Plaintiff v Defendants

(a) At all relevant times from around September 2002, de Gabriele, as the authorised representative of SPM, was retained by the plaintiff as his professional advisor to provide financial planning and investment advice according to his investor risk profile. This is defined by the plaintiff as "the SPM retainer". (para 6)

(b) Pursuant to the SPM retainer, de Gabriele gave the plaintiff certain advice, defined as "the balanced investor advice", "the balanced portfolio advice" and "the Westpoint promissory note advice" (collectively, "the SPM advice"). (paras 8-11)

(c) Acting in reliance on the SPM advice, in December 2002 the plaintiff borrowed $240,000 and invested it in the mezzanine notes. (para 12)

(d) The mezzanine notes issued to the plaintiff contained various terms as to the payment of interest and their redemption. The terms of the mezzanine notes were not honoured after 30 September 2005. (paras 15-22)

(e) In giving the Westpoint promissory note advice, de Gabriele breached various contractual duties of care imposed by the SPM retainer, including a duty to exercise reasonable care, skill or diligence when providing the advice. (paras 7 and 23)

(f) Further, by reason of having given the SPM advice, de Gabriele made certain representations and warranties, which are defined as "the Westpoint promissory note representations" (para 13), which:

(i) Were made in trade or commerce and were misleading or deceptive or likely to mislead or deceive, contrary to ss9 and/or 12(e) of the Fair Trading Act 1999 (Vic) ("FTA"); (para 24) and

(ii) Related to a financial product and were misleading or deceptive or likely to mislead or deceive, contrary to s1041H of the Corporations Act. (para 25)

(g) The same loss and damage is said to flow from the breaches of contract and the statutory breaches by de Gabriele, namely, the plaintiff has failed to recover the capital sum of $240,000 which he invested in the mezzanine notes, together with interest from 1 October 2005. (para 26)

(h) In or around September 2004, de Gabriele, whilst acting for and on behalf of Pyxus and as an authorised representative of Chimaera, was retained by the plaintiff to provide professional advice as to whether he should exit his investment in the mezzanine notes ("the Pyxus retainer"). (para 27)

(i) At a meeting in September 2004, de Gabriele, as servant or agent of Pyxus, advised the plaintiff not to exit his investment ("the Pyxus advice"). (para 31)

(j) As a consequence of having given the Pyxus advice, Pyxus is taken to have adopted and also given to the plaintiff all the earlier SPM advice and made the Westpoint promissory note representations. (para 32)

(k) By reason of the Pyxus advice, de Gabriele and Pyxus made certain representations and warranties to the plaintiff ("the Pyxus representations"). (para 34)

(l) Acting in reliance on the SPM advice, the Westpoint promissory note representations, the Pyxus representations, and de Gabriele's failure to advise at the September 2004 meeting that the plaintiff could exit his investment, the plaintiff did not exit the investment. (paras 35-36)

(m) In failing to advise the plaintiff to exit the investment, Pyxus breached various contractual duties of care imposed by the Pyxus retainer, including a duty to exercise reasonable care, skill or diligence when providing the Pyxus advice. (para 37)

(n) The Pyxus representations were:

(i) made in trade or commerce and were misleading or deceptive or likely to mislead or deceive, contrary to s53(g) of the TPA and/or ss9 and/or 12(e) of the FTA; (para 38)

(ii) made with respect to a future matter without reasonable grounds, contrary to s51A of the TPA; (para 39(a))

(iii) a misleading representation, contrary to s53(g) of the TPA; (para 39(a))

(iv) related to a financial product and were misleading or deceptive or likely to mislead or deceive, contrary to s 1041H of the Corporations Act. (para 40)

(o) The plaintiff claims against de Gabriele and Pyxus damages pursuant to ss82 and/or 87 of the TPA and/or s159 of the FTA and/or at common law. The particulars of loss and damage simply refer back to paragraph 26, which claims loss of the capital sum of $240,000 and interest since 1 October 2005. (para 41)

(p) The only claim apparently pleaded against Chimaera is that by the operation and force of s917E of the Corporations Act, Chimaera as the financial services licensee of de Gabriele and Pyxus, is directly liable to the plaintiff for that loss and damage. (para 42)

11 The plaintiff served an amended statement of claim in February 2007. Apart from removing the curious allegation in paragraph 32 (see sub-para (j) above), the amendments simply provided further particulars relating to the Pyxus retainer.

12 The defendants' defences, dated March 2007, only dealt with the factual matters constituting their answers to the plaintiff's allegations.

13 Pyxus and Chimaera subsequently served a proposed draft amended defence, which contained the following allegations, in the alternative to their denial of wrongdoing:

(a) At all material times prior to March 2004, de Gabriele was an employee and/or agent of SPM. (para 44)

(b) If de Gabriele gave any of the alleged advice, made any of the alleged representations or committed any alleged breach of contract, prior to March 2004, he did so as an employee and agent of SPM. (para 47)

(c) SPM is liable for any contravention by de Gabriele of ss12(e) or (n) of the FTA, s1041H of the Corporations Act, or the SPM retainer. (paras 48-9)

(d) The loss and damage claimed in paragraph 26 of the claim was caused by the acts or omissions of SPM and is the same loss as that claimed against Pyxus and Chimaera. (paras 50 and 51)

(e) The plaintiff's claim for loss and damage against Pyxus and Chimaera is an "apportionable claim" for the purposes of Division 2A of Part 7.10 of the Corporations Act, alternatively, Part VIA of the TPA, alternatively, Part IVAA of the Wrongs Act. (para 52)

(f) If the acts or omissions of de Gabriele, Pyxus or Chimaera caused the loss or damage alleged in paragraph 41, then each of SPM, de Gabriele, Chimaera and Pyxus is a "concurrent wrongdoer" within the meaning of s1041L of the Corporations Act, alternatively s87CB(3) of the TPA, alternatively s24AH of the Wrongs Act, and the liability of Pyxus and Chimaera is limited accordingly. (para 53)

14 The second draft claim seeks to make the following changes to the plaintiff's case:

(a) To change the characterisation of the contractual duty of care said to be owed under both the SPM and Pyxus retainers, from a duty "to exercise reasonable care, skill and diligence" to a duty "to exercise due skill and diligence", when providing the relevant advice. (paras 7 and 28)

(b) To allege that de Gabriele gave the Westpoint promissory note advice and made the Westpoint promissory note representations as a result of his negligence in failing to exercise reasonable care, skill and diligence whilst acting as professional adviser to the plaintiff. (para 25A)

(c) To delete the allegation that the Westpoint promissory note representations were misleading or deceptive and likely to deceive, contrary to ss9 and/or 12(c) of the FTA, and replace it with an allegation that they were made in contravention of ss12(e) (representations as to use or benefit) and (n) (false, misleading or deceptive in a material particular) of the FTA. (para 24)

(d) To delete the allegation that the Pyxus representations were misleading or deceptive or likely to mislead or deceive contrary to s53(g) of the TPA and/or ss9 and/or 12(c) of the FTA, and replace it with an allegation that they were made in contravention of s12DB(1)(e) of the Australian Securities and Investments Act 2001 (Cth) ("ASIC Act") (representations as to use or benefit) and s12(n) of the FTA (false, misleading or deceptive in a material particular). (para 38)

(e) In relation to the claim that the Pyxus representations were made as to a future matter without reasonable grounds, to bring that claim under s12BB of the ASIC Act, not s51A of the TPA. (para 39(a))

(f) To allege a misleading representation contrary to s12DB(1)(g) of the ASIC Act, instead of s53(g) of the TPA. (para 39(b))

(g) To claim the same loss and damage against Pyxus and Chimaera, but pursuant to ss12GF and/or 12GM of the ASIC Act instead of the TPA, as well as at common law.

15 Leave will be granted to the plaintiff to make all of these amendments, save for the proposed paragraph 25A.

16 The removal of any claim by the plaintiff under the TPA removes the need for the court to consider whether the plaintiff's claim under that Act is in substance, if not in form, a claim of contravention of s52 (which would be an "apportionable claim" under s87CB(1) of the TPA).

17 In considering the applications by Pyxus and Chimaera, I assume that the references in their draft defence to the TPA will be amended to refer to the equivalent provisions in the ASIC Act.

The employment dispute

18 Before considering the various statutory apportionment regimes, it is convenient to dispose of an evidentiary matter raised by the plaintiff.

19 The allegation that de Gabriele was employed by, or an agent of, SPM at all material times prior to September 2004, is an essential element in Pyxus and Chimaera's claim that SPM is a concurrent wrongdoer.

20 In support of their summons, Pyxus and Chimaera rely upon an affidavit of their solicitor, Jonathan Risby, sworn 26 April 2007. In paragraph 4, Mr Risby deposes that he has been informed by de Gabriele and believes that during the period from September 2001 until August 2004, de Gabriele was employed as a financial planner by SPM, and his dealings with the plaintiff in the relevant period were in the course of that employment and on behalf of SPM. Whilst not the most direct evidence, parties are entitled to rely on hearsay evidence for the purpose of interlocutory applications such as these.

21 In opposition to the summons, the plaintiff has produced to the court a document which it obtained on discovery from de Gabriele, being an executed services agreement with SPM dated 1 September 2001. The plaintiff says I should reject Mr Risby's affidavit, because clause 3.1 of that agreement provides that the legal relationship between SPM and de Gabriele is that of independent contractor "and not that of agent, employer, employee, partnership or joint venturers".

22 The initial term of the services agreement was from 1 September 2001 to 31 August 2002, and SPM had an option to extend the agreement for a further period of 1 year. The earliest relevant conduct by de Gabriele pleaded in the second draft claim commences "from around September 2002", that is to say, after the expiry of the initial term. The plaintiff has adduced no evidence as to whether the agreement was extended after 31 August 2002 (assuming, for present purposes, that it governed the parties' entire relationship in the previous year), or whether there was some other (and, if so, what) agreement between SPM and de Gabriele.

23 No doubt the precise nature of the relationship between de Gabriele and SPM will need to be examined at trial, on all the evidence. If the defendants are unable to satisfy the trial judge that the relevant employment or agency relationship existed at the relevant times, that may well have significant costs consequences for them. But for the purposes of these applications, it cannot be said (as the plaintiff asserts) that there is no evidentiary basis for allowing Chimaera and Pyxus to plead that de Gabriele was employed by, or an agent of, SPM.

Corporations Act

24 An "apportionable claim" for the purposes of Division 2A of Part 7.10 of the Corporations Act is defined in s1041L(1) as a claim for damages made under s1041I for economic loss or damage to property, caused by conduct in contravention of s1041H.

25 Here, the plaintiff claims that the Westpoint promissory note representations and the Pyxus representations constituted conduct by de Gabriele in relation to a financial product, which was misleading or deceptive, or likely to mislead or deceive, contrary to s1041H.[3]

26 Section 1041I creates a right of recovery of loss or damage caused by, amongst other things, a contravention of s1041H. The prayer for relief in the second draft claim does not actually refer to s1041I, but there would be no point in pleading the breaches of s1041H unless a claim was being made under s1041I. In fact, the plaintiff's first submissions, dated 2 May 2007, expressly concede that there is an apportionable claim within the meaning of s1041L(1) of the Corporations Act.

27 The next question is whether Pyxus, Chimaera and SPM are concurrent wrongdoers in relation to the claim under s1041I. According to s1041L(3), that will be so if each is:

one of 2 or more persons whose acts or omissions (or act or omission) caused, independently of each other or jointly, the damage or loss that is the subject of the claim.

28 The "damage or loss which is the subject of the claim" against Pyxus and Chimaera is that specified in paragraph 41 of the second draft claim, and is, self-evidently, the same damage or loss that is claimed against de Gabriele in paragraph 26. The draft amended defence alleges that that same loss was also caused by SPM, because the acts or omissions of de Gabriele which are alleged to have caused that loss were also the acts or omissions of SPM.

29 The plaintiff argues that SPM should not be regarded as having caused the loss which is the subject of the claim under s1041I, because it played no causative role in making the Pyxus representations. Accordingly, it is argued, SPM is not a concurrent wrongdoer. This argument is misconceived. If the acts or omissions of SPM caused the damage or loss which is the subject of the claim under s1041I, the words of sub-s1041H(3) make it plain that it does not matter whether the two or more concurrent wrongdoers caused the loss independently of each other or jointly. There is no added requirement that one or both of them must have had a causative, or any, role in the contravening conduct of the other.

30 It follows that the claim against Pyxus and Chimaera under s1041I is an apportionable claim in respect of which SPM would be a concurrent wrongdoer.

31 The consequence is that s1041N would apply, sub-ss(1) and (2) of which provide as follows:

(1) [Liability of concurrent wrongdoer] In any proceedings involving an apportionable claim:

(a) the liability of a defendant who is a concurrent wrongdoer in relation to that claim is limited to an amount reflecting that proportion of the damage or loss claimed that the court considers just having regard to the extent of the defendant's responsibility for the damage or loss; and

(b) the court may give judgment against the defendant for not more than that amount.

(2) [Liability where claims are mixed] If the proceedings involve both an apportionable claim and a claim that is not an apportionable claim:

(a) liability for the apportionable claim is to be determined in accordance with the provisions of this Division; and

(b) liability for the other claim is to be determined in accordance with the legal rules, if any, that (apart from this Division) are relevant.

32 Pyxus and Chimaera have pointed out that there is a possible tension between s1041N(2) on the one hand, and s1041L(2) which provides that:

there is a single apportionable claim in proceedings in respect of the same loss or damage, even if the claim for the loss or damage is based on more than one cause of action (whether or not of the same or a different kind).

33 The meaning of s1041L(2) is not easy to extract. The defendants argue that the construction which seems most naturally to arise is that all of the claims in the proceeding that are in respect of the same loss are a single apportionable claim, regardless of whether they are individually apportionable claims. This reading flows from the fact that the words "(whether or not of the same or a different kind)" in relation to causes of action suggest that sub-s1041L(2) is not simply referring to other apportionable claims (in this context, claims under s1041I for a loss caused by contravention of s1041H) but to claims generally, so long as they are in respect of the same loss. After all, there is only one kind cause of action with which s1041L(1) is concerned, namely a claim under s1041I caused by a contravention of s1041H.

34 The defendants suggest that one way to resolve that tension is to regard s1041N(2) as directed to claims which are not for the same damage or loss as the apportionable claim.

35 If these submissions by the defendants are correct, then, as all claims in this proceeding are for the same loss or damage, there would be a single apportionable claim under the Corporations Act. In that case, s1041N(1) would apply and there would be no need to refer to the ASIC Act or the Wrongs Act. In addition, there would be no need to join SPM, because under s1041N(4) the court may have regard to the comparative responsibility of a concurrent wrongdoer who is not a party to the proceeding.

36 It is not necessary for me to determine at this stage whether liability in this case should be determined in accordance with sub-s(1) or (2) of s1041N. That is a matter which should be determined at trial, on the final pleadings and after hearing more detailed argument from all parties. For the purposes of their amendment application, Pyxus and Chimaera's draft defence adequately pleads the matters upon which they rely in support of their assertion that there should be apportionment under s1041N of the Corporations Act, and those amendments should be allowed.

37 Given that the plaintiff may fail in its claims under the Corporations Act, or withdraw those pleadings, or s1041L(2) may ultimately be held not to have the meaning for which the defendants contend, I will consider the remaining legislation.

ASIC Act

38 The relevant provisions are found in Subdivision GA of Division 2 of the ASIC Act. They are in the same terms as the corresponding provisions in the Corporations Act, save that an apportionable claim is defined in s12GP(1) as a claim for damages made under s12GF for economic loss or damage to property caused by conduct done in contravention of s12DA. Section 12DA is equivalent to s52 of the TPA, save that it only applies to conduct in relation to financial services.

39 The second draft claim alleges that the Pyxus representations contravene the following provisions of the ASIC Act (in substitution for the equivalent provisions in the TPA):

(a) s12DB(1)(e) [sic][4], in that they were false representations made in trade or commerce in connection with the supply of goods and services that the goods or services had uses or benefits they did not have; (para 38(i)) and

(b) s12DB(1)(g), in that they were false or misleading representations concerning the existence, exclusion or effect of a right. (para 39(b))

40 The plaintiff claims damages against Pyxus and Chimaera under s12GF of the ASIC Act. The question which arises is whether, for the purposes of the definition of an "apportionable claim" (s12GP(1)), the claim for damages is a claim for loss and damage "caused by conduct that was done in contravention of s12DA".

41 The conduct which is alleged to have contravened ss12DB(1) in this case, would also constitute misleading and deceptive conduct contrary to s12DA. I agree with the defendants that there is no doubt that the loss claimed under s12GF would have been caused by conduct which was in fact done in contravention of s12DA. The question is whether the plaintiff can escape that conclusion simply by framing his claim only under s12DB, and not under s12DA.

42 The defendants referred me to the explanatory memorandum to the Corporations Law Economic Reform Programme (Audit Reform and Corporate Disclosure) Bill 2003, which set out the objectives of the introduction of the proportionate liability regime as being to:

(a) Prevent the 'deep-pocket' syndrome which is synonymous with professionals. This syndrome occurs when professionals are the targets of negligence actions not because of culpability but because they are insured and have the capacity to pay large damages awards;

(b) Allow insurers to more accurately price risk. Currently under joint and several liability insurers have to price for the negligent actions of third parties. Proportionate liability enables insurers to insure only against the negligent conduct of the insured;

(c) Assist professionals to obtain suitable cover at more reasonable premiums;

(d) Limit the liability of defendants for the loss suffered by a plaintiff to the extent to which each defendant is responsible for the plaintiff's loss.

43 There is much force in the defendants' submission that the plaintiff's narrow construction would permit the objects of the legislation to be defeated in many cases, simply by the plaintiff changing the legal label attaching to the contravening conduct.

44 Once again, it is not necessary for me to finally determine these issues. For the purposes of the defendants' amendment application, I am satisfied that there is at least an arguable case that the apportionment provisions of the ASIC Act apply in this case, and Pyxus and Chimaera should be allowed to make the relevant amendments.

45 Given that the plaintiff may fail in its claims under the ASIC Act, or withdraw those pleadings, it is necessary to consider the remaining legislation.

The Victorian legislation

46 The proportionate liability provisions relating to the FTA are contained in Part IVAA of the Wrongs Act. The scheme of the state legislation is broadly the same as in the federal legislation, save in respect of concurrent wrongdoers who are not parties to the litigation (which will be discussed below).

47 In relation to the FTA, the definition of apportionable claims in s24AF(1)(b) of the Wrongs Act refers to "a claim for damages for a contravention of s9" of the FTA. Section 9 of the FTA contains the general prohibition on engaging in misleading and deceptive conduct.

48 Here, the plaintiff claims damages under s159 of the FTA, on the basis that the Westpoint promissory note representations and the Pyxus representations were made in contravention of the following provisions of the FTA:

(a) s12(e), being representations as to use or benefit; and

(b) s12(n), being representations made in trade or commerce that were false or misleading in a material particular.

49 The plaintiff proposes to amend so as to delete his earlier claim that the very same conduct also constituted a breach of s9 of the FTA. However, the conduct which the plaintiff pleads as contravening ss12(e) and (n) would in fact also involve a contravention of s9 of the FTA, whether pleaded as such or not. As with the ASIC Act, the question is whether the plaintiff can escape that conclusion simply by framing his claim only under s12, and not under s9.

50 Part IVAA of the Wrongs Act was inserted by the Wrongs and Limitations of Actions Acts (Insurance Reform) Act 2003. The explanatory memorandum for the Bill for that Act makes clear in its commentary to clause 2 that the proportionate liability provisions are part of the national scheme discussed above. The second reading speech delivered by the Premier on 21 May 2003 said little specifically about proportionate liability, but in its introductory remarks makes it clear that the reforms contained in the Bill were a response to concerns about insurance, in particular professional indemnity and public liability insurance. It may thus be inferred that the objectives of the proportionate liability legislation enacted by Victoria are similar, if not the same, to those articulated in the explanatory memorandum to the federal legislation.

51 If this is accepted, then for the reasons articulated above, the defendants argue that a construction of s24AF(1)(b) which advances those objectives should be preferred. That construction would apply the definition of apportionable claim to all claims for damages under s159 of the FTA based on conduct that in fact contravened s9, whether or not the plaintiff expressly pleads that section. As with the earlier legislation, it is at least arguable for the purposes of these applications that the plaintiff's claims are apportionable.

52 Further issues arise in relation to the plaintiff's proposed claims against de Gabriele and Pyxus for damages for breach of contract and against de Gabriele for negligence. Section 24AF(1)(a) of the Wrongs Act defines an apportionable claim as:

a claim for economic loss or damage to property in an action for damages (whether in tort, in contract, under statute or otherwise) arising from a failure to take reasonable care.

53 The plaintiff's contractual claims involve breaches of an implied term of the relevant retainer that de Gabriele would exercise "due skill and diligence" when providing the advice which he was retained to provide. The implied term was previously pleaded as a duty to exercise "reasonable care, skill and diligence". In either formulation, the term was said to be implied "by reason of the need to give business efficacy to the Pyxus retainer".

54 There is implied by law in every contract for services a term that the party to provide those services will exercise reasonable care and skill in doing so.[5] That being so, I agree with the defendants that it is difficult to see why any implication in fact of a term requiring the exercise of "due skill and diligence" would or could be necessary.

55 However, even supposing that the alleged implied term did add something to the term already implied by law, it is not alleged that the obligation implied by law to exercise reasonable care and skill was thereby negatived. Thus, whether or not the plaintiff has pleaded it, the SPM and Pyxus retainers did contain the obligation of reasonable care and skill which the law implies in such contracts.

56 I also agree with the defendants that it is very difficult conceptually to distinguish the content of an obligation to exercise "reasonable care and skill" from that of an obligation to exercise "due skill and diligence". If "due" does not mean "reasonable", then it is difficult to know what, if anything, it means.

57 The facts alleged by the plaintiff in this proceeding are, in substance, that the implied terms of the SPM and Pyxus retainers were breached by failure to take reasonable care. It is instructive that the plaintiff, having deleted "reasonable care" from the body of the relevant paragraphs, has nevertheless left the particulars unaltered.

58 For the reasons already advanced in earlier contexts, it is at least arguable that a claim should be regarded as apportionable under s24AF(1)(a) of the Wrongs Act, if the facts on which the claim is based include allegations of a failure to take reasonable care, whether or not the plaintiff chooses to give it that name. In other words, it is arguable that an apportionable claim is a claim for economic loss or damage to property that arises, on the facts, from a failure to take reasonable care. The proposed amendments to this part of the defence should also be permitted.

59 The position would be even clearer if the plaintiff were permitted to amend so as to add the proposed paragraph 25A. This is the proposed pleading that de Gabriele gave the Westpoint promissory note advice and made the Westpoint promissory note representations as a result of his negligence in failing to exercise reasonable care, skill and diligence.

60 I agree with de Gabriele's submission that the proposed paragraph 25A should not be allowed in its current form, because it is embarrassing and liable to be struck out. The plaintiff has not pleaded any duty of care; the relevant facts and circumstances said to give rise to, or the scope and content of, the legal duty said to have been breached; or the acts or omissions said to constitute the breaches of duty. There is simply a bare assertion of negligence.

61 If such a claim in negligence were to be properly pleaded and particularised, there could be no doubt about the application of Part IVAA of the Wrongs Act to that claim, which would clearly be one "arising from a failure to take reasonable care."

Joinder of SPM

62 The necessity for joinder of SPM arises if the Wrongs Act is the relevant proportionate liability legislation governing the claims made by the plaintiff under state law. The necessity arises from s24AI(3) of the Wrongs Act, which provides that:

In apportioning responsibility between defendants in the proceeding the court must not have regard to the comparative responsibility of any person who is not a party to the proceeding unless the person is not a party to the proceeding because the person is dead or, if the person is a corporation, the corporation has been wound-up.

This may be contrasted with the federal legislation, which permits apportionment without requiring that all persons who are responsible for the loss be parties to the proceeding. Even though not required by the federal Acts, all of the proportionate liability regimes in fact confer power on the court to give leave to join a party such as SPM to the proceeding.

63 Although SPM is in liquidation, its winding up has not been completed, so it would have to be joined as a party by virtue of s24AI(3) of the Wrongs Act, if the other defendants wish to rely upon the apportionment regime.

64 Section 24AL of the Wrongs Act provides that the court may give leave for any persons who are concurrent wrongdoers in relation to an apportionable claim to be joined "as defendants" in a proceeding in relation to that claim. "Defendant" is defined in s24AE as including any person joined as a defendant or other party to the proceeding (except a plaintiff), whether joined under Part IVAA of the Wrongs Act, under rules of court or otherwise.

65 The plaintiff argues that, if SPM is to be joined at all, it should be joined as a third party. I agree with Pyxus and Chimaera that SPM should be joined as a defendant, not a third party, for the following reasons. The defendants make no claim against SPM which could be the subject of a third party notice. The Wrongs Act clearly envisages the possible joinder of such a person as a defendant, for the purpose of apportioning the defendants' respective liability to the plaintiff. In so far as the plaintiff's submissions seem to be driven by a concern as to who will pay the costs occasioned by SPM's joinder, the ultimate responsibility for those costs is a matter which can be determined at trial, and is not dependent on the capacity in which SPM is joined.

Joinder of a company in liquidation

66 A question arises as to whether there is a further requirement for leave under s471B of the Corporations Act, which relevantly provides that a person cannot "begin or proceed with a proceeding in a court against a company" which is being wound up, without the leave of the court. The question is whether adding SPM as a defendant in these circumstances amounts to beginning a proceeding or, put another way, will the result of adding SPM as a defendant be that there is in existence a proceeding against SPM?

67 Ordinarily, of course, there could be no doubt about that. But the Wrongs Act creates the unusual situation that, although:

(a) The defendants cannot bring a proceeding for contribution against SPM;

(b) The defendants do not claim any relief against SPM in favour of the plaintiff; and

(c) The plaintiff, with good reason, has no interest in pursuing a claim for relief against SPM,

it is necessary that SPM be a party to the proceeding.

68 The policy of, and jurisprudence relating to, s471B is to require that all claims against a company in liquidation be made by the submission of a proof of debt to the liquidator, unless the claimant can establish some good reason for departing from that process.[6] In this way, expedition and economy can be obtained, and assets preserved for the benefit of creditors or contributories. Courts have adopted a liberal and purposive approach to determining the question whether a particular step or procedure is within the prohibition of the section. Applying that approach in this case would lead to the conclusion that in seeking to join SPM, Pyxus and Chimaera are not beginning a proceeding against it, within the meaning of s471B.

69 Here, Pyxus and Chimaera cannot lodge a proof of debt, as they have no claim against SPM. Yet they are clearly entitled under the apportionment legislation to seek the joinder of SPM, even though it is in liquidation. In those circumstances, I conclude that leave should be granted, if (contrary to the previous paragraph) it is required.

Conclusion

70 It follows that there should be appropriate orders to the following effect:

(1) The plaintiff have leave to file and serve a further amended statement of claim in substantially the same form as the second draft claim, excluding the proposed paragraph 25A.

(2) Leave be granted to join SPM as a defendant to the proceeding and the writ be amended accordingly.

(3) Pyxus and Chimaera have leave to file and serve an amended defence and counterclaim in substantially the same form as the proposed amended defence, save that references to the TPA be replaced by relevant references to the ASIC Act.

71 I will hear from the parties as to the precise form of orders, and as to costs.

[1] Corporations Act 2001, Part 7.10, Div. 2A; Australian Securities and Investments Act 2001 Div. 2, Subdiv. GA

[2] In doing so, I assume that the plaintiff will file and serve a further amended statement of claim substantially in the form of the second draft claim.

[3] Section 1041H is equivalent to s52 of the TPA, save that it is limited to conduct relating to financial products and services.

[4] This seems to be a mistaken reference, as the relevant sub-section should be (c).

[5] Astley v Austrust Ltd (1999) 197 CLR 1 at [44] - [48].

[6] See the discussion in McPherson's Law of Company Liquidation (3rd ed, 1987) at pp 180-186, and by Einstein J in Ingot Capital Investments Pty Ltd v Macquarie Equity Capital Markets [2003] NSWSC 307; (2003) 45 ACSR 224 at [32]- [47], and in particular, the passage from Ogilvie-Grant v East (1983) 7 ACLR 699 quoted at [33].