Bolitho v Banksia Securities Limited (No 15)
[2020] VSC 725
•2 November 2020
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMERCIAL COURT
GROUP PROCEEDINGS LIST
S CI 2012 07185
| LAURENCE JOHN BOLITHO | First Plaintiff |
| AUSTRALIAN FUNDING PARTNERS PTY LIMITED (ACN 167 628 597) | Second Plaintiff |
| v | |
| BANKSIA SECURITIES LIMITED (ACN 004 736 458) (RECEIVERS AND MANAGERS APPOINTED) (IN LIQUIDATION) & ORS (according to the attached Schedule) | Defendants |
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JUDGE: | John Dixon J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 30 October 2020 |
DATE OF RULING: | 2 November 2020 |
CASE MAY BE CITED AS: | Bolitho & Anor v Banksia Securities Limited & Ors (No 15) |
MEDIUM NEUTRAL CITATION: | [2020] VSC 725 |
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PRACTICE AND PROCEDURE – Appointment of representative – Death of defendant after commencement of proceeding – Executor of last will of defendant proposed to be appointed as representative – Probate not yet granted – Supreme Court (General Civil Procedure) 2015 (Vic) r 16.03.
PRACTICE AND PROCEDURE – Application for determination of separate question – Application made at trial – Not a clear case - Prospect of fragmentation, delay and increased costs to other defendants if separate question determined – Supreme Court (General Civil Procedure) Rules 2015 (Vic) r 47.04.
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APPEARANCES: | Counsel | Solicitors |
| For the First Defendant | Mr J A Redwood SC | Maddocks |
| For the Fourth Defendant | Mr C Juebner with Ms G S J Berlic | Colin Biggers & Paisley |
| For the Legal Practitioners’ Liability Committee and Ms Katerina Peiros | Mr A P Trichardt | Lander & Rogers |
HIS HONOUR:
Introduction
On 30 October 2020, the first defendant (‘SPR’) sought orders, following the death of the sixth defendant (‘Mr Trimbos’) that:
(a) Ms Katerina Peiros be appointed to represent the estate of Mr Trimbos for the purpose of the proceeding and that the title of the proceeding be amended accordingly; or
(b) alternatively, the proceeding continue in the absence of a representative for the interests of the estate of Mr Trimbos.
Ms Peiros, who is the executor of Mr Trimbos’ last will that is yet to be admitted to probate, consented to this limited appointment as representative. Ms Peiros is a solicitor. However, Ms Peiros and the Legal Practitioners’ Liability Committee (Mr Trimbos’ insurer) (the ‘Trimbos interests’) contended that no cause of action survived Mr Trimbos’ death and the proceeding could not continue against his estate. The Trimbos interests applied for that issue to be determined as a separate question, pursuant to r 47.07 of the Supreme Court (General Civil Procedure) Rules 2015 (‘Rules’).
The material on the application proved neither that Mr Trimbos had died nor that his last will appointed Ms Peiros as his executor, but neither fact was in contest. Ms Peiros undertook to the court to file a supplementary affidavit evidencing these matters when the documentary material was available.
I made orders appointing Ms Peiros as representative of the estate of Mr Trimbos. I reserved my decision on the application made by the Trimbos interests for the determination of the separate question. On 2 November 2020, I dismissed that application and ordered that the Revised List of Issues be amended to add:
13. Has any cause of action survived the death of Mr Peter Trimbos?
I stated that I would later publish my reasons. These are my reasons.
Background
The proceeding, on remittal from the Court of Appeal, is presently part-heard, and has been the subject of previous interlocutory rulings explaining its subject matter in detail.[1]
[1]Bolitho v Banksia Securities Ltd (No 6) [2019] VSC 653; Bolitho v Banksia Securities Ltd (No 8) [2020] VSC 174.
Mr Trimbos was retained by the second plaintiff (‘AFP’) as an expert witness, both on the original settlement approval application before Croft J[2] and in the remitter, to opine on the reasonableness of costs incurred by the first plaintiff’s legal representatives in prosecuting the group proceeding. AFP substantially abandoned its claim for reimbursement of legal costs during the trial and no longer sought to rely on Mr Trimbos’ reports. On 20 August 2020, I ordered that Mr Trimbos be joined to the proceeding as sixth defendant in the remitter, for the purpose of determining whether any order should be made against him under s 29 of the Civil Procedure Act 2010 (Vic), and if so, what order.
[2]Re Banksia Securities Ltd (Rec & Mgr Apptd) (in liq) (No 2) [2018] VSC 47.
Mr Trimbos[3] claimed indemnity under a policy of insurance issued by LPLC, the independent statutory authority responsible for providing professional indemnity insurance for Australian legal practitioners in the State of Victoria.[4] On 21 August 2020, Lander & Rogers, presumably on instructions from the LPLC, assumed conduct of Mr Trimbos’ defence and filed a notice of appearance on his behalf. Mr Trimbos was thereafter represented by counsel. It appears that the LPLC has advanced defence costs since Mr Trimbos’ joinder, but has reserved its position in respect of indemnity under the policy.
[3]Or Peter Trimbos Costs Lawyer, the business name under which he practised.
[4]Legal Profession Uniform Law Application Act 2014 (Vic) ss 13(1), 102.
On 28 August 2020, the Contradictor filed and served particulars of allegations and relief sought against Mr Trimbos (‘Trimbos Particulars’). The Trimbos Particulars included allegations that:
(a) as an expert witness that had opined that the first plaintiff’s costs in the group proceeding were fair and reasonable, Mr Trimbos was obligated to, and represented that:
(i) he understood and agreed to be bound by the Expert Code of Conduct;
(ii) he was independent from and not an advocate for AFP;
(iii) he had identified the facts, matters and assumptions on which each opinion in his reports was based; and
(iv) he had made all inquiries which he believed were desirable and appropriate, and that no matters of significance which he regarded as relevant had, to his knowledge, been withheld from the court;
(b) for the reasons identified therein, Mr Trimbos had failed to comply with these obligations and his duty to the court at the time of preparing each expert reports, and by failing to provide a supplementary report disclosing any change in an opinion expressed in his reports;
(c) accordingly, Mr Trimbos had breached his paramount duty to the court and the overarching obligation not to mislead or deceive, contrary to ss 16 and 21 of the Civil Procedure Act; and
(d) those contraventions had caused loss to debenture holders, as had they not occurred, Mr Trimbos would not have represented that the legal fees and disbursements claimed were fair and reasonable, and the court would not have approved them or the funding commission in the amounts sought, or at all.
On 21 September 2020, Mr Trimbos filed an affidavit responding to the Trimbos Particulars. Earlier in the trial of the remitter, Mr Trimbos’ reports were tendered into evidence by the Contradictor and he was cross-examined.
On 24 September 2020, Lander & Rogers informed the court and the parties that Mr Trimbos had passed away. Any cause of action that has survived Mr Trimbos’ death is one against his estate.[5] Whether that has occurred is in contest.
[5]Administration and Probate Act 1958 (Vic) s 29.
On 26 October 2020, Lander & Rogers confirmed that Ms Peiros had consented to act as the representative for Mr Trimbos’ estate for the purposes of the proceeding, and that Lander & Rogers will act for Ms Peiros.
Appointment of representative
The SPR seeks the appointment of a representative for the estate of Mr Trimbos under r 9.09, or, alternatively, r 16.03 of the Rules.
Rule 16.03 is the appropriate rule. Rule 9.09 is applicable in circumstances where a party to the proceeding has died and their interest or liability in the proceeding has been assigned, transmitted or devolved to another person. Although Ms Peiros is named as executor under Mr Trimbos’ will, there is no grant of probate or any other form of administration order that would assign, transmit or devolve the liability flowing from the proceeding to her. Until such time as that occurs, any application must proceed under r 16.03.
Rule 16.03 of the Rules states:
16.03 Deceased person
(1)Where a deceased person was interested, or the estate of a deceased person is interested, in any question in a proceeding and the deceased person has no personal representative, the Court may—
(a)proceed in the absence of a person to represent the estate of the deceased; or
(b)by order (with the consent of the person appointed) appoint a person to represent the estate for the purpose of the proceeding.
(2)An order under paragraph (1), and any judgment or order subsequently given or made in the proceeding, shall bind the estate of the deceased person as it would had a personal representative of the deceased been a party.
(3)Before making an order under this Rule, the Court may require notice of the application for the order to be given to any person having an interest in the estate.
In the remitter proceeding, Mr Trimbos’ estate is interested in the question of whether the claims made in the proceeding against him have survived his death and may, if proved, be a liability of his estate. If the former question is not determined in favour of the estate, it will be interested in the remaining questions in the proceeding, in particular whether the estate has a liability to pay compensation under s 29 of the Civil Procedure Act.
I am satisfied that the estate of a deceased person is interested in a question in this proceeding. I am also satisfied that the estate presently has no personal representative, as Ms Peiros is yet to apply for a grant of probate of Mr Trimbos’ will. Given that Ms Peiros has identified herself as the person named as executor in Mr Trimbos’ last will and consents to the appointment, it is not appropriate to proceed in the absence of a person to represent the estate. Ms Peiros is an appropriate person to be appointed to represent the interests of his estate as the sixth defendant in the proceeding.
I did not require notice of the application for the order to be given to any person having an interest in the estate for several reasons.
First, as Mr Trimbos’ nominated executor, Ms Peiros is the person who will be responsible for the administration of his estate and she has consented to act.
Secondly, the LPLC has accepted that Ms Peiros is an appropriate representative for Mr Trimbos’ estate in connection with the issues in the proceeding. Although there may be unresolved issues concerning indemnity under the LPLC policy in relation to the claim in the proceeding, Lander & Rogers will continue to act for Ms Peiros and defence costs are being met.
Thirdly, all persons having an interest in Mr Trimbos’ estate will be equally affected, if at all, by the outcome in the proceeding.
Fourthly, I am satisfied from the material filed by the SPR in support of the application that members of Mr Trimbos’ immediate family were aware of the application. It appears that Lander & Rogers was provided with Ms Peiros’ contact details by the family in connection with a proposed appointment as representative.
Finally, no good purpose would be served through incurring the cost and delay that would be caused by requiring notice of the application to be given to any person having an interest in the estate.
Determination of a separate question
Applicable principles
The Trimbos interests seek an order that the question of whether the proceeding against the sixth defendant abated upon his death (‘Question’) be determined as a preliminary issue. Such an order is sought pursuant to r 47.04 of the Rules. I have the advantage of two recent Court of Appeal decisions that have reviewed the cases in respect of preliminary determination of issues and conveniently summarised the applicable principles.
In Murphy v Victoria (‘Murphy’),[6] the Court of Appeal summarised the caution to be exercised before ordering the trial of separate questions under r 47.04, in the following terms:
[6](2014) 45 VR 119, 126 [28] (citations omitted).
(a) A separate trial should be ordered under r 47.04 only with great caution and only in a clear case.
(b) The attraction of trials of issues rather than of cases in their totality are often more chimerical than real, so that separate trials should only be embarked upon when their utility, economy and fairness to the parties are beyond question.
(c) The advantages of trying separate questions for one party may unfairly disadvantage another party, including because the questions will be determined without the benefit of all the evidence relevant to the proceeding.
(d) There should be no trial of a separate question on the basis of assumed facts unless the facts are agreed or can readily be determined judicially. Otherwise, the parties remain free to dispute the relevant facts at any later trial.
(e) As a general rule, it is inappropriate to order that a preliminary issue be isolated for determination unless the determination of the issue in favour of the plaintiff or the defendant will put an end to the action, or where there is a clear line of demarcation between issues and the determination of one issue in isolation from the other issues in the case is likely to save inconvenience and expense.
(f) Factors which tell against making order under r 47.04 include that the separate determination of the question:
(v) may give rise to significant contested factual issues both at the time of the hearing of the preliminary question and at the time of trial;
(vi) may result in significant overlap between the evidence adduced on the hearing of the separate question and at trial; possibly involving the calling of the same witnesses at both stages of the hearing of the proceeding; and
(vii) may prolong rather than shorten the litigation.
Murphy was followed by the Court of Appeal in Hoh v Ying Mui Pty Ltd.[7]
[7][2019] VSCA 203, [393].
Analysis
I have not been persuaded that it is appropriate in the present proceeding to grant the application for preliminary determination of the Question.
First, this is not a clear case. At its highest, the Trimbos interests contended that the determination of the issue in favour of the sixth defendant will put an end to the action in so far as it involved that defendant. That is a possible outcome which enlivens consideration of whether determination of a preliminary question ought be entertained.
Counsel submitted that there was no surviving claim and that it would not be in conformity with the overarching purpose of civil litigation for the issue to be resolved in the trial as a defence. The Trimbos interests put no submission as to the basis for this contention. That is not to say that it was necessary for the submission to be fully developed in advance of a r 47.04 hearing, but rather, to say that the Trimbos interests failed to persuade me that this was a clear case for dismissal of the claims remaining against the sixth defendant. Without understanding how the argument may be put, I cannot exercise great caution, as I am required to do, before setting the question down for a separate trial.[8] Given that I may ultimately have to rule on the question, it is not appropriate that I rehearse the arguments for or against the question, as I might formulate them, in the absence of any submissions from the affected parties.
[8]Jacobson v Ross [1995] 1 VR 337, 340.
Secondly, the Trimbos interests submitted that determining the question at trial was inefficient, costly and inimical to achieving the overarching purpose under the Civil Procedure Act. I do not accept this contention for several reasons.
It is important to note that the trial of the proceeding is almost complete. AFP had completed its evidence on the remitted application, as had the Contradictor (in respect of the issues that had arisen against the second to fourth defendants), and the proceeding had been scheduled for final submissions. I need not dwell to explain the circumstances of the joinder of the fifth and sixth defendants, which are set out in other reasons.[9] In its submissions on the application, the sixth defendant did not foreshadow any intention to lead any further evidence. Assuming that to be the case, all that remains for the sixth defendant is its final submissions, that would extend, if its present application is refused, to submissions answering the material allegations identified in the Trimbos Particulars, as well as the Question.
[9]Bolitho & Anor v Banksia Securities Limited & Ors (No 10) [2020] VSC 524
It should not be thought that the recently appointed representative of the sixth defendant has lacked an opportunity to consider such matters, because as I have noted, Mr Trimbos claimed indemnity under his policy and his insurer was conducting his defence. Prior to his demise, Mr Trimbos put on his defence by an affidavit. Mr Trimbos had earlier given evidence and been cross-examined before being joined as a party to the proceeding. All that remained was any further cross-examination.
Further, it is also important to avoid fragmentation and delay in the final resolution of this remitter. There has already been substantial delay in finalising the distribution to many thousands of elderly debenture holders. The chances of fragmentation and delay are increased if the Question is subject to separate determination. I accept that there is some delay in moving to final submissions occasioned by completion of the case against the fifth defendant, who was joined to the proceeding at the same time as the sixth defendant. I also accept that the argument on the Question may be confined. However, the court must still accommodate the hearing and then prepare the ruling.
Final resolution might be further prolonged by an application for leave to appeal the separate determination of the Question. The risk of delay and expense being incurred in that way is avoided if the Question is determined together with the other issues in the proceeding, allowing it to move to final submissions and judgment. The opportunity to take any decision on the Question to a higher court after final judgment will remain. Given the late stage in the proceeding at which this application is made, a lesser risk of fragmentation and delay remains significant when compared to an application made well before the proceeding is fixed for trial. In any event, this risk is not readily susceptible to quantification.
I do not accept the contention of the Trimbos interests that there will be prejudice through increased costs if they are required to prepare submissions addressing the material allegations identified in the Trimbos Particulars. While it may be accepted that there would be increased costs, it does not follow that those costs would be thrown away. If the sixth defendant succeeds at trial with any of its defences, it will be entitled to seek its costs. The prospect of minimising any call against debenture holders’ funds may have motivated the SPR to support, without real commitment to the submission, preliminary determination of the Question. In theory, that hearing might be short and, if lost by the Trimbos interests, the risk to the funds of debenture holders might be eliminated. As I have noted, without even a skeleton outline of the proposed arguments, I cannot conclude that this is a clear case either way.
Thirdly, it is necessary to balance the advantages to the Trimbos interests of a r 47.04 hearing against the disadvantages to other parties. None of AFP or the second, third or fourth defendants have any interest in the Question, save in one respect. The fourth defendant contends that the sixth defendant is a concurrent wrongdoer and that any judgment against the fourth defendant should be proportionate to its liability, having regard to, inter alia, the conduct of the sixth defendant. There is merit in the fourth defendant’s opposition to this application, on the ground that delay in the determination of the entire remitter proceeding will cause prejudice to the other parties because:
(a) on the Contradictor’s case, interest continues to accrue at the penalty interest rate;
(b) the other litigants are faced with the ongoing stress of this long-running litigation; and
(c) the delay to the final determination in the proceeding will likely result in increased costs to all parties in the proceeding.
The quantum of these costs and expenses would substantially outweigh the additional legal costs that the Trimbos interests might have to bear if they ultimately succeeded on the Question at trial.
I am satisfied that this is an instance where the attraction of trials of issues rather than of cases in their totality ‘is more chimerical than real’.[10] Because separate trials should ‘only be embarked upon when their utility, economy and fairness to the parties are beyond question’,[11] which is not this case, the application is refused.
[10]Tepko Pty Ltd v Water Board (2001) 206 CLR 1, 55 [168].
[11]Ibid, 55 [170].
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SCHEDULE OF PARTIES
S CI 2012 07185
BETWEEN:
| LAURENCE JOHN BOLITHO | First Plaintiff |
| AUSTRALIAN FUNDING PARTNERS PTY LIMITED | Second Plaintiff |
| - and - | |
| JOHN ROSS LINDHOLM IN HIS CAPACITY AS SPECIAL PURPOSE RECEIVER OF BANKSIA SECURITIES LIMITED (ACN 004 736 458) (RECEIVERS AND MANAGERS APPOINTED) (IN LIQUIDATION) | First Defendant |
| NORMAN O’BRYAN SC | Second Defendant |
| MICHAEL SYMONS | Third Defendant |
| ANTHONY ZITA AND PORTFOLIO LAW PTY LTD | Fourth Defendant |
| ALEXANDER CHRISTOPHER ELLIOTT | Fifth Defendant |
| KATERINA PEIROS, AS THE REPRESENTATIVE OF THE ESTATE OF PETER TRIMBOS, DECEASED | Sixth Defendant |
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