Rosebridge Nominees Pty Ltd v Commonwealth Bank of Australia (No 6)

[2014] WASC 203

JURISDICTION     :   SUPREME COURT OF WESTERN AUSTRALIA

IN CHAMBERS

CITATION:   ROSEBRIDGE NOMINEES PTY LTD -v- COMMONWEALTH BANK OF AUSTRALIA [No 6] [2014] WASC 203

CORAM:   LE MIERE J

HEARD:   28 MAY 2014

DELIVERED          :   11 JUNE 2014

FILE NO/S:   CIV 1235 of 1999

BETWEEN:   ROSEBRIDGE NOMINEES PTY LTD

Plaintiff

AND

COMMONWEALTH BANK OF AUSTRALIA
First Defendant

CORRS CHAMBERS WESTGARTH (A FIRM)
Second Defendant

WFB PTY LTD
Third Defendant

Catchwords:

Application to be joined as a plaintiff in capacity as trustee of the plaintiff - Deed of appointment not executed by all unit holders - Appointment as trustee ineffective - Applicant cannot be joined as a plaintiff

Vesting of claims in new trustee

Applicant would not be joined as plaintiff if plaintiffs not jointly represented and would bring separate claims

Legislation:

Rules of the Supreme Court 1971 (WA), O 18 r 6(2)
Trade Practices Act 1974 (Cth), s 82
Trustees Act 1898 (NSW), s 6
Trustees Act 1962 (WA), s 10

Result:

Application dismissed

Category:    B

Representation:

Counsel:

Plaintiff:     Mr R I Viner QC & Mr M N Blandford

First Defendant             :     Mr R W Douglas

Second Defendant         :     Mr A T Macknay

Third Defendant           :     Mr M J Lang

Solicitors:

Plaintiff:     Angove Law Pty Ltd

First Defendant             :     Clayton Utz

Second Defendant         :     MDS Legal

Third Defendant           :     Jackson McDonald

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

Boston Commercial Services Pty Ltd v GE Capital Finance Australasia Pty Ltd (2006) 236 ALR 720

Carnie v Esanda Finance Corp Ltd (1996) 38 NSWLR 465

Chapman v Luminis (No 4) (2001) 123 FCR 62

Ghose v CX Reinsurance Company Ltd [2010] NSWSC 110

Goold & Porter Pty Ltd v Housing Commission [1974] VR 102

Krishell Pty Ltd v Nilant (2006) 32 WAR 540

Lewis v Daily Telegraph Ltd [No 2] [1964] 2 QB 601

Loxton v Moir (1914) 18 CLR 360

MG Corrosion Consultants Pty Ltd v Gilmour [2012] FCA 383

Park v Allied Mortgage Corporation Ltd (1993) ATPR (Digest) 46‑105

Pritchard v Racecage Pty Ltd (1997) 72 FCR 203

Salfinger v Niugini Mining (Australia) Pty Ltd [No 3] [2007] FCA 1532

1. LE MIERE J:  This action has a long and unfortunate history.  The plaintiff company, Rosebridge Nominees Pty Ltd (Rosebridge), is no longer represented by solicitors and consequently is currently unable to take any step in the proceedings.  The existing statement of claim is the second substituted statement of claim dated and filed 1 July 2009.  The plaintiff there pleads that it sues in its capacity as trustee of the Night Life Unit Trust (the Night Life Trust).  Mr Tony Grego has applied to be joined as a plaintiff in this action on the ground that he has been appointed, in place of Rosebridge, as trustee of the Night Life Trust.

2. The defendants each oppose the joinder.  The defendants say that there is no evidence that Mr Grego has been effectively appointed as trustee of the Night Life Trust.  The defendants say that the evidence before the court is that the instrument which purports to appoint Mr Grego as trustee is ineffective because it has not been executed by the Night Life Trust unit holders.  Furthermore, the defendants say that the bare right to litigate is not assignable and in any event a claim for damages under Trade Practice Act 1974 (Cth) s 82 (TPA) is not assignable.  Furthermore, the defendants say that Mr Grego should not be joined and permitted to prosecute the action as a plaintiff unless and until he and the existing plaintiff, Rosebridge, are represented by the same solicitors.

Night Life Trust Deed

1. The Night Life Trust was established by a deed made on 1 August 1985 (the Trust Deed).  The initial unit holders are set out in the first schedule to the Trust Deed as follows:

Unit Holder	Number of Units
Basilio Galati	12
Erigo Fazio	12
Sebastiano Giuseppe Fazio as trustee for the Sebastiano Fazio Family Trust	12
Giuseppe Calogero Monastra as trustee for The Giuseppe Monastra Family Trust	12
Tony Grego	12
Ralph Roy Selchow	6
Frances Katies Tomasich	6

The trustee is Rosebridge.  Clause 17(b) provides:

The Trustee may at any time be removed and any further Trustee may be appointed, by a majority of the registered holders at a meeting duly convened.

1. There is no evidence that any meeting of the registered holders has been convened for the purpose of removing Rosebridge as trustee and appointing Mr Grego in its place.  However, Mr Grego submits that by a deed of appointment made 14 March 2014 the unit holders appointed Mr Grego to be the trustee in place of Rosebridge.  Mr Grego says that the deed of appointment was executed by all of the current unit holders.

2. Mr Grego gave oral evidence about who are the unit holders in the Nightlife Trust and produced a document which he identified as a copy of the register of unit holders.  That document stated that the current unit holders are:

   Basilio Galati

   Erigo Fazio

   Tony Grego

   Ticula Pty Ltd

   Sepra Pty Ltd

3. In his oral evidence Mr Grego verified a written statement which is exhibit 1.  That statement refers to the original unit holders and transfers of units.  The outcome of those transfers is that the current unit holders, according to Mr Grego are:

   Erigo Fazio

   Tony Grego

   Ticula Pty Ltd

   Joseph and Jagoda Ravlich

   Sepra Pty Ltd

   Dinko and Dianne Burmas Family Trust

Deed of appointment not executed by all unit holders

1. The evidence does not establish clearly who are the unit holders.  However, based on Mr Grego's written statements and the copy of the unit holders register produced by him, I find that the current unit holders include the following:

   Erigo Fazio

   Tony Grego

   Ticula Pty Ltd

   Sepra Pty Ltd

   J and J Ravlich Family Trust

   Dinko Burmas as Trustee for D and D Burmas Family Trust

2. The deed of appointment is executed by Tony Grego and Erigo Fazio.  The deed is not executed by Ticula Pty Ltd.  It was executed by Jasminka Sunjic as Trustee for the Ticula Unit Trust.  In his written statement Mr Grego said that he had previously stated in his affidavits that Ticula Pty Ltd had purchased its shares as trustee for the Ticula Unit Trust but that is not correct.  Mr Grego said the units were purchased by Ticula Pty Ltd in its own right as the Ticula Unit Trust was not established until 1994 and the units were acquired before that time.  In his submissions Mr Grego said that Jasminka Sunjic is a director of Ticula Pty Ltd and she joined in his appointment as trustee.  That does not assist Mr Grego.  A company is an artificial legal personality separate and distinct from its shareholders and directors.  Ms Sunjic did not execute the deed on behalf of Ticula Pty Ltd.  She executed it in her name as trustee of the Ticula Unit Trust.  The deed is not executed by Sepra Pty Ltd.  It was executed by Erigo Fazio as trustee for the Sepra Unit Trust.  Once again, Sepra Pty Ltd is a legal personality separate and distinct from Erigo Fazio, notwithstanding that he is a director of Sepra Pty Ltd.  The deed was executed by Joseph Ravlich but not in his capacity as a trustee for the J and J Ravlich Family Trust.  The deed was executed by Dinko Burmas but not in his capacity as trustee for the Dinko and Diane Burmas Family Trust.

3. On the basis of the matters set out above, the deed of appointment was not signed by all of the holders of units in the Nigh Life Trust.  It was not executed by Ticula Pty Ltd and Sepra Pty Ltd who appear to be the major unit holders.  Those two companies between them, according to Mr Grego's evidence, hold the majority of the units in the Night Life Trust.  Therefore, there was no meeting of unit holders to appoint Mr Grego as trustee and the deed of appointment was not executed by a majority of unit holders, let alone all of the unit holders.  Therefore, the deed of appointment is not effective to appoint Mr Grego as trustee of the Night Life Trust.

4. Mr Grego is not the trustee of the Night Life Trust.  Therefore, his application to be joined as a party must be dismissed because he applied to be joined as a party on the ground that he is the trustee of the Night Life Trust.

Vesting of claims in new trustee

1. It is not necessary to consider the other matters raised by the defendants.  However, I will briefly state my view on those matters.

2. The Trustees Act 1962 (WA) s 10 provides that where a new trustee is appointed, the execution of the instrument of appointment vests, subject to qualifications not relevant, the trust property in the new trustee. The effect of these provisions is that the appointment of a new trustee operates as a statutory assignment of the trust property vesting it in the new trustee and divesting it from the trustee whom he replaces.

3. In Loxton v Moir (1914) 18 CLR 360 there was a question whether new trustees appointed in consequence of the retirement of the original trustees held the benefit of a guarantee of a mortgage debt. The mortgage and the guarantee were given to the original trustees and the court was called upon to consider whether the right of action on the guarantee was, by that provision, vested in the new trustees. The High Court held that the right of action upon a guarantee vested in new trustees by reason of Trustee Act 1898 (NSW) s 6, which is the equivalent of Trustees Act 1962 (WA) s 10. The court held that the section is effectual to vest a legal chose in action, being trust property, in new trustees upon their appointment.

4. The expression 'a thing in action' is not itself defined in the Trustees Act.  In Krishell Pty Ltd v Nilant (2006) 32 WAR 540 the Western Australian Court of Appeal said that the phrase 'a thing in action' is the same as 'a chose in action'. McLure JA expressed the view that a chose in action is a personal right of property that can only be claimed or enforced by action as distinct from taking physical possession, and that an essential criterion of a chose in action is that the right be of a proprietary character and that a personal right is not a chose in action because it is not property. Buss JA appeared to accept that 'a thing in action' means a thing recoverable by action, as contrasted with a chose in possession, and the expression describes all personal rights of property which can only be claimed or enforced by action and not by taking physical possession.

5. The effect of Trustees Act 1962 (WA) s 10 is that where a new trustee is appointed, the instrument of appointment vests a right to claim damages under TPA s 82 if that right is 'trust property'.

6. Even if a right to claim damages under TPA s 82 is not a thing in action it may nevertheless be trust property within the meaning of the Trustees Act s 10. 'Property' is defined in s 6 of the Trustees Act to include 'any thing in action, and any other right or interest, whether in possession or not'. Therefore, it is arguable that a right to claim damages under TPA s 82 is included within 'any other right or interest whether in possession or not' even if it is not a thing in action.

7. In MG Corrosion Consultants Pty Ltd v Gilmour [2012] FCA 383 Barker J points out at [16] that the discussion in the texts and cases as to what is a thing in action or chose in action reflects 'a level of puzzlement with rules that appear to include some actions for recovery within the category of things or choses in action, while denying other actions that property status'. In that case Barker J was considering whether, amongst other things, a statutory right to apply for compensation under the Corporations Act 2001 (Cth) was a thing or chose in action and thus 'property' within the definition of that term in s 9 of the Corporations Act.  His Honour found that it was not and in doing so placed weight on the fact that it was incapable of assignment.  Barker J said that there is another reason why the proceeding should not be considered a thing in action and that is because:

   it is one for compensation under s 1317H of the Corporations Act in respect of losses referred by the alleged breach of the Corporations Act by Mr Gilmour … and such an action is not assignable under the Corporations Act. Only a 'corporation or registered scheme' that suffers damage can be compensated under this provision. Just as similar statutory compensation provisions, for example, s 82 of the former Trade Practices Act 1974 (Cth), have been held not to be assignable (see, for example, Park v Allied Mortgage Corporation Ltd (1993) ATPR 46‑105) so too should the right of the plaintiff to claim compensation under s 1317H be considered incapable of assignment. As a result, it should be considered a cause of action not constituting a thing in action [18].

8. In Salfinger v Niugini Mining (Australia) Pty Ltd [No 3] [2007] FCA 1532 at [110] Heerey J said that '[i]t is well established that a cause of action for the recovery of damages under either sections 82 or 87 of the Trade Practices Act is not one capable of assignment'.  His Honour said that the relevant authorities, which are summarised by Rares J in Boston Commercial Services Pty Ltd v GE Capital Finance Australasia Pty Ltd (2006) 236 ALR 720 [50] ‑ [52], include Park v Allied Mortgage Corporation Ltd (1993) ATPR (Digest) 46‑105, 53,467; Pritchard v Racecage Pty Ltd (1997) 72 FCR 203, 218; and Chapman v Luminis (No 4) (2001) 123 FCR 62 [204] ‑ [207].

9. In Park v Allied Mortgage Corporation Ltd Davies J said:

   In my opinion, a right to claim damages under ss 82 and 87 of the Trade Practices Act 1974 (NSW) is, in general, a bare right of action which cannot be assigned. I am not speaking of an assignment such as may occur on the bankruptcy or death of a person or on the merger of a company into another entity.  Absent such special circumstances, a right to claim under ss 82 and 87 cannot, in my opinion, be assigned.  Section 82 provides:

   (1)A person who suffers loss or damage by conduct of another person that was done in contravention of a provision of Part IV or V may recover the amount of the loss or damage by action against that other person or against any person involved in the contravention.

   The section does not allow for the award of damages in respect of a loss which was not suffered by any party to the proceedings.  Both the terms of the statutory provision and the principle as enunciated in cases such as Dawson v Great Northern and City Railway Co (1905) 1 KB 260 at 270‑1, Defries v Milne (1913) 1 Ch 98 and Poulton v The Commonwealth (1953) 89 CLR 540 at 602, preclude Mrs Regan from suing for damages in respect of any loss suffered by Mr and Mrs Park. Mr and Mrs Park have discontinued their claims and that is an end to them.

10. In Pritchard v Racecage the appellant was the widow of the deceased who died after being struck by a motor vehicle being driven in the 'Cannonball Run' race.  The deceased was acting as an official in the race.  The appellant commenced proceedings on her own behalf, as executrix of the deceased's estate and as next friend of her three children, seeking damages against the respondents for misleading and deceptive conduct.  The Full Court of the Federal Court held that the proceedings were not maintainable by the applicant on her own behalf nor on behalf of the estate nor on behalf of the children.  Branson J, with whom Spender and Olney JJ agreed, said:

    The estate of the deceased cannot satisfy the statutory requirement of s 82 of the TP Act of being a 'person' who suffers loss or damage. Nor can the estate, in my view, satisfy the statutory requirements of s 87 of the TP Act of being 'a person who is a party to the proceeding' or ' a person who has suffered, or is likely to suffer, loss or damage' (Park v Allied Mortgage Corp Ltd (1993) (Digest) 53,467 at 53,469; National Mutual Property Services (Australia) Pty Ltd v Citibank Savings Ltd (1995) 132 ALR 514. (218)).

11. In Chapman v Luminis, von Doussa J said that it has been consistently held in the Federal Court that the cause of action created by s 82 of the TPA cannot be assigned and must be enforced by action by the person who suffers loss or damage. Von Doussa J specifically referred to the passage in Park v Allied Mortgage Corporation Ltd which I have set out above.  Von Doussa J continued:

    Davies J recognised that in the special circumstances mentioned, it might be possible to effect an assignment of a bare right of action in the nature of an action in tort. An action arising under s 82 of the TPA is such an action. In this case the assignments to Mr and Mrs Chapman were made by the liquidator of Binalong in exercise of a liquidator's powers to 'sell or otherwise dispose of, in any manner, all or any part of the property of the company': s 477(2)(c) of the Corporations Law. If the general law prohibition upon assigning a bare right of action were the only obstacle to the maintenance of an action under s 82 by an assignee of the person who suffered loss or damage by a contravention of a relevant provision of the TPA, it is probable that s 477(2)(c), and the principles discussed in Trendtex Trading Corp v Credit Suisse [1982] AC 679 by Lord Wilberforce at 694 and Lord Roskill at 703 would overcome that obstacle. However the second ground relied on by Davies J would remain, namely that an assignee is not a person who comes within the terms of the statutory remedy. This view was adopted by Branson J in Brookfield at 28.  Lindgren J reached the same conclusion in National Mutual where he said (at 539):

    'The causes of action under the TP Act ... are not assignable, if for no other reason, because it is relevantly only the claimants who could possibly satisfy the statutory descriptions of being persons who suffered loss or damage caused by the conduct described in the statutes ...'

    This construction of s 82 has now been unanimously endorsed by a Full Court of this Court in Pritchard v Racecage Pty Ltd [205] - [206].

12. If the general law prohibition upon assigning a bare right of action were the only obstacle to the maintenance of an action under TPA s 82 by an assignee of the person who suffered loss or damage by a contravention of TPA s 52, it is probable that the Trustees Act s 10 would overcome that obstacle. That is because the right to bring an action under s 82 is either a thing in action or 'any other right or interest whether in possession or not' and therefore property as defined by the Trustees Act and therefore vests in the new trustee by operation of the Trustees Act s 10. However, the second ground relied on by Davies J and the subsequent Federal Court authorities to which I have referred to the effect that an assignee is not a person who comes within the terms of the statutory remedy prevents the claim under s 82 passing to the new trustee. As a matter of statutory construction only 'a person who suffers loss or damage by conduct of another person that was done in contravention of a provision of Part V' may recover damages under TPA s 28.

13. It was Rosebridge that leased the premises in Fremantle and which carried on a nightclub business there. It was Rosebridge which surrendered the lease and executed a replacement lease. It was Rosebridge to which the alleged misleading or deceptive conduct was directed and which suffered any loss as a result of that conduct. That is not altered by the fact that Rosebridge held the lease and carried on the business in its capacity as trustee for the Night Life Trust. TPA s 82 provides that a person who suffers loss or damage by conduct of another person that was done in contravention of a provision of pt V may recover the amount of loss or damage by action against that other person or against any person involved in the contravention. The person who suffered the alleged loss or damage is Rosebridge notwithstanding that it held the lease and carried on the business in its capacity as trustee for the Night Life Trust.

14. Only Rosebridge may claim damages under TPA s 82. I find that even if, contrary to my finding, Mr Grego was appointed trustee of the Night Life Trust in place of Rosebridge, Mr Grego cannot maintain the claim for damages under TPA s 82 which is presently claimed in this action by Rosebridge.

Two plaintiffs

1. Mr Grego has applied to be joined as a plaintiff in addition to, not in substitution for, Rosebridge. There has been no application to remove Rosebridge as a plaintiff. If, contrary to my finding, Mr Grego has been appointed trustee of the Night Life Trust in place of Rosebridge, that would not be a sufficient ground for substituting Mr Grego for Rosebridge as the plaintiff. The causes of action, other than the claim for damages under TPA s 82, would have vested in Mr Grego but the claim for damages under TPA s 82 remains a claim brought by Rosebridge and has not, and cannot, vest in Mr Grego.

2. The defendants say that Mr Grego should not be joined as a plaintiff in addition to Rosebridge because that would result in two plaintiffs who were not jointly represented and the court should not permit separate representation.

3. Order 18 r 6(2) of the Rules of the Supreme Court 1971 (WA) provides that at any stage of the proceedings the court may on such terms as it thinks just order that any person whose presence before the court is necessary to ensure that all matters in dispute in the matter may be effectually and completely determined and adjudicated upon be added as a party. If, contrary to my finding, Mr Grego has been appointed trustee of the Night Life Trust in place of Rosebridge then his presence before the court would be necessary to ensure that all matters in dispute in the matter be effectually and completely determined and adjudicated upon. Therefore, the court would have power to join Mr Grego as a party. The court might refuse to do so in the exercise of its discretion or might permit joinder on such terms as the court thinks just.

4. In Ghose v CX Reinsurance Company Ltd [2010] NSWSC 110 Austin J said that there is a rule of practice that, without leave, separate representation of plaintiffs is not permitted. Austin J said that the leading case on the issue is Lewis v Daily Telegraph Ltd [No 2] [1964] 2 QB 601 where the English Court of Appeal refused to permit the separate representation in libel proceedings of Mr Lewis and his co‑plaintiff, a company of which he was director. Pearson LJ noted at 620 ‑ 621 the problems caused by separate representation, finding that it was not consistent with proper or regular practice for two plaintiffs to be separately represented. His Lordship acknowledged that it was not an impossibility, but held (at 620) it was 'not very easy to envisage such cases' and in the context of a libel case before a judge and jury it would be 'extremely inconvenient and awkward' to have separate representation. Russell LJ noted that the basis of the rule is fairness to the defendant:

   Prima facie, co‑plaintiffs, whether in one original action or in an action consisting of consolidated actions, must be jointly represented by solicitor and counsel.  In a proper case, an order may be made authorising severance in point of representation; but this must be, I think, rare and should only be done to avoid injustice (622 ‑ 623).

   In Ghose v CX Reinsurance Company Ltd, Austin J observed (at [36]) that extremely inconvenient and awkward consequences may arise from separate representation in single proceedings.

5. In Carnie v Esanda Finance Corp Ltd (1996) 38 NSWLR 465 Young J said:

   It is clear that under the rules of court, all plaintiffs must act by the same solicitor and counsel and that the court will waive this rule only in the most extreme circumstances and that different views of plaintiffs in representative proceedings are not such a circumstance (at 470).

6. In Goold & Porter Pty Ltd v Housing Commission [1974] VR 102 Norris J noted but doubted the dictum of Russell LJ in Lewis v Daily Telegraph (No 2) that where there are a number of plaintiffs in an action there is a discretion to allow separate representation to the plaintiffs.  Norris J said that the condition of the plaintiffs being separately represented is to avoid injustice and it must be rare.  Norris J said:

   In the absence of any other authority suggesting that there is a discretion, I am disposed to the view that there is no discretion in the case of an action which is not a consolidated action (at 103).

7. Mr Grego has made it clear that if he is joined as a plaintiff he intends to plead a different case from that currently pleaded by Rosebridge notwithstanding that the claims arise out of the same events and transactions.  I would not have allowed Mr Grego to be joined as a plaintiff unless the claim or claims which he brings are the same as, or consistent with, those pleaded by Rosebridge.  Rosebridge is presently unable to take any step in the proceedings because it is not represented by a solicitor.  In those circumstances I would not have joined Mr Grego as a plaintiff except on condition that he be represented by the same solicitor and counsel as Rosebridge and that one statement of claim be pleaded jointly by Mr Grego and Rosebridge.

Stay action or put it on or inactive cases list

1. At different times in the course of this application the defendants proposed that the action should be stayed until Rosebridge is represented by a solicitor.  Mr Colvin SC for the third defendant foreshadowed that the third defendant will seek orders that the case be put on the inactive cases list.  Mr Douglas for the first defendant submitted that the court may, of its own motion, summons the parties to attend a hearing to show cause why the case should not be put on the inactive cases list.  I will not take that step at this time.

2. The unit holders in the Night Life Trust, or some of them, and the directors of Rosebridge, or some of them, have recently been directing their attention to Mr Grego being appointed as trustee of the Night Life Trust in place of Rosebridge, being joined as a plaintiff and taking over the conduct of the action.  It appears that those controlling Rosebridge, or with the capacity to control the company, have done nothing to prosecute the action because of the efforts to have Mr Grego take over that function.  I have now decided that Mr Grego has not been appointed trustee of the Night Life Trust and will not be joined as a plaintiff in the action.  In those circumstances those controlling Rosebridge must now consider whether to retain a solicitor and proceed with the action or to allow it to become inactive and in due course be dismissed.

Rintag

1. In the course of the hearing of Mr Grego's application to be joined as a plaintiff in this action in his capacity as trustee of the Night Life Trust, Mr Grego has also referred to Rintag Pty Ltd as the trustee for the Goodtime Unit Trust being joined as a plaintiff to bring claims against the defendants which involve common questions of law or fact as Rosebridge's claims in this action.  Mr Grego has also referred to himself having being appointed as trustee of the Goodtime Unit Trust in place of Rintag and being joined as a plaintiff in his capacity as trustee of the Goodtime Unit Trust.

2. I have not treated Mr Grego's references to those matters as a formal application for Rintag or Mr Grego as trustee of the Goodtime Unit Trust to be joined as a plaintiff.  Any application by Rintag, or Mr Grego as trustee of the Goodtime Unit Trust, would face procedural and substantive obstacles, not the least of which is obvious limitation issues.  Such an application should be brought by chamber summons supported by an affidavit or affidavits going only to the issue of joinder of that party or parties.  That should not be taken as any encouragement for Mr Grego, those controlling Rintag or the unit holders in the Goodtime Unit Trust to bring such an application.  As I have said, there are major procedural and substantive obstacles to such an application.

Conclusion

1. Mr Grego's application to be joined as a plaintiff in his capacity as trustee of the Night Life Trust will be dismissed.