Melbourne Orthopaedic Group Pty Ltd v SY Group Pty Ltd and Anor (Ruling)
[2013] VCC 2056
•20 December 2013
| IN THE COUNTY COURT OF VICTORIA AT MELBOURNE DAMAGES AND COMPENSATION LIST | Revised Not Restricted Suitable for Publication |
GENERAL DIVISION
Case No. CI-13-00308
| MELBOURNE ORTHOPAEDIC GROUP PTY LTD (as Trustee for the MELBOURNE ORTHOPAEDIC GROUP SERVICE TRUST) (ACN 005 057 269) | Plaintiff | |
| v | ||
| SY GROUP PTY LTD (ABN 11 935 172) | First Defendant | |
| and | ||
| ROBERT DAVID COCHRANE | Second Defendant | |
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JUDGE: | HER HONOUR JUDGE KINGS | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 22 November 2013 | |
DATE OF RULING: | 20 December 2013 | |
CASE MAY BE CITED AS: | Melbourne Orthopaedic Group Pty Ltd v SY Group Pty Ltd & Anor (Ruling) | |
MEDIUM NEUTRAL CITATION: | [2013] VCC 2056 | |
RULING
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Subject:PRACTICE AND PROCEDURE – Joinder of Third Party to Proceeding
Catchwords: Joinder of concurrent wrongdoer – s24AL of the Wrongs Act – meaning of apportionable claim – meaning of previously concluded proceeding
Legislation Cited: Wrongs Act 1958; Supreme Court (General Civil Procedure) Rules 2005
Cases Cited:Godfrey Spowers (Victoria) Pty Ltd v Lincolne Scott Australia Pty Ltd & Ors (2008) 21 VR 84; Perlman v Perlman (1984) 155 CLR 474; Newcrest Mining Limited v Thornton (2012) 293 ALR 493
Ruling: Joinder permitted.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr A Kirby | Kelly Hazell Quill Pty Ltd |
| For the First and Second Defendants | Mr P G Cawthorn SC | Moray & Agnew |
HER HONOUR:
1 The defendants, SY Group Pty Ltd (“SY”), a firm of accountants, and Robert Cochran (Mr Cochran), a principal of SY, seek an order that Aloysius Apputharaj David (Mr David) be joined as a party to the proceeding, as third defendant, pursuant to s24AL of the Wrongs Act 1958 (“the Act”).
2 The plaintiff, Melbourne Orthopaedic Group Pty Ltd (“MOG”), operates a medical practice on behalf of a group of surgeons and is responsible for the collection of patients’ remittances, then distributing the relevant funds to each of the surgeons on a weekly basis.
3 MOG retained SY, and alternatively Mr Cochran, in or about 2005, to provide accountancy advice and services. The retainer was terminated on or about 3 April 2012.
The proceeding
4 On 24 January 2013, MOG commenced this proceeding against SY and Mr Cochran.
5 MOG alleges that the former practice manager, Mr David:
(a) was employed by it as its practice manager:
(b) was responsible for banking cash and cheques received by the surgeons from patients on a daily basis into the practice bank account;
(c) failed to bank $723,067.33 in cash received by the surgeons from patients during the period 1 July 2006 and 20 January 2012, and misappropriated it for his personal use.
6 MOG alleges that:
(a) it retained both SY and Mr Cochrane to undertake periodic reconciliations of the practice’s bank account, with patient receipts received by the surgeons;
(b) SY and Mr Cochrane failed to undertake the reconciliations;
(c) The failure to undertake the reconciliations resulted in Mr David’s misappropriation not being detected;
(d) SY and Mr Cochrane breached their retainer and duty of care and are liable to MOG for loss and damage in the amount of $723,067.33.
Other proceeding
7 In March 2012, MOG commenced proceedings in the Supreme Court of Victoria against Mr David alleging he misappropriated $454,402.31 in patients’ receipts between 1 July 2009 and 20 February 2012. Mr David did not defend the Supreme Court action and did not enter an appearance.[1]
[1]Affidavit of Brook Grearley (“Grearley affidavit”) dated 13 November 2013 at [12]
8 On 13 April 2012, a judgment (“the judgment”) was made by Justice Emerton against Mr David that:
(a) the sum of $454,402.31 is held on trust by the defendant for the plaintiff;
(b) the defendant pay the plaintiff the sum of $454,402.31. Orders were made about interest and costs.
9 Mr David is a bankrupt and has not met the judgment (despite MOG obtaining a freezing order over his assets).[2]
[2]Grearley affidavit at [16]
Supreme Court Rules
10 Order 21.03 of the Supreme Court (General Civil Procedure) Rules 2005 (“the Supreme Court Rules”) provides that where a claim is made for recovery of a debt, the plaintiff may enter final judgment for the amount stated in the writ.
11 Order 21.04 of the Supreme Court Rules provides that where a claim is made other than for the recovery of a debt, damages or any property, the court may give judgment for the plaintiff upon the statement of claim and such an application may be made without notice to the defendant. Since David did not appear, the judgment was a default judgment, without a determination on the merits.
12 Order 21.07 of the Supreme Court Rules provides a default judgment can be set aside on proper material.
Part IVAA of the Wrongs Act
13 It was conceded that the claim against the defendants in this proceeding is an apportionable claim under s24AF of the Act.
14 Section 24AL of the Act provides:
“ 24AL Joining non-party concurrent wrongdoer in the action
(1)Subject to subsection (2), the court may give leave for any one or more persons who are concurrent wrongdoers in relation to an apportionable claim to be joined as defendants in a proceeding in relation to that claim.
(2)The court is not to give leave for the joinder of any person who was a party to any previously concluded proceeding in relation to the apportionable claim.”
15 The issue is whether s24AL(2) prevents the joinder of Mr David under the proportionate liability provisions of the Act.
16 The submission of the defendants was that the claim against Mr David was not in relation to an apportionable claim, so the second limb is not satisfied. Further, there has not been a previously concluded proceeding, on the merits, so the first limb is not satisfied either.
17 The plaintiff opposed the application on the basis that:
(i) Mr David was a party to a “previously conducted proceeding”;
(ii) the “previous conducted proceeding” was in relation to the apportionable claim.
18 Both parties relied on the judgment of Ashley JA in Godfrey Spowers (Victoria) Pty Ltd v Lincolne Scott Australia Pty Ltd & Ors.[3] In that case, Ashley JA held that a previously concluded proceeding “should be understood … as being a reference to a proceeding which culminated in judgment”. He explained the legislative purpose of this as:
[3](2008) 21 VR 84 at [58]
“… part of a regime which attempts to ensure that such a party is freed from attack — whether by the plaintiff or by a concurrent wrongdoer. … .”
That is, the judgment debtor is not to be attacked again in another proceeding in respect of the same loss.
19 In Godfrey Spowers,[4] the Court of Appeal found that the apportionment provisions of the Act did not operate in relation to a settlement, but operated only where there had been a judgment on the merits.[5]
[4]Supra
[5]Ashley JA at [57] – [59] and [94] – [96] and [98]
20 I accept that Ashley JA considered the requirements of Part IVAA involved a finding of relevant facts and the entry of judgment and a determination that a defendant is a current wrongdoer in relation to an apportionable claim. The protection of a defendant against claims for contribution or indemnity (afforded by, among other provisions, s24AL(2)), is “the determination that a defendant is a current wrongdoer”. That is the kind of previously concluded proceeding in relation to an apportionable claim which s24AL(2) addresses. Section 24AL(2) does not apply to the default judgment in this case. Thus, there must be a judicial determination about apportionment for the section to be engaged. In addition, s24AL is a procedural provision only, which does not determine that a person is a concurrent wrongdoer for the purpose of Part IVAA.[6]
[6]Godfrey Spowers (Victoria) Pty Ltd v Lincolne Scott Australia Pty Ltd & Ors (supra) at [112]
21 In Newcrest Mining Limited v Thornton,[7] (“Thornton”), the High Court considered a statute which provided that judgment recovered against any tortfeasor would not be a bar against an action against any other person, but if more than one action was brought, then the sums recoverable under the judgments must not exceed “the amount of damages awarded by the judgment first given”.[8] In that case, the majority of the High Court found that a consent judgment did not amount to a judgment for damages “awarded by the judgment first given”. The idea of “adjudging” meant the carrying out of the process of analysing relevant considerations to decide what ought to be awarded.[9] Bell J thought the mischief which the provision was designed to address (a multiplicity of actions) had force when applied to damages awarded by judge or jury but not when applied to a consent judgment giving effect to the parties’ agreement.[10]
[7](2012) 293 ALR 493
[8]See French CJ at [3]
[9]Heydon J at [36]
[10]at [124]
22 I accept that a default judgment is not “a previously concluded proceeding” as there has been no exercise of judicial determination resulting in a “conclusion” to the previous proceeding after a hearing on the merits. A default judgment can be set aside on proper material: Order 21.07 of the Supreme Court Rules. Order 21.07 is a specific and relevant statutory provision allowing recall by the Court. The fact that the judgment has not been set aside in over twelve months is irrelevant. Application to set aside the judgment can be made at any time.
23 Accordingly, I do not accept that Mr David was a party to a previously concluded proceeding.
24 Further, under the Act, the “previously concluded proceeding” must be in relation to “the apportionable claim”. Counsel for the plaintiff submitted the phrase “in relation to” is of wide import.
25 Reliance was placed upon Perlman v Perlman.[11] Gibbs CJ stated that:
“The words ‘in relation to’ import the existence of a connection or association between the two proceedings, or, in other words, that the proceedings in question must bear an appropriate relationship to completed proceedings of the requisite kind … . An appropriate relationship may exist if the order sought in the proceedings in question is consequential on or incidental to a decree made in the completed proceedings … .”
[11](1984) 155 CLR 474 at 484
26 Counsel for the plaintiff’s submission was that the earlier proceeding (the Supreme Court proceeding) was in relation to the same loss, therefore, it must have been in relation to the claim now brought against the accountants.
27 I do not accept that the claim against Mr David in the Supreme Court proceeding was “in relation to the apportionable claim” as it did not meet the description in s24AF(1)(a) of a claim for economic loss or damages to property in an action arising from a failure to take reasonable care (whether in tort, in contract, under statute or otherwise). The proceeding in the Supreme Court was based in fraud, conversion and or failure to maintain books and records so as to conceal unauthorised transactions. That is not the same claim as in this proceeding.
28 Accordingly, I propose to permit the joinder of Mr David as a defendant.
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