Lewis v Nortex Pty Ltd

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

3081/97 PETER LAWRENCE LEWIS v NORTEX PTY LTD (In Liq) JUDGMENT 1 HIS HONOUR: This matter is very convoluted. I dealt with certain aspects of it in a judgment last Friday, 22 February 2002: Lewis v Nortex Pty Ltd (In Liq) [2002] NSWSC 124 ("my judgment"). In my judgment I indicated in [8] that the parties should devise a way, by way of filing a statement of claim or cross claim or in some other way, to formulate the fraud claims sought to be made, and which I required to be made and adjudicated upon at the same time as the statutory motion which is currently the vehicle of these proceedings. That was acted on not by way of discussion among the parties, but by way of the plaintiff propounding a document entitled "cross claim" and succeeding in having that document accepted across the counter at the Court Registry. Its present status is some what unclear. The Court staff then, not unnaturally, experienced some difficulty as to what should be done with it. Upon an approach made to me, I directed that it be held in limbo until the matter came before me today. To any extent that it can now be regarded as being upon the Court file, I now direct that that document be taken off the Court file. 2 A modified document, also entitled "cross claim", has been brought forward today. That has raised complaints from both Mr Somerset, solicitor for the liquidator, and Mr Baird, solicitor for Kation Pty Ltd ("Kation") and the Lewis interests on various grounds. These include that, although what I had contemplated was simply a pleading of the case of fraud against the necessary defendants, it has been brought forward as a document encompassing, as has been avowed in court by Mr Motbey, of counsel for Lamru Pty Ltd ("Lamru"), all the claims sought to be maintained in the proceedings, whether upon the statutory appeal or in respect of the claims now sought to be made against other persons. As Mr Baird has pointed out, it also makes a claim in respect of various matters raised in the statutory appeal upon a new juridical basis, namely, the basis that those acts constituted breaches of trust, rather than merely wrong processes of accounting. Furthermore, those allegations are made in respect of transactions in respect of some years which were not the subject of the statutory appeal at all. Mr Baird says realistically that his client cannot preclude these claims from being made, but that they have a potential to change the shape of the proceedings and to expand them. I am not sure that the effect will be to expand them as greatly as Mr Baird fears, but certainly the shape of the proceedings may be changed. However, as he has realistically said, I do not think that that can be precluded at this stage. 3 One issue that seemed to me to be potentially material to the form in which the new claim was made was the question of whether there may be defences available arising under a statute of limitations, the incidence of which would be different whether the proceedings were now commenced or whether the issues arose under the statutory appeal instituted in 1997. Mr Baird again very realistically has said that he does not think there is any such issue, and that certainly his clients do not intend to raise any such defence, at least in so far as the claims relate to matters raised in the statutory appeal. Mr Baird also says that in his present view, it may well be unlikely that there is any question of the statute of limitations, bearing in mind both the nature of the claims and the times at which various of them arose. However, to the extent that the plaintiff now makes claims which were not previously made in the litigation, then in the end it must bear the consequences that arise from the time at which the claims were made, and that matter can be dealt with if it arises in the proceedings as they progress. 4 Although the "cross claim" propounded by Mr Motbey is wider than I had anticipated, and creates such problems as have been raised above, it does have the advantage of alleging all the matters in issue in a compendious way. That in my view will be of assistance in the definition of issues and the overall conduct of the proceedings. It is procedurally unsuitable, however, for the "cross claim" to span two sets of proceedings of different sorts, namely the statutory appeal in which the Court can make only the orders contemplated by s 1321 of the Corporations Act 2001 ("the CA"), and proceedings in which monetary judgments, which avowedly Lamru desires to obtain, are sought against various people. That point has been squarely taken by Mr Somerset. 5 In my view, the appropriate way to deal with the situation is to proceed in the following fashion. It seems to me best that fresh proceedings seeking the orders contained in the prayers of the "cross claim" now propounded should be commenced by summons against the persons named as the second, third and fourth cross defendants in the "cross claim". Prayer 1, which seeks an order against the liquidator under the statutory powers in s 1321 of the CA, should not be encompassed in that summons. Nor, it seems to me, should the liquidator as first cross defendant be joined as a defendant to the summons, nor should paragraphs 85 to 88 of the "cross claim", which raise a plea of estoppel against the liquidator in relation to a change in accounting procedures, be incorporated in the fresh proceedings. Mr Motbey said those paragraphs were included in the "cross claim" by way of giving clear notice to the liquidator of what is alleged. No doubt the inclusion of those paragraphs in the "cross claim" delivered to the liquidator does that, but those seem to me to be matters to be determined within the framework of the statutory appeal, and they should not be repeated in the fresh proceedings. I propose in all the circumstances to dispense with the filing fee on the summons. 6 I propose to order that the proceedings commenced by the summons for which I shall give leave should be heard together with the statutory appeal at the fixture to commence on 10 April 2002, and I propose to direct that points of claim be brought forward to stand as a full and compendious statement of the matters to be alleged by Lamru in both sets of proceedings. I am a Judge who is generally allergic to points of claim, because it tends to be unclear whether they are fish or fowl or anything else: see Ritchie's Supreme Court Procedure [5.11.1]. However, I think it desirable to order points of claim in these proceedings as spanning the two different types of proceedings concerned. Their function in the proceedings is the definition of the issues, which I have power to order in any appropriate way (Part 26 r 1 of the Supreme Court Rules 1970). They are to take the form which I have just stated, namely, they are to be a full and compendious statement of all matters to be alleged and relied on by Lamru in both sets of proceedings. 7 Mr Baird has had to deal with the document served upon him at short notice, and has fears that extensive particulars will be required. I do not intend in any way to bind the hands of Mr Baird's clients in their conduct of the proceedings, but I again ask that, when the points of claim are finally delivered, they receive close consideration and, if useful, cooperative discussion as urged by me in paragraph [9] of my judgment. To any extent that new areas of fact are raised, particulars may be necessary, but I think it is apparent from the discussion that has taken place in Court that, in many instances, the document will simply seek to place a different juridical characterisation upon facts and circumstances that are already in play in the proceedings. However, I should think it is of importance to all parties that the fixture for 10 April be kept if at all possible. I urge the defendants to bring forward any requests for particulars that are really necessary as soon as possible, and I remind Lamru that it will have to give swift and full answers to any particulars required if it desires to keep the fixture, as it avows that it does. 8 I should note that Mr Baird has informed me in Court today that, until last Friday, he acted for Mark Lewis as well as for Kation and Peter Lewis, but has ceased to act for Mark Lewis by reason of the perception of conflicts of interest arising from allegations now made. Mark Lewis has been present in Court at the hearing today, but indicated that he had no desire at this stage to participate in the proceedings before the Court. 9 I think the best thing is if I stand the matter over for a further directions hearing before me next Friday. It is of the utmost importance that the directions I shall give as to the bringing forward of the points of claim be complied with on time, so that all parties next Friday may be in a position to indicate to the Court on that occasion their views as to the further conduct of the matter. It is also important that Mark Lewis be served with the summons before next Friday and as soon as possible, so that he can consider his position and be represented if he desires as a party to the proceedings on that day. 10 The orders of the Court are as follows: (1) Direct that the document entitled Cross Claim filed on behalf of Lamru Pty Limited on 27 February 2002 be removed from the Court file. (2) Grant leave to Lamru Pty Limited to file a summons naming as defendants Kation Pty Limited, Peter Lawrence Lewis and Mark Lewis and containing prayers in the form of prayers 2 to 6 of the draft cross claim handed up in Court today returnable before me at 9.30am on 8 March 2002. (3) Dispense with the filing fee on the summons. (4) Abridge time before which the summons may be served on Mark Lewis to 5pm on Wednesday, 6 March 2002. (5) Order that these proceedings be heard together with the proceedings to be commenced by summons at the fixture commencing on 10 April 2002 before me. (6) Direct that Lamru Pty Limited deliver to the other parties on or before 6 March 2002 points of claim encompassing a full and compendious statement of all matters to be alleged and relied on by Lamru Pty Limited both in these proceedings and in the proceedings to be commenced by summons which I have given leave to file. (7) Costs of today reserved.

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