Matthew David Woods as joint and several liquidator of Brierty Limited v Deputy Commissioner of Taxation
[2024] WASC 201
•5 JUNE 2024
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS
CITATION: MATTHEW DAVID WOODS as joint and several liquidator of BRIERTY LIMITED -v- DEPUTY COMMISSIONER OF TAXATION [2024] WASC 201
CORAM: COBBY J
HEARD: 19 MARCH 2024 AND FURTHER WRITTEN SUBMISSIONS 2 AND 4 APRIL 2024, 6 AND 7 MAY 2024
DELIVERED : 5 JUNE 2024
FILE NO/S: COR 37 of 2021
BETWEEN: MATTHEW DAVID WOODS as joint and several liquidator of BRIERTY LIMITED
First named First Plaintiff
HAYDEN LEIGH WHITE as joint and several liquidator of BRIERTY LIMITED
Second named First Plaintiff
CLINT PETER JOSEPH as joint and several liquidator of BRIERTY LIMITED
Third named First Plaintiff
BRIERTY LIMITED
Second Plaintiff
AND
DEPUTY COMMISSIONER OF TAXATION
Defendant
Catchwords:
Practice and procedure - Application to amend originating process - Amendments to raise claims after expiration of limitation period - Whether amendments advance new cause of action - Whether amendments are time-barred by Corporations Act 2001 (Cth) - Application dismissed
Legislation:
Corporations Act 2001 (Cth) s 9, s 588FF(1), s 588FF(3)
Rules of the Supreme Court 1971 (WA) O 21 r 5
Supreme Court (Corporations) (WA) Rules 2004
Result:
Application dismissed
Category: A
Representation:
Counsel:
| First named First Plaintiff | : | P R Edgar SC |
| Second named First Plaintiff | : | P R Edgar SC |
| Third named First Plaintiff | : | P R Edgar SC |
| Second Plaintiff | : | P R Edgar SC |
| Defendant | : | E Luck |
| Interested Parties | : | C K Pearce |
Solicitors:
| First named First Plaintiff | : | Lavan |
| Second named First Plaintiff | : | Lavan |
| Third named First Plaintiff | : | Lavan |
| Second Plaintiff | : | Lavan |
| Defendant | : | Craddock Murray Neumann Lawyers |
| Interested Parties | : | Blackwall Legal LLP |
Case(s) referred to in decision(s):
Belgravia Nominees Belgravia Nominees Pty Ltd v Lowe Pty Ltd [2017] WASCA 127; (2017) 51 WAR 341
Berezovsky v Abramovich [2011] EWCA Civ 153; [2011] 1 WLR 2290
Davies v Chicago Boot Co Pty Ltd (No 2) [2007] SASC 12; (2007) 96 SASR 164
Duncan v SMA Industries Pty Ltd [2020] SASC 88
Dye v Griffin Coal Mining Co Pty Ltd (1998) 19 WAR 431
Farah Constructions Pty Ltd v Say‑Dee Pty Ltd (2007) HCA 22; [2007] 230 CLR 89
Forge Group Ltd (in liq)(rcvrs and mgrs apptd) v Clough Ltd [2021] WASC 136
Fortress Credit Corporation (Australia) II Pty Ltd v Fletcher [2015] HCA 10; (2015) 254 CLR 489
Gordon v Tolcher (2006) 231 CLR 334
Grant Samuel Corporate Finance Pty Ltd v Fletcher [2015] HCA 8 (2015) 254 CLR 477
Greig v Stramit Corporation Pty Ltd [2003] QCA 298; [2004] 2 QdR 298
Hoffmans (a firm) v Ahmed [2021] WASCA 210
Litmus Australia Pty Ltd v Canty [2006] NSWSC 196; (2006) 198 FLR 184
Morgan v Banning (1999) 20 WAR 474
Rodgers v Commissioner of Taxation [1998] FCA 1296; (1998) 88 FCR 1
Rossen v Airey [2012] WASCA 26
Sydney Recycling Park Pty Ltd v Cardinal Group Pty Ltd (in liq) [2016] NSWCA 329; (2016) 69 NSWLR 251
COBBY J:
By an originating process filed 22 June 2020 the plaintiffs sought, ex parte, an extension of time to commence proceedings under s 588FF(1) of the Corporations Act 2001 (Cth) in relation to certain unfair preference claims.
On 21 July 2020 Acting Master Strk (as her Honour then was) made an order in terms of the plaintiffs' amended minute of proposed orders of that date as follows:
Pursuant to s 588FF(3)(b) of the Corporations Act 2001 (Cth), the time of making application under s 588FF(1) of the Corporations Act with respect to the Unfair Preference Claims involving the Defendant Creditors as defined in the affidavit of Matthew David Woods sworn 23 June 2020, the first confidential affidavit of Matthew David Woods sworn 22 June 2020 (First Confidential Woods Affidavit), and the second confidential affidavit of Matthew David Woods sworn 17 July 2020 (Second Confidential Woods Affidavit) is extended up to an including 6 March 2021'.
The plaintiffs filed the originating process in these proceedings on 4 March 2021.
That originating process provides, so far as is presently relevant:
ADETAILS OF APPLICATION
This application is made under section 588FA, 588FC, 588FE and 588FF of the Corporations Act 2001 (Cth) (Act).
This is an application for orders voiding payments made to the defendant by Brierty Limited as insolvent transactions, each providing for an unfair preference, priority or advantage over other creditors.
On the facts stated in the supporting affidavit(s), the plaintiff claims:
Interlocutory Orders
1The matter proceed by way of pleadings.
Final Relief
2A declaration that each of the following payments made to the defendant by Brierty Limited (ACN 095 459 448) (in Liquidation) is:
2.1an unfair preference with the meaning of section 588FA of the Act;
2.2an insolvent transaction within the meaning of section 588FC of the Act; and
2.3a voidable transaction of the Company within the meaning of section 588FE of the Act.
Payment Date Amount (s) 19 May 2017 162,990.00 26 May 2017 306,789.00 2 June 2017 113,293.00 8 June 2017 402,476.87 9 June 2017 307,823.00 14 June 2017 574.99 16 June 2017 108,299.00 23 June 2017 271,599.00 30 June 2017 576,592.00 30 June 2017 117,588.00 7 July 2017 257,807.00 14 July 2017 101,111.00 18 July 2017 4,481.61 21 July 2017 241,156.00 24 July 2017 400,957.00 28 July 2017 84,655.00 4 August 2017 369,279.00 11 August 2017 111,018.00 18 August 2017 1,121.83 18 August 2017 257,000.00 25 August 2017 98,871.00 28 August 2017 871,382.00 1 September 2017 302,370.00 5 September 2017 101,568.00 TOTAL 5,570,802.30 2.4an order pursuant to section 588FF(1)(a) of the Act that the defendant pay to the Company the sum of $5,570,802.30 being the total amount paid by the Company under the voidable transactions.
2.5...
An affidavit of Matthew David Woods sworn 4 March 2021 was filed in support of the originating process. At [18] of his affidavit, Mr Woods deposes that the plaintiffs are of the opinion that Brierty Ltd was insolvent on and from 16 March 2017.
Mr Woods' affidavit comprises 1090 pages, including attachments. Mr Woods also sought to, in effect, incorporate by reference his affidavit sworn 3 March 2021 and filed in Action COR 35 of 2021 in this court, comprising a further 251 pages, the affidavit of Andrew Leigh Moyle also sworn 3 March 2021 and filed in COR 35 of 2021, comprising 859 pages including attachments, and the affidavit of Daniel Christian Vivian affirmed 3 March 2021 and filed in the same action, being a further 123 pages, so that a total of 2,323 pages of affidavit material supported the originating process.
The plaintiffs now seek to amend the originating process to include an additional 16 payments said to constitute unfair preferences, all of which predate the payments identified in [2.3] of the originating process, on the basis that they have relevantly recently obtained an expert opinion to the effect that Brierty Ltd was insolvent prior to 16 March 2017, being the date previously identified by the plaintiffs as the date on and from which Brierty Ltd was insolvent.
The defendant and the interested parties, being the former directors of the company, oppose the amendments on grounds which include that:
(a)the claims are outside the scope of the order for the extension of time made by the Acting Master on 21 July 2020, and are therefore prohibited; and
(b)there is no power to amend the originating process under the Rules of the Supreme Court 1971 (WA).
The parties are, however, agreed that an amendment to reflect the resignation of Hayden Leigh White as a liquidator of the company should be made, and I will make an order to that effect.
For the reasons which follow, I consider that this court has no power to allow the substantive amendments the plaintiffs seek to make, and I will therefore otherwise dismiss the application to amend. The consequence is that the law regarding the amendment of claims for unfair preferences pursuant to s 588FF(1)[1] after the expiration of the periods fixed in s 588FF(3) is different in Western Australia from other jurisdictions, notwithstanding the federal nature of the Corporations Act.
[1] References to legislation are to the provisions of the Corporations Act 2001 (Cth) unless otherwise stated.
Section 588FF provides, so far as is presently relevant:
Courts may make orders about voidable transactions
(1)Where, on the application of a company's liquidator, a court is satisfied that a transaction of the company is voidable because of section 588FE, the court may make one or more of the following orders:
(a)an order directing a person to pay to the company an amount equal to some or all of the money that the company has paid under the transaction;
(b)an order directing a person to transfer to the company property that the company has transferred under the transaction;
(c)an order requiring a person to pay to the company an amount that, in the court's opinion, fairly represents some or all of the benefits that the person has received because of the transaction;
(d)an order requiring a person to transfer to the company property that, in the court's opinion, fairly represents the application of either or both of the following:
(i)money that the company has paid under the transaction;
(ii)proceeds of property that the company has transferred under the transaction;
(e)an order releasing or discharging, wholly or partly, a debt incurred, or a security or guarantee given, by the company under or in connection with the transaction;
(f)if the transaction is an unfair loan and such a debt, security or guarantee has been assigned an order directing a person to indemnify the company in respect of some or all of its liability to the assignee;
(g)an order providing for the extent to which, and the terms on which, a debt that arose under, or was released or discharged to any extent by or under, the transaction may be proved in a winding up of the company;
(h)an order declaring an agreement constituting, forming part of, or relating to, the transaction, or specified provisions of such an agreement, to have been void at and after the time when the agreement was made, or at and after a specified later time;
(i)an order varying such an agreement as specified in the order and, if the Court thinks fit, declaring the agreement to have had effect, as so varied, at and after the time when the agreement was made, or at and after a specified later time;
(j)an order declaring such an agreement, or specified provisions of such an agreement, to be unenforceable.
(2)Nothing in subsection (1) limits the generality of anything else in it.
(3)An application under subsection (1) may only be made:
(a)during the period beginning on the relation - back day and ending:
(i)3 years after the relation - back day; or
(ii)12 months after the first appointment of a liquidator in relation to the winding up of the company;
whichever is the later; or
(b)within such longer period as the Court orders on an application under this paragraph made by the liquidator during the paragraph (a) period.
The High Court of Australia held in Gordon v Tolcher[2] that s 588FF(3) is a time stipulation which is of the essence, rather than a procedural rule. In Grant Samuel Corporate Finance Pty Ltd v Fletcher[3] the High Court held that an order providing for an extension of time within which to bring proceedings under s 588FF(3)(b) could not be varied using State procedural provisions, the application of any procedural rule of a State or territory to allow an extension of time being inconsistent with s 588FF(3)(b). In doing so, the High Court reaffirmed that 'the bringing of an application within the time required by s 588FF(3)(a) or (b) is a precondition to the court's jurisdiction under s 588FF(1)'.[4]
[2] Gordon v Tolcher (2006) 231 CLR 334 [37], [40].
[3] Grant Samuel Corporate Finance Pty Ltd v Fletcher [2015] HCA 8 (2015) 254 CLR 477.
[4] At [17].
In a decision delivered the same day as Grant Samuel, Fortress Credit Corporation (Australia) II Pty Ltd v Fletcher,[5] the High Court held that the making of what is commonly referred to as a 'shelf order', whereby the time to make any application under s 588FF(1) is extended without identifying any particular transaction or transactions, is authorised by s 588FF(3)(b).
[5] Fortress Credit Corporation (Australia) II Pty Ltd v Fletcher [2015] HCA 10; (2015) 254 CLR 489.
The High Court has stated that the policy informing s 588FF(3) reflects the balancing of the competing interests of the creditors of a company in liquidation and those persons who have had past dealings with the company and might be subject to a claim pursuant to s 588FF(1), the legislature's intention being that there be a degree of commercial certainty for those who might be the subject of s 588FF proceedings.[6]
[6]Grant Samuel [21]; Fortress Credit [24].
A series of decisions of intermediate appellate courts have, however, drawn a distinction between the commencement of proceedings seeking orders pursuant to s 588FF(1) and the making of an amendment in proceedings commenced within the time fixed by s 588FF(3) in order to bring claims pursuant to s 588FF(1) which would otherwise be statute barred.
In Rodgers v Commissioner of Taxation,[7] a decision delivered prior to each of Gordon v Tolcher, Grant Samueland Fortress Credit, a Full Federal Court held that there was no inconsistency between s 588FF(3) and O 13 r 2 of the then Federal Court Rules 1979 (Cth), holding that it was possible to amend a pleading in an existing proceeding after the expiration of the period fixed by s 588FF(3)(a) to add two additional payments, the court having power to allow the amendment under a rule of court which permitted amendments where they arose out of the same or substantially the same facts as those already pleaded.
[7] Rodgers v Commissioner of Taxation [1998] FCA 1296; (1998) 88 FCR 1.
The approach taken in Rodgers was subsequently referred to with approval by the Queensland Court of Appeal[8] and the Full Court of the Supreme Court of South Australia,[9] both States having legislative provisions to similar effect to that considered in Rodgers.
[8] Greig v Stramit Corporation Pty Ltd [2003] QCA 298; [2004] 2 QdR 298 [89], [126].
[9] Davies v Chicago Boot Co Pty Ltd (No 2) [2007] SASC 12; (2007) 96 SASR 164.
In Sydney Recycling Park Pty Ltd v Cardinal Group Pty Ltd (in liq)[10] a five member bench of the New South Wales Court of Appeal considered whether Rodgers remained good law in light of the subsequent decisions in Grant Samuel and Fortress Credit.
[10] Sydney Recycling Park Pty Ltd v Cardinal Group Pty Ltd (in liq) [2016] NSWCA 329; (2016) 69 NSWLR 251.
In Sydney Recycling Park, a liquidator had made an application for orders pursuant to s 588FF(1) within time but sought leave to amend to add claims in respect of three further payments after the time specified in s 588FF(3) had expired. The Court of Appeal was unanimously of the view that the appellant's submission that Rodgers did not survive the more recent decisions of the High Court should not be accepted, stating that nothing in those decisions compelled the conclusion that Rodgersshould no longer be followed,[11] the High Court not having considered the power of amendment considered in Rodgers and the cases which had followed it.[12]
[11] Sydney Recycling Park [96] - [98].
[12] Sydney Recycling Park [99].
The parties in Sydney Recycling Park had conducted the case before the primary judge on the basis that each payment was identified in the statement of claim as a separate 'transaction',[13] although the Court of Appeal held that the primary judge was correct to conclude that the numerous individual payments made by the company to the appellant could also properly be treated as a single 'transaction',[14] having regard to the authorities to the effect that a series of dealings may constitute a single 'transaction' if they are 'connected in being directed to bringing about a change in the company's rights, liabilities or property'.[15]
[13] Sydney Recycling Park[70], [125].
[14] Sydney Recycling Park[70].
[15] Sydney Recycling Park[69].
The appellant in Sydney Recycling Park argued that s 588F(1) required that there be 'an application' in respect of a particular identified 'transaction', so that each individual payment the subject of a claim for relief was required to be identified in the originating process.
Bathurst CJ and Payne JA rejected that construction, stating:
Fortress Credit at paragraph [20] addresses the proposition that 'an application under s 588FF(1) must seek orders for which that subsection provides'. The court then sets out the specific matters that must be addressed before a court could make an order under that section. The High Court was not addressing the point in time at which all necessary particulars needed to be provided to enliven the court's jurisdiction to make 'orders for which that subsection provides', much less was it addressing whether once commenced an 'application' could be amended.
In paragraph [21] of Fortress Credit the High Court addressed 'the class of applications which can be made by liquidators under s 588FF(1) in relation to a transaction alleged to be voidable'. This is a reference to an application by a company's liquidators for the kind of orders that can be made pursuant to s 588FF. It is not in our view a prescription of the matters which must be contained in an originating process. [85] - [86]
Beazley P also rejected the appellant's construction, finding that there was nothing in the text of the section that required that the time limit prescribed by s 588(3)(a) must be satisfied in respect of each 'transaction'.[16]
[16] Sydney Recycling Park [137] - [141].
Addressing the form an application made pursuant to s 588FF(1) is required to take, Bathurst CJ and Payne JA said:
The text of s 588FF(3), however, is also open to the interpretation that the section is concerned and only concerned with the time limit to make an application, the form of which application is left to the relevant law of the jurisdiction where the proceeding is commenced. Section 588FF(1) is open to the construction that the 'application' referred to in sub-s (1) is to be understood as the application, including the application as subsequently amended. [74]
Accordingly, time ceases to run for the purposes of s 588FF(3) when the application required by s 588FF(1) is filed. The New South Wales Court of Appeal considered, and I accept, that the High Court did not consider in Fortress Credit 'the point in time at which all necessary particulars needed to be provided to enliven the court's jurisdiction to make 'orders for which that sub‑section provides', much less was it addressing whether once commenced an application could be amended'.[17]
[17] Sydney Recycling Park [85].
I am required to follow the decisions of intermediate appellate courts in other jurisdictions on the interpretation of Commonwealth legislation unless I consider that interpretation is plainly wrong.[18]
[18] Farah Constructions Pty Ltd v Say‑Dee Pty Ltd (2007) HCA 22; [2007] 230 CLR 89 [135].
I do not consider either Rodgers or Sydney Recycling Park to be plainly wrong. The construction of s 588FF adopted in each case was open, and there is nothing in the three High Court decisions which requires the conclusion that the reasoning in Rodgers is no longer valid.
It follows that I accept that the word 'transaction' where it is appears in s 588FF(1) is open to be construed in a manner such that additional payments by a company following a pattern of conduct already identified in an originating process may be said to form part of a single 'transaction'.
Were it not for what follows regarding the legislative regime in Western Australia, I would follow and apply Rodgers and Sydney Recycling Park in the present proceedings.
Turning to the first ground of opposition to the application raised by the defendant and the directors, I do not consider the orders made by the then Acting Master prevent the plaintiffs from making any further claim against the defendant, should that claim be otherwise available.
The issues before the Acting Master were limited to whether it was appropriate to extend the time in which to institute proceedings under s 588FF(1) against the defendant, and the length of the extension of time to be granted.
I do not accept that the Acting Master's orders operate to prevent the making of any further claim by the plaintiffs against the defendant. The Acting Master was not called upon to determine whether there were other claims available to the plaintiffs in respect of which an extension of time should be refused. The question whether the plaintiffs should be denied the opportunity to bring some other claim, if available to them to do so, was simply not before the court for determination at that time.
Further, Sydney Recycling Park is authority for the proposition that an amendment to add a claim after the expiration of the periods fixed by s 588FF(3) does not contravene the legislative policy that potential defendants know that they may be subject to a claim, and the potential scope of that claim. That is consistent with the view expressed by the High Court in Fortress Credit, albeit in a slightly different context, that 'what is a reasonable or an unreasonable prolongation of uncertainty and the scope of such uncertainty are more appropriately considered case-by-case in the exercise of judicial discretion'.[19]
[19] Fortress Credit [24].
The statutory policy considerations identified in Grant Samuel and Fortress Credit, to the effect that a defendant is entitled to know the extent of the claims against them within the time limited by s 588F, are factors to be considered in the exercise of the discretion to allow a proposed amendment. If that is the case, then the identification and institution of claims functionally identical to those the subject of an order extending time pursuant to s 588FF(3)(b) do not infringe either those policy considerations or an order extending the time in which to make a claim pursuant to s 588FF(1), s 588FF(3)(b) being solely concerned with the time in which any application is to be made to the court.
I therefore do not accept the first ground of opposition to the application.
I turn to the second ground of opposition, to the effect that this court does not have power to permit the amendments.
It is clear that the procedural rules of the court in which an application is made pursuant to s 588FF(1) govern a party's ability to amend that application. In Gordon v Tolcher, the High Court stated:
Accordingly, s 588FF is dealing, as an essential aspect of the regime it creates, with the period within which the application must be made. An application may be made only to a court invested with federal jurisdiction by one or other of the provisions of Pt 9.6A. Thereafter, and subject to any other relevant provision of the Corporations Act, the conduct of the litigation is left for the operation of the procedures of that court. These procedures will vary from one State or Territory to another and within the court structures of those States and Territories. The scheme of the Corporations Act is not to impose a direct federal and universal procedural regime. Rather, s 79 of the Judiciary Act is left to operate according to its terms in the particular State or Territory concerned. [40]
In Western Australia, the Supreme Court (Corporations) (WA) Rules 2004 apply to a proceeding in this court under the Corporations Act: r 1.3(1).
The other rules of the court apply to the extent that they are relevant and not inconsistent with those rules: r 1.3(2).
The Corporations Rules do not provide for the amendment of any application to which those rules apply. Accordingly, any amendment to an originating process filed pursuant to the Corporations Rules is governed by O 21 r 5 of the Rules of the Supreme Court 1971.
The legislative regime in Western Australia is consequently very different from that considered in Rodgers and Sydney Recycling Park, because O 21 r 5 does not permit an amendment to add a new claim or cause of action following the expiration of a relevant limitation period. The Court of Appeal made clear in BelgraviaNomineesBelgravia Nominees Pty Ltd v LowePty Ltd[20] that in Western Australia 'no doctrine of relation back or rule of court can preclude the defendant relying upon a limitation defence', where an amendment would introduce a new cause of action after the expiration of a relevant limitation period.[21]
[20] BelgraviaNomineesBelgravia Nominees Pty Ltd v LowePty Ltd[2017] WASCA 127; (2017) 51 WAR 341.
[21] At [43], [46].
The fundamental difficulty with the plaintiff's application is therefore that, unlike the courts of New South Wales, Queensland and South Australia and the Federal Court of Australia, this court does not have power to allow the addition of a new cause of action to an existing claim once the time periods fixed in s 588FF(3) have expired, whether as such or by way of particulars of an existing claim where the amendment is properly characterised as the addition of a new cause of action.
Although O 21 r 5(5) permits the court to allow an amendment notwithstanding a limitation period may have expired on the basis that argument as to whether that is the case is usually better conducted at trial, I consider that this is a clear case where the additional claims sought to be raised by the plaintiffs are statute barred.
In each of the authorities relied upon by the plaintiffs in support of the application to amend where an amendment to add an additional claim has been allowed, that has been done pursuant to a specific statutory power. There being no such provision in Western Australia, I consider that the parties would be put to unnecessary cost and expense in ascertaining whether Brierty Ltd was insolvent at a time earlier than that specified in the present statement of claim and in considering the 16 transactions which the plaintiffs seek to add to the existing claims were I to allow the amendments on the basis that the application of the limitation period should be determined at trial. The evidence related to the determination of the issue is, in my view, highly unlikely to change between now and the trial of the plaintiffs' claim, and, in the particular circumstances of this case, the question to be determined is one of law.
There is one aspect of the application which the parties did not initially address, being whether the proposed amendments are within the scope of the originating process filed in the proceedings, and therefore permissible by way of analogy with the principles applicable to the amendment of a writ of summons. Generally, an amendment to plead additional facts, or existing facts in a different way, will not add a new cause of action if the new or amended facts arise out of substantially the same facts as a cause of action identified in the originating process.[22]
[22] Morgan v Banning (1999) 20 WAR 474, 484; Belgravia Nominees [46(b)].
At the invitation of the court, the plaintiffs and the defendant filed further submissions addressing this issue, the directors declining to do so.
The effect of r 2.2(1)(a) read with r 2.2(3) of the Corporations Rules is that an application pursuant to s 588FF(1) is to be made by filing an originating process in accordance with Form 2 which states each section under which the proceeding is brought, and the relief sought. Form 2 requires, relevantly, as 'Details of application', the section number of the Corporations Act under which the application is made and a brief statement 'of the proceeding, eg application for winding up on ground of insolvency; or complaint about a receiver'.
Form 2 contemplates that the originating process will be supported by an affidavit or affidavits setting out the facts supporting the applicant's claims.
As can be seen above, in these proceedings the originating process states in section A that the application is for 'orders voiding payments made to the defendant by Brierty Limited as insolvent transactions, each providing for an unfair preference, priority or advantage over other creditors'. The additional payments the subject of the application to amend are therefore within the description of the proceeding contained in the originating process.
That statement of the nature of the plaintiff's case is arguably sufficient to include the further payments the subject of the application for amendment. That position is supported by Sydney Recycling Park, in which Bathurst CJ and Payne JA said:
The breadth of the inclusive definition of the word 'transaction' will be recalled. There is no reason why as a matter of policy, having regard to the breadth of that definition, a case pleaded as a very broadly described 'transaction' involving multiple payments could effectively be amended by adding additional particulars to a claim whereas a more closely described pleading which attacked the same payments pleaded out as separate 'transactions' could not be amended. [92]
As has already been said, however, it needs to be borne in mind that view was expressed in a jurisdiction which has power to allow an amendment to add an otherwise statute barred claim.
In the present case, the additional payments are outside the scope of the relief as claimed in the originating process, which is limited to the payments identified in [2.3] of the statement of the relief claimed by the plaintiffs. The plaintiffs seek to amend the originating process by adding additional payments to the table contained in that paragraph.
The affidavit of Mr Woods filed in support of the originating process on 4 March 2021 contains evidence in the attachments to the affidavit of the payments in respect of which the plaintiffs now seek leave to amend, although it must be said that Mr Woods makes no express reference to those payments in his affidavit and they are not otherwise identified in a way which gave any indication that a claim for relief would ever be made in respect of them.
Nor can it be said that it was obvious that evidence had any direct connection to the claims advanced by the plaintiffs in their statement of relief.
Similarly, the attachments to Mr Woods' affidavit contain evidence that could support the proposition that Brierty Ltd was insolvent prior to 16 May 2017, the date previously advanced by the plaintiffs as the date on and from which Brierty Ltd was insolvent.
In Forge Group Ltd (in liq)(rcvrs and mgrs apptd) v Clough Ltd,[23] Le Miere J, considering a submission that the originating process together with the facts stated in the supporting affidavit defined 'the four corners of the proceedings and form the reference point for whether a cause of action is within the boundaries of the proceedings', said:
The essential averments in an originating process are the two matters required by r 2.2(3) and set out in Form 2. The first is each section of the Corporations Act under which the proceeding is brought. The second is the relief sought or a brief statement of the nature of the proceeding, eg application for winding up on ground of insolvency or complaint about receiver, or relevantly in this case:
an application for orders that the defendants compensate the plaintiff for damage suffered by the plaintiff within the meaning of section 1043L(5) of the Act resulting for the defendants contraventions, further or alternatively involvement in contraventions, of section 1043A(1) of the Act in respect of Division 3 financial products issued by the plaintiff
and a statement of relief sought. [21]
[23] Forge Group Ltd (in liq)(rcvrs and mgrs apptd) v Clough Ltd [2021] WASC 136.
Le Miere J referred with apparent approval to the decision of Barrett J in Litmus Australia Pty Ltd v Canty[24] where his Honour, while agreeing that an affidavit may serve the purpose of advancing contentions, said that 'generally speaking, an affidavit does not outline a case'.
[24] Litmus Australia Pty Ltd v Canty [2006] NSWSC 196; (2006) 198 FLR 184.
An affidavit filed in support of an originating process is not part of the originating process, for the reasons identified in Forge Group by Le Miere J at [18], although at [65] his Honour said that '[i]nsofar as the facts stated in the affidavit define or confine the plaintiff's causes of action for the purposes of the Corporations Act … those facts include facts asserted in or disclosed by the documents annexed to the supporting affidavit'.
Strictly speaking, it was unnecessary for his Honour to determine the status of an affidavit filed in support of an originating process, Le Miere J having found that the amended statement of claim to which objection was taken advanced a claim commenced by the plaintiff's originating process, being 'of the nature stated in the plaintiff's originating process and [having been] brought under the provisions of the Corporations Act specified in the originating process',[25] and that in any event the contested amendments did not sufficiently change the formulation of the plaintiff's case as to constitute a new cause of action.
[25] At [24].
Further, in my view, Le Miere J's statement of the position at [65] did not constitute unequivocal acceptance of the proposition that the supporting affidavit defines a plaintiff's causes of action for the purposes of the Corporations Act, evidenced by his Honour's use of the word 'insofar' in that paragraph. His Honour appears to have simply assumed the correctness of the argument, without determining it, in proceeding to dismiss the application.
In my view, Forge Group should not be considered authority for the proposition that the facts stated in a supporting affidavit filed with an originating process define or confine the causes of action identified in the originating process. As the court may direct that no affidavit be filed in support of an originating process,[26] I consider that it is the terms of the originating process itself to which regard is to be had in determining whether a claim sought to be raised is within the scope of the document for limitation purposes.
[26] Corporations Rules, r 2.4(1).
As the amendment of an originating process is governed by O 21 r 5, it is appropriate to apply the principles stated by the Court of Appeal in Belgravia Nominees in determining the application to amend. No limitation issue will therefore arise if the amendments do not add a new cause of action, and in assessing, as a matter of impression and degree, whether the amendments have that effect, the averments contained in the originating process are to be construed generously, rather than narrowly.[27]
[27] Belgravia Nominees [43].
Taking that approach, I consider that each of the additional payments is to be regarded as a new cause of action, regardless of whether the amendments are framed in the terms proposed by the plaintiffs or, consistent with Sydney Recycling Park, as further particulars of the claim stated in Section A of the originating process.
A 'cause of action' is the factual situation which would entitle a plaintiff to relief if proved.[28] A principal purpose of a cause of action is to enable a defendant to know with finality what facts are said to give rise to the action against him or her.[29]
[28] Rossen v Airey [2012] WASCA 26 [30]; Belgravia Nominees [10].
[29] Morgan v Banning (1999) 20 WAR 474, 485.
Whether a particular claim involves a 'new' cause of action or arises from substantially the same facts already identified is a matter of impression and degree.[30]
[30] Dye v Griffin Coal Mining Co Pty Ltd (1998) 19 WAR 431, 434; Hoffmans (a firm) v Ahmed [2021] WASCA 210 [27].
The addition or substitution of a claimed loss will not necessarily involve the assertion of a new cause of action. For example, in Berezovsky v Abramovich,[31] Longmore LJ said:
It may indeed be the case that if a claimant, suing in tort, substitutes by amendment a different kind of loss from that originally pleaded, he will be asserting a new cause of action, but that will not always be so. One needs to know more of the facts of the case before one can confidently assert that the claimant is proposing to substitute a new cause of action. If an act of violence constituting a single breach of duty causes the loss of both a cat and a dog, the claimant would not be substituting a new cause of action if he substituted the word 'dog' for the word 'cat' but would be relying on the original cause of action which had caused loss. He would be substituting a new loss for the old loss but would not be substituting a new cause of action for the original cause of action. If on the other hand the claimant was relying on a second and distinct act of violence causing a loss at some different time from the loss originally caused to the cat, he would no doubt be relying on a different cause of action.
Thus the addition or substitution of a new loss is by no means necessarily the addition or substitution of a new cause of action. For a cause of action to arise in tort there must be a breach of duty which causes loss but it is permissible to add or substitute further losses if they all stem from an original breach of duty which has caused some loss. This happens everyday in personal injury claims in which a loss of earnings claim may be added to (or substituted for) a claim for loss and suffering, even after the original time-bar has expired; there is no question of a new cause of action being added or substituted because the loss all stems from the negligent act of the car driver or other tortfeasor …. [63 ] - [64]
[31] Berezovsky v Abramovich [2011] EWCA Civ 153; [2011] 1 WLR 2290.
The central elements of a claim pursuant to s 588FF(1) are: [32]
(a)immediately before the payment, the company owed a debt to the defendant;
(b)that debt was unsecured;
(c)the payment was made by the company or the company was a party to the transaction involving the payment so that the creditor received a benefit from the company;
(d)the company was insolvent immediately before or immediately after the payment; and
(e)the payment resulted in the creditor receiving more than the creditor would receive from the company in respect of the debt if the transaction were set aside and the creditor proved for the debt in the winding up of the company.
[32] See, for example, Duncan v SMA Industries Pty Ltd [2020] SASC 88 [119].
As each of the matters identified in the preceding paragraph must be established by a plaintiff liquidator in respect of each payment sought to be avoided, I consider that each of the payments in respect of which the plaintiffs seek leave to amend are to be regarded as a separate cause of action, notwithstanding that at least some of those elements are common to both the payments in [2.3] of the statement of the relief sought and the payments the subject of the application to amend.
As to whether each of those payments should be regarded as a 'new' cause of action, I consider, taking a generous view of the terms of the originating process, that the claims now sought to be made are outside the scope of the payments specifically identified as the subject of the plaintiffs' claims in [2.3] of the statement of the relief, and should therefore be characterised as 'new'.
If I am wrong in my view that the contents of a supporting affidavit filed with the originating process do not define or confine the causes of action identified in the originating process, the volume of material relied upon in support of the originating process as filed, the lack of any identification by the plaintiffs of the evidence which now might be said to support the amendments at the time the originating process was filed and the failure of the plaintiffs to rely upon the point until the court raised the possibility with the parties militate against accepting the proposition that the claims now sought to be raised by the plaintiffs should be held to be within the scope of the originating process, read with Mr Woods' affidavit and the voluminous materials referred to therein.
For those reasons, I hold that the proposed amendments would raise new causes of action, outside the current scope of the originating process, which this court lacks power to permit.
I will therefore dismiss the plaintiffs' application, save for the application to remove Mr White as a plaintiff, and hear from the parties as to costs. Subject to hearing from the parties, my preliminary view is that costs should follow the event.
I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
VR
Associate to the Hon Justice Cobby
4 JUNE 2024
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