Imagatec Pty Ltd v Gosley-Fuller
[2012] QDC 15
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- Imagatec Pty Ltd v Gosley-Fuller[2012] QDC 15
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Imagatec Pty Ltd v Gosley-Fuller[2012] QDC 15
Imagatec Pty Ltd v Gosley-Fuller[2012] QDC 15
DISTRICT COURT OF QUEENSLAND
CITATION: | Imagatec P/L v Gosley-Fuller [2012] QDC 15 |
PARTIES: | IMAGATEC PTY LTD (Plaintiff) v NARELLE GOSLEY-FULLER (Defendant) |
FILE NO/S: | 4515/2011 |
DIVISION: | Applications |
PROCEEDING: | Application in a proceeding |
ORIGINATING COURT: | Brisbane |
DELIVERED ON: | 14 February 2012 |
DELIVERED AT: | Brisbane |
HEARING DATE: | 1 February 2012 |
JUDGE: | Dorney QC, DCJ |
ORDERS: |
|
CATCHWORDS: | PROCEDURE – Stay of proceedings – Where both Federal Magistrates Court of Australia proceedings and Queensland District Court proceeding concurrent – Considerations relevant to stay – Proceeding in District Court raising a question already arising, with others, in earlier commenced Family Court of Australia proceedings – Whether District Court proceeding an abuse of process District Court of Queensland Act 1967 (Qld) ss 69(1), 69(2)(c) Family Law Act 1975 (Cth) Part VIIIA, ss 79, 90AE, 90AF Uniform Civil Procedure Rules 1999 (Qld) rr 16, 16(g), 171(1)(e) Batistatos v Roads and Traffic Authority (NSW) (2006) 226 CLR 256 Century Yuasa Batteries Pty Ltd v Century Batteries Holdings Pty Ltd [2004] QSC 271 Dupas v The Queen (2010) 241 CLR 237 Flynn v Suncorp-Metway Ltd [2009] QSC 175 Henry v Henry (1999) 185 CLR 571 Jago v District Court of New South Wales (1989) 168 CLR 23 Kinglsey v Kendle [2010] FamCA 598 Oswal v Burrup Fertilisers Pty Ltd (Receivers and Managers Appointed) [2011] FCAFC 117 Puddy & Grossvard and Anor [2010] FLC 93-432 R v Higgins [2006] QDC 369 Sterling Pharmaceuticals Pty Ltd v The Boots Company (Australia) Pty Ltd (1992) 34 FCR 287 Union Steamship Co of New Zealand v The Ship Caradale (1937) CLR 277 |
COUNSEL: | A C Barlow for the Plaintiff C A Johnstone for the Defendant |
SOLICITORS: | Family Law Doyle Keyworth and Harris for the Plaintiff Dixie Ann Middleton and Associates for the Defendant |
Introduction
- [1]In this proceeding the plaintiff company claims, essentially, against the defendant $174,418.23 as equitable compensation for breach of fiduciary duty. The Claim and Statement of Claim were filed on 9 November 2011.
- [2]The defendant, by an action in the Federal Magistrates Court of Australia (“FMCA”), Brisbane Registry, filed on 31 August 2010, initiated proceedings concerning parenting and property settlement orders. The respondent there is the defendant’s husband, who is also one of two directors of the plaintiff company. The relevant ASIC extract shows that the second director is Trevor Robert Turnbull. There is no evidence that the defendant’s husband is the sole directing mind of the company.
- [3]In the FMCA proceedings, the defendant’s husband, Christopher Robert Gosley, by an Amended Response to the Initiating Application, filed 3 November 2010, applied for, amongst other orders:-
“THAT upon determination of the net value of the pool the Court order the Wife to repay to (the plaintiff company) 50% of the total amount of the funds she misappropriated and that the Husband be responsible for repayment of the balance 50% out of his share of the funds.” (emphasis added)
- [4]By leave given, instanter, during the hearing of this application on 1 February 2012, the applicant/defendant amended her application filed 11 January 2012 and now seeks an order that the present District Court proceeding be stayed pursuant to r 16 of the Uniform Civil Procedure Rules 1999 (“UCPR”).
- [5]While the plaintiff objected to the amendment – which I granted despite such objection – the objection appeared to be based more upon whether the applicant/defendant had identified the correct basis for such an application to “stay”. I will deal with this, in detail, later.
Comparison of the Different Proceedings
- [6]It is clear from the Statement of Claim filed here that, primarily, the plaintiff alleges that during the defendant’s period of employment with the plaintiff, and without authorisation, the defendant transferred from a relevant account of the plaintiff to a Westpac Altitude Visa account of her own the sum of $151,181.24 (designated the “unauthorised funds”). Secondly, on the same basis, it is alleged that the defendant paid expenses of a personal nature using the plaintiff’s funds in an amount of $11,586.73. Thirdly it is alleged, on the same basis, that the defendant paid expenses of a personal nature in the amount of $45.82 on 22 January 2009 which the plaintiff “refunded to her”. Fourthly, on the same basis, it is alleged that the defendant incurred expenses of a personal nature in the amount of $2,687.76 “for which (the plaintiff) paid”. Fifthly, it is alleged that, as a consequence of the defendant “depriving (the plaintiff) of the transferred funds and the personal funds” the plaintiff incurred shortfall interest charges of $7,175.21 for the 2008 financial year and $1,361.47 for the 2009 financial year.
- [7]The applicant/defendant’s Defence, relevantly, admits that she was employed for the relevant employment period, that she was employed in a part-time capacity and that she provided relevant book-keeping and administration services. Further, she admits that, with respect to the unauthorised funds, the personal funds and the other funds mentioned that, during her employment with the plaintiff, she did transfer money from the plaintiff’s bank account to her credit card, paid family expenses using the plaintiff’s funds, reimbursed herself for family expenses for the plaintiff’s funds, and incurred family expenses that were paid by the plaintiff. What she denies is that she did those things without authorisation, alleging that she was directed to use such funds to pay family expenses “by” her husband (who was then, as now, a director of the plaintiff) and had the plaintiff’s actual or apparent authority to give such a direction.
- [8]Stripped of irrelevant issues (for present purposes) such as the seeking of parenting orders, relevant issues in the FMCA proceedings are the type of orders the Court should make for final settlement of the property and financial needs of the parties. And arising from those issues is the question whether an order for the applicant/defendant to “repay” to the plaintiff 50% of the total amount of the funds she is alleged to have “misappropriated”, with the husband being “responsible” for repayment of the balance 50%, is the same, or substantially the same, question as arises in this proceeding in the District Court. As noted, the FMCA proceedings seek an order to “(re)pay”.
- [9]At paragraphs 96 to 98 (inclusive) of the affidavit filed by the defendant’s husband in the FMCA proceedings, he deposes to the basis of the alleged misappropriation. As well, he states that he “engaged” a forensic Chartered Accountant firm, Grant Thornton, to conduct an examination, amongst other things, of the books of the plaintiff and to advise the extent to which the defendant had “unilaterally (and without the knowledge and/or consent of either my Co-Director or me) removed funds from the Company bank account”. At paragraph 125 of the same affidavit, he states that he seeks that the FMCA take into account in due course the extent to which the “defendant’s conduct” had “the effect” of “creating a liability” between him and the plaintiff company, asserting that he had earlier deposed to engaging Grant Thornton for the purpose of ascertaining the “extent of the liability which I expect I’ll be responsible for discharging in due course”.
- [10]That report of Grant Thornton demonstrates that the author of the report was instructed to report by the defendant’s husband, on behalf of the plaintiff company, and that he was instructed that the plaintiff company was an entity “related” to the defendant’s husband. The report indicates that the sum identified by the author of the report is exactly the same amount as the sum of $151,181.24 referred to above as appearing in the plaintiff company’s Statement of Claim (apart from the deletion of the amount of 24 cents in the report).
- [11]In the FMCA proceedings, the defendant’s husband, as a procedural matter, had sought an adjournment of the defendant’s application for a determination of entitlement for a distribution from the matrimonial pool of assets pending the provision of that report by Grant Thornton “identifying the extent to which the wife has removed funds from … (the plaintiff company) …”.
Power to Stay
- [12]Because the District Court is a court of limited jurisdiction, its power is derived, essentially, from statute. In addition, certain inherent powers have been identified by the High Court as available for exercise when the relevant conditions for the use of that power are engaged.
- [13]As stated by McGill SC DCJ in R v Higgins [2006] QDC at 369, there is no doubt that the District Court has jurisdiction to stay a proceeding (in that case, an indictment): at [8]. Among the authorities used as a basis for that conclusion is Jago v District Court of New South Wales (1989) 168 CLR 23.
- [14]In Dupas v The Queen (2010) 241 CLR at 237, the High Court, after reference to cited authority, noted that from “early times” the courts had inherent power to see that their processes were not abused, and that the power existed to enable the courts to protect themselves and thereby safeguard the administration of justice: at 243 [14]. As later noted there, the joint reasons of Gleeson CJ, Gummow, Hayne and Crennan JJ in Batistatos v Roads and Traffic Authority (NSW) (2006) 226 CLR 256 (at 264-265 [8]) observed that this inherent power applies to “both civil and criminal proceedings”, adding that the power does so with somewhat different emphases according to its exercise: at 244 [16].
- [15]The High Court in Batistatos, when referring to the power of the New South Wales Supreme Court, indicated that there existed both that inherent power and power under the relevant rules of court to order a stay or dismissal of proceedings as an abuse of the process of the court: at 270 [25].
- [16]It is important to note that s 69(2)(c) of the District Court of Queensland Act 1967 states that, without affecting the generality of s 69(1), the District Court shall, in any proceedings in which jurisdiction is conferred under the relevant part, have “power” to grant relief “by staying the proceeding”.
- [17]Further, as relied upon by the applicant/defendant here, r 16 of the UCPR states that the Court may “stay a proceeding”: see r 16(g). It is unlikely, given the absence of a rule in the UCPR which expressly empowers an order to be made that a proceeding be stayed where there is an abuse of a process, that r 16(g) would not be given a liberal interpretation. It should be noted, in this context, that r 171(1)(e) applies the power to strike out all or part of a pleading where there is “an abuse of the process of the court”: that is not the application here.
- [18]In any event, the statutory conference under the relevant Act, if not the inherent power, would provide an appropriate source of power in this case. Thus, it is not to the point that the respondent/plaintiff might argue that an incorrect source of such power has been relied upon in the Amended Application.
The principles concerning a stay
- [19]As was held by Muir J (as he then was) in Century Yuasa Batteries P/L v Century Batteries Holdings P/L [2004] QSC 271, the proposition that a temporary stay of local proceedings may be granted to allow “common factual issues” to be determined in foreign proceedings, even where there is “not a complete identicality of issues and parties”, is “not in doubt”: at [48] relying upon Henry v Henry (1999) 185 CLR 571 (at 590). As also identified by him, in arriving at a determination it will normally be appropriate to have regard to considerations such as those listed by Lockhart J in Sterling Pharmaceuticals Pty Ltd v The Boots Company (Australia) Pty Ltd (1992) 34 FCR 287: at [48].
- [20]In Sterling Pharmaceuticals, the relevant considerations taken into account (at 291), included:
- which proceeding was commenced first;
- whether the termination of one proceeding was likely to have a material effect on the other;
- the public interest;
- the undesirability of two courts competing to see which of them determines common facts first;
- a consideration of circumstances relating to witnesses;
- whether work done on pleadings, particulars, discovery, interrogatories and preparation might be wasted;
- the undesirability of substantial waste of time and effort if it becomes a common practice to bring actions in two courts involving substantially the same issues;
- how far advanced proceedings are in each court;
- that the law should strive against the bringing of multiplicity of proceedings in relation to similar issues; and
- generally balancing the advantages and disadvantages to each party.
- [21]In the very recent decision of the Full Court of the Federal Court of Oswal v Burrup Fertilisers Pty Ltd (Receivers and Managers Appointed) [2011] FCAFC 117 the majority of the court, Mansfield and Foster JJ, with whom Dowsett J (although in dissent on the outcome) agreed, after consideration of many authorities including Sterling Pharmaceuticals, referred to the plurality (Dawson, Gaudron, McHugh and Gummow JJ) in Henry to the effect that it is prima facie vexatious and oppressive, in the strict sense of those terms, to “commence” a second or subsequent action in the courts of this country if an action is already pending with respect to the “matter in issue”: at [97] referring to Henry at 591.
- [22]Where, in Oswal, the majority and the minority disagreed was in the application of the relevant principles to the facts of that case. In contrast to the majority, Dowsett J held that, in that case, the primary judge did not have the luxury of being able to choose the case which should proceed, noting that he could either stay or dismiss the action in the Federal Court or allow the continuation of the abuse of process, adding that it would seem that all matters in dispute were capable of resolution in either the proceedings in the Federal Court or those in the Supreme Court of Victoria although, in either case, some amendment might be necessary: at [113]. He then concluded that a stay, rather than dismissing the action, was probably preferable, as it would keep open the possibility of future prosecution of the proceedings, should that course become desirable: at [113]. In contrast, the majority considered that it was open to the primary judge to decide that it was better to allow each of the actions to progress whilst the parties were left to resolve between themselves the better course of action for each of the proceedings: at [107]. It should be appreciated that there was not a complete overlap of issues between these two actions, although there was a common question for determination concerning payments totalling $A95,764.912, and, while there was not a complete overlap of parties, there was a possibility that some form of issue of estoppel might arise by reason of privity.
- [23]An example of the application of the principles enunciated in Henry is Flynn v Suncorp-Metway Ltd [2009] QSC 175. There, a proceeding begun by an Originating Application in the Supreme Court was stayed by de Jersey CJ because it raised “a question” that had already arisen, with others, in an earlier commenced Magistrates Court proceeding. In the lower court proceeding, the defendant was the same as in the Supreme Court proceeding and the plaintiffs were the applicant in the Supreme Court proceeding together with his mother and sister. It can, therefore, be seen both that there was a substantial identity both of parties and of questions.
- [24]Finally, in accordance with relevant principle, it is important here to determine the extent to which the FMCA’s determination of any question presently arising can bind the present plaintiff company. This arises from the often approved observation by Dixon J in Union Steamship Co of New Zealand v The Ship Caradale (1937) CLR 277 to the effect that multiple proceedings with respect to the same subject matter in different courts in Australia demonstrates that the “inconvenience and embarrassment of allowing two independent actions involving the same questions of liability to proceed contemporaneously in different courts needs no elaboration” (emphasis added): quoted in Henry (at 590). The important point, therefore, is the question of “liability”.
- [25]In that context, it is important to take account of the plurality judgment of Warnick and Boland JJ in Puddy & Grossvard and Anor where, after agreeing with Coleman J that there is power within the terms of the Family Law Act 1975 (Cth) to make an order that a party to a marriage pay an amount to a creditor, whether that creditor is a party or not, there is “doubt” that, leaving aside accrued jurisdiction, there is power: either to “bind” a creditor, even if a party to the property settlement proceeding, to accept, in satisfaction of a debt, less than the full amount; or to determine the merits and/or quantum of a creditor’s claim: at 84,691 [102]. The power given does not go to determining the “proof” of such debts “where liability is in issue”: at 84,691 [103]. They preferred to leave to one side, also, any consideration the powers under Part VIIIAA of that Act: at 84,691 [104] and 84,691-2 [110]. Coleman J, for his part, held that an “issue remains” whether the jurisdiction to make orders with respect to “debts” in reliance upon s 90AE (in Part VIIIAA) “and/or” s 79 extends to determining the existence and quantum of debts asserted by a creditor which are still, relevantly, “disputed”: at 84,684 [55].
Analysis
- [26]Belatedly, and without leave of the Court, although without opposition, the applicant drew the Court’s attention to the later single Judge decision in Kingsley v Kendle [2010] FamCA 598. Trench J, in dealing with an application brought against a company (which thereby became a party to the proceedings), made an order against that company pursuant to s 90AF (in Part VIIIAA). But it was only a restraining order, preventing the company from taking “any further proceedings” against the wife “to recover its debt before a specified date”. Despite the further written submissions concerning Kingsley (from the applicant), it is difficult to see its relevance to the present facts. Whatever the applicant might seek in the FMCA in the future is for her to determine – not for the Court to speculate on. Furthermore, there is no obligation on the respondent company to elect to become embroiled in the FMCA proceeding. Therefore, no “accrued jurisdiction”, or Part VIIIAA “relief”, has presently been pleaded there. Alternatively, even on the present FMCA pleadings - to the extent to which Part VIIIAA has been relied on - s 90AF(3)(c) requires “procedural fairness” to be accorded to any “third party”. This has not presently occurred. See, also, s 90AE(3)(c). The respondent/plaintiff has subsequently, also without leave, replied to the further submissions. That reply has concentrated, wrongly on my view, on the difference between the “causes of action”, and the necessity for identity of the same relief, or remedy.
- [27]Ignoring, for the moment, the lack of identity of the parties between the two proceedings and the issue of any lack of power in the Federal Magistrates Court to bind a third party by a finding in those proceedings, it is otherwise probable that on an application of the relevant considerations outlined in Sterling Pharmaceuticals (noting that they are not exhaustive) a stay might well have been exercised by this Court. Not only were the other proceedings commenced first, they were commenced a long time prior to this. The work done on procedural aspects concerning the alleged misappropriation in the Federal Magistrates Court might well be wasted, with a potential for a substantial waste of time and effort having been put into all things concerned with the preparation of the report of Grant Thornton. The proceeding here has only reached the stage of close of pleadings. These, of course, do not involve a complete consideration of all the relevant issues if they were to have been necessary to consider in full.
- [28]It must be accepted that, although the close association between the defendant’s husband and the plaintiff company has been amply demonstrated (particularly by the inferred acquiescence of the plaintiff company in the preparation of the report for the FMCA), what is decisive is the objective effect of the continuation of the District Court action, recognizing that there is no “requirement that the continuance of the action would involve moral delinquency on the part of the plaintiff”: see Batistatos at 281 [70].
- [29]Since it is inescapable that the proceedings in the FMCA do not involve the present plaintiff company as a party and that, therefore, there is no issue of accrued jurisdiction, or relief claimed pursuant to Part VIIIAA of the relevant Act for which procedural fairness has been accorded, with respect to the common question here, it must be decisive in this case that any finding made by the FMCA would not bind the plaintiff.
- [30]In such circumstances, whatever the merits otherwise for a stay might be on the application of general principles, it is proper for the plaintiff company in this case to seek vindication of its rights concerning the alleged breach of fiduciary duty in a court where a binding finding can be made upon that.
- [31]It is conceded that this may lead to difficulties about how the question which is common between these two proceedings is dealt with by the FMCA. It is of interest, although perhaps passing only, that in Oswal the majority noted that, whilst it was desirable (for the reasons expressed in Union Steamship) that either one action be heard and determined before the other or that, by appropriate orders, they be heard together, the primary judge considered the appropriate and sensible starting point was for discussion between the parties and their legal representatives to occur, rather than that a peremptory stay order be made: at [76]-[77]. Furthermore, the extensive time and significant costs already incurred in the FMCA are, or course, a matter for it, should it be necessary for that Court, in the final washup, to await the acceptance of the determination of the factual matters in a binding way insofar as it concerns the plaintiff company.
Summary
- [32]For the reasons that I have canvassed extensively here, it is not appropriate at this time in this case to order a stay of this proceeding.
- [33]Consequently, I will dismiss the application made for such a stay as appears in the Amended Application.
Costs
- [34]It is appropriate that costs, following the event, be that the applicant/defendant pay the respondent/plaintiff’s costs of and incidental to this application to be assessed on the standard basis.