Re S & D International Pty Ltd (No 2)
[2009] VSC 341
•4 August 2009
| IN THE SUPREME COURT OF VICTORIA | Not Restricted | |
AT MELBOURNE
COMMERCIAL AND EQUITY DIVISION
COMMERCIAL COURT
CORPORATIONS LIST
No 7807of 2008
IN THE MATTER OF S & D INTERNATIONAL PTY LTD (ACN 075 030 447) (in liquidation) (receiver and manager appointed)
| Plaintiffs | |||
| v | ||||
| MIG PROPERTY SERVICES PTY LTD (ACN 006 657 174) & ORS | Defendant | |||
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JUDGE: | ROBSON J | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 4 August 2009 | |
DATE OF JUDGMENT: | 4 August 2009 | |
CASE MAY BE CITED AS: | Re S&D International Pty Ltd (No 2) | |
MEDIUM NEUTRAL CITATION: | [2009] VSC 341 | |
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CORPORATIONS – inquiry ordered into conduct of second defendant as receiver and manager of S&D International Pty Ltd and as agent in possession of land of the company – application of second defendant to adjourn inquiry and to defer date by which he is to file affidavits for the inquiry until Court of Appeal has heard and determined application for a stay of order for inquiry – application refused
CORPORATIONS – practice and procedure – application to file and serve a third party notice – application withdrawn as the proceedings not commenced by writ or otherwise as referred to in r 11.05(1) of the Supreme Court (General Civil Procedure) Rules 2005 – application for directions in Corporations List for the filing and serving of the third party notice – directions given – r 11.05 of the Supreme Court (General Civil Procedure) Rules2005
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiffs | Mr J P Moore | Mills Oakley Lawyers |
| For the First Defendant | Mr C Leonidas | Comlaw |
| For the Second Defendant | Mr M G R Gronow | Irlicht & Broberg |
HIS HONOUR:
On 9 June 2009, I delivered my decision on certain issues raised in these proceedings between the plaintiffs and the first and second defendants concerning the sale of the Footscray property by the first and second defendants under securities held by the first defendant, MIG, over the Footscray property.[1]
[1]Re S & D International Pty Ltd (in liq)(rec and mgr appointed) [2009] VSC 225.
On 19 June 2009, I made orders in accordance with my reasons, inter alia, that the first and second defendants render to the plaintiffs proper accounts of and vouch their receipts and payments as mortgagee, receiver and manger of the property of the first plaintiff, S & D, and as agent of the mortgagee, MIG, and that there be an inquiry into the amounts and sums that should have been included in the account that the first defendant as mortgagee, the second defendant as receiver and manager and the second defendant as agent for the mortgagee should have rendered the first plaintiff on the settlement of the sale of the Footscray property.
On 3 July 2009, Mr Vartelas, the second defendant, filed and served a notice of appeal against the whole of my order of 19 June 2009. On 3 July 2009, Mr Vartelas also filed and served a notice of change of practitioner and an application to the Court of Appeal for leave to appeal against the order of 19 June 2009.
On 24 July 2009, Mr Vartelas applied to the Court of Appeal for a stay, pending the hearing and determination of the appeal, of paragraphs 6, 7, 8, 9, 15 and 16 of the orders of 19 June 2009. The application for a stay is to be heard on 14 August 2009 along with the application for leave to appeal.
I have before me an interlocutory process dated 29 July 2009 wherein Mr Vartelas, under rule 11.05 of the Supreme Court (General Civil Procedure) Rules 2005, seeks leave to file and serve a third party notice and seeks an adjournment of the inquiry and the date for filing affidavits for the inquiry.
On the hearing of the application before me Mr Gronow, who appeared for Mr Vartelas, further refined Mr Vartelas’ application. On the third party notice, Mr Gronow indicated Mr Vartelas no longer sought leave to issue the third party notice but merely sought that the Court fix a date by which the third party notice be filed and served. On the application to adjourn the inquiry, Mr Gronow informed the Court that under the orders made on 19 June 2009, that on or before 11 August 2009, the first and second defendants are to file and serve any affidavits on which they intend to rely at the inquiry. The inquiry was ordered to be held on 18 August 2009. Mr Gronow says that he seeks the adjournment of the inquiry to a date to be fixed and the filing of any affidavits his client intends to rely on to be adjourned to seven days before the day subsequently fixed for the hearing.
Mr Gronow submits that the matter of a stay of my order in respect of the inquiry is a matter solely for the Court of Appeal. He says that if on 14 August 2009, the Court of Appeal grants the stay then the inquiry will be stayed. If, on the other hand, on 14 August 2009, the Court of Appeal declines to grant the application for a stay, Mr Gronow accepts that if I grant his application to adjourn the inquiry to a date to be fixed that the plaintiffs will be entitled to apply immediately thereafter for a day to be fixed for the inquiry to take place.
Mr Broberg solicitor for Mr Vartelas estimates that the cost of a one day hearing and the legal costs and disbursements of Mr Vartelas in connection with the inquiry will be approximately $17,000. It was unclear on the evidence before me what costs might be wasted if Mr Vartelas had to file his affidavit material by 11 August 2009 as presently ordered and prepare for the inquiry on the 18 August 2009.
Mr Moore submits that Mr Vartelas did not apply to the Court of Appeal for a stay of the inquiry until 24 July 2009 some six weeks after my orders were made. He contends that the plaintiffs in the meantime have gone to great trouble and expense preparing for the inquiry including filing and serving a lengthy notice of objection to the accounts filed by Mr Vartelas. He contends that the only costs that might be thrown away are the costs of the affidavits ordered to be filed on 11 August 2009 and the preparation costs up to and including 14 August when the Court of Appeal is to consider the stay application. He contends that the in the context of the costs that have been incurred in these proceedings that is a small sum. He submits that it would be inconvenient to interrupt the final resolution of the matters outstanding against Mr Vartelas.
As the matter stands, whether the inquiry proceeds on 18 August 2009 or not is in the hands of the Court of Appeal. No application has been made to me for a stay and accordingly any views I may have about the merits of a stay are not relevant. The real issue before me is whether or not the obligation on Mr Vartelas to file and serve any affidavits he intends to rely on should be deferred.
If that obligation is deferred and the Court of Appeal does not grant the stay, the inquiry will not be able to proceed on 18 August 2009 and another time convenient to the Court and the parties will have to be found. In view of the sorry history of this proceeding, I am loath to cause further delay and expense to the plaintiffs and the other parties. Further, if I refuse the application the only inconvenience Mr Vartelas will be put to is the filing of the affidavits he intends to rely on at the inquiry.
After taking all these matters into account, in the exercise of my discretion, I am not prepared to adjourn the inquiry and extend the time for Mr Vartelas to file and serve his affidavits to a date seven days before the date subsequently fixed for the inquiry.
I turn now to the third party notice. It is sought to be issued against Mitsui Sumitomo Insurance (London Management) Ltd. Under the draft notice tendered in evidence, Mr Vartelas claims that by a written contract of professional indemnity insurance dated 6 June 2008 the insurer agreed for reward to insure and indemnify Mr Vartelas against all civil claims made against him and notified to the insurer in the period from 1 July 2008 to 30 June 2009 in respect of any civil liability incurred in the conduct of his practice as an accountant.
He alleges that under the policy civil claims meant:
(a) any originating legal or arbitral process, cross claim or counterclaim served on Mr Vartelas; or
(b) any written or verbal demand for compensation made by a third party against Mr Vartelas.
Mr Vartelas claims that these proceedings were commenced in September 2008, the insurer was thereupon notified but has failed and refused to agree to indemnify Mr Vartelas in respect of the proceeding and the claims made against him in it.
Mr Vartelas claims he is entitled to a declaration and an order that the insurer is liable to indemnify him in respect of any amount he is ordered to pay in this proceeding whether by way of account, damages, repayment of remuneration, compensation, statutory interest and costs and otherwise. He seeks such a declaration and indemnity in respect of any sum he is so ordered to pay.
Mr Gronow submits that in the circumstances Mr Vartelas is entitled under r 11.01 of the Supreme Court (General Civil Procedure) Rules 2005 to join the insurer as a third party. The relevant rules provide:
11.01 Claim by third party notice
Where a defendant claims as against a person not already a party to the proceeding (in this Order called the third party)—
(a) any contribution or indemnity;
(b) any relief or remedy relating to or connected with the original subject matter of the proceeding and substantially the same as some relief or remedy claimed by the plaintiff; or
(c) that any question relating to or connected with the original subject matter of the proceeding should be determined not only as between the plaintiff and the defendant but also as between either or both of them and the third party—
the defendant may join the third party as a party to the proceeding and make the claim against that third party by filing and serving a third party notice.
11.02 Statement of claim on third party notice
A third party notice shall be in Form 11A and shall be indorsed with a statement of claim.
11.03 Time for appearance
(1) A third party notice shall state a time within which the third party may file an appearance in the proceeding.
(2) The time under paragraph (1) shall be—
(a) where the notice is to be served within Victoria—not less than 10 days after service;
(b) where the notice is to be served out of Victoria—within the time limited by Rule 8.04(b), (c) or (d) in the case of appearance by a defendant to a writ, whichever is appropriate, or within the time limited by any order of the Court authorising service of the notice.
11.04 Filing and service of third party notice
(1) A claim by third party notice shall be commenced by filing a third party notice in the Court whereupon the third party shall become a party to the proceeding.
(2) A third party notice shall be filed and served on the third party in the same manner as originating process is filed and served on a defendant.
11.05 Time for third party notice
(1) In a proceeding commenced by writ or a proceeding in respect of which an order has been made under Rule 4.07(1) a defendant may not file a third party notice until the defendant has first served a defence.
(2) A defendant may file a third party notice—
(a) within 30 days after the time limited for the service of a defence; or
(b) at any time with the leave of the Court or the consent in writing of the plaintiff and any other party who has appeared.
11.06 Leave to file third party notice
An application for leave to file a third party notice shall be made on notice to the plaintiff but the Court may direct notice to be given to any other party who has appeared.
11.07 Other requirements for service
(1) A third party notice shall be served on the third party within 60 days after it is filed.
(2) Notwithstanding paragraph (1), the Court may fix another period for the service of a third party notice either—
(a) before the notice is filed; or
(b) at the time it grants leave under Rule 11.05(2) to file the notice.
(3) Where a third party notice has not been served on the third party, the Court from time to time by order may extend the period for service of the notice for such further period it thinks fit.
(4) An order may be made under paragraph (3) before or after expiry of the period for service.
(5) At the time of service of a third party notice on a third party there shall also be served a copy of—
(a) any order or consent under Rule 11.05(2);
(ab) any order under paragraph (2) of this Rule made before the third party notice was filed fixing a period for service of the notice;
(ac) any order under paragraph (3) of this Rule;
(b) the writ or other originating process;
(c) any pleadings or affidavits filed and served in the proceeding.
(6) Within the period for service of the third party.
Mr Gronow says that Mr Vartelas seeks contribution or indemnity from the insurer and thus satisfies paragraph (a) of r 11.01. He also submits that Mr Vartelas satisfies paragraph (b) of r 11.01 as the relief he seeks is related to or connected with the original subject matter. He also argues that there are common questions in issue between Mr Vartelas and the insurer and as between the plaintiffs and Mr Vartelas. I am not satisfied that this last submission is correct. I have already determined the substantive issues in the case as between the plaintiffs and the first and second defendants. I do not see the inquiry as raising any common questions that Mr Vartelas has with his insurer.
As it is, I do not need to determine that issue. Mr Gronow submits that if Mr Vartelas is ordered to pay moneys to anybody that are the subject of the indemnity Mr Vartelas wishes the insurer to be party to the same proceedings so that appropriate orders can be made for the insurer meet the obligations of Mr Vartelas.
Mr Moore opposes the application. He said that there is no common question and no danger of inconsistent findings between those that might be made in this proceeding and as between Mr Vartelas and the insurer. He contends that it would be inconvenient to these proceedings to allow the joinder of the insurer with the potential for delay and disruption that may cause.
I am loath to allow any further delay to the proceedings. However, I feel it is only fair and just for Mr Vartelas to be able to join his insurer who is denying liability if he faces the possibility of orders for the payment of significant sums of money.
I accept this submission of Mr Gronow on this issue. Insofar as there is any discretion in me in the matter I would allow the insurer to be joined. Mr Leonidas as solicitor for the first defendant consents to the joinder and argues in favour of it.
As it is, Mr Gronow contends that Mr Vartelas does not require leave under r 11.05 to file and serve the third party notice as these proceedings are not covered by the rule. He says that as the Corporations List is a managed list, he seeks a date by which the third party must be filed and served. Mr Gronow concedes if the third party is joined that it may be appropriate nevertheless to hear separately the third party notice.
I propose to make the order sought by Mr Gronow. I order that if the second defendant intends to join Mitsui Sumitomo Insurance (London Management) Ltd as a third party to the proceedings, he file and serve the notice on or before the 18 August 2009.
I dismiss the application by Mr Vartelas for the adjournment of the inquiry.
I order that Mr Vartelas pay the costs of and incidental to the application to adjourn the inquiry. I order that each party’s costs of and incidental to Mr Vartelas’ application concerning the third party notice be that parties costs in the proceedings.
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