Ong v Lottwo Pty Ltd (in liq)
[2013] SASCFC 57
•27 June 2013
SUPREME COURT OF SOUTH AUSTRALIA
(Full Court: Civil)
ONG & ORS v LOTTWO PTY LTD (IN LIQ)
[2013] SASCFC 57
Judgment of The Full Court
(The Honourable Chief Justice Kourakis, The Honourable Justice Stanley and The Honourable Justice Nicholson)
27 June 2013
APPEAL AND NEW TRIAL - APPEAL - GENERAL PRINCIPLES - INTERFERENCE WITH DISCRETION OF COURT BELOW - PARTICULAR CASES - CONTROL OVER PROCEEDINGS - OTHER CASES
PROCEDURE - SUPREME COURT PROCEDURE - SOUTH AUSTRALIA - PROCEDURE UNDER RULES OF COURT - PARTIES - JOINDER OF PARTIES
PROCEDURE - SUPREME COURT PROCEDURE - SOUTH AUSTRALIA - PROCEDURE UNDER RULES OF COURT - PLEADINGS - GENERALLY
EQUITY - TRUSTS AND TRUSTEES - IMPLIED TRUSTS - RESULTING TRUSTS - WHEN ARISING - PURCHASE IN ANOTHER'S NAME
CORPORATIONS - WINDING UP - CONDUCT AND INCIDENTS OF WINDING UP - PROCEEDINGS BY OR AGAINST THE COMPANY - LEAVE TO PROCEED - WHEN LEAVE GRANTED
Purchasers defaulted on loans used to purchase several properties – bank exercised mortgagee’s powers of sale – surplus remained after borrowers’ liabilities discharged – surplus paid into Court in actions relating to the different properties – the appellants applied to a Master to be joined as plaintiffs to the action – Master granted the application but following an appeal a single Judge refused the application for joinder – further appeal against the Judge’s order refusing the joinder.
Whether each of the appellants has an arguable claim to a proprietary interest in the money in Court – whether each of the appellants has sufficiently pleaded a claim to a resulting trust on the basis of contributions provided to the purchase price.
Held: Appeal allowed. With respect to the joinder of both appellants the orders of the Master restored. Each appellant has sufficiently pleaded a claim to a proprietary interest based on a resulting trust.
Corporations Act 2001 s471B; Trustee Act 1936 (SA) s47; Supreme Court Rules 6R 74, 6R 190; Jacobs’ Law of Trusts in Australia 7th ed, 2006 LexisNexis Butterworths Australia, JD Heydon and MJ Leeming at 240 and 241; Bullen & Leake & Jacob’s Precedents of Pleadings Sweet and Maxwell, Thompson Reuters 17th ed, 2012, vol 2 at paragraph 91-Y5; Corporations Legislation 2012 Lawbook Co, 2012, Baxt, Finnane and Harris, at p622, referred to.
Lottwo Pty Ltd (in liq) v Tudo & Ors [2012] SASC 172; Muschinski v Dodds (1985) 160 CLR 583; Nelson v Nelson (1995) 184 CLR 538; Calverley v Green (1984) 155 CLR 242; Atilgan v Atilgan [1999] NSWSC 324; Dyer v Dyer (1788) 2 Cox 92, 30 ER 42; The Venture [1908] P 218; Dewar v Dewar [1975] 1 WLR 1532; Vajpeyi v Yusuf [2003] EWHC 2788 (Ch); Tinsley v Milligan [1994] 1 AC 340; Ryall v Ryall (1739) 1 Atk 59, 26 ER 39; Equuscorp Pty Ltd v Jimenez [2002] SASC 225; Martech Energy Systems Pty Ltd (in liq) v Bell [2005] VSC 198; Napier v Public Trustee (WA) (1980) 55 ALJR 1, 32 ALR 153; Remm Construction (SA) Pty Ltd v Allco Newsteel Pty Ltd SASC No 2671, 21 December 1990; Leonard (JJ) Properties Pty Ltd v Leonard (WA) Pty Ltd (in liq) (1986) 11 ACLR 224; Sihota v Pacific Sands Motel Pty Ltd (2003) 51 NSWLR 721; QBE Insurance (International) Ltd v Cycand Pty Ltd [2009] NSWSC 1177; Hewlett Packard Australia Pty Ltd v Siltek Holdings Pty Ltd [2005] NSWSC 672; Vagrand Pty Ltd v Fielding (1993) 41 FCR 550; Re Summit Design & Construction Pty Ltd (1999) 33 ACSR 301, 18 ACLC 125, [1999] NSWSC 1136; Oceanic Life Ltd v Insurance & Retirement Planning Services Pty Ltd (in liq) (1993) 11 ACSR 516, 11 ACLC 1,157; Lawless v Mackendrick (No 2) [2008] WASC 15; Skinner v Jeogla Pty Ltd (2001) 37 ACSR 106, 19 ACLC 1,163, [2001] NSWCA 15; Pace Tasmania Pty Ltd (in liq) v FAI General Insurance Co Ltd (2001) 10 Tas R 276, [2001] TASSC 112; King v Yurisich (2006) 59 ACSR 598, [2006] FCA 1369; Australian Competition & Consumer Commission v Link Solutions Pty Ltd [2008] FCA 1790; Chahwan v Euphoric Pty Ltd t/as Clay & Michel [2006] NSWSC 1002; Tyrrell v Tyrrells Building Consultancy Pty Ltd (2008) 66 ACSR 134, [2008] NSWSC 416; Australian Competition & Consumer Commission v Link Solutions Pty Ltd (2008) 68 ACSR 561, [2008] FCA 1790; Done v Financial Wisdom Ltd [2008] FCA 1706; Nominal Defendant v FAI General Insurance Co Ltd (in liq) (2004) 42 MVR 184, [2004] QSC 309; Tolhurst Druce & Emmerson v Maryvell Investments Pty Ltd (in liq) [2007] VSC 271; Deckers Outdoor Corp Inc v Farley (No 5) [2009] FCA 1298; Commonwealth v Davis Samuel Pty Ltd (No 5) (2008) 164 ACTR 124; Bratovic v SBM Argentinian Bar and Grill Pty Ltd [2005] SASC 431, considered.
ONG & ORS v LOTTWO PTY LTD (IN LIQ)
[2013] SASCFC 57Full Court: Kourakis CJ, Stanley and Nicholson JJ
KOURAKIS CJ.
I agree that the appeal should be allowed for the reasons given by Nicholson J. I would join in the orders proposed by him.
I make two incidental observations.
First, the action to which the appellants sought to be joined was one which arose out of the payment of money in the sum of $193,979.07 into the Suitors Fund of this Court (“payment in”) by the mortgagee, Westpac, of the subject land pursuant to s 47 of the Trustee Act 1936 (SA) and Rule 190 of the Supreme Court Rules 2006 (6SCR 190). The payment in was accompanied by a Notice of Payment and a supporting affidavit.[1] A court file was created and it was allocated an action number. However, the payment in did not raise a legal controversy, the only matter arising out of it was an administrative one. Subsequently an application was made by Kimberlina Pty Ltd (Kimberlina) pursuant to 6SCR 190 for an order that the money or a portion of it be paid out to it. An application pursuant to 6SCR 190 allows for the expeditious, and on occasion summary, determination of a claimant’s entitlement to the money paid into court.[2] Kimberlina’s application was opposed by the respondent and a justiciable controversy arose for the first time. The subject matter of the controversy was Kimberlina’s disputed claim to a proprietary interest in the money paid into Court.
[1] FDN1 (Notice of payment into suitor’s fund) & FDN2 (Affidavit of Mr M Burden), Action number 192 of 2010.
[2] Westpac Banking Corporation v Gibbons (No 2) [2011] SASC 186.
Kimberlina’s action was resolved in November 2011 and an order for payment out to Kimberlina in the sum of $150,000 was made. The claims of two other parties were also resolved at about the same time without any payment.[3] The matter again became an administrative one.
[3] Jiang Ling Huang Pty Ltd and Wu You Yang Pty Ltd.
The application brought by the appellants in August 2011 to be joined as plaintiffs is, in substance, an application for an order that the money paid into the Suitors Fund be paid out to them pursuant to 6SCR 190. It alleges a proprietary interest in the balance of the moneys paid into the Suitors Fund by Westpac. In determining whether to entertain that application, the Court should not impose any higher threshold than that demanded of any pleading. Indeed, as Nicholson J has observed, there is no impediment to the appellants seeking declarations as to their entitlements by bringing an independent action. If the appellants were to institute an action for declarations, they would have standing to oppose the payment out of money from the Suitors Fund to any other claimant until their action is determined.
The manner in which the appellants’ claims should be determined, and in particular whether they should proceed on pleadings or affidavits, and how an application for summary dismissal, if it is made, should be dealt with, are matters of case management for the Master.
Secondly, it is not obvious to me that the appellants’ potential claim is limited to only a small proportion of the money remaining in the Suitors Fund. The contributing purchasers of the subject land are entitled to both the proportionate recovery of their capital and, if there is an excess, to a proportionate share in the appreciation in the value of the land. The respondent may have had a part, at least, of its contribution effectively repaid by reason of the mortgagees recovery. However, that is not a matter which arises on this appeal. It is part of controversy which is yet to be determined.
STANLEY J.
I would allow the appeal. I agree with the reasons and orders of Nicholson J. I also agree with the observations of the Chief Justice.
NICHOLSON J.
Introduction
The appellants, Biay Ing Ong (who has been referred to throughout the proceedings as Moses) and Rose Ong (who has been referred to throughout the proceedings as Rose) each claim a proprietary interest (as beneficiaries under a “purchase money” resulting trust) in funds that have been paid into Court in this and other (related) actions. Both claim that they contributed a portion of the money used by various companies, including the respondent, to purchase real estate, the title to which was registered only in the names of those companies.
They have appealed against an order made by a Judge of this Court refusing permission to be joined as plaintiffs to this action. In so deciding, his Honour reversed orders made by a Master of this Court including, inter alia, that permission be granted to Moses and Rose to be joined as plaintiffs to the action.
Further background to the application for joinder by Moses and Rose and to this appeal is set out in the judgment under appeal.[4]
[4] Lottwo Pty Ltd (in liq) v Tudo & Ors [2012] SASC 172 at [2]-[10].
The proceedings at first instance arise out of the purchase in 2006 of seven parcels of land in or near to Gouger Street, Adelaide. Two parcels (Properties 1 and 2) were purchased by Gouger Centre Pty Ltd (Gouger Centre); one parcel (Property 3) by Gouger Centre and Pua Hor Ong; one parcel (Property 4) by Gouger Centre and Shek Kwan Lee; one parcel (Property 5) by Magnificant Pty Ltd; one parcel (Property 6) by the present appellant Lottwo Pty Ltd (Lottwo); and one parcel (Property 7) by The Wine Kingdom Pty Ltd. Each of these companies is now in liquidation. The purchasers (collectively, the Gouger Central Companies) borrowed $7.5m from St George Bank, now part of the Westpac Banking Corporation (Westpac). The borrowings were secured by mortgages over the seven parcels of land (collectively, “the Land”) and by directors’ guarantees.
The Gouger Central Companies defaulted in making repayment and, eventually, Westpac exercised the mortgagee’s powers of sale. Settlement of the sales was effected on 24 December 2009. As I understand it, each of the properties was sold to the one purchaser under the one contract. The overall purchase price was apportioned pro rata between the seven properties by reference to their respective areas.
After discharge of the borrowers’ liability to Westpac and payment of associated expenses, a surplus remained. Westpac paid the surplus into Court. It did so in six separate actions, being Actions numbered 188-193 of 2010 respectively. Action 188 of 2010 relates to the payments in respect of Properties 1 and 2. The remaining actions relate to the respective payments concerning Properties 3-7 inclusive. The surplus sum was apportioned pro rata between the seven properties according to their respective areas.
The present appeal concerns Action 192 of 2010 being the amount of the surplus ($193,979.07) relating to Property 6 previously owned by Lottwo.
On 9 June 2010, the Court ordered that Kimberlina Pty Ltd be the plaintiff in the action and have the carriage of the proceedings. Wu You Yang Pty Ltd, Jiang Ling Huang Pty Ltd and Lottwo were designated as defendants. On 7 November 2011, a Master ordered, by consent, that $150,000 of the amount standing in Court to the credit of this action be paid out to Kimberlina Pty Ltd in settlement of its claims arising under an equitable mortgage. The claims of Wu You Yang Pty Ltd and Yiang Ling Huang Pty Ltd have also been compromised and neither they nor Kimberlina took any part in the appeal. No party suggested that their presence was necessary in order that there be a proper hearing and determination of the appeal.
The Master’s decision giving rise to the present appeal concerned an interlocutory application filed on 23 November 2011 by Moses, Tudo, Rose and two others. As at 23 November, none of these persons was a party to this action nor, as I understand it, to any of the other actions. The five claimants sought orders to the following effect:
(1)the disjoinder of Kimberlina Pty Ltd as plaintiff and of Wu You Yang Pty Ltd and Yiang Ling Huang Pty Ltd as defendants;
(2)the consolidation of the six actions;
(3) their joinder as plaintiffs to Action 192 of 2010;
(4)the joinder of the remaining Gouger Central Companies as defendants;
as well as orders relating to the filing of pleadings.
The Master did not hear and determine the claims for each of these orders. Instead, at the request of the parties, he heard and determined only the application by the five claimants to be joined as plaintiffs in Action 192 of 2010, albeit in the context of the foreshadowed application for consolidation of this action with the other five actions.
The Master granted the application of Moses, Tudo and Rose but dismissed those of the fourth and fifth claimants. No appeal has been brought in respect of that dismissal and it is not necessary to mention further the claims of the fourth and fifth claimants.
Lottwo now appeals against the order for joinder of Moses, Tudo and Rose. Its notice of appeal is irregular in that it also named the other Gouger Central Companies as appellants. They are not yet parties to the action and have no standing to appeal. However, for present purposes nothing turns on their inclusion as appellants.
Whilst the Judge allowed the appeal by the present respondent (Lottwo) against the Master’s joinder of Moses and Rose, his Honour dismissed the appeal insofar as it concerned Maxwell Tudo. Tudo is now a plaintiff to this action. At heart, the dispute would appear to be between the appellants (and Tudo) and the creditors, and perhaps shareholders, of Lottwo. It would seem that if the action were to remain as presently constituted, the balance of moneys paid into Court in this action would revert to Lottwo as original registered proprietor subject to Tudo establishing his claims to a proprietary interest. However, if the appellants were to be joined as plaintiffs, issue also would be joined between them and Lottwo as to the appellants’ claims to a proprietary interest. If the true character of any entitlement that the appellants, in fact, may have is non-proprietary (for example moneys were merely lent) they would be reduced to proving in the liquidation of Lottwo in the ordinary way.
The significance of this appeal is not limited to the $190,000 or so that has been paid into Court in this action. The application for joinder in these proceedings is but a first step. The appellants’ claims ultimately concern asserted interests in all of the monies paid into Court across the six actions (presently, in excess of $950,000 according to counsel for the appellants). Should the question of joinder in this action be decided favourably to the appellants, it is anticipated that an order for consolidation of all six actions would follow (although this is not a matter upon which I express any view).
The impugned proposed pleadings
The pleading proposed by Moses is in the following terms.[5]
13On or about 23 June 2006, 29 June 2006 and 4 July 2006, the First Plaintiff, BIAY ING ONG (“Moses”) paid a sum of $200,000, for a total of $600,000, into the trust account of the Defendants’ conveyancers, Bail & Robazza.
14The amount paid into the trust account by Moses was subsequently used as part of the purchase price provided by the Defendants for the purchase of the Land.
15In the premises, the Defendants each held their interest in the Land on a resulting trust in favour of Moses, being an equitable interest in favour of Moses equal to 5.24% (600,000/11,456,540) of the total value of the Land.
16Subsequently, Moses received the sum of $300,000 from Twohong Australia Pty Ltd.
17Moses is entitled to an interest in the Funds in Court and payment out of the sum of $224,524, being equal to 5.24% of the sale price obtained by Westpac for the sale of the Land less the amount of $300,000 pleaded above, plus any interest accruing on that sum since its payment into Court.
[5] Case Book at 158.
The pleading proposed by Rose is in the following terms.[6]
26On or about 4 July 2006, the Third Plaintiff, ROSE ONG (“Rose”) paid a sum of $530,000 into the trust account of the Defendants’ conveyancers, Bail & Robazza.
27The amount paid into the trust account by Rose was subsequently used as part of the purchase price provided by the Defendants for the purchase of the Land.
28In the premises, the Defendants each held their interest in the Land on a resulting trust in favour of Rose, being an equitable interest equal to 4.63% (530,000/11,456,540) of the total value of the Land.
29Rose is entitled to an interest in the Funds in Court and payment out of the sum of $463,463, being equal to 4.63% of the sale price obtained by Westpac for the sale of the Land, plus any interest accruing on that sum since its payment into Court.
[6] Case Book at 159.
It can be seen that each of Moses and Rose has asserted an entitlement to a proprietary interest in the land[7] and therefore in the moneys that have been paid into court in all actions. In so doing, they rely solely on allegations that they each provided funds subsequently used as part of the purchase price for the relevant properties. When the matter first came before the Court, the Master held that both Moses and Rose had pleaded an arguable case for a resulting trust and allowed their applications to be joined as plaintiffs to the proceedings. The following encapsulated his Honour’s reasoning.[8]
[T]here is at least prima facie evidence that Moses … and Rose paid substantial monies to the conveyancers involved in the property transactions and that those monies were used as part of the purchase price of those properties. There is no evidence before the Court to explain any arrangements between those three claimants and the companies and persons involved in actually purchasing the properties. The claimant’s rely on the presumption of a resulting trust, it being demonstrated that they have paid substantial monies to the purchase price.
In my view, those … claimants have an arguable case of a resulting trust. This is so notwithstanding that there may be considerable argument as to the extent of the trust and whether it exists at all. That will be a matter for pleading at trial. It is convenient that they should be joined as plaintiffs to this action … .
[7] The “land” being all of the seven properties as identified in the extract from the Judge’s reasons quoted above.
[8] Master’s reasons in action No 192 of 2010, delivered 28 February 2012 at [30]-[31].
However, as the Judge observed,[9]
The master was not concerned by the absence of any plea or foreshadowed plea that Moses … or Rose had paid the money upon which they relied as purchasers of the land. He considered the material indicating that their monies had been used to meet the purchase price was “sufficient to give them an arguable case of a resulting trust and therefore a proprietary interest in the funds held in the suitor’s fund”…
In his reasons for decision, the Judge briefly outlined the relevant principles underlying the notion of a resulting trust and then sought to apply those principles to the circumstances as pleaded by Moses and Rose.
[9] [2012] SASC 172 at [21].
The essence of the Judge’s reasoning in refusing the joinder had two aspects to it. His Honour was plainly concerned about the absence in each proposed pleading of an allegation that Moses and Rose had an intention to advance moneys as purchaser.[10] His Honour appeared to accept Lottwo’s argument that this was a fact material to the existence of a resulting trust which a claimant was obliged to plead in order to show a reasonably arguable cause of action. However, his Honour put it in these terms: “it is reasonable to suppose that an intention to advance the moneys as purchaser, if that had been the case, would be pleaded”.[11]
[10] At [29].
[11] At [29].
His Honour then proceeded to consider affidavit material filed on behalf of Moses and Rose in support of their application for joinder and observed,[12] “the affidavits of [the appellants’ solicitor] upon which Moses and Rose rely do not make good these omissions in the draft statement of claim.” I infer, at this point, that his Honour was satisfied that the pleading of an intention to advance the moneys as purchaser was a material omission from the draft statement of claim and that there was a need to make that omission good before joinder might be allowed. His Honour identified aspects of the affidavit material which, in his view, were inconsistent with the moneys having originally been advanced in the character of a purchaser.[13] However, in this respect, his Honour appears only to have identified criticisms insofar as the claim by Moses is concerned.
[12] At [30].
[13] At [31]-[38].
His Honour was pressed by counsel for Moses and Rose with the contention that where two or more persons provide the purchase money for property which, when acquired, is registered in the name of only one of them that person will be presumed to hold the property on a resulting trust[14] and that this presumption performs much the same function as the civil onus of proof.[15]
[14] The trust will be for the benefit of the contributors according to the proportions of the price each contributed.
[15] In this latter respect his Honour cited Muschinski v Dodds (1985) 160 CLR 583 at 612, Nelson v Nelson (1995) 184 CLR 538 at 547.
However, his Honour responded to this contention and by way of conclusion in the following terms.[16]
I do not consider this to be a persuasive consideration for present purposes. It is to be remembered that Moses and Rose sought to be joined to the present proceedings. It was incumbent upon them to set out a proper basis upon which the Court may act under r 74. That is particularly so given the relatively modest amount now standing to the credit of this action. These circumstances, together with the well‑settled principles concerning the existence of a resulting trust in the present context, made it appropriate for them both to assert and to provide at least some evidence that they had advanced the monies relied upon as purchasers (if that is their contention).
Counsel for Moses … and Rose also submitted that the requirement that the monies be advanced by the payer in the capacity of purchaser really operates in a negative way against the operation of the presumption of a resulting trust. In Chambers’ Resulting Trusts, the author states:
It is often said that a resulting trust will not arise in favour of a contributor to the purchase price unless he or she made the contribution “in the character of a purchaser”. This does not mean that the contributor must have intended to purchase the property in question. … The expression really means that the presumption of resulting trust will not apply if the contribution was intended to be a gift, loan or payment for some other purpose.[17]
It is not necessary presently to consider the appropriateness of this characterisation. Whether it be appropriate or otherwise does not, in my opinion, bear upon the adequacy of the case for joinder put forward by Moses and Rose.
I consider, with respect, that in the case of the applications by Moses and Rose the Master has erred. They did not establish an arguable case of a resulting trust so as to warrant the order for joinder which he made. The matters about which the Master acknowledged that there may be “considerable argument” should not, in my opinion, be left for pleading and trial if Moses and Rose are not prepared to plead positively the character of their advances and to provide the Court with at least some evidence indicating that the pleaded character is reasonably arguable.
[16] At [40]-[43], citations omitted in the original, emphasis in the original.
[17] Robert Chambers, Resulting Trusts (1977) at 27.
It does seem, with respect, that his Honour decided the joinder application on a basis wider than the mere pleading point that Moses and Rose, in their proposed statement of claim, have failed to allege a material fact essential to the finding of a resulting trust, namely that the moneys provided were provided by Moses and Rose in their capacities as purchasers. His Honour appears to have decided the matter on the broader basis that they had not established “an arguable case of a resulting trust so as to warrant the order for joinder…”. Nevertheless, his Honour’s view that the proposed pleading, considered in isolation, was defective, was quite influential in the outcome of the appeal.
Initially two issues arose on the present appeal,
(i)what material facts must a claimant prove (and therefore plead) to raise a presumption of a “purchase money” resulting trust; and
(ii)if the pleading of Moses and Rose, in this respect, is (contrary to the view of the Judge) adequate to disclose a reasonable cause of action, from a proper pleading perspective, are there other discretionary considerations in this case which militate against an order under R74 for joinder in any event?
During the hearing of the appeal it came to the Court’s attention that, before proceeding with their claims against Lottwo, Moses and Rose needed leave pursuant to s471B of the Corporations Act 2001.
The parties agreed that, insofar as it might be thought necessary or expedient when considering the disposition of this appeal to do so, this Court could decide the question of leave. For this purpose, counsel for the appellants made an oral application for leave and indicated that they would not seek to file any further affidavit material. Each side was given permission to file a written supplementary submission directed to this issue. This then became a third issue for consideration on the appeal.
The pleading issue – the law of resulting trusts
As the Judge observed, the principles relating to resulting trusts in the present context are well settled. Both parties and the Judge referred to and relied upon statements of principle to be found, inter alia, in Jacobs’ Law of Trusts in Australia.[18]
A resulting trust will be presumed where, on a purchase, the legal title to real or personal property is vested in someone other than the person who is proved (by parol or other evidence) to have provided the purchase money. Thus, where A purchases land from X and directs X to make the transfer to B, which X does, there is a presumption of a resulting trust in favour of A except … where A is the husband or parent of, or stands in loco parentis to B.
. . . .
These principles will not apply if A lends or gives money to B and B uses the money to buy property from X or if A lends or gives money to B and at the direction of B pays it to X; B is not an implied trustee of the land for A now because A has not acted as a purchaser. Unless A can show an express trust of the land by B in favour of A, the relationship between A and B would be limited to donor and donee or lender and borrower. (Emphasis supplied.)
[18] 7th ed, 2006 LexisNexis Butterworths Australia, JD Heydon and MJ Leeming at 240 and 241 (citations omitted). The parties also drew the Court’s attention to other text book and journal article treatments of the subject. However, none explicitly adopt or argue for a position concerning the pleading issue contrary to that taken in these reasons.
With reference to this notion that the moneys must have been provided by a claimant in the character of a purchaser, both parties drew the Court’s attention to the well known passage in the reasons of Gibbs CJ in Calverley v Green.[19]
Where a person purchases property in the name of another, or in the name of himself and another jointly, the question of whether the other person, who provided none of the purchase money, acquires a beneficial interest in the property depends on the intention of the purchaser. However, in such a case, unless there is such a relationship between the purchaser and the other person as gives rise to a presumption of advancement, ie, a presumption that the purchaser intended to give the other a beneficial interest, it is presumed that the purchaser did not intend the other person to take beneficially. In the absence of evidence to rebut that presumption there arises a resulting trust in favour of the purchaser. Similarly, if the purchased money is provided by two or more persons jointly, and the property is put into the name of one only, there is in the absence of any such relationship, presumed to be a resulting trust in favour of the other or others. For the presumption to apply the money must have been provided by the purchaser in his character as such – not eg, as a loan.
[19] (1984) 155 CLR 242 at 246, emphasis supplied.
There is no doubt that for a resulting trust to arise the moneys contributed must bear the character of purchase moneys. A resulting trust will not arise where money is provided by way of gift or by way of loan or on some other commercial basis such as, for example, pursuant to a contractual obligation which is independent of the use to which the money might be put by the recipient. Ultimately, the Court must be satisfied that the money has been provided with the requisite character. However, this is all that the former Chief Justice was intending to convey. The passages from Jacobs, set out above, and the passage from the judgment of the Chief Justice in Calverley v Green purport to identify the law as to when a resulting trust will arise; they do not directly address the anterior question as to how an applicant must plead its case. Nevertheless, the correct approach in this respect can be inferred from the legal requirements to prove a resulting trust as there explained.
In the important last sentence of the passage quoted from the Chief Justice above, his Honour used the phrase “for the presumption to apply”; the phrase “to apply” is used in the sense of “to prevail”. His Honour did not use the phrase “for the presumption to arise” or similar. In other words, his Honour was speaking of a time beyond the raising of the presumption; the time of determination by the Court. It is at this time that the Court must be satisfied that the subject moneys had not been provided by way of gift, loan or pursuant to some other commercial imperative. However, there is no obligation on an applicant to plead this.
It will be sufficient, if an applicant were to plead, as the appellants have done in this case, the fact of the provision of moneys and the fact that they were used by the recipient as part of the price for the purchase of the relevant property in the recipient’s name. In those circumstances, a presumption of a resulting trust will arise. The presumption will apply or prevail unless the presumption is rebutted. It, ultimately, may be rebutted if the circumstances also give rise to a presumption of advancement or if the person in whose name the title has been registered demonstrates, on the facts, that the true character of the moneys provided was not by way of purchase but by way of, for example, loan or gift.
This view of what is sufficient, ultimately, to establish a resulting trust and therefore of what is the minimum that must be pleaded in order to raise the presumption which, if not rebutted, will found a resulting trust, is supported by authority and is consistent with principle. There are many cases where the position, in these terms, has either been accepted or applied.[20]
[20] See, for example, Dyer v Dyer (1788) 2 Cox 92; 30 ER 42, The Venture [1908] P 218, Dewar v Dewar [1975] 1 WLR 1532, Vajpeyi v Yusuf [2003] EWHC 2788 (Ch), Tinsley v Milligan [1994] 1 AC 340, Ryall v Ryall (1739) 1 Atk 59; 26 ER 39, Atilgan v Atilgan [1999] NSWSC 324, Equuscorp Pty Ltd v Jimenez [2002] SASC 225 and Martech Energy Systems Pty Ltd (in liq) v Bell [2005] VSC 198.
A stark illustration of the potential power of the presumption is Atilgan v Atilgan.[21] In that case Austin J made these findings.[22]
[21] [1999] NSWSC 324.
[22] At [109]-[110], citations omitted.
Here, relevantly, the only evidence is that the savings existed and must have been used as the cash component of the acquisition. It is a bare case of legal title vested in someone other than the person who must have provided the cash component of the purchase money, and that is the very case in which (absent a presumption of advancement) equity will presume a resulting trust rather than a loan.
. . . .
The presumption of a resulting trust may be rebutted by the presumption of advancement… .
. . . .
Here the surrounding circumstances rebut the presumption of advancement, and the lack of evidence about the circumstances of the actual provision of the funds leads to a presumption that Mr and Mrs Atilgan’s money was used for the making of a permanent investment, and also to a presumption of a resulting trust.
In order to sustain this approach one need only go to Calverley v Green itself. The factual basis of the parties’ respective claims in Calverely v Green[23] is far removed from the factual basis relied on in the present claim and the judgments in Calverley v Green are of assistance only insofar as they purport to state principle rather than as to their application of principle to the facts in that case.
[23] The purchase of a property in the context of a de facto relationship where the legal title was placed in the names of the two parties ostensibly in equal shares but where the respective contributions varied.
If one returns to the passage quoted from the judgment of Gibbs CJ, its structure is revealing. His Honour dealt first with the situation where a person purchases property in the name of another or in the name of themself and another jointly. His Honour observed that, in this case, the ultimate location of the beneficial interest in the property will depend on the intention of the purchaser. His Honour went on to say that, in such a case and in the absence of a relationship giving rise to a presumption of advancement, “it is presumed that the purchaser did not intend the other person to take beneficially. In the absence of evidence to rebut that presumption, there arises a resulting trust…”. In this situation, the Chief Justice spoke first of the presumption arising and then of the presumption taking effect in the absence of evidence to rebut it.
His Honour then went on to deal with the situation the subject of the application before this Court, that is, where purchase money is provided by two or more persons jointly and the property is put into the name of one only. His Honour observed that in that situation, and again in the absence of any presumption of advancement operating, there is presumed to be a resulting trust. His Honour omitted, at this point, to repeat his earlier proposition that in the absence of evidence to rebut the presumption there arises a resulting trust. In other words, his Honour went immediately to the conclusion ultimately to be reached (in the absence of rebuttal evidence). It was only in this (conclusory) context that his Honour proceeded to observe: “for the presumption to apply the money must have been provided by the purchaser in his character as such…”.
The structure of the passage, as just described, and his Honour’s use of the phrase “for the presumption to apply” rather than “for the presumption to arise”, indicate that his Honour was focussed on the law of resulting trusts and the ultimate basis of any determination to be made by a court rather than on the method by which a claimant should plead its case.
Mason and Brennan JJ characterised the arrangements entered into by the two parties to the de facto relationship in order to facilitate the purchase of the relevant property, as giving rise to a situation where both parties contributed to the purchase price. In these circumstances their Honours’ stated the proper approach to be as follows.[24]
[I]t was necessary to consider another equitable presumption which arises from the unequal contribution of the purchase price and which governs the present case unless some opposing presumption displaces it or the other facts of the case rebut or qualify it. Unless an equitable presumption of a trust is displaced by a counter-presumption or it is rebutted or qualified by evidence of the intention of the party paying the purchase price or of the common intention of the parties who contribute that price, the presumption determines the conclusion to be reached… Once it was found that both parties had contributed to the purchase price, the conclusion had to conform to the relevant equitable presumption unless it was displaced, rebutted or qualified.
There is no suggestion here nor elsewhere in their Honours’ judgment that more needs to be demonstrated in order for the presumption to arise than the fact that both parties contributed to the purchase price. Once this were to be established the conclusion will conform to the relevant equitable presumption unless displaced, rebutted or qualified.
[24] At 258, citations omitted, emphasis supplied.
Perhaps the judgment in Calverley v Green which is of most direct assistance to the pleading issue in the present matter is that of Deane J. Whilst suggesting that the presumption which leads to a resulting trust and the presumption of advancement might be seen as products of a bygone age such that their worth might now be seen as debatable, his Honour indicated that they are “too well entrenched as “landmarks” in the law of property to be simply discarded by judicial decision.”[25] His Honour identified three presumptions of relevance to the matter before him. The second one is of most relevance to this appeal and he described it in the following terms.[26]
Where two or more persons advance the purchase price of property in different shares, it is presumed that the person or persons to whom the legal title is transferred holds or hold the property upon resulting trust in favour of those who provided the purchase price in the shares in which they provided it.
Deane J (as part of the majority on this point[27]) endorsed the decision in Napier v Public Trustee (WA)[28] that “no presumption of advancement arises in favour of a de facto wife”. Accordingly, on the facts before his Honour, the presumption of advancement was not available to preclude the ordinary implication of a resulting trust which otherwise arose on the facts. His Honour then said this.[29]
In these circumstances, the starting point for the determination of the extent of the respective beneficial interests of Mr Calverley and Ms Green in the Baulkham Hills property was a presumption that the property was held upon resulting trust for them according to their respective contributions to the purchase price. That presumption could be rebutted or qualified by permissible evidence which indicated either that Ms Green intended to have a full half beneficial interest in the property or that Mr Calverley was intended to have the whole beneficial interest.
A little later in the judgment his Honour observed,[30]
[T]he primary question will be whether there was any arrangement between the parties which precluded or modified the trust which would otherwise result from their respective contributions to the purchase price.
[25] At 266.
[26] At 266.
[27] Gibbs CJ dissented.
[28] (1980) 55 ALJR 1; 32 ALR 153, Aickin J with whose judgment Mason, Murphy and Wilson JJ expressed general agreement.
[29] At 269.
[30] At 270.
A majority of the High Court in Calverley v Green[31] held that the presumption that the parties held the legal estate in trust for themselves in shares proportionate to their contributions had not been rebutted by the circumstances of the case. In joining in this conclusion Deane J said this.[32]
The evidence in the present case is silent as to the intentions of Mr Calverley and Ms Green on the subject of the beneficial ownership of the Baulkham Hills property and discloses no adequate grounds for an inference either that there was an arrangement between them or that either intended that the beneficial interest in the property should be otherwise than according to their respective contributions to the actual purchase price. In the context of the relationship which existed between Mr Calverley and Ms Green at the time of the purchase, the presumption of a resulting trust in Mr Calverley’s favour of an approximate two-thirds interest in the property had little, if any, practical significance beyond that of determining questions of onus of proof. Even so regarded however, the presumption remained unrebutted by the evidence.
[31] Gibbs CJ, Mason, Brennan and Deane JJ.
[32] At 271, emphasis supplied.
The judgments in Calverley v Green to which I have referred are entirely consistent with and lend support to the proposition that whether a presumption of a resulting trust will arise in the circumstances of the present matter will turn on whether there has been a contribution by each of Moses and Rose to the moneys used to acquire the properties, that is, to the purchase price. It is necessary to plead this but no more (although, such an applicant may choose to plead more). Once that were to be established on the evidence, the presumption will arise and the onus will shift to Lottwo to adduce evidence sufficient to rebut the presumption. The parties will join issue in the usual way on the issues, for example, whether the moneys relied on by Moses and Rose were, in fact, not received by or on behalf of Lottwo or were not used as part of the purchase price of the land in question. However, it will be for Lottwo to plead and to adduce evidence tending to prove that any moneys, in fact received, were received not as purchase moneys but by way of a loan or a gift and so on.
This approach is also consistent with principle. If Moses and Rose were obliged to go further and to plead and therefore adduce evidence tending to prove that the moneys provided were intended to inure to their benefit by way of providing a proprietary interest (interest as purchaser) in the property rather than as being impressed with some other character, such as a gift or a loan, there would be no work for the presumption to do; it would be otiose. Lottwo would simply join issue with the factual allegations pleaded in the usual way, Moses and Rose would have to adduce evidence in support of all material facts as pleaded and in the absence of or in the face of any factual response, their claims would be determined according to the strength of the proofs. There is no work for a presumption here.
The approach outlined is consistent with long standing pleading practice. In Bullen & Leake & Jacob’s Precedents of Pleadings[33] the editors provide a draft “particulars of claim asserting interest under resulting trust”. It is in the following terms.
[33] Sweet and Maxwell, Thompson Reuters 17th ed, 2012. General Editors: the Hon Mr Justice Blair, Lord Brennan QC, the Rt Hon Professor Sir Robin Jacob and the Hon Mr Justice Langsaff, vol 2 at paragraph 91-Y5 (p1597).
(i)By a conveyance dated … the property ... was transferred to the defendant.
(ii)The property was purchased for … of which the defendant paid … the claimant paid … and the remaining … was loaned from … which took a legal charge over the property … .
(iii)The defendant has paid the instalments of interest and capital … under the terms of the legal charge.
(iv)In the premises, the beneficial interest in the property is owned by the claimant and the defendant in shares proportionate with their respective contributions to the purchase price.
(v)…
(vi)…
(vii)…
(viii)In the premises, the claimant is entitled to and claims a declaration that the defendant holds the property on trust for the claimant and the defendant in shares which are proportionate to their respective contributions to the purchase price…
The essence of such a pleading is the provision of money used as part of the purchase moneys.
Furthermore, the debate as to the proper form of pleading in the present case does have an element of artificiality about it. Each of Moses and Rose allege the payment of a sum of money into the trust account of the defendants’ conveyancers and that this money was subsequently used as part of the purchase price for the land. In addition, each pleads that Lottwo holds the legal title in the land, as to a proportion thereof, on a resulting trust. Lottwo knows, from its understanding of the law of resulting trusts that, ultimately, the moneys alleged to have been paid by each of Moses and Rose and which allegedly formed a proportionate part of the purchase price of the land can only be characterised, as a matter of law, in a limited number of ways.
Either the money was a gift in order to assist with the purchase price or it was a loan in order to assist with the purchase price or it was the product of some other commercial imperative or legal obligation independent of the purchase itself or each of Moses and Rose contributed the money “as purchasers” of the land. Once each of Moses and Rose has pleaded an entitlement to a proportionate proprietary interest in the land, asserting as its basis a resulting trust, they have by implication denied a gift or a loan or any other commercial basis and have asserted that the moneys were provided in their capacities as purchaser.
Again, if Moses and Rose were required to break down this implied allegation of “as a purchaser” and provide further material facts or particulars as to any “agreement” reached or basis for a conclusion that they each would contribute as a purchaser, there would be no work for any presumption then arising to do. Doubtless, issue would be joined on any such factual obligations in the usual way. In any event, such an agreement is not essential to a resulting trust; indeed such an agreement might indicate an express trust. A resulting trust might arise simply in the circumstances where a party becomes aware that the other party needs funds to assist with a purchase and makes those funds available. What more is an applicant to plead here? In these circumstances, the law has adopted the position that the provider of the funds ought not have to plead and prove a negative – such as no loan, or no gift was intended. Rather the default position is that a trust is presumed unless the recipient pleads and proves material facts of a positive – it was a loan or it was a gift. On the facts of many cases the presumption will readily be rebutted but it is the recipient who assumes this onus.
The respondent in its written submissions on appeal[34] submitted the following.
The person providing the funds needs to do so in a particular capacity, that being the capacity of purchaser. If the person does not contribute funds as a purchaser, then no presumption arises. It is therefore essential for a person seeking to plead a case of a resulting trust to plead that the funds were provided in that capacity, including the material facts as to why that is so.
I agree with the proposition stated in the first sentence of this submission. However, I disagree with the proposition in the second sentence. For the reasons I have explained, the second sentence is not correct. It conflates the work of the presumption with the ultimate determination to be reached. The second sentence ought properly read “if the person is found not to have contributed funds as a purchaser, then no resulting trust arises”. Equally, it does not follow (“it is therefore essential”) that a person seeking to advance a case of resulting trust must plead that the funds were provided in the capacity of purchaser “including the material facts as to why that is so”. As I have endeavoured to explain, if this were so there would be no need for the presumption.
[34] At [17].
The form of the pleading as it presently stands is, in my view, sufficient to put Lottwo on notice of each of Moses’ and Rose’s case that the moneys provided (if established) were not provided by way of a loan or a gift or in any capacity other than the capacity of purchaser. If the matters as presently pleaded are proved the presumption will arise with the onus shifting to Lottwo to plead, by way of rebuttal, the factual basis of its alleged true characterisation (if not as purchaser) of any moneys provided.
If the pleading by either Moses or Rose in their present forms occurred in proceedings separate from the matter before the Court, I would not order that they be struck out as disclosing no reasonable cause of action. In my view, both are adequate pleas in support of a declaration of a resulting trust.
Rule 74
Supreme Court Rule 6R 74(1) provides (relevantly):
The court may, on application or on its own initiative, order that a person who is not a party to the action be joined as a party if satisfied that –
(a) the person has an interest in the subject matter of the action or in a question of law or fact involved in the action; or
. . . .
(d) the person should be joined as a party to ensure that all matters in dispute in the action are determined; or
(e) the person should be joined as a party in order to enable determination of a related dispute and thus avoid multiplicity of proceedings.
The Court has a wide discretion under the rule.[35] I have reviewed the affidavit material filed on behalf of Moses and Rose and which was before the Master and the Judge. I am satisfied that there is evidence available to Moses and Rose which has a tendency to establish that money was paid by each to the conveyancer who acted on the purchase and that this money formed part of the purchase price. Ultimately, whether or not a resulting trust will be found will be a matter for trial upon an assessment of all the evidence there adduced. I agree with the Judge that aspects of the affidavit evidence might be seen as contra indicators to a resulting trust, at least insofar as Moses is concerned; aspects of the affidavit evidence are suggestive that the money was provided as a loan.
[35] Remm Construction (SA) Pty Ltd v Allco Newsteel Pty Ltd SASC No 2671, 21 December 1990 (Mullighan J).
However, the affidavits before the Court are those of the appellant’s solicitor sworn on an information and belief basis. Furthermore, and more importantly, those aspects of the affidavit evidence that Lottwo has relied on in this respect concern events that took place after the money was handed over and which by and large can be characterised as admissions of law or of mixed fact and law. Any such later conduct or admissions by or on behalf of Moses and Rose may comprise a later misapprehension of the true characterisation of the events (the provision of any money) as at the time they occurred. This evidence, to the extent that, at face value, it might tell against an intention to have provided the funds in question “as purchaser(s)”, may be open to explanation by further evidence, oral or documentary, should a trial proceed.
In some respects, the question of joinder under R74 was approached before the Master and the Judge with one eye to a strike out question and another eye to a summary judgment (for Lottwo) question. I have already indicated that I would not strike out the pleading(s). Nor am I of the view that the pleading(s) and affidavit evidence as they presently stand would permit Lottwo to succeed with an application for summary judgment. Given my view of the proposed pleadings and the presently available evidence tending to support the facts asserted in the proposed pleadings,[36] I would not be satisfied that there is no reasonable basis for the claims as pleaded.[37]
[36] In particular, the affidavit of Girish Patel sworn 22 November 2011 including exhibits (Case Book 61ff) and affidavit of Girish Patel sworn 10 January 2012 [4]-[9] (Case Book 146-147).
[37] SCR 6R 232(2)(b).
In these circumstances, I am satisfied that both Moses and Rose fall within paragraphs (a), (d) and (e) of Rule 74(1). The discretion to permit joinder as plaintiffs is enlivened. With respect to the Judge, I am also satisfied that his Honour erred as to the pleading issue and that this was influential in the exercise of the discretion under R74(1). As such, the discretion should be exercised afresh.
On the appeal, apart from the pleading point and the evidentiary point already dealt with, the other matters relied on by Lottwo as militating against exercising the discretion to allow joinder can be summarised as follows.
(i)There is only a limited pool of money now available to creditors in the winding up of Lottwo (and each other company land holder).
(ii)The incurring of further legal costs will cause less funds to be available for distribution.
(iii)The applications for joinder were brought about a year and a half after the proceedings were “commenced”.[38]
[38] Strictly, proceedings were not commenced by Westpac. It paid money into Court and sought directions as to how it should be dealt with.
In the circumstances of (i), (ii) and (iii) above, counsel for Lottwo submitted that the applications for joinder should be “scrutinised with care” to ensure “a proper basis is made out” and that the proposed pleadings “make out a reasonably arguable cause of action”. As is apparent to this point, I am satisfied of both these matters.
The size of the pool available (potentially more than $950,000 if all matters proceed on a consolidated basis) is not insubstantial. However, it may be that, at best, Moses and Rose can only expect (if successful) to obtain a relatively small proportion of that amount. Further, if consideration were to be restricted just to the Lottwo funds ($190,000 or so) there would be much to be said for the Judge’s concern that there was only a “modest amount”[39] at stake in this action. Nevertheless, I take the view that there is some practical sense, in the circumstances of this matter, in focussing on the total potentially available for distribution. Furthermore, the fact that a plaintiff might have only a modest claim has never been a reason to prevent such a plaintiff, with a properly pleaded reasonably arguable cause of action, from pursuing that claim.
[39] At [40].
The delays in this matter are regrettable. However, counsel for Moses and Rose provided some explanation which when considered with the court record would make it difficult to attribute blame for much of the delay to Moses and Rose.
On the other side of the ledger, both Moses and Rose have pleaded a cause of action that ordinarily they would be entitled to pursue. There would be little to stop them from commencing new and separate proceedings and then seeking injunctive relief against Lottwo and the other companies, pending resolution of the entitlements to the pool of money paid into Court. The practical and sensible course is to use the present action(s) as the vehicle to determine the claims pleaded by Moses and Rose. In exercising the discretion afresh, I would allow the appeal and restore the Master’s orders that Moses and Rose be joined as plaintiffs to the proceedings.
Leave under s471B
However, there remains the question of whether or not leave to proceed should be given pursuant to s471B of the Corporations Act which provides as follows.
While a company is being wound up in insolvency or by the Court, or a provisional liquidator of a company is acting, a person cannot begin or proceed with:
(a) a proceeding in a court against the company or in relation to property of the company; or
(b) enforcement process in relation to such property;
except with the leave of the Court and in accordance with such terms (if any) as the Court imposes.
Such leave, if given, can be given nunc pro tunc.[40]
[40] Sihota v Pacific Sands Motel Pty Ltd (2003) 51 NSWLR 721.
The well accepted purpose behind the general prohibition provided for by s471B is that it is intended to ensure that a company liquidation proceeds in an orderly manner in accordance with the rules governing such liquidations and that creditors should be restricted in their capacity to take steps outside the liquidation process itself which might lead to preferential treatment. In Leonard (JJ) Properties Pty Ltd v Leonard (WA) Pty Ltd (in liq)[41] the purpose of s471B was described as follows.
preserving the limited assets of the company… in the best way for distribution among all the persons who have claims upon [it]. There being only a small fund or a limited fund to be divided among a great number of persons, it would be monstrous that one or more of them should be harassing the company with actions and incurring costs which would increase the claims against the company and diminish the assets which ought to be divided among all the creditors.
[41] (1986) 11 ACLR 224 at 226
Where, as in the present case, the claim alleges a proprietary interest in the company’s assets, such a claim (if successful) falls outside the province of the proof of debt system. Leave is likely to be given in such cases.[42] However, it is important to bear in mind that such a court action, even if the company were to be successful in resisting it, will expose the company to potentially substantial expenditures on costs which it may not recover. For this reason, even where a proprietary claim is concerned an applicant for leave ordinarily will be required to demonstrate that the claim gives rise to a serious dispute and has a solid foundation.[43] In addition, there are other factors that may be relevant to the discretion including the following.[44]
[42] See, for example, QBE Insurance (International) Ltd v Cycand Pty Ltd [2009] NSWSC 1177, Hewlett Packard Australia Pty Ltd v Siltek Holdings Pty Ltd [2005] NSWSC 672.
[43] Vagrand Pty Ltd v Fielding (1993) 41 FCR 550.
[44] See Corporations Legislation 2012 Lawbook Co, 2012, Baxt, Finnane and Harris, at p622.
(i)the impact that the proceedings would have on the company’s creditors, including the pari passu distribution;[45]
[45] Re Summit Design & Construction Pty Ltd (1999) 33 ACSR 301; 18 ACLC 125; [1999] NSWSC 1136.
(ii)the impact on the company;[46]
[46] Oceanic Life Ltd v Insurance & Retirement Planning Services Pty Ltd (in liq) (1993) 11 ACSR 516; 11 ACLC 1,157 at 1,159 (ACLC), 520 (ACSR) per Zeeman J.
(iii)whether there is insurance involved;[47]
(iv)whether the liquidator would be unduly distracted by the proceedings (this is determined by reference to the prospects of success and the utility resulting from the likely outcome of the proceedings);[48]
(v)the nature of the proceedings proposed, particularly the complexity of the issues involved and the current stage of the proceedings – essentially the question is whether the creditor seeking leave should be forced to submit a proof of debt rather than bringing a separate action;[49]
(vi)whether the creditor will be able to obtain relief from the liquidation;[50]
(vii)who the applicant is;[51]
(viii)the complexity of the proceedings;[52]
(ix)whether the dispute arose out of the liquidation;[53]
(x)whether the applicant’s case has a solid foundation;[54] and
(xi)the stage the proceedings had reached when a liquidator was appointed.[55]
A range of potential considerations has also been summarised by Refshauge J in Commonwealth v Davis Samuel Pty Ltd (No 5).[56]
[47] Lawless v Mackendrick (No 2) [2008] WASC 15 at [35] and the cases there cited.
[48] Skinner v Jeogla Pty Ltd (2001) 37 ACSR 106; 19 ACLC 1,163; [2001] NSWCA 15 at [31] per Spigelman CJ.
[49] Pace Tasmania Pty Ltd (in liq) v FAI General Insurance Co Ltd (2001) 10 Tas R 276; [2001] TASSC 112, King v Yurisich (2006) 59 ACSR 598; [2006] FCA 1369.
[50] Australian Competition & Consumer Commission v Link Solutions Pty Ltd [2008] FCA 1790; Chahwan v Euphoric Pty Ltd t/as Clay & Michel [2006] NSWSC 1002 at [40] per Barrett J, Tyrrell v Tyrrells Building Consultancy Pty Ltd (2008) 66 ACSR 134; [2008] NSWSC 416 at [30] where Austin J said, “[s]ection 471B is not restricted to cases where the applicant for leave may also prove in the winding up; indeed, the fact that there is an obstacle to lodging a proof of debt, if it be so, is (or is part of) a ground for granting leave”.
[51] Australian Competition & Consumer Commission v Link Solutions Pty Ltd (2008) 68 ACSR 561; [2008] FCA 1790 in which case the ACCC sought to protect consumers in the public interest
[52] Done v Financial Wisdom Ltd [2008] FCA 1706.
[53] Nominal Defendant v FAI General Insurance Co Ltd (in liq) (2004) 42 MVR 184; [2004] QSC 309.
[54] Tolhurst Druce & Emmerson v Maryvell Investments Pty Ltd (in liq) [2007] VSC 271.
[55] Deckers Outdoor Corp Inc v Farley (No 5) [2009] FCA 1298 at [10].
[56] (2008) 164 ACTR 124 at [30].
In the supplementary written submissions filed on behalf of Lottwo after the hearing of the appeal, the only objection to leave raised is the concern that Moses and Rose have not demonstrated that the claim has a solid foundation and raises a serious dispute. Reliance was placed on the Judge’s criticisms of the affidavit evidence and his Honour’s view of the inadequacy of the pleading.[57] I have taken a different view as to the latter and have placed less weight on the former when considering the R74 issue.
[57] Judge’s Reasons at [23]-[44].
This being the only substantive concern raised by Lottwo, I would take the same approach to the s471B issue and grant leave to proceed nunc pro tunc, if this course were properly open to me.
However, counsel in his supplementary written submissions drew to the Court’s attention a decision of this Court to the effect that an application under the Corporations Act can only be made in proceedings instituted under the Corporations Rules and not in an action commenced in the ordinary jurisdiction of this Court.[58] The respondent has referred to this as a technical objection to the appellants’ oral application for leave but one that it does not wish to press. The difficulty with this approach is that it is not clear to me (assuming the correctness of the point) that it is an objection that the parties can waive or that it involves a requirement that this Court can, or perhaps ought, dispense with. The ruling in question is some eight years old now and presumably has been governing practice in this Court for at least that period of time. The Court has not heard argument on its correctness or otherwise and any practical ramifications that might follow from a reversal of the decision, or from the activation of any jurisdiction to dispense with such a requirement of the Rules. Furthermore, on my initial review of the decision, but without coming to a final conclusion, I incline to the view that it is correct.
[58] Bratovic v SBM Argentinian Bar and Grill Pty Ltd [2005] SASC 431 (Lunn J).
For these reasons, I would not be prepared to grant leave under s471B. I would allow the appeal, restore the orders of the Magistrate joining Moses and Rose to these proceedings and remit the matter to the Master for further directions. However, these orders would be conditional on the appellants bringing and succeeding with an application under Rule 2.2 of the Corporations Rules 2003 (SA) for leave to proceed pursuant to s471B. Any leave obtained would need to be granted nunc pro tunc. It would be appropriate for such an application to be returnable before the Master.
I would make the following orders.
1.The appeal is allowed.
2.Orders 1 and 3 made by the Judge on 27 September 2012 are set aside.
3.The respondent’s appeal from the judgment of the Master is dismissed and order 1 of the Master is reinstated.
4.Orders 2 and 3 are conditional on each appellant making an application for and obtaining leave to proceed nunc pro tunc pursuant to s471B of the Corporations Act 2001.
I would hear the parties further on the questions of the costs of the appeals from the Master to the Judge and from the Judge to this Court.
77
27
1