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[2024] NSWSC 1500

Zagga Investments Pty Ltd v Walsh; Walsh v Preston Rowe Paterson Newcastle & Central Coast Pty Ltd (No 2)

Statement of Cross-Claim struck out; defendant/cross-claimant to pay the second cross-defendant’s costs of the motion

Catchwords

CIVIL PROCEDURE – pleadings – striking out – where defendant/cross-claimant has joined wrong cross-defendant to cross-claim – where defendant/cross-claimant has arguable case on his cross-claim – where cross-claim, in its current form, is nonetheless insufficiently pleaded

Cases cited

  • Frost v James Finlay Bank Limited [2001] Lloyd’s Rep. Bank. 302; [2001] 6 WLUK 524; Rehman v Santander UK Plc[2018] EWHC 748; [2018] 4 WLUK 127
  • Perre v Apand Pty Ltd (1999) 198 CLR 180;[1999] HCA 36

Legislation cited

  • Competition and Consumer Act 2010 (Cth), § 2 – Australian Consumer Law

Judgment

  1. [1]

    The background to this matter is set out in my judgment of 8 November 2024. [1]

  2. [2]

    The plaintiff, Zagga Investments Pty Ltd, brings these proceedings against the defendant, Mr Dylan Walsh. Zagga Investments seeks to recover some $3 million from Mr Walsh under a guarantee that Mr Walsh executed in relation to advances made by Zagga Investments to New Aged Projects No 2 Pty Ltd (“NAP2”), a company associated with Mr Walsh. NAP2 is now in liquidation.

  3. [3]

    Mr Walsh has made a cross-claim against Zagga Markets Pty Limited, a different company to Zagga Investments.

  4. [4]

    I am now dealing with the Notice of Motion of 5 November 2024 filed by Zagga Markets, which seeks to have Mr Walsh's Cross-claim against it struck out. I referred to that motion at [4] of my earlier judgment. I incorrectly referred to the motion as having been brought by Zagga Investments.

  5. [5]

    Mr Walsh's Cross-claim has the problems that I outlined at [21] to [27] of my earlier judgment.

  6. [6]

    There are further problems, so far as Mr Walsh's claim is formulated against the Zagga interests.

  7. [7]

    First, the cross-defendant is named as Zagga Markets. Zagga Markets was not the lender to NAP2 and, on the evidence before me, appears to be a stranger to the transaction. Mr Walsh has thus joined the wrong defendant.

  8. [8]

    If that were the only problem, it could doubtless be cured by simply substituting Zagga Investments for Zagga Markets.

  9. [9]

    There is, however, a wider problem. As best I can understand Mr Walsh's Cross-claim, he appears to contend that the lender to his company, NAP2, owed him, as guarantor of NAP2's debts, a duty of some kind concerning the correctness of the valuation or perhaps regarding the instructions given to the valuer. Those contentions, without more, cannot possibly impose on the lender a duty in favour of the borrower or the guarantor concerning the correctness of the valuation.

  10. [10]

    First, it is impossible to see how those circumstances could attract the principles that are necessary to be brought to bear when determining whether a duty of care exists in relation to pure economic loss. [2]

  11. [11]

    Further, there is authority from the United Kingdom which establishes, in terms, that a lender who receives a valuation relating to a proposed lending does not owe the borrower, let alone the guarantor of the borrower, a duty of care [3] .

  12. [12]

    As to the claim in the Cross-claim concerning misleading or deceptive conduct for the purpose of s 18 of the Australian Consumer Law, [4] the only allegations appear to be directed to the valuation itself save, perhaps for [49] which is in these terms:

  13. [13]

    The Cross-claim in its current form cannot be sustained.

  14. [14]

    I order that it be struck out.

Unofficial copy. Source: NSW Caselaw. Refer to the official version for authoritative text.