Jones v Miami Waterfront Developments Pty Ltd - [2012] WASC 483

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION: MARTIN BRUCE JONES as Receiver and Manager of Miami Waterfront Developments Pty Ltd -v- MIAMI WATERFRONT DEVELOPMENTS PTY LTD [2012] WASC 483

CORAM: EDELMAN J

HEARD: 26 NOVEMBER 2012 AND ON THE PAPERS

DELIVERED : 7 DECEMBER 2012

FILE NO/S: COR 167 of 2012

BETWEEN: MARTIN BRUCE JONES as Receiver and Manager of Miami Waterfront Developments Pty Ltd
First named First Plaintiff
ANDREW JOHN SAKER as Receiver and Manager of Miami Waterfront Developments Pty Ltd (Receivers and Managers Appointed)
Second named First Plaintiff
DOS FOXTROT LTD
Second Plaintiff
AND
MIAMI WATERFRONT DEVELOPMENTS PTY LTD
First Defendant
STEPHEN LESLEY REIFFER
Second Defendant

Catchwords:

Practice and procedure - Misjoinder - Whether director improperly or unnecessarily joined as a party to originating process for declarations including declarations of the validity of appointment of receivers - Director properly joined

Legislation:

Corporations Act 2001 (Cth), s 418A, s 429
Rules of the Supreme Court 1971 (WA), O 18 r 6
Supreme Court Act 1935 (WA), s 25(6)

Result:

Application dismissed

Category: B

Representation:

Counsel:

First named First Plaintiff    :     Mr M L Bennett
Second named First Plaintiff :     Mr M L Bennett
Second Plaintiff     :     Mr M L Bennett
First Defendant     :     Mr J Thomson SC
Second Defendant     :     Mr J Thomson SC

Solicitors:

First named First Plaintiff    :     Bennett & Co
Second named First Plaintiff :     Bennett & Co
Second Plaintiff     :     Bennett & Co
First Defendant     :     Tottle Partners
Second Defendant     :     Tottle Partners

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

Amon v Raphael Tuck & Sons Ltd [1956] 1 QB 357
Homestyle Pty Ltd v City of Belmont [1999] WASCA 59
John Alexander's Clubs Pty Ltd v White City Tennis Club Ltd [2010] HCA 19; (2010) 241 CLR 1
Jones v Narrogin Beef Producers Pty Ltd [No 2] [2010] WASC 365
Lois Nominees Pty Ltd v Hill [2011] WASC 53
Morrell v Mercantile Mutual Insurance (Australia) Ltd [1999] WASCA 250; (1999) 21 WAR 451
Newhart Developments Ltd v Co-Operative Commercial Ltd [1978] 1 QB 814
News Ltd v Australian Rugby Football League Ltd [1996] FCA 870; (1996) 64 FCR 410
Oil Basins Ltd v Commonwealth [1993] HCA 60; (1993) 178 CLR 643
Pegang Mining Co Ltd v Choong Sam [1969] 2 MLJ 52
QBE Insurance (Australia) Ltd v Lois Nominees Pty Ltd [2012] WASCA 186
Sankey v Whitlam [1978] HCA 43; (1978) 142 CLR 1
Tiao v Lai [No 2] [2010] WASCA 189
Woodings v Stevenson [2001] WASC 174; (2001) 24 WAR 221

EDELMAN J:

Introduction

This is an interlocutory application in the main proceedings. The main proceedings concern a challenge to the appointment of the first plaintiffs as receivers of the first defendant (Miami Waterfront). For convenience I will describe the first plaintiffs as the Receivers. The Receivers and a creditor (DOS Foxtrot) are seeking declarations under s 418A of the Corporations Act 2001 (Cth) and ancillary orders, including declarations that the Receivers were validly appointed.
This application is brought by the second defendant, Mr Reiffer. He seeks to have these proceedings dismissed against him. He says that he has been improperly or unnecessarily made a party. Neither counsel, nor I, has been able to find any case which has considered whether directors can, or should, be joined as defendants in an action under s 418A of the Corporations Act. This occurred in one recent decision, but it appears that no issue was taken with the joinder in that case.[1]
[1] Jones v Narrogin Beef Producers Pty Ltd [No 2] [2010] WASC 365.
Mr Reiffer was properly joined as a defendant to these proceedings. The orders sought have a direct effect on his powers and duties as a director. And Mr Reiffer's joinder to the action is further supported by case management considerations.

The nature of the proceedings

The primary asset of Miami Waterfront is a caravan park. There is dispute about the value of the caravan park and whether that value exceeds the amount of the debt owed to DOS Foxtrot. There is a dispute in the primary proceedings concerning the terms of the loan agreement between DOS Foxtrot and Miami Waterfront; in particular, whether the loan agreement provided for regular interest payments or a balloon payment of interest and principal at the conclusion of the loan.
Section 418A of the Corporations Act provides as follows:
Court may declare whether controller is validly acting
(1)Where there is doubt, on a specific ground, about:
(a)whether a purported appointment of a person, after 23 June 1993, as receiver of property of a corporation is valid; or
(b)whether a person who has entered into possession, or assumed control, of property of a corporation after 23 June 1993 did so validly under the terms of a security interest in that property;
the person, the corporation or any of the corporation's creditors may apply to the Court for an order under subsection (2).
(2)On an application, the Court may make an order declaring whether or not:
(a)the purported appointment was valid; or
(b)the person entered into possession, or assumed control, validly under the terms of the security interest;
as the case may be, on the ground specified in the application or on some other ground.
In these proceedings, by originating summons the Receivers seek orders as follows:
2.1 A declaration that the novation and assignment of the charge dated 17 December 2007 and execution of the charge dated 4 July 2011 granted by MWDPL (together the Charges) were effective;
2.2 A declaration that the novation and assignment of the first registered mortgage [registration number K453571] over the whole of Lot 22 on Plan 7203 and Lot 53 on Diagram 46151 commonly known as 30 to 32 Olive Road, Falcon, in the State of Western Australia (together the Land) registered 20 December 2007 and the execution of the second registered mortgage granted by MWDPL and registered on 6 July 2011 (together the Mortgages) were effective;
2.3 A declaration that the appointment under the Charges and Mortgages of Martin Bruce Jones and Andrew John Saker each of Ferrier Hodgson as Receivers and Managers were valid and effective including over any property of MWDPL;
2.4 A declaration that the Mortgages and Charges operate over the whole of the Land and all other property of MWDPL including but not limited to the present and future assets and undertaking, including uncalled or unpaid share capital premiums and including all assets and undertakings of MWDPL;
2.5 An order that the plaintiffs are validly in possession or control of any property of the first defendant under the terms of the Charges and Mortgages; and
2.6 Such further or other order as to this Honourable Court may seem just.
When it became clear that there would be disputed issues of fact, directions were given for pleadings to be filed. The orders sought by the Receivers in the statement of claim are different from those sought in the originating summons. But, sensibly, no point was taken about the difference and the hearing proceeded by reference to the orders sought in the statement of claim. In the statement of claim the relief sought by the plaintiffs is as follows:
1.A declaration that the appointment under the Charges and Mortgages of Martin Bruce Jones and Andrew John Saker each of Ferrier Hodgson as Receivers and Managers were valid and effective including over all property of Miami, including the Land;
2.A declaration that the Mortgages and Charges operate over the whole of the Land and all other property of Miami including but not limited to the present and future assets and undertaking, including uncalled or unpaid share capital premiums and including all assets and undertakings of Miami;
3.An order that Martin Bruce Jones and Andrew John Saker each of Ferrier Hodgson are validly in possession or control of any property of Miami under the terms of the Charges and Mortgages;
4.Such further or other order as to this Honourable Court may seem just;
5.An order that the First Defendant pay the costs of the proceedings on an indemnity basis pursuant to clause 16.2 of the Loan Agreement, alternatively costs pursuant to the Supreme Court Act 1935.
6.An order that the Second Defendant pay the costs of the proceedings to be taxed.

The test for a necessary and proper party

The Rule

Mr Reiffer says that the proceedings against him should be dismissed because the proper contradictor to the proceedings is Miami Waterfront, and Mr Reiffer should not be exposed to potential adverse costs orders.
Order 1.3 (2) of the Supreme Court (Corporations) (WA) Rules 2004 (WA) (the Corporations Rules) provides that other rules of the Court apply to the extent that they are relevant and not inconsistent with the Corporations Rules. The Corporations Rules are silent on the issue of who should be joined as a party to an originating process seeking declaratory relief.
In these circumstances, it was common ground that the relevant rule in this case was O 18 r 6 of the Rules of the Supreme Court 1971 (WA). That rule is entitled 'Misjoinder and nonjoinder of parties'. It provides as follows:
(1)No cause or matter shall be defeated by reason of the misjoinder or nonjoinder of any party; and the Court may in any cause or matter determine the issues or questions in dispute so far as they affect the rights and interests of the persons who are parties to the cause or matter.
(2)At any stage of the proceedings in any cause or matter the Court may on such terms as it thinks just and either of its own motion or on application -
(a)order that any person who has been improperly or unnecessarily made a party or who has for any reason ceased to be a proper or necessary party, to cease to be a party;
(b)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,
but no person shall be added as a plaintiff without his consent signified in writing or in such other manner as may be authorised.
(3) An application by any person for an order under subrule (2) adding him as a defendant must, except with the leave of the Court, be supported by an affidavit showing his interest in the matters in dispute in the cause or matter.
Order 18 r 6(2)(a) and O 18 r 6(2)(b) are different sides of the same coin. The former is concerned with situations including when a person is unnecessarily made a party. The latter is concerned with situations where it is necessary to join a person as a party.

Authorities considering the Rule

As Lord Diplock said in the Privy Council in Pegang Mining Co Ltd v Choong Sam,[2] the words of rules equivalent to O 18 r 6 have been 'the subject of voluminous judicial exegesis'. In the same case, Lord Diplock rejected a test for whether a person was a 'necessary' party by reference to a distinction between whether that person's legal interests, as opposed to mere commercial interests, were affected. Instead, Lord Diplock said that
[a] better way of expressing the test is: will his rights against or liabilities to any party to the action in respect of the subject matter of the action be directly affected by any order which may be made in the action?
[2] Pegang Mining Co Ltd v Choong Sam [1969] 2 MLJ 52.
If the matter were wholly free from authority it might have been arguable that a test of 'direct effect' might not fully reflect the broad approach to joinder taken in the pre‑Judicature Chancery cases which expressed concern for a material interest of a person to be joined.[3] This may have been the basis for the modern rule.[4] But the passage from Lord Diplock, and the 'direct effect' test it embodies, have been quoted with approval and applied on a number of occasions in this jurisdiction.[5] The Full Court of the Federal Court has also said that the 'requirement of a direct effect on rights and liabilities differentiates the case where a person ought to be joined, from other cases where the effect of the order on non-parties can be characterised as only indirect or consequential.'[6] It is, therefore, not necessary to consider whether, properly understood, there is any difference between an approach which asks whether joinder is necessary because of a material interest or one which focuses upon direct effect upon that persons rights.
[3] See J Mitford, A treatise on the pleadings in Suits in the Court of Chancery (2nd ed, 1787) page 190. Mitford was later Lord Redesdale, Lord Chancellor of Ireland. The relevant passage is repeated in all the subsequent editions of his book.
[4] John Alexander's Clubs Pty Ltd v White City Tennis Club Ltd [2010] HCA 19; (2010) 241 CLR 1, 48 ‑ 49 [139] (the Court); Amon v Raphael Tuck & Sons Ltd [1956] 1 QB 357, 379 (Devlin J).
[5] Homestyle Pty Ltd v City of Belmont [1999] WASCA 59 [30] (Templeman J; Malcolm CJ & Owen J agreeing); Morrell v Mercantile Mutual Insurance (Australia) Ltd [1999] WASCA 250; (1999) 21 WAR 451, 456 ‑ 457 [14] ‑ [15] (Malcolm CJ; Kennedy & Pidgeon JJ agreeing); Tiao v Lai [No 2] [2010] WASCA 189 [109] (Buss JA; Owen & Murphy JJA agreeing).
[6] News Ltd v Australian Rugby Football League Ltd [1996] FCA 870; (1996) 64 FCR 410, 525 (the Court).
In Pegang Mining Co Ltd, Lord Diplock acknowledged the unique facts of the case and said that the issue of joinder required a 'flexibility of approach' which made it undesirable to lay down any general proposition. Nevertheless, the facts of that case are a helpful illustration of the application of the 'direct effect' approach.
That case concerned a tripartite agreement between parties described as 'the Company' which held a mining lease, a sublessee of the mining lease, and a sub‑sublessee. The sub‑sublessee claimed that under the agreement the Company was obliged to grant subleases to the sublessees of mining leases which the Company later acquired over other land. In turn, the sub‑sublessees argued that they were entitled to a sub‑sublease over the land from the sublessees.
Each of the three parties was a party to the litigation. However, one person, described as the Contractor, was not party to the litigation. The Contractor had entered into a separate agreement with the sub‑sublessee by which the sub‑sublessee agreed to use her best endeavours to obtain mining rights over the lands contemplated by the tripartite agreement. The sub‑sublessee also promised the Contractor that she would grant the Contractor liberty to enter on those lands, and to win and work the materials on the same terms as the sub‑sublessee had agreed with the Contractor in relation to the existing sub‑sublease. The Contractor undertook to the sub‑sublessee to be solely responsible for any costs incurred in enforcing her rights under the agreement. In turn, the sub‑sublessee promised that the Contractor would have the final decision on whether to appeal.
The claim failed. The sub‑sublessee brought an appeal joining the Company and sublessees as respondents. But she subsequently entered an agreement of compromise with the Company and withdrew the appeal. She did so without the consent of the Contractor. The Contractor brought a notice of motion seeking to substitute him or the sublessee as the appellant. In the Privy Council, it was 'strenuously argued on behalf of the Company'[7] that the Contractor was not a necessary or proper party to the appeal.
[7] Pegang Mining Co Ltd v Choong Sam [1969] 2 MLJ 52.
After referring to the test for 'direct effect', Lord Diplock held that the Contractor was directly affected by an order made in the action. Although the Contractor was not a party to the tripartite agreement, and although the Contractor did not have a leasehold interest in the subject matter of the action, the Contractor's interest was sufficiently direct because the success or failure of the appeal would affect whether the Contractor could exercise separate rights under his licence from the sub‑sublessee to enter the land and to win the minerals for the sub-sublessee in exchange for a share of the proceeds of sale.
Another case which considered and applied this rule regarding joinder was News Ltd v Australian Rugby Football League Ltd.[8] In that case, the Australian and NSW Rugby Leagues requested associated clubs to sign agreements described as Commitment Agreements requiring them to play exclusively in the League's competition for five years. The request was in response to rumours of the establishment of a new rugby league competition by News Ltd and associated companies (the Super League). Later, the Australian and NSW Rugby Leagues requested the associated clubs to sign Loyalty Deeds which were designed to strengthen the Commitment Agreements. The Super League, commenced proceedings seeking to set aside the Commitment Agreements and Loyalty Deeds under s 45 and s 46 of the Trade Practices Act 1974 (Cth).
[8] News Ltd v Australian Rugby Football League Ltd [1996] FCA 870; (1996) 64 FCR 410.
The trial judge made orders effectively restraining News Ltd, the Super League and various rebel clubs who had joined the Super League from conducting a rival rugby league competition for five years. A cross‑claim was brought by Australian and NSW Rugby Leagues and loyal clubs. The cross‑claim alleged breach of contractual and fiduciary duties by rebel clubs who joined the Super League.
One issue before the Full Federal Court was whether the players and coaches allied to the Super League should have been joined. The Full Federal Court applied the 'direct effect' test. The Court concluded that the orders sought would directly affect the rights of players and coaches allied to the Super League. The order would affect their rights to choose the employer for whom they would work. The players and coaches should have been joined.
The decision in News Ltd was approved in John Alexander's Clubs Pty Ltd v White City Tennis Club Ltd.[9] In a unanimous judgment, the High Court (French CJ, Gummow, Hayne, Heydon & Kiefel JJ) referred with approval to the reasons of the Full Court of the Federal Court in News Ltd[10] and held that the Court of Appeal of New South Wales should have joined a third person (Walker Corporation) as a party because that person claimed an interest in the land concerning which the court had been invited to make, or proposed to make, orders.
[9] John Alexander's Clubs Pty Ltd v White City Tennis Club Ltd [2010] HCA 19; (2010) 241 CLR 1, 46 [132].
[10] John Alexander's Clubs Pty Ltd v White City Tennis Club Ltd [2010] HCA 19; (2010) 241 CLR 1, 46 ‑ 49 [132], [140].
Another case applying the test was Tiao v Lai (No 2).[11] In that case, the trial concerned a claim by Mr Lai against Mr Tiao, Mr Hui Wang and an incorporated religious and charitable association. Mr Lai sought various matters of relief including a permanent injunction to restrain what he claimed was the unauthorised sale by Mr Tiao of part of the Association's land, purportedly on behalf of the Association. Mr Tiao also entered into a contract, purportedly on behalf of the Association as vendor, with Level Holdings as purchaser, to develop part of the land (the Level Holdings Contract).
[11] Tiao v Lai [No 2] [2010] WASCA 189.
The trial judge made orders, including an order (order 5) that
Once the Association has held a General Meeting, elected a board of directors, identified its financial position and passed a resolution at a validly convened general meeting which identifies the extent to which the development of the land under the Level Holdings contract needs to be reversed, there be liberty to apply for an order that [Mr Tiao and Mr Hui Wang] do restore the Land to its original condition as it stood prior to 11 May 2004 at their own costs.

The trial judge also made declaration (declaration 7) that
[Mr] Tiao was not authorised by the Board or by the members of the Association to enter into the contract between Level Holdings Pty Ltd and the Association dated 11 May 2004 (the Level Holdings contract) in respect of the land being Lot 42 on Diagram 64776 in Certificate of Title 1660 Folio 668 ('Land').
The Court of Appeal held that declaration 7 and order 5 directly affected Level Holdings' rights against and the liabilities to the Association in respect of the Level Holdings Contract.
In contrast with all of these decisions, the opposite result was reached in Morrell v Mercantile Mutual Insurance (Australia) Ltd.[12] Mrs Morrell brought actions against various parties for negligence arising from a parasailing accident. Mercantile Mutual Insurance was joined as a respondent in both actions. At the same time, the trial judge heard a consolidated action by the defendants seeking indemnity from Mercantile Mutual Insurance under a contract of indemnity. The trial judge found two of the defendants to be negligent and to have caused Mrs Morrell's injuries. The trial judge further held that Mercantile Mutual Insurance was liable to indemnify them.
[12] Morrell v Mercantile Mutual Insurance (Australia) Ltd [1999] WASCA 250; (1999) 21 WAR 451.
Mercantile Mutual Insurance appealed from the order that it was liable to indemnify. Mrs Morrell sought to be joined as second respondent in an appeal. Mercantile Mutual Insurance submitted that Mrs Morrell was not a necessary or proper party to the appeal. It submitted that any right of the defendants to claim indemnity did not directly affect any property, legal right or obligation of Mrs Morrell as judgment debtor. It was further submitted that at best the outcome of the appeal on the rights of or liabilities to Mrs Morrell would be indirect or consequential.
The Full Court of the Supreme Court determined the question of joinder by reference to O 18 r 6(2) and the test from Pegang Mining Co Ltd. Malcolm CJ held that Mrs Morrell had no direct legal or equitable right which would be directly affected by the existence or otherwise of a liability on the part of the appellant to indemnify, saying also that[13]
whether or not the defendant was insured and, if so, whether the insurer was liable to indemnify the defendant, are issues which do not affect the liability of the defendant insured to the plaintiff. For relevant purposes, the existence of insurance increases the commercial chance of the plaintiff actually recovering the amount of a judgment in the event that the insurer is liable to indemnify the defendant.

The rationales for the Rule

[13] Morrell v Mercantile Mutual Insurance (Australia) Ltd [1999] WASCA 250; (1999) 21 WAR 451, 458 ‑ 459 [22] ‑ [23].

In Pegang Mining Co Ltd, Lord Diplock said of the rule concerning joinder of an additional party:
[O]ne of the principal objects of the rule is to enable the Court to prevent injustice being done to a person whose rights will be affected by its judgment by proceeding to adjudicate upon the matter in dispute in the action without his being given the opportunity to be heard.
Another rationale is case management. It has been held that the meaning of the words 'necessary to ensure that all matters in dispute in the cause or matter may be effectually and completely determined' encompasses 'modern notions of case management and the desire of the justice system to minimise time and costs in litigation'.[14] This also reflects the remarks concerning the direct effect test that '[t]he test involves matters of degree, and ultimately judgment, having regard to the practical realities of the case, and the nature and value of the rights and liabilities of the third party which might be directly affected.'[15]
[14] Woodings v Stevenson [2001] WASC 174; (2001) 24 WAR 221, 226 ‑ 227 [24] (Owen J).
[15] News Ltd v Australian Rugby Football League Ltd [1996] FCA 870; (1996) 64 FCR 410, 525 (the Court); Morrell v Mercantile Mutual Insurance (Australia) Ltd [1999] WASCA 250; (1999) 21 WAR 451, 456 ‑ 457 [15] (Malcolm CJ).

Is Mr Reiffer a necessary and proper party to the action?

Mr Reiffer is a necessary and proper party to be joined to the proceeding. Mr Reiffer accepted, as he must, that his powers as a director are affected by the appointment of the Receivers. The powers of the Receivers diminish Mr Reiffer's powers as a director.[16]
[16] Newhart Developments Ltd v Co-Operative Commercial Ltd [1978] 1 QB 814, 820 ‑ 821 (Shaw LJ), 822 (Stephenson LJ).
Mr Reiffer made various submissions concerning why he was not a necessary and proper party to be joined. Essentially, he had two principal arguments.
First, Mr Reiffer submitted that the effect of the appointment of Receivers on his powers as a director was only an indirect effect. Senior counsel submitted that 'the organs of the company have their powers reduced but it [is] a consequence of the company having entered into the relevant contractual relationship, so in those circumstances the effect that it has is a secondary effect'.[17]
[17] ts 72.
This submission applies the test for direct effect in too narrow a manner. In Pegang Mining Co Ltd the joined Contractor was not a party to the relevant contractual relationship. In News Ltd, the players and coaches were not parties to the relevant contractual relationships. But their legal rights were directly affected by the outcome of the legal proceedings. As the Full Federal Court said in News Ltd:[18]
Where, before trial, a question arises whether a necessary party has been joined, attention should be directed to the orders sought in the proceedings. It is the effect of the orders upon the third party that must be determined. The test is not whether the conduct of the third party is raised in the pleadings between the existing parties, or whether the third party is a party to a contract, the meaning or effect of which is pleaded as a matter relevant to the ascertainment of the rights between those parties. (emphasis added)
[18] News Ltd v Australian Rugby Football League Ltd [1996] FCA 870; (1996) 64 FCR 410, 525.
The same reasoning applies to the effect of receivership on Mr Reiffer's powers as a director. A declaration that the Receivers' appointment was valid means that his powers are directly affected, and diminished.
Mr Reiffer sought to draw an analogy with the situation of an insurer in a case such as Morrell. He also relied upon the dissenting decision of McLure P in QBE Insurance (Australia) Ltd v Lois Nominees Pty Ltd[19] to the effect that it would be 'very rare' for a third party to obtain declaratory relief in respect of the private rights and duties of others. Extrapolating from this he submitted that it should be even rarer for a third party to be compelled to be a party to an action for declaratory relief in respect of the private rights and duties of others.[20]
[19] QBE Insurance (Australia) Ltd v Lois Nominees Pty Ltd [2012] WASCA 186 [40].
[20] Second defendant's submissions dated 8 November 2012 [14].
The premise of this submission is incorrect. As I have explained, the declaratory relief directly affects the rights and powers of Mr Reiffer as the director of Miami Waterfront. Mr Reiffer is not in the same position as a third party whose rights are unaffected by a defendant's action against an insurer for a declaration.
Mr Reiffer's second principal argument was that he did not dispute that, if the Receivers were validly appointed, his powers as a director would be diminished. This conclusion cannot be drawn from any defence by Mr Reiffer since he has not filed one. But Mr Reiffer said in an affidavit that he did 'not dispute that the [Receivers] have the powers conferred by the security instruments pursuant to which their appointments were made, and the Corporations Act, if they have been validly appointed'.[21]
[21] Affidavit of Mr Reiffer dated 29 November 2012 [15].
Mr Reiffer's argument was essentially that because he disputed the entirety of the Receivers' appointment, rather than merely the scope of their powers, the claim by the plaintiffs 'does not affect any disputed legal rights of [Mr Reiffer]'.[22] This submission must be rejected. The declaration sought by the plaintiffs seeks to bind both Miami Waterfront and Mr Reiffer. By challenging the entirety of the appointment of the Receivers, Mr Reiffer implicitly asserts that his powers and duties as a director are unaffected by the appointment. It is not to the point that there is no dispute currently raised concerning the scope of his powers as a director.
[22] Second defendant's submissions dated 8 November 2012 [13].
Further, another order sought by the plaintiffs against Miami Waterfront and Mr Reiffer is an order that the plaintiffs are validly in possession or control of any property of Miami Waterfront under the terms of the Charges and Mortgages. It appears from affidavit evidence that there is some dispute between the parties concerning the discovery and inspection of books and records of Miami Waterfront.[23] By disputing the validity of the appointment of the Receivers, Mr Reiffer denies that the Receivers are validly in possession or control of any property of Miami Waterfront. As he is the director of Miami Waterfront that property is property over which Mr Reiffer asserts control as a director.
[23] See the affidavit of Mr Booth sworn 3 December 2012 [21] ‑ [23].
Finally, even if it were unclear whether Mr Reiffer disputed the validity of the appointment of the Receivers and their possession and control over the property of Miami Waterfront he might still have been properly joined. The declarations sought affect the rights of Mr Reiffer in the 'wide and loose' sense of 'rights' including privileges, powers and immunities as well as claim rights.[24] A declaration of right in this sense can be made without granting any consequential relief.[25] There is no requirement that a defendant in an action for a declaration must oppose the plaintiff.[26] Hence, even if the matter were unclear, it might not have been appropriate for the plaintiffs to attempt to anticipate whether the relief they sought would be opposed by Mr Reiffer or not. In John Alexander's Clubs Pty Ltd v White City Tennis Club Ltd,[27] the High Court quoted with approval from the decision of the Full Court of the Federal Court in News Ltd[28] that
Generally speaking, to permit [the party prosecuting the proceedings] to transfer to others who might be affected by the outcome of the proceedings the responsibility of deciding whether or not they should apply to be joined could be productive of uncertainty and inconvenience. At times, it could lead to the need to halt expensive litigation part-way through, because a third party insufficiently understood the proceedings, or, through impecuniosity or some other reason, was not adequately advised.
[24] Sankey v Whitlam [1978] HCA 43; (1978) 142 CLR 1, 23 (Gibbs ACJ); Lois Nominees Pty Ltd v Hill [2011] WASC 53 [18] (McLure P).
[25] Supreme Court Act 1935 (WA), s 25(6).
[26] Oil Basins Ltd v Commonwealth [1993] HCA 60; (1993) 178 CLR 643, 650 (Dawson J).
[27] John Alexander's Clubs Pty Ltd v White City Tennis Club Ltd [2010] HCA 19; (2010) 241 CLR 1, 49 [140].
[28] News Ltd v Australian Rugby Football League Ltd[1996] FCA 870; (1996) 64 FCR 410, 526.
However, in circumstances in which Mr Reiffer does dispute the validity of the Receivers' appointment it is not necessary to express any concluded view on the applicability of this general principle to this case.
For these reasons, Mr Reiffer was properly joined as a party to the action. One of the principal objects of rules of joinder - to enable the Court to prevent injustice being done to a person whose rights will be affected by its judgment by proceeding to adjudicate upon the matter in dispute in the action without his being given the opportunity to be heard - is fulfilled by the joinder of Mr Reiffer. Joinder gives Mr Reiffer the opportunity of being heard, if he wishes, in proceedings which directly affect his powers as a director.
As explained above, this conclusion is also supported by case management considerations which aim to ensure that all matters in dispute are effectually and completely determined. A small selection of matters can be referred to from the voluminous correspondence in evidence. For instance, in correspondence Mr Reiffer has said that he is not prepared to give any undertakings in relation to the property of Miami Waterfront unless and until the issues concerning the validity of the Receivers' appointment are determined.[29] Mr Reiffer has requested that DOS Foxtrot (the second plaintiff) circulate his director's report to the shareholders of Miami Waterfront. And the plaintiffs say that Mr Reiffer, as sole reporting officer of Miami Waterfront, has continually refused to provide a statutory report required by the Receivers to perform their statutory functions.[30]
[29] Affidavit of Mr Booth dated 8 November 2012, annexure CDB 20, pages 139 ‑ 141.
[30] Section 429(1) Corporations Act 2001 (Cth); Affidavit of Mr Booth dated 8 November 2012, annexure CDB 22, pages 143 ‑ 161, CBD 28, page 208.
None of the matters described above is pleaded. By themselves these matters would not be sufficient for joinder of Mr Reiffer. But they cast light on the 'questions of degree, and ultimately judgment, having regard to the practical realities of the case' which informs the case management consideration rationale underlying joinder. They support the conclusion that the effect of the orders upon Mr Reiffer is sufficiently direct to require him to be joined as a party.

Conclusion

For the reasons expressed above, Mr Reiffer is a necessary and proper party to these proceedings. The concern which motivated this application by Mr Reiffer appears to be twofold. First, Mr Reiffer is concerned about the possibility of incurring a costs liability. But if that were his only concern then Mr Reiffer could enter a submitting appearance, thereby minimising any potential exposure to costs.
Secondly, senior counsel for Mr Reiffer submitted that the concern of the application was 'whether or not Mr Reiffer is entitled to give directions to cause ... [Miami Waterfront] to defend the action'.[31] But the application does not raise or answer that question. Although Mr Reiffer is properly joined as a defendant to these proceedings, it may be that he can submit to any order of the Court in his personal capacity but nevertheless, as a director, cause Miami Waterfront to defend the proceedings. The course of the parties submissions on this matter suggest that any dispute concerning this course of action is limited to whether Mr Reiffer is required to give an undertaking and indemnity for costs incurred by Miami Waterfront. But that issue is a separate matter from the question of whether Mr Reiffer was properly joined in his personal capacity.
[31] ts 75.
Finally, and possibly related to the second concern, the submissions of the parties involved a dispute concerning whether a plea by Miami Waterfront that the security documentation is liable to be rectified is a matter to be pleaded as a defence or whether rectification ought only to be pleaded as a counterclaim. But this issue is also independent of the immediate question of the joinder of Mr Reiffer which was raised in this application.