Ellis v Fisher - [2011] VSC 621

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMON LAW DIVISION

S CI 2010 00193

IAN GEOFFREY ELLIS AND CATHY ANN ELLIS	Plaintiffs
v
BRIAN FISHER (and others according to the schedule)	Defendants
- and -
WALTER PERCIVAL EDWARDS	Third Party

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JUDGE:	RANDALL AsJ
WHERE HELD:	Melbourne
DATE OF HEARING:	1 July 2011
DATE OF JUDGMENT:	6 December 2011
CASE MAY BE CITED AS:	Ellis v Fisher and ors
MEDIUM NEUTRAL CITATION:	[2011] VSC 621	Revised 20 December 2011

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PRACTICE AND PROCEDURE – Bankruptcy – Effect of bankruptcy on legal proceedings – Commencement and maintenance of proceedings – Joint claim for damages for breach of agreement by plaintiffs – Estate of the first plaintiff was sequestrated prior to the filing of the writ – Section 62 of the Bankruptcy Act provides for suit by a joint contractor without joining a bankrupt – Whether the proceeding is and was always a nullity due to the bankruptcy of the first plaintiff – Proceeding not defeated by misjoinder of bankrupt first plaintiff – Supreme Court (General Civil Procedure) Rules 2005, r 9.05 and 9.06, Bankruptcy Act 1966 (Cth), s 58 and s 62.

COSTS – Court ordered mediation – Bankrupt first plaintiff’s cause of action vested in his trustee in bankruptcy – Plaintiffs attending mediation before regularising the proceedings – Not all appropriate parties present at mediation – Settlement could not have been reached – special costs order justified.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiffs	Mr M T Lapirow	Warren McKeon Dickson Lawyers
For the First and Second Defendants	Mr S P Matters	Pinto Law
For the Third to Seventh Defendants	Mr A Herskope	JBT Lawyers
For the Third Party	Mr P X Tuohey	Monahan + Rowell Lawyers

HIS HONOUR:

On or about 4 July 2005, the plaintiffs made a mortgage advance in the principal sum of $850,000 to a mortgagor. In the same month, the mortgagor granted a mortgage in favour of Permanent Trustee Australia Limited ACN 008 412 913 (“PTA”). Further, in or about July or August 2005, the mortgagor granted a further mortgage in favour of the defendants to this proceeding.

A priority agreement was entered into between the mortgagor, PTA, the plaintiffs and the defendants. The substance of the priority agreement was to provide for any sale or realisation proceeds to be applied firstly to PTA, secondly to the plaintiffs and thirdly to the defendants. The priority agreement also contained a provision that in the event that there was any transfer or assignment, the transferee or the assignee would enter into a priority deed in the same form as the priority agreement.

On 4 August 2005, PTA registered its mortgage. On 1 September 2005, the defendants registered their mortgage. The plaintiffs did not lodge their mortgage for registration by the Registrar of Titles. Accordingly, on the face of the title, PTA was first mortgagee and the defendants were recorded as second mortgagee.

On or about 1 November 2007, the defendants’ mortgage was transferred to…

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] VSC 621
Decision Date: 6 December 2011

CaseChat Overview and Summary

In the case of Ellis v Fisher, the plaintiffs brought an action against the defendant for damages arising from a breach of an agreement. The first plaintiff’s estate was placed into bankruptcy prior to the filing of the writ. Despite this, the second plaintiff proceeded with the action, joining the bankrupt first plaintiff as a co-plaintiff. The defendant argued that the proceeding was a nullity due to the bankruptcy of the first plaintiff and sought to have the case dismissed. The court was required to determine whether the proceeding was indeed a nullity and, if not, whether special costs should be awarded due to the circumstances of the case.

The central legal issues revolved around the effect of the first plaintiff’s bankruptcy on the joint claim and whether the proceeding could continue without the bankrupt. The court examined the relevant provisions of the Supreme Court (General Civil Procedure) Rules 2005 and the Bankruptcy Act 1966 (Cth). Specifically, section 62 of the Bankruptcy Act allows a joint contractor to proceed with a suit without joining a bankrupt, whereas sections 58 and 62 pertain to the effects of bankruptcy on legal proceedings. The court also considered the procedural rules under r 9.05 and r 9.06 of the Supreme Court (General Civil Procedure) Rules 2005, which govern the joinder and misjoinder of parties.

The court found that the proceeding was not a nullity due to the bankruptcy of the first plaintiff. It held that the action could proceed under section 62 of the Bankruptcy Act, allowing the second plaintiff to continue the suit without the bankrupt. However, the court also addressed the issue of costs, noting that the proceeding had not been properly regularised before the mediation. The bankrupt's cause of action was vested in his trustee in bankruptcy, and not all appropriate parties were present at the mediation, which rendered a settlement impossible. Consequently, the court concluded that a special costs order was justified due to the circumstances surrounding the mediation and the misjoinder of the bankrupt plaintiff.

The final orders of the court included the dismissal of the defendant's application to have the proceeding declared a nullity and the making of a special costs order against the plaintiffs for the costs incurred due to the misjoinder and improper regularisation of the proceeding.

Orders