Destec Pty Ltd v Mineral Resources Limited

[2020] WASC 95

JURISDICTION     :   SUPREME COURT OF WESTERN AUSTRALIA

CITATION:   DESTEC PTY LTD  -v- MINERAL RESOURCES LIMITED  [2020] WASC 95

CORAM:   HILL J

HEARD:   27 FEBRUARY 2020

DELIVERED          :   27 FEBRUARY 2020

PUBLISHED           :   20 MARCH 2020

FILE NO/S:   CIV 3173 of 2019

BETWEEN:   DESTEC PTY LTD

Plaintiff

AND

MINERAL RESOURCES LIMITED

First Defendant

BULK ORE SHUTTLE SYSTEM PTY LTD

Second Defendant

Catchwords:

Corporations - Procedure - Application to set aside writ of summons - Where Corporations Act claim and general law claims advanced in single proceeding - Whether proceedings can be commenced by writ - Whether proceedings required to be commenced by originating process - Whether writ of summons should be set aside for non-compliance - Appropriate remedy

Legislation:

Rules of the Supreme Court 1971 (WA), O 2 r 1, O 4 r 1(a), O 59 r 9
Supreme Court (Corporations) (WA) Rules 2004, r 1.3, r 2.2, r 2.4

Result:

Writ of summons treated as it if were originating process filed under the Supreme Court (Corporations) (WA) Rules 2004

Category:    B

Representation:

Counsel:

Plaintiff	:	T C Russell
First Defendant	:	M L Bennett
Second Defendant	:	No appearance

Solicitors:

Plaintiff	:	Armeli & Molony Lawyers
First Defendant	:	Bennett + Co
Second Defendant	:	No appearance

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

Chamberlain & Chamberlain v Shirand Nominees Pty Ltd (Unreported, WASC, Library No 8332, 22 June 1990)

Litmus Australia Pty Ltd (in liq) v Canty [2006] NSWSC 196; (2006) 57 ACSR 71

Wildflower Electrical Refrigeration Service (WA) v Refrigid Pty Ltd [2014] WASC 382

HILL J:

(These reasons were delivered extemporaneously at the conclusion of the hearing.  They have been edited from transcript to correct matters of grammar and so as to include complete references in the form of footnotes.)

1. On 23 December 2019, the plaintiff filed a writ of summons which annexed a statement of claim. The statement of claim asserts that the first defendant has breached a shareholders deed entered into between the plaintiff and first defendant in respect of the second defendant and claims that the first defendant's breaches of the shareholders deed constitutes oppressive conduct within the meaning of that term in s 232 of the Corporations Act 2001 (Cth) (Act). The plaintiff seeks damages for breach of the shareholders deed together with an order pursuant to s 233 of the Act that the first defendant sell its shares in the second defendant to the plaintiff at a price to be determined.

2. On 9 January 2020, the first defendant filed a memorandum of conditional appearance together with a chambers summons seeking orders for the writ of summons to be set aside on the basis of non-compliance with the Supreme Court (Corporations) (WA) Rules 2004 (Corporations Rules). An amended chambers summons was filed on 24 January 2020 seeking an order, in the alternative, that pursuant to O 2 r 1 of the Rules of the Supreme Court 1971 (WA) (Rules) that the matter be treated as if commenced ab initio by originating process pursuant to the Corporations Rules.  It is the alternative relief that is pressed by the first defendant in addition to orders for the filing and serving of any affidavits in support of the application together with a concise statement of facts and issues.

3. The defendant opposes the application and denies there was any irregularity in its commencement of the proceedings by way of writ of summons.  In any event, the defendant says that no orders can be made on the application as the first defendant failed to confer prior to filing the application.

Conferral

1. In support of its chambers summons filed 9 January 2020, the first defendant filed a memorandum of conferral pursuant to O 59 r 9(1) of the Rules. The memorandum referred to correspondence exchanged between the solicitors for the plaintiff and first defendant between 24 December 2019 and 9 January 2020.

2. Paragraph 4.3.2 of the Consolidated Practice Directions makes plain that conferral requires the parties to exchange views for the purpose of trying to resolve the matter in issue and that an exchange of correspondence is inadequate.  That is, the obligation under the Rules is not complied with unless and until there has been oral conferral in respect of the substantive issues either by telephone or meeting.

3. However, strict compliance with O 59 r 9(1) is not required where it is of no utility and will only lead to unnecessary costs being incurred.[1]

   [1] Wildflower Electrical Refrigeration Service (WA) v Refrigid Pty Ltd [2014] WASC 382 [14].

4. I accept that the conferral that occurred between the plaintiff and first defendant did not comply with [4.3.2] of the Consolidated Practice Directions.  However, I note that after the chamber summons was filed on 9 January 2020, conferral, including oral conferral, has continued between the parties.  On the evidence before me, I consider that if oral conferral had occurred prior to the filing of the chamber summons, this would not have resolved the dispute, and would only have led to further costs being incurred by the parties.  For that reason, I consider that I can deal with the substantive application.

Requirements of the Corporations Rules

1. Rule 1.3 of the Corporations Rules is in the following terms: 

   (1)Unless the court otherwise orders, these rules apply to a proceeding in the court under the Corporations Act or the ASIC Act that is commenced on or after the commencement of these rules.

   …

   (2)The other rules of the court apply, so far as they are relevant and not inconsistent with these rules -

   (a)to a proceeding in the court under the Corporations Act or the ASIC Act that is commenced on or after the commencement of these rules.

2. Rule 2.2 of the Corporations Rules provides that:

   (1)Unless these rules otherwise provided, a person must make an application required or permitted by the Corporations Act to be made to the Court -

   (a)if the application is not made in a proceeding already commenced in the court – by filing an originating process; and

   (b)in any other case, and whether or not final or interlocutory relief is claimed – by filing an interlocutory process.

   …

   (3)An originating process must -

   (a)be in accordance with Form 2; and

   (b)state –

   (i)each section of the Corporations Act or the ASIC Act, or each regulation of the Corporations Regulations, under which the proceeding is brought; and

   (ii)the relief sought.

3. Rule 2.4 of the Corporations Rules states that:

   (1)Unless the Court otherwise directs, an originating process, or interlocutory process, must be supported by an affidavit stating the facts in support of the process.

   (2) Subject to rule 2.4A, an affidavit in support of an originating process must annex or exhibit a record of a search of the records maintained by the Commission, in relation to the company that is the subject of the application to which the originating process relates, carried out no earlier than 7 days before the originating process is filed.

4. It is clear from the terms of the Corporations Rules that first, unless there are already proceedings on foot, any application made under the Act is required to be made by originating process and not by writ of summons, and second, a supporting affidavit is required in every case unless the Court has directed otherwise.

5. However, once commenced by originating summons, there is no requirement that the plaintiff proceed in any particular manner. Subject to orders being made by the court in the appropriate case, the matter can proceed by way of pleadings. This is apparent from r 1.3(2) of the Corporations Rules.

Nature of Proceedings

1. The plaintiff did not concede that these proceedings were governed by the Corporations Rules. Rather the plaintiff contended that the primary relief sought in the proceedings concerned the breach of the shareholders agreement and that these were, in effect, hybrid proceedings. They noted that O 4 r 1(a) of the Rules requires every action in the court to be commenced by writ of summons. That obligation is expressly subject to the provisions of any Act and the Rules.

2. The first defendant submits that the Corporations Rules apply to these proceedings as the first defendant seeks orders pursuant to s 232 and s 233 of the Act. Counsel for the first defendant referred me to the decision of Barrett J in Litmus Australia Pty Ltd (in liq) v Canty:[2]

   A proceeding will be a 'proceeding … under the Corporations Act or the ASIC Act' if the claims made and relief sought have their source wholly within the relevant Act. But a proceeding will not fail to be a 'proceeding … under the Corporations Act or the ASIC Act' just because it also advances claims and seeks relief that have some other source. The first five words of r 1.3(1) are important. 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, at the same time making such other arrangements as were conducive to the just, cheap and quick resolution of the particular controversy.

   [2] Litmus Australia Pty Ltd (in liq) v Canty [2006] NSWSC 196; (2006) 57 ACSR 71 [43].

3. I agree with the views expressed by his Honour. 

4. In these proceedings, the plaintiff makes an application permitted by the Act, namely, an application for relief from oppression pursuant to s 232 and s 233 of the Act. Although the plaintiff also advances a claim based on the general law of contract for breach of the shareholders agreement, it is my view that these proceedings are proceedings under the Act.

5. This is consistent with the guidance that is provided by [4.1.4] of Civil Procedure which states that:

   The provisions of this Order relating to the form in which proceedings are to be commenced, and the way in which applications in pending proceedings are to be made, have no application when the court is exercising jurisdiction conferred on it by the Corporations Act 2001 (Cth) or the Australian Securities and Investments Commission Act 2001 (Cth). Those proceedings are to be commenced and pursued by new forms of process governed by the Corporations Rules: see the Supreme Court (Corporations) (WA) Rules.

6. The terms of the Corporations Rules are clear. The provisions of O 4 r 1(a) of the Rules are inconsistent with r 2.2(a) of the Corporations Rules. Rule 2.2(a) of the Corporations Rules requires any application under the Corporations Rules to be made by filing an originating process. Accordingly, it is my view that the plaintiff was required to commence these proceedings by way of originating process supported by affidavit.

Disposition

1. The fact that the proceedings were commenced by writ rather than originating process does not mean that the proceedings should be set aside for non‑compliance.

2. As is made plain by O 2 r 1(3) of the Rules, the court should not set aside any proceedings on the basis that they were commenced using an incorrect process.[3]  In any event, this is not the order sought by the first defendant.

   [3] Chamberlain & Chamberlain v Shirand Nominees Pty Ltd (Unreported, WASC, Library No 8332, 22 June 1990) p 6 ‑ 7 (Master White).

3. In my view, the commencement of the proceedings should be regularised in the following manner. First, the writ of summons should be treated as if it were an originating process filed under r 2.2 of the Corporations Rules. Second, the plaintiff should file an affidavit in support of its application which annexes a company search of the second defendant and the shareholders agreement. At the same time the plaintiff should file a concise statement, not exceeding five pages, summarising the material facts alleged to constitute the acts of oppression, the relief sought from the court and against whom, the primary legal grounds for the relief sought and a preliminary estimate of the value of the shares in the second defendant.

4. Otherwise, I consider that this is a matter that should properly proceed by way of pleadings.  The reason for that, as I indicated in my exchange with counsel for the first defendant, is that a number of the matters that are set out in the statement of claim could not properly be raised in an affidavit.  Once pleadings have closed, the matter should be listed before me for a strategic conference.

I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.

MG
Research Orderly to the Honourable Justice Hill

20 MARCH 2020