Lewis v CD International Pty Ltd
[2005] QDC 300
•19 October 2005
DISTRICT COURT OF QUEENSLAND
CITATION:
Lewis & Anor v CD International Pty Ltd & Ors [2005] QDC 300
PARTIES:
THOMAS RODERICK LEWIS
First Plaintiff
And
TRL INVESTMENTS PTY LTD
Second Plaintiff
V
CD INTERNATIONAL PTY LTD
First Defendant
And
JONATHAN CHAFFE
Fourth Defendant
And
DAVID DEROOY
Sixth Defendant
And
SVEN BRUGGMANN
Seventh Defendant
And
MATTHEW CHAFFE
Eighth Defendant
And
LYN MARGARET TAYLOR
Ninth Defendant
And
PETER ANTON BRUGGMANN
Tenth Defendant
And
WILLIAM ALAN CASTLE
First Third Party
And
GRAHAM JOHN DONNELLY
Second Third Party
And
MARK LEONARD SEABROOK
Third Third Party
FILE NO/S:
No BD736 of 2004
DIVISION:
Civil
PROCEEDING:
Application in civil claim
ORIGINATING COURT:
Brisbane
DELIVERED ON:
19 October 2005
DELIVERED AT:
Brisbane
HEARING DATE:
14 October 2005
JUDGE:
Judge Robin QC, DCJ
ORDER:
Application dismissed, the respondents having leave to amend the third party statement of claim, applicant’s costs to be his costs in the third party proceedings in any event
CATCHWORDS:
Uniform Civil Procedure Rules r 171, r 192 – application by third party to strike out third party statement of claim after removal from it of express reliance on Law Reform Act 1995 s 6 – UCPR held procedural only – defendants granted leave to amend to restore the deleted reference
COUNSEL:
Mr Oliver for applicant third third party
Mr Collins for respondent, 4th and 6th to 10th defendantsSOLICITORS:
Hemming & Hart for the applicant
Fitzwalters for the respondents
This is an application by the third third party, Mr Seabrook for striking out of the third party statement of claim against him pursuant to rule 171 (1)(a) on the ground that it discloses no reasonable cause of action against him. It seeks costs on the standard basis, notwithstanding the reference to indemnity costs in sub-rule (2). The respondents are the fourth and the sixth to tenth defendants. The plaintiffs are no longer proceeding against the other three, although two of them, Messrs Castle and Donnelly remain in the proceeding as first and second third parties. Mr Seabrook was never a defendant. The nature of the application is such that the assumption should be made that the allegations in the third party statement of claim will be established.
The current third party statement of claim is dated 4 September 2005. It is before the court as an exhibit to Ms Whitehouse’s affidavit. The plaintiffs are claiming in respect of lost capital provided to and lack of expected returns from investments which failed. The allegations against the present applicant are: -
“AMENDED THIRD PARTY STATEMENT OF CLAIM
The Fourth Defendant, Sixth Defendant, Seventh Defendant, Eighth Defendant, Ninth Defendant and Tenth Defendant rely upon the following facts in support of the claim.
1. At all material times
(a) the Third Third Party, Mark Leonard Seabrook, was:(i) the servant or agent of the First Defendant CD International Pty Ltd;
(ii) was a director of the Second Plaintiff from 23rd March 2000;
(iii) had control of and managed the affairs of Thomas Lewis, the First Plaintiff and TRL Investments Pty Ltd, the Second Plaintiff.
(b) the First Third Party, William Alan Castle, was:
(i) a member of the “group” of investors referred to in the Amended Statement of Claim;
(ii) was originally a Defendant in the action commenced by the Plaintiffs;
(iii) was a director servant or agent of the First Defendant from the 3rd August, 2000;
(iv) was a director servant or agent of the First Defendant from the 3rd August, 2000;
(c) the Second Third Party, Graham Donnelly, was:
(i) a member of the ‘group’ referred to in Statement of Claim
(ii) was originally a Defendant in the action commenced by the Plaintiffs;
(iii) was a director servant or agent of the First Defendant from 2nd November, 1998 until 3rd August, 2000.
2. In or about the years 1999 and 2000 the Third Third Party:
(a) was responsible for creating, controlling and organising an investment scheme whereby potential investors paid moneys to the First Defendant, or at the Third Third Parties’ direction, pursuant to a purported investment strategy.
(b) made representations to potential investors including the First Plaintiff and Second Plaintiff as to the expected returns of the investment scheme.
PARTICULARS
(i) The Third Third Party was responsible for the acquisition of the First Defendant, CD International Pty Ltd as the entity into which the investments were to be made;
(ii) CD International Pty Ltd was intended by the Third Third Party to secure investments from potential investors on the basis that it purportedly conducted importation business with construction interest which has a legal “offshore” tax minimisation structure;
(iii) The Third Third Party would represent to each investor that they set up a trust with a trustee company for the purposes of participating in the tax minimisation scheme.
3. In or about the middle of 2000 the Third Third Party caused representations to be made to the First Plaintiff and Second Plaintiff to induce the Plaintiffs to invest moneys in the investment scheme or alternatively, the Third Third Party on behalf of the First Defendant, entered in to an agreement with the Plaintiffs whereby the First Plaintiff and Second Plaintiff, as directed by the Third Third Party, invested moneys in the investment scheme.
PARTICULARS OF REPRESENTATIONS
(a) The Third Third Party told the First Plaintiff that the First Plaintiff should invest moneys in the subject investment scheme;
(b) The Third Third Party told the First Plaintiff that if the First Plaintiff invested $50,000.00 the First Plaintiff would be assigned a “A” class share in the subject group;
(c) The Third Third Party told the First Plaintiff that the return on the investment would be a guaranteed 100% per annum and that those guarantees would be provided;
(d) The Third Third Party told the First Plaintiff that(i) For $10,000.00 he would acquire an “A” class shareholding in the First Defendant and an equal unit trust holding in what the First Third Party described as the Chok Dee Unit Trust,
(ii) he should pay $20,000.00 for investment capital to expand the First Defendant’s export and commercial activities,
(iii) he should ay $3,000.00 for the incorporation of the Second Plaintiff which would act as the trustee for the Lewis Family Trust,
(iv) the Plaintiffs could, on ninety (90) days notice, demand the return of the $20,000.00,
(v) the group guaranteed the performance of the First Defendant’s obligations and indemnified the Plaintiffs for any loss.
4. Induced by and in reliance upon the representations as particularised in paragraph 3 aforesaid or further or alternatively pursuant to the agreement referred to aforesaid the First Plaintiff and Second Plaintiff in or about the middle of 2000 paid the sum of THIRTY THREE THOUSAND DOLLARS ($33,000.00) to the First Defendant for investment in the investment scheme.
PARTICULARS
(a) In or about the middle of 2000 the First Plaintiff by the Second Plaintiff paid $33,000.00 to the First Defendant.
5. Further,
(a) In or about the last quarter of the year 2000 the Third Third Party represented to the First and Second Plaintiff that for a further contribution of $10,000.00 the First and Second Plaintiff:(i) would be deemed to have an investment of $50,000.00
(ii) would be guaranteed a return of 50% per annum in the first year
(iii) would be guaranteed a return of 100% per annum in the second year issued
(iv) that the group orally guaranteed the repayment of the sum of $50,000.00 on demand.
(b) Induced by and in reliance upon the representations as particularised aforesaid or alternatively at the direction of the Third Third Party (at a time when the Third Third Party had control of the financial affairs of the Plaintiffs) the First Plaintiff and Second Plaintiff paid the further sum of TEN THOUSAND DOLLARS ($10,000.00)PARTICULARS
(i) In or about January, 2001 the First Plaintiff and Second Plaintiff paid the sums of $10,000.00 to the First Defendant.
5A. In making the representations as particularised in paragraph 3 aforesaid,
(a) the Third Third Party knew the Plaintiffs would rely on the said representations;
(b) intended the Plaintiffs to rely on the representations(c) made the representations negligently or otherwise fraudulently insofar as the representations were made with reckless disregard as to their truth or falsity.
5B. The said representations in paragraph 3 were false by reason that
(a) there was no genuine prospect by which the payment of the said investment sums would result in any guaranteed returns
(b) the said monies expended by way of investment would be lost(c) there was no effective guarantee or indemnity offered by the group by which the plaintiffs would be indemnified for any loss suffered.
5C. The said representations in paragraph 5 were false by reason that
(a) there was no genuine prospect by which the payment of the said investment sums would result in any guaranteed returns
(b) the said monies expended by way of investment would be lost(c) there was no effective guarantee or indemnity offered by the group by which the Plaintiffs would be indemnified for any loss suffered.
5D. The said representations in paragraph 5 were false by reason that
(a) there was no deemed investment
(b) there was no prospect of a guaranteed return of 50% per annum in the first year
(c) there was no prospect of a guaranteed return of 100% per annum in the second year
(d) there was no effective guarantee offered by the group by which the Plaintiffs would receive $50,000 on demand.6. Further or alternatively by reason of the matters particularised in paragraph 1 aforesaid, the Third Third Party was the trustee of the funds of the First Plaintiff or Second Plaintiff or otherwise acted in a fiduciary capacity to the First Plaintiff and Second Plaintiff in respect of the moneys invested by the First Plaintiff and Second Plaintiff at the direction of or in reliance upon the advice of the Third Third Party.
PARTICULARS OF FIDUCIARY CAPACITY
(a) The Third Third Party assumed control of the finances of the First Plaintiff and Second Plaintiff.
(b) In so conducting himself whereby he had control of those interests the Third Third Party owed a fiduciary duty to the First Plaintiff and Second Plaintiff to act only in the interests of those parties.6A. The loss of the said payments made by the Plaintiffs as particularised in paragraphs 6.1,6.2,6.3 and 11.1 of the Further Amended Statement of Claim were caused by the Third Third Party dealing with the monies in the circumstances where he knew the said payment would be not be recovered.
7. In the premises, if any of the:
(a) Fourth Defendant
(b) Sixth Defendant
(c) Seventh Defendant
(d) Eighth Defendant
(e) Ninth Defendant
(f) Tenth Defendant
are liable in accordance with the provisions of the Further Amended Statement of Claim for any loss allegedly suffered by the First Plaintiff and/or Second Plaintiff of the sums paid by the Plaintiffs as particularised in paragraphs 6.1,6.2,6.3 or 11.1 of the Further Amended Statement of Claim (being the sum of $43,000.00) as a capital loss then the Defendants and each of them as particularised aforesaid say that such loss was caused solely by or otherwise contributed to the conduct of the Third Third Party as particularised in paragraphs 3,4 and 5to 6A aforesaid.8. Further each of the:
(a) First Third Party and
(b) Second Third Party;
were the servants or agents of the Third Third Party and or the First Defendant and knew of or approved of the said representations being made to the First Plaintiff and Second Defendant as particularised in the Statement of Claim.”
Representative of the relief claimed is the following:
“AND the Fourth Defendant claims against the Third Third Party:
(a)An indemnityor contributionpursuant to the provisions ofSection 6 of the Law Reform Act 1995 as amendedin such amounts as this Honourable Court does order for so much of the claim by the Plaintiffs for the loss of the sum of $43,000.00 being the payments referred to in paragraphs 6.1,6.2,6.3 or 11.1 (“the capital loss”) for which the Fourth Defendant shall be found liable;
(b) Such further or other as this Honourable Court deems meet;
(c) Costs.”
These last paragraph references may be taken as being to the Amended Statement of Claim.
The deletion of reference to s 6 of the Law Reform Act 1995 is not replicated in four preceding pages of similarly expressed statements of relief claimed against the other third parties, although there are such deletions in respect of all three third parties in the accompanying amended third party notice.
The third party statement of claim as it stands clearly makes the general contention that Mr Seabrook is the person principally if not solely responsible for any loss the plaintiffs may have incurred (no admission of any liability having been made by the respondents). If he is shown to be solely responsible, the defendants will have no liability to the plaintiffs.
On the face of things, the case is a clear one for third party proceedings under r 192. Here, the history has been complicated. The respondents required leave under r 194. Around March 2003, application for leave was made to Judge Nase in Beenleigh. His reasons show that that application and an accompanying application for security for costs (which was successful in the result) met opposition from both plaintiffs, that in addition submissions were received from the proposed third parties. Castle and Donnelly did not prevail, but his Honour said: -
“The application for leave in respect of Seabrook stands in a different position. Unlike Castle and Donnelly, Seabrook has never been a party to the action. The absence of any attempt to explain the delay is a relevant factor, as the period of delay is significantly longer in his case. It is also doubtful whether the third party procedure is appropriate. I will endeavour to briefly explain the reservation I hold about the appropriateness of the use of the third party procedure to join Seabrook.
The third party procedure contemplates that the Defendant has a cause of action against the third party. Once served with the third party notice the third party has the same rights against the Defendant as if the Defendant has sued the third party in separate proceedings1. In the proposed third party statement of claim Seabrook is sought to be joined on the basis the operative representations to the Plaintiffs were made by Seabrook (paragraphs 2,3,4 and 5), and, on the separate basis of breach of an alleged fiduciary duty owed by Seabrook to the Plaintiffs, or to one of them (paragraph 6). The case the applicants wish to prosecute against Seabrook is that he solely (and not any of the applicants) is liable for any loss suffered by the Plaintiffs, or that he “contributed to” the loss suffered by the Plaintiffs. I assume the “contributed to” allegation is a claim Seabrook is a joint tortfeasor with the applicants. The “contributed to” allegation, as I interpret the pleadings, is very much a fall back position, and the real argument the applicants which to pursue is that Seabrook alone (and not any of the applicants) is liable for the loss suffered by the Plaintiffs.
________________________
1 See the discussion in Australian Civil Procedure 5th ed. Cairns pp272 to 277. Cairns notes that it is only in relation to the Defendant that the third party is a Defendant (p276).”
The next important event was a hearing before Judge McGill SC in October 2004. The plaintiffs obtained from his Honour leave to amend their statement of claim (which was availed of to make substantial changes) and the present respondents were granted general leave for third party proceedings. It is clear from the transcript of the hearing that Judge McGill was fairly apprised of what had happened in March 2003. The present respondents’ counsel told his Honour: -
“MR COLLINS: - we brought an application some time ago to join a third party by the name of Seabrook, who – and we failed in that application on the pleading as it stood and before disclosure had been completed. After disclosure has been completed, we consider we now have a co-joint basis for joining Seabrook. So, it may well be that an – and I just flag this for my friend’s benefit and his solicitors – that we may apply to join Seabrook. If my friend claims expectations or loss of profits on the trade practices claim, we’ll certainly be back here again striking that part out.
The other aspect is – but that’s 14 days to plead the defence, your Honour. Now, I’m not sure how the rules operate – or I should know because I’m a barrister – but under 208 and 198 and 194 about when you’re joining a third party – you have that prescribed period that now operates to join the third party. I would perceive that we can’t take the benefit of joining Seabrook as a third party because we get a new pleading.”
Mr Seabrook’s solicitors complained about the third party notice which was filed on 26 November 2004 and had not been served by the date of their letter of 23 March 2005. The notice was discovered on “a search of the registry”. The response raised Judge McGill’s order in defence of the third party proceedings. Some months later there followed in a letter of 6 September 2005 a critical analysis of the third party statement of claim referring to paragraphs 2,3,4,5 and 6: -
“We see no logic or causal connection between the pleaded conduct by our client and your client’s potential exposure to the plaintiff in damages.
No cause of action is alleged, either by the defendants or the plaintiffs, in the Third Party Statement of Claim against Seabrook either in contract, tort, or under the Trade Practices Act. You simply assert conduct on the part of Seabrook which induced the plaintiffs to undertake certain actions.
The first plaintiff and the second plaintiff make no claim against Seabrook in respect of representations made or that it was induced to act on those representations.
Even if the pleaded facts are made out, as the first plaintiff and the second plaintiff has no claim against Seabrook, then we fail to see how your client, without pleading any specific cause of action against out client, can succeed in recovering any loss it incurs?
The matter is further complicated in that the prayer for relief by each of the defendants against the third third party is for: -
“(a)an indemnity or contribution pursuant to the provisions of section 6 of the Law Reform Act 1995 as amended for so much of the claim by the plaintiffs for which the fourth defendant shall be found liable.”
We remind you of the provisions of s.6 of the Law Reform Act which is in the following terms: -
“6. Where damage is suffered by any person as a result of a tort (whether a crime or not) –
(a) judgement recovered against any tortfeasor liable in respect of that damage shall not be a bar to an action against any other person who would, if sued, have been liable as a joint tort feasor in respect of the same damage.”
For you to be successful, you will have to establish (and plead) that the first plaintiff and the second plaintiff, if they sued Seabrook in tort, they would be successful. No such case is pleaded by the first plaintiff and the second plaintiff against Seabrook, , nor is any such case pleaded against Seabrook in the Third Party Statement of Claim.
In fact, even in the Amended Statement of Claim no cause of action in tort is pleaded against the defendants although this is not fatal to claiming contribution against a third party.”
The third party statement of claim quoted extensively above reveals amendments made in response to that letter, perhaps to forestall a threatened application to strike out its predecessor unless there was a discontinuance. It came with the following letter of 12 September 2005:
“Further to your letter of 6 September 2005, we enclose the Amended Third Party Notice and the Amended Third Party Statement of Claim which we are presently filing in the Court.
Thank you for allowing us the opportunity to review the pleadings.”
Mr Oliver’s submissions in support of the application were:
“3. There is no claim made for contribution against Seabrook pursuant to s 6 of the Law Reform Act (UCPR 208).
4. Therefore, the joinder is made pursuant to UCPR 192(2) in that the defendant wants to:
‘Claim against a person who is not already a party to the proceeding a contribution or indemnity’5. As the defendants are not relying on the Law Reform Act, the statement of claim against Seabrook must on its face plead a case upon which if the facts are found in the defendants favour establishes a cause of action against Seabrook, which sounds in damages.
6. The amended statement of claim seeks to set up a cause of action whereby the plaintiff, if it pleaded the case against Seabrook, would have a remedy. In other words the defendants are attempting to rely on a potential cause of action the plaintiffs may have against Seabrook, which if pursued would result in damages. It pleads:-
…
7. The plaintiffs have chosen not to make any claim against Seabrook in these proceedings or any other proceedings nor has the first defendant.
8. The claim as pleaded against Seabrook does not establish and basis upon which the defendants have any claim against Seabrook or are entitled to contribution.
9. If the defendants are relying upon UCPR 192(b) then it is incumbent on the defendants to plead a case against the Seabrook so that if the defendants could, in a separate proceeding, succeed against Seabrook.1
10. No such case is pleaded against Seabrook. If one considers the pleaded case against Seabrook, it is clear that it does not disclose any cause of action.
11. The rule to permit joinder of third parties is procedural only and the defendant must have a right to relief against the third party, Seabrook.2
12. The Rule being only procedural, and does not confer a substantive right of contribution in the absence of an independent cause of actions against the third party,3 excluding, of course, rule 208.
13. The above proposition was adopted by His Honour Judge Nase in his reasons for judgment in refusing leave to join Seabrook as a third party in the application of the 11 March 2003.4
14. Nothing has changed since that application except that the contribution claimed under the Law Reform Act has been excluded.
15. The absurdity of this situation is tested this way, if the pleading stands then Seabrook has to plead to allegations made against him by a third party as to his commercial relationship with the plaintiffs, who have no interest in perusing (sic) him in the same proceedings.
____________________________
1 Australian Civil Procedure, Cairns page 275
2 Dillingham Constructions Pty Ltd v Steel Mains Pty Ltd (1974) 132 CLR 323
3 As an example the discussion in Southern Textile v Stehar Knitting Mills (1979) N.S.L.R. 692
4 Reasons for Judgment Exhibit “SW-1” to Affidavit of Sonia Whitehouse”
Mr Collins’ submissions on behalf of the respondents did indeed point to r 192 as the justification for the third party proceedings. In my opinion, r 192 is not available for that purpose. Statutory reform was necessary to overcome the stern view of the common law about contribution. It is convenient to pick up extracts from the discussion in Fleming, The Law of Torts (9th) 292 ff, interpolating the current version of the Queensland legislature’s response:
“The common law did not countenance contribution among tortfeasors. This was established in 1799 in Merryweather v Nixan … The most controversial aspect of this rule of “joint and several liability” was, no doubt, the power it conferred on the plaintiff to determine the incidence of loss distribution between co-tortfeasors at his own whim, allowing him to throw the whole loss, if so minded, on one of them and completely exempt the other. … statutory reform eventually adopted contribution.”
[In Queensland now the Law Reform Act 1995 provides:
“6. Where damage is suffered by any person as a result of a tort (whether a crime or not)-
(a) judgment recovered against any tortfeasor liable in respect of that damage shall not be a bar to an action against any other person who would, if sued, have been liable as a joint tortfeasor in respect of the same damage;
…
(c) any tortfeasor liable in respect of that damage may recover contribution from any other tortfeasor who is, or would if sued have been, liable in respect of the same damage, whether as a joint tortfeasor or otherwise, so, however, that no person shall be entitled to recover contribution under this section from any person entitled to be indemnified by the person in respect of the liability in respect of which the contribution is sought.]“Despite its apparent simplicity, this provision has proved to be “a piece of law reform which seems itself to call somewhat urgently for reform”.
There must, first of all, be a common liability in tort. This excludes not only claims lying only in contract, but also claims between a tortfeasor and someone liable only for breach of contract, warranty or trust … Contribution may be claimed only from a tortfeasor “who is, or would if sued have been, liable in respect of the same damage”. … The torts may have been committed simultaneously … or at an interval … What is at once necessary and sufficient is that both defendants be liable for the same damage.”
Reference to the criticism noted may be found in Kim v Cole [2002] QCA 176 (at [17] ff in the context of difficulties arising from the different situations in tort and contract) and in Dillingham Constructions Pty Ltd v Steel Mains Pty Ltd (1975) 132 CLR 323, notably by Murphy J. In the latter, pertinently, Gibbs J said at 330:
“The provisions of s. 78 of the Supreme Court Act, 1970 (NSW) are purely procedural. They permit a defendant in any proceeding to obtain relief against another person without having to institute a separate proceeding for that purpose. Section 78 in no way assists the cross-claimant once it is decided that he has no right to contribution under s. 5(1)(c) of the Law Reform (Miscellaneous Provisions) Act, 1946.”
See, to similar effect, Barwick CJ at 328 (Stephen and Mason JJ agreeing). Those observations are apposite to r 192. Mr Oliver relied on a discussion of the effect of the High Court decision in the different context of availability of set-offs in Southern Textile Converters Pty Ltd v Stehar Knitting Mills Pty Ltd [1979] 1 NSWLR 692, 696. Without reliance on s 6, Mr Collins’ clients can no more claim contribution or indemnity than could the corresponding party in the High Court situation.
At p 21 of the transcript of the hearing, Mr Oliver said of Mr Collins that, “he’s already deleted any reference to the Law Reform Act to give him the right to bring us in as co-contributor for a tortious liability under s 6” and agreed with my suggestion that s 6 having been there originally (and then removed), put the respondents in a worse situation than if it had never been there. As he said, “If they want to bring us in as a third party, excluding s 6 of the Law Reform Act, they must identify a cause of action that they have against us and that’s consistent with the authorities.” There was reference to Professor Cairns’ book and Judge Nase’s proposition by reference to it that “the third party procedure contemplates that the defendant has a cause of action against the third party.” Quite apart from the point made in the text that the litigation precedes as if the defendant and third party were plaintiff and defendant, in this context we are contemplating not a conventional cause of action, but, rather, the right to claim contribution or indemnity, which depends on s 6. Nothing appears by way of what I have called a conventional cause of action available to the respondents against Mr Seabrook.
Mr Oliver advanced some strong criticisms of the third party statement of claim as a pleading. I confess to confusion as to whether those were advanced from the point of view of showing a good claim in the plaintiffs against Mr Seabrook (a requirement under s 6) or a good claim by the fourth and sixth to tenth defendants (or some of them) against him. At p 27, Mr Oliver said:
“192(b) says, ‘A claim against a person who is not already a party to the proceeding, relief relating to or connected with the original subject matter of the proceeding and substantially the same relief claimed by the plaintiff.’ So what I’m saying there is if they’re going to rely on that, then they’ve got to plead a case against the defendant which gives rise to a separate cause of action against the third party by the defendant. … That’s what Cairns says.”
That contemplates a claim by the relevant defendants. Yet, at 24, for example, there was a criticism of the paragraph 5A(c) allegation of representations being made “negligently or otherwise fraudulently” which, as Mr Oliver said, “doesn't itself create a cause of action. It lacks all the ingredients of a cause of action of duty, of breach … nothing like that is pleaded.”
Mr Collins made it clear (at p 32 of the transcript) that the third party proceedings against Mr Seabrook were based on s 6 of the Law Reform Act, despite the history of the pleading. There and at other stages (finally at p 40), he indicated he sought leave to amend the third party statement of claim to put a reference to it (back) in. In those circumstances, one wonders why the reference was taken out. If nothing had ever been committed to writing in a pleading referring to s 6 or the Act generally, in my opinion, the defendants seeking contribution (or indemnity) would have been entitled to rely on it. I am not persuaded that the history of the ill-advised deletion of the reference precludes those defendants’ reliance on a basic feature of the legal environment where there are joint tortfeasors. If there was any abandonment of rights to contribution contemplated at any time (I do not think there was), I can see no justification in the circumstances for that being made permanent.
The question remains whether s 6 applies in any event. It is necessary that both the relevant defendant(s) and Mr Seabrook be “tortfeasors”. The relevant loss of the plaintiffs relied on, being capital contributions by them only, in this context, is the same. Provided that the defendants would be liable as tortfeasors, it does not matter whether the plaintiffs have sued them in that capacity (Kim v Cole [19] ff). Does Mr Seabrook have a potential liability as a tortfeasor? The answer has to be, yes. Mr Oliver appeared to suggest that the principal claim imputed to the plaintiffs against Mr Seabrook was in fraud or deceit. That is certainly the one pleaded in detail. I took him to suggest that such a claim was not a “tort” for the purposes of s 6. So far as I am aware, it is a tort, speaking generally, and is so dealt with in the textbooks, for example Fleming 694 ff. The difficult considerations that have troubled the courts in relation to negligent misrepresentation are dealt with at 704 ff, where much is said about special features, particularly in establishing the duty of care. Mr Oliver is right that the pleading is woefully thin in identifying anything resembling a cause of action in the plaintiffs against Mr Seabrook for negligent misrepresentation. (On the other hand, it would be straining things to say that Mr Seabrook had no idea what case is sought to be made against him.)
I do not think there is anything in Mr Seabrook’s claim about incongruity or difficulty in his facing allegations about dealings between him and the plaintiffs made not by them, but by the defendants. See paragraph 15 of the outline of argument and p 23 of the transcript. I can see no problem about Mr Seabrook’s having to say whether or not the assertions about what he did vis-a-vis the plaintiffs are true or not. One has the feeling that the allegations may be somewhat speculative, having regard to par 1(a)(ii) and (iii). That is of no relevance presently.
My conclusion that the respondents presently are (or will be following the amendment indicated by Mr Collins) in a position to rely on s 6 means that the application by Mr Seabrook must fail. It will be dismissed, and the respondents will be given general leave to amend the third party proceedings. I think they are largely the authors of their present predicament, and that their assertion (now abandoned, apparently) that they did not need s 6, but might rely on r 192, is unsound. The appropriate costs order is that the third third party’s costs be his costs in the third party proceedings, in any event. However, the parties are invited to make submissions for different orders.
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