HPM Pty Ltd v Fear

INTRODUCTION 35 On 6 March 2002, a Judge of this Court made orders that the applicant's application be dismissed as an abuse of process and that he pay the costs of the first respondent and the second respondent. On 25 March 2002, the applicant lodged a document headed "Notice of Appeal". 36 The first and second respondents contend that the "appeal" should be dismissed as incompetent because the applicant has not sought or obtained leave to appeal pursuant to Order 52 rule 10. 37 In my view, the judgment of 6 March 2002 was interlocutory in accordance with well-settled authority. But it is of a type of interlocutory judgment which has, subject to the application of the usual discretionary considerations, perhaps more than the usual potential to be the subject of a grant of leave. By that I mean to say that the orders are not to do with practice and procedure. 38 The applicant did not, until the appeal was called on, seek leave to appeal. It has maintained that it does not require such leave. But when the hearing started Mr H T J Blakeley (a former managing director and principal shareholder of the applicant who was granted leave to appear on its behalf) asked that leave to appeal be granted to the applicant. Implicitly (by asking for whatever leave he needed) he asked that time be extended to apply for leave. The first and second respondents opposed the grant of such leave.

Supreme Court of Western Australia Action No CIV 2236 of 1994 39 On 14 September 1990 the first respondent (a chartered accountant) was appointed to be receiver and manager of the applicant under the terms of a mortgage and charge held by the second respondent over the applicant's property. Eventually the first respondent sold to the third respondents one of the applicant's assets, being a property known as the Hotel Peninsula at Mandurah. 40 On 20 December 1994 the applicant commenced proceedings in the Supreme Court of Western Australia in action number CIV 2236 of 1994 against BPM Pty Ltd, trading as Bird Cameron, Accountants. Their role in the matter is described below. The first respondent and the third respondents were named as defendants to that action together with The Bank of Melbourne. On 17 October 1995 the second respondent was substituted for The Bank of Melbourne by order of a Master and an amended statement of claim dated 18 October 1995 was filed. 41 In that statement of claim the applicant alleged that the appointments of the first respondent as receiver and manager were invalid as the applicant was not in default under the terms of the mortgages when the appointments were made. The bases for that contention were that, first, notices of demand issued by the mortgagee did not specify the amounts owing to it under the relevant securities, and, secondly, that those notices of demand were "nullified" by an agreement made between the applicant and the second respondent on 23 August 1990. The substance of that agreement was said to be that the applicant would continue to trade, on certain conditions. The first respondent was said to have failed to make certain of the validity of his appointment, to have acted without power, to have failed to act in good faith and to have breached a statutory duty under s 229(2) of the Companies (Western Australia) Code to exercise a reasonable degree of care and diligence in exercising his power of sale. He was said to have been negligent and in breach of his duties in failing to take reasonable care to obtain either a proper price or the true market value of the hotel and other property sold under the relevant mortgages. The applicant alleged that the first respondent had allowed its hotel business to degenerate through lack of proper management, care and maintenance, thereby reducing its saleability and value. He was also said to have failed to advertise and present the property in a proper and adequate manner prior to public auction. There were a number of other respects in which he was said to have failed to discharge his duty of care. 42 The claim against BPM Pty Ltd related to its alleged failure to act carefully and diligently in the provision of advice to the applicant pursuant to an oral agreement said to have been made between it and Mr Blakeley, as a director of the applicant. 43 Then it was alleged that the first respondent entered upon the applicant's lands and took possession of its property and caused it to be sold thereby converting it to his own use or to that of the mortgagee. The applicant claimed to have suffered loss and damages as a result. The second respondent was alleged to be liable jointly with the first respondent for that loss and damage. Both the first and second respondents, so the applicant pleaded, were said to have knowledge of the defect in the first respondent's appointment and thereby to have become constructive trustees for the applicant and liable to account to the applicant for all the proceeds of the sale. It was also alleged that the first respondent acted fraudulently in effecting that sale. This was based upon an allegation of his collusion with the third respondents pursuant to which he conspired to sell the hotel at a grossly undervalued price. The applicant claimed damages (including exemplary damages for fraud against the second defendant) against the first respondent, the second respondent and the third respondents, declarations, an account and interest. 44 On 21 December 1995 the applicant was wound up by order of the District Registrar of this Court. Mr Gary John Trevor of Messrs Ferrier Hodgson & Co was appointed liquidator. On 14 March 1997, the liquidator entered into a deed with Mr Blakeley by which he assigned to Mr Blakeley all of the applicant's rights in the action in the Supreme Court. This was done pursuant to a resolution of a meeting of creditors held on 5 September 1996 and a direction given by Lee J in this Court on 25 February 1997. 45 In the meantime, on 14 June 1996 an order was made by a Master that the applicant provide $75,000 as security for its costs in relation to its claim against the first respondent and the second respondent. $10,000 was to be paid within 30 days of service of the order upon the applicant and the balance upon entry for trial. The action was to be stayed if the applicant failed to pay either sum by the specified date. The applicant made no payments pursuant to that order. 46 On 3 June 1997, Mr Blakeley was substituted for the applicant as plaintiff in the action by order of a Master of the Supreme Court. Mr Blakeley applied for a variation of the orders for security for costs previously made, but that application was dismissed by Wheeler J on 2 February 1998. Mr Blakeley did not appeal against that order. 47 On 25 September 1998 Mr Blakeley obtained leave to discontinue the proceedings against the first respondent and the second respondent and was ordered to pay their costs of that action. On a date which does not appear from the papers (nor did the applicant inform us of the date) the applicant's claim against BPM Pty Ltd was dismissed by consent. 48 On 10 November 1998, Mr Blakeley filed a chamber summons in the discontinued proceedings seeking to reinstate them against the first respondent and the second respondent. That application was dismissed by Wheeler J on 18 November 1999.