Case: Rambaldi v Spalla [2005] VSC 162
Outcome: referred to
The application was heard by Hansen J on 6 May 2005. Mr Randall appeared for Mr Rambaldi. Mr Spalla appeared in person. Mr Randall said that, although Mr Rambaldi had come to Court to put the option of allowing the officers of Irlmond to take over the litigation, "his preference is that the court declines to make the orders". Mr Spalla spoke also. He expressed disapproval of how Mr Rambaldi had acted in signing the Deed and said that he wished to take control of the litigation. At the conclusion of the hearing, his Honour declined to make the orders sought and gave reasons: see Rambaldi v Spalla [2005] VSC 162 (" Rambaldi "). 116 Hansen J found that he had insufficient information to form a view on the likelihood of success of Irlmond on appeal or at trial: Rambaldi at [19]. Therefore, he was unable to determine if it was in the best interests of the company to continue with the litigation. He noted that Mr Spalla had not made any "proposal by which the position of the company in relation to the adverse costs orders which are to be released under the settlement could be secured, that is to say if authority was given to Mr Spalla to continue with the proceeding, that the company would be no worse off than it would be in that respect under the settlement": Rambaldi at [20]. Similarly, his Honour noted that he had no "assurance beyond that stated by Mr Spalla, as to how the company's ongoing costs are to be paid": Rambaldi at [20]. 117 Later that day (but before 5.00 pm), Mr Rambaldi procured the consent of his partners to the Deed. 118 Before turning to the parties' submissions, I note that Mr Borden properly conceded that he could not recollect the precise words used at the mediation or in pre-mediation conferences and that, in general, his file notes are likely to be more reliable than his present recollection. I accept this and further I accept that Mr Borden's handwritten notes, which were made at the time of the mediation, are even more reliable than his typed notes of the mediation. 202 On legal advice, Mr Spalla did not make an application to take over the carriage of the primary proceeding for Irlmond. Having sought his own independent legal advice, Mr Rambaldi did apply to the Supreme Court. Mr Spalla claims that the application to the Supreme Court was not made in good faith because Mr Rambaldi did not support it. Mr Rambaldi explained that he did not support the orders sought by the application because he did not believe that Mr Spalla was an appropriate person to have conduct of the Irlmond claim in the primary proceeding. He explained that, in his view, Mr Spalla was too emotionally involved with the litigation and might not be able to bring sufficient objectivity to the commercial decisions associated with managing litigation on behalf of a company in liquidation. This does not show that Mr Rambaldi brought the application in bad faith. As liquidator of Irlmond, Mr Rambaldi was required to advise the Court of his position in relation to the application. Although he did not support the application, by bringing it he gave Mr Spalla the opportunity to seek an order giving him authority to conduct the litigation. As Hansen J explain in Rambaldi at [18]: " [D] oubtless out of some thought for the other interests involved, [Mr Rambaldi] has brought this application which may be thought to have been designed to draw Mr Spalla to seek authority to conduct the litigation under the guise of the originating process. As I have said, Mr Spalla takes the opportunity to seek that authority. He wishes to be able to conduct the litigation and, as discussed with counsel, I could make such an order under s.511(1)(b) of the Act if, in my view, it was otherwise appropriate to do so." Similarly, I do not find that the application was brought in bad faith. I find that it was filed in a good faith attempt to seek the guidance of the Court and to allow Mr Spalla an opportunity to put his case to the Court. Overall, I find no reason to conclude that Mr Rambaldi acted in bad faith in the week before the Deed was ratified.