Allens

HIS HONOUR:

Introduction and summary

Bill Express Limited, a company in liquidation, sues its former auditors, Pitcher Partners and KPMG, each of whom audited the company’s financial statements in different financial years. It claims damages from each firm due to their allegedly defective conduct of those audits.

By this application, Bill Express has applied (by its liquidators) under Rule 50.01 of the Supreme Court (General Civil Procedure) Rules 2005 (Rules) for an order referring questions to a special referee – an accountant[1] − for the determination of an aspect of the dispute. The questions that Bill Express wants referred concern the correct application of the Australian Accounting Standards, made pursuant to s 334 of the Corporations Act 2001 (Cth), to the accounting treatment of particular computer terminals in the company’s financial statements.
[1]Bill Express proposed either of two accountants: Mr Bruce Porter and Mr Christopher Westworth. Should the application be granted, the auditors indicated they would not oppose Mr Westworth’s appointment as special referee.

The application is opposed by both Pitcher Partners and KPMG.

Bill Express argued that, in the circumstances of this case, the appointment of a special referee is not only appropriate but entirely consonant with the overarching purpose to which this Court must seek to give effect in the exercise of its powers, including those derived from any rules of the court.[2] As required by the Civil Procedure Act 2010, the overarching purpose is to facilitate the just, efficient, timely and cost effective resolution of the real issues in dispute in civil proceedings.[3]
[2]Civil Procedure Act 2010

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2014] VSC 482
Decision Date: 26 September 2014

CaseChat Overview and Summary

Bill Express Ltd brought a claim against Pitcher Partners (a Firm) seeking damages for alleged professional negligence in the audit of the company's financial statements. The auditors opposed the claim and filed an application to have questions of law referred to a special referee under the Supreme Court (General Civil Procedure) Rules 2005 (Vic) r 50.01. The proposed questions involved the construction of Australian Accounting Standards and required the court to determine whether it was appropriate to refer these questions to a special referee, given the risk of re-litigation, the proposed procedure, and the considerations of justice, efficiency, timeliness, and cost effectiveness.

The court examined whether the questions posed were predominantly legal in nature or involved complex factual issues. The court considered the potential for re-litigation and the risk of inconsistent decisions. Additionally, the court evaluated the proposed procedure for the conduct of the reference, including the scope of the referee's inquiry, the format of the evidence, and the final report. The court referred to previous cases, such as Talacko v Talacko [2009] VSC 98 and Matthews v SPI Electricity & Ors (Ruling No 19) [2013] VSC 180, to assist in determining the appropriate course of action.

In reaching its decision, the court found that the questions posed were largely legal in nature and involved the interpretation of Australian Accounting Standards. The court also noted the potential for re-litigation and the risk of inconsistent decisions. However, the court was satisfied that the proposed procedure for the conduct of the reference was fair and would facilitate a just and efficient resolution of the legal issues. Consequently, the court granted the application to refer the questions to a special referee. The court issued orders setting out the scope of the referee's inquiry, the format of the evidence, and the final report.

Orders