Compton v Wilson

[2007] NSWDC 66

CITATION:	Compton v Wilson [2007] NSWDC 66
HEARING DATE(S):	2/4/07 - 3/4/07
EX TEMPORE JUDGMENT DATE:	2 April 2007
JURISDICTION:	Civil
JUDGMENT OF:	Goldring DCJ
DECISION:	Grant leave to the Salvation Army to amend cross-claim in the terms set out in the document; Applicant to pay the respondent's costs of the motion including any costs thrown away
CATCHWORDS:	Practice and procedure - joinder of parties - unincorporated association - costs
LEGISLATION CITED:	Uniform Civil Procedure Act s 64 Salvation Army (NSW) Property Trust Act, 1929
CASES CITED:	Warringah Shire Council v Salvation Army (NSW) Property Trust, (1943) 15 LGR, 91 Taff Vale Railway Company v Amalgamated Society of Railway Servants, [1901] AC 426 Bradley Egg Farm Limited v Clifford, [1943] 2 All ER 378
PARTIES:	Carl Anthony Compton (Plaintiff) Lawrence Allan Wilson (First Defendant) The Salvation Army (Second Defendant/Cross Claimant/Applicant) Zurich Australian Insurance Limited (Cross Defendant/Respondent)
FILE NUMBER(S):	13889/01
COUNSEL:	J.N.West QC with J.E.Lazarus (Cross Claimant/Applicant) P.Webb QC with B Hull (Cross Defendant/Respondent)
SOLICITORS:	Corrs Chambers Westgarth Lawyers (Cross Claimant/Applicant) George Mallos Lawyer (Cross Defendant/Respondent)

JUDGMENT

1 HIS HONOUR: This is an application to file a second further Amended Cross Claim in these proceedings. The original cross claimant was the Salvation Army.

2 It is now sought by the Salvation Army to substitute two cross-claimants, the first being the Salvation Army (NSW) Property Trust, and the second being Jeanette Seymour as representative of the Members of the Unincorporated Association known as the Salvation Army.

3 The cross-defendant remains Zurich Australian Insurance Limited.

4 At the beginning of the proceedings today, when Mr Webb, senior counsel for the cross-defendant indicated his consent, I made an order substituting Seymour, Colonel Seymour I think she is, as a representative of the Salvation Army, and as I say that was done by consent.

5 The Salvation Army, as became apparent to me in proceedings in September 2005, is an unincorporated association. In those proceedings, which concerned mostly discovery of documents, I heard evidence about the structure of the Salvation Army and it became quite clear that it is an unincorporated association. I have learnt more about the structure and nature of the Army, and I will refer to it as “the Army”, and of its activities.

6 These proceedings began, in a sense, in 1997 when the plaintiff, Mr Compton, began proceedings against a person called Lawrence Allan Wilson, who at one stage was an officer of the Salvation Army, and against the Army itself.

7 Those proceedings were settled and in August 1999 Mr Compton entered into a Deed between himself on the one part and the General and all other persons who comprised the religious society known as the Salvation Army on the other.

8 In that Deed he acknowledged that he had received a sum of money, and he released the Salvation Army, including the General and all other persons who comprised the religious society known as the Salvation Army, and the Salvation Army (NSW) Property Trust, from any liability.

9 Subsequently some other people commenced similar proceedings against the Salvation Army and their matters were settled on a similar basis. The cross claims arise because the cross-defendant succeeded to the business of two other insurance companies, which, it is alleged, had issued public liability policies of some type to the Salvation Army or possibly the Salvation Army (NSW) Property Trust. That is not clear. Both names appear in some of the insurance documents, although as far as I can see the Property Trust is referred to in one document only.

10 There has been a dispute about whether the Salvation Army, or anybody acting in connection with it, or on its behalf, did things that were properly the subject of a claim under those policies. That is the substance of the cross-claim.

11 As I have indicated there were, and I understand continue to be, some issues relating to the discovery of documents, some of which I have considered.

12 Under s 64 of the Uniform Civil Procedure Act I have power to give leave to amend proceedings. S 64 says this:

(1) At any stage of the proceedings the court may order
(a) that any document in the proceedings be amended or
(b) that leave be granted to a party to amend any document in the proceedings.

(2) Subject to s 58 all necessary amendments are to be made for the purpose of determining the real questions raised by or otherwise depending on the proceedings, correcting any defect or error in the proceedings and avoiding multiplicity of proceedings.

I will not read subs (3). Subs (4) says:-

If there has been a mistake in the name of a party this section applies to the person intended to be made a party as if he or she were a party.

13 Mr West, senior counsel for the cross-claimant, says that it is necessary to make these amendments because, on his argument, it is the property trust that should be the cross-claimant, because it is only the property trust that is capable of doing certain things.

14 Before I consider in detail the nature and functions of the property trust and how the functions of the Salvation Army might affect these proceedings, I should refer to the history of the proceedings. Originally when Mr Compton commenced his proceedings the defendant was the Salvation Army (NSW) Property Trust. On 9 September 1997 Mr Malcolm Davies of Dunhill Madden Butler, the solicitors then acting for the defendant, wrote to the solicitors acting for Mr Compton. They said this:-

“We act for the Salvation Army and the Salvation Army (NSW) Property Trust and refer to the proceedings issued by you against the Salvation Army (NSW) Property Trust. We are in the process of filing an appearance and defence to those proceedings. The proceedings are not able to be brought against the Salvation Army (NSW) Property Trust for the following reasons:-
(1) the trust holds property on specific trusts, included amongst which is a trust to hold property on trust for the Salvation Army;
(2) the trust did not conduct the boys’ home at Bexley North, nor did it or does it carry on any activity by way of what loosely may be described as social work. That function is performed by the Salvation Army, not the trust;
(3 )the trust’s role is limited to the holding of property on the trusts imposed upon the trustees and the trustee’s liability is limited to matter related to the carrying out of the trustee’s functions.
Accordingly the name of the second defendant in the proceedings should be amended to the Salvation Army. No doubt you will submit a consent order to us for that purpose. In the event that no action is taken to amend the name of the second defendant in the proceedings we reserve the right to move to strike out the statement of claim against the second defendant. Yours faithfully.”

15 There was then further correspondence on 17 September 1997. The solicitors then acting for Mr Compton wrote to Dunhill Madden Butler enclosing an amended statement of claim seeking their consent.

16 Subsequently, the solicitors acting for the plaintiff, wrote to another firm of solicitors, who succeeded Dunhill Madden Butler, firm of Teece Hodgson and Ward, and those solicitors on 6 May 1999 wrote to the solicitors for the plaintiff. In that letter they said this:-

“(1)(b)The entity against which the proceedings should have been brought is the Salvation Army.
(c) The proceedings were previously brought against Salvation Army (NSW) Property Trust. This was not the correct entity, as the trustee’s function is simply to hold property on behalf of the Salvation Army and its role is strictly limited to that function.”

17 The plaintiff has acted on those assurances from that time till the present. Last year, after there had been lengthy proceedings before me, there was a change of solicitors for the Salvation Army. The new solicitors were involved in negotiations about the consequences of the orders that I made for discovery and in the course of that, those solicitors, I am sure acting in good faith, became concerned that in fact the Salvation Army might, despite what has already been said by solicitors acting for the army, that the proper party to the proceedings after all, might be the property trust and they sought the consent of the cross-defendant to an amendment. That was not given, on a number of bases, but most particularly, as Mr Webb has said here, because since 1997 the legal representatives of the Salvation Army had maintained, and indeed insisted, that the proper party to the proceedings was not the property trust, but the Salvation Army.

18 Mr Webb says that the cross-defendant was entitled to act on that basis and has done so. If a change is now made to the identity of the first cross-claimant most of the work that has been done by the cross-defendant would have been in effect lost. The Salvation Army and the property trust, through their legal representatives, say that is not the case. There is no difference, particularly in relation to questions of discovery and inspection and anything that remains to be discovered by the Salvation Army is congruent with the material to be discovered by the trust, except that the trust may have some additional accounting reports.

19 The trust was established by an Act of Parliament in 1929. That act is called the Salvation Army (NSW) Property Trust Act, 1929 and it was assented to on 19 November 1929.

20 It contains a very long preamble, which sets out the purpose of the act, and that was to ensure the succession to the real and personal property in New South Wales which had previously been vested in the general of the Salvation Army in London and held by the general on a series of trusts which were established by a number of deeds registered in England. The preamble to the act actually recites all of those deeds. The deeds are in fact reproduced and are in evidence before me.

21 The act establishes the trustees as a statutory corporation and gives it the power to:-

“And shall be capable of acquiring, holding, managing, controlling and subject to this act, granting, mortgaging, demising, selling, disposing or otherwise dealing with any property, real and/or personal and of suing and being sued by the aforesaid name and doing and suffering all such acts and things as bodies corporate may either do or suffer.”

22 It provides for the appointment of trustees, the custody of the common seal, the vesting of all property, real and personal previously vested in the general of the Salvation Army or the director of the social work of the Salvation Army in the trust, and it sets out a number of other powers, which the trustees have.

23 Indeed, when the matter that the content of that act was first considered by the court in 1943, Street J, who dealt with the matter, set out the whole of the preamble and summarised the act in much more detail than I have done. That was in a case Warringah Shire Council v Salvation Army (NSW) Property Trust, (1943) 15 LGR, 91.

24 Mr West, for the cross-claimant, read to me a lengthy passage from his Honour’s judgment. His Honour at p 99 referred to the purposes of the establishment of the trust and said this:-

“It appears to me that the real purpose and design of the act was to vest the title to the whole of the property belonging to the army in New South Wales in the trustees for the purpose of convenience of management and administration and for facilitating the use or disposal of any property.”

I omit some words. He goes on to say:-

“The whole of the legal estate and these assets having been vested in the trustees, it was also necessary to provide that they should have the widest powers of dealing with the property in such a manner as to further the aims and purposes of the Salvation Army and they were therefore given the fullest powers in this respect, but in whatever they did under those powers, the benefit must go to the Salvation Army. In so far as the beneficial interest is concerned, that remains in the army, being protected by the right of control possessed by the general and the specific powers given to him by the act. The trustees in one sense are agents for the army, although this is not an accurate way of describing their legal position. The fact that the title of the property was vested in them constituted them in name and in fact as trustees. If the whole of their powers were designed to be exercised for the single purpose of furthering the aims and objects of the army and under the control and power of direction possessed by the army through the general. While the legal ownership was in the trustees, the beneficial ownership in every sense of the term was in the Salvation Army and the legislature itself by the language which”

and this is how it appears in the report

“ it has used as for instance in s 10 and s 19B, clearly recognised that it was the Salvation Army which was properly to be regarded as the body beneficially entitled under the trust created by the act in question.”

And on the following page, his Honour says:-

“Here the beneficial owner of the land and the person entitled to some equity is the Salvation Army and in every sense of the words it appears to me entirely appropriate to say that this lands belongs to the Salvation Army within the meaning properly given to those words where they occur in”

and he then referred to the statute he was considering.

25 The purpose of the trust is quite clear. It is a trust established to hold property. The difficulty of dealing with unincorporated associations has been considered by the court, by the English courts at least, in two cases to which I was referred, the first being the Taff Vale Railway Company v AmalgamatedSociety of Railway Servants, [1901] AC 426.

26 In the course of the consideration of the question by the House of Lords, which was mostly concerned with the effect of the legislation relating to trade unions, there are some passages which may be helpful. Lord Macnaghten said at 438:-

“Then if trade unions are not above the law the only remaining questions it seems to me is one of form. How are these bodies to be sued. I have no doubt whatever that a trade union, whether registered or unregistered, may be sued in a representative action if the person selected as defendants be persons who from their position may be taken fairly to represent the body.”

Lord Lindley to similar effect at 443 says:-

“I have myself no doubt whatever that if the trade union could not be sued in this case in its registered name, some of its members (namely its executive committee) could be sued on behalf of themselves and the other members of the society and an injunction and judgment for damages could be obtained in a proper case in an action so framed. Further, it is in my opinion equally plain that if the trustees in whom the property of the society is legally vested were added as parties an order could be made in the same action with the payment by them out of the funds of the society of all damages and costs for which the plaintiff might obtain judgment against the trade union.”

27 Mr West also referred me to another case where an unincorporated association was sued. That was a decision of the Court of Appeal in England in Bradley Egg Farm Limited v Clifford, [1943] 2 All ER 378. There the majority of the Court of Appeal, Goddard and Scott LJJ, considered the position of an unincorporated associated which was in this case the position of the body represented by the defendant Clifford.

Scott LJ said at 386:-

“That the plaintiffs intended to make a real contract with somebody is beyond doubt, but it is equally beyond doubt that they had never formed any intention in their own minds beyond the vague one of making a contract with the person or persons the law would hold responsible on the contract. They did not of course think about it all. They merely assumed, with a confidence natural to a nation which normally carries out its contracts that somebody would be responsible. They expected performance not reached, but the rest was assumption which they never began to think out.”

28 Now those passages certainly point out the difficulty that arises whenever an unincorporated association, such as the Salvation Army, engages in litigation. That is certainly the position in the Bradley case where the defendant was sued.

29 Here the Salvation Army was sued by Mr Compton and others. It now seeks to recover on an insurance policy and Mr West says that the body which entered into that policy could not have been the unincorporated association; it had to be the property trust, and that is the main reason why he seeks to have the property trust joined, so that it may seek to enforce the benefit, if any, that arises under the policy.

30 It would be unfortunate if this matter were to go to trial and after ten years of litigation, although not ten years involving Zurich, which I think has come into the proceedings a little later, but still after a long time and then for the proceedings to be thwarted because a party has not been joined. It is quite clear that Zurich has been put to a great deal of disadvantage and expense because of the letters which I have read in full, written by the solicitors acting for the Salvation Army. Nevertheless the risk of the proceedings going astray because the proper parties are not joined is so great that it seems to me that I must make the order, but I will do so in a way that to the greatest extent possible protects Zurich from costs to date and to the extent that I can to protect Zurich from the consequences of joining an additional party in the future.

31 So I will grant leave to the Salvation Army to amend the cross-claim in the terms set out in the document to which I have referred, but I will make some costs orders. Do you want to deal with that this afternoon, or we deal with that tomorrow?

32 WEBB: Tomorrow your Honour I think.

[Argument as to costs]

33 HIS HONOUR: This is a question concerning the costs of an application by the Salvation Army the applicant seeking to substitute the Salvation Army (NSW) Property Trust as the plaintiff instead of the Salvation Army.

34 In the remarks, which I made yesterday, I gave a history of the proceedings, which are in effect proceedings by the Army, or by the property trust, to claim indemnity from its liability insurer. The original proceedings were commenced by the plaintiff, Mr Compton. As I indicated yesterday successive solicitors acting for the Salvation Army indicated that the property trust, which was the original defendant, was not an appropriate defendant because of its functions. That was a view, which on the material put before me yesterday, I would certainly be inclined to favour, although, I think the matter is not beyond doubt.

35 During 2006 the Salvation Army changed its solicitors and it then received legal advice that it would be appropriate to join the property trust as a plaintiff, originally, I am told, to substitute the property trust for the Army, but ultimately to add the property trust as an additional plaintiff, or, as Mr Webb, for the respondent to the motion put it, to put the matter back to where it was ten years ago.

36 I understand that this application was not brought to gain any tactical advantage, but because the current legal advisors to the applicant considered that that was appropriate. The motion succeeded, because I was convinced that if there was any chance at all that the property trust was a proper plaintiff, it should be joined as a party.

37 Nevertheless, the respondent has been in a position where it has conducted these proceedings for as long as it has been involved, which is not ten years, but is a significant period, on the basis that the person claiming against it was in fact not a person but an unincorporated association, now represented by a representative party.

38 To that extent, I remain convinced that the proper analogy is to proceedings where a party seeks to proceed out of time. In those circumstances it is accepted that even though the party is successful in gaining an extension of time, the other party, which has acted on the basis that the proceedings would be either not taken or taken in the particular form, should not be put to expense because the other party has changed its mind. For that reason, it seems to me appropriate that in this case the respondent should not have to meet the costs of the application.

39 Mr West, for the applicant concedes that the respondent should not in any case have to bear costs thrown away as a result of the application. That certainly will be encompassed by my order.

40 My order on the application to add the additional plaintiff is that the applicant should pay the respondents’ costs of that motion. That should include any costs thrown away. I do not propose, at this stage, to make an order in relation to additional costs incurred by the respondent as a result of the addition of the extra plaintiff, should that plaintiff prove to be unsuccessful. I am convinced that if the property trust is unsuccessful as a plaintiff, the position of the respondent can be adequately protected by an order for costs after the hearing.

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