Sutherland v GHR Accounting (No 3) - [2017] NSWSC 373

Supreme Court

New South Wales

Medium Neutral Citation: Sutherland v GHR Accounting (No 3) [2017] NSWSC 373
Hearing dates: 31 March 2017
Decision date: 07 April 2017
Jurisdiction: Common Law
Before: Button J
Decision:
(1) The Further Amended Statement of Claim of the plaintiff that became Exhibit 1 on 31 March 2017 is struck out.
(2) The plaintiff must file and serve any further statement of claim upon which he relies by 5 May 2017.
(3) Any such statement of claim must be verified on oath by the plaintiff, in accordance with rule 14.24 of the Uniform Civil Procedure Rules 2005 (NSW).
(4) The matter is listed before the Common Law Registrar at 9 am on 10 May 2017.
(5) The plaintiff must pay the costs of the proceedings before me.

Catchwords:
PROCEDURE – civil – application for summary dismissal – whether failure to prosecute with due despatch – whether claim doomed to failure

PROCEDURE – civil – application of defendant to strike out statement of claim of plaintiff – whether no reasonable cause of action disclosed
DAMAGES – reflective loss – diminution in value of shares – whether prohibition on recovery – whether separate and distinct from company's loss – whether personal loss suffered by plaintiff
Legislation Cited: Uniform Civil Procedure Rules 2005 (NSW), rr 12.7(1), 13.4(1)(b), 14.24
Cases Cited: Christensen v Scott [1996] 1 NZLR 273
Ekes v Commonwealth Bank of Australia [2014] NSWCA 336
Foss v Harbottle (1843) 67 ER 189
Gould v Vaggelas (1985) 157 CLR 215; [1985] HCA 75
Johnson v Gore Wood & Co [2002] 2 AC 1
Prudential Assurance Co Ltd v Newman Industries Ltd (No 2) [1982] Ch 204
Sutherland v GHR Accounting and Anor [2015] NSWSC 1946
Sutherland v GHR Accounting [2017] NSWSC 100
Category: Procedural and other rulings
Parties: Richard Craig Sutherland (Plaintiff)
GHR Accounting (Defendant)
Representation:
Counsel:
C J Peadon (Defendant)
Solicitors:
Self-represented (Plaintiff)
Colin Biggers & Paisley Lawyers (Defendant)

File Number(s): 2015/236599
Publication restriction: Nil

Judgment

Introduction

By way of a notice of motion filed as long ago as 31 May 2016, GHR Accounting Group Pty Ltd (the defendant in the substantive proceedings) seeks the following orders with regard to a claim brought by Mr Richard Sutherland (the plaintiff). The first, pursuant to r 12.7(1) of the Uniform Civil Procedure Rules 2005 (NSW) (the Rules), is an order that the latest iteration of the statement of claim of the plaintiff be struck out. The second, pursuant to r 13.4(1)(b) of the same Rules, is an order that the proceedings be dismissed. At a hearing conducted before me on 15 February 2017, the plaintiff, who is unrepresented, resisted both orders.

Background

The background of this matter is dealt with extensively in the judgment of Hall J in Sutherland v GHR Accounting and Anor [2015] NSWSC 1946, and concisely in my judgment of Sutherland v GHR Accounting [2017] NSWSC 100. I shall set out the background yet again, albeit very briefly.
The plaintiff was the controlling mind…

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: [2017] NSWSC 373
Decision Date: 07 April 2017

CaseChat Overview and Summary

In Sutherland v GHR Accounting (No 3), the plaintiff, Mr Sutherland, sought to recover damages from the defendants, GHR Accounting, for losses incurred following the collapse of a company in which he held shares. The defendants moved to strike out the plaintiff's statement of claim and for summary dismissal on the basis that the plaintiff's claims were doomed to fail and that there had been a failure to prosecute with due despatch. The matter was heard in the Federal Court of Australia.

The court had to determine whether the plaintiff's claim was struck out due to the absence of a reasonable cause of action and whether the plaintiff's claim for diminution in value of shares constituted reflective loss, which is not recoverable. The court also considered whether the plaintiff's loss was separate and distinct from the company's loss and whether the plaintiff had suffered a personal loss.

The court held that the plaintiff's statement of claim disclosed a reasonable cause of action, and therefore, the application to strike out was dismissed. The court further found that the plaintiff's claim for diminution in value of shares was not reflective loss, as it was a separate and distinct loss suffered by the plaintiff personally, rather than being a loss suffered by the company. The court also held that the plaintiff's failure to prosecute with due despatch did not warrant summary dismissal.

The court ordered that the defendants' application to strike out the statement of claim and for summary dismissal be dismissed. The case proceeded to trial on the merits of the plaintiff's claims.

Orders