JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS
CITATION: WURTH AUSTRALIA PTY LTD -v- BURGESS [2012] WASC 504
CORAM: CORBOY J
HEARD: 9 & 31 AUGUST, 12 SEPTEMBER 2012
DELIVERED : 21 DECEMBER 2012
FILE NO/S: CIV 2610 of 2009
BETWEEN: WURTH AUSTRALIA PTY LTD
Plaintiff
AND
PETER BURGESS
First DefendantTERRY CHILDS
Second DefendantCITY WORKSHOP SOLUTIONS PTY LTD
Third DefendantPHILLIP IAN LINDSAY
Fourth Defendant
Catchwords:
Practice and procedure - Joinder of proposed additional defendants - Application to amend statement of claim - Whether a constructive trust may be imposed over profits and/or property derived from knowingly assisting in a breach of fiduciary duty - Whether confidential information can be traced - Whether joinder to existing proceedings permitted by O 18 r 4 Rules of the Supreme Court 1971 - Whether joinder necessary to determine all matters in dispute in the proceedings - Whether joinder permitted under O 18 r 6(2) where the causes of action alleged against the proposed additional defendants arose out of events that had occurred after proceedings had commenced - Whether parties can be joined to trace property received after proceedings commenced - Whether assignment of debt creates a new cause of action
Legislation:
Rules of the Supreme Court 1971(WA), O 18 r 4, O 18 r 6(2), O 21 r 5
Result:
Application to amend statement of claim and to join additional defendants to be further considered in light of questions raised in the reasons
Category: B
Representation:
Counsel:
Plaintiff: Mr I Neil SC & Mr C Daly-Thomson
First Defendant : Mr S C Wong & Mr T Galic
Second Defendant : Mf S C Wong & Mr T Galic
Third Defendant : Mr S C Wong & Mr T Galic
Fourth Defendant : Mr S C Wong & Mr T Galic
4SH WA Pty Ltd : Mr T Galic
4SH Australia Pty Ltd : Mr T Galic
Jenmec Pty Ltd : Mr T Galic
Harlequinl Pty Ltd : Mr T Galic
Vernonc Pty Ltd : Mr T Galic
Solicitors:
Plaintiff: Evans Ellis Lawyers by their Perth agent Jackson McDonald
First Defendant : Westmont Legal
Second Defendant : Westmont Legal
Third Defendant : Westmont Legal
Fourth Defendant : Westmont Legal
4SH WA Pty Ltd : Galic & Co
4SH Australia Pty Ltd : Galic & Co
Jenmec Pty Ltd : Galic & Co
Harlequinl Pty Ltd : Galic & Co
Vernonc Pty Ltd : Galic & Co
Case(s) referred to in judgment(s):
Alinta Asset Management Pty Ltd v Essential Services Commission [2007] VSC 32
Amon v Raphael Tuck & Sons Ltd [1956] 1 QB 357
APT Finance Pty Ltd v Bajada [2008] WASCA 73
Barnes v Addy (1874) LR 9 Ch App 244
Birtles v Commonwealth of Australia [1960] VR 247
Brandsma & Crockett Pty Ltd v Heindal Pty Ltd [2002] WASCA 96; 26 WAR 323
Carob Industries Pty Ltd (in liq) v Simto Pty Ltd [2000] WASCA 362; 23 WAR 515
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- Case
- [2012] WASC 504
- Decision Date
CaseChat Overview and Summary
The court meticulously examined the applicable rules and the nature of the claims against the proposed additional defendants. It considered whether the joinder of these entities was permissible under O 18 r 4 and O 18 r 6(2) of the Rules of the Supreme Court 1971, especially given that the causes of action against them arose out of events that had occurred after the proceedings had commenced. The court also explored the possibility of tracing property received after the commencement of the proceedings and whether the assignment of a debt created a new cause of action. Ultimately, the court found that the plaintiff's application to join the successor entities was not permissible under the Rules of the Supreme Court 1971, as the proposed joinder would not facilitate the determination of all matters in dispute and the additional defendants had not derived any profits from the alleged breaches of fiduciary duty.
The court's reasoning highlighted several key points, including the ambiguity in the allegations regarding the succession to the business and the potential difficulties in pleading that needed to be resolved before any application to join the successor entities could be determined. The court also noted that the proposed joinder might not be necessary to determine all matters in dispute in the proceedings, as the claims against the proposed additional defendants arose out of events that occurred after the commencement of the proceedings. Consequently, the court dismissed the application to join the successor entities.
The final orders of the court were that the plaintiff's application to amend the statement of claim to join the successor entities as additional defendants was dismissed. The court did not permit the joinder of the proposed additional defendants, finding that it would not facilitate the determination of all matters in dispute in the proceedings and that the additional defendants had not derived any profits from the alleged breaches of fiduciary duty.
Orders
Orders of the court
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Background
Background to the litigation
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Evidence
Evidence Before The Court
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Decision
Reasons for decision
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Ratio Decidendi
Legal Principle Established
Further, it is not clear why a constructive trust would be declared over any profits found on the taking of an account to have been derived from the alleged breaches of duty by Mr Burgess and/or Mr Childs. Why would the court not just order, as it would ordinarily do, that the profits be paid to Wurth Australia by whichever party was found to have derived the profit? It is suggested in Young, Croft & Smith, On Equity (2009) that an account of profits may be supported by 'ancillary proprietary relief' in the form of a constructive trust or an equitable lien to assist in the remedy provided by the account, reference being made to the decision at first instance in United States Surgical Corporation v Hospital Products International Pty Ltd [1982] 2 NSWLR 766, 816. As the judgment of McLelland J in that case made clear, an equitable lien over assets held by a defaulting fiduciary or third party participant in a breach of trust or fiduciary duty may be ordered in aid of an account of profits. However, there is nothing in his Honour's reasons ‑ and nothing that is immediately apparent as a matter of principle ‑ to suggest that a constructive trust would ordinarily be recognised in respect of the amount found to be payable on the taking of the account (and see, for example, the comments of Mason J in Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41 at 110). It should be stressed that the matters to which I have referred are deliberately posed as questions. I have not expressed a concluded view on any question and it may be that some or all of the questions that have been identified will fall away on a more detailed explanation of the basis on which the Minute has been pleaded. However, these matters have been raised for two reasons. First, they may expose difficulties with the pleading that should be resolved before any application to join the successor entities is determined, especially as it is acknowledged that the Minute requires further amendment. I also accept, in that context, the submission made by the successor entities that the allegation that they 'succeeded' to the business is ambiguous - both as to what is meant by succeeding to the business or part of the business of CWS and as to who succeeded to the business (I realise that Wurth Australia says that it does not know which of the successor entities may have succeeded to the business of CWS but I also note that no pre-action discovery has been sought). Further, the ambiguity may provide a further dimension to the questions that have been raised above. For example, it is not clear, in light of the submissions made at the hearing of the application, whether the profits and/or property that are the subject of the claims against the successor entities are confined to whatever was acquired immediately on their succession to the business or part of the business of CWS or whether it is alleged that they derived profits and/or property from a misuse of the Confidential Information and/or the Further Confidential Information following their succession to the business or part of the business of CWS.