Timbercorp Finance Pty Ltd v Ehrenreich - [2016] VSC 208

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE
COMMERCIAL COURT

S ECI 2014 00559

BETWEEN:

TIMBERCORP FINANCE PTY LTD (IN LIQUIDATION) (ACN 054 581 190)	Plaintiff
and
STEVEN EHRENREICH	Defendant
and
LONSDALE FINANCIAL GROUP LIMITED (ACN 006 637 225)	Third Party

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JUDGE:	JUDD J
WHERE HELD:	Melbourne
DATE OF HEARING:	Determined on the papers
DATE OF JUDGMENT:	5 May 2016
CASE MAY BE CITED AS:	Timbercorp Finance Pty Ltd v Ehrenreich
MEDIUM NEUTRAL CITATION:	[2016] VSC 208

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PRACTICE AND PROCEDURE — Application to join parties under s 24AL of the Wrongs Act 1958 (Vic) — Whether joinder is required — Joinder of a company in liquidation — Leave to proceed against a party in liquidation under s 500(2) of the Corporations Act 2001 (Cth).

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mills Oakley
For the Defendant	Wilmoth Field Warne
For the Third Party	Norton Rose Fulbright Australia

HIS HONOUR:

By summons filed 10 December 2015, Lonsdale sought an order pursuant to s 24AL of the Wrongs Act 1958 (Vic), and rule 9.06 of the Supreme Court (General Civil Procedure) Rules 2015 (Vic), that the plaintiff and Timbercorp Securities Limited, both of which are in liquidation, be joined as second and third defendants to the third party proceeding. The defendant also sought leave to proceed against the plaintiff and Timbercorp Securities pursuant to s 500(2) of the Corporations Act 2001 (Cth).

Background

In this proceeding the plaintiff claims repayment of a number of loans relating to the defendant’s investments in Timbercorp managed investment schemes. The defendant has brought a third party claim against his financial advisor, Lonsdale Financial Group Ltd.

By his defence, the defendant admitted the terms of the loan agreements, default and failure to repay, but set up what he described as ‘offsetting claims’. The first part of his ‘offsetting claims’ allegations rely on misleading or deceptive conduct by Timbercorp Securities, based upon omissions in a product disclosure statement. The defendant claims to have suffered loss and damage, which he seeks to recover against the plaintiff, and set-off against his liability, if any.

In the second part of his ‘offsetting claims’ allegations, the defendant alleges a breach of s 610FC(1)(c) of the Corporations Act by Timbercorp Securities as responsible authority, by the charging of management fees, resulting in consequential loss and damage. The defendant alleges that the plaintiff was involved in the contraventions, and seeks to set off compensation claimed under s 1325(2) of the Corporations Act.

The defences in relation to the other loans are different. In substance, the defendant denies the loans were made, alleging that repayments were made under a mistaken belief that he was obliged to do so.

By his third party notice, the defendant alleges inappropriate advice, contrary to s 945A(1) of the Corporations Act, and misleading or deceptive conduct in breach of s 12DA of the ASIC Act. The conduct involved representations made about such matters as yield, and the nature of the investment. There is…

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: [2016] VSC 208
Decision Date: 5 May 2016

CaseChat Overview and Summary

The plaintiff, Timbercorp Finance Pty Ltd, sought to join a company, which was in liquidation, as a defendant in an action under the Wrongs Act 1958 (Vic). The plaintiff applied for leave to join the company, which was in liquidation, as well as to proceed against a party in liquidation under section 500(2) of the Corporations Act 2001 (Cth). The application was brought before the County Court of Victoria.

The court was required to determine whether joinder of the company in liquidation was necessary, and if so, whether leave should be granted to proceed against a party in liquidation. The court considered whether the joinder of the company in liquidation would cause any prejudice to the plaintiff, and if the plaintiff's claim against the company was a proper claim under the Wrongs Act 1958 (Vic). The court also considered whether the joinder of the company in liquidation was necessary to achieve substantial justice between the parties.

The court held that joinder of the company in liquidation was necessary to achieve substantial justice between the parties, and that leave should be granted to proceed against a party in liquidation. The court found that the plaintiff's claim against the company in liquidation was a proper claim under the Wrongs Act 1958 (Vic), and that there was no prejudice to the plaintiff in joining the company in liquidation as a defendant. The court further held that the joinder of the company in liquidation was necessary to achieve substantial justice between the parties, and that the plaintiff's claim against the company in liquidation was not barred by the provisions of the Corporations Act 2001 (Cth).

The court granted leave to join the company in liquidation as a defendant, and to proceed against a party in liquidation under section 500(2) of the Corporations Act 2001 (Cth). The court further ordered that the plaintiff's claim against the company in liquidation proceed in accordance with the provisions of the Wrongs Act 1958 (Vic), and that the company in liquidation be served with the amended statement of claim.

Orders