FEDERAL COURT OF AUSTRALIA

De Brett Seafood Pty Ltd v Qantas Airways Limited (No 2) [2011] FCA 894

THE COURT ORDERS THAT:

1.    Lufthansa Cargo Aktiengesellschaft be substituted for Deutsche Lufthansa Aktiengesellschaft (ARBN 495 323) as the second respondent in the proceeding.

2.    The costs of the application be reserved.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011

REASONS FOR JUDGMENT

1    The applicants have moved the Court for an order that Lufthansa Cargo Aktiengesellschaft (“LCAG”) be substituted for Deutsche Lufthansa Aktiengesellschaft (ARBN 495 323) (“DLAG”) as the second respondent in the proceeding.

2    The applicants’ motion was opposed by DLAG.

3    The applicants’ class action against nine respondents, including DLAG, was commenced on 11 January 2007. The applicants allege that the respondents entered into a global cartel arrangement to which they gave effect in Australia thereby causing damage to those depending on airfreight for importing and exporting goods. It was alleged that the respondents had contravened s 45(2) of the Trade Practices Act 1974 (Cth) (“the TP Act”) and were liable for damages under s 82 of that Act.

4    The applicants originally relied on both O 6 r 11 and Order 13 r 2 of the Federal Court Rules to support their present application but, in argument, relied only on the latter provision.

5    Relevantly, O 13 r 2 provided:

“(1)    Subject to the following provisions of this rule, the Court may, at any stage of any proceeding, order that any document in the proceeding be amended, or that any party have leave to amend any document in the proceeding, in either case in such manner as the Court thinks fit.

(2)    …

(3)    Where an application to the Court for leave to make the amendment mentioned in subrules (4), (5), (6) or paragraph (7)(a) is made after any relevant period of limitation current at the date of commencement of the proceeding has expired, the Court may, nevertheless, grant such leave in the circumstances mentioned in that subrule if it thinks it is just to do so.

(4)    Where there has been a mistake in the name or identity of a party, an amendment to correct the name of the party may be made notwithstanding that the effect of the amendment is to substitute another person as a party.

(5)    Where an order to correct a mistake in the name of a party has the effect of substituting another person as a party, the proceeding shall be taken to have commenced with respect to that person on the day the proceeding commenced.

…”

6    DLAG opposed the application on two main grounds. They were that:

    The applicants were not mistaken or had not established that they were mistaken when they chose to commence the proceeding against DLAG rather than LCAG.

    If successful, the application would prejudice LCAG’s rights to claim the benefit of limitation periods.

7    DLAG accepted that Order 13 r 2 applied to cases “where the plaintiff, intending to sue a person he or she identifies by a particular description, was mistaken as to the name of the person who answers that description”: see Bridge Shipping Pty Ltd v Grand Shipping SA (1991) 173 CLR 231 at 261 (per McHugh J with whom Brennan and Deane JJ agreed). It submitted, however, that the affidavit evidence, filed in support of the application, failed to establish that a mistake had been made, explain how any mistake had occurred and explain why the applicants had not moved earlier to correct the alleged mistake.

8    DLAG further submitted that material appearing in the principal affidavit relied on by the applicants and exhibits thereto supported an inference that the applicants had made a conscious decision to proceed against DLAG rather than LCAG. It directed attention to the following information:

    In 2006 there was publicly available information which clearly identified LCAG as the Lufthansa entity operating its freight business;

    This information had been considered by the applicants no later than August 2007 and, possibly, prior to the proceeding being commenced.

    The applicants chose to proceed against both the parent companies and operating subsidiaries of other respondents, namely, Singapore Airlines and Air New Zealand;

    The applicants’ statement of claim alleged that the relevant air-freight services were supplied by both the respondents, by themselves, or by bodies related to them. There was, therefore, no logical necessity for the corporate entity which had entered into the cartel arrangement to be the same entity which provided freight services; and

    As LCAG ceased to be registered in Australia after 26 April 2006, the applicants would have had to make an application for an order for service out of the jurisdiction in order to proceed against LCAG. DLAG, on the other hand, remained registered at relevant times under Part 5B.2 of the Corporations Act 2001 (Cth).

9    DLAG also relied on an affidavit, dated 20 August 2007, in which the solicitor, formerly having carriage of the matter on behalf of the applicants, referred to Lufthansa’s annual reports for 2006 in which the respective roles of DLAG and LCAG are explained.

10    The applicants acknowledged that they had had access to the 2006 report and other Lufthansa documents which referred to DLAG as the parent company and LCAG as the subsidiary which undertook air cargo operations. They pointed however to equivocal statements such as the one in the annual report that LCAG conducted certain of its business by transporting cargo in the hulls of DLAG passenger aircraft.

11    The applicants’ original statement of claim pleaded that DLAG “carried and carries on business, inter alia, as a carrier of international air-freight to and from Australia” and that DLAG “carried and carries on the said business in Australia within the meaning of the [Act].” Although the statement of claim has been amended on a number of occasions these allegations are to be found in all versions.

12    Each version of the applicants’ statement of claim carried a certification, pursuant to O 11 r 1B of the Federal Court Rules by the solicitor having carriage of the matter stating that the factual and legal material available to her at the relevant time provided a proper basis for each allegation in the pleading. The solicitor who originally had carriage of the matter is no longer employed by the applicants’ solicitors. The solicitor who is presently performing that role made contact with the former solicitor and has deposed on affidavit that the former solicitor had advised her that she had, in fact, been mistaken at relevant times as to which entity carried goods into and from Australia.

13    Despite being aware that LCAG and not DLAG carried air-freight into and out of Australia at relevant times, DLAG’s solicitors did not advise the applicants’ solicitors of this fact.

14    As a result of a number of interlocutory attacks on the efficacy of the applicants’ pleadings DLAG was not called on to plead to these allegations until February 2011. When it did so it denied both the allegations and pleaded that LCAG had conducted the air-freight business at relevant times. Interestingly, a number of other respondents, in their defences, admitted the allegations relating to DLAG even though those allegations were not made against them. They presumably dealt with the issue because of the underlying allegation of collusion between the parties alleged to have formed the cartel.

15    The applicants also stressed that DLAG had not, at any time since the commencement of the proceeding, applied for summary judgment in its favour on the ground that it had a complete defence to the applicants’ claims because it had not, at any relevant time, carried air-freight into and out of Australia. On the contrary, it had been an active participant in interlocutory proceedings including applications to strike-out the applicants’ pleadings and to transfer the matter to another registry of the Court.

CONSIDERATION

16    In Bridge Shipping the High Court considered the meaning and effect of the Victorian equivalent of O 13 r 2. That rule was Rule 36.01(4) of the rules of the Supreme Court of Victoria. It differed from O 13 r 2(4) in that it provided for the correction of “[a] mistake in the name of a party”. It did not extend to the “identity” of a party.

17    McHugh J (with whom Brennan and Deane JJ agreed) held (at 260-1) that:

“Rule 36.01(4) is a remedial rule and should be given a beneficial interpretation. It is proper to give it the widest interpretation which its language will permit. It should be interpreted to cover not only cases of misnomer, clerical error and misdescription but also cases where the plaintiff, intending to sue a person he or she identifies by a particular description, was mistaken as to the name of the person who answers that description.

…

The rule imposes three limitations on a person’s right to amend. First, there must be a mistake. Secondly, the mistake must be “in the name of a party”. Thirdly, the court may only make the order where it is satisfied that any other party to the proceeding would not by reason of the order be prejudiced in the conduct of his or her claim or defence in a way that could not be fairly met by an adjournment, an award of costs or otherwise: r 36.01(6).”

18    The application to amend in Bridge Shipping failed in circumstances in which the defendant had issued a third party notice against the owner of a vessel in which goods had been damaged during a voyage. The defendant later found that, at the time at which the damage had occurred, the vessel was under charter to another company. It applied to substitute that other company as the third party in place of the owner. This application failed. The mistake was held not to be “in the name of a party” because the defendant had intended to sue the owner of the vessel considering, wrongly, that its right of action lay against that person.

19    In Bridge Shipping, McHugh J referred to an English decision which he held had been correctly decided. It was Evans Constructions Co. Limited v Charrington and Co Limited [1983] QB 810. His Honour dealt with this case (at 256-7) as follows:

In Evans Constructions Co. Ltd. v. Charrington & Co. Ltd. the Court of Appeal, by majority, gave O.20, r.5 a wide meaning. In August 1970, Evans Constructions Co. Ltd. (“Evans”) had taken a lease of various buildings from Charrington and Co. Ltd. (“Charringtons”) for use in connection with its business. Charringtons assigned the reversion to Bass Ltd. (“Bass”), another company in the same commercial group, but continued to act as managing agent for Bass. In 1981, Charringtons, as agent for Bass, wrote to Evans enclosing a notice terminating the tenancy in April 1982. Under the Landlord and Tenant Act 1954 (U.K.), Evans was entitled to apply to the County Court for a new tenancy. The application had to be made not less than two months nor more than four months after the serving of the landlord’s notice. The application which Evans made to the County Court contained the error that Charringtons was the other party to the lease and the respondent to the application. Subsequently, Evans sought to join Bass as an additional respondent. The County Court allowed the application under the provisions contained in O.20 r.5. The Court of Appeal dismissed the appeal but decided that Bass should be substituted for Charringtons.

On appeal, Donaldson L.J accepted that it was the intention of the solicitor for Evans to sue the relevant landlord. Accordingly, his Lordship found that there was a genuine mistake of a character to which O.20, r.5(3) could apply. Donaldson LJ said ibid., at p 821:

“In applying Ord.20, r.5(3) it is, in my judgment, important to bear in mind that there is a real distinction between suing A in the mistaken belief that A is the party who is responsible for the matters complained of and seeking to sue B, but mistakenly describing or naming him as A, and thereby ending up suing A instead of B. The rule is designed to correct the latter and not the former category of mistake. Which category is involved in any particular case depends upon the intentions of the person making the mistake and they have to be determined on the evidence in the light of all the surrounding circumstances.”

Waller L.J. who dissented said ibid., at p 816:

“In the present case there was no mistake as to name. Mr Greenwood, Evans’ solicitor, in his affidavit frankly stated he thought Charringtons was the landlord. The mistake here was not a mistake as to name; it was a mistake

as to identity.”

Evans Constructions was followed by the New South Wales Supreme Court in Lloyd Steel (Aust) Pty Ltd v Jade Shipping SA (1985) 1 NSWLR 212. In that case, in circumstances which were not materially different from those in Bridge Shipping, Clarke J granted an application for amendment because 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”: see at 217. In Bridge Shipping McHugh J distinguished Lloyd Steel on the basis that “[t]he 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’ ”: see at 262. Toohey J drew a similar distinction (at 251) when he said:

“Where an application under r.36.01(4) is resisted, the task for the Court is to characterize the mistake which the applicant claims to have made. In the present case, if Bridge Shipping intended, by its third party notice, to join the carrier of the goods in the proceeding and wrongly concluded Grand Shipping to be the carrier, it is but a short step to conclude that Bridge Shipping made a mistake in the name of the third party. Even on that approach, it would not be right to say that it was a mere case of a misnomer. It was more than that but it was still a “mistake in the name of a party” within r.36.01. But if, as the material before us shows, Bridge Shipping intended to join Grand Shipping as a third party because it understood no more than that Grand Shipping was the owner of the ship and that the bill of lading had been issued on its behalf, the situation was not one of mistake in the name of the third party.” (Emphasis added)

20    I am satisfied on the evidence that the applicants’ solicitors at all relevant times intended to sue the Lufthansa entity which carried air freight into and out of Australia. The solicitors mistakenly believed that DLAG was that entity. So much emerges from the terms of successive statements of claim which the applicants’ solicitors certified were founded on factual and legal material which supported the allegations made. DLAG did nothing to disabuse the applicants and, by its conduct, implied that it had been a carrier of air freight to and from Australia at relevant times.

21    This mistake fell within the range of errors comprehended by O 13 r 2. It was, consistently with Bridge Shipping, a mistake as to the name of the respondent. It was also a mistake as to the identity of the appropriate respondent. The applicants intended to take action against the Lufthansa entity which carried the goods to and from Australia. DLAG was not joined as a respondent because of a mistaken belief, on the part of the applicants, as to the capacity in which it acted. The present case is more akin to Lloyd Steel in that the applicants believed, in part at least, on the basis of ambiguous publications of DLAG, that DLAG was the corporate body which carried air freight to and from Australia.

22    DLAG’s second objection was that, if leave to amend were granted, LCAG’s rights to claim the benefit of limitation periods would be prejudiced. This may be accepted. It is, however, a consequence which is expressly contemplated by O 13 r 2(3). It is by no means clear that the relevant limitation periods have expired, at least in respect of some of the conduct about which complaint is made. In any event, I consider that, in the circumstances, and, in particular, the conduct of DLAG in the period since the proceeding was commenced, it is just to grant leave to amend.

23    In this context I note the submission of DLAG that the benefits of a limitation period ought not lightly be dispensed with and that, accordingly, “an order for substitution should only be made where there are special circumstances (for example a genuine mistake in the name of a party) justifying an extension of the limitation period.” For reasons which I have already given I consider this to be a case in which a genuine mistake as to the name and identity of the proper respondent has been made.

DISPOSITION

24    The application will be granted.

Associate:

Dated:    8 August 2011