George v Pannuti

[2014] VCC 2172

IN THE COUNTY COURT OF VICTORIA

AT MELBOURNE

CIVIL DIVISION

Revised
Not Restricted
Suitable for Publication

COMMERCIAL LIST
GENERAL DIVISION

Case No. CI-14-02476

PHILIP GEORGE	First Plaintiff
and
AJG PTY LTD (ACN 005 420 182)	Second Plaintiff
v
FABIO PANNUTI	First Defendant
and
MOBILE COMMUNICATION SYSTEMS PTY LTD (ACN 006 480 431)	Second Defendant

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JUDGE:	HIS HONOUR JUDGE LACAVA
WHERE HELD:	Melbourne
DATE OF HEARING:	12 November 2014
DATE OF JUDGMENT:	18 December 2014
CASE MAY BE CITED AS:	George & Anor v Pannuti & Anor
MEDIUM NEUTRAL CITATION:	[2014] VCC 2172

REASONS FOR JUDGMENT
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Subject:IRREVOCABLE ELECTION BETWEEN THE CLAIMS MADE AGAINST TWO DEFENDANTS

Catchwords:             Plaintiffs enter judgment in default of appearance against first defendant – whether such a course amounts to an irrevocable election between the claims made against both defendants

Legislation Cited:     Civil Procedure Act 2010, s62 and s63; County Court Civil Procedure Rules 2008, Rule 23.03; Australian Consumer Law, s18 and s29

Cases Cited:Petersen v Moloney (1951) 84 CLR 91;   Sunray Irrigation Services Pty Ltd v Hortulan Pty Ltd (In liq) [1993] 2 VR 40

Judgment:                Summary judgment for the Second Defendant.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiffs	Dr J Glover	Beaumont Lawyers
For the Defendants	Mr K Naish	Darren Muir Fleiter

HIS HONOUR:

1 The second defendant applies by Summons dated 23 September 2014 for summary judgment. The application is made pursuant to s62 and s63 of the Civil Procedure Act 2010 and Rule 23.03 of the County Court Civil Procedure Rules 2008.  Alternatively, the Summons seeks relief, asking for an order that the proceeding against the second defendant be permanently stayed.

2       I am of the opinion that the second defendant must succeed on its Summons and there will be an order that the plaintiffs’ claims against it will be dismissed.  My reasons are set out below.

3       The Summons is supported by an affidavit of Shane William Dare, the legal practitioner of the second defendant, sworn 23 September 2014.

4       The factual matrix in which this Summons falls to be decided is of short compass and is not in contention between the parties.  For the purposes of deciding the Summons, I assume the facts pleaded have been made out.

5       The plaintiff commenced the proceeding against each of the named defendants by Writ in the Supreme Court on 19 August 2013.  On or about 14 March 2014, the proceeding was transferred to this Court.

6       By their Statement of Claim, the plaintiff’s purport to plead separate claims against the defendants arising out of the following pleaded circumstances.  The Statement of Claim pleads facts under two headings.  Commencing after paragraph 2 appears the heading “Liability of the first defendant”.  Commencing after paragraph 12 appears the heading “Liability of the second defendant”.

7       The plaintiffs plead that on or about 30 April 2012, the first defendant (“Pannuti”) requested the first plaintiff (“George”) to advance to him $250,000 on terms that Pannuti would pay to George $275,000 on 30 April 2013.  The plaintiffs allege Pannuti gave a written undertaking to repay the sum of $275,000 upon receipt by the second defendant (“Mobile”) of the sum of $250,000 into its bank account.

8       On 30 April 2012, George nominated the second plaintiff (“AJG”) to advance $250,000 to Mobile.  According to the particulars to paragraph 7 of the Statement of Claim, on the same day, AJG deposited $250,000 into the bank account of Pannuti.  In fact it is agreed on the pleadings that Mobile received $250,000 into its bank account on 30 April 2012.

9       On 22 July 2013, George presented the undertaking given by Pannuti to him and demanded payment of $275,000 but he has not paid that sum or any other amount to George.

10 The plaintiffs allege Pannuti engaged in conduct that was misleading or deceptive or likely to mislead or deceive contrary to s18 of the Australian Consumer Law. They also allege Pannuti acted contrary to s29 of the same Act. In consequence of these breaches by Pannuti, the plaintiffs plead that AJG has suffered loss and damage which is claimed to be the $250,000 advanced and, loss of interest since the date it was advanced.

11      The plaintiffs also plead that on 12 June 2013, AJG made a demand in writing to Mobile for payment to it of $250,000 with interest and that on 17 June 2013, Mobile responded and claimed it had no knowledge of $250,000 having been advanced by AJG.

12      The plaintiffs plead that the $250,000 paid by AJG on 30 April 2012 was received by Mobile under a mistake of fact.  It is pleaded that AJG mistakenly believed that Mobile had agreed to repay it $250,000 and interest on 30 April 2013.

13      Alternatively, the plaintiffs plead that $250,000 was paid by AJG to Mobile for a consideration which has wholly failed.  Significantly, in the particulars to paragraph 16, the plaintiffs plead:

“Neither the first defendant nor the second defendant has repaid any part of the sum of $250,000 advanced to it by the second plaintiff on 30 April 2012 or any interest thereon.”

14      AJG claims $250,000 from Mobile as money had and received.  Alternatively, that Mobile holds the sum of $250,000 for it on a resulting trust.

15      The prayer for relief in the Statement of Claim is split between claims by George and/or AJG against Pannuti for $275,000; alternatively, $250,000 and, a claim by AJG only against Mobile for $250,000.

16      On 3 June 2014, the plaintiffs entered judgment against Pannuti for the sum of $275,000 plus interest and costs.  Judgment was entered in default of appearance.

17      Mobile submits that the causes of action pleaded against it and Pannuti are alternative claims, as are the claims by the plaintiffs themselves.  In those circumstances, Mobile submits that by entering judgment against PannutI, the plaintiffs have made an irrevocable election between the claims and, therefore the claim that persists against Mobile must fail.

18      Mr Naish of counsel, who appeared on behalf of Mobile, in a helpful written submission, relied, inter alia, upon the principle in Petersen v Moloney[1] where the High Court said, inter alia:

“… Moloney or Pulbrook might be liable to the plaintiff, but both could not be.  In such a case a final election to treat either as liable would preclude the plaintiff from proceeding against the other, and it is a well- settled general principle that, while the commencement of an action against one of two persons alternatively liable does not, entry of judgment against one of them does, constitute a final and irrevocable election.  … .”

[1](1951) 84 CLR 91 at 102

19      Mr Naish submitted this is not a case where the plaintiffs were unaware of the existence of Mobile and the role that they asserted it played.  He submits that having fully pleaded a claim against Mobile and, having elected to enter judgment against Pannuti, the plaintiffs have made an irrevocable election not to proceed against Mobile.  He relies upon the dicta of Tadgell J in Sunray Irrigation Services Pty Ltd v Hortulan Pty Ltd (In liquidation).[2]

[2][1993] 2 VR 40 at 44

20      Dr Glover of counsel, who appeared for the plaintiffs, submitted that the submissions made on behalf of Mobile are misconceived in two ways.  Firstly, he submitted that when analysed, the claims by the plaintiffs are broken up into separate claims against the first and second defendants by different plaintiffs.  He argues that when seen in that way, there is no inconsistency in AJG seeking to proceed against Mobile because there are different claims by different legal persons.  Dr Glover submits the causes of action by AJG against Mobile only for money had and received and for money owing on a resulting trust are separate causes of action that are not inconsistent with the judgment entered by the plaintiffs jointly against Pannuti.  The argument ignores the possibility of double recovery.  It also ignores the pleading in paragraph 16 which I have set out above which, in my view, is clear indication the plaintiffs put their claims on an alternate basis.

21      Secondly, Dr Glover submitted that as the judgment entered by the plaintiffs against Pannuti was in default of appearance, it was interlocutory in nature and is therefore not a binding election.  In this regard he relies upon the obiter in Petersen v Moloney[3] at 103 to 104.  I reject this argument.  The plaintiffs have not sought to have the default judgment set aside.  Applying the dicta of Tadgell J in Sunray[4] (above), they would not be permitted to do so.

[3]Supra

[4]ibid

22      I accept the submissions of Mr Naish, although in this relatively brief judgment I perhaps do not do justice to the obvious work that has gone into them.  On the facts pleaded, having given an unsecured loan, the plaintiffs seeks to recover against Mobile, which was not a party to any contract with either of them, in a situation where they already have a judgment against the party with whom one or other of them did contract.  If allowed to proceed, and assuming the plaintiffs or one of them succeeded in obtaining judgment for the sum of $275,000 against Mobile, that would amount to double recovery. 

23      In my view, the plaintiffs should be bound to their irrevocable election to recover from Pannuti.  The plaintiff’s claim against Mobile must fail.

24 I am satisfied that the plaintiffs’ claim against Mobile has no real prospect of success within s62 and s63 of the Civil Procedure Act 2010.

25 Further, I am satisfied Mobile has a good defence on the merits within Rule 23.03 of the County Court Civil Procedure Rules 2008.

26      The plaintiffs’ claim against the second defendant is dismissed.

27      I will hear the parties on costs.

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