Coleman v Australasian Fencing Pty Ltd

The Bannerton Project

1. In respect of the Bannerton Project, it is alleged that in December 2017, before ACJV Holdings was incorporated, Colemans Fencing (I interpolate to note that it is not evident from the pleading to which entity this refers) and Australasian Fencing, on behalf of ACJV Holdings, together submitted a tender to UGL Engineering Pty Ltd (UGL) for a subcontract to perform works for the Bannerton Solar PV Project (the Bannerton Project) (see [9] of the amended statement of claim); that, by agreement (the Bannerton Agreement) dated 20 December 2017 between UGL and Mr Barnes trading as Australasian Fencing, Mr Barnes agreed to perform fencing works for the Bannerton Project (see [10] of the amended statement of claim); and, relevantly, that UGL paid ACJV Holdings in respect of the Bannerton Project under the Bannerton Agreement by making payments totalling $477,276.45 into Australasian Fencing's bank account (with an amount remaining to be paid at the conclusion of the defects liability period on 19 September 2018) (see [12] of the amended statement of claim). It is alleged that the net profit from the Bannerton Project was $137,289.27 (see [13] of the amended statement of claim).
2. The plaintiffs have alleged that, in respect of the Bannerton Project, Mr Barnes and/or Australasian Fencing have paid Mr Coleman the sum of $10,000 and Mr Mesic the sum of $8,000 (see [14] of the amended statement of claim).
3. It is alleged that, in breach of the Joint Venture Agreement, in respect of the Bannerton Project, Mr Barnes and/or Australasian Fencing have failed to pay: Mr Coleman the sum of $50,407.28; Mr Mesic the sum of $14,278.73; and any amount to those parties in respect of the $12,237.86 to be paid when the defects liability period concluded (see [15] of the amended statement of claim).
4. Thus, the allegation appears to be that, in breach of the Joint Venture Agreement, Mr Barnes and/or Australasian Fencing (into whose bank account it is alleged the payments were made) has retained and failed to pay the plaintiffs their respective entitlements to a share of the profits from the Bannerton Project.

The Karadoc Project

1. In respect of the Karadoc Project, it is alleged that, by agreement (the Karadoc Agreement) dated 9 March 2018 between Energy Solutions Pty Ltd trading as Beon Energy Solutions (Beon) and ACJV Holdings, ACJV Holdings agreed to supply and install fencing for the Karadoc solar farm (the Karadoc Project) (see [16] of the amended statement of claim); that Beon paid ACJV Holdings under the Karadoc Agreement by making payments totalling $511,409.80 into Australasian Fencing's bank account (see [18] of the amended statement of claim); and that the profit from the Karadoc Project was $185,061 (see [19] of the amended statement of claim). (Pausing here, the plaintiffs note that the defendants in their amended defence admit that $516,809.80 was paid into the bank account of Australasian Fencing in respect of the Karadoc Project (see the amended defence at [18])).
2. It is alleged that Mr Barnes and/or Australasian Fencing have paid Mr Coleman the sum of $10,000 and Mr Mesic the sum of $7,000 (see [20] of the amended statement of claim); and that, in breach of the Joint Venture Agreement, Mr Barnes and/or Australasian Fencing have failed to pay: $83,277.45 to Mr Coleman and $27,759.15 to Mr Mesic (see [21] of the amended statement of claim).
3. Thus, the plaintiffs' allegation again appears to be that, in breach of the Joint Venture Agreement, Mr Barnes and/or Australasian Fencing has retained and failed to pay the plaintiffs their respective entitlements to a share of the profits (this time from the Karadoc Project).

The Numurkah Project

1. Finally, in respect of the Numurkah Project, it is alleged that, on or around 13 November 2017 (before ACJV Holdings was incorporated), Mr Coleman proposed to Mr Graham Black of Downer Group that Colemans Group and Australasian Fencing together provide fencing to the Numurkah solar farms (the Numurkah Project) (see [22] of the amended statement of claim); and that, as between Mr Coleman, Mr Mesic, Mr Barnes and Australasian Fencing, it was agreed that the Numurkah Project was to be an ACJV Holdings' project (see [23] of the amended statement of claim).
2. It is alleged that, on 21 December 2017, Mr Barnes, on behalf of ACJV Holdings, provided a quote to Rizaldy Guintu of Downer Group in respect of the Numurkah Project (see [24] of the amended statement of claim); that from 21 December 2017 to September 2018 certain steps were taken in relation to the Numurkah Project (see [25] of the amended statement of claim); and that, on or around 25 September 2018, Mr Coleman was informed that Colemans Group and Australasian Fencing had been successful in obtaining the Numurkah Project (see [26] of the amended statement of claim); which project has been finalised (see [27] of the amended statement of claim).
3. It is alleged that, in breach of the Joint Venture Agreement and/or the agreement pleaded at [23] of the amended statement of claim, none of Mr Coleman, Colemans Group, Mr Mesic or Marcaid has received any payment from Mr Barnes or Australasian Fencing in respect of the Numurkah Project (see [28] of the amended statement of claim).
4. The plaintiffs contend that the evidence served by them in these proceedings establishes that the profit generated in respect of the Numurkah Project is in the total amount of $224,764.28 (referring to the affidavit sworn 12 December 2019 by Mr Mesic at [40]). They contend that their respective entitlements to the profits of the Numurkah Project are as follows: $98,896.28 to Mr Coleman (40% of the profit) and $37,086.11 to Mr Mesic (15% of the profit) (see their submissions at [18]).
5. The plaintiffs have foreshadowed further amendments to their pleading (see at [28] to [30] of the draft further amended statement of claim annexed to their written submissions), which they say are in order to bring the pleading into line with the evidence in relation to the profits for the Numurkah Project.
6. In essence, therefore, as I read the pleadings, the nub of the dispute is that the plaintiffs maintain that they have not been paid their share of the profits of the three projects in which they say the Joint Venture has engaged (to which they allege they are entitled pursuant to the terms of the alleged Joint Venture Agreement); and that one or both of the defendants (the alleged parties to the Joint Venture Agreement) is or was obliged to make the payments due to them in respect of their agreed share of the profits of the Joint Venture.
7. The relief claimed by the plaintiffs in these proceedings includes: damages in respect of the Bannerton Project; damages in respect of the Karadoc Project; a declaration that all funds received by the defendants in respect of the Numurkah Project are held on trust for the benefit of ACJV Holdings pursuant to the Joint Venture Agreement; a declaration that the profit received from the Numurkah Project is to be distributed between Mr Coleman, Mr Mesic and Mr Barnes in the proportions specified in the alleged Joint Venture Agreement; and damages in respect of the Numurkah Project.

Summary dismissal/strike-out application

1. By letter dated 14 May 2020, the defendants' solicitors, Gilchrist Connell, wrote to the plaintiffs' solicitors, The Law Man, identifying perceived deficiencies in the amended statement of claim and inviting the plaintiffs to take appropriate steps to rectify the deficiencies. That letter met with a response (by letter dated 15 May 2020 from The Law Man), which included the statements that: … The claim by the plaintiffs is for breach of contract. The relief claimed is damages for breach of contract and for declarations that the funds received by the defendants (Mr Barnes and Australian Fencing [sic]) in respect of the Numurkah Project is [sic] held by them for the plaintiffs pursuant to the contract and the profits are to be distributed in accordance with the parties' contractual entitlement.
2. The defendants then filed their notice of motion seeking summary dismissal or the striking out of the amended statement of claim.

Relevant principles

1. The relevant principles in relation to an application for summary dismissal pursuant to r 13.4 of the UCPR and/or to strike out pleadings pursuant to r 14.28 of the UCPR are well known and were not here in dispute.
2. In summary, the parties here accept that the power summarily to dismiss proceedings is to be exercised sparingly and with exceptional caution (see, for example, General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125 at 129-130; [1964] HCA 69 per Barwick CJ; Young v Richmond Valley Council [2020] NSWSC 514 at [19] per Darke J). Reference was made to the statement by Emmett JA in State of New South Wales v Williams [2014] NSWCA 177, with which Macfarlan JA and Simpson J (as her Honour then was) agreed, in the context of striking out a defence, that (at [71]): 71. The requirement for establishing that there is no triable issue is a demanding one and the power to strike out a pleading on the basis that it discloses no reasonable defence, or is an abuse of process, should be exercised only in plain and obvious cases. The power should not be exercised in cases of doubt or difficulty or where the pleading raises a debatable question of law. Once it appears that there is a real issue, whether of fact or law, and that the rights of the parties depend upon it, a court should not dismiss a defence raising such an issue, either on the basis that no reasonable defence is disclosed or as an abuse of process. [Citations omitted]
3. It is also noted that leave to replead ought ordinarily be granted unless the Court takes the view that the proceeding is frivolous or vexatious or no reasonable cause of action is disclosed (see, for example, Steiner v Strang [2016] NSWSC 9 at [26]-[27], [49] per Lindsay J; S1 v The Trustees of Marist Brothers [2016] NSWSC 970 at [51]-[52] per Harrison AsJ) or that the case sought to be put is hopeless or manifestly groundless (see, for example, Wentworth v Rogers (No 5) (1986) 6 NSWLR 534 at 536 per Kirby P, as his Honour then was; Commonwealth Bank of Australia v ZYX Learning Centres Ltd [2014] NSWSC 1676; (2014) 103 ACSR 476 at [52], [254]-[256] per Hamill J; Galati v Deans (No 2) [2018] NSWSC 1813; (2018) 133 ACSR 516 at [97]).

Issues on present application

1. The basis on which objection is taken by the defendants to the plaintiffs' pleaded claim is, as noted above, twofold: first, they maintain that Mr Coleman and Mr Mesic are not the proper plaintiffs; second, they maintain that not all the necessary parties have been joined. I consider each issue in turn.

Whether Mr Coleman and Mr Mesic are proper plaintiffs

1. In relation to the first of those bases, the parties submit as follows.

Defendants' submissions

1. The defendants contend that, on the material facts pleaded, the proper plaintiff is ACJV Holdings.
2. They invoke the rule in Foss v Harbottle (1843) 67 ER 189 (Foss v Harbottle), to the effect that a shareholder in a company who is aggrieved by the loss of value of his or her shares in that company has (subject to certain strict exceptions) no right to commence proceedings against an alleged tortfeasor against the company who is said to have caused that diminution in value (referring also to Sutherland v GHR Accounting (No 3) [2017] NSWSC 373 at [24] per Button J). Reference is also made in this context to Ekes v Commonwealth Bank of Australia [2014] NSWCA 336; (2014) 313 ALR 665 at [150] per Bathurst CJ (Beazley P, as Her Excellency then was, and Emmett JA agreeing) and to Chen v Karandonis [2002] NSWCA 412 at [35] where Beazley JA (Heydon JA, as his Honour then was, and Hodgson JA agreeing) cited with approval observations made by Cumming-Bruce, Templeman and Brightman LJJ, as their Lordships then were, in Prudential Assurance Co Ltd v Newman Industries Ltd (No 2) [1982] 1 Ch 204. It is noted that the general law exception to the rule in Foss v Harbottle has been abolished by s 236(3) of the Corporations Act 2001 (Cth).
3. The defendants say that the principle cannot be avoided by pleading a cause of action separate and distinct from the cause of action the company might have; that the question is not whether the duties owed to the company and the shareholder are the same but, rather, whether the loss claimed is truly reflective of the company's loss; and that this is a question of substance, not form (citing Thomas v D'Arcy [2005] 1 Qd R 666; (2005) 52 ACSR 609 at [18] per McPherson JA, [29]-[31], [37]; Ballard v Multiplex Ltd [2008] NSWSC 1019; (2008) 68 ACSR 208 at [41] per McDougall J; Vplus Holdings Pty Ltd v Bank of Western Australia Ltd [2012] NSWSC 1327; (2008) 91 ACSR 545 at [32] per Stevenson J).
4. The defendants say that the amended statement of claim is clear in that it pleads that each of the projects was entered into by or on behalf of ACJV Holdings. Further, it is noted that, in respect of the Bannerton Project and the Karadoc Project, it is alleged that the respective clients "paid" the money not to ACJV Holdings but into the account of Australasian Fencing.
5. It is submitted that the loss alleged by Mr Coleman and Mr Mesic is properly characterised as a loss to ACJV Holdings; and that Mr Coleman and Mr Mesic have no right to maintain proceedings against Australasian Fencing or Mr Barnes for a loss suffered by ACJV Holdings.

Plaintiffs' submissions

1. The plaintiffs do not cavil with the authorities in support of the proposition that, when a company suffers a loss or damage, the cause of action in respect of that loss vests in the company and not its shareholders; but they maintain that those authorities are not relevant to the present dispute because the plaintiffs do not contend that ACJV Holdings suffered loss or damage due to non-payment of any entitlements under the contracts for each of the three Projects.
2. Rather, the plaintiffs say that their pleaded cause of action is for loss suffered by them by reason of the breach by the defendants of the Joint Venture Agreement entered into between the plaintiffs and the defendants (i.e., for loss arising due to the defendants failing to distribute to them profits in accordance with the Joint Venture Agreement). The plaintiffs point out that ACJV Holdings is not a party to the Joint Venture Agreement; and they say that they do not seek any relief against ACJV Holdings (and, therefore, that there is no utility in joining it to the proceedings, particularly in circumstances where it is controlled by Mr Barnes).
3. The plaintiffs say that they do not allege that ACJV Holdings received any funds under the three alleged joint venture projects (the Bannerton Project, the Karadoc Project and the Numurkah Project). They say that the invoices issued by the defendants in respect of each of the Bannerton Project, the Karadoc Project and the Numurkah Project directed moneys payable under the contracts for each to be paid into accounts in the names of: NJ Barnes trading as Australasian Fencing, in respect of the contract in relation to the Bannerton Project (the Bannerton Contract); NJ Barnes trading as Australasian Fencing (other than one invoice upon which the nominated account was in the name of ACJV Holdings Pty Ltd), in respect of the contract in relation to the Karadoc Project (the Karadoc Contract); and NJ Barnes trading as Australasian Fencing, in respect of contract in relation to the Numurkah Project (the Numurkah Contract).
4. The plaintiffs' position is that ACJV Holdings was not a party to the Bannerton Contract. Although they allege that ACJV Holdings was a party to each of the Karadoc Contract and the Numurkah Contract, the plaintiffs say that money paid pursuant to those contracts was paid into the bank account of Australasian Fencing. They say that there is no suggestion by either party that the money was paid to or held by ACJV Holdings. Accordingly, the plaintiffs maintain that they are the proper plaintiffs in respect of their claim that the defendants have breached the Joint Venture Agreement.

Defendants' reply submissions

1. Insofar as the plaintiffs say that ACJV Holdings was a party to each of the Karadoc Contract and the Numurkah Contract and do not plead that those contracts were entered into by or on behalf of the Joint Venture Agreement, the defendants say that the plaintiffs cannot maintain their claims in respect of the Karadoc Project or the Numurkah Project as the proper plaintiff is ACJV Holdings.
2. The defendants say that the plaintiffs' submission that the money was not paid to or held by ACJV Holdings is irrelevant to the determination of the proper plaintiff in this proceeding. Furthermore, it is noted that the plaintiffs do plead that ACJV Holdings was paid, albeit that it is alleged that the payment was made into the bank account of Australasian Fencing, under the Bannerton Project and the Karadoc Project.
3. Insofar as the plaintiffs submit that the relevant cause of action is for breach of the Joint Venture Agreement, the defendants say that this omits critical material facts which have been pleaded by the plaintiffs. The defendants emphasise that the pleaded claim in the amended statement of claim is that each of the projects was entered into by, or on behalf of, ACJV Holdings. The defendants say that therefore ACJV Holdings is the proper plaintiff to the cause of action and the proceedings ought to be dismissed.
4. As to the plaintiffs' proposed draft further amended statement of claim, the defendants take issue with the fact that the plaintiffs have not filed an application seeking leave to file and rely upon the proposed pleading. The defendants' position is that until such an application is made, heard and determined, their present application ought to be determined with reference to the amended statement of claim filed 28 December 2018 (in this connection, I interpolate to note that the present application has been so determined).
5. In any event, it is said that even if the plaintiffs sought and obtained leave to file and serve the proposed pleading, ACJV Holdings would continue to be the proper plaintiff for the Karadoc Project and the Numurkah Project, as the plaintiffs' proposed pleading provides as follows: that the Karadoc Project was between Beon and ACJV Holdings; that Mr Coleman, Mr Mesic, Mr Barnes and Australasian Fencing "agreed that the Numurkah Project was to be an ACJV Holdings' project"; and that, on 21 December 2017, Mr Barnes, on behalf of ACJV Holdings, provided a quote in respect of the Numurkah Project. The defendants say that the plaintiffs do not plead that the Karadoc Project or the Numurkah Project was entered into by or on behalf of the Joint Venture Agreement; and therefore that, on the pleaded facts, ACJV Holdings continues to be the proper plaintiff.
6. In respect of the Bannerton Project, it is noted that in the proposed pleading there is the allegation that, by agreement dated 20 December 2017 between UGL and Mr Barnes trading as Australasian Fencing, Mr Barnes agreed to perform fencing works for the Bannerton Project. It is noted that the plaintiffs do not plead that the Bannerton Project was entered into on behalf of the Joint Venture Agreement but, rather, that the negotiations with the client for the Bannerton Project were conducted "on behalf of ACJV Holdings" and regular financial updates and relevant documents were stored in ACJV Holdings' "Dropbox" (and that Ms Barnes established a Dropbox for ACJV Holdings) (see, for example, at [11] of the proposed pleading). The defendants say that the inference from those pleaded facts is that it was agreed to be an ACJV Holdings project.
7. Insofar as the plaintiffs seek to remove the prior alleged material facts that ACJV Holdings tendered for the Bannerton Project and was paid in respect of the Bannerton Project, the defendants say that, once those facts are removed, the proposed pleading does not disclose a cause of action which would entitle the plaintiffs to damages in respect of the Bannerton Project.
8. The defendants submit that the proposed amended pleading does not alter the plaintiffs' case in such a way that entitles the plaintiffs to damages; and that it follows that there is no utility in the plaintiffs being granted leave to rely upon the proposed pleading and the proceedings ought be summarily dismissed or struck out.

Determination

1. Other than insofar as the relief claimed in the amended statement of claim includes a declaration (see prayer 3) that moneys received by the defendants in relation to the Numurkah Project are held on trust for the benefit of ACJV Holdings (pursuant to the Joint Venture Agreement between the parties to the proceeding) and a declaration (see prayer 4) as to the distribution of profits in respect of the fencing for the Numurkah Project, I agree that the plaintiffs are proper plaintiffs to maintain the causes of action sought to be brought by them.
2. That is because the causes of action are for damages or loss suffered as a result of an alleged breach by the defendants of a contract alleged to be entered into between them and the plaintiffs (not for breach of any contract by ACJV Holdings nor for any loss that may or may not have been sustained by ACJV Holdings in respect of the fact that moneys were paid into Australasian Fencing's bank accounts or otherwise in relation to the Joint Venture Agreement). Put differently, what is here alleged is that the defendants agreed with the plaintiffs that a joint venture would be entered into which would involve the incorporation of a company in which the plaintiffs would have shares and through which the plaintiffs would receive a specified share of the profits of the Joint Venture; and they complain that this has not occurred.
3. The alleged contractual promise was not a promise made by ACJV Holdings, nor was it a promise made to ACJV Holdings. While it may be noted that it is not clear as to how it was anticipated that a promise under the Joint Venture Agreement as to the distribution of profits paid to the joint venture company would be enforceable (in circumstances where profits earned by the joint venture company would presumably be paid to that company and then distributed in accordance with that company's constitution or any shareholders' agreement), I see no reason in principle why the plaintiffs cannot maintain a claim for breach of contract as a result of a failure by the defendants to perform a contractual promise that the joint venture company would distribute profits in a particular way (at least to the extent that the defendants or either of them were or was in a position to cause the company to do so).
4. In this connection (though not expressly pleaded), insofar as the plaintiffs' case is for breach by the defendants of the alleged contract, it seems at least arguable that the claim is one that could encompass an allegation of breach of an implied contractual duty to cooperate in the performance of the contract. In this context, I note what was said by Griffith CJ in Butt v M'Donald (1896) 7 QLJ 68, then Chief Justice of Queensland, in considering the observations of Lord Blackburn in Mackay v Dick (1881) 6 App Cas 251 (and see also, particularly, Mason J, as his Honour then was, in Secured Income Real Estate (Australia) Ltd v St Martins Investments Pty Ltd (1979) 144 CLR 596; [1979] HCA 51 and more recently, for example, Nettle JA, as his Honour then was, in McMahon v National Foods Milk Ltd (2009) 25 VR 251; [2009] VSCA 153).
5. I do not see the claims sought to be brought by the plaintiffs as being in substance a claim by ACJV Holdings (say, for recovery of funds due to it but paid to Australasian Fencing or Mr Barnes' bank accounts). Again, I see this as a claim by the plaintiffs for loss suffered because the other parties to the alleged joint venture arrangements have not performed what (it is alleged) is required to permit the plaintiffs to have the benefit of their contractual bargain. It may well be that the claim could be better pleaded (rarely is there a pleading that could not to some extent be improved, in my experience) but the complaint here made is not that there are pleading deficiencies (nor that the defendants do not understand the case put against them) but that the plaintiffs are not the proper plaintiffs. For the foregoing reasons, on the breach of contract claims, I disagree.
6. With that said, where there is force to the defendants' complaints is in relation to the claim as to funds being held on trust for ACJV Holding (which is a claim for the company, not its shareholders, to pursue) and the claim for a declaration as to the distribution of profits (at least insofar as that purports to be a claim as to the distribution by the company of profits, in which case it would be a claim to be pursued against the company, which has not been joined to the proceedings).
7. Therefore, I would strike out the claims for relief in prayers 3 and 4 but otherwise would not summarily dismiss the proceedings.

Whether all required parties have been joined to the proceedings

1. The second issue is as to whether the plaintiffs (assuming, as I have held them to be, that they are the proper plaintiffs to maintain the claims pleaded in the amended statement of claim) have failed to join all necessary parties to the proceedings (the defendants here pointing to r 6.20 of the UCPR, which requires that, unless the court orders otherwise, all persons jointly entitled to the same relief must be joined as parties in any claim for that relief that is made by any one or more of them).
2. Strictly speaking, this may not arise in light of my ruling on the first of the two issues but, in case I am wrong on that issue (or it was intended that this be raised as a further, and not true alternative, complaint), I deal with it as follows.

Defendants' submissions

1. It is submitted that, on the pleading as presently drafted, ACJV Holdings would be entitled to the same relief as the plaintiffs. It is noted that the purpose of r 6.20 of the UCPR is to protect a defendant against the risk of multiple proceedings (citing Conridge v Lorenzo Flammia Trading as Manna & Flammia Solicitors [2013] NSWSC 498 at [24] per McCallum J, as her Honour then was).
2. The defendants accept that proceedings are not defeated merely because of the non-joinder of any person as a party to the proceeding (citing r 6.23 of the UCPR) but nevertheless, they invoke what was said by Young CJ in Eq, as his Honour then was, in obiter in Churchill v Connolly [2004] NSWCA 212 (Churchill) (at [35]-[36]), by reference to Kenyan authority (Lochab Bros v Kenya Furfural [1985] Law Reports of the Commonwealth, Commercial 737, 750) to the effect that a deliberate non-compliance with the rules may entitle the judge to dismiss the proceedings (his Honour there distinguishing between a "mere" non-joinder and a case where it is necessary to have all holders of the right before the Court for the Court to be able to adjudicate on the issue and there referring to a similar decision that was reached by the Court of Appeal for East Africa in Qureshi v Patel (1951) 18 EACA 1).
3. The defendants here submit that a person who is directly affected by orders sought in a proceeding is a necessary party and that the obligation to join that person rests upon the plaintiff or the person applying for those orders; and they say that joinder, not notice, is the default position (citing Ross v Lane Cove Council (2014) 86 NSWLR 34; [2014] NSWCA 50 at [51], [54] per Leeming JA).
4. Reference is made in this context to John Alexander's Clubs Pty Ltd v White City Tennis Club Ltd (2010) 241 CLR 1; [2010] HCA 19 at [131] where the High Court (French CJ, Gummow, Hayne, Heydon and Kiefel JJ, as her Honour then was) accepted the proposition that where a Court is invited to make, or proposes to make, orders directly affecting the rights or liability of a non-party, the non-party is a necessary party and ought to be joined (citing Victoria v Sutton (1998) 195 CLR 291; [1998] HCA 56 at [76]-[81]; News Ltd v Australian Rugby Football League Ltd (1996) 64 FCR 410 at 523-525; [1996] FCA 870).
5. The defendants submit that, on the facts pleaded in the amended statement of claim, any orders for the distribution of profits from the projects would directly affect the rights of ACJV Holdings because the plaintiffs plead that each of the contracts was entered into by or on behalf of ACJV Holdings.
6. In addition, it is noted that the amended statement of claim appears to suggest that Colemans Group and Marcaid may be entitled to payment from the profits of the Numurkah Project. (I interpose to note that the plaintiffs here expressly disavow any such claim.)
7. In sum, complaint is made that the plaintiffs have not joined ACJV Holdings, Coleman Group or Marcaid as parties to the proceedings. The defendants say, on the basis that the plaintiffs have failed to comply with r 6.20 of the UCPR, that the proceedings ought be dismissed or struck out.

Plaintiffs' submissions

1. The plaintiffs say that it is neither appropriate nor necessary for ACJV Holdings to be a party to the proceedings in circumstances where ACJV Holdings: was not a party to the Joint Venture Agreement but, rather, was incorporated pursuant to the terms of the Joint Venture Agreement; and is not alleged to have received into any account in its name moneys paid in respect of the Bannerton Project, the Karadoc Project and/or the Numurkah Project.
2. The plaintiffs say that they are not seeking any relief from ACJV Holdings; instead they are seeking orders that the defendants distribute moneys in their possession or under their control to the plaintiffs in accordance with the plaintiffs' contractual entitlements. Therefore, it is said that ACJV Holdings is not directly affected by the orders sought in the proceedings and it is not a necessary party to the proceedings.
3. Further, the plaintiffs say that the defendants know the claim that they are required to meet; and that the plaintiffs' case discloses a reasonable cause of action (being a breach of the terms of the Joint Venture Agreement), raises a real issue upon which the rights of the parties depend and is neither manifestly groundless nor is it doomed to fail. Accordingly, it is submitted that neither summary dismissal nor striking out of the pleadings is appropriate.

Determination

1. Once the claim for relief that would affect the company (being the claim as to the declaration in respect of distribution of profits) or in which it would have an interest (being the claim that funds are held on trust for it) goes (as, I have held it should - see [59] above), there does not seem to me to be any basis on which it can be said that ACJV Holdings is a necessary (or, indeed, appropriate) party to be joined to the proceedings, nor would there be any apparent utility in its joinder. True it is that ACJV Holdings might perhaps itself have a claim against Mr Barnes and/or Australasian Fencing if moneys payable to the company were in some way diverted from it or if those moneys have been improperly be retained by the recipients of the funds, but that is an issue between those entities (not a dispute necessarily to be determined in the context of the present dispute). Nor do I see the basis on which it is suggested that Colemans Group or Marcaid should be joined to the proceedings having regard to the plaintiffs' disavowal of any suggestion that those entities might be entitled to a share of the profits of the Numurkah Project.
2. Furthermore, I note that I would not have struck out the proceeding had I been of the view that ACJV Holdings was a necessary party. I would simply have directed that it be added as a party since, even though it was a deliberate choice that it not be joined, it was a choice made on a reasonably arguable view that such joinder was not necessary (and the plaintiffs have made clear that if that view be wrong then they would apply to join ACJV Holdings as a defendant to the proceedings).
3. In those circumstances, it is not necessary to consider the desirability or otherwise of following the approach in the Kenyan authority (or the perceived misunderstanding in those cases of the East African authority) to which Young CJ in Eq referred in his Honour's obiter comments in Churchill.

Proposed further amendments

1. Finally, the plaintiffs have proposed the following further amendments to the pleading in their draft further amended statement of claim: [9] In December 2017, before ACJV Holdings was incorporated, Colemans Fencing and Australasian Fencing, together submitted a tender to UGL Engineering Pty Ltd (UGL) for a subcontract to perform works for The Bannerton Solar PV Project (Bannerton Project). … [12] UGL made payments in respect of the Bannerton Project under the Bannerton Agreement totalling $477,276.45 into Australasian Fencing's or Mr Barnes' bank account being the bank account in the name of N J Barnes trading as Australasian Fencing ... … [18] Beon made payments under the Karadoc Agreement totalling $511,409.80 into Australasian Fencing's bank account or Mr Barnes' bank account being the bank account in the name of N J Barnes trading as Australasian Fencing. … [28] Downer Group made payments in respect of the Numurkah Project under the Numurkah Agreement totaling $736,288.17 into an account in the name of N J Barnes trading as Australasian Fencing. [29] The net profit from the Numurkah Project was $224,764.28. [30] In breach of the Joint Venture Agreement, in respect of the Bannerton Project, Mr Barnes and/or Australasian Fencing have failed to pay: a. Mr Coleman the sum of $98,896.28; b. Mr Mesic the sum of $37,086.11. [31] In breach of the Joint Venture Agreement, neither Mr Coleman, nor Mr Mesic have [sic] received any payment from Mr Barnes or Australasian Fencing in respect of the Numurkah Project.

Defendants' position in relation to proposed further amendments

1. As to the proposed further amended pleading, the defendants would oppose any application to rely upon the proposed pleading (noting that no application for leave has been brought as such). In that connection, complaint is made that the plaintiffs have not provided an explanation as to why they now seek fundamentally to change the material facts pleaded.

Determination

1. It is not, in my opinion, in the interests of the just, quick and cheap resolution of the real issues in dispute (see s 56 of the Civil Procedure Act 2006 (NSW)) now to require a further application (and further costs to be incurred) in a dispute as to whether leave should be given for the filing of the proposed further amended statement of claim.
2. To my mind, the reasons for its filing at this stage were made apparent from the submissions made on the present application (albeit not supported by an affidavit deposing thereto). Those reasons are as follows: first, to bring the pleading in line with the evidence (in relation to the Numurkah Project); and second, to address the perceived complaints by the defendants as to the pleading (in particular, as I apprehend it, the complaints as to the pleading alleging that moneys had been "paid" to ACJV Holdings, in circumstances where it is said that in fact they were paid into the defendants' accounts) and the like. If the pleading is confined (as it now will be) to complaints as to breach by the defendants of the alleged joint venture agreement, there can be no real prejudice by an amendment to clarify those matters at this stage (particularly if, as I would propose to do, there be an order for costs thrown away by the amendments).
3. Accordingly, I will give leave for the filing of the further amended statement of claim (with the striking out of the claims for relief in prayers 3 and 4) and direct that this be done within seven days.

Costs

1. It remains for something to be said in relation to costs of the notice of motion per se.

Defendants' position in relation to costs

1. The defendants indicated that they wished to file and serve written costs submissions following reasons being provided.

Plaintiffs' position in relation to costs

1. Meanwhile, the plaintiffs' submissions as to costs were: that, in the event that the defendants are unsuccessful in their application then they ought to be ordered to pay the plaintiffs' costs of the motion as agreed or assessed (that is to say, for costs to follow the event); in the event that the plaintiffs are successful (such that the amended statement of claim were to be struck out), the plaintiffs nevertheless submitted that in circumstances where the defendants brought their application after the parties had served their evidence and not at an early stage of the proceedings (when the costs associated with the preparation of evidence may have been avoided), the only order for costs that ought to be made in the proceedings is that the plaintiffs pay the defendants' costs of this application.

Determination

1. Having regard to the defendants' stated desire to serve further written submissions on costs (and, although I deprecate further costs and time being wasted on such an exercise), as a matter of procedural fairness I will direct that any such brief written submissions be served within seven days; and I will then make orders on the papers. In that connection, I should note that my preliminary view is that costs of the motion should follow the event.
2. Meanwhile, as indicated above, the plaintiffs should pay the costs thrown away by the further amendment of the pleading and there seems to me to be no reason to defer making that costs order at this stage.

Orders

1. For the above reasons, I make the following orders. 1. Dismiss the defendants' application by notice of motion filed 22 May 2020 for the summary dismissal of the proceedings or striking out of the amended statement of claim. 2. Give leave for the plaintiffs to file the further amended statement of claim in the form attached to their written submissions but omitting the claims for relief in prayers 3 and 4. 3. Direct that the further amended statement of claim referred to in Order 2 be filed and served within 7 days. 4. Order the plaintiffs to pay the costs thrown away by the further amendment of the statement of claim. 5. Direct the defendants to serve any brief written submissions on costs of their motion filed on 22 May 2020 within 7 days. 6. Reserve the question of costs of the defendants' motion filed on 22 May 2020, that issue to be dealt with on the papers. 7. List the matter for directions before me on 1 September 2020 at 8:30 am.

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: 18 August 2020