AMP Fire and General Insurance Co Ltd v David Balfour, Patrick James Courtney and Paul Saunders No. SCGRG 93/68 Judgment No. 4365 Number of Pages 8 Practice Joinder of Parties (1993) 61 Sasr 492

[1993] SASC 4365

COURT IN THE SUPREME COURT OF SOUTH AUSTRALIA MATHESON J

CWDS
Practice - joinder of parties - plaintiff jockey injured in race as a result of fall - allegation that fall caused by negligence of another jockey - action against jockey and trainer to whom he was indentured - trainer indemnified under insurance policy, but dispute as to whether jockey entitled to indemnity - joinder of insurer should have been ordered - Supreme Court Rules, r 27. J N Taylor (In Liquidation and J N Taylor Finance Pty Ltd (In liquidation) v Alan Bond and Others (1993) 59 SASR 432 and Mullett and Another v Gabriel and Another (1989) 52 SASR 330, applied.

HRNG ADELAIDE, 15 December 1993 #DATE 24:12:1993
Counsel for appellants:     Mr M A W Birchall
Solicitors for appellants:    Scales and Partners
Counsel for respondent:     Mr T P Kavanagh
Solicitors for respondent:    Caldicott and Co

ORDER
Appeal dismissed.

JUDGE1 MATHESON J This is an appeal from an order of his Honour Judge Bowen Pain, Master of the Supreme Court, granting the plaintiff leave to join AMP Fire and General Insurance Co. Ltd. as a defendant. The plaintiff, Patrick James Courtney, who I will refer to hereafter as the respondent, was at all material times a jockey. In his More Explicit Statement of Claim filed on 15 July, 1993, he alleges that on 20 January, 1990 he was retained to ride, and did ride the horse, "Signorelli" in Race 6 at Victoria Park Race Course. The first and second defendants in the action were a horse trainer and an apprentice jockey respectively. The respondent alleges that the second defendant was at all material times employed by and indentured to the first defendant. The first defendant Balfour entered a horse called "Bay Regent" in the race, and the respondent alleges that he instructed and/or retained the second defendant, Saunders, to ride the horse. It is convenient now to set out paragraph 10 of the More Explicit Statement of Claim:
    "During the said race a collision occurred between
    Signorelli and Bay Regent which caused Signorelli and the
    Plaintiff to fall whereupon the Plaintiff sustained injury and
    suffered loss and damage. Bay Regent and Signorelli started the
    race alongside each other at the Barriers. Signorelli was at
    Barrier position 5 and Bay Regent was at Barrier position 6.
    Both horses initially raced straight until the Second Defendant
    gradually shifted Bay Regent in towards the running rail.
    When Bay Regent was about 3 parts of a length of ahead of
    Signorelli the Second Defendant (rode) Bay Regent across the path
    of Signorelli. A rear hoof of Bay Regent came into contact with a
    front hoof of Signorelli causing Signorelli to lose its footing
and fall." 2. The respondent, who at the time of the collision was a leading jockey, suffered grievous injuries. He alleges that his injuries were caused by the negligence of the first defendant and/or the negligence of the second defendant. I am informed that he relies on the decision in Johnston v. Frazer (1990) 21 NSWLR 89. The first defendant Balfour has filed a defence denying that the second defendant was his servant or agent or that he was vicariously liable for any negligence. The second defendant Saunders has been served, but has not entered an appearance. 3. On 14 October, 1993, the respondent filed an application for an order granting him leave to add AMP Fire and General Insurance Co. Ltd. as a defendant, and in an affidavit sworn herein on the same date, Mr T P Kavanagh, solicitor for the plaintiff said, inter alia:
    "4. The second defendant has failed to enter an Appearance
    or Defence in respect to this matter. I am instructed by the
    plaintiff and verily believe that the second defendant would not
    have anywhere near sufficient funds to satisfy a judgment in
    this matter. He is only a young man of limited means. As far
    as I am aware, he does not own any real property.
    5. I am instructed by the plaintiff and verily believe that the
    Australian Trainers Association on behalf of all horse trainers
    including the first defendant arranged for a public liability
    policy to cover all race horse trainers licensed by the South
    Australian Jockey Club Incorporated. That policy of insurance
    was underwritten by AMP Fire and General Insurance Company
    Limited.
    6. I am further instructed that the said policy is endorsed to
    include in the definition of 'the insured' in the policy:-
     (f) any person in the service of The Insured including those
    indentured to them as apprentices.
    7. By letter from Scales and Partners solicitors dated 22 July
    1993 we were informed that AMP Fire and General Insurance
    Company Limited was not prepared to indemnify Mr Saunders in
    this matter ...
    8. I have been provided with a copy of (a) public liability
    policy which I believe to be the public liability policy for
    horse trainers and apprentices which was in place on the date of
    the accident namely 20 January 1990. ... The policy covers
    apprentices.
    9. Considering the stand taken by AMP Fire and General
    Insurance Company Limited I am instructed to seek leave from
    this Honourable Court to join AMP Fire and General Insurance
    Company Limited as a defendant to this claim.
    10. I am further instructed to seek consequential orders to
    amend the Statement of Claim filed herein to seek a declaration
pursuant to Section 31 of the Supreme Court Act that AMP Fire
    and General Insurance Company Limited is liable to indemnify the
    second defendant for any loss sustained in consequence of any
    judgment in favour of the plaintiff." 4. An application for directions was heard by Judge Bowen Pain on 14 October. Mr A J Redford appeared on behalf of the defendant Balfour, and Mr Britton appeared with Mr Kavanagh for the respondent. I quote from Mr Redford's affidavit sworn herein on 21 October, 1993 as to what happened at that hearing:
    "5. I said to Mr Britton that AMP Fire and General
    Insurance Co Ltd was not my client and that I would need to
    get instructions in relation to that application.
    6. The matter was then called on before Judge Bowen Pain.
    During the course of the hearing, Mr Britton drew Judge Bowen
    Pain's attention to the fact that there had been no Appearance
    filed by the second defendant and that the plaintiff would
    attend to obtaining a judgment against the second defendant in
    default of that Appearance. Judge Bowen Pain indicated that the
    request for the filing of a More Explicit Defence was hopelessly
    out of time and chastised me for taking out an application for a
    More Explicit Statement of Claim so long after the receipt of
    the Rule 46.20 Notice. I indicated to Judge Bowen Pain that I
    had not taken out an application at an earlier stage as I was
    awaiting the receipt of Rule 46.15 Particulars which may have
    cleared up the issues which I had in doubt.
    7. I indicated to Judge Bowen Pain that I had only just
    received the Application seeking the joining of the appellant
    herein and that I was without instructions and was not in any
    position to determine the appellant's attitude.
    8. As a consequence of this exchange, Judge Bowen Pain made the
    following orders:
    (a) That within fourteen days the plaintiff file and deliver a
    More Explicit Statement of Claim which addresses the matters
    raised in the letter of Scales and Partners dated 12th October
    1993.
    (b) That within fourteen days of receipt of the More
    Explicit Statement of Claim the first defendant is to file
    an(sic) More Explicit Defence which addresses the matters
    raised in the Rule 46.20 Notice dated 14th October 1993.
    (c) Leave to the plaintiff to file a Reply within ten days
    of the receipt of the More Explicit Defence.
    (d) Adjourned to 9:00 am on 19th October 1993." 5. On 18 October, the respondent filed a fresh application seeking an order granting him leave to join AMP Fire and General Insurance Co. Ltd. as a defendant, and in a further affidavit sworn on the same day, Mr Kavanagh asked that the application be made specially returnable before Judge Bowen Pain at 9 a.m. on 19 October as the matter had been specifically adjourned to that date for the application to be heard. The application was not endorsed as required by Rule 67.04(4), and was not served on the solicitors for Balfour two clear days prior to the hearing as required by Rule 67.04(2). I do not think the respondent had to serve Saunders, as he had not entered an appearance, or to serve the appellant (see Rule 27.06(d) where the word "may" is used). It must be remembered that his Honour adjourned the application in the presence of Mr Redford on 14 October to 9 a.m. on 19 October. I would be prepared if asked, to make an order nunc pro tunc dispensing with compliance with the relevant rules. 6. It is necessary now to quote again from Mr Redford's affidavit:
    "9. Unfortunately, I did not properly hear the last part of
    the order of Judge Bowen Pain and noted that the matter had been
    adjourned to 9:00 am on 20th October 1993.
    10. On the 15th day of October 1993, I caused to be sent to my
    instructing solicitors in Melbourne a letter advising them of
    the orders made together with a copy of the application referred
    to in paragraph 4 herein requesting that I have their urgent
    instructions as to the appellant's attitude to the said
    application.
    11. On Monday the 18th of October 1993 I was required to attend
    a funeral in Millicent and therefore was away from work and
    unable to obtain instructions on that date.
    12. On Tuesday the 19th October 1993 I did not attend the
    adjourned hearing time as a consequence of my failure to note
    the correct date.
    13. At or about 4:00 pm on Tuesday 19th October 1993, I
    received instructions from the Melbourne solicitors to the
    effect that the appellant opposed any order that it be joined as
    a third defendant and further that in the absence of any
    conflict of interest that my firm had instructions to act on
behalf of the appellant in that application." 7. In the absence of any explanation as to why Mr Redford was not in attendance, Judge Bowen Pain, inter alia, granted leave to the plaintiff to join AMP Fire and General Insurance Co. Ltd. as a defendant in this action. Perhaps understandably in all the circumstances, he did not give reasons. It is convenient here to refer to the remarks of O'Loughlin J in Mullett v. Gabriel (1989) 52 SASR 330. At p 333, he said:
    "The mere absence of reasons does not, of itself, determine
    the fate of appeals from masters of this Court; the absence of
    reasons will not inhibit interference by an appellate court if
    it is obvious that, on the facts, the discretion has miscarried.
    This view reflects the parallel situation arising on appeals
    against sentence. In House v The King (supra) in their joint
    judgment, Dixon, Evatt and McTiernan JJ said (at 505): 'If the
    judge acts upon a wrong principle, if he allows extraneous or
    irrelevant matters to guide or affect him, if he mistakes the
    facts, if he does not take into account some material
    consideration, then his determination should be reviewed and the
    appellate court may exercise its own discretion in substitution
    for his if it has the materials for doing so. It may not appear
    how the primary judge has reached the result embodied in his
    order, but, if upon the facts it is unreasonable or plainly
    unjust, the appellate court may infer that in some way there has
    been a failure properly to exercise the discretion which the law
    reposes in the court of first instance. In such a case,
    although the nature of the error may not be discoverable, the
    exercise of the discretion is reviewed on the ground that a
    substantial wrong has in fact occurred.'" 8. The rule of court governing joinder of parties is Rule 27 and is as follows:
    "27.01 Two or more persons may be joined as plaintiffs or
    defendants in any proceedings:
    (a) where:
    (i) if separate proceedings were brought by or against each
    of them, a common question of law or of fact would arise in
    all the proceedings; or
    (ii) all rights to relief claimed in the proceedings,
    whether they are joint, several or alternative, are in
    respect of, or arise out of, the same transaction or series
    of transactions; or
    (b) where the Court gives leave to do so.
    27.02 Unless the Court otherwise orders, a plaintiff who
    claims any relief to which any other person is jointly
    entitled shall join as parties to the proceeding all persons
    so entitled, and any of them who do not consent to be joined
    as a plaintiff shall be made a defendant.
    27.03 Where all of the persons who should or could be
    parties in those proceedings are not joined as parties, any
    party may apply to the Court for such order as may be just to
    join any person who is not already a party or is not already a
    party in that capacity.
    27.04 Where any joinder of parties or of causes of action or any
    matter raised by a counterclaim will unduly complicate embarrass
    or delay a fair trial of the proceedings or is otherwise
    inconvenient, the Court may disjoin parties or may order
    separate trials or make such other order as is just.
    27.05 The Court may upon application, or of its own motion, join
    any person to the proceedings as a party upon such terms and
    conditions as the Court may prescribe at any time including
    after the determination of the plaintiff's entitlement to
    relief, but before the grant of remedy, if:
    (a) that person claims an interest in the subject matter of the
    proceedings;
    (b) that person has a claim or defence that raises a question of
    law or fact the decision of which might affect the proceedings;
    (c) the Court will require that person's co-operation to
    implement an effective decree;
    (d) that person has a right to joinder under an enactment or
    Rule;
    (e) that person ought to be joined as a party, or his
    presence before the Court is necessary, to ensure all matters in
    dispute in the proceedings may be effectually determined and
    adjudicated upon;
    (f) there exists between that person and a party to the
    proceedings a question or issue arising out of, relating to or
    connected with any relief or remedy sought in the proceedings,
    which in the opinion of the Court it would be just and
    convenient to determine as between him and that party as well as
    between the parties to the proceedings.
    27.06 Where an application is made pursuant to the above Rule:
    (a) it shall be accompanied by an affidavit setting out the
    precise grounds and terms upon which joinder is sought;
    (b) it together with any supporting affidavits shall be served
    on all parties;
    (c) on its hearing the Court may:
    (i) determine whether joinder is appropriate at that stage of
    the proceedings or at all;
    (ii) determine upon what terms and conditions any joinder shall
    be permitted;
    (iii) direct that security be given for costs;
    (iv) give all necessary directions.
    (d) the Court may give directions to allow a person who is
    proposed to be joined as a party to be heard on the application,
    and if so such person shall be bound by any order then made for
    his joinder as a party.
    27.07 Any order for joinder made pursuant to this rule may
be varied or discharged at any time before judgment." 9. The submission on behalf of the appellant AMP Fire and General Insurance Co. Ltd. was put in this way. The respondent has no direct cause of action against the appellant. The respondent claims that the defendant Saunders is entitled to an indemnity from the appellant, and it has not been granted. However, Saunders has not made a claim against the appellant, or sought indemnity. The defendant Balfour has indemnity, but he says that Saunders was not riding as his employee, and denies that he is vicariously liable for any negligence of Saunders. The appellant submits that if the respondent succeeds in establishing that Saunders was negligent, and that at the relevant time he was Balfour's employee, Balfour will be indemnified, and the respondent's claim will be met. If the appellant fails against Balfour, but succeeds against Saunders, he can enter judgment against Saunders and take steps to execute his judgment. Saunders may then wish to make a claim under the policy. If liability is then denied by the appellant, his claim can be litigated as a separate and discrete matter. As the action stands and with the appellant joined as a defendant, the trial will involve a range of issues that are irrelevant to the respondent's claim against Saunders. Finally, the appellant submits that its joinder was sought on a ground upon which it ought not to have been joined at that stage of proceedings. The joinder will raise issues that may never be relevant and will prolong the trial. 10. I was referred to the case of J.N. Taylor Holdings Limited (In Liquidation) and J.N. Taylor Finance Pty. Ltd. (In Liquidation) v. Alan Bond and Others (1993) 59 SASR 432. The facts were succinctly summarised in the headnote as follows:
    "The plaintiff companies, both in liquidation, sued three of
    their former directors alleging breaches of their duties as
    directors. Each of the directors held policies of insurance
    indemnifying them in respect of any wrongful act committed by
    them in their capacity as directors of the plaintiff companies.
    Of the three directors, one was bankrupt and the other two had
    left the country. In the case of the bankrupt defendant, the
    trustee in bankruptcy had already agreed to assign to the
    plaintiff companies that defendant's right to indemnity under
    the policy, subject to the consent of the insurer. The
    liquidator of the plaintiff companies wrote to the insurer
    inquiring whether the insurer accepted liability to indemnify
    the directors in respect of the plaintiff companies' claims.
    The insurer replied denying any liability to indemnify the
    directors. The plaintiff companies thereupon sought leave to
    join the insurer as an additional defendant to the proceedings
    on the grounds that they were entitled to seek, by way of
    declaration, an order that the insurer was obliged to indemnify
    the directors in respect of any judgment in favour of the
    plaintiff companies arising out of any wrongful act within the
    terms of the policy. The judge at first instance refused leave
    on the grounds that the question raised by way of the
    application for declaratory relief was, at that stage,
    theoretical in that no judgment had been obtained against the
    defendant directors. The plaintiff companies appealed from that
decision." 11. The Full Court (King CJ, Prior and Perry JJ) allowed the appeal and ordered the joinder of the insurer. They held, inter alia, that the statutory source of the Court's jurisdiction to grant declaratory relief is to be found in s.31 of the Supreme Court Act 1935 and that it is not necessary that the plaintiff have a cause of action against the defendant. The facts in that case seem to me more clearly to require the joinder of the insurer than the facts here, but there is much in the judgment of King CJ that has assisted me in deciding this appeal. 12. King CJ said at pp.441-442:
    "... that the joinder of the insurer would be likely, in
    the event of a judgment against the defendant directors, to
    obviate the need for a long trial of an action against the
    insurer in which much the same factual ground would have to be
    covered. That is the cogent consideration in favour of joinder.
    A number of considerations against joinder require
    consideration. Joinder involves embroiling the insurer in these
    proceedings although, if it is not joined, the occasion for
    proceedings against it may never arise. That is an important

    factor in the exercise of the discretion: AMP Fire and General
Insurance Ltd v Dixon (1982) VR 833. It cannot prevail,
    however, against other compelling considerations:
    Hordern-Richmond Ltd v Duncan (1947) l KB 545; Mayne Nickless
Ltd v Pegler (1084) 1 NSWLR 228; Reinecke v Incorporated General
Insurances Ltd (1974) 2 SA 84; Corti v Rodwell (1985) VR 287.
    It was argued that the insurer has defences to any claim on the
    policy which make it unnecessary to embark on an inquiry as to
    whether there have been wrongful acts by the directors ... If
    such defences are pleaded by the insurer, they can be
    determined, if appropriate, as preliminary issues and, if
    determined in favour of the insurer, the insurer's involvement
    in a long and expensive trial thereby avoided. There is also a
    question whether the efficient conduct of the trial would be
    prejudiced by joinder ... I appreciate the difficulties in the
    trial which would result from the proposed joinder. Most of
    those difficulties would confront the plaintiffs. They would
    run the risk of proving too much, for example that the wrongful
    act was dishonest fraudulent or reckless, or that it amounted to
    conflict or preferment in relation to related companies. The
    plaintiffs are prepared to accept these problems as the price of
    avoiding the prohibitive cost of a second trial on the issues
    arising out of the directors' conduct. In the exercise of the
    discretion, the court must be guided, in my opinion, by the
    overriding principle that multiplicity of proceedings is to be
    avoided. That principle is embodied in s27 of the Supreme Court
    Act ... The trial of the issues affecting the insurer's
    liability at the same time as those affecting the directors'
    liability would undoubtedly render the trial more complex and
    present difficulties to both the court and the parties. In the
    final analysis, however, I think that the need to avoid the
    prospect of a second long and complex trial, must outweigh other
    considerations. Justice will best be served, in my opinion, by
    the trial and determination of the issue of the insurer's
    liability to the defendant directors concurrently with the trial
    and determination of the issue of the defendant directors'
    liability to the plaintiffs. I have reached the conclusion that
    the insurer should be joined on the basis of the claim for a
    declaration that it is liable to indemnify the directors." 13. There is another passage in the judgment of King CJ in J.N. Taylor Holdings Ltd v Bond that is apposite, mutatis mutandis. At pp.430-440, his Honour said:
    "Once it is accepted that the plaintiffs' claim to
    declaratory relief is within jurisdiction, it follows, in my
    opinion, that the insurer could have been joined as a defendant,
    subject to the power of disjoinder in r 27.04, and the claim
    pursued against it in these proceedings. The right to the
    declaration sought arises out of the same transaction or
    transactions as the plaintiffs' claim against the directors,
    namely the conduct by the directors of the affairs of the
    companies. The criterion in r 27.01(a)(ii) is thereby
    satisfied. In addition the criterion in r 27.01(a)(i) is
    satisfied because there is a common question of law and fact
    namely the alleged breaches of duty on the part of the
    directors. That being so r 27.03 authorises the joinder of the
    insurer in the discretion of the court. The argument before us
    turned on r 27.05, but it seems to me that that is concerned, or
    at least primarily concerned, with intervention by a party which
    seeks to be joined (Tetra Molectric Ltd v Japan Imports Ltd
(1976) RPC 547; astro Exito Navegacion SA v Southland Enterprise
    Co Ltd (1982) l QB 1248), and with joinder of the court's own
    motion. Paragraphs (e) and (f) may be applicable where an
    application is made by an existing party. If so the joinder
    would be further warranted by par (f)." 14. It seems clear that the trial of the issues in the case at the bar, with or without the joinder of the appellant, will not be over lengthy or complicated. It is also clear that additional issues will need to be tried as a result of the joinder, for example, the meaning of the relevant part of the insurance policy and the failure of Saunders to give notice or make a claim. However, and notwithstanding the forceful and able submissions of counsel for the appellant, the order appealed from was reasonably open. I am not persuaded that his Honour's discretion has miscarried. I think all issues, including those arising under the insurance policy, can conveniently be dealt with at the same time. The appeal will be dismissed. As was pointed out at the hearing before me, the appellant has the right to apply to discharge the order for joinder under rule 27.07, but in stating that I do not wish to be understood as indicating that such an application should succeed on the material before me.