Lewis v Nortex Pty Ltd (In liq); Lamru Pty Ltd v Kation Pty Ltd [2004] NSWSC 121

New South Wales Supreme Court

CITATION : Lewis v Nortex Pty Ltd (In liq); Lamru Pty Ltd v Kation Pty Ltd [2004] NSWSC 121 HEARING DATE(S) : 2 March 2004 JUDGMENT DATE : 2 March 2004 JURISDICTION: Equity JUDGMENT OF : Hamilton J DECISION : Submission that plaintiff must amend points of claim to rely upon particular item of subject matter refused.

CATCHWORDS : PROCEDURE [101] - Supreme Court procedure - Procedure under SCR - Amendment - Whether amendment necessary for plaintiff to rely on particular item of subject matter. CASES CITED : White (ACT) (In Liquidation) v G B White [2004] NSWSC 71 3081/97 Peter Lawrence Lewis (P) Lamru Pty Ltd (Applicant) Kation Pty Ltd (Respondent) Brian Raymond Silvia (Liquidator) PARTIES : 1750/02 Lamru Pty Limited (P) Kation Pty Limited (D1) Peter Lawrence Lewis (D2) Mark Lewis (D3) Nortex Pty Ltd (In Liq) (D4) FILE NUMBER(S) : SC 3081/97; 1750/02 N A Cotman SC & J T Johnson (P L Lewis & Kation P/L) COUNSEL : S J Motbey (Lamru P/L) V R Gray (Liquidator & Nortex P/L) No appearance (M Lewis) Kemp Strang (P L Lewis & Kation P/L) SOLICITORS : Lyons & Lyons (Lamru P/L) Abbott Tout (Liquidator & Nortex P/L) Corrs Chambers Westgarth (M Lewis)

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

HAMILTON J

TUESDAY, 2 MARCH 2004

3081/97 PETER LAWRENCE LEWIS v NORTEX PTY LTD (In Liq) 1750/02 LAMRU PTY LIMITED v KATION PTY LIMITED & ORS JUDGMENT – Re Amendment to Pleadings re China Creditors 1 HIS HONOUR: There has been agitated before me a question of whether there should be some amendment to the "pleadings", or otherwise in relation to the definition of issues in this case, in relation to what is referred to as the "China creditors" issue. I place the word "pleadings" in inverted commas since the "pleadings" in this case are informal, being consolidated points of claim in the two sets of proceedings being heard together and documents filed consequent upon them. The "China creditors" issue relates to some $284,000 odd and arises in this way. 2 Originally an item was shown as a deduction in the 1997 accounts of Nortex being in respect of moneys owed to the "China creditors". The "China creditors" lodged a proof of debt in respect of this sum and the liquidator in due course rejected that proof. From that rejection there has been no appeal. 3 The $284,000 should be taken as at some point of time not having been or having ceased to be an obligation of Nortex. It is not mentioned in the points of claim or points of defence or Scott Schedule in these proceedings. The reason for that appears to me to be that, up to now, there has been no controversy amongst the parties to the proceedings about what should be done about the "China creditors'" item. The "China creditors" having ceased to be creditors, the $284,000 should be written back into the company's accounts as a credit item. What has not previously been, but is now made, a subject matter of controversy, is whether that should occur in the 1997 year, which is open before the Court, or the 1998 year which is not at present open before the Court. The former would or may be the appropriate course if the obligations in truth never existed. The latter would or may be the appropriate course if the debt undoubtedly did once exist, but was subsequently discovered to be a bad debt and written off as such. There is not sufficient clarity in the evidence before me concerning the "China creditors" to determine which of those courses is appropriate or to make a positive determination as to what should be the correct date for credit. 4 Mr Ventry Gray, of counsel for the liquidator, now suggests that it is necessary for Lamru to amend its points of claim to include an item of claim concerning the "China creditors" in order for the 1997 accounts to be adjusted by making the credit in that year. Mr Motbey, on behalf of Lamru, says that Lamru has advisedly not propounded a claim concerning this matter in its points of claim and that it ought not now be required to do so. Lamru says that no issue has been taken in the proceedings with the proposition that the proof of debt of the "China creditors" was rightly rejected by the liquidator and that 1997 is the appropriate year for the credit to be brought into account. As there is no issue at present among the parties concerning that, then it may be done on that agreed basis without being agitated in any way among the issues in these proceedings. The basis on which Mr Motbey contends that is as follows. 5 On 9 December 2002 Lamru's solicitor, Mr Lyons, wrote to Abbott Tout, the solicitors for the liquidator, a letter including the following: "What is plain enough in this difficult case is that there are a number of issues of substance, and a number of non-issues of substance, behind the different arithmetical positions advanced by the parties. When the issues of substance are ruled upon by the Court the parties, or perhaps some independent person, will be able to sit down and do the arithmetic. There having been no appeal by the so-called China creditors from the rejection of their claims for $284,837.20, the relevant arithmetical adjustment to the 1997 accounts has become a non-issue of substance. " 6 On 2 May 2003, Mr Lyons wrote to Kemp Strang, the solicitors for the Lewis interests, with a copy to Abbott Tout, as follows: "A close analysis of the Scott Schedule Item 24 and para 55 of the Points of Claim show that the $284,837.20 non-existent liability to some China creditors ... whose claims were advanced through Mr Lewis and rejected by the liquidator with no appeal has been omitted from the free nett income as at 30 June 1997. There is no issue but that the free nett income to that date must be increased by the $278,837.20 [sic] since there is no issue but that Nortex, as the liquidator rightly reckoned, did not owe this sum. " 7 The question was raised by Mr Cotman, of Senior Counsel for the Lewis interests, in Court on 17 June 2003 as to whether this issue should be raised and agitated in the proceedings. After argument concerning that, at transcript 2536 I said: "I don't think that letter says anything more than that the proofs were rejected by the liquidator and, therefore, as things stand there is a windfall of $284,000 which needs to be counted in."