Re Jadewest 2024 Pty Ltd

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION:   RE JADEWEST 2024 PTY LTD; EX PARTE JADEWEST 2024 PTY LTD [2024] WASC 165
CORAM:   HILL J
HEARD:   1 MAY 2024
DELIVERED          :   1 MAY 2024
PUBLISHED           :   8 MAY 2024
FILE NO/S:   CIV 1475 of 2024
MATTER:   IN THE MATTER OF JADEWEST 2024 PTY LTD
EX PARTE

JADEWEST 2024 PTY LTD
First Plaintiff

SILVER FOX (WA) PTY LTD
Second Plaintiff

PINETTA NOMINEES PTY LTD
Third Plaintiff

Catchwords:

Practice and procedure - Service out of jurisdiction on second defendant - Leave required under O 5 r 9 of the Rules of the Supreme Court 1971 (WA) - Whether leave required for service under O 10 of the Rules of the Supreme Court 1971 (WA) - Turns on own facts

Legislation:

Rules of the Supreme Court 1971 (WA) O 5 r 9, O 10

Result:

Leave granted

Category: B

Representation:

Counsel:

First Plaintiff	:	N Lucarelli KC & B J Tomasi
Second Plaintiff	:	N Lucarelli KC & B J Tomasi
Third Plaintiff	:	N Lucarelli KC & B J Tomasi

Solicitors:

First Plaintiff	:	Forbes Kirby
Second Plaintiff	:	Forbes Kirby
Third Plaintiff	:	Forbes Kirby

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

Micon Mining and Construction Products GMBH & Co KG v MacMahon Mining Services Pty Ltd [2022] WASCA 56

HILL J:

(This judgment was delivered extemporaneously and has been edited from the transcript.)

On 29 April 2024, the plaintiffs, Jadewest 2024 Pty Ltd, Silver Fox (WA) Pty Ltd, and Pinetta Nominees Pty Ltd, filed an originating motion for leave to issue a writ of summons outside Australia, as required by O 5 r 9 of the Rules of the Supreme Court 1971 (WA) (Rules).
Leave is required because the proposed second defendant, Mr Benjamin Vella, ordinarily resides in Canada. The proposed first defendant, BTFMS Pty Ltd, is a company incorporated in Australia and has its registered office in Ascot, Western Australia. The sole director, secretary and shareholder of BTFMS Pty Ltd is the proposed second defendant.
In support of the originating motion, the plaintiffs rely on three affidavits:
(a)an affidavit of Mitchell Terry Tolcon, a principal of the plaintiffs' solicitors, filed 30 April 2024, attaching the proposed writ of summons indorsed with a statement of claim;
(b)an affidavit of Christine Louise Vella, the sole director and shareholder of the first and third plaintiffs and a director and joint shareholder of the second plaintiff, filed 29 April 2024; and
(c)an affidavit of Melissa Jane Oliver, a director, company secretary and joint shareholder of the second plaintiff, filed 29 April 2024.

Factual background

The proposed second defendant is the son of Mrs Vella and the brother of Ms Oliver.
The plaintiffs' claim against the proposed defendants is set out in the statement of claim which is annexed to the proposed writ of summons. The claim arises from conduct of the proposed defendants in respect of three separate matters: first, an accounting practice referred to in the proposed writ as the BA accounting practice; second, properties previously owned by the second plaintiff as trustee of the White Eagle Unit Trust in West Kalgoorlie; and third, two properties which are located at 53 Ida Street in Bassendean.
In respect of the BA accounting practice, the proposed statement of claim pleads that in May 2008, a unit trust entitled the BA Trust was established. The sole unit holder of the trust is and has been Pinetta Nominees Pty Ltd, the third plaintiff. The initial trustee of the BA Trust was Jadewest Holdings Pty Ltd, who was replaced by the first plaintiff as trustee on 18 April 2024.
The principal asset of the BA Trust is an accounting practice which is referred to in the proposed statement of claim as the BA accounting practice. The allegation in the proposed statement of claim is that since 12 May 2014, the proposed first defendant through its sole director Mr Vella, has wrongfully conducted the BA accounting practice for its own benefit, including by directing and procuring the payment to the proposed first defendant of all fees and revenue.
As a result, the plaintiffs say that the proposed first defendant holds the BA accounting practice, as well as its accounting fees and revenue, on trust for the first plaintiff, alternatively for the third plaintiff, as the sole beneficiary of the BA Trust. A number of alternative claims are also pleaded in the statement of claim, including that the first and third plaintiffs have an equitable lien or charge over the practice, fees and revenue trust money of the BA accounting practice, and that the proposed first defendant became the assumed trustee of the BA Trust and breached the duties it owed to the beneficiaries of the BA Trust.
In relation to the proposed second defendant, the plaintiffs say that the proposed second defendant owed fiduciary duties to the BA Trust and/or its beneficiaries, which he breached. An alternative claim is also pleaded against the proposed second defendant of knowing involvement in the proposed first defendant's breach of trust.
The claim in respect of the West Kalgoorlie property is that on or about 21 May 2003, White Eagle Holdings as trustee for the White Eagle Unit Trust, purchased a property in West Kalgoorlie. Subsequently, on or about 15 August 2005, the third plaintiff, and then on 5 September 2023, the second plaintiff, became trustee of the White Eagles Unit Trust.
In September 2017, the third plaintiff leased the West Kalgoorlie property to Nouchy Mining Services Pty Ltd. At the time of entry into this lease, the proposed second defendant was a director of the third plaintiff. Between 1 September 2017 and 31 August 2023, the lessee of the West Kalgoorlie property paid the rent for this property to proposed first defendant. This totalled $343,200.
The plaintiffs say that this amount is held on constructive trust by the proposed first defendant for the second plaintiff as trustee of the White Eagles Unit Trust. They also contend that the proposed second defendant breached the duties he owed as a director to the third plaintiff by directing the tenant to pay rent to the proposed first defendant, and not to the trustee of the White Eagle Unit Trust. This conduct is said to be a breach of s 181 and s 182 of the Corporations Act 2001 (Cth), as well as a knowing inducement or procurement of the breach of trust by the third plaintiff.
The final claim concerns the purchase of a property in Bassendean by the proposed second defendant on 8 May 2009. The plaintiffs say that the entirety of the purchase price was provided by the third plaintiff by way of a loan from the ANZ bank. Interest and other charges were paid by Jadewest Holdings Pty Ltd as trustee for the BA Trust, alternatively on behalf of the third plaintiff, between July 2009 and January 2012.
In November 2011, the third plaintiff borrowed $970,000 from the ANZ bank to repay the initial loan and to construct two residential houses, the titles to which have been issued to the proposed second defendant. The balance of the construction costs, as well as payment of interest and other charges on the property, have been paid by Jadewest Holdings Pty Ltd, either as trustee for the BA Trust, or on behalf of the third plaintiff.
The plaintiffs say that by reason of the payments that have been made by the third plaintiff and first plaintiff, the entirety of these properties are held on resulting trust for either the first plaintiff as trustee of the BA Trust, or the third plaintiff.

Legal principles

The legal principles that govern this application were set out in the Court of Appeal in Micon Mining and Construction Products GMBH & Co KG v MacMahon Mining Services Pty Ltd,[1] where the court stated that it is necessary to read O 5 r 9 of the Rules with O 10 of the Rules. That is, the court 'will not grant leave to issue a writ for service outside Australia unless the court would also grant leave to serve the writ outside Australia'.[2]
[1] Micon Mining and Construction Products GMBH & Co KG v MacMahon Mining Services Pty Ltd [2022] WASCA 56.
[2] Micon Mining and Construction Products GMBH & Co KG v MacMahon Mining Services Pty Ltd [67].
Order 10 of the Rules was substantially amended on 9 April 2024 to bring it in line with the procedure that operates in most, if not all, superior courts of Australia. Order 10 of the Rules now sets out a significant number of categories of originating processes that can be served outside Australia without leave.
These include the following: first, where the subject matter claim is land or other property situated in Australia;[3] second, where a party is a necessary or proper party to a proceeding properly brought against another person served or to be served under any other provision of the Rules;[4] third, where the remedy of constructive trust is sought and the liability arises out of acts or omissions done wholly or partly in Australia;[5] and fourth, when the claim is founded on a cause of action arising in Australia.[6]
[3] Rules of the Supreme Court 1971 (WA) O 10 r 5(e).
[4] Rules of the Supreme Court 1971 (WA) O 10 r 5(h)(i).
[5] Rules of the Supreme Court 1971 (WA) O 10 r 5(l).
[6] Rules of the Supreme Court 1971 (WA) O 10 r 5(n).
In addition to these provisions, the plaintiffs also rely on O 10 r 5(d)(i), O 10 r 5(d)(ii), and O 10 r 5(s) of the Rules.

Disposition

In this case, I am satisfied that the plaintiffs do not require leave to serve the writ on the proposed second defendant. This is because a number of the claims fall within O 10 r 5(l) of the Rules, all claims are founded on causes of action that arise in Australia, and the proposed second defendant as the sole director of the proposed first defendant is a necessary or proper party to proceedings the plaintiffs can bring as of right against the proposed first defendant. Given this conclusion, it is not necessary to consider whether the claims fall within the other subrules of O 10 r 5 of the Rules.
On this basis, I consider that leave should be granted to the plaintiffs to issue the proposed writ outside of Australia and orders be made in the following terms:
1.Pursuant to O 5 r 9 of the Rules of the Supreme Court 1971 (WA), the plaintiffs have leave to issue the writ of summons, which is 'Annexure MTT-1' to the affidavit of Mitchell Terry Tolcon sworn 30 April 2024, subject to the correction of minor typographical errors, as raised at the hearing.
2.The costs of the application be costs in the cause of the proceedings to be commenced as foreshadowed by order 1.

I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
JN
Associate to the Honourable Justice Hill
8 MAY 2024

CaseChat Overview and Summary

Orders of the court

Background to the litigation

Evidence Before The Court

Reasons for decision

Legal Principle Established