Davies v Beyond Building Systems Pty Ltd & ors [2009] NSWSC 1489 (30 October 2009)

Last Updated: 30 March 2010

NEW SOUTH WALES SUPREME COURT

CITATION:
Davies v Beyond Building Systems Pty Ltd & ors [2009] NSWSC 1489


JURISDICTION:
Equity Division

FILE NUMBER(S):
4263/09

HEARING DATE(S):
30 October 2009


EX TEMPORE DATE:
30 October 2009

PARTIES:
Steven Michael Davies (plaintiff)
Beyond Building Systems Pty Ltd (first defendant)
Vincent Brian Lee Smith (second defendant)
Henrih Horthy (third defendant)

JUDGMENT OF:
Brereton J

LOWER COURT JURISDICTION:
Not Applicable

LOWER COURT FILE NUMBER(S):
Not Applicable

LOWER COURT JUDICIAL OFFICER:
Not Applicable



COUNSEL:
Ms V Culkoff (plaintiff)
Mr D Pritchard SC (defendants)


SOLICITORS:
Steven Klinger (plaintiff)
Addisons (defendants)


CATCHWORDS:
PROCEDURE – Supreme Court Procedure – New South Wales – Procedure under Rules of Court – Amendment – whether plaintiff should be granted leave to further amend statement of claim

LEGISLATION CITED:
(CTH) Corporations Act 2001, s 233

CATEGORY:
Procedural and other rulings

CASES CITED:
Laurie v Carroll [1958] HCA 4; (1958) 98 CLR 310
Mondial Trading Pty Ltd v Interocean Marine Transport Inc (1985) 65 ALR 155
Rice Growers Co-operative Limited v ABC Containerline (1996) 138 ALR 480

TEXTS CITED:


DECISION:
Motion dismissed with costs.



JUDGMENT:

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION


BRERETON J

Friday 30 October 2009


4263/09 Steven Michael Davies v Beyond Building Systems Pty Ltd

JUDGMENT (ex tempore)

1 HIS HONOUR: Although the court record does not appear to disclose it, the parties do not dispute that, on 2 October 2009, I dismissed a motion filed on 29 September 2009 whereby the second and third defendants sought orders varying the orders made by Justice White on 18 September 2009 and substituting an alternative access regime to some of the first defendant's computer financial records, which would have provided for no access to the PayPal accounts.

2 The history of these proceedings, since 2 October 2009 until the present, has involved competing attempts by the plaintiff to secure access to the PayPal accounts and by the defendants to impose more or less restrictive access regimes in respect of those accounts.

3 That debate, proceeded in part formally (including by the plaintiff's Notice of Motion filed on 13 October 2009), and in part informally (by a draft interlocutory process, prepared by the second and third defendants on or about 8 October 2009, and subsequent draft orders setting out the access regime which they proposed). Ultimately, by orders made, some by consent and some not by consent today, the plaintiff's position has prevailed. Viewed objectively, although there are one or two minor deviations from what the plaintiff sought, the plaintiff substantially has succeeded in that dispute.

4 The contempt application proceeded in parallel with that dispute, and the evidence on it informed the action of the access dispute.

5 Viewed objectively, the plaintiff has succeeded on the access argument in obtaining almost entirely the access that it sought. It is true that various attempts were made by the defendants along the way to reach a middle position, but all of them involved restricted access regimes, not acceptable to the plaintiff and not contemplated by White J’s order.

6 Whatever the reason for the ultimate position adopted by the defendants, it is not one of compromise, but of capitulation. In those circumstances, objectively, the plaintiff must be entitled to the costs of what has taken place between 2 October and today. The costs order made on 23 October 2009 is intended to cover the costs of the proceedings after 2 October 2009 to and including 23 October 2009, insofar as they are connected with what I have described as the access time, including the plaintiff's Notice of Motion filed on 13 October 2009 and the contempt application.

7 By Notice of Motion filed in court by leave today, the plaintiff seeks leave to further amend its Statement of Claim by joining Beyond Building Group Limited (BBG) as a fourth defendant and dispensation with the requirement for service ex juris on BBG, which is a Hong Kong corporation, and an order for substituted service on BBG.

8 The draft amended Statement of Claim relevantly seeks a declaration that the plaintiff is entitled to a 25% shareholding in BBG, a declaration that the second defendant Mr Smith holds his shares in BBG in trust for the plaintiff and Mr Horthy in the same shareholdings as in BBS, an order that the plaintiff's shareholding in BBG (so it is described) be purchased by BBG, BBS or the other defendants pursuant to (CTH) Corporations Act 2001, s 233, and, alternatively, an order that BBG be wound up.

9 In the course of argument it has been practically conceded that enormous jurisdictional difficulties confront the court in making an order under the Corporations Act oppression power or winding up power in respect of a Hong Kong corporation. The declarations sought do not necessitate the involvement of BBG as a party, since the alleged trustee is Mr Smith against whom that declaration is properly sought. It is not necessary that the company, the shares in which are the alleged trust property, be joined for that purpose.

10 Other than the bare allegation in paragraph 8(c) that Mr Smith holds his shares in BBG in trust for the plaintiff and Mr Horthy, paragraph 8(b) alleges an agreement between the plaintiff, Mr Horthy and Mr Smith that, as part of the BBS business, BBG will be incorporated in Hong Kong to develop and undertake BBS's international wholesale business. That may be so, but the pleading goes nowhere and demonstrates no conclusion or consequence to flow from that circumstance. If it were established, then there are a number of possibilities. Mr Smith might hold his shares in BBG upon trust for BBS, or BBG might hold its assets and undertaking upon trust for BBS; but none of that is articulated in the pleading. The pleading fails to disclose any viable cause of action against BBG.

11 In those circumstances, it is inappropriate to grant leave to amend. It may be that the plaintiff will be able to formulate a cause of action against BBG, but it has not, at this stage, done so.

12 In those circumstances, it is unnecessary to consider the issues which arise concerning substituted service where the party to be served is outside the jurisdiction, as referred to in Laurie v Carroll [1958] HCA 4; (1958) 98 CLR 310, Mondial Trading Pty Ltd v Interocean Marine Transport Inc (1985) 65 ALR 155, and Rice Growers Co-operative Limited v ABC Containerline (1996) 138 ALR 480. However, it would be necessary to establish, first, that one of the grounds on which service outside the jurisdiction is authorised under UCPR Part 11 was established, and that it was impracticable in the relevant sense to serve the documents in the manner required by the rules – observing that, in Rice Growers, Tamberlin J was of the view that the mere fact that it might take three months to serve documents did not mean that it was impractical to do so.

13 Whether an order for substituted service is even necessary is also a matter that requires consideration. As I recall the position, service by post is an authorised means of service on a corporation in any event, even of originating process, and, in those circumstances, it may well be that no order for substituted service is required at all. But those considerations can await another day, if the plaintiff chooses to reformulate a case against BBG.

14 I dismiss the Notice of Motion filed 30 October 2009.

15 It seems to me that the amendment made allegations against Mr Smith and sought relief against Mr Smith, namely that he held 25% of the shares in the Hong Kong company upon trust for the plaintiff. In those circumstances, he had an interest in opposing leave to amend. To that extent, Mr Pritchard was therefore entitled to be here and to oppose it.

16 The motion is dismissed with costs.

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LAST UPDATED:
26 March 2010