Mam Mortgages Limited (in Liq) v Cameron Bros - [1999] QSC 131

IN THE SUPREME COURT
OF QUEENSLAND No. 1562 of 1996
Brisbane
[Mam Mortgages Limited (in liq) V Cameron Bros & Ors]
BETWEEN:
MAM MORTGAGES LIMITED (IN LIQUIDATION)
Plaintiff

AND:
CAMERON BROS. (a firm)
First Defendant

AND:
DAVID ALAN STUART CAMERON
Second Defendant
AND:

HIH CASUALTY AND GENERAL INSURANCE LTD

Third Party

REASONS FOR JUDGMENT - CHESTERMAN J

Judgment delivered 16 June 1999

By summons dated 23 March 1999 the plaintiff applied to have Melbourne Asset Management Nominees Pty Ltd (In liquidation) (“Nominees”) joined as a second plaintiff and for leave to amend the writ and statement of claim. On 26 March 1999 I heard argument in relation to the application to amend the statement of claim in respects other than the joinder of Nominees. On 30 March 1999 I gave leave to the plaintiff to deliver a statement of claim amended in a manner described in my reasons for judgment. Those reasons outlined the nature of the action and the relevant history of the proceedings. It is not necessary to repeat that account which I incorporate into these reasons. On 4 June 1999 I heard argument on the application to join Nominees as plaintiff. The application is opposed by the defendants and the third party.
As formulated in the present statement of claim the plaintiff alleges that in reliance upon valuations prepared by the defendants in respect of three specified properties, it advanced sums aggregating $2.55 million some or all of which of it has lost, because its properties are not worth as much as the valuations suggested. If Nominees is joined the proposed pleading would allege that the plaintiff engaged in the business of mortgage lending, either on its own behalf or, alternatively, as agent or trustee for Nominees and, in either case, in conjunction with that company. Conformably with that allegation, the proposed statement of claim will allege that:
·the contract to value the properties were made for the benefit of the plaintiff on its own behalf or as agent or trustee for Nominees;
·the valuations were delivered to the plaintiff on its own behalf or alternatively on behalf of Nominees;
·that the defendants owed a duty of care to Nominees;
·Nominees relied upon the valuations;
·the plaintiff or, alternatively, Nominees has suffered the loss.
The application is made pursuant to O 3 r 11(2) which provides that -
“The Court or Judge may, at any stage of the proceedings ... and on such terms as may appear to the Court or Judge to be just, order that ... the names of any persons who ought to have been joined ... be added, either as plaintiffs or defendants.”
The statement of claim pleads an entitlement to recover damages based upon
(i)breach of an implied contractual term to take reasonable care in the preparation of the valuations;
(ii)negligence in the preparation of the valuations;
(iii)contravention of section 52 of the Trade Practices Act 1974 (Cth) and/or section 37 of the Fair Trading Act 1985 (Victoria).
The valuations were obtained in November 1990. The cause of action in contract will have become unenforceable by reason of the Limitations of Actions Act 1974 in November 1996. It is not clear when the loss complained of was suffered so that it is not presently possible to determine when the limitation period for the causes of action in negligence and the contravention of the statutes expired or will expire. The plaintiff seeks an order that Nominees’ joinder take effect from the date of issue of the writ, 23 February 1996. The defendants and the third party oppose the joinder and its being given retrospective effect because they would be deprived of their right to rely upon the statutory time limitation.
Hayward v Darling Downs Aircraft Services Pty Ltd [1993] 2 Qd R 153 decided that the court may, when adding a plaintiff under O 3 r 11, order that the joinder take effect from a date earlier than the order but no earlier than the date of the writ. Such an order may be made only in “special or peculiar” circumstances. The origin of the phrase appears to be Lynch v Keddell [1985] 2 Qd R 103 in which “the language of Weldon v Neal (1887) 19 QBD 394 was echoed” - see Lynch v Keddell No 2 [1990] 1 Qd R 10 at 14 per Macrossan CJ. It might have been thought that the judgment of McHugh J (with whom Brennan and Deane JJ agreed) in Bridge Shipping Pty Ltd v Grand Shipping (SA) (1991) 173 CLR 231 has rendered doubtful the applicability or relevance of 19th century authorities on how rules of court should be construed and given effect. The judgment might suggest to some that rules of court should be read liberally and that powers conferred by the rules should not be restricted by judge imposed constraints. Notwithstanding McHugh J’s explicit rejection of the “narrow” approach taken by judges of this Court to the construction of O 32 r 1(3) Hayward insists upon such an approach in dealing with applications under O 3 r 11. It is true, as was pointed out in Hayward, that Bridge Shipping did not deal with the question of adding parties but Hayward’s insistence upon the 19th century perception of the rules appear, at the least, incongruous.
Be that as it may, I am obliged to approach this application, which is one to join a plaintiff, as requiring special or peculiar circumstances if the effective date of the addition is to be that of the writ.
What circumstances properly justify the appellation “special” or “peculiar” must depend upon the context in which they are to perform their function of separating the non-ordinary ("special") from the ordinary. The ultimate inquiry is whether the circumstances relied upon to justify an order retrospectively joining a party to an action are sufficiently out of the ordinary to make it proper to designate them as “special” or “peculiar”. The present context is an application to join a plaintiff in the alternative to an existing plaintiff. No new claims are to be made. No new defendant is to be made amenable to proceedings after a limitation period had expired to its benefit.
The reason for the application is that the plaintiff conducted its affairs in rather a curious manner. It and Nominees are both in liquidation and the litigation is conducted by the liquidator whose knowledge of how the business of lending was conducted is imperfect. His source of knowledge is limited to such documentary records as the companies kept. It appears that the plaintiff had access to moneys and operated bank accounts but the documentation for the loans, including mortgages and guarantees, name Nominees as creditor and mortgagee. The plaintiff was the provider of funds for the loans.
The application was prompted when the third party, in its defence of 18 December 1998 to the plaintiffs’ statement of claim put in issue the plaintiff’s title to sue. As I recounted in my earlier reason, the third party had initially defended the action on behalf of the defendants. It was their insurer, but in 1998 denied liability under its policy and was joined in the action at the suit of the defendants. The defendants’ defence of 2 June 1996 was delivered when the third party was conducting proceedings on behalf of the defendants. It denied negligence and put the plaintiff to proof of its loss. The third party, when joined, was given leave to defend the plaintiff’s action against the defendants as well as the defendants’ claim against it. In paragraph 6 of the defence delivered 18 December 1998, the third party -
“says that the plaintiff at no time:
(a)obtained security over the properties the subject of the valuation;
(b)entered any agreement with ... to provide funds ...
(c)provided loans to the named companies;
(d)received repayments from the named companies;
(e)was entitled to recover funds advanced to the companies;
and therefore the plaintiff has suffered no loss ... and is not the proper plaintiff entitled to bring these proceedings.”
The defendants delivered an amended defence on 26 March 1999. Relevantly they put in issue the plaintiff’s claim for loss by a bare traverse. They “do not admit that the plaintiff has suffered loss and damage as alleged, or at all”.
Mr Perkins, who appeared for the defendants, submitted that a traverse in those terms would allow his clients to contest the action on the basis that it was Nominees to whom duties were owed and who had suffered loss. In my view resistance to the action on that ground was something that O 22 r 14 required to be specifically pleaded. In the absence of such content in the defence, the plaintiff could properly complain of surprise. Accordingly the defendants’ defence does not allow it to take the point that the third party has taken.
It is this circumstance which appears to me special or peculiar. When the third party was conducting the defendants’ defence, it did not see fit to impugn the plaintiff’s title to sue. It defended before the expiration of the limitation period so that, had it taken the point, Nominees could have been joined without having to show the case for joinder was special. After the expiration of the limitation period, the defendants would not have been given leave to amend to challenge the plaintiff’s title because it would have been unfair to the plaintiff. The joinder of Nominees would have been out of time. By refusing indemnity to the defendants and being joined as third party, the insurer can now take the point it did not take when representing the defendants and could not have taken had it continued to represent them. There would be in the eventuality that Nominees is not joined as a plaintiff a most unfortunate appearance of unfairness.
I have considered the points advanced by counsel for the plaintiff which are to be found in para. 20 of their written submissions. I accept that each of the points there made is relevant to the exercise of the discretion to join Nominees but I propose to make that order principally for the reason I have identified.
I order that -
(a)Melbourne Asset Management Nominees Pty Ltd (In liquidation) be added as a party to the action and be designated the second plaintiff;
(b)the joinder of the second plaintiff take effect from 23 February 1996;
(c)the plaintiffs have leave to file an amended writ of summons in the terms of Exhibit GME 27;
(d)the plaintiffs have leave to deliver a further amended statement of claim in the terms of Exhibit GME 26;
(e)the plaintiffs have leave to deliver amended further and better particulars in the terms found in Exhibits GME 28 and 29;
(f)the defendants and third party have leave to deliver further amended defences to the further amended statement of claim on or before 30 June 1999;
(g)the costs of and incidental to the application be costs in the cause.
IN THE SUPREME COURT
OF QUEENSLAND  No. 1562 of 1996
Brisbane
BETWEEN:
MAM MORTGAGES LIMITED (IN LIQUIDATION)
Plaintiff
AND:
CAMERON BROS. (a firm)
First Defendant
AND:
DAVID ALAN STUART CAMERON
Second Defendant
AND:
HIH CASUALTY AND GENERAL INSURANCE LTD
Third Party
REASONS FOR JUDGMENT - CHESTERMAN J
Judgment delivered 16 June 1999
CATCHWORDS:     PRACTICE - joinder of parties - whether plaintiff demonstrated special or peculiar circumstances to warrant joinder effective from the date of the writ - deprivation of limitation defence by reason of joinder.
Counsel:Mr J C Sheahan SC for the plaintiff
Mr I Perkins for the defendant
Mr P Taylor for the third party
Solicitors:MacGillivrays for the plaintiff
Flower & Hart for the defendant
Gadens Lawyers for the third party
Hearing Date:              4 June 1999