Ipower Ltd v Ince

[2009] VCC 1110

IN THE COUNTY COURT OF VICTORIA Revised

(Not) Restricted

AT MELBOURNE
COMMERCIAL LIST

EXPEDITED DIVISION

Case No. CI-09-00672

IPOWER LTD & ANOR	Plaintiffs
v.
INCE	Defendant
JOHN VALVES GRUP HOLDINGS PTY and	Third Parties
JOHNSON

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JUDGE:	His Honour Judge Anderson
WHERE HELD:	Melbourne
DATE OF HEARING:	8 September 2009
DATE OF JUDGMENT:	8 September 2009
CASE MAY BE CITED AS:	Ipower Ltd & Anor v. Ince
MEDIUM NEUTRAL CITATION:	[2009] VCC 1110

REASONS FOR JUDGMENT

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Catchwords:	Practice and Procedure – Application to stay third party proceeding – Similar issues of fact and law arising in the third party proceeding and between the same parties in a Supreme Court action – Possibility of
inconsistent findings of fact and law by the Supreme Court and County Court – Appropriate to stay third party proceeding in the County Court.

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APPEARANCES:	Counsel	Solicitors
For the Defendant	Mr P.J. Booth	Brown & Co.
For the Third Parties	Mr I. Upjohn	John Matthies & Co.
HIS HONOUR:

1 proceeding no 8495 of 2008 in the Supreme Court of Victoria. I have determined that
it is inappropriate for the third party proceeding to continue, because, at present, that
proceeding is set down for trial on 15 September 2009 as part of the trial of the
proceeding between the plaintiff and defendant, whereas the Supreme Court
proceeding has reached the stage where pre-trial directions will not be given until a
hearing on 10 November 2009. In those circumstances, if I were not to make an

The third party proceeding in this Court overlaps to a significant extent with defendant and third parties, which are part of the issues to be litigated in the Supreme Court proceeding.

2           In the Supreme Court, the plaintiff (who is the defendant in this Court) sues two defendants (who are the third parties in this Court). The plaintiff sues, principally, for monies owed pursuant to a sale of shares agreement. The plaintiff sold shares in a group of companies on the basis that the defendants would, thereafter, operate the companies.

3 has breached an obligation to obtain the relief of the plaintiff from obligations as
guarantor of the companies’ obligations, pursuant to personal guarantees. The

As part of the Supreme Court proceeding, the plaintiff claims that the first defendant guaranteed the first defendant’s obligations pursuant to the sale of shares agreement. In defence of the Supreme Court proceeding, the defendants say that there were representations which induced them to enter into the sale of shares agreement or the second defendant’s obligations as guarantor of that agreement and which misled them. Further, they allege that conduct on the part of the plaintiff constituted breaches of fiduciary obligations and misleading or deceptive conduct which should vitiate their obligations pursuant to the sale of shares agreement and the guarantee.

4           These same issues have been raised in the defence of the third party proceeding in this Court. In this Court, those issues are only raised in respect of a claim by an electrical supplier for the supply of electricity during a period of two months following the first defendant (first third party) taking over the operation of the businesses. In respect of the Supreme Court proceedings, these issues will need to be determined, both in respect of other transactions guaranteed by the plaintiff (defendant in this Court) and in respect of the first defendant’s obligations to pay the substantial sums unpaid under the sale of shares agreement.

5           In the County Court proceeding, the electricity supply which forms the basis of the plaintiff’s claim relates to the months of July and August 2008, whereas the businesses were transferred pursuant to the sale of business agreement in March 2008.

6           The defendant says that, in those circumstances, he might have a liability pursuant to his ongoing guarantee to the electrical supplier, but otherwise has no information which would found a defence against the plaintiff’s claim. He simply wishes to be indemnified in respect of any liability by reason of the first third party’s failure to obtain the release of him from his obligations as guarantor, and secondly the second third party’s obligations to guarantee the performance of the first third party under the sale of shares agreement.

7           The parties in this Court have been in dispute about the conduct of a mediation. A mediation took place on 24 August 2009, essentially between the plaintiff and defendant with only a brief attendance by the third parties’ solicitors. The mediation followed correspondence between the parties’ solicitors where the third parties’ solicitors made it clear that, as far as they were concerned, it was a matter for the defendant to resolve the plaintiff’s claim, and for whatever sum agreed, for it to be then pursued as part of the Supreme Court action.

8 made orders staying the present proceeding. The proceeding is stayed on the basis
that the third parties will adhere to the position adopted in correspondence between
the parties and in the affidavit filed by the third parties’ solicitor in the proceeding.

I have accepted that this course is the appropriate one and for this reason I have contest the plaintiff’s claim against the defendant, and that it is solely a matter between the plaintiff and the defendant to resolve that dispute, and that, once that is done, the third parties would have no objection to the settled amount being included as part of the claim in the Supreme Court proceeding. This will mean that the determination of who is liable ultimately for the amount conceded as payable to the plaintiff will then need to be determined in the Supreme Court proceeding, rather than as part of the third party proceeding in this Court.

9           I consider that this is the appropriate course for the following reasons:

a.	the issue was first raised by the plaintiff in the Supreme Court proceeding, which expressly referred to the claim made by the electricity supplier. The present proceeding was commenced later;
b.	the setting of a trial date and the interlocutory directions were made in the County Court proceeding before the third party was joined and before it had the opportunity to make submissions as to the appropriateness of those directions insofar as they concerned the determination of the dispute between the defendant and the third parties;
c.	if the third party proceeding continued in the County Court and was resolved by a judgment of the Court, it would involve determination of issues of fact and law in relation to a claim of approximately $115,000 by the electricity supply company. However, these are essentially the same issues of fact and law that would need to be determined in relation to claims of many millions of dollars in the Supreme Court proceeding, relating to other guarantees, but also the alleged failure by the defendants in that proceeding to pay the balance owing pursuant to the sale of shares agreement.

10         As a matter of convenience and to avoid the possibility of questions of issue estoppel and inconsistency of findings on similar matters of fact and law being made by separate courts, it is appropriate that the third party proceeding in the County Court be stayed. I have reserved liberty to apply and made the stay order subject to further order, in case there is some circumstance which arises which, in relation to the Supreme Court proceeding, makes it appropriate for either the defendant or the third parties to return to this Court to litigate the primary issue of liability for the plaintiff’s claim, or any other subsidiary issue.

11         Paragraph 3 of the third parties’ summons sought to vacate the costs order made by Her Honour Judge Kennedy on 7 August 2009. It appears that the directions hearing on 7 August 2009 was set down on the basis of correspondence sent to the Court by the plaintiff’s solicitor, without ensuring that a copy of that correspondence was sent to the third parties’ solicitor. The correspondence was, however, on the court file and the costs orders made by Her Honour on 7 August 2009 were made at a hearing at

which each of the parties was represented and was presumably able to make
whatever submissions they wished. There is no evidence before me of anything that
happened at the hearing on 7 August 2009, which would cause me to take the
unusual step of vacating a costs order made by another judge.

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Certificate

I certify that these 3 pages are a true copy of the reasons for decision of His Honour Judge

Anderson delivered on 8 September 2009.

Dated: 8 September 2009

Caroline Dawes

Associate to His Honour Judge Anderson