Karellas Investments Pty Ltd v FW Projects Pty Limited (in liq)

The case of Karellas Investments Pty Ltd v FW Projects Pty Limited (in liq) involved Karellas Investments, the plaintiff, seeking to appoint a special purpose liquidator to investigate the affairs of FW Projects, the defendant company. The application was made in the context of prior proceedings in the Supreme Court involving the same company, its liquidators, and another party, Manassen. Karellas sought either to be joined as a defendant in the current proceedings or, alternatively, to be granted leave to be heard in the proceedings. The key legal issues were whether Karellas could be joined as a defendant under r 2.13(3) of the Federal Court (Corporations) Rules 2000 (Cth), and whether it should be granted leave to be heard under r 2.13(1) of the same Rules. The court considered the relationship between the power to join a party under r 2.13(3) and the general power under r 9.05 of the Federal Court Rules 2011 (Cth).

The Court found that while the power to join a party under r 2.13(3) of the Corporations Rules is an independent power, it is not without constraints. The criteria specified in r 9.05(1)(b)(i) to (iii) of the Rules, which relate to the proper constitution of proceedings, are relevant and not inconsistent with the exercise of the joinder power in r 2.13(3). The Court concluded that Karellas was not a necessary party to ensure that each issue in dispute could be heard and finally determined. Therefore, Karellas was not granted leave to be joined as a defendant. However, Karellas was granted leave to be heard in the proceedings under r 2.13(1) of the Corporations Rules. The Court reserved costs, leave to cross-examine, and other procedural matters to the docket judge.

The final orders of the Court were that Manassen Holdings Pty Ltd was granted leave to be heard at the hearing of the plaintiff’s application filed on 19 April 2021, and the costs of the interlocutory application were to be costs in the cause.