Austructures Pty Ltd v Makin
[2014] VSC 544
•27 October 2014
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMERCIAL COURT
S CI 2014 03514
| AUSTRUCTURES PTY LTD (ACN 113 589 718) and PAGES HIRE CENTRE | First Plaintiff Second Plaintiff |
| v | |
| VICTOR ROGER MAKIN and RODER HTS HOCKER GMBH | First Defendant Second Defendant |
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JUDGE: | ALMOND J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 16 September 2014 |
DATE OF JUDGMENT: | 27 October 2014 |
CASE MAY BE CITED AS: | Austructures Pty Ltd v Makin |
MEDIUM NEUTRAL CITATION: | [2014] VSC 544 |
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PRACTICE & PROCEDURE – Pleadings – Application for leave to amend statement of claim – Expiry of limitation period – Addition of statute-barred causes of action – Corporations Act 2001 (Cth) s 1317K, 1322(4)(d) – Whether limitation period in s 1317K can be extended by s 1322(4)(d) – Whether s 1317K bars remedy or right of action – Statutory construction of ‘no later than’ in s 1317K – No discretion to extend time prescribed in s 1317K.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiffs | C R Northrop | Matthew Shaw & Associates |
| For the Defendants | S H Parmenter | Minter Ellison |
HIS HONOUR:
By summons filed on 8 August 2014, the plaintiffs seek leave to amend their statement of claim. In support of the application, the plaintiffs rely upon an affidavit of Nicholas Michael John Baldock, dated 7 August 2014, which exhibits the proposed amended statement of claim.[1]
[1]The proposed third amended statement of claim is Exhibit NMJB1 to the affidavit of Nicholas Michael John Baldock, affirmed 7 August 2014 (‘Baldock affidavit’).
The defendants oppose the application to amend and rely upon two affidavits of Jonathan Leigh Kelp, dated 3 March 2014 and 18 August 2014.
The plaintiffs submit that the proposed amendments:
(a)expand existing claims based on breaches of the Corporations Act2001 (Cth) (‘the Act’) to include claims against the second defendant (paragraphs 49H to 49J);
(b)would allow the plaintiffs to seek, if necessary, an extension of time for the commencement of the proceeding for breach of statutory obligations (paragraph 49K and paragraph 2B of the prayer for relief);
(c)claim from the second defendant any benefit it received from the first defendant’s breaches of fiduciary obligations (paragraphs 49L and 49M).
The current statement of claim, among other things, sets out alleged contraventions by the first defendant, Victora Roger Makin, of s 180(1) of the Act (duty to exercise care and diligence), s 181(1) of the Act (duty to exercise powers in good faith and for a proper purpose), s 182(1) of the Act (duty not to improperly use position), and s 183(1) of the Act (duty not to improperly use information). The current statement of claim also sets out limited claims against the second defendant.
The alleged contraventions by Mr Makin are the foundation for the proposed claims against the second defendant (Roder) for involvement in such contraventions (as defined in s 79 of the Act). The contraventions are alleged to have occurred during the period late February 2007 to May 2007. On their face, it is clear that the proposed claims against Roder (in paragraphs 49H to 49J of the proposed third amended statement of claim) rely upon facts which allegedly occurred more than seven years ago. As a consequence, this squarely raises for consideration the time prescription in s 1317K of the Act and the general power of extension in s 1322(4)(d) of the Act.
Section 1317K of the Act provides:
Proceedings for a declaration of contravention, a pecuniary penalty order, or a compensation order, may be started no later than 6 years after the contravention.
Section 1322(4) of the Act provides:
Subject to the following provisions of this section but without limiting the generality of any other provision of this Act, the Court may, on application by any interested person, make all or any of the following orders, either unconditionally or subject to such conditions as the Court imposes:
(d)an order extending the period for doing any act, matter or thing or instituting or taking any proceeding under this Act or in relation to a corporation (including an order extending a period where the period concerned ended before the application for the order was made) or abridging the period for doing such an act, matter or thing or instituting or taking such a proceeding:
and may make such consequential or ancillary orders as the Court thinks fit.
Plaintiffs’ submissions
In support of the application for amendment, the plaintiffs place particular reliance on PSL Industries Ltd v Simplot Australia Pty Ltd.[2]This case concerned an application for the amendment of a claim under the Trade Practices Act 1974 (Cth) (‘TPA’) after the expiry of the relevant limitation period under that Act. Section 82 of the TPA then relevantly provided:
(1)A person who suffers loss or damage by conduct of another person that was done in contravention of a provision of Part IV, IVB or V or section 51AC may recover the amount of the loss or damage by action against that other person or against any person involved in the contravention.
(2)An action under subsection (1) may be commenced at any time within 3 years after the date on which the cause of action accrued.
[2](2003) 7 VR 106 (‘PSL Industries’).
In PSL Industries, the applicant relied on s 34 of the Limitation of Actions Act 1958 (Vic) and r 36.01(6) of Chapter I of the Supreme Court Rules (collectively the Victorian Provisions) in support of its contention that an amendment should be allowed notwithstanding that the (then applicable) limitation period may have expired.
Section 34 of the Limitation of Actions Act 1958 (Vic) provides:
34 Abrogation of rule in Weldon v. Neal (1887) 19 Q.B.D. 394
(1)If a court would, but for the expiry of any relevant period of limitation after the day a proceeding in the court has commenced, allow a party to amend a document in the proceeding, the court must allow the amendment to be made if it is satisfied that no other party to the proceeding would by reason of the amendment be prejudiced in the conduct of that party's claim or defence in a way that could not be met by an adjournment, an award of costs or otherwise.
(2)This section does not apply to an amendment in a proceeding commenced before 1 January 1987.
Rule 36.01 of Chapter I of the Supreme Court Rules provides:
36.01 General
(1) For the purpose of—
(a)determining the real question in controversy between the parties to any proceeding; or
(b) correcting any defect or error in any proceeding; or
(c) avoiding multiplicity of proceedings—
the Court may, at any stage order that any document in the proceeding be amended or that any party have leave to amend any document in the proceeding.
…
(6)The Court may, notwithstanding the expiry of any relevant limitation period after the day a proceeding is commenced, make an order under paragraph (1) where it is satisfied that any other party to the proceeding would not by reason of the order be prejudiced in the conduct of that party's claim or defence in a way that could not be fairly met by an adjournment, an award of costs or otherwise.
In PSL Industries, Ashley J (as he then was) had at first instance[3] decided that the court had a discretion under the Victorian Provisions to allow amendments notwithstanding that the limitation period specified in s 82(2) of the TPA had expired. This was based upon reasoning that the time limit in s 82(2) of the TPA, on its proper construction, only barred the remedy in s 82(1) and did not extinguish the right to make the claim out of time. It was therefore concluded that the time limit in s 82(2) of the TPA was susceptible to extension. This decision was upheld on appeal.[4]
[3]Simplot Australia Pty Ltd v PSL Industries [2001] VSC 419.
[4]PSL Industries (2003) 7 VR 106, [18] per Chernov JA.
The plaintiffs submit the same approach should be taken in this application. In particular, counsel for the plaintiffs submits that the expression ‘within three years’, considered in PSL Industries, is ‘very similar terminology’[5] which ‘means the same thing as “no later than”’[6] six years in s 1317K of the Act and therefore the time limit in s 1317K of the Act is susceptible to extension.
[5]Transcript 7:12-16.
[6]Transcript 15:1-3.
The plaintiffs further submit that:
(a) it is significant that s 1317K is found in the context of a suite of provisions in the Act that includes s 1322, which empowers the court to extend the time for commencement of a proceeding;
(b) the language in s 1317K is to be contrasted with the language of s 1317HD of the Corporations Law 1989 (Cth) (‘Corporations Law’), now repealed but considered in Newtronics Pty Ltd (Receivers and Managers appointed) (in liq) v Gjergja.[7] Section 1317HD provided:
[7](2008) 219 FLR 1, [2008] VSCA 117.
(1)Where a person contravenes a civil penalty provision in relation to a corporation, the corporation may, by proceedings in a court of competent jurisdiction, recover from the person, as a debt due to the corporation:
…
(2)Proceedings under this section may only be begun within 6 years after the contravention.
(Emphasis added)
(c) the words ‘may only’ were of great significance to the court in Newtronics, as they had been to the High Court in David Grant & Co Pty Ltd v Westpac Banking Corporation,[8] which was applied in Newtronics;[9]
(d) section 1317K of the Act (cf s 1317HD) is a general provision which applies to a wide variety of circumstances and is not specifically limited to a particular kind of action; and
(e) it is significant that s 1317K is not contained within the provision which confers the right and that Parliament changed the expression ‘may only’ (in s 1317HD) to ‘no later than’ (in s 1317K).
[8](1995) 184 CLR 265 (‘David Grant’).
[9]In David Grant, the court held that s 1322(4)(d) of the Corporations Law did not apply to extend the time prescribed to apply to set aside a statutory demand pursuant to s 459G of the law which provided relevantly that an application to do so ‘may only be made within 21 days after the demand…’.
In addition to their submissions on statutory construction, the plaintiffs submit that the proposed amendments to the claims against Roder do not raise significant new factual issues but merely present the case in a different way.[10]
[10]Citing by analogy Agtrack (NT) Pty Ltd v Hatfield (2003) 7 VR 63 (‘Agtrack’); see also Agtrack (NT) Pty Ltd v Hatfield (2005) 223 CLR 251.
Finally, the plaintiffs submit that it would be unconscionable to allow Roder to rely upon the statutory bar as there is evidence of concealment. In this regard, the plaintiffs rely upon the New South Wales Court of Appeal decision of Gerace v Auzhair Supplies Pty Ltd[11] and, in particular, upon passages from the judgment of Meagher JA (Beazley P and Emmett JA agreeing). After considering the authorities, Meagher JA said:
The authorities…show that in purely equitable proceedings, where there is a corresponding remedy at law in respect of the same matter and that remedy is the subject of a statutory bar, equity will apply the bar by analogy unless there exists a ground that justifies its not doing so because reliance by the defendant on the statute would in the circumstances be unconscionable… [12]
…
The grounds on which equity declines to permit a defendant to rely upon a statutory bar by analogy include where there has been fraudulent concealment, which requires either fraudulent conduct as an element of the right of action or conduct consisting of active concealment of a right of action that does not include fraud as an element.[13]
[11](2014) 310 ALR 85; [2014] NSWCA 181.
[12]Ibid, [70].
[13]Ibid, [75], citing Meagher, Gummow & Lehane’s Equity Doctrines and Remedies at [34-085].
The plaintiffs submit that in this case there is a close connection between the statutory obligations and the fiduciary obligations, and although ordinarily there would be a statutory bar by analogy to the claims based on breach of fiduciary obligations, equity will not apply the bar by analogy because there has been concealment.
Defendants’ submissions
The defendants oppose the proposed amendments on four grounds.
First, they submit that the Court has no discretion under the Victorian Provisions or s 1322 of the Act because on the proper construction of s 1317K of the Act, the claims are extinguished after six years.
Secondly, if the claims are not extinguished and the court is able to exercise its discretion under the Victorian Provisions or s 1322 of the Act, the discretion should not be exercised in the plaintiffs’ favour:
(a)because the proposed amendments make new claims that raise new and distinct factual matters against Roder;
(b)because there is no relevant explanation advanced for the delay in bringing the new claims in that the explanation which has been advanced does not assist the plaintiffs;
(c)by reason of general prejudice to Roder.
Thirdly, as the claim for an order under s 1322(4)(d) of the Act (with respect to claimed contraventions of the statutory obligations) has no real prospect of success, the amendment seeking to insert a claim for such an order should be disallowed.
Fourthly, if the amendments are allowed, the question of the date of the commencement of the new claims should not automatically relate back to the commencement of the proceeding but should be left for determination at trial.
Nature of the existing claims
Currently, the claims in the proceeding are made principally against Mr Makin, a former director and employee of the first plaintiff (Austructures) for breach of his statutory obligations set out in s 180 to s 183 of the Act, for breach of fiduciary duties owed to the second plaintiff (Pages) and for breaches of Mr Makin’s contract of employment with Pages. Essentially, it is alleged that Mr Makin took over responsibility and management for Roder’s Australian business in circumstances where Mr Makin purchased a shelf company, sought registration of a similar name (Roder HTS Hocker Pty Ltd), was appointed sole director and shareholder of this entity and was appointed as the senior management salesperson for all of Roder’s Australian business; and that as a result, Mr Makin and Roder replaced the first plaintiff as the distributor of the products previously the subject of the distributorship agreement.
The plaintiffs allege that as a result of the conduct of Mr Makin, Mr Makin obtained a significant advantage for himself and Roder at the expense of and to the detriment of the plaintiffs.
The cause of action currently pleaded against Roder is, in essence, a claim for breach of contract arising from alleged breaches of a distributorship agreement, namely the termination of a distributorship agreement, contrary to its terms. The claimed breach is an alleged failure to give appropriate written notice of termination.[14]
[14]Second Amended Statement of Claim, 2 December 2013, [38], [58] and [60].
There is also a general but unparticularised allegation of misleading and deceptive conduct by Roder, and an allegation that Roder encouraged Mr Makin to become the manager and operator of its Australian business.[15]
[15]Second Amended Statement of Claim, 2 December 2013, [72] and [73].
Resolution
Considered against this background, in my view the claims against Roder in paragraphs 49H to 49J of the proposed statement of claim do not enlarge upon existing claims but raise new claims. In substance, the new claims are that Roder was involved (as that term is defined in s 79 of the Act) in statutory breaches by Mr Makin. These new claims concern Roder’s knowledge of Mr Makin’s contravening conduct.
In the circumstances, the s 1317K time limit for making an application for a compensation order becomes relevant.
For the reasons outlined below, I do not accept the plaintiffs’ contention that ‘no later than’ in s 1317K is analogous to the word ‘within’ used in s 82(2) of the TPA (considered in PSL Industries) and that s 1317K only bars the remedy without extinguishing the right to make a claim after the effluxion of the specified time.
First, the language of s 1317K is in emphatic terms. It provides that ‘proceedings may be started no later than 6 years after the contravention’. In my view, the words ‘no later than’ are sufficiently peremptory to suggest the section is to have the same operative effect as the words ‘may only’ had in s 1317HD(2) of the Corporations Law; that is, to bar the right, not just the remedy.
Secondly, Part 9.4B of the Act deals with the civil consequences of contravening civil penalty provisions. Specifically, it provides for the making of declarations of contravention (s 1317E, s 1317F), pecuniary penalty orders (s 1317G), and compensation orders (s 1317H, s 1317HA, and s 1317HB). It provides a time limit for starting proceedings for such declarations or orders; no later than six years after the contravention (s 1317K).[16]
[16]Amendments from Act No 146 of 199 (as amended by Act No 63 of 2002).
A predecessor Part 9.4B (which included s 1317HD) was introduced to the Corporations Law by the Corporate Law Reform Act 1992 (Cth). It was repealed by the Corporate Law Economic Reform Program Act 1999 (Cth), which substituted Part 9.4B in its current form.
The Explanatory Memorandum (‘EM’), which accompanied the Corporate Law Economic Reform Program Bill, summarises the key amendments proposed by the Bill. The second reading speech for the Bill identifies the key amendments as reform of the law relating to corporate fundraising, directors duties, greater accountability to shareholders and the rules relating to takeovers.[17]
[17]Second Reading Speech, 3 December 1998, 1284-1285.
The EM refers to the rewriting of existing provisions in specified Parts as follows:
The Bill will also rewrite without substantial change the existing provisions in (Officers) Part 3.2, (Related Party Transactions) Part 3.2A, (Oppression) Part 3.4 and (Civil Penalty Provisions) Part 9.4B.
The EM then outlines the ‘more significant changes proposed to be made to these provisions in the course of re-writing them’. No reference is made to s 1317K in the outline applicable to Part 9.4B.[18]
[18]Explanatory Memorandum to the Corporate Law Economic Reform Program Bill, page 12 paragraph 4.3, and page 31 paragraph 6.10.
Had it been intended to change the absolute time bar of 6 years on starting proceedings for compensation (by changing the words “must only” in s 1317HD to ‘no later than’ in s 1317K) in my view it would most likely have been referred to in the outline of more significant changes.
Thirdly, the plaintiffs also rely upon the principle of construction that a subsequent specific provision which confers and regulates the exercise of a power will exclude the operation of a prior, general power. This principle was considered by Gummow J in David Grant as a significant, but not an absolute, factor in determining whether a time limitation establishes the jurisdictional character of the specified time limit. This was referred to by Dodds-Streeton J in Newtronics. Her Honour said:
The approach of the High Court in David Grant indicates that the emphatic prescription of the limitation period in the very provision which confers a right of action will ordinarily establish the jurisdictional character of the unmodified time limit, compliance with which is a pre-condition of the Court’s power.[19]
[19](2008) 219 FLR 1 at 14, [82].
In this case, the prescription of the limitation period is not in a sub-section of the specific provision which confers the right of action. Part 9.4B is structured differently. It deals generally with the civil consequences of contravening civil penalty provisions. Sections 1317E and 1317F address declarations of contravention. Section 1317G addresses pecuniary penalty orders. Sections 1317H, 1317HA and 1317HB address compensation orders of various kinds.
Relevantly, s 1317H(1) provides:
Compensation orders—corporation/scheme civil penalty provisions
Compensation for damage suffered
(1)A Court may order a person to compensate a corporation or registered scheme for damage suffered by the corporation or scheme if:
(a)the person has contravened a corporation/scheme civil penalty provision in relation to the corporation or scheme; and
(b) the damage resulted from the contravention.
Section 1317J identifies the legal persons who may apply for a declaration of contravention, and a pecuniary penalty or compensation order. Section 1317K deals with proceedings for declarations, pecuniary penalty orders or compensation orders, providing in each case for a limitation period for starting proceedings of no later than six years.[20]
[20]Section 1317K is set out above at paragraph [6].
The defendants, by their counsel, submit that it is not necessary to the success of their argument to demonstrate that the provision under consideration which creates the right of action also includes the prescribed limitation period. By way of illustration, counsel for the defendants cited Agtrack, where the provision enabling a party to bring a claim was found in one section of the Act and the provision which had the effect of extinguishing the claim was found in another section.
Though Agtrack turns on its own facts (in particular, it involved a separate section which expressly extinguished the right of action), I accept the general proposition that in order to show that a time limitation establishes the jurisdictional character of the specified time limit, it is not essential to demonstrate that the prescribed limitation period is found in the same section as the section which creates the right of action. In my view, this is not inconsistent with the observations of Gummow J in David Grant. Here, the statute confers and regulates the exercise of the power not within one specific provision, but in separate sections in the same Part, Part 9.4B. Part 9.4B is a sub-regime devoted to the civil consequences of contravening civil penalty provisions and post-dates the prior general remedial provision in s 1322(4)(d) in Part 9.5 of the Corporations Law, which was enacted in 1990 and remained in substantially identical terms when the Act was enacted.[21]
[21]The word ‘law’ has been replaced by the word ‘Act’ to accommodate the repeal of the Corporations Law by the Corporations Act 2001 (Cth).
In Anthony Hordern & Sons Ltd v Amalgamated Clothing & Allied Trades Union of Australia,[22] Gavin Duffy CJ and Dixon J, in their joint judgment, state:
[W]hen [the section] expressly gives a special power subject to limitations and qualifications, surely it must be understood to mean that the Court shall not exercise an unqualified power to do the same thing. When the Legislature explicitly gives a power by a particular provision which prescribes the mode in which it shall be exercised and the conditions and restrictions which must be observed, it excludes the operation of general expressions in the same instrument which might otherwise have been relied upon for the same power.[23]
[22][1932] HCA 9; (1932) 47 CLR 1.
[23]Ibid, [7].
In R v Wallis, Dixon J said:
…an enactment in affirmative words appointing a course to be followed usually may be understood as importing a negative, namely, that the same matter is not to be done according to some other course.
This applies especially when the power or duty affirmatively conferred or imposed is qualified by some condition, limitation or direction.[24]
[24](1949) 78 CLR 529 at 550.
Applying this principle suggests that s 1317K, by its affirmative words appointing the course to be followed (i.e. that proceedings may be started no later than 6 years after the contravention) may be understood as importing the negative, namely, that such proceedings may not be started other than within 6 years.
Further, I do not accept the plaintiffs’ submission that the construction of s 1317K contended for by the defendants would deprive s 1322(4)(d) of much if not all scope of operation. As counsel for the defendants submitted, s 1322 is also used to extend time limits imposed under ASIC class orders[25] and for extending the time limit for seeking quotation of securities on a financial market.[26] The time limit imposed by s 1317K applies only to proceedings for declarations of contravention, pecuniary penalty orders or compensation orders. By way of example, orders which might be made in proceedings brought by minority shareholders seeking relief in the nature of winding up or orders that shares be purchased at fair value would not be governed by the time limit in s 1317K. Likewise (depending on the relief sought) with proceedings brought derivatively on behalf of a company.[27]
[25]Re Dana Australia (Holdings) Pty Ltd (2006) 57 ACSR 99, Re Affinity Health Ltd (2006) 58 ACSR 461.
[26]Re Nusep Ltd (2007) 62 ACSR 301.
[27]E.g. Part 2F.1, section 233.
Further, Part 9.4B contains punitive provisions. In Brisbane South Regional Health Authority v Taylor, McHugh J examined in general the policy considerations underlying limitation periods for commencing actions. His Honour said:
The effect of delay on the quality of justice is no doubt one of the most important influences motivating a legislature to enact limitation periods for commencing actions. But it is not the only one. Courts and commentators have perceived four broad rationales for the enactment of limitation periods. First, as time goes by, relevant evidence is likely to be lost. Secondly, it is oppressive, even "cruel", to a defendant to allow an action to be brought long after the circumstances which gave rise to it have passed. Thirdly, people should be able to arrange their affairs and utilise their resources on the basis that claims can no longer be made against them. Insurers, public institutions and businesses, particularly limited liability companies, have a significant interest in knowing that they have no liabilities beyond a definite period...
…The final rationale for limitation periods is that the public interest requires that disputes be settled as quickly as possible.[28] (citations omitted)
[28]Brisbane South Regional Health Authority v Taylor (1996) 186 CLR 541, 552.
In my view, these observations are all the more potent where punitive provisions such as those found in Part 9.4B are concerned.
Counsel for the plaintiffs was unable to cite any direct authority on s 1317K to support the argument that the limitation period specified in s 1317K can be extended. The defendants rely on the observations of Emerton J in Hodgson v Amcor Ltd, where her Honour in considering a proposed pleading amendment said that ‘[t]here is force to the argument that the limitation period specified in s 1317K of the Corporations Act cannot be extended and is not affected by s 34 of the Limitation of Actions Act or r 36.01(6) of the Rules’.[29] However the observation was made in passing as it was not necessary to decide the issue in the circumstances of that amendment application.
[29]Hodgson v Amcor Ltd [2010] VSC 204 at [95].
Based on the foregoing considerations, in my view, on the proper construction of the statute, the Court does not have a discretion under s 1322(4)(d) to extend the time prescribed in s 1317K for commencing a claim for a compensation order under s 1317H of the Act.
Had I concluded that the court did have a discretion to extend the time for commencing a claim for a compensation order under s 1317H of the Act, in this case I would not have exercised it in the plaintiffs’ favour in respect of proposed claims that Roder was involved in the contraventions by Mr Makin for the following reasons.
First, in the Baldock affidavit, there is no satisfactory explanation as to why the claims which are sought to be advanced now could not have been advanced when the proceeding was issued in March 2013. Mr Baldock deposes that the plaintiffs engaged a computer expert (ASV Computing) to examine computer records but the computer records could not be resurrected or read due to the fact that they had been extensively over-written, but he does not state when the examination occurred. The defendants note that further and better particulars provided by the plaintiffs suggest ASV Computing was engaged in mid-2007.
Secondly, Mr Baldock deposes that in 2011 the managing director of the plaintiffs, Mr Boros, located an unsigned copy of the distributorship agreement between the first plaintiff and the second defendant. This document contained the term requiring six months’ notice to terminate the distributorship agreement. Presumably, one or other of the plaintiffs had a copy of this document at all relevant times. The fact that it was located in 2011 (and therefore, depending on the date it was found in 2011, at least 15 months, but possibly over two years prior to the proceeding being commenced on 27 March 2013) provides no clear basis for the granting of an indulgence.
Thirdly, the plaintiffs’ material does not specify when in 2013 they became aware of the establishment of the company by Mr Makin, which Mr Baldock deposes carried on business immediately after Mr Makin ceased to be employed by Pages.
Considering this material as a whole provides no firm basis for the exercise of discretion had that course been open.
Proposed paragraph 49K
In light of my finding that the Court does not have a discretion to extend the limitation period specified in s 1317K of the Act, I refuse leave to amend the statement of claim in the form of the amendment sought in paragraph 49K. Granting this amendment would have no utility as claims made out of time against either defendant for contraventions of the statutory obligations have no real prospect of success.
Proposed paragraphs 49L and 49M
Different considerations apply to these allegations as they do not depend upon Roder being involved in the contraventions under s 79 of the Act.
Paragraph 49A of the existing statement of claim contains an allegation that Mr Makin obtained a significant advantage for himself and the second defendant at the expense of and detriment to the plaintiffs without the plaintiffs’ knowledge or consent (as a result of conduct pleaded in the preceding paragraphs [32] to [48]). In particular, it is alleged that by reason of that conduct Roder gained the benefit of the first plaintiff’s business which the first plaintiff operated pursuant to the distributorship agreement.
Proposed paragraphs 49L and 49M are to the effect that Roder obtained that advantage knowing it had been procured by Mr Makin in breach of his fiduciary obligations as a director of Austructures and as an employee of Pages and that accordingly (among other things) Roder is liable to account for any profits or other benefits derived and to hold such profits or benefits on a constructive trust.
In my view, this pleading amendment ought to be allowed so that the question of Mr Makin’s legal capacity between himself and Roder at the relevant times can be determined at trial. If it should turn out that Mr Makin obtained a significant advantage for himself and the second defendant whilst acting for and on behalf of Roder (a question of fact and law), paragraphs 49L and 49M will be shown to have been an elaboration of a pre-existing claim rather than a new claim. If it transpires that paragraphs 49L and 49M turn out to be an elaboration of existing claims then, prima facie, they are not statute-barred. Naturally, Roder can plead any limitation defence to these claims.
Conclusion
In the result, leave will be granted to permit the plaintiffs to file and serve a proposed statement of claim incorporating paragraphs substantially in the form of paragraph 49L and paragraph 49M. Otherwise, the plaintiffs’ application for leave to amend is refused.
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