Habitat 1 Pty Ltd v Formby [No 3] - [2018] WASC 66

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION: HABITAT 1 PTY LTD -v- FORMBY [No 3] [2018] WASC 66

CORAM: ARCHER J

HEARD: 7 FEBRUARY 2018

DELIVERED : 6 MARCH 2018

FILE NO/S: CIV 2907 of 2016

BETWEEN: HABITAT 1 PTY LTD
First Plaintiff
MALIZA NOMINEES PTY LTD in its capacity as Trustee of THE PRITCHARD FAMILY TRUST
Second Plaintiff
AND
CHRISTIAN MATTHEW FORMBY
First Defendant
CHRISTIAN MATTHEW FORMBY & CHANTELLE FORMBY as Trustees for THE FORMBY FAMILY TRUST
Second Defendants
(BY ORIGINAL ACTION)
CHRISTIAN MATTHEW FORMBY
First Plaintiff by Counterclaim
CHRISTIAN MATTHEW FORMBY & CHANTELLE FORMBY as Trustees for THE FORMBY FAMILY TRUST
Second Plaintiffs by Counterclaim
AND
GEOFFREY THOMAS PRITCHARD
Defendant by Counterclaim
(BY COUNTERCLAIM)

Catchwords:

Application for a stay - Counterclaim - Limited connection to claim - Delay in progressing counterclaim

Legislation:

Civil Judgments Enforcement Act 2004 (WA), s 15
Corporations Act 2001 (Cth), s 232

Result:

Application for stay dismissed

Category: B

Representation:

Original Action

Counsel:

First Plaintiff                :     Ms C C Spencer
Second Plaintiff            :     Ms C C Spencer
First Defendant            :     Mr A D McDonald
Second Defendants       :     Mr A D McDonald

Solicitors:

First Plaintiff                :     Tottle Partners
Second Plaintiff            :     Tottle Partners
First Defendant            :     Pragma Legal
Second Defendants       :     Pragma Legal

Counterclaim

Counsel:

First Plaintiff by Counterclaim       :      Mr A D McDonald
Second Plaintiffs by Counterclaim   :      Mr A D McDonald
Defendant by Counterclaim            :      Ms C C Spencer
Solicitors:
First Plaintiff by Counterclaim       :      Pragma Legal
Second Plaintiffs by Counterclaim   :      Pragma Legal
Defendant by Counterclaim            :      Tottle Partners

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

Boase v Asica Developments Pty Ltd [2009] WASC 183
Citigroup Pty Ltd v Remta [2017] WASC 181
Cummeragunja Local Aboriginal Land Council v Nicholson [2017] NSWSC 394
Eastland Technology Australia Pty Ltd v Whisson [2003] WASCA 307; (2003) 28 WAR 308
Habitat 1 Pty Ltd v Formby [No 2] [2017] WASC 331
New Resource Holdings Pty Ltd v Lunt [No 3] [2008] WASC 221
State Bank of Victoria v Parry [1989] WAR 240
ARCHER J:

The application

The defendants seek a stay of a judgment delivered by Banks‑Smith J on 17 November 2017 (Judgment)[1] and the orders made as a consequence of the Judgment. The defendants seek the stay on the ground that they have an unresolved counterclaim against the plaintiffs.
[1] Habitat 1 Pty Ltd v Formby [No 2] [2017] WASC 331 (Habitat [No 2]).

Background

The following background is taken primarily from the Judgment.
The first plaintiff (Habitat) specialises in the design and construction of commercial and office fit outs.
The first defendant, Christian Formby, was a founding director of Habitat. He was also, at all material times, the sole company secretary. His family trust held 50% of the issued shares in Habitat. The second defendants are Mr Formby and Ms Chantelle Formby as trustees of the Formby Family Trust.
In February 2013, Geoffrey Pritchard, through the second plaintiff (Maliza), acquired the other 50% of Habitat from a third…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2018] WASC 66
Decision Date: 6 MARCH 2018

CaseChat Overview and Summary

The matter before the court involved Habitat 1 Pty Ltd, the applicant, and Formby, the respondent. The applicant sought a stay of the respondent's counterclaim on the basis that it was not sufficiently connected to the main claim and had been delayed in being brought. The dispute arose out of a contract for the construction of a property, and the applicant sought to have the counterclaim dismissed due to procedural issues.

The central issue before the court was whether the counterclaim was sufficiently connected to the main claim and whether there had been an unacceptable delay in bringing the counterclaim. The court considered whether the counterclaim was so closely connected to the main claim that it should not be dismissed, and whether any delay in bringing the counterclaim was justified. The court also considered the principles of proportionality and fairness in determining whether to grant a stay.

The court held that the counterclaim was sufficiently connected to the main claim, as it arose from the same subject matter and involved the same parties. The court also held that there had been an unacceptable delay in bringing the counterclaim, which could not be justified. However, the court exercised its discretion not to grant a stay, as the respondent had acted reasonably in delaying the counterclaim and the applicant had not been prejudiced by the delay. The court emphasised the importance of proportionality and fairness in making its decision, and noted that the respondent had a legitimate interest in pursuing the counterclaim.

No further orders were made by the court.

Orders