HPM Pty Ltd v Fear - [2002] FCA 202

FEDERAL COURT OF AUSTRALIA
HPM Pty Ltd v Fear [2002] FCA 202
PRACTICE AND PROCEDURE - abuse of process - proceedings commenced in name of liquidated company in Federal Court - replicating previous proceedings in Supreme Court - orders for security for costs in Supreme Court unmet - previous proceedings in Supreme Court discontinued or struck out - proceedings in Federal Court an attempt to circumvent or avoid the effect of Supreme Court decisions - abuse of process - leave to proceed in name of company discharged by institution of proceedings in Supreme Court.
HPM PTY LTD (ACN 008 679 481) v CHARLES ANTHONY CANDLIN FEAR, RESI STATEWIDE MORTGAGE CORPORATION (ACN 005 083 394), ROBERT CLAUDE COOK, TERENCE CORNELIUS McMANUS, ROBERT HENRI DE BUF, PATRICIA ANNE DE BUF, REGINALD SARSFIELD FINN, ELIZABETH ROSE FINN, DONALD GEORGE LYSTER, LEONE BEATRICE LYSTER, JOHN SELSMARK, ROGER LLOYD GEORGE RICHARD-COOMBES, IDA ELEANOR RICHARD-COOMBES, GRAEME CAMPBELL REYNOLDS, LESLEY HANNAH REYNOLDS, JOSEPH COCI, HELEN JOY COCI, ERNEST RAMPELLINI, JENNIFER ANNE RAMPELLINI, PETER JOE CHITTENDEN, MICHAEL SKUBA, MICHAEL CYRIL HALPIN, GEORGE HUGH MARGETTS, GWENDOLINE MARY MARGETTS, TOLEEN NOMINEES PTY LTD, LAVIN NOMINEES PTY LTD, TUDOR COURT INVESTMENTS PTY LTD, MACDOUGALL PTY LTD and OREGON NOMINEES PTY LTD
W3001 of 2001
FRENCH J
6 MARCH 2002
PERTH

IN THE FEDERAL COURT OF AUSTRALIA

WESTERN AUSTRALIA DISTRICT REGISTRY

W3001 OF 2001

BETWEEN:

HPM PTY LTD (ACN 008 679 481)
APPLICANT

AND:

CHARLES ANTHONY CANDLIN FEAR
FIRST RESPONDENT

RESI STATEWIDE MORTGAGE CORPORATION
(ACN 005 083 394)
SECOND RESPONDENT

ROBERT CLAUDE COOK, TERENCE CORNELIUS McMANUS, ROBERT HENRI DE BUF, PATRICIA ANNE DE BUF, REGINALD SARSFIELD FINN, ELIZABETH ROSE FINN, DONALD GEORGE LYSTER, LEONE BEATRICE LYSTER, JOHN SELSMARK, ROGER LLOYD GEORGE RICHARD-COOMBES, IDA ELEANOR RICHARD-
COOMBES, GRAEME CAMPBELL REYNOLDS, LESLEY HANNAH REYNOLDS, JOSEPH COCI, HELEN JOY COCI, ERNEST RAMPELLINI, JENNIFER ANNE RAMPELLINI, PETER JOE CHITTENDEN, MICHAEL SKUBA, MICHAEL CYRIL HALPIN, GEORGE HUGH MARGETTS, GWENDOLINE MARY MARGETTS, TOLEEN NOMINEES PTY LTD, LAVIN NOMINEES PTY LTD, TUDOR COURT INVESTMENTS PTY LTD, MACDOUGALL PTY LTD and OREGON NOMINEES PTY LTD
THIRD RESPONDENT

JUDGE:

FRENCH J

DATE OF ORDER:

6 MARCH 2002

WHERE MADE:

PERTH

THE COURT ORDERS THAT:
1.        The application be dismissed.
2.        Harold Blakeley is to pay the First and Second Respondents' costs of the application.
Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA

WESTERN AUSTRALIA DISTRICT REGISTRY

W3001 OF 2001

BETWEEN:

HPM PTY LTD (ACN 008 679 481)
APPLICANT

AND:

CHARLES ANTHONY CANDLIN FEAR
FIRST RESPONDENT

RESI STATEWIDE MORTGAGE CORPORATION
(ACN 005 083 394)
SECOND RESPONDENT

ROBERT CLAUDE COOK, TERENCE CORNELIUS MCMANUS, ROBERT HENRI DE BUF, PATRICIA ANNE DE BUF, REGINALD SARSFIELD FINN, ELIZABETH ROSE FINN, DONALD GEORGE LYSTER, LEONE BEATRICE LYSTER, JOHN SELSMARK, ROGER LLOYD GEORGE RICHARD-COOMBES, IDA ELEANOR RICHARD-COOMBES, GRAEME CAMPBELL REYNOLDS, LESLEY HANNAH REYNOLDS, JOSEPH COCI, HELEN JOY COCI, ERNEST RAMPELLINI, JENNIFER ANNE RAMPELLINI, PETER JOE CHITTENDEN, MICHAEL SKUBA, MICHAEL CYRIL HALPIN, GEORGE HUGH MARGETTS, GWENDOLINE MARY MARGETTS, TOLEEN NOMINEES PTY LTD, LAVIN NOMINEES…

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: [2002] FCA 202
Decision Date: 6 MARCH 2002

CaseChat Overview and Summary

This case involves proceedings brought by Harold Blakeley, a former director of HPM Pty Ltd, against Charles Fear, Resi Statewide Mortgage Corporation, and others, in the name of a company in liquidation. The respondents argue that these proceedings in the Court are an abuse of process, designed to circumvent the effect of decisions made in the Supreme Court of Western Australia. They also contend that leave granted to Blakeley in the Supreme Court to bring proceedings in the name of the company was discharged by the institution of proceedings in that Court and does not permit the commencement of the proceedings in this Court. The legal issues before the court included whether the proceedings in this Court were an abuse of process and if the leave granted in the Supreme Court was effectively discharged by the commencement of the proceedings in that Court.

The court considered the arguments and found that the proceedings in this Court were indeed an abuse of process. The leave granted to Blakeley in the Supreme Court was specifically for proceedings in that Court and did not extend to the commencement of proceedings in this Court. The court held that the respondents had demonstrated that the proceedings were an abuse of process and that the leave granted in the Supreme Court was discharged by the institution of proceedings in that Court. Therefore, the court was satisfied that the application to strike out or stay the proceedings should be granted.

In conclusion, the court dismissed the application and ordered Harold Blakeley to pay the First and Second Respondents' costs of the application. The court's decision was based on the finding that the proceedings in this Court constituted an abuse of process and that the leave granted in the Supreme Court did not extend to proceedings in this Court. This outcome reinforces the importance of adhering to the specific terms and conditions under which leave is granted in legal proceedings.

Orders

Orders of the court

1. The application be dismissed.

2. Harold Blakeley is to pay the First and Second Respondents' costs of the application.

Background

Background to the litigation

This is a motion to strike out or stay proceedings commenced in this Court in the name of a company in liquidation. The proceedings are brought in the name of the company by its former director. Like proceedings against the same respondents in the Supreme Court have been discontinued or dismissed. The respondents are of the view that the proceedings in this Court are an abuse of process calculated to circumvent or avoid the effect of decisions in the Supreme Court of Western Australia. They contend also that leave granted in the Supreme Court to the former director to bring proceedings in the name of the company was discharged by the institution of proceedings in that Court and does not authorise the commencement of the proceedings in this Court. Background to these Proceedings On 23 November 2001, proceedings were instituted in this Court by Harold Blakeley in the name of a company in liquidation, HPM Pty Ltd ("HPM"), against Charles Fear ("Fear"), Resi Statewide Mortgage Corporation ("Resi") and a number of other persons named as third respondents. Blakeley was a director of HPM before its liquidation. Fear is a chartered accountant who was appointed, on 14 September 1990, as receiver and manager of HPM. There was an issue as to the scope of the appointment but that does not affect the outcome of this case. The appointment was made under the terms of a mortgage and charge held by Resi over HPM's property. The third respondents (the hotel purchasers) were the purchasers from Fear of HPM's property, The Hotel Peninsula at Mandurah. HPM alleges in its statement of claim that the appointments of Fear as receiver and manager were invalid as it was not in default under the terms of either security when the appointments were made. The bases for that contention are: 1.Notices of demand issued by Resi did not specify the amounts owing to Resi under the relevant securities. 2.The notices of demand issued by Resi were "nullified" by an agreement between HPM and Resi made on 23 August 1990. The substance of that agreement was that HPM would continue to trade on certain conditions. Fear is said to have failed to make certain of the validity of his appointment, to have acted without power, to have failed to deliver up HPM's property, to have failed to apply to the Court for permission to deal in HPM's property over a prior charge of the National Australia Bank. He is also said to have owed a duty of care to HPM and a duty to act in good faith in exercising his power of sale and not to disregard the interests of HPM. He was said to have owed a statutory duty to HPM pursuant to s 229(2) of the Companies (Western Australia) Code to exercise a reasonable degree of care and diligence in exercising his power of sale. He was allegedly negligent and in breach of his duties in failing to take reasonable care to obtain either a proper price or the true market value of the hotel and property to be sold under the relevant mortgage. He was said to have allowed HPM's hotel business to degenerate through lack of proper management, care and maintenance thereby reducing its saleability and value. He was also said to have failed to advertise and present the property in a proper and equitable manner prior to public auction. There are a number of other respects in which he was said to have failed to discharge his duty of care.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

FRENCH J

Full text does not contain this section.

Ratio Decidendi

Legal Principle Established

Established by: FRENCH J

Full text does not contain this section.

IN THE FEDERAL COURT OF AUSTRALIA
WESTERN AUSTRALIA DISTRICT REGISTRY	W3001 OF 2001

BETWEEN:	HPM PTY LTD (ACN 008 679 481) APPLICANT
AND:	CHARLES ANTHONY CANDLIN FEAR FIRST RESPONDENT RESI STATEWIDE MORTGAGE CORPORATION (ACN 005 083 394) SECOND RESPONDENT ROBERT CLAUDE COOK, TERENCE CORNELIUS McMANUS, ROBERT HENRI DE BUF, PATRICIA ANNE DE BUF, REGINALD SARSFIELD FINN, ELIZABETH ROSE FINN, DONALD GEORGE LYSTER, LEONE BEATRICE LYSTER, JOHN SELSMARK, ROGER LLOYD GEORGE RICHARD-COOMBES, IDA ELEANOR RICHARD- COOMBES, GRAEME CAMPBELL REYNOLDS, LESLEY HANNAH REYNOLDS, JOSEPH COCI, HELEN JOY COCI, ERNEST RAMPELLINI, JENNIFER ANNE RAMPELLINI, PETER JOE CHITTENDEN, MICHAEL SKUBA, MICHAEL CYRIL HALPIN, GEORGE HUGH MARGETTS, GWENDOLINE MARY MARGETTS, TOLEEN NOMINEES PTY LTD, LAVIN NOMINEES PTY LTD, TUDOR COURT INVESTMENTS PTY LTD, MACDOUGALL PTY LTD and OREGON NOMINEES PTY LTD THIRD RESPONDENT
JUDGE:	FRENCH J
DATE OF ORDER:	6 MARCH 2002
WHERE MADE:	PERTH