Mitry v Business Australia Capital Finance Pty Ltd

Court of Appeal (NSW)|2010-11-26|Before: Hodgson JA, Macfarlan JA, Young JA, MacFarlan JA

CITATION: Mitry v Business Australia Capital Finance Pty Ltd (in liquidation) [2010] NSWCA 360

JUDGMENT OF: Hodgson JA at 1; Macfarlan JA at 3; Young JA at 55

(1) Allow the appeal; (2) Dismiss the cross appeal; (3) Set aside the judgment entered at first instance in favour of BACF against the appellant in the sum of $202,739.73 and set aside the order that the appellant pay BACF's costs of the proceedings at first instance; (4) Judgment for the appellant on BACF's claim against him; DECISION: (5) Judgment for BACF on the appellant's Cross-Claim against it; (6) No order as to the costs of the proceedings at first instance; (7) Order BACF to pay the appellant's costs of the proceedings on appeal; (8) BACF to have a certificate under the Suitors' Fund Act 1951, if qualified. [Note: The Rules provide (Rule 36.11) that unless the Court otherwise orders, a Uniform Civil Procedure judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16].

CATCHWORDS: CONTRACT - agreement to pay commission on loans made to persons introduced by appellant to respondent - whether causal relationship between introductions and loans made - relevance of Challenger Group Holdings Ltd v Concept Equity Pty Ltd - PROCEDURE - civil - s 65(2)(b) Civil Procedure Act - whether "mistake in the name of a party" - whether primary judge wrongly exercised discretion by the granting leave to liquidator to amend name of plaintiff from his own to that of the company in liquidation

LEGISLATION CITED: Civil Procedure Act 2005 Corporations Act 2001

Blatch v Archer (1774) 1 Cowp 63; (1774) 98 ER 969 Bridge Shipping Pty Ltd v Grand Shipping SA [1991] HCA 45; (1991) 173 CLR 231 Central Insurance Co Ltd v Seacalf Shipping Corporation (The Aiolos) [1983] 2 Lloyd's Rep 25 CASES CITED: Challenger Group Holdings Ltd v Concept Equity Pty Ltd [2009] NSWCA 190 Greenwood v Papademetri [2007] NSWCA 221 Kent v La Communaute des Soeurs de Charite de la Providence [1903] AC 220 Russo v Aiello [2003] HCA 53; (2003) 215 CLR 643 Sibroll Pty Ltd (in liq) v Mitch Properties Pty Ltd [2007] NSWSC 579; (2007) 212 FLR 1

PARTIES: Richard Mitry (Appellant) Business Australia Capital Finance Pty Ltd (in liquidation) (Respondent)

COUNSEL: A Rogers (Appellant) T S Hale SC/J Baird (Respondent)

SOLICITORS: Mitry Lawyers (Appellant) McLachlan Chilton Solicitors and Attorneys (Respondent)

LOWER COURT DATE OF DECISION: 16 February 2010 and 22 February 2010

IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 2010/56308

HODGSON JA MACFARLAN JA YOUNG JA

17 DECEMBER 2010 MITRY v BUSINESS AUSTRALIA CAPITAL FINANCE PTY LTD (IN LIQ) Judgment 1 HODGSON JA: I agree with the orders proposed by Macfarlan JA and with his reasons. 2 I would add that, in my opinion, a further reason why there was "a mistake in the name of a party" within s 65(2)(b) of the Civil Procedure Act 2005, even though the liquidator intended that he be the plaintiff, is that the mistake consisted in naming the plaintiff as "Andrew Hugh Jenner Wiley in his capacity as Liquidator of Business Australia Capital Finance Pty Ltd ACN 002 462 726" rather than as "Business Australia Capital Finance Pty Ltd (in liquidation)". The company was always included in the name of the plaintiff, with the mistake being that the name of the plaintiff did not specify that the company was itself the plaintiff. 3 MACFARLAN JA: On 19 October 2002 the appellant, Richard Mitry, entered into a written Introducer Agreement with the respondent, Business Australia Capital Finance Pty Ltd ("BACF"). BACF carried on business in Sydney as a funds management company. It is now in liquidation. 4 The only presently relevant provisions of the Agreement are as follows: " Recitals The Introducer [the appellant] wishes to introduce Applicants to BACF for Lending Products and investors in BACF in return for payment of commission on the terms and conditions set out in the agreement. … 4 Costs fees and other amounts What BACF must pay a) BACF must pay the Introducer commission of 5% of the loan or investment amount within 14 days of settlement, subject to any change in the commission as may be agreed in writing between the parties. b) BACF must pay the Introducer additional consideration in relation to any goods and service tax". 5 The present proceedings were commenced by Mr Andrew Wily in his capacity as liquidator of BACF claiming on behalf of BACF repayment of amounts that the appellant drew down under a Loan Agreement made between the appellant and BACF on 2 April 2003. Interest and a default fee were also claimed. 6 By a judgment of 16 February 2010 Neilson DCJ granted Mr Wily leave to amend the name of the plaintiff in the proceedings so as to substitute BACF's name for his name. In a judgment dated 22 February 2010 his Honour found that BACF was entitled to judgment against the appellant in the sum of $202,739.73. On appeal the only basis upon which the appellant challenged that judgment was that he contended that the primary judge should not have granted leave to amend the plaintiff's name. I shall return to this point later. 7 By a Cross-Claim filed in the proceedings the appellant claimed that BACF was liable to pay commission to him under the Introducer Agreement as a result of BACF making loans to potential borrowers he introduced to BACF. The primary judge rejected the appellant's contentions and dismissed his Cross-Claim. The only issue on appeal in relation to the Cross-Claim is whether the appellant is entitled to commission as a result of his introduction to BACF of representatives of the Republic of Nauru ("the Government") and of the Nauru Phosphate Royalties Trust ("the Trust"). 8 For reasons that I give below, I have concluded that the appellant is entitled to succeed on his claim to commission (see [22] - [33] below) but not on his challenge to the grant of leave to amend the plaintiff's name (see [34] - [50] below). 9 I turn first to consider the facts upon which the appellant's claim to commission is based.

The Nauruan Dealings and Transactions 10 In late July 2003 the appellant met with Mr Ian Lazar and Mr Matthew Demaris at the offices of BACF in Sydney. The appellant understood Mr Lazar to be the Chief Executive Officer of BACF and Mr Demaris to be a director of that company. In response to an offer made by the appellant, Mr Lazar and Mr Demaris indicated that they were interested in the appellant arranging a meeting with representatives of the Government and of the Trust, so it would seem, to discuss the possibility of BACF arranging for the Trust to refinance its borrowings of some $211,000,000 that it had made from GE Capital. Those borrowings were described in a summary of the Trust's loan position that the appellant provided to Mr Lazar and Mr Demaris at that meeting. 11 The appellant duly organised meetings between representatives of BACF and representatives of the Government and of the Trust. These occurred on 18 and 19 August 2003. On those days BACF made a presentation to the Nauruan delegation. The Powerpoint Summary of the presentation identified the services that "BA Group" could offer in connection with the refinance of the Trust borrowings. 12 There was only limited evidence of what occurred thereafter. In essence, it was contained in correspondence that the appellant tendered (presumably having been obtained by him on discovery) and in evidence given by a representative of the liquidator of BACF, Ms Fleur Evans, as to certain loans that were made. 13 Letters that BACF wrote to the Trust on Friday 22 August 2003 indicate that BACF was proposing to lend on that day, or very soon thereafter, an amount of money (which was not quantified in the letters) to the Trust with the Trust initially providing security over the Royal Randwick Shopping Centre, which was owned by the Trust. The letters indicated that this security was to be replaced by security to be given over property in Texas. 14 A letter from BACF of Tuesday 26 August 2003 indicated that a proposed settlement on the previous Friday of a loan, stated to be of $2,000,000, did not occur as had been planned. BACF said in another letter that "we will have finalised the security issues by tomorrow morning and look forward to forwarding you the $2,000,000" (Blue Appeal Book p 180; unless noted, references in this judgment are to the Blue Appeal Book). A further letter from BACF of that date said that it had been told that afternoon that, instead of $2,000,000, what the Trust required urgently was an amount of $500,000. 15 On Friday 29 August 2003 the Trust wrote to persons associated with BACF. To that letter or one following it were attached documents referring to a widespread workers' strike in Nauru and suggesting that this was, or may have been, caused by "the delay in obtaining the bridging finance", that is, an alleged delay in BACF providing that finance. A letter that the Trust wrote on the same day to Mr Lazar as CEO of BACF included the following statements: "I would like to express my frustration and disappointment with the length of time it has taken to settle this $2 million short-term loan. … Our Government after your presentation were impressed by your services and were looking forward to a long and prosperous relationship. We have many exciting projects and services we can offer, but to date, the way this short-term loan has been conducted has affected our faith in your company's sincerity for a harmonious relationship and ability to deliver. Unfortunately, if this short-term loan cannot be finalised broadly in the same terms and conditions as agreed by midday today, we do not wish to proceed with this short-term loan" (p 189). 16 On Monday 1 September 2003 BACF wrote to the Government stating that BACF "will forward 2 million dollars based on humanitarian grounds, to the Republic of Nauru" upon the fulfilment of certain identified conditions (p 194). 17 On Tuesday 2 September 2003 the Government wrote to BACF referring to letters from BACF of 29 August and 1 September 2003. The letter of 29 August 2003 was not in evidence. The Government's letter included the following: "The contents of your letters are replete with misrepresentations, inaccuracies and false assertions ... [y]our conduct has been nothing short of misleading and deceptive … We are currently in the process of obtaining legal advice and compiling the damages suffered by us. We will institute proceedings in the appropriate jurisdictions and with the appropriate Government and regulatory authorities as advised by our legal and other advisors" (pp 187 - 188). 18 The only evidence as to what thereafter occurred was given by Ms Evans, a representative of the liquidator, based on her examination of the books and records of BACF. She said that she could not find any record of any advance by BACF to the Government or to the Trust, but that a related company, Business Australia Capital Mortgage Pty Ltd (now in liquidation) ("BACM") made advances to the Trust between 5 September 2003 and 5 April 2004 totalling $3,250,000. On the hearing of the appeal it was common ground that some of these advances were in fact made to the Nauru Phosphate Corporation and that the correct details of the advances were as follows (see Orange Appeal Book p 8): Date Recipient Amount 05.09.03 Nauru Phosphate Royalties Trust $50,000 25.09.03 Nauru Phosphate Corporation $200,000 16.12.03 Nauru Phosphate Corporation $600,000 17.12.03 Nauru Phosphate Royalties Trust $500,000 23.12.03 Nauru Phosphate Royalties Trust $500,000 16.01.03 Nauru Phosphate Royalties Trust $200,000 19.01.04 Nauru Phosphate Royalties Trust $200,000 27.01.04 Nauru Phosphate Royalties Trust $350,000 03.02.04 Nauru Phosphate Royalties Trust $50,000 12.02.04 Nauru Phosphate Royalties Trust $200,000 05.03.04 Nauru Phosphate Corporation $200,000 05.03.04 Nauru Phosphate Corporation $100,000 05.03.04 Nauru Phosphate Royalties Trust $100,000 Total $3,250,000

The appellant's claim, as it was ultimately formulated by the end of the hearing at first instance was that he was entitled to commission equivalent to 5% (plus 0.5% for GST) of these loans. 19 In his judgment, the primary judge examined the relationship of the Nauru Phosphate Corporation to the Government. He concluded that it was "essentially an emanation" of the Government (Judgment [86]). As this conclusion was not challenged on appeal, I do not consider that there is any significance in the fact that some of the loans were made to the Corporation rather than to the Government or the Trust.

The Judgment at First Instance 20 The primary judge did not find that the appellant's claim for commission failed because such loans as occurred were made by BACM rather than by BACF. He considered that the facts in evidence concerning the securing of loans made by BACF to the appellant and a company of which the appellant was a director indicated that BACF and BACM "were closely related and that the one would act as the agent of the other" (Judgment [89]). He concluded that "the sums advanced by BACM to either the Trust or the Nauru Phosphate Corporation were monies advanced because of a relationship between the Trust and/or members of the Nauru Government and BACF" (ibid). 21 His Honour's reasons for rejecting the appellant's claim for commission are encapsulated in the following extracts from his Judgment: "91. Learned counsel for the defendant has submitted that the only rational explanation for the lending by BACM to the Trust and/or the Phosphate Corporation was the introduction by the defendant of the Trust and the Ministerial delegation to BACF on or about 18 August 2003. I cannot accede to that submission. As I have said, it appears to me that the relationship was at an end as soon as BACF delivered its letter to the Nauruans on 1 September 2003, bearing in mind the response shown by [the] Nauruans in the Minister's letter of 2 September 2003. The only reasonable inference I draw is that something must have happened to re-establish a relationship such that $50,000 was lent to the Trust on 5 September and that $200,000 was lent to the Nauru Phosphate Corporation on 25 September 2003. An impasse had been reached. For there to be these loans, there must have been the intervention of someone, or a volte-face by one of the parties. That volte-face, one would think, would have to be prompted by someone or something. … 95. …The use of the definite article [being the word "the" before "loan" in clause 4(a)] indicates to me that what was intended was that there be some relationship between the nature of the introduction by Mr Mitry and the loan or the investment taken out. Here, Mr Mitry introduced the Trust to BACF and the object then was the refinancing of the loans that the Trust had obtained from GEC Capital, loans amounting to $211,000,000. 96. I infer from the correspondence which I have cited that what was initially sought by the Nauruans was some bridging finance of $50,000 as the absolute minimum, but preferably $200,000. It would appear that eventually it can be seen that the finance was to be used to pay wages due by the Nauru Government to its employees. Hence, no doubt the involvement of the Nauru Phosphate Corporation. 97. However, as I said, the relationship objectively was at an end by at least 2 September 2003. What then caused it to proceed? The evidence is completely silent. One might infer that the $50,000 lent to the Trust on 5 September 2003 was for the immediate bridging finance needs and the $200,000 lent to the Nauru Phosphate Corporation on 25 September 2003 for the payment of wages. However there is then a gap of nearly three months before there is any further lending and for what purpose, the evidence does not disclose. … 104. Without there being evidence of what happened between 2 and 5 September I cannot be persuaded on the balance of probabilities that it was the introduction by Mr Mitry of the Nauruan interest to BACF which led to the two advances being made in September 2003. Without there being any evidence of what happened between 25 September 2003 and the next payment of 16 December 2003, I cannot be satisfied on the balance of probabilities that it was the introduction of Mr Mitry that led to the advances being made at that time and thereafter to either the Trust and/or the Nauru Phosphate Corporation. One might easily draw the inference, if there were no evidence of any disagreement between the lender and the borrower. However there was a major disagreement between the lender and the borrower. A disagreement which called for some form of reconciliation. Furthermore, the business which Mr Mitry sought to introduce was a refinancing of the Trust property portfolio in Australia and that patently never occurred. Otherwise there would be no need for the GEC Capital companies to be a party to the Federal Court litigation. It is clear from the recitals that I have already quoted, that there was no refinancing of the GEC loans to the Trust".

The Claim for Commission 22 The primary judge rightly proceeded upon the basis that to succeed in his claim for commission the appellant had to establish a causal relationship between his introduction of the Nauruan interests and the subsequent lending to which I have referred (Judgment [95], part of which is quoted in [21] above). However in my view his Honour erred in concluding that the appellant had not, on the balance of probabilities, proved that relationship. 23 The critical point in his Honour's reasoning was his conclusion that because of the terms of BACF's letter of 1 September 2003 imposing conditions upon advances occurring and the acrimony in the Trust response of 2 September 2003 "there must have been the intervention of someone, or a volte-face by one of the parties" to enable the loans to proceed (Judgment [91] quoted in [21] above). However even if one assumes that one of these events must have occurred that would not of itself indicate that the necessary relationship between the introduction and the loans did not exist. Certainly, by Tuesday 2 September 2003 the parties were at odds but intervention by someone to assist the parties to resolve their differences would not necessarily mean that the subsequent loans did not result from the appellant's introduction. Nor would that have been the case if one or other of the parties had performed a "volte-face" in its position. The position would have been no different if each party had given some ground so that they agreed upon a midpoint. 24 The primary judge referred in this context to the decision of this Court in Challenger Group Holdings Ltd v Concept Equity Pty Ltd [2009] NSWCA 190. 25 Challenger Group Holdings was however a different case to the present. In that case the relevant Introducer Agreement related to the introduction of "a number of merger/acquisition opportunities in the financial services sector" (quoted at [21]). Concept Equity introduced such an "opportunity" to Challenger in late 1999. That opportunity was explored in negotiations that occurred in the following few months but the negotiations did not come to fruition. Some years later, that is in late 2003, the transaction that Concept Equity had proposed was entered into by Challenger. The persons then involved in the transaction on behalf of Challenger however had no knowledge of the earlier exploration of the possibility of Challenger entering into that transaction and did not have any knowledge of Concept Equity or of its earlier introduction. It was in those circumstances that this Court held that the later transaction did not constitute a taking up of the opportunity that Concept Equity had earlier introduced to Challenger. 26 The present is different. First, the Introducer Agreement related not to the introduction of particular merger or acquisition opportunities but to the introduction of "Applicants … for Lending Products". As the expression "Lending Products" was not defined, the expression should in my view be given its ordinary English meaning and therefore be understood as a reference to any loans made available by BACF. The simple reference to "the loan" in Clause 4(a) supports this approach. The introductions contemplated were thus of persons who were interested in having BACF make loans available to them. 27 Given this generality of language, I do not consider that there is any basis for confining the appellant's right to commission to commission on specific loans that were discussed at the time of the appellant's introduction of BACF to the Nauruan interests. In the present case it would seem from the limited evidence tendered that whilst refinancing of the GE Capital borrowings was the main point of the introduction, the need for bridging finance was either part of it or at least arose out of it, as within two days of the conclusion of the meetings of 18 and 19 August (that is by 21 August) the parties were in an advanced position in relation to the proposed lending by BACF to the Trust of what the primary judge described as bridging finance of $2,000,000 (Judgment [96] quoted in [21] above). Whether the bridging finance was spoken of at the initial meetings or evolved out of discussions in the days following is not in my view of any significance. I consider the position to be likewise in respect of the subsequent lending through to March 2004 if, as I consider should be inferred upon the evidence that was before his Honour, such lending evolved out of the initial discussions. 28 Secondly, in Challenger Group Holdings years intervened between, on the one hand, the conclusion of the introduction and the negotiations that followed, and, on the other hand, the effectuation of the transaction. As well, those involved in the latter knew nothing of the former. Here, there were only a few days between BACF's letter of 1 September 2003 that still contemplated that lending would occur and the date of the first loan (5 September 2003), and there was no evidence of any discontinuity in the relationship after that first loan was made. Moreover there is no reason to think that those involved in the lending were not those who were involved in the introductory meetings and the correspondence that followed them. 29 The appellant contended on appeal that the inference that the requisite relationship between the introduction and the loans existed should readily be drawn because BACF did not call any evidence to explain how the relationship between the Nauruans and BACF had been restored, despite the fact that it was peculiarly within the knowledge of BACF, rather than of the appellant, how this had occurred. The appellant relied upon the principle stated by Lord Mansfield in Blatch v Archer (1774) 1 Cowp 63 at 65; (1774) 98 ER 969 at 971 that "all evidence is to be weighed according to the proof which it was in the power of one side to have produced, and in the power of the other to have contradicted." In Russo v Aiello [2003] HCA 53; (2003) 215 CLR 643 Gleeson CJ described this principle as "a fundamental precept of the adversarial system of justice [that] is treated as axiomatic in the day to day operations of courts" (at [11]). 30 Although relevant to the present case in the manner that the appellant contends, the application of the principle here is in my view ameliorated to some extent by two factors. The first is that BACF is in liquidation and the conduct of the litigation is in the hands of its liquidator. In many cases liquidators will not have ready recourse to the assistance of former officers or shareholders of the company. However the Blatch v Archer principle in my view retains some relevance here as the liquidator did not call evidence of any difficulty he had in obtaining assistance from Mr Lazar who was involved in the introductory meetings and was the person at BACF to whom the Government's letter of 2 September 2003 was addressed and whom the judge found was likely to have been the beneficial owner of BACF and BACM (Judgment [13]). Indeed counsel for BACF said in response to an observation from the primary judge that "I suppose that Mr Lazar has gone back to South Africa" and that "I think Mr Lazar is around … " (Transcript p 77). 31 Secondly, because, as was understandable, the appellant was not involved after the introductory meetings in the dealings between BACF and the Nauruans, his claim changed as some of the facts about those dealings became known to him (see [18] above and [53] below). BACF did not contend on appeal that it was not open to the appellant to put the case which he ultimately put at first instance but BACF did point out that BACF's knowledge of that case was very late. It argued that this provided an explanation for relevant evidence not being called or its absence explained. Although this is a matter to be taken into account, I do not consider that it is of particular significance because it was open to BACF to seek an adjournment if it considered that it was prejudiced by the late formulation of the appellant's case. It did not do this. 32 In these circumstances I consider that the absence of relevant evidence from BACF enables the relevant inference to be more readily drawn. It is in any event difficult to envisage an explanation that BACF might have given that would have dispelled the inference that the requisite connection between the introductions and the loans existed. BACF would probably have had to have shown that subsequent to the meetings that the appellant arranged, BACF was quite separately, and entirely independently of the appellant, introduced to the Nauruan entities and that this quite differently established relationship led to the loans being made. There was no basis on the evidence for thinking this occurred. On the contrary, the inference to be drawn, reinforced by the absence of contrary evidence from BACF, was that the loans flowed from the appellant's introduction. The fact that the relationship between BACF and the Nauruans so created may, at least at one point, have been a rocky one did not destroy the relevant connection.

The Relevance of the Lender being BACM 33 The primary judge's conclusion that BACF and BACM were closely related and that it was likely that Mr Lazar was the beneficial owner of both of the companies (Judgment [13]) was not challenged on appeal. The judge referred to the two companies, in at least some respects, acting as agent for each other (Judgment [89]) but I do not consider that it is necessary to rest the conclusion that I consider should be reached that the loans that BACM made gave rise to commission entitlements on the part of the appellant on an agency basis. It is sufficient in my view that the inference should be drawn, as the primary judge drew it (Judgment [89]), that the BACM advances occurred because of the relationship between the Nauruans and BACF, a relationship which flowed from the introduction. I note in this regard that the presentation made at the introductory meetings of 18 and 19 August 2003 was indicated in the Powerpoint document to have been made by the "BA Group". It would not be a sensible commercial interpretation of the Introducer Agreement to exclude the appellant from commission where he introduced prospective borrowers to BACF and loans resulting from that relationship were made through a company closely related to BACF, rather than BACF itself. The language of the Agreement is consistent with an interpretation that applies the obligation of BACF to pay commission to all lending resulting from the appellant's introduction of a prospective lender to BACF, whether BACF was the lender or not.

The Grant of Leave to Amend the Name of the Plaintiff 34 The right to recover the loans that BACF made to the appellant was one to which BACF was entitled under the general law. BACF being in liquidation, the right was one which its liquidator was entitled to cause BACF to pursue. The relevant power in this regard is conferred by s 477(2) Corporations Act 2001 which confers authority on a liquidator of a company to: "(a) bring or defend any legal proceedings in the name and on behalf of the company". 35 In the introductory portion of the Statement of Claim in these proceedings, the plaintiff was described as follows: "ANDREW HUGH JENNER WILY in his capacity as Liquidator of BUSINESS AUSTRALIA CAPITAL FINANCE PTY LTD ACN 002 426 726". 36 The first paragraph under the heading "Pleadings and Particulars" was in the following terms: "1. On 16 November 2005, the Plaintiff was appointed Liquidator of Business Australia Capital Finance Pty Ltd ('the Company'). The Company's principal business was as a Money Lender". 37 The Statement of Claim was filed within the statutory limitation period for recovery of the loans that were alleged to have been made by BACF to the appellant. After expiration of the limitation period Mr Wily, the liquidator of BACF, applied for leave to amend the name of the plaintiff from his name to that of BACF. 38 The application was made under s 65 Civil Procedure Act 2005 which relevantly is in the following terms: "(1) This section applies to any proceedings commenced before the expiration of any relevant limitation period for the commencement of the proceedings. (2) At any time after the expiration of the relevant limitation period, the plaintiff in any such proceedings may, with the leave of the court under section 64(1)(b), amend the originating process so as: (a) … (b) to correct a mistake in the name of a party to the proceedings, whether or not the effect of the amendment is to substitute a new party, being a mistake that, in the court's opinion, is neither misleading nor such as to cause reasonable doubt as to the identity of the person intended to be made a party, or (c) to add or substitute a new cause of action, together with a claim for relief on the new cause of action, being a new cause of action that, in the court's opinion, arises from the same (or substantially the same) facts as those giving rise to an existing cause of action and claim for relief set out in the originating process. (3) Unless the court otherwise orders, an amendment made under this section is taken to have had effect as from the date on which the proceedings were commenced". 39 In granting the leave sought, the primary judge relied particularly upon the decision of the Privy Council in Kent v La Communaute des Soeurs de Charite de la Providence [1903] AC 220. In that case liquidators who had sued in their own names to recover a debt due to the company were given leave at first instance to amend their originating process to substitute the name of the company as plaintiff for their names as plaintiffs. The judgment of the Board, declining to interfere with that discretionary decision, included the following observations: "The office of the liquidator has in fact a double aspect. On the one hand he wields the powers of the company, and on the other hand he is the representative for some purposes of the creditors and contributories. There are therefore many cases in which he may sue in his own name, as, e.g., to impeach some act or deed of the company before winding-up which is made voidable in the interest of the creditors and contributories. But their Lordships think that wherever the object of the action is to recover a debt, or to recover or protect property the title to which is in the company, the action should be brought in the name of the company. … The substance of the action was to recover a debt alleged to be due to the company in liquidation which the liquidators were the only proper persons to receive and give discharge for. No defence was available against the company which was not equally available against the liquidators, and the parties were content to fight the case out with the liquidators, who were their real opponents, and the case was in fact fought out with the liquidators without any exception to their right to sue, and was ripe for judgment. It is impossible to say that the proposed amendment changes the nature of the demand, or can in any way cause prejudice to the respondents. In short, the liquidators are domini litis and it was not improper to make them plaintiffs, but they ought to have joined with themselves the company; or, in other words, the liquidators had the right to sue, but sued in the wrong form. It would seem, therefore, that art. 521 of the Code is applicable to the case" (at 226 - 227). [The terms of art. 521 are not apparent from the judgment.]

40 The primary judge in the present case concluded on this issue by saying: "20. Here it is clear that when the liquidator named himself he was joining himself with the company and although the company is the proper plaintiff no one could be in any way misled by the pleadings as they stand, nor could anyone be prejudiced in their defence of the substance of the plaintiff company's action".

The power to grant leave to amend 41 The Victorian counterpart of s 65(2)(b) Civil Procedure Act was considered by the High Court in Bridge Shipping Pty Ltd v Grand Shipping SA [1991] HCA 45; (1991) 173 CLR 231. In that case the owner of goods damaged in transit by sea claimed damages from the company with whom it had arranged the carriage. The defendant issued a third party notice against the registered owner of the vessel. When the defendant later discovered that at the relevant time the vessel had been under a demise charter to another company and that that other company had therefore been the carrier of the goods, it applied to substitute the charterer as third party in place of the owner of the vessel. 42 The High Court held that the application was properly refused at first instance. It held that the defendant "had not made a mistake 'in the name of a party'" within the meaning of the legislation because it had intended to sue the owner of the vessel, believing its right of action lay against the owner, but had made a mistake as to the identity of the owner, not as to its name. McHugh J (with whom Brennan and Deane JJ agreed) concluded as follows: "The statement of claim in the present case does not indicate that Bridge sued Grand because it believed that Grand was the carrier but was mistaken as to the name of the carrier. To the contrary, the allegation in par. 3 that Grand was 'the owner of the vessel' at all material times indicates that Bridge intended to sue Grand because it believed that Grand was the owner of the vessel. The correctness of that conclusion is confirmed by the affidavit of Bridge's solicitor who swore that he 'was concerned to preserve Bridge Shipping's rights against the Owner of such vessel'.

Bridge made no mistake as to description of the party which it wished to sue. It intended to sue the owner and did so. Bridge's mistake was not one of misnomer, clerical error or misdescription. Nor was it one where, intending to sue a person whom it identified by a particular description, it was mistaken as to the name of the person who answered that description. The present case is different, therefore, from Lloyd Steel where Clarke J. accepted that the plaintiff's solicitor had 'instituted the proceedings because he believed, as a result of his searches of the Lloyd's Register, that the first named defendant in each case was the carrier'. The mistake which Bridge made was that it believed that it had rights against the owner of the vessel. But that was not a mistake 'in the name of a party'" (at 262). 43 I do not consider that this decision dictates a conclusion that leave should have been refused in the present case. The present is a different case to Bridge Shipping. Here the liquidator, in exercise of the power conferred upon him by s 477(2)(a) Corporations Act, purported to bring the action "on behalf of the company". What he failed to do was to bring the action "in the name … of the company" as s 477(2)(a) also specifies. This was truly "a mistake in the name of a party" in the sense contemplated by s 65(2)(b). True it is that in strict terms the effect of the amendment was to substitute a new party, that is, to substitute the company for the liquidator, but that is a circumstance expressly permitted by s 65(2)(b). 44 The subsection specifically contemplates that an amendment to correct the name of a party may be one that substitutes a new party for an existing one. If the present is not a case of the type contemplated in the subsection, it is very difficult to contemplate one that would be. 45 Bearing in mind that the rule "is a remedial rule and should be given a beneficial interpretation" and that "[i]t is proper to give it the widest interpretation which its language will permit" (Bridge Shipping per McHugh J at 260 - 261), my view is that the rule authorised the primary judge to grant the leave that he did grant. There is no other basis upon which his Honour's decision was challenged on appeal. 46 In Sibroll Pty Ltd (in liq) v Mitch Properties Pty Ltd [2007] NSWSC 579; (2007) 212 FLR 1, Young CJ in Eq (as his Honour then was) declined to grant leave to a company in liquidation, after the expiration of the limitation period, to substitute the company's liquidator for the company as plaintiff. The claim brought in the proceedings was one for the recovery under s 588FF Corporations Act of a preference or payment made under an uncommercial transaction. Under this section the claim may only be made by the liquidator of a company. It may not be made, as happened in Sibroll, by the company itself. His Honour considered that the case before him was similar to that which was before the English Court of Appeal in Central Insurance Co Ltd v Seacalf Shipping Corporation (The Aiolos) [1983] 2 Lloyd's Rep 25 and that the mistake was one as to the entity in which the right of action was vested rather than one as to the name of the person entitled to sue. 47 Sibroll was referred to with approval by this Court in Greenwood v Papademetri [2007] NSWCA 221 where Campbell JA (with the concurrence of Tobias JA) said: "There had been no mistake [in Sibroll ] in the name of a party, merely a mistake concerning a matter of law about whether an action to recover a preference or uncommercial transaction should be brought by the company in liquidation or by the liquidator" (at [77]). 48 There was no express evidence in the present case as to how the proceedings came to be formulated in the way that they were. However even if it be assumed (against BACF's interests) that the liquidator made a mistake as to the party in whom the right of action was vested, the decision in Sibroll does not in my view govern the present case. The fact that a mistake of that nature was made does not mean that there was not also, as can be concluded to have occurred here, a mistake in the name of the plaintiff that would attract the operation of s 65(2)(b). That subsection does not require that the "mistake in the name of a party" be the sole mistake that has been made. 49 It is in my view significant that in this case, pursuant to the power conferred by s 477(2)(a) of the Corporations Act, the liquidator did attempt to pursue the proceedings on behalf of the company. However by naming himself as plaintiff rather than the company, he stopped short of conforming with the first element of s 477(2)(a) (see [34] above). That was in my view "a mistake as to the name of a party" within the meaning of s 65(2)(b) Civil Procedure Act. 50 The position in Sibroll was different because the company in liquidation had no right to bring the preference proceedings on behalf of the liquidator. The company could not act as agent of the liquidator for that purpose. In the present case the legislation specifically authorised the liquidator to act as agent for that purpose. He attempted to do so but made a mistake as to the name in which he sued.

Orders to be made 51 For the reasons I have given, the only challenge to BACF's judgment against the appellant (that is, that leave to amend the name of the plaintiff was wrongly granted) fails. 52 For reasons I have also given, the appellant is entitled to succeed on his claim for commission. It was common ground at the hearing of the appeal that if the appellant succeeded in his commission claim the amount of the judgment to which he would be entitled would exceed the amount of the judgment entered at first instance in favour of BACF against him, and that the appellant's claim against BACF would constitute a set-off. As the appellant indicated to the Court that he would not pursue his claim to the extent that it exceeded BACF's claim against him (because BACF is in liquidation), the appropriate result is that the monetary judgment in favour of BACF be set aside and that there be no monetary judgment in favour of the appellant. This reflects the fact that the claims negate each other. 53 The appellant argued that in these circumstances he should obtain an order for payment of his costs of the proceedings at first instance. On the other hand counsel for BACF relied on the fact that the appellant's Cross- Claim had not been purely defensive but had sought an amount considerably higher than sought by BACF from the appellant. BACF pointed in this regard to the fact that the Cross-Claim claimed commission (which would have been calculated at the rate of 5.5%) in relation to a loan facility of approximately $6 million that BACF allegedly arranged for the Government of Nauru. The appellant was ultimately unable to sustain this allegation in light of the evidence that became available to him but nevertheless, until well into the proceedings at first instance, BACF was entitled to regard the claim as much more than a defensive one. Looking at the position broadly, the position was in my view one where BACF failed in its claim because of the defensive aspect of the appellant's Cross-Claim (that is, the appellant proved a liability of BACF to him which was set off against, and therefore negated, the appellant's liability to BACF). To the extent that the Cross-Claim was more than a defence to BACF's claim against the appellant, it failed. In these circumstances my view is that each party should pay his/its own costs of the proceedings at first instance. As the appellant succeeded on appeal in having the judgment against him set aside, BACF should pay his costs of the appeal. The fact that he was able to do this upon the basis of his claim for commission but not upon the alternative basis that he relied upon concerning the name of the plaintiff is not in my view a reason to deprive him of his costs. 54 I accordingly propose the following orders: (1) Allow the appeal;

(3) Set aside the judgment entered at first instance in favour of BACF against the appellant in the sum of $202,739.73 and set aside the order that the appellant pay BACF's costs of the proceedings at first instance;

(4) Judgment for the appellant on BACF's claim against him;

(5) Judgment for BACF on the appellant's Cross-Claim against it;

(6) No order as to the costs of the proceedings at first instance;

(7) Order BACF to pay the appellant's costs of the proceedings on appeal;

(8) BACF to have a certificate under the Suitors' Fund Act 1951, if qualified. 55 YOUNG JA: I agree with Macfarlan JA.

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