FEDERAL COURT OF AUSTRALIA
Letten v Templeton [2014] FCAFC 131
Citation: Letten v Templeton [2014] FCAFC 131 Appeal from: Application for leave to Appeal: Australian Securities and Investments Commission v Letten (No 22) [2014] FCA 681 Parties: MARK RONALD LETTEN v DAMIAN JOHN TEMPLETON and PHILIP HENNESSY (IN THEIR CAPACITY AS COURT APPOINTED RECEIVERS AND MANAGERS) File number: VID 376 of 2014 Judges: BESANKO, DAVIES AND WHITE JJ Date of judgment: 3 October 2014 Catchwords: PRACTICE AND PROCEDURE – application under s 24(1A) of the Federal Court of Australia Act 1976 (Cth) to appeal from interlocutory judgment – whether proposed appeal is competent – matters to be taken into account when a non-party seeks leave to appeal from an interlocutory judgment Legislation: Corporations Act 2001 (Cth) s 601ED
Federal Court of Australia Act 1976 (Cth) s 24Cases cited: Ah Toy v Registrar of Companies (1985) 61 ALR 583; [1985] FCA 237
Anying Group Pty Ltd v Wang [2012] FCA 702
Ashby v Slipper (2011) 281 ALR 38; [2014] FCAFC 15
Australian Securities and Investments Commission v Letten [2010] FCA 140
Australian Securities and Investments Commission v Letten (No 7) (2010) 190 FCR 59; [2010] FCA 1231
Australian Securities and Investments Commission v Letten (No 10) [2011] FCA 498
Barnes v Addy (1874) LR 9 Ch App 244
Bass v Permanent Trustee Co Ltd (1999) 198 CLR 334
Commonwealth v Construction, Forestry, Mining and Energy Union (2000) 171 ALR 379; [2000] FCA 453
Décor Corporation Pty Ltd v Dart Industries (1991) 33 FCR 397; [1991] FCA 655
Driclad Pty Ltd v Federal Commissioner of Taxation (1968) 121 CLR 45
Fortress Credit Corporation (Australia) II Pty Ltd v Fletcher [2011] FCAFC 89
MacedonianOrthodox Community Church St Petka Incorporated vHis Eminence Petar The Diocesan Bishop of The Macedonian Orthodox Diocese of Australia and New Zealand [2008] 237 CLR 66; [2008] HCA 42
Mellifont v Attorney-General for the State of Queensland (1991) 173 CLR 289
Moller v Roy (1975) 132 CLR 622
O’Toole v Charles David Pty Ltd (1990) 171 CLR 232
Re Atkinson [1971] VR 612
Re Judiciary and NavigationActs (1921) 29 CLR 257
Williams v Spautz (1992) 174 CLR 509Date of hearing: 22 August 2014 Place: Melbourne Division: GENERAL DIVISION Category: Catchwords Number of paragraphs: 49 Counsel for the Applicant: Mr I G Waller QC with Mr S Hibble Solicitor for the Applicant: Baker & McKenzie Counsel for the Respondents: Mr R Strong Solicitor for the Respondents: King & Wood Mallesons
IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
GENERAL DIVISION
VID 376 of 2014
ON APPEAL FROM THE FEDERAL COURT OF AUSTRALIA
BETWEEN: MARK RONALD LETTEN
ApplicantAND: DAMIAN JOHN TEMPLETON and PHILIP HENNESSY (IN THEIR CAPACITY AS COURT APPOINTED RECEIVERS AND MANAGERS)
Respondents
JUDGES:
BESANKO, DAVIES AND WHITE JJ
DATE OF ORDER:
3 OCTOBER 2014
WHERE MADE:
MELBOURNE
THE COURT ORDERS THAT:
1.The applicant’s application for leave to appeal dated 10 July 2014 be dismissed.
2.The respondents’ notice…
Continue reading Letten v Templeton
Sign in free to access the full text
Details
- AGLC
- Letten v Templeton [2014] FCAFC 131
- Case
- [2014] FCAFC 131
- Decision Date
CaseChat Overview and Summary
Letten v Templeton involved a dispute between Mr Letten and the Receivers appointed to manage the assets of various unregistered managed investment schemes he operated. The central issue before the Court was whether Mr Letten could appeal an interlocutory judgment that permitted the Receivers to use funds from a Common Fund to pursue civil proceedings against him for knowing assistance in relation to alleged breaches of trust. The Court had to determine whether the proposed appeal was competent and whether Mr Letten should be granted leave to appeal.
The Court considered the legal principles governing appeals from interlocutory judgments, particularly focusing on the criteria for granting leave to appeal and the competency of the proposed appeal. The Court found no legal error in the primary judge's rejection of Mr Letten's claims of abuse of process and concluded that the proposed proceedings were not an abuse of process despite the Receivers' potential hope for third-party payments. Additionally, the Court held that the orders made did not determine substantive rights and were not productive of any substantial injustice.
In conclusion, the Court dismissed Mr Letten's application for leave to appeal, finding the proposed appeal was competent but that Mr Letten was not entitled to leave. The Court also dismissed the Receivers' objection to competency and their interlocutory application, with no order as to costs.
ORDERS:
1. The applicant’s application for leave to appeal dated 10 July 2014 be dismissed.
2. The respondents’ notice of objection to competency dated 7 August 2014 be dismissed.
3. The respondents’ interlocutory application dated 7 August 2014 be dismissed with no order as to costs.
The Court considered the legal principles governing appeals from interlocutory judgments, particularly focusing on the criteria for granting leave to appeal and the competency of the proposed appeal. The Court found no legal error in the primary judge's rejection of Mr Letten's claims of abuse of process and concluded that the proposed proceedings were not an abuse of process despite the Receivers' potential hope for third-party payments. Additionally, the Court held that the orders made did not determine substantive rights and were not productive of any substantial injustice.
In conclusion, the Court dismissed Mr Letten's application for leave to appeal, finding the proposed appeal was competent but that Mr Letten was not entitled to leave. The Court also dismissed the Receivers' objection to competency and their interlocutory application, with no order as to costs.
ORDERS:
1. The applicant’s application for leave to appeal dated 10 July 2014 be dismissed.
2. The respondents’ notice of objection to competency dated 7 August 2014 be dismissed.
3. The respondents’ interlocutory application dated 7 August 2014 be dismissed with no order as to costs.
Orders
Orders of the court
1. The applicant’s application for leave to appeal dated 10 July 2014 be dismissed.
2. The respondents’ notice of objection to competency dated 7 August 2014 be dismissed.
3. The respondents’ interlocutory application dated 7 August 2014 be dismissed with no order as to costs.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
Background
Background to the litigation
For the reasons that follow I would dismiss the objection to competency but would refuse Mr Letten leave to appeal.BACKGROUND It is unnecessary to go into the background in any detail. For present purposes, it is sufficient to note that in February 2010, the Court ordered the winding up of various unregistered managed investment schemes operated by Mr Letten in breach of s 601ED of the Corporations Act 2001 (Cth) and the Receivers were appointed by the Court as receivers and managers of the property of the schemes and corporate entities associated with these schemes: Australian Securities and Investments Commission v Letten [2010] FCA 140. The corporate entities were subsequently ordered to be wound up and the Court appointed the Receivers as the liquidators: Australian Securities and Investments Commission v Letten (No 10) [2011] FCA 498. Following their appointment as receivers and managers, the Receivers sought, and obtained, directions from the Court that they were justified in pooling the assets of the schemes and corporate entities and placing any surplus from the proceeds of sale of those assets into a Common Fund for distribution rateably amongst claimants who have a claim: Australian Securities and Investments Commission v Letten (No 7) (2010) 190 FCR 59; [2010] FCA 1231. The Receivers did so and have since distributed $6.1 million of the Common Fund to investors in the schemes. As at 27 March 2014, $8.8 million remained in the common fund available for distribution, net of the Receivers’ remuneration costs and expenses. In June 2014, the Receivers sought a direction from the Court that they are justified in deploying funds from the Common Fund in the institution and prosecution of civil proceedings (“the proceedings”) against Mr Letten and Mr Lane for knowing assistance under the second limb of Barnes v Addy (1874) LR 9 Ch App 244 in relation to alleged breaches of trust by the corporate entities. Approximately $12 million is sought to be recovered. THE APPLICATION FOR JUDICIAL ADVICE The question addressed by the primary judge in considering whether the judicial advice should be given was whether the deployment of the funds in the Common Fund to fund the proceedings is in the best interests of the investors. In addressing that question, the primary judge considered whether the proceedings would be “fruitless”: Re Atkinson [1971] VR 612 at 615-6. Mr Letten argued that the proposed proceedings would be “fruitless” because, on his assertion (without putting evidence before the Court), he had no assets out of which to satisfy a judgment debt against him and the Receivers could not demonstrate that they had any means of enforcing a successful judgment against him. He also argued that the proposed proceeding was an abuse of process because the Receivers were bringing the proceeding for the improper purpose of: … exert[ing] pressure on people who would not be parties to the proceeding (the financial backers of Mr Letten and Mr Lane), so as to force them to make a financial contribution to the Common Fund to “keep Mr Letten out of bankruptcy”.
Evidence
Evidence Before The Court
Full text does not contain this section.
Decision
Reasons for decision
The reasons of the primary judge in rejecting the abuse of process claim do not disclose any legal error in either the identification or application of the relevant principles. The question was whether the proposed proceedings are to be brought for a purpose other than to prosecute them to a conclusion. The fact, if it be the case that, the Receivers may hope that payment may be forthcoming from some third party if the claim is successful against Mr Letten does not make the proceeding an abuse of process. In any event it was plainly open on the evidence before the Court for the primary judge to consider that such intent was not the predominant purpose of the Receivers in bringing the claim. Conclusion For these reasons, the application for leave should be dismissed. Whether there would be substantial injustice For the sake of completeness, this ground is also not established. It was submitted for Mr Letten that the orders and directions sought should not have been made and that substantial injustice will result if leave is refused by reason that Mr Letten: (a)has been unfairly exposed to the hardship of onerous legal proceedings;(b)cannot simply ignore the proceedings as they raise serious allegations of fraud against him; and(c)will likely be incarcerated, thus hampering his ability to defend himself in the proceedings. It was also submitted that substantial injustice will be done because the Receivers are officers of the Court and it is a matter of public interest that the Receivers’ application be made with sufficient proper material to allow the Court properly to perform its functions and for a proper purpose. This submission can be rejected for the reason that I am of the view that the decision was correct. I otherwise do not consider that it can be said that any substantial injustice would result from the decision if leave were not granted, assuming the decision to be wrong. First and foremost, the orders and directions made did not determine any substantive rights as between the Receivers and Mr Letten. There has been no resolution by the primary judge of any issue arising in that proceeding and the primary judge was careful to eschew making any finding that would be binding on Mr Letten in the substantive proceedings. Secondly, all that has occurred is consideration by the Court as to whether it would be proper for the Receivers to commence those proceedings in the circumstance that the causes of action sued upon exist independently of the orders and directions of the primary judge. Whether Mr Letten defends the proceeding or does not is a matter for him and the need to make that decision is not an injustice. Mr Letten’s incarceration is no doubt a matter that will need to be taken into account to the management of the proceedings, but is not a fact which of itself is productive of injustice by the granting of a direction to the Receivers that they are justified in commencing those proceedings. ORDERS For the reasons given, both the Receivers’ objection to competency and Mr Letten’s application for leave should be dismissed. I would make the following orders:(1)The applicant’s application for leave to appeal dated 10 July 2014 be dismissed.(2)The respondents’ notice of objection to competency dated 7 August 2014 be dismissed.(3)The respondents’ interlocutory application dated 7 August 2014 be dismissed with no order as to costs.
Ratio Decidendi
Legal Principle Established
Full text does not contain this section.