Gorczynski v W and FT Osmo Pty Ltd

[2019] NSWCA 80

Court of Appeal

Supreme Court

New South Wales

Medium Neutral Citation:	Gorczynski v W & FT Osmo Pty Ltd [2019] NSWCA 80
Hearing dates:	12 April 2019
Date of orders:	12 April 2019
Decision date:	18 April 2019
Before:	Leeming JA and McCallum JA
Decision:	1.   Summons seeking leave to appeal filed 29    October 2018 dismissed with costs. 2.   Reasons reserved.
Catchwords:	APPEALS – Appeal from interlocutory decision of associate Judge – Effect of commencing proceedings in Court of Appeal – Supreme Court Act 1970 (NSW), s 51(2) applied – Whether appellable error in refusal to order preliminary discovery – No error established – Leave refused
Legislation Cited:	Civil Procedure Act 2005 (NSW), ss 3, 56 Supreme Court Act 1970 (NSW), ss 51, 101, 104, 118(4) Supreme Court Rules 1970 (NSW), Pt 60 rr 10, 17 Uniform Civil Procedure Rules 2005 (NSW), rr 5.3, 49.4
Cases Cited:	Gorczynski v W & FT Osmo Pty Ltd [2018] NSWSC 1107 Saunders v RHG Mortgage Corporation Ltd [2016] NSWCA 313 Secure Funding Pty Ltd v Stark; Secure Funding Pty Ltd v Conway [2014] NSWCA 151 The Age Company Ltd v Liu (2013) 82 NSWLR 268; [2013] NSWCA 26
Category:	Principal judgment
Parties:	Peter Francis Gorczynski (Applicant) W & FT Osmo Pty Ltd (First Respondent) Michelle Sarah Hale (Second Respondent) Tammy Meyer (Third Respondent) Robert Ebner (Fourth Respondent) Vadim Topolinsky (Fifth Respondent) Bradd Morelli (Sixth Respondent, submitting)
Representation:	Counsel: M Luitingh (Applicant) J O’Sullivan (Second, Third and Fourth Respondents) C Lambert (Fifth Respondent)   Solicitors: & Legal (Second, Third and Fourth Respondents) Cohen & Krass (Fifth Respondent)
File Number(s):	2018/246718
Publication restriction:	Nil
Decision under appeal	Court or tribunal: Supreme Court Jurisdiction: Common Law Citation: [2018] NSWSC 1107 Date of Decision: 20 July 2018 Before: Harrison AsJ File Number(s): 2008/289619

Judgment

1. THE COURT: These are our reasons for dismissing the summons seeking leave to appeal on 12 April 2019, immediately following the conclusion of oral addresses.

2. By reserved judgment delivered on 20 July 2018, Harrison AsJ dismissed a notice of motion brought by Mr Peter Francis Gorczynski seeking orders in the nature of preliminary discovery: Gorczynski v W & FT Osmo Pty Ltd [2018] NSWSC 1107. Mr Gorczynski filed a notice of intention to appeal on 10 August 2018 and a summons seeking leave to appeal on 29 October 2018. On any view the summons is slightly more than a week late, and Mr Gorczynski has served evidence seeking to explain that delay.

3. The respondents against whom preliminary discovery is sought were associated in one way or another with the late William Osmo. The sixth respondent is the liquidator of Mr Osmo’s company, W & FT Osmo Ltd (in liq), and that company is named as the first respondent. The second and third respondents are executors of the estate of the late William Osmo, and the fourth respondent is a solicitor who acted for Mr Osmo. The fifth respondent is Mr Vadim Topolinsky, who was a former employee of Mr Osmo.

Jurisdictional obstacle?

4. A threshold difficulty was raised by the written submissions made on behalf of the second, third and fourth respondents, which were adopted by the fifth respondent. Those respondents, who were the only active respondents, said that there was no point in granting leave, because the appeal would be incompetent, no appeal lying from the interlocutory decision of the associate Judge to the Court of Appeal.

5. It is as well to explain why that is not so, notwithstanding that, when the matter was debated at the outset of the hearing, ultimately counsel withdrew this objection.

6. The judgment and order of the associate Judge have effect as a judgment and order of the Court: Supreme Court Act 1970 (NSW), s 118(4). However, the appeal created by s 101 from judgments or orders of the Court in a Division does not apply, by reason of s 104. Section 104 of the Supreme Court Act provides:

“104   Exclusion of appeal from associate Judges and others

Subject to the rules, an appeal shall not lie to the Court of Appeal from any decision, judgment, order, opinion, direction or determination of the Court in a Division constituted by an associate Judge, registrar or other officer.”

7. Part 60 r 17 of the Supreme Court Rules qualifies the effect of s 104. However, it is accepted that none of the qualifications is applicable to the decision of the associate Judge from which Mr Gorczynski seeks leave to appeal.

8. Those provisions were raised with the parties by the Registrar of the Court of Appeal late last year, and were debated at a hearing before the Registrar on 18 February 2019. The Registrar delivered reasons stating that Mr Gorczynski sought for the matter to be remitted to the Common Law Division, while the respondents sought for the matter to remain in the Court of Appeal. The Registrar noted that he doubted whether the dismissal of Mr Gorczynski’s notice of motion was not a final decision for the purposes of Pt 60 r 17. If it were final, then an appeal would lie to the Court of Appeal. However, in light of what was common ground, the Registrar proceeded on the basis that the order was interlocutory. Applying s 56 of the Civil Procedure Act 2005 (NSW) and having regard to a date for the hearing having been allocated and there already having been two directions hearings in the Court of Appeal, the Registrar directed that the matter remain in the Court of Appeal.

9. We are of the view that the orders made by the associate Judge are interlocutory: The Age Company Ltd v Liu (2013) 82 NSWLR 268; [2013] NSWCA 26 at [104]. That is the common position between the parties. It follows that an appeal lies to the Common Law Division. (Formerly, this was pursuant to Pt 60 r 10 of the Supreme Court Rules; the appeal now lies pursuant to UCPR r 49.4.). An appeal does not lie to the Court of Appeal.

10. But, contrary to the respondents’ submissions, that is not an end to the matter. Merely because an appeal is commenced in the Court of Appeal when it should have been commenced in the Court in a Division does not mean that the application should be dismissed. Instead, the application is irregular, as Beazley P stated in Saunders v RHG Mortgage Corporation Ltd [2016] NSWCA 313 at [2], and s 51(2) of the Supreme Court Act applies. That subsection provides:

“(2)   Where proceedings are commenced in the Court of Appeal but are, under this or any other Act or under the rules, assigned to a Division:

(a)   the proceedings shall be for all purposes well commenced on the date of commencement in the Court of Appeal, notwithstanding that the proceedings are assigned to a Division,

(b)   the Court of Appeal may, on application by a party or of its own motion, order that the proceedings be remitted to a Division,

(c)   upon an order for remission being made under paragraph (b), the proceedings may be continued and disposed of in a Division, and

(d)   subject to any order under paragraph (b), the proceedings may be continued and disposed of in the Court of Appeal.”

11. Thus, in Secure Funding Pty Ltd v Stark; Secure Funding Pty Ltd v Conway [2014] NSWCA 151 an interlocutory appeal not materially different from the present appeal was remitted to a Division. On the other hand, in Saunders v RHG Mortgage Corporation Ltd the matter was retained by this Court. That was the effect of the Registrar’s decision on 18 February 2019.

12. It was on that basis that the matter proceeded as an application for leave to appeal to the Court of Appeal. It is taken to have been “well commenced” under s 51(2)(a) and may be “continued and disposed of in the Court of Appeal” pursuant to s 51(2)(d).

The merits of the proposed appeal

13. The oral hearing focussed upon the underlying merits of the proposed appeal, rather than the additional hurdle Mr Gorczynski faced in seeking an extension of time. We took this course because the underlying merits are in any event relevant to the discretion to extend the time within which an application for leave to appeal may be brought.

14. The primary judge had before her an amended notice of motion which sought orders in the nature of preliminary discovery in paragraphs 3 to 8 as follows:

“(3) An order that the Executors of the estates of William Osmo and Fortunee Toni Osmo (“Toni Osmo”) and/or Mr Robert Ebner provide the plaintiff with details of the whereabouts of the books, financial records and documents relating to the examinable affairs of W & FT Osmo Pty Ltd (also known as Osmo & Associates Pty Ltd), being ‘books’, ‘financial records’ and ‘examinable affairs’ as defined in section 9 of the Corporations Act 2001.

(4) An order that the Executors of the respective estates of William Osmo and Fortunee Toni Osmo and/or the Executors’ solicitor Mr Robert Ebner furnish to the plaintiff the books, financial records and documents relating to the examinable affairs of W & FT Osmo Pty Ltd (also known as Osmo & Associates Pty Ltd), being ‘books’, ‘financial records’ and ‘examinable affairs’ as defined in section 9 of the Corporations Act 2001.

(5) Further or in the alternative to Order 4 above, an order pursuant to rules 5.3 and 5.4 of the Uniform Civil Procedure Rules 2005 that the Executors of the respective estates of William Osmo and Toni Osmo and/or the Executors’ solicitor Mr Robert Ebner give discovery to the plaintiff in relation to the business affairs of William Osmo and Fortunee Toni Osmo and the business affairs of any companies of which they were directors and/or members, being ‘business affairs’ as defined in section 9 of the Corporations Act 2001.

(6) An order pursuant to rules 5.3 and 5.4 of the Uniform Civil Procedure Rules 2005 that Vadim Topolinsky give discovery to the plaintiff in relation to the business affairs and examinable affairs of T.O.P Consulting Group Pty Ltd (ACN 094 569 623) and T.O.P Consulting Group (NSW) Pty Ltd (ACN 156 071 706), being ‘business affairs’ and ‘examinable affairs’ as defined in section 9 of the Corporations Act 2001.

(7) An order pursuant to sections 5-30, 70-45 and 70-90 of Schedule 2 of the Corporations Act 2001, that Bradd Morelli, Liquidator, produce to the Plaintiff the books of TOP Consulting Osmo Group Pty Ltd (ACN 156 642 554), being ‘books’ as defined in section 9 of the Corporations Act 2001.

(8) Further or in the alternative to Order 7 above, an order pursuant to rules 5.3 and 5.4 of the Uniform Civil Procedure Rules 2005 that Bradd Morelli, Liquidator, give discovery to the Plaintiff in relation to the business affairs of TOP Consulting Osmo Group Pty Ltd (ACN 156 642 554).”

15. No attempt appears to have been made before her Honour to restrict any of those categories of documents, either by reference to time or subject matter. In this Court, Mr Luitingh was content to confine the categories to documents dated or brought into existence from 2000 to date (which is to say more than 18 years), but resisted any suggestion that the categories should be narrowed by subject matter. The breadth of the classes of documents sought was, on a fair reading of the associate Judge’s reasons, the principal reason for refusing the application.

16. The reason for seeking documents going back to 2000 related to the history of Mr Gorczynski’s complaints against Mr Osmo and his company and other related persons, which were summarised by the primary judge at [5]-[21]. It is not necessary to give anything other than a brief account of that background. What follows is drawn from her Honour’s reasons, which were not suggested to be inaccurate. In short, Mr Gorczynski had successfully sued his neighbour in the Land and Environment Court, in relation to building works and structures which were found to have been defective and non-compliant. Mr Osmo, an engineer, had created reports and certifications in relation to those structures.

17. After his success in the Land and Environment Court, Mr Gorczynski then sued Mr Osmo’s firm (among other proceedings) as a result of which on 7 July 2006 he obtained a default judgment against it. The amount claimed by Mr Gorczynski was $316,816.77. However, in 2008 the proceeding was transferred to the Supreme Court because Mr Gorczynski then claimed damages exceeding the $750,000 jurisdictional limit of the District Court. It seems that Mr Gorczynski’s underlying proceedings remain unresolved in the Common Law Division, more than a decade later.

18. The firm W & FT Osmo Pty Ltd, which is the first respondent to this application, no longer exists. It was common ground at the bar table that it had been deregistered on 18 February 2019. When the matter was heard before the primary judge, it was in the process of being wound up, but its liquidator Mr Bradd Morelli did not appear.

19. Mr Luitingh acknowledged the difficulties faced by Mr Gorczynski in his application, having regard to the passage of time. Mr Gorczynski wishes to submit that one or more of the persons involved in the affairs of Osmo can be sued. Given the time that has passed, Mr Luitingh accepted that only causes of action based on fraud, or involving fraudulent concealment, could be viable. There is much to be said for the proposition that there has been insufficient articulation by Mr Gorczynski of any sound basis for making an allegation alleging fraud against any other party, which is necessary in order to enliven the power in the Rules for preliminary discovery which turn upon the Court’s being satisfied that “the applicant may be entitled to make a claim for relief”: UCPR r 5.3. However, it is not necessary to go so far. Further, despite some of the respondents’ submissions, the associate Judge did not do so.

20. The primary judge received evidence from each of the second, third and fifth defendants. There was no application to cross-examine any of those deponents. Their evidence supported the dispositive findings made by the primary judge. Dealing with the claim for discovery from the second, third and fourth respondents, her Honour said at [58]-[61]:

“58.   As I set out earlier, there is a factual dispute as to the location of the documents of W & FT Osmo Pty Ltd, a dispute I am unable to resolve.

59.   It is my view, that unlike the situation in Wright Medical, the plaintiff has not sought to confine the orders for disclosure, discovery and production of documents to a defined period of time, nor identified the particular types of documents he requires. He requires books, financial records and the examinable affairs of the companies as defined in s 9 of the Corporations Act. These definitions are wide. No attempt has been made to specify categories of documents. The second, third and fourth respondents have provided information as to the likely whereabouts of the documents. As they do not have or have had them in their possession, they cannot produce them.

60.   It is noted that the defendant in these current proceedings is W & FT Osmo Pty Limited, so the plaintiff could issue a properly drafted subpoena to both the solicitor and the accountants.

61.   The second, third and fourth respondents do not have to provide preliminary discovery as set out in paragraph 3 and 4 of the amended notice of motion.”

Her Honour made a similar finding in relation to paragraph 5 of the amended notice of motion, in [71].

21. In relation to Mr Topolinski, her Honour addressed the claim against him at [76]:

“So far as TOP Consulting Group (NSW) Pty Ltd is concerned, Mr Topolinsky explains that it has four staff members, himself, two engineers and one part time administrative employee. As the orders sought are so broad, it would be onerous for Mr Topolinsky to produce the documents sought. TOP Consulting Group (NSW) was registered in 2012. It would appear that the affairs of that company conducted after 2012 would have no relevance to the events that took place in the LEC proceedings which were finalised in 2003. I do not make an order that TOP Consulting Group (NSW) Pty Ltd or Mr Topolinsky provide preliminary discovery as required in paragraph 6 of the amended notice of motion.”

22. Finally, her Honour in addition to making similar findings in relation to seeking preliminary discovery from the liquidator, added that it was unreasonable for the Court to order a liquidator to expend funds — thereby depriving other creditors — in providing those documents.

23. In oral submissions, Mr Luitingh focussed upon one main point. It was said that in finding that the second, third, fourth and fifth respondents did not have documents “in their possession”, her Honour had applied too narrow a focus, and had failed to have regard to the expanded definition of “possession” in s 3 of the Civil Procedure Act, which includes custody and power. It was said that her Honour had failed to have regard to what steps those respondents could take to obtain documents from other parties (such as banks and accountants). The short answer to this submission is that it does not arise on a fair reading of her Honour’s reasons. At [29] her Honour expressly accepted that the Rules referred to documents “that a person may have or had ‘possession’ of and therefore includes identification of documents that they may have had in the past”. Section 3 of the Civil Procedure Act defines “possession” as including “custody” and “power”. Further, the affidavits sworn by the respondents were not confined to possession. They repeatedly denied that they had “possession, custody or control” over various documents.

24. In those circumstances, it has not been established that the primary judge erred by applying an unduly narrow approach to the concept of possession, as an element of her Honour’s discretionary refusal to grant the orders sought by Mr Gorczynski.

25. Further, it is plain from paragraphs [59], [71], [76] set out above that the discretion exercised by the primary judge was informed by the breadth of the categories, the failure to identify particular documents, and the steps which had been taken by the respondents. Given the width of the documents sought, and the unwillingness on the part of Mr Gorczysnki to narrow them, it is difficult to see how any other result could have been reached.

26. Mr Luitingh made two subsidiary points. One took objection to what was said about the unresolved factual dispute in [58]. The other was whether it was correct to say that a properly drafted subpoena could issue. It is not necessary to take either of those points any further, because it is plain that neither was dispositive of the primary judge’s decision not to order preliminary discovery.

27. Mr Gorczynski’s application for leave to appeal was accompanied by a prolix draft notice of appeal containing eight grounds and numerous sub-grounds, as well as lengthy submissions (both contained in the draft notice, and in a separate document). When asked about this, Mr Luitingh confirmed that he sought leave in terms of the entirety of the draft notice of appeal, and abandoned none of the submissions. He did not however seek to be heard further in relation to them.

28. In circumstances where counsel was given more than hour in oral address (which is considerably longer than normally allowed on an application for leave to appeal) and chose not to develop any of the written submissions which had been prepared by his client, and seemingly without the benefit of legal advice, it is not necessary to address the undeveloped written submissions in any detail. For the most part, the proposed grounds of appeal, and submissions in support, failed to identify matters capable of casting doubt upon the exercise of discretion by the primary judge. Instead, they focus upon the facts, and disagreements by Mr Gorczynski as to what had occurred in the past and what had occurred at the hearing before the primary judge. Proposed ground 8 dealt with discovery by the sixth respondent, the liquidator Mr Morelli, and was not developed at all orally. There is no basis for interfering with the exercise of discretion made by her Honour and, further, Mr Gorczynski now faces the difficulty that the company no longer exists.

22. The result is that no case has been established warranting a grant of leave, with the result that it is not necessary separately to consider the extension of time.

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Decision last updated: 18 April 2019