Brando Aus Holdo Pty Ltd v Gary Shayne as representative of the persons identified in Schedule 1

Supreme Court of NSW|2021-06-16|Before: Rees J

These proceedings

On 7 April 2021, Brando commenced these proceedings. Brando's solicitors sought confirmation whether Johnson Winter & Slattery had instructions to accept service on behalf of any, or all, of the named defendants. Johnson Winter & Slattery replied, "We confirm that we have instructions to accept service of the proceedings on behalf of Gary Shayne in his capacity as Sellers Representative under the Share Sale Agreement dated 13 March 2019."
On 14 April 2021, a Notice of Appearance was filed for Mr Shayne as representative of the persons identified in Schedule 1 of the Summons "pursuant and subject to the provisions of the Share Sale Agreement dated 13 March 2019". The same qualification was repeated in an email from Johnson Winter & Slattery to Brando's solicitors, serving the Notice of Appearance.
On 21 April 2021, Johnson Winter & Slattery wrote again, suggesting that the proceedings, as presently framed, were not properly constituted and appeared to be based on a misunderstanding of clause 9.3 and clause 14.2 of the Share Sale Agreement. "Your client appears to be incorrectly operating under the assumption that the authority of the Sellers' Representative extends to permitting the Sellers' Representative to be sued on behalf of all the Sellers. The SSA, however, makes no such provision in terms." Annexed to the letter was a schedule providing the contact details for the Sellers, as provided in Schedule 1 to the Share Sale Agreement and updated in respect of some Sellers, reflecting the most recent Sellers' contact details provided to, or obtained by, Mr Shayne in his capacity as Sellers' Representative.

A REPRESENTATIVE ORDER?

The first issue is whether section 56 (Overriding purpose), section 57 (Objects of case management) or section 58 (Court to follow dictates of justice) of the Civil Procedure Act 2005 (NSW) confer power on the Court to appoint Mr Shayne as the representative of the Sellers.
For many years, rule 7.4 of the Uniform Civil Procedure Rules 2005 (NSW) and its predecessors contained a formulation of Rules of the Supreme Court 1883 (UK) Order 16 rule 9, which provided: Where there are numerous persons having the same interest in one cause or matter, one or more of such persons may sue or be sued, or may be authorised by the court or a judge to defend in such cause or matter on behalf of or for the benefit of all persons so interested.
Under that rule, and its inter-state counterparts, person were permitted to advance a claim on behalf of non-parties with - and sometimes without - a representative order. Whilst the rule has now been repealed in New South Wales, cases where such an order was made may be helpful in understanding the circumstances in which such an order may be warranted under the Court's powers to ensure that proceedings are conducted efficiently and fairly to resolve the issues between the parties and quell further controversy.
Thus, in Trustees Executors & Agency Co Ltd v Urquhart (1896) 21 VLR 713, Holroyd J considered it appropriate for a trustee company to sue one of 26 beneficiaries entitled to share in a particular bequest, as a representative of the class of beneficiaries, to determine the beneficiaries' entitlements. Obviously enough, the factual and legal issues were identical for all 26 beneficiaries, as the issue before the Court turned upon the construction of particular provisions of a Will. Likewise, in Carnie v Esanda Finance Corporation Ltd (1995) 182 CLR 398; [1995] HCA 9, a representative order was made to permit two borrowers suing a lender for failure to disclose a credit charge in accordance with the Credit Act 1984 (NSW), on behalf of all other persons who had entered into loan contracts with the lender in the same terms. As Brennan and McHugh JJ observed, the plaintiff and the members of the represented class had a community of interest in the determination of a substantial issue of law or fact.
In Tydeman v Roberts [1985] 2 Qd R 144 - a case heavily relied upon by Brando - a jockey was injured in a fall from a horse on the Mount Isa Race Club racecourse. The jockey sought common law damages from the Club as his employer, in order to avail himself of the Club's workers' compensation insurance. A representative order was made by Williams J to permit the jockey to sue the president and treasurer as representatives of all members of the Mount Isa Race Club. In making the order, Williams J noted at 150: Clearly the intention of the plaintiff in this case is to recover any damages award from [workers' compensation], without seeking to enforce the judgment against all or any of the members of the Mount Isa Race Club personally. Those are all matters which it is proper to take into account in determining what orders, if any, should be made … As such, no "personal rights were in jeopardy" but, where it otherwise, Williams J may have made the representative order subject to a condition that the judgment not be enforced against the members of the Club personally without further leave of the Court: at 150.
Notwithstanding the repeal of rule 7.4 UCPR in 2011 - at the same time as more elaborate provisions relating to "Representative Proceedings" came into operation (being Part 10 of the Civil Procedure Act) - representative orders continue to be made. In Ahmed v Chowdhury [2012] NSWSC 1452, Lindsay J noted the equitable jurisdiction of the Court to make representative orders, which jurisdiction pre-dated the rule and is unaffected by its repeal: at [27]-[51]. In particular, at [44]: The equitable jurisdiction to make representative orders is thus governed by "considerations of justice and convenience", and the management of proceedings by the Court "to ensure fairness" in the conduct of litigation: Mobil Oil Australia Pty Ltd v Victoria (2002) 211 CLR 1 at 21-22 [6] and 29-30 [33]-[34].
Further, at [47]: A final judgment given in proceedings the subject of a representative order ordinarily binds all members of the class of persons purportedly represented by the representative party: KR Handley, Spencer Bower and Handley: Res Judicata (Lexis Nexis, London, 4th ed, 2009), para [9.20]; Carnie (1995) 182 CLR 398 at 423-424. However, a person purportedly represented pursuant to a representative order may be entitled to apply for joinder in the proceedings as a defendant (in aid of an application to set aside the judgment or to appeal) for the purpose of contending that the judgment does not apply to him or her because he or she does not fall within the class of represented parties; because of some special circumstance personal to him or her; or because it was obtained irregularly, illegally or against good faith: Commissioners of Sewers of the City of London v Gellatly (1876) 3 Ch D 610 at 616; UCPR r 36.15(1). Cf, Wentworth v Rogers (No 5) (1986) 6 NSWLR 534 at 538-539.
Lindsay J also considered that, even if the equitable jurisdiction of the Court did not support a representative order, such orders may nevertheless be justified under section 16 of the Civil Procedure Act as "directions with respect to [an] aspect of practice or procedure for which rules of court or practice notes do not provide": at [37]. In that case, Lindsay J made a representative order in proceedings concerning an incorporated association, Bangladesh Islamic Centre of New South Wales Incorporated. The effect of the order was that both sides of a factional dispute were represented at the hearing, such that both sides of the argument were heard and all members of the association were bound by the Court's determination so that the dispute within the membership as to the governance of the association could be finally resolved.
It is indeed commonplace for representative orders to be made in disputes concerning associations: see, for example, Islamic Association Western Suburbs Sydney Inc v Khan [2014] NSWSC 1897 at [17] per Black J; Re Ryde Ex-Services Memorial & Community Club Ltd (administrator appointed) [2015] NSWSC 226 at [50] per Lindsay J; Re Order of AHEPA NSW Inc [2019] NSWSC 1329 at [172]-[173] (describing a representative order made by Black J in the proceedings). The factual and legal issues in such matters are, by and large, the same, such as: what does the constitution mean; were the procedures to call a meeting followed; what happened at the meeting; and, who is a member of the association?
Another example of where a representative order may be made is, in the Corporations List, in proceedings concerning the distribution of surplus funds amongst the creditors of a company in liquidation. Representatives may be appointed to advocate alternate means of distribution which favour identifiable classes of creditors. In Re Courtenay House Capital Trading Group Pty Ltd (in liquidation) [2020] NSWSC 780, rather than joining 780 investors to argue how the remains of a Ponzi scheme should be distributed, three defendants were joined to represent the classes of investors who would benefit under the three possible scenarios: at [3].
Representative orders have also been made by Lindsay J to ensure that all persons interested, or prospectively interested, in an Estate are bound: Re Estate Schwartz [2015] NSWSC 1484 at [35].
In Burwood Council v Ralan Burwood Pty Ltd (No 2) [2014] NSWCA 179, Sackville AJA, sitting as a single Judge, made a representative order, not under the equitable jurisdiction of the Court, but sections 56 to 58 of the Civil Procedure Act. There, a developer had constructed the façade of a commercial and residential building in breach of the development consent. Proceedings were brought by the Council against the developer to carry out works rectifying the exterior of the building to conform with the development consent. The primary judge dismissed the proceedings and Council appealed. Shortly before the hearing of the appeal, it became apparent that the lot owners and occupiers of the strata plan - of which there were more than 300 - were necessary parties.
Whilst the developer contended that the Council needed to join and serve each lot owner, Sackville AJA followed Ahmed v Chowdhury, in particular, where Lindsay J identified the Civil Procedure Act as an alternative source of continuing power for the Court to make representative orders in civil proceedings: Ahmed v Chowdhury at [37]; Burwood v Ralan at [13]. Further, Sackville AJA considered at [15]: … I think that Lindsay J was correct to conclude that the Court continues to have the power to order that a party be appointed to represent a group of persons who are necessary parties to litigation, where it is in the interests of justice to do so.
In addition to the sources of power identified by Lindsay J, Sackville AJA considered that sections 56 to 58 of the Civil Procedure Act conferred power to make such an order. At [18]: It would be very strange indeed if this Court lacks power to make a representative order in proceedings in circumstances where such an order is necessary to achieve the objectives stated in ss 56 and 57 of the Civil Procedure Act. There may be a question as to the residual authority of the Court to make representative orders in circumstances covered by Part 10 of the Civil Procedure Act, which establishes an elaborate regime for the institution and conduct of representative proceedings. But Part 10 does not cover the field. For example, following the repeal of UCPR r 7.4, it appears there is no legislation or rule of court of general application in New South Wales which specifically empowers the Court to make an order that a defendant be appointed to represent persons who have the same interest and are necessary parties to the litigation. (UCPR r 7.6 provides for representative orders in proceedings concerning the administration of a deceased estate, property the subject of a trust or the construction of an Act, instrument or other document.) In the absence of such a general provision, ss 56-58 of the Civil Procedure Act provide a source of authority to make an order that one or more defendants (or respondents to an appeal) represent other persons with a common interest in the proceedings.
After reviewing the equitable principles governing representative orders and the terms of section 56 to 58 of the Civil Procedure Act, Sackville AJA gave a non-exhaustive statement as to when representative orders may be made otherwise than under a statute or rules of the court, being where (at [21]): … ● the party seeking the order shows that a class of necessary parties is so numerous that it is not reasonably practicable to join them in the proceedings unless a representative order is made; ● the representative party and the represented class have a common interest in the proceedings; ● the proceedings raise a substantial common issue of law or fact affecting the representative party and all members of the represented group; and ● it is in the interests of justice and consistent with the overriding purpose stated in s 56(1) of the Civil Procedure Act that the order should be made.
Sackville AJA noted that it would be extremely difficult for the Council to join all lot owners and occupiers and serve them in accordance with the rules of Court, including because a number of the lot owners did not have a personal address recorded on the strata roll and insisted on the use of a post office box or a managing agent to receive correspondence, leading his Honour to infer that some of the lot owners resided outside Australia: at [26]. It remained open to any lot owner or occupier to seek leave to be separately joined, or to be permitted to make submissions on an issue of concern, the object of the orders being "to ensure that all necessary parties are before the Court and that the proceedings are conducted fairly and efficiently": at [29].
The regime ordered in Burwood v Ralan was noted by the Court of Appeal in Randren House Pty Ltd v Water Administration Ministerial Corporation [2020] NSWCA 14 without demur: at [30] per Leeming JA. Whilst the defendants submitted that Burwood v Ralan was wrong and, as his Honour was sitting as a single judge, I was not bound to follow the decision, I consider that Sackville AJA was clearly correct.
Brando submitted that an order appointing Mr Shayne as the defendant representing the Sellers was appropriate as, at the time of the Share Sale Agreement, the Sellers all held the same type of share in Marlin, which Brando acquired. Accordingly, all Sellers were said to have the same potential liability and therefore interest in the proceedings. This position was said to be acknowledged in the letter of 8 October 2020 from Johnson Winter & Slattery to the Sellers. For the same reasons as Mr Lancken was appointed as attorney for the Sellers, Mr Shayne should be appointed to represent the Sellers in the proceedings. This was said to be consistent with the mechanism that the parties adopted in clause 14.2 of the Share Sale Agreement, which contemplated that Mr Shayne was authorised to, and would, represent the Sellers with respect to any Claim, including in proceedings commenced by Brando. It would also said to be consistent with how the share sale came about, with the Sellers' interests being represented in negotiations by the defendants. Further, if each of the Sellers were joined, the costs of the litigation would substantially increase and delay would also follow.
The defendants submitted that this was not an appropriate case for such an order to be made in respect of Mr Shayne. There was no explanation of the mechanism by which any liability established on the part of the Sellers through Mr Shayne could bind the Sellers and be enforced against them. Each of the Sellers was a necessary party, being a person whose rights or liabilities will be directly affected by an order that may be made in the action: Jones v Miami Waterfront Developments Pty Ltd [2012] WASC 483 at [12] per Edelman J, citing Pegang Mining Co Ltd v Choong Sam [1969] 2 MLJ 52 per Lord Diplock. The Commercial List Summons claims damages from the Sellers. The Commercial List Statement alleges inter alia that the claims against the Sellers arise out of fraud, wilful default or wilful concealment of the Sellers, including: The Sellers through at least Mr Kerr, Mr Dobromilsky, Mr Lancken and Mr Daffue knew of and deliberately chose not to reveal these accounting deficiencies.
The defendants submitted that this serious allegation could not be determined in the absence of the Sellers as it concerned their knowledge, and potentially the extent of any agency with the named individuals in the allegation. The Sellers associated with Mr Kerr, Mr Lancken and Mr Daffue may have a different interest to Sellers who did not have that association. Elsewhere, the Commercial List Statement referred to the Sellers' knowledge (actual or constructive). Questions of the Sellers' knowledge were at the heart of the case pleaded against them. Whilst the deeming provision in clause 1.2(h) of the Share Sales Agreement (see [22]) provided that, for the purposes of a warranty given "so far as the Sellers are aware", the Sellers are deemed to know or be aware provided certain requirements are satisfied, it was an individual question for each Seller to consider whether those requirements were in fact satisfied. Further, the defendants submitted that the deeming provision did not apply to statutory claims nor have the effect of deeming all Sellers to have engaged in fraud, as alleged in the Commercial List Statement. Nor could the deeming provision derogate from clause 14.2(g), which provided that the Sellers' Representative had no liability in that capacity.
The defendants submitted that, as a matter of practical reality, it would be impossible for Mr Shayne to take instructions and defend these allegations in respect of every Seller. In Dyczynski v Gibson [2020] FCAFC 120; (2020) 381 ALR 1 at [208]-[210], Murphy and Colvin JJ explained that the lawyers acting for the non-party group members owe them a fiduciary duty in relation to their claims. How would lawyers acting for Mr Shayne discharge a fiduciary duty owed to Sellers in relation to allegations of fraud made against all or perhaps only some of them? Why should Mr Shayne and his lawyers have imposed on them the burden of determining whether and to what extent conflicts of interest prevent them representing some or all of the Sellers? The plaintiff's convenience was not a proper basis to impose these burdens on Mr Shayne.
I do not consider it is appropriate to make a representative order in this case as there is no substantial common issue between the Sellers, noting of course that Mr Shayne is not himself a Seller. In particular, Brando's claim against the Sellers is for damages. Unlike Tydeman v Roberts, the personal rights of the Sellers are in jeopardy. Whether Brando's claim against a particular Seller is established will depend upon the acts and omissions of the particular Seller, including the Seller's knowledge of particular matters. The individual nature of Brando's claim for damages against each of the Seller is heightened by the allegation of fraud, wilful default or wilful concealment. I can well imagine that the position of MBA, as the largest Seller, or Sellers associated with the defendants, may stand in a different position to a Seller who owned shares in Marlin through an employee incentive scheme. It may be that the Sellers fall into different classes and may, as these proceedings continue, have a single representative for each class. But until each Seller is notified of these proceedings, it is far too early to say. In the first instance, each Seller must be joined.

EFFECTIVE DATE OF JOINDER

If the court orders that a person be joined as a party, the date of commencement of the proceedings, in relation to that person, is taken to be the date on which the order is made or such later date as the court may specify in the order: rule 6.28, Uniform Civil Procedure Rules. Given clause 9.3 of the Share Sale Agreement (see [25]), joinder of the Sellers at this point in time may prove futile as the Sellers will likely plead that the proceedings are time-barred. Indeed, joinder may be refused if a party sought to be joined has a clear defence of this type: Ritchie's Uniform Civil Procedure NSW at [6.24.45] and the authorities there cited.
Without accepting that any claim against the Sellers so joined would necessarily be time-barred, Brando sought to overcome this potential problem by seeking an order under section 65(2)(b) of the Civil Procedure Act such that the joinder of the Sellers be taken to have had effect as from the date on which these proceedings were commenced. Section 65 of the Civil Procedure Act provides: (emphasis added) 65 Amendment of originating process after expiry of limitation period (1) This section applies to any proceedings commenced before the expiration of any relevant limitation period for the commencement of the proceedings. (2) At any time after the expiration of the relevant limitation period, the plaintiff in any such proceedings may, with the leave of the court under section 64(1)(b), amend the originating process so as - … (b) to correct a mistake in the name of a party to the proceedings, whether or not the effect of the amendment is to substitute a new party, being a mistake that, in the court's opinion, is neither misleading nor such as to cause reasonable doubt as to the identity of the person intended to be made a party, or … (3) Unless the court otherwise orders, an amendment made under this section is taken to have had effect as from the date on which the proceedings were commenced. … (5) This section has effect despite anything to the contrary in the Limitation Act 1969. …
The power to make such an order extends to where the limitation period is contractual rather than statutory: Lloyd Steel Co (Aust) Pty Ltd v Jade Shipping SA (1985) 1 NSWLR 212 at 213 to 214 (Clarke J).
The section is to be liberally construed. In Bridge Shipping Pty Ltd v Grand Shipping SA (1991) 173 CLR 231, McHugh J (with whom Brennan, Deane and Toohey JJ agreed) considered the provision to be a remedial rule to be given a beneficial interpretation. At 260-261 (footnote omitted): It is proper to give it the widest interpretation which its language will permit. It should be interpreted to cover not only cases of misnomer, clerical error and misdescription but also cases where the plaintiff, intending to sue a person he or she identifies by a particular description, was mistaken as to the name of the person who answers that description.
Likewise, Priestley JA (with whom Kirby P and Clarke JJA agreed) held in McInnes v Wingecarribee Shire Council (1987) 10 NSWLR 660 at 668: The courts have adopted, when construing rules of the general kind in question in the present case, an approach which gives the empowering words in such rules as full a meaning as they can reasonably bear in their context. … the preferred approach at the present time is to give courts very ample jurisdiction to grant amendments, including those which as a matter of simple fact allow causes of action to be litigated which could not be litigated if the amendment were not allowed, leaving it to the discretion of the court to decide when justice requires that such an amendment should or should not be granted.
Thus, section 65(2)(b) has two components, being: 1. a subjective component focusing on the nature of the mistake and the evidence of the person who made it as to what they intended, but failed, to achieve by suing the incorrect defendant; and 2. an objective component focusing on how the mistake would have been perceived by those familiar with the issue sought to be agitated in the proceedings, that is, whether those in the 'know' would have readily understood that a mistake had been made and apprehended who the correct defendant was, such that it is just and fair to grant the amendment. The components are essentially the opposite sides of the same coin, identifying reasonably obvious mistakes as to the name of the correct defendant as opposed to substantive legal errors as to who is the correct entity to sue or be sued.
The nature of the mistake which may be cured by section 65(2)(b) was explained by Donaldson LJ in Evans Constructions Co Ltd v Charrington & Co Ltd [1983] 1 QB 810 in respect of the UK equivalent, RSC Ord 20 r 5, at 821: … it is, in my judgment, important to bear in mind that there is a real distinction between suing A in the mistaken belief that A is the party who is responsible for the matters complained of and seeking to sue B, but mistakenly describing or naming him as A and thereby ending up suing A instead of B. The rule is designed to correct the latter and not the former category of mistake. Which category is involved in any particular case depends upon the intentions of the person making the mistake and they have to be determined on the evidence in the light of all the surrounding circumstances. …
This formulation has been endorsed in Australia: Bridge Shipping Pty Ltd v Grand Shipping SA; Lloyd Steel Co (Aust) Pty Ltd v Jade Shipping SA at 218 per Clarke J. As Kirby P described it in Brown v Jammal [1995] NSWCA 62 at pages 7-8: Characterising the mistake may lead the Court to a conclusion that the pleader's error concerns the legal effect of a rule of the common law or of statute by which one person rather than another is liable. If that is the conclusion of the Court the mistake is not in the "name" of the party. True, an incorrect party will have been named. But the misnomer is not the character of the mistake. It is its result. In such a case, the court must dismiss the application. See Smith, above, per Handley JA 7. Confusion as to who was, in law, the proper party is not a foundation for the application of the rule. That application is limited to the case where a mistake has occurred in the naming of the party. See Price v Ferris (1994) 34 NSWLR 704 (CA), 709. Where such mistakes of law occur on the part of the legal advisers of a party, that party will normally not be without redress. Part, at least, of the claim may be recovered in a negligence action against the lawyer responsible for the mistake;
The importance of the evidence of the person who made the mistake was also emphasised by Kirby P in Brown v Jammal at pages 7-8: … it is normal for the court to consider evidence of the intention of the solicitor or other person who filed the supposedly mistaken document. Thus the court will ordinarily examine an affidavit from the solicitor who, if necessary, will be submitted to questioning as to the supposed mistake. However, where, as here, the solicitor is unavailable, the court is not without power. It can examine the suggested mistake from the point of view of the solicitor's file, the solicitor's correspondence and other surrounding circumstances from which inferences may be drawn. … The objective facts must be viewed as a whole. This is because it is the duty of the Court to exercise a discretion having regard to all relevant facts presented to it. … But in every case, it is necessary for the decision-maker to view the totality of the evidence before approaching the task of characterisation required by the rule. …
An example of evidence of a solicitor's mistake is Environinvest Ltd (in liq) v Former Partnership of Webster, White, Gridley, Nairn, Newman, Peters and Miller (2012) 208 FCR 376; [2012] FCA 1307, where the plaintiff's solicitor set out in detail the steps taken to identify the plaintiff's former auditor, against whom the solicitor had been instructed to commence proceedings. The auditor identified by the solicitor was not the correct auditor. There was no doubt that the plaintiff intended to sue its auditor. The solicitor was not cross-examined. Gordon J considered it to be straightforward that the plaintiff intended to sue its auditor and mistakenly believed that the identity of the auditor was the defendant: at [22]. The plaintiff was entitled to amend the pleading to substitute the correct auditor, notwithstanding that limitation issues had since arisen.
A mistake of the relevant type was made in Evans v Charrington. The plaintiff entered into a lease with the defendant. During the currency of the lease, the defendant assigned the reversion to another company, but continued to act as managing agent for the new lessor. The defendant served a notice terminating the lease and the plaintiff commenced proceedings against the defendant rather than the new lessor. On an application to amend the proceedings to substitute the new lessor for the defendant, the plaintiff relied on the evidence of its solicitor, who described how he wrongly concluded from the documents that the landlord was the defendant. Donaldson LJ found on the evidence that the solicitor had made a genuine mistake of a character to which the rule applied.
Another mistake of this type was made in Lloyd Steel Co (Aust) Pty Ltd v Jade Shipping SA where, after a search of the Lloyds' Register, the plaintiff's solicitors commenced proceedings against the defendants in the mistaken belief that the defendants was the carrier. The plaintiff was later informed that the vessel had been chartered by the defendants to others, who were thus the carrier of the goods. Lloyd sought to amend to replace the defendants with the actual carrier, the time-bar in the bill of lading having by then expired. Clarke J considered Donaldson LJ's explanation in Evans v Charrington to be "utterly persuasive", noting at 218: The rule is not limited to those cases where there is a mere misdescription of a particular entity but extends to cover cases where the party intended to be sued is wrongly identified. Clarke J accepted that there had been a mistake in the identity of a party as the carrier was wrongly named.
Another example is McInnes v Wingecarribee, where members of a local environmental society lodged objections to a proposed quarry in Bowral. The secretary of the society lodged an appeal to the Land and Environment Court on behalf of the society but, when he became ill, another member of the society who had not lodged an objection, Mr McInnes, was substituted. However, only objectors had a right to appeal. Leave was sought to substitute Mr and Mrs Clarke, who had lodged objections, on the ground that a mistake had been made, the time for lodging an appeal having since expired. Priestley JA, with whom Kirby P and Clarke JJA agreed, considered that there was a mistake in the name of the party as the intention was to make the appellant a person from the society eligible to appeal; Mr McInnes was thought to be such a person but was not. If this mistake had not occurred, then Mr and Mrs Clarke would have become parties, in a real sense, to the proceedings and they were thus persons intended to be made parties. As Gleeson J later put it in Captiv8 Pty Ltd (in liq) v Bodger [2018] FCA 1801, the mistake in McInnes could be characterised as a mistaken belief as to the identity of the person having the relevant standing to bring the action: at [53].
Where the nature of the objection was known to the council and the developer within the times stipulated by the Environmental Protection Act, the developer was prepared to meet that case, the society took what its solicitor thought were the appropriate steps to have the appeal brought before the Land and Environment Court, the appeal should not fail on a technicality where the developer did not suggest it had taken any steps to its detriment on the faith of there being no maintainable appeal: 668-669. In those circumstances, the Land and Environment Court should, if it thinks it fair in all the circumstances, permit amendments on the appeal to go forward: at 669.
The mistake which does not fall within the section was made in Central Insurance Co Ltd v Seacalf Shipping Corporation (The "Aiolos") [1983] 2 Lloyd's Rep 25. An insurer sued wrongly in its own name when asserting a right of subrogation, believing it was entitled to do so. The Court upheld the refusal of an application to add the names of the insureds. As Oliver LJ explained at 30-31, the mistake was not of a mistaken belief that the person made party to the proceedings fulfilled a particular description, such as that of landlord or insurer: … but a case of an erroneous belief that the plaintiff, because he was in fact what he was thought to be, that is, the insurer, had as a result of that certain legal rights which he did not in fact have. There was therefore no error either as to the name or as to the identity of the party which fell to be corrected, but simply an error of law as to the rights possessed by the correctly identified party.
Likewise in Bridge Shipping Pty Ltd v Grand Shipping SA, McHugh J was not satisfied that the plaintiff had made a mistake in the name of a party. On a review of the statement of claim, his Honour concluded that the plaintiff sued the defendant because it believed that the defendant was the owner of the vessel as opposed to the carrier. The mistake which the plaintiff made was that it believed that it had rights against the owner; this was not a mistake in the name of a party: at 262. His Honour adopted the summary of Lloyd LJ in The "Sardinia Sulcis" and "Al Tawwab" [1991] 1 Lloyd's Rep 201 at 207, being: In one sense a plaintiff always intends to sue the person who is liable for the wrong which he has suffered. But the test cannot be as wide as that. Otherwise there could never be any doubt as to the person intended to be sued, and leave to amend would always be given. So there must be some narrower test. In Mitchell v Harris Engineering the identity of the person intended to be sued was the plaintiff's employers. In Evans v Charrington it was the current landlord. In Thistle Hotels v McAlpine the identity of the person intending to sue was the proprietor of the hotel. In The Joanna Borchard it was the cargo-owner or consignee. In all these cases it was possible to identify the intending plaintiff or intended defendant by reference to a description which was more or less specific to the particular case. Thus if, in the case of an intended defendant, the plaintiff gets the right description but the wrong name, there is unlikely to be any doubt as to the identity of the person intended to be sued. But if he gets the wrong description, it will be otherwise.
Finally, in Sibroll Pty Ltd (in liq) v Mitch Properties Pty Ltd [2007] NSWSC 579, a liquidator commenced proceedings in the name of the company to recover a preference or uncommercial transaction under section 588FF of the Corporations Act. An application by the liquidator to be substituted for the plaintiff was refused where, "The mistake was made after consideration as to think that the right of action was in the company in liquidation rather than the liquidator": at [48] per Young CJ in Eq. Campbell JA agreed with this conclusion in Greenwood v Papademetri [2007] NSWCA 221, "There had been no mistake in the name of a party, merely a mistake concerning a matter of law about whether an action to recover a preference or uncommercial transaction should be brought by the company in liquidation or by the liquidator": at [77].

Application to the case at hand

As to the mistake which is said to have been made, there is no evidence of any mistake by Brando's legal representatives. Rather, according to Mr Solomons (as communicated to Mr Slater), at all times since issue of the Claim Notice until Johnson Winter & Slattery's letter of 21 April 2021, Brando believed that, under the Share Sale Agreement, Mr Shayne could be sued in any proceeding as representative for all the Sellers. Further, Brando believed and intended that the Sellers be parties to the proceedings through Mr Shayne as their representative. Further, and perhaps more controversially: Brando was not told by JWS, C2C, any representative of C2C, or any Seller that Mr Shayne could not be sued as representative for all the Sellers in accordance with the [Share Sale Agreement] or that the Sellers were required to be joined individually to the proceedings.
However, it was not the responsibility of the defendants or their solicitors to tell Brando who it could, or should, sue, nor how it ought sue. To the extent that Brando sought, by its evidence or submissions, to blame the defendants or their solicitors for its present difficulties, I do not accept those submissions. Johnson Winter & Slattery's correspondence did not put a syllable wrong.
Brando submitted that it was plain that it intended to sue the Sellers through the medium of the Sellers' Representative. To the extent that Brando has irregularly commenced the proceedings by naming Mr Shayne as a representative, then there is a mistake in the name of the party to the proceeding which it should be permitted to correct effective from the commencement of the proceedings to avoid any risk that a contractual limitation period may apply.
For their part, the defendants accepted that Brando intended to sue the Sellers but submitted that Brando's mistake was the type to which section 65(2)(b) did not apply, being "an error of law as to the rights possessed by the correctly identified party": Central Insurance per Oliver J at 31. Brando's mistake was in respect of Mr Shayne's authority to represent the Sellers in legal proceedings. Brando made an error as to the legal status and rights of the named defendant, not the name of the defendant.
As to the subjective component, the evidence before the Court as to the nature of the mistake is slight. That Mr Solomons held a mistaken belief that, under the Share Sale Agreement, Mr Shayne could be sued in any proceeding as representative for the Sellers, is inconsistent with the interlocutory relief sought in the Commercial List Summons, which envisaged that an order was needed from the Court pursuant to sections 56, 57 and 58 of the Civil Procedure Act to enable Brando to proceed in this fashion. If Mr Solomons did hold this belief, then Brando's legal representatives did not disabuse him of this notion. I infer that any mistake was mutual.
As to the objective component, there is no doubt that Brando intended to sue the Sellers. There is no doubt that those in the 'know' would have apprehended who the correct defendants were.
The real issue is whether the mistake was of the kind which may be cured by section 65(2)(b) of the Civil Procedure Act, bearing in mind that the provision is a remedial rule to be given a beneficial interpretation. The mistake which may be gleaned from the Commercial List Summons and Commercial List Statement is that, by reason of Mr Shayne's appointment as the Sellers' Representative under the Share Sale Agreement and, in particular, clause 14.2(e)(iv), the appropriate procedure was to join Mr Shayne as first defendant and, as the Commercial List Statement explained: Consistently with his status under the Agreement as the representative of all Sellers, he is joined to these proceedings with the intent that Brando will immediately seek an order that he be appointed a representative defendant for all Sellers for the purpose of these proceedings.
That is, the mistake was as to practice and procedure rather than any liability which Mr Shayne was thought to have for and on behalf of the Sellers. The pleadings did not suggest that the Sellers' Representative was himself liable or that Brando had legal rights against him. Brando's intention was to have the Court appoint Mr Shayne as a representative of the Sellers. Mr Shayne was thought to be a suitable person - presumably having regard to the legislation and case law including Burwood v Ralan - but he was not. The position is similar to McInnes v Wingecarribee: Brando had a mistaken belief as to the identity of the person against whom the action against the Sellers could be brought.
As White J put it more eloquently in Austin Australia Pty Ltd (in liq) v A & G Scaffolding & Rigging Service Pty Ltd [2007] NSWSC 1077; (2007) 25 ACLC 1363 at [24]: The intention of the party seeking the amendment is relevant in two respects. First, the use of the incorrect name must be because of a mistake (Re Nos 55 and 57, Holmes Rd, Kentish Town [1958] 2 All ER 311 at 316 and 318). Secondly, once it is established that there was a mistake, then the party making the mistake must always have intended that the party to be named was the party who was to seek to assert the right (Alexander Mountain & Co (suing as a firm) v Rumere Ltd [1948] 2 KB 436), or was the party against whom the right was sought to be asserted (Rainbow Spray Irrigation Pty Ltd v Hoette [1963] NSWR 1440). Here, the effect of Brando's mistake is that the Sellers are misdescribed by the imposition of Mr Shayne as their representative.
Where Brando's claim was known to the Sellers' Representative by the Claims Notice within the times stipulated by the Share Sale Agreement; where the Sellers have since been notified of the Claim, so far as the Sellers' Representative has been able, by providing a copy of the Claims Notice; where the mistake was of a procedural nature and reasonably obvious; and where the mistake has been addressed soon after commencement of these proceedings, justice requires that the Sellers be joined from the date of commencement of these proceedings.
Brando should nonetheless pay the costs of this application and the defendants' costs thrown away by reason of the amendment. Brando has come to the Court asking for an indulgence arising from its mistake. The defendants strongly opposed the application but it cannot be said that they resisted too strongly: Mass (Australia) Pty Ltd v R & B Crane & Rigging Pty Ltd (2008) 2 ACTLR 154; [2008] ACTSC 23 at [33] per Master Harper cf A & M Short Pty Ltd v Prestige Residential Marketing Pty Ltd [2005] NSWSC 872; (2005) 54 ACSR 760 at [37] per Young CJ in Eq; Suzlon Energy Ltd v Bangad (2011) 196 FCR 259; [2011] FCA 921 at [38]-[41] per Rares J. The indulgence has been granted but the defendants should have their costs.

ORDERS

For these reasons, I make the following orders: 1. Pursuant to section 65(2)(b) of the Civil Procedure Act 2005 (NSW) and rule 6.24(1) of the Uniform Civil Procedure Rules 2005 (NSW), order that the 71 persons identified in Schedule 1 to the Commercial List Summons be joined to these proceedings as defendants, such amendment to have effect from the commencement of these proceedings. 2. Order the plaintiff to pay the defendants' costs, if any, occasioned by the amendment. 3. Order the plaintiff to pay the defendants' costs of the motion filed on 12 May 2021. 4. List the matter for further directions at 9.45 am on 27 August 2021 in accordance with the Protocol under which Hammerschlag J is presently operating.

schedule 1 Marlin Brands Australia Limited Conchord Pty Ltd as Trustee for the Neo Camelot No 2 Trust Artio Trustees Limited as nominee for A N Shell Investments Pty Ltd as Trustee for The A N Shell Family Trust Artio Trustees Limited as nominee for 19 Investments Pty Ltd as Trustee for the 19 Investments Trust Artio Trustees Limited as nominee for Nicholas Dobromilsky Artio Trustees Limited as nominee for Helena Josephine Skira Gorter Artio Trustees Limited as nominee for Espin House Pty Ltd as Trustee for the RAF Family Trust Artio Trustees Limited as nominee for Stabilis Capital Limited Artio Trustees Limited as nominee for Sheroda Novis Trogmedia Pty Ltd as trustee for The Kerr Family Trust Thomas James Yuille Kimpton Diane Smith-Gander C2C Ventures 2 Malta Limited Russell Turner C2C Capital Pty Ltd Angrem Holdings Limited Cambridge Capital Limited Artio Trustees Limited as nominee for each of the C2C Parties: Artio Trustees Limited as nominee for Adam Shell Artio Trustees Limited as nominee for Adam Pietruskiewicz Artio Trustees Limited as nominee for Wojciech Dománski Artio Trustees Limited as nominee for Piotr Krawczyk Artio Trustees Limited as nominee for Katarzyna Marchlewska-Sieczek Artio Trustees Limited as nominee for Tomasz Potapczuk Artio Trustees Limited as nominee for Krzysztof Caruk Artio Trustees Limited as nominee for Mateusz Gawałkiewicz Artio Trustees Limited as nominee for Marika Michorowska Artio Trustees Limited as nominee for Agata Niesyto Artio Trustees Limited as nominee for Marek Pietrzak Artio Trustees Limited as nominee for Anna Wawrzyńczak-Palynyczak Artio Trustees Limited as nominee for Christine Camilleri Artio Trustees Limited as nominee for Patrick Debattista Artio Trustees Limited as nominee for Glorianne Xuereb Artio Trustees Limited as nominee for Nissim Ohayon Artio Trustees Limited as nominee for Nicola Schembri Artio Trustees Limited as nominee for Georgina Wells Artio Trustees Limited as nominee for Edmund Williams Artio Trustees Limited as nominee for Nischal Baijnath Artio Trustees Limited as nominee for Chris Beart Artio Trustees Limited as nominee for Kaizen Capital Limited Artio Trustees Limited as nominee for Rainbow Tree Investments Limited Artio Trustees Limited as nominee for Zane Davies Artio Trustees Limited as nominee for Robyn De Moor Artio Trustees Limited as nominee for Silvertree Limited as the Trustee for the Euphrates Trust Artio Trustees Limited as nominee for Andrew Elcock Artio Trustees Limited as nominee for Joseph Fine Artio Trustees Limited as nominee for Ramya Govinder Artio Trustees Limited as nominee for Lara Grieve Artio Trustees Limited as nominee for Silvertree Limited as the Trustee for the Huvahendhoo Trust Artio Trustees Limited as nominee for Lindsay Griffin Artio Trustees Limited as nominee for Ewa Harcourt-Wood Artio Trustees Limited as nominee for Waseem Hassen Artio Trustees Limited as nominee for Sally Hellings Artio Trustees Limited as nominee for Yaseen Jhaveri Artio Trustees Limited as nominee for Sally Kitley Artio Trustees Limited as nominee for Christo Kok Artio Trustees Limited as nominee for Abacus Investments Limited Artio Trustees Limited as nominee for David Kriel Artio Trustees Limited as nominee for Vinay Martin Artio Trustees Limited as nominee for Ashleigh May Artio Trustees Limited as nominee for Tertius Mynhardt Artio Trustees Limited as nominee for Silvertree Limited as the Trustee for the Momente IOM Trust Artio Trustees Limited as nominee for Silvertree Limited as the Trustee for the DewDrop Trust Artio Trustees Limited as nominee for Silvertree Limited as the Trustee for the Sonnekus Trust Artio Trustees Limited as nominee for Pieter Strauss Artio Trustees Limited as nominee for SKI Enterprises Limited Artio Trustees Limited as nominee for Elsabe Tromp Artio Trustees Limited as nominee for Johan Van Schalkwyk Artio Trustees Limited as nominee for Elizabeth Van Wyk Artio Trustees Limited as nominee for Rudi Visser Artio Trustees Limited as nominee for Silvertree Limited as the Trustee for The Oakhill Trust Artio Trustees Limited as nominee for Keegan Ziady

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 10 August 2021

Australian Consumer Law Australian Securities and Investments Commission Act 2001(Cth)

(Cth), the Australian Securities and Investments Commission Act 2001(Cth)

Credit Act 1984(NSW)

Civil Procedure Act 2005(NSW)ss 56, 57, 58, 64, 65, Pt

Uniform Civil Procedure Rules 2005(NSW)rr 6.24, 6.28, 7.4

der of AHEPA NSW Inc [2019] NSWSC 1329 Re Ryde Ex-Services Memorial & Community Club Ltd (administrator appointed) [2015] NSWSC 226 Sibroll Pty Ltd (in liq) v Mitch Properties Pty Ltd [2007] NSWSC 579 Suzlon Energy Ltd v Bangad (2011) 196 FCR 259; [2011] FCA 921 The "Sardinia Sulcis" and "Al Tawwab" [1991] 1 Lloyd's Rep 201 Trustees Executors & Agency Co Ltd v Urquhart (1896) 21 VLR 713 Tydeman v Roberts [1985] 2 Qd R 144 Texts Cited: Ritchie's Uniform Civil Procedure NSW Category: Principal judgment Parties: Brando Aus Holdco Pty Ltd (Plaintiff) Gary Shayne as representative of the persons identified in Schedule 1 (First Defendant) Gregory Kerr (Second Defendant) Bradley Lancken (Third Defendant) Johannes Daffue (Fourth Defendant) Representation: Counsel: Mr JAC Potts SC / Ms B Ng (Plaintiff) Mr D McLure SC / Mr G O'Mahoney (First, Third and Fourth Defendants) No appearance for second defendant

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