A Pitt and Co Pty Ltd v Simmons Wolfhagen
[2022] TASSC 8
•21 February 2022
[2022] TASSC 8
COURT: SUPREME COURT OF TASMANIA
CITATION: A Pitt and Co Pty Ltd v Simmons Wolfhagen [2022] TASSC 8
PARTIES: A PITT & CO PTY LTD (ACN 080 422 706) and BERNAC PTY LTD (ACN 110 078 709)
v
SIMMONS WOLFHAGEN PTY LIMITED (ACN 635 248 976) trading as SIMMONS WOLFHAGEN LAWYERS (A FIRM)
FILE NO: 1691/2021
DELIVERED ON: 21 February 2022
DELIVERED AT: Hobart
HEARING DATES: 13 December 2021 and 18 February 2022
JUDGMENT OF: Holt AsJ
CATCHWORDS:
Limitation of Actions – Limitation of particular actions – Contribution between tortfeasors – Position in Tasmania – Twelve month period for commencement under the Wrongs Act1954 (Tas) only applies if another period of limitation has expired – Six year period for the commencement of contribution proceedings under the Limitation Act1974 (Tas) had not expired – Addition of new defendants not time barred.
The Owners of Strata Plan 87231 v 3A CompositesGmbH (No 3) [2020] FCA 748, followed.
Wrongs Act1954 (Tas), s 5.
Limitation Act 1974 (Tas), s 4.
Aust Dig Limitation of Actions [1039]
REPRESENTATION:
Counsel:
Plaintiffs: B R McTaggart SC
Defendant and prospective defendants: S B McElwaine SC (13 December 2021)
C Groves (18 February 2022)
Solicitors:
Plaintiffs: Woodina Law
Defendant and prospective defendants: Shaun McElwaine + Associates and
Dobson Mitchell Allport (from 23 December 2021)
Judgment Number: [2022] TASSC 8
Number of paragraphs: 27
Serial No 8/2022
File No 1691/2021
A PITT & CO PTY LTD (ACN 080 422 706) and BERNAC PTY LTD (ACN 110 078 709) v SIMMONS WOLFHAGEN PTY LIMITED (ACN 635 248 976) trading as SIMMONS WOLFHAGEN LAWYERS (A FIRM)
REASONS FOR JUDGMENT
HOLT AsJ
21 February 2022
Introduction
Simmons Wolfhagen Pty Limited was incorporated on 1 August 2019 and became an incorporated legal practice within the meaning of the Legal Profession Act 2007 (Tas). On 23 December 2019 the partnership, which had traded under the name Simmons Wolfhagen, was dissolved.
On 9 July 2021 the plaintiffs issued a writ containing allegations that Simmons Wolfhagen had acted negligently and in breach of a retainer to provide legal services in 2013. The writ named as the sole defendant the company, rather than naming as the defendants those individuals who were members of the legal partnership as it was constituted at the time of the alleged wrongdoing, namely in 2013.
According to the Statement of Claim filed with the writ:
·"CWS Mortgage Ltd (CWS) was the responsible entity for the managed investment scheme known as the CWS Mortgage Fund.
·On 26 March 2013 four companies, each controlled by the same individual, became respectively the registered proprietors of four lots on a strata plan. The land had been sold to the companies by the Derwent Valley Council. On the same day agreements between the Council, being a planning authority within the meaning of the Land Use Planning and Approvals Act 1993 (Tas), were registered over the four titles with effect that under the Act the burden of covenants contained in the agreements ran with the land. By the agreements, the companies agreed to pay by instalments the purchase price for the four lots being the total sum of $225,500. The instalments fell due upon the completion of various stages of a development plan. The agreements provided that the payment obligation was a charge on the land.
·In October 2013 the companies applied to CWS for a loan of $1M. The plaintiffs, being the entities which operated a property valuation business, provided valuations in respect of the four lots, which valuations were relied upon by CWS. The loan application was approved.
·CWS engaged Simmons Wolfhagen to act for it in the transaction whereby the loan was to be secured by mortgages registered over each of the four titles. Simmons Wolfhagen had the mortgages registered in November 2013 and between 3 December 2013 and 29 May 2014 CWS made advances to the companies totalling about $1M.
·The companies defaulted in the payment of money due and in November 2016 CWS obtained judgment against the companies for about $1.2M.
·The judgment was not satisfied and on 10 December 2019 CWS, as mortgagee, sold the four lots for the total sum of $650,000.00.
·On 10 July 2020 CWS instituted proceedings in the Federal Court of Australia against the plaintiffs in the present action in respect of the valuations which they had provided in 2013, claiming damages for misleading or deceptive conduct pursuant to the Australian Consumer Law and damages for negligent misstatement.
·On 9 June 2021 the plaintiffs, being the respondents in the Federal Court proceedings, settled the claim on terms including that the settlement did not discharge any persons other than the plaintiffs from liability to CWS.
The plaintiffs' claim for relief against Simmons Wolfhagen appears at par 41 of the Statement of Claim and is as follows:
"The plaintiffs seek the following orders:
(a) They be entitled to contribution from the defendant pursuant to section 3(1)(d) of the Wrongs Act 1954 (Tas) or in equity;
(b) The amount of contribution shall amount to a complete indemnity or, alternatively, be an amount as may be found by the court to be just and equitable pursuant to section 3(2) of the Wrongs Act or in equity; and
(c) Costs and interest."
On 9 September 2021 the defendant filed its defence comprising six paragraphs only. Paragraphs 3 to 6 are as follows:
"3 Simmons Wolfhagen Pty Ltd (ACN 635 248976) was not incorporated until August 2019
4 At all material times between 16 October 2013 and I August 2019 the legal practice of Simmons Wolfhagen was conducted in partnership
5 At all material times between 16 October 2013 and 29 May 2014 the partners of Simmons Wolfhagen were David Morris, Chris Cunningham, Patrick Lunn, Mark DeVries and Kristy Foale, the latter of whom was a salaried partner.
6 For those reasons:
(a) the claim framed against Simmons Wolfhagen Pty Ltd is wholly misconceived and should be struck out;
(b) none of the allegations at paragraphs 3-41 of the statement of claim are relevant to any acts, errors or omissions of Simmons Wolfhagen Pty Ltd
(c) in any event, each of the allegations made in those paragraphs are denied; and
(d) Simmons Wolfhagen Pty Ltd declines to plead further in answer to the statement of claim."
The Application
The plaintiffs have not filed a reply. Instead, they filed an interlocutory application on 13 October 2021 as follows:
"The first plaintiff and the second plaintiff (the plaintiffs) apply for the following orders:
1 Pursuant to rule 184(1)(b) of the Supreme Court Rules 2000 (Tas) that the following individuals be added as defendants to these proceedings:
Patrick Lunn;
Kristy Foale;
Mark De Vries;
David Morris;
Chris Cunningham;
Neil Readett; and
James Walker
2 Pursuant to rule 184(6), the proceedings against the parties whose names have been added as defendants by (1) above are taken to have begun upon the filing of the original writ in this action.
3 Further, or in the alternative to (2) above, pursuant to section 3(6) of the Wrongs Act 1954 (Tas) the period within which proceedings for recovery of contribution against the parties referred to in (1) may be commenced by the plaintiffs be extended for such period as the Court deems fit.
4 The costs of this application be in the cause."
The Supreme Court Rules 2000 (Tas), r 184 is, relevantly, as follows:
"Adding or deleting parties
(1) At any stage of a proceeding and whether or not any relevant limitation period has expired, the Court or a judge, either on or without application, may order –
(a) that the name of a party improperly or erroneously joined be struck out; or
(b) that the name of a person who ought to have been joined as a party or whose presence may be necessary for the Court or judge to adjudicate on and settle all the questions involved in the proceeding be added; or
….
(6) Unless otherwise ordered, a proceeding against a party whose name is added as defendant … is taken to have begun on the service of the originating process on that party.
(7) An application under subrule (1) –
(a) may be made to the Court or a judge at any time before trial or at the trial of the action; and
(b) is to be made in a summary manner.
(8) If an order is made under subrule (1) …
(a) the originating process is to be amended accordingly; and
(b) the plaintiff … is to file a copy of the originating process as amended; and
(c) any new defendant … is to be served with the amended originating process in the same manner as originating process is served; and
(d) the proceeding continues as if the new defendant … had originally been made a defendant …."
The Legislation
The prospective defendants argue a limitation point relying on the Wrongs Act 1954, s 3(5). The Act, s 3 relevantly provides:
"Proceedings against, and contribution between, wrongdoers
(1) Where damage is suffered by a person as the result of a wrongful act –
…
(d) a person may recover contribution or indemnity from another person who is, or would, if sued by the person by whom the damage was suffered at the time when the cause of action arose, have been, liable in respect of the same damage by settling with the person by whom the damage was suffered and thereafter commencing or continuing an action against the other person, in which case the first-mentioned person shall satisfy the court that the amount of the settlement was reasonable, and if the court finds that the amount of the settlement was excessive it may fix the amount at which the claim should have been settled.
(2) In proceedings for contribution under this section, the amount of the contribution that is recoverable from a person shall be such amount as may be found by the court to be just and equitable, having regard to the extent of that person's responsibility for the damage, and, for the purposes of this section, the court has power to exempt a person from liability to make contribution, or to direct that the contribution to be recovered from a person shall amount to a complete indemnity.
(3) A release of, or accord with, one person granted or made by a person by whom damage is suffered–
(a) does not discharge another person unless the release so provides; and
(b) relieves the person to whom it is granted or with whom it is made from liability to make contribution to another person–
and has effect to reduce the claim of the person by whom damage is suffered–
(c) in the amount of the consideration paid for the release or accord;
(d) in any amount or proportion by which the release or accord provides that the total claim of that person shall be reduced; or
(e) to the extent that the person to or with whom the release or accord is granted or made would have been liable to make contribution to another person if the total claim of the person by whom damage is suffered had been paid by the other person–
whichever is the greatest.
…
(5) Notwithstanding any provisions of any enactment … limiting the time within which an action may be brought, proceedings for contribution under this section may, although… the time so limited has expired, be commenced at any time within the period of twelve months (or within such extended period as may be allowed pursuant to subsection (6) of this section) after the writ in the original action was served on the person seeking to recover contribution.
(6) A judge, magistrate or any other person constituting or presiding over a court of competent jurisdiction, on the application of a person seeking to recover contribution under this section, may, in his discretion and subject to such conditions (if any) as he may impose, extend the period within which proceedings for recovery of contribution shall be commenced, notwithstanding that the period prescribed in subsection (5) of this section may have expired, if he is satisfied that the person from whom contribution is sought to be recovered will not be prejudiced in his defence by reason of the extension."
Subsection (5), insofar as a statutory limitation may exist, is expressed to operate notwithstanding that another time limit has expired rather than being expressed to exclude entirely the operation of such other limitation provision.
A cause of action for contribution or indemnity under the Wrongs Act, s 3(1)(d), arises upon the settlement of a claim by the person suffering the damage. The primary time limit for instituting proceedings in respect of a cause of action founded on tort or to recover any sum recoverable by virtue of an enactment is contained in the Limitation Act 1974, s 4(1)(a) and (d) and is six years. The section relevantly provides:
"General period in actions of contract, tort, & c.
(1) Except as otherwise provided in this Division, the following actions shall not be brought after the expiration of 6 years from the date on which the cause of action accrued, that is to say:
(a)actions founded on simple contract (including contract implied by law) or founded on tort, including actions for damages for a breach of statutory duty;
…
(d) actions to recover any sum recoverable by virtue of an enactment, other than a penalty or forfeiture or a sum by way of penalty of forfeiture."
Discussion
A claim by a tortfeasor against a concurrent tortfeasor is a claim founded on tort notwithstanding that the law of tort has been expanded and modified by statute, namely the Wrongs Act. Accordingly, the claim can be characterised as falling within the meaning of s 4(1)(a). Further, the contribution claimed can be characterised as a sum recoverable by virtue of an enactment within the meaning of s 4(1)(d).
Those sought to be joined submitted that the Limitation Act does not apply as the claim is not for "any sum recoverable by virtue of an enactment" but is a claim for contribution or indemnity to the extent that a Court may consider to be just and equitable, with the starting point being an assessment of the reasonableness of the settlement sum.
The authority cited in support of the proposition that the reference in the Limitation Act, s 4(1)(d) to a "sum" does not encompass an amount of money to be ascertained by the type of enquiry required by the Wrongs Act was Central Electricity Board v Halifax Corporation [1962] 3 All E R 915. This was an action to recover a debt vested in the plaintiff by an act of Parliament, but the action was not commenced until after the expiry of 6 years from the vesting date. A question arose as to whether a 12 year limitation period (within which time the action had been commenced) applied, as the proceeding was an action on a speciality, that is to say an act of Parliament, being in counsel's submission, "the highest form of speciality". The case does not assist as no point arises in the present circumstances regarding the distinction between a speciality and other causes of action given by statute. I can see no reason why the reference to "any sum" in s 4(1)(d) should be narrowly construed so as to exclude a sum of money to be ascertained following an assessment.
It was also submitted by counsel for the prospective defendants that if there is a conflict between a general limitation period and a specific limitation period the latter prevails. Bargen v State Government Insurance Office (QLD) [1982] HCA 22, 154 CLR 318 is authority in point and supporting the proposition put by counsel. However, here there is no inconsistency. The Wrongs Act, s 5(5), properly construed, is not in conflict with the Limitation Act, s 4. It deals with cases where time otherwise has expired and is not expressed so as to impose a limitation period independently of all other enactments.
It was on the basis of Halifax, and also on the basis of an assertion that the Wrongs Act, s 5(5) is in conflict with the Limitation Act, that counsel for the proposed new defendants submitted that I should conclude that a recent case, directly in point, was wrongly decided. The case is The Owners of Strata Plan 87231 v 3A Composites GmbH (No 3) [2020] FCA 748. There Wigney J said at [113] – [115]:
"113 Section 4 of the Limitation Act 1974 (Tas) specifies the limitation periods for a number of different actions. The effect of subs 4(1)(d) is that 'actions to recover any sum recoverable by virtue of an enactment' cannot be brought after the expiration of six years from the date on which the cause of action accrued. Section 7 of the same statute provides that where 'an action is brought against a person in respect of any damage nothing in this Act shall be taken to prejudice or affect the operation of the Wrongs Act 1954 in relation to any action for contribution in respect of that damage'.
114 The combined operation of the abovementioned provisions would appear to be that the limitation period for an action for contribution is six years from the date that the cause of action accrues, which is ordinarily when a judgment or award in damages is entered against the person who seeks contribution, or when that person settles the action against them. If that period expires, however, an action for contribution can nevertheless be brought within 12 months after the writ in the original action was served on the person seeking to recover contribution.
115 3A contended that, notwithstanding that apparent operation of the relevant provisions, subs 3(5) of the Wrongs Act 1954 has been 'applied as a hard limitation date'. It cited, in that regard, a decision of Tennant J in the Supreme Court of Tasmania in Mirkazemi v Manns[2008] TASSC 63. It would appear that in that case Tennant J did treat subs 3(5) as if it prescribed the limitation period for an action for contribution. There is, however, nothing in the judgment to suggest that there was any contest or argument in respect of that issue and there is no reference in the judgment to subs 4(1)(d) of the Limitation Act 1974. It would appear that the party who sought contribution either assumed or conceded that subs 3(5) prescribed the limitation period as he filed an interlocutory application seeking an extension of time under subs 3(6). That was the only real issue addressed in the case. In those circumstances, it is somewhat doubtful that the case stands as authority for the proposition that subs 3(5) prescribes a "hard limitation date". Even if it was authority for that proposition, it would appear, at first blush at least, that it was wrongly decided. The better view would appear to be that the period referred to in subs 3(5) is only of relevance if a time limit prescribed by some other provision has expired"
I have concluded that the action is of the type referred to in the Limitation Act, s 4(1)(a) and (d) and that the Act is not in conflict with the Wrongs Act and so I can find no fault in the reasoning of Wigney J. I will follow his decision. The result is that the primary limitation period is that set out in the Limitation Act, namely six years.
In the present case the settlement occurred on 9 June 2021. It follows that the time for bringing the claim does not expire until six years later, namely not before 9 June 2027.
Disposition
The only ground of opposition to the addition of the proposed new defendants was the limitation point, which I have decided in favour of the plaintiffs. It is plain that the partners of the law firm should have been made defendants at the time the writ issued. The failure to do so was clearly a mistake. Rule 184 allows for the correction of the error. If it is not corrected a new writ, within time, may issue in any event. There is no point causing this to occur. An order should be made for the addition of the new defendants in the existing action.
Counsel for the existing defendant and the prospective defendants submitted that no basis upon which the existing corporate defendant should remain as a party exists. This is now conceded and so the effect of the order which I will make will be for substitution rather than addition.
As the existing statement of claim makes no reference to the proposed defendants a modified pleading will need to be filed and served containing at least an additional allegation that the defendants were partners of the law firm at the relevant time or times or, if not partners, performed the work for which the firm was engaged. The new defendants must be served. There is no reason to make an order that the proceedings against them be taken to have begun before they have been served. There will not be an order in the terms sought in paragraph 2 of the interlocutory application.
In light of my finding that an action against the proposed new defendants is within time under the Limitation Act no occasion to extend time arises. However, against the event that I am wrong in my finding that time for commencement of the action has not expired I will make an order extending time to cover that contingency for reasons which I now briefly set out.
I am satisfied that an extension of time would not result in the new defendants being prejudiced in their defence. Counsel for the proposed new defendants submitted that there would be prejudice, namely the loss of the ability to plead a limitation defence. This is self-evidently not relevant prejudice within the meaning of the Wrongs Act, s 3(6). If it was, the threshold test could never be satisfied with the result that time could never be extended under the provision. The prospective defendants have not asserted that their files contain inadequate information to assess and, if appropriate, to defend the claim or that their files have been lost or destroyed. They assert no prejudice other than the loss of a limitation defence. I accordingly infer and so find that an extension of time will not prejudice the prospective defendants in their defence of the claim, nor cause them oppression.
The plaintiffs were joined as respondents to the Federal Court proceeding by order made 14 August 2020. At the same time it was also ordered that the amended originating application and amended statement of claim be served on 14 August. There being no suggestion that there was late compliance with the service order, I proceed on the basis that, if it had applied, the 12 month time limit in the Wrongs Act, s 3(5) commenced to run from 14 August 2020.
It is now about 18 months since the plaintiffs were served with the proceedings in the Federal Court. Within 12 months of service the Federal Court proceeding was settled. The settlement occurred on 9 June 2021 and on 9 July 2021 the present action was commenced, albeit against the wrong defendant. The error became apparent on the service of the defence in September 2021. Within 2 weeks the plaintiffs sought the consent of the solicitor for the prospective defendants for the addition of them. Consent was not forthcoming and on 13 October the application seeking the addition was filed. A timetable for its prosecution was imposed and it was set down for hearing for 3 November. There was a consent extension of time for the plaintiffs to file their supporting affidavits and the hearing was rescheduled for 13 December and commenced on that day, with the evidence in support being received and submissions commencing. The hearing resumed shortly after this Court resumed sittings in late January 2022. The delay is not inordinate and has been satisfactorily explained.
Subject to the limitation point, which I have decided in favour of the plaintiffs, it is conceded that the case against the prospective defendants, other than Mr Neil Readett, is viable. The plaintiffs have advised that they no longer wish to pursue a claim against Mr Readett.
In the circumstances that extending time will not prejudice the prospective defendants, that the delay has been explained and that the proposed case is viable, I am persuaded that the justice of the case rests with granting an extension of time, if it is needed.
Orders
I make the following orders:–
1The name of the original defendant be struck out.
2Patrick Lunn, Kristy Foale, Mark De Vries, David Morris, Chris Cunningham and James Walker be added as defendants.
3The application made in paragraphs 2 of the interlocutory application is dismissed.
4If, contrary to my finding, time has expired for the commencement of the proceeding against the added defendants, the period within which the proceeding may be commenced against the added defendants is extended to 21 days from the date of these orders.
5Unless an application to the contrary is filed within fourteen days, the plaintiffs are to pay the agreed or taxed costs of the added defendants and Mr Neill Readett in respect of the interlocutory application in any event, and the plaintiffs are to pay the agreed or taxed costs of the action against the original defendant.
6A certificate in respect of the attendance of counsel on the hearing of the interlocutory application is granted.
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