Donnelly v Saunders
[2013] NSWSC 136
•01 March 2013
Supreme Court
New South Wales
Medium Neutral Citation: Donnelly v Saunders [2013] NSWSC 136 Hearing dates: 26 February 2013 Decision date: 01 March 2013 Jurisdiction: Common Law Before: Harrison J Decision: Summons filed 13 February 2013 dismissed with costs
Catchwords: PRACTICE & PROCEDURE - transfer of proceedings from District Court to Supreme Court - s 140(1) Civil Procedure Act 2005 - whether necessary for all matters arising out of related facts to be heard at one time - whether transfer indicated in order to satisfy the s 56 overriding purpose Legislation Cited: Civil Procedure Act 2005, ss 56 & 140(1) Category: Procedural and other rulings Parties: Chrisopher Peter Donnelly (First plaintiff)
Mark Rodney Bissaker (Second plaintiff)
Keith Charles Saunders (Defendant)Representation: Counsel:
B DeBuse and E Weisske (Plaintiffs)
B Burke (Defendant)
Solicitors:
Martin Legal (Plaintiffs)
Courtenay & Co Solicitors (Defendant)
File Number(s): 2013/45076 Publication restriction: Nil
Judgment
HIS HONOUR: The plaintiffs seek an order pursuant to s 140(1) of the Civil Procedure Act 2005 for the removal into this Court of certain nominated proceedings in the District Court. The order is opposed.
The National Australia Bank originally commenced the District Court proceedings on 11 June 2010 against Mr Donnelly and Mr Bissaker and a company with which they were associated, seeking judgment for a sum of just over $513,000 advanced to them or to related entities commencing on approximately 19 September 2007 and from time to time thereafter. Mr Donnelly and Mr Bissaker borrowed these monies to fund a series of business ventures in New South Wales and Queensland. They did so in accordance with advice they received from Mr Saunders who acted for them as their financial adviser and accountant. Mr Saunders also took a financial and executive interest in the ventures. All three men provided personal guarantees to the bank as partial security for the advances. The ventures ultimately failed and in about October 2009 the bank called upon all of the guarantees.
Mr Saunders sold his interest in the accounting practice styled Roberts & Morrow, of which he was a member, for the sum of $550,000 to the continuing partners of the firm on 1 December 2009 upon the condition that he applied those monies in satisfaction of his liability to the bank. Mr Saunders then settled the bank's claim against him before the District Court proceedings were commenced and so he was never named as a defendant by the bank. Mr Donnelly and Mr Bissaker also settled with the bank but not until after the District Court proceedings had begun. On 23 December 2011 Mr Donnelly and Mr Bissaker filed cross-claims in the District Court against Mr Saunders seeking contribution and indemnity from him as a co-guarantor. That dispute is all that remains of the District Court proceedings. Mr Saunders has filed a defence to the cross-claims in which he has denied any liability to contribute more than he has already.
Mr Donnelly and Mr Bissaker commenced proceedings in this Court on 14 December 2012 against Mr Saunders and his former partners in Roberts & Morrow claiming damages on manifold grounds, including professional negligence, for the losses alleged to have been sustained as a result of their role in advising Mr Donnelly and Mr Bissaker concerning the ventures that failed. The retainer upon which Mr Donnelly and Mr Bissaker sue is said to have existed throughout the period from about December 2006 until July 2009.
Mr Donnelly and Mr Bissaker contend that the guarantees upon which they sue in the District Court are material to their professional negligence proceedings in this Court. They contend that there are facts and issues that are common to both proceedings and that they should be heard and determined in this Court. There is also said to be the potential for problems with issue estoppel, res judicata and Anshun estoppel. Furthermore, Mr Donnelly and Mr Bissaker insist that if the proceedings are transferred to this Court there will be no duplication of costs that they contend will be the result of separate hearings in different jurisdictions.
Mr Saunders is of a completely different view. He submits that the District Court proceedings are within a limited compass and concern issues that are separate and distinct from the negligence proceedings in this Court. The cross-claims do not allege negligence against Mr Saunders and do not raise any issues or claims of the sort agitated by Mr Donnelly and Mr Bissaker in this Court. There is no allegation of any liability said to arise from anything said or done by Mr Saunders.
Mr Donnelly and Mr Bissaker estimate that the negligence claim in this Court will require three weeks of hearing time. The proceedings are obviously a long way from being heard. On the contrary, the District Court proceedings are likely to be disposed of in one day and are ready for a hearing soon. Mr Saunders does not want any further delay to occur in the District Court proceedings, a consequence that would inevitably follow if a transfer were to take place.
Mr Saunders also raises another important matter. He has retained solicitors to appear for him in the District Court proceedings. He is, however, represented by different solicitors in the negligence proceedings in this Court. Those solicitors were appointed by the professional indemnity insurers who stand behind the defendants, including Mr Saunders, sued in respect of their conduct as accountants and financial advisers. A transfer of the proceedings from the District Court to this Court could mean that Mr Saunders would be represented by different solicitors in the one set of proceedings with potentially conflicting interests given that Mr Saunders' interests as an insured defendant may not necessarily align with those he has as a single defendant sued in his non-professional capacity.
Added in a related sense to this is the fact that Mr Saunders remains responsible personally for the costs of defending the proceedings in the District Court. He is concerned if those proceedings are coupled to the negligence proceedings in this Court that his lawyers, who are only involved in the District Court proceedings, will be required to be present in court for almost three weeks at considerable cost to him but with no appreciable or even apparent corresponding benefit.
Finally, David Courtenay, Mr Saunders' solicitor, swore an affidavit that was read before me. Mr Courtenay deposed to a series of calculations by reference to which he estimated the value of the claim for contribution in the District Court. He was not cross-examined. According to documents prepared by the bank, the sum of $550,000 paid to it by Mr Saunders was approximately $42,599 less than the full amount claimed by the bank as owing by him. The amounts so far paid by Mr Donnelly and Mr Bissaker come to $433,337. Mr Courtenay calculated that the amount that could form the basis of the claim for contribution by Mr Donnelly and Mr Bissaker, taking into account a retained sum of $27,759, was only $14,840. In those circumstances Mr Saunders argued that the claim for contribution by Mr Donnelly and Mr Bissaker was quite limited and not one that should attract a transfer to this Court in any event.
Disposition
Section 140(1) of the Civil Procedure Act 2005 is in these terms:
"140 Transfer of proceedings to higher court
(1) The Supreme Court may, of its own motion or on application by a party to proceedings before the District Court or the Local Court, order that the proceedings, including any cross-claim in the proceedings, be transferred to the Supreme Court."
There is considerable authority, if authority were required, for the propositions that there is a public interest in having all matters in controversy arising out of related facts determined at the one time and that when exercising the power contemplated by s 140(1) the Court must give effect to the overriding purpose contemplated by s 56 of the Act.
In the present circumstances, Mr Donnelly and Mr Bissaker and Mr Saunders all became guarantors for advances by the bank to finance joint ventures in which they were all involved. As it happened, Mr Saunders was also the accountant upon whose professional expertise and experience the others allegedly relied when doing so. To that extent there is a factual coincidence between the execution of the guarantees that form the basis for the contribution claims in the District Court and steps taken by Mr Donnelly and Mr Bissaker to do so allegedly upon Mr Saunders' advice. Significantly, neither Mr Donnelly nor Mr Bissaker has sought in either jurisdiction to challenge the validity of the guarantees that they gave. In both the District Court and in this Court they rely upon the guarantees to support a claim for contribution on the one hand and a claim for damages on the other hand. There is therefore no prospect of them adopting a particular forensic position concerning the guarantees in one court thereby creating some corresponding forensic disadvantage or embarrassment in the other court.
The statement of claim in this Court is an impressive document of considerable length and not for present purposes easily or conveniently summarised. It runs to more than 100 paragraphs. There are fourteen defendants including Mr Saunders. The claim as formulated contains allegations of breach of retainer, negligence, breach of fiduciary duties, misleading and deceptive conduct and unconscionable conduct. Thirty-five separate breaches of retainer or breaches of duty are particularised. The face value of the claim including interest and costs is unquantified but would appear to run into a seven-figure sum.
In considering the question of the just, quick and cheap resolution of proceedings, it would be a mistake in my view to have regard only to the proceedings in this Court. The just, quick and cheap resolution of the District Court proceedings is no less important. There seems to be no issue that the removal of the District Court proceedings into this Court would delay them by some considerable time. The cost for Mr Saunders at least could be greatly increased. That delay and increase in costs would in my view produce an injustice to Mr Saunders whatever might ultimately be the outcome of the competing contribution arguments.
I am also not satisfied that Mr Donnelly or Mr Bissaker have identified any tangible procedural or substantive prejudice to them that supports the present application. Written submissions produced on their behalf have referred to the existence of an overlap of facts and issues to be determined in the two cases and the so-called fact that the District Court proceedings are but one aspect of a larger dispute between the parties in this Court. No content has been given to those general contentions, or at least none that satisfies me that the application has merit. In the same way, I have difficulty understanding what is only generally referred to as the duplication of proceedings and costs or the potential duplication of evidence. The fact that all three protagonists may give evidence in both proceedings does not reliably inform the proposition that inconsistent findings may result if the proceedings are not somehow consolidated. The possibility of some estoppel or judicial determination foreclosing the proper presentation of their case is relied upon by Mr Donnelly and Mr Bissaker but without any indication of what the specific issue or issues might be in this regard. In forming these views I have specifically taken account of what is pleaded in paragraphs 93 to 108 of the statement of claim in this Court to which I was particularly directed. References in those paragraphs to agreements among Mr Donnelly, Mr Bissaker and Mr Saunders to contribute capital to the ventures in the ways there described do not lead me to alter my views.
Finally I note that none of the defendants in the professional negligence proceedings in this Court, apart from Mr Saunders, appeared in response to the present application. The summons filed on 13 February 2013 only named Mr Saunders as a defendant. The other defendants in the professional negligence proceedings would seem to me to have been necessary parties to the present application. Possibly obvious or accurate assumptions about their likely attitude to the application should not have become a substitute for their right to be heard. However, I have not taken account of the absence of these defendants as a separate reason for refusing the application even though it would have been necessary in my view to give them an opportunity to be heard before the application to transfer the proceedings could have been granted.
Decision
I consider that the summons filed on 13 February 2013 should be dismissed with costs.
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Decision last updated: 01 March 2013
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