Jolly & Sons Pty Ltd v Hughes
[2014] WASC 380
•22 OCTOBER 2014
JOLLY & SONS PTY LTD -v- HUGHES [2014] WASC 380
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2014] WASC 380 | |
| Case No: | CIV:1521/2014 | 22 OCTOBER 2014 | |
| Coram: | EDELMAN J | 22/10/14 | |
| 8 | Judgment Part: | 1 of 1 | |
| Result: | Leave granted to join additional defendants | ||
| B | |||
| PDF Version |
| Parties: | JOLLY & SONS PTY LTD ROSS ANTHONY HUGHES TARJAC ENTERPRISES PTY LTD |
Catchwords: | Practice and procedure Ex parte application to join additional defendants Case management considerations |
Legislation: | Rules of the Supreme Court 1971 (WA) |
Case References: | Bridge Shipping Pty Ltd v Grand Shipping SA [1991] HCA 45; (1991) 173 CLR 231 Co-operative Bulk Handling Ltd v Brookfield Rail Pty Ltd [2014] WASC 31 Holmes v Permanent Trustee Co of New South Wales Ltd [1932] HCA 1; (1932) 47 CLR 113 Liff v Peasley [1980] 1 WLR 781 Pegang Mining Co Ltd v Choong Sam [1969] 2 MLJ 62 |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
- IN CHAMBERS
- Plaintiff
AND
ROSS ANTHONY HUGHES
First Defendant
TARJAC ENTERPRISES PTY LTD
Second Defendant
Catchwords:
Practice and procedure - Ex parte application to join additional defendants - Case management considerations
Legislation:
Rules of the Supreme Court 1971 (WA)
Result:
Leave granted to join additional defendants
Category: B
Representation:
Counsel:
Plaintiff : Mr D J Morris
First Defendant : In person
Second Defendant : No appearance
Solicitors:
Plaintiff : HHG Legal Group
First Defendant : In person
Second Defendant : No appearance
Case(s) referred to in judgment(s):
Bridge Shipping Pty Ltd v Grand Shipping SA [1991] HCA 45; (1991) 173 CLR 231
Co-operative Bulk Handling Ltd v Brookfield Rail Pty Ltd [2014] WASC 31
Holmes v Permanent Trustee Co of New South Wales Ltd [1932] HCA 1; (1932) 47 CLR 113
Liff v Peasley [1980] 1 WLR 781
Pegang Mining Co Ltd v Choong Sam [1969] 2 MLJ 62
1 EDELMAN J: The plaintiff in these proceedings, Jolly & Sons, has applied for leave to join two parties as the third and fourth defendants. The proposed third and fourth defendants are Ms Taryn Batenburg and a company in which she is the sole director, secretary, and shareholder called Territory Logistic Solutions Pty Ltd.
2 The application is brought under O 18 r 6(2)(b) of the Rules of the Supreme Court 1971 (WA)which empowers the Court to
order that any person who ought to have been joined as a party or whose presence before the Court is necessary to ensure that all matters in dispute in the cause or matter may be effectually and completely determined and adjudicated upon, be added as a party…
3 The words of O 18 r 6 have been the subject of 'voluminous judicial exegesis'.1 It is not necessary in this application to consider the extent or operation of the concepts of 'ought to have been joined' or necessity. It suffices to say that the heart of the rule is concerned with whether the rights or liabilities of the proposed parties will be directly affected. Further, an overarching principle is that O 18 r 6 is a remedial provision. In Bridge Shipping Pty Ltd v Grand Shipping SA,2 McHugh J (with whom Brennan and Deane JJ agreed) said, of a rule concerned with substituting a new party for an existing party mistakenly included in the action, that the rule is a 'remedial rule and should be given a beneficial interpretation. It is proper to give it the widest interpretation which its language will permit'.3 The same is true of O 18 r 6(2)(b).
4 As is sometimes the case, the application is brought ex parte (that is, it is brought in the absence of Ms Taryn Batenburg or Territory Logistic Solutions). But, as is also appropriate, Ms Batenburg was given notice of this application. She emailed the Court yesterday setting out numerous reasons why she should not be joined as a party and asking to be excused from attendance at the hearing. I excused her attendance for four reasons:
(i) The making of an ex parte order joining her and Territory Logistic Solutions to the proceedings does not prejudice her from applying to set aside the order. If she wishes to apply to set aside the order then the appropriate course would be for her to file a conditional appearance with the Supreme Court (Form 6 of Sch 2 of the Rules of the Supreme Court) and make an application to have the amended writ and service set aside.4
(ii) Ms Batenburg lives in the Northern Territory and she said in her email to my associate that she has not received many of the legal documents because her street address (although not her Post Office Box address) is outside the Australia Post delivery area. It is appropriate that she be served with all of the documents (including the application to join both additional defendants, the supporting affidavit, and the proposed amended statement of claim) to permit her to consider her opposition to joinder.
(iii) Much of the information that Ms Batenburg raises in her email which sets out her opposition to joinder involves assertions of fact relating to key issues in the proposed proceeding. That information, and those facts, should be in the form of an affidavit or statutory declaration sworn or affirmed by her.
(iv) Mr Hughes has foreshadowed making an application to transfer these proceedings to the Northern Territory. If this application to transfer is made, and if it is successful, then it would be convenient if any application for the setting aside of the amended writ and service take place in the Northern Territory where Ms Batenburg resides.
5 Although I proceed to hear this application ex parte, my conclusions below are concerned only with whether there is a prima facie case for joinder. If joinder is still opposed by either or both of Ms Batenburg or Territory Logistic Solutions then they can enter a conditional appearance and apply for the order to be set aside.
6 At this stage I conclude that there is a prima facie case for joinder of Ms Batenburg and Territory Logistic Solutions for the following reasons.
7 In relation to the background to this joinder application, and the allegations against Mr Hughes (the first defendant) and Tarjac Enterprises (the second defendant), the General Manager of Jolly & Sons says the following, in affidavit evidence in support of this application.
(i) Mr Hughes was employed as the Northern Territory Branch Manager of Jolly & Sons from 16 June 2011. He had broad autonomy to grow the operations of Jolly & Sons, including obtaining new customers. He developed an intimate knowledge of the Northern Territory business of Jolly & Sons.
(ii) The Northern Territory branch of Jolly & Sons was remote from the head office in Perth so the directors of Jolly & Sons placed a high level of trust in Mr Hughes.
(iii) On 7 June 2013, a company called Tarjac Enterprises Pty Ltd was registered at Mr Hughes' address in the Northern Territory with Mr Hughes as the sole director and secretary.
(iv) In early 2014, the General Manager heard that Mr Hughes had started his own transport business and had approached a number of the customers of Jolly & Sons which he was employed as the Northern Territory Branch Manager. In a meeting prior to 2 April 2014, Mr Hughes admitted to having registered Tarjac Enterprises for the purposes of operating a transport business.
(v) Prior to 3 April 2014, Mr Hughes was asked to provide the accounts for Tarjac Enterprises. Mr Hughes promised to do so but then reneged on that promise.
(vi) Following various meetings between representatives of Jolly & Sons and Mr Hughes, Mr Hughes resigned from his employment with Jolly & Sons on 9 April 2014.
(vii) The General Manager of Jolly & Sons was unable to recover many of the files from Mr Hughes' laptop (which he believes to have been deleted) but some of the files recovered included tax invoices, statements, transport dockets and a jobs list from Tarjac Enterprises to customers of Jolly & Sons.
(viii) On 20 July 2014, the solicitors for Mr Hughes and Tarjac Enterprises (who had orders made in relation to removing them from the record on 24 September 2014) wrote to the solicitors for Jolly & Sons. The solicitors said that Mr Hughes and Tarjac Enterprises are impecunious. They enclosed copies of the confidential financial records of Mr Hughes and Tarjac Enterprises. A sensible open offer of informal negotiations was made in order to attempt to resolve the matter before legal costs escalated. There is no evidence of how the solicitors for Jolly & Sons responded to that letter.
8 Against this background, the reason why Jolly & Sons now seek to join Ms Batenburg and Territory Logistic Solutions is based on the following allegations.
(i) Mr Hughes lives with Ms Batenburg.
(ii) Ms Batenburg was employed by Jolly & Sons in an administrative role in the Northern Territory on a casual basis in January and February 2014.
(iii) Ms Batenburg's role gave her access to customer lists of Jolly & Sons and other confidential business information.
(iv) An ASIC search on 21 July 2014 showed that a company called Territory Logistic Solutions Pty Ltd was registered on 9 April 2014. The address of the company is the same as the address of Ms Batenburg and Mr Hughes. Ms Batenburg is the sole director, shareholder and secretary of Territory Logistic Solutions.
(v) An extract from the LinkedIn profile of Territory Logistic Solutions shows that it has eight followers including 'Taryn B' (Taryn being the first name of Ms Batenburg) and 'Ross H' (Ross being the first name of Mr Hughes).
9 The proposed amended statement of claim by Jolly & Sons alleges that Ms Batenburg established Territory Logistic Solutions solely, or predominantly, for the purposes of transporting goods by road in the same areas and on behalf of the same clients as Jolly & Sons and in competition with Jolly & Sons' business. It also alleges that Territory Logistic Solutions was used by Ms Batenburg as a vehicle for carrying on substantially the same trade as Jolly & Sons.5
10 It appears that the relief sought against Ms Batenburg and Territory Logistic Solutions is as follows:
(i) An injunction to restrain them from carrying on the business of Territory Logistic Solutions; and
(ii) Damages under s 236 of the Competition and Consumer Act 2010 (Cth).
11 The cause of action supporting each claim for relief is pleaded in very general terms.
12 The cause of action supporting (i) seems to be based upon an allegation that Ms Batenburg's registration of Territory Logistic Solutions was done at the 'behest and instigation' of Mr Hughes, and that Mr Hughes has de facto control of it.6 This is said to be a breach of Mr Hughes' contractual and fiduciary duties to Jolly & Sons.7
13 The cause of action supporting (ii) seems to be an allegation that Ms Batenburg and Territory Logistic Solutions made misrepresentations that Territory Logistic Solutions had over 20 years' experience and a 'vast background in the transport and logistics industry'.8 The manner in which the alleged loss and damage was suffered from these alleged misrepresentations is not adequately pleaded.
14 Although it appears from the email communication from Ms Batenburg that a number of the factual allegations in the affidavit evidence filed in support of this application may be disputed, I am satisfied that there is a prima facie case for joinder of Ms Batenburg and Territory Logistic Solutions. I reiterate that this is not a final order and that Ms Batenburg is not precluded from making an application to set aside these orders, accompanied by the evidence that she wishes to rely upon, in the appropriate form. However, in light of the letter sent by Mr Hughes' former solicitors (referred to above at [7(viii)]), it is appropriate that Ms Batenburg and Mr Hughes confer with the solicitors for Jolly & Sons about the prospects of an early mediation before more legal expenses are incurred, and more energy is directed at these proceedings where already the interlocutory issues are beginning to multiply to include (to mention only matters discussed in correspondence and directions hearings):
(i) an application to set aside the amended writ and service of it;
(ii) any application based on the lack of legal representation of any defendant company; and
(iii) an application to transfer these proceedings to the Northern Territory.
15 Counsel for Jolly & Sons also raised issues this morning about the scope of discovery. Mr Hughes has indicated that there may be a legal dispute about the process of discovery in circumstances in which he says that Tarjac Enterprises trades, or has commenced trading, in areas which Jolly & Sons have only just begun to operate. But counsel for Jolly & Sons and Mr Hughes shared the view that mediation should be held as soon as possible. Mr Hughes particularly expressed the concern that the matter should be mediated before it 'spiralled into a cost ball that could never be paid by the defendants'. The discovery issues prior to mediation should be able to be resolved informally in the manner I indicated this morning. If agreement cannot be reached on the discovery then I will hear from the parties in relation to limiting some of the discovery to solicitors to avoid any further argument about confidentiality and trade rivalry prior to the mediation.9 I will reserve the costs of this application and relist this matter for further directions in two weeks on 5 November 2014 at 10.30am, to deal with orders for mediation and any interim orders for discovery if agreement cannot be reached between all the parties.
1Pegang Mining Co Ltd v Choong Sam [1969] 2 MLJ 62, 62 (Lord Diplock).
2Bridge Shipping Pty Ltd v Grand Shipping SA [1991] HCA 45; (1991) 173 CLR 231, 260 - 261.
3 See also generally Holmes v Permanent Trustee Co of New South Wales Ltd [1932] HCA 1; (1932) 47 CLR 113, 119 (Rich J).
4Liff v Peasley [1980] 1 WLR 781, 799 (Brandon LJ); Kendall, C and Curthoys, J (eds) Civil Procedure in Western Australia, 18.6.11.
5 Minute of proposed amended statement of claim [14] - [17].
6 Minute of proposed amended statement of claim [19].
7 Minute of proposed amended statement of claim [20].
8 Minute of proposed amended statement of claim [31].
9Co-operative Bulk Handling Ltd v Brookfield Rail Pty Ltd [2014] WASC 31 [52] - [53].
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