Sibroll Pty Ltd v Mitch Properties Pty Ltd

5453/06 - SIBROLL PTY LTD v MITCH PROPERTIES PTY LTD JUDGMENT 1 HIS HONOUR: This is an interlocutory application by Sibroll Pty Ltd (in liquidation) (Sibroll) seeking orders that leave be granted to correct any mistake in the name of the plaintiff by amending the originating process under ss 64 and 65 of the Civil Procedure Act 2005 (NSW) to add the personal name of the court appointed liquidator of Sibroll, Mr Peter David Rodgers, as the second plaintiff to these proceedings. 2 The application was heard by me on 7 May 2007, Mr Philip Taylor SC appearing for the applicant and Mr S Golledge appearing for the respondent. Written submissions were furnished to me subsequent to the hearing. 3 The relevant background facts of the dispute are as follows. 4 The plaintiff company was registered in 1988 and carried on business until about 18 June 2002 as a holding company for commercial and residential real estate which it leased. 5 On 27 October 2003, this Court made orders that the plaintiff be placed into provisional liquidation and on 2 December 2003, orders were made placing the plaintiff into liquidation. Mr Peter David Rodgers was appointed liquidator. 6 On 24 October 2006, the plaintiff's solicitors, Streeter Commercial Lawyers (Streeters), filed an originating process with this Court. 7 The drafter of the originating process, Mr Andrew-Marcus Chee, a solicitor at Streeters, named the plaintiff as "Sibroll Pty Ltd (in liquidation) ACN 003 603 772". 8 The originating process is poorly drafted, though it appears that the main claim is for recovery of a preference or uncommercial transaction in the amount of $150,494 against the first defendant under s 588FF of the Corporations Act 2001 (Cth). 9 Section 588FF(3) of the Corporations Act as far as is relevant provides that an application under the section may only be made within three years after the relation-back day. 10 Pursuant to s 9 of the Corporations Act, the relation back day is 27 October 2003, being the date that the application to wind up Sibroll was filed. An action under s 588FF must, then, have been commenced before 27 October 2006. 11 It is common ground between the parties that the proceedings as brought by Sibroll were commenced in time. The objection is that they were brought by a person without standing to do so and that it is now too late to sue in the name of the correct plaintiff, Sibroll's liquidator. 12 On 8 December 2006, the solicitors for the first defendant, Blake Dawson Waldron, faxed a letter to Mr Chee pointing out a number of "procedural defects" in the drafting of the originating process, including the absence of the liquidator's name as a plaintiff as required by s 588FF of the Corporations Act. 13 On 13 February 2007, Mr Streeter filed an interlocutory application requesting that leave be granted to correct any mistake in the name of the plaintiff by amending the originating process under ss 64 and 65 of the Civil Procedure Act to add the personal name of the court appointed liquidator of Sibroll, Mr Peter David Rodgers, as the second plaintiff to these proceedings. 14 In a supporting affidavit, Mr Chee stated that he had no discussions with Mr Streeter or counsel as to the parties to the proceedings (Affidavit of Andrew-Marcus Chee in Support of Interlocutory Process, para 4). 15 Mr Chee also stated: "I was mindful of section 477(2)(a) of the Corporations Act 2001 ('the Act') which provides … that a liquidator of a company may bring proceedings in the name and on behalf of the company. At the time of drafting the originating process, when reading section 588FF of the Act, which refers to an 'application of a company's liquidator', I believed that, given section 477(2)(a) refers to a liquidator bringing proceedings in the name of the company and given that the order being sought in these proceedings is an order under section 588FF(1)(a) directing payment to the company, that the correct name of the plaintiff was the company in liquidation. I believed that the way the liquidator brought proceedings, or made an application, was through, and in the name of, the company in liquidation" (paras 5-6). 16 Mr Chee said in cross-examination "I consciously chose Sibroll because, as I say in my affidavit, I thought that is the manner in which the liquidator brings the proceedings". 17 The matters I need to consider may conveniently be dealt with under the following heads: A. What role ss 64 and 65 of the Civil Procedure Act 2005 (NSW) has to play in proceedings brought under s 588FF of the Corporations Act 2001 (Cth)? B. Do the facts and circumstances empower the court to grant the amendment and, if so, should the order requested be made?

I will deal with each of these matters in turn. 18 A. Section 64(1) and (2) of the Civil Procedure Act relevantly provides that at any stage of proceedings the court may order that any document in the proceedings be amended and that all such amendments are to be made for the purpose of determining the real questions raised by the proceedings, correcting any defect or error in the proceedings and avoiding multiplicity of proceedings. 19 Section 64(4) says "If there has been a mistake in the name of a party, this section applies to the person intended to be made a party as if he or she were a party". 20 Section 65 deals specifically with amendment of an originating process after the expiry of a relevant limitation period. 21 Sub-section (1) limits the application of the section to any proceedings which have already commenced before the expiration of a relevant limitation period. 22 Sub-section (2) allows a plaintiff to amend an originating process where the plaintiff has applied to the court for leave to do so after the expiration of the relevant limitation period and the court has granted leave under section 64(1)(b). 23 One of the type of amendments which may be made is "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": s 65(2)(b). 24 Finally, sub-section (3) provides that "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". 25 The wording of s 65(2)(b) reflects the general concern of the court in nineteenth-century English cases and carried through in the modern cases up to the present day, namely, that the alleged mistake must be a genuine mistake in all relevant senses of this phrase, taking into account the circumstances of the case, before the court will order an amendment. 26 I considered the operation of these sections in a matter arising under the Corporations Act in A & M Short Pty Ltd v Prestige Residential Marketing Pty Ltd (2005) 194 FLR 32; 54 ACSR 760. I there considered a number of authorities on the sections and corresponding provisions in England. I held that a response to a statutory demand which contained an error as to the name of the creditor was a mere misnomer. 27 In Short's case at FLR 38, I said that where there is a mere misnomer, the relevant document operates from the date of the filing of the document that contained the error so that there was no conflict with s 459G(2) of the Corporations Act which required such an application to be filed within a short time span. Of course, where there was no plaintiff or the wrong plaintiff, a different conclusion may be reached. 28 Since Short's case was decided, the High Court has on two occasions considered the application of State legislation impinging on time limits set by Federal legislation. 29 Before considering those cases, it must be noted that s 588FF(3) is in very strong terms; an application may "only be made" within the time laid down by the sub-section. In this regard, what the High Court said of the stark directory nature of similar words in David Grant & Co Pty Ltd v Westpac Banking Corp (1995) 184 CLR 265 is relevant. See also BP Australia Ltd v Brown (2003) 58 NSWLR 322. 30 In Agtrack (NT) Pty Ltd v Hatfield (2005) 223 CLR 251, a widow of a man who died in a plane crash sued the airline for common law negligence. She then, after the expiry of a two year limitation period, wished to add a count under Federal legislation. The High Court said that the facts on which the statutory count was based had already been pleaded so that the amendment was unnecessary. However, it also made comments that are pertinent to the current case. 31 At p 270, the Court accepted that the Victorian equivalent to ss 64 and 65 could not apply in an action brought under Federal law unless picked up under s 79 of the Judiciary Act 1903 (Cth). 32 Section 79 does not pick up a State law extending the time for bringing actions if the Federal Law extinguishes the right at the end of a set period of time. 33 The High Court then considered the problems in this area of the law in Gordon v Tolcher (2006) 81 ALJR 507. The basic point was whether the District Court Rules allowing for extensions of time could apply in light of s 588FF(3) of the Corporations Act. 34 Essentially, what occurred in Gordon's case was that, because of inaction, the proceedings had automatically been dismissed under the then District Court Rules. However, there was power in the Rules for the proceedings to be revived. 35 The District Court dismissed the claim for revival on the merits. However, the Court of Appeal allowed the revival. The High Court affirmed that decision but for reasons not here relevant, ruled that there was no power in the District Court to make the order requested. 36 The High Court ruled that because of the structure of Part 9.6A of the Corporations Act, s 588FF(3) of that Act did not operate so as to deny the operation of s 79 to pick up the relevant part of the District Court Rules as to revival. 37 It would seem to follow that ss 64 and 65 of the Civil Procedure Act are available to the plaintiff on this present application. 38 B. The currently received view of the effect of s 65(2)(b) of the Civil Procedure Act is that an order may be made to correct a mistake in the name of a party in circumstances which extend beyond a mere misnomer to cases where there has been a culpable mistake, including a mistake in giving the wrong name of the party intended to be sued: Bridge Shipping Pty Ltd v Grand Shipping SA (1991) 173 CLR 231. 39 The section does not authorise an additional party to be added, as opposed to substituting one alleged party for another: Hayward v Darling Downs Aircraft Services Pty Ltd [1993] 2 Qd R 153 and Sullivan v Van der Broek [1999] NSWSC 1177 (a decision of Windeyer J). 40 This leads to the inevitable dismissal of the interlocutory application because the only order sought is that the liquidator be added as a plaintiff. 41 However, it is prudent to canvass briefly the applicable legal principles in this sort of case to prevent a wider waste of resources on hearing an amended motion to substitute the liquidator (perhaps with the addition of the company) for the company in liquidation. 42 Although none were cited in argument, there are a number of authorities which support the view that, in certain circumstances, the Court ought to allow an amendment the effect of which is to add the name of an official receiver of a bankrupt, or a liquidator of a company, as a plaintiff in order to save the Statute of Limitations or similar statute. 43 In similar circumstances to the present case, in Brown v Fullerton (1844) 13 M & W 557; 153 ER 233, Parke B held that the court was obliged by precedent to allow the name of the assignee of a bankrupt to be added to the writ of summons and subsequent proceedings as a co-plaintiff in order to avoid the situation where, if the amendment were not made, the Statute of Limitations would be a bar to the recovery of the debt for which the action was brought. See also Baker v Neaver (1832) 1 C & M 112; 149 ER 336 and Carne v Malins (1851) 6 Exch 803; 155 ER 770. 44 Mr Golledge submits that as Mr Chee agreed in cross-examination that there was no mistake in naming the company as plaintiff in place of the liquidator and that he had made a conscious decision to formulate the proceedings in that way, Mr Chee's action is not an error in the nature of a misnomer, but rather is a simple error in identifying the party vested with the legal right to bring the proceedings. 45 On his own evidence, it is clear that Mr Chee consciously intended to commence the proceedings in the name of Sibroll Pty Ltd (in liq) as the sole plaintiff based on his own particular reading of the relationship between ss 477(2)(a) and 588FF(1)(a) of the Corporations Act. 46 The English Court of Appeal in Central Insurance Co Ltd v Seacalf Shipping Corporation (The Aiolos) [1983] 2 Lloyd's Rep 25 held that a proposed amendment by the plaintiff insurance company to add 28 persons/companies, who were entitled to the company's insurance policies, as new plaintiffs and add new claims against the defendant company should not be allowed. 47 Of the circumstances in that case, Lord Justice Oliver said at 29: "[I]t is clear that there was not in fact any mistake about the name of the person originally named as plaintiff, nor about the capacity in which he sued as plaintiff. The company was rightly described and was made plaintiff as the insurer of the goods. The mistake which was made was the mistake of thinking that the cause of action was vested in that plaintiff and in that capacity". 48 It seems to me that the present case is in like plight. The mistake was made after consideration as to think that the right of action was in the company in liquidation rather than the liquidator. 49 In possible anticipation of this finding, Mr Taylor indicated that he would then seek an order under s 65(2)(c) of the Civil Procedure Act to add a new cause of action by the liquidator under s 588FF of the Corporations Act. (Written Outline of Plaintiff's Submissions, para 20). 50 I should note that it is generally accepted that the purpose of s 588FF of the Corporations Act is to make sure that the defendant knows one way or the other at the expiration of the three year period whether any claim is to be made against it; see Rodgers v Commissioner of Taxation (1998) 88 FCR 61 and Gordon's case at 513. 51 Section 65(2)(c) provides that a court may grant leave for the plaintiff to amend an originating process so as "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". 52 Mr Taylor says that a cause of action by the liquidator under s 588FF of the Corporations Act would be "a new cause of action" under s 65(2)(c) of the Civil Procedure Act "if only because it is maintained (and relief is sought) by a different party, the liquidator". (Written Outline of Plaintiff's Submissions para 20). 53 If I am to make such an order it is to be done under s 64(1)(b) of the Civil Procedure Act. To do so I must abide by sub-section (2) which says that amendments must only be made for the purpose of determining the real questions raised, correcting any defect or error in the proceedings and avoiding multiplicity of proceedings. 54 If I permit a new cause of action to be added, there will be two separate plaintiffs asserting different rights in the one action. Sibroll will be asserting its rights against the first defendant and, for the first time in the proceedings, the first defendant will be faced with the assertion of the personal rights of the liquidator. 55 Mr Taylor submits that Sibroll will pursue a cause of action under s 1317H of the Corporations Act and the liquidator will pursue a cause of action under s 588FF of the Act. (Written Outline of Plaintiff's Submissions, para 13). 56 I do not consider it a proper exercise of the Court's power to allow amendments under ss 64 and 65 of the Civil Procedure Act, to permit such a situation to exist. 57 I also take into consideration in making that decision that, although section 588FF(3) is not, strictly speaking, a limitation of action provision, it is in like plight, and the deprivation of the defendant's right to rely on it is a significant factor. 58 For these reasons I cannot allow Mr Taylor's proposed alternative application to add the liquidator's claim under s 588FF of the Corporations Act as a new cause of action to the originating process. 59 Accordingly the present application must be dismissed with costs. 60 It may be necessary to decide whether the proceedings have been competently begun and whether they should now be dismissed. Accordingly, I will stand over the proceedings to the Corporations Judge's list for mention on Monday 25 June 2007.

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