Dezic Pty. Ltd. v McCluskys Lawyers
[2010] VCC 1360
•5 October 2010
| IN THE COUNTY COURT OF VICTORIA | Revised |
(Not) Restricted
AT MELBOURNE
CIVIL DIVISION
Case No. CI-09-05030
| Dezic Pty. Ltd. | Plaintiff |
| v | |
| McCluskys Lawyers and Another | Defendant |
---
| JUDGE: | Lewitan |
| WHERE HELD: | Melbourne |
| DATE OF HEARING: | 29 September 2010 |
| DATE OF JUDGMENT: | 5 October 2010 |
| CASE MAY BE CITED AS: | Dezic Pty. Ltd. v McCluskys Lawyers |
| MEDIUM NEUTRAL CITATION: | [2010] VCC 1360 |
REASONS FOR JUDGMENT
---
Catchwords: Application to strike out third party notice; concurrent wrongdoers and Part IV of the Wrongs Act 1958.
---
| APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr. David Carne | Sharrock Pitman Legal |
| For the Defendant | Mr. K. J. Naish | Obst Legal |
| For the Third Party | Mr. J. D. Loewenstein | Alliance Legal |
| HER HONOUR: |
1 The third party seeks an order that the defendant’s claim against the third party be stayed or alternatively judgment be given in favour of the third party on the basis that the claim does not disclose a cause of action; is scandalous frivolous or vexatious or is an abuse of the process of the Court. [1]
[1] Pursuant to Order 23.01 of the County Court Civil Procedure Rules 2008 (“the County Court Rules”).
The plaintiff’s claim
2 On 16 October 2009 the plaintiff issued a statement of claim (“the statement of claim”) against McCluskys Lawyers (“the solicitors”) and Marble Grove Pty. Ltd. (“the estate agent”) in relation to the conduct of a sale of the property situate at 31 Stanley Street Wallan in the State of Victoria (“the property”) . The plaintiff claims that the solicitors were negligent because they failed to advise the plaintiff (inter alia) that:
[2] Paragraph 21 of the Statement of Claim dated 16 October 2009.
(a) the purchaser had not paid the balance of the deposit; (b) it would be in the interests of the plaintiff for the purchaser to withdraw from the contract and for the property to be sold to another party.[2]
3 In paragraph 30 of the statement of claim the plaintiff claims that it has suffered loss and damage in that:
(a)
The Plaintiff lost the opportunity to sell the property prior to a substantial decrease in market value which occurred between 18 December 2007 and 22 July 2008.
(b)
But for the First Defendant’s [the solicitors] failure to advise the Plaintiff that the balance of the deposit remained unpaid or to advise as to the action that the Plaintiff ought to take in relation to the failure to pay the said deposit, the Plaintiff would have sold the property to a willing purchaser for market value.
(c)
But for the Second Defendant’s [the estate agents] failure to advise that [sic] Plaintiff at any time prior to 10 May 2008 that the balance of the deposit remained unpaid, the Plaintiff would have sold the property to a willing purchaser for market value.
Curial History
4 On 1 April 2010 the estate agent issued a summons pursuant to Order 23.01 of the County Court Rules seeking judgment in favour of the estate agent on the basis that its claim did not disclose a cause of action. On 29 April 2010 Judge Anderson ordered by consent that the plaintiff’s claim against the estate agent be dismissed. On that day the plaintiff and the estate agent entered into terms of settlement and released each other from all claims howsoever arising from the sale of the property.[3]
[3] Exhibit MAM1 to affidavit made by Mario Anthony Merlo on 10 September 2010.
5 On 15 July 2010 Judge Ginnane ordered that the solicitors have leave to file a third party notice on the estate agent. The solicitors filed a third party notice (“the third party notice”) on the estate agent on 16 July 2010 claiming that:
17. The third party breached the agency agreement or, alternatively, its duty of care to the plaintiff to act reasonably as an agent in performing the services.
PARTICULARS
(i) the third party failed to collect the full deposit of $35,000 from the purchaser on or before 1 January 2008, or at all; (ii) the third party did not advise the plaintiff, or the first defendant as the plaintiff’s solicitor, before 14 January 2008 that the plaintiff [sic] had not paid the deposit of $35,000 in full; (iii) the third party did not advise the plaintiff, or the first defendant as the plaintiff’s solicitor, at any time between 22 January 2008 and 10 May 2008 that the plaintiff [sic] had not paid the deposit of $35,000 in full in circumstances in which the third party could reasonably expect such advice may have affected the plaintiff’s negotiations with the purchaser.
6 In paragraph 18 of the third party notice the solicitors claim that:
18. If, which is denied, the first defendant is liable to the plaintiff in relation to the allegations set out at paragraphs 1 to 35 of the plaintiff’s statement of claim, the first defendant is entitled to contribution from the third party in respect of any sum which the plaintiff may recover herein against the first defendant.
PARTICULARS
The first defendant relies on Part IV of the Wrongs Act 1958 (Vic).
7 The solicitors plead in the alternative that the plaintiff’s claim is an apportionable claim for the purposes of Part IVAA of the Wrongs Act 1958 (Vic) and that the estate agent is a concurrent wrongdoer. The solicitors allege in paragraph 19(b)(ii) of the third party notice that:
(ii) The third party breached the agency agreement or, alternatively, breached its duty of care to the plaintiff in that:
(a) failed to collect the full deposit of $35,000;
(b) failed to advise the plaintiff or the first defendant:
(i) prior to 14 January 2008; and
(ii) between 14 January 2008 and 10 May 2008;
that the purchaser had not paid the full deposit of $35,000; and
(c) in the absence of that advice, the plaintiff acted to its detriment in not
rescinding the Contract of Sale.
8 In paragraph 19(c) of the third party notice the solicitors referred to s.24AI of the Wrongs Act 1958 and claim that the liability of the solicitors in relation to the plaintiff’s claim is limited to an amount reflecting that proportion of the loss or damage that the Court considers just, having regard to the extent of the solicitor’s responsibility for the loss or damage.
The estate agent’s submissions
9 Counsel for the estate agent, Mr. Loewenstein, submitted that the solicitors were at all times the agent of the plaintiff as vendor. If the principal is making no claim against the estate agent, the solicitors as agent cannot have a claim that is better than the principal’s claim against the estate agent.
10 Mr. Loewnstein submitted that there is nothing in the pleading to allege that the estate agent had any obligation to advise the solicitors. He submitted that the estate agent advised the solicitors on 14 January 208 that the purchaser had not paid the balance of the deposit moneys. As at 14 January 2008 the solicitors as agents of the vendor knew that the balance of the deposit moneys had not been paid. Although the plaintiff alleges that the solicitors thereafter agreed to grant extensions of time to the purchaser on three occasions without obtaining the plaintiff’s instructions, the solicitors’ action had nothing to do with the estate agent. There was nothing that the agent could do.
11 Mr. Loewenstein referred to s.23B of the Wrongs Act 1958 and submitted that in this case the solicitors cannot recover contribution from the estate agent because the estate agent is not liable to the plaintiff in respect of the same
damage.
12 I do not accept Mr. Loewnstein’s submissions. The solicitors were retained on 14 January 2008. It is arguable that any loss attributable to the failure by the agent to collect the full deposit on or before 14 January 2008 or to advise the plaintiff that the purchasers had not paid the deposit was caused by the estate agent.
13 It is arguable that if the Court finds that the solicitors had an obligation to tell the plaintiff that the deposit had not been paid, it is also arguable that the estate agent had a duty to advise the plaintiff that the deposit had not been paid. The duty applies particularly to the period between the date for payment of the deposit (1 January 2008) and the date upon which the solicitors were retained (14 January 2008). In these circumstances it is arguable that the solicitors and the estate agent are concurrent wrongdoers in respect of the damage suffered by the plaintiff. If the Court finds that the solicitors are not wholly responsible for the failure to collect the deposit, the solicitors and the estate agent are concurrent wrongdoers.
14 In any event the plaintiff claims in its statement of claim that the damage suffered by the plaintiff is the decrease in the market value of the property from the time the property was first purported to be sold. The damage claimed must take into account the value of the deposit which was not collected. Had the deposit been paid, the plaintiff would not have been able to claim the total amount of the alleged decrease in the market value of the property.
15 I accept the submission made by counsel for the solicitors, Mr. Naish, that it is arguable that the estate agent failed to collect the deposit from the purchaser on or before 1 January 2008 and that the unpaid deposit is part of the claim. The unpaid deposit forms part of the shortfall on the sale. Although the plaintiff did not allege that the estate agent had failed to collect the deposit in its statement of claim against the estate agent, the solicitors are not limited by the failure of the plaintiff to formulate its claim against each party in every way.
Applicable principles
16 A proceeding should not be dismissed summarily unless the claim is so clearly untenable that it cannot possibly succeed.[4] Where any real question of fact or law emerges upon which the rights of the parties depend, the question must be determined and it is not possible to stay the proceedings as
[4] General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125.
[5] Munnings v Australian Government Solicitor (1994) 120 ALR 586.
frivolous and vex atious.[5] Part IVAA of the Wrongs Act – Proportionate Liability
17 S.24AF of the Wrongs Act 1958 provides that Part IVAA applies to a claim for economic loss in an action for damages (whether in tort, in contract, under statute or otherwise) arising from a failure to take reasonable care. In this case the plaintiff claims (inter alia) that it has suffered damage because the solicitors have failed to take reasonable care by not advising the plaintiff that the purchaser had failed to pay the balance of the deposit. The solicitors deny liability but rely on Part IVAA of the Wrongs Act 1958 in their defence (paragraphs 38-39). The solicitors allege that the estate agent is a concurrent wrongdoer.
18 In its third party notice, the solicitor claims that if there be any loss suffered by the plaintiff, the acts of the estate agent gave rise to such losses. A claim for contribution is made under Part IV of the Wrongs Act 1958 (paragraph 18) and a claim for apportionment is made under paragraph 19 of the third party notice.
19 In Godfrey Spowers (Victoria) Pty Ltd v Lincolne Scott Australia Pty. Ltd.[6] Ashley AJ held:
The consequence of s.24AI(3) is that, if a defendant wishes to have the distinct advantage of the proportionate liability regime, and if the plaintiff has not named as defendants all of those persons which it considers might be held to be concurrent wrongdoers, then it is the defendant which must bring them into the proceeding – that is, unless the person sought to be implicated is dead or, being a corporation, has been wound up.
The further consequence of s24AI(3) is this: if a defendant brings in putative concurrent wrongdoers, and if the plaintiff does not make them defendants to its proceeding, and if they are found to be concurrent wrongdoers, then the plaintiff will only recover – by operation of s24AI(1) – such proportion of its damages as are attributable to the proportionate liability of the defendant (or defendants) to its proceeding.[7]
[6] (2008) 21 VR 84, paras 55 and 56.
[7] See also Coastal Seafarms Holdings Pty ltd v Port of Portland Pty. Ltd. [2010] VSC 167.
20 I accept Mr. Naish’s submission that the situation is no different where a defendant has settled with the plaintiff. In such a case it is appropriate that the party who has settled remain a party to the proceeding.[8] It is noted that in those circumstances s.24AJ of the Wrongs Act 1958 would operate so that the estate agent would not be required to contribute to the damages recoverable against the solicitors. I accept the submissions made by Mr. Naish, that the liability of the solicitors would be limited to an amount reflecting that proportion of the loss or damage claimed that the Court considers just having regard to the extent of the solicitor’s responsibility for the loss or damage. [9]
[8] See Vollenbroich v Krongold Constructions (Domestic Building) [2006] VCAT 1710.
[9] See paragraph 8 of the submissions filed on behalf of the solicitors and Wrongs Act 1958 s.24AI(1).
Conclusion
21 Having considered the submissions made by counsel, I have formed the view that it is necessary for the solicitors to join the estate agent as a third party to the proceeding to enable the solicitors to take advantage of the proportionate liability regime under the Wrongs Act 1958. In these circumstances the third party’s summons seeking a stay or judgment against the solicitors is dismissed.
22 The Court orders that the estate agent pay the solicitors costs of the summons filed by the estate agent on 13 September 2010.
0
4
0