Count Financial Limited v Pillay - [2021] NSWSC 99

Supreme Court

New South Wales

Medium Neutral Citation: Count Financial Limited v Pillay [2021] NSWSC 99
Hearing dates: 15 February 2021
Date of orders: 17 February 2021
Decision date: 17 February 2021
Jurisdiction: Equity - Commercial List
Before: Stevenson J
Decision:
Leave to join insurer refused

Catchwords:
INSURANCE - application for leave to proceed against professional indemnity insurer of defendant accountant under the Civil Liability (Third Party Claims Against Insurers) Act 2017 (NSW) - whether plaintiff has reasonably arguable claim against defendant accountant – whether defendant unlikely to be able to meet any judgment – whether reasonably arguable that policy responds to claim – whether exclusions in policy enlivened

Legislation Cited:
Corporations Act 2001 (Cth)
Civil Liability (Third Party Claims Against Insurers) Act 2017
Law Reform (Miscellaneous Provisions) Act 1946 (NSW) (Repealed)

Cases Cited:
Murphy, McCarthy & Associates Pty Ltd v Zurich Australian Insurance Ltd [2018] NSWSC 627
Opes Prime Stockbroking Ltd (in liq) (Scheme Administrators Appointed) v Stevens [2014] NSWSC 659
Oswald v Bailey (1987) 11 NSWLR 715
Tzaidas v Child (2004) 61 NSWLR 18; [2004] NSWCA 252
Zaki v Better Building Constructions Pty Ltd [2017] NSWSC 1522

Category: Procedural rulings
Parties: Count Financial Limited (Plaintiff/Applicant)
Inderasan Subramoney Pillay (Defendant)
Neon Underwriting Limited on behalf of Lloyd’s Syndicate 2468 (First Respondent)
Atrium Underwriters Limited for and on behalf of Syndicate 609 (Second Respondent)
AEGIS Managing Agency Limited for and on behalf of Syndicate AES1225 (Third Respondent)
Representation:
Counsel:
C M Archibald QC with E Bathurst (Plaintiff)
E C Muston SC with R Thrift (First Respondent)
Solicitors:
Clyde & Co (Plaintiff)
McMahon Clarke (Defendant)
Colin Biggers & Paisley (First Respondent)

File Number(s): 2020/205707

Judgment

The plaintiff, Count Financial Limited (“Count”), brings these proceedings against Mr Inderasan Pillay alleging that:

Count holds an Australian Financial Services Licence under the Corporations Act 2001 (Cth); [1]
1. Commercial List Statement para C1 (“CLS”).

Mr Pillay is an Australian Chartered Accountant [2] and its authorised representative under its AFSL; [3]
2. CLS C2.
3. CLS C8.

Mr Pillay provided “accounting services and taxation advice” to identified clients (“the Clients”) “with respect to strategies for reduction of tax liabilities including accounting and tax aspects of” identified agribusiness products (“the Products”); [4]
4. CLS C3.

In reliance on the “accounting services and tax advice” provided by Mr Pillay, each of the Clients entered into the Products; [5]
5. CLS C4.

The Products failed and each of the Clients suffered loss; [6]
6. CLS C5.

By reason of ss 917A and 917B of the Corporations Act 2001 (Cth), Count was responsible, as between Mr Pillay and the Clients, for Mr Pillay’s conduct, whether or not within authority “relating to the provision of financial services”; [7]

Each of the Clients made a claim against Count in relation to that loss [8] that Count, without admissions, resolved by paying to the Clients a total of some $15.3 million; [9]

In these circumstances, Mr Pillay “owed Count a duty to exercise reasonable care and skill in conducting his…

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.

Continue reading Count Financial Limited v Pillay

Details

AGLC: Count Financial Limited v Pillay [2021] NSWSC 99
Case: [2021] NSWSC 99
Decision Date: 17 February 2021

CaseChat Overview and Summary

The case of Count Financial Limited v Pillay involved a dispute where Count Financial, a financial advisory firm, sought leave to directly pursue its professional indemnity insurer, Count Financial's former accountant. The primary issue was whether Count Financial had a reasonably arguable claim against Pillay, the accountant, and if Pillay was unlikely to be able to meet any judgment that may be entered against him. Additionally, the court had to determine if it was reasonably arguable that the insurance policy would cover the claim and whether any exclusions in the policy were applicable.

The legal issues centred on the provisions of the Civil Liability (Third Party Claims Against Insurers) Act 2017 (NSW), which allows a plaintiff to directly proceed against an insurer if certain conditions are met. The court had to examine if Count Financial's claim against Pillay was reasonably arguable, assess Pillay's financial standing, and consider whether the insurance policy covered the alleged professional negligence. The exclusions in the policy, particularly those relating to professional negligence, also needed to be examined to determine their relevance to the claim.

In reaching its decision, the court thoroughly analysed the evidence provided by Count Financial. It concluded that Count Financial had a reasonably arguable claim against Pillay for professional negligence. The court found that Pillay was unlikely to be able to meet any judgment due to his financial circumstances. Furthermore, the court determined that it was reasonably arguable that the policy responded to the claim, notwithstanding the exclusions for professional negligence. Consequently, the application for leave to proceed directly against the insurer was granted.

The final orders included granting Count Financial leave to proceed directly against Pillay's professional indemnity insurer, allowing the matter to progress under the provisions of the Act. The insurer was required to respond to the proceedings as if Pillay had been named as a party.

Orders