Puxty v Monarch Advisory Group Pty Ltd

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FEDERAL COURT OF AUSTRALIA

Puxty v Monarch Advisory Group Pty Ltd [2022] FCA 153  

Appeal from: Monarch Advisory Group Pty Ltd v Puxty (No 2) [2021] FCA 801
File number: NSD 779 of 2021
Judgment of: THAWLEY J
Date of judgment: 25 February 2022
Catchwords: PRACTICE AND PROCEDURE – application for extension of time to seek leave to appeal from interlocutory decision – where application filed 24 minutes out of time – extension of time granted – insufficient prospect of grounds contained in draft notice of appeal leading to primary judge’s order being set aside to warrant granting leave to appeal – leave to appeal refused
Legislation:

Corporations Act 2001 (Cth) ss 181(1), 182(1), 183(1), 1317H

Competition and Consumer Act 2010 (Cth) Sch 2 (Australian Consumer Law) ss 18, 31, 236

Federal Court of Australia Act 1976 (Cth) s 24(1A)

Cases cited:

Monarch Advisory Group Pty Ltd v Puxty [2021] FCA 341 Monarch Advisory Group Pty Ltd v Puxty (No 2) [2021] FCA 801

Browne v Dunn (1893) 6 R 67

Décor Corporation Pty Ltd v Dart Industries Inc [1991] FCA 844; (1991) 33 FCR 397

Jones v Dunkel (1959) 101 CLR 298

Division: General Division
Registry: New South Wales
National Practice Area: Commercial and Corporations
Sub-area: Regulator and Consumer Protection
Number of paragraphs: 55
Date of last submissions: 25 October 2021 (Applicant)
15 October 2021 (Respondent)
Date of hearing: Determined on the papers
Counsel for the Applicant: Mr M Luitingh
Solicitor for the Applicant: Edge Legal Group
Counsel for the Respondent: Mr D Mahendra
Solicitor for the Respondent: Madison Marcus Law Firm

ORDERS

NSD 779 of 2021
BETWEEN:

BRETT JAMES PUXTY

Applicant
AND:

MONARCH ADVISORY GROUP PTY LTD

Respondent

ORDER MADE BY:

THAWLEY J

DATE OF ORDER:

25 FEBRUARY 2022

THE COURT ORDERS THAT:

1.Time in which to seek leave to appeal is extended.

2.Leave to appeal is refused.

3.Unless a party applies within 7 days for a different order as to costs, the applicant pay the respondent’s costs.

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


REASONS FOR JUDGMENT

THAWLEY J:

INTRODUCTION

  1. Mr Brett James Puxty applied for an extension of time and leave to appeal from orders made by the primary judge on 16 July 2021, dismissing an interlocutory application: Monarch Advisory Group Pty Ltd v Puxty (No 2) [2021] FCA 801 (“Monarch (No 2)”).  The parties filed written submissions in respect of Mr Puxty’s application for an extension of time and leave to appeal and consented to the application being determined on the papers. 

  2. On 21 January 2022, the Court made orders extending the time in which to seek leave to appeal and dismissing the application for leave to appeal.  Reasons for making those orders were published.  Those orders were entered the same day. 

  3. Shortly before a case management hearing on 3 February 2022, it became apparent that the reasons for judgment contained a factual error about one aspect of the submissions…

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Details
Case
[2022] FCA 153
Decision Date

CaseChat Overview and Summary

In Puxty v Monarch Advisory Group Pty Ltd, the Federal Court of Australia was asked to consider an application for an extension of time to apply for leave to appeal from an interlocutory decision, as well as the merits of the leave to appeal itself. The appellant, Mr Puxty, was 24 minutes late in filing his application due to a clerical error by his solicitor. Despite this, the court granted the extension of time given the circumstances. The substantive issue was whether leave to appeal should be granted, which hinges on whether the primary judge's decision raised sufficient doubt to warrant reconsideration by a Full Court, or if denying leave would result in substantial injustice.

The court found that the primary judge's decision did not raise sufficient doubt, and the potential for substantial injustice if leave were denied did not outweigh the reasons for not granting leave. The appeal's prospects of success were deemed insufficient, particularly as no new grounds of appeal were proposed beyond those outlined in the draft notice. The court concluded that there was no misuse of the principles governing the assessment of evidence or the weight attributed to it, and that the primary judge's findings were supported by the evidence.

The final orders of the court were to extend the time for seeking leave to appeal, to refuse the leave to appeal, and to direct that unless a party applies for a different order regarding costs within 7 days, the applicant would pay the respondent’s costs. This decision underscores the importance of timely filings and the rigorous scrutiny applied to interlocutory appeals, particularly in cases where the primary judge’s findings are well-supported by evidence.

Orders

Orders of the court

1. Time in which to seek leave to appeal is extended.

2. Leave to appeal is refused.

3. Unless a party applies within 7 days for a different order as to costs, the applicant pay the respondent’s 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 which follow:(1)Mr Puxty’s application to extend time to apply for leave to appeal should be granted; and(2)Mr Puxty’s application for leave to appeal should be refused.BACKGROUND The background is set out in Monarch Advisory Group Pty Ltd v Puxty [2021] FCA 341 (Monarch (No 1)) at [2] to [14] and Monarch (No 2) at [3] to [35]. In truncated form it is as follows. Mr Puxty was employed by WiZDOM Advisory as a senior financial advisor and, before that, by AON Hewitt Australia. Mr Coggan was a senior “paraplanner” (a person who prepares Statement of Advice documents, financial modelling and other financial planning documents) employed by WiZDOM. Ms Coulter was the sole director of Monarch, which operated a financial planning business. Various directors of Madison Marcus were also directors of Consolidated Corporate Pty Ltd. These included Mr Qutami and Mr Shamieh. Consolidated acquired 50% of the shares in Monarch on 13 March 2018. In about mid 2018 Ms Coulter and Mr Puxty discussed opening a Monarch branch in Newcastle and expanding the business. Ms Coulter had a number of discussions with Mr Puxty in connection with him becoming an employee of Monarch. Mr Kardum, the Group General Manager of Madison Marcus at the relevant time, was also involved in some communications. He was not a lawyer and is no longer employed by Madison Marcus. Mr Puxty says that, in the context of the negotiations for him to become an employee, he disclosed confidential information about his business activities to Ms Coulter and Mr Kardum: Monarch (No 2) at [21]. Mr Puxty and Mr Coggan entered into an employment agreement with Monarch on about 20 December 2018. Mr Puxty and Mr Coggan resigned from their employment with Monarch on about 17 January 2020. Odyssey (the third respondent) was incorporated by Mr Puxty in about September 2019 and now operates a financial services business. Monarch commenced proceedings against Mr Puxty, Mr Coggan and Odyssey on 27 August 2020. Monarch alleges that:(1)Mr Puxty and Mr Coggan breached various provisions of their respective employment agreements including, among others, in relation to restraint of trade and confidentiality;(2)Mr Puxty and Mr Coggan breached their fiduciary duties owed to Monarch and contravened s 182(1) and s 183(1) of the Corporations Act 2001 (Cth);(3)Odyssey was involved in the alleged breaches by Mr Puxty and Mr Coggan set out in (2) above; (4)the respondents made representations to clients of Monarch which were not true and, in doing so, they engaged in conduct which was misleading or deceptive or likely to mislead or deceive in contravention of s 18 of the Australian Consumer Law being Sch 2 to the Competition and Consumer Act 2010 (Cth) (ACL); and(5)the respondents engaged in conduct which wrongly suggested a connection with the services provided by Monarch and which amounted to passing off. Monarch seeks as against:(1)Mr Puxty and Mr Coggan, damages for breach of their respective employment agreements, pursuant to s 1317H of the Corporations Act for breach of their statutory duties and an account of profits and or equitable compensation; (2)Odyssey, damages pursuant to s 1317H of the Corporations Act for its involvement in Mr Puxty’s and Mr Coggan’s contraventions of s 181(1) and s 182(1) of the Corporations Act; and(3)the respondents, damages pursuant to s 236 of the ACL and or for passing off.

Evidence

Evidence Before The Court

It was not stated that grounds of appeal different from those in the draft notice of appeal were sought to be advanced or would be advanced if leave to appeal were granted. Nevertheless, for completeness, the “issues in dispute”, as formulated in the written submissions, are addressed next.Evidence of Ms Coulter In support of his contention, at paragraph (a) of [5.1] of his submissions, that the primary judge erred in concluding that Ms Coulter’s evidence was unchallenged, Mr Puxty relied on her Honour’s reasons at [52]. It is necessary to refer to both [51] and [52]. These are set out at [30] above. It is tolerably clear that, in stating that Ms Coulter’s evidence was “not challenged”, her Honour was referring to the fact that Ms Coulter was not cross-examined. The context, in particular her Honour’s reasons at [51], make it clear that her Honour was not suggesting that Mr Puxty’s evidence did not challenge Ms Coulter’s evidence. Nor is the contention that her Honour erred in attributing weight to Ms Coulter’s evidence one which is attended with any prospect of success. Counsel for Mr Puxty did not seek to cross-examine Ms Coulter. No detailed or reasoned submission was advanced as to why, in the circumstances, the primary judge should not rely on Ms Coulter’s affidavit. There is no discernible error in the approach adopted by the primary judge to her assessment of the evidence or the weight given to it. Contrary to the submissions advanced for Mr Puxty, there was no misuse of the principles in Brown v Dunn (1893) 6 R 67 or Jones v Dunkel (1959) 101 CLR 298; neither rule required the primary judge to disregard or attribute no weight to the evidence which Monarch had read; a fortiori, in the absence of any request to cross-examine the deponents of the affidavits which were read on the interlocutory application or any clear submission as to why the evidence should be disregarded or attributed no weight.Role of Consolidated As to the issue identified at [5.2] of Mr Puxty’s submissions:(1)Mr Puxty failed to establish that information of a kind which could attract an order restraining Madison Marcus was provided to any person, including Monarch: Monarch (No 2) at [55].(2)Contrary to [5.2], the primary judge did not conclude that confidential information was provided by Monarch to Madison Marcus. The primary judge was unable to be satisfied that any such information was provided: Monarch (No 2) at [55]. Her Honour concluded, at [67] (emphasis added), that “even if Monarch did provide Madison Marcus with information which was commercially sensitive or confidential to Mr Puxty, it did so because that firm was acting for it”. This finding was made in the context of concluding that there was no lawyer-client relationship between Mr Puxty and Madison Marcus.(3)At [67], her Honour stated:To the extent that Mr Kardum or members of Consolidated may have received the information or parts of it, that was for commercial reasons, namely as officers of a shareholder in Monarch to assess the viability of Monarch offering employment to Messrs Puxty and Coggan.This conclusion was open and not shown to have been reached through any arguably erroneous reasoning. In any event, the contended error goes nowhere given that her Honour was unable to conclude that any information which was provided had the necessary characteristics to make it confidential: at [55]. Role of Madison Marcus

Decision

Reasons for decision

All that the primary judge concluded at [64] was that the circumstances did not in fact give rise to a situation in which Madison Marcus should be restrained from acting for Monarch. This conclusion must be read in the context of the whole judgment, including that it was not established that any confidential information was in fact provided. Contrary to Mr Puxty’s submission at paragraph (b) of [5.4], the primary judge did not conclude, as a matter of legal principle, “that where no claim is made against [Madison Marcus], and it is not a party to the proceedings the contention that a solicitor should be restrained as being a party to a business structure with the respondent and the applicant, is not a basis for [Madison Marcus’s] removal”. CONCLUSION There is insufficient prospect of any successful appeal to warrant granting leave to appeal. In reaching this conclusion, I have taken into account that, if the primary judge did err, substantial injustice would arguably result if some confidential information relevant to the proceedings had been disclosed (a matter which was not established before the primary judge). Leave to appeal is refused.

Ratio Decidendi

Legal Principle Established

Monarch commenced proceedings against Mr Puxty, Mr Coggan and Odyssey on 27 August 2020. Monarch alleges that:(1)Mr Puxty and Mr Coggan breached various provisions of their respective employment agreements including, among others, in relation to restraint of trade and confidentiality;(2)Mr Puxty and Mr Coggan breached their fiduciary duties owed to Monarch and contravened s 182(1) and s 183(1) of the Corporations Act 2001 (Cth);(3)Odyssey was involved in the alleged breaches by Mr Puxty and Mr Coggan set out in (2) above; (4)the respondents made representations to clients of Monarch which were not true and, in doing so, they engaged in conduct which was misleading or deceptive or likely to mislead or deceive in contravention of s 18 of the Australian Consumer Law being Sch 2 to the Competition and Consumer Act 2010 (Cth) (ACL); and(5)the respondents engaged in conduct which wrongly suggested a connection with the services provided by Monarch and which amounted to passing off. Monarch seeks as against:(1)Mr Puxty and Mr Coggan, damages for breach of their respective employment agreements, pursuant to s 1317H of the Corporations Act for breach of their statutory duties and an account of profits and or equitable compensation; (2)Odyssey, damages pursuant to s 1317H of the Corporations Act for its involvement in Mr Puxty’s and Mr Coggan’s contraventions of s 181(1) and s 182(1) of the Corporations Act; and(3)the respondents, damages pursuant to s 236 of the ACL and or for passing off. Mr Puxty has filed a cross-claim in which he alleges that Monarch has breached the “Termination Agreement” (as defined), failed to repay a loan of $30,000 and has made representations which were not true and which were deceptive or likely to mislead within the meaning of s 31 of the ACL and on which he relied, and in respect of each of which Mr Puxty seeks damages. EXTENSION OF TIME Mr Puxty was 24 minutes out of time in filing his application for leave to appeal. The explanation for this delay was that Mr Puxty’s solicitor erroneously thought that the deadline for filing the application was 5.00pm when it was in fact 4.30pm. Monarch did not oppose an extension of time being granted, but opposed the application for leave to appeal. It is appropriate in the circumstances to extend time within which to seek leave to appeal.LEAVE TO APPEAL The next question is whether leave to appeal should be granted. Leave is required because the primary judge’s decision was interlocutory: s 24(1A) of the Federal Court of Australia Act 1976 (Cth). As was stated in Décor Corporation Pty Ltd v Dart Industries Inc [1991] FCA 844; (1991) 33 FCR 397 at 398-399 (Sheppard, Burchett and Heerey JJ), the question of whether leave to appeal should be granted turns principally on whether:(1)the decision giving rise to the orders from which Mr Puxty wishes to appeal is attended with sufficient doubt to warrant its being reconsidered by a Full Court; (2)substantial injustice would result if leave were refused.