M and S Butler Investments Pty Ltd and Ors v Granny May's Franchising Pty Ltd and Ors Stewart, Jack and Anor v Granny May's Franchising Pty Ltd and Ors
[1998] FCA 568
•11 MAY 1998
IN THE FEDERAL COURT OF AUSTRALIA
LIMITED DISTRIBUTION NEW SOUTH WALES DISTRICT REGISTRY
QG 136 of 1996 BETWEEN:
M & S BUTLER INVESTMENTS PTY LTD
(ACN 066 688 211)
FIRST APPLICANTMARK BUTLER & SHAUNA BUTLER
SECOND APPLICANTJACK STEWART & JANN STEWART
THIRD APPLICANTAND:
GRANNY MAY'S FRANCHISING PTY LTD
(ACN 003 917 879)
FIRST RESPONDENTMICHAEL TENNER
SECOND RESPONDENTROBERT MICHAEL SMITH
THIRD RESPONDENTQG 22 of 1997 BETWEEN:
JACK STEWART & JANN STEWART
APPLICANTAND:
GRANNY MAY'S FRANCHISING PTY LTD
(ACN 003 917 879)
FIRST RESPONDENTM & S BUTLER INVESTMENTS PTY LTD
(ACN 066 688 211)
SECOND RESPONDENTMARK BUTLER
THIRD RESPONDENTJUDGE:
HILL J
DATE OF ORDER:
11 MAY 1998
WHERE MADE:
SYDNEY
THE COURT ORDERS THAT:
The application and Further Amended Statement of Claim in proceedings QG 136 of 1996 be struck out only insofar as it relates to M & S Butler Investments Pty Ltd as a party.
Order 1 be stayed until 27 May 1998 to allow the Liquidator to make application to have that order set aside.
The second applicant in proceedings QG 136 of 1996 file and serve a Further Amended Application and Statement of Claim deleting all references to M & S Butler Investments Pty Ltd as a party on or before 22 May 1998.
Both proceedings QG 136 of 1996 and QG 22 of 1997 be remitted to the District Court of New South Wales with the recommendation that the two proceedings be consolidated with proceedings issued by Granny May’s Franchising on 28 June 1996 by way of defence and cross claim as the case may be.
Order 4 be stayed until 27 May 1998 to allow the Liquidator to make application to have that order set aside.
The costs of today in proceedings QG 22 of 1997 be costs in the proceedings.
The costs of the Notice of Motion in proceedings QG 136 of 1996 filed on 5 May 1998 and supporting affidavit (but not the costs of the hearing of the motion) be costs of the first respondent in those proceedings. The balance of the costs to be costs in the proceedings.
IN THE FEDERAL COURT OF AUSTRALIA
LIMITED DISTRIBUTON
NEW SOUTH WALES DISTRICT REGISTRY
QG 136 of 1996 BETWEEN:
M & S BUTLER INVESTMENTS PTY LTD
(ACN 066 688 211)
FIRST APPLICANTMARK BUTLER & SHAUNA BUTLER
SECOND APPLICANTJACK STEWART & JANN STEWART
THIRD APPLICANTAND:
GRANNY MAY'S FRANCHISING PTY LTD
(ACN 003 917 879)
FIRST RESPONDENTMICHAEL TENNER
SECOND RESPONDENTROBERT MICHAEL SMITH
THIRD RESPONDENTQG 22 of 1997 BETWEEN:
JACK STEWART & JANN STEWART
APPLICANTAND:
GRANNY MAY'S FRANCHISING PTY LTD
(ACN 003 917 879)
FIRST RESPONDENTM & S BUTLER INVESTMENTS PTY LTD
(ACN 066 688 211)
SECOND RESPONDENTMARK BUTLER
THIRD RESPONDENTJUDGE(S):
HILL J
DATE:
11 MAY 1998
PLACE:
SYDNEY
EX TEMPORE REASONS FOR JUDGMENT
On 5 May 1998, in matter QG 136 of 1996, a motion was filed on behalf of the respondents seeking orders that a Further Amended Statement of Claim, which by that time had been issued and served apparently on behalf of the first and second applicants, be struck out so far as it related to the first applicant or, in the alternative, that the proceedings be stayed. It seems that that motion was served the same day.
In support of the motion there was filed an affidavit of Leon Sidney Davis on 6 May 1998, which presumably was not in fact filed together with a motion, but separately. I assume, from the variation in dates, that it was also served on a separate day.
The point of the motion was that M & S Butler Investments Pty Limited, which was the first applicant in the proceedings, had as and from September 1997 been in liquidation. The Liquidator apparently has no interest in the proceedings. There is certainly no argument between the parties that, in this circumstance, the pleadings have had to be recast to eliminate M & S Butler Investments Pty Limited as a party. I have already indicated orders that I propose to make dealing with that matter.
On 5 May 1998, that is to say the day before the filing of the affidavit of Mr Davis, the solicitors for Mark and Shauna Butler and Jack and Jann Stewart, the second and third applicants, wrote to L S Davis & Associates advising that they did not propose to oppose the motion and confirming that the firm of Barry Lazarus Lawyers was not instructed to act on behalf of M & S Butler Investments Pty Limited (in liquidation) and would advise the Court when the matter came before it.
There is a dispute between the parties as to the point in time at which the solicitors, Barry Lazarus Lawyers, or, for that matter, their clients were aware of the fact that the company, M & S Butler Investments Pty Limited was in liquidation. There is a letter from the senior manager for the Liquidator of M & S Butler Investments Pty Limited which indicates that he had had a conversation with Ms Drayton, an associate of Barry Lazarus Lawyers, in which he had instructed her that the Liquidator would not be continuing with the action and that there were no instructions that would be given to her.
In an affidavit filed today Ms Drayton deposes that she had a conversation with Mr Connolly on 21 April 1998 and was made aware that the company was in liquidation. However, she says that she, on or about that day, telephoned the solicitors for the respondents and said that she had been advised that, in fact, the first applicant was in liquidation and that she did not have instructions to act. Apparently Mr Davis, with whom she spoke, responded that he thought that this was the case.
Rather sensibly, the parties have agreed not to litigate any questions of factual dispute between them as concerns the solicitors but the issue has arisen as to how the costs of the motion, the affidavit of Mr Davis and today should be dealt with, so far as matter QG 136 of 1996 is concerned. I should say in respect of matter QG 22 that there is no reason to make any order for costs, other than that the costs of today be costs in the proceedings so that the matter can be dealt with in due course by the District Court.
Both the second applicant and the first respondent request that they should have costs in their favour in these proceedings. The respondents say that on at least two occasions and in an Amended Statement of Claim the firm of Barry Lazarus Lawyers has represented that they had instructions from the Liquidator when they clearly did not. In part I have no doubt that the amendments sought to be made by the Further Amended Statement of Claim, while misconceived, were made not in an attempt to make any representation of acting for the Liquidator but in an attempt to deal with the case as it concerned the second applicant, rather than to interfere with the case as it had been brought by the first applicant.
It seems clear from the letter of 5 May that, at least on that date, everybody was aware that the matter was going to be dealt with by consent. This is not to say that the proceedings today were unnecessary because something had to be done to ensure that the pleadings were fixed up and the matter went back to the District Court or, alternatively, stayed in this Court as the case may be. Had there been sensible communication between the solicitors it may be that the need for a formal motion could have been avoided, perhaps not. To, however, order costs in favour of either party for this afternoon's hearing seems to me merely to penalise one party or the other for what was an absolutely essential hearing in any event, particularly as I am not in a position to find whose fault it was that the matter ended up in the mess, perhaps, that it did. In the circumstances it seems to me the only way that might perhaps fairly accommodate the situation without apportioning fault is an order that the costs of the motion and the affidavit, but not of today's hearing, be the first respondent's costs in the proceedings. That is to say if they are successful they will get them, if they are not, no one will get them. I would, so far as the balance of the costs incurred today, order that they be the costs in the proceedings.
Accordingly, I make the following orders:
The application and Further Amended Statement of Claim in proceedings QG 136 of 1996 be struck out only insofar as it relates to M & S Butler Investments Pty Ltd as a party.
Order 1 be stayed until 27 May 1998 to allow the Liquidator to make application to have that order set aside.
The second applicant in proceedings QG 136 of 1996 file and serve a Further Amended Application and Statement of Claim deleting all references to M & S Butler Investments Pty Ltd as a party on or before 22 May 1998.
Both proceedings QG 136 of 1996 and QG 22 of 1997 be remitted to the District Court of New South Wales with the recommendation that the two proceedings be consolidated with proceedings issued by Granny May’s Franchising on 28 June 1996 by way of defence and cross claim as the case may be.
Order 4 be stayed until 27 May 1998 to allow the Liquidator to make application to have that order set aside.
The costs of today in proceedings QG 22 of 1997 be costs in the proceedings.
The costs of the Notice of Motion in proceedings QG 136 of 1996 filed on 5 May 1998 and supporting affidavit (but not the costs of the hearing of the motion) be costs of the first respondent in those proceedings. The balance of the costs to be costs in the proceedings.
I certify that this and the preceding three (3) pages are a true copy of the Reasons for Judgment herein of the Honourable Justice Hill
Associate:
Dated: 11 May 1998
Solicitor for Applicant in QG 22 of 1997: Woodward Lawyers
Solicitor for Applicant in QG 136 of 1996
and the Third Respondent in QG 22 of 1997:Barry Lazarus Lawyers
Counsel for the Respondents in QG 136 of 1996 and the First Respondent in QG 22 of 1997: Mr T J North Solicitor for the Respondents in QG 136 of 1996 and the First Respondent in QG 22 of 1997:
L S Davis & Associates Date of Hearing: 11 May 1998 Date of Judgment: 11 May 1998
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