HP and CJ Sweeney Pty Ltd v CA Hill and Associates Pty Ltd

[2006] NSWDC 82

CITATION:	HP & CJ Sweeney Pty Ltd v CA Hill & Associates Pty Ltd [2006] NSWDC 82
HEARING DATE(S):	6,7,8,& 21 September 2006
JUDGMENT DATE:	20 October 2006
JUDGMENT OF:	Williams DCJ at 1
DECISION:	Verdict for the plaintiff in the sum of $65,857.72. Defendant to pay plaintiff's costs.
CATCHWORDS:	Accountants - registered office of company - receipt of documents for company - duty of care - statutory notice of demand - winding up petition - need to alert company officers other than by mail - damages
LEGISLATION CITED:	Evidence Act s160 Civil Liability Act s5B,s5O(1) Corporations Act (Cwlth) s142
CASES CITED:	Briginshaw v Briginshaw (1938) 60 CLR 336 Bannister v Walton (1993) 30 NSWLR 699 Allianz v Woodfast (2003) NSWSC 587 Lane Cove Council v Geebung Polo Club #2 (2002) NSWSC 118 Fancourt v Mercantile Credit Ltd (1983) 154 CLR 87 Hawkins V Clayton (1988) 164 CLR 539 Rogers v Whittaker (1992) 175 CLR 479 Hayden v NRMA Ltd (2000) 51 NSWLR 1 Tai v Hatzistavrou (1999)NSWCA 306
PARTIES:	H P & C J Sweeney Pty Ltd C A Hill & Associates Pty Ltd
FILE NUMBER(S):	5297/05
COUNSEL:	Mr Reoch for Plaintiff Mr Gambi for Defendant
SOLICITORS:	John Dowling Solicitor Wooton & Kearney Insurance Lawyers

IN THE DISTRICT COURT No. 5297/05
OF NEW SOUTH WALES Coram: Judge J S Williams
AT SYDNEY Date: 20th October 2006

BETWEEN:
H.P & C.J SWEENEY Pty Ltd.
Plaintiff
AND:
C.A HILL & Associates Pty Ltd.
Defendant

HEARING DATE: 6,7,8 and 21 September 2006

JUDGEMENT DATE: 20 October 2006

JUDGMENT

1. In this matter the plaintiff was represented by Mr Reoch and the defendant by Mr Gambi. During the course of the judgement I will refer to the plaintiff as “Sweeney” and to the defendant as “Hill” unless otherwise indicated.

WHY THESE PARTIES ARE IN COURT.

2. According to Sweeney, it was sent into liquidation without being aware that steps were in progress to wind up the company. Sweeney was naturally upset at this and blamed Hill who was its accountant and at whose office address was the company’s registered office. Hill says it is not to blame as, although it received the statutory demand and the subsequent Supreme Court winding up summons, it forwarded those documents onto Sweeney by pre-paid ordinary mail and it has the mail book to prove it.

3. Sweeney says that is not good enough. “You should have contacted us by phone or fax to alert us to the situation…” because Sweeney says that it did not receive either the statutory demand or the winding up summons.

4. Sweeney is sueing Hill for the expenses involved in getting itself re-registered, paying the liquidator and a small loss of profit. All in all its claim is worth about $80,000.

WITNESSES.

5. Giving evidence at the trial was Mr D Sweeney a principle and director of the company, Ms J Gibson, the groups financial administrator, Mr C Hill the principle and director of that company, Ms Hill and Ms Wynn who were administrative assistants responsible for mail and Ms B Hardcastle, an accountant and former employee of Hills. There is also an agreed tender bundle of documents Exhibit A and a number of other documentary exhibits.

ISSUES.

6. The only substantial issue to be determined in this trial is essentially a legal one and that is whether Hill had any Common Law or Statutory obligation to let Sweeney know about the impending Supreme Court proceedings other than what in fact occurred.

FINDING AS TO PRINCIPLE FACTS.

7. Let me say at the outset that I am satisfied on the balance of probabilities that the two crucial documents in question were

a. Received by Hill

b. Were known and appreciated by Hill as to what each document entailed for Sweeney

c. Were forwarded through the firm’s mail system to Sweeney, and

d. Were probably posted using ordinary pre-paid mail in the ordinary course of Hill’s business, although the witnesses called in that regard, Ms Hill and Ms Wynn, cannot remember the specific items or the days in question except by reference to the mail book which is an exhibit in the proceedings.

8. Whilst Hill has changed his mail recording system since this incident, in my view that is only partially relevant to any question of duty in this case, because despite the system that operated, I am satisfied on the balance of probabilities, that the documents were posted to Sweeney.

9. I am also satisfied positively having regard to the evidence of Mr Sweeney and Ms Gibson that on the balance of probabilities that Sweeney did not receive either document. Of course, the fault, if there is one in that regard, lies with Australia Post and not with Hill. S160 of the Evidence Act 1995 raises a rebuttable presumption that articles posted in Australia will reach their recipient at least by the fourth working day after posting. That is a day that is not a weekend or a public holiday or a bank holiday. The reason for the non-receipt may lie in the fact that Sweeney’s address is in a rural area near Campbelltown and not a regular suburban location.

BACKGROUND.

10. Sweeney is one of several companies involved in running a large property of about 800 acres near Campbelltown on which are horse riding and conference/reception type facilities. It is unnecessary to refer to the detail of the various corporate structures, as that is irrelevant to the issue for determination except in a minor way as to an aspect of damages. The other companies in the group are Scenic Hills Riding Ranch Pty Ltd, HP and PJ Sweeney Enterprises Pty Ltd and DJ Sweeney Holdings Pty Ltd. Mr Sweeney is a director of each company. The enterprise employs about 30 people on either a full or part time basis and is required to insure them for the purposes of workers compensation.

11. Mr Sweeney was dissatisfied with his then accountant at whose premises the registered office of the company then was and looked elsewhere. Ms Gibson recommended Hill who was her personal accountant. Mr Sweeney and Mr Hill met on the 18th of June 2003. Also present was Ms Gibson. Mr Hill agreed to take over the accounts and provide registered office administrative services for the companies.

12. Sweeney had it’s worker’s compensation policy with CGU and on the 16th of July 2004 received a reminder to pay an overdue amount of $144.16 in regard to the 2004 year’s premium. Worker’s compensation premiums do not necessarily remain constant and can vary each year depending upon the staff returns made for the year before. On the 21st of July 2004, CGU wrote informing Sweeney that it was offering to renew the worker’s compensation policy and that the amount payable was $3,956.56. In the same letter it also advised that the amount could be paid by three instalments, the first of which needed to be paid by the 23rd of September 2004.

13. In previous years Ms Gibson on behalf of Sweeney had arranged to pay the premiums by instalments. The instalments were negotiated directly with someone from CGU. Ms Gibson said she contacted someone at CGU in regard to the instalments after receiving the letter of the 21st of July 2004. She then went on holiday for a time. On the 19th of October 2004, Sweeney received a final notice in the amount of $4,050.94. Ms Gibson said she telephone CGU that day to complain that CGU hadn’t sent an instalment plan and she couldn’t understand how the calculations for the premium had been made. CGU said that they had sent a plan but they would send out another instalment plan and set out how the figure of $4,050.94 was calculated.

14. On the 17th November 2004 a statutory demand was served on Hill for $4,002.91 in regard to the unpaid worker’s compensation premium owed to CGU. Hill posted that document to Sweeney but Sweeney did not receive it. Ms Gibson says that on the 1st of December 2004 she went through her tray and saw the final notice of the 18th of October 2004 ((Exhibit A37). Ms Gibson also says, and I accept, that on the 2nd of December 2004, she rang Hill’s office and spoke to Ms Hardcastle to arrange a meeting with Mr Hill and Mr Sweeney and others for the 31st January 2005 in regard to another matter. She says that nothing was said to her about the statutory demand that had been received by Hill.

15. Ms Gibson checked the CGU file and the MYOB system and asked her assistant to enter the account into the system as a reminder to be paid.

16. On the 15th of December 2004 Ms Gibson again telephoned CGU because the instalment notice and calculations had not been received. She offered to pay $1,000 immediately but was told by the person on the phone that the instalments needed to be in accordance with the instalment notice. Nothing was said to her about an impending winding up summons. A purchase order for CGU in the sum of $4, 151.74 was raised and put into the MYOB system at Sweeney's.

17. On the 21st December 2004 the Supreme Court winding up summons was served on Hill. These documents were posted to Sweeney on 24 December, but not received. The summons was returnable for the 25th of February 2005. The 21st of December 2004 was a Tuesday and Christmas fell on the Saturday of that week.

18. Ms Gibson says that on the 6th of January 2005, from a diary entry on that date, she rang Hills office to re-arrange the date of the meeting of the 31st of January 2005. Mr Hill and Ms Hardcastle suggest that this is unlikely as the office was closed until late January but Ms Hardcastle conceded that although she didn’t come into the office in that period, an employee could and the computerised diary could be changed by any staff member. Ms Gibson telephoned Ms Hardcastle on the 1st of February 2005 to confirm the changed date.

19. The fact is that the meeting in question was changed to the 3rd of February 2005 and a meeting was held on that date between Mr Hill, Mr Sweeney and Ms Gibson at Sweeney’s office. Ms Gibson’s evidence is supported by diary notes and I accept that her recollections are more likely to be accurate than those of Mr Hill or Ms Hardcastle.

20. Despite being aware of the statutory demand and the winding up petition Mr Hill admits that he said nothing about these matters to anyone at the meeting of the 3rd of February 2005 although, in fairness to him, the meeting was in regard to an unrelated topic.

21. Mr Hill says that when he received the winding up summons he gave it a cursory glance. He said that his office received many winding up summons in regard to corporations for which his firm offered a registered office address. Apart from passing on the documentation and making a record in the mail book, there was no other office procedure instigated to keep the date of the up coming dissolution in the fore-front of Hill’s practice considerations.

ARGUMENT.

22. Mr Reoch for the plaintiff suggests that Hill should have done a number of things that would of obviated any problem and would have been quite inexpensive to implement. They were

a. Following up the two documents with a telephone call.

b. Sending the documents by Registered mail.

c. Sending the documents by Express post.

d. Sending the documents by Facsimile.

e. Physically taking the documents around to Sweeney’s premises.

He says that in those circumstances, if Sweeney had ignored the crisis that was developing then it would have no one else to blame but itself.

23. Mr Hill certainly realised the significance of the documents that passed across his desk and that one of his clients, with substantial real estate assets, could be wound up for a debt of $4,000. His view of being the company’s registered office was that he was just a mail re-directory service for company documents. However he was, of course, also the accountant for the company.

24. Mr Gambi for the defendant provided a written outline of submissions and spoke to them. Whilst not pleaded and whilst falling short of actually using the word “fraud”, he suggests that having regard to the evidence of Ms Gibson the raising of the purchase order for $4,151.74 allegedly on the 15th of December 2004 and the drawing up of a cheque for $4,151.74 on the 21st of February 2005 payable to CGU, which was apparently presented for payment on the 23rd of February 2005, that is two days before the winding up summons was heard, that these documents and her evidence have been manufactured to cover the fact that Sweeney did receive the statutory demand and the winding up summons and that she, at least, was aware of their receipt but failed to act and is now just trying to hide her mistake. Reference was made to emotions expressed by Ms Gibson after the winding up was conveyed to her by Hill after the 25th of February 2005.

25. I have difficulty in accepting this byzantine theory. It certainly has not been established on the evidence to the degree of certainty required by the case law for such serious allegations (see Briginshaw-v- Briginshaw (1938) 60 CLR 336 at 362, Banister-v- Walton (1993) 30 NSWLR 699.)

26. Mr Gambi argues that having regard to what was said in three cases namely Allianz-v- Woodfast [2003] NSWSC 587, Lane Cove Council-v- Geebung Polo Club (No2) [2002] NSWSC 118 and Fancourt–v- Mercantile Credit Ltd (1983) 154 CLR 87 that mere evidence of non-receipt does not prove non-delivery. I would distinguish the issues decided in those cases from the present situation in that the present case is simply concerned about the receipt of ordinary mail and not whether or not a statutory notice or other document has been served on a particular address, person or corporation in accordance with a legislative requirement. Presumably the defendant wants to argue that having regard to the evidence of Mr Sweeney and Ms Gibson as to the office practices at Sweeney’s, delivery of the documents has not been negatived.

27. Unlike the mail system in place at Hills, Sweeney’s was a fairly simple and straight forward affair. Mr Sweeney collected the mail from a box at the roadside at the front of the property and opened it. The only time he would not collect the mail would be if he were on holidays or the like.

28. There is no evidence one way or the other, as to whether there was any identifying markings on Hill’s envelopes to indicate that any enclosed material came from that source. However there can be little doubt someone at Sweeney’s, be it Mr Sweeney, Ms Gibson or Kim, the office assistant, would open every letter that came in. Given the nature of the documents in question, if their envelopes had been opened by Kim rather than anyone else, I have no doubt that the contents would have been drawn to the attention of either Mr Sweeney or Ms Gibson. It is highly improbable that both letters were received and left unopened somewhere in the office and subsequently misplaced.

29. The Civil Liability Act now provides the principles applicable to defining the duty of care. They are set out in s5B of the Act.

30. In my view Hill was entitled to presume that at least one or both of the letters posted to Sweeney’s were likely to be received by Sweeney. Was it a breach of the duty of care of Hill’s to not take account of a risk that the letters might go astray in the mail? No doubt in all mail systems there must always be a risk of item loss. Presumably that is why mail providers allow for categories of mail such as Registered Post and Express Delivery. Obviously the more important a document or thing might be, the more likely a person who is posting that document will take greater precautions in the mailing of it than for example he or she may take in regard to Christmas cards. Hill’s mail procedures certainly allowed for the use of Registered Mail and Express Post and that is evidenced from the mail book which is Exhibit 4.

31. The evidence establishes that although the winding up summons was served personally on Hill’s on the 21st of December 2004, it wasn’t posted to Sweeney’s until the 24th of December 2004, that is Christmas Eve. Apart from anything else this would mean that there would be a delay in delivery caused by the Christmas Day/ Boxing Day holidays and the two public holidays in lieu. Why that occurred is unexplained, nor whose decision it was to post by ordinary mail rather than Registered Mail or Express Post is also unknown.

32. Mr Hill gave evidence of the mail recording procedure prior to this incident and what had changed thereafter. After this incident the mail was photocopied, the documents would be mailed to the client and the client would be faxed or phoned to say that mail was on its way. The latter two options were not used with mail previous to this particular incident.

THE RETAINER ISSUE

33. There is a matter that I haven’t previously referred to that is relevant to Hill’s obligations to Sweeney and that is the nature of the retainer between Sweeney and Hill entered into when the parties met on the 18th of June 2003 and Hill agreed to take over Sweeney’s accounting work and act as it’s registered office. The allegation in the statement of claim was that there was a specific term in the retainer that important documents would be forwarded to Sweeney’s and followed up by a telephone call. Mr Sweeney, despite some prompting by way of leading questions, gave no such evidence. All Ms Gibson said about such an arrangement was that Mr Hill said that he would call if anything should come in. It’s quite unclear what she meant by that expression or indeed what Mr Hill might have meant by that expression. Mr Hill denied saying anything to the effect of the allegation contained in the statement of claim. His evidence was that the registered office would be the mailing address for any legal notices and that when received, they would be forwarded to Sweeney’s by ordinary mail. Unfortunately none of these persons made any notes of the matters discussed at this meeting. Having regard to that evidence I am not satisfied that such a specific term was indeed part of the general retainer.

34. Mr Reoch argued that if not specifically part of the retainer, then such a term could be implied. Mr Gambi objected to that argument on the basis that no such implied term had been pleaded. It is probably unnecessary to resolve that issue because the duty of care in this case, is said to be created both in contract and in tort.

35. Having regard to Hawkins-v- Clayton (1988) 164 CLR 539, the terms of a retainer or contract will not necessarily confine the boundaries of the tortious duty of care. Hawkins case revolved around the duty of care owed by a solicitor to inform an executor of the death of the testator. Deane J held that the relationship the solicitor to client was one of such proximity that it

“may give rise to a duty of care on the part of the solicitor which requires the taking of positive steps, beyond the specifically agreed professional task or function, to avoid real and foreseeable risk of economic loss being sustained by the client. Whether the solicitor/client relationship does give rise to a duty of care requiring the taking of such positive steps will depend upon the nature of the particular professional task or function which is involved in the circumstances of the case.”

36. In that case the majority found that the solicitor had a duty to locate the executor and inform him of the testator’s death and the contents of the will and was liable for any economic damage sustained as a result of that failure. The testator had apparently died in 1975 but the solicitors did not attempt to locate the executor until 1981 during which time the house, the subject of the will, was allowed to fall into disrepair.

37. The failure to warn of a consequence or possible consequence of action or inaction has been the subject of many appellate decisions. The principle High Court decision was that of Rogers-v- Whittaker (1992) 175 CLR 479 where an ophthalmologist was held to be negligent in failing to warn a patient of a 1 in 10,000 chance of developing sympathetic opthalmia in the patient’s healthy eye following surgery on the patient’s affected eye. It has been held that the principle in that case also applies to lawyers (Hayden-v- NRMA Ltd [2000] 51 NSWLR p.1) and also, presumably, to accountants.

38. In Tai-v- Hatzistavrou [1999] NSWCA 306 a specialist was held liable for not following up a patient’s booking into hospital for a diagnostic procedure recommended by the specialist to eliminate a question of the presence of cancer.

39. In the present case, there are two documents that are the cause of concern, namely the statutory demand and the winding up summons.

40. I have no doubt that statutory demands may well be fairly commonplace in the business arena and I have difficulty in seeing that Hill’s was in error in not doing anything more than they actually did, that is forward the demand by prepaid ordinary mail. I am not persuaded that although Hill had a duty of care in regard to the statutory demand, that it has breached that duty. There is no doubt that had the statutory demand not been forwarded on Hill would have breached it’s duty of care to Sweeney but that did not happen. The fact that Hill heard nothing back from Sweeney in regard to the statutory demand is in my view neither here nor there because, no doubt, most statutory demands end up being paid and there the matter would end.

41. The winding up summons was a statutory court document originating proceedings against a company to bring the companies activities to an end and place it in liquidation. The seriousness of this process is reflected in the requirement that the summons be personally served at the company’s registered office, as indeed it was.

42. In the present case then, we have a situation where Hill received on behalf of Sweeney the papers commencing proceedings to send Sweeney into liquidation. They were received on the 21st of December. They were forwarded to Sweeney on the 24th of December, the Friday before the Christmas break when Hill’s office was going to be closed for the next three to four weeks. The return date of the summons was the 25th of February 2005.

43. Mr Hill gave evidence that he was unaware from his studies and his experience and attendance at professional development courses and the like of any requirement for the registered office of a company to do anything other than forward to the company the documents that were received by the registered office. Presumably this evidence was elicited in order to take advantage of s5O(1) of the Civil Liability Act which provides that “a person practicing a profession does not incur a liability in negligence arising from the provision of a professional service if it is established that the professional acted in a manner that at the time the service was provided was widely accepted in Australia by peer professional opinion as competent professional practice.”

44. There may be an argument that what was involved here was not really a professional service as that is understood in the section but that need not be decided at this time. What the section does essentially do is to provide a defence of widely accepted competent conduct within a profession, so that a court cannot impose it’s own standard if there is a widely accepted competent conduct that has been proved, merely because there happens to be a competing conduct in operation that the court prefers.

45. Whilst I accept that Mr Hill is an experienced account with a number of professional qualifications, for him to be able to rely on s5O(1) as a defence there would need, in my view, to be evidence from an independent professional, outside what might be regarded as the self serving evidence of the defendant. The problem with relying solely on this evidence is that the experience relied on is too narrowly confined to constitute something that could be regarded as “widely accepted in Australia”.

46. There is no doubt that Hill had a duty of care to bring to the attention of Sweeney the originating summons. Once it had done that it’s obligations under the duty would have been exhausted. The real issue therefore is whether simply posting the summons constituted a sufficient drawing of Sweeney’s attention to the summons.

47. I am not satisfied that it was sufficient. The letter was posted on Christmas Eve when Hill’s office was going to be closed for the next three to four weeks. There were a number of cheap additional measures that could have been taken to make sure Sweeney’s were aware that proceedings had been commenced to wind the company up.

48. The document could have been faxed, sent by express mail, sent by courier or sent by registered mail. Hill could have rung Sweeney and told them that the document had been received. Hill could have entered the return date of the summons into their system as a reminder for them to check with Sweeney and see what was happening with this vital document that had been received.

49. Of course the fact that something else could have been done, does not of itself, establish a duty to act in those ways. However, I would have thought that a document such as this, that was personally served on Hill’s office that, if the proceedings went ahead unchallenged, would lead to the termination of the company and its businesses, warranted more than just being posted off to Sweeney’s rural address on Christmas Eve. In my view, Hill had an obligation to make sure that this document came to the attention of Sweeney and posting it in the circumstances would not necessarily achieve that end. The expense of other forms of notification were inconsequential compared to the potential damage likely to be suffered by Sweeney. Further, the procedures relevant to other forms of notification were simple and easy to put in place.

50. Had Hill not been Sweeney’s accountant as well as the registered office, perhaps different considerations would apply and the argument that a registered office is just a post box for documents may have had more relevance. But the fact that the Corporations Act 2001 (Cwlth) in s142 requires a company to have a formal registered office is indicative that the legislation expects that the registered office be something more than just a post box and that the registered office will act as the point of communication between others and the company. Under that section a company is required to notify ASIC within 28 days of any change of registered office something, by the way, that Hill failed to do. Further if a company is not the occupier of the address of the registered office, then such a notice must state that the occupier consents to those premises being used as the registered office.

51. Evidence has been given as to contact between Ms Gibson and Hill on the 6th of January 2005, a contact which is disputed, and also the meeting that was had on the 3rd of February 2005 between Mr Hill, Mr Sweeney and Ms Gibson. The thrust of this evidence is that Ms Gibson says that on the 6th of January 2005 nothing was said to her about the winding up summons and it is certainly agreed by Mr Hill that he said nothing about the winding summons to anyone at the meeting of the 3rd of February 2005. Whether these two examples of inaction on the part of Hill amount to additional negligent acts is probably not necessary to decide. At best they were lost opportunities on the part of Hill to avoid the consequences of the winding up summons that was then in progress.

52. Hill received notice of the winding up on the 28th of February 2005. Mr Hill discussed the situation with Ms Hardcastle who immediately telephoned Mr Gregory Sweeney and as well faxed the notice of winding up to the company. It is perhaps interesting to contrast the reaction by Hill to the receipt of that document, to the reaction when Hill received the winding up summons some two months earlier.

53. Thereafter it is probably fair to say that Sweeney and Hill went in to damage control mode to reverse the liquidation proceedings. In addition to that situation, Hill and Sweeney were engaged in other activities concerning the Sweeney group of companies. There was a meeting held on the 2nd of June 2005 after which Mr Hill and Mr Sweeney had a conversation and gave differing evidence of what occurred during that conversation about which neither made a note. I am unable to resolve what the conversation was, and what the effect was of what was said, having regard to the quite different versions given by the two men concerned.

54. What is argued by Hill is that given the relative normality of relations between Hill and Sweeney after the 28th of February 2005 until Hill’s retainer was terminated, that suggests that Sweeney really did know about the winding up prior to it happening and wasn’t blaming Hill at that point of time. The suggestion is that Ms Gibson, who concedes that she was quite upset on the 28th of February 2005, was upset because she realised that she had made a serious mistake and at that stage no blame was being laid at Hill’s door. That interpretation is strongly denied and I see nothing unusual in Ms Gibson being upset at the news of the company being wound up, given her long and close association with the company and the family behind it. I also see nothing unusual in Sweeney continuing to use Hill’s services to try and rectify the problem as well as keep their other business interests in operation. It appears that the Hill/ Sweeney relationship was finally terminated on the 6th July 2005.

DAMAGES

55. The plaintiff’s claim for damages relates to

1. Fees paid to David Begg a solicitor who acted on the insolvency, (see Exhibit A 97-98).

2. Fees of Mr Dowling a solicitor who took over that work (see Exhibit A 105).

3. Fees of an accountant Mr Barter who prepared a report for the liquidator (see Exhibit A 104).

4. Fees of Mr Young the liquidator (see Exhibit A 102-103).

5. The liquidators out of pocket expenses (see Exhibit A 102).

6. The liquidator’s solicitor’s costs (see Exhibit A 102 and A 109-113).

7. The rent paid by Sweeney to an associated company- Scenic Hills Riding Ranch Pty Ltd (see Exhibit A 102).

8. Ms Gibson’s administrative and travel expenses associated with the winding up (see Exhibit A 96, 99 &100), and

9. Sweeney’s gross loss of business (see Exhibit A 96).

56. The fee note in respect of Mr Begg comes to $11, 500. Criticism of the account is made on the basis that a significant amount of the work is of a solicitor/client nature, that a lot of the work was done to no effect and that the reasonableness of the costs haven’t been assessed by a costs assessor. I am unable to judge the effectiveness of Mr Begg’s work. Mr Sweeney was dissatisfied with his progress in getting the liquidation reversed and decided to change solicitors. That is a situation that seems to me be little different to a plaintiff in a personal injury action being dissatisfied with treatment from a doctor and going somewhere else. Doing that does not necessarily render the loss sustained in regard to the first practitioner unrecoverable? Mr Begg’s bill, whether or not it has been assessed by a tax assessor, is payable by Sweeney to Begg and I see no relevance to the fact that the bill has not been assessed or that it may relate in part to solicitor/client costs. By comparison with the liquidator’s solicitor’s bill of costs, the figure charged doesn’t seem to me to be unreasonable.

57. Likewise in regard to the fees claimed by Mr Dowling, which are in the sum of $7,700, I see nothing in his bill, although in global form, that is questionable having regard to the state of the company’s affairs and that it had in effect been bailed out by a personal loan from Mrs Sweeney which had to be properly dealt with as a creditors debt in the proceedings. I am not satisfied that the fees charged were irrelevant or unreasonable again by comparison with those of the liquidators solicitor who had a much simpler task to perform. I cannot see that any significant part of Mr Dowling’s bill amounts to a duplication of work done by Mr Begg and no attempt has been made to establish that proposition in evidence.

58. The only other two areas of damage in dispute relate to Ms Gibson’s administrative and travel expenses said to amount to $2,707.20 and Sweeney’s gross loss of business said to be in the sum of $13,265. The argument in regard to Ms Gibson is that she is employed by D.J Sweeney Holdings Pty Ltd which has paid and continues to pay her wages. She is paid for a fixed 38 hour week but does work at other times as she feels necessary. Although paid by D.J Sweeney Holdings Pty Ltd it appears that her work involves all the companies in the Sweeney group.

59. The amount claimed as loss of business is in regard to four events that were cancelled because the company was closed due to the liquidation. The evidence is that the company tried to operate at a profit of between 25-33% although Mr Sweeney indicated that the year 2006 was probably going to be the first time that the company was able to show some sort of profit.

60. Given these two lots of figures are estimations and given the evidence of Ms Gibson and Mr Sweeney I am not satisfied that Sweeney has proved any loss of net profit in regard to the liquidation. Additionally having regard to Ms Gibson’s evidence as to her functions generally and the lack of a reasonably accurate accounting of her time spent on this particular problem I discount the $2,702.20 to a figure of $1,216 being 40 hours of work at $30.40 per hour.

61. There will therefore be a verdict for the plaintiff in the sum of $65,857.72.

62. The figure is made up as follows.

· Amount due to Mr Begg $11,500.

· Amount due to Mr Dowling $7,700.

· Amount due to Mr Burtons $6,250.

· Amount due to the liquidator $17,200.83.

· Liquidator advertising $246.73.

· Liquidator bank charges $18.30.

· Liquidator insurance $550.

· Liquidator valuation $3,503.50.

· McLoughlin- Chiltern Solicitors $12,627.82.

· Rent paid to associated company $5,454.54.

· Plaintiff’s administrative and travel expenses $1,216.

There will be a judgement accordingly and I order the defendant to pay the plaintiff’s costs.

COUNSEL:

Plaintiff: Mr Reoch.

Defendant: Mr Gambi.

SOLICITORS:

Plaintiff: John Dowling Solicitor.

Defendant: Wooton & Kearney Insurance Lawyers.