Kennedy v Williamson

[2000] QDC 218

DISTRICT COURT OF QUEENSLAND

CITATION:

Kennedy v Williamson & Anor [2000] QDC 218

PARTIES:

FRANCIS DESMOND JOHN KENNEDY
(plaintiff)
v.
KENNETH WILLIAMSON
(first defendant)
and
FAI INSURANCE COMPANY LIMITED
(ACN 000 327 855)
(second defendant)

FILE NO/S:

2396 of 1997

DIVISION:

District Court

PROCEEDING:

Civil

ORIGINATING COURT:

Brisbane

DELIVERED ON:

2^nd June 2000

DELIVERED AT:

Brisbane

HEARING DATE:

12^th May 2000

JUDGE:

Forde DCJ

ORDER:

(1)   The application is dismissed.

(2)   The plaintiff is to pay the defendant’s costs of and incidental to this application to be assessed, such costs being the defendant’s costs in any event.

CATCHWORDS:

PRACTICE – Joinder – Application for joinder of company as second plaintiff and employer of plaintiff – personal injuries action – additional wages paid by company to employees – as a result of injuries to first plaintiff – loss of earning capacity – duty of care – proposed second plaintiff not in existence at time of injuries sustained – whether duty of care owed to proposed second plaintiff – proximity

UCPR R. 62, 69
Husher v Husher (1999) 197 CLR 138 applied
Robinson v Unicos Property Corp. Limited [1962] 1 WLR 520
X and Y (by her tutor X) v Pal & Ors (1991) 23 NSWLR 26
Attorney-General for NSW v Perpetual Trustee Co (Ltd) [1951-1952] 85 CLR 237
Hawkins v Clayton (1988) 164 CLR 539
Bryan v Maloney (1995) 182 CLR 609
Voli v Inglewood Shire Council (1963) 110 CLR 74
Seymour v Gough (1996) 1 Qd R 89

COUNSEL:

Mr P Smith for the Applicant
Ms R Treston for the Respondent

SOLICITORS:

Paul Everingham & Co for the Applicant
Gadens Ridgeway for the Respondent

DISTRICT COURT OF QUEENSLAND

Registry : BRISBANE

Number  :   2396/1997

Plaintiff:FRANCIS DESMOND JOHN KENNEDY

AND

First Defendant:           KENNETH WILLIAMSON

AND

Second Defendant:      FAI INSURANCE COMPANY LIMITED

(ACN 000 327 855)

Reasons for Judgment

Introduction

1. This is an application on behalf of the Plaintiff, Francis Desmond John Kennedy (Athe Applicant@), to join K & K Pools Pty. Ltd. (ACN 084 889 583) as Second Plaintiff in this action. The application is made pursuant to Rule 62 and/or 69 of the Uniform Civil Procedure Rules (AUCPR@).   The Plaintiff commenced an action for personal injuries arising out of a motor vehicle accident which occurred on the 21^st April 1996.  On or about 4^th October 1996, the Plaintiff gave written notice to the Second Defendant in accordance with Section 37 of the Motor Accident Insurance Act 1994 (Athe Act@). At the time of the said accident, the Plaintiff worked as a self-employed pool installer.  Since the accident, additional wages are alleged to have been paid to employees which would not have been incurred but for the accident.  On 26^th October 1998, the business conducted by the Plaintiff continued to be conducted in the name of the proposed Second Plaintiff.  According to the affidavit of Mr. Calvin Kong, the proposed Second Plaintiff has continued to pay wages which would not have been paid but for the accident.  For the financial year ended 30^th June 1999, the amount paid was $1992.00. (Exhibit ACK4").  The Applicant and his wife are the directors of the company.  Mrs. Kennedy is also the secretary.   They each hold as beneficial owners one share each.  There were two shares issued.

Right of Proposed Second Plaintiff to Sue

1. At the time of the accident, the proposed Second Plaintiff did not exist.  Counsel for the Applicant argues in his supplementary written submissions that by analogy, the decision in Robinson v. Unicos Property Corp. Limited [1962] 1 WLR 520 applies. In that case, the plaintiffs were partners in a business as real estate agents. The existing partners, in 1938, entered into a contract for the letting of accommodation in a building which had yet to be completed. The defendants (the original developer) did not develop the site but sold it to a purchaser who completed the project. The defendants did not assign to the purchaser the plaintiffs= contract for letting of the accommodation. As a consequence, the plaintiffs suffered a loss of profits which would have accrued to them if the contract had been assigned. However, at the time that the contract was entered into between the plaintiffs and the defendants, changes had occurred in the plaintiffs= partnership. Originally, it consisted of one of the existing plaintiffs and another partner who died before the commencement of the proceedings. The plaintiffs after the limitation period were allowed to allege by amendment that the continuing partner in entering into the contract acted on his own behalf and for the deceased partner. They were also allowed to allege that the benefit of the contract had been assigned through changes in the partnership to the existing partners, the plaintiffs. Counsel argues that the subject matter of the action devolved through various changes in the partnership.

1. The difference between that case and the present case is that the deceased partner existed at the time of the contract, there was continuity provided by the existing partner and the peculiar nature of a partnership arrangement.  The estate of a deceased may retain the right to sue in contract or in tort.  Also, in Robinson=s case, there was an assignment of interests by the existing partner to his new partners.  In Robinson=s case, it was the same contract being sued on.  It cannot be said that it is the same duty owed to both the Applicant and the proposed Second Plaintiff.    

1. It was conceded by the defence that a duty of care to a party can exist which was not in existence at the date the negligent act occurred.  For example, the duty owed to unborn children: X and Y (by her tutor X) v. Pal & Ors. (1991) 23 NSWLR 26. It is necessary in a case of that nature, that the injured person falls within the class of persons to whom the duty was owed, even if that person was not identified or in existence at the time of the breach of duty alleged: X & Y (ibid. p.40 per Clark JA and per Mahoney JA at p.30).  I accept the submission of the defence that the proposed Second Plaintiff does not fall within such a class.  It was conceded that if the company had existed at the time of the accident, then the First Defendant would have owed a duty of care.  That concession is consistent with the decision of Attorney-General for N.S.W. v. Perpetual Trustee Co. (Ltd.) [1951-1952] 85 CLR 237 at 248.

In X & Y, Mahoney JA said:

AIf A is negligent in building a building and five years later it falls down, A is liable not only to those who were born when the building was built but also to those who have been born since the building was built...It is sufficient, at the least, that he can identify a class of persons apt to be injured and that the plaintiff is, in the event, of that class.@(p.30)

1. In the present case, it is difficult to place the proposed Second Plaintiff in a class which is referred to by Mahoney JA.  The relevant duty arises only if the proposed Second Plaintiff was in a class of persons likely to suffer the loss irrespective of whether it existed at the time or was formed at a later point.  In my view, it does not. The principle was clarified further in Hawkins v. Clayton (1988) 164 CLR 539 at 577-578, such passage being referred to by Clarke JA in X & Y at p.41:

A....On the other hand, it is not necessary for the existence of a relationship of proximity in some other categories of case for there to have been any physical proximity between the parties concerned.  Indeed, a relationship of proximity can exist with, and a duty of care can be owed to, a class of persons which includes members who are not yet born or who are identified by some future characteristic or capacity which they do not yet have.  Cases involving damage by reason of a latent defect in property demonstrate the point.  Thus, a relationship of proximity ordinarily exists between the architect or builder of a residential building (e.g. a maternity hospital) and members of the class of persons who will in future years be born or housed in it.  That relationship of proximity is such as to give rise to a duty of care to avoid a real risk of injury by reason of faulty design of the building.  The duty of care is owed to each member of the class.  If, by reason of the negligence of architect or builder, the building subsequently collapsed and a particular baby was injured, that baby would have a cause of action for the damage sustained by reason of the breach of duty of care which may have been owed to him, and broken, by a person who has died before he was born@.

1. The proposed Second Plaintiff, in my view, falls outside the class of entities or persons who are owed a duty of care.  The relationship of proximity arose in the present case when the applicant chose to re-organise his affairs in a company structure.   In Hawkins v. Clayton, the executor clearly fell within the class of persons who would be affected by the negligence of the solicitor responsible for administering the estate.

1. Cases such as Bryan v. Maloney (1995) 182 CLR 609 can be distinguished. The relationship of proximity is established as each of the purchasers of the house would foreseeably suffer economic loss by inadequate footings. In the present case, it was only the creation of the company which gave it any standing to claim. Counsel for the Applicant argues, applying Bryan=s case, that if, a company was formed after the footings had been put in place, and then it purchased the house, an action would be available to the company.  The defence concedes this and refers to Voli v. Inglewood Shire Council (1963) 110 CLR 74. Counsel for the defence says that if the same company purchased the property after the defect in the footings had already been discovered and had knowledge of it and the loss having occurred, then it could not complain that it ought be compensated for the loss. Counsel for the Applicant limited his submission to the right of a new employer to sue if the symptoms became worse for the Applicant if he had changed employment after the accident. There is no evidence in the present case that the Applicant=s condition has worsened since 26^th October 1998.    

1. Counsel for the Applicant made reference to the Court of Appeal decision of Seymour v. Gough (1996) 1 Qd R 89. The plaintiff and his wife carried on business in partnership conducting a business of reading electricity meters. The plaintiff suffered an injury on 9^th September 1987.  He and other employees carried out the physical side of the business. A company was formed in the 1989 financial year as part of a new structure, with the plaintiff and his wife as joint shareholders.  They each took wages thereafter, except for one year when the wife took nothing.  In one year, the plaintiff took a larger share than his wife.  The Court held that the defendant must take the plaintiff as he finds him, both physically and in relation to his financial arrangements.  The Court held that the plaintiff could not be treated as having lost more than was reflected in the book of accounts.  The assessment proceeded on the basis, therefore, as to what income should be treated as the plaintiff=s and what amount as his wife=s.  In fact, the Court gave effect to what the distribution had been and was likely to be without regard to the lost capacity aspect.

1. If Seymour=s case applied, then there may be good grounds for applying to join the company as a co-plaintiff.  Seymour=s case was disapproved in Husher v. Husher (1999) 197 CLR 138. Judgment was given on 23^rd June 1999.  The present Plaint was filed on 11^th June 1997, well after the decision in Seymour=s case.  The present point was not argued in Seymour=s case, namely, does a  company obtain a right to sue if it suffers loss in relation to an accident to an employee and which occurred before it was formed and where the nature of the loss was known at the date of incorporation?

1. The facts in Husher=s case were that the plaintiff and his wife carried on a partnership at will where the profits were shared equally.  The plaintiff=s physical labour and skill generated the entire income of the partnership.  The plaintiff suffered personal injuries as a result of the negligent driving of a motor vehicle by his wife.  He was unable to continue the physical work needed by the business and the partnership ceased.  It was held that the assessment of damages for loss of earning capacity requires identification of the capacity that has been impaired or lost and the financial loss occasioned as a result.  It required a view to be formed of what would have happened in the future but for the negligent act which caused the personal injury.  It was also held that the partnership income was produced by exploitation of the plaintiff=s earning capacity which went into the partnership.  The financial loss occasioned by that impairment of earning capacity was the loss of his ability to control and dispose of the income that he would have earned if there had been no accident.  In the joint judgment of the Court, the justices said that it was incorrect to award damages on the footing that his damages must be limited to the share of profits he would have received from the continuation of past partnership arrangements.

1. The Court was did point out (p.148) that Husher=s case differed from a case where a person expected to remain a member of a partnership not terminable at will or a partnership in which persons other than the injured plaintiff contributed significantly  to the business.  The present case cannot be readily distinguished from Husher=s case.  It is the following passage in Husher=s case which provides some guidance in the present case:

ADeciding what value is to be ascribed to the loss of future earning capacity of an injured plaintiff requires close attention to the facts of each case.  The task is not one to be undertaken by seeking to classify cases as concerning >sole traders= or >partnerships= or >wage earners= or >trading trusts=, and then attempting to deduce some rule of general application to all cases falling within the classification thus devised.  Rather the inquiry is about what could the plaintiff have done in the workforce but for the accident and what sum of money would the plaintiff had at his or her disposal.@ (p. 148-9).

1. In assessing damages, the court hearing damages would on the facts of the present case be able to apply Husher=s case as discussed and determine a capital sum to reflect  the impairment to the plaintiff=s earning capacity.

1. In my view, the application can be dismissed on two grounds.  Firstly, there is no relevant duty of care owed by the defendant to the proposed Second Plaintiff.  Secondly, on the facts of this case, it is unnecessary to join the entity who is the new employer, namely, the proposed Second Plaintiff as the Applicant=s loss of earning capacity is the issue to be determined.

1. In light of the above, it is unnecessary to deal with the arguments advanced pursuant to the Motor Accident Insurance Act 1994.

ORDERS

1.        The Application is dismissed.

2.It is ordered that the plaintiff do pay the defendants= costs of and incidental to this application to be assessed and that such costs be the defendants= costs in any event.