Bruderle & Anor v Freitag - [2011] QCA 202

[2011] QCA 202

COURT OF APPEAL

MUIR JA

Appeal No 5635 of 2011

SC No 165 of 2009

DIETHARDT EUGEN BRUDERLE	Applicant/Defendant
and
PARS PRO TOTO PTY LTD
ACN 010 859 579	Applicant/Defendant
and
SVARGO KLAUS FREITAG	Respondent/Plaintiff
BRISBANE
DATE 19/08/2011

MUIR JA: The respondents to this appeal apply under r 772 of the Uniform Civil Procedure

Rules 1999 (Qld) for security for costs in the sum of $30,000. The appeal is against an order

of a judge of the trial division of this Court made on 31 May 2011 determining against the

appellant/respondent the preliminary question of whether his claim was statute barred. The

primary judge gave judgment for the applicants on the whole of the claim and ordered that the

respondent pay the applicants’ costs.

The primary judge explained the applicants’ case as follows in his reasons. The respondent

sued as administrator of the estate of one Günter Muller who died in April 1990. At the time

of his death, the deceased was a director and shareholder of the second applicant ("the

company"). No letters of administration were tendered at first instance and the applicants

challenged the respondent's right to represent the estate. The primary judge, however, found

it unnecessary to determine the question of standing.
The respondent alleged that the first applicant acted fraudulently in the conduct of the affairs

of the company, thereby causing loss to his estate. It was further alleged that the respondent,

by his conduct towards the beneficiaries of the estate, created a constructive trust which he

breached by his dealing with the assets of the estate and that he cloaked that fraud by failing

to file correct annual company returns and to give a proper account to the shareholders. There

were other allegations of irregularities in changing the second applicant's share structure in

2002 and in "the directorate since 2003."

The primary judge observed that the second applicant's balance sheet for 1990 indicated that it

"had no value at that time" and that "it has not been shown that it has any value now." His

Honour noted also that the respondent "acknowledges that he believed that the company had

shut down in 1992." It was found also that, between 1990 and 1992, the respondent

undertook investigations into the second applicant's financial affairs. Elsewhere in his

reasons, the primary judge recorded circumstances from which it could be inferred that the

respondent had investigated the financial affairs of the second applicant in 1991 and 1992 and

had made a deliberate decision not to “pursue litigation”. The primary judge held that the

respondent could not use s 38 of the Limitation of Actions Act 1974 (Qld) to extend the

limitation period as the respondent, who bore the onus of proof, could not show that it could

not have discovered the fraud by using reasonable diligence, see Hutchinson v Equititour Pty

Ltd & Ors [2010] QCA 104. It was further held that there was no evidence linking the

conduct of the first applicant to any…

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: [2011] QCA 202
Decision Date: 19 August 2011

CaseChat Overview and Summary

In the case of Bruderle & Anor v Freitag, the applicants, Diethardt Eugen Bruderle and Pars Pro Toto Pty Ltd, sought security for costs against the respondent, Klaus Freitag, as administrator of the estate of Günter Muller. The application was made under rule 772 of the Uniform Civil Procedure Rules 1999 (Qld) and was in response to an order made by a judge of the trial division of the Court of Appeal on 31 May 2011, which determined that Freitag's claim was not statute-barred. The primary judge had ruled in favour of the applicants on the entirety of the claim and ordered Freitag to pay the applicants' costs.

The legal issues before the court centred on the validity of Freitag's claim under the Limitation of Actions Act 1974 (Qld), and whether Freitag had demonstrated sufficient grounds to extend the limitation period. The primary judge had found that Freitag could not use section 38 of the Act to extend the limitation period, as Freitag had failed to prove that it could not have discovered the fraud through reasonable diligence. Furthermore, the primary judge noted that there was no evidence linking the conduct of Bruderle to any detriment in the value of the estate. The appeal raised the question of whether Freitag had a prospect of success on appeal and whether he would be able to pay the applicants' costs if ordered to do so.

In delivering the judgment, Muir JA considered the respondent's prospects of success on appeal, noting that while they did not appear good, it was not possible to conclude that there were no prospects at all. The court also took into account that the parties were self-represented, and that Bruderle had already provided security for costs in the form of a charge over 80 shares in the company held by the estate. The court exercised its discretion to refuse the application for security for costs and made no order as to costs.

Orders