FEDERAL COURT OF AUSTRALIA

Captiv8 Pty Limited (in liquidation) v Bodger [2018] FCA 1801

ORDERS

THE COURT ORDERS THAT:

1.    Leave be granted to the plaintiff to file within 14 days of the date of these orders an amended originating process and an amended concise statement, adding Darren Vardy as the second plaintiff in respect of insolvent trading claims made in those documents.

2.    Otherwise, the amended interlocutory process dated 9 August 2018 be dismissed.

3.    The plaintiff pay the costs of the amended interlocutory process and the costs thrown away by reason of the amendments referred to in order 1 above.

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

REASONS FOR JUDGMENT

GLEESON J:

1    By amended interlocutory process dated 9 August 2018, the plaintiff (Captiv8 Pty Ltd (in liquidation)) (“Captiv8”) applied for the following relief:

(1)    Leave to amend the originating process and concise statement to add Darren Vardy in his capacity as liquidator of Captiv8 as the second plaintiff in the proceeding, pursuant to r 8.21 of the Federal Court Rules 2011 (“Rules”).

(2)    An order that any amendments made in accordance with order 1 be taken to have been made at the time of filing the originating process, pursuant to r 8.21(2) of the Rules.

2    The amendments are sought to enable Mr Vardy to bring a claim against the first defendant, Mr Bodger, and the second defendant, Mr Maher, pursuant to s 588FF(1)(c) of the Corporations Act 2001 (Cth) (“Act”). Messrs Bodger and Maher are former directors of Captiv8. In the originating process and concise statement as filed, the claim is mistakenly made by Captiv8, which does not have standing to bring that claim.

3    The application was made after the expiry of the limitation period for actions pursuant to s 588FF(1)(c).

4    The application was opposed by Mr Bodger, Mr Maher and the fourth defendant (Now We Collide Pty Ltd), who were represented by Mr Ipp of counsel, insofar as it sought the addition of Mr Vardy in relation to the s 588FF(1)(c) claim. It was not opposed in relation to an insolvent trading claim which is not statute barred.

5    The third defendant, Mr Corte, did not appear on the hearing of the application. Mr Corte is the sole remaining director of Captiv8.

Uncontentious facts

6    Captiv8 was registered as a company on 27 July 2006. On 16 June 2015, Mr Vardy was appointed as the liquidator of Captiv8 in a creditors’ voluntary winding up.

7    By letter dated 12 April 2016 from Mr Vardy’s lawyers, Paul Taylor and Adam Wiederman of CCSG Legal Pty Ltd (“CCSG”), to Mr Corte, CCSG notified Mr Corte of Mr Vardy’s intention to recover funds of $228,424.58 from him in respect of insolvent trading. The letter noted that this was a claim that may be brought by the liquidator under s 588G of the Act. Annexed to the letter was a draft statement of claim which nominated Captiv8 and Mr Vardy as plaintiffs.

8    By letters also dated 13 April 2016, CCSG wrote to Mr Maher and Mr Bodger in similar terms.

9    After other correspondence, by letter dated 14 March 2017, from CCSG (Ms Warren and Mr Wiederman) to Rostron Carlyle Lawyers (then apparently acting for Messrs Bodger, Maher and Corte), CCSG stated relevantly that:

(1)    The liquidator maintained that Messrs Bodger, Maher and Corte were liable for the amount of $228,424.58 as a result of the company trading whilst insolvent.

(2)    Messrs Bodger, Maher and Corte “have been well aware of the Liquidator’s Claim against them, and the Liquidator has provided ample opportunity for your clients to formulate a defence … [Therefore] our client will be left with no alternative but to commence legal proceedings without further notice”.

(3)    They reserved “the Liquidator’s rights” to rely on the letter in relation to costs.

Originating process

10    On 14 June 2018, Captiv8 filed an originating process, signed by its lawyer Paul Taylor, of CCSG, bringing proceedings against the defendants.

11    The originating process states that the application is made under ss 180, 181, 182, 183, 184, 588FB, 588FDA, 588FF(1), 588G(2), 588M(2) and 1317H of the Act. Relevantly, it states:

The Plaintiff [i.e. Captiv8] claims that [Messrs Bodger and Maher] contravened ss 181, 182, 183, 184, 588FB and 588FDA of the Act, and their fiduciary duties owed to the Plaintiff while directors of the Plaintiff by causing the Plaintiff to be a party to a transaction where they transferred its assets to themselves and to the Fourth Defendant, being the goodwill in its business, its client list and portfolio, and its intellectual property, where a reasonable person in the Plaintiff’s circumstances would not have entered into the transaction (Unfair Transaction).

12    The originating process states that, “on the facts stated in the concise statement filed in these proceedings and served with the originating process”, Captiv8 claims relief including:

(1)    As against Messrs Bodger and Maher, an order pursuant to s 588FF(1)(c) of the Act to pay to Captiv8 an amount that fairly represents some or all of the benefits that they have received because of the “Unfair Transaction”.

(2)    As against Mr Corte, an order pursuant to s 588M(2) of the Act to pay to Captiv8, as a debt due, an amount equal to the loss or damage caused by Mr Corte’s contravention of s 588G(2).

13    Captiv8 acknowledges that it has no standing to seek relief under either s 588FF(1)(c) or s 588M(2): each of those provisions confers an entitlement to make an application on a company’s liquidator, not on the company itself.

14    Section 588FF(1)(c) provides that where, on the application of a company’s liquidator, a court is satisfied that a transaction of the company is voidable because of s 588FE, the court may make an order requiring a person to pay to the company an amount that, in the court’s opinion, fairly represents some or all of the benefits that the person has received because of the transaction. Certain transactions are voidable because of s 588FE if, relevantly, the transaction is an “uncommercial transaction” within the meaning of s 588FB or the transaction is an “unreasonable director-related transaction” within the meaning of s 588FDA.

15    By s 588FF(3), an application under s 588FF(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.

16    The relation-back day is 16 June 2015.

17    Section 588M(2) confers on a company’s liquidator the right to recover from a director, as a debt due to the company, an amount equal to the loss or damage caused by a director’s contravention of s 588G(2) (relevantly) where s 588M(1) applies. There is no opposition to the addition of Mr Vardy as a second plaintiff for the purposes of prosecuting the claim under s 588M(2), which is not statute-barred.

Concise statement

18    Also on 14 June 2018, Captiv8 filed its “Concise Statement” dated 14 June 2018. The concise statement was also signed by Mr Taylor, and contains a notation to the effect that it was prepared by Mr Taylor.

19    The concise statement identifies Captiv8 as an Australian proprietary company limited by shares which entered liquidation on 16 June 2015. It notes that Darren Vardy was appointed as liquidator.

20    After setting out various facts, under the heading “Causes of action advanced and relief sought by Captiv8”, the concise statement records, relevantly:

17.    Captiv8 contends that:

a.    Bodger and Maher contravened ss 588FB and 588FDA … while directors of Captiv8 by causing it to be a party to a transaction where they transferred Captiv8’s assets to themselves and to [the fourth defendant]. A reasonable person in Captiv8’s circumstances would not have entered into the transaction. Accordingly, Captiv8 seeks an order pursuant to s 588FF(1)(c) of the Act to pay to it an amount that fairly represents some or all of the benefits that Bodger and Maher have received because of that transaction.

Genuine Steps Statement

21    On 14 June 2018, Captiv8 also filed its “Plaintiff’s Genuine Steps Statement” dated 14 June 2018. The genuine steps statement was also signed by Mr Taylor, and contains a notation to the effect that it was prepared by Mr Taylor.

22    The genuine steps statement refers to correspondence and a meeting and then states:

No further steps could be taken to try to resolve the issues in dispute between the plaintiff and the defendants prior to commencement of proceedings as the limitation period for the Plaintiff’s claims under s 588FB and 588FDA expires on 16 June 2018.

Evidence in support of application

23    Captiv8 relied on an affidavit sworn by Hayley Warren, a solicitor in the employ of CCSG. Neither Mr Vardy nor Mr Taylor gave evidence.

24    Relevantly, Ms Warren said:

(1)    She is the solicitor with the day to day carriage of this matter, instructed by Mr Vardy in his capacity as liquidator of Captiv8.

(2)    Messrs Bodger, Maher and Corte were publicly examined on 5 and 6 April 2018.

(3)    When commencing proceedings for voidable transactions and insolvent trading on behalf of a liquidator, it was the usual practice of CCSG and Ms Warren to adopt precedents which had previously been drafted and utilised by CCSG and amended to reflect the relevant proceedings. When drafting these documents, it is the firm’s practice to include both the liquidator and the company as a party to the proceeding.

(4)    It is the usual practice of CCSG to use a precedent for an originating process seeking recovery of an unfair preference that nominates the first plaintiff as the company in liquidation and the second plaintiff as the liquidator of the company in liquidation.

(5)    In this proceeding, CCSG elected to adopt the new practice of using a concise statement as described in the Commercial and Corporations Practice Note. This was the first time Ms Warren had used the “Concise Statement” form and CCSG did not, to her knowledge, have a specific precedent for the concise statement.

(6)    Prior to filing the originating process, concise statement and genuine steps statement, due to an “oversight” on her part, Ms Warren “did not realise that the Liquidator was not a formal party to the proceedings”.

(7)    It was always Ms Warren’s intention that the liquidator and the company in liquidation would both be the plaintiffs in the proceeding.

25    The documents do not merely fail to identify Mr Vardy as a plaintiff. They also explicitly identify Captiv8 as the party claiming relief under s 588FF(1)(c).

26    Although Ms Warren says that this was the first time she had “used” the concise statement, she does not say that she drafted the concise statement. If Ms Warren had drafted the concise statement, she would have selected Captiv8 as the plaintiff, failed to identify Mr Vardy as a party to the proceeding, and expressly articulated the claim for an order pursuant to s 588FF(1)(c) as a claim by Captiv8, and not by Mr Vardy.

27    Thus, the evidence does not explain how the concise statement (which, on its face, is said to have been prepared by Mr Taylor) (and the originating process and the genuine steps statement) came to be drafted in the form in which the claim under s 588FF(1)(c) was expressed or identified as a claim by Captiv8, instead of Mr Vardy.

Captiv8’s contentions

28    Captiv8 contended that the application was made on the following bases:

(a)    the identification of the company in liquidation “represents a mistake in the name of the Plaintiff(s)”; and

(b)    the proposed amendments arise out of the same facts as those already pleaded to support an existing claim for relief.

Legal framework

29    Rule 8.21 provides that:

(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.

(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.

30    Rule 8.22 provides:

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.

Amendment to correct a mistake in the name of a party

31    In Bridge Shipping Pty Ltd v Grand Shipping SA [1991] HCA 45; (1991) 173 CLR 231, McHugh J (with whom Brennan and Deane JJ agreed) explained what was comprehended in “a mistake in the name of a party” within the meaning of the relevant rules of the Supreme Court of Victoria, saying at 260-261 ([20]-[21]):

[20]    [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, e.g. 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.

[21]    Order 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 Holmes v. Permanent Trustee Co. of New South Wales Ltd. [1932] HCA 1; (1932) 47 CLR 113, at p 119. 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.

32    In Sibroll Pty Ltd (in liq) v Mitch Properties Pty Ltd [2007] NSWSC 579; (2007) 212 FLR 1, Young CJ in Eq rejected an application to correct a mistake in the name of the plaintiff by amending the originating process to add the name of the liquidator as second plaintiff to the proceeding. The application was made pursuant to ss 64 and 65 of the Civil Procedure Act 2005 (NSW). As in this case, the originating application sought recovery of a preference or uncommercial transaction under s 588FF but was filed in the name of the company in liquidation rather than in the name of the plaintiff’s liquidator. The evidence was that the drafter of the originating process consciously chose the company as plaintiff, thinking that this was the manner in which a liquidator brings proceedings.

33    Section 64 relevantly empowered the Supreme Court to order the amendment of documents. Section 65 dealt with amendment of an originating process after the expiry of a relevant limitation period. One of the types of permitted amendments was “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). Section 65(2)(c) provided 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.”

34    At [38] to [40], Young CJ in Eq stated:

[38]    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] HCA 45; (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.

35    Young CJ in Eq then explained why the liquidator could not be substituted as plaintiff for the company in liquidation in the circumstances of that case, saying (at [48]) that the relevant mistake was to think that the right of action was in the company in liquidation rather than the liquidator.

36    In Hayward v Darling Downs Aircraft Services Pty Ltd [1993] 2 Qd R 153, the appellant commenced proceedings claiming damages in respect of damage to a helicopter, having instructed his solicitor that he owned it. After the expiry of the relevant limitation period, he applied to amend the proceeding by adding a company as plaintiff on the basis that the company was the true owner of the helicopter. At 158, Pincus JA and Ambrose J concluded that adding the name of the company as an additional plaintiff would not “correct” the name of the originally joined plaintiff.

37    However, as Campbell JA (Tobias JA agreeing) noted in Greenwood v Papademetri [2007] NSWCA 221 at [67] and [68], the judgment in Hayward did not explain what rights Mr Hayward wished to assert or how he had any such rights even though he was not the owner of the aircraft, or how the rights he wanted to assert related to the causes of action that had been originally alleged.

38    Campbell JA referred to the statement by Pincus JA and Ambrose J in Hayward (at 158) that the relevant Queensland rule did “not authorise the joinder of a party additional to that whose name is sought to be correct”. At [69], Campbell JA concluded that in Greenwood:

If it was clear that a plaintiff intended to sue the owner of a particular piece of property, and sued A in the belief that A was the owner of the property, but in fact the owners were A and B, there is no reason why an amendment to add B could not count as an amendment “so as to correct a mistake in the name of a party to the proceedings”.

39    At [71], his Honour added, relevantly:

[I]f the “party whose name is sought to be corrected” is identified by the attributes that the party has, the principle is unexceptionable. In the first example I considered at para [69], the party whose name is sought to be corrected is the owner of the property, and adding B as a defendant is simply adding the name of someone so that the owner of the property is correctly identified. Adding B in that way is not joining a party additional to the party whose name is sought to be corrected.

40    In Sullivan v Van der Broek [1999] NSWSC 1177, the plaintiff brought a negligence claim against five defendants as members of the Nambucca Valley Galah Day Committee and against the first and second defendants as owners and occupiers of a property called “Willow Bend”. At [5] of his Honour’s reasons, Windeyer J noted that the plaintiffs’ intention to sue the members of the committee was “perfectly clear”.

41    Windeyer J distinguished 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.

42    Windeyer J concluded that the evidence did not establish that there was any mistake in joinder of the original defendants, whom the plaintiff still claimed were members of the relevant committee. The amendment sought to add four other persons whom the plaintiff also sought to say were members of the committee. At [10], his Honour thus held that “leaving the original defendants in makes it impossible to say there has been a mistake in name”.

43    In Greenwood at [75], Campbell JA observed that Windeyer J’s decision in Sullivan did not depend upon following or accepting Hayward, but upon deciding whether the particular mistake that had been made counted as a “mistake in the name of a party”.

44    At [77], Campbell JA agreed with the outcome in Sibroll (see [32] above) saying, relevantly:

There had been no mistake in the name of a party, merely a mistake concerning a matter of law about whether an action to recover a preference or uncommercial transaction should be brought by the company in liquidation or by the liquidator.

45    At [78], Campbell JA disagreed with Young CJ in Eq’s conclusion (at [39] of his Honour’s reasons, set out at [34] above) that s 65(2)(b) did not authorise an additional party to be added, saying:

… I doubt that a rigid dichotomy can be drawn between adding an additional party, and substituting one alleged party for another. If it mattered, I see no violence to language in saying that litigation started out with A as the defendant, but then A and B were substituted as the defendant. More importantly, the scope of the power in section 65(2)(b) does not depend upon whether or not the amendment is one that “substitutes” a new party. As earlier explained, I would not follow the first possible reading of the principle in Hayward, and in my view Sullivan v Van der Broek did not have as its ratio that there was never any power under Part 20, rule 4 for an additional party to be added, as opposed to substituting one alleged party for another.

46    In Mitry v Business Australia Capital Finance Pty Ltd (in liquidation) [2010] NSWCA 360, proceedings were commenced in the name of the liquidator as liquidator of the company in liquidation. The primary judge granted leave to amend the name of the plaintiff to substitute the company’s name for the liquidator’s name. The application for leave to amend was made after the expiration of the relevant limitation period. At [43] and [44], Hodgson JA (Macfarlan and Young JJA agreeing) said:

[43]    … Here the liquidator, in exercise of the power conferred upon him by s 477(2)(a) Corporations Act, purported to bring the action “on behalf of the company”. What he failed to do was to bring the action “in the name ... of the company” as s 477(2)(a) also specifies. This was truly “a mistake in the name of a party” in the sense contemplated by s 65(2)(b). True it is that in strict terms the effect of the amendment was to substitute a new party, that is, to substitute the company for the liquidator, but that is a circumstance expressly permitted by s 65(2)(b).

[44]    The subsection specifically contemplates that an amendment to correct the name of a party may be one that substitutes a new party for an existing one. If the present is not a case of the type contemplated in the subsection, it is very difficult to contemplate one that would be.

47    Macfarlan JA considered Sibroll, and distinguished that case, saying (at [49] and [50]):

[49]    It is in my view significant that in this case, pursuant to the power conferred by s 477(2)(a) of the Corporations Act, the liquidator did attempt to pursue the proceedings on behalf of the company. However by naming himself as plaintiff rather than the company, he stopped short of conforming with the first element of s 477(2)(a) … That was in my view “a mistake as to the name of a party” within the meaning of s 65(2)(b) Civil Procedure Act.

[50]    The position in Sibroll was different because the company in liquidation had no right to bring the preference proceedings on behalf of the liquidator. The company could not act as agent of the liquidator for that purpose. In the present case the legislation specifically authorised the liquidator to act as agent for that purpose. He attempted to do so but made a mistake as to the name in which he sued.

48    In Laing v Victoria [2005] FCA 791; (2005) 144 FCR 462, Merkel J refused an application to amend an application to substitute Mr Hadgkiss for Mr Laing as the applicant in the proceeding, in so far as the application made a claim for a penalty under the Workplace Relations Act 1996 (Cth). As Mr Laing was not authorised to claim a penalty, the claim was struck out summarily.

49    The application was governed by the Federal Court Rules 1979 (which preceded the Rules) and specifically O 13 r 4 which permitted an amendment to substitute another person as a party “[w]here there has been a mistake in the name or identity of a party”. At [26], Merkel J concluded that, on the evidence, it was the intention of Mr Laing, Mr Hadgkiss and their solicitor that Mr Laing be named as the applicant. His Honour also observed that there was no evidence that Mr Laing was selected to be the applicant by reference to some property or characteristic peculiar to Mr Laing. At [27], Merkel J added:

The evidence does not even establish that when the proceeding was commenced Laing was named as applicant because it was believed that he possessed some capacity or authority to sue which he did not have. Rather, the highest that it might be put was that it was subsequently ascertained that there had been an error “as to the rights possessed by the correctly identified party” (see The Aiolos at 31). The error was that by reason of s 298T(2) of the WR Act Laing was not entitled to commence the application for a penalty. That error is not a mistake in the name of a party and therefore cannot attract the power of the Court under O 13 r 2(5) to retrospectively substitute the name of a party notwithstanding the expiry of a limitations period.

(Emphasis in original)

50    On the same basis, Merkel J concluded (at [28]) that the facts did not establish a mistake as to the identity of a party.

Amendment to correct the identity of a party

51    In Environinvest Ltd (in liq) v Former Partnership of Webster, White, Gridley, Nairn, Newman, Peter and Miller [2012] FCA 1307; (2012) 208 FCR 376, Gordon J held that an order correcting the identity of a party to proceedings may be made under r 8.21(1)(d) if the applicant intended to commence the proceeding against a particular person and the applicant mistakenly believed that the party against whom proceedings were commenced was that person.

52    In Robinson, in the matter of Reed Constructions Australia Pty Limited (in liq) v JFK Interiors Australia Pty Limited [2015] FCA 1500, Farrell J found that the plaintiffs had made a mistake as to the identity of a defendant, being a company that fitted the description of an entity which was the creditor of the company in liquidation.

53    In McInnes v Wingecarribee Shire Council (1987) 10 NSWLR 660, Priestley JA (Kirby P and Clarke JA agreeing) found (at 667) that there was a mistake in the name of a party, being to think that he was a person authorised to represent a group of individuals comprising the Bowral and Burradoo Environmental Preservation Society, that group being a person which had made a submission under s 87 of the Land and Environment Court Act 1979 (NSW) and therefore having standing to bring the relevant action. In my view, the mistake in McInnes could be characterised as a mistaken belief as to the identity of the person having the relevant standing to bring the action.

Amendment to add or substitute a new claim for relief that arises out of the same facts or substantially the same facts as those already pleaded to support an existing claim for relief

54    As Middleton J noted in Camilleri v The Trust Company (Nominees) Limited [2015] FCA 1138; 109 ACSR 191 at [10], r 8.21(g)(i) of the Rules directs attention to the existing claim or relief, and the facts pleaded to support it, and then directs attention to the question of whether the proposed amendments are properly characterised as a new claim for relief, arising out of “substantially” the same facts as those already pleaded.

55    As explained at [32] above, in Sibroll, Young CJ in Eq rejected a proposed alternative application to add the liquidator’s claim under s 588FF of the Act as a new cause of action to the originating process, saying (at [53]-[57]):

[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 Act and the liquidator will pursue a cause of action under s 588FF of the Act.

[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.

56    I accept the submission of Mr Ipp that r 8.21(g)(i) does not provide for the joinder of a new party to the proceeding.

57    Although there may be room for argument, the authorities suggest that r 8.21(1)(g) is unlikely to permit an amendment to add material facts necessary to complete a defective pleading of a cause of action, after the cause of action has become statute barred: cf Advanced Switching Services Pty Ltd v State Bank of New South Wales t/as Colonial State Bank [2007] FCA 954 (“Advanced Switching Services”) at [69], construing O 13 r 2 of the 1979 Rules. At [70] in that decision, Rares J said:

I am of opinion that in the circumstances of the present case, there being no contrary authority to which I have been referred, I should construe subr (2) as allowing only amendments to enable the real questions already raised in another form to be determined. In a case where no limitation period has been exceeded the Court can allow any amendment and none of the succeeding provisions of O 13 r 2 after subr (1) apply to limit the power or the discretion. But where one party has the benefit of an absolute defence, even if it has not pleaded it, or has the right to say that, on the pleadings, the applicant or plaintiff cannot prove a cause of action, I am of opinion that the interests of justice should generally be seen as following the policy decision of the legislature to impose a limitation period within which an action may be brought.

58    In Bryant (Liquidator) v L.V. Dohnt & Co Pty Ltd, in the Matter of Gunns Limited (In Liq) (Receivers and Managers Appointed) [2018] FCA 238 at [69] and [70], Davies J did not accept that Advanced Switching Services was authority for the proposition that r 8.21(g)(i) does not authorise amendments adding new material facts in support of a new claim not made within the limitation period, where s 588FF proceedings were commenced within time and the jurisdictional precondition in s 588FF was met. Her Honour applied the decision of the Full Court in Rodgers v Federal Commissioner of Taxation [1998] FCA 1296; (1998) 88 FCR 61 at 70 and followed Wigney J’s decision in Re Spec FS NSW Pty Ltd (in liquidation) [2013] FCA 1027 to conclude that r 8.21(2), where it applies, “permits an amendment to an application commenced within time even though the effect of the amendment is to add a new claim for relief which, had the proceedings not already been commenced, would have been statute barred”.

59    In McGraw-Hill Financial, Inc v Clurname Pty Ltd [2017] FCAFC 211; (2017) 123 ACSR 467, the Full Court considered an application for an amendment to a pleading to include the tort of deceit, where there was an argument as to whether the cause of action was statute barred. At [23], the Full Court relevantly said:

The language of r 8.21(1) is clear: an applicant may apply to the Court for leave to amend an originating application for any reason “including” any of the reasons in r 8.21(1)(a)-(g). Subrules (a) to (g) are examples of amendments that may be the subject of application. They are not a code. Thus, the interaction of r 8.21(1)(g) and (2) does not mean that the Court’s power to permit an amendment asserted to involve a statute-barred claim is confined to the circumstances in r 8.21(1)(g)(i). We leave to one side for further argument the proper approach to an amendment introducing an unarguably statute-barred claim.

Consideration

Nature of the “mistake”

60    The evidence does not sufficiently reveal the circumstances in which Mr Vardy was not included as a second plaintiff to the proceeding by the originating process. It is reasonable to assume that he gave instructions to CCSG to commence the proceeding including a claim for relief under s 588FF(1)(c).

61    On the evidence, the error or errors that led to the omission of Mr Vardy as a second plaintiff occurred within the offices of CCSG. Ms Warren says that it was her oversight, but that does not explain how Mr Taylor came to sign the originating process, the concise statement and the genuine steps statements, each of which positively identified the claim as a claim made by Captiv8.

62    Ultimately, it may be easier to make findings about what did not happen than what did happen.

63    First, there was no mistake in naming Captiv8 as a plaintiff to the proceeding. As in Sibroll, that proposition is demonstrated by the fact that it does not seek to have Mr Vardy substituted as the plaintiff. It is also apparent from the originating process and the concise statement that Captiv8 is a proper plaintiff, and that Mr Vardy has correctly commenced the proceeding in the name of Captiv8 pursuant to the power conferred on him by s 477(2)(a) of the Act to bring any legal proceeding in the name of and on behalf of the company.

64    Second, Captiv8 does not contend that there was a mistake as to the identity of the plaintiff, for the purposes of r 8.21(1)(d). However, it is relevant to note that there was no mistake as to the identity of the liquidator of Captiv8, that being the person with standing to bring a claim pursuant to s 588FF(1)(c). Further, there is no evidence that Captiv8 (or Mr Vardy or Ms Warren) mistakenly believed that Captiv8 was the proper plaintiff for a claim pursuant to s 588FF(1)(c). Rather, the evidence was that Mr Vardy was not identified as an additional plaintiff by reason of Ms Warren’s oversight.

Captiv8’s arguments

65    Captiv8 made the following submissions:

(1)    The liquidator commenced the proceedings in the name of and on behalf of the company in accordance with s 477(2)(a) of the Act.

(2)    Mr Vardy is CCSG’s client.

(3)    The misnomer in this matter is not a matter of mistaking the identity of the plaintiff but a mere oversight “to identify the same person in different capacities”.

(4)    The facts as pleaded in relation to the proposed amendment are the same. There are no proposed changes to the originating process or the concise statement apart from the addition of Mr Vardy as the named liquidator.

66    The first proposition does not assist Captiv8 because the power in s 477(2)(a) was not exercisable in relation to the proposed claim under s 588FF(1)(c) which could only be instituted by the liquidator: Re: Harris Scarfe Ltd (in liq) & Harris Scarfe Wholesale P/L (in liq) [2006] SASC 277; (2006) 203 FLR 46 at [27].

67    As to the second proposition, accepting that Mr Vardy is CCSG’s client, the evidence does not establish a mistake in the name of a party to the proceeding. As noted above, there was no mistake in naming Captiv8 as a plaintiff to the proceeding because of the claims made apart from the claim under s 588FF(1)(c).

68    As to the third proposition, the errors in this case go beyond “oversight”. Captiv8 was positively identified in both the originating process and the concise statement as the entity making the claim under s 588FF(1)(c) instead of Mr Vardy. The evidence does not explain how this positive identification occurred, including how Mr Taylor came to sign the originating process and the concise statement in the form in which they were filed. In those circumstances, I am not satisfied that the evidence demonstrates mere misnomer. Thus, the application based on r 8.21(1)(c) fails.

69    As to the fourth proposition, I accept that the claim arguably adds a new claim for relief (the liquidator’s claim under s 588FF(1)(c), that arises out of the same facts or substantially the same facts as those already pleaded to support an existing claim for relief by the applicant (Captiv8’s claims based on breach of directors’ duties). However, where the effect of the amendment would be to introduce a claim otherwise precluded by s 588FF(3), I would not exercise the discretion in Captiv8’s favour because (noting that Captiv8 seeks an order that the relevant amendments be taken to have been made at the time of filing the originating process) to do so would be to deprive Messrs Bodger and Maher of the benefit of s 588FF(3) where there is presently no claim made by the liquidator in his own capacity.

70    Accordingly, Captiv8’s application fails except to the extent that it is unopposed.

Conclusion

71    I will grant leave to Captiv8 to file an amended originating process and an amended concise statement, making only such amendments as are necessary to add Mr Vardy as a second plaintiff to the proceeding in relation to insolvent trading claims presently identified in the originating process and the concise statement (that is, to the extent that the application was not opposed).

72    Captiv8 should pay the costs of the amended interlocutory process and the costs thrown away by reason of the amendments.

Associate:

Dated:    21 November 2018