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Chahwan v Euphoric Pty Ltd

Chahwan v Euphoric Pty Ltd

Case [2009] NSWSC 805 12 June 2009

Trusts and Trustees

Issue Estoppel

Amendment of Pleadings

Limitation Periods

Trusts & Equity

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Reported Decision:
73 ACSR 252

New South Wales

Supreme Court

CITATION: Chahwan v Euphoric Pty Ltd trading as Clay & Michael & anor [2009] NSWSC 805

HEARING DATE(S): 10 June 2009

JURISDICTION: Equity Division
Corporations List

JUDGMENT OF: Brereton J

EX TEMPORE JUDGMENT DATE: 12 June 2009

DECISION: Leave to amend granted

CATCHWORDS: TRUSTS AND TRUSTEES – exceptional circumstances jurisdiction - Proceeding by beneficiary against third party where trustee will not sue – application for leave to amend to make clear basis on which plaintiff claims standing – where sufficiently arguable that liquidator which controls trustee will not bring proceedings – where leave under Corporations Act, s 237, previously refused - whether determined on preliminary application. AMENDMENT – Whether claim must fail due to limitations defence – where limitation is at least arguably not applicable – arguably limitation issue should not be determined at preliminary stage – whether amendment adds an additional cause of action – (NSW) Civil Procedure Act 2005, s 64, s 65(2)(a), (c). ESTOPPEL – Whether proceedings barred by Anshun estoppel arising out of failure to raise issue in earlier District Court proceedings – where previously held that no clear case of Anshun estoppel given District Court’s lack of corporations and limited equitable jurisdiction – held: not reason to reject amendment. AMENDMENT – Discretionary grounds – where no additional prejudice will be occasioned by allowing amendment that simply clarifies basis upon which standing is claimed

LEGISLATION CITED: (CTH) Corporations Act 2001 s 237
(NSW) Civil Procedure Act 2005 s 64(1), s 64(2), s 64(3), s 65, s 65(2)(a), s 65(2)(c)
(NSW) Contracts Review Act 1980

CATEGORY: Procedural and other rulings

CASES CITED: Alexander v Perpetual Trustees WA Ltd [2004] HCA 7, (2003) 216 CLR 109
Baldry v Jackson [1976] 1 NSWLR 19
Brickfield Properties Ltd v Newton [1971] 3 All ER 328
Brinds Ltd v Chapmans Ltd (Supreme Court of New South Wales, Needham J, 24 September 1985, unreported)
Chahwan v Euphoric Pty Ltd [2006] NSWSC 1002
Chahwan v Euphoric Pty Ltd [2008] NSWCA 52
Chatsworth Investments Ltd v Cussins (Contractors) [1969] 1 All ER 143
Hayim v Citibank NA [1987] AC 730, [1987] 3 WLR 83
Ishac v David Securities Pty Limited (No 9) (Supreme Court of New South Wales, Young J, 5 June 1992, unreported)
Lidden v Composite Buyers Ltd (1996) 139 ALR 549
McGee v Yoemans [1977] 1 NSWLR 273
Ramage v Waclaw (1988) 12 NSWLR 84
Shang v Zhang [2007] NSWSC 856
Stainton v Carron Co (1854) 18 Beav 146, 52 ER 58
Stephenson v Garnet [1898] 1 QB 677
Wardley Australia Ltd v Western Australia (1992) 175 CLR 514
Yassim v Australian Mid-Eastern Club Ltd (1989) 15 ACLR 449

PARTIES: Elie Chahwan (plaintiff)
Euphoric Pty Ltd t/as Clay & Michael (first defendant)
Bycoon Pty Ltd (in liq) (second defendant)

FILE NUMBER(S): SC 1787/05

COUNSEL: Mr R McKeand SC (plaintiff)
Mr G Lucarelli (first defendant)

SOLICITORS: Simon Diab & Associates (plaintiff)
Blake Dawson Waldron (first defendant)

IN THE SUPREME COURT

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Chahwan v Euphoric Pty Ltd

Details

AGLC: Chahwan v Euphoric Pty Ltd [2009] NSWSC 805
Case: [2009] NSWSC 805
Decision Date: 12 June 2009

CaseChat Overview and Summary

Euphoric Pty Ltd, a company in liquidation, was the defendant in a proceeding brought by Chahwan, who sought to amend his statement of claim to clarify his basis for standing to sue. The dispute was before the Supreme Court of New South Wales. The plaintiff's original claim was based on the assertion that the liquidator, who controlled the trustee, would not bring proceedings against the defendant, and therefore, he had standing to sue on behalf of the company. The court had previously refused the plaintiff leave to amend the statement of claim under section 237 of the Corporations Act. The plaintiff sought leave to amend his statement of claim to make clear the basis upon which he claims standing to sue and to address the limitation and Anshun estoppel defences raised by the defendant.

The legal issues before the court were whether the plaintiff should be permitted to amend his statement of claim to clarify his basis for standing to sue, despite the defences raised by the defendant. The court considered whether the amendment would add an additional cause of action, whether the limitation issue should be determined at the preliminary stage, and whether the proceedings were barred by Anshun estoppel arising out of the failure to raise the issue in earlier District Court proceedings. The court also considered whether there would be any prejudice to the defendant if the amendment was allowed.

The court held that there were sufficiently arguable grounds to permit the plaintiff to amend his statement of claim. The court held that the amendment would not add an additional cause of action, and that the limitation issue should not be determined at the preliminary stage. The court also held that the proceedings were not barred by Anshun estoppel, given the District Court's lack of corporations and limited equitable jurisdiction. The court held that there would be no additional prejudice occasioned by allowing the amendment, which simply clarified the basis upon which standing was claimed.

The court granted the plaintiff leave to amend his statement of claim to clarify his basis for standing to sue. The court held that the amendment would not add an additional cause of action, and that the limitation issue should not be determined at the preliminary stage. The court also held that the proceedings were not barred by Anshun estoppel. The court held that there would be no additional prejudice occasioned by allowing the amendment.

Orders