(d) Is there an absolute requirement for the BP companies to be joined as parties to the proceeding, before the final hearing?
45 In their written submissions the plaintiffs conceded that the question whether it is necessary to join the BP companies as parties to the proceeding was before the Court and could be decided. It has been fully argued. In my opinion the answer does not depend upon any evidence beyond what is already before the Court.
46 The ex parte orders made on 4 September 2000 were not orders targeting the position of any particular creditor. They were orders granting an extension of time to the plaintiffs to bring actions under s 588FF against any creditor of the DML companies. In July 2001 I held, having regard to some evidence that included correspondence between the plaintiffs and BP Holdings, that the BP companies had an interest in the outcome of the application of 4 September 2000, and a legitimate expectation that they would have the opportunity to make submissions before the Court's orders were made. I did not take the view that it was necessary that they be joined as parties before the orders of 4 September 2000 were made, but only that they be notified of the application and given the opportunity to appear and make submissions.
47 The position has now changed. Once I have made orders to set aside the ex parte orders insofar as they affect the BP companies, the ex parte orders will no longer apply with respect to any recovery proceedings against the BP companies. Thereafter, the relief sought by the plaintiffs in the present proceeding will become, in effect, relief by way of orders expanding the scope of the existing extension of time orders so that they come to apply to the BP companies. Thus, the principal relief sought in the proceeding will come to be relief targeting the position of the BP companies. That would become plain if the plaintiffs sought to amend the originating process consequent upon my orders setting aside the extension of time orders as regards the BP companies. An application to amend in this manner would be necessary, as I have already observed, if the case were to proceed further.
48 The question is whether the plaintiffs may proceed to a final hearing at which such relief, specifically affecting the BP companies, is sought, without the BP companies being parties to the proceeding. The issue is important in principle, and has significant practical implications. Generally speaking, unless a person has been joined as a party to a proceeding, that person has no right to adduce evidence, cross-examine, appeal, obtain discovery, issue subpoenas, or seek costs in the proceeding.
49 The joinder of parties is dealt with in Part 8 rule 8 (1) of the Supreme Court Rules, which is in the following terms:
'Where a person who is not a party-
(a) ought to have been joined as a party; or
(b) is a person whose joinder as a party is necessary to ensure that all matters in dispute in the proceedings may be effectually and completely determined and adjudicated upon,
the Court, on application by him or by any party or of its own motion, may order that he be added as a party and make orders for the further conduct of the proceedings.'
50 The rule is closely similar to rules of Court applying in other British Commonwealth countries, and so decisions in those other jurisdictions are generally applicable here. The wording of the rule does not give any direct guidance as to when the rights or interests of a person are so much at stake in the proceeding that the person ought to be joined as a party. One must turn to the case law for assistance.
51 Some guidance was given by Viscount Maugham in London Passenger Transport Board v Mosscrop [1942] AC 332. That was a case where the only orders sought were declaratory in nature. His Lordship said (at 445):
'… the persons really interested were not before the Court, for not a single member of the Transport Union was, nor was the Union itself, joined as a defendant in the action. It is true that in their absence they were not strictly bound by the declaration, but the courts have always recognised that persons interested are or may be indirectly prejudiced by a declaration made by the Court in their absence, and that except in very special circumstances, all persons interested should be made parties … .'
52 The notion that persons 'interested' or 'really interested' should be joined as parties to the proceeding was refined by the Privy Council in Pegang Mining Co Ltd v Choong Sam (1969) 2 MLJ 52. In 1931 an agreement relating to tin mining rights in Malaya was made between three parties, referred to in the judgment as 'the company', 'the sub-lessees' and 'the sub-sub-lessee'. The company held mining leases granted by the State, and had sub-let to the sub-lessees, but the company was dissatisfied with the manner in which the sub-lessees were working the mines. The 1931 agreement provided that the sub-lessees would grant sub-sub-leases to the sub-sub-lessee, who was already mining adjacent parcels of land. The agreement contemplated the future acquisition by the company of mining leases over other parcels of land in the vicinity, which were to become subject to the same arrangements.
53 In 1959 the company acquired mining leases over new parcels of land and the sub-sub-lessee claimed that the company was obliged under the 1931 agreement to grant sub-leases to the sub-lessee, who was in turn obliged to grant sub-sub-leases to the sub-sub-lessee. When the company refused to do so, the sub-sub-lessee brought a proceeding against the company and the sub-lessees for specific performance of the 1931 agreement. Although they were defendants, the sub-lessees supported the plaintiff sub-sub-lessee at the hearing. The Court at first instance held that the 1931 agreement did not impose any obligation on the company to grant sub-leases of the disputed parcels of land, or upon the sub-lessees to grant sub-sub-leases of that land.
54 At the time of the action the sub-sub-lessee had entered into a contract with Choong Sam ('the contractor') by which the contractor undertook to work the mines on the land subject to existing sub-sub-leases, for a fee of 85.5% of the proceeds of sale. The contract obliged the sub-sub-lessee to use her best endeavours to obtain mining rights over other parcels of land contemplated by the 1931 agreement and to grant the contractor the right to work mines on the new land. The contractor and the sub-sub-lessee agreed that the contractor would be solely responsible for the costs of the litigation and would have the final decision whether or not to appeal.
55 The sub-sub-lessee appealed but subsequently, in breach of her agreement with the contractor, she entered into an agreement with the company whereby in consideration of a lump sum payment she undertook to withdraw the appeal, and acknowledged that the company's obligations to her had been fully and completely discharged. The contractor applied by notice of motion for an order that he be substituted for the sub-sub-lessee as appellant. The Federal Court of Malaysia agreed to do so and an appeal, by leave, by the company to the Privy Council was dismissed.
56 Lord Diplock, delivering the advice of the Board, referred to the proposition that a party may be added if its legal interests will be affected by the judgment in the action but not if its commercial interests only would be affected (at 55-6). He said (at 56):
'The cases illustrate the great variety of circumstances in which it may be sought to join an additional party to an existing action. In their Lordships' view one of the principal objects of the rule is to enable the Court to prevent injustice being done to a person whose rights will be affected by its judgment by proceeding to adjudicate upon the matter in dispute in the action without his being given an opportunity of being heard. To achieve this object calls for a flexibility of approach which makes it undesirable in the present case, in which the facts are unique, to attempt to lay down any general proposition which could be applicable to all cases. … While their Lordships agree that the mere fact that a person is likely to be better off financially if a case is decided one way rather than another is not a sufficient ground to entitle him to be added as a party, they do not find the dichotomy between 'legal' and 'commercial' interests helpful. A better way of expressing the test is: will his rights against or liabilities to any party to the action in respect of the subject matter of the action be directly affected by any order which may be made in the action?'
57 In that case the contractor's rights against the sub-sub-lessee under the contract between them would be directly affected by the dismissal of the sub-sub-lessee's appeal. In the opinion of the Privy Council, the contractor was entitled to be joined as a party even though he had a mere licence to enter and work for minerals, rather than a leasehold interest.
58 Lord Diplock's test was applied by the Full Federal Court in News Ltd v Australian Rugby Football League Ltd (1986) 64 FCR 410. In that case proceedings were brought by News Ltd and associated companies ('Super League') against the Australian Rugby Football League (ARL) and the NSW Rugby League ('the League') and others. The ARL and the League had conducted the rugby league competition in New South Wales for many years, and the clubs which participated in the competition had signed a competition contract for 1995 and a commitment agreement pledging loyalty for five years. Super League wished to establish a rival competition and in 1995, they arranged for a substantial number of top players and coaches to sign contracts with new entities associated with some of the clubs ('the rebel clubs').
59 By their proceeding, Super League alleged that the commitment agreements should be set aside under ss 45 and 46 of the Trade Practices Act 1974 (Cth). The ARL, the League and the clubs still loyal to the League ('the loyal clubs') cross-claimed against the rebel clubs for breach of the rebel clubs' contractual duties under their contracts to participate in the 1995 competition and under their commitment agreements, and for breach of the rebel clubs' alleged fiduciary duties in relation to transfer of club assets to the Super League venture. They also cross-claimed against Super League for inducing the rebel clubs' breaches of their contractual and fiduciary duties.
60 The players and coaches who had signed up with the rebel clubs were not parties to the proceeding. However, the solicitors for the ARL wrote letters to them, advising them of the orders that the ARL was seeking by its cross-claim in the proceeding, and suggesting that they should seek their own legal advice on the implications of any of those orders. After the judge at first instance made orders in favour of ARL and the League, Super League appealed, arguing (inter alia) that since the players and coaches had not been joined as parties, the cross-claim was improperly constituted and the orders should be set aside.
61 The Full Federal Court referred with approval to Lord Diplock's test in the Pegang Mining case and said (at 525):
'The test involves matters of degree, and ultimately judgment, having regard to the practical realities of the case, and the nature and value of the rights and liabilities of the third party which might be directly affected. The requirement that a third party's rights against, or liability to, any party to the proceeding be directly affected is an important qualification that recognises that many orders of a court are likely to affect other people to a greater or lesser extent. … Where, before trial, a question arises whether a necessary party has been joined, attention should be directed to the orders sought in the proceeding. It is the effect of the orders upon the third party that must be determined. The test is not whether the conduct of the third party is raised in the pleadings between the existing parties, or whether the third party is a party to a contract, the meaning or effect of which is pleaded as a matter relevant to the ascertainment of the rights between those parties.'
62 The Full Court held that insofar as the remedies sought at the trial had been confined to damages for unlawful inducement of breaches of players' and coaches' contracts with the ARL and the League, the players and coaches who had signed up with the rebel clubs were not necessary parties who ought to have been joined. This was because an award of damages against Super League would not directly affect the rights and liabilities of the players and coaches. However, insofar as the relief sought in the cross-claim included injunctive relief and declarations relating to the Super League venture with the rebel clubs, the position was different. In particular, the trial judge had made a declaration that the Super League companies held in trust for the League all their rights pursuant to any contracts which any of them had with any Super League player or coach; and had made injunctive orders to require the Super League to notify every player and coach aligned with the rebel clubs that Super League would require them to return to the clubs for which they had previously worked, and to restrain the Super League from paying players or coaches who failed to do so. The orders affected the players' and coaches' rights against, or liabilities to, their Super League employers, restricting their freedom to choose the employer for whom they would work. The orders affected the obligations and rights of the players and coaches in a substantial and direct way (at 527).
63 As to the effect of the defendant giving the players and coaches notice of the proceeding, their Honours said (at 526):
'In our opinion the notice given to the players before trial does not, and could not, extend the jurisdiction of the Court to make orders which offend the test stated in Pegang Mining . Absent an application for joinder by a defendant, or by a third party who claims to be directly affected by the proposed orders, it is for the party prosecuting the proceedings to choose who are necessary parties to enable the Court to make the orders sought. Generally speaking, to permit that party to transfer to others who might be affected by the outcome of the proceedings the responsibility of deciding whether or not they should apply to be joined could be productive of uncertainty and inconvenience.'
64 The Full Federal Court's decision in the Super League case was followed by the Court of Appeal of New South Wales in Wentworth v Wentworth (executor of the estate of the Late GN Wentworth) [2000] NSWCA 350. The appellant was the plaintiff in a proceeding under the Family Provision Act 1982 (NSW) against the first respondent. The Court ordered the first respondent to pay the appellant's costs of that proceeding, subject to some exceptions, and the appellant lodged a bill of costs for taxation. During the course of the taxation of the bill of costs, the appellant invited the taxing officer to disqualify himself on the ground that his conduct gave rise to a reasonable apprehension of bias. He refused to do so. Subsequently the appellant sought an order setting aside the taxing officer's determination. Santow J made the order, holding (on 6 February 1998) that the taxing officer ought to have disqualified himself.
65 At the time of that decision, no order was sought against the taxing officer, and he was not a party to the proceeding, although he had been sent copies of the transcript and the relevant applications. The appellant sought an order for costs against the taxing officer, who was later joined to the proceeding for the purpose of hearing the application for costs against him. Santow J declined to make that order and the appellant appealed to the Court of Appeal, arguing that the Court had the power to make a costs order against the taxing officer under Part 52A rule 4 (5) (b) of the Supreme Court Rules.
66 The Court of Appeal held that there was no basis for Santow J to make a costs order against the taxing officer, because the taxing officer had not been a party to the proceeding at the time when the decision as to his disqualification had been made. Heydon JA (with whom Davies AJA agreed) referred to the Full Federal Court's statement that where a question of joinder of parties arises before trial, attention should be directed to the orders sought in the proceeding. He pointed out (at paragraph 149) that if Santow J had made costs orders against the taxing officer, he would have had standing to seek leave to appeal against them and to contend that the cost orders lacked any basis, on the ground that he was not party to the processes which led to Santow J's findings of 6 February 1998, on which any costs order would have depended.
67 Heydon JA held, again applying the Super League case, that the taxing officer could also have argued that the cost orders were defective because of his non-joinder, which had not been cured by communications from time to time advising him of the proceeding. He found that Part 52A rule 4 (5) (e) did not justify or mandate the non-joinder of the taxing officer, and did not avert the consequences which otherwise flowed from that non-joinder (at paragraph 166).
68 It is interesting that in Heydon JA's opinion, there was no requirement that the taxing officer be joined as a party to the proceeding under Part 8 rule 8 (1) prior to determination of the question whether he should have disqualified himself for reasonable apprehension of bias, because at that stage no orders were sought against the taxing officer (at paragraph 148). Clearly the taxing officer's interests (such as his interest in protecting his reputation) were at stake at that point, but Heydon JA's reasoning reaffirms the proposition, stated by Lord Diplock in the Pegang Mining case, that the question is not whether a person's commercial or other interests would be affected by the orders sought in the proceeding, but whether the orders would directly affect the rights or obligations of the person. The taxing officer had completed his determination before the application was made to set his decision aside, and at that stage an order setting the decision aside would not affect his rights or obligations with respect to future conduct of the taxation or otherwise.
69 In the present case, once I set aside the ex parte orders, it will be necessary for the plaintiffs to seek orders for extension of time specifically directed to the position of the BP companies. The BP companies will have the right to rely on the time limit in s 588FF (3) by way of defence to any action by the plaintiffs under s 588FF, unless the plaintiffs are successful. In my opinion, this right is analogous to the contractual rights of the contractor in the Pegang Mining case, which would have been directly affected by the proposed orders in that proceedings, and the rights of the players and coaches in the Super League case, which would have been directly affected by some of the orders proposed in the cross-claim in that case. Indeed, this is a stronger case than those cases, because the orders which the plaintiffs would seek could not be articulated except by reference to the position of the BP companies. The BP companies are in a position analogous to the position of the taxing officer against whom an order for costs was sought in the Wentworth case, except that here the BP companies are seeking to preserve their existing position against orders that would take away their rights, rather than to protect themselves against the imposition of a liability by the proposed orders.
70 It can be said that the right of the BP companies is conditional, the condition being that the Court does not extend the time under s 588FF (3) (as to such a conditional right, see Oates v Attorney-General (Cth) (1998) 156 ALR 1). However, if there is a condition, it is akin to a condition subsequent rather than a condition precedent; the right of the BP companies to rely on the time limit may be defeasible (if a timely application for extension is made) but presently in existence.
71 In my judgment of July 2001 I took the view that the BP companies had an interest and a legitimate expectation sufficient to warrant that they should have been given notified before my orders of 4 September 2000 were made, but I did not say that they ought to have been joined as parties to the proceeding at that stage. If one examines the orders sought and made on 4 September 2000, as required by the approach of the Full Court in the Super League case, they affected the interests of all creditors including the BP companies, but they did not directly affect the rights of the BP companies. Now, however, where the only substantive relief that could be sought would be an order for extension of time with respect to the BP companies alone, the orders would in terms affect their position and their rights. At this stage, they have more than a legitimate expectation to be notified of the application for relief. The relief, being directed against them, could not be granted unless they were joined as parties.
72 The Pegang Mining , Super League and Wentworth cases are consistent, in my view, with some decisions considered in my reasons for judgment of 17 July 2001, namely Re Eastern Cleaning Services Pty Ltd (1978) 2 NSWLR 278 and Dahozo Pty Ltd v Oz-US Film Productions Pty Ltd (1997) 24 ACSR 739. The plaintiffs sought to rely on Kioa v West (1995) 159 CLR 550, especially at 582 (per Mason J), for the proposition that something less than joinder would be sufficient, but in my opinion that case addresses an administrative process in quite different circumstances from the present case.
73 In their written submissions, the BP companies reviewed the authorities to support their contention that the plaintiffs could not continue unless the BP companies were joined as parties to the proceeding, and then they said (paragraph 23 of their submission dated 31 July 2001):
'The exceptional jurisdiction available to the Court to make orders against non-parties is one that must necessarily be sparingly exercised. The jurisdiction is one which is beneficial and analogous to equitable relief and, as such, ought not be used to support unreasonable and inequitable applications.'
74 They cited Hospital Products Ltd v United States Surgical Corporation (1985) 156 CLR 41 at 149, per Dawson J, in support of this proposition, but in oral argument they conceded on reflection, that the Hospital Products case was irrelevant. Nevertheless counsel for the plaintiffs seized upon this proposition and urged the Court to bring the proceeding to a final hearing without joining the BP companies as parties, on the basis that the Court would be able to invoke the 'exceptional jurisdiction' to make orders against the BP companies after the case had been finally heard. Counsel's research has not put much flesh on the bones of the 'exceptional jurisdiction'. The inherent power of the Court may permit it to grant leave to a non-party to intervene: see Fernance v Nominal Defendant (1989) 17 NSWLR 710, at 718, where Gleeson CJ set out a quotation from the unreported judgment of McLelland J in Wenham v General Credits Ltd (Supreme Court of New South Wales, 16 December 1988, unreported). The Court has jurisdiction to make an order for costs against a non-party in certain circumstances, under Part 52A rule 4 (5) (a provision discussed in the Wentworth case, para 162ff). And the inherent jurisdiction may well permit orders of other kinds to be made against a non-party in exceptional circumstances.
75 However, counsel have not referred me to any case in which an exceptional jurisdiction has been asserted over a non-party who clearly would have an absolute defence to any claim for relief if he or she were joined as a party to the proceeding. In my opinion it would be an abuse of the inherent jurisdiction for the Court to use it to sidestep a limitation defence. In the present case, the assertion of exceptional jurisdiction over the BP companies in the manner envisaged by the plaintiffs' submission could only have that purpose and effect.
76 There is, therefore, no basis for the Court to exercise jurisdiction over the BP companies, by making an order for extension of time directly affecting them in a proceeding to which they are not parties.