Mansfield (Liquidator) v Fortrust International Pty Ltd, in the matter of Palladium Investments International Pty Ltd (in liq)

In the matter of Palladium Investments International Pty Ltd (in liquidation), the liquidator, Mansfield, applied for leave to join a plaintiff and a defendant, as well as for leave to file further amended originating process and a further amended statement of claim. The application was made in the Federal Court of Australia. The application also sought leave to serve the defendants outside of Australia.

The legal issues the court was required to decide included whether the proposed pleading by the trustee in bankruptcy of Mr Yang against GS Asia had a substantial connection with the existing subject matter of the proceedings, and whether the court should grant leave to join the new parties and causes of action to avoid a multiplicity of proceedings. The court was also required to determine whether leave was required to serve the proceedings outside Australia, and whether a stay may be sought under the International Arbitration Act 1974 (Cth) in relation to claims made by the trustee in bankruptcy of Mr Yang against GS Asia.

The court found that there was a substantial connection between the proposed pleading by the trustee in bankruptcy of Mr Yang against GS Asia and the existing subject matter of the proceedings, which would justify the joinder of the new parties and causes of action to avoid a multiplicity of proceedings. The court also found that leave was not required to serve the proceedings outside Australia, as the proposed further amended originating process fell within certain items referred to in r 10.42 of the Federal Court Rules 2011 (Cth). Turning to the issue which arises under the International Arbitration Act, the court found that the defendants relied on an arbitration agreement which fell within subs 7(1) of the International Arbitration Act, and that the court should stay the proceedings and refer the parties to arbitration in respect of the matter.

The court granted leave to join Mr Mansfield in his capacity as the trustee of Mr Yang’s bankrupt estate as the third plaintiff, to join GS Asia Investment Co Ltd as the fifth defendant, and to file a further amended originating process and further amended statement of claim. The court also ordered the defendants to pay the plaintiffs’ costs of the interlocutory application dated 9 March 2023, and stood the matter over for a further case management hearing at 9.30am on 15 May 2023.