Renovation & Finance Co Pty Ltd v Kott Gunning (A Firm) - [2006] WASC 29

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION: RENOVATION & FINANCE CO PTY LTD -v- KOTT GUNNING (A FIRM) [2006] WASC 29

CORAM: JENKINS J

HEARD: 21 DECEMBER 2005

DELIVERED : 24 FEBRUARY 2006

FILE NO/S: CIV 1279 of 1991

BETWEEN: RENOVATION & FINANCE CO PTY LTD
Plaintiff
AND
KOTT GUNNING (A FIRM)
Defendant

FILE NO/S :CIV 1394 of 1991

BETWEEN :JOHN STUART GOLDTHORPE
JOAN ELVA GOLDTHORPE
Plaintiffs
AND
KOTT GUNNING (A FIRM)
Defendant

Catchwords:

Practice and procedure - Power to add a third plaintiff - Relationship between power to add parties and power to join parties - Whether leave to add party should be granted where action is time barred - Whether leave to add party should be allowed where there is no application to amend writ

Practice and procedure - Application to strike out writ - Whether indorsement of writ discloses a cause of action

Practice and procedure - Consolidated statement of claim - Whether causes of action in statement of claim are outside the scope of the indorsements of writ

Legislation:

Credit Act 1984 (WA), s 159, s 160

Limitations Act 1935 (WA)

Supreme Court Rules (WA)

Result:

Application to join a third plaintiff dismissed
Application to strike out writ of summons in CIV 1394 of 1991 dismissed
Application for order that proposed consolidated statement of claim stand as the statement of claim in the consolidated action is dismissed

Category: B

Representation:

CIV 1279 of 1991

Counsel:

Plaintiff: Mr I A Viner QC
Defendant: Mr G M Abbott

Solicitors:

Plaintiff: Bruce Havilah & Associates
Defendant: Sparke Helmore

CIV 1394 of 1991

Counsel:

Plaintiffs: Mr I A Viner QC
Defendant: Mr G M Abbott

Solicitors:

Plaintiffs: Bruce Havilah & Associates
Defendant: Sparke Helmore

Case(s) referred to in judgment(s):

ABB Service Pty Ltd (formerly known as ABB Engineering Construction Pty Ltd) v Hetherington & Anor [2001] WASCA 235
Acclaim Holdings Pty Ltd v Vlado Pty Ltd (1989) 1 WAR 128
Bainbridge & Ors v Lawton & Ors [2002] WASC 293
Brandsma & Crockett Pty Ltd & Anor v Heindal Pty Ltd & Ors [2002] WASCA 96
Cameron v McBain [1948] VLR 245
Stone James v Pioneer Concrete (WA) Pty Ltd [1985] WAR 233
Tristram v Hyundai Automotive Distributors Australia Pty Ltd & Anor [2005] WASCA 168
Wardley Australia Ltd v Western Australia (1992) 175 CLR 514

Case(s) also cited:

Jaensch v Coffey (1984) 155 CLR 549
Tame v New South Wales (2002) 211 CLR 317

JENKINS J: This judgment determines applications by the plaintiffs for leave to file a consolidated statement of claim and to join a third plaintiff, Narga Pty Ltd ("Narga"). It also determines an application by the defendant to strike out the plaintiffs' writ of summons in the original action CIV 1394 of 1991.
The original actions which have now been consolidated and these applications have regrettably long and convoluted histories. It is necessary for me to summarise them before I deal with the substance of the applications before me.
On 25 February 1991 the writ of summons in action CIV 1279 of 1991 ("the RFC action") was issued. Hilmar Pty Ltd ("Hilmar") and Renovation and Finance Co Pty Ltd ("RFC") were, in this order, named as co‑plaintiffs and Kott Gunning (a firm) was named as the defendant. The indorsement on the writ stated:
"The plaintiffs and each of them claim against the defendant damages for breach of contract or alternatively for negligence by reason of the Defendant's failure in March 1985 and thereafter whilst acting as the Plaintiffs solicitors to advise the Plaintiffs accurately in relation to their obligations under the Credit Act 1984 and by drafting a document styled 'Acknowledgment of Debt' for use by the second named Plaintiff in the course of its business as a credit provider which document did not comply with the requirements of the said Act by reason of which debtors are not liable to pay credit charges and by further drafting a document styled 'Loan Contract' in or about 1986 for use by the second named Plaintiff which document also did not fully comply with the requirements of the said Act by reason of which debtors are not liable to pay credit charges.
AND THE PLAINTIFF claims
(i)damages.
(ii)interest on such damages at the rate of 14% per annum (or at such other rate as this Honourable Court see fit) until judgment pursuant to s.32 of the Supreme Court Act."
On 12 March 1991 the writ of summons in action CIV 1394 of 1991 ("the Goldthorpe action") was issued. Mr John Stuart Goldthorpe and his wife, Mrs Joan Elva Goldthorpe, were named as co‑plaintiffs and Kott Gunning (a firm) was named as the defendant. The indorsement on the writ stated:
"The plaintiffs and each of them claim against the defendant damages for negligence by reason of the Defendant's failure in March 1985 and thereafter whilst acting as the solicitors for Renovation & Finance Co Pty Ltd (in respect of which, the Plaintiffs are both directors thereof) to advise Renovation & Finance Co Pty Ltd accurately in relation to its obligations under the Credit act 1984 and by drafting a document styled 'Acknowledgment of Debt' for use by Renovation & Finance Co Pty Ltd in the course of its business as a credit provider which document did not comply with the requirements of the said Act by reason of which an offence may have been committed and by further drafting a document styled 'Loan Contract' in or about 1986 for use by Renovation & Finance Co Pty Ltd which document also did not fully comply with the requirements of the said Act by reason of which an offence may have been committed. By reason of s.160 of the said Act the Plaintiffs and each of them are liable to be proceeded against.
AND THE PLAINTIFF claims
(i)damages.
(ii)interest on such damages at the rate of 14% per annum (or at such other rate as this Honourable Court see fit) until judgment pursuant to s.32 of the Supreme Court Act."
The defendant filed appearances in both actions. Neither action was entered for trial in the standard time of nine months provided for by Supreme Court Rules ("SCR") O 29 r 4. A Registrar extended that time on numerous occasions.
In March 2002 the plaintiffs in both actions changed solicitors, both being represented, as before, by the same firm. At the same time the plaintiffs filed notices of intention to proceed in both actions.
In July 2002 a hearing was held before a Registrar at which Hilmar and RFC submitted that Narga should be a plaintiff to the RFC action. The learned Registrar extended the standard time in that action on condition that the plaintiffs applied to substitute Narga for Hilmar and applied for consolidation of it with the Goldthorpe action by 15 August 2002.
On the same date a similar hearing was held in the Goldthorpe action at which the learned Registrar ordered that the standard time be further extended in that matter on condition that the plaintiff apply to consolidate the action with the RFC action by 15 August 2002.
On 15 August 2002 the plaintiffs in the RFC action filed a chamber summons to substitute Narga as the first‑named plaintiff in lieu of Hilmar, to consolidate the two actions and for directions related to the consolidation.
On the same date the plaintiffs in the Goldthorpe action filed a chamber summons to consolidate the two actions and for directions related to the consolidation.
In support of these applications the plaintiffs in both actions filed an affidavit of Mr Goldthorpe in which he deposed that:
1.Hilmar was deregistered on 16 January 1990 after it sold its interests in the businesses known as Celluform Distributors of WA, Alutile Distributors of WA and Decra Distributors and Renovations to Narga;
2.The writs in these two actions were issued without consultation with him or Mrs Goldthorpe who have at all times had control of Narga, Hilmar and RFC;
3.The error in naming Hilmar instead of Narga as a party was an oversight on the part of the solicitors who drafted the writ; and
4.There is no prejudice to the defendant as it has, at all times, been familiar with all aspects of the relevant business structure.
Annexed to the affidavit is a letter dated 6 April 1995 from the plaintiffs' then solicitor to the defendant's solicitor in which the issue of the wrong plaintiff having been named in the RFC action is raised. In summary it says that an application to add Narga will be deferred in order to save costs because of the defendant's agreement not to take any point concerning the expiration of a limitation period "during the course of our negotiations".
On 22 August 2002 the parties attended before an Acting Master and believed that the Acting Master ordered consolidation by consent of the RFC action and the Goldthorpe action and an adjournment of the application for substitution of Hilmar with Narga. However, no notation of the order for consolidation was made on the file or the chamber summons.
On 22 November 2002 the plaintiff served on the defendant, but did not file, a minute of proposed consolidated statement of claim. This minute assumed that the actions had been consolidated and that Narga had been substituted for Hilmar.
The applications dated 15 August 2002 were adjourned on a number of occasions. On 20 August 2003 the plaintiffs filed an affidavit sworn by Mr Goldthorpe in support of the application to substitute Narga for Hilmar. Mr Goldthorpe deposed that it was always his intention to claim as Narga and not Hilmar and that he believed that the error is so obvious that it could only have been "carelessness, an oversight or simple mistake" on behalf of his then solicitors. He deposed that the limitation period for Narga to commence proceedings was "still valid" when he first raised the issue with his then solicitors.
On 18 December 2003 the defendants filed a chamber summons, purportedly in the consolidated action, seeking orders that Hilmar's action be struck out.
On 23 January 2004 Acting Master Dixon dismissed the application to substitute Narga for Hilmar, ordered that the action by Hilmar be struck out and that Hilmar be removed as a party to the RFC action. His reasons were read into the transcript but there is no transcript on the court file. At a hearing before Master Sanderson on 2 November 2004, senior counsel for the plaintiffs summarised Acting Master Dixon's reasons as being that Narga could not be substituted for a party which was not in existence at the time of commencement of proceedings.
On 18 August 2004 the remaining plaintiff in the RFC action filed a chamber summons seeking orders for consolidation, directions in respect to consolidation and orders that Narga be joined as a third plaintiff to the consolidated action.
On 2 November 2004 Master Sanderson ordered that the two actions be consolidated and otherwise adjourned sine die the summonses dated 15 August 2002. As to the chamber summons dated 18 August 2004, he dismissed the paragraph seeking similar orders to those sought in the chamber summonses of 15 August 2002 and otherwise adjourned it sine die.
On 8 June 2005 the plaintiffs filed a minute of proposed consolidated statement of claim. Whilst it referred to Narga it did not seek relief on its behalf.
On 7 September 2005 the plaintiffs in the consolidated action filed a chamber summons for directions on the consolidation of the actions, for orders that the minute of proposed consolidated statement of claim filed 8 June 2005 stand as a statement of claim in the consolidated action and that upon an order of the court to join Narga as a plaintiff to the consolidated action the plaintiffs have leave to file and serve an amended consolidated statement of claim within 28 days. Further directions were sought. On 14 September 2005 the plaintiffs filed an amended minute of proposed consolidated statement of claim ("the proposed consolidated statement of claim") and it is this proposed consolidated statement of claim that counsel referred to at the hearing before me even though it is not the express subject of an application. There is little difference between it and the minute of 8 June 2005. The defendant did not object to the plaintiffs' reliance on the 14 September minute. Therefore I will assume that the plaintiffs seek to have the September minute stand as the consolidated statement of claim.
On 16 November 2005 the defendant filed a chamber summons in the Goldthorpe action seeking orders that the plaintiffs' writ be struck out on the basis that it discloses no cause of action, an extension of time within which to bring the application and related orders.
On 28 November 2005 the consolidated action came before me for hearing of the plaintiffs' outstanding applications on the chamber summonses dated 15 August 2002, 18 August 2004 and 7 September 2005. The defendant's chamber summons dated 16 November 2005 was not listed for hearing before me. The plaintiffs requested an adjournment so they could deal with the late delivery of the defendant's written outline of submissions. The defendant opposed the adjournment. I granted the adjournment, one reason for the adjournment being so that all outstanding applications could be dealt with at the one hearing.
On 21 December 2005 the matter was re‑listed before me and I heard submissions in respect to the following applications by the plaintiffs:
1.For the minute of proposed consolidated statement of claim to stand as the statement of claim in the consolidated action (par 2, chamber summons 7 September 2005); and
2.That Narga be joined as a third plaintiff in the consolidated action (par 5, chamber summons 18 August 2004).
I also heard submissions in regard to the defendant's application to strike out the writ of summons in the Goldthorpe action (chamber summons, 16 November 2005).
That leaves outstanding the directions required upon consolidation. The parties agreed that these will be substantially resolved upon my determination of the above three applications.
The defendant submits that it is not clear which of the plaintiffs is applying to join Narga as a third plaintiff to the consolidated action. The chamber summons of 18 August 2004 was filed on behalf of RFC and Narga in the RFC action. Now that that action has been consolidated with the Goldthorpes' action, I regard the application as having been made by RFC and Narga to join Narga as a third plaintiff in the consolidated action. It is clear that this application is supported by the Goldthorpes.
It is appropriate that I determine these applications in light of the plaintiffs' claims and the material facts alleged by them in the proposed consolidated statement of claim. The plaintiffs propose to plead that Mr and Mrs Goldthorpe carried on business as home renovators by several business names and several companies. The defendant provided legal advice to the plaintiffs in respect to the conduct of the businesses and the companies. Part of the Goldthorpes' business was the operation of a finance company, RFC, which lent money to customers for building and renovation work carried out by the Goldthorpes' companies including Hilmar and Narga trading under various business names.
It is alleged that negligent advice was given in 1985 and 1986 by the defendant concerning compliance by RFC, a credit provider, with the requirements of the Credit Act 1984 (WA). It is alleged that this advice was given to the Goldthorpes and RFC.
In about October 1988 Narga acquired the business activities of Hilmar, which was affected with the legal advice and documentation prepared by the defendant. Narga was carrying on those business activities when action was taken against RFC and Narga in July 1994 for breach of the Credit Act by RFC and Narga.
As the alleged breaches were by Narga and not Hilmar, the plaintiffs submit that it was a mistake to name Hilmar instead of Narga in the writ of summons.
The plaintiffs say that in the Credit Tribunal the defendant admitted that RFC and Narga had relied upon the defendant's advice.
It is alleged in the proposed consolidated statement of claim that RFC, Narga and the Goldthorpes, as shareholders, employees and trust beneficiaries of RFC and Narga, suffered considerable loss as a result of the defendant's negligent advice which caused the breaches of the Credit Act and resulted in actions being taken against RFC and Narga under the Credit Act.
The plaintiffs plead that the defendant owed a duty of care to RFC, the Goldthorpes and associated entities. RFC's claim is based on the breach of the defendant's duty of care as solicitors in respect of advice given to it and the Goldthorpes in relation to compliance with the Credit Act. RFC claims damages for this breach of duty.
The claim by the Goldthorpes is based on the duty of care owed to them, RFC and associated entities and the breach of that duty, the consequential economic loss they have personally suffered by reason of the breaches of the Credit Act caused to RFC by the negligent advice of the defendant, the economic loss the Goldthorpes have personally suffered by reason of the breaches of the Credit Act caused to Narga by the negligent advice of the defendant and the Goldthorpes' physical and mental injury they each suffered as a result of the defendant's negligence.
As is clear from my summary of the chronology Narga was not a party to the two separate actions, is not a party to the consolidated action and was not mentioned in the writs of summons in the two separate actions. However, Narga is mentioned in the proposed consolidated statement of claim to support the Goldthorpes' claim for damages for economic loss they have suffered by reason of the breaches of the Credit Act caused to Narga by the negligent advice of the defendant.
If Narga is joined as a third plaintiff, the plaintiffs propose amending the proposed consolidated statement of claim by adding Narga as the third plaintiff and amending the title of the consolidated action accordingly, adding a par 1A to allege the incorporation of Narga at all material times and amending the paragraph containing the claim for damages by adding Narga to it. No application has been made to amend a writ.

Application to join Narga as third plaintiff

The plaintiffs rely upon SCR O 18 r 4 as the power to enable Narga to be joined as a third plaintiff to the consolidated action. SCR O 18 r 4(1) states:
" … 2 or more persons may be joined together in one action as plaintiffs … with the leave of the court or where –
(a)if separate actions were brought by or against each of them, as the case may be, some common question of law or fact would arise in all actions; and
(b)all rights to relief claimed in the action (whether they are joint, several or alternative) are in respect of or arise out of the same transaction or series of transactions."
The defendant submits that this rule permits the joinder of parties in an action at its commencement and does not empower me to add a party 15 years after the issuing of a writ. It submits that the plaintiffs must rely upon SCR O 18 r 6(2)(b). SCR O 18 r 6(2)(b) states:
"At any stage of the proceedings in any cause or matter the Court may on such terms as it thinks just and either of its own motion or on application –
…
(b)order that any person who ought to have been joined as a party or whose presence before the Court is necessary to ensure that all matters in dispute in the cause or matter may be effectually and completely determined and adjudicated upon, be added as a party,
but no person shall be added as a plaintiff without his consent signified in writing or in such other manner as may be authorised."
The reason why the defendant is insistent upon the identification of the correct rule is that SCR O 18 r 8(4) makes it clear that where by an order under r 6 a person is added as a party, they do not become a party until the relevant writ has been amended in relation to him under SCR O 18 r 8(1) and he is served with the amended writ. SCR O 18 r 8(1) requires the relevant writ to be amended and indorsed with a reference to the order in pursuance of which the amendment is made and the date on which the amendment is made.

Thus, the defendant says that Narga's addition as a plaintiff would only commence from the date of my order. The commencement of Narga's claim the defendant submits would be clearly out of time, as the limitation would have expired in or about 1991.
Further, the defendant submits that by relying upon SCR O 18 r 4 the plaintiffs are attempting to avoid having to amend the RFC writ, attempting to avoid comparison of Narga's claim with the writ but rather attempting to rely upon its connection with the proposed consolidated statement of claim and are attempting to preserve an argument that Narga's action was commenced in time because the RFC writ of summons was issued within time.
In my opinion any power to add Narga as a third plaintiff some 15 years after the issue of the separate writs is contained in SCR O 18 r 6(2)(b) and not SCR O 18 r 4. This view is based on the language used in those two rules. It is also based on the existence of the express provision in SCR O 18 r 8 setting out the effect of adding a party under r 6 and the absence of such provision for the effect of joining a party under r 4. This is consistent with there not being the need for such a provision where the joinder occurs at the commencement of an action. Finally, I have taken into account the fact that joinder under SCR O 18 r 4(1) based on common questions of law or fact, the same transaction or a series of transactions does not require the leave of the court. It would be an odd result if a party did not require the leave of the court to add a party 15 years after the commencement of proceedings.
The plaintiffs also relied upon SCR O 83 r 1, in some way, to support the application to join Narga as a third plaintiff. In my opinion, SCR O 83 r 1 is irrelevant. Narga's proposed claim is not pending and so cannot be consolidated with the pending claims pursuant to SCR O 83 r 1. Whether the application to add Narga is construed as an application to add it to the RFC action or the consolidated action, it must be determined on the basis of SCR O 18 r 6(2)(b).
As to whether the requirements of SCR O 18 r 6(2) have been met, at par 21 of their written submissions filed in December 2005 the plaintiffs concede:
"The materiality of Narga and its relevance to the subject matter of the Indorsements in the actions by RFC and the Goldthorpes do not require the joinder of Narga as a party to the consolidated action as, in those actions, Narga is only relevant to the damages claimed by RFC and the Goldthorpes to have flowed from the breach of duty owed to each Plaintiff by the Defendant."
By the effect of this submission the plaintiffs acknowledged that the requirements of SCR O 18 r 6(2) have not been met. The submissions go on to say that it is Narga's claim for relief, in its own right, which requires its joinder because the material facts upon which it relies to establish a cause of action against the defendant are those that are pleaded in the proposed consolidated statement of claim. As the plaintiffs acknowledge in their submissions this may be a justification for joinder under SCR O 18 r 4. It does not justify adding a party to correct non‑joinder under SCR O 18 r 6(2).
The defendant also submits that in the exercise of my discretion I ought to have regard to the limitation issue. Pursuant to the Limitation Act 1935 (WA) Narga had six years within which to commence an action against the defendant after its cause of action arose.
It is only in the clearest of cases that limitation defences will be determined on an interlocutory basis: Wardley Australia Ltd v Western Australia (1992) 175 CLR 514 at 533. On the other hand, as Wheeler J noted in Bainbridge & Ors v Lawton & Ors [2002] WASC 293 at [9]:
" … it is correct to say that it is a rule of practice not to permit a person to be joined as plaintiff if the limitation period has clearly expired in relation to that person. To do so would be unnecessarily to complicate proceedings by adding a party whose claim could not succeed. As the House of Lords held in relation to the addition of defendants, the addition of a party against whom an action is clearly statute barred, would serve 'no useful purpose': Ketteman v Hansel."
Murray J expressed a similar view in Brandsma & Crockett Pty Ltd & Anor v Heindal Pty Ltd & Ors [2002] WASCA 96 at [5]. In my opinion, it is clear as it could be that Narga's cause of action against the defendant is statute barred. Taking the view of the alleged facts most favourable to Narga, the defendant gave negligent advice to the Goldthorpes and Hilmar and RFC about the requirements of the Credit Act in 1985 and 1986 which was relied upon by those entities up to July 1990.
In 1988 Narga was incorporated and purchased Hilmar's business. It continued to rely upon the defendant's advice to Hilmar to the defendant's knowledge until 16 July 1990. The contracts entered into in reliance upon the negligent advice in fact contravened the Credit Act. It is not clear to me exactly what loss Narga suffered as a consequence but whatever it was it is alleged that as a consequence Narga ceased trading on 30 June 1996. It is further pleaded that all legal proceedings resulting in losses to Narga were concluded by the end of 1997. Thus, Narga's action against the defendant was time barred prior to this application being made on 18 August 2004 and certainly prior to the date of any order I could make.
Narga submits that the limitation period has not expired because it suffers a continuing loss. I do not accept this submission. There is no material before me either in the statement of claim or the affidavit material to suggest that Narga has sustained loss in the last six years attributable to the defendants alleged wrong some 20 years ago.
The plaintiffs also rely upon Bainbridge (supra) in which Wheeler J allowed parties to be added as plaintiffs to an action even though there was "an arguable limitation issue" in relation to some of the plaintiffs. However, as I have noted, it was Wheeler J in Bainbridge (supra) who stated the general principle that it is a rule of practice not to permit a person to be joined as plaintiff if the limitation period has clearly expired in relation to that person. Secondly, the defendants in that case did not ask her Honour to determine in relation to any particular plaintiff whether the limitation period had so clearly expired that it would be futile to join the proposed plaintiff. It seems that the defendant in that case acknowledged that the limitation issue was arguable but not clear. The defendant, quite rightly in my view, makes no such concession in this case.
However, my final view is that I ought not to decide this application on the basis of the limitation issue. If Narga was added as a third plaintiff pursuant to SCR O 18 r 6(2) it would have to be affected by amendment of the RFC writ pursuant to SCR O 18 r 8. The plaintiffs were told both by Master Sanderson and myself that if they propose to seek to have the writ amended they must bring in a minute of proposed amendment. This was so that the proposal could be considered along with the pleading in the proposed consolidated statement of claim. The plaintiffs have not filed any such minute. Even if the requirements of SCR O 18 r 6(2) had been met, which they have not, I would not consider adding a party 15 years after the commencement of the action when the applicants have declined to file a minute of the amendment required to the relevant writ or to apply for an amendment to the writ.
For these reasons I would dismiss the application to join or add Narga as a third plaintiff to the consolidated action.

Application to Strike out the Goldthorpe Writ

Logically, the next issue to determine is the defendant's application to strike out the Goldthorpe writ of summons. If it is successful it would be clear that the proposed consolidated statement of claim could not stand.
The defendant submits that the only loss asserted in the indorsement to the Goldthorpe writ of summons is the damage that the plaintiffs might incur as a result of being liable to be prosecuted under the Credit Act, s 160, as the indorsement does not indicate whether the plaintiffs were either prosecuted or became liable to any penalty as a result of any such prosecution. The defendant has adduced evidence to the effect that the Goldthorpes have not been prosecuted for breaches of the Credit Act. Thus, the defendant says that the writ of summons and its indorsement does not disclose a reasonable cause of action against the defendant because the plaintiffs have not suffered any actual loss or damage as a result of the defendant's breach of its tortious duty. The defendant says that the entitlement to damages with respect to a cause of action in tort does not arise at a point where there is a potentiality of loss and damage, but only when actual loss and damage occurs. The defendant submits that as the indorsement only contains an allegation of contingent loss and damage, it does not allege that any actual loss and damage has occurred. Further, the three year limitation period for prosecutions under the Credit Act has long expired and there is no evidence to suggest that the Attorney General may extend the period within which a prosecution may be brought pursuant to his discretion in the Credit Act, s 159. Thus, the defendant says that no cause of action is disclosed by the Goldthorpe writ and it is not now capable of amendment to introduce a cause of action.
The defendant relies upon the decision of the majority of the High Court in Wardley Australia Ltd v Western Australia (supra) at 532 where their Honours said:
"If, contrary to the view which we have just expressed, the English decisions properly understood support the proposition that where, as a result of the defendant's negligent misrepresentation, the plaintiff enters into a contract which exposes him or her to a contingent loss or liability, the plaintiff first suffers loss or damage on entry into the contract, we do not agree with them. In our opinion, in such a case, the plaintiff sustains no actual damage until the contingency is fulfilled and the loss becomes actual; until that happens the loss is prospective and may never be incurred."
Further, at 533 their Honours stated:
"It is unjust and unreasonable to expect the plaintiff to commence proceedings before the contingency is fulfilled. If an action is commenced before that date, it will fail if the events so transpire that it becomes clear that no loss is, or will be, incurred. Moreover, the plaintiff will run the risk that damages will be estimated on a contingency basis, in which event the compensation awarded may not fully compensate the plaintiff for the loss ultimately suffered. These practical consequences which would follow from an adoption of the view for which the appellants contend outweigh the strength of the argument that the principle applicable to the cases in which the plaintiff acquires property (or a chose in action) should be extended to cases where an agreement subjects the plaintiff to a contingent loss. In such cases, it is fair and sensible to say that the plaintiff does not incur loss until the contingency is fulfilled."
The merit of the defendant's application relies upon a view of the indorsement to the Goldthorpe writ that it is limited to a claim for damages arising out of the plaintiffs being liable to be prosecuted under the Credit Act, s 160.
The defendant seeks to strike out the writ of summons pursuant to SCR O 20 r 19(1)(a) and the inherent jurisdiction of the court. SCR O 6 r 1(2) is the only power to set aside a writ and such an application must be made before an appearance is filed. The defendant filed an appearance over 10 years before it made this application.
SCR O 20 r 19 permits a court to strike out pleadings or the indorsement of any writ at any stage of proceedings. A writ is not a pleading: Acclaim Holdings Pty Ltd v Vlado Pty Ltd (1989) 1 WAR 128 at 134, 135. Thus it would seem that the only power I could exercise is that contained in SCR O 20 r 19 to strike out the indorsement of the writ.
The power to strike out an indorsement pursuant to SCR O 20 r 19 is now conditional upon the application being made within 21 days of the service of the writ. That time limit did not exist at the time the Goldthorpe writ was served on the defendant. Nevertheless there has been gross delay on the part of the defendant in making this application. If there is any issue of substance in the defendant's application and it had been made in a timely fashion the Goldthorpes could have applied to amend their indorsement or commence fresh proceedings. By entering an unconditional appearance and waiting 14 years to make this application the defendant has robbed the Goldthorpes of this fall back position. In my opinion this places a heavy onus on the defendant to satisfy me that it is clear beyond doubt that the indorsement does not disclose a reasonable cause of action.
In ABB Service Pty Ltd (formerly known asABB Engineering Construction Pty Ltd) v Hetherington & Anor [2001] WASCA 235 McLure J, Wheeler J agreeing, set out the three functions of an indorsement. Her Honour said:
"This application raises for consideration the information which must be included in an indorsement to satisfy the requirements of O 6 r 1 and O 20 r 19 of the SCR. The minimum requirement has to be assessed in the context of the functions of an indorsement of claim in a writ. It has three functions two of which are related. Firstly, it marks out the perimeter within which a plaintiff may frame the statement of claim. Pursuant to O 20 r 2(2) of the SCR:
'A statement of claim must not contain any allegation or claim in respect of a cause of action unless that cause of action is mentioned in the writ or arises from facts which are the same as, or include or form part of, the facts giving rise to a cause of action so mentioned.'
If a statement of claim or a proposed amendment exceeds the indorsement, the statement of claim should be struck out or the amendment refused unless the indorsement is amended: Stone James v Pioneer Concrete (WA) Pty Ltd [1985] WAR 233 at 238.
Secondly, an indorsement in a writ has important limitation ramifications. The Limitation Act 1935 is concerned with the date of issue of the writ. Provided a writ is not a nullity, amendments can be made to a defective indorsement on the writ if the terms of the writ are wide enough to encompass the proposed amendments as they particularise, clarify or expand a cause of action already instituted: Morgan v Banning (1999) 20 WAR 474; O 21 r 5(5) SCR. An open ended or otherwise defective indorsement may be relied on to the advantage of a plaintiff who seeks to amend its writ and then its statement of claim after the expiry of the limitation provided.
Thirdly, an indorsement also provides notice to the defendant of the nature of the plaintiff's claim and the relief sought in the action. However, it is not intended to be in the nature of a pleading but only a summary of the nature of the claim: Renowden v McMullin (1970) 123 CLR 584 at 595.
The nature and extent of the information necessary to meet the requirement that the indorsement contain a concise statement of the nature of the claim made and the relief or remedy required does not depend upon a rigid formula. Relevant information can be conveyed in different ways and adequacy is to be determined from the indorsement as a whole."
It is also pertinent to remember that an indorsement should not be read narrowly: Stone James v Pioneer Concrete (WA) Pty Ltd [1985] WAR 233 at 239 per Burt CJ.
In my opinion there is no cause to read the indorsement of the Goldthorpe writ as being limited to a claim for damages arising out of the potential for the Goldthorpes to be prosecuted for a breach of the Credit Act, s 160. The indorsement is not well drafted. However, the interpretation that the defendant seeks to put on it is the narrowest interpretation available. I am not prepared to put such a narrow interpretation on the indorsement. In my opinion it is reasonably able to be read as alleging that the Goldthorpes' claim against the defendant is in negligence and for damages by reason of the defendant's failure in March 1985 and thereafter to advise RFC accurately in relation to its obligations under the Credit Act 1984 and by drafting an "acknowledgement of debt" and a "loan contract" for use by RFC in the course of its business which documents did not comply with the Credit Act. Whilst the indorsement, in the same sentence continues on to refer to the risk of prosecution of the plaintiffs under the Credit Act, in my opinion it is reading the indorsement too narrowly to say that it limits the cause of action alleged therein to damage arising out of such potential prosecution. For these reasons I would dismiss the defendant's application to strike out the writ or the indorsement of it.

Objections to the Proposed Consolidated Statement of Claim

The final application for my determination is the plaintiffs' application for the proposed consolidated statement of claim to stand as the statement of claim in the consolidated action.
The defendant has an initial concern that if a consolidated statement of claim is filed it will lose the ability to have Limitation Act issues and issues relating to whether the consolidated statement of claim is within the scope of the individual indorsements of the writs in the unconsolidated actions determined by reference to those original indorsements. The plaintiffs raised this issue before Master Sanderson in November 2004. The Master indicated that despite consolidation, any statement of claim would have to fall within the indorsements of one or other of the writs. He said that he could see no reason why the usual rules would not apply. He said that any issues with respect to SCR O 21 r 5 could be met by ensuring that any order for amendment of the writ would take effect from the date upon which any new cause of action was to be pleaded.
In my opinion this issue was one to raise in respect to whether an order for consolidation ought to be made. Now that the actions have been consolidated they are to proceed as one action: Cameron v McBain [1948] VLR 245 at 246. As no statement of claim had been filed at the date of consolidation, prima facie, after consolidation one statement of claim should be filed consistent with the status of the consolidated action. Further, a single set of pleadings should be more efficient, reduce costs and assist the court and the parties to identify the issues between the parties.
As Master Sanderson indicated to the parties, the defendant may still rely upon any limitation defences it may have arising from the unconsolidated writs and may also require the pleading by each plaintiff in the consolidated statement of claim to be within the scope of the relevant writ issued by each plaintiff in the unconsolidated action.
Consequently I would not dismiss the plaintiffs' application simply on the basis that they seek to file a single consolidated statement of claim.
The defendant further submits that the pleadings in the proposed consolidated statement of claim are not within the scope of the indorsements on the writs issued in the unconsolidated actions and consequently the court should not order that the proposed consolidated statement of claim stand as the statement of claim in the consolidated action.
SCR O 20 r 2(2) and (3) states:
"(2)A Statement of Claim must not contain any allegation or claim in respect of a cause of action unless that cause of action is mentioned in the writ or arises from facts which are the same as, or include or form part of, facts giving rise to a cause of action so mentioned.
(3)Subject to paragraph (2) a plaintiff may in his Statement of Claim alter, modify or extend any claim made by him in the indorsement of the writ without amending the indorsement."

In Tristram v Hyundai Automotive Distributors Australia Pty Ltd & Anor [2005] WASCA 168 at [21] and [22] McLure JA said (Wheeler JA agreeing):
"The Commissioner answered the question in issue by construing the terms of the indorsement to determine whether the statutory causes of action were expressly or impliedly included in it. That approach is not consistent with O 20 r 2(2) of the Rules. It is apparent that, provided there is sufficient factual overlap with the cause of action mentioned in the writ, a statement of claim can plead a cause of action that is not mentioned in the indorsement. That being the case, it is not determinative that the indorsement is drafted in terms that confine the facts to a specific category or head of claim, in this case negligence, or that the relevant statute is not expressly identified. What is a sufficient factual overlap is a question of degree.
To assess whether there is a sufficient factual overlap with the facts giving rise to the negligence claim pleaded in the indorsement, regard must be had to the material facts giving rise to the statutory causes of action pleaded in the statement of claim. However, it must be remembered that O 6 r 1(1) of the Rules does not require a plaintiff to plead in the indorsement all of the material facts giving rise to a cause of action: ABB No 2 at [25] - [26]."
If the proposed consolidated statement of claim fails to meet the requirements of SCR O 20 r 2(2) then I should not allow it to stand as the consolidated statement of claim. As detailed earlier the plaintiff has not brought in a minute of proposed amendments to either writ in the unconsolidated actions. Thus, if I determine that a proposed pleading is beyond the scope of the writ, I do not intend to go on and consider whether the proposed consolidated statement of claim should be allowed to stand on condition that the writ be amended. It would not be possible for me to consider that matter without seeing a proposed amendment and considering the issues that arise when leave is sought to make an amendment to a writ to raise a cause of action that is statute barred.
The defendant submits that the causes of action in the proposed consolidated statement of claim do not have a factual overlap with the causes of action mentioned in the indorsements of claim in the RFC or Goldthorpe actions. The first issue raised by the defendant is that the proposed statement of claim pleads meetings that occurred and advice that was given up to August 1990 about various matters. The defendant submits that the indorsements only raise causes of action arising in March 1985 and in or about 1986. I disagree. Both indorsements refer to the defendant's failure to advise "in March 1985 and thereafter". In my view this phrase is broad enough to encompass dates from 1985 through to 1990.
The second issue raised by the defendant is that the proposed consolidated statement of claim alleges that the defendant gave advice to the Goldthorpes and their associated entities, being the Goldthorpe group of firms and the Goldthorpe group of companies. It is said that these pleadings are outside the indorsements which are restricted to advice given to RFC and only then specifically related to the "acknowledgement of debt" and "loan contract" documents.
In respect to this latter issue the plaintiffs submit that the indorsements allege that the defendant's negligent advice the subject of the actions included the advice given in 1985 and 1986 in respect to compliance with the Credit Act and the terms of the acknowledgement of debt document and a loan contract. They say the perimeter of the indorsements clearly includes advice given in respect to RFC's compliance with the Credit Act and is not limited to advice in respect to the two specified documents. I agree. It is reading the indorsements too narrowly to limit them in the manner contended for by the defendant.
As to the first point and the indorsement of the writ in the RFC action, RFC can only claim for losses occasioned to it by the negligent acts and omissions of the defendant in relation to advice given to it either directly or via the Goldthorpes about its obligations under the Credit Act, the "acknowledgment of debt" for use by RFC and the "loan contract" for use by RFC.
Whereas, in accordance with the relevant indorsement, the Goldthorpes' cause of action is in respect to loss caused to them by the defendant's negligent advice to or in respect to RFC and its obligations under the Credit Act, the "acknowledgment of debt" for use by RFC and the "loan contract" for use by RFC.
Both indorsements allege that the defendant acted as RFC's solicitor. There is no direct plea in the proposed consolidated statement of claim that RFC retained the defendant as its solicitor. Instead the proposed consolidated statement of claim, in effect, alleges that the Goldthorpes retained the defendant to provide them with legal advice in relation to the business affairs of their associated entities, including RFC, knowing that such advice would be relied upon by RFC and the Goldthorpes in respect to their associated entities.
In my view there is a sufficient factual overlap between the indorsements which allege that the defendant acted as solicitors for RFC and the proposed consolidated statement of claim which alleges that advice was given to the Goldthorpes in respect to RFC and thereafter was used by RFC. I acknowledge that there is a distinction between those allegations but in my opinion the cause of action by RFC and the Goldthorpes as pleaded arises from the facts which include or form part of the same set of facts contained in the writs.
Further, it is appropriate for the proposed consolidated statement of claim plead that the defendant gave advice to the Goldthorpes and their associated entities as this is in part the factual background which supports the plaintiffs' plea that the defendant knew of the nature of RFC's business and the Goldthorpes' relationship to RFC and the "debtors" referred to in the RFC action.
However, in my opinion there is insufficient factual overlap between what is stated in the indorsements and what is pleaded in the proposed consolidated statement of claim regarding Narga and the Goldthorpes' business entities, other than RFC.
The proposed consolidated statement of claim pleads that the defendant owed a duty of care not only to RFC and the Goldthorpes but also to their associated entities ([21]). It further pleads that as a result of negligent advice given to the Goldthorpes which was used in other related businesses, including Narga ([37]) those businesses, including Narga, suffered loss ([39]) and as a consequence the Goldthorpes suffered loss.
As I have already stated, on the basis of what is contained in the indorsement of the writ in the Goldthorpe action, the Goldthorpes' cause of action is limited to loss relating to the defendant's advice concerning RFC's obligations under the Credit Act, "the acknowledgment of debt" for use by RFC and the "loan contract" for use by RFC. In my opinion it is outside the scope of the indorsement in the Goldthorpe action for the Goldthorpes to claim loss that derives not from these aforementioned matters but rather from advice that was given in respect to and used by other associated entities. This is what it seems to me that the statement of claim does.
In other words, the Goldthorpes' cause of action derives from the negligent advice given to and work done relating to RFC. It is not possible for the Goldthorpes to plead a cause of action that derives from negligent advice given to and work done in respect to other associated entities. Such a cause of action is not mentioned in the Goldthorpe writ nor does it otherwise meet the requirements of SCR O 20 r 2(2). This is not to say that it would be impossible for the Goldthorpes to claim damages resulting to them from the collapse of associated entities. However, in my opinion, such losses must be supported by a pleading which alleges that the losses flowed from the advice given in respect to RFC and not in respect to associated entities.
Further, there is no attempt in the proposed consolidated statement of claim to limit RFC's losses to those it actually suffered. Particulars of RFC's loss are pleaded as including loss of Narga's profit and vice versa. In fact, the proposed consolidated statement of claim includes RFC, the Goldthorpes and their associated entities in almost every paragraph alleging duty of care, breach of duty and loss. The filing of a single consolidated statement of claim does not relieve the plaintiffs of the obligation to separately plead the cases of each plaintiff. Whilst there is a common factual background to the causes of action of both plaintiffs, there are differences in their causes of action and loss which require separate treatment.
For these reasons I would not allow the proposed consolidated statement of claim to stand as the statement of claim in the consolidated action. The plaintiffs need to bring in a fresh minute in accordance with these reasons. Obviously in view of the age of this matter, that needs to be done in a timely fashion. I will hear the parties as to final orders.