Tropical Hire Pty Ltd (in LIQ) v Simpson & Ors. (No. 2)
[2015] QDC 309
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- Tropical Hire Pty Ltd (in LIQ) v Simpson & Ors. (No. 2)[2015] QDC 309
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Tropical Hire Pty Ltd (in LIQ) v Simpson & Ors. (No. 2)[2015] QDC 309
Tropical Hire Pty Ltd (in LIQ) v Simpson & Ors. (No. 2)[2015] QDC 309
DISTRICT COURT OF QUEENSLAND
CITATION: | Tropical Hire Pty Ltd (in LIQ) v Simpson & Ors. (No. 2) [2015] QDC 309 |
PARTIES: | TROPICAL HIRE PTY LTD (ACN 119 814 587) (in Liquidation) (Applicant) and SANDE PALGRAVE SIMPSON (Respondent) and DUANE PATRICK O'CONNOR (First Third Party) and OTAS INVESTMENT HOLDINGS PTY LTD (ACN 112 742 800) (Second Third Party) |
FILE NO/S: | TD 169/2014 |
DIVISION: | Civil |
PROCEEDING: | Application |
ORIGINATING COURT: | District Court at Townsville |
DELIVERED ON: | 02 December 2015 |
DELIVERED AT: | Townsville |
HEARING DATE: | 13 October 2015 |
JUDGE: | Durward SC DCJ |
ORDERS: | 1 Application dismissed 2 Costs reserved |
CATCHWORDS: LEGISLATION: CASES: | PRACTICE & PROCEDURE – REQUEST TO DISPENSE WITH SIGNATURE OF OTHER PARTY ON REQUEST FOR TRIAL DATE – where pleadings amended and not closed – where disclosure not complete – where third parties involved – where defendant not ready for trial – whether signature of defendant on request for trial date should be dispensed with. PRACTICE & PROCEDURE – TRIALS – THIRD PARTIES – SEPARATE TRIALS – where plaintiff seeks trial against defendant but not against third parties – whether common issues in both proceedings - where defendant and third parties seek mediation - where not in interests of justice to order separate trials. Uniform Civil Procedure Rules 1999 sections 5, 202, 203, and 469. Portland Downs pastoral Co Pty Ltd v Great Northern Developments Pty Ltd and Ors [2010] QSC 467; Tropical Hire Pty Ltd (in Liq) v Simpson [2014] QDC (unreported, 06 November 14); Ransard Pty Ltd v MM Properties Pty Ltd[2006] QSC 363; Mid Australia Pty Ltd v Around Australia Pty Ltd [2004] QSC 374; Port Pirie City & District Council v Leeders & Partners Pty Ltd [2001] SASC 208 |
COUNSEL: | Mr G. Humphries for the applicant. Mr C Wilson for the respondent. J Moore for the third parties. |
SOLICITORS: | Connolly Suthers Lawyers for the Applicant. Wilson Ryan & Grose Lawyers for the Respondent. Thynne & Macartney for the First and Second Third Parties. |
- [1]The plaintiff company (“the plaintiff”) is in liquidation. The proceeding has been commenced by the liquidator against the sole director and shareholder of the plaintiff, Mr Simpson (“the defendant”).
History
- [2]On 06 November 2014 I refused an application by the plaintiff for summary judgment against the defendant and granted an application for the provision of further and better particulars by the defendant. I ordered the plaintiff to pay the defendant’s costs of both applications on the standard bases: Tropical Hire Pty Ltd (in Liq) v Simpson [2014] QDC (unreported, 06 November 14) (“the first judgment”).
- [3]I refused the application for summary judgment on two bases: Firstly, the test in r292 of the Uniform Civil Procedure Rules 1999 (“UCPR”) was not made out by the plaintiff; and secondly, the Claim had not been amended even though the Statement of Claim had been amended and the application had been made in respect of the amended orders sought in the Statement of the Claim.
This application
- [4]The plaintiff has now sought an order pursuant to r469 UCPR that the Court dispense with the signature of the defendant on the Request for Trial Date made on 30 August 2015; and an order that the proceeding be set down on the call over list.
The third parties
- [5]Since the first judgment was delivered the defendant, with the consent or acquiescence of the plaintiff, joined by leave given on 17 June 2015 as First and Second Third Party respectively, an accountant one Duane Patrick O'Connor and OTAS Investments Holdings Pty Ltd (“the third parties”). The Third Parties had been the defendant’s and the plaintiff’s professional financial advisors and accountants.
Default judgement
- [6]On 31 July 2015, a Request for Default Judgment was filed by the defendant against the first and second third parties and default judgment was ordered by the Registrar on the date. On 13 August 2015 the Registrar made an order with the consent of the defendant and the third parties, pursuant to r 290 UCPR, setting aside the default judgment.
- [7]Whilst the default judgment was prima facie regular and I have been informed of why it was set aside by consent in affidavit material, I do not consider that it is a matter that is relevant to the issue in this application.
The position of the defendant and the third parties
- [8]The plaintiff’s application is opposed: firstly, by the defendant on the ground that it is premature, the pleadings not having closed and disclosure by the plaintiff being incomplete; by the third parties on the ground that the Request for Trial Date refers to a trial against the defendant only and omits reference to a trial against them; and by both the defendant and the third parties on the grounds that if there is to be trial, there should be one hearing involving all the parties, but that there should first be a mediation conducted after the close of pleadings and completion of disclosure, before any listing of the matter for hearing.
Background
- [9]The plaintiff was incorporated on 22 May 2006. The defendant was sole director and shareholder of the plaintiff from that date until the plaintiff was wound up in insolvency on 28 February 2014. The plaintiff had carried on the business of fuel maintenance and electrical contracting.
- [10]In or about May 2009 the plaintiff sold the business. The defendant disposed of the sale proceeds. The debts of the plaintiff were not completely paid. So far as is relevant, a substantial indebtedness to the Australian Taxation Office (“ATO”) was not completely acquitted.
- [11]The plaintiff’s claim is that the defendant breached his duties as a director. There is a proof of debt of the ATO. The director’s duties are admitted by the defendant, but he denies he was in breach of those duties.
- [12]The defendant has pleaded that the plaintiff, when sold, had combined assets exceeding the sale price; that he had relied on advice provided by the plaintiff’s accountant about, inter alia, acquitting any total indebtedness to the ATO; that he believed the accountant had attended to all the financial affairs of the plaintiff; that he had acted in good faith in disposing of the proceeds of sale, which were received in three payments each in 2009, 2010, 2011 respectively; and that he had caused the sum of $118,157.00, to be paid to the ATO on 16 July 2013, on the advice of the accountant.
The first hearing of this application
- [13]Judge Baulch SC heard this application on 20 October, 2015 and made an interim order adjourning the application and directed that the application be served on the third parties. The application was adjourned and listed before me.
- [14]In the course of his Honour’s reasons for the orders, he said that “the multiplicity of issues raised as between the defendant and the third parties are a matter of legitimate concern for the plaintiff. It seems to me the plaintiff could probably make a compelling case for trial of the issues between the plaintiff and the defendant to take place separately from those arising between the defendant and the third party. Whilst it must be acknowledged that there is some overlapping, the length of the trial is likely to be significantly increased, and the plaintiff’s exposure to costs increased accordingly”; and expressed curiosity as to why the third parties were not served in the first place and why a regular default judgment was set aside by consent.
- [15]None of those statements amounted to a ruling and were no more than obiter, it seems to me. However, they may have encouraged the plaintiff to make this application.
Submissions
Plaintiff
- [16]Mr Humphreys for the plaintiff submitted that the plaintiff’s position was straightforward and the plaintiff’s case was ready for trial. The defendant had a regular default judgment but consented to it being set aside but had given no explanation, but maintained nevertheless that any trial must involve all the parties; the plaintiff’s claim and the defendant’s third party claim dealt with separate issues, further disclosure would occur if the defendant identified what it sought by way of further documents, he not having brought his own application about that issue; the recently filed Amended Statement of Claim only increased quantum (by addition of an indebtedness to Telstra Corporation which has nothing to do with the third parties); there were no common issues; and that the plaintiff’s claim can be dealt with more cost effectively as a separate trial. He submitted that pre-liquidation conduct was irrelevant, the winding-up of the plaintiff was not opposed, the defendant had been a director of the plaintiff and a taxation debt was unpaid.
Defendant
- [17]Mr Wilson for the defendant submitted that the recently Amended Statement of Claim raised new facts, required further disclosure and caused consequential amendments to be made to the Third Party Statement of Claim; there are common issues between the plaintiff and the defendant and the defendant and the third parties; that the proceedings should be heard together; and that the defendant’s consent to setting aside the default judgment was appropriate and was consistent with the philosophy of r5 UCPR.
Third parties
- [18]The third parties expressed uncertainty as to why the application to proceed separately against the defendant had been made, because there were no exceptional circumstances. It was also submitted that the exclusion of the third party proceedings from the plaintiff’s action made it difficult, if not impossible, to pursue genuine efforts at resolution, such as a mediation. It was asserted that the plaintiff appeared to wish to side-step any mediation process.
- [19]It was submitted that the rights and liabilities of all of the parties should be determined at the same time to prevent possible different results from two proceedings, to avoid multiplicity of actions and to save expense involved in separate hearings. It was also submitted that considerations of justice in the circumstances were relevant and that it was undesirable to have witnesses such as the first third party or employees of the second third party to be called to give evidence in separate proceedings, that the same judge might not necessarily hear both proceedings, that the plaintiff had consented to the defendant’s application to bring third party proceedings in the first place and that a single hearing was appropriate and consistent with r203(2) UCPR.
Discussion
- [20]The defendant’s Second Amended Defence added his response to the Telstra debt. He has yet to amend the Third Party Statement of Claim and the Third parties have yet to plead.
- [21]Mr Humphries submitted that the Telstra debt (and the ATO debt, for that matter) had nothing to do with the Third Parties. The defendant of course maintains the contrary position. There is prima facie an issue about the defendant’s reliance on his accountant in the discharge of his duties as a company director that will most likely have to be determined on a trial.
- [22]Rule 469 UCPR provides as follows:
“469Dispensing with signature on request for trial date
On the application of a party who has signed a request for trial date, the court may dispense with the signature of another party who has been served with the request under rule 467 (2) and has not signed and returned it within 21 days after service.”
- [23]A party who wishes to utilise this rule must be ’ready for trial’ in terms of the matters listed in r467 (4): in other words be compliant, in so far as appears relevant in this case, with:
Disclosure and inspection,
Any order requiring particulars,
Completion of all necessary steps in the proceeding,
Having all necessary witnesses available, and
The proceeding being in all respects ready for trial.
- [24]In Ransard Pty Ltd v MM Properties Pty Ltd [2006] QSC 363 Robin AJ held that such an application was premature where an amended statement of claim had not been particularised to the defendant’s and the court’s satisfaction. In Mid Australia Pty Ltd v Around Australia Pty Ltd [2004] QSC 374 a similar result arose where the defendant was waiting to receive an experts report. Of course, a trial date may nevertheless be set where there has been unreasonable delay by a party.
- [25]The defendant was not ‘ready for trial’ when the application was filed or when the application was heard. The correspondence exhibited to affidavits filed in the application demonstrate that. The pleadings are not complete and there is outstanding disclosure to be completed by the plaintiff. The plaintiff’s application is premature.
- [26]However, there is also the position of the third parties to consider. Do the circumstances warrant or justify a departure from r203 UCPR by an order for separate trials as between the plaintiff and the defendant and the defendant and the third parties? Rule 203 provides:
“203Trial
(1)A third party may appear at, and take part in, the trial in the proceeding as the court directs.
- (2)At the trial, the issues between the defendant who included the third party and the third party must be tried concurrently with the issues between the plaintiff and the defendant, unless the court otherwise orders.”
- [27]In Portland Downs Pastoral Co Pty Ltd v Great Northern Developments Pty Ltd & Ors [2010] QSC 467, Applegarth J, by reference to r203 (2), referred at [32] to the summary of Lander J in Port Pirie City & District Council v Leeders 7 partners Pty Ltd [2001] SASC 208 at[36]:
“First, a trial which involves all the parties simultaneously is the most effective way of deciding competing rights. Secondly, all parties obtain a decision at the same time. There is no hiatus when one party is subject to a judgment but cannot prosecute a claim for contribution or indemnity… Thirdly, it avoids the possibility of conflicting findings and conflicting verdicts. It is inimical to the administration of justice for the court to be called upon to consider the same factual circumstances twice. One court may be presented with different material to another or reach different views on the credibility or reliability of witnesses with result that different findings of fact are made, and different and inconsistent verdicts reached.”
- [28]However, Lander J qualified that statement by stating [at 45] that “… there will be some cases where it is inappropriate for the third party proceedings to be heard at the same time as the primary proceedings. It is not possible to say that those circumstances will always have to be exceptional. Those circumstances will give rise to separate trials when it is in the interests of justice to do so.”
- [29]In Portland Downs Pastoral Applegarth J, applying the “interests of justice “ test, in effect, concluded that there were circumstances affecting the plaintiff that justified the separate trial of the primary proceedings.
- [30]Here the Defence, in simple terms, is that the defendant relied upon and acted on the advice of the third parties with respect to the debt to the ATO. The plaintiff contends that such reliance is irrelevant as a matter of law and the defendant cannot delegate his duties as a director to another or others. The third parties maintain that separate trials would, in effect, give rise to the difficulties that potentially arise, in the context of the matters that were submitted on the hearing of the application, by Mr Moore.
- [31]There is a common issue in both case in my view, in respect of the defendant’s allegation of reliance on the advice of the third parties. Separate trial are not warranted.
- [32]The other relevant matter is a mediation. The different positions taken on the ‘reliance’ issue, as a matter of law, may not be capable of resolution other than by judgment. However, a mediation should take place before any trial date is ordered.
Conclusion
- [33]I consider the plaintiff’s application to have been made prematurely. There are no or no sufficient circumstances upon which a departure from r203 (2) is justified, applying the “interests of justice “test.
- [34]The plaintiff’s application is refused.
Costs
- [35]I reserved costs at the conclusion of the hearing
ORDERS
1 Application refused
2 Costs reserved