Circuit Finance Pty Ltd v Gardner
[2005] VSC 111
•11 May 2005
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMERCIAL AND EQUITY DIVISION
No. 7871 of 2003
| CIRCUIT FINANCE PTY LTD | Plaintiff |
| V | |
| HELEN RAE GARDNER | Defendant |
| GEOFFREY JULIAN HERCULES | First Third Party |
| KEITH ALAN HERCULES | Second Third Party |
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JUDGE: | HANSEN J | |
WHERE HELD: | MELBOURNE | |
DATE OF HEARING: | 11 MAY 2005 | |
DATE OF JUDGMENT: | 11 MAY 2005 | |
CASE MAY BE CITED AS: | CIRCUIT FINANCE v GARDNER & ORS | |
MEDIUM NEUTRAL CITATION: | [2005] VSC 111 | |
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PRACTICE AND PROCEDURE – Magistrates’ Court – Third party notice – Filed but not served – Proceeding transferred to Supreme Court – Second third party took numerous steps in proceeding – Whether third party proceeding a nullity – Whether failure to serve curable – Submission to jurisdiction – Waiver.
COSTS – Application without merit – Solicitor and client basis.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | No appearance | |
| For the Defendant | Mr A.T. Strahan | Taylor, Splatt & Partners |
| For the First Third Party | No appearance | |
| For the Second Third Party | Mr M.J. Corrigan | Keith Hercules Solicitors |
HIS HONOUR:
This is the hearing of a summons which, by an order of the Listing Master made on 5 May 2005, has been referred to a judge for hearing.
The summons that has been referred is that of Keith Alan Hercules (“the second third party”) filed on 26 April 2005. At the same time Helen Rae Gardner (“the defendant”) has made returnable a summons seeking relief related to that which is the subject of the second third party’s summons.
The case arises in the following context of proceedings. On 13 November 2002, Circuit Finance Pty Ltd (“the plaintiff”) filed a complaint in the Magistrates’ Court against the defendant. The plaintiff claimed a relatively modest amount of $20,000 or so owing in connection with the lease of a horse called Mountain Princess. The defendant filed a third party notice, to which the second third party responded by filing a counterclaim, which, in its full amount, could only be adjudicated in this Court. On the application of the second third party the entire proceeding (that is, the proceeding and the third party proceeding) was transferred to this Court. Subsequently, the Chief Justice remitted to the Magistrates’ Court the proceeding between the plaintiff and the defendant, leaving that between the defendant and the second third party in this Court. The plaintiff and the defendant have settled their proceeding. The third party proceeding is ongoing in this Court. I turn from this overview to the detail of the case.
The second third party’s summons seeks an order, in effect a declaration, that an order for the filing and service of a third party notice made by the Magistrates’ Court at Geelong on 17 July 2003 is and was a nullity as the magistrate had no power or jurisdiction to make it. There is an alternative expression of the application in the summons, and that is that the magistrate had no power to make the order because he could not have been satisfied, in the absence of an application and an affidavit in support, that the order was proper to make. It is further stated in the summons that the order did not take effect because the third party notice was not filed and served within the time limited by the order.
Essentially what has been contended before me is that the order of the magistrate which provided for the filing and service of a third party notice against the second third party and another, and any proceeding that has been constituted in reliance upon a notice which was filed, is a nullity.
At the start of the argument this morning, counsel for the second third party sought leave to amend the second third party's summons by adding two paragraphs claiming an order (a) that the proceeding be dismissed for want of parties, and (b) a declaration that “the proceeding is null and void as transferred without jurisdiction purportedly pursuant to the Courts (Case Transfer) Act 1991”.
Those matters rely on the same basic grounds that are comprehended by the summons and the application to amend is not opposed. I give leave to the second third party to amend the summons accordingly.
At a very late stage, indeed in reply, counsel for the second third party sought a further amendment to the summons in terms which he agreed in discussion with me. The amendment sought is that the order of the Magistrates’ Court at Geelong made on 17 July 2003 be set aside on the ground of an absence of material in support of the order for the filing and service of a third party notice.
The defendant objected to this on the basis that it raised matters of fact not raised by the summons, namely as to that which was before the magistrate when he made the order for the filing and service of a third party notice. Mr Corrigan’s submission as to the purpose of the amendment made it clear that it was the purpose and intent of the amendment to raise a new area of fact.
The ground that is contained in the summons at present, refers to the magistrate not being able to be satisfied that it was proper to make the order in the absence of an application and an affidavit in support. That is an objectively ascertainable matter, that is to say there either was or there was not an application and affidavit, meaning in written form. A search of the file can show that, and there is no suggestion that there was such an application or affidavit, but the further ground proposed refers to an absence of material in support of the order, and in doing so would comprehend that which was before the magistrate either in written or oral form, at the time when and which led him to making the order. There is no evidence as to that, save for what is contained in the register as to the order, and the back sheet of counsel together with attached minutes of orders which were produced to the court under subpoena this morning.
Reference has been made to that back sheet and those minutes in the course of the discussion today, and it seems to me for that reason, and because at one point it did affect Mr Corrigan's argument, those two documents should be formally received as evidence in the application, and I propose to mark them as Exhibit A. I do that because if there was to be an appeal they otherwise have no status in a sense, but would be properly referred to by counsel as material that was used in the hearing.
The extract in the register of the Magistrates’ Court states that the order made on that day, giving leave to file and serve a third party notice and particulars on or before 7 August 2003, was made by consent. Furthermore, the back sheet of counsel appearing for the plaintiff before the magistrate noted that orders were made “as per minutes of orders herewith”, and the relevant order stated in the minutes is that "The defendant have leave to file and serve a third party notice and particulars thereto substantially in the form attached hereto on or before 7 August 2003". The minutes were signed by counsel for the plaintiff and the solicitor for the defendant.
That minute of order indicates that there was a third party notice and particulars in existence, and it might well have been provided to the magistrate although that is uncertain, or the magistrate might otherwise have been satisfied on what he was told that it was proper to make the order. However that may be, it is uncertain as to exactly what was said to the magistrate or the exact course of events. Nevertheless what I have said is sufficient to indicate that there was a hearing before the magistrate, although one does not know at the moment exactly what information was passed to the magistrate by the parties’ lawyers and which resulted in the orders that were made on that day.
A judicial officer may be informed, sometimes orally by lawyers in front of him or her, as to orders to be made of a practice and procedural nature, and often orders are made without there being an affidavit sworn for the specific purpose of supporting the particular order, it being otherwise able to be seen that the order is proper to be made.
It is thus apparent that the further ground in respect of which leave to amend the summons is sought by the second third party would open areas of fact not presently comprehended, which the parties have not prepared for and the defendant cannot now deal with. The second third party has had ample time to identify that which he wished to rely on. If the amendment were permitted there would have to be an adjournment to permit the investigation of evidentiary matters. Regarding the circumstances overall, including the lack of proportion in the conduct of the case, I refuse leave to amend.
I turn then to the summons of the defendant. The purport of the summons is to make an order extending the time for service of the third party notice; put simply, to validate the proceeding if that be necessary.
The defendant seeks amendments to that summons, no objection has been taken and I grant the leave that is sought.
It is now necessary to return to the proceeding and to give further context to the case.
As I have said, the proceeding was commenced by the plaintiff’s complaint filed in the Magistrates’ Court on 13 November 2002. On 13 December 2002 the defendant filed a defence. The case was fixed for trial on 17 July 2003 on which day orders were made, not merely for the filing and service of a third party notice but also to vacate the trial date, for payment of costs, transferring the case to the Melbourne Magistrates’ Court, the filing of an affidavit of documents with leave to serve interrogatories, and for an amended defence.
The solicitor for the defendant duly filed a third party notice on 5 August 2003 and sent the notice for service. The third party notice sought an indemnity from the third parties in respect of the defendant’s liability to the plaintiff. There were two third parties, the first of whom is bankrupt and has not been served, it apparently being thought to be of no utility to do so. An affidavit sworn by the defendant's solicitor on 6 May 2005 deposes as to the third party notice being sent for service and as to advice as to that matter.
It is then necessary to piece together what the second third party, who, I might say, is a solicitor of long standing in this city, says about the matter of the third party notice. He says that on or about 13 August 2003 he received a notice of hearing from the Magistrates’ Court at Melbourne which showed him as a third party and gave the date for the hearing as 27 August 2003. He attended at the Melbourne Magistrates’ Court on that day and obtained a copy of the third party notice. He said in an affidavit sworn in the proceeding on 15 August 2003, and which he has relied upon on the present application, that he had not been served with a copy of the third party notice or informed by the defendant's solicitors of the hearing date of the proceeding, and that he had not been given any notice of a pre-hearing conference. He deposed that he had now filed and served his defence to the third party notice. That is correct. He filed that defence on that day, 15 August 2003.
The second third party in his affidavit sworn on 15 August 2003, further said that in essence the defendant pleaded against him that on 24 May 2000 he entered into a written agreement with her as pleaded, and that his defence was that he did not do so and that the signature appearing on such agreement purporting to be his was a forgery. In the circumstances he was not able to proceed to a hearing on 27 August 2003 as he lacked sufficient time to prepare his case and desired to have discovery and interrogatories. The case did not proceed on that day and indeed it is still lurching around after the taking of many steps and prolonged vexation.
The defendant’s solicitor states in his affidavit that on 15 August 2003 he received by facsimile from Keith Hercules, Barristers & Solicitors, the defence of the second third party to the third party notice, a summons and affidavit in support. The defendant’s solicitor did not know that the second third party had not been served with the third party notice.
On 19 August 2003 the defendant’s solicitor advised the second third party that he consented to the adjournment of the matter that was the subject of his summons and affidavit to mid October as a three day hearing. On the same day the second third party wrote to the defendant’s solicitor in relation to interlocutory orders which he sought.
On 20 August 2003 the proceeding was mentioned in court, the second third party representing himself. There was a direction that the trial be fixed not before 24 November 2003. In these circumstances the defendant’s solicitor assumed that the second third party had been served pursuant to his instructions to the process server. He states further that he has now been told by the process server that this is not the case. He does not know why the second third party was not served. It was only on seeing the second third party's affidavit sworn on 26 April 2005, that he discovered that he had not been served with the third party notice.
On 2 September 2003 the second third party filed a counterclaim against the defendant claiming $500,000 as damages. On 17 September 2003 the defendant filed a defence to the counterclaim. On 17 October 2003 the second third party filed an affidavit of documents.
In or about September/October it seems, the second third party, having filed the counterclaim that could only be adjudicated in this Court in its full amount, applied for the proceeding to be transferred to this Court, and that duly occurred. The difficulty with that was that it brought up with it the modest claim of the plaintiff. The plaintiff, objecting to the transfer of its proceeding, took out a summons on 20 November 2003 for its proceeding to be remitted to the Magistrates’ Court.
The matter came before the Chief Justice on 5 December 2003 when her Honour made an order that the proceeding between the plaintiff and the defendant be transferred to the Magistrates’ Court at Melbourne but that the proceeding between the defendant and the third parties remain in the Supreme Court, "and be subject to the following timetable". Her Honour then made a series of directions for the conduct of the proceeding, namely that on or before 4.00pm on 19 December 2003, the defendant file and serve an amended third party notice; that on or before 4.00pm on 30 January 2004 the second third party serve and file his defence to any amended third party notice; and with further orders allowing for requests for particulars of each other's pleading, for interrogatories, mediation and a further directions hearing in June 2004.
Following that order and in accordance with it, on 19 December 2003 the defendant filed and served an amended third party claim and on 28 January 2004 the second third party filed and served an amended defence to the amended third party claim. In February the second third party filed and served a request for further and better particulars of the amended third party claim, and in March the second third party filed and served interrogatories for the examination of the defendant who likewise served interrogatories in March.
On 22 March 2004 the proceeding between the plaintiff and the defendant was settled for $18,000 and the plaintiff's case in the Magistrates’ Court was struck out in May 2004.
The events that followed are set out in a chronology which is an exhibit to the affidavit of the defendant's solicitor. I note that on 28 October 2004 the defendant provided a further amended third party statement of claim, in which she claimed an indemnity for the settlement sum of $18,000 together with her costs of defending the claim of $8,339.90, the total of which is $26,339.70, a paltry amount on any consideration, especially when considered in light of the costs expended in this case.
On 9 November the second third party requested particulars of that amended claim. On 25 November 2004 the second third party filed a further amended defence and amended counterclaim in which he claimed unliquidated damages. On 3 December 2004 the defendant filed further and better particulars of her further amended statement of claim.
In none of this have I referred to the many summonses that have been brought into existence in the proceeding. I note from the order of the Listing Master on 5 May 2005 by which this matter was referred to a judge, that she adjourned, to a date to be fixed by her, applications by three summonses filed by the second third party, a summons filed by the defendant and an appeal by the second third party from a Master.
In his affidavit sworn in support of the present application on 26 April 2005, the second third party deposed to some matters additional to those referred to in his earlier affidavit sworn in 2003. He referred to searching a file on 14 August 2003 at the Magistrates’ Court and obtaining a copy of the third party notice which was dated and sealed with a stamp of the court, and which, as he says, appeared to be validly and regularly issued. He stated that he had never been served with a copy of the notice. He further stated that, at the request of counsel on 8 April 2005, he had searched the file and found that there was no affidavit in support of the application made on 17 July 2003 to file and serve the third party notice. He says further that he had never been served with a copy of the order made of 17 July 2003, and that he was unaware of it. Nor was he aware until 19 April 2005 that the defendant had purportedly obtained leave to file and serve a third party notice against him some five months or so out of time. That last statement refers to a requirement in the Magistrates’ Court rules, Rule 8.02(4) that a third party notice not be served more than 42 days after the day on which notice of defence is given unless the court otherwise orders. He concluded his affidavit by saying that when he saw the order of 17 July 2003 he observed that a registrar and not a magistrate had made the order; hence he was sure it was a nullity. This last point was entirely without substance and it was abandoned before me. The simple fact is that the order was made by a magistrate.
I have been presented today with an elaborate and careful submission by counsel for the second third party. He made a variety of submissions, essentially concerned to establish that the order made on 17 July 2003 for the filing and service of a third party notice should not have been made because there were no proper application and affidavit before the magistrate, as required by the rules; that the notice had not been served, and that in consequence of Rule 8.02(3) which provides that a third party becomes a party to the proceeding when served with the notice, that the second third party never became and still is not a party to the proceeding. Hence the proceeding is a nullity and cannot be regularised.
I have attempted to summarise the essence of that which Mr Corrigan has addressed it, but what I have said strikes at the heart of it. What happened was such that the magistrate could never have made an order and having made an order which was not complied with, the second third party has never been properly brought into the proceeding and the third party proceeding against him is a nullity.
It is said too, that that situation cannot now be rectified. There was a period in which the third party notice was required to be served, and that having expired, by reason of Rule 4.05 of the Magistrates’ Court rules, no extension can now be made.
In addition, there is reference to a number of matters which reflect a failure by the defendant to comply with requirements of the rules and forms in relation to the addition of a third party which are all relevant to be taken into account in considering whether to exercise a discretion in favour of the defendant, assuming that there is a discretion to exercise. It is said that in these circumstances what came to this Court was a nullity and that it is not now capable of being regularised or rectified.
I do not overlook anything that counsel said and his written outline of submissions, dated 11 May 2005, has been initialled by me and placed on the file. Likewise with the outline of counsel for the defendant.
The essential point made by counsel for the defendant is that in taking the steps which he has in the proceeding, both in the Magistrates’ Court and in this Court, without raising until 26 April this year the matter of non-service of the third party notice, the second third party has submitted to the jurisdiction of the Court or waived the irregularity in the third party notice not having been served upon him, or indeed for that matter any irregularity constituted by the absence of a written application or affidavit in support of the order when it was made on 17 July 2003.
The cases are numerous in which it has been held that in their circumstances a party has submitted to the jurisdiction with the consequence that he or she must be taken not to have objected to or to have waived an irregularity or a requirement in another party to take a step under the rules.
The situation in this case is that the second third party, who is a solicitor, finding that according to the court he was a third party to a proceeding, but knowing that he had not been served with the process, and without approaching the court under protest or in any conditional way, so as to avoid whatever the risk that whatever he did might be taken as constituting a waiver of any irregularity in connection with him being made a party, voluntarily filed and served a defence and took steps by the filing of a summons and an affidavit in support to seek orders in the proceeding that he considered appropriate to defend himself, and thereafter followed the many steps in the proceeding to which I have referred and other steps referred to in the chronology. In short, the second third party has participated in the proceeding as fully and vigorously as a party could who had been regularly made a party and with never an objection to the regularity of his joinder until 26 April 2005.
An argument occurred today as to the significance of the order of the Chief Justice. At one stage I think that Mr Corrigan was reading a little bit too much into it or perhaps he merely had the common apprehension of counsel that someone else might read a bit more into it than should be, but, as I would follow it, the order was made in the context that there was no contention that there was any invalidity or irregularity in the third party proceeding. The second third party had been present during the day although apparently not at the time when the orders were made but I take it from what Mr Corrigan said that he was aware of the orders that were to be made, or at least the substance of them. They were made in the context of a live proceeding and of course all that had gone before would have confirmed that. The Chief Justice would therefore not have had in mind, as obviously the parties and counsel did not at that time, the matters that have been argued today. The premise was that it was a live proceeding and directions were made for its future conduct.
I do not think that the orders were intended to effect any regularity of that which had gone before, and I do not consider it necessary to determine whether they may have that effect. Indeed I do not consider it necessary in the resolution of the application to consider the several contentions made on behalf of the second third party. I consider it overwhelmingly a case in which, by his conduct, in circumstances where he knew that he had not been served with the third party notice, and being a solicitor well able to read the rules and aware of the requirement that initiating process be served, and if the file in this case is any indication, being prepared to take any point in his favour, the third party must be taken to have submitted to the jurisdiction, first of the Magistrates’ Court and then of this Court.
In my view it is a case in which it can, and should, be held that notwithstanding the failure to serve the third party notice, the second third party has so submitted to the jurisdiction of the court or waived any right to rely on the absence of service, that the application must be dismissed. He has voluntarily, in my view, chosen to participate in the case notwithstanding failure to serve the third party notice and any irregularity in obtaining the order.
I should say finally, that counsel for the defendant in concluding his submissions, said that this was not a case in which, if the second third party's contentions were correct, the defendant would be precluded from commencing another proceeding against him, that is to say that there is no question of being precluded by any limitation bar from commencing the like claim. Assuming that to be the case, one wonders what could have been the purpose of the present application by the second third party unless it were to simply seek a weapon of vexation on costs in relation to the defendant.
On the question of costs, in my view this is an application which was without merit and should not have been brought, having regard to the history of the matter and the futility of success on the application except for providing an instrument of vexation of the defendant on the costs.
It is referred to in the rules and it is axiomatic that parties to litigation including in particular a solicitor as a party to litigation, should conduct litigation at every turn with an eye to expedition, economy and, if I may say so, common sense. In my view this application by the second third party is quite unnecessary and failed in those respects.
I am going to make the following orders on costs:
7.The second third party pay the defendant's costs of the application by the said amended summons filed 26 April 2005 including costs reserved as between solicitor and client;
8.There be no order for costs on the application by the defendant's said amended summons filed 6 May 2005.
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