Kirby v Centro Properties Ltd

Case [2012] FCA 60

FEDERAL COURT OF AUSTRALIA

Kirby v Centro Properties Limited [2012] FCA 60

Citation: Kirby v Centro Properties Limited [2012] FCA 60
Parties:

RICHARD KIRBY v CENTRO PROPERTIES LIMITED (ACN 078 590 682), CPT MANAGER LIMITED (ACN 054 494 307), PRICEWATERHOUSECOOPERS

NICHOLAS VLACHOS, MONATEX PTY LTD, RAMON FRANCO v CENTRO PROPERTIES LIMITED (ACN 078 590 682), CPT MANAGER LIMITED (ACN 054 494 307), CENTRO RETAIL LIMITED (ACN 114 757 783), CENTRO MCS MANAGER LIMITED (ACN 051 908 984)

NICHOLAS STOTT v PRICEWATERHOUSECOOPERS

NICHOLAS VLACHOS, MONATEX PTY LTD, RAMON FRANCO v PRICEWATERHOUSECOOPERS
File numbers: VID 326 of 2008
VID 366 of 2008
VID 1028 of 2010
VID 1041 of 2010
Judge: GORDON J
Date of judgment: 7 February 2012
Date of hearing: 1 February 2012
Date of last submissions: 1 February 2012
Place: Melbourne
Division: GENERAL DIVISION
Category: No catchwords
Number of paragraphs: 34
VID 326 of 2008 
Counsel for the Applicant: Mr MBJ Lee SC with Mr WAD Edwards
Solicitor for the Applicant: Maurice Blackburn
Counsel for the First & Second Respondents: Mr M Garner
Solicitor for the First & Second Respondents: Freehills
Counsel for the Third Respondent: Mr CA Moore SC with Mr S Nixon & Mr J Watson
Solicitor for the Third Respondent: Mallesons Stephen Jaques
VID 366 of 2008 
Counsel for the Applicants: Ms R Doyle SC with Ms R Enbom
Solicitor for the Applicants: Slater & Gordon
Counsel for the First & Second Respondents: Mr M Garner
Solicitor for the First & Second Respondents: Freehills
Counsel for Third & Fourth Respondent: Mr P Jopling QC with Mr P Wallis
Solicitor for Third & Fourth Respondent: Middletons
VID 1028 of 2010
Counsel for the Applicant: Mr L Glick SC with Mr M Osborne
Solicitor for the Applicant: Strongman & Crouch
Counsel for the Respondent: Mr CA Moore SC with Mr S Nixon & Mr J Watson
Solicitor for the Respondent: Mallesons Stephen Jaques
VID 1041 of 2010
Counsel for the Applicants: Ms R Doyle SC with Ms R Enbom
Solicitor for the Applicants: Slater & Gordon
Counsel for the Respondent: Mr CA Moore SC with Mr S Nixon & Mr J Watson
Solicitor for the Respondent: Mallesons Stephen Jaques

IN THE FEDERAL COURT OF AUSTRALIA

VICTORIA DISTRICT REGISTRY

GENERAL DIVISION

VID 326 of 2008
BETWEEN:

RICHARD KIRBY
Applicant
AND:

CENTRO PROPERTIES LIMITED (ACN 078 590 682)
First Respondent

CPT MANAGER LIMITED (ACN 054 494 307)
Second Respondent

PRICEWATERHOUSECOOPERS
Third Respondent

JUDGE:

GORDON J

DATE OF ORDER:

7 FEBRUARY 2012

WHERE MADE:

MELBOURNE

THE COURT ORDERS THAT:

1.The First and Second Respondents’ oral application for the evidence of Richard Norman Gore and Glenn Rufrano to be given by video link is dismissed.

2.The First and Second Respondents pay the Applicant’s costs and the Third Respondent’s costs of and incidental to the application.

Note:Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

IN THE FEDERAL COURT OF AUSTRALIA

VICTORIA DISTRICT REGISTRY

GENERAL DIVISION

VID 366 of 2008
BETWEEN:

NICHOLAS VLACHOS
First Applicant

MONATEX…

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AGLC
Kirby v Centro Properties Ltd [2012] FCA 60
Case
[2012] FCA 60
Decision Date

CaseChat Overview and Summary

The case of Kirby v Centro Properties Ltd involved the Applicants, the Respondents, and the Cross Respondents, all parties engaged in a complex dispute primarily concerning the financial reporting and management of Centro Properties Ltd (CNP). The Applicants sought to have the evidence of Richard Norman Gore and Glenn Rufrano given by video link. Gore, the financial accounting manager of CNP, provided critical evidence regarding the preparation of CNP’s financial statements and monthly board management accounts, which the Applicants alleged contained critical debt maturity information. The Respondents and Cross Respondents opposed the application, arguing that Gore’s evidence was both central to the resolution of major issues in the dispute and contentious, particularly regarding the consolidation of financial statements and the classification of interest-bearing liabilities.

The central legal issues before the court were whether Gore's evidence should be admitted via video link and whether it was contentious and pivotal to the case. The Applicants argued that Gore’s role in preparing the financial statements and monthly board management accounts was crucial, given that these documents allegedly contained the debt maturity information defined as the Liability Information. Furthermore, the Applicants asserted that the evidence would be contentious and involved issues of credit. The Respondents and Cross Respondents contended that despite the significance of Gore’s evidence, it was not centrally important to the case and did not necessarily involve contentious credit issues.

The court considered the importance of Gore’s evidence in the context of the overall case. The Applicants argued that the evidence was essential to proving their claims, particularly regarding the alleged misclassification of debt maturity information in the monthly board management accounts. The Respondents and Cross Respondents, however, argued that the evidence was not pivotal and did not raise issues of credit. After careful deliberation, the court determined that Gore’s evidence was indeed central to resolving major issues in the case, and it was contentious. The court ultimately dismissed the application for the evidence to be given by video link, ruling that the Respondents and Cross Respondents were to pay the Applicants' costs and the Respondent’s costs of and incidental to the application.

In summary, the Federal Court held that Richard Norman Gore’s evidence was critical and contentious, and thus, it could not be given by video link. The Respondents and Cross Respondents were ordered to pay the Applicants' costs and the Respondent’s costs of and incidental to the application, as per Rule 39.32 of the Federal Court Rules 2011.

Orders

Orders of the court

1. The First and Second Respondents’ oral application for the evidence of Richard Norman Gore and Glenn Rufrano to be given by video link is dismissed.

2. The First and Second Respondents pay the Applicant’s costs and the Third Respondent’s costs of and incidental to the application.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

1. The First and Second Respondents’ oral application for the evidence of Richard Norman Gore and Glenn Rufrano to be given by video link is dismissed.

2. The First and Second Respondents pay the Applicants’ costs and the Cross Respondents’ costs of and incidental to the application.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

1. The First Cross Respondent’s oral application for the evidence of Richard Norman Gore and Glenn Rufrano to be given by video link is dismissed.

2. The First Cross Respondent pay the Applicant’s costs and the Respondent’s costs of and incidental to the application.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

1. The oral application for the evidence of Richard Norman Gore and Glenn Rufrano to be given by video link made by the Cross Respondents to the Third Further Amended First Cross Claim is dismissed.

2. The Cross Respondents to the Third Further Amended First Cross Claim pay the Applicants’ costs and the Respondent’s costs of and incidental to the application.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

Background

Background to the litigation

Mr Gore’s affidavit is structured as follows: 1 Background, qualifications and job description 32 Method of preparing CNP’s accounts 4 2.1 Template 4 2.2 Source of information regarding CNP debt 53 The audit 64 CNP audit and the JPM Domestic Bridge 75 CNP’s investment schedule 96 Guarantees 107 CNP forecasts – borrowings, interest and margins 108 Super LLC debt allocation 13 CNP accepts that Mr Gore’s evidence is significant. It is common ground that his evidence goes to (1) the preparation of CNP’s accounts, (2) the identification of the misclassification of the JP Morgan Bridge facility in late August 2007 and (3) the calculation of interest costs for the purposes of CNP’s DPS forecasts. However, CNP submitted that notwithstanding the “significance” of Mr Gore’s evidence, it is not “centrally important” to the case. In support of that latter contention, CNP submitted, in relation to (a), that CNP admits its 2007 financial reports misclassified CNP’s interest bearing liabilities and that Mr Gore’s evidence in relation to the preparation of CNP’s accounts was therefore unlikely to be contentious. In relation to (b), CNP submitted that there was no indication in the lay evidence filed by the parties to suggest that Mr Gore’s evidence will be contentious or that his credit will be in issue. In relation to (c), CNP submitted that while the issue may be contentious it does not give rise to any issues of credit. As noted above, the application was opposed by the Applicants and PWC. Each submitted that Mr Gore’s evidence was both central to the resolution of some of the major issues in dispute, was contentious and involved issues of credit. In support of those submissions, Mr Lee SC, Counsel for the Kirby parties, identified three principle matters. First, from February 2006 to March 2008, Mr Gore was the financial accounting manager of CNP who principal responsibility was to prepare the financial statements and monthly board management accounts for CNP. Mr Gore gives evidence about how those accounts were prepared. Why then is that evidence so important? It is the monthly board management accounts of CNP (unlike the financial statements) which the Applicants allege had the debt maturity information which is defined as the Liability Information: see, by way of example, paragraph 17 of the Fourth Further Amended Statement of Claim (the FFASC). The difficulty, as identified by the Applicants, is that on the case as currently pleaded, CNP’s defence does not admit that the Liability Information was known or ought to have been known (see [18] and [30] of the First and Second Respondents’ Defence to Applicant’s Amended Third Further Amended Statement of Claim dated 7 October 2011 (the CNP Defence). There are other issues with the accounts prepared by Mr Gore. One concerns whether CNP had any obligation to combine the financial statements of CNP and/ or CER and Super LLC (see [17] and Section U of the FFASC). It is an important issue. On the case as currently pleaded, CNP denies that the accounts of Super LLC should have been consolidated into CNP’s accounts (see [17] and Section U of the CNP Defence).

Evidence

Evidence Before The Court

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Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

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