FEDERAL COURT OF AUSTRALIA Addenbrooke Pty Limited v Duncan [2016] FCA 431 Appeal from: Addenbrooke Pty Limited v Duncan (No 6) [2015] FCA 793 File number: NSD 1001 of 2015 Judge: ALLSOP CJ Date of judgment: 28 April 2016 Catchwords PRACTICE AND PROCEDURE – removal of parties as unnecessary – no question of principle Registry: New South Wales Division: General Division National Practice Area: Commercial and Corporations Sub-area: Corporations and Corporate Insolvency Category: Catchwords Number of paragraphs: 26 Counsel for the Appellant: Mr FM Douglas QC and Mr WAD Edwards Solicitor for the Appellant: Deutsch Miller Counsel for the First Respondent: Mr G Ng Solicitor for the First Respondent: Yeldham Price O'Brien Lusk Solicitor for the Second and Third Respondents: Mr B Giles of Speed and Stracey Lawyers Solicitor for the Fourth Respondent: Ms T Tran of TressCox Lawyers Solicitor for the Fifth and Sixth Respondent: Mr T Murray of Torq Murray Law ORDERS NSD 1001 of 2015 BETWEEN: ADDENBROOKE PTY LIMITED (ACN 055 973 576) Appellant AND: TRAVERS WILLIAM DUNCAN First Respondent PETER GRAY Second Respondent SOUTHERN CROSS EQUITIES PTY LTD (ACN 071 935 441) (and others named in the Schedule) Third Respondent JUDGE: ALLSOP CJ DATE OF ORDER: 28 APRIL 2016 THE COURT ORDERS THAT: 1. The fourth, fifth and sixth respondents to the appeal be removed as parties to the appeal, there being no part of the appeal that affects them or their interests and they being unnecessary parties. 2. The appellant pay the costs of the fourth, fifth and sixth respondents from 15 October 2015. 3. If the appellant seeks to move the Full Court for the joinder of the fourth, fifth and sixth respondents or for a variation of orders 1 and 2 above, such application is to be accompanied by full security for the costs in order 2 (unless already paid) and for the costs of the application for joinder. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. REASONS FOR JUDGMENT ALLSOP CJ: 1 Addenbrooke Pty Limited (Addenbrooke), under the control of Mr Denis O'Neil sued Mr Travers Duncan, Mr Peter Gray and Southern Cross Equities Pty Limited (SCE) alleging that Mr O'Neil and Addenbrooke were seriously misled by each of the defendants as to the true purpose of a capital raising and about the involvement of Mr Edward Obeid and his family interests in the surrounding commercial circumstances of the relevant transaction. The claims involved serious allegations of commercial impropriety. 2 Mr Gray and SCE brought cross-claims against three parties: Cascade Coal Pty Limited (Cascade), Mr Richard Poole and Arthur Phillip Pty Limited (Arthur Phillip). 3 No joinder in the main claim was made by Addenbrooke of these three cross-defendants. 4 The primary judge dismissed Addenbrooke's claims, refusing to accept the evidence of Mr O'Neil, in particular, upon reliance: Addenbrooke Pty Limited v Duncan (No 6) [2015] FCA 793. 5 The primary judge's orders dealt (as they were required to do) with the cross-claims. They were dismissed and the cross-claimants (Mr Gray and SCE) were ordered to pay the costs of the three cross-defendants. The position of Mr Gray and SCE was then protected by an order in the nature of a Bullock order that the costs that Addenbrooke were ordered to pay the defendants included the costs that Mr Gray and SCE had to pay the three cross-defendants. 6 For the avoidance of doubt, I set out below the six orders of the primary judge: 1. Leave to amend the Amended Originating Application and the Second Amended Statement of Claim in accordance with the amendments set out in MFI-11 be refused. 2. The whole of this proceeding be dismissed. 3. The First and Second Cross-Claims be dismissed. 4. The plaintiff pay the costs of the first defendant (Travers William Duncan), the second defendant (Peter Gray) and the third defendant (Southern Cross Equities Pty Ltd) of and incidental to this proceeding (including the costs which those parties are ordered to pay to the cross-defendants pursuant to Order 5 and Order 6 below). 5. The cross-claimant in the First Cross-Claim (Southern Cross Equities Pty Ltd) pay the cross-defendants' costs of and incidental to that Cross-Claim. 6. The cross-claimant in the Second Cross-Claim (Peter Gray) pay the cross-defendant's costs of and incidental to that Cross-Claim. 7 Addenbrooke has appealed. By its notice of appeal, it has joined Cascade, Mr Poole and Arthur Phillip. It seeks no orders against them. 8 The notice of appeal was filed in August 2015. 9 On 26 October 2015, Speed and Stracey, the solicitors for the two defendants (now respondents to the appeal) who had issued the cross-claims (Mr Gray and SCE) wrote to the appellant's solicitors informing them that their clients do not maintain any of the cross-claims against the three cross-defendants (who were now the fourth to sixth respondents to the appeal) and requesting that the fourth to sixth respondents be removed as parties to the appeal. 10 The solicitors for the appellant refused to discontinue against the fourth to sixth defendants until all costs orders in favour of those parties (including the order that Addenbrooke pay the costs of the two defendants in paying those costs) were set aside by consent. 11 This position appeared not to comprehend what was being proposed, which was immediately pointed out by Speed and Stracey. Speed and Stracey pointed out that the only order affecting the fourth to sixth respondents that concerned Addenbrooke was the order that included the Bullock order: order 4. The position of Mr Gray and SCE was implicitly that if Addenbrooke won the appeal and succeeded in setting aside all orders that affected it (orders 1 to 4) Mr Gray and SCE would not contest the dismissal of the cross-claims and did not require the cross-claims and any costs orders related thereto to be reagitated. Therefore, the fourth to sixth respondents were entirely irrelevant to the substance of the appeal. 12 On 4 November 2015, it was asserted in correspondence by the appellant's solicitors that: …the only reason why the cross-respondents are parties to this appeal is because the Registrar of the Federal Court insisted upon it in order to facilitate the filing of our client's Notice of Appeal. 13 The letter continued: We are sympathetic to your view that the cross-respondents are probably not necessary parties, because the costs orders in favour of your clients, including the Bullock order, can be set aside without their participation in the appeal. However, in light of the fact that the Registrar insisted that they be made parties to the appeal, we would prefer to deal with this matter at the next directions hearing. We would not oppose this course and cannot see how any costs will be incurred by the cross-respondents before then, nor by your clients in respect of those cross respondents. 14 On 5 November 2015, Speed and Stracey once again called for the discontinuance against the fourth to sixth respondents. 15 In December 2015, TressCox, who act for the fourth respondent to the appeal (Cascade) called upon the appellant to discontinue against their client. Despite a promise of a "substantive response" in December, by February 2016, no response had been given. 16 In February 2016, TressCox once again wrote requesting discontinuance. 17 Nothing had been done by the time the matter came before me for a case management hearing on 14 March 2016. In the debate before me, there was a refusal by the appellant to discontinue against the fourth to sixth respondents. It was submitted that the fourth to sixth respondents should put on a submitting appearance. 18 The difficulty with that submission is that there were no orders that could be made on the appeal as framed which were against them or affected them at all. The cross-claims have been resolved and the appellant makes no claim against them. 19 The appellant has already acknowledged in correspondence that the fourth to sixth respondents are not necessary parties. Indeed, they are unnecessary parties. They are likely, however, necessarily to incur some costs and need not be subjected to the risk of further costs. 20 To the extent that there is an assertion that a Registrar of the Court required the addition of the parties, that could have been resolved promptly in October by an order of the Court. 21 At the hearing before me on 14 March 2016, Mr Douglas QC said that if there is to be a new trial, as there may well have to be if Addenbrooke is successful, they would be parties to that trial. But they would only be parties if the cross-claims were to be prosecuted after being subject of a contingent appeal. If there is to be a new trial, the evidence reveals that the cross-claimants/defendants (Mr Gray and SCE) have resolved their issues with the cross-defendants, and no cross-claim will be agitated. 22 The appellant has never claimed against these parties. 23 I see no reason why parties who cannot be affected by any order immediately or consequentially should be put to the expense of this litigation, even as passengers. 24 I will order that the fourth to sixth respondents be removed as parties from the appeal as unnecessary parties. 25 In case there is any change in any issue, I do not shut out the appellant from applying for any joinder of the fourth to sixth respondents, but, given the circumstances of what has passed, I think it only fair that any such application be necessarily accompanied by proof of payment of past costs or full security for costs in the past, and for the application for joinder. 26 The orders of the Court will be: 1. The fourth, fifth and sixth respondents to the appeal be removed as parties to the appeal, there being no part of the appeal that affects them or their interests and they being unnecessary parties. 2. The appellant pay the costs of the fourth, fifth and sixth respondents from 15 October 2015. 3. If the appellant seeks to move the Full Court for the joinder of the fourth, fifth and sixth respondents or for a variation of orders 1 and 2 above, such application is to be accompanied by full security for the costs in order 2 (unless already paid) and for the costs of the application for joinder. I certify that the preceding twenty-six (26) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Chief Justice Allsop. Associate: Dated: 28 April 2016 SCHEDULE OF PARTIES NSD 1001 of 2015 Respondents Fourth Respondent: CASCADE COAL PTY LIMITED (ACN 119 180 620) Fifth Respondent: ARTHUR PHILLIP PTY LTD (ACN 100 908 101) Sixth Respondent: RICHARD JONATHAN POOLE