Bajaj v Bajaj - [2010] WASC 1

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION: BAJAJ -v- BAJAJ [2010] WASC 1

CORAM: SIMMONDS J

HEARD: 9 DECEMBER 2009

DELIVERED : 4 JANUARY 2010

FILE NO/S: COR 214 of 2006

BETWEEN: SANJEEV SINGH BAJAJ
Plaintiff
AND
AMARJEET SINGH BAJAJ
First defendant
SAGELINE HOLDINGS PTY LTD (ACN 110 462 407)
Second defendant
BANK OF WESTERN AUSTRALIA LTD
Third defendant

Catchwords:

Practice and procedure - Plaintiff seeks leave to discontinue - Turns on own facts

Legislation:

Corporations Act 2001 (Cth)
Rules of the Supreme Court 1971 (WA)

Result:

Leave to discontinue proceedings granted

Category: B

Representation:

Counsel:

Plaintiff:     Mr S D Majteles
First defendant              :     No appearance
Second defendant          :     No appearance
Third defendant            :     No appearance

Solicitors:

Plaintiff:     Lavan Legal
First defendant              :     In person
Second defendant          :     No appearance
Third defendant            :     No appearance

Case(s) referred to in judgment(s):

IBN Corporation Pty Ltd v The Banjyma Aboriginal Corporation [2009] WASC 279
Pharmaust Ltd v Advance Healthcare Group Ltd [2007] WASC 125
SCI Operations Pty Ltd v Trade Practices Commission (1984) 2 FCR 118

SIMMONDS J: This is a return of an application by chamber summons for leave to discontinue the proceedings in COR 214 of 2006. These proceedings, which have a somewhat protracted history, have not reached a hearing on the merits. The orders sought by the plaintiff provide that the proceedings in COR 214 of 2006 be discontinued. This is the appropriate form of order to be made when an application for leave to discontinue is accepted. See LexisNexis, Civil Procedure WA [23.2.4].
The orders sought by the plaintiff do not include any provisions dealing with the commencement of subsequent proceedings of the same or similar kind and expressly provide for no order as to costs. It is my determination that the application should be granted in terms of the orders sought, which also include an order waiving the requirement for conferral under O 59 r 9. These are my reasons for so ordering.
I begin by briefly describing the protracted history I have referred to. I then describe my jurisdiction to make the present orders and explain why I made the orders I did.

History of the proceedings

So far as the history of the proceedings in COR 214 of 2006 is concerned, the originating process, seeking relief primarily under Corporations Act2001 (Cth) (the Act) s 233 and dated 27 December 2006, was filed on 28 December 2006.
That originating process concerned the conduct of the first defendant as a director of the second defendant. The conduct was said to be contrary to the Act s 180, s 181 and s 182, which are provisions about the general duties of directors. The conduct was also said to be conduct oppressive or unfairly prejudicial to the interests of the plaintiff as shareholder in the second defendant, by virtue of the first defendant's shareholding in the second defendant.
Based on 'the [f]acts in the supporting affidavits', the originating process claimed orders for the regulating of the second defendant's affairs or other orders under the Act s 233(1), such further or other order as the court may deem just, and costs.
There was, however, no affidavit filed in support of the originating process, at least for the purposes of the initial hearing of the process. However, on the affidavit of the plaintiff in support of an application for an interlocutory injunction, heard in December 2006, as well as the affidavit of the first defendant in opposition to that application and the affidavit of the plaintiff sworn 4 December 2009 in support of the present chamber summons, the following background emerges. As there has been no hearing on the merits, what follows are not findings of fact.
The plaintiff and his wife are the two directors and shareholders of Highdrive Holdings Pty Ltd (Highdrive), which holds 80% of the units in the SAAM Unit Trust as trustee for the Bajaj Family Trust. The first defendant is a director and shareholder of Crestwood Investments Pty Ltd (Crestwood), which holds 20% of the units in the SAAM Unit Trust as trustee for the AJS Family Trust. The Bajaj Family Trust and the AJS Family Trust appear to be the family trusts of the plaintiff and the first defendant respectively.
Highdrive is the franchisee of five Caltex or Caltex Woolworths service stations. The plaintiff managed Highdrive's affairs. In 2004 the plaintiff and the first defendant had discussions about the latter moving to Australia. It is sufficient, notwithstanding some contest over who initiated these discussions and what agreement they produced, for me to note that the plaintiff and the first defendant agreed to establish a Caltex service station business in which both would be involved at least for a time. The establishment of the service station was to assist the first defendant in his application to come to Australia.
In September 2004 the second defendant and the SAAM Unit Trust were created for the purpose of operating Caltex stores. They were established on the basis that the plaintiff or entities he controlled would hold 80% of the shares or units in them and the first defendant or entities he controlled would hold the remaining 20%.
In October 2004 Highdrive provided an amount of at least $180,000 to the second defendant. Around that time, the second defendant became the franchisee of a Caltex service station in Morley (the Morley Franchise). The second defendant entered into a site licence agreement and a franchise agreement with Caltex Australia Petroleum Pty Ltd (Caltex), both dated 1 October 2004.
Under the terms of the franchise agreement the plaintiff was to pay for all Caltex goods as defined in the agreement by way of direct debit, subject to Caltex reasonably designating another manner of payment. Initially, the plaintiff managed the Morley Franchise. In or around January 2005 the first defendant moved to Perth. From about that time the plaintiff and the first defendant were both involved in the Morley Franchise, although it appears from the material before me that the parties dispute the roles they respectively played in the management and conduct of its operations.
In or around October 2005 the second defendant became the franchisee of a second Caltex franchise in Beechboro (the Beechboro Franchise). This was effected by a deed of assignment of franchise interest, between the then franchisee of the premises and the second defendant. Caltex consented to the assignment and the plaintiff and the first defendant signed as guarantors.
The franchise interest assigned was the interest the assignor held under a franchise agreement between the assignor as franchisee and Caltex as franchisor. Under the terms of that franchise agreement the franchisee had to pay certain fees by direct debit and had to pay for Caltex petroleum products, a term defined in the agreement, by direct debit unless Caltex varied the method of payment.
At the time the second defendant became the franchisee of the Beechboro Franchise, the plaintiff and the first defendant were both jointly involved in the operations of the second defendant. The plaintiff was also heavily occupied with the management of five stores operated by Highdrive. It appears from the material before me that there is a contest as to what roles the plaintiff and first defendant effectively played in the management and conduct of the operations of the Beechboro franchise.
The plaintiff made a number of allegations about the conduct of the first defendant, or others associated with him, in relation to the management and operations of the Morley Franchise and the Beechboro Franchise. Some of this conduct was said to be in breach of the relevant franchise agreement. The plaintiff also made allegations about conduct by the first defendant in relation to the affairs of the second defendant. The first defendant denied these allegations or sought to explain the conduct they described by allegations of further facts.
In the hearing before me on 22 December 2006, I adjourned the plaintiff's application for an interlocutory injunction, after the plaintiff and the first and second defendants had provided undertakings in terms of the handwritten document attached to the plaintiff's affidavit of 4 December 2009. The undertakings provided principally for the regulation of the business of the second defendant.
According to the undertakings, the valuation of the first defendant's interest in the second defendant was the price to be paid by the plaintiff to the first defendant for that interest. The first defendant also undertook to provide the plaintiff with information for payroll and other taxation purposes and for the preparation of financial statements.
On 25 January 2007 the plaintiff's wife was appointed as a director of the second defendant. On 20 February 2007 the defendant filed an application for an interlocutory injunction to restrain the plaintiff from proceeding with any meeting of the directors of the second defendant at which any resolution to take over the conduct of the business from the first defendant would be considered. The court dismissed this application on 23 February 2007.
The business of the second defendant was then taken over from the first defendant. Following a number of adjournments of the plaintiff's application for an interlocutory injunction, the last of which was 11 April 2007, there was no further activity on the file, apart from a mention in the Master's list on 3 July 2007, until the first defendant filed an interlocutory application for orders declaring the first defendant's solicitors had ceased to act. This application was granted on 21 April 2008.
Then ensued a further period of inactivity on the file, following which the court sought from the parties information as to what further steps they proposed to take. The court then called a hearing for directions. That hearing was adjourned from 7 September 2009 to 21 September 2009 and then to 12 October 2009.
The first defendant did not respond to the court's initial request for information, nor did he appear at any of those hearings. The present application for leave to discontinue is the plaintiff's ultimate response following his appearances at those hearings. The first defendant did not appear at the present hearing of the chamber summons. However, on the morning of the hearing, shortly before its listed time of 9 am, the first defendant emailed the court the following request:
I would be grateful if the matter could be vacated, and relisted for approximately 28 days. I will then arrange for pleding [which appears to be 'pleading'] my case.
The first defendant provided no indication of why he had not sought that outcome earlier.
The court had been provided with an affidavit sworn 8 December 2009 of a member of the firm of solicitors for the plaintiff responsible for the conduct of the matter. The affidavit attached a copy of an email from the firm to the first defendant at the address from which the first defendant emailed his request to the court. That email indicates that it was sent on 8 December at 8.33 am, that it attached the present chamber summons and its supporting affidavit and that the present hearing was to take place.
The court sent a reply email to the first defendant informing him that he should appear at the present hearing to make his request in person. The first defendant replied to that email saying that he had had 'a change of mind and I do not want to contest the Case any further and request the respected Court to proceed accordindly'.

Jurisdiction

I turn then to my jurisdiction in relation to discontinuance and the exercise of that jurisdiction. The jurisdiction to make the orders sought by the plaintiff is to be found in Rules of the Supreme Court 1971 (WA) O 23 r 2(3) as the present are proceedings in which pleadings are not to be exchanged: Civil Procedure WA [23.2.4]. Leave may be granted on such terms as are just: O 23 r 2(3).
In considering whether or not to grant leave, and if so on what terms, the court 'has a wide discretion to do justice between the parties': SCI Operations Pty Ltd v Trade Practices Commission(1984) 2 FCR 118, 182 (Sheppard J).
Where a party seeks a discontinuance, the court should lean towards giving leave to that party, unless to do so will cause manifest injustice to the other side: SCI Operations (182); IBN Corporation Pty Ltd v The Banjyma Aboriginal Corporation [2009] WASC 279 [144] (Hasluck J).
While injustice to the other side from the grant of leave is a consideration in the exercise of the discretion, even where leave cannot be granted without injustice to the other side, leave may still be granted: SCI Operations (161 ‑ 162) (Sweeney J), (161) (Sheppard J).
The preservation of any advantage obtained by the other side in the litigation is also a relevant consideration: SCI Operations (161) (Sheppard J).
In the absence of any appearance before me by or for the first defendant, and in view of his email, I have no indication from him of any injustice to him from the grant of leave, nor any indication from him of an advantage obtained by him to be preserved. There is no injustice or advantage evident to me from the background I have described, leaving aside the matter of costs. I deal with those in a moment.
There is the question of whether or not the leave should be granted only on terms that the plaintiff undertake to bring no subsequent proceedings on causes of action in COR 214 of 2006, this being said to be highly desirable. The parties should not be left in an uncertain state as to what further litigation may be brought concerning the same subject matter: SCI Operations (182) (Sheppard J). These terms can be imposed: see IBN Corporation where the court required an undertaking not to bring proceedings, and Civil Procedure WA [23.2.7].
However, the court need not require any such undertaking or make other provisions, such as in relation to whether or not any estoppel arises from the discontinuance, in its orders as to the discontinuance: see Pharmaust Ltd v Advance Healthcare Group Ltd [2007] WASC 125 (Le Miere J).
Where orders without any such provisions are made, the court should be inclined so to proceed, it seems to me, where the other side has not sought to persuade it to make orders to another effect, and where it is apparent to the court that in the interests of justice it should make those orders.
In this case it seems to me that the plaintiff has secured by other means a substantial part of what it sought by its originating process when control of the second defendant was taken over. However, there remains a significant part of what it sought that was not secured, principally relief for the way in which the plaintiff alleged the first defendant conducted the business of the second defendant. It is not apparent from the history of the proceedings in COR 214 of 2006 that it must fail in that latter respect. Further, the first defendant has not taken any part in the proceedings on the chamber summons to put forward another view.
In those circumstances, it seems to me that it is in the interests of justice, where there has been no hearing on the merits, that the plaintiff not be prevented, by a requirement for undertakings, from pursuing its causes of action subsequently. The plaintiff has not sought orders that would expressly permit it to pursue such causes of action; however, the effect of making an order without provision as to future proceedings would seem to be that the discontinuance of itself is not a defence to further proceedings: Civil Procedure WA [23.2.9].
Nor, it seems to me, is there any issue estoppel that would arise here. In any event, neither party has sought orders with respect to such an estoppel. In these circumstances, I determine that no orders in respect of any cause of action or issue estoppel are called for in the interests of justice. This takes me to the matter of costs.

Costs

Again the first defendant has not sought any orders in that regard. The plaintiff's orders are for no orders as to costs, as I have indicated, and the only orders as to costs in any of the interlocutory proceedings in this matter were costs reserved or no order as to costs.
The court has the power to make the order that the plaintiff seeks: see Pharmaust Ltd, where such an order was made. Such an order would be appropriate where the discontinuing party began and continued its action reasonably until the purpose to be served by continuing its proceedings had largely ceased in circumstances that it should not have foreseen: see Pharmaust Ltd [34].
Here it seems to me the plaintiff did so proceed, as can be seen in part from the fact that the first defendant had sought by its application for interlocutory injunction to prevent, on an interim basis at least, the plaintiff achieving the change of control it sought through these proceedings. I have not been shown that the plaintiff should have foreseen the change of control in any event. In those circumstances, I determine that I should make the costs order that the plaintiff has sought.
Finally, I note the order waiving conferral under O 59 r 9. In view of the difficulty in securing responses from the first defendant, it seems to me that it is appropriate to make that order also. It follows then that I make orders in terms of the chamber summons.