Heindal Pty Ltd v Papadopoulos
[2001] WASC 312
HEINDAL PTY LTD & ORS -v- PAPADOPOULOS & ORS [2001] WASC 312
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2001] WASC 312 | |
| 15/11/2001 | |||
| Case No: | CIV:1038/1997 | 7 NOVEMBER 2001 | |
| Coram: | MASTER BREDMEYER | 9/11/01 | |
| 12 | Judgment Part: | 1 of 1 | |
| Result: | Application allowed | ||
| B | |||
| PDF Version |
| Parties: | HEINDAL PTY LTD (ACN 065 044 493) ALISTAIR RITCHIE LEANNE FLORENCE RITCHIE DENNIS DAVIS ROBYN LYNETTE CAMPBELL DAVIS GEORGE PAPADOPOULOS BRANDSMA & CROCKETT PTY LTD (ACN 009 329 051) MARK JAMES REGAN |
Catchwords: | Pleading Amendment of pleading to correct a name Mistake in name of defendant genuine and not misleading |
Legislation: | Limitation Act Rules of the Supreme Court, O 21 r 5(2), (3) |
Case References: | Beacon Funds Management Pty Ltd v Kevan [2000] WASC 274 Bridge Shipping v Grand Shipping (1991) 173 CLR 231 Morgan v Banning (1999) 20 WAR 474 Wardley Australia Ltd v State of Western Australia (1992) 175 CLR 514 Commonwealth v Verwayen (1990) 170 CLR 394 Gas Lighting Improvement Co Ltd v Inland Revenue Commissioners [1923] AC 723 Hobart Bridge Company Ltd v Federal Commissioner of Taxation (1951) 82 CLR 372 John Pfeiffer v Rogerson [2000] HCA 36 (2000) 172 ALR 625 Mahfoud v Minister for Immigration & Multicultural Affairs (1993) 33 ALD 609 Nykredit Mortgage Bank plc v Edward Erdman Group Ltd (No 2) [1997] 1 WLR 1627 Pearce & Argumet "Delegated Legislation" (2nd edition 1999) Pioneer Concrete Services Ltd v Yelnah Pty Ltd & Ors (1986) 5 NSWLR 254 Trustor AB v Smallbone (No 2) [2001] 1 WLR 1177 Walker v Wimborne (1976) 137 CLR 1 |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
- IN CHAMBERS
- First Plaintiff by Counterclaim
ALISTAIR RITCHIE
Second Plaintiff by Counterclaim
LEANNE FLORENCE RITCHIE
Third Plaintiff by Counterclaim
DENNIS DAVIS
Fourth Plaintiff by Counterclaim
ROBYN LYNETTE CAMPBELL DAVIS
Fifth Plaintiff by Counterclaim
AND
GEORGE PAPADOPOULOS
Third Defendant by Counterclaim
BRANDSMA & CROCKETT PTY LTD (ACN 009 329 051)
Fifth Defendant by Counterclaim
(Page 2)
- MARK JAMES REGAN
Sixth Defendant by Counterclaim
Catchwords:
Pleading - Amendment of pleading to correct a name - Mistake in name of defendant genuine and not misleading
Legislation:
Limitation Act
Rules of the Supreme Court, O 21 r 5(2), (3)
Result:
Application allowed
Category: B
(Page 3)
Representation:
Counsel:
First Plaintiff by Counterclaim : Ms F C E Davis
Second Plaintiff by Counterclaim : Ms F C E Davis
Third Plaintiff by Counterclaim : Ms F C E Davis
Fourth Plaintiff by Counterclaim : Ms F C E Davis
Fifth Plaintiff by Counterclaim : Ms F C E Davis
Third Defendant by Counterclaim : No appearance
Fifth Defendant by Counterclaim : Mr D G Solomon
Sixth Defendant by Counterclaim : No appearance
Solicitors:
First Plaintiff by Counterclaim : Phillips Fox
Second Plaintiff by Counterclaim : Phillips Fox
Third Plaintiff by Counterclaim : Phillips Fox
Fourth Plaintiff by Counterclaim : Phillips Fox
Fifth Plaintiff by Counterclaim : Phillips Fox
Third Defendant by Counterclaim : No appearance
Fifth Defendant by Counterclaim : Solomon Brothers
Sixth Defendant by Counterclaim : No appearance
Case(s) referred to in judgment(s):
Beacon Funds Management Pty Ltd v Kevan [2000] WASC 274
Bridge Shipping v Grand Shipping (1991) 173 CLR 231
Morgan v Banning (1999) 20 WAR 474
Wardley Australia Ltd v State of Western Australia (1992) 175 CLR 514
Case(s) also cited:
Commonwealth v Verwayen (1990) 170 CLR 394
Gas Lighting Improvement Co Ltd v Inland Revenue Commissioners [1923] AC 723
Hobart Bridge Company Ltd v Federal Commissioner of Taxation (1951) 82 CLR 372
(Page 4)
John Pfeiffer v Rogerson [2000] HCA 36 (2000) 172 ALR 625
Mahfoud v Minister for Immigration & Multicultural Affairs (1993) 33 ALD 609
Nykredit Mortgage Bank plc v Edward Erdman Group Ltd (No 2) [1997] 1 WLR 1627
Pearce & Argumet "Delegated Legislation" (2nd edition 1999)
Pioneer Concrete Services Ltd v Yelnah Pty Ltd & Ors (1986) 5 NSWLR 254
Trustor AB v Smallbone (No 2) [2001] 1 WLR 1177
Walker v Wimborne (1976) 137 CLR 1
(Page 5)
1 MASTER BREDMEYER: I have to consider an application by Heindal Pty Ltd, Mr and Mrs Ritchie and Mr and Mrs Davis, who are the first, second, third, fourth and fifth plaintiffs by counterclaim to amend three defences and counterclaims against the fifth defendant by counterclaim, Brandsma & Crockett Pty Ltd. For convenience I will refer to these plaintiffs by counterclaim as the "plaintiffs" and to the fifth defendant by counterclaim as the "defendant". The effect of the amendments would be to replace Brandsma & Crockett Pty Ltd (ACN 009 329 051) by MGI Brandsma & Crockett Pty Ltd (ACN 008 903 240).
2 I also have an application for summary judgment under O 16 by the fifth defendant by counterclaim against the same five plaintiffs.
3 I will consider the plaintiffs' application to amend first. The application is made under O 21 r 5(2) and r (3).
4 By way of background, I mention that in late 1994, Brandsma & Crockett had been accountants for Mr Ritchie for some years past. The plaintiffs say for ten year's past. The defendant says for five year's past. In October 1994, Mr Ritchie and Mr Davis were interested in purchasing a business known as "Metro Fruit & Vegies". They went to consult with Mr Di Giulio of Brandsma & Crockett for certain accounting advice on the viability of the business. He gave them certain advice, part of which was to purchase a shelf company to operate the business. They purchased a shelf company and that is Heindal Pty Ltd, the first plaintiff by counterclaim. They say, acting on the accountant's advice, that they purchased the business on 10 November 1994. Mr Ritchie and Mr Davis also asked Mr Di Giulio to prepare an income and expense budget for the year December 1994 to December 1995 for the new business, which he did.
5 The business purchased was a leasehold one. It failed. The landlord sued Heindal Pty Ltd for unpaid rent and the Ritchies and the Davises as guarantors. That is the subject of the main action which has now been settled.
6 On 15 April 1997 these plaintiffs, by counterclaim, filed their original defence and counterclaims against the fifth defendant by counterclaim. In those counterclaims they allege professional negligence and misleading and deceptive conduct by the fifth defendant, Brandsma & Crockett.
7 When the accountant's advice was given in late 1994, the accountancy company was known as Brandsma & Crockett Pty Ltd
(Page 6)
- (ACN 008 903 240). On 28 January 1997, it changed its name to MGI Brandsma & Crockett Pty Ltd and, of course, kept the same ACN. I will refer to that company as the "practice company" or the "accounting company".
8 In 1994, these accountants had a company to provide services to the practice company, called Brandsma & Crockett Services Pty Ltd (ACN 009 329 051). It did not deal with the public. I will refer to that as the "service company". On 6 February 1997, the service company changed its name to Brandsma & Crockett Pty Ltd and kept the same ACN. The effect of these two changes of name is that since early 1997 the service company has used the old name of the practice company.
9 Just prior to issuing the three counterclaims in April 1997, Mr Smith, a young solicitor employed by Phillips Fox, carried out a search of Brandsma & Crockett Pty Ltd with ASC. He carried out a brief search, not the longer historical search which is also available. The brief search referred to a change of name on 6 February 1997 on page one. It also mentioned a change of name on page five, ie the last page, of the search document. Mr Smith failed to inquire further about the change of name. He issued the three counterclaims against the company he searched, namely Brandsma & Crockett Pty Ltd (ACN 009 329 051). Those three counterclaims were thus filed against the service company.
10 Had Mr Smith searched more thoroughly he would have discovered that the Brandsma & Crockett Pty Ltd which he searched was formerly called Brandsma & Crockett Services Pty Ltd. He would have discovered that he had "sued" the service company and not the practice company for negligent accounting advice etc, which clearly the service company did not provide.
11 The mistake went unnoticed by anyone for some four years until mid-2001. It went unnoticed by the plaintiffs and their solicitors, Phillips Fox, who employed Mr Smith. It went unnoticed by the defendant's solicitors who, until mid-2001, were Downings Legal. In the defences to the counterclaims, the defendant admitted that it had acted for Mr Ritchie as accountant and tax agent since 1990. It admitted that Mr Di Giulio met with Messrs Ritchie and Davis to discuss the acquisition of Metro Fruit & Vegies. It admitted that Mr Di Giulio reviewed the financial documents shown to him at that time and advised Messrs Ritchie and Davis that the business was running at a loss and was not worth the $100,000 asking price. He advised them that they should not pay anything for goodwill.
(Page 7)
- The defence admits that Mr Di Giulio prepared a budget for the business based on information supplied to him by the plaintiffs and the vendors.
12 In addition to admissions in the pleadings, the defendant by Mr Di Giulio has made admissions in interrogatories administered by the plaintiffs. For example, answer 2 is an admission that a 1995 account for $1,869 was submitted by Brandsma & Crockett Pty Ltd to the plaintiffs. Other admissions were made about the accountancy work done for the plaintiffs by Mr Di Giulio and by Mr David Hatton on behalf of the defendant. Mr Di Giulio admitted also making various handwritten annotations on the accounts of the business to 30 June 1993, given to him by the vendors just prior to the purchase by Heindal Pty Ltd.
13 Mr Di Giulio on behalf of the defendant also swore affidavits of discovery.
14 The mistake as to the correct identity of the fifth defendant by counterclaim was also undetected by the accountant's insurer, FAI. On receipt of the defence and counterclaim in April 1997, Mr Di Giulio passed it on to his company's professional indemnity insurer, FAI, which then took over the defence on the company's behalf. FAI never noticed that the name of the defendant, ie, the firth defendant by counterclaim, was the service company and not the practice company. The practice company was insured with FAI. I assume that the service company was not.
15 FAI went into liquidation in March 2001. Its instructions to Downings Legal ceased. The defendant was on its own. It got another solicitor. Solomon Brothers became the new solicitors on the record. It was about that time that Mr Fielding, who was a director of both companies, discovered that the service company had been sued and not the practice company. He immediately notified his new solicitors who in turn notified Phillips Fox and on 3 August 2001 brought the O 16 application.
16 The application for amendment falls to be considered under O 21 r 5(2) and (3) of the Rules of the Supreme Court and involves the consideration of the leading cases on the subject Bridge Shipping v Grand Shipping (1991) 173 CLR 231, Beacon Funds Management Pty Ltd v Kevan [2000] WASC 274, a decision of Sanderson M, and Morgan v Banning (1999) 20 WAR 474.
(Page 8)
17 If I quote from O 21 r 5(2) and r (3):
"(2) Where an application to the Court for leave to make the amendment in para(3), para(4) or para(5) is made after any relevant period of limitation current at the date of issue of the writ has expired, the Court may nevertheless grant such leave in the circumstances mentioned in that paragraph if it things it just to do so.
(3) An amendment to correct the name of a party may be allowed under para(2) notwithstanding that it is alleged that the effect of the amendment will be to substitute a new party of the Court is satisfied that the mistake sought to be corrected was a genuine mistake and was not misleading, or such as to cause any reasonable doubt as to the identity of the party intending to sue or, as the case may be, intended to be sued."
18 I start with r 5(2). The amendment sought is being made after the period of limitation current to the date of issue of the writ, has expired. The causes of action arose in late 1994, hence the limitation period expired in late 2000.
19 The mistake made by the plaintiffs' solicitor as to the name of the defendant - which was meant to be the accounting company which gave the advice - was a very genuine one. It was not only made by Mr Smith but made, or not detected, by later solicitors in that firm who handled the file. The mistake was also made by Mr Di Giulio, a director of both Brandsma & Crockett companies, by Downings Legal, and by FAI, over a four-year period. In defending the claims through the interlocutory stages, making certain admissions in the pleadings, answering interrogatories and giving discovery, Mr Di Giulio, at all times, thought he was defending the action on behalf of the practice company. FAI, at all times assumed it was defending a claim against its insured, the practice company.
20 I also consider that the plaintiffs' mistake in claiming against the service company, and not the practice company, was not misleading and did not cause any reasonable doubt as to the identity of the company intended to be sued. The company intended to be sued was the practice company. The directors of the practice company and its insurer, all thought it was sued, and defended the action on that basis. They were not misled as the company intended to be sued when they saw the name
(Page 9)
- Brandsma & Crockett Pty Ltd named as the fifth defendant on the counterclaim. They thought it referred to the practice company. It was a mistake made by the plaintiffs, the practice company, its insurer, and the service company.
21 Applying those rules, I consider it just to grant the amendment. I express that view provisionally, however, because I need to examine authority which may cause me to come to a different view. In Bridge Shipping (supra)at 245 Dawson J said:
"It may sometimes be difficult to determine whether there is a mistake in name or a mistake in identity. When that is so and an amendment is sought under r 30.01. The question can only be resolved by asking whether, in all the circumstances, it can reasonably be said that the party whose name is sought to be amended would remain the same in all but name or description if the amendment were allowed. If so, then there is a misnomer or misdescription and the rule applies notwithstanding that, as a matter of formality, the amendment results in the substitution of another entity. If not, and the effect of the amendment would be, not to correct the name of the party, but to alter the identity of the party, then that rule does not apply."
22 In the circumstances of this case, the party whose name is really sought to be amended is the Brandsma & Crockett accounting firm. That may seem a bit surprising because the fifth defendant, as named in the heading of the counterclaim, is the service company. But the circumstances of this case include not just the name of the fifth defendant in the heading to the defence and counterclaim but what is said about that defendant in the text of the counterclaim. From the pleas in that document, it is clear that the defendant which is being sued for negligence in the giving of accounting advice, is the accountancy firm that had acted for Mr Bridge for 10 years past, and who, through Mr Di Giulio, gave the plaintiffs certain advice on their proposed acquisition. The description of the defendant is the accounting firm. The effect of the amendment will be to change the name of that defendant from one company to another but it will remain the same in description. It will remain the accounting firm. In the circumstances of this case, I consider that the party, whose name is sought to be amended, if the amendment is allowed, will remain the same party in description. Thus, the amendment should be allowed even though the effect of it is to substitute another entity.
(Page 10)
23 I now turn to the judgment of McHugh J which was adopted by Brennan and Deane JJ. In considering which party was "sued" in the third party notice in that case, McHugh J did not look simply at the name of the third party, Grand Shipping, on the third party notice. He looked at the content of the statement of claim which accompanied the third party and in that document it described Grand Shipping as "the owner of the vessel". He said it was clear that Bridge intended, in the third party notice, to sue the owner of the vessel. So Bridge did not make a mistake about the name of the third party. It wanted to sue the owner of the vessel and it correctly named the owner of the vessel as the third party. Therefore, to change by amendment the name of Grand Shipping (the owner) to Rainbow Line (the charterer) was not to correct a mistake in the name of a party. The mistake was more fundamental than that. The mistake was to think that Grand Shipping had issued the bill of lading when it had not.
24 Contrast that with the case before me, the mistake made was in the name of the owner of the accountancy practice.
25 The reasoning of Toohey J is the same as of McHugh J and does not need any special comment.
26 I now consider Beacon Funds Management (supra) a decision of Master Sanderson. The facts of that case are very close to the facts of my case. The plaintiff intended to sue the mortgage manager it appointed and which traded under the business name "Countrywide Credit". There were two companies in the same stable, each with the word "Countrywide" in its name. The plaintiff got the wrong one. It sued Countrywide Credit Ltd, a dormant company which did not trade, rather like the service company in my case. Countrywide Credit Ltd was not the mortgage manager. The plaintiff failed to sue Countrywide Home Loans Limited, which was the mortgage manager, and which traded and which owned the business name "Countrywide Credit".
27 I decline to follow that decision. The facts of the instant case are distinguishable. I am required to consider the circumstances set out in r 5(3). To reiterate those circumstances, I consider the plaintiffs' mistake in the defendant's name was a genuine one. It was not misleading. For four years the practice company treated the claim as applying to it and defended the action through the interlocutory processes as being a claim made against the practice company. That did not happen in Beacon Funds Management (supra). In that case, at the outset, the solicitors for the defendant said "we have no instructions to accept service on behalf of
(Page 11)
- Countrywide Credit Limited" - meaning in effect, "you have sued the wrong company".
28 I consider that the plaintiffs' mistake in this case, because it was shared by the accounting company and its directors and its insurer for four years, causes no doubt that the practice company was intended to be sued. And it defended the action through the interlocutory processes on that basis. It is therefore just, and I think, imminently just, to correct the name of the defendant.
29 I now turn to Morgan and Banning (supra). In that case, Owen J at 476 said, in effect that the Court, either in its inherent jurisdiction or exercising its powers under O 21 r 5(2) - (5) cannot alter the operation of the Limitation Act. I accept that. An Act takes precedence over rules and inherent jurisdiction. But if Mr Solomon is right that the amendment of the name of a party does not relate back to the filing of the writ, then the Limitation Act is not circumvented. He can plead a limitation defence.
30 I have no views on whether an amendment to correct the name of a party under O 21 r (5)(3) takes effect from the date of the amendment or relates back to the issue of the writ. It is not necessary for me to decide that. I do not regard Bridge Shipping (supra), however, as a strong authority for Mr Solomon's proposition. Dawson J discussed the position at page 236 but his purportedly general statement of the law, may, in fact, be confined to Victoria where r 9.11(3) expressly states that the amendment to the name of a party takes effect from the date of the order making the amendment. The amendment referred to in that rule is adding or substituting a party under the Victorian equivalent of our O 18 r 6.
31 The plaintiffs' counsel says there is no useful purpose to be achieved by amending to add a defendant when the case against the defendant is statute-barred. I say that the case against this defendant may or may not be statute-barred. It is not appropriate that I rule on it and lower courts have been enjoined by the High Court in Wardley Australia Ltd v State of Western Australia (1992) 175 CLR 514 at 533 not to decide limitation questions in interlocutory proceedings except in the clearest of cases. I do not regard this as the clearest of cases. In any case, the amendment which I consider is permitted by O 21 r 5, for the reasons given above and I consider that rule is not ultra vires the Limitation Act.
32 I propose the allow the amendments and dismiss the summary judgment application.
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