Cooper v Perrone
[2016] SASC 102
•4 July 2016
SUPREME COURT OF SOUTH AUSTRALIA
(Civil)
COOPER & ORS v PERRONE & ORS
[2016] SASC 102
Reasons of Judge Roder a Master of the Supreme Court
4 July 2016
PROCEDURE - SUPREME COURT PROCEDURE - SOUTH AUSTRALIA - PROCEDURE UNDER RULES OF COURT - COMMENCEMENT OF ACTION
Action commenced under Civil Rules - should have been commenced under Corporations Rules - permission to amend summons to comply with the form of originating process prescribed by the Corporations Supplementary Rules - permission conditional upon filing affidavits of deponents who can verify the contents of the statement of claim - action to proceed on pleadings.
PROCEDURE
Extension of time for service of summons on third and fourth defendants - proper reasons to extend time for service.
CORPORATIONS
Action commenced under Civil Rules - should have been commenced under Corporations Rules - failure to file affidavit as required by Rule 2.4 of Corporations Rules - permission to amend summons to comply with the form of originating process prescribed by the Corporations Supplementary Rules - permission conditional upon filing affidavits of deponents who can verify the contents of the statement of claim - action to proceed on pleadings.
COOPER & ORS v PERRONE & ORS
[2016] SASC 102
JUDGE RODER. On 19 August 2015 the plaintiffs commenced this action by summons, endorsed as being issued under Rule 34(3) of the Supreme Court Civil Rules 2006 (SA) (“the 2006 Rules”). The summons is in the form prescribed by Form 4 of the Third Schedule to the Supreme Court Civil Supplementary Rules 2014 (SA) (“the SCCSR”).
The summons is supported by a statement of claim, as is (subject to Rule 96 of the 2006 Rules) required by Rule 91 of the 2006 Rules.
The summons and statement of claim have been served on the first and second defendants, who have filed notices of address for service. The proceedings have not been served on the third and fourth defendants. I will return to that matter later in these reasons.
The Introduction to the statement of claim reads as follows:
The first plaintiff is the liquidator of the second and third plaintiffs and is seeking relief from the directors of the second and third plaintiffs in respect of a debt owed jointly and severally by them to the Deputy Commissioner of Taxation as a result of property transfers.
The causes of action relied on are:
1. breach of directors’ duties;
2. insolvent trading;
3. voidable transactions under the Corporations Act 2001.
The Introduction to the statement of claim is a fair summary of the pleading. So far as the Act is concerned, the plaintiffs rely on Sections 180, 181, 182, 183, 588FA, 588FB, 588FC, 588FDA, 588FE, 588FF, 588J, 1317E and 1317H. They also allege breaches of “fiduciary and/or equitable duties”.
The plaintiffs have used the wrong form. As they seek relief under the Act, the proceedings should have been issued under the Corporations Rules 2003 (SA) (“CR”).
The action should have been begun by an originating process in the form of Form 2 in Schedule 1 to the Corporations Supplementary Rules 2015 (SA) (the “CSR”), not – as has occurred - Form 4 of Schedule 3 to the SCCSR.
Further, the plaintiffs should have filed an affidavit (CR 2.4), not a statement of claim.
By FDN 6 filed on 27 April 2016, the plaintiffs seek orders:
1. That the Supreme Court Civil Rules 2006 apply to this proceeding and the Corporations Rules 2003 (South Australia) do not apply to this proceeding, nunc pro tunc.
2. Alternatively, that the plaintiffs be given permission to amend the Summons so that it complies with the Corporations Rules 2003 (South Australia) and that:
2.1the requirement to file an affidavit in accordance with Rule 2.4 of the Corporations Rules 2003 (South Australia) be dispensed with, or alternatively the time for the filing of an affidavit in support of the amended Summons be extended;
2.2the proceedings thereafter proceed on pleadings.
…
Mr Whitington, for the plaintiffs, put it to me that the application was made out of an abundance of caution.
Mr Robertson SC, for the first and second defendants, submitted that there is no need for the order sought in paragraph 1 of FDN 6. The 2006 Rules apply (save to the extent of any inconsistency) to proceedings under the CR (CR 1.3(2)). Mr Robertson submitted that the plaintiffs have no claim for an unfair preference and that the Section 588FE claims could be raised in new proceedings. In such proceedings, he said, the first and second defendants could rely on Section 588FF(3) – (see David Grant & Co Pty Ltd v Westpac Banking Corporation (1995) 184 CLR 265 and Gordon v Tolcher (2006) 231 CLR 334).
The first and second defendants are yet to make any application in respect of the allegedly statute barred causes of action but have clearly indicated their positions and reserved their rights.
There is no suggestion that the action is a nullity. The Court has jurisdiction in respect of the plaintiffs’ claims (Litmus Australia Pty Ltd (in liq) v Canty & Ors (2006) 198 FLR 184 at [36]). The jurisdiction of the Court has been invoked (eg Griffiths v ANZ Banking Group Limited (2002) 83 SASR 491) although in an irregular way. A procedural irregularity does not render an action void (2006 Rules, Rule 12).
Irregularities can be cured.
Mr Whitington relied on:
·Rule 1.3 of the CR;
·Rule 10 of the 2006 Rules;
·Rule 117 of the 2006 Rules;
·Rule 1.7 of the CR (I took him to also rely on Rule 1.8 of the CR);
·Rule 54 of the 2006 Rules;
·Section 1322 of the Act;
·Section 1337B of the Act; and
·the inherent jurisdiction of the Court.
Mr Robertson criticised the reliance on section 1322. I agree with him. However, there is no doubt that the Court does have power to cure the irregularity in question. Mr Robertson agreed that was the case.
It appears to me that the objection to the plaintiffs’ proceedings is quite literally a matter of form against substance. The plaintiffs have used the wrong form. They used Form 4 in the SCCSR. They should have used Form 2 in the CSR. The substance of their case is quite clear. It is not for me to decide whether Mr Robertson’s criticisms of that case are correct. Had the plaintiffs used the correct form (and an affidavit instead of a statement of claim), there is no doubt that when the matter was first before the Court there would have been an order that the action proceed on pleadings – by a statement of claim.
I do not think that there can be any injustice by the use of the wrong form of document (In the matter of Bevillesta Pty Ltd [2011] NSWSC 1378 at [28]). It is clear that the Court has jurisdiction to entertain the claims that the plaintiffs wish to advance. They have instituted an action which is not a nullity. As there is jurisdiction to determine the claims, the manner of commencement is of little importance (Palatium Pty Ltd v Koren Holdings Pty Ltd (No 2) [2015] WASC 311 at [13]).
The Full Court has held that there is power to make orders that would allow claims under the Act that would otherwise be out of time to be introduced by amendment (Davies & Anor v Chicago Boot Co (No 2) (2007) 96 SASR 164). I am not asked to go that far. I express no view as to whether any or all of the claims that are made under the Act are out of time. It is sufficient for me that the claims have already been made. Any order I make will not introduce a new claim.
In Griffiths v ANZ (supra) (at [53]), Doyle CJ held that it was appropriate to amend a summons which incorrectly invoked a jurisdiction that the District Court did not have so as to invoke an alternative jurisdiction that that Court did have. It seems to me that that decision applies a fortiori in this case – this Court does have jurisdiction to entertain the claims that have already been made in this action.
Litmus Australia v Canty (supra) was a case where a plaintiff sought to make claims under both the Act and the general law. The defendants submitted that the plaintiff had to proceed under the Act in the Corporations List and at general law in the general law list. I accept that that is not a submission that Mr Robertson makes for the first and second defendants. Relevantly, Barrett J said (at [43]):
… If a hybrid proceeding were to arise which, for some reason or other, could not conveniently be conducted in accordance with the Supreme Court (Corporations) Rules, the court itself would exclude those rules as contemplated by those opening words[1], at the same time making such other arrangements as were conducive to the just, cheap and quick resolution of the particular controversy: …
[1] The reference to “those opening words” is to the first five words of CR 1.3(1).
Mr Whitington sought an order primarily in terms of paragraph 1 of FDN 6. Mr Robertson submitted that that was inappropriate – the 2006 Rules already apply to the action that has been commenced. Mr Robertson submitted that if any order were to be made it should be made in the terms of paragraph 2 of FDN 6.
An issue arose as to whether any order should be made nunc pro tunc. Again, Mr Whitington sought such an order out of “an abundance of caution”.
Mr Robertson made submissions based on Brook v The Flinders University of South Australia (1988) 47 SASR 119 (“Brook”). That was a case involving both the Supreme Court Rules 1947 (“the 1947 Rules”) and the Supreme Court Rules 1987 (“the 1987 Rules”). The plaintiff issued a writ under the 1947 Rules claiming damages for slander and malicious falsehood. The plaintiff sought an extension of time under section 48 of the Limitations of Actions Act, because the action was out of time. The plaintiff filed a statement of claim 11 months later (as was permitted under the 1947 Rules). The defendant sought to strike out the statement of claim, partly on the basis that it pleaded causes of action other than slander and malicious falsehood and that those causes of action were also out of time. The plaintiff then sought to amend the endorsement on the writ.
von Doussa J held that the amendment should be allowed under Rule 53.01(1)(c) of the 1987 Rules. That Rule provided:
53.01(1) Subject to Rule 46.01(2) a party may amend any document, other than an order, filed by him in a proceeding:
(a)…
(b)…
(c)at any time with the leave of the Court on such terms as may seem just.
von Doussa J allowed the amendment, but on condition that it operate from the date on which notice of the proposed amendment had first been given to the defendant. That preserved the defendant’s right to take the time point in respect of the new causes of action.
Rule 57(3) of the 2006 Rules is to the same effect – an amendment may be made on “conditions the Court considers appropriate”. Similar conditions to those in Brook have been imposed under the 2006 Rules (eg B & P Falcinella Pty Ltd v Hamilton (2015) 122 SASR 6).
I do not consider it appropriate to apply that reasoning in this case. The plaintiffs are not seeking to introduce a new cause of action. The causes of action are already pleaded. The prejudice avoided by the condition imposed in Brook does not arise.
Mr Robertson submitted that I should impose the condition in Brook in respect of any order I made in respect of an affidavit. He asserted that the first and second defendants had a time point relating to the affidavit. I do not think that it is appropriate to do so. Such an order would not be for an amendment - there is no affidavit to amend and in any event an affidavit cannot be amended (Rule 54(8) of the 2006 Rules). An affidavit could only have effect from, at earliest, the date it is sworn. Again, in my view the prejudice identified in Brook could not arise and does not need to be addressed.
I conclude that the irregularity occasioned by the use of the wrong form should be cured. I propose to do that by giving permission to the plaintiffs to amend the summons to comply with the form of the originating process that should have been filed. There is no need to make any order about the statement of claim or the applicability of the 2006 Rules.
I accept Mr Robertson’s submission that the plaintiffs should be required to file an affidavit as required by CR 2.4 (see Jacobs v Edwards [2011] SASC 6 at [7] – see also Jacobs v Edwards (No 6) [2012] SASC 66). Mr Whitington did not resile from that. I propose to proceed in the manner ordered by Judge Lunn in Jacobs v Edwards [2011] SASC 6 at [6], namely that the amendment be conditional upon affidavits being filed with the amended form of originating process from deponents who can verify its contents from their own knowledge or from documents with evidentiary value.
Otherwise, it is apparent from the nature of the claims made that it is appropriate that this action thereafter proceed on pleadings. I will so order.
The plaintiffs have caused this problem. I order (subject to any application for a different order) that the plaintiffs pay the costs of this application, the costs of the amendment (if any) and the costs thrown away (if any) by reason of the amendment. Any application for a different costs order is to be made within 14 days.
By FDN 3 filed on 19 February 2016, the plaintiffs seek an extension of time for serving the “originating process” on the third and fourth defendants. This application does not affect the first and second defendants. The application is supported by an affidavit of Mr Moran affirmed on 19 February 2016. Mr Moran deposes that his process server was unable to personally serve the third and fourth defendants. In respect of the third defendant the evidence suggests that he was overseas and would return to Adelaide on 3 March 2016. There is no evidence as to why he has not been served since then.
In respect of the fourth defendant the evidence is that the fourth defendant may be in America.
It is clear that there have been attempts to properly serve the third and fourth defendants. I accept Mr Whitington’s submission that no further attempts have been made because it was considered desirable that the status of the documents be resolved on FDN 6.
In the circumstances I am satisfied that it is appropriate to order an extension of time for service. The plaintiffs’ solicitors may wish to consider whether an application should be made for presumptive service, at least in respect of the fourth defendant.
The costs of FDN 3 should be costs in the cause as between the plaintiffs and the third and fourth defendants.
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