| JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA LOCATION : PERTH CITATION : BALUSTRADING WA -v- ASHTON [2002] WADC 178 CORAM : MULLER DCJ HEARD : 5 AUGUST 2002 DELIVERED : Delivered Extemporaneously on 5 AUGUST 2002 typed from tape and edited by Trial Judge FILE NO/S : CIVO 5 of 2002 BETWEEN : BALUSTRADING WA Plaintiff
AND
NORMAN MEL ASHTON
Defendant
HIA INSURANCE SERVICES PTY LTD (ABN 86 076 460 967)
First Third Party
DONATO FINI
Second Third Party
JARDINE LLOYD THOMPSON PTY LTD (ACN 009 098 864)
Third Third Party
ALLIANZ AUSTRALIA INSURANCE LIMITED (ABN 150 001 22850)
Fourth Third Party
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Catchwords: Third party proceedings - Application by one third party to set aside joinder of that party - s 77 District Court of Western Australia Act 1969 - Remittal of third party proceedings to Supreme Court - Multiplicity of third party proceedings in several discrete actions involving same parties - Current Supreme Court action also involving same parties and substantially the same issues - Desirability of third party proceedings being consolidated and dealt with in the one action
Legislation: District Court of Western Australia Act 1969, s 77
Result: Third party proceedings remitted to Supreme Court Representation:
Counsel:
Plaintiff : Not applicable
Defendant : Mr I R Freeman
First Third Party : Mr M D Howard
Second Third Party : Mr S S Sandhu
Third Third Party : Ms B K Callanan
Fourth Third Party : Mr S M Davies
Solicitors:
Plaintiff : No appearance
Defendant : Phillips Fox
First Third Party : Downings Legal
Second Third Party : Pullinger Readhead Stewart
Third Third Party : Mullins Handcock
Fourth Third Party : Blake Dawson Waldron
Case(s) referred to in judgment(s):
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Rodgers v Commissioner of Taxation (1998) 88 FCR 61
Case(s) also cited:
Nil
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1 MULLER DCJ: In action 1554 of 2001 the first third party has applied for an order setting aside the third party proceedings brought against it. These proceedings were commenced by a third party notice dated 31 July 2001. In the alternative the first third party has sought an order pursuant to s 77 of the District Court of Western Australia Act 1969 remitting the defendants' third party proceedings against the third party to the Supreme Court. The fourth third party has also made an application seeking the remittal of the third party proceedings brought against it to the Supreme Court. The fourth third party has not sought an order setting aside the third party proceedings brought against it.
2 I understand the second third party and the third third party have joined with the submissions made by the first third party. The defendants have sought the remittal of the entire proceedings to the Supreme Court or, alternatively, the remittal of the third party proceedings to that jurisdiction. 3 The plaintiff in action 1554 of 2001 has sought orders for the dismissal of the third party proceedings against the first third party or, alternatively, the remittal of the third party proceedings involving the defendants and both the first third party and the fourth third party to the Supreme Court. 4 The action which is the subject of this application is, as I understand the situation, one of seven discrete actions in this court in which different plaintiffs have sued the defendants who in turn have joined the first third party and the fourth third party as third parties to each action. In most of these other actions the second third party and the third third party have also been joined. 5 In each of the seven actions the plaintiff has claimed payment of a debt from the defendants who were appointed as voluntary administrators of a company called Parklane Constructions Pty Ltd. In each action the plaintiff alleges that following a deed of company arrangement entered into between Parklane Constructions Pty Ltd and the two defendants on 10 May 2000 the defendants sent each plaintiff a series of documents which it is now claimed induced each plaintiff to continue to deal with Parklane and supply goods or services to the company under administration. Each plaintiff is now claiming payment from the defendant for the goods supplied or the services it rendered to Parklane Constructions Pty Ltd.
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6 The defendants have asserted that as the administrators of Parklane they entered into a loan agreement with the first third party in terms of which the first third party undertook to finance the construction of houses which Parklane had been building but which remained uncompleted. The defendants claim that the first third party breached the loan agreement by failing to provide adequate funds for the completion of the houses and as a consequence the defendants were unable to pay for the goods and services allegedly provided by the plaintiff.
7 In these proceedings the first third party's position is that the defendants' claim against the first third party is based exclusively on an indemnity within the first paragraph of O 19, r 1(1) and on the strict definition of what constitutes an indemnity must necessarily fail. 8 There may be merit in the first third party's submission. Having said that, I accept the submission made on behalf of the defendants that the use of this term was simply intended to denote an anticipated loss the defendants may or will suffer as a consequence of the first third party's alleged breach. I do not believe the word "indemnity" can be given the restricted meaning advanced by the first third party. I am prepared, for the purposes of this application, to consider the third party issue in the context of O 19, r 1 as a whole. 9 I turn now to consider the issue from the perspective of subrules (b) and (c) of O 19, r 1. I do have some reservations as to whether the subject matter of the principal action is connected with the defendants' claims against the third parties or whether the relief sought in the third party proceedings is substantially the same as that claimed in the principal action. 10 Counsel have referred me to the decision in Rodgers v Commissioner of Taxation (1998) 88 FCR 61 which I have had the opportunity of perusing. The defendants have submitted that the breach by the first third party of its obligations under the loan agreement is a question or issue relating to or concerned with the subject matter of the plaintiff's claim for goods and services. 11 In his submissions Mr Freeman crystallised the issues common both to the principal action and to the third party proceedings. Firstly, did Bunnings supply material to the defendants; secondly, did Bunnings have valid claims against the defendants; thirdly, was there an obligation on the part of the first third party to compensate the defendants for any amounts the defendants have or might have to pay the plaintiff?
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12 I have considered these issues and in my view the connection seems somewhat tenuous. Having said that I also believe that for the purposes of this application the connection may be enough. On balance I agree with the submission made by Mr Freeman in his written submissions that the nexus is sufficient to justify the third party issue being tried rather than being summarily dismissed.
13 I am not prepared to strike out the third party proceedings in action 1554 of 2001. That ruling, of course, applies with equal force to the third party proceedings in any of the related actions. 14 The claims made by the defendants against each of the four third parties that have been joined in most if not all the seven discrete actions are substantially the same. The claim against the first third party is apparently based upon the alleged failure of HIA to continue lending to Parklane sums of money as it allegedly represented it would do to enable Parklane to complete a number of building contracts that it entered into. 15 The claim against the second third party, Donato Fini, is that the latter, as the general manager of Parklane, was negligent in fulfilment of his duties and that, but for such negligence, Parklane would not have incurred debts without having the funds to discharge those debts. The claim against the fourth third party, Allianz Australia Insurance Ltd, is based upon the alleged indemnification by Allianz under a policy of insurance with the firm in which the two defendants are principals. 16 The claim against the third third party alleges that as the defendants' insurance broker the third third party was negligent in obtaining for the defendants an insurance policy that did not cover their claim. I am satisfied that in the seven discrete actions there is a multiplicity of third party proceedings involving substantially the same issues of fact and law being separately litigated between the defendants and the third parties. 17 It goes without saying this procedure is both inefficient and wasteful and I have no doubt has already significantly added to the costs of this litigation. I am satisfied that the proceedings against the four third parties are interrelated. I accept, as has been submitted by one of the parties, that the success or failure of the defendants' claim against one or more of the third parties will affect the success or failure of the defendants' claim against another or others of those third parties. 18 I can see the merit in the submission that the proceedings involving the defendants and the four third parties should be tried together. Having reached this conclusion, I must consider whether it would be appropriate
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to remit the third party proceedings to the Supreme Court as I have been urged to do. 19 In considering this issue it is significant that the first third party has commenced proceedings in the Supreme Court against the defendants relating to their role as administrators of Parklane. Counsel for the first third party has submitted that the Supreme Court action involves issues that are substantially similar if not identical to the issues arising in the several actions in this court between the defendants and the first third party. 20 My attention has also been drawn to a letter from the defendants' solicitors to the other third parties indicating that the defendants intend to join the other third parties as parties to the Supreme Court action. I accept it is highly undesirable that substantially the same issues should be litigated in different courts and that it is in the best interests of all concerned for the third party proceedings to be consolidated if at all possible and tried in the one court at the same time. 21 I believe there are grounds for the exercise of the power conferred by s 77 of the District Court Act. Apart from the various issues I have already mentioned I have also been told in the written submission that the claim between the defendants and the fourth third party is likely to exceed the jurisdictional limits of this Court. I have also been told that a proposed counterclaim to be brought by the first third party against the defendants is also likely to exceed the jurisdiction of this court. 22 All these factors point towards the desirability if not the necessity of remitting the third party actions to the Supreme Court to enable all third party claims to be dealt with together in consolidated proceedings. I have no doubt this is the correct approach to adopt. 23 This conclusion is reinforced by consideration of the plaintiff's position in action 1154 of 2001. I mention this action as an example. That in all probability reflects the situation of the plaintiffs in the other actions as well. The continuation of the proceedings in their present form would, in my view, prejudice the plaintiff by resulting in the introduction of other issues that have no bearing in the case between the plaintiffs and the defendants and by so doing add substantially to the expense and delay of the proceedings. 24 I accept the submission made by counsel for the plaintiff in his written submissions that the third party proceedings do not raise any substantial relief that relates to the subject matter of the principal action or
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for that matter any really common factual matter. It has been submitted that the existence or otherwise of any agreement between Parklane and one or more of the third parties is entirely irrelevant to the issues in the main action and that none of the plaintiffs nor the defendants rely on any such agreement in the principal action.
25 I am not sure whether that submission is correct but I am prepared to accept it on face value for the purposes of this exercise. From that perspective the issues between the defendants and the third parties are alien to the issues between the plaintiffs and the defendants in the principal action. 26 I also accept that the continuation of the proceedings in their current form will inevitably result in a long delay in listing, a substantial increase in the length of the trial and inevitably a blow-out in the expenses associated with these proceedings. All these factors are to the very great disadvantage of the plaintiff in action 1554 of 2001 and for that matter to the disadvantage of the plaintiffs in the other discrete actions as well. 27 I believe that the third party proceedings can be conveniently separated from the main action. I do not believe it is appropriate to remit the entire action to the Supreme Court. The defendants' claims against the four third parties can, however, be remitted pursuant to s 77 of the Act and I would make those orders if the appropriate applications are made by all concerned.
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