FEDERAL COURT OF AUSTRALIA

Robinson, in the matter of Reed Constructions Australia Pty Limited (in liq) v JFK Interiors Australia Pty Limited [2015] FCA 1500

IN THE MATTER OF REED CONSTRUCTIONS AUSTRALIA PTY LIMITED (IN LIQUIDATION) ACN 003 340 878

REASONS FOR JUDGMENT

1    By interlocutory process filed on 16 October 2015, the plaintiffs applied for orders under r 8.21(1) of the Federal Court Rules 2011 (Cth), specifically paragraphs (c) or (d), to further amend the amended originating application filed on 12 June 2015 to correct the name or identity of the tenth defendant from “AJ Lucas Group Limited ACN 060 309 104” (“Group”) to “AJ Lucas Operations Pty Limited ACN 087 777 633” (“Operations”).

2    By interlocutory process filed on 3 November 2015, Group sought orders setting aside orders made by Gleeson J on 12 June 2015 (giving leave to join the second to fifteenth defendants and to file the amended originating process which set out the claims against the second to fifteenth defendants) insofar as Gleeson J’s orders applied to Group. Alternatively, Group sought an order that the amended originating process and the statement of claim be struck out insofar as they apply to the tenth defendant. Alternatively, Group sought summary judgment against the plaintiffs.

3    On 21 December 2015, I indicated to the parties that I would make orders under r 8.21(1)(d) to the effect set out in [1] and dismiss Group’s interlocutory process. Following submissions as to costs, I indicated the costs orders I would make. On 22 December 2015, I made orders in a form agreed by the parties reflecting my decisions. These are my reasons for making those orders, expanded from the ex tempore reasons given on 21 December 2015.

Background

4    The first plaintiff (“Mr Robinson”) is the liquidator of the second plaintiff (“Reed”). Prior to its insolvency, Reed’s business was building and construction. On 15 June 2012, a director of Reed appointed joint administrators. On 9 July 2012, Reed was wound up in insolvency: In the matter of Reed Constructions Australia Pty Ltd [2012] NSWSC 1045.

5    It is not contentious that the relation-back day for the purposes of s 588FE(2) of the Corporations Act 2001 (Cth) was 15 June 2012 and that the relevant limitation period in which the liquidator must commence proceedings under s 588FF(1) is set out in s 588FF(3) which provides as follows:

(3)    An application under subsection (1) may only be made:

(a)    during the period beginning on the relation‑back day and ending:

(i)    3 years after the relation‑back day; or

(ii)    12 months after the first appointment of a liquidator in relation to the winding up of the company;

whichever is the later; or

(b)    within such longer period as the Court orders on an application under this paragraph made by the liquidator during the paragraph (a) period.

6    Accordingly, any proceedings under s 588FF(1) to recover the proceeds of any unfair preference, insolvent transaction or voidable transaction must have been commenced by the plaintiffs by 15 June 2015 unless an extension of time was obtained by that date and no such extension was sought or obtained: see Grant Samuel Corporate Finance Pty Ltd v Fletcher (2015) 254 CLR 477; [2015] HCA 8 (“Grant Samuel”) at [17].

7    On 12 June 2015, the plaintiffs commenced proceedings to recover moneys from the first defendant. On the same day Gleeson J granted the plaintiffs leave to join the second to fifteenth defendants under r 9.05 and to file an amended originating process. By the amended originating process, the plaintiffs claimed declarations that payments made by Reed to the tenth defendant on 3 and 14 February 2012 for an aggregate amount of $150,459.57 were unfair preferences, insolvent transactions and voidable transactions and the plaintiffs sought an order that the tenth defendant pay that amount to Reed. The application to join the second to fifteenth defendants was made ex parte and commenced with some urgency.

8    A statement of claim was filed and served on the defendants on 17 September 2015.

Issues

9    The primary issues raised by the competing applications were:

(1)    Was there a mistake made by the plaintiffs in relation to the identity of a party for the purposes of r 8.21(1)(d)?

(2)    Does the correction of a party under r 8.21(1)(d) amount to substitution of a party such that r 8.22 applies?

(3)    Does s 588FF(3) exclude the operation of r 8.21(1) and (2)?

(4)    If the Court is not precluded from exercising discretion under r 8.21(1)(d), is the Court minded to do so?

10    The other issue identified by the tenth defendant was whether the order made on 12 June 2015 joining the tenth defendant should be set aside because:

(1)    the plaintiffs failed to afford the tenth defendant procedural fairness by failing to notify Group of the application for leave to join it as a defendant; or

(2)    the plaintiffs failed to meet their obligation of candour on the ex parte application.

11    At the hearing of the applications, Counsel for Group conceded that there was no failure to accord Group procedural fairness by reason of the operation of r 9.05(4) which provides: “An application under subrule (1) need not be served on any person who was not served with a copy of the originating application.”

Evidence

12    Shares in Group are listed for quotation on the Australian Securities Exchange Limited. Mr Peter Davis (deponent on behalf of Group) gave evidence that Group is predominantly a shareholding and investment company which does not, in its own right, enter into building and construction contracts. It is the holding company of companies known as the AJ Lucas Group. Group provides performance guarantees in relation to contracts entered into by its subsidiaries. Operations is a wholly owned subsidiary of Group.

13    Before it was placed in administration, Reed was the head contractor appointed under the “Building the Education Revolution” program for school projects in the North Coast and New England region of New South Wales. It is not contested that Operations was the entity which lodged tenders and entered into subcontracts with Reed.

14    Mr Brett Manwaring (a director in PPB Advisory) works with Mr Robinson and under his supervision in relation to the liquidation of Reed. The administration of Reed’s insolvency was a substantial undertaking, involving in excess of 1,500 creditors. Mr Manwaring says that due to the size, nature and complexity of the liquidation, various staff members were utilised to undertake investigations and perform tasks.

15    From about August 2014, Mr Geoffrey Knoke, a senior manager of PPB Advisory, undertook the majority of investigations into identifying antecedent transactions and recovery actions which might be available to Mr Robinson for the benefit of creditors. Mr Knoke worked under Mr Manwaring’s supervision. Mr Manwaring instructed Mr Knoke to collate material in relation to each potential unfair preference claim before letters of demand were prepared and issued. The material included correspondence from around the time that disputed payments were made by Reed. Mr Knoke ceased employment with PPB Advisory in January 2015.

16    Mr Manwaring was the employee tasked with identifying the defendants in the recovery proceedings and he gave instructions to Mr Robinson’s solicitors to prepare the schedule of proposed defendants. Mr Manwaring identified Group as the tenth defendant in reliance on information contained in a bundle of material collated by Knoke (“Bundle”) which is Annexure BM7 to the affidavit of Mr Manwaring affirmed 11 December 2015.

17    The Bundle included email correspondence between Mr Mark Summergreene, the Chief Financial Officer of Group and employees of Reed between January 2012 and February 2012. Mr Summergreene’s signature block appears twice in the emails and contains the words “Chief Financial Officer AJ Lucas Group Limited”. There are no references to Operations in the emails; the references are to “AJ Lucas Group”. Mr Manwaring says he had particular regard to the fact that the correspondence was between officers of Reed and an officer of Group. An email from Mr Summergreene to Reed’s chief financial officer, Mr Field said:

Given the quantum dollars [sic] … currently due we cannot allow this matter to delay any further without a satisfactory resolution being reached between our two companies...

18    The Bundle contained a letter dated 25 November 2014 from PPB Advisory signed by Mr Robinson (below which is a “contact name” of Geoffrey Knoke) and addressed to Group to the attention of Mr Summergreene as Chief Financial Officer saying (among other things):

I am of the opinion that payments made by the Company to AJ Lucas Group Limited (‘AJ Lucas’) totalling $150,459.57, comprising $50,000.00 paid on 3 February 2012 and $100,459.57 paid on 14 February 2012, (‘Preference amounts’) constituted unfair preferences and are voidable under the provisions of the Corporations Act 2001 (‘Act’).

Demand is hereby made on AJ Lucas to repay the Preference amounts to the Company within 21 days of the date of this letter.

Section 4 of the letter went on to say:

4.    Parties to the transaction

Records show that the Preference amounts was (sic) paid by the Company to AJ Lucas in respect of goods and/or services provided by AJ Lucas to the Company.

I refer to the following documents:

•    Various emails between the Company and AJ Lucas regarding works undertaken by AJ Lucas for the Company.

•    Banking records of the Company notating the transfer of funds from the Company’s bank account to AJ Lucas.

Based, amongst other things, on the above, I am of the opinion that AJ Lucas and the Company were parties to the transaction.

19    The Bundle contained a letter dated 3 December 2014 from Hugh & Associates Lawyers to Mr Robinson. The subject line of the letter was “AJ Lucas Group Limited – claim by Liquidator of Reed Construction Australia Pty Ltd (in liquidation)”. Its first line read: “We act on behalf of AJ Lucas Group Limited (“Lucas”).” Mr Manwaring had regard to the fact that the letter did not correct or take issue with the detail of the transactions set out in the 25 November 2014 letter from Mr Robinson. The 3 December 2014 letter did say:

For the record, at this stage Lucas does not have a concluded view in relation to the assertions you make as to the alleged unfair preference.

20    Last, the Bundle contained a Statement of Account from St George Bank held in the name of Reed for the period 1 to 29 February 2012 which recorded two payments on which are marked two faint handwritten notations “AJ Lucas”.

21    The statement of claim served on Group on 17 September 2015 claimed in relation to Group that:

[84]    AJ Lucas Group Limited ACN 060 309 104 (AJ Lucas) is and at all material times has been a company duly incorporated under the Act.

[85]    Prior to the Relation-Back Day, the Company and AJ Lucas entered into transactions whereby AJ Lucas provided goods and/or services to the Company (AJ Lucas Transactions).

[86]    Pursuant to the terms of the AJ Lucas Transactions, the Company was obliged to pay AJ Lucas for the goods and/or services, but did not do so immediately.

[87]    By reason of the matters pleaded in paragraph 5, 85 and 86 above, AJ Lucas was an unsecured creditor of the Company within the six month period ending on the Relation-Back Day.

[88]    AJ Lucas received payments totalling $150,459.57 from the Company in reduction of the aforesaid unsecured debt owed by the Company to AJ Lucas pursuant to the AJ Lucas Transactions …

22    Mr Manwaring says that it was on 22 September 2015, following service of the statement of claim on the tenth defendant, that Hugh & Associates Lawyers wrote to Mr Robinson’s lawyers saying for the first time that:

The payments said to constitute unfair preferences given to Group were not made to Group. Further, Group:

(a)    is not a creditor of Reed, nor was it a creditor of Reed at any time during the relation back period;

(b)    was not a party to and did not receive any of the payments referred to in paragraph 88 of the [statement of claim].

…

Reed’s dealings, transactions and the contractual relationship (before Mr Robinson’s appointment) … were with AJ Lucas Operations Pty Ltd … Further, the alleged payments were made to Operations and not to Group.

23    It is in that context, and the context of Mr Davis deposing to the fact that payments were made by Reed to Operations’ bank that Mr Manwaring deposed that:

It was always my intention to commence proceedings against the party who received the payment which is the subject of the existing claim against AJ Lucas Group.

24    Mr Davis now concedes that the payments made by Reed on 3 and 14 February 2012 were made to an account styled “AJ Lucas Group Limited AJ Lucas Corporate”. In fact, the account number for this account was the designated account on Operations’ invoices to Reed for payment to Operations: see Annexure PJAD7 to the affidavit of Mr Davis sworn on 29 October 2015. Mr Davis says that the payments “represented payments for retention releases due by Reed to Operations under Operations’ Sub-contracts with Reed”. Business records set out in Annexure PJAD9 record that in February 2012, Operations received the payments made by Reed.

25    On 11 December 2015, Mr Manwaring deposed that:

For the avoidance of any doubt, it was always my intention for the proceedings to be commenced against the party who was the creditor of Reed, had the relevant contractual relationship with Reed, and who ultimately received the payments from Reed.

When the proceedings were initially commenced against AJ Lucas Group, I mistakenly believed that this company fitted the description of an entity which was the creditor of Reed, had the relevant contractual relationship with Reed, and was the recipient of the relevant payments.

26    It is an agreed fact that at the time the proceedings commenced against Group on 12 June 2015, Mr Robinson’s office had, amongst its records concerning Reed or was otherwise able to access documents (“Other Documents”) which included:

    BER NSW Head Contract between the Minister for Education for the State of New South Wales and Reed;

    A subcontract agreement dated 2 July 2010 between Reed and Operations in relation to the Narrabri Public School;

    A form of appointment of proxy lodged by Operations with Reed’s voluntary administrators dated 25 June 2012;

    An informal proof of debt lodged by Operations with the voluntary administrators undated together with the Notice of First Meeting of Creditors in respect of which the proxy was lodged.

27    It is also agreed that at that time, the Other Documents were located off-site from Mr Robinson’s office and Mr Manwaring did not retrieve or access the Other Documents for the purpose of identifying the tenth defendant as a party to the proceedings.

Rules

28    Rules 8.21 and 8.22 provide:

8.21    Amendment generally

(1)    An applicant may apply to the Court for leave to amend an originating application for any reason, including:

(a)    to correct a defect or error that would otherwise prevent the Court from determining the real questions raised by the proceeding; or

(b)    to avoid the multiplicity of proceedings; or

(c)     to correct a mistake in the name of a party to the proceeding; or

(d)    to correct the identity of a party to the proceeding; or

(e)    to change the capacity in which the party is suing in the proceeding, if the changed capacity is one that the party had when the proceeding started, or has acquired since that time; or

(f)    to substitute a person for a party to the proceeding; or

(g)    to add or substitute a new claim for relief, or a new foundation in law for a claim for relief, that arises:

(i)    out of the same facts or substantially the same facts as those already pleaded to support an existing claim for relief by the applicant; or

(ii)    in whole or in part, out of facts or matters that have occurred or arisen since the start of the proceeding.

Note: For paragraph (1)(b) and the avoidance of multiplicity of proceedings, see section 22 of the Act.

(2)    An applicant may apply to the Court for leave to amend an originating application in accordance with paragraph (1)(c), (d), (e) or subparagraph (g)(i) even if the application is made after the end of any relevant period of limitation applying at the date the proceeding was started.

(3)    However, an applicant must not apply to amend an originating application in accordance with subparagraph (1)(g)(ii) after the time within which any statute that limits the time within which a proceeding may be started has expired.

Note 1: Applicant, claim and originating application are defined in the Dictionary.

Note 2: For the Court’s power to make rules amending a document, see section 59(2B) of the Act.

Note 3: Rule 9.05 deals with joinder of parties by court order.

8.22    Date on which amendment takes effect

If an originating application is amended with the effect that another person is substituted as a party to the proceeding, the proceeding is to be taken to have started for that person on the day the originating application is amended.

Was there mistake as to the name or identity of a party?

29    In Environinvest Ltd (in liq) v Former Partnership of Webster, White, Gridley, Nairn, Newman, Peters and Miller (2012) 208 FCR 376 (“Environinvest”) at [22], Gordon J found that an order may be made under r 8.21(1)(d) if the applicant intended to commence proceedings against a person having particular characteristics (in that case, the auditor) and the applicant mistakenly believed that the identity of the person with those characteristics was the party against whom proceedings were commenced, following the decision of the High Court in Bridge Shipping Pty Limited v Grand Shipping S.A. (1991) 173 CLR 231 (“Bridge Shipping”). In Bridge Shipping at 260-261 McHugh J (in whose judgment Brennan and Deane JJ agreed) reasoned:

… a plaintiff may make “a mistake in the name of a party” not only because the plaintiff mistakenly believes that a certain person, whom the plaintiff can otherwise identify, bears a certain name but also because the plaintiff mistakenly believes that a person who answers a particular description bears a certain name. Thus, a plaintiff may make a mistake “in the name of a party” because, although intending to sue a particular person whom the plaintiff knows by sight, the plaintiff is mistaken as to that person’s name. Equally, the plaintiff may make a mistake “in the name of a party” because, although intending to sue a person whom the plaintiff knows by a particular description, eg the driver of a certain car, the plaintiff is mistaken as to the name of the person who answers that description. In both cases, the plaintiff knows the person intended to be sued by reference to some property or properties which is or are peculiar to that person but is mistaken as to the name of that person. In the first case, the properties which identify the person are personal characteristics; in the second case, they are the properties which are of the essence of the description of that person. But for the purpose of sub-r. (4) that distinction is irrelevant. In both cases, the plaintiff was mistaken only as to the name of the person intended to be sued. There is no warrant for treating sub-r. (4) as dealing only with the case where the properties which identify the party are inherent properties. That is, there is no warrant for treating sub-r. (4) as dealing only with the case where the plaintiff says: “The person I wish to substitute as a party is that entity which I identified by certain inherent properties peculiar to it but whose name I mistakenly believed was X.” The sub-rule applies equally to the case where the plaintiff says: “The person I wish to substitute as a party is that entity which I identified by reference to certain properties which are true of it and of no one else and whose name I mistakenly believed was X.” In both cases, a mistake in the name of the party has occurred and can be seen to have occurred only because the person sued does not have or is not identified by some property or properties which is or are peculiar to the person intended to be sued and to no one else.

… [The rule] 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.

30    Counsel for Group contended that the statement of claim and Mr Manwaring’s evidence do not identify characteristics (such as “the auditor” in Environinvest), but rather the intention to sue the person against whom the plaintiffs believed the plaintiffs had rights. He submitted that it is the same mistake as that made by the applicant in Bridge Shipping.

31    I reject that submission and accept the plaintiffs’ submissions. The plaintiffs submitted that the pleading in the statement of claim set out at [21] and Mr Manwaring’s evidence at [25] above identify the characteristics of the person they intended to sue as envisaged by McHugh and Gordon JJ, but Mr Manwaring was simply mistaken as to the identity of that person and that mistake was carried through into the statement of claim. While it is true that the characteristics identified in the statement of claim and by Mr Manwaring are apt to describe a person against whom the plaintiffs may have rights to recover unfair preferences, as acknowledged in Bridge Shipping at 262, at one level that is always true.

32    In Bridge Shipping, Bridge Shipping Pty Ltd (“Bridge”) would have had rights if the person sued was the carrier of goods; that was the relevant characteristic. Bridge sued the owner of the ship; Bridge’s solicitor confirmed that he was “concerned to preserve Bridge Shipping’s rights against the Owner of such vessel”. As found by McHugh J, Bridge made no mistake as to the description of the party which it wished to sue: it wished to sue the owner: “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 the party”.” Bridge’s mistake was as to the characteristics of the person against whom it had rights, not as to identity. That is not the mistake made in this case.

33    I find that the plaintiffs made a mistake as the identity of a party to the proceedings within the meaning of r 8.21(1)(d).

Does the correction of a party under r 8.21(1)(d) amount to substitution of a party such that r 8.22 applies?

34    The answer to this question is no for the reasons expressed by Gordon J in Environinvest at [28]-[32]. See also Austin Australia Pty Ltd (in liq) v A & G Scaffolding & Rigging Service Pty Ltd (2007) 25 ACLC 1363; [2007] NSWSC 1077 (“Austin Australia”) at [26]-[33] and [36] per White J.

35    Gordon J found that r 8.22 does not apply to correction of the identity of a party under r 8.21(1)(d) because that would be contrary to the express wording of r 8.21(2) and an order under r 8.21(d) would be futile if a limitation period had expired, an absurd result which should not be adopted. I reject Group’s contention that Gordon J erred in this finding at [28].

36    As Gordon J pointed out at [29]:

Such a result is not surprising. It is not surprising because, consistent with the earlier analysis of “mistake”, such an amendment does not change or alter the substantive basis on which the proceeding was commenced. There was a change of name but that is all … There has been no substantive change in the purpose of the proceedings, the identity of the party intended to be sued, the subject matter of the proceedings or the causes of action pleaded.

37    Consistent with this reasoning, Gordon J found that an amendment under r 8.21(1)(d) takes effect from the commencement of the proceedings. This was because, although changing the name or identity of a party would arguably be a “substitution” in a technical sense, it is not a substitution of “another person” of the kind with which r 8.22 is concerned; otherwise the consequence would be that any change, however minor, “having the effect” of substituting a new party would take effect on and from the date of the amendment. That would include, for example, the correction of a mere spelling error. Such a result would be “absurd, contrary to the express terms of the FCR and established principles”. I agree and do not accept Group’s submissions to the contrary.

38    For completeness, as a result of the inclusion of rr 8.21(1)(d) and 8.21(2) in the Federal Court Rules, I do not accept the application of a general proposition proposed by Group based on the decision in Laing v Victoria (2005) 144 FCR 462 that the amendment or substitution of a party incorrectly named will not be allowed if the amendment or substitution will deprive the opposite party of a limitation period. In Laing, Merkel J found that there was no mistake as to either name or identity: see [28].

Does s 588FF(3) exclude the operation of r 8.21(1) and (2)?

39    Group contended that the plaintiffs’ application “rests on the proposition that rules of Court can supplement or vary the power given to the Court to extend the clear and emphatic limitation period for the bringing of preference claims” under s 588FF(3) and Group says that that proposition was unanimously rejected by the High Court in Grant Samuel at [23] and the authorities relied on by the plaintiffs all predate that decision. Group contended that this application made under r 8.21(1)(c) or (d) combined with r 8.21(2) is in substance an application to extend time made after the end of the period to which s 588FF(3) applies and therefore falls foul of the reasoning in Grant Samuel.

40    In Grant Samuel the High Court considered whether, pursuant to r 36.16(2)(b) of the Uniform Civil Procedure Rules 2005 (NSW), a judge of the Supreme Court of New South Wales could vary orders made by Hammerschlag J under s 588FF(3)(b) within the relevant three years period to change the date ordered by Hammerschlag J to a later date. The High Court considered its earlier decision in Gordon v Tolcher (2006) 231 CLR 334 and the legislative history of s 588FF(3) and said (citations deleted):

[17] The court in Gordon v Tolcher said that s 588FF deals with the period within which an application under s 588FF(1) is to be made, as an essential aspect of the regime s 588FF creates. The provision in s 588FF(3), as to the time for the making of the application, is not to be characterised merely as a procedural stipulation as to time. It would follow that the bringing of an application within the time required by s 588FF(3)(a) or (b) is a precondition to the court’s jurisdiction under s 588FF(1).

…

[21] The addition of the alternative time limitation in s 588FF(3)(a)(ii) does not detract from the force of what was said in BP Australia Ltd v Brown concerning the statutory aim of certainty which is evident in s 588FF(3). If anything, it tends to reinforce the decision of the legislature, in balancing in a liquidation the competing interests of creditors and those who have dealt with the company and might be the subject of s 588FF(1) proceedings, to limit the times within which such proceedings may be brought. Section 588FF(3) does so in language which may be described as “clear and emphatic”.

[22] Section 588FF(3) provides that an application under s 588FF(1) “may only be made” within the periods set out in paras (a) and (b) of s 588FF(3). The phrase “may only be made” should be read with both paragraphs. So understood, the term “may only” has the effect of defining the jurisdiction of the court by imposing a requirement as to time as an essential condition of the right conferred by s 588FF(1) to bring proceedings for orders with respect to voidable transactions. An element of that right is that it must be exercised within the time specified. This is what is conveyed by Gordon v Tolcher.

[23] The only power given to a court to vary the para (a) period is that given by s 588FF(3)(b). That power may not be supplemented, nor varied, by rules of procedure of the court to which an application for extension of time is made. The rules of courts of the States and Territories cannot apply so as to vary the time dictated by s 588FF(3) for the bringing of a proceeding under s 588FF(1), because s 588FF(3) otherwise provides. It provides otherwise in the sense that it is inconsistent with so much of those rules as would permit variation of the time fixed by the extension order.

41    I accept the plaintiffs’ contention that Grant Samuel at [23] is a summary of the Court’s finding in Gordon v Tolcher and the cases relied on by the plaintiffs remain relevant.

42    As pointed out in Austin Australia at [21], s 588FF was enacted against the background of principles which had been developed at common law and rules of court concerning the effect of misnomer or mistake as to identity where an amendment to correct the mistake was made after the expiration of a limitation period and s 588FF should be construed against that background. The Bridge Shipping, Environinvest and Austin Australia decisions are predicated on the propositions founded in common law that correction for misnaming or identity does not alter the substantive basis on which the proceedings were commenced; this reasoning is concisely expressed in Environinvest at [29]. Where proceedings were commenced within the three years period prescribed by s 588FF(3), reliance on rr 8.21(1)(d) and 8.21(2) does not undermine the policy basis for s 588FF(3) being the timely commencement of proceedings.

43    I therefore reject Group’s argument and find that the correction of a name of a party to proceedings commenced before the limitation period set out in s 588FF(3) does not alter the basis on which the proceedings were brought even if the application to correct the name is made after the end of the limitation period. Rules 8.21(1)(c) and (d) and 8.21(2) are not inconsistent with s 588FF(3); a correction of name does not operate as an extension of time within which a liquidator may bring proceedings for recovery of an unfair preference. It is conceptually different from the issue considered in Grant Samuel.

Exercise of discretion

44    While Group raised no issue of prejudice either to it or to Operations arising out of this application, it did contend that relief under r 8.21(1)(d) should be denied because the plaintiffs (through Mr Manwaring) were insufficiently diligent in identifying the proper party to the proceedings under s 588FF. The plaintiffs contend that a similar issue was raised in Environinvest at [35]-[36] where it was contended that the liquidator “ignored the obvious evidence about who conducted the audit”. Gordon J pointed out that it took the auditors a considerable amount of time to raise the issue themselves and exercised her discretion in favour of the liquidator.

45    The fact that the liquidator in this case was so selective in the material on which he (through Mr Manwaring) relied to identify the tenth defendant is of concern; the invoices and contract are fundamental to the identity of the creditor, whether or not relevant materials were held off site and the administration was big. It is also not a difficult thing to check which creditors have lodged proofs of debt with the administrator and in this case such a check would have put Mr Knoke or Mr Manwaring on notice that there was an issue as to the identity of the creditor. This failure of diligence is an issue which goes to discretion.

46    Having said that, it is plain that Mr Manwaring gave instructions based on the materials collected by Mr Knoke and he made a mistake as to identity as a result. It is also true that Group’s own conduct contributed to the mistake because Group’s Chief Financial Officer (identified in correspondence as such) conducted negotiations with Reed’s officers for payments of outstanding invoices without identifying Operations as the creditor. The person best placed to know and understand the correct name of the entity which provided services under the contract and to identify the mistake was Group. Group is a holding company which does not conduct operations of a kind for which the payment had been made and therefore Reed’s creditor must be a subsidiary. The mistake made by the liquidator is apparent on the face of Mr Robinson’s letter of 25 November 2014 (when the question of whether there had been an unfair preference had been paid to Group was first raised). However, neither Group nor its solicitors took any action to correct that mistake until the letter from Group’s solicitors on 22 September 2015, after the statement of claim had been served.

47    It is in the interest of justice that the true issues in proceedings be addressed. I was not satisfied that there is any relevant prejudice to either of Group or Operations by reason of the exercise of my discretion to grant leave to the plaintiffs to amend the originating application to correct the identity of the tenth defendant.

Obligation of candour

48    It is undoubtedly true that in an ex parte application, it is the obligation of the party seeking orders, through its representatives, to take the place of the absent party to the extent of bringing forward all the material facts which that party would have brought forward in defence of the application: Walter Rau Neusser Oel Und Fett AG v Cross Pacific Trading Ltd [2005] FCA 955 (“Walter Rau”) at [38] per Allsop J (as he then was) relying on Thomas A. Edison Limited v Bullock (1912) 15 CLR 679 at 681-682 per Isaacs J. Group submitted, in this case, the plaintiffs failed in this obligation because they failed to disclose the invoices and contracts which named Operations as a party.

49    The dictum of Allsop J was made in the context of a broader point that the obligation of the moving party is not satisfied merely by providing voluminous materials to the Court, but rather that the duty means “squarely putting the other side’s case, if there is one, by coherently expressing the known facts in a way such that the Court can understand, in the urgent context in which the application is brought forward, what might be said against the making of the orders”.

50    That is a different context from that in which this matter falls for decision. While it is true that with greater diligence on behalf of Mr Knoke or Mr Manwaring, counsel for the plaintiffs would have been in a position to inform the Court on 12 June 2015 of the detail of the invoice and contract. Had those instructing counsel for the plaintiffs known of those matters, it is not the case that it would have been appropriate to draw those matters to the attention of the Court: the matter would not have arisen. The correctly identified party would have been named as the tenth defendant. There was a mistake. In this context, at least some of the opprobrium for the misidentification falls at the feet of Group, which was also in a position to know of the mistake and correct it from at least November 2014, but it did not whether through inadvertence or in seeking forensic advantage.

51    I was not satisfied that the plaintiffs’ failure to identify the tenth defendant correctly at the hearing on 12 June 2015 at which the second to fifteenth defendants were joined should disentitle the plaintiffs to the relief that they sought under r 8.21(1)(d).

Costs

52    Last is the issue of costs. While it would be usual for the plaintiffs to bear the costs of an application under r 8.21(1) in which they seek an indulgence to correct an error which they made, the application was strenuously resisted in the circumstances described at [50] above. Accordingly, I made no order as to costs in relation to the plaintiffs’ application. Group was wholly unsuccessful on its application and accordingly I ordered that the tenth defendant pay the plaintiffs’ costs of Group’s application.

Associate:

Dated:    23 December 2015

Schedule

Second Defendant:     ACN 141 699 032 PTY LTD (FORMERLY KNOWN AS BALUSTRUCT PTY LTD) ACN 141 699 032

Third Defendant:    EMPIRE BLOCKLAYING PTY LTD ACN 138 940 299

Fourth Defendant:    BLEASDALE NATIONAL PERSONNEL PTY LTD AS TRUSTEE FOR LINDALES PERSONNEL AUSTRALASIA UNIT TRUST

Sixth Defendant:     MRG AUSTRALIA PTY LTD ACN 124 292 986

Seventh Defendant:     POLYTRONIC INTERNATIONAL AG

Tenth Defendant:     AJ LUCAS GROUP LIMITED ACN 060 309 104

Eleventh Defendant:     FLEET PARTNERS PTY LIMITED ACN 006 706 832

Thirteenth Defendant:    MOZAF PTY LIMITED T/A ‘ACTIVE EXCAVATION WORKS’ ACN 088 397 264

Fifteenth Defendant:     MAINLAND CIVIL NSW PTY LIMITED ACN 142 347 297