John Patrick Davey and Eric Malcolm Bray v Valerie Herbst and Adam Herbst
[2011] ACTSC 112
•20 July 2011
JOHN PATRICK DAVEY AND ERIC MALCOLM BRAY v VALERIE HERBST AND ADAM HERBST [2011] ACTSC 112 ( 20 July 2011)
APPEAL – appeal from Magistrates Court – civil appeal – grounds of appeal not made out – appeal dismissed
PRACTICE AND PROCEDURE – Court Procedures Rules 2006 pertaining to summary judgment and pleadings – whether appellants had a good defence or counterclaim to the statement of claim on the merits – whether third party notices should be struck out – whether the debt was validly assigned – whether the loan agreement was enforceable because of obviously inapt descriptions in the agreement – definition of “cause of action”.
Magistrates Court Act 1930 s 274
Court Procedures Rules 2006 rr 425, 462, 464, 501, 507, 512, 1146, 1147, 6256
Civil Law (Property) Act 2006 s 211
Limitation Act 1985 s 16B
Dey v Victorian Railways Commissioners (1949) 78 CLR 62
General Steel Industries Inc v Commissioner for Railways(NSW) (1964) 112 CLR 125
Agar v Hyde (2000) 201 CLR 552
Do Carmo v Ford Excavations Pty Ltd (1984) 154 CLR 234
Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175
ON APPEAL FROM THE MAGISTRATES COURT OF THE AUSTRALIAN CAPITAL TERRITORY
No. SCA 34 of 2010
Judge: Gray J
Supreme Court of the ACT
Date: 20 July 2011
IN THE SUPREME COURT OF THE )
) No. SCA 34 of 2010
AUSTRALIAN CAPITAL TERRITORY )
ON APPEAL FROM THE MAGISTRATES COURT OF THE AUSTRALIAN CAPITAL TERRITORY
BETWEEN:JOHN PATRICK DAVEY
First Appellant
ERIC MALCOLM BRAY
Second Appellant
AND: VALERIE HERBST
First Respondent
ADAM HERBST
Second Respondent
ORDER
Judge: Gray J
Date: 20 July 2011
Place: Canberra
THE COURT ORDERS THAT:
The appeal be dismissed with costs.
Pursuant to s 274 of the Magistrates Court Act 1930 (ACT) John Patrick Davey and Eric Malcolm Bray (the appellants) appeal to this court against the judgment and orders of the ACT Magistrates Court in a proceeding in which the matter in issue amounts to $2000 or more. The plaintiff in the original proceeding was Valerie Herbst (the first respondent in this appeal) and the third party, Adam Herbst was her son (the second respondent in this appeal).
The judgment and orders appealed from are:
(a) an order made on 28 April 2010 granting leave to the first respondent to further amend her amended statement of claim by deleting in paragraph 3 the words “to the defendants” and inserting in their place the words “to Herm Fine Frames Pty Ltd” and subsequently assigned to the defendant’s on or about 21 January 2008”.
(b) an order made on 4 May 2010 dismissing the appellants appeal to that court; and
(c) an order confirming orders of the registrar of the court that:
(i) Pursuant to rule 1146 of the Court Procedure Rules 2006 (CPR) summary judgment be entered for the plaintiff (Mrs Valerie Herbst) against the second defendant (Messrs Bray and Davey) in the amount of $39,247.44 plus interest from 13 June 2008 to date; and
(ii) Judgment be entered in favour of the third party (Mr Adam Herbst) against the first and second defendants (Messrs Bray and Davey) with respect to the third party notices of 14 and 15 May 2009; and
(d) an order that the counterclaims by Messrs Bray and Davey against the first respondent and second respondent to this appeal be dismissed; and
(e) An order that Messrs Bray and Davey pay the plaintiff (Mrs Herbst) and the third party (Mr Herbst) costs of the appeal as agreed or assessed on an indemnity basis as well as an order that Messrs Bray and Davey pay the costs in relation to compliance costs of setting aside subpoenas.
Summary Judgment
This matter proceeded by way of applications under the Court Procedures Rules 2006 by each of the parties seeking summary judgment in respect of the claims that the other made or in the case of Valerie Herbst and Adam Herbst to have certain proceedings struck out.
I propose to refer to the relevant sections of the Court Procedures Rules 2006 by the prefix CPR followed by the rule number.
CPR 1146(2) provides for a plaintiff to apply for summary judgment in these terms:
The Court may give judgment for the plaintiff against the defendant for all or a part of the plaintiff’s claim for relief, unless satisfied that –
(a) the defendant has a good defence to the claim for relief on the merits; or
(b) sufficient facts are disclosed to entitle the defendant to defend the claim for relief generally.
CPR 1147(2) provides for a defendant to apply for summary judgment in these terms:
The court may give judgment for the defendant against the plaintiff for the plaintiff’s claim for relief (or part of it) if satisfied –
(a) that the claim (or part of it) is frivolous or vexatious; or
(b) that there is a good defence to the claim (or part of it) on the merits; or
(c) that the proceeding should be finally disposed of summarily or without pleadings.
Provision is made in CPR 425 for pleadings to be struck out in these terms:
Pleadings – striking out
(1) The court may, at any stage of proceeding, order that a pleading or part of a pleading be struck out if the pleading –
(a)discloses no reasonable cause of action or defence appropriate to the nature of the pleading; or
(b)may tend to prejudice, embarrass or delay the fair trial of the proceeding; or
(c)is frivolous, scandalous, unnecessary or vexatious; or
(d)is otherwise an abuse of the process of the court
Note 1The registrar may also reject a document that is filed if it does not comply with these rules (see r 6140 (Rejecting documents – noncompliance with rules etc) or if it is an abuse of the court’s process or is frivolous or vexatious (see r 6142 (Rejecting documents – abuse of process etc)).
Note 2Pt 6.2 (Applications in proceedings) applies to an application for an order under this rule.
Note 3Rule 6901(Orders may be made on conditions) provides that the court may make an order under these rules on any conditions it considers appropriate.
(2) The court may receive evidence on the hearing of an application for an order under this rule.
(3) If the court makes an order under this rule, it may also make any other order it considers appropriate, including, for example –
(a)if the court makes an order under subrule (1) (a) – an order staying or dismissing the proceeding or entering judgment; and
(b)an order about the future conduct of the proceeding.
NoteAn example is part of these rules, is not exhaustive and may extend, but does not limit, the meaning of the provision in which it appears (see Legislation Act, s 126 and s 132).
The effect of such orders made under these provisions is to bring the proceedings to an end and in this respect the exercise of the power under each of these rules is only appropriate where no defence to the claim or the defect preventing the matter proceeding is clearly established. Reference may be made to: Dey v Victorian Railways Commissioners (1949) 78 CLR 62 at 91, 92; General Steel Industries Inc v Commissioner for Railways(NSW) (1964) 112 CLR 125 at 128, 129; and Agar v Hyde (2000) 201 CLR 552 at 575 [57]. This principle was not in contest in the appeal before me.
Background
This appeal arises from civil proceedings commenced in the Magistrates Court by way of originating claim filed on 11 July 2008. The appellants in this appeal were the defendants in the original proceedings. There were originally three plaintiffs in the original proceedings. Adam Herbst as the first plaintiff (who is now the second respondent in these proceedings), Peter Herbst who was then deceased as the second plaintiff and Valerie Herbst as the third plaintiff (who is now the first respondent in these proceedings). Valerie Herbst was married to Peter Herbst and Adam Herbst is their son.
The statement of claim accompanying the originating claim pleaded a claim for a debt arising from money loaned by the plaintiffs to the defendants. The pleading referred to a written loan agreement dated 21 January 2005. The terms of the agreement pleaded were that the defendant’s were loaned the sum of $123,995.04 by the plaintiffs and that the defendant’s agreed to pay weekly payments of $578.99 over 60 months and that on and from 7 April 2008 the weekly payments had not been paid. The plaintiffs claimed the sum of $39,247.44 and interest.
On 19 August 2008 the defendants filed a defence titled “Defence and counterclaim” which only pleaded matters by way of defence and not by way of counterclaim. In their defence the defendant’s denied any loan, denied the agreement and the obligation to make weekly payments and otherwise put in issue the plaintiff’s claim.
By application in proceedings dated 10 March 2009 the first appellant sought to remove all three plaintiffs from the proceedings and have the claim dismissed. On 27 March 2009 the registrar ordered that first and second plaintiffs (Adam Herbst and Peter Herbst) be removed as parties to the proceedings and gave leave to the remaining plaintiff (Valerie Herbst) to file an amended statement of claim. An amended statement of claim was filed on 9 April 2009.
On 14 and 15 May 2009 Messrs Davey and Bray respectively filed separate third party notices against Adam Herbst. Those notices were almost identical and claimed contribution and indemnity alleging assault, duress, coercion and unjust enrichment.
On 9 July 2009 the plaintiff filed an application to further amend the statement of claim. Paragraph 3 of the amended statement of claim provided:
The plaintiff claims payment for a debt arising from money loaned to the defendants.
The amendment sought was to provide:
The plaintiff claims payment for a debt arising from money loaned to Herm Fine Frames Pty Ltd and subsequently assigned to the defendants on or about 21 January 2005.
That application also sought summary judgment in the sum of $39,247.44 and interest, and that the defendant’s defence be struck out.
By a separate application also filed on 9 July 2009, Adam Herbst as the subject of the third party notices made an application for summary judgment on the third party notices or alternatively that the notices be struck.
On 12 July 2009 an amended defence and counterclaim was filed by the defendants. The counterclaim named Adam Herbst as “2nd Counter Defendant”. The counterclaim alleged malicious prosecution by Adam Herbst and intimidation by the plaintiff.
On 24 July 2009 Mr Davey filed an application for dismissal of the plaintiff’s claim and summary judgment on the cross claims. It seems to have been treated as an application on the part of both defendants. On 14 August 2009 the defendants applied for and were granted a default judgment on the third party notices. The Magistrate’s Court registrar set aside that judgment on 20 August 2009 on the ground that the third party was not aware of the entry of the default judgment and there being no prejudice to the defendants in so doing.
The plaintiff’s and Adam Herbst’s applications of 9 July 2009 and the defendants’ application of 24 July 2009 were heard by the registrar as “essentially cross-applications for summary judgment”. All parties had filed affidavits in support.
An initial request was made by the plaintiffs counsel for a ruling that the amended defence and counterclaim filed on 12 July 2009 be struck out as leave to file it had not been obtained. The registrar ruled that CPR 507 applied and that the pleadings had closed within the time required by the CPR. The defendants accordingly required leave to file the amended defence and counter claim.
The registrar proceeded to consider the cross-applications for summary judgment. He concluded that taking into account the assertions in the defendants affidavits that the defendants did not have an arguable defence to the plaintiff’s claim. He was satisfied on the material before him that the plaintiff was entitled to summary judgement on her claim. The matters upon which the registrar relied in finding that the defendants did not have an arguable defence, in his view, meant also that the third party was entitled summary judgment in respect of the third party notices.
It is common ground that no formal order was made granting leave to amend the plaintiff’s claim as sought in the application of 9 July 2009.
The defendants appealed the registrar’s orders to a magistrate pursuant to CPR 6256. CPR 6256(4) provides that the appeal is a rehearing of the matter anew.
The factual findings
On the material before the magistrate, her honour made certain findings as to the factual background to the proceedings. Although in the original notice of appeal to this court there were some grounds expressed that might have put in issue the magistrate’s findings of fact, the grounds of appeal that the appellants finally settled upon seem to only challenge at best the inferences to be drawn from those facts. Accordingly, I respectfully adopt the magistrate’s account of the facts that she drew from the material before her.
That account is:
On or about 14 November 2002 Peter and Valerie Herbst lent $85,000 to Herm Fine Frames Pty Ltd (“the company”) for use as the company’s working capital.
On or about 26 August 2003 Peter and Valerie Herbst lent a further 16,000 pounds Sterling to the company. At the time this equated to $38,995.04. The total of the two loans was $123,995.04.
Messrs Davey and Bray were directors of the company at the time of both loans. There was no written agreement at the time evidencing the terms of the loans. It is, however, common ground that there was an agreement for the first loan of $85,000 to be repaid within two years.
Mr Adam Herbst became a director of the company on 28 January 2003. As a consequence of a falling out between Mr Herbst and Mr Davey in June 2004 Mr Herbst resigned as a director of the company. The ASIC records tendered in evidence indicate that he ceased to be a director on 11 February 2005.
Due to the breakdown of the business relationship between Mr Herbst and Messrs Bray and Davey negotiations commenced on 2 July 2004 for the repayment of the monies owing to Mr Herbst’s parents.
On 2 and 6 July 2004 Messrs William Love & Nicol, acting on behalf of Mr Peter and Mrs Valerie Herbst, sent letters of demand to the company seeking repayments of the loans plus interest. In one of the letters it was stated that Mr Adam Herbst had been excluded from the business premises (presumably by Messrs Bray and Davey).
On 12 July 2004 Messrs Rod J Barnett & Associates, Barristers and Solicitors, acting on behalf of the company at the direction of Messrs Bray and Davey, responded to Messrs William Love & Nicol’s earlier correspondence and, among other things, suggested a conciliation meeting to resolve the terms upon which Mr Adam Herbst might exit the company.
Thereafter, communication between the two law firms proceeded with the result that a meeting took place between the parties on 5 August 2004. At that meeting all parties were legally represented.
Subsequently, on 26 August 2004 Messrs Rod J Barnett & Associates offered two options for the repayment of monies owed by the company, it having been acknowledged in that firm’s letter dated 12 July 2004 that there was no contest in relation to the debt owed. In that same letter of 26 August 2004 it was suggested that, after Messrs Williams Love & Nicol took instructions from their clients, the appropriate documentation be drafted by Messrs Williams Love & Nicol.
Negotiations continued for several months, culminating in a letter dated 13 December 2004 from Messrs Rod J Barnett & Associates on behalf of Messrs Davey and Bray suggesting that Messrs Davey and Bray enter into an agreement for repayment of the debt plus interest (as well as various other terms of agreement). This proposal – that Messrs Davey and Bray have the debt assigned to them – was acceptable to Mr Peter and Mrs Valerie Herbst.
On 22 December 2004 Messrs Williams Love & Nicol forwarded a loan agreement to Messrs Rod J Barnett & Associates with a request that the agreement be executed and returned by 25 December 2004. This did not happen. On 23 December 2004 Mr Barnett responded on behalf of his clients indicating that they were in Melbourne and that he would forward the documents to them.
On 10 January 2005 Messrs William Love & Nicol again wrote to Messrs Rod J Barnett & Associates stating that they still had not received any evidence of the execution of the documentation nor related monies contemplated by that documentation. On 11 January 2005 Messrs Davey and Bray wrote to Messrs William Love & Nicol indicating that the draft loan agreement had not accurately reflected the agreements that had been reached between the parties and restated their terms including:
“(3) assignment of the debt of $123,995.04 to Peter and Valerie Herbst to John Davey and Eric Bray personally (please see the addition to clause ‘E’ in the recitals). Repayment to be weekly calculated on 8% interest p.a i.e. $578.99 per week”.
This was accompanied by a copy of the loan agreement with hand written amendments made to the draft including the addition of:
“E. The Borrowers have agreed to have the advance assigned to them personally”.
On the same day, 11 January 2005, Williams Love & Nicol responded to Messrs Rod J Barnett & Associates agreeing to the insertion of the requested recital “E” as well as some other requested amendments, but not all of them.
Ultimately the parties entered into the loan agreement Deed on 21 January 2005. In accordance with this agreement Messrs Davey and Bray became personally liable for the debt of $123,995.04 and in accordance with the agreement began to make repayments.
Between January 2005 and June 2008 Messrs Davey and Bray made 166 repayments leaving $39,247.44 outstanding.
It is this outstanding $39,247.44 which is in dispute.
The magistrate’s findings
On those facts the magistrate made the following finding:
I find that at all relevant times Messrs Davey and Bray and the company were legally represented; that there was a debt of $123,995.04 owed by the company to Mr and Mrs Herbst; that this debt was validly assigned to the two company directors, Messrs Bray and Davey; that 166 repayments were made by Messrs Davey and Bray; and that $39,247.44 was outstanding when they ceased making repayments.
In my view, that finding is amply supported by the facts upon which the magistrate relied. After making this finding, the magistrate then rejected the submissions made that duress could be raised as a defence to the plaintiff’s claim. Having regard to the facts found by the magistrate that also has to be correct. At all times the appellants were legally represented. The final deed upon which this claim is founded was formally executed by them. In those circumstances the appellants claim that the agreement is unenforceable on such a ground is not supported by the facts that the magistrate accepted and is clearly based on unjustified assertions and borders on being vexatious. That is so with respect to each of the other claims in the counterclaims and third party notices alleging malicious prosecution, assault, duress, coercion and unjust enrichment. In my view, all of those claims do not have any basis whatsoever in the facts found by the magistrate. It was clearly open to the magistrate to find that the appellants had no defence to the claim and to find that there was no basis for the appellant’s pleading which raised those issues.
The grounds of appeal
It is with this background that the grounds of appeal fall to be considered. Before the appeal came before me for hearing the initial grounds of appeal were extensively amended. At the conclusion of the first day of hearing of this appeal an application was made to further amend those grounds by way of a further amended notice of appeal. Ultimately that application was not pursued. The grounds upon which the appellants say they relied are those set out in the amended notice of appeal:
10.The magistrate erred in granting leave to amend the Statement of Claim.
Particulars
(a)The proceedings purportedly commenced by Peter Herbst after his death were invalid and a nullity.
(b)The proceedings purportedly commenced in the name of Peter Herbst could not be rendered valid by subsequent order of the Court.
(c)The amendment to the Plaintiff’s Claim is contrary to the principles articulated by the High Court in Aon v Australian National University [2009] HCA 27. The Amendment created a new cause of action against the Defendants, namely an assignment in equity of a debt from a corporation. The original claim was stated as a loan made to and repayable partially repaid directly by the Defendants.
11.The Magistrate erred in finding that the first respondent was entitled to judgment in the sum of $39,247.44
Particulars
(a)Such finding was contrary to the provisions of section 211 Civil Law (Property) Act 2006
(b)Such finding was contrary to the evidence;
(c)Such finding was contrary to the law
12.The magistrate erred in finding that Peter and Valerie Herbst lent a total of $123,995.04 to Herm Fine Frames Pty Ltd when such finding was contrary to the evidence.
13.The magistrate erred in finding that the first respondent was entitled to summary judgment pursuant to rule 1146 Court Procedure Rules 2006
Particulars
(a)The Appellants has a good Defence to the claim on the merits;
(b)Sufficient facts were disclosed to entitle the Appellants to defend the Claim for relief generally;
(c)The First Respondent did not discharge her onus of proof of the matters referred to in rule 1146 (2) Court Procedures Rules 2006.
14.The magistrate erred in finding that a debt was validly assigned by Herm Fine Frames Pty Ltd when there was no evidence supporting such a finding.
15.The magistrate erred in finding that 166 repayments were made by the Appellants.
Particulars
(a)There was no evidence supporting such a finding;
(b)Such a finding was contrary to the magistrate’s determination that evidence that the Appellants had not made payments was irrelevant to the issue at hand.
16.The magistrate erred in determining that the ‘loan agreement’ was enforceable.
Particulars
(a)By failing to give reasons or adequate reasons for her determination;
(b)By failing to address the grounds for invalidity argued on behalf of the appellants;
(c)By giving as the reasons for the determining that the loan agreement was enforceable that the appellants and the company were legally represented.
17.The magistrate erred in dismissing the counterclaim by the appellants –
Particulars
(a)By failing to give reasons or adequate reasons for the dismissal;
(b)By making the determination without a proper application.
18.The magistrate erred in dismissing the Third Party Notices by the Appellants
Particulars
(a)By failing to give reasons or adequate reasons for the dismissal;
(b)By making the determination without a proper application;
(c)Such a dismissal was contrary to the evidence.
19.The magistrate erred by not taking proper consideration of the Rules pertaining to the valid application of a Summary Judgment.
Particulars
(a)The Summary Judgment Application was not filed and served in accordance with Regulations 1150, 6008 and 6351 and was therefore not an Application capable of supporting Summary Judgment.
(b)The Affidavit of Adam Richard Herbst filed in support of the Application for Summary Judgment was defective and not capable of supporting Summary Judgment.
20.The magistrate erred in not permitting the Appellants to re-plead their Defence after allowing the amendment to the Plaintiff’s Claim
Particulars
(a)The proper Orders to be made on permitting an Amendment is to also grant leave to the Defendant to re-plead their Defence and to make an order for costs thrown away up until the date of the Amendment. The Magistrate failed to apply Regulation 513 Court Procedure Rules 2006.
The Submissions on appeal
Messrs Davey and Bray were represented on the appeal by Mr R.D Shepherd who appeared as counsel before me. Mr Davey had represented himself before the magistrate and at that time Mr Bray was represented by Ms C Harley.
Mrs Herbst and Adam Herbst were represented both before the magistrate and on this appeal by Mr P Walker who appeared as counsel before me on the hearing of this appeal.
The written and oral submissions put by Mr Shepherd for the appellants on the appeal, in most cases, differed from the particulars cited as supporting the grounds of appeal. I shall seek to deal with the grounds of appeal as qualified by those submissions.
The first ground
The magistrate erred in granting leave to amend the statement of claim.
Mr Shepherd for the appellants did not address the assertion in paragraphs (a) and (b) and the particulars to this ground concerning Peter Herbst. Peter Herbst had died before the originating claim was issued. He was, of course, the other party with his wife Valerie Herbst to the deed referred to in the pleadings. The proceedings were amended to remove him as a party by order of the registrar on 27 March 2009. The proceedings continued with Mrs Herbst as plaintiff. The removal of Mr Herbst as a party does not affect the proceeding by her as plaintiff.
The appellant’s real complaint seems to be the magistrate’s order permitting the amendment of the statement of claim to describe the claim as a debt arising from money loaned to the defendants to one arising from money loaned to a company and subsequently assigned to them.
It is put that the amendment should not have been permitted as it amounted to an abandonment of the claim as had been pleaded. In my view that submission cannot be sustained.
A cause of action is the entire set of facts that gives rise to an enforceable claim. In Do Carmo v Ford Excavations Pty Ltd (1984) 154 CLR 234 (at 245) Wilson J, citing a number of authorities said:
The concept of a “cause of action” would seem to be clear. It is simply the fact or combination of facts which gives rise to a right to sue.
In the present case the fact pleaded that gives rise to the plaintiff’s claim is the agreement of 21 January 2005 constituted by a written deed of agreement. It is that agreement which acknowledges monies owed by the appellants to Peter and Valerie Herbst to be repaid in a particular manner.
The descriptions in the agreement of Peter and Valerie Herbst, as lenders, and the appellants as borrowers and the description of the “Advance” being assigned to the borrowers personally do not alter the factual circumstance that, under the deed executed by all parties, Peter and Valerie Herbst have a claim by way of debt against the appellants arising from that document. The inapt expression certain of the terms in the executed deed do not alter that fact. That is made clear from the extensive correspondence between the solicitors acting for the parties and the circumstances deposed to in the affidavits filed which make it crystal clear what was intended by the obligations that the deed imposed upon the appellants.
Before the magistrate the appellants submitted that because the money was lent to the company and not to them as individual directors of the company it remained a debt owed by the company.
The magistrate said this about that submission:
There is no valid legal substance to this argument because Messrs Davey and Bray specifically requested that the debt be assigned to them personally in substitution for the company, as evidenced by the document signed by them on 11 January 2005. That document was accompanied by handwritten amendments made by them to the draft loan agreement. The loan agreement in final form signed by them on 21 January 2005 reflected precisely the assignment they had requested. Furthermore, they had been legally represented throughout the almost seven month period of negotiation prior to the signing of the loan agreement. Also, critically, their personal acknowledgement of the debt is evidenced by the fact that they made 166 payments over a period of three and a half years, commencing immediately after they signed the loan agreement.
In my view, on the facts referred to by the magistrate there can be no successful challenge to these observations.
In my view, the amendment that the plaintiffs proposed to the amended statement of claim did not substitute a new cause of action or materially alter the existing cause of action. It was an amendment that could fairly be said to have been made for the purpose of deciding the real issues in the proceedings (see CPR 501(a)). Even if it remained in the form pleaded by the amended statement of claim, that would permit summary judgment to be given against the appellants in the factual circumstances accepted by the magistrate.
The appellants refer to Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175 in the particulars that they give in support of this ground of appeal. As explained above the amendment was not to substitute a new cause of action or a different claim. In that circumstance, that authority has no application to this case.
In any event, the amendment about which the appellants complain was part of the application before the registrar for summary judgment. The appellants cannot be heard to say that it was a late addition of a new claim. Whilst it appears that the registrar had not made a formal order allowing the amendment, the magistrate in doing so was merely formalising a matter of which the appellants had ample notice and opportunity to address before both the registrar and the magistrate.
The second ground
The magistrate erred in finding that the first respondent was entitled to judgment in the sum of $39,247.44.
Although the particulars refer to s 211 of the Civil Law (Property) Act 2006 which deals with tenants in common acquiring a legal estate, the appellants complaint seems to be that as the only debt arising was owed to both Peter Herbst and Valerie Herbst, Valerie Herbst could not be entitled to more than one half of the amount sued for.
Before the magistrate both the issue of whether Mrs Herbst was entitled by way of survivorship as a joint owner of the debt owed or by way of inheritance as the joint beneficiary of the estate of Peter Herbst was raised.
It was put to Mr Davey and to Mr Bray’s counsel that the question of inheritance was not a live issue. There was assent to this proposition. I take the assent to extend to concurrence with the position that there was no issue with the entitlement of Mrs Herbst to the whole of the debt owed either by way of survivorship or inheritance. In the circumstances, the point that the appellants seem to wish to now take should not be open to them and is without merit.
The third ground
The magistrate erred in finding that Peter and Valerie Herbst lent a total of $123,995.04 to Herm Fine Frames Pty Ltd when such finding was contrary to the evidence.
The basis upon which Mr Shepherd asserted that this ground was pressed relates to the assertion that it was the company that was loaned the money not the appellants. As I understand the submission, the ground refers to the expressions in the deed describing the appellants as borrowers. That is not a submission that can succeed having regard to what I have earlier said about the inapt expressions in the deed not affecting the appellants’ liability under it.
The fourth ground
The magistrate erred in finding that the first respondent was entitled to summary judgment pursuant to rule 1146 Court Procedures Rules 2006.
This ground seeks to call in issue whether the magistrate could be satisfied that the appellants did not have a good defence to the respondents claim.
In determining that issue, the appellants place reliance on the matters asserted by the amended defence and counterclaim that they had filed on 12 July 2009. The amended defence and counterclaim had been filed outside the time that it could be filed without leave being obtained to do so.
This counterclaim alleged that Adam Herbst had committed the tort of malicious prosecution against the appellants by instituting the proceedings in his own name and that of his father Peter Herbst. That part of the counterclaim claims damages against Adam Herbst.
The counterclaim also alleges that Valerie Herbst had committed the “Tort of Intimidation” against the appellants. The pleadings allege demands for payment of monies (presumably the solicitor’s letters of demand). There is an assertion that “any agreement” is voidable due to the “duress and coercion” of Adam Herbst and Valerie Herbst. Damages are claimed against Valerie Herbst.
Relying upon the affidavits and other materials before her, the magistrate made the following finding:
Earlier, I referred to a falling out between Mr Adam Herbst and Messrs Bray and Davey. The catalyst seems to have been an alleged minor assault-a push- of Mr Davey by Mr Herbst. This led to Messrs Davey and Bray excluding Mr Herbst from the business premises. Shortly after this it appears that Mr Herbst was allowed conditional re-entry to the premises whereupon it is alleged that he interfered with MYOB software used by the company. Other allegations were made against Mr Adam Herbst and it was further claimed that solicitor’s letters from Messrs Williams Love & Nicol on behalf of Peter and Valerie Herbst constituted duress.
As for this latter claim, I reject out of hand that normal letters of demand sent by solicitors on the instructions of their client in this case constitute any form of duress.
Although the magistrate’s findings do not refer to coercion or intimidation, it is clear to me that the findings encompass those notions and that her ultimate conclusion that the matters referred to in the counterclaims had no merit should be upheld.
I have already dealt with the question of whether the claim was enforceable in determining that the magistrate did not err in granting leave to amend the amended statement of claim.
The fifth ground
The magistrate erred in finding that a debt was validly assigned by Herm Fine Frames Pty Ltd when there was no evidence supporting such a finding.
I do not agree that the magistrate necessarily found that there was a valid assignment by Herm Fine Frames Pty Ltd of the debt to the appellants arising by reason of the written agreement. The magistrate accepted that there had been an assignment of the debt owed by Herm Fine Frames Pty Ltd to Peter and Valerie Herbst which the appellants by their execution of the deed undertook to repay in the manner provided for in the deed. In view of the recital to the deed that had been inserted in the deed at the appellant’s request, namely that they “have agreed to have the Advance assigned to them personally”, the point seems to have little substance and no relevance in light of my findings as to the cause of action which gives rise to the summary judgment.
The sixth ground
The magistrate erred in finding that 166 repayments were made by the Appellants.
Mr Shepherd conceded that this ground was unnecessary and no submissions were made concerning it.
The seventh ground
The magistrate erred in determining that the ‘loan agreement’ was enforceable.
The question of the enforceability of the agreement seems to be bound up in the issue concerning the amendment to the amended statement of claim which is dealt with under the first ground of appeal.
The eighth ground
The magistrate erred in dismissing the counterclaim by the appellants.
The appellants initially claimed that the counterclaims could be filed without leave being given to do so. The original defence did not contain a counterclaim. No amended defence was filed within time to the amended statement of claim. An amended defence and counterclaim was filed out of time and without the leave that CPR 507 required be obtained.
Although the appellants sought to submit that a counterclaim could be filed without leave it was conceded that CPR 464 required a counterclaim to be included in the same document as a defence. Accordingly, leave was required to file the amended defence and counterclaim upon which the appellants sought to rely in this case.
It was put that, because of the fact that the magistrate permitted amendment to the amended statement of claim, the appellants should have been permitted to replead and this would have enabled an amended defence and counterclaim to be filed presumably in similar terms to the amended defence and counterclaim that had been filed without leave on 12 July 2009. I do not agree. Any repleading could only have been directed to issues occasioned by the amendment, leave would still have been necessary for an amended defence and counterclaim in the terms sought by the appellants. CPR 512(1) provides:
If a party amends a pleading, an opposite party may plead to the amended pleading or amend the opposite party’s own pleading.
I do not regard that provision as enabling a further amendment of a party’s pleading at large but rather the amendment being restricted to the matter that is the occasion for the operation of the rule.
The counterclaim in the amended defence and counterclaim made a counterclaim firstly, against Adam Herbst for “malicious prosecution” and secondly, against Valerie Herbst alleging “coercion and duress”, “the Tort of Intimidation” and “unjust enrichment” as a consequence of that coercion and duress.
As far as the counterclaim against Adam Herbst is concerned, he was not the plaintiff in the proceedings. CPR 462 (1) provides:
A defendant to a proceeding may make a counterclaim against a person other than a plaintiff (whether or not the person is already a party to the proceeding) if –
(a) the plaintiff is also made a party to the counterclaim; and
(b) either –
(i)the defendant alleges that the other person is liable with the plaintiff for the subject matter of the counterclaim; or
(ii)the defendant claims against the other person relief relating to or connected with the original subject matter of the proceeding.
In view of the provisions of CPR 462 (1) the appellants conceded that the counterclaim against Adam Herbst did not make the plaintiff a party to that counterclaim and that accordingly the pleading was defective in this respect.
The magistrate found that on the materials before her she could find no merit in any of the claims made by the appellants that might constitute a defence to the plaintiff’s claim. I am satisfied that on the material before her, the magistrate could properly make that finding.
The ninth ground
The magistrate erred in dismissing the Third Party Notices by the Appellants.
The third party notices filed separately by the appellants named Adam Herbst as the third party. The notices are in almost identical terms and claimed contribution and indemnity on the grounds of assault, duress, coercion and unjust enrichment on the part of the third party. Claims to a similar effect although differently stated were made in the amended defence and counterclaim.
It is also pertinent to note that the claim for assault and damages for personal injury is in fact statute barred (s 16B Limitation Act 1985 (ACT)).
The application to strike out the notices was made on the grounds that they did not disclose a reasonable cause of action, that they were frivolous, unnecessary or vexatious or an abuse of process.
The third party notices put as their subject matter the activities of Adam Herbst which were said to constitute “an act of coercion and duress” against the appellants. These are the matters involved in the assertions made in the counterclaims. There is an associated claim of unjust enrichment which is certainly not pleaded in a manner that could support the claim.
These matters are associated also with the appellants’ claims in the amended defence and counterclaim alleging malicious prosecution, abuse of process and intimidation by Adam Herbst.
In view of these claims being rejected by both the registrar and the magistrate in the context of the submissions put concerning the counterclaims it was appropriate to strike out the third party notices. I would not interfere with the magistrate’s order that the third party have summary judgment on the third party notices although I think that the proper order would have been to strike them out. In the result I can see no practical difference because the test for either result would seem to be indistinguishable.
The tenth ground
The magistrate erred by not taking proper consideration of the Rules pertaining to the valid application of a Summary Judgment.
The particulars refer to alleged non compliance with the rules and the extent to which reliance could be placed upon an affidavit. No submissions were made about these matters and Mr Shepherd said that this ground was “covered by the grounds concerning summary judgment generally”.
The eleventh ground
The magistrate erred in not permitting the Appellants to re-plead their Defence after allowing the amendment to the Plaintiff’s claim.
This ground has been dealt with in consideration given to the other grounds of appeal particularly the first ground of appeal. The discussion under the first ground of appeal emphasises the limited extent of the amendment sought by the respondent. There does not appear to have been any efficacy at all in permitting the appellants to replead on this aspect.
The appellants have not made out any of their grounds of appeal. I dismiss the appeal with costs.
I certify that the preceding seventy (70) numbered paragraphs are a true copy of the Reasons for Judgment herein of his Honour, Justice Gray.
Associate:
Date: 20 July 2011
Counsel for the first and second appellants: Mr R.D.Shepherd
Solicitor for the appellants: Mason Sier Turnbull
Counsel for the first and second respondents: Mr P.Walker
Solicitor for the respondents: Williams Love & Nichol
Date of hearing: 17 March 2011 and 27 May 2011
Date of judgment: 20 July 2011