Perpetual Corporate Trust Limited v Pearson - [2023] VSC 211

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE
COMMERCIAL COURT
COMMERCIAL LIST

S ECI 2022 04613

PERPETUAL CORPORATE TRUST LIMITED (ACN 000 341 533) AS CUSTODIAN FOR THE LA TROBE AUSTRALIAN CREDIT FUND (ARSN 088 178 321)	Plaintiff
v
RANDALL MARK PEARSON	Defendant

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JUDGE:	M Osborne J
WHERE HELD:	Melbourne
DATE OF HEARING:	14 April 2023
DATE OF JUDGMENT:	21 April 2023
CASE MAY BE CITED AS:	Perpetual Corporate Trust Limited v Pearson
MEDIUM NEUTRAL CITATION:	[2023] VSC 211

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STAY – Action for recovery of money – Guarantee and indemnity – Criminal proceedings – Civil proceedings for recovery of money concurrent with criminal proceedings on related issue – Whether civil proceeding should be stayed – Commissioner of the Australian Federal Police v Zhao (2015) 255 CLR 46 – McMahon v Gould (1982) 7 ACLR 202.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	A Germano	Kalus Kenny Intelex
For the Defendant	A Campbell	Doherty & Colleagues

HIS HONOUR:

By summons filed 24 January 2023, the defendant, Randall Mark Pearson (‘Mr Pearson’), applies for a stay of proceedings commenced against him on 11 November 2022 by Perpetual Corporate Trust Limited as custodian for the La Trobe Australian Credit Fund, the plaintiff (‘La Trobe’), pending the hearing and determination of criminal charges levied against Mr Pearson.

Mr Pearson faces 68 indictable charges relating to the falsification of documents, the knowing use of falsified documents, obtaining property by deception and attempting to pervert the course of justice and destruction of evidence (‘Criminal Charges’). Most of the Criminal Charges relate to finance obtained by Frankston Commercial Investments Pty Ltd (‘FCI’) as trustee for the Bayside Project Units Trust (‘Borrower’) in connection with a development undertaken by the Borrower at 345 Nepean Highway, Frankston (‘Development’).

In support of his application, Mr Pearson relies upon two affidavits sworn by his solicitor, John Buordolone, on 16 December 2022 and 24 February 2023 and an affidavit sworn by Mr Pearson on 24 February 2023.

The stay application arises in the context of a proceeding commenced by La Trobe against Mr Pearson by writ filed 11 November 2022.

In the proceeding, La Trobe alleges that on or about 26 September 2018, it entered into a facility agreement with the Borrower pursuant to which it agreed to advance to the Borrower on its request the sum of $8,464,000 (‘Advance’) on the terms and conditions set out in the written facility agreement.

La Trobe further alleges that by a deed of guarantee and indemnity dated 24 September 2018, Mr Pearson and Jacques Khouri (‘Mr Khouri’), who were directors of the Borrower, signed a guarantee and indemnity (‘Guarantee’) by which they guaranteed the performance of the Borrower under the facility agreement.

La Trobe alleges that between 7 November 2018 and 23 December 2019, it advanced the sum of $2,344,040.50 to the Borrower by way of construction advances.

It further alleges that as at 17 November 2022, the Borrower defaulted on the facility agreement and that on that day,…

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: [2023] VSC 211
Decision Date: 21 April 2023

CaseChat Overview and Summary

In the matter of Perpetual Corporate Trust Limited versus Pearson, the dispute arose in the Federal Court of Australia. The plaintiff, Perpetual Corporate Trust Limited, sought to recover a sum of money from the defendant, Pearson, under a guarantee and indemnity agreement. The background to this legal action was rooted in a broader set of circumstances involving both civil and criminal proceedings. The criminal proceedings were related to the same issues that formed the basis of the civil action, leading to a complex interplay between the two.

The court was tasked with determining whether the civil proceedings should be stayed in light of the concurrent criminal proceedings. This involved a careful examination of relevant case law, particularly the decision in Commissioner of the Australian Federal Police v Zhao, where the High Court provided guidance on the circumstances under which a civil proceeding may be stayed. Additionally, the court considered the principles articulated in McMahon v Gould, which addressed similar issues of concurrent proceedings. The central legal issue was whether the principles of justice required the civil proceeding to be stayed to avoid an unjust overlap with the criminal proceedings.

The court concluded that the principles established in Commissioner of the Australian Federal Police v Zhao and McMahon v Gould did not necessitate a stay in this instance. The court found that the civil proceeding could proceed concurrently with the criminal proceedings without causing an unjust overlap. The decision was influenced by the distinct nature of the claims in each proceeding and the potential for different evidence to be presented in each forum. The court emphasised the importance of ensuring that justice was not compromised by a stay, and it found that the civil proceeding could proceed without prejudicing the outcome of the criminal proceedings.

In light of the above reasoning, the court dismissed the application to stay the civil proceedings. The decision underscored the court’s commitment to ensuring that justice was served in both the civil and criminal contexts, without unduly favouring one over the other. The court’s ruling allowed the civil action to proceed, enabling Perpetual Corporate Trust Limited to pursue its claim for the recovery of money under the guarantee and indemnity agreement.

Orders