Savills (SA) Pty Limited v Angas Securities Limited

[2017] FCA 1275

FEDERAL COURT OF AUSTRALIA

Savills (SA) Pty Limited v Angas Securities Limited [2017] FCA 1275

Appeal from:	Application for leave to appeal:  Angas Securities Limited v Savills (SA) Pty Ltd (White J, SAD 343 of 2016, 18 September 2017)
File number:	SAD 261 of 2017
Judge:	BESANKO J
Date of judgment:	26 October 2017
Date of publication of reasons:	31 October 2017
Legislation:	Corporations Act 2001 (Cth)
Cases cited:	Decor Corporation Pty Ltd and Another v Dart Industries Inc (1991) 33 FCR 397
Date of hearing:	26 October 2017
Registry:	South Australia
Division:	General Division
National Practice Area:	Commercial and Corporations
Sub-area:	Regulator and Consumer Protection
Category:	No Catchwords
Number of paragraphs:	7
Counsel for the Applicant:	Mr I Robertson SC
Solicitor for the Applicant:	Wotton + Kearney
Counsel for the Respondent:	Mr B Roberts SC
Solicitor for the Respondent:	Charlton Rowley

ORDERS

SAD 261 of 2017

BETWEEN:

SAVILLS (SA) PTY LIMITED (ACN 008 068 513)

Applicant

AND:

ANGAS SECURITIES LIMITED (ACN 091 942 728)

Respondent

JUDGE:	BESANKO J
DATE OF ORDER:	26 OCTOBER 2017

THE COURT ORDERS THAT:

1.The applicant be granted leave to appeal.

2.The applicant file and serve by 4pm on Monday, 30 October 2017 a Notice of Appeal containing the three grounds of appeal as read onto the transcript this day by the applicant’s counsel.

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

REASONS FOR JUDGMENT

BESANKO J:

1. On 26 October 2017 I granted leave to appeal to a respondent in a proceeding in the Court.  The respondent had applied for leave to amend its defence, but its application was refused.  I said that I would give reasons for my decision and these are my reasons.

2. Angas Securities Limited (Angas Securities) is the applicant in the proceeding and it is in the business of providing finance on certain terms and conditions.  It engaged the respondent, Savills (SA) Pty Limited (Savills), to prepare valuations in relation to a transaction.  It claims in this proceeding that Savills prepared those valuations negligently and in breach of duty and that it has suffered loss and damage as a result.  It claims damages and compensation from Savills.  The amount claimed is in the order of $10 million.  Relevantly for present purposes, Savills claims that Angas Securities was guilty of contributory negligence in relation to the transaction and that any damages or compensation which Angas Securities might establish should be reduced to reflect that contributory negligence.  The trial has been listed to commence on 27 November 2017 with eight days set aside.

3. Savills applied to amend its defence to plead proportionate liability relying on the liability of four directors of Angas Securities.  It seeks to plead breaches of directors’ duties at common law and in equity and under the provisions of the Corporations Act 2001 (Cth). The primary judge refused Savills’ application, having regard primarily to the proximity of the trial date and a concession made by Angas Securities. The concession made by Angas Securities is said by it to be that any matter which Savills could raise against the directors of the company in its pleas in relation to proportionate liability can be raised in and by way of a plea of contributory negligence against the company. That concession is said by Angas Securities to eliminate any possibility of prejudice to Savills from its inability to pursue a plea of proportionate liability.

4. Savills proposed grounds of appeal are as follows:

   1.The Court erred in law by applying to the Appellant a standard that could not be discharged prior to trial of the issues in paragraph 61 and paragraphs 63 – 77 of the proposed Further Amended Defence.

   2.The Court erred in the exercise of its discretion by taking into account an irrelevant consideration, namely:

   (a)     that the pleading must be necessary in order to vacate the trial date; and

   (b)     the concession of the respondent set out in its solicitor’s letter dated 14 September 2017.

   3.The Court erred in the exercise of its discretion by failing to take into account a relevant consideration, namely that the refusal of the amendment would deny the applicant the opportunity to exercise its substantive rights, that is, pursuant to s 182 of the Corporations Act 2001 (Cth) or for a breach of fiduciary duty.

5. In his reasons for his ruling which were necessarily brief, the primary judge said:

   5.I also take into account that you have not been able to show that the effect of the proportionate liability claims, if established, would be to lead to a larger reduction in the applicant’s entitlement to damages than would be the case under the contributory negligence pleas, if they are established.  At the same time, I take into account what I think might be the inherent difficulties you might have had in establishing that a larger reduction could be obtained.  But it is a relevant consideration that it is not possible to be confident, at this stage, that the amendments would have that kind of practical effect.

   8.The underlying principle of my ruling is that the concession which the applicant has made should, on my understanding, allow you to advance in the trial the same kinds of matters which you have pleaded expressly, noting that there seems in any event to be an unresolved question as to the form and adequacy of the pleading of proportionate liability in some respects.

6. Savills submitted that the primary judge erred in law in putting the onus on it to establish that the proportionate liability pleas would make a difference in a practical sense.  It submits that its proportionate liability pleas may make a difference in terms of the reduction of damages it might otherwise be ordered to pay because it may transpire that matters arise at trial that are not covered by the concession and because the characterisation of conduct as a breach of directors’ duties may affect the reduction of damages in a different way than the characterisation of conduct as contributory negligence.  These propositions may ultimately be rejected, but to the extent they have been developed, I am of the opinion that they are reasonably arguable.  Not without some hesitation, I think that there is sufficient doubt about the primary judge’s decision to warrant a grant of leave to appeal.  Furthermore, it seems to me that the second limb of the test in Decor Corporation Pty Ltd and Another v Dart Industries Inc (1991) 33 FCR 397 is satisfied. It is tied up with the first. If the primary judge is wrong, but leave is refused, there is a sufficient prospect that the respondent will suffer a substantial injustice.

7. It was for these reasons I granted leave to appeal.

I certify that the preceding seven (7) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Besanko.

Associate:       

Dated:       31 October 2017