Lycopodium Minerals Ltd v Datacom Systems (WA) Pty Ltd - [2017] WASC 80

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION: LYCOPODIUM MINERALS LTD -v- DATACOM SYSTEMS (WA) PTY LTD [2017] WASC 80

CORAM: MASTER SANDERSON

HEARD: 15 MARCH 2017

DELIVERED : 23 MARCH 2017

FILE NO/S: CIV 2287 of 2015

BETWEEN: LYCOPODIUM MINERALS LTD
Plaintiff
AND
DATACOM SYSTEMS (WA) PTY LTD
Defendant

FILE NO/S :CIV 2871 of 2016

BETWEEN :LYCOPODIUM LTD
Plaintiff
AND
DATACOM SYSTEMS (WA) PTY LTD
Defendant
DPSA PTY LTD
First Third Party
SCHNEIDER ELECTRIC IT AUSTRALIA LTD
Second Third Party

Catchwords:

Practice and procedure - Hopeless procedural mess - Turns on own facts

Legislation:

Rules of the Supreme Court 1971 (WA)

Result:

CIV 2287 of 2015 stayed
Application for consolidation dismissed

Category: B

Representation:

CIV 2287 of 2015

Counsel:

Plaintiff: Mr P W Graham
Defendant: Dr J T Schoombee

Solicitors:

Plaintiff: Sparke Helmore
Defendant: SRB Legal

CIV 2871 of 2016

Counsel:

Plaintiff:     Mr P W Graham
Defendant:     Dr J T Schoombee
First Third Party            :     No appearance
Second Third Party       :     No appearance

Solicitors:

Plaintiff:     Sparke Helmore
Defendant:     SRB Legal
First Third Party            :     No appearance
Second Third Party       :     No appearance

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

Hughes v Gales (Unreported, WASC, Library No 980323, 12 June 1998)
Jasmin Solar Pty Ltd v Trina Solar Australia Ltd [2015] FCA 1453

MASTER SANDERSON: This judgment deals with an application in each of these matters. Lycopodium Ltd is named as a plaintiff in CIV 2871 of 2016. Lycopodium Minerals Pty Ltd is named as a plaintiff in CIV 2287 of 2015. Throughout the hearing these two corporations were referred to as 'Limited' and 'Minerals'. That is the nomenclature that I will adopt.
The first application in time was an application in CIV 2287 of 2015 by the defendant, Datacom Systems (WA) Pty Ltd, to set aside purported service of the amended writ. The application was made by letter dated 23 November 2016. Reference was made to O 12 r 6 of the Rules of the Supreme Court 1971 (WA) (the Rules). A conditional appearance had been entered on 8 November 2016. In CIV 2871 of 2016 Limited applied by letter dated 10 February 2017 to consolidate the two actions. A draft consolidated statement of claim was lodged. It is clear from the draft statement of claim Minerals is to take the lead in the consolidated proceedings.
Regrettably the actions have been plagued by procedural irregularities. What should have been two relatively straightforward applications have been unnecessarily complicated. In any event both applications now have to be determined. The background facts are of limited relevance to the applications but I will briefly summarise the nature of the claims by the plaintiffs in both proceedings.
Both concern damage occasioned by a fire on 30 March 2013 in a computer server room located in the administrative offices of Limited and Minerals. In both actions the plaintiffs allege the fire originated within a battery pack supplied as part of a server upgrade package installed by the defendant pursuant to a contract. The purchase order was issued by Minerals. Minerals is a wholly owned subsidiary of Limited. The right of Minerals and/or Limited to sue is at the heart of the issue raised by both of these applications.
In CIV 2287 of 2015 the writ was issued on 14 August 2015. An amended writ of summons was lodged on 14 March 2016. Two amendments had been made to the original writ. First, and most importantly, Limited was added as a plaintiff. Second, the date of supply of the battery pack was amended. This amendment was in accordance with the Rules and created no issue between the parties.
However, the writ could not be amended without leave to add another party. That is the effect of O 21 r 1(3)(b). Although the parties differed on the effect of this irregularity there was no dispute that leave to make the amendment was necessary and had not been obtained. If the plaintiff had followed the correct procedure it would have applied to amend the writ under O 21 r 5(1)(c). Such an application has never been made.
When the parties in CIV 2287 of 2015 were served with the amended writ they entered a conditional appearance. It is generally accepted when a party disputes the jurisdiction of a court to deal with a dispute they have two possible courses of action. The first is to apply by motion to set aside service of the writ. That application is brought under O 12 r (7). The alternative course is to enter a conditional appearance as was done in this case. The conditional appearance is entered under O 12 r 6. For present purposes subrule (2) is important. It is in the following terms:
The defendant shall forthwith apply to the Court to have the question raised by his conditional appearance decided, and if such an application is not made within 14 days from the entry of the conditional appearance, or if the application be dismissed, the conditional appearance shall, unless the Court otherwise orders, become and operate as an unconditional appearance.
The defendant did not enter its conditional appearance within 14 days. It therefore sought an order the appearance be regarded as conditional to facilitate setting aside of service of the amended writ. In response counsel for Limited and Minerals pointed out that as no application had been made within time the appearance became unconditional and both Limited and Minerals had consented to jurisdiction. Counsel further maintained that the failure to obtain leave to join Limited was no more than a procedural irregularity and could be waived under O 2 r 1(1). Without going into detail on this question it would seem to me the addition of a party cannot be cured under O 2. The fact there is a rule dedicated to the addition of a party and the requirements are clear means leave must be obtained. Of course if a party allows a conditional appearance to be come unconditional and does not at any stage take a step to set aside service of the writ then the position might be different.
If all of this was not enough the defendant did not comply with O 59 r 9 and discuss its application with the plaintiffs before issuing proceedings. The affidavit material contains no real explanation as to why this was not done. Counsel for the plaintiffs made the point if it had been done then perhaps an application would have been made within 14 days of the entry of the conditional appearance. After all the ink that has been spilt on the subject of O 59 r 9 there is nothing left to say. In this case there is clearly no reason why there could not have been compliance with the rule.
The defendant's real complaint is that although the contract for the server upgrade was entered into by Minerals it is now clear Limited was an undisclosed principal. The defendant says once an undisclosed principal seeks to assert rights under a contract the right of the agent to sue is 'destroyed'. Justice Edelman in Jasmin Solar Pty Ltd v Trina Solar Australia Ltd [2015] FCA 1453 [115] ‑ [133] examined the authorities on when an undisclosed principal may sue on a contract in its own name. But really this is the clearest of cases. In both writs Limited and Minerals have attempted to sidestep the issue by a somewhat vague indorsement of claim. But really there can be no doubt especially as Minerals is a wholly owned subsidiary of Limited. So Minerals has lost the right to bring proceedings in its own name.
In the course of his submissions counsel for the plaintiffs did refer to the decision of Master Bredmeyer in Hughes v Gales (Unreported, WASC, Library No 980323, 12 June 1998). In that case the master refused to strike out a statement of claim when both the agent and the undisclosed principal were suing. But that matter concerned equitable principles and is altogether different in nature from this case. The authorities make it clear the claim here lies with Limited and Minerals cannot sue.
Counsel for Datacom, while seeking to have his client's appearance in CIV 2287 of 2015 regarded as conditional and service of the writ set aside, indicated the same result could be achieved by simply staying the action. That would effectively dispose of the plaintiff's application in CIV 2871 of 2016 because consolidation would no longer be possible. Counsel was of the view that would sidestep the procedural difficulties and achieve a result consistent with the law.
In the end I think the best resolution of these matters is as follows. In CIV 2287 of 2015 I would extend the time for entry of a conditional appearance and set aside service of the amended writ so far as it relates to Limited. So far as it relates to Minerals I would stay the proceedings while CIV 2871 of 2016 remains on foot. In reaching this conclusion I have necessarily taken the view the requirements of O 59 r 9 should be dispensed with. I have not taken this step lightly. But any other decision would only exacerbate an already confused procedural situation and result in further costs to all parties. But were the plaintiff in either or both actions to seek costs, even costs on an indemnity basis, I would give the application serious consideration.
It follows the consolidation application must fall away. That application will be dismissed.
On publication of these reasons the parties should confer with a view to agreeing orders.