Cote v Devine [No 3] - [2014] WASC 443

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION: COTE -v- DEVINE [No 3] [2014] WASC 443

CORAM: MASTER SANDERSON

HEARD: 4 SEPTEMBER 2014

DELIVERED : 13 NOVEMBER 2014

PUBLISHED : 26 NOVEMBER 2014

FILE NO/S: COR 25 of 2013

MATTER :Aurora Balanced Living Properties Pty Ltd (Administrators Appointed)
Aurora Balanced Living Pty Ltd (Administrators Appointed)

BETWEEN: ROBERT COTE
MARIE CELINE SOLANGE CHOUINARD
GEORGINA MARGARET MOORE
Plaintiffs
AND
TRENT DEVINE
SULE ARNAUTOVIC
RODERICK MACKAY SUTHERLAND
Defendants

Catchwords:

Corporations law - Application to amend originating process - Turns on own facts

Legislation:

Corporations Act 2001 (Cth)
Corporations Regulations 2001 (Cth)

Result:

Application refused

Category: B

Representation:

Counsel:

Plaintiffs: Mr R M Garratt QC
Defendants: Mr D K J Skender

Solicitors:

Plaintiffs: Culshaw Miller
Defendants: Sparke Helmore

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

Ainsworth v Criminal Justice Commission (1992) 175 CLR 564
Cote v Devine [No 2] [2013] WASC 313

MASTER SANDERSON: This is the plaintiffs' application to amend the originating process in terms of a minute of amended originating process dated 14 October 2014. The application was opposed by the defendants. The application is of some consequence. It is difficult to see how, if the amendments are refused, there will be any life left in the action. For reasons which follow I am satisfied the amendments ought be refused.
These reasons should be read in conjunction with my reasons for allowing an earlier amendment: see Cote v Devine [No 2] [2013] WASC 313. Since the publication of those reasons there have been a number of relevant developments. First, the liquidators have formally adjudicated the proofs of debt lodged in relation to Aurora Balanced Living Properties Pty Ltd (in liquidation) (ABLP). These proofs include many of the claims made in the originating process. Secondly, the plaintiffs have commenced COR 55 of 2014 to appeal certain of the adjudications but not others. Thirdly, there are no funds in the liquidation of Aurora Balanced Living Pty Ltd (ABL). Thus the liquidators cannot fund any litigation concerning that company or pay admitted claims of the creditors. Consequently, the liquidators do not intend to adjudicate on debts in relation to that company.
In relation to the proposed par 1 of the amended originating process, the plaintiffs say the liquidators have previously excluded the second‑named plaintiff for voting purposes in respect of the debt for which they have now subsequently admitted her as a creditor of ABLP. In fact, the second‑named plaintiff has been admitted as a creditor for an amount of $678,690.27 as against the amount of $764,781 for which the proof of debt was lodged. The remaining amount is subject to an appeal against the liquidators' decision in COR 55 of 2014.
What the plaintiffs are seeking by the amendment to par 1 is effectively a declaration the liquidators cannot, at some stage, revoke or amend the admitted proof of debt. The plaintiffs say the liquidators have declined to confirm that the amount for which Ms Chouinard (the second‑named plaintiff) has been admitted for distribution purposes is commensurate with her voting entitlement.
The entitlement of a liquidator to revoke or amend a decision in relation to a proof of debt is found in reg 5.6.55(1) of the Corporations Regulations 2001 (Cth). Pursuant to reg 5.6.55(3), if a liquidator decides to revoke a proof of debt he is required to give notice to the creditor. If a creditor is dissatisfied with that decision it is subject to appeal. In my view, that is the proper course in this case. At present there is no indication from the liquidators they will revoke or vary Ms Chouinard's proof of debt. It is certainly the case they have declined to confirm they will not do so. But in my view, to litigate this issue, which is effectively moot as matters stand at the moment, would be in no one's interest. Unless and until there is a change of position by the liquidators, the matter should not be the subject of further action.
The same arguments apply in relation to Ms Moore (the third‑named plaintiff). She lodged a proof of debt in an amount of $88,038. Of that amount $43,856.49 was rejected. Part of the objected portion is subject of the appeal in COR 55 of 2014. In my view, it would serve no useful purpose to allow amendment of par 2 as proposed by the plaintiffs for the same reasons set out in relation to par 1.
By par 3 of the proposed amendments, the plaintiffs seek a declaration that Navitas Business Modelling Pty Ltd (Navitas) is not a creditor in an amount of $127,957.50. Navitas lodged a proof of debt in this amount. It was rejected by the liquidators. There has been no appeal against that decision. Once again, it is possible under reg 5.6.55(2) the liquidators will revoke their decision and admit Navitas as a creditor. But there is no indication this will happen and if it does, the relevant provisions of the Corporations Act 2001 (Cth) and Corporations Regulations will be triggered to allow the plaintiffs to seek a review of that decision. That is the proper course to follow and at present, no useful purpose would be served by allowing the amendment.
In relation to the proposed amendment to par 4, this concerns claims of Ms Moore to be a creditor of the proposed sixth defendant (ABL). As mentioned above, ABL has no assets and any claim would not be defended. The liquidators refer to s 545 of the Corporations Act, correctly, they are not liable to incur any expense in relation to the winding‑up of a company unless there is sufficient property available. As there are no funds available they say amendment as proposed should not be permitted. Reference was made to the High Court's decision in Ainsworth v Criminal Justice Commission (1992) 175 CLR 564, 581 ‑ 582.
The liquidators' submission on this issue ought be accepted. There is no utility in the matter being litigated. There will be no contradictor and no benefit to Ms Moore if the application is successful. The amendment ought not be permitted.
The proposed amended par 5 relates to discovery and inspection of certain books. The plaintiffs agree the relief is also sought in proceeding COR 55 of 2014. There is no point in having the same relief sought in two separate proceedings. Accordingly, there is no utility in allowing the amendment as proposed by the plaintiffs.
The proposed amended par 6 seeks a declaration that neither director of ABLP or ABL is a creditor of either company in certain respects. The directors in question are the proposed third and proposed fourth defendants. Once again this is a matter to be determined by the liquidators. It is not a matter which should be the subject of an action such as this.
Finally the proposed order 7 seeks declarations as to the status of the first‑named plaintiff in the liquidation. This is a matter that should be dealt with by the liquidator and if an appeal is brought from his decision then the proper process can be followed.
In summary then, I am not satisfied the amendments proposed by the plaintiffs ought be permitted. They serve no useful purpose. Nor am I satisfied any of the parties the plaintiffs seek to join should be made parties to the action. There is now a real question as to whether the action in COR 25 of 2013 is of any further interest, save with respect to costs. However, that was not a point which was argued during the course of this hearing. For the present, it is sufficient if I say I would refuse leave to amend in terms of the minute. I will hear the parties as to what further orders ought be made.