Brookfield v Davey Products Pty Ltd

REASONS FOR DECISION 1 On 1 November 1993 the applicants instituted proceedings in the Court against the respondents. The present issue concerns only the first applicant, Ian Walter Brookfield (Mr Brookfield) and the first respondent, Davey Products Pty Ltd. In this judgment for reasons that will become apparent I will refer to the entity originally incorporated under the name Davey Products Pty Ltd as Davey/Yevad. On 8 February 1996, a judge of the Court dismissed the application of the applicants against the respondents. It was then ordered that Mr Brookfield pay the costs of "the first respondent", namely Davey/Yevad, of the proceedings. An appeal to the Full Court of this Court was subsequently dismissed, and an application for special leave to appeal to the High Court was refused. On 19 December 1997, the order for costs made on 8 February 1996 was varied to read: "The first applicant to pay the first -named respondent's costs specified in the sum of $380,493.82." 2 At all times, Davey/Yevad has been described in the proceedings in the heading and otherwise under the description "Davey Products Pty Ltd". In fact, on 6 March 1995 it changed its name to Yevad Products Pty Ltd. On the same day, a company called Domali Pty Ltd (Domali) changed its name to "Davey Products Pty Ltd". Those name changes occurred following the sale by Davey/Yevad of its business to Domali. Despite that name change, the name of Davey/Yevad was not changed in the proceedings. 3 By notice of motion dated 14 June 2002, Davey/Yevad now seeks an order: "That the judgments of this Court in this action dated 8 February 1996 and 19 December 1997, whereby judgment was granted in favour of the first respondent and whereby the first respondent's costs were fixed in the amount of $380,493.82 be amended by correcting the name of the first respondent to Yevad Products Pty Ltd (ACN 004 813 192)." As would be expected, the ACN number of Davey/Yevad has remained constant wherever it has been identified in documents filed in the proceedings from time to time. The application is opposed by Mr Brookfield. 4 The evidence on the application is the affidavit of Stephen John White sworn on 14 June 2002 and the affidavit of Mr Brookfield sworn on 3 July 2002. No other evidence was adduced by either party on the hearing of this application. In particular, Davey/Yevad did not proffer any explanation for why its name in the proceedings had not been changed to Yevad Products Pty Ltd following the change of its name on 6 March 1995. The parties made written and oral submissions, and supplementary written submissions following the hearing. 5 The circumstances giving rise to the present application are readily apparent. On 10 July 2001 Davey/Yevad issued a bankruptcy notice against Mr Brookfield in respect of the order for costs payable by him to it, plus interest. The bankruptcy notice described the creditor as "Davey Products Pty Ltd". It was served on 18 March 2002. On 9 April 2002, Mr Brookfield applied under s 41 of the Bankruptcy Act 1966 (Cth) to set aside the bankruptcy notice. In the application, he described Davey/Yevad as "Yevad Products Pty Ltd (formerly Davey Products Pty Ltd)". The grounds of his application included issues as to the identity of the creditor, namely that "the party that is applying for the bankruptcy notice is not the same party that is named in the judgment" and that "the party that is named in the judgment was removed from the proceedings six months before the trial started". There are other similar grounds. There are further grounds upon which he has applied to set aside the bankruptcy notice, concerning the existence of the claimed indebtedness based upon the order of 19 December 1997, but it is not necessary to refer to them in detail. Davey/Yevad wishes to avoid any complications caused by the issue raised by Mr Brookfield as to the identity of his creditor by the order sought in the present motion. Ultimately, even if some order such as that sought in the present motion is granted, it is a matter for the Magistrate or Registrar to determine whether his claim that the party applying for the bankruptcy notice is not the same party as that named in the judgment has any substance. 6 Mr Brookfield's affidavit refers to extensive material upon which, he contends, no order should be made as sought. In essence, that is because he claims that Davey/Yevad consciously did not cause its name in the proceedings to be changed to Yevad Products Pty Ltd following its change of name on 6 March 1995 so as to mislead the Court, and himself, as to its true identity. In the concluding part of his affidavit he says: "… the granting of the bankruptcy notice would not only be unfair and unjust, it would amount to a gross miscarriage of justice. I believe the respondent made a conscious decision to mislead the Court and myself as to its true identity …" because the parent company of Davey/Yevad, namely McPherson's Ltd, was at the time in a poor financial position and needed unencumbered access to the proceeds of the sale of the business of Davey/Yevad to continue to operate. He claims that disclosure of its change of name at the time would have led to him applying for a Mareva injunction in the proceedings prior to the trial, and the withholding of those proceeds of sale to the significant detriment of McPherson's Ltd. 7 I am not satisfied that Davey/Yevad deliberately withheld disclosure of its change of name from the Court or from Mr Brookfield, or publicly, for any such reason, or indeed that it deliberately withheld its change of name at all. 8 The evidence indicates that the parent company of Davey/Yevad at all times has been McPherson's Ltd. Its half-yearly report for the six months to 31 December 1994, dated 14 March 1995, reports on an extensive program of group net debt reduction by the sale of assets. It specifically then mentioned the sale of "the Davey pump business". The annual report of McPherson's Ltd for the year ended 30 June 1995 disclosed net shareholders' funds of $20.8 million, net debt of $47.8 million, and an operating loss for that year of $2.2 million. It disclosed that the operating loss was in part contributed to by no longer being in receipt of the "Davey Pumps profit contribution". McPherson's Ltd then apparently resolved upon a capital reconstruction. An explanatory memorandum of 6 May 1996 reported that it was trading profitably, but that past losses had resulted in substantial accumulated losses, so it was proposed to re-organise the share capital essentially by "writing off share capital" against a portion of those accumulated losses, and then consolidating every four shares into one new share. The writing off of the share capital was proposed to be done by reducing the par value of the shares from 50 cents to 5 cents, and the cancelled paid up capital applied to reduce the accumulated losses. A special meeting of the company passed appropriate resolutions on 31 May 1996, and the share reduction was approved by an order of the Supreme Court of Victoria made on 7 June 1996. Other information revealed that the business of Davey/Yevad was sold on 3 March 1995 for a sum in excess of $28 million. I do not consider that the material which Mr Brookfield has introduced supports the conclusion that Davey/Yevad or its parent company McPherson's Ltd would have been so sensitive to the risk of the Court making a Mareva order in the claim by Mr Brookfield and Septic Products Australia Pty Ltd (In Liquidation), even if that order were in a substantial amount, to support the inference for which Mr Brookfield contends. 9 Moreover, his contention is inconsistent with the disclosure by Davey/Yevad and its parent McPherson's Ltd of the fact of the sale of the business of Davey/Yevad in March 1995. As noted, in its half-yearly report of 14 March 1995, for the six month period to 31 December 1994, McPherson's Ltd reported of the sale of the assets of the Davey pumps business on 3 March 1995. It made an announcement to the Australian Stock Exchange Ltd on 1 March 1995 reporting on the sale of all of the assets of Davey/Yevad to G.U.D. Holdings Ltd (of which Domali is a subsidiary) to be settled on 3 March 1995. In its annual report for the year ended 30 June 1995, McPherson's Ltd again reported upon the fact of having disposed of the Davey pumps business. In an affidavit filed in the proceeding and sworn on 30 July 1995, Dallas Wilsdon, the state manager of Davey/Yevad, deposed to Davey/Yevad through its parent having sold the business of Davey/Yevad and the name "Davey Products" on 3 March 1995. Those communications were all relatively contemporaneous with the transaction itself. 10 In the fifth list of documents of Davey/Yevad, filed on 10 May 1999 (in response to a motion of Mr Brookfield in the proceedings subsequent to the judgments referred to), and verified by Alan Fahy, a director of Davey/Yevad, he deposed to the change of name to Yevad Products Pty Ltd having been made formally on 6 March 1995 following the sale of its business to Domali. He deposed to Davey/Yevad not then trading, and not having traded since the sale of its business. 11 That material contradicts the contention of Mr Brookfield that Davey/Yevad concealed its change of name from the public, or from Mr Brookfield, or from the Court. 12 There were a number of other matters which Mr Brookfield sought to ventilate concerning the quality of the discovery given by Davey/Yevad from time to time. They are matters which have been ventilated earlier in these proceedings, but in my view do not have direct relevance to the present application. The fact is, as Mr Brookfield acknowledged, his claim was at all times against Davey/Yevad, and notwithstanding the sale of the business of Davey/Yevad on 3 March 1995, continued to be against Davey/Yevad. Had his application ultimately been successful, he would have sought to enforce the judgment against Davey/Yevad (and not against Domali, even though Domali had by then changed its name to Davey Products Pty Ltd). The entity against which his claim was made at all times, including at the time it was dismissed, was Davey/Yevad. The entity in respect of which the orders for costs were made against him was at all times Davey/Yevad. 13 In my judgment, the precise order sought by Davey/Yevad is not necessary. There is no reason to change the terms of the judgments as to costs given on 8 February 1996 or on 19 December 1997. Those orders as to costs were in favour of "the first respondent", which clearly was Davey/Yevad. It is the title to the proceedings which, in reality, Davey/Yevad wishes to change. It is not a circumstance where it is appropriate or necessary to apply the slip rule under O 35 r 7(3) of the Federal Court Rules. There was no clerical mistake in the judgment, and no error from an accidental slip or omission. The judgments give effect to the intention of the Court. Nor, in my judgment, is it necessary or appropriate to exercise the power which the Court has under O 35 r 7(2)(e) to vary either of those judgments and orders after the orders have been entered where the orders do not reflect the intention of the Court. The intention of the Court is plain. It is to order costs to be paid by Mr Brookfield to Davey/Yevad. As I have found, it was clearly understood by Mr Brookfield as being an order made in favour of the first respondent in the proceedings, which at all times was the entity Davey/Yevad, notwithstanding that Davey/Yevad had changed its name from Davey Products Pty Ltd to Yevad Products Pty Ltd on 6 March 1995. 14 In my judgment the present circumstances simply result from the misnomer of the first respondent Davey/Yevad in the title of the proceedings following that change of name. Section 161(2) of the Corporations Act 2001 (Cth) in force from 15 July 2001 provides: "Any legal proceedings that could have been continued or begun by or against the company in its former name may be continued by or against it in its new name." That section had a corresponding antecedent in the Corporations Law. 15 But Mr Brookfield and Davey/Yevad at all times understood the entity which was the true first respondent. There can, therefore, be no prejudice to Mr Brookfield. There is no question of a statute-barred claim being revived, or of any change in the real identity of the party. In those circumstances, I regard it as appropriate to order that from 6 March 1995 the title of the proceedings should be amended by substituting for the words "Davey Products Pty Ltd" the words "Yevad Products Pty Ltd". In Metropolitan Oils Pty Ltd v Fortron Industrial Lubricants Pty Ltd (1986) 11 FCR 335, Toohey J made such an order, albeit in a case where the misnomer occurred from the start of the proceedings. I will not refer in detail to his Honour's reasons for that decision but I respectfully adopt them. As his Honour found, in my view such an order can appropriately be made under O 13 r 2(1), (2) and (3) of the Rules. It does not involve the addition of a party. In that case the order was made even though the misnomer of the party occurred from the time when the proceedings were commenced, and at the time of his Honour's order the proceedings were already statute barred. That did not inhibit the making of the order in those circumstances. In this case, it is clearly a case of misnomer from the time of the change of name on 6 March 1995, and was so understood by Mr Brookfield. Beazley J in Smithkline Beecham (Australia) Pty Ltd v Minister for Family Services (1993) 45 FCR 587 adopted a similar approach at 595-599. As there is no question of substituting another person as a party by the order by which I propose to make, it is not necessary to consider the full extent of the power contained in O 13 r 2(4) of the Rules: see Bridge Shipping Pty Ltd v Grand Shipping SA (1991) 173 CLR 231. 16 I accordingly order that the title to the proceedings from 6 March 1995 be amended to substitute for the words "Davey Products Pty Ltd" the words "Yevad Products Pty Ltd". The first respondent Davey/Yevad will have to effect those amendments on the Court file. I dispense with compliance with the Rules to the extent that they require Davey/Yevad to amend Mr Brookfield's copies of those documents or to serve upon him fresh copies of any document so altered. Hereafter, the first respondent's name in the title of the proceedings will be "Yevad Products Pty Ltd". 17 The first respondent Davey/Yevad should pay the costs of the notice of motion dated 14 June 2002. Its failure to alter its name following the change of name on 6 March 1995 led to the need for the motion. It should also pay to Mr Brookfield any costs thrown away by reason of the amendments to be made. Given the stage of the proceedings, and that Mr Brookfield appeared in person to oppose the motion, I presently do not see that he will in fact be able to recover any such costs by reason of this costs order other than any properly incurred disbursements in relation to the motion. That is, however, a matter for the taxing officer. I certify that the preceding seventeen (17) numbered paragraphs are a true copy of the Reasons for Decision herein of the Honourable Justice Mansfield.