McDonald v DGJ Group Pty Ltd
[2003] VSC 441
•13 November 2003
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMERCIAL AND EQUITY DIVISION
No. 8659 of 2001
| JENNIFER LOUISE McDONALD | Plaintiff |
| v | |
| DGJ GROUP PTY LTD (ACN 001 805 205) T/AS DEACONS | Defendant |
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JUDGE: | HABERSBERGER J | |
WHERE HELD: | MELBOURNE | |
DATE OF HEARING: | 16 OCTOBER 2003 | |
DATE OF JUDGMENT: | 13 NOVEMBER 2003 | |
CASE MAY BE CITED AS: | JENNIFER McDONALD v DGJ GROUP PTY LTD | |
MEDIUM NEUTRAL CITATION: | [2003] VSC 441 | |
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Practice and Procedure – Substitution or addition of defendants – Whether plaintiff mistaken as to name of her former solicitors – Whether proposed substituted defendant prejudiced by order permitting substitution – Whether proposed additional defendants' possible limitation defence meant order permitting addition of defendants should not be made – Supreme Court (General Civil Procedure) Rules 1996 r.36.01(1), (4), (5) and (6) and r.9.06 and r.9.11(3)(a)
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr D.J. Currao | McNab McNab & Starke |
| For the Defendant | Ms G.L. Schoff | Minter Ellison |
HIS HONOUR:
The Application
This is an appeal from an order of Master Wheeler made on 29 September 2003. The plaintiff's application, which the Master dismissed, was for an order:
"That the Plaintiff have leave to file and serve an Amended Statement of Claim in the terms of the proposed Amended Statement of Claim that is exhibit DCS1 to the Affidavit of David Campbell Skeels sworn 18 September 2003 filed in this proceeding, joining
(a) David Charles Coombes;
(b) Gadens Ridgeway (a firm); and
(c) Deacons Graham & James
in substitution for DGJ Group (trading as Deacons) and that the proceeding be amended accordingly."
The Background
On 10 December 2001, the plaintiff commenced this proceeding naming "DGJ Group Pty Ltd (ACN 001 805 205) T/AS Deacons" ("DGJ") as the defendant. Paragraph 1 of the statement of claim was as follows:
"The Defendant ('Deacons') is and was at all material times:
(a)a company duly incorporated pursuant to the provisions of the Corporations Law;
(b)carrying on in business and practice as solicitors from, inter alia, 385 Bourke Street, Melbourne in the State of Victoria;
(c)trading under the name of Deacons, a business name registered pursuant to the Business Names Act 1962;
(d)the successor in law to the law practices of Gadens Ridgeway ('Gadens') and Sly & Weigall ('Sly')."
In summary, the plaintiff's complaint as set out in the statement of claim is that in 1994 and 1995 she and her parents Alan and Alma McDonald ("the McDonalds") had retained a solicitor Mr David Coombes, a partner of Gadens Ridgeway (and subsequently of Sly & Weigall and Deacons Graham & James) to act for them and advise them in respect of a particular matter (paragraph 13). This involved the McDonald Family Trust ("the Trust"), the trustee of which was Jenalan Pty Ltd ("Jenalan") (paragraph 2(b)). Mr and Mrs McDonald were Specified Beneficiaries and their children were General Beneficiaries under the Trust (paragraph 4). One asset of the Trust was the East Melbourne Apartment Hotel ("the Trust Business") (paragraph 10). The McDonalds all worked in the Trust Business (paragraph 11).
By the time they consulted Mr Coombes, the marriage between the plaintiff's parents had broken down and Mr McDonald wished to retire to the country and cease his involvement in the Trust Business (paragraph 12). It is alleged that Mr Coombes was instructed to advise how Mr McDonald could retire from the Trust Business and the Trust, how the plaintiff's contribution to the Trust Business could be recognised and how everything from the Trust and her parents' estate be left to her and nothing from the Trust or the parents' estate be left to their estranged son (paragraph 14).
It is further alleged that Gadens Ridgeway advised that if the plaintiff was an Appointor of the Trust, she would have control as to who would be the trustee and would control the manner in which the trustee exercised its discretion (paragraph 16). Accordingly, by a Deed of Variation of Trust dated 5 January 1995 ("the Variation Deed"), the plaintiff and her mother were appointed as joint Appointors of the Trust in addition to Mr McDonald (paragraph 17). It was alleged that the Variation Deed was prepared by Gadens Ridgeway (paragraph 18).
The statement of claim further alleged that throughout 1995 negotiations as to Mr McDonald's retirement from the Trust Business and the Trust continued between the McDonalds and that Gadens Ridgeway continued to act for them (paragraph 20), but at some time in 1995 Sly & Weigall "took over the legal practice" of Gadens Ridgeway and, ultimately, the defendant "took over the legal practice" of Sly & Weigall (paragraph 21). Consequently, from about mid to late 1995 the defendant was retained by the McDonalds in respect of the same matter (paragraph 22).
The negotiations between the McDonalds concluded in December 1995 with the parties entering into a Deed of Settlement dated 12 December 1995 ("the Settlement Deed"), whereby in consideration of certain payments to be made to him, Mr McDonald retired from the Trust Business and disclaimed any interest he might have as a beneficiary of the Trust (paragraph 24). Clause 6 of the Settlement Deed provided that, pursuant to the power available to him under the terms of the Trust, Mr McDonald nominated the plaintiff and her mother to act as joint Appointors of the Trust with him (paragraph 25). It was alleged that the Settlement Deed was prepared by DGJ (paragraph 26).
The proviso to clause 1(b)(i) of the Trust provided that any person who was from time to time the Appointor, amongst others, was excluded from the class of General Beneficiaries unless specifically included in the schedule as a Specified Beneficiary (paragraph 5). Thus, it was pleaded that upon execution of the Variation Deed, the plaintiff was excluded as a General Beneficiary under the Trust (paragraph 29). Despite this, distributions from the Trust have subsequently been made to the plaintiff (paragraph 27).
In March 2001 in Family Court proceedings between Mr and Mrs McDonald, Mr McDonald raised the lawfulness of the distributions from the Trust to his daughter (paragraph 28). In another proceeding commenced by the plaintiff in 2001 she is seeking rectification of the Variation Deed and the Settlement Deed so that she is deleted as an Appointor of the Trust. If she loses that proceeding the plaintiff is concerned that she may be held liable to restore distributions made from the Trust. The plaintiff also claims that even if she is successful she will have incurred extra legal costs (paragraph 36).
The plaintiff alleges that any such loss suffered by her was caused by the failure to exercise all reasonable professional care, skill and diligence by Gadens Ridgeway, alternatively Sly & Weigall, alternatively DGJ (paragraphs 34 and 35).
In its defence, DGJ denied that it was carrying on in business and practice as solicitors and that it was trading under the name of Deacons, although it said that since 15 July 1999, it had been the owner of the business name 'Deacons', registered pursuant to the Business Names Act 1962. It also denied that it was the successor in law to the law practice of Gadens Ridgeway and Sly & Weigall. Further, it denied that Sly & Weigall took over the legal practice of Gadens Ridgeway and that it took over the legal practice of Sly & Weigall. DGJ also denied in its defence that the Settlement Deed had been prepared by it and said that it was "prepared by Deacons Graham & James".
The affidavit of documents filed by DGJ disclosed that it had not had in its possession, custody or power any relevant documents, other than Court documents and correspondence between the solicitors for the parties.
In the affidavit of David Campbell Skeels sworn on 18 September 2003 in support of the plaintiff's application, Mr Skeels, a partner in the firm of solicitors acting on behalf of the plaintiff, deposed that:
"An examination of the Variation Deed reveals that it was prepared by Gadens Ridgeway the party it is sought to name as the second named defendant. An examination of the Settlement Deed reveals that it was prepared by Deacons Graham and James, the proposed third named defendant. In each case it is alleged by the plaintiff that the responsible partner for the preparation of each of the Variation Deed and the Settlement Deed was the proposed first named defendant Coombes when he was a partner firstly at Gadens Ridgeway and subsequently at Deacons Graham and James."
Mr Skeels went on to state that since the issue of this proceeding it had become evident that the proposed new parties should be joined as defendants to the proceeding in substitution for DJG.
Despite the wording of the plaintiff's summons and what Mr Skeels said in his affidavit, the proposed amended statement of claim exhibited to Mr Skeel's affidavit was drawn on the basis that there would be four, and not three, new defendants, because "Sly & Weigall (a firm)" was also sought to be added as the fourth defendant, and that there would be no substitution of defendants because DGJ was retained as the first defendant. The proposed amended statement of claim contained the following paragraphs in addition to the existing paragraph 1 set out above:
"1A. The Second Defendant is and was at all material times a barrister and solicitor of the Supreme Court of Victoria.
1B. The Third Defendant is and was at all material times a firm the members of which carried on in partnership the business of barristers and solicitors of the Supreme Court of Victoria.
1C. The Fourth Defendant is and was at all material times a firm the members of which carried on in partnership the business of barristers and solicitors of the Supreme Court of Victoria.
1D. The Fifth Defendant is and at all material times was a firm the members of which carried on in partnership the business of barristers and solicitors of the Supreme Court of Victoria.
1E. At all material times until 30 June 1995, the Second Defendant was a member of the Third Defendant and acted in the course of such partnership.
1F. At all material times between 1 July 1995 and 14 September 1995, the Second Defendant was a member of the Fourth Defendant and acted in the course of such partnership.
1G. At all material times from 15 September 1995, the Second Defendant was a member of the Fifth Defendant and acted in the course of such partnership."
Although the summons did not seek it, the proposed amended statement of claim added the words "a firm" after the name of Deacons Graham & James in the title of the proceeding (see r.17.01(1) of the Supreme Court (General Civil Procedure) Rules 1996 ("the Supreme Court Rules")).
On 26 September 2003, an affidavit in opposition to the plaintiff's application was sworn by Annabel Jane Evans, a solicitor employed by the firm of solicitors acting on behalf of DGJ. She deposed that:
"4. I am informed by David Coombes and believe that he was a partner of the Melbourne firm of Gadens Ridgeway from the time that firm commenced until its dissolution on 30 June 1995. On 1 July 1995 Mr Coombes informs me he joined the Melbourne partnership of Sly & Weigall. Mr Coombes further informs me that the Melbourne firm of Sly & Weigall changed its name to Deacons Graham & James and that that partnership joined the national partnership of Deacons Graham & James and changed its name to Deacons in about July 2000. He is, however, unable to inform me of the precise dates of these events.
5. The current named defendant, DGJ Group Pty Ltd, is a company incorporated on 20 November 1979. From 3 November 1989 the company changed its name to Sly & Weigall Group Pty Ltd and from 4 September 1996 to DJG Group Pty Ltd …
6. I am informed by Guy Dastoli in the records section of the Law Institute of Victoria and believe that the Law Institute of Victoria has no record, either current or past, of a firm of legal practitioners by the name of DGJ Group Pty Ltd.
7. I am informed by Kenneth Barry, a director of DGJ Group Pty Ltd from 6 July 1992 to 28 February 2000, and believe that DGJ Group Pty Ltd has never carried on business as legal practitioners.
8. 'Deacons' was registered as a business name on 15 July 1999. DGJ Group Pty Ltd became the owner of the registered business name 'Deacons' on 15 July 1999. It ceased to own the business name on 1 February 2000. …"
Substitution Under Rule 36.01
This appeal was heard at the same time as the appeal in the related matter of Alma McDonald v DGJ Group Pty Ltd.[1] Mr Currao of counsel, who appeared on behalf of the plaintiff in this proceeding, presented his submissions after the plaintiff's counsel in the related case, Mr Cameron, had addressed the Court. Mr Currao largely adopted and relied on Mr Cameron's submissions. Therefore, his first submission was that the application to substitute parties could be granted under the power conferred by r.36.01 of the Supreme Court Rules. This rule allows the Court to give a party leave to amend any document where a mistake in the name of the party has been made, whether or not the effect is to substitute another person as a party (r.36.01(4)). Where an order to correct a mistake in the name of the party has the effect of substituting another person as a party, the proceeding shall be taken to have commenced with respect to that person on the day the proceeding commenced (r.36.01(5)). Mr Currao accordingly sought to rely on r.36.01(1) and (4) as the substitution of the proposed defendants for DGJ would overcome any possible defence that those defendants had under the Limitation of Actions Act 1958.
[1][2003] VSC 435
It was submitted on behalf of the plaintiff that she had made a mistake in the name of the relevant party. However, Ms Schoff of counsel, who appeared on behalf of DGJ, submitted that it could not be argued that the amendment sought was one necessary to correct a mistake in the name of the party in circumstances where the plaintiff was seeking to substitute four defendants for the original defendant. This has to be correct, in my opinion. I consider that only one of the proposed defendants could possibly be substituted. As will be seen, the most likely candidate if any order for substitution were to be made is Deacons Graham & James.
In Bridge Shipping Pty Ltd v Grand Shipping SA[2], McHugh J stated:
"Rule 36.01(4) is a remedial rule and should be given a beneficial interpretation. It is proper to give it the widest interpretation which its language will permit … It should be interpreted to cover not only cases of misnomer, clerical error and misdescription but also cases where the plaintiff, intending to sue a person he or she identifies by a particular description, was mistaken as to the name of the person who answers that description."[3]
In an application such as this, according to Toohey J:
"… the task for the Court is to characterize the mistake which the applicant claims to have made.”[4]
[2](1991) 173 CLR 231
[3](1991) 173 CLR 231 at 260-261
[4](1991) 173 CLR 231 at 251
It seems to me to be reasonably clear that the plaintiff sued DGJ intending thereby to sue the firm of solicitors known at the commencement of the proceeding as "Deacons", of which Mr Coombes was a partner. The plaintiff wanted to sue Deacons because it had been formerly known as "Deacons Graham & James", the firm whose name appeared on the Settlement Deed. By mistake, she assumed that at the relevant time DGJ represented the corporate manifestation of the entity which carried on practice as solicitors under the name of "Deacons". DGJ was the owner of the registered business name of "Deacons" between 15 July 1991 and 1 February 2000, and thus on 12 December 1995, when the Settlement Deed was entered into. However, the unchallenged evidence was that DGJ had never carried on practice as solicitors. In the circumstances, I consider that it is appropriate to conclude that the plaintiff was mistaken as to the name by which the solicitors "Deacons Graham & James" could be sued. She was mistaken as to the name of the entity which answered the description of her solicitors in December 1995.[5]
[5]Bridge Shipping Pty Ltd v Grand Shipping SA (1991) 173 CLR 231 at 260 per McHugh J
There was no such mistake in respect of the other proposed defendants. In my opinion, the plaintiff did not sue DGJ intending to sue Mr Coombes individually, nor can it be said that she was mistaken as to the identity of Gadens Ridgeway or Sly & Weigall.
Ms Schoff submitted that paragraph 1 of the statement of claim showed that the relevant mistake was that the plaintiff had sued DGJ as "the successor in law to the law practices of Gadens Ridgeway … and Sly &Weigall …" This, she submitted, was a mistake of law, which could not be cured by an order under r.36.01(1) and (4). Whilst this may be correct, it does not affect the application under r.36.01, in my opinion, in respect of Deacons Graham & James, which I have held was mistakenly thought to have been sued by naming DGJ as the defendant.
Ms Schoff also relied on the provisions of r.36.01(6) to found the submission that the application should be refused because to grant it would prejudice the substituted defendant in the conduct of its defence. She emphasised that the proceeding involved serious allegations of professional negligence against Mr Coombes arising as long ago as 1995. It was unfair to allow this claim to be brought about eight years after the events occurred. Moreover, she drew attention to the 17 month delay by the plaintiff in bringing the application to substitute or add defendants, when the problem should have been realised once DGJ's defence was delivered in February 2002. The issue of the wrong defendant was also indicated by DGJ's affidavit of documents.
No doubt this application should have been made earlier. Nevertheless, it is difficult to conclude that the defendant has been prejudiced in a way that cannot be fairly met by an award of the costs thrown away, when DGJ is obviously related to Deacons Graham & James. Therefore, it is not as if these allegations are being made for the first time eight years after the events took place. Moreover, Mr Currao referred me to the existence of proceeding number 8686 of 2001 in this Court in which Mr McDonald had sued Mr Coombes, Gadens Ridgeway and Deacons Graham & James in respect of the same issues raised and sought to be raised in this proceeding. He submitted that this showed that the proposed defendants were well aware of all of the issues.
I therefore consider that I should allow the appeal from the Master and order that pursuant to r.36.01 the plaintiff have leave to substitute "Deacons Graham & James (a firm)" for "DGJ Group Pty Ltd (ACN 001 805 205) T/AS Deacons" as the defendant in the proceeding and that the writ be amended accordingly.
There seemed to be some confusion over the consequence of a successful application under r.36.01. In the circumstances of this proceeding, it must involve the removal of DGJ as a party. If for some reason the plaintiff does wish to keep DGJ as a defendant, which seems to me to be a pointless exercise in the light of the unchallenged evidence about DGJ, then it cannot rely on the leave which I indicated in the previous paragraph I was prepared to grant, pursuant to r.36.01.
Addition or Substitution Under Rule 9.06
Mr Currao submitted in the alternative that if leave were not given under r.36.01(1) and (4), it should be given under r.9.06 of the Supreme Court Rules. This rule allows parties to be added, removed or substituted in certain circumstances. As I have already decided that Deacons Graham & James should be substituted for DGJ, it is appropriate to consider the alternative submission only in respect of Mr Coombes, Gadens Ridgeway and Sly & Weigall and to treat it as one to add them as defendants rather than to substitute them for DGJ.
No point was taken by the defendant as to whether the plaintiff had established that Mr Coombes, Gadens Ridgeway and Sly & Weigall ought to have been joined as parties or that their presence before the Court was necessary to ensure that all questions in the proceeding were effectually and completely determined and adjudicated upon (r.9.06(b)(i)). Rather, it was submitted that, as a proceeding against a defendant added pursuant to an order made under r.9.06 commences upon the amendment of the filed originating process (r.9.11(3)(a)), the claims in contract and tort became statute barred six years after the Variation Deed and the Settlement Deed were entered into (on 5 January 1995 and 12 December 1995 respectively). Accordingly, any application made in 2003 should be refused because it was futile in the light of the limitation defence available to Mr Coombes, Gadens Ridgeway and Sly & Weigall.[6]
[6]Bridge Shipping Pty Ltd v Grand Shipping SA (1991) 173 CLR 231 at 236 per Dawson J
In accordance with High Court authority, Mr Currao submitted that the question of whether there was a limitation defence available to the proposed additional defendants should not be "decided in interlocutory proceedings in advance of the hearing of the action, except in the clearest of cases."[7] He further submitted that it was arguable that the limitation period in respect of the tort claim may not have commenced to run until well after 1995 because, for example, there was no damage sustained until Mr McDonald raised the issue in 2001.[8] Heeding the admonition of the High Court, I do not propose to decide this complex issue at this stage of the proceeding. Suffice it to say that I consider that the question of whether a limitation defence is available to the proposed additional defendants is not clearly established. If such a defence is pleaded, it should be dealt with at the trial.
[7]Wardley Australia Ltd v Western Australia (1992) 175 CLR 514 at 533 per Mason CJ, Dawson, Gaudron and McHugh JJ
[8]Hawkins v Clayton (1988) 164 CLR 539 at 587 per Deane J and at pp.600-601 per Gaudron J; Wardley Australia Ltd v Western Australia (1992) 175 CLR 514 at 527 and 533 per Mason CJ, Dawson, Gaudron and McHugh JJ
In the circumstances, therefore, I also consider that I should order that pursuant to r.9.06 the plaintiff have leave to add "David Charles Coombes", "Gadens Ridgeway (a firm)" and “Sly & Weigall (a firm)” as defendants in the proceeding and that the writ be amended accordingly.
Form of Order
I will hear from counsel as to the final form of the order and as to the question of costs.
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