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Treadwell v Hickey

Treadwell v Hickey

Case [2009] NSWSC 1395 16 December 2009

Breach of Contract

Unconscionable Conduct

Assignment of Legal Chose in Action

Joinder of Parties

Contract Law

Corporate Law & Governance

Equity

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CITATION: Treadwell v Hickey [2009] NSWSC 1395

HEARING DATE(S): 23/11/09, 24/11/09, 25/11/09, 26/11/09

JUDGMENT DATE :
16 December 2009

JURISDICTION: Equity Division

JUDGMENT OF: Barrett J

DECISION: Proceeding dismissed with costs.

CATCHWORDS: PROFESSIONS AND TRADES - accountants - accountant in private practice retained by group of companies - alleged breach of retainer and negligence - scope of retainer - whether accountant required to act otherwise than on clients' instructions and information given by clients - whether breaches when payroll tax registration not obtained by client and business activity statements not lodged by client - CONTRACT - alleged breaches of contract concerning laptop computer and loan - no matter of principle - CORPORATIONS - winding up - winding up in insolvency - automatic set-off under Corporations Act s 553C(1) - set-off inoperative under s 553C(2) if person seeking it had notice of fact of insolvency at time of giving or receiving credit - need for insolvency to be proved to activate s 553C(2) - insolvency not proved - EQUITY - general principles - assignments in equity - assignment of legal chose in action - where assignee of causes of action commences proceedings before notice of assignment given to the defendant - assignor not made a party to the proceedings at inception - but later joined - whether recovery of common law remedy by assignee precluded - PROCEDURE - joinder of parties - application at start of trial by plaintiff equitable assignee to join assignor as party - application opposed by defendant - application granted

LEGISLATION CITED: Conveyancing Act 1919, s 12
Corporations Act 2001 (Cth), ss 95A, 436A, 553C
Limitation Act 1969, s 63(2)

CATEGORY: Principal judgment

CASES CITED: Australian Securities and Investments Commission v Plymin [2003] VSC 123; (2003) 175 FLR 124
Barton v Atlantic 3 Financial (Australia) Pty Ltd [2004] QSC 376; (2004) 212 ALR 348
Equus Financial Services Ltd v Glengallan Investments Pty Ltd (unreported, QCA, 19 May 1994, BC9404553)
Gye v McIntyre [1991] HCA 60; (1991) 171 CLR 609
Holt v Heatherfield Trust Ltd [1942] 2 KB 1
Jennings v Credit Corp Australia Pty Ltd [2000] NSWSC 210; (2000) 48 NSWLR 709
Long Leys Co Pty Ltd v Silkdale Pty Ltd (1991) 5 BPR 11,512
McIntosh v Shashoua [1931] HCA 56; (1931) 46 CLR 494
National Mutual Life Nominees Ltd v National Capital Development Commission (1975) 6 ACTR 1
Norman v Federal Commissioner of Taxation [1963] HCA 21; (1963)109 CLR 9
Performing Right Society Ltd v London Theatre of Varieties Ltd [1924] AC 1
Powell v Fryer [2001] SASC 59; (2001) 159 FLR 433
Purdon v Purdon [2007] NSWSC 141
Re Westerton; Public Trustee v Gray [1919] 2 Ch 104
Southern Cross Interiors Pty Ltd v Deputy Commissioner of Taxation [2001] NSWSC 621; (2001) 53 NSWLR 213
Stein v Blake [1995] UKHL 1; [1996] AC 243
Thomas v National Australia Bank Ltd [1999] QCA 525; [2000] 2 Qd R 448
Weddell v J A Pearce…

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.

Continue reading Treadwell v Hickey

Details

AGLC: Treadwell v Hickey [2009] NSWSC 1395
Case: [2009] NSWSC 1395
Decision Date: 16 December 2009

CaseChat Overview and Summary

The case of Treadwell v Hickey involved a dispute between the plaintiff, Treadwell, and the defendant, Hickey, an accountant in private practice. The plaintiff alleged that the defendant breached his retainer agreement and was negligent in his professional services. Treadwell, who owned a group of companies, retained Hickey to provide accounting services. The core of the dispute centred on whether the defendant's actions or inactions constituted a breach of the retainer, particularly regarding the failure to obtain a payroll tax registration and the non-lodgement of business activity statements. Additionally, the plaintiff claimed breaches concerning a laptop computer and a loan agreement. The case was heard and determined in the Federal Court of Australia.

The central legal issues revolved around the scope and terms of the retainer between the parties, whether the accountant was required to act independently or strictly on the instructions and information provided by the client, and if the accountant's failure to act in certain areas constituted a breach of the retainer agreement. The court also needed to decide if the accountant's conduct was negligent and whether such negligence caused the plaintiff's losses. Furthermore, the case addressed the enforceability of an automatic set-off under the Corporations Act and the implications of an assignment of legal causes of action without proper joinder of parties at the inception of the proceedings.

The court held that the accountant's retainer did not require him to act independently of the clients' instructions and information. Therefore, no breach occurred in this regard. Regarding the payroll tax registration and business activity statements, the court found that the accountant's failure to act did not constitute a breach of the retainer. Concerning the laptop computer and loan, the court concluded that these were separate matters and did not involve a breach of the retainer. The court also determined that the set-off provision under the Corporations Act was inoperative as the insolvency of the assignor had not been proved. Lastly, the court ruled that the joinder of the assignor as a party, despite the initial omission, did not preclude the assignee from recovering the common law remedy. Consequently, the plaintiff's claims were dismissed.

The Federal Court of Australia ordered that the plaintiff take nothing by his action and that he pay the defendant's costs. The court found that the plaintiff's claims against the defendant were unfounded, and no breaches of the retainer agreement or acts of negligence had occurred. The joinder of the assignor as a party did not affect the outcome of the proceedings. The defendant was entitled to recover his costs from the plaintiff.

Orders