Clemfern Pty Ltd v Citic Aust Foods Pty Ltd & Anor No. Scgrg-98-1474 Judgment No. S240

CLEMFERN PTY LTD v CITIC AUSTRALIA FOODS PTY LTD AND KEITH SEEDS PTY LTD
[1999] SASC 240

Civil

LANDER J (ex tempore) I will deal first with the third party's application in action number 1474 in 1998 of 19 May 1999. On 11 March 1999 I listed two matters for hearing, one after the other. In the main action, action number 674 of 1998, Keith Seeds Pty Ltd is plaintiff and Citic Australia Foods Pty Ltd and persons associated with that company are defendants. In the second action, 1474 of 1998, Clemfern Pty Ltd is plaintiff, Citic Australia Foods Pty Ltd is defendant and Keith Seeds Pty Ltd is third party. On the same day I ordered that the matters be listed for hearing on 7 June 1999. Later that date was changed to 15 June. In the first instance I ordered that both matters be heard together but again later by direction I ordered that action number 674 of 1998 proceed first and be followed immediately by action 1474 of 1998. When I made the orders for trial all parties assured me that the matters were ready for trial and all interlocutory matters had been disposed of.
On the 23 November 1998 Keith Seeds Pty Ltd, as third party in action number 1474 of 1998, applied to have the third party proceedings against it stayed. That application was made on the basis that the third party proceedings were a duplication of matters in Action 674 of 1998, between Keith Seeds Pty Ltd and Citic Australia Foods Pty Ltd. The application was not opposed by either the plaintiff or the defendant and on 11 December 1998 I made an order on the third party proceedings that no further interlocutory steps were to be taken until further order. The order upon reflection is somewhat imprecise. However, the effect of the order was that the parties were to take no further proceedings in relation to those third party proceedings because the parties assumed that those third party proceedings would be disposed of in action number 674 of 1998 where the same issues were raised.
In fact, no further interlocutory steps have been taken on those third party proceedings but apparently recently the plaintiff made further discovery to the third party.
On 19 May 1998 the third party made an application to this court in the following form:
"1....... That the orders of 15 December 1998 staying further interlocutory steps in this action as between the defendant and the third party be set aside.
2...... That the third party be granted leave to file and serve a defence to the plaintiff’s statement of claim in the form contained in Annexure ‘JBK9’ to the affidavit of John Bruce Kain filed herein within 48 hours.
3...... That the third party be granted leave to file a defence to the third party statement of claim in the form contained in Annexure ‘JBK10’ to the affidavit of John Bruce Kain filed herein within 48 hours.
4...... That the plaintiff make further and better discovery of those documents referred to in the letter from Clelands Solicitors to Johnson Winter & Slattery dated 13th May 1999 within 7 days.
5...... That the plaintiff make discovery on oath within 6 days.
6...... That this application be made specially returnable to be heard before His Honour Justice Lander on or before Friday 14th May 1999.
7...... Such further or other orders as this Honourable Court deems fit."

The third party now wants the third party proceedings in action number 1474 of 1998 to be heard. It wants to file a defence to the third party Statement of Claim and therefore enliven the third party proceedings. More importantly, it wants to file a defence to the plaintiff's claim against the defendant. Lastly, it wants the plaintiff to make further and better discovery of the documents referred to in the correspondence in para4 of the application. Effectively, the third party now wants me to revoke the order which I made at the third party's instigation in December 1998. It wants the third party proceedings considered and it wants to participate in Clemfern Pty Ltd's action against Citic Australia Foods Pty Ltd; indeed, it not only wants to participate in those proceedings it wants to adopt a more extended role than the defendant in that action itself.
The parties assured me at the time that the matters were set down that they were ready and would seek no further interlocutory orders. The third party says that it has made this application now because recent discovery has shown that the plaintiff Clemfern Pty Ltd previously made incomplete discovery. Whether that is so or not I do not know, but the fact is that the third party had previously sought a stay when Clemfern Pty Ltd had not made any discovery. Discovery or the absence of it, did not motivate that application for a stay of the third party proceedings. At that stage the third party was quite happy to leave it to the defendant to defend the proceedings against it.
I think this application is now brought because Keith Seeds Pty Ltd is concerned that Citic Australia Foods Pty Ltd has not taken every defence available to it and that Citic Australia Foods Pty Ltd may become liable to Clemfern Pty Ltd, therefore enlivening the possibility that it will become liable to Citic Australia Foods Pty Ltd. However, that was always Keith Seeds' risk and it should have been appreciated when it sought the stay of the third party proceedings against it. This application is far too late. It is yet another example of parties to litigation giving assurances to the court in circumstances where those assurances have not been properly assessed.
The court went to considerable trouble to give these parties a hearing date. My roster was changed so as to enable me to deal with these matters. Other litigants were disrupted and, indeed, the parties achieved a priority over other litigants to which, in fact, they were not entitled.
Clemfern Pty Ltd says that if I were to allow these applications the matter in which it is plaintiff would need to be adjourned. It objects to all of the orders.
Originally Citic Australia Foods Pty Ltd did not object to Keith Seeds Pty Ltd filing a defence to its Statement of Claim on the third party proceedings. Nor did it object to Keith Seeds Pty Ltd filing a defence to Clemfern Pty Ltd's action against Citic Australia Foods Pty Ltd. However, during the application, Ms Pemberthy, who then appeared for Citic Australia Foods Pty Ltd, advised me that she objected to the form of the defence which was proposed to be filed by the third party to the plaintiff's action against the defendant. In fact, when she examined that defence, it was clear that she objected to the whole of the document, except in so far as it reiterated Citic Australia Foods Pty Ltd's defence already filed.
On the further hearing of the application, Mr Walsh, QC, who now appears for Citic Australia Foods Pty Ltd, has advised me that Citic Australia Foods Pty Ltd does not consent to any of the orders sought. He said that Citic Australia Foods Pty Ltd's original consent was premised on the basis that a settlement would be reached between it and Keith Seeds Pty Ltd in the other action. That was not put to me at the time that the application was first considered, and of course, without suggesting I would not accept what Mr Walsh tells me, it seems that Citic Australia Foods Pty Ltd might be taking an opportunistic position in relation to this application.
It seems to me I can do one of three things: I can grant the applications without terms; I can refuse the applications; or, I can the grant the applications, but only upon terms. I am certainly not disposed to grant the applications without terms. I am satisfied that if the applications were granted, some prejudice would be caused to Clemfern Pty Ltd, and Clemfern Pty Ltd would not be in a position to proceed with the action on 15 June. I must say that when the matter originally came before me, I was disposed to think that the second of the three alternatives ought to be adopted, but I recognise that if there is anything in the proposed defences, and in particular the proposed rule 37 defence, sought and filed by the third party to the plaintiff's action against the defendant, then to reject these applications would cause an injustice to the third party. Injustices ought to be avoided if possible; Queensland v J L Holdings (1997) 189 CLR 146. In that case, the majority, Dawson, Gaudron and McHugh JJ, said at p155:
"Justice is the paramount consideration in determining an application such as the one in question. Save in so far as costs may be awarded against the party seeking the amendment, such an application is not the occasion for the punishment of a party for its mistake or for its delay in making an application. Case management, involving as it does the efficiency of the procedures of the court, was, in this case, a relevant consideration. But it should not have been allowed to prevail over the injustice of shutting the applicants out from raising an arguable defence, thus precluding the determination of an issue between the parties."
It seems to me, therefore, that if there is a possibility of injustice to the third party, then the application should be granted, but only upon terms to avoid prejudice to either of the other parties.
I am not able to identify any immediate prejudice that would be caused to the defendant, save for any costs it may have incurred. However, the plaintiff would suffer prejudice if the matter was to proceed on 15 June. It seems to me, therefore, that one of the terms of the applications must be the adjournment of the action. A further term must necessarily be that the third party must pay the costs of this application and the costs thrown away by other parties by reason of the adjournment of these proceedings.
I therefore make the following orders in relation to the application of 19 May 1999:
the order of 15 December 1998 staying further interlocutory steps in the action is set aside;
the third party is given leave to file and serve a defence to the plaintiff's statement of claim substantially in the form contained in Exhibit JBK 9 to the affidavit of John Bruce Kain but with the deletion of paragraphs 3, 4 and 5 of the proposed defence and such typographical changes as are necessary within seven days.
that the third party is granted leave to file a defence to the third party's statement of claim in the form contained in Exhibit JBK 10 to the affidavit of John Bruce Kain within seven days;
that the plaintiff is given leave to file a reply to the third party's defence to the plaintiff's statement of claim within 21 days;
that the defendant is granted leave to file a reply to the third party's defence to the defendant's statement of claim within 21 days.
the third party to pay the plaintiff's costs of and incidental to this application;
the third party to pay the defendant's costs of and incidental to this application;
I set aside the setting down for trial and vacate the hearing date of 15 June;
the third party to pay the plaintiff's and defendant's costs thrown away by reason of the vacation of the hearing date on 15 June.

[1999] SASC 240

27 May 1999