Kirk v PBP Accounting Solutions Pty Ltd - [2015] VSC 173

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMON LAW DIVISION

S CI 2014 835

JUNE PATRICIA KIRK & ORS	Plaintiffs
v
PBP ACCOUNTING SOLUTIONS PTY LTD & MICHAEL GEORGE WORTMAN	Defendants

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JUDGE:	MACAULAY J
WHERE HELD:	Melbourne
DATE OF HEARING:	17 April 2015
DATE OF JUDGMENT:	30 April 2015
CASE MAY BE CITED AS:	Kirk & Ors v PBP Accounting Solutions Pty Ltd & Anor
MEDIUM NEUTRAL CITATION:	[2015] VSC 173

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PRACTICE AND PROCEDURE – Summary judgment sought pursuant to r 21.02(1) of the Supreme Court (General Civil Procedure) Rules 2005 (Vic) – No defences filed despite orders and an extension - Allegations taken to be admitted – Whether facts establish entitlement to relief.

EQUITY – Breach of fiduciary duties – Accessorial liability of corporate first defendant – Declarations amounts held on trust - Award of equitable compensation – Whether simple or compound interest – Rate of interest.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiffs	Mr J Mereine	K&L Gates
For the First Defendant	No appearance
For the Second Defendant	In person

HIS HONOUR:

Introduction

Rule 21.02(1) of the Supreme Court (General Civil Procedure) Rules 2005 (Vic) (‘Supreme Court Rules’) provides that where a defendant does not serve a defence within the time limited to do so, the plaintiff may apply for judgment against that defendant.

June Patricia Kirk, the first plaintiff, now in her 89^th year, gave powers of attorney to the second defendant, Michael George Wortman, in 2004 and 2009. Mrs Kirk, the trustee of her family trust, Talpa Pty Ltd (‘Talpa’), and two other persons who owned a property the subject of the claim (collectively, the plaintiffs) brought this proceeding against Mr Wortman and PBP Accounting Solutions Pty Ltd (the first defendant, or ‘PBP’), a company of which Mr Wortman was director and secretary. The plaintiffs allege that, using the powers granted, but in breach of his fiduciary obligations, Mr Wortman transferred very substantial sums of money belonging to the plaintiffs to PBP. The plaintiffs seek recovery of that money.

As this is a claim subject to directions in a managed list, the time limited for serving a defence has been the subject of directions. In circumstances described more fully below, when the defendants failed to file defences within the time ordered by the court, the plaintiffs applied for judgment in default of defence. After the court allowed Mr Wortman and, in effect,[1] PBP a further period of time in which to file the defences, still neither did so. The plaintiffs have again applied for judgment in default of defence.
[1]See paragraph [15] below.

The first issue is whether the defendants have failed to serve a defence within the time so limited. If not, the second issue is whether the plaintiffs have established an entitlement to relief on their statement of claim. If so, the third issue is what relief should be granted.

Did the defendants default in serving their defences?

There must be proof by affidavit of the…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2015] VSC 173
Decision Date: 30 April 2015

CaseChat Overview and Summary

In the Supreme Court of Victoria, Kirk initiated proceedings against PBP Accounting Solutions Pty Ltd and others, seeking relief for alleged breaches of fiduciary duties and accessory liability. The dispute centred on the alleged mismanagement of funds by the corporate defendant, which Kirk claimed resulted in a significant financial loss. The plaintiff sought declarations, equitable compensation, and interest on the amounts held by the defendants.

The court was tasked with determining whether the plaintiff's allegations, accepted as admitted due to the defendants' failure to file defences, sufficiently established a basis for the sought-after relief. Specifically, the court had to decide whether the admitted facts constituted a breach of fiduciary duties and accessory liability, as well as the appropriate form and rate of equitable compensation and interest. The court's analysis involved a careful review of the admitted facts against established legal principles concerning fiduciary duties and accessory liability, as well as the principles governing equitable compensation and interest.

The court found that the admitted facts indeed established breaches of fiduciary duties and accessory liability on the part of the corporate defendant. It held that the plaintiff was entitled to declarations regarding the amounts held on trust, and an award of equitable compensation. The court further determined that the appropriate form of interest was simple interest, rather than compound, and set the rate at 5% per annum. The court granted the plaintiff the declarations, compensation, and interest as requested.

The court ordered that the corporate defendant was to provide declarations regarding the amounts held on trust for the plaintiff and pay equitable compensation along with simple interest at the rate of 5% per annum from the date of the judgement until satisfaction.

Orders