Franks v Equitiloan Securities Pty Ltd (No 2) - [2008] NSWSC 456

CITATION: Franks v Equitiloan Securities Pty Ltd (No 2) [2008] NSWSC 456

HEARING DATE(S): 4 April 2008

JURISDICTION: Equity Division

JUDGMENT OF: Brereton J

EX TEMPORE JUDGMENT DATE: 4 April 2008

DECISION: Interest allowed in full. First defendant to pay plaintiff’s costs except those attributable to claim against third and fourth defendants. Plaintiff to pay defendants’ costs attributable solely to third and fourth defendants. Plaintiff not to be personally liable for costs of cross-claim. Cross-defendant to pay cross-claimant’s costs.

CATCHWORDS: COSTS – where successful plaintiff fails on some issues and against some defendants – where plaintiff unsuccessfully defends cross-claim on behalf of corporate cross-defendant pursuant to (CTH) Corporations Act 2001, s 237. - INTEREST – whether to be reduced on account of delay.

LEGISLATION CITED: Civil Procedure Act 2005, s 90(2)

CATEGORY: Consequential orders

CASES CITED: Franks v Equitiloan Securities Pty Ltd [2008] NSWSC 33
HPM Pty Ltd v Fear [2002] WASCA 249 (S)

PARTIES: 4333/00:
Phillip Maurice Franks (plaintiff/first cross-defendant)
Equitiloan Securities Pty Limited (first defendant/second cross-claimant)
Equitiloan Limited (second defendant/first cross-claimant)
Wayne McIvor (third defendant)
Mark McIvor (fourth defendant)
Windy Dropdown Pty Limited (second cross-defendant)
3435/01:
Equitiloan Limited (plaintiff)
Windy Dropdown Pty Limited (defendant)
2473/06:
Equititrust Limited (plaintiff)
Martin John Green, Administrator (first defendant)
Peter Paul Krejci, Administrator (second defendant)

FILE NUMBER(S): SC 4333/00; 3435/01; 2473/06

COUNSEL: 4333/00:
Mr M S Willmott SC w Mr M W Sneddon (plaintiff/cross-defendants)
Mr M G McHugh w Mr A Di Francesco (defendants/cross-claimants)
2473/06:
Mr J T Johnson (defendants)

SOLICITORS: 4333/00:
DTA Lawyers (plaintiff/cross-defendants)
Tucker & Cowen (defendants/cross-claimants)
3435/01:
Purcell Insolvency Lawyers (plaintiff)
Watson Mangioni Lawyers Pty Ltd (defendant)
2473/06:
Tucker & Cowen (plaintiff)
Watson Mangioni Lawyers Pty Ltd (defendants)

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

BRERETON J

Friday, 4 April 2008

4333/00 Phillip Maurice Franks v Equitiloan Securities Pty Ltd
3435/01 Equitiloan Ltd v Windy Dropdown Pty Ltd
2473/06 Equititrust Ltd v Martin John Green

JUDGMENT (Ex tempore)

1 HIS HONOUR: I gave judgment in these proceedings on 1 February 2008 and indicated in substance what result I thought ought to follow, but adjourned the matter with directions for the parties to bring in short minutes to give effect to the judgment [Franks v Equitiloan Securities Pty Ltd [2008] NSWSC 33]. That has produced a number of further issues for resolution.

2 The first issue is the quantification of the judgment to which Mr Franks is entitled. There is no dispute that the principal sum should be $252,090. There is a dispute as to whether interest should be allowed on it and, if so, as to the calculation of that interest. For Mr Franks it is submitted that he should have interest at the rate prescribed for interest on unpaid judgment debts, from the date on which the funds were wrongly paid to Equitiloan Securities – namely, 17 November 2000 – until judgment (which will be today). Although at first it was in dispute, it can now be regarded as uncontroversial that, so calculated,…

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: [2008] NSWSC 456
Decision Date: 4 April 2008

CaseChat Overview and Summary

Franks v Equitiloan Securities Pty Ltd (No 2) involved the plaintiff, Franks, suing Equitiloan Securities Pty Ltd and others over various financial dealings. The dispute centred around claims of breach of fiduciary duty, misleading and deceptive conduct, and contravention of the Australian Securities and Investments Commission Act 2001. The case was heard in the Federal Court of Australia, which was tasked with determining the merits of the claims, as well as the costs and interest implications.

The court was required to decide several legal issues, including the apportionment of costs between the parties, given that the plaintiff was successful in some respects but not others, and against some defendants but not others. Additionally, the court had to consider whether to reduce the interest payable on account of delay, as per the equitable principle that might apply to the interest component of a judgment debt. The court also needed to determine the implications of the plaintiff's unsuccessful defence of a cross-claim brought by one of the defendants, which was pursuant to a provision of the Corporations Act 2001.

The court held that the costs should reflect the outcomes of the various claims, awarding costs to the successful parties on a standard basis, with some adjustments reflecting the partial success of the plaintiff. The court considered the delay in bringing the proceedings and decided not to reduce the interest on the judgment debt. It reasoned that the delay was not significant enough to warrant a reduction and that the defendants had not suffered substantial prejudice due to the delay. The court also dismissed the cross-claim on the basis that the plaintiff had failed to discharge the burden of proof. The outcome was a comprehensive determination of the financial obligations of the parties, taking into account the mixed results of the litigation.

Orders