Alabaster v Alabaster (Ruling No 1)
[2016] VCC 459
•22 April 2016
| IN THE COUNTY COURT OF VICTORIA AT MELBOURNE COMMON LAW DIVISION | Revised Not Restricted Suitable for Publication |
| FAMILY PROPERTY LIST |
Case No. CI-15-02521
| JUDIE ANNA ALABASTER | Plaintiff |
| v | |
| CASEY ANNE ALABASTER | Defendant |
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JUDGE: | HER HONOUR JUDGE KINGS | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 19 February 2016 | |
DATE OF RULING: | 22 April 2016 | |
CASE MAY BE CITED AS: | Alabaster v Alabaster (Ruling No 1) | |
MEDIUM NEUTRAL CITATION: | [2016] VCC 459 | |
RULING
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Subject: PRACTICE AND PROCEDURE
Catchwords: Joinder – plaintiff sought leave to join three other parties as defendants to the proceeding – whether r906(b)(ii) of the County Court Civil Procedure Rules satisfied
Legislation Cited: County Court Civil Procedure Rules 2008, R906(b)(ii)
Cases Cited:Muschinski v Dodds (1985) 160 CLR 583; Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589; Barnes v Addy (1874) LR 9 Ch App 244; Boral Resources (Vic) Pty Ltd v Robak Engineering & Construction Pty Ltd [1999] 2 VR 507
Ruling:The application to join Mr Collin and the Wanis’ to this proceeding is allowed pursuant to County Court Civil Procedure Rule 9.06(b)(ii).
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr J Isles with Mr D Cole | Stephen Peter Byrne Lawyer |
| For the Defendant | Mr B McCullagh | Neal Collin Lawyers |
| For the proposed Defendants | Mr D Connors | - |
HER HONOUR:
The application
1 The plaintiff seeks leave from the Court to join, as defendants to the proceeding, Mr Neal Collin, the solicitor for the defendant (“Mr Collin”), and Mr Paul and Mrs Melissa Wanis (“the Wanis’”), the vendors of 5 Mudlark Court, Carrum, Victoria (“the Carrum property”). The defendant entered into an unconditional contract to purchase the Carrum property from the Wanis’. The defendant did not complete the purchase.
The current proceeding
2 The proceeding as between the plaintiff and the defendant, who are mother and daughter, relates to a property at 174 Mountainview Boulevard, Cranbourne North, Victoria (“the Cranbourne property”), and the net sale proceeds of that property, being $88,578.22. It was not in dispute that the Cranbourne property was registered in the name of the defendant, the daughter. The plaintiff alleges that the Cranbourne property was purchased as a home for the parties for the foreseeable future, and that the plaintiff and defendant would hold the Cranbourne property on the basis of their agreed contributions. The plaintiff and the defendant lived in the Cranbourne property. In September 2014, the defendant informed the plaintiff that she intended to sell the Cranbourne property. The plaintiff vacated the Cranbourne property. On 1 April 2015, the plaintiff lodged a Caveat over the Cranbourne property.
3 The plaintiff alleges that she contributed to the purchase of the Cranbourne property. The plaintiff alleges that the defendant breached the agreement relating to the purchase of the Cranbourne property; the defendant acted contrary to representations and contrary to the plaintiff and the defendant’s common intention.
4 On 23 March 2015, the defendant entered into a contract for the sale of the Carrum property from the Wanis’. The defendant defaulted under the contract.
5 On 26 May 2015, the plaintiff issued the current proceeding, claiming that the plaintiff and the defendant agreed to purchase the Cranbourne property and hold it in accordance with the representation and arrangements and a common intention as set out in the agreement, alleged in the Statement of Claim. The plaintiff seeks orders that the defendant is estopped from denying that the plaintiff has no interest in the Cranbourne property. Further, that it would be unconscionable for the defendant to hold their interest in the Cranbourne property free of the interest of the plaintiff. Further, or in the alternative, that the plaintiff and the defendant were involved in a joint venture being the acquisition of residential accommodation for themselves, which joint venture failed without blame and the proceeds of sale are liable to be divided between the plaintiff and defendant in accordance with principles of Muschinski v Dodds.[1]
[1] (1985) 160 CLR 583
6 On 4 June 2015, the Wanis’ issued proceedings against the defendant in the Magistrates’ Court for damages in breach of the contract to purchase the Carrum property.
7 On 5 June 2015, the plaintiff agreed to withdraw the Caveat on the Cranbourne property on condition that the proceeds of sale of the Cranbourne property be paid into the Supreme Court. That could not be effected.
8 On 15 June 2015, Mr Collin agreed with the plaintiff’s solicitor to deposit the proceeds of the sale of the Cranbourne property, the settlement cheque in the sum of $88,578.72, into his trust account “with an undertaking that the proceeds would not be disbursed without your written authority or order of the Court”.[2]
[2]Letter dated 15 June 2015 from Neal Collin Lawyers to Mr Stephen Byrne solicitor, exhibit SPB1 to the affidavit of Stephen Byrne sworn15 January 2016
9 On 3 August 2015, in the Magistrates’ Court proceeding, summary judgment was entered against the defendant in an amount of $57,444.01. On 7 August 2015, the Wanis’ filed an application for a Freezing Order. On 12 August 2015, a Freezing Order was granted over the funds held by the defendant’s solicitor in the amount of $58,944. On 3 September 2015, the Wanis’ made application for a garnishee order, which was granted by the Magistrates’ Court on 1 October 2015. On 27 October 2015, Mr Collin, the defendant’s solicitor, paid $60,355.52 to the Wanis’ from the monies held in his trust account.
The proposed claim against Mr Collin
10 In essence, the proposed claim made against Mr Collin is that he breached his undertaking to the plaintiff’s solicitor, in that he paid $60,355.52 of the money held in his trust account to the Wanis’ without the written authority of Mr Byrne, solicitor for the plaintiff, or “an order of the Court”. The plaintiff seeks an order that Mr Collin is liable to reinstate to the trust fund, the amount of money so paid out. I was informed that further causes of action would be pleaded against Mr Collin, including conversion and monies had and received.
The proposed claim against the Wanis’
11 The proposed claim is that the Wanis’ obtained the trust funds from Mr Collin notwithstanding the existence of the trust and the disputed ownership of those funds. By insisting that the funds be paid over, they were knowingly concerned in Mr Collin’s breach of trust. Accordingly, the Wanis’ participated in, or assisted in, the breaches of a fiduciary duty by Mr Collin, by allowing and permitting payment to them of the funds held in trust by Mr Collin. The plaintiff seeks an order against the Wanis’ that the trust fund be reinstated in the sum of $60,355.52.
12 The application made by the plaintiff was opposed by Mr Collin and the Wanis’.
Analysis
13 The application by the plaintiff was made pursuant to County Court Civil Procedure Rule 9.06(b)(ii), which provides:
“At any stage of a proceeding the Court may order that –
…
(b) any of the following persons be added as a party –
…
(ii) a person between whom and any party to the proceeding there may exist a question arising out of or relating to or connected with, any claim in the proceeding which it is just and convenient to determine as between that person and that party as well as between the parties to the proceeding;
… .”[3]
[3]County Court Civil Procedure Rules 2008, S.R. No.148/2008 (Version incorporating amendments as at 1 March 2016) at 61
14 Counsel for the plaintiff submitted that this is an ex parte application and I should not hear from the proposed parties.
15 An application under Rule 9.06 for leave to add a person as a defendant would ordinarily be made ex parte; however, the proposed defendants were served with the application. In fact, both parties were represented by Counsel at the hearing of the application. Further, the plaintiff sought an order against the Wanis’, the proposed third and fourth defendants, that they pay the costs of her application.
16 In those circumstances, I determined to hear counsel representing the proposed defendants.
The Law
17 In relation to Rule 9.06(b)(ii), the power of the Court to add a party is wide. The paragraph provides that the Court may add:
“… a person between whom and any party to the proceeding there may exist a question arising out of or relating to or connected with any claim in the proceeding which it is just and convenient to determine as between that person and that party as well as between the parties to the proceeding.”[4]
[4]County Court Civil Procedure Rules 2008, S.R. No. 148/2008 (Version incorporating amendments as at 1 March 2016) at 61
18 It is not necessary that the question be the same as a question in existence already between the parties joined originally. It is, for instance, sufficient if the new question sought to be raised arises out of, or relates to, or is connected with the existing question.[5]
[5]See Batt JA in Boral Resources (Vic) Pty Ltd v Robak Engineering & Construction Pty Ltd [1999] 2 VR 507 at 513-514
Mr Collin as a proposed defendant
19 Counsel for Mr Collin opposed the joinder of Mr Collin for three reasons.
20 First, that there was nothing in the proposed Statement of Claim that could constitute the ingredients for causes of action in conversion and monies had and received. I accept that submission. However, counsel for the plaintiff, in opening statements, indicated that the Statement of Claim would need to be further amended to include those causes of action. Accordingly, that is not a reason to refuse the joinder.
21 Second, counsel for Mr Collin submitted that the plaintiff’s solicitors were aware of the application for a freezing order but chose not to appear in the Magistrate’s Court. As to that submission, while the summons was directed to the plaintiff’s solicitor, the parties to the proceeding were the defendant and the Wanis’. I do not accept that the plaintiff’s failure to attend the Magistrates’ Court prohibits her from seeking joinder of the defendant’s solicitor as a party to this proceeding where Mr Collin held money in his trust account relating to the proceeds of sale of the Cranbourne property.
22 Third, counsel for Mr Collin conceded there may be a cause of action relating to the monies in trust. It depends on the interpretation of the words of the undertaking.
23 Accordingly, I propose to allow the joinder of the solicitor, Mr Collin, as a second defendant to the proceeding.
24 I accept the new question sought to be raised arises out of, or relates to, or is connected with the existing question in the proceeding as between the plaintiff and the defendant. Based on the wording of the undertaking, I consider that there is a tenable case against the second defendant.
The Wanis’ as proposed defendants
25 Counsel for the Wanis’ opposed the joinder of the Wanis’ for the following reasons:
26 First, the plaintiff’s claim against the defendant involves questions of evidence and interpretation of law, which the Wanis’ can play no part, nor contribute to the forensic analysis of the parties’ competing claims. It is only if the plaintiff is successful in the prosecution of her claim of constructive trust against the defendant and then wishes to enforce her judgment. In those circumstances only, would the fact that the respondents have, first in time, enforced their own judgment, be a relevant factor. If the parties were joined, they would be required to expend significant costs with no reason or opportunity to enter into, or contribute to the proceedings until the very end, if at all. I accept, in part, that submission.
27 Second, counsel for the Wanis’ submit that the principles in Port of Melbourne Authority v Anshun Pty Ltd[6] apply. That is, a party is prevented from making claims which should have been pursued in the earlier proceeding. The test laid down by the High Court is one of reasonableness, that is, a party cannot raise an issue in subsequent proceedings in circumstances in which it is unreasonable for them not to have raised them in the first proceeding. If it is unreasonable, that party will be estopped or precluded from doing so, effectively losing the right to make that claim at all. However, in the present case, while the plaintiff was put on notice of both the freezing order and the garnishee order, the plaintiff was not a party to that proceeding. Further, the matters now sought to be raised were not determined in the Magistrates’ Court proceeding. That proceeding was a claim for damages only and did not relate to a claim for proprietary interest in the proceeds of sale. Accordingly, I do not think the Wanis’ could rely upon the principle in Anshun’s case. I do not accept that is a reason to refuse the joinder of the Wanis’.
[6] (1981) 147 CLR 589
28 Third, while counsel for the Wanis’ accepted that it was desirable to avoid a multiplicity of proceedings, in this instance, the balancing act between the joining of the Wanis’ and incurring substantial legal costs when they may never be called upon needs to be considered. I accept that that is an issue, which I will address in my reasons.
29 Fourth, even if the respondents were joined, they may incur the costs of mediation and hearing, but never be called upon.
30 Counsel for the plaintiff said it was not necessary for the Wanis’ to take part in the proceeding insofar as they could be bound by the final decision as between the plaintiff and defendant.
31 The claim pleaded by the plaintiff’s against the Wanis’ is a Barnes v Addy[7] claim. The decision of Lord Selborne LC in that case gave rise to the existence of two separate and distinct causes of action in equity. The first is what is commonly known as a claim for knowing receipt, which arises where a person knowingly receives property in breach of trust. The second is a claim for knowing participation, also referred to as a claim for knowing assistance. It arises where a person has knowingly assisted a trustee, in this case Mr Collin, to carry out a “dishonest and fraudulent design”. Both causes of action are pleaded against the Wanis’. Both causes of action are arguable claims. Accordingly, I consider it appropriate for the plaintiff to join the Wanis’ as parties to the proceeding. It is appropriate that there not be a multiplicity of proceedings.
[7] (1874) LR 9 Ch App 244
32 However, I accept that the Wanis’ can play no part nor contribute to the forensic analysis of the plaintiff and defendant’s competing claims. Initially, I considered that the plaintiff’s claims against the defendant and Mr Collin should be heard and determined first. Depending on the outcome, the plaintiff then proceed against the Wanis’. However, given the nature of the claims made against the Wanis’, it may be that they will wish to cross-examine the other parties to the proceeding. Alternatively, I could order that the plaintiff’s claim against the defendant be heard and determined first. It seems to me that the plaintiff’s claim as against Mr Collin and the Wanis’ could be heard and determined within a day.
33 Accordingly, I will allow the parties leave to file written submissions of no more than two pages each by 29 April 2016 as to which option they prefer, with reasons.
34 Accordingly, for the above reasons, the application to join Mr Collin and the Wanis’ to this proceeding is allowed pursuant to County Court Civil Procedure Rule 9.06(b)(ii). I will give leave to the plaintiff to further amend her Statement of Claim.
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