H Stanke & Sons Pty Ltd v Von Stanke & Ors (No M2)
[2007] SASC 130
•17 April 2007
SUPREME COURT OF SOUTH AUSTRALIA
(Civil: Application)
H STANKE & SONS PTY LTD v VON STANKE & ORS (NO M2)
[2007] SASC 130
Reasons of Judge Lunn a Master of the Supreme Court
17 April 2007
PROCEDURE
Contribution notices - R 37.07 - whether contribution notice is so related to issues in action that it should be determined between all parties under subr 37.07(1)(c) - striking out of improper pleadings - abuse of process where duplicationof contribution notice with counterclaim in another action.
H STANKE & SONS PTY LTD v VON STANKE & ORS (NO M2)
[2007] SASC 130
Further reasons on the application by the 1st defendant to strike out the contribution notice of the 2nd defendant.
JUDGE LUNN: On 20 February 2007 I delivered reasons in Judgment [2007] SASC 51 dealing with part of this application. These reasons need to be read as a continuation of those previous reasons. At the conclusion of those reasons I said that paragraph 72.1 of the amended contribution notice was to be struck out on the grounds that this Court did not have power to remove an executor without also revoking his probate. I said I would hear counsel on whether that meant that other paragraphs of the contribution notice should also be struck out. I had in mind that consequentially paragraphs 38-59, and possibly other paragraphs, should be struck out as they only related to the relief in paragraph 72.1 and not also to the other relief sought in paragraph 72.2 for equitable compensation and paragraph 72.3 for the 1st defendant to account to the 2nd defendant for profits derived by him. The point had not been addressed in the earlier submissions.
On 5 March 2007 the 2nd defendant issued a notice for directions seeking leave to amend further her contribution notice. The main thrust of the proposed amendments was to plead an alternative claim for the removal of the 1st defendant as an executor under s 36 of the Trustee Act. This had been foreshadowed by counsel for the 2nd defendant in his original submissions but I had declined to entertain it as it had not then been pleaded. Counsel for the 1st defendant had made it clear that any such amendment would be vigorously opposed.
Further argument on the matters raised by me in my reasons about the contribution notice was set for 15 March 2007. Prior to that hearing counsel for the 1st defendant had lodged written submissions, although they did not come to my attention until that day. A significant part of those submissions were in effect a demurrer that on what the 2nd defendant had pleaded she could not be entitled to the relief claimed in paragraphs 72.2 and 72.3 of the contribution notice and therefore on these grounds alone the balance of the contribution notice should be struck out. This attack on paragraphs 72.2 and 72.3 was open to the 2nd defendant on the original hearing to strike out the contribution notice, but it had not been made. Junior counsel for the 2nd defendant intimated that he had not previously been aware of this line of attack on the contribution notice and was not prepared to meet it.
At the hearing on 15 March there was a good deal of preliminary skirmishing between counsel. I ruled that I would not hear the 2nd defendant’s application of 5 March until I had heard the submissions on the consequential effect of striking out paragraph 72.1. I then ruled that I was not prepared to hear the 1st defendant’s quasi demurrer on paragraphs 72.2 and 72.3 as part of the argument on the consequential effect of the striking out of paragraph 72.1. At that point both counsel joined in an application that I should rule on the balance of the original grounds for striking out the contribution notice which I had deferred in my reasons of 20 February. I thereupon further reserved my decision on the original application and did not hear any additional submissions.
The rulings which I now make are based upon only:
paragraph 72.1 having been struck out of the contribution notice of 3 January 2007.
The contribution notice not being amended as sought in the application of 5 March 2007.
The quasi demurrer points about paragraphs 72.2 and 72.3 not being before me at this stage.
The issues as between the plaintiffs and the 2nd defendant being defined by the pleadings as they now stand, even though my refusal to strike out the defence of the 2nd defendant is now subject to an appeal to the Full Court.
Whether the contribution notice is within R 37.07?
Rule 37.07(1) provides:
(1) A defendant ….. may without leave issue a contribution notice in Form 11 against any person who is already a defendant or subsequent party to the action claiming:
(a)an entitlement to contribution or indemnity;
(b)relief related to or connected with the original subject matter of the action and substantially the same as some relief or remedy claimed by the plaintiff; or
(c)the determination of any question or issue relating to or connected with the original subject matter which is substantially the same as some question or issue arising between the plaintiff and a defendant and which should also be properly determined as between other parties.
The 2nd defendant asserts that her contribution notice qualifies as contribution notice under subrule (1)(c), but the 1st defendant disputes this. The 2nd defendant relied only upon subrule (1)(c) and conceded she could not qualify under subrr(1)(a) or (b).
R 37.07(1) is very similar to R 37.01(1) dealing with the criteria for a defendant to be able to join a third party. Most of the authorities deal with R 37.01, but there was no suggestion that they were not equally applicable to R37.07.
There is no decided authority of which I am aware in relation to either RR37.01 or 37.07(1) where a Court has considered whether a third party or a contribution notice which did not qualify under (1)(a) or (b) could qualify under (1)(c). There are some authorities which had found qualification under (1)(b) and then in dicta reinforced the conclusion by finding there would be an additional qualification under (1)(c). There is no authority on subr (1)(c) standing alone as the basis for qualification.
There are authorities on subr (1)(b) that “substantially mean the sameness in substance rather than in form and does not require them to be exactly the same” : re Burford: Burford v Clifford [1932] Ch 122. It was not disputed that similar considerations apply to the same phrase in subr (1)(c).
Subr (1)(c) contains two legs, both of which must be satisfied before a contribution notice can qualify under it. The first leg is the defendant bringing the contribution notice must be claiming “the determination of any question or issue relating to or connected with the original subject matter which is substantially the same as some question or issue arising between the plaintiff and a defendant”. The second leg is that such question or issue “should also be properly determined as between other parties”.
The first leg of the test in subr (1)(c) is easily satisfied. It only requires that one question or issue which is raised by the contribution notice should be substantially the same as one question or issue arising between the plaintiff and a defendant. Here there are literally hundreds of issues raised between the plaintiff and the defendants as the matters pleaded between them stretch out in excess of over 50 years involving numerous family members and companies and a plethora of transactions between them. The contribution notice also raises many issues involving the same or similar subject matter. To satisfy the first leg it is sufficient if but one question or issue raised on the pleadings as between the plaintiffs and the defendants is substantially the same as one issue pleaded in the contribution notice.
Although a good deal of argument was directed towards identifying or refuting commonality of issues between the action constituted between the plaintiff and the defendants on the one hand and the contribution notice on the other hand, it is quite clear that there is at least one common issue which is substantially the same.
I confine myself to three instances of such substantially similar questions or issues. One is the beneficial ownership of the land registered in the name of the first defendant which is claimed by the plaintiff. The second is the ownership structure of the “family business”, whose contributions to the acquisition and improvement of the land claimed by the plaintiff is an integral part of the plaintiff’s claim. The second defendant in the contribution notice brings the first defendant’s handling of the estate in relation to these matters into issue. The third is that second defendant puts in issue as between herself and the plaintiff the ownership of crayfish pot licences and raises the first defendant’s failure to assert ownership of those licences in her contribution notice. The first leg of the test under subr (1)(c) is clearly satisfied.
The second leg of subr (1)(c) has not been the subject of any discussion in the decided cases. While the first leg broadly corresponds to the criterion in subr (1)(b), this second leg has no equivalent in subr (1)(b). Indeed, but for the existence of this second leg, there would be no point in having subr (1)(b) because any contribution claim which would qualify under subr (1)(b) would necessarily also qualify under subr (1)(c). Subr (1)(c) contemplates that there will be a class contribution claims qualifying under subr (1)(c) which do not qualify under subr (1)(b), but which will be restricted by the terms of its second leg.
The meaning of the second leg is somewhat unclear. It presumably means “properly determined” in the action. It is not that the issues in the contribution notice cannot be properly determined in other separate proceedings between the defendants who are the parties to it. The meaning of “as between other parties” is also unclear. Presumably it means the parties to the action other than the defendants who are the parties to the contribution notice. This would suggest that it has to be thought proper that the plaintiff, any other defendants who are not parties to the contribution notice and any third or subsequent parties should be subjected to the consequences of the issues on the contribution notice being dealt with as part of the whole action. It means that the Court has a broad judicial discretion whether to allow such contribution proceedings or not.
Insofar as the Court has this discretion on the second leg it must be exercised having regard to s 27 of the Supreme Court Act which provides:
“The court in every cause or matter pending before it shall have power to grant, and shall grant, either absolutely or on such reasonable terms and conditions as it deems just, all such remedies whatsoever as any of the parties thereto may appear to be entitled to in respect of every legal or equitable claim properly brought forward by them respectively, in such cause or matter, so that, as far as possible, all matters so in controversy between the parties may be completely and finally determined, and all multiplicity of legal proceedings concerning any of such matters avoided”.
In an analogous situation under R 27 for the joinder of additional defendants to an action the Full Court said, in J N Taylor Holdings Ltd v Bond (1993) 59 SASR 432 at 442 applying s 27 of the Supreme Court Act:
“In the exercise of the discretion, the court must be guided, in my opinion, by the overriding principle that multiplicity of proceedings is to be avoided”.
The reality here is that if the second defendant is denied the right to bring her contribution notice she will institute a separate action against the first defendant for similar relief which will produce a multiplicity of actions. There will probably be applications that such a further action be tried concurrently with the present action. It will be for the Judge managing this action to decide whether that occurs or not. The trial of this action will involve a mammoth enquiry into the affairs of many aspects of the affairs the wider von Stanke family stretching over several generations. If the action had been confined to a few narrow discrete issues it may well be that the Court might exercise its discretion under the second leg not to allow numerous other entirely unrelated issues to be introduced into that action by the contribution notice, albeit there might be one or two issues which are substantially the same, but that is not the case here. It is likely that the trial Judge will need to give complicated directions about how all of the evidence is to be adduced at the trial and whether some issues can be dealt with discretely and without the involvement of parties not concerned in them. This is not a case where the factors against properly determining the contribution issues in the action are of such weight that they outweigh the overriding principle that a multiplicity of actions is to be avoided. Accordingly, the amended contribution notice is not to be struck out on this ground.
Striking out of improper pleadings
The first defendant’s counsel sought to attack 24 parts of the contribution notice as being improperly pleaded. Her submissions are conveniently tabulated in the schedule to her written submissions. She adopted the submissions of counsel for the plaintiff on the requirements of R 46A. In my earlier reasons I have dealt with these issues of principle and do not repeat here what I said there. There are a number of common issues in the various objections which can be dealt with collectively:
Vague and embarrassing pleadings
This objection was raised to paragraphs 12.1, 13 and 14, 22, 23, 24, 26.3, 32.9, 34-36, 39-42, 59 and 66.23. I repeat what I said in paragraphs [7B], [8], [12] and [13] in my earlier reasons. This objection fails.
Scandalous, frivolous and vexatious
This objection was taken to paragraphs 12.3-12.5, 15-21, 22.5, 30, 31, 32.1-32.8, 42-58 and 66.2.1. No relevant pleading can be struck out as scandalous: Millington v Loring (1880) 6 QBD 190. Insofar as the 2nd defendant is pleading what would constitute fair notice of her case at trial, it cannot be struck out as frivolous or vexatious – see [5] of the earlier reasons. These objections fail.
Pleading of evidence
This objection was raised to paragraphs 15-21, 30-32.4 and 66.1. These objections fail for the reasons set out in [10] and [11] of the earlier reasons.
Unpleaded insinuation allegations
In paragraph 22 the use of “recent” does not imply the existence of other unpleaded allegations which could be relied upon. See [5] of the earlier reasons.
Pleading of conclusions
This was raised in objection to paragraphs 32.4-32.8 and 39-41. I repeat [12] and [13] of my earlier reasons. These objections fail.
I do not follow the objection to paragraphs 67-71 where the written submissions state “any unconscionable conduct by the Executor during Gwen’s lifetime does grant the court to effectively alter the terms of Gwen’s Will”. If it is meant to be a submission that paragraphs 67-70 did not give rise to the relief sought in paragraph 71 no authority was cited on the topic. It may be novel, but I am not satisfied that it is so removed from what could be a reasonable cause of action that it should be struck out.
The first defendant contended that paragraphs 12.3-12.5, 15-21, 34-36 and 43-57 should be struck out as not disclosing reasonable causes of action. I repeat [5] of my earlier reasons. It cannot be assumed that these paragraphs are necessarily pleading a cause of action rather than giving notice of the case the second defendant will present at trial.
As to paragraph 26.3 objection is taken that there is nothing pleaded that the first defendant’s executorial duties have been completed and thus he has become a trustee rather than an executor. However, the plea goes to his understanding of his duties. I am not satisfied that any such understanding of his duties is so irrelevant that the plea should be struck out.
The first defendant challenges paragraph 32.9 in which it is alleged that the first defendant’s affidavit of assets and liabilities put forward in obtaining his grant of probate was false. Again I repeat [5] of my earlier reasons. It is not so clear that para 32.9 is a plea of a cause of action rather than giving notice of case to be made out at trial that it should be struck out.
The 1st defendant objects to the last part of paragraph 66.2.3. It is alleged that the 1st defendant had not reimbursed $12,000 to the estate and then pleads “but sought to disguise this financial benefit in conjunction with his second solicitor”. I accept that the allegation of disguise is a plea of fraud and thus it should be pleaded with much greater particularity: Civil Procedure SA, 1987 Rules volume, para [R 46.14.10]. The words “but sought to disguise this financial benefit in conjunction with his second solicitor” will be struck out, but there will be leave for the second defendant to re-plead with proper particularity.
Similar proceedings by the 2nd defendant in her counterclaim in 645/05.
I repeat paragraphs [30] and [41] of my earlier reasons. Until the second defendant’s application of 5 March 2007 to amend her contribution notice and the first defendant’s foreshadowed application to strike out paragraphs 72.2 and 72.3 have been dealt with it will not be known precisely what proceedings the second defendant is seeking to bring before the Court. Nothing is occurring in action 645/05 which is likely to cause any inconvenience or expense to any party if this part of the application is held over. I envisage that if there is such duplication between second defendant’s counterclaim in 645/05 and her defence and contribution notice in this action that it amounts to an abuse of process, she should be put to her election as to which set of proceedings should be stayed. I do not consider she should be put to any such election until it is clear what proceedings she is otherwise entitled to pursue for the relief which she seeks.
As I am on long service leave until 4 June 2007 it is appropriate that I resolve the outstanding application before me and leave it for a Justice or another Master to deal with the other outstanding applications.
I have today made the following further order on the 1st defendant’s application of 10 January 2007 (FDN83):
That paragraph 72.1 of the amended contribution notice be struck out.
Liberty to the first defendant to bring a further application seeking to strike out other paragraphs of that contribution notice that are consequential upon the striking out of paragraph 72.1.
That the words “but sought to disguise this financial benefit in conjunction with his second solicitor” be struck out from paragraph 66.2.3 of that contribution notice, but with liberty to the second defendant to re-plead that allegation with proper particularity within 21 days.
Apart from paragraphs 1-4 above, paragraphs 1 and 3 of the first defendant’s application of 10 January 2007 are dismissed.
The question of costs is reserved.
Certified fit for senior counsel.
Application to stay the contribution notice for abuse of process is adjourned to a date to be fixed.
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