ACN 072 358 831 Pty Ltd & Anor v Arnott
[2006] VSCA 243
•27 October 2006
SUPREME COURT OF VICTORIA
COURT OF APPEAL
No. 3800 of 2006
| ACN 072 358 831 PTY LTD and ANOR. | |
| Appellants | |
| v. | |
| JOHN ARNOTT | Respondent |
---
---
JUDGES: | MAXWELL, P. and EAMES, J.A. | |
WHERE HELD: | MELBOURNE | |
DATE OF HEARING: | 27 October 2006 | |
DATE OF JUDGMENT: | 27 October 2006 | |
MEDIUM NEUTRAL CITATION: | [2006] VSCA 243 | |
---
PRACTICE AND PROCEDURE – County Court – Trial – Action for breach of contract of employment – After trial date fixed, plaintiff added second defendant and amended to allege contract made with defendants jointly – Order for separate trials against first and second defendants respectively – Whether breach of natural justice to proceed in absence of second defendant – Whether trial of plaintiff’s claim possible in absence of second defendant – Order quashed – Trial date vacated – Rule 9.06(b)(i).
---
| APPEARANCES: | Counsel | Solicitors |
| For the Appellants | Mr M.P. Pirrie | Ewan McLean & Associates |
| For the Respondent | Mr J.J. Isles | Slater & Gordon |
MAXWELL, P.:
By summons filed 23 October 2006, the applicant defendants seek leave to appeal from orders made by the County Court on 13 October 2006. The Judge ordered that the trial of the proceeding between the plaintiff and the first defendant proceed on 6 November 2006, and that no steps be taken in the proceeding between the plaintiff and the second defendant without further order of the court, it being anticipated (the order said) that no such order would be made until the proceeding against the first defendant is heard and determined or otherwise resolved.
In my opinion, for the reasons which follow, leave to appeal should be granted, the appeal should be treated as having been heard instanter (pursuant to r. 62.27(1)(d)) and allowed and the orders made by his Honour set aside.
The plaintiff, which is the respondent to this summons, commenced a proceeding in the County Court by writ filed 12 February 2004. Until 27 September 2006, less than one month ago, the first of the two applicants, a company named ACN 072 358 831 Pty Ltd, was the only defendant in the proceeding. In the statement of claim annexed to the writ, the plaintiff alleged that on about 30 November 2000 the defendant offered the plaintiff, and the plaintiff accepted, employment as general/financial manager. That is the contract of employment on which the proceeding is founded. In the particulars, the agreement was said to have been partly oral. Insofar as oral, it was said to be constituted by a conversation between the plaintiff and Mr Brent Hughes, for the defendant, on about 30 November 2000.
The claim made by the plaintiff in the proceeding was, and is, for the recovery of damages for breach of the contract of employment, alleged in that pleading to have been made between himself and the defendant (now the first of two defendants). As the proceeding progressed, that defendant filed an extensive defence and counterclaim, and gave further and better particulars of its defence and counterclaim and of the damages sought in the counterclaim.
In July 2006 the County Court commenced a pilot of a Commercial List. The plaintiff made application to have his proceeding, which had been commenced in the General Division Damages List, entered into the Commercial List pilot. Since about mid-July 2006, the proceeding has been in that list.
By order of the judge made 2 August 2006, the proceeding was listed for trial on 6 November. Following the setting down for trial, the plaintiff made application to add a second defendant, Market Intelligence Strategy Centre Pty Ltd, and to amend his statement of claim accordingly. On 22 September 2006, that is, some seven weeks after the order setting the matter down for trial, his Honour granted leave to the plaintiff to join that company as second defendant, and gave the plaintiff leave to amend his statement of claim. The Judge directed that the plaintiff serve the amended writ and amended statement of claim on each of the defendants on or before 27 September 2006. Service was effected on the second defendant, it appears, on or about 27 September.
Mr McLean, the solicitor for the first defendant, swore an affidavit on 5 October, in support of an application on behalf of his client, the first defendant (up to 27 September, the only defendant) for an adjournment of the trial because of the addition of a defendant. He there set out reasons why in his estimation he could not "properly serve and represent the best interests of his client" (the named defendant) now that there was another defendant. He also made statements about the position of the new defendant – although at that time he was not instructed to act for it – and made what in my opinion was a perfectly valid point. He said that that company, having just been joined, "ought not be expected or required to file and serve its defence and any counterclaim and complete interlocutory and pre-trial steps and be ready for a trial within some six weeks or so from having been joined". It was stated – and this was in the nature of a submission in that affidavit – that to impose those obligations would be a denial of natural justice to the new defendant.
The adjournment application came on on 6 October. The first defendant was represented by Mr Pirrie of counsel, who appears on behalf of both defendants in this Court today. The adjournment application was itself adjourned to 13 October 2006, by which time Mr Pirrie as counsel and Mr McLean as solicitor were instructed to appear on behalf of both defendants. In a written outline of submissions, Mr Pirrie pointed out that the second defendant would be putting in a separate defence, denying the alleged agreement; would need to make discovery, and would need discovery from the plaintiff; and would need to consider requesting particulars. Further, he argued:
"It is not appropriate to split the trial, as there will be issues common to the cases of all parties, and the expenses associated with that course would not justify adopting that course."
Ms Blencowe has affirmed an affidavit in opposition to today's application, to which she very helpfully exhibits the notes she made of the hearing on 13 October 2006. It is an admirably comprehensive record, in the nature of a transcript, of what occurred before his Honour on that day. The parties have been content for us to proceed on the basis that it is an accurate record of the substance of what was said.
The position taken by the plaintiff was as follows, as stated by his counsel:
“Our position is that there is no prejudice to the second defendant in preparing for trial commencing on 6 November 2006 and that the trial against both defendants should proceed on 6 November 2006. However if keeping the trial date of 6 November 2006 means splitting the trials of the proceedings against the first and second defendants, so be it.”
His Honour then said to Mr Pirrie:
"I just want you to address the issue of splitting the trial. I won't force the second defendant on to trial on 6 November 2006."
His Honour evidently accepted that the second defendant could not reasonably be expected to be ready for trial on 6 November. With respect, that seems an entirely correct view of the circumstances. The late joinder of an additional defendant cannot be allowed to foreshorten the interlocutory timetable in such a way as to deny that new party the opportunity to plead, to make and seek discovery, to give and seek particulars, and so on.
In response to his Honour's question, Mr Pirrie said:
"The plaintiff's whole case is against both companies. Where there are common issues of fact and law the trial should not be split. It will result in duplication of matters at hearing. We are only asking that the matter be heard in February 2007."
His Honour's response was as follows:
"The difficulty is that this case is out of the ordinary. It was set down last year. For various reasons it didn't proceed. There has to be some grappling of the issues. I am not confident that if I stood the matter over until February or March 2007 that another issue wouldn't arise that would lead the defendants to say that the matter could not proceed to trial at that time."
He later said:
"I don't see why the trial can't proceed as fixed against both defendants. The fact is your client objects to that. I don't think I can force the second defendant on. I do not have confidence that the matter will resolve unless it is properly case-managed. I have no confidence that if the trial is adjourned there won't be some other issue that you raise to say that the trial cannot proceed. You have not satisfied me that there is any reasonable prejudice that means I should adjourn the trial."
His Honour then made the orders which are the subject of the application for leave to appeal.
Nothing in what I am about to say should be taken as in any way deflecting the County Court, or the Judge in charge of the Commercial List, from the commendable objective of case management of commercial matters. The experience of the Supreme Court over 20 years has been that active case management of commercial matters is very much to the benefit of parties and to the Court. In my respectful opinion, however, this is a case where a proper concern for case management and efficient use of court time has obscured rather more fundamental questions of the proper conduct of a trial.
The critical factor is that the amended statement of claim alleges a contract to which both defendants were party. The plaintiff makes a single, foundational, allegation. He alleges that he made a contract with two companies simultaneously. Accordingly, the particulars now allege that the conversation which constituted the oral part of the contract was between the plaintiff himself and Mr Hughes acting on behalf of both defendants.
The very first issue which the judge determining liability will have to decide is whether there was any such contract. The plaintiff having pleaded the contract in the unambiguous terms in which he has, there are only two possible answers. Either there was a contract between the plaintiff and the two companies, or the plaintiff fails to make out his case. As Mr Isles properly concedes, even if he had pleaded, in the alternative, a contract made with one or other of the individual companies, so long as the allegation of a joint contract was maintained, the judge would have to rule on that allegation in order to decide the issues in the proceeding.
It follows, in my opinion, that there could be no trial without both defendants present. No other view was open in the circumstances. The plaintiff's evidence will no doubt be that he had a conversation with Mr Hughes in which the offer of employment was made. If Mr Hughes gives evidence saying, "I made the offer of employment", the Judge will have to decide for himself whether, as alleged, Mr Hughes was speaking on behalf of both companies.
It is, in my respectful opinion, inconceivable that that issue could be investigated without the second defendant being present. As I have said, the evidence to be led by the plaintiff will be led in order to establish an allegation against both defendants. To have evidence supporting an allegation against both defendants led in the absence of one of those defendants would be a fundamental breach of natural justice. Our court system is based on affording natural justice to parties against whom allegations are made, and natural justice means that a party must have a reasonable opportunity to hear, and respond to, allegations against it.
But this is not just a question of natural justice. The question for the judge is: was there a contract, as alleged, between the plaintiff and the two companies? It seems to me a legal impossibility to have a trial of that question unless both defendants participate. To proceed without one defendant would not be a trial according to law. It would not be a lawful determination of that issue.
A defining feature of the Commercial List in the Supreme Court of Victoria is that very considerable benefits accrue to a plaintiff through the acceleration of trial dates and the active case management associated with entry into that list. Doubtless the County Court is seeking to achieve exactly the same objectives. But a plaintiff only stays in the Commercial List, and has the benefit of an early trial date, if the pleading is in final form well enough in advance of the trial date to enable a fair trial on all issues against all parties on the date fixed. If, as occurred here, a plaintiff joined a second defendant, and the second defendant said it could not be ready for the impending trial date, the inevitable consequence in the Commercial List is that the trial date would be vacated. That should happen as a matter of course, because the convenience associated with fast track lists is never allowed to override the basic principles of justice which entitle parties to a proper opportunity to prepare the case which they need to present.
There is an express policy which informs Rule 9.06(b)(i) (of the Supreme Court and County Court Rules) allowing for the addition of parties. The rule relevantly says that a person may be added "who ought to have been joined as a party or whose presence before the court is necessary to ensure that all questions in the proceeding are effectually and completely determined and adjudicated upon". It was in the exercise of that very power that his Honour gave leave to join the second defendant. For the proceeding then to be split up would, in my opinion, be to produce a result in direct conflict with that policy, that is, the split would prevent all questions in the proceeding being “effectually and completely determined and adjudicated upon” in one proceeding.
It is against the public interest for there to be two trials on the same set of facts, involving the same plaintiff and – as proposed – the defendants in succession. Accepting that, as we are told, the plaintiff has no concerns about the additional costs associated with the second trial, the court system must nevertheless set its face against any arrangement which would require consideration of the same questions of fact or law between the same parties on two separate occasions.
A final consideration is that pleadings in this proceeding have not yet closed. For that reason alone the trial could not proceed. There has been no defence from the second defendant, let alone the ordinary pleading processes which follow, that is to say, requests for particulars, replies, and so forth.
In short, the late joinder of the second defendant meant, inevitably, that this matter could not be ready for trial on 6 November, absent the consent of the second defendant which was not forthcoming. In my respectful opinion his Honour's discretion miscarried. The only conclusion reasonably open was that the trial date be vacated, and there be a trial of all issues on a date to be fixed.
EAMES, J.A.:
I agree with the orders proposed by the learned President and with his Honour's reasons.
(Discussion ensued.)
MAXWELL, P.:
In our view, the proper order in relation to the costs of the application before his Honour is that those costs be reserved. We think it appropriate that any decision about the costs of the two hearings on the adjournment application be made by either the judge in charge of the Commercial List or the judge hearing the trial.
We are setting aside his Honour's order. As there was only one course open in the circumstances, namely, to order that the hearing date be vacated. We would substitute for the order set aside an order that the trial date be vacated, we are reinforced in that view by the suggestion made by Mr Isles for the plaintiff that his client might contemplate now, having lost today, changing his pleading yet again and taking out the second defendant. We would do nothing that would allow that to occur at this late stage.
We order that the respondent pay the appellant's costs of the appeal. We grant a certificate to the respondent under the Appeal Costs Act.
---
ACN 072 358 831 Pty Ltd v Arnott [2006] VSCA 243
0
0
0