Di Nella v Australian Manufacturers Corporation Pty Ltd [No 2]
[2023] WASC 207
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS
CITATION: DI NELLA -v- AUSTRALIAN MANUFACTURERS CORPORATION PTY LTD [No 2] [2023] WASC 207
CORAM: HILL J
HEARD: ON THE PAPERS
DELIVERED : 14 JUNE 2023
FILE NO/S: COR 79 of 2021
BETWEEN: DAVID PETER DI NELLA
Plaintiff
AND
AUSTRALIAN MANUFACTURERS CORPORATION PTY LTD
First Defendant
DANIEL MICHAEL DI NELLA
Second Defendant
DANIEL MICHAEL DI NELLA
D.M. DINELLA PTY LTD AS TRUSTEE FOR DANIEL MICHAEL DI NELLA FAMILY TRUST (ABN 49 611 478 063)
Plaintiff by counterclaim
DAVID PETER DI NELLA
D G C (AUST) PTY LTD (ACN 127 228 157) IN ITS OWN RIGHT AND AS TRUSTEE FOR DAVID PETER DI NELLA FAMILY TRUST (ABN 48 314 108 207)
Defendant by counterclaim
Catchwords:
Practice and procedure - Application by party to be joined as defendant - Amendment to pleading after filing of submissions - Application not opposed as a result of amendment - Appropriate costs order - Turns on own facts
Legislation:
Rules of Supreme Court 1971 (WA) O 66, r 1(1)
Result:
Application for joinder allowed
Plaintiff pay the costs of the second defendant and DM Di Nella of the application
Category: B
Representation:
Counsel:
| Plaintiff | : | No appearance |
| First Defendant | : | No appearance |
| Second Defendant | : | No appearance |
| Plaintiff by counterclaim | : | No appearance |
| Defendant by counterclaim | : | No appearance |
Solicitors:
| Plaintiff | : | Dentons Australia |
| First Defendant | : | In Person |
| Second Defendant | : | Frichot Lawyers |
| Plaintiff by counterclaim | : | Frichot Lawyers |
| Defendant by counterclaim | : | Dentons Australia |
Case(s) referred to in decision(s):
Di Nella v Australian Manufacturers Corporation Pty Ltd [2023] WASC 119
Frigger v Lean [2012] WASCA 66
HILL J:
On 17 April 2023, I delivered reasons for my decision that DM Dinella Pty Ltd as trustee for the Daniel Michael Di Nella Family Trust (ABN 49 611 478 063) had not properly been joined as a party to these proceedings.[1] Following this, on 8 May 2023, the second defendant and DM Di Nella Pty Ltd as trustee for the Daniel Michael Di Nella Family Trust filed a chamber summons seeking to have DM Di Nella Pty Ltd as trustee for the Daniel Michael Di Nella Family Trust (DM Di Nella) joined as a defendant to these proceedings.
[1] Di Nella v Australian Manufacturers Corporation Pty Ltd [2023] WASC 119 (Reasons).
Orders were made for the parties to file submissions and the application was otherwise to be determined on the papers. On 24 May 2023, orders were made for the filing of further submissions.
On 30 May 2023, the second defendant filed a further amended defence and counterclaim. The amendments amended a date in one of the paragraphs of the counterclaim and the subsections of s 233 of the Corporations Act 2011 (Cth) (Act) relied upon for the relief sought.
The plaintiff says that, as a result of these amendments, he no longer opposes the application and accepts these issues are matters for trial. However, the plaintiff says that orders should be made for the second defendant and DM Di Nella to pay his costs thrown away on the application from 8 May 2023 until 30 May 2023 and for indemnity costs after 30 May 2023.
The defendant says that this contention is without merit and that the costs of the application should follow the event.
For the reasons that follow, it is my view that the plaintiff should pay the costs of the second defendant and DM Di Nella of the application in any event.
Relevant procedural history
On 18 May 2021, the plaintiff filed an originating process against Australian Manufacturers Corporation Pty Ltd (AMC) and Mr Daniel Di Nella as defendants. The originating process was made under s 232 and s 233 of the Act and sought various relief including a declaration that the second defendant's conduct has caused the affairs of AMC to be conducted in a manner that is contrary to the interests of the members of AMC as a whole and/or oppressive as against the plaintiff, as well as orders that the second defendant sell his share in AMC to the plaintiff and that the second defendant resign as a director of AMC.
On 1 June 2021, orders were made by Master Sanderson for the filing of pleadings.
On 25 June 2021, the plaintiff filed his statement of claim.
On 27 August 2021, the second defendant filed his defence to the plaintiff's claim as well as a counterclaim. Amended pleadings have been filed on 1 November 2021, 3 February 2023 and 30 May 2023. In response to the plaintiff's claim, the second defendant pleads that:
(a)at all material times, AMC has been acting in its capacity as corporate trustee of the D.P and D.M Di Nella Unit Trust which traded as Park Motor Body Builders (ABN 32 846 160 902);
(b)the unit holders of the trust were the second defendant by counterclaim and DM Di Nella.
The second defendant responds to the matters relied on by the plaintiff as constituting oppressive conduct and denies the plaintiff is entitled to the relief sought or any relief.
In his counterclaim, the second defendant contends the plaintiff's conduct has been oppressive to his interests. In addition, the second defendant pleads various breaches of duty owed by AMC in its capacity as trustee to DM Di Nella and that as a result, DM Di Nella has suffered loss. The specific relief sought by the second defendant include a declaration that the plaintiff's conduct was contrary to the interest of the members of AMC as a whole, as well as oppressive to, unfairly prejudicial to or unfairly discriminatory against the second defendant. As a consequence, the second defendant sought an order pursuant to s 233(1)(d) of the Act for the plaintiff to sell his share in AMC to the second defendant and for the defendant by counterclaim to transfer its unit in the Trust to DM Di Nella, as well as an order pursuant to s 233(1)(j) of the Act that the plaintiff resign as a director. In the alternative, the second defendant sought orders pursuant to s 233(1)(e) of the Act that the second defendant sell his share in AMC to the plaintiff and DM Di Nella transfer its units in the Trust to the defendant by counterclaim.
The plaintiff filed a reply and defence to the counterclaim on 22 October 2021, which was amended on 8 December 2021 and 17 February 2023. In each of these documents, the plaintiff admitted the matters at [10(a)] and [10(b)]. As part of the defence to the counterclaim, the plaintiff denied DM Di Nella was capable of being a 'counterclaimant' in the proceedings. No steps were taken to resolve this issue by either party until earlier this year.
At a strategic conference held on 23 February 2023, this issue was raised and the matter was programmed to be dealt with on the papers. On 17 April 2023 I delivered reasons for my decision that DM Di Nella had not been properly joined to the proceedings. Orders were made on 5 May 2023 for the second defendant's application for joinder of DM Di Nella to be filed together with the filing of submissions by both parties.
Following the filing of these submissions, the second defendant's solicitors requested that I not deliver my reasons for decision until after they had had an opportunity to file further submissions.[2] On 24 May 2023, orders were made by consent for the parties to file further submissions.
[2] Email from Frichot Lawyers to the Associate to Hill J dated 22 May 2023.
On 30 May 2023, the second defendant filed a further re-amended defence. The amendments to the counterclaim expanded the relief sought by the second defendant to orders under s 233(1)(c) and (j) of the Act. These subsections allow the court to make orders regulating the conduct of the company's affairs in the future and to require a person to do a specified act. On the same date, the second defendant filed supplementary submissions in support of its application for joinder which referred to a number of authorities of various state supreme courts in support of the proposition that relief can be granted under s 233 of the Act where a company is acting as trustee and the oppression relates to the affairs of the trust.
As a consequence of these amendments, in submissions filed on 6 June 2023, the plaintiff conceded that DM Di Nella should be joined as the third defendant to the proceedings and sought their costs of the application. Specifically, the plaintiff contends that the second defendant and DM Di Nella should pay the plaintiff and second defendant by counterclaim's costs thrown away in relation to the application from 8 May 2023 to 30 May 2023 and after 30 May 2023 on an indemnity basis.
Legal principles
It is not in dispute that, pursuant to s 37(1) of the Supreme Court Act 1935 (WA) the question of costs is in the discretion of the court. This discretion is unfettered but must be exercised judicially.[3]
[3] Frigger v Lean [2012] WASCA 66 [53].
In exercising its discretion, the court seeks to achieve what is fair and just as between the parties according to the circumstances of the particular case. This includes making an order that a party be liable for the other side's costs on an indemnity basis. The categories of cases in which the court may order indemnity costs are not closed.
The court may order indemnity costs:
(a)as a mark of disapproval by reason of its assessment as to the existence of a level of improper or unreasonable conduct in the litigation; or
(b)where a party persists in pleading an untenable case where it is clear this should not have occurred.
However, an order for indemnity costs is not punitive; it is designed to compensate a party fully for the costs that have been incurred.
Disposition
The general rule under O 66 r 1(1) of the Rules of the Supreme Court 1971 (WA) is that the costs of an application should follow the event. In this case, given that joinder has now been conceded, the general rule would result in the plaintiff paying the costs of the second defendant and DM Di Nella.
The plaintiff relies on two reasons for its argument that this general rule should not apply in this case. The first is that the second defendant and DM Di Nella delayed in making this application. There is no question that there has been a delay in bringing this application. However, this, in my view, is not a sufficient reason to depart from the general rule.
The second is that there was insufficient conferral or explanation as to why DM Di Nella should be joined as a party and this did not occur until after receipt of the submissions in reply and the amended defence and counterclaim. For the following reasons, I do not accept this argument.
First, it should have been clear to the plaintiff that the second defendant by its defence and counterclaim contended the affairs of the trust were relevant to the issues in these proceedings. It is expressly pleaded that the first defendant carried on business as a trust, which is admitted by the plaintiff. On this basis, I accept that the unitholders of the trust have an interest in the proceedings and should be joined to the proceedings.
Second, there are a number of authorities, as summarised in the reply submissions filed by the second defendant and DM Di Nella, including intermediate appellate court authority, that address whether trustee companies can be the subject of oppression proceedings and the types of relief that can be granted. The plaintiff's solicitors should have been aware of these authorities prior to its decision to oppose the application for joinder.
Third, I do not accept that the amendments to the defence and counterclaim are as significant as contended by the plaintiff. As set out by the second defendant and DM Di Nella, the relevant question for the court is whether the pleadings support the prayer for relief or whether some other relief ought be granted. Ultimately, this is a matter for the court.
Conclusion and orders
For these reasons, I consider the appropriate costs order is that the plaintiff should pay the costs of the second defendant and DM Di Nella of the joinder application.
I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
FD
Associate to the Honourable Justice Hill
14 JUNE 2023
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