Legal Services Board v Werden
[2010] VSC 105
•9 April 2010
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
PRACTICE COURT
No 8199 of 2009
| IN THE MATTER OF THE SENTENCING ACT 1991 | |
| AND | |
| IN THE MATTER OF THE CONFISCATION ACT 1997 | |
| BETWEEN | |
| LEGAL SERVICES BOARD | Plaintiff |
| and | |
| GABRIEL WERDEN | Defendant |
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JUDGE: | ROBSON J | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 25 February 2010 | |
DATE OF JUDGMENT: | 9 April 2010 | |
CASE MAY BE CITED AS: | Legal Services Board v Werden | |
MEDIUM NEUTRAL CITATION: | [2010] VSC 105 | |
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PRACTICE AND PROCEDURE – application for a stay of originating process – abuse of process – application under s 86 of Sentencing Act 1991 by Legal Services Board for compensation by a solicitor convicted of misappropriating clients’ moneys – the Legal Services Board recovered some of the moneys misappropriated from Crown Ltd the operator of the Crown Casino under the Lotteries Gaming and Betting Act 1966 – application by convicted solicitor for stay of Legal Services Board’s application for compensation on the grounds that the Board would not disclose amount received from Crown Ltd – moneys received under a confidentiality agreement - whether application would be inherently unfair and oppressive to the applicant former solicitor – whether proceeding is an abuse of process as it is foredoomed to fail - whether Court entitled to take into account moneys received by the Board from the Casino operator in making an order under s 86 of the Sentencing Act 1991 - application refused – s 86 Sentencing Act 1991
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr S R Senathirajah | Amalia Castos Legal Services Board |
| For the Defendant | Mr C G Juebner | Theo Magazis & Associates |
Boncristiano v Lohmann [1998] 4 VR 82
Gill v Walton (1991) 25 NSWLR 190
Jago v District Court of New South Wales (1989) 168 CLR 23
The National Insurance Company of New Zealand Ltd v Espagne (1961) 105 CLR 569
Redding v Lee (1983) 151 CLR 117
State of Tasmania v Leighton Contractors Pty Ltd [2005] TASSC 133
St George Bank Ltd v Quinerts Pty Ltd [2009] VSCA 245
Victorian Lawyers RPA Ltd v Werden [2006] VSC 73
Walton v Gardiner (1993) 177 CLR 378
HIS HONOUR:
INTRODUCTION AND SUMMARY
By an originating motion dated 7 August 2009, the plaintiff (“the Board”) commenced proceedings against the defendant (“Mr Werden”) seeking an order pursuant to s 86 of the Sentencing Act 1991 that Mr Werden pay compensation to the Board in respect of his misappropriation of various sums of money, an offence he was convicted of.
By a summons dated 15 January 2010, Mr Werden applies for an order that pursuant to the inherent jurisdiction of the Court, or alternatively pursuant to r 23.01(1)(c) of the Supreme Court (General Civil Procedure) Rules 2005, the Board’s claim against him be stayed until further order.
Alternatively, Mr Werden seeks a similar order insofar as the Board’s claim relates to:
(a) $60,000 (count 4); and
(b) $315,000 (count 6). The counts are explained below.
Mr Werden contends that the Board’s application is inherently unfair and oppressive to him as the Board does not intend to disclose to the Court the amount it has received from Crown Ltd in relation to sums misappropriated by Mr Werden and that accordingly the application should be stayed as an abuse of process under the principles espoused and approved by the High Court of Australia in Walton v Gardiner.[1] Further, Mr Werden argues that the proceeding is an abuse of process as unless the Board discloses the amount it has received from Crown Ltd to the Court, the Court will be unable to exercise its discretion under s 86 of the Sentencing Act 1991 and the Board’s application is foredoomed to fail.
[1](1993) 177 CLR 378 at 393 per Mason CJ, Deane and Dawson JJ.
For the reasons explained below, in my opinion, the current intention of the Board not to inform the Court of the amount received from Crown Ltd does not amount to or lead to an abuse of process. It does not make the proceeding inherently unfair and oppressive to Mr Werden not does it make it foredoomed to failure. Any alleged unfairness to or oppression of Mr Werden (which I do not express any view on) could be avoided by the Court, in the exercise of its discretion under s 86 of the Sentencing Act 1991, by taking into account the publicly known fact that it has received less than $315,000 and for that reason also that the application is not foredoomed to fail.
Accordingly, I decline to make the orders sought and deny Mr Werden’s application. The application of Mr Werden to stay the Board’s application is dismissed.
BACKGROUND[2]
[2]I acknowledge that in this judgment I have made liberal use of the written submissions of the Board and also of the written submission filed on behalf of Mr Werden. I am grateful to counsel for the high standard of their submissions.
The Board commenced this proceeding to recover compensation for the losses it (and its statutory predecessor, the Legal Practice Board) suffered as a result of the thefts (and related) offences committed by Mr Werden in the period May 1997 to March 1998.
On 27 October 2006, Teague J sentenced[3] Mr Werden in respect of 13 offences.[4] Mr Werden had, in effect, stolen $1,104,729.11.[5] Mr Werden was a solicitor at the time.[6] He stole clients’ funds entrusted to him. The thefts ranged from $3,000 (count 10) to $550,000 (count 6).[7] He gambled away those funds, mainly at Crown Casino and the Sydney Casino.[8]
[3]The convictions were pleaded to and the relevant circumstances as set out in the Crown Opening (part (b) of Exhibit “AC-12” to the Affidavit of Amalia Castos sworn 10 September 2009) was agreed to by the Defendant: Transcript of Sentencing Hearing on 4 July 2006 in R v Werden at 12 (lines 28-31) (part (e) of Exhibit “AC-12” to the Affidavit of Amalia Castos sworn 10 September 2009).
[4] DPP v Werden [2006] VSC 397 at [1].
[5]Ibid at [2].
[6]Ibid at [2]-[3].
[7]Ibid.
[8]Ibid.
The Board is the statutory custodian (pursuant to the Legal Profession Act2004) of a fidelity fund (“the Fidelity Fund”) covering the liabilities of legal practitioners practising in Victoria. Before that, its predecessor, the Legal Practice Board, was charged with maintaining the Fidelity Fund.
As a result of Mr Werden’s thefts of clients’ funds, clients made claims on the Fidelity Fund. Many of those claims were allowed, and payments were made out of the Fidelity Fund. In particular, payments were made out of the Fidelity Fund to claimants relating to the amounts the subject of Counts 4, 6, 7, 8, 9 and 10, in respect of which he pleaded guilty.[9] Those amounts totalled $583,000.
[9]Exhibit “AC-12(d)” to the Affidavit of Amalia Castos sworn 10 September 2009.
At the time of Teague J’s sentencing of Mr Werden, the Board says it did not make an application for compensation because the available information indicated that Mr Werden did not have any assets and was unlikely to be in a position to satisfy any restitution or compensation order made against him in respect of the losses suffered by the Fidelity Fund.[10]
[10]Affidavit of Amalia Castos sworn 10 September 2009 at [4].
On about 19 March 2009, a solicitor working in the Proceeds of Crime Directorate of the Office of Public Prosecutions (“the OPP”):[11]
[11]Ibid at [2].
(a) notified the Board that Mr Werden had been released from jail and that the OPP had obtained an order from this Court restraining funds (held in a bank account) in which the OPP believed Mr Werden had an interest;
(b) notified the Board that the OPP had obtained the restraining order for the purpose of satisfying any order for restitution or compensation that may be made under the Sentencing Act 1991; and
(c) invited (on behalf of the OPP) the Board to consider seeking an order for restitution or compensation under the Sentencing Act 1991.
CLAIM ON THE FIDELITY FUND BY MICHAEL Di PIETRO
In April 1999, Michael Di Pietro (“Mr Di Pietro”), a former client of the legal practice of Mr Werden made a claim on the Fidelity Fund for $550,000.[12] Although the claim was initially rejected, upon Mr Di Pietro commencing action in this Court to enforce his claim, it was settled by a payment of $315,000 out of the Fidelity Fund.[13]
[12]Victorian Lawyers RPA Ltd v Werden [2006] VSC 73 at [3].
[13]Ibid at [3]-[5].
CLAIM ON THE FIDELITY FUND BY NORRENE JOHNSTON
On 17 April 1998, $60,000 was paid out of the Fidelity Fund to Norrene Sandra Johnston (“Ms Johnston”), a former client of the legal practice of Mr Werden following a claim by her for the theft by Mr Werden of that amount.[14]
[14]Ibid at [7]; Exhibit “AC-12(d)” to the Affidavit of Amalia Castos sworn 10 September 2009.
CLAIM ON THE FIDELITY FUND BY MARCIA RACITI
On 1 December 1998, $40,000 was paid out of the Fidelity Fund to Maria Raciti/Soul, (“Ms Raciti”) a former client of the legal practice of Mr Werden following a claim by her for the theft by Mr Werden of about that amount.[15]
[15]Ibid; Exhibit “AC-12(d)” to the Affidavit of Amalia Castos sworn 10 September 2009.
RECEIVER’S CLAIM AGAINT CROWN CASINO
On 3 April 2002, the Receiver (“the Receiver”) appointed to Mr Welden’s (former) legal practice commenced proceedings in this court against Crown Ltd (the operator of the Crown Casino).[16] By that proceeding, the Receiver sought to recover (pursuant to s 67 of the Lotteries Gaming and Betting Act1966) an amount of $635,940 from Crown Ltd, being stolen clients’ funds wagered away by Mr Werden.[17]
[16]Ibid at [2], [7].
[17]Ibid at [7]-[8].
Of the $635,940 claimed by the Receiver:
(a) $531,000 constituted client funds belonging to Mr Di Pietro;[18]
[18]Ibid at [7].
(b) $60,000 constituted client funds belonging to Ms Johnston;[19] and
(c) $44,940 constituted client funds belonging to Ms Raciti.
[19]Ibid.
On 24 September 2004, the Receiver settled his claim against Crown Ltd[20] under written terms of that settlement (“the Receiver’s Settlement Agreement”).[21] The terms of that settlement required Crown Ltd to pay (“the Crown Ltd Payment”) a specified amount to the Receiver, which after deduction of the Receiver’s costs, totalled less than $315,000 (ie the amount that was paid out of the Fidelity Fund to Mr Di Pietro).[22]
[20]Affidavit of Amalia Castos sworn 27 January 2010 at [2].
[21]Ibid at [3].
[22]Victorian Lawyers RPA Ltd v Werden [2006] VSC 73 at [11], [26] and [40].
On 3 March 2006, Habersberger J ordered the Receiver to pay the Crown Ltd Payment (less the amount of the Receiver’s costs) to the Board.[23]
[23]Ibid at [41] and [44].
MR WERDEN’S CONVICTIONS
As referred to above, on 27 October 2006, Teague J sentenced Mr Werden on 13 counts, which included:
(a) one count of theft in respect of the $550,000 stolen from Mr Di Pietro (Count 6); and
(b) one count of theft in respect of the $60,000 stolen from Ms Johnston (Count 4).
The count of theft in respect of the $45,003.11 belonging to Ms Raciti (ie Count 3) was not proceeded with, and as a result Mr Werden was not convicted in respect of it.
THE COMPENSATION CLAIMS OF THE BOARD
The Board seeks an order pursuant to s 86 of the Sentencing Act 1991 that Mr Werden pay compensation to the Board in respect of his misappropriations of the following amounts:
(a) $60,000 (count 4) (Ms Johnson);
(b) $315,000 (count 6) (Mr Di Pietro);
(c) $45,000 (count 7) (Ms Raciti);
(d) $80,000 (count 8);
(e) $80,000 (count 9); and
(f) $3,000 (count 10) (and $115 in interest and $993.60 in costs).
SECTIONS 86 AND 87 OF THE SENTENCING ACT 1991
Sections 86 and 87 provide:
Subdivision (2) – Compensation for property loss
86 Compensation order
(1) If a court finds a person guilty of, or convicts a person of, an offence it may, on the application of a person suffering loss or destruction of, or damage to, property as a result of the offence, order the offender to pay any compensation for the loss, destruction or damage (not exceeding the value of the property lost, destroyed or damaged) that the court thinks fit.
(2) If a court decides to make an order under subsection (1) it may in determining the amount and method of payment of the compensation take into account, as far as practicable, the financial circumstances of the offender and the nature of the burden that its payment will impose.
(3) A court is not prevented from making an order under subsection (1) only because it has been unable to find out the financial circumstances of the offender.
(4) In making an order under subsection (1) the court may direct that the compensation be paid by instalments and that in default of payment of any one instalment the whole of the compensation remaining unpaid shall become due and payable.
(5) An order under subsection (1)—
(a) may be made on an application made as soon as practicable after the offender is found guilty, or convicted, of the offence; and
(b) may be made in favour of a person on an application made—
(i) by that person; or
(ii) on that person's behalf by the Director of Public Prosecutions or (if the sentencing court was the Magistrates' Court) the informant or police prosecutor.
(6) Nothing in subsection (5)(b)(ii) requires the Director of Public Prosecutions or the informant or police prosecutor (as the case requires) to make an application on behalf of a person.
(7) On an application under this section—
(a) a finding of any fact made by a court in a proceeding for the offence is evidence and, in the absence of evidence to the contrary, proof of that fact; and
(b) the finding may be proved by production of a document under the seal of the court from which the finding appears.
(8) A court must not exercise the powers conferred by this section unless in the opinion of the court the relevant facts sufficiently appear from evidence given at the hearing of the charge or from the available documents, together with admissions made by or on behalf of any person in connection with the proposed exercise of the powers.
(9) In subsection (8) the available documents means—
(a) any written statements or admissions which were made for use, and would have been admissible, as evidence on the hearing of the charge; or
(b) the depositions in the committal proceeding; or
(d) any victim impact statement made to the court for the purpose of assisting it in determining sentence.
(9D) Despite any rule of law or practice to the contrary or any provision to the contrary made by or under any other Act, each party to a proceeding under this section must bear their own costs of the proceeding unless the court otherwise determines.
(10) Nothing in this section takes away from, or affects the right of, any person to recover damages for, or to be indemnified against, any loss, destruction or damage so far as it is not satisfied by payment or recovery of compensation under this section.
(11) References in this section to property include references to a motor vehicle.
87 Enforcement of compensation order
Subject to section 30 of the Confiscation Act 1997, an order under section 86(1), including costs ordered to be paid by the offender on the proceeding for that order, must be taken to be a judgment debt due by the offender to the person in whose favour the order is made and payment of any amount remaining unpaid under the order may be enforced in the court by which it was made.
MR WERDEN’S CONTENTIONS
Mr Werden contends that under s 86(1) of the Sentencing Act 1991, it is relevant to the exercise of the Court’s discretion in making a compensation order that the Board’s loss has been diminished as a result of recovery from a third party. In this case, it is not in dispute that the Board has received a sum from the Receiver, pursuant to the order of Habersberger J, which sum the Receiver had received from Crown Ltd under the Receiver’s Settlement Agreement. As indicated above, the Receiver had sought to recover (pursuant to s 67 of the Lotteries Gaming and Betting Act1966) an amount of $635,940 from Crown Ltd, being clients’ funds wagered away by Mr Werden.[24] Of the $635,940 claimed by the Receiver:
[24]Ibid at [7]-[8].
(a) $531,000 constituted client funds belonging to Mr Di Pietro;[25]
[25]Ibid at [7].
(b) $60,000 constituted client funds belonging to Ms Johnston;[26] and
(c) $44,940 constituted client funds belonging to Ms Raciti.
[26]Ibid.
As also indicated above, the amount received by the Receiver from Crown Ltd, after the deduction of costs, was less than $315,000. The sum paid is subject to a confidentiality agreement between the Board and Crown Ltd.
Mr Werden submits that Mr Werden and the Court are entitled to know the amount that the Board has recovered so as to prevent double recovery from occurring. He submits that there is a rule against double recovery and there is no reason why it ought not apply to compensation applications under the Sentencing Act 1991. By double recovery, Mr Werden means recovery from Crown Ltd as well as from him in respect of the misappropriated money.
Mr Werden contends that the Court cannot properly exercise its discretion to make a compensation order under s 86(1) unless it is fully appraised of any amounts already recovered by the victim from third parties.
Mr Werden does not submit that the institution of the compensation proceeding by the Board constitutes an abuse of process. However, he does contend that the maintenance of that proceeding in circumstances where the Board:
(a) refuses to make full disclosure of its settlement with Crown Ltd; and
(b) maintains that its settlement with Crown Ltd is irrelevant to the confiscation proceeding,
is so inherently unfair and oppressive to Mr Werden that, until full disclosure of the settlement is made, the compensation proceeding ought to be stayed. He submits that the Board can then take all necessary steps to make full disclosure of the settlement deed to Mr Werden and thereafter apply to have the stay lifted.[27]
[27]Mr Werden’s written submissions of 25 February 2010 at [29].
I do not understand Mr Werden to submit that as a matter of construction of s 86(1) the “loss or destruction of, or damage to, property” as a result of the offence is to be calculated by deducting the moneys the Board has recovered from the Receiver from the moneys it has paid out to the claimant who was the victim of the offence.
Rather, I understand Mr Werden’s contention to be that once the Court’s jurisdiction to make a compensation order under s 86(1) is enlivened, the Court has a discretion to order the payment of “any compensation for the loss, destruction or damage (not exceeding the value of the property lost, destroyed or damaged) that the Court thinks fit”. I understand Mr Werden to contend that in exercising that discretion, the Court should take into account the rule against double recovery and the sums already received by the Board in respect of the claims it has paid out as a result of the misappropriations of Mr Werden which has led it to suffer loss as a result of the offences Mr Werden has been convicted of.
As indicated above, Mr Werden contends that the Board ought to apply to be released from the confidentiality agreement with Crown Ltd. In any event, Mr Werden contends that whilst the Board maintains its position:
(a) that it will not disclose how much it has recovered from Crown Ltd in repayment of the monies paid to Mr Werden’s former clients; and
(b) that any recovery from Crown Ltd is irrelevant,
the compensation proceeding against Mr Werden is inherently unfair and ought to be stayed as an abuse of process.[28]
[28]Mr Werden’s written submissions of 25 February 2010 at [22].
THE BOARD’S CONTENTIONS
The Board contends that it cannot disclose the Receiver’s Settlement Agreement or its terms because it is bound by an obligation of confidentiality (contained in the Receiver’s Settlement Agreement) to Crown Ltd not to disclose such matters.[29]
[29]Affidavit of Amalia Castos sworn 27 January 2010 at [4] and [6].
The Board contends that at the hearing[30] before Habersberger J, Crown Ltd briefed counsel to intervene on its behalf for the sole purpose of obtaining orders to maintain the confidentiality provisions contained in the Receiver’s Settlement Agreement, in particular, the amount of the Crown Ltd Payment.[31]
[30]Victorian Lawyers RPA Ltd v Werden [2006] VSC 73.
[31]Ibid at [25] and [42]-[43].
Ultimately, Habersberger J was persuaded by Crown Ltd’s submissions, and his Honour made orders preserving the confidentiality of its settlement with the Receiver.[32]
[32]Ibid at [42]-[43].
The Board argues that the fact that Mr Werden’s solicitors have offered[33] to enter into confidentiality undertakings is irrelevant. The Board says that it cannot evade its duty of confidentiality to Crown Ltd by securing confidentiality undertakings from the proposed recipient of that information.
[33]See Affidavit of Theo Magazis sworn 15 January 2010 at [15].
The Board submits that it is Mr Werden who wants to have access to the Receiver’s Settlement Agreement. The Board says that he can do so by obtaining the consent of the parties to it (ie particularly, Crown Ltd) or compel those parties do so by way of a subpoena or third party discovery. The Board says that it has indicated to Mr Werden that it would not oppose such a course.[34] The Board says that it has no objection to Mr Werden having access to the Receiver’s Settlement Agreement. The Board says Mr Werden has chosen not to avail himself of any of those means.
[34]Affidavit of Amalia Castos sworn 27 January 2010 at [6].
The Board has informed the court that it does not propose to rely upon the Receiver’s Settlement Agreement in prosecuting this proceeding.
The Board contends that as this proceeding has been commenced by Originating Motion, it is not under any obligation to make discovery of documents in its possession. The Board submits there is no basis for contending that it should take any steps to procure the release of the Receiver’s Settlement Agreement to Mr Werden.
The Board contends that for these reasons, the application by Mr Werden is misconceived. It argues Mr Werden has the means to obtain access to the Receiver’s Settlement Agreement. It argues that at best, a stay of this proceeding would be warranted only where Mr Werden has exhausted all those other avenues.
CAN THE RECEIVER’S SETTLEMENT AGREEMENT BE USED IN THE PROCEEDING?
The Board contends that a critical premise underlying Mr Werden’s application for a stay of this proceeding is that he would be entitled to rely upon the Receiver’s Settlement Agreement in this proceeding. The Board contends that this is incorrect.
It argues that the proceeding is brought by Mr Werden pursuant to s 86 of the Sentencing Act1991. It argues that sub-ss 86(8) and (9) of that Act, in effect, prohibit the Court from considering (in adjudicating upon a compensation application) any material other than that which was before the Court in the criminal proceeding. The Receiver’s Settlement Agreement was not part of the material that was before the Court in the criminal proceeding against the Defendant.
I do not accept that submission. In my opinion, the sub-section is directed solely to the facts the Court is entitled to rely on in deciding whether or not its jurisdiction is enlivened to make an order under sub-section (1). Under sub-section (2) the Court is expressly permitted to take into account matters that do not fall within the facts referred to in sub-section (8). Further, the prefatory words to sub-section (8) make it clear that the limitation on the facts the Court may rely on only applies to the enlivening of “the exercise of the powers conferred by the section”.
In my opinion, the Court is not prevented from taking into account the compensation the Board has received from Crown Ltd in exercising its discretion under sub-section (1) if its jurisdiction is otherwise enlivened.
DOES THE PAYMENT RECEIVED BY THE BOARD FROM CROWN LTD REDUCE MR WERDEN’S LIABILITY TO COMPENSATE THE BOARD?
The Board contends that its receipt of the payments made by Crown Ltd (pursuant to the Receiver’s Settlement Agreement) in respect of the thefts of funds belonging to Mr Di Pietro and Ms Johnston cannot reduce Mr Werden’s obligation to compensate the Board for the payments made out of the Fidelity Fund to Mr Di Pietro and Ms Johnston arising out of his thefts.
The Board relies on State of Tasmania v Leighton Contractors Pty Ltd[35] where the Full Court of the Tasmanian Supreme Court held that the general principle is that “payment or indemnity by another does not alter the responsibility of persons in breach of tortious or contractual harm to make recompense for loss”.[36] The Full Court relied on the decisions of the High Court in The National Insurance Company of New Zealand Ltd v Espagne[37] and Redding v Lee.[38]
[35][2005] TASSC 133.
[36]Ibid at [39].
[37](1961) 105 CLR 569 (esp at pp 573 (per Dixon J) and 599 (per Windeyer J)).
[38](1983) 151 CLR 117 (esp at p 137 (per Mason and Dawson JJ) (with Wilson J agreeing)).
Here, the Board argues that Mr Werden was liable in (the tort of) conversion to Mr Di Pietro and Ms Johnston in respect of his thefts of their respective funds. By operation of s 217(1) of the Legal Practice Act1996, upon payment out of the Fidelity Fund to Mr Di Pietro and Ms Johnston, the Board’s predecessor (and now the Board) was subrogated to the extent of those payments to the rights and remedies of Mr Di Pietro and Ms Johnston.
Consequently, the Board contends that the Board’s receipt of the payments made by Crown Ltd (pursuant to the Receiver’s Settlement Agreement) in respect of the thefts of funds belonging to Mr Di Pietro and Ms Johnston cannot reduce Mr Werden’s obligation to compensate the Board for the payments made out of the Fidelity Fund to Mr Di Pietro and Ms Johnston arising out of his thefts.
Mr Werden contends to the contrary and relies on Boncristiano v Lohmann[39] where Winneke P (with whom Charles and Batt JJA agreed) made the following observations in relation to the rule against double recovery:[40]
The General Rules of Procedure in Civil Proceedings 1986 entitle a plaintiff to sue several defendants upon different causes of action. However in cases where the plaintiff seeks to recover from the several defendants compensation in respect of the same damage it is fundamental that the plaintiff cannot recover more than the total damage which he or she has sustained. Where the claims for damages are concurrent, in the sense that the claims “overlap”, recovery by the plaintiff of the whole or part of the loss claimed from one defendant will necessarily be taken into account in assessing the damages to be recovered from the other.
[39][1998] 4 VR 82.
[40]Ibid at 88.
The Board contends this case is distinguishable because that decision was predicated on the finding that the builders (ie the first and second respondents) were concurrent wrongdoers with the solicitors (ie the fourth defendants) in that the owners (ie appellants) were seeking the same relief (or compensation for the same damage) against each of them.[41] The Board contends that in the present case, Crown Ltd and Mr Werden were not concurrent wrongdoers.
[41]Ibid at 89-90.
The Board submits that in St George Bank Ltd v Quinerts Pty Ltd,[42] the Court of Appeal held that where the action (or inaction) of one defendant does not cause the other defendant to engage (or refrain from engaging) in the conduct that leads to that second defendant becoming liable to the plaintiff, the first mentioned defendant is not a concurrent wrongdoer with the second mentioned defendant.[43] In particular, the Court of Appeal considered that where one defendant became liable to the plaintiff at a time different to the time at which the other defendant became liable to the plaintiff, the two defendants cannot be seen to have caused the same damage (and cannot be considered concurrent wrongdoers).[44]
[42][2009] VSCA 245.
[43]Ibid at [75]-[96].
[44]Ibid at [89]-[96].
The Board contends that here, nothing which Crown Ltd did (or did not do) caused Mr Werden to become liable to Mr Di Pietro and Ms Johnston. Mr Werden became liable to them because he stole their money. The Board contends that the time at which Mr Werden became liable to Mr Di Pietro and Ms Johnston was different (ie earlier) than the time at which Crown Ltd became liable to the Board. It says Mr Werden became liable at the instant he stole the clients’ funds. Crown Ltd became liable only later when Mr Werden gambled with the stolen funds at Crown Casino.
The Board contends that Mr Werden was not a concurrent wrongdoer with Crown Ltd. As a result, it says the payment received by the Board from Crown Ltd does not decrease the liability of the Defendant to compensate the Plaintiff.
In my opinion, it is unnecessary for me to resolve any issue relating to concurrent wrongdoers. As indicated above, Mr Werden does not contend that the moneys received from Crown Ltd must be deducted from the compensation payable to the Board. Rather, he submits that it is a relevant matter for the Court to consider in exercising its discretion under s 86 (1) of the Sentencing Act 1991 as to the amount that should be paid. Under s 86(1) the Board does not have an absolute right to be compensated. Rather the exercise of the Court’s power to order compensation to the Board is within the discretion of the Court.
DOES THE BOARD’S RECEIPT OF PAYMENT FROM CROWN LTD AFFECT THE DETERMINATION OF MR WERDEN’S LIABILITY TO THE BOARD?
The Board contends that it received less than $315,000 from Crown Ltd pursuant to the Receiver’s Settlement Agreement. It submits that if that payment could be considered as decreasing the extent of Mr Werden’s liability to compensate the Board, which it denies for the reasons given above, the amount of the payment will have to be reduced pro rata for the purposes of this proceeding because the claim against Crown Ltd included a claim in respect of the payment to Ms Raciti and the Board does not in this proceeding seek compensation for that payment. Further, the Board contends that payments totalling $375,000 were made to Mr Di Pietro and Ms Johnston out of the Fidelity Fund. Consequently, the Board submits that it has not covered amounts in excess of its total loss.
In those circumstances, it submits there is no ab initio bar of double recovery as the amount of the payment actually received by the Board from Crown Ltd under the Receiver’s Settlement Agreement could not determine whether or not Mr Werden is liable to compensate the Board.
In other words, the Board argues that even if the Court were to make a full allowance for the amount received from Crown Ltd, the Board would still have a claim for compensation against Mr Werden.
In my opinion, this submission does not meet the complaint raised by Mr Werden. As indicated above, Mr Werden’s contention is that the amount received from Crown Ltd is relevant to the court exercising its discretion under s 86(1) of the Sentencing Act 1991 and it would be unduly unfair and oppressive to Mr Werden if the Court were to exercise its discretion without being informed by the Board of the amount received from Crown Ltd.
ABUSE OF PROCESS
In Jago v District Court of New South Wales,[45] Gaudron J said that the power to grant a stay of proceedings is only exercisable in exceptional cases or sparingly and with the utmost caution.[46] In Walton v Gardiner,[47] Mason CJ, Deane and Dawson JJ prescribed the circumstances where a court ought stay proceedings as an abuse of process. They said:
The inherent jurisdiction of a superior court to stay its proceedings on grounds of abuse of process extends to all those categories of cases in which the processes and procedures of the court, which exist to administer justice with fairness and impartiality, may be converted into instruments of injustice or unfairness. Thus, it has long been established that, regardless of the propriety of the purpose of the person responsible for their institution and maintenance, proceedings will constitute an abuse of process if they can be clearly seen to be foredoomed to fail ((22) See, e.g., Metropolitan Bank v. Pooley (1885) 10 App Cas 210 at pp 220-221; General Steel Industries Inc. v. Commissioner for Railways (N.S.W.) [1964] HCA 69; (1964) 112 CLR 125, at pp 128-130.). Again, proceedings within the jurisdiction of a court will be unjustifiably oppressive and vexatious of an objecting defendant, and will constitute an abuse of process, if that court is, in all the circumstances of the particular case, a clearly inappropriate forum to entertain them ((23) See, generally, Voth v. Manildra Flour Mills Pty. Ltd. (1990) 171 CLR 538.). Yet again, proceedings before a court should be stayed as an abuse of process if, notwithstanding that the circumstances do not give rise to an estoppel, their continuance would be unjustifiably vexatious and oppressive for the reason that it is sought to litigate anew a case which has already been disposed of by earlier proceedings ((24) See, e.g., Reichel v. Magrath (1889) 14 App Cas 655, at p 668; Connelly v. D.PP. (1964) AC 1254, at pp 1361-1362.). The jurisdiction of a superior court in such a case was correctly described by Lord Diplock in Hunter v. Chief Constable of the West Midlands Police ((1982) AC 529, at p 536.) as "the inherent power which any court of justice must possess to prevent misuse of its procedure in a way which, although not inconsistent with the literal application of its procedural rules, would nevertheless be manifestly unfair to a party to litigation before it, or would otherwise bring the administration of justice into disrepute among right-thinking people".[48]
[45](1989) 168 CLR 23.
[46]Ibid at 76; see also ASIC v Lindberg [2010] VSCA 19 at [18].
[47](1993) 177 CLR 378.
[48]Ibid at 392-393.
The majority agreed with tests expressed by the New South Wales Court of Appeal in Gill v Walton[49] where Gleeson CJ and Kirby P held that the relevant proceedings should be stayed on the ground that they were “so unfairly and unjustifiably oppressive” as to constitute an abuse of process.[50] Mahoney JA expressed the test as whether in all the circumstances, the continuation of the proceedings before the Tribunal would involve “unacceptable injustice or unfairness”.[51] As indicated above, on appeal to the High Court, the majority in Walton v Gardiner[52] agreed with both these tests.
[49](1991) 25 NSWLR 190.
[50]Ibid at 392 per Gleeson CJ and Kirby P.
[51]Ibid at 392.
[52](1993) 177 CLR 378 at 392-393.
IS THE PROCEEDING AN ABUSE OF PROCESS?
In my opinion, the current intention of the Board not to inform the Court of the amount received from Crown Ltd does not amount to an abuse of process. It does not make the proceeding inherently unfair and oppressive to Mr Werden. Any alleged unfairness to or oppression of Mr Werden (which I do not express any view on) could be avoided by the Court using the knowledge that it does have to ensure that any order it does make is not unfair to Mr Werden.
In my view, if the Court considered that the amount received by the Board from Crown Ltd was relevant to the exercise of its discretion under s 86(1) of the Sentencing Act 1991 and the Board did not inform the court of the amount it had received, then the Court could in its discretion proceed on the basis that a sum slightly less than $315,000 was received by the Board in relation to the moneys misappropriated from Mr Di Pietro, Ms Johnston and Ms Raciti. In my view, this would ensure that any order the Court does make is not unfair to Mr Werden, if it otherwise would be so.
If the Board feels that this approach is unacceptable to it, then as the party seeking compensation from Mr Werden, it could take steps to put the precise figure before the Court.
FURTHER ABUSE OF PROCESS SUBMISSION
In Mr Juebner’s oral submissions in support of Mr Werden’s application, he contends that it would be impossible for the Court to exercise its discretion under s 86 of the Sentencing Act 1991 without reference to the amount of money that the Board has already recovered.[53] He submits that therefore unless the Board changes its current intention not to disclose the amount received, the Board proceeding against Mr Werden is doomed to fail.
[53]Transcript of 25 February 2010, pp 13, 28 and 29.
Mr Juebner refers to and relies on the observations in Walton v Gardiner[54] “that proceedings will constitute an abuse of process if they can be clearly seen to be foredoomed to fail.”[55] He contends that so long as the Board does not disclose to Mr Werden the amount of money which it has already recovered the proceeding should be stayed as an abuse of process.[56]
[54](1993) 177 CLR 378.
[55]Ibid at 392-393
[56]Transcript of 25 February 2010, at p 30
In my opinion, this argument does not advance Mr Werden’s case any further. The underlying premise to this alternative argument is that the Court will not be able to exercise its discretion in the absence of knowledge the exact amount received by the Board from Crown Limited. For the reasons expressed above, I do not consider the Court will be unable to exercise its discretion under s 86. I therefore do not accept this argument.
CONCLUSION
I am not prepared to grant the stay sought and the application of Mr Werden is dismissed. I will hear the parties on costs.
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