Sancterra Pty Ltd v Selby St Pty Ltd - [2020] WASC 321

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION:   SANCTERRA PTY LTD -v- SELBY ST PTY LTD [2020] WASC 321
CORAM:   TOTTLE J
HEARD:   3 SEPTEMBER 2020
DELIVERED          :   7 SEPTEMBER 2020
FILE NO/S:   CIV 1422 of 2020
BETWEEN:   SANCTERRA PTY LTD
Plaintiff

AND

SELBY ST PTY LTD (IN LIQUIDATION)
Defendant

Catchwords:

Practice and procedure - Claim for rectification of instrument - Application by third parties for joinder - Where third parties' rights may be affected by rectification - Third parties joined as second defendants

Equity - Rectification - Remedies - Discretionary considerations - Where third parties assert rectification may affect their rights - Where third parties' rights challenged in related proceedings involving same parties - Requirement to establish third parties' rights - Case management - Related proceedings to be tried concurrently with rectification claim

Legislation:

Rules of the Supreme Court 1971 (WA), O 18 r 6(2)

Result:

Third parties joined as second defendants
Case management directions made

Category: B

Representation:

Counsel:

Plaintiff	:	Mr L Christensen
Defendant	:	Mr V Ghosh
Other Party	:	Mr L Warnick

Solicitors:

Plaintiff	:	CX Law
Defendant	:	Craddock Murray Neumann
Other Party	:	Chalmers Legal Studio

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

Harris v Smith [2008] NSWSC 545
Homestyle Pty Ltd v City of Belmont [1999] WASCA 59
JJ Leonard Properties Pty Ltd v Leonard (WA) Pty Ltd (1987) 12 ACLR 1

TOTTLE J:

Introduction

A residential property development undertaken by the defendant (Selby Street - now in liquidation) has given rise to a tripartite dispute between Selby Street and its liquidator, the plaintiff (Sancterra), which provided finance to Selby Street, and Mr Peter Charles Langford and Mrs Pauline Mary Langford (the Langfords) in their capacities as trustees for the Majestic Superannuation Fund. The Langfords provided finance to a company related to Selby Street and, as part of that transaction, they took security from Selby Street.
In broad terms the dispute between Sancterra and the Langfords revolves around the question of who has the better claim to five specified strata titled residential units in the property development.
Sancterra's claim against Selby Street is the subject of this action and, on the pleadings as they presently stand, it involves an application to rectify the loan agreement between it and Selby Street (the Sancterra Agreement). The action is listed for a two day trial due to commence on 22 September 2020.
The Langfords advance their claims against both Sancterra and Selby Street in a separate action numbered CIV 2575 of 2018.
Selby Street and its liquidator resist the Langfords' claims on a number of grounds including that the transactions relied on by the Langfords may be avoided by the liquidator or that they are voidable transactions.
At a strategic conference held in CIV 2575 of 2018 the parties agreed that the most efficient method of resolving all their disputes was for Sancterra's rectification action to proceed first. The Langfords' counsel foreshadowed an application by the Langfords to be joined as a party to…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2020] WASC 321
Decision Date: 7 SEPTEMBER 2020

CaseChat Overview and Summary

In this case, Sancterra Pty Ltd sought rectification of a contract with Selby St Pty Ltd, asserting that it had been incorrectly recorded. The dispute was heard in the Federal Court of Australia, where the primary issue was whether the third parties, who might be affected by the rectification, should be joined as defendants. The third parties in question were entities that could potentially have their rights impacted by the rectification of the contract. The court was required to determine whether these third parties should be joined as second defendants in the proceeding and whether their rights should be established before proceeding with the rectification.

The court examined the legal principles concerning the joinder of third parties in rectification claims, particularly focusing on whether the third parties' rights might be affected by the proposed rectification. It was necessary to consider whether these third parties' rights should be decided in the context of the rectification claim or if they should be resolved in a related proceeding involving the same parties. The court held that the third parties could be joined as second defendants if their rights were likely to be affected by the rectification. However, before proceeding with the rectification, these third parties needed to establish their rights. This was particularly relevant as there were related proceedings where these rights were being contested.

The court ruled that the third parties could be joined as defendants in the rectification claim since their rights could be affected by the rectification. However, before the court could grant rectification, the third parties had to establish their rights in the related proceedings. The court further directed that these related proceedings should be tried concurrently with the rectification claim to ensure a comprehensive resolution of all issues. This decision was significant in balancing the rights of all parties involved and ensuring that the rectification process was fair and equitable.

The final orders of the court mandated that the third parties be joined as second defendants in the rectification claim. It directed that the related proceedings concerning the third parties' rights should proceed concurrently with the rectification claim. This ensured that all issues were addressed simultaneously, facilitating a comprehensive resolution of the dispute. The court's decision highlighted the importance of considering the rights of all parties potentially affected by a rectification claim and the need for coordinated proceedings to achieve a fair outcome.

Orders