Soclever Investments Pty Ltd as trustee for the Andrew Tonner Family Trust v Jaytona Pty Ltd
[2021] WASC 133
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS
CITATION: SOCLEVER INVESTMENTS PTY LTD AS TRUSTEE FOR THE ANDREW TONNER FAMILY TRUST -v- JAYTONA PTY LTD [2021] WASC 133
CORAM: REGISTRAR WHITBY
HEARD: 20 APRIL 2021
DELIVERED : 30 APRIL 2021
PUBLISHED : 30 APRIL 2021
FILE NO/S: CIV 2833 of 2019
BETWEEN: SOCLEVER INVESTMENTS PTY LTD AS TRUSTEE FOR THE ANDREW TONNER FAMILY TRUST
Plaintiff
AND
JAYTONA PTY LTD
First Defendant
JAYSEN ANDREW TAYLOR
Second Defendant
TONIA MICHELLE TAYLOR
Third Defendant
NADER EL SAYED
Fourth Defendant
NAMEO PTY LTD
Fifth Defendant
Catchwords:
Practice and procedure - Joinder of intervening party as a plaintiff or defendant to the action - Consolidation of proceedings
Legislation:
Rules of the Supreme Court 1971 (WA), O 4A r 24, O 4A r 27 O 4A r 28, O 7 r 1, O 18 r 4, O 18 r 6, O 23 r 2, O 59 r 9, O 83 r 1
Result:
The Intervening Party be joined as a defendant to the proceedings
Category: B
Representation:
Counsel:
| Plaintiff | : | P Edgar |
| First Defendant | : | No appearance |
| Second Defendant | : | No appearance |
| Third Defendant | : | No appearance |
| Fourth Defendant | : | No appearance |
| Fifth Defendant | : | No appearance |
| Intervening Party | : | L Rowley |
Solicitors:
| Plaintiff | : | Weeks & Co |
| First Defendant | : | Barry Nilsson Lawyers |
| Second Defendant | : | Barry Nilsson Lawyers |
| Third Defendant | : | Barry Nilsson Lawyers |
| Fourth Defendant | : | Barry Nilsson Lawyers |
| Fifth Defendant | : | Barry Nilsson Lawyers |
| Intervening Party | : | Charlton Rowley |
Case(s) referred to in decision(s):
Dalian Huarui Heavy Duty Industry International Company Ltd v Clyde & Co Australia (a Firm) [No 3] [2020] WASC 312
Hunter Automative Group Pty Ltd v Range Motors Pty Ltd [2021] WASC 122
Moondancer Holdings Pty Ltd v Navarac Pty Ltd [2011] WASC 250
Wildflower Electrical Refrigeration Service (WA) v Refrigid Pty Ltd [2014] WASC 382
Wurth Australia Pty Ltd v Burgess [2012] WASC 504
REGISTRAR WHITBY:
Introduction
On 1 March 2018, Andrew Tonner and Linda Tonner commenced proceedings in the Supreme Court against Jaytona Pty Ltd, Jaysen Taylor and Tonia Taylor (First Proceedings). I refer to the individuals by their first names without any disrespect intended.
Jaytona trades as Multiplant and carries on the business of civil engineering and construction. The First Proceedings concern the ownership of Jaytona. Andrew and Linda are seeking orders that Jaysen and Tonia hold 47.5% of their shares in Jaytona on constructive trust for Andrew and Linda in equal shares.
On 20 March 2018, the Federal Circuit Court of Australia made a sequestration order appointing Nicholas David Cooper as trustee of the bankrupt estate of Andrew. As a result, the First Proceedings were stayed until Mr Cooper made an election in writing to prosecute or discontinue the First Proceedings.
On 2 April 2019, Mr Cooper elected to continue prosecuting the First Proceedings. Mr Cooper has not yet taken any procedural steps in the First Proceedings.
Prior to commencing the First Proceedings, Andrew, Linda and the Andrew Tonner Family Trust (Trust) entered into a funding agreement with GT Capital Partners Pty Ltd to fund the First Proceedings.
Mr Cooper applied to the Federal Court to disclaim the funding agreement. On 24 December 2019, Besanko J of the Federal Court made an order granting Mr Cooper leave to disclaim the funding agreement.
On 21 October 2019, Soclever Investments Pty Ltd, as trustee for the Trust, commenced these proceedings against Jaytona, Jaysen, Tonia, Nader El Sayed and Nameo Pty Ltd. In these proceedings, Soclever is seeking orders, inter alia, that:
(a)Jaysen and Tonia were carrying on the Multiplant business in partnership with the Trust;
(b)the Trust is entitled to one half of the profits of the Multiplant business and one half of the assets of the Multiplant business; and
(c)the shares in Jaytona are assets of the partnership.
Application
This is an application by Mr Cooper, in his capacity as trustee of the bankrupt estate of Andrew, to be either joined as a plaintiff or defendant to these proceedings or for these proceedings to be consolidated with the First Proceedings.
Mr Cooper says that he is an interested party in these proceedings because they relate to the same subject matter as the First Proceedings. At the hearing of the application, counsel for Mr Cooper submitted that the most appropriate order is for Mr Cooper to be joined as a defendant to these proceedings.
Soclever opposes Mr Cooper's application. Soclever says that Mr Cooper should not be joined as a party to these proceedings, nor should these proceedings be consolidated with the First Proceedings because:
(a)there has been inadequate conferral prior to Mr Cooper's making this application;
(b)there is no commonality between these proceedings and the First Proceedings;
(c)Soclever would suffer prejudice due to the delay to these proceedings that would result as a consequence of joinder or consolidation; and
(d)Mr Cooper has failed to prosecute the First Proceedings for a significant period of time without adequate explanation.
Issues
The issues that arise in this application are:
(a)whether there has been adequate conferral prior to Mr Cooper's application, and if not, the potential consequences of inadequate conferral;
(b)whether Mr Cooper has an interest in these proceedings which requires him to be joined as a party; and/or
(c)whether there is sufficient nexus between the First Proceedings and these proceedings which justifies an order for consolidation.
For the reasons that follow, I find that Mr Cooper should be joined as a party to these proceedings. I also decline to make an order consolidating these proceedings and the First Proceedings.
Has there been adequate conferral?
In order to satisfy the requirements of O 59 r 9 of the Rules of the Supreme Court 1971 (WA) (RSC), genuine conferral requires the lawyers with conduct of the matter to converse in an attempt to reach common ground, preferably face to face, but at a minimum by telephone: Dalian Huarui Heavy Duty Industry International Company Ltd v Clyde & Co Australia (a Firm) [No 3] [2020] WASC 312 [19].
However, the court does not insist on compliance with the obligations of conferral contained in O 59 r 9 RSC when there would be no utility in doing so: Wildflower Electrical Refrigeration Service (WA) v Refrigid Pty Ltd [2014] WASC 382 [14].
Mr Cooper's solicitors filed a Memorandum of Conferral in support of the application filed 2 December 2020. The Memorandum detailed conferral in the form of very limited written correspondence between the solicitors. That was inadequate. The issue is whether the application should be dismissed because of that inadequate conferral.
The issues of joinder and consolidation have not been resolved by the parties since the application was made. Given the application is still contested by Soclever, the lack of conferral has not resulted in a wasted application.
In the event that Soclever had ultimately consented to the application, the lack of adequate conferral would be addressed by an appropriate costs order. Mr Cooper assumed the risk that, in the absence of inadequate conferral, the trustee in bankruptcy may be deprived of its costs and/or face an adverse costs order even if Soclever had consented to the orders sought in the application.
As Soclever has not consented to the orders sought in the application, the application remains to be determined and the lack of adequate conferral is of no consequence.
Legal Principles
Joinder of parties
Mr Cooper initially made an application to be joined as a party to these proceedings pursuant to O 18 r 4 of the RSC. Mr Cooper conceded, prior to the hearing of the application, that the court did not have power pursuant to O 18 r 4 of the RSC to make orders to join him as a defendant to these proceedings. Instead, Mr Cooper relies upon O 18 r 6 of the RSC in support of his application.
O 18 r 6(2) provides:
6. Misjoinder and nonjoinder of parties
…
(2) At any stage of the proceedings in any cause or matter the Court may on such terms as it thinks just and wither of its own motion or on application –
…
(b)order that any person who ought to have been joined as a party or whose presence before the Court is necessary to ensure that all matters in dispute in the cause or matter may be effectually and completely determined and adjudicated upon, be added as a party.
…
(3)An application by any person for an order under subrule (2) adding him as a defendant must, except with the leave of the Court, be supported by an affidavit showing his interest in the matters in dispute in the cause or matter.
In Wurth Australia Pty Ltd v Burgess [2012] WASC 504 [57], Corboy J considered the principles that govern joinder of a party pursuant to O 18 r 6(2):
(a)The rule is designed to avoid unnecessary technicality so that the parties may litigate the real issues between them in an expeditious, efficient and cost effective way: Elovalis v Elovalis [2008] WASCA 141(S) [6]. Consequently, the phrase 'all matters in dispute' should be given a beneficial interpretation. The phrase should be afforded the widest interpretation that the language of the rule will permit.
(b)Further, the phrase gives the rule an 'elastic' application. The rule is not to be construed so that the matters in dispute are limited to matters arising on the existing pleadings. The disputed matters for the purpose of the rule may include disputed issues of fact that are 'subjacent' to the pleadings: Elovalis [7].
(c)In Amon v Raphael Tuck & Sons Ltd [1956] 1 QB 357, Devlin J observed that the expression 'the cause or matter' in the then equivalent English rule referred to the action 'as it stands between the existing parties' - '[i]f it were otherwise, then anybody who showed a cause of action against either a plaintiff or defendant could, of course, say that the question involved in his cause of action could not be settled unless he was made a party' (369; see also, at 378). Similarly, Adams J in Birtles v Commonwealth of Australia [1960] VR 247 held that the reference to 'cause' in the then equivalent Victorian rule referred to the existing cause or matter against the original defendant (251).
(d)Although O 18 r 6(2) is to be interpreted beneficially, the test imposed by the rule is necessity; a party cannot be joined merely because it is thought to be just or convenient: The Hancock Family Memorial Foundation Ltd v Fieldhouse [No 3] [2010] WASC 223; Vandervell Trustees Ltd v White [1971] AC 912, 935 - 936 (Viscount Dilhorne).
(e)The rule requires the court to consider whether the proposed parties' rights against or liabilities to any existing party in respect of the subject matter of the action will be directly affected by any order that may be made in the action: Pegang Mining Co Ltd v Choong Sam [1969] 2 MLJ 52, 55 - 56; News Ltd v Australian Rugby Football League Ltd (1996) 64 FCR 410, 524 and Homestyle Pty Ltd v City of Belmont [1999] WASCA 59 (Templeman J, with whom Malcolm CJ and Owen J agreed). In a passage that was cited with approval in Homestyle and more recently by the Court of Appeal in Cheng Chih Tiao v Sheng Chin Lai [No 2] [2010] WASCA 189, the Full Court of the Federal Court in News Ltd v Australian Rugby Football League observed, in relation to the test identified by the Privy Council in Pegang Mining, that (525):
The test involves matters of degree, and ultimately judgment, having regard to the practical realities of the case, and the nature and value of the rights and liabilities of the third party which might be directly affected. The requirement that a third party's rights against, or liability to, any party to the proceedings be directly affected is an important qualification that recognises that many orders of a court are likely to affect other people to a greater or lesser extent. This is particularly so with remedies in the nature of an injunction: see Silktone Pty Ltd v Devreal Capital Pty Ltd (1990) 21 NSWLR 317 at 322 per Kirby P. The requirement of a direct effect on rights or liabilities differentiates the case where a person ought to be joined, from other cases where the effect of the order on non-parties can be characterised as only indirect or consequential.
Consolidation of proceedings
O 83 r 1 provides that:
Causes may be consolidated
Whenever any issues between the parties can be conveniently tried together, or whenever it appears desirable notwithstanding that the parties are not identical and that the evidence necessary to prove the issues is not identical, the Court may consolidate any number of causes or matters in order to quiet all claims relating to one subject matter, transaction or event, or to substantially similar matters, transactions or events.
The following factors are relevant in determining whether actions should be consolidated (Moondancer Holdings Pty Ltd v Navarac Pty Ltd [2011] WASC 250):
(a)whether there are common questions of fact or law or a common set of transaction/s which make it desirable for all of the matters to be determined at the same time;
(b)whether consolidation would avoid multiple actions and save time and costs;
(c)whether the court is satisfied that there will be no unfairness or prejudice to any party caused by a consolidation;
(d)whether consolidation would result in a just resolution of the issues between the parties; and
(e)whether there are any practical matters which make it inexpedient for the actions to be consolidated.
Should Mr Cooper be joined as a defendant to these proceedings?
Mr Cooper's submissions
Mr Cooper relies upon the Affidavit of Travis John Shueard sworn on 1 December 2020 (Shueard Affidavit) in support of his application.
Mr Cooper submits:
(a)that, in bringing the First Proceedings in their individual capacities, Andrew and Linda considered that the cause of action was property in their own right, not property held beneficially for another person or entity;
(b)Soclever has not provided an adequate explanation for not prosecuting the First Proceedings in the form in which it now attempts to prosecute these proceedings. By inference, Soclever has commenced these proceedings to avoid dealing with Mr Cooper in the First Proceedings; and
(c)the subject matter of the First Proceedings and these proceedings is the same: to determine who is beneficially entitled to the profits and assets of the Multiplant business and the shares of Jaytona. If Mr Cooper is not joined as a defendant to these proceedings, then there will be two separate sets of proceedings before this Court, although commenced by different plaintiffs, claiming the same relief.
Soclever's submission
Soclever relies upon the Affidavit of Peter William Weeks sworn on 29 March 2021 in opposition to the application.
At the application hearing, Soclever opposed Mr Cooper amending his application to refer to O 18 r 6 of the RSC (as opposed to O 18 r 4) given the amendment was only sought the day before.
In summary, Soclever submitted that if the application were considered pursuant to O 18 r 6 of the RSC, Mr Cooper should not be joined as a defendant for the following reasons:
(a)the director of Soclever is Jordana Tonner. Neither Jordana nor Soclever are plaintiffs in the First Proceedings, nor were either parties to the funding agreement the subject of proceedings in the Federal Court between GT Capital and Mr Cooper;
(b)it is irrelevant whether Andrew and Linda considered the cause of action in the First Proceedings to be owned by them in their own right – any assertion by them to that effect does not constitute a legal opinion and neither Andrew or Linda could be expected to appreciate a distinction between rights held in their personal and trustee capacities;
(c)Mr Cooper has not progressed the First Proceedings since he elected to prosecute them in April 2019. If Mr Cooper considered the cause of action in the First Proceedings to have value, then he ought to have taken steps to get on the record in, and prosecute, the First Proceedings. Mr Cooper's delay in doing so precludes him from now seeking to be joined as a party to these proceedings; and
(d)if Mr Cooper were joined as party to these proceedings, he may not have the resources to progress the matter, which will serve as a constant anchor and delay.
Determination
Parties may be joined to existing actions in many circumstances. Ultimately, a party will be joined to prevent injustice to a person whose rights will be affected by a judgment in the action.
I have jurisdiction to make an order for joinder of a party pursuant to O 18 r 6 of the RSC, not O 18 r 4 of the RSC: Hunter Automative Group Pty Ltd v Range Motors Pty Ltd [2021] WASC 122 [6].
In order to deal with this application efficiently and expeditiously, I permit Mr Cooper to amend the application to refer to O 18 r 6 of the RSC.
The test is not whether Mr Cooper's conduct is raised in these proceedings, nor whether he is a party to a contract which is pleaded in these proceedings. It is the effect of the orders on Mr Cooper that determines whether he should be joined as party to these proceedings.
The court will be required, in these proceedings, to make orders on the beneficial ownership of the Jaytona shares between Soclever as trustee of the Trust and Jaysen and Tonia.
In the First Proceedings, the court would also be required to make orders as to the beneficial ownership of the Jaytona shares. The difference being that the orders in the First Proceedings will determine rights between Andrew and Linda and Jaysen and Tonia.
It is clear that any order as to the beneficial ownership of the Jaytona shares in these proceedings will have a direct effect on the rights of Andrew. His and Linda's cause of action, as pleaded in the First Proceedings, could not maintained if Soclever is successful in these proceedings. Accordingly, Mr Cooper's rights, as trustee for Andrew, will be also directly affected by orders in these proceedings. It is necessary for him to be joined as a defendant to these proceedings to prevent injustice by denying him the opportunity to be heard on the issue of who is beneficially entitled to the Jaytona shares.
Mr Cooper's delay in progressing the First Proceedings does not change the effect that an order in these proceedings may have on Mr Cooper. It is not an answer to this application to say that the delay in the First Proceedings prevents Mr Cooper from being joined as a party to these proceedings. Soclever was always at liberty to include Mr Cooper as a defendant to these proceedings, in circumstances where it was aware that Mr Cooper has asserted that Andrew has an interest in the ownership of the Jaytona shares.
In any event, given the history of the proceedings and the role of Mr Cooper as a third party without a direct personal interest in this subject matter, the delay is not so inordinate as to preclude Mr Cooper from seeking to be joined as a party to these proceedings.
Finally, any issues of delay by Mr Cooper in complying with directions in these proceedings can be dealt with in the normal course of case management and consequences attendant upon non-compliance with those directions.
Mr Cooper rightly submits that it is more appropriate to be joined as a defendant, rather than as a plaintiff, to these proceedings.
I find that Mr Cooper should be joined as a defendant to these proceedings.
Should these proceedings be consolidated with the First Proceedings?
Given I have decided that Mr Cooper should be joined as a defendant to these proceedings, it is unnecessary for me to determine whether these proceedings should be consolidated with the First Proceedings. In any event I find that it would be inappropriate to do for the reasons detailed below.
At the application hearing, counsel for Soclever described the First Proceedings as being in a 'zombie‑like state'. It is an apt description. The writ was issued on 1 March 2018. The Writ has not been served on any of the defendants and no application has been made, pursuant to O 7 r 1(2) of the RSC, to extend the validity of the writ. On 21 June 2019, despite not being served, the first defendant filed a memorandum of appearance.
No procedural step has been taken in the First Proceedings since 21 June 2019. Pursuant to O 4A r 24 of the RSC, the First Proceedings are taken to be inactive.
O 4A r 26 of the RSC provides:
26. Consequences of case being on Inactive Cases List
(1)If a case is on the Inactive Cases List, only these documents may be filed in the Court in relation to the case -
(a)a request for an order under rule 27(1);
(b)a notice of discontinuance by the plaintiff under Order 23 rule 2;
(c)a request made by the plaintiff or the defendant for leave under Order 23 rule 2;
(d)a written consent under Order 43 rule 16 to the making of an order that would finally dispose of the case.
(2)If the plaintiff or defendant in a case on the Inactive Cases List files a request for leave under Order 23 rule 2, the Court may grant leave under that rule even though the case has not been removed from that list.
(3)If a written consent is filed under Order 43 rule 16 to the making of an order in a case on the Inactive Cases List that would finally dispose of the case, the Court may make the order even though the case has not been removed from that list.
Pursuant to O 4A r 28 of the RSC, if a case is on the inactive cases list for 6 continuous months after the date on which notice is given under O 4A r 25(1)(b) to the parties to the case, the case is taken to have been dismissed for want of prosecution. No affidavit of service was filed in the First Proceedings, so no notice has been given to any of the parties for the purposes of O 4A r 25(1)(b) to enter the First Proceedings on the inactive cases list.
The result of the above set of events is that:
(a)the Writ in the First Proceedings is stale in relation to Jaysen and Tonia;
(b)the First Proceedings are inactive; and
(c)while the First Proceedings have not been dismissed, only certain documents can be filed in the First Proceedings;
The state of the First Proceedings makes it inexpedient for the actions to be consolidated.
Conclusion and Orders
I find that Nicholas David Cooper, as trustee for the bankrupt estate of Joseph Andrew Tonner, ought be joined as a defendant to these proceedings.
The parties ought confer in relation to final orders and costs and provide either a Memorandum of Consent Orders or competing minutes of proposed orders within 7 days of delivery of these reasons.
I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
TG
Court Officer
30 APRIL 2021
11
0