JUDGE:	M Osborne J
WHERE HELD:	Melbourne
DATE OF HEARING:	23, 24 March 2022
DATE OF JUDGMENT:	26 August 2022
CASE MAY BE CITED AS:	Zphere Pty Ltd v Pakis
MEDIUM NEUTRAL CITATION:	[2022] VSC 496

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PARTNERSHIP – Res Judicata – Whether partner in accountancy firm a privy in interest of partners who had previously brought a proceeding against a defaulting partner which had been finally determined by consent orders – Ramsay v Pigram (1968) 118 CLR 271 – Tomlinson v Ramsay Food Processing (2015) 256 CLR 507 – House of Spring Gardens v Waite & Ors [1991] 1 QB 241 – Page v McKensey & Ors [2003] NSWSC 759 – Smith v Rynne [2005] NSWCA 77.

CONTRACT – Whether manager of partnership entered into deed of settlement on behalf of partners with an entitlement – Whether authorised to enter into deed – Whether intention to enter into deed as agent for principal.

ABUSE OF PROCESS – Whether proceeding should be stayed on abuse of process grounds – Whether second action unduly or oppressively burdensome to defendant – Whether defendant faces double jeopardy – Johnson v Gore Wood [2002] AC 1 – Walton v Gardiner (1993) 177 CLR 378 – Chickabo Pty Ltd v Zphere Pty Ltd [2019] VSC 73 – Chickabo Pty Ltd v Zphere Pty Ltd (No 3) [2020] VSC 464.

APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr M Garner	K & L Gates
For the Defendant	Mr B Gibson with Mr D Porteous	Mills Oakley

TABLE OF CONTENTS

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

The Moore Stephens partnership, its deed, and the alleged wrongful gain.......................... 2

The Chickabo Proceeding................................................................................................................ 3

The Pakis Proceeding and the Zphere Proceeding...................................................................... 7

A comparison of the claims made in the Chickabo Proceeding and the Pakis proceeding 9

Submissions of the parties and summary of conclusions........................................................ 27

The Res Judicata issue..................................................................................................................... 28

Are the Chickabo Proceeding Final Orders a final order or judgment on the merits?...... 29

Is Mr Pakis a privy of the Chickabo Plaintiffs?......................................................................... 30

Can Mr Pakis be a privy in interest of the Chickabo Plaintiffs if he did not have notice of the Chickabo Proceeding?............................................................................................................... 39

Some analogous authorities?......................................................................................................... 42

The Gain-based claim: the account of profits and constructive trust in the Gain and its traceable proceeds....................................................................................................................................... 45

The loss-based claims: section 32 of the Partnership Act, equitable compensation, and damages for breach of the deed...................................................................................................................... 57

The Chickabo Settlement Deed Issue.......................................................................................... 67

Abuse of process.............................................................................................................................. 77

Conclusion......................................................................................................................................... 84

HIS HONOUR:

Introduction

This proceeding is complex. It is convenient to offer a short summary at the outset. Given that the proceeding involves intricate issues of legal personality and the law of partnership, such a summary is likely to…

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 Zphere Pty Ltd v Pakis

Details

AGLC: Zphere Pty Ltd v Pakis [2022] VSC 496
Case: [2022] VSC 496
Decision Date: 26 August 2022

CaseChat Overview and Summary

Zphere Pty Ltd sought to recover money from Pakis, an individual who had been a partner in an accountancy firm. The firm had previously entered into a settlement deed with one of its other partners, who had defaulted on their financial obligations. The current proceedings were brought by Zphere on behalf of the firm, and Pakis sought to have the matter dismissed on the basis that the claim was res judicata, an abuse of process, or that the settlement deed was not binding. The case was heard by the Supreme Court of Victoria.

The court had to determine whether the current claim was barred by the doctrine of res judicata, as it was brought by a party who was not a party to the previous proceeding. The court also had to consider whether the manager of the firm was authorised to enter into the settlement deed on behalf of the firm and whether the deed was binding. Finally, the court had to consider whether the proceeding should be stayed on the basis that it was an abuse of process, unduly or oppressively burdensome to the defendant, or that the defendant faced double jeopardy.

The court found that the claim was not barred by res judicata, as the previous proceeding did not involve the current claimant and did not determine the rights and liabilities of the current claimant. The court also found that the manager of the firm was authorised to enter into the settlement deed on behalf of the firm, and that the deed was binding. The court found that the proceeding was not an abuse of process, and that the defendant did not face double jeopardy. The court dismissed the application to stay the proceeding.

The court ordered that the proceeding be not stayed, and that the matter proceed to trial.

Orders