Fewin Pty Limited v Prentice

Case [2018] FCA 852

FEDERAL COURT OF AUSTRALIA

Fewin Pty Limited v Prentice [2018] FCA 852

File number: NSD 484 of 2017
Judge: MARKOVIC J
Date of judgment: 8 June 2018
Catchwords:

PRACTICE AND PROCEDURE – application for leave to amend statement of claim – where some of the proposed amendments are based on a recent court decision – where some of the proposed amendments relied on factual matters which arose after the commencement of the proceeding – whether respondent would be prejudiced if leave was granted – whether proposed amended statement of claim is embarrassing – whether leave should be granted – application allowed in part.

PRACTICE AND PROCEDURE – application for a stay of this proceeding until costs of an earlier proceeding are paid – where different applicants and different relief is sought in each proceeding – whether current proceeding is brought on the basis of the same, or substantially the same, cause of action on which the earlier proceeding was based – application allowed.
Legislation:

Bankruptcy Act 1966 (Cth) ss 134, 177, 178, 179

Federal Court of Australia Act 1976 (Cth) ss 23, 37M

Insolvency Law Reform Act 2016 (Cth)

Federal Court Rules 2011 (Cth) rr 16.51(4), 16.53, 26.15

Insolvency Law Reform (Transitional Provisions) Regulation 2016 (Cth) reg 5(2)(p)

Uniform Civil Procedure Rules 2005 (NSW) r 12.4

Cases cited:

Aon Risk Services Australia Limited v Australian National University (2009) 239 CLR 175

Banque Commerciale SA, En Liquidation v Akhil Holdings Ltd (1990) 169 CLR 279

CGU Insurance Ltd v Watson (as trustee of the deed of arrangement in respect of Greaves) [2007] NSWCA 301

Coshott v Barry [2016] FCAFC 173

Coshott v Burke (No 2) [2018] FCAFC 81

Fewin Pty Ltd v Burke (No 3) [2017] FCA 693

Hutchinson v Nominal Defendant (1972) 1 NSWLR 443

McKellar v Container Terminal Management Services Ltd [1999] FCA 1639

Morgan v Banning (1999) 20 WAR 474

Pi v Zhou [2016] NSWCA 148

Pi v Zhou [2017] NSWCA 16

QS Holdings Sarl v Paul's Retail Pty Ltd (No 2) [2011] FCA 1038

Research In Motion Ltd v Samsung Electronics Australia Pty Ltd (2009) 176 FCR 66

Servcorp Ltd v Nuclei Ltd [2011] FCA 1229

University of Sydney v ResMed Limited (No 5) [2012] FCA 232

Young v Thomson [2017] FCAFC 140

Date of hearing: 18 December 2017
Registry: New South Wales
Division: General Division
National Practice Area: Commercial and Corporations
Sub-area: General and Personal Insolvency
Category: Catchwords
Number of paragraphs: 100
Counsel for the Applicants: Ms M Tovey
Solicitor for the Applicants: Murphy Lyons
Counsel for the Respondent: Ms M Castle
Solicitor for the Respondent: Gillis Delaney Lawyers

ORDERS

NSD 484 of 2017
BETWEEN:

FEWIN PTY LIMITED ABN 64 051 132 453

First Applicant

RONALD MICHAEL COSHOTT

Second Applicant
AND:

MAXWELL WILLIAM PRENTICE

Respondent

JUDGE:

MARKOVIC J

DATE OF ORDER:

8 JUNE 2018

THE COURT ORDERS THAT:

1.Subject to Order 4 grant leave to the applicants to file an amended statement of claim which includes [11]-[13], [13A]-[13B], [14] (chapeau), [14.1], [14.6], [14.8]-[14.11], [43A]-[43C], [54A]-[54J], [54K(a)-(g),…

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AGLC
Fewin Pty Limited v Prentice [2018] FCA 852
Case
[2018] FCA 852
Decision Date

CaseChat Overview and Summary

The applicants, Fewin Pty Limited and Robert Coshott, sought leave to amend their statement of claim and a stay of proceedings against the respondent, Mr Prentice, who is the trustee of the bankrupt estate of Robert Coshott. The case was heard in the Federal Circuit Court of Australia. The main legal issues revolved around whether leave should be granted to amend the statement of claim and whether the proceeding should be stayed until the applicants paid the costs from an earlier proceeding. The court found that some of the proposed amendments to the statement of claim were permissible, while others were not. The amendments that were based on recent court decisions and did not rely on post-commencement facts were allowed. However, the amendments that relied on facts that arose after the commencement of the proceeding were not permitted. The court also held that the proceeding should be stayed until the applicants paid the costs from the earlier proceeding. The court reasoned that the current proceeding was not brought on the basis of the same or substantially the same cause of action as the earlier proceeding, and therefore, the stay was appropriate. The costs order from the earlier proceeding did not prevent the applicants from bringing the current proceeding, and the stay was necessary to ensure that the applicants did not benefit from their earlier default in paying costs. The court made orders granting leave to amend the statement of claim in part, staying the proceeding until the applicants paid the costs from the earlier proceeding, and ordering the applicants to pay the respondent's costs of the interlocutory application.

Orders

Orders of the court

1. Subject to Order 4 grant leave to the applicants to file an amended statement of claim which includes [11]-[13], [13A]-[13B], [14] (chapeau), [14.1], [14.6], [14.8]-[14.11], [43A]-[43C], [54A]-[54J], [54K(a)-(g), (i)-(l)], [55]-[59], [61.4A], [61.5] and [61.19]-[61.22] of the proposed amended statement of claim at pp 53-70 of exhibit ND1 to the affidavit of Nicholas Dale sworn on 7 December 2017 (Proposed Amended Statement of Claim).

2. Subject to Order 4 in relation to the amendments at [14.7], the heading above [45], [45A], [54K(h)], [59A], [59B], [61.9.1], [61.10.1] and [61.12]-[61.18] of the Proposed Amended Statement of Claim:

(a) grant leave to the applicants to re-plead these paragraphs to address the issues identified in the reasons of the Court published today;

(b) the amended pleading prepared in accordance with (a) above be provided in draft to the respondent within 14 days of the date of compliance with Order 4;

(c) within 14 days of receipt of any further draft amended pleading the respondent notify the applicants of any objection he has;

(d) if the respondent does not notify the applicants of any objections, grant leave to the applicants to file any further amended statement of claim prepared in accordance with this order; and

(e) if the respondent notifies the applicant of an objection in accordance with (c) above, the parties are to approach the associate to Markovic J to have the matter relisted for case management hearing.

3. The applicants pay the respondent’s costs thrown away by reason of filing and serving the Proposed Amended Statement of Claim in accordance with Order 1 above, including in relation to any further amendments to be made pursuant to Order 2 above.

4. Pursuant to r 26.15 of the Federal Court Rules 2011 (Cth) this proceeding be stayed until the applicants pay the costs of $189,888 ordered in proceeding NSD1222/2015 on 23 June 2017.

5. The applicants pay the costs of the respondent’s interlocutory application filed on 7 December 2017 seeking a stay of the proceeding.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

Background

Background to the litigation

These applications were heard together. I address each of them in turn below. BACKGROUND Before turning to consider each of the interlocutory applications it is relevant to set out the following background information. This proceeding arises out of the bankrupt estate (Estate) of Robert Gilbert Coshott (Robert Coshott). A sequestration order was made against Robert Coshott on 7 November 2008. There have been three different trustees of the Estate: the Official Trustee was trustee over two different periods; John Burke was trustee for a period of time; and Mr Prentice, the respondent to this proceeding, has been the trustee since 21 March 2013. Although Robert Coshott is now a discharged bankrupt, the administration of the Estate is ongoing. On 30 March 2017 Fewin and Mr Coshott, who is a director of Fewin, commenced this proceeding by lodging an application in which they sought relief pursuant to ss 30, 178 and 179 of the Bankruptcy Act 1966 (Cth) (Act). Both Fewin and Mr Coshott are creditors of the Estate. Before proceeding further I note that, while s 178 and s 179 were repealed by the Insolvency Law Reform Act2016 (Cth) Sch 1, Pt 2, item 54, the repeal and associated amendments did not come into effect until 1 September 2017 (see Insolvency Law Reform (Transitional Provisions) Regulation 2016 (Cth) reg 5(2)(p)). On 27 April 2017 the Court ordered, among other things, that Fewin and Mr Coshott file an amended originating application and statement of claim. As Fewin and Mr Coshott failed to comply with that order, on 24 May 2017 a further order was made that they file and serve any amended originating application and statement of claim by 14 June 2017. On 16 and 20 June 2017 Fewin and Mr Coshott respectively filed an amended originating application and statement of claim. In summary, in their amended originating application Fewin and Mr Coshott seek various orders and declarations in relation to Mr Prentice’s conduct as trustee of the Estate including:(1)a declaration that Mr Prentice has failed to comply with s 64(1)(b) of the Act regarding the convening of a creditors’ meeting and an order that he convene a creditors’ meeting of the Estate, failing which he be removed as trustee of the Estate;(2)a declaration that Mr Prentice failed to comply with s 19(1)(d) and s 173(1) of the Act concerning provision of Estate accounts to Fewin and Mr Coshott and an order pursuant to s 178 of the Act that Mr Prentice provide or permit inspection of the Estate accounts to Fewin and Mr Coshott;(3)an order for inquiry into the conduct of Mr Prentice as trustee of the Estate pursuant to s 179 of the Act;(4)a declaration that the “withdrawal by [Mr Prentice] of his claim to remuneration on 20 January 2017 was irrevocable” or alternatively, if Mr Prentice revives his remuneration claim, an order that the process of taxation of Mr Prentice’s remuneration be reinstated; (5)a declaration that the costs and disbursements charged to the Estate by Mr Prentice relating to legal proceedings were not incurred reasonably and for the purpose of the proper administration of the Estate;(6)a declaration that Mr Prentice should not be entitled to recourse to assets of the Estate for costs and disbursements relating to legal proceedings that were not incurred reasonably and for the purpose of proper administration of the Estate; and(7)an order that Mr Prentice personally pay the costs of the application on an indemnity basis without recourse to or indemnity by the estate.

Evidence

Evidence Before The Court

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Decision

Reasons for decision

No submissions were made about the nature of the costs order to be made or why an order should be made that costs be payable forthwith. There is no basis on which I could be satisfied that it is justified in the circumstances to order that Mr Prentice’s costs of the interlocutory application be payable forthwith. Further, none of the circumstances in which the discretion might be exercised identified in McKellar v Container Terminal Management Services Ltd [1999] FCA 1639 at [14]-[20] in relation to O 62 r 3 of the previous Federal Court Rules is present here. Nor is it the case that this application has resolved a significant number of the issues in the proceeding nor was any submission put or evidence tendered that the final resolution of the proceeding is some time away, further matters which may be relevant to the exercise of the discretion: see QS Holdings at [38]-[39].CONCLUSION I will make orders giving effect to these reasons.

Ratio Decidendi

Legal Principle Established

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