Bozic v Rand Mining Ltd [No 2]
[2021] WASC 92
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS
CITATION: BOZIC -v- RAND MINING LTD [No 2] [2021] WASC 92
CORAM: ALLANSON J
HEARD: 7 APRIL 2021
DELIVERED : 7 APRIL 2021
FILE NO/S: CIV 2485 of 2018
BETWEEN: FRANJO BOZIC
Plaintiff
AND
RAND MINING LTD
Defendant
Catchwords:
Practice and procedure - Where plaintiff applies to add party as second defendant to action - Where dispute between plaintiff and proposed defendant underlies plaintiff's claim in the action - Whether proposed defendant a necessary party - Whether joinder should be refused for apparent deficiency in proposed pleading - Turns on own facts
Legislation:
Rules of the Supreme Court 1971 (WA)
Result:
Joinder granted
Category: B
Representation:
Counsel:
| Plaintiff | : | Mr J C Yeldon |
| Defendant | : | Mr P J Ward |
Solicitors:
| Plaintiff | : | Westmont Legal |
| Defendant | : | Nova Legal |
Case(s) referred to in decision(s):
Dolphin Quay Pty Ltd v Appeal Holdings Pty Ltd [2011] WASC 352
Kestrel Coal Pty Ltd v Longwall Roof Supports Ltd [2003] QSC 187
News Ltd v Australian Rugby Football League Ltd (1996) 64 FCR 410
Tiao v Lai [No 2] [2010] WASCA 189
ALLANSON J:
Introduction
The plaintiff, Franjo Bozic is registered as the holder of 250,000 shares in the defendant, Rand Mining Limited. On 25 August 2016, the board of Rand Mining resolved to prohibit the registration of any transfer of the shares until a dispute regarding the legal and beneficial ownership of the shares had been resolved.
Mr Bozic commenced this action on 23 August 2018. He seeks relief including a declaration that the resolution of 25 August 2016 is void, and an order that Rand Mining register any share transfer of his shares.
By its defence, filed 18 June 2020, Rand Mining denies the resolution was void. It pleads that it is entitled to apply a holding lock to prevent further transfer of the shares 'in circumstances where the board of directors of the defendant is aware of a genuine dispute as to the plaintiff's title and right to transfer the shares in question'.[1] The dispute as pleaded relates to a claim that Mr Bozic had pledged the shares as security for repayment of loans made to him by Mr Anton Billis.[2]
[1] Defence [5(b)].
[2] Defence [5(c)].
Rand Mining further specifically pleads that Mr Bozic's claim is not justiciable without the joinder of Mr Billis as a defendant.[3]
[3] Defence [9(a)].
By originating summons, filed 13 November 2020, Mr Bozic applied to join Mr Billis as the second defendant to this action.
Rand Mining, understandably given its defence, did not oppose Mr Billis being joined as a defendant, but made submissions regarding the proposed amended statement of claim.
Mr Billis filed written submissions and counsel appeared and opposed the proposed joinder.
Procedural history
The history of this matter is complicated. It is necessary to consider not only this action, but proceedings, CIV 2557 of 2017, commenced by Mr Bozic in 2017. I will refer to the two actions as the 2017 action and the 2018 action.
In September 2017, Mr Bozic began proceedings against four defendants: Mr Billis, Rand Mining, Tribune Resources Limited, and Phanatchankorn Wichaikul. That action is continuing.
There have been long periods in which nothing was done. The 2017 action was stayed between 1 March 2018 and 11 July 2018, following an order for security for costs. The 2018 action was commenced against Rand Mining shortly after the stay ended.
On 27 August 2019, the 2017 action was put onto the Inactive Cases List on the basis that no procedural step had been taken for 12 months by any party. It remained on the Inactive Cases List until 25 February 2020.
While Rand Mining was a party to the 2017 action, the issues pleaded had some limited overlap with those in the 2018 action. Mr Bozic pleaded that, '[as] part of a contra exchange for services rendered', 250,000 options to acquire shares in Rand Mining were issued to him in or about 1998, that he exercised the option, and the 250,000 shares were issued to him on or about 2002.[4] Mr Bozic pleaded a further or alternative claim of an agreement with Mr Billis in relation to 500,000 shares in Rand Mining.[5] He pleaded breach of the agreement by Mr Billis' failure to put a resolution to the board of Rand Mining that it issue Mr Bozic with 500,000 shares.[6]
[4] Statement of claim [8].
[5] Statement of claim [10].
[6] Statement of claim [12] - [13].
Although the 250,000 shares may have been part of that larger parcel of shares, Mr Bozic sought no relief in relation to the beneficial ownership of the shares held in his name.
Mr Billis filed a defence in the 2017 action on 21 April 2020, in which he pleaded:
(b)… the plaintiff pledged the 250,000 Rand shares as security for a loan provided by him to the plaintiff in 2005 in respect of a project in Indonesia;
(c)on 25 August 2016 the Board of Rand having been advised of the dispute as to the ownership of the shares resolved pursuant to ASX Listing Rule 8.10.1(c) to place a holding lock on the Rand shares;[7]
[7] Defence of first defendant [3].
This plea was not responsive to anything pleaded by Mr Bozic. Mr Billis did not counterclaim for a declaration or other relief regarding the shares held by Mr Bozic.
Rand Mining and Tribune Resources also filed a joint defence on 21 April 2020, in which they also alleged the shares were pledged to Mr Billis as security, and:
(a)on or around 25 August 2016, the board of directors of the Second Defendant (Rand's Board) became aware of a dispute arising as to the beneficial and legal ownership of the Rand Shares because the loan referred to in paragraph 5(a) above had not been repaid by the Plaintiff and was due and payable;
(b)on 25 August 2016, Rand's Board passed a circular resolution to the effect that until the dispute regarding the ownership of Rand Shares is resolved and Rand is provided with evidence as to the beneficial and legal ownership of the Rand Shares any purported transfer of Rand Shares will not be registered;
Again the plea was not responsive to anything pleaded by Mr Bozic, and Rand Mining did not counterclaim.
By the time Mr Billis and Rand Mining pleaded the issue of the dispute about the beneficial and legal ownership of the shares, Mr Bozic had already commenced the 2018 action in which he challenged the resolution to place a holding lock on the shares.
On 18 June 2020, Rand Mining applied by summons for the 2018 action to be stayed pursuant to O 17 r 4 of the Rules of the Supreme Court 1971 (WA) pending resolution of the 2017 proceedings. That rule provides for a defendant to proceedings to seek interpleader relief.
Also on 18 June 2020, Rand Mining filed its defence to the 2018 action, in which it pleaded that the plaintiff's claims are not justiciable without joinder of Mr Billis as a defendant. Although counsel for Rand Mining described the defence as an interpleader defence, it is not so limited.
On 30 June 2020, Mr Bozic filed an amended writ and statement of claim in the 2017 action. Rand Mining remained a party to the amended writ, but the claims against it were deleted.
The amended statement of claim retained the reference to Mr Bozic being the registered holder of 250,000 shares in Rand Mining. In [2] of the Prayer for Relief, Mr Bozic sought, 'the orders sought by the Plaintiff in CIV 2485 of 2018'. He did not otherwise seek any relief against Rand Mining.
On 5 August 2020, Rand Mining was removed as a party to the 2017 action. The 2018 action is the only proceeding in which the title to the Rand Shares is raised as an issue.
The power to join
Mr Bozic did not specify the rule under which he sought to join Mr Billis as a defendant to the 2018 action.
The court has power under O 18 r 6(2) to:
order that any person who ought to have been joined as a party or whose presence before the Court is necessary to ensure that all matters in dispute in the cause or matter may be effectually and completely determined and adjudicated upon, be added as a party.
The test, on an application to join a third person to an action, is whether that person's rights against or liabilities to any party to the action in respect of the subject matter of the action are directly affected by any order which may be made in the action.[8]
[8] See Tiao v Lai [No 2] [2010] WASCA 189 [109] ‑ [111]; News Ltd v Australian Rugby Football League Ltd (1996) 64 FCR 410, 524.
There are cases where the court may consider, at the application for joinder, whether a reasonable cause of action can be demonstrated against the proposed party, rather than defer that consideration to any application for summary dismissal or strike out brought after a party has been joined.[9] In this case, Mr Bozic has filed a minute of proposed further amended writ and statement of claim.
[9] See Dolphin Quay Pty Ltd v Appeal Holdings Pty Ltd [2011] WASC 352 cf Kestrel Coal Pty Ltd v Longwall Roof Supports Ltd [2003] QSC 187 [16].
But the question raised by O 18 r 6 can often be determined by considering the issues joined by the existing parties to the action. The power under r 6(2) may be exercised by the court on its own motion. In the present case, where Rand Mining has directly raised the need for Mr Billis to be joined, and there is an underlying question whether Mr Bozic pledged the shares as security to Mr Billis, I believe that Mr Billis' presence before the court is necessary.
Mr Billis sought to be heard on the application for joinder and filed submissions, contending that the minute of proposed statement of claim filed by Mr Bozic contained no allegations that would give rise to a cause of action against him.
Mr Billis further contended that by the proposed joinder, Mr Bozic seeks to raise matters which should properly have been alleged in the 2017 proceedings.
I do not accept that either argument is a sufficient basis to refuse joinder. Mr Bozic is registered as the holder of the 250,000 shares. The allegation that they are charged as security to Mr Billis for a loan in 2005, and that he has an equitable interest in the shares, is something that Mr Billis has asserted. He has deposed to it in an affidavit sworn in the 2018 action. It is not something that Mr Bozic needs to plead or prove.
The claims by Mr Billis regarding his interest in the shares was pleaded by him in the 2017 action. But that plea was not responsive to anything in the plaintiff's claim, and was not the subject of a counterclaim. The joinder of Mr Billis is not the re‑litigation of matters, or the advancing of claims that Mr Bozic made an abandoned in the 2017 action.
I will order pursuant to O 18 r 6(2) that Mr Billis be added as a defendant to the proceedings in CIV 2485 of 2018. The plaintiff should bring in a minute of consequential orders pursuant to O 18 r 8 to give effect to this decision.
I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
MG
Associate to the Honourable Justice Allanson
7 APRIL 2021
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