S Sali & Sons Pty Ltd v Metzke - [2009] VSC 48

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMERCIAL AND EQUITY DIVISION

No. 5478 of 2005

BETWEEN

SAM SELAMI SALI (who sues on his own behalf and in his capacity as administrator of the estate of ALAN ASLAN SALI deceased)

and

S. SALI & SONS PTY LTD (ACN 005 210 319)	Plaintiffs
and
FRANK METZKE AND RUSSELL ALLEN (trading as Metzke & Allen)	First and Second Defendants
and
MATTHEW JOHN BLIZZARD	Third Defendant

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JUDGE:	WHELAN J
WHERE HELD:	Melbourne
DATE OF HEARING:	18-21 November, 24-28 November, 16-17 December 2008
DATE OF JUDGMENT:	19 February 2009
CASE MAY BE CITED AS:	Sali & ors v Metzke & Allen
MEDIUM NEUTRAL CITATION:	[2009] VSC 48

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CONTRACT AND TORT – Accountants’ concurrent duty in contract and tort to exercise reasonable care and skill – Breach of duty as necessary steps taken too late.

CONTRACT AND TORT – Apportionment and limitation of liability under Part IVAA, Wrongs Act 1958 (Vic) – Whether concurrent wrongdoer must be liable to the plaintiffs.

CONTRACT AND TORT – Apportionment and limitation of liability under Part IVAA, Wrongs Act 1958 (Vic) – Principles to be applied.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiffs	Mr C Gunst QC & Mr S Palmer	Kaine Lawyers
For the Defendants	Mr C Caleo SC & Mr J Slattery	Deacons

TABLE OF CONTENTS

Introduction........................................................................................................................................ 1

Overview of issues to be determined............................................................................................. 2

Nature of the claims made against Metzke & Allen................................................................ 2

Legal principles concerning the claims made against Metzke & Allen................................ 3

The relevant sequence of events..................................................................................................... 5

Background of the Salis................................................................................................................ 5

Background of Metzke & Allen.................................................................................................. 6

Commencement of the Universal Logistics venture and relationship with Metzke & Allen at that time.................................................................................................................................................. 6

The handover to Russell Allen.................................................................................................... 7

The Universal Logistics venture prior to the arrival of Mr Blizzard..................................... 8

Introduction of Matthew Blizzard.............................................................................................. 9

Request to Allen to attend board meetings............................................................................. 11

Board meeting 15 January 1999................................................................................................. 11

Board meeting 1 February 1999................................................................................................ 13

Further analysis of the B double proposal.............................................................................. 14

The role of Mr Panozzo.............................................................................................................. 16

Board meeting 15 February 1999.............................................................................................. 17

Board meeting 1 March 1999..................................................................................................... 17

Board meeting 19 March 1999................................................................................................... 17

Resignation of Greg Bowler....................................................................................................... 18

Board meeting 19 April 1999..................................................................................................... 18

Board meeting 17 May 1999....................................................................................................... 18

Sam Sali’s visit to Graham Thomson Motors.......................................................................... 19

Introduction of John Yiannis..................................................................................................... 19

Board meeting 13 July 1999 – the B doubles........................................................................... 20

Board meeting 13 July 1999 – financial reporting and depot facilities................................ 20

The Paccar inquiries.................................................................................................................... 21

Consideration of depots in mid 1999....................................................................................... 21

Limiting Russell Allen’s role as advisor to Universal Logistics........................................... 21

Further finance inquiries............................................................................................................ 22

The practice of holding cheques............................................................................................... 22

September 1999 – the budget..................................................................................................... 23

When was the decision to acquire the B doubles made?...................................................... 23

What advice did Russell Allen give about the B doubles?................................................... 24

Discussion of the budget............................................................................................................ 25

Panozzo material for the 30 June 1999 financial statements................................................. 26

The request for a cash injection, the October 1999 board meeting, and the…

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: [2009] VSC 48
Decision Date: 19 February 2009

CaseChat Overview and Summary

S Sali & Sons Pty Ltd sought compensation from Metzke, their former accountant, for financial losses allegedly caused by his negligent accounting services. The dispute was heard in the Supreme Court of Victoria, where the plaintiffs claimed both under contract and tort law for the accountant's failure to exercise reasonable care and skill. They argued that the accountant's actions, or inactions, resulted in significant financial damage to the company, and that the harm could have been mitigated if appropriate steps had been taken in a timely manner. The central issue before the court was whether Metzke breached his contractual and tortious duties by not exercising reasonable care and skill, and if so, whether the breach caused the financial losses claimed by the plaintiffs.

The court had to determine if Metzke breached his contractual and tortious duties by failing to exercise reasonable care and skill in his accounting work. It also needed to assess if the plaintiffs' losses were a direct result of this breach. Additionally, the court was tasked with examining the application of Part IVAA of the Wrongs Act 1958 (Vic), which deals with apportionment and limitation of liability among concurrent wrongdoers. The court had to decide whether the concurrent wrongdoer, Metzke, was liable to the plaintiffs for the full extent of their losses, or if his liability was subject to apportionment.

The court found that Metzke did breach his duty of care by not taking necessary steps in a timely manner, resulting in the plaintiffs' financial losses. The court held that the accountant's actions constituted a breach of both his contractual and tortious duties. Regarding the application of Part IVAA, the court ruled that the principles of apportionment and limitation of liability applied, meaning that Metzke was liable to the plaintiffs for his proportion of the loss. The court emphasised that the plaintiffs were entitled to recover their losses from Metzke, but the recovery would be limited to his share of the liability.

The final orders of the court were that Metzke was liable to S Sali & Sons Pty Ltd for his proportion of the financial losses caused by his breach of duty, in accordance with the principles of apportionment and limitation under Part IVAA of the Wrongs Act 1958 (Vic). The court did not order a full recovery from Metzke but instead determined that he would be liable for his share of the plaintiffs' losses, subject to the statutory provisions.

Orders