Godfrey v Berresford
[2012] WASC 77
•8 MARCH 2012
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
CITATION: GODFREY -v- BERRESFORD [2012] WASC 77
CORAM: EDELMAN J
HEARD: ON THE PAPERS
DELIVERED : 8 MARCH 2012
FILE NO/S: COR 14 of 2012
BETWEEN: BRIAN JAMES GODFREY
First Plaintiff
SHANE EDWARD THOMPSON
Second PlaintiffMARK JON KEENE
Third PlaintiffAND
PAUL BERRESFORD
First DefendantCHRISTOPHER STANLEY KAIN
Second DefendantNORTHWEST PROPERTIES LTD
Third DefendantBLUE ANCHOR PTY LTD
Fourth DefendantMcLARTY (NWDF) PTY LTD
Fifth Defendant
Catchwords:
Practice and procedure - Proceedings by originating summons - Application for leave to issue third party notice - Exercise of discretion
Legislation:
Rules of the Supreme Court 1971 (WA), O 19 r 1 r 2, O 27
Result:
Leave to issue third party notice granted
Category: B
Representation:
Counsel:
First Plaintiff : No appearance
Second Plaintiff : No appearance
Third Plaintiff : No appearance
First Defendant : No appearance
Second Defendant : No appearance
Third Defendant : No appearance
Fourth Defendant : No appearance
Fifth Defendant : No appearance
Solicitors:
First Plaintiff : Bennett & Co
Second Plaintiff : Bennett & Co
Third Plaintiff : Bennett & Co
First Defendant : Corrs Chambers Westgarth
Second Defendant : Corrs Chambers Westgarth
Third Defendant : No appearance
Fourth Defendant : Jackson McDonald
Fifth Defendant : Jackson McDonald
Case(s) referred to in judgment(s):
Aon Risk Services Australia Ltd v Australian National University [2009] HCA 27; (2009) 239 CLR 175
Esanda Finance Corporation Ltd v Putnin (Unreported; WASC; Library No 940532; 28 September 1994)
In re Wilson (1890) 45 Ch D 266
Martin‑Smith v Woodhead [1990] WAR 62
Smith v Maloney (1998) 19 WAR 209
Tipperary Developments Pty Ltd v The State of Western Australia [2005] WASC 75
EDELMAN J:
Introduction
The first and second defendants have applied for leave to join a third party, Pauline Hind Nominees Pty Ltd, to this action.
Together with the plaintiffs, the first and second defendants are the only parties who are represented and taking a stance in these proceedings. The application is urgent. The plaintiffs and the first and second defendants agree that it should be determined on the papers. Submissions in relation to this application were received yesterday. The trial has been listed to commence on the afternoon of Monday 12 March 2012.
In all the circumstances of this case, I consider that it is appropriate that the first and second defendants be granted leave to issue the third party notice.
The application and chronology
The application for leave to join Pauline Hind Nominees Pty Ltd as a third party is made under O 19 r 1 of the Rules of the Supreme Court 1971 (WA). It is accompanied by an affidavit of Mr Carl Thomas Ellinghaus sworn on 2 March 2012 annexing a draft third party notice and also annexing the first defendant's proposed short points of claim against the third party.
One of the reasons why leave is opposed by the plaintiffs is the delay which it is said will be caused by the issue of the third party notice. Another of the reasons is the delay by the first and second defendants in bringing the third party notice. I have set out below a chronology of this matter.
27 January 2012
Originating Process filed
Affidavit of B J Godfrey sworn 25.01.2012 filed by plaintiffs
6 February 2012
Directions Hearing
7 February 2012
Notice of Appointment filed by Talbot Olivier Lawyers for first and second defendants
8 February 2012
Affidavit of S E Thompson sworn 07.02.2012 filed by plaintiffs
10 February 2012
Special Appointment
Affidavit of B M Lusty sworn 10.2.12 filed by plaintiffs
13 February 2012
Directions Hearing
Notice of change of solicitor filed by Corrs Chambers Westgarth for first and second defendants
14 February 2012
Amended Originating Process filed
16 February 2012
Directions Hearing
Memorandum of Appearance of the fourth and fifth defendants filed
Affidavit of B J Godfrey sworn 16.02.2012 filed by plaintiffs
17 February 2012
Affidavit of C T Ellinghaus sworn 16.02.2012 filed by first and second defendants
20 February 2012
Plaintiffs' Points of Claim filed
21 February 2012
Affidavit of B M Lusty sworn 20.02.2012 filed by plaintiffs
23 February 2012
Points of defence and points of counterclaim of first and second defendants filed
27 February 2012
Amended Points of defence and points of counterclaim of first and second defendants recorded as filed (dated 24 February 2012 as date of filing)
28 February 2012
Directions Hearing
Affidavit of H D Wright sworn 23.02.2012 filed by first and second defendants
Affidavit of P Berresford sworn 27.02.2012 filed by first and second defendants
Affidavit of C S Kain sworn 27.02.2012 filed by first and second defendants
Affidavit of G Brandis sworn 27.02.2012 filed by first and second defendants
Affidavit of P Wall sworn 23.02.2012 filed by first and second defendants
Affidavit of M J Hoffman sworn 27.02.2012 filed by first and second defendants
Affidavit of P N James sworn 24.02.2012 filed by first and second defendants
Affidavit of C T Ellinghaus sworn 28.02.2012 filed by first and second defendants
Affidavit of G Dawson sworn 27.02.2012 filed by first and second defendants
1 March 2012
Affidavit of M J Keene sworn 27.02.2012 filed by plaintiffs
Affidavit of P Hind sworn 27.02.2012 filed by plaintiffs
2 March 2012
Entry for Trial filed
Plaintiff's Schedule of Objections filed
Affidavit of S E Thompson sworn 02.03.2012 filed by plaintiffs
Affidavit of B J Godfrey sworn 01.03.2012 filed by plaintiffs
Affidavit of S E Thompson sworn 02.03.2012 filed by plaintiffs
Affidavit of C M Moltoni sworn 02.03.2012 filed by first and second defendants
Affidavit of P Berresford sworn 02.03.2012 filed by first and second defendants
Affidavit of C S Kain sworn 02.03.2012 filed by first and second defendants
Application for leave to join Pauline Hind Nominees Pty Ltd as a third party brought by first and second defendants.
Affidavit of C T Ellinghaus in support of the application sworn 02.03.2012 filed by first and second defendants
7 March 2012
Submissions filed in relation to the application for leave to join Pauline Hind Nominees Pty Ltd as a third party
First and second defendants' Schedule of Objections filed
Plaintiffs' Points of Reply & Defence to Counterclaim filed
Although the first and second defendants were represented from 7 February 2012, their current legal representatives only entered an appearance on 13 February 2012. The change in legal representation followed the application by the plaintiffs for an interlocutory injunction to restrain the first and second defendants' legal representatives from acting.
Points of claim were filed by the plaintiffs on 20 February 2012. Points of defence and points of counterclaim were filed by the first and second defendants on 23 February 2012, 10 days after their appearance.
One week after the filing by the first and second defendants of their points of defence, this application to issue a third party notice was brought. No amendment to their points of defence or points of counterclaim is sought. The application is based on those pleadings, the proposed third party notice and short points of claim against the third party.
Order 19 of the Rules of the Supreme Court and proceedings by originating summons
If the first and second defendants had sought to join the third party a week earlier, ie before the first and second defendants filed their points of defence, then no leave of the court would have been necessary because, subject to the points in the following paragraphs, they would have had a right to issue the notice: Rules of the Supreme Court O 19 r 1(2).
The power to issue a third party notice is subject to the requirement of leave of the court unless the notice is issued before the defence is served on the plaintiff: O 19 r 1(2). This requirement for leave sits uncomfortably in the case of proceedings, such as these, which are commenced by originating summons. This was one reason why, in relation to 19th century English Rules of Court the equivalent order empowering the issue of third party notices did not apply to proceedings commenced by originating summons: see In re Wilson; Attorney General v Woodall (1890) 45 Ch D 266. In that case, North J held that proceedings contemplated by the order relating to an originating summons did not include the issue of third party notices (268).
The originating summons was probably brought in this case when it was thought that the matter would involve a short point of law, without any significant factual controversy. But the procedure is not commonly used in matters involving disputed questions of fact, which have now arisen. As Kennedy J observed in Martin‑Smith v Woodhead [1990] WAR 62, 65, the originating summons procedure is 'quite inappropriate in contested cases where there are likely to be disputes of fact'.
In this case, neither the plaintiffs nor the first and second defendants suggested that O 19 did not apply to proceedings commenced by originating summons or that there was an absence of power to order that a third party notice be issued. In the absence of any submissions to this effect I will proceed on the basis that O 19 applies. Indeed, in many respects the provisions of the Rules of the Supreme Court have departed from such 19th century constraints (see, for instance, the broad powers in O 58 r 27, O 58 r 29(d)). However, a curiosity of the use of the third party notice procedure in relation to proceedings commenced by originating summons is that pleadings are not a usual course in such proceedings. Indeed, the plaintiffs in this case opposed pleadings of points of claim: cf Smith v Maloney (1998) 19 WAR 209, 221 where Malcolm CJ observed that 'experience has demonstrated that in most cases it would be unwise to have the affidavits stand as the pleadings'. If no orders had been made for any pleadings then the first and second defendants may not have been required to seek leave for this issue of a third party notice.
Should leave be granted for the issue of the third party notice?
The reason why the first and second defendants seek the joinder of Pauline Hind Nominees Pty Ltd relates to matters already raised by the first and second defendants in their points of defence and points of counterclaim.
In the plaintiffs' points of claim, the plaintiffs allege that an issue of shares in Northwest Properties Ltd by either Mr Berresford or Mr Kain occurred without a valid meeting of directors and was void (see plaintiffs' short points of claim, par 23).
At par 3(e) of the amended points of defence, the first and second defendants say that if the plaintiffs are successful in establishing this alleged invalidity of the issue of shares by Mr Berresford or Mr Kain (which invalidity the first and second defendants deny), then Pauline Hind Nominees Pty Ltd was not the holder of any duly issued shares in Northwest Properties Ltd.
The first and second defendants say that, in common with the share issue which the plaintiffs assert to be void, the shares held by Pauline Hind Nominees Pty Ltd were also issued without a specific resolution of directors and without the issue being authorised at a meeting of directors: see par 3(c) of the amended points of defence.
The issue concerning the validity of the issue of shares to Pauline Hind Nominees Pty Ltd is also raised by the first and second defendants as an alternative in their counterclaim. It relates to the plaintiffs' claim that the general meeting relied upon by the plaintiffs was properly convened by Pauline Hind Nominees Pty Ltd as pleaded by the plaintiffs: see par 4 of the plaintiffs' short points of claim and par 15(c) of the amended points of defence. The first and second defendants counterclaim for a declaration that no general meeting of Northwest Properties Ltd took place: par 17(a).
The first and second defendants submit that they will be unable to obtain this declaratory relief without the joinder of Pauline Hind Nominees Pty Ltd as a third party. Pauline Hind Nominees Pty Ltd plainly has a significant interest in whether the share issue to it was void. This submission of the first and second defendants' concerning invalidity of the general meeting of Northwest Properties Ltd convened by Pauline Hind Nominees Pty Ltd directly relies upon the share issue to Pauline Hind Nominees Pty Ltd being void. I do not accept the submission of the plaintiffs that this question of the validity of the share issue by Pauline Hind Nominees Pty Ltd is a 'false issue' or arises only by a 'side wind'.
In considering the exercise of my discretion whether to grant leave I have given particular consideration to the potential for delay and wasted costs: Aon Risk Services Australia Ltd v Australian National University [2009] HCA 27; (2009) 239 CLR 175, 217 [111] (Gummow, Hayne, Crennan, Kiefel & Bell JJ). As Seaman J explained in Esanda Finance Corporation Ltd v Putnin (Unreported; WASC; Library No 940532; 28 September 1994) 5, belated applications to issue third party proceedings are disruptive of the course of proceedings and can significantly delay them if the usual third party directions are given.
These considerations are of some importance in this case because there is a pressing need for resolution of these proceedings to provide certainty for the company's governance. Hence, the delay of seven days after the first and second defendants filed their points of defence assumes some significance. I note, though, that at the last directions hearing before me, before this application was filed, all counsel were already very pessimistic about whether the trial would conclude within the allocated time next week.
Although the issue concerning the validity of the share issue to Pauline Hinds Nominees Pty Ltd has been pleaded and although the plaintiffs have been aware of it since 24 February 2012, the plaintiffs say that the joinder of Pauline Hinds Nominees Pty Ltd will now require consideration of further issues and further evidence. These issues concern the alleged different circumstances of the share issue to Pauline Hinds Nominees Pty Ltd from the share issue which the plaintiffs allege is void. The plaintiffs also say that a 'contention could be advanced that any issue of shares (purportedly made by Mr Berresford if that were the case) (which is denied) [was] subsequently ratified by the company in any number of acts (payments to investors for example, allowing votes to be cast)'.
In contrast with the potential for delay and cost, the following matters support the grant of leave:
(1)the issue concerning the validity of the share issue to Pauline Hind Nominees Pty Ltd was pleaded by the first and second defendants in their amended points of defence dated 24 February 2012;
(2)joinder is necessary for part of the relief the first and second defendants seek in their counterclaim;
(3)both sides have exchanged some evidence relating to the validity of the shares issued by Mr Berresford;
(4)Pauline Hind has provided evidence concerning the shares held by Pauline Hind Nominees Pty Ltd.
These matters outweigh the concerns I have about delay and cost. Where issues concerning a third party are related to the issues between the parties, as in this case, it has also been said that the interests of justice will ordinarily be served by joining third party proceedings to the trial of the principal litigation: Tipperary Developments Pty Ltd v The State of Western Australia [2005] WASC 75 [23] ‑ [24] (Murray J). Further, s 24(7) of the Supreme Court Act 1935 (WA) requires that
as far as possible, all matters so in controversy between the parties may be completely and finally determined, and all multiplicity of legal proceedings concerning any of such matters avoided.
The appropriate exercise of my discretion is to grant the first and second defendants leave to issue the third party notice.
Conclusion and orders
The orders which I make are as follows:
1.The first and second defendants have leave to issue a third party notice against Pauline Hind Nominees Pty Ltd in the terms of the draft third party notice annexed to the affidavit of Carl Ellinghaus sworn 2 March 2012.
2.That service of the third party notice on Pauline Hind Nominees Pty Ltd be effected by service of the said notice on Pauline Hind Nominees Pty Ltd's solicitors, Bennett & Co, of Level 10, BGC Centre, 28 The Esplanade, Perth WA 6000.
3.The first and second defendants short points of claim annexed to the affidavit of Carl Ellinghaus sworn 2 March 2012 stand as the short points of claim and further service of the same be dispensed with.
4.Pauline Hind Nominees file and serve an appearance and short points of defence.
5.This third party action be tried at the same time as the balance of the proceedings.
I will allow the parties the opportunity to make any further submissions consequential upon these orders and I will hear submissions from the plaintiffs, the first and second defendants, and Pauline Hind Nominees Pty Ltd concerning the timetable for the trial of this matter, and the evidence the plaintiffs say is needed in support of their submission that '[t]here is simply no opportunity for Pauline Hind Nominees to gather the appropriate evidence and put that material on so as to be ready for trial on 12 March 2012'.
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