Tanamerah Estates Pty Ltd as the trustee for Alexander Superannuation Fund v Tibra Capital Pty Ltd
[2013] NSWCA 266
•19 August 2013
Court of Appeal
New South Wales
Case Title: Tanamerah Estates Pty Ltd as the trustee for Alexander Superannuation Fund v Tibra Capital Pty Ltd Medium Neutral Citation: [2013] NSWCA 266 Hearing Date(s): 12 August 2013 Decision Date: 19 August 2013 Before: Basten JA at [1];
Sackville AJA at [30]Decision: (1) Direct that the orders made by Hallen J in the Equity Division on 23 May 2013, as entered in the Court's computerised record system, be varied to read:
(1) Dismiss the application brought by Tanamerah Estates Pty Ltd and James Tydeman to set aside or vary the costs order made on 6 February 2013 in these proceedings.
(2) Order that Tanamerah Estates Pty Ltd and James Tydeman pay the defendant's costs of the application to set aside or vary the costs order previously made, being limited to the costs incurred in filing submissions in reply and attending to take judgment.
(3) Subject to the orders made by Bergin CJ in Eq on 8 March 2013, dismiss the motion filed by Tanamerah Estates Pty Ltd on 18 February 2013.
(4) Direct that the costs orders made against Mr Tydeman may be enforced forthwith.
(5) Subject to order (6), direct that the costs order made against Tanamerah Estates Pty Ltd may be enforced forthwith.
(6) In the event that Tanamerah Estates Pty Ltd retains a solicitor to act for it in the proceedings, and in the event that the parties are unable to reach agreement with respect to the payment of costs incurred to date, grant leave to Tanamerah Estates Pty Ltd to seek a stay of the enforcement of the costs orders made against it.(2) Extend the time for the applicants to file a summons seeking leave to appeal up to and including 29 July 2013.
(3) Dismiss the application for leave to appeal.
(4) Order the applicants to pay the costs of the respondent in this Court.
[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]
Catchwords: PROCEDURE - civil - parties - identification - whether director entitled to commence and carry on proceedings for company - director authorised agent of company - director joined as party to proceedings - whether director could only be a plaintiff if director had a personal cause of action against the defendant, separate from that of the company - Uniform Civil Procedure Rules 2005, r 7.1
PROCEDURE - civil - parties - identification - whether director appeared as tutor for plaintiff company - whether company is a "person under legal incapacity" - persons under legal incapacity forced to sue through tutor - concept concerned with individuals not juristic persons - Civil Procedure Act 2005 (NSW), s 3(1)
WORDS AND PHRASES - person under legal incapacity - Civil Procedure Act 2005 (NSW), s 3(1)Legislation Cited: Civil Procedure Act 2005 (NSW), ss 3, 14, 56-60, 98
Supreme Court Rules 1970 (NSW), r 8
Uniform Civil Procedure Rules 2005, rr 7.1, 7.2, 7.13, 7.14, 13.4, 14.28, 42.1Cases Cited: Connectland Pty Ltd v Porthaven Pty Ltd [2011] NSWSC 616
DB Mahaffy and Associates Pty Ltd v Mahaffy [2011] NSWSC 673
In the Matter of DB Mahaffy & Associates Pty Limited [2012] NSWSC 776
In the Matter of DB Mahaffy & Co Pty Limited [2012] NSWSC 1286
JSBG Developments Pty Ltd v Kozlowski [2009] NSWSC 1128; 75 NSWLR 745Category: Principal judgment Parties: Tanamerah Estates Pty Ltd as the Trustee for Alexander Superannuation Fund (First Applicant)
James Scott Tydeman (Second Applicant)
Tibra Capital Pty Ltd (Respondent)Representation - Counsel: Counsel:
Ms K Richardson (Respondent)- Solicitors: Solicitors:
James Tydeman appeared for the Applicants
Herbert Smith Freehills (Respondent)File Number(s): CA 2013/175752 Decision Under Appeal - Court / Tribunal: Supreme Court - Before: Hallen J; Bergin CJ in Eq - Citation: [2013] NSWSC 36; [2013] NSWSC 616 - Court File Number(s): SC 2012/269942
JUDGMENT
BASTEN JA: On 29 August 2012 Tanamerah Estates Pty Ltd ("Tanamerah") commenced proceedings against Tibra Capital Pty Ltd ("Tibra") by a statement of claim filed in the Equity Division. It purported to do so through the agency of Mr James Tydeman, a director of Tanamerah, whom Tanamerah had authorised to act on its behalf.
On 18 September 2012 Tibra raised with Tanamerah an issue as to its entitlement to commence proceedings without a solicitor and noted the need for it to seek a waiver of the relevant rules if it proposed to maintain the proceedings without a solicitor acting for it. In response to that letter, an amended statement of claim was filed on 24 September 2012 naming Mr Tydeman as a second plaintiff.
By notice of motion dated 28 September 2012 Tibra sought orders removing Mr Tydeman as a party and staying the proceedings until Tanamerah appointed a solicitor to act for it. Tanamerah and Mr Tydeman continued to assert their entitlement to proceed in the manner they had taken to that time. In the alternative, by notice of motion dated 31 October 2012, they sought a dispensing order under s 14 of the Civil Procedure Act 2005 (NSW).
The motions were heard by Hallen J on 10 December 2012. Judgment was delivered on 6 February 2013, ordering that:
"(a) James Scott Tydeman be removed as a party/Plaintiff in the proceedings.
(b) The Plaintiffs' notice of motion filed on 31 October 2012 is dismissed.
(c) Unless by 20 February 2012, a notice of legal practitioner acting has been filed and served by a solicitor retained by Tanamerah Estates Pty Limited, the proceedings be stayed.
(d) Tanamerah Estates Pty Limited and Mr Tydeman are to be jointly and severally liable to pay the Defendant's costs of the notices of motion."
Neither Tanamerah nor Mr Tydeman sought leave to appeal against those orders within 28 days, nor did they file a notice of intention to appeal. Rather, on 18 February 2013, Tanamerah filed a notice of motion seeking to set aside orders (a), (c) and (d) ("the reopening motion").
On 8 March 2013 the reopening motion came before Bergin CJ in Eq. The Chief Judge made orders, partly by consent and partly by way of directions, permitting the plaintiff to apply to Hallen J to set aside or vary the costs order, (d). The parties agreed that that application should proceed on the papers, that is without an oral hearing. The Chief Judge also directed that Tanamerah pay 75% of Tibra's costs of the notice of motion. She declined an application by Tibra to make a costs order against Mr Tydeman.
According to Hallen J, who gave a second judgment in the matter on 23 May 2013, Bergin CJ in Eq effectively dismissed the notice of motion except for the challenge to the costs order made on 6 February. She ordered that Tanamerah pay 75% of Tibra's costs of the reopening motion. It may be noted that neither the Chief Judge nor Hallen J made an order disposing of the reopening motion, otherwise than with respect to the costs question. Such an order should be taken to give final effect to the judgments below, in exercise of the slip rule. Tanamerah challenges the costs order made by the Chief Judge on 8 March 2013.
In his second judgment, Tanamerah Estates Pty Ltd v Tibra Capital Pty Ltd (No 2) [2013] NSWSC 616, Hallen J made three orders. The orders which are summarised in the text of the judgment at [83]-[87] do not accord with the orders on the front sheet, nor with the orders entered on JusticeLink. As the orders of the Court are the orders as entered on JusticeLink, it is appropriate to refer to those orders (rather than those appearing in the judgment) namely:
"a. Orders that the application brought by Tanamerah and Mr Tydeman to set aside or vary the costs order be dismissed with costs (limited as set out above).
b. As Mr Tydeman is no longer a party to the proceedings, there is no reason why the costs orders made against him should not be able to be enforced forthwith.
c. In relation to Tanamerah, as the proceedings brought by it have been stayed, there is also no reason why the costs orders should not be able to be enforced forthwith. However, in the event that the matter proceeds with a solicitor retained by Tanamerah, before any costs order has been enforced, an application to stay the enforcement of the costs orders against it may be brought if the parties are unable to reach agreement on that issue."
There are difficulties with the form of these orders. Order (a) purports to be "limited as set out above" but there is nothing by way of limitation recorded. A perusal of the judgment indicates that the trial judge intended to limit the costs order to "the costs and disbursements incurred in, and associated with, filing the submissions in reply and attending to take judgment (if Tibra does so by a legal representative)": at [84]. That order is not challenged, although it is appropriate that, pursuant to the slip rule, it be amended to give effect to the intention expressed in the judgment. Orders (b) and (c) are sought to be challenged in the draft notice of appeal. Each was intended to make the costs orders enforceable forthwith: however, they do not say that. If the application for leave to appeal is otherwise dismissed, again to regularise the record, it is appropriate to reformulate the orders in accordance with the intention expressed by the trial judge in his reasons for judgment and as reflected in the orders appearing on the front sheet of the judgment as delivered.
A summons seeking leave to appeal was filed on 7 June 2013, accompanied by a draft notice of appeal, seeking to challenge the following orders:
(i) order (c) (the stay ) made on 6 February 2013;
(ii) order (d) (as to costs) made on 6 February 2013;
(iii) order (10) (as to costs) made on 8 March 2013;
(iv) order (b) (as to costs) made on 23 May 2013, and
(v) order (c) (as to costs) made on 23 May 2013.
Extension of time
Because Tanamerah and Mr Tydeman had proceeded by an alternative means (the reopening motion) and had not given notice of intention to appeal, their application for leave to appeal in respect of the orders made prior to May 2013 required an extension of time. Tibra did not suggest that it was prejudiced by the delay and there is no reason why such extensions should not be granted.
Leave application - stay
The challenge to the stay raised three issues addressed by the trial judge, with respect to the commencement of proceedings by a corporation. Because each matter was dealt with comprehensively and correctly by Hallen J in his judgment of 6 February 2013, the matters now sought to be raised by the applicants can be addressed succinctly. It is convenient first to set out the relevant parts of r 7.1 of the Uniform Civil Procedure Rules 2005 (NSW) ("the UCPR"):
7.1 By whom proceedings may be commenced and carried on
(1) A natural person may commence and carry on proceedings in any court, either by a solicitor acting on his or her behalf or in person.
...
(2) A company within the meaning of the Corporations Act 2001 of the Commonwealth:(a) may commence and carry on proceedings in any court by a solicitor or by a director of the company ....
(3) In the case of proceedings in the Supreme Court, subrule (2)(a) authorises a company to commence proceedings by a director only if the director is also a plaintiff in the proceedings."
Rule 7.2 requires that a person commencing or carrying on proceedings as the director of a company must file an affidavit as to his or her authority to act, together with a copy of an instrument evidencing that authority, namely a resolution of the directors.
The applicants failed to comply with these rules, not because of any deficiency in the form or manner of commencing proceedings, but because the company did not commence proceedings by a solicitor and, the proceedings being commenced in the Supreme Court, could only satisfy r 7.1 if Mr Tydeman was "also a plaintiff in the proceedings". Mr Tydeman put two arguments in support of the proposition that, once he had been joined in the amended statement of claim, he was a "plaintiff" in the proceedings.
First, he noted that a plaintiff was defined in the Civil Procedure Act to mean "a person by whom proceedings are commenced": s 3(1), plaintiff. He said that he satisfied that requirement once he was joined as a party and his right to be a plaintiff flowed from his role as authorised agent of the company. Hallen J rejected that submission at [104]-[118]. He concluded that the director could only be a plaintiff if as an individual, the director had a cause of action against the defendant (or at least one of the defendants, if more than one). As submitted by counsel for the respondent, if the pleadings disclose no reasonable cause of action in the director personally, and no claim for relief was properly made by the director personally, it would be appropriate to remove the director from the proceedings, pursuant to r 13.4 or r 14.28: at [114]. This reading of the rules was supported by a number of authorities including JSBG Developments Pty Ltd v Kozlowski [2009] NSWSC 1128; 75 NSWLR 745 at [18] (Barrett J); Connectland Pty Ltd v Porthaven Pty Ltd [2011] NSWSC 616 at [18]-[19] (White J); DB Mahaffy and Associates Pty Ltd v Mahaffy [2011] NSWSC 673 at [27] (White J) and In the Matter of DB Mahaffy & Associates Pty Limited [2012] NSWSC 776 at [2] (Brereton J) and In the Matter of DB Mahaffy & Co Pty Limited [2012] NSWSC 1286 at [2]-[3] (Brereton J).
It is, of course, true that a person who commences proceedings without an arguable cause of action is a "plaintiff" for various purposes, not the least being the rules with respect to pleading. However, in r 7.1(3) the term "plaintiff" is not used to describe any person who initiates proceedings, but to refer to a person, being a director, who also has an arguable cause of action which may properly be pursued in the same proceedings as the cause of action pursued by the corporation. That exception provides a degree of protection to a defendant against incurring legal costs, which may be irrecoverable from the corporate plaintiff, because there is also a plaintiff (namely the director) who has a direct personal interest in the proceedings and a responsibility for the company's conduct. Mr Tydeman no doubt satisfied the latter element, but not the former.
In this Court the applicants ran an alternative case based on the contention that Mr Tydeman appeared as a "tutor" for the company. The respondent submitted that there was a factual element missing with respect to this construct, namely that Mr Tydeman had been authorised to pursue the litigation as the company's agent, but not as a "tutor". There are, however, two more fundamental problems. The first is that while a tutor represents a person, he or she does not pursue a personal interest in the proceedings and hence would not be a plaintiff for the purposes of r 7.1. Secondly, a company does not need to act by a tutor, nor can it.
Mr Tydeman argued that a company was a "person under legal incapacity" for the purposes of r 7.14. That phrase is defined in s 3(1) of the Civil Procedure Act in the following terms:
person under legal incapacity means any person who is under a legal incapacity in relation to the conduct of legal proceedings (other than an incapacity arising under section 4 of the Felons (Civil Proceedings) Act 1981) and, in particular, includes:
(a) a child under the age of 18 years, and
(b) an involuntary patient, a forensic patient or a correctional patient within the meaning of the Mental Health Act 2007, and
(c) a person under guardianship within the meaning of the Guardianship Act 1987, and
(d) a protected person within the meaning of the NSW Trustee andGuardian Act 2009, and
(e) an incommunicate person, being a person who has such a physical or mental disability that he or she is unable to receive communications, or express his or her will, with respect to his or her property or affairs.There is a supplementary definition in r 7.13, which is in the Division dealing with the requirement for a person under legal incapacity to commence and carry on proceedings by a tutor:
7.13 Definition
In this Division, person under legal incapacity includes a person who is incapable of managing his or her affairs.
Mr Tydeman argued that a company, not being able to act except through appointed agents, was under a "legal incapacity". However, if that were so, every company would be forced to sue through a "tutor" in all cases. The reason that that does not happen is because the concept of a "person under legal incapacity" is concerned with individuals rather than juristic persons. The fact that all of the paragraphs in the definition refer to individuals with a disability reflects that historical approach. (Under the former Supreme Court Rules 1970 (NSW) ("SCR"), the characterisation was not of a "person under legal incapacity" but a "disable person": SCR, r 8(1).) Whilst it is true, as Mr Tydeman noted, that the definition is inclusive and not exhaustive, the genus or class which it creates remains one of individuals and not artificial or juristic entities.
Tanamerah not having properly commenced proceedings, the remaining question was whether the requirements of r 7.1(3) should properly have been dispensed with, pursuant to s 14 of the Civil Procedure Act. Such a power is available in respect of any rule and in any circumstances, so long as the court is satisfied that a dispensing order is appropriate. The exercise of that discretion must be informed by the overriding purpose set out in ss 56-60 of the Civil Procedure Act.
The primary judge gave careful consideration to that question at [147]-[178]. He was not satisfied that Mr Tydeman would be able properly to manage the company's case - at [167]; there was an absence of relevant evidence explaining why Tanamerah did not have a solicitor acting - at [173]; there was no evidence as to the financial circumstances of Mr Tydeman - at [176], and the judge was not satisfied that the imposition of a stay until Tanamerah obtained legal representation would force it to abandon the proceedings - at [175].
This Court will generally be slow to grant leave to appeal with respect to matters of practice and procedure, where no clear error of principle has been demonstrated and where the orders in question are not fatal to the applicant's pursuit of its interests. No basis has been demonstrated for interfering with the refusal to make a dispensing order under s 14.
Leave applications - costs
The costs orders were, in their terms, unremarkable: costs followed the event, in accordance with s 98 of the Civil Procedure Act and UCPR r 42.1. Once it is accepted that the substantive issues were correctly determined, there is no general basis for interfering with those orders. The only particular question concerns the order made against Mr Tydeman personally with respect to the costs ordered on 6 February 2013. It was that issue which Bergin CJ in Eq held should appropriately be referred back to Hallen J for further consideration.
In his second judgment of 23 May 2013, Hallen J held that up until the point at which Mr Tydeman was dismissed from the proceedings he was a party to the proceedings: at [63]. Accordingly, it was not correct to identify him as a person who, as a "non-party" had been subjected to a costs order. That conclusion was correct and warranted an order that he be jointly and severally liable for the costs incurred by the defendant, Tibra, up to that time. As Mr Tydeman had appeared on the reopening application in support of his own interests in resisting the costs order so far as it applied against him, it was again appropriate that each be ordered to pay the costs of that unsuccessful application. No error has been identified in that respect. Leave should be refused with respect to the costs orders.
Errors to be corrected under the slip rule
The reopening application was dealt with in the first instance by Bergin CJ in Eq. She dismissed the motion except with respect to costs and ordered that Tanamerah pay 75% of the costs of the motion. The intention of Hallen J, who was conscious of the costs order made by the Chief Judge, was to award costs with respect to the remainder of the motion as determined by him. Accordingly, his order should be amended to reflect the judgment.
Hallen J also held that the costs orders made on 23 May 2013 were enforceable forthwith. Orders in that form were not entered in JusticeLink. This Court should now order that the record be corrected.
These corrections do not require the grant of leave to appeal. The applicants being unsuccessful in their challenges to the orders made in the Equity Division, leave should be refused and they should pay the costs of the proceedings in this Court.
The orders of the Court should be:
(1) Direct that the orders made by Hallen J in the Equity Division on 23 May 2013, as entered in the Court's computerised record system, be varied to read:
(1) Dismiss the application brought by Tanamerah Estates Pty Ltd and James Tydeman to set aside or vary the costs order made on 6 February 2013 in these proceedings.
(2) Order that Tanamerah Estates Pty Ltd and James Tydeman pay the defendant's costs of the application to set aside or vary the costs order previously made, being limited to the costs incurred in filing submissions in reply and attending to take judgment.
(3) Subject to the orders made by Bergin CJ in Eq on 8 March 2013, dismiss the motion filed by Tanamerah Estates Pty Ltd on 18 February 2013.
(4) Direct that the costs orders made against Mr Tydeman may be enforced forthwith.
(5) Subject to order (6), direct that the costs order made against Tanamerah Estates Pty Ltd may be enforced forthwith.
(6) In the event that Tanamerah Estates Pty Ltd retains a solicitor to act for it in the proceedings, and in the event that the parties are unable to reach agreement with respect to the payment of costs incurred to date, grant leave to Tanamerah Estates Pty Ltd to seek a stay of the enforcement of the costs orders made against it.
(2) Extend the time for the applicants to file a summons seeking leave to appeal up to and including 29 July 2013.
(3) Dismiss the application for leave to appeal.
(4) Order the applicants to pay the costs of the respondent in this Court.
SACKVILLE AJA: I agree with Basten JA.
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