Ross Ambrose Group Pty Ltd v Renkon Pty Ltd
[2002] TASSC 74
•26 September 2002
[2002] TASSC 74
CITATION:Ross Ambrose Group Pty Ltd v Renkon Pty Ltd & Ors [2002] TASSC 74
PARTIES: ROSS AMBROSE GROUP PTY LTD ACN 009 501 759
v
RENKON PTY LTD ACN 009 581 622
REES, Suzanne
SHIPTON, Peter John
PLUNKETT, Rodney
PLUNKETT, Susan Elaine
v
DOOLAN, Bruce Richard
ELLIS, Timothy
WELCH, Phillip Andrew
SMITH, David Anthony
BAILEY, Raymond Fred
TITLE OF COURT: SUPREME COURT OF TASMANIA
JURISDICTION: ORIGINAL
FILE NO/S: 422/1992
DELIVERED ON: 26 September 2002
DELIVERED AT: Hobart
HEARING DATES: 24 July 2002 and 23 September 2002
JUDGMENT OF: Master Holt
CATCHWORDS:
Procedure - Supreme Court procedure - Tasmania - Amendments - Statement of claim - Whether valid or merely irregular - Whether proposed amendment if allowed, would introduce a statute barred cause of action.
Renowden v McMullin (1970) 123 CLR 584; Weldon v Neal (1887) 19 QBD 394, considered.
Aust Dig Procedure [276]
REPRESENTATION:
Counsel:
First defendant: G L Sealy
Third party: K B Procter SC
Solicitors:
First defendant: Page Seager
Third party: Murdoch Clarke
Judgment Number: [2002] TASSC 74
Number of Paragraphs: 13
Serial No 74/2002
File No 422/1992
ROSS AMBROSE GROUP PTY LTD (ACN 009 501 759) v
RENKON PTY LTD (ACN 009 581 622) & ORS
REASONS FOR JUDGMENT MASTER HOLT
26 September 2002
The proceedings
By writ issued 20 November 1992 the plaintiff sued the first defendant for rent and interest pursuant to a lease dated 1 July 1989. The first defendant delivered a counterclaim to the plaintiff and the company, Deming No 80 Pty Ltd ("Deming"), in which the following was alleged. The plaintiff and Deming by an agreement made 30 June 1989 with the first defendant, authorised the first defendant to surrender the lease if within two years a restrictive covenant over the demised premises was not removed. The agreement stipulated that upon surrender the plaintiff and Deming would pay to the first defendant the sum of $1,000,000 less some adjustments. The covenant was still in place on 30 September 1992 on which date the first defendant issued a notice of surrender. The surrender was not accepted and the $1,000,000 was not paid. The first defendant sought to set off such part of the $1,000,000 as was necessary to extinguish the plaintiff's claim and counterclaimed the balance plus damages including damages in the nature of interest for the wrongful withholding of the $1,000,000. In their defence to the counterclaim the plaintiff and Deming claimed that the notice of surrender had to issue within a reasonable time of the expiration of the two year period for the removal of the covenant and that it had issued out of time. In late 1996, the first defendant obtained leave to join its solicitors as a third party. The third party notice was served and delivered with it were copies of the plaintiff's statement of claim; the first defendant's counterclaim; and the defence to the counterclaim. By the third party notice the first defendant said that it "claims to be entitled to a contribution and/or a complete indemnity or indemnity in such amount as may be found to be just and equitable … to the extent of the whole of any sum that the plaintiff may recover from the first defendant upon its claim". On about 9 January 1997 the first defendant delivered its statement of claim to the third party. In that statement of claim it is alleged that the solicitors negligently issued advice in May 1991 that the lease could not be surrendered and that was the reason for the failure to issue the notice of surrender in a timely fashion. Damages arising from the lost ability to surrender the lease were claimed.
The application
The third party notice claimed only "a contribution … or … indemnity". The statement of claim delivered pursuant to it claimed damages at large at common law. The first defendant has applied by application filed 30 November 1999 to amend the third party notice to bring it into conformity with the statement of claim.
The arguments
There was no suggestion that the third party notice is or if amended would be outside the scope of matters provided for in the rules authorising the issue of third party proceedings. The opposition to the amendment was based solely on an assertion that to allow it would offend the rule in Weldon v Neal (1887) 19 QBD 394. Counsel for the third party submitted:
(a)There being no suggestion that the third party had contracted to indemnify the first defendant the claim in the third party notice for a "contribution or indemnity" could only have been a claim under the Wrongs Act 1954. Contribution or indemnity is the relief afforded under the Wrongs Act as distinct from "damages" which is the relief afforded on a common law claim.
(b)There was no entitlement to deliver a statement of claim going outside the perimeter of the third party notice: Renowden v McMullin (1970) 123 CLR 584 at 595. The statement of claim asserts a common law claim for damages for negligence and this claim cannot be made under an originating proceeding in respect of only a statutory cause of action under the Wrongs Act. Hence, a valid claim for damages for negligence has not yet been made by the statement of claim or otherwise.
(c)The first defendant had suffered damage as a result of the alleged negligence of the third party by no later than the rejection of the notice of surrender.
(d)Under the Limitation Act 1974, s4(1), the claim for damages cannot be brought after the expiration of six years from the time when damage was first suffered. More than six years have passed since the rejection of the notice of surrender.
(e)The proposed amendment to the third party notice if made would speak from the date the third party notice issued and so deprive the third party of a limitation defence.
(f)An amendment having this effect, except perhaps in "very peculiar circumstances", is not permissible: Weldon v Neal (supra). There are no peculiar circumstances.
Counsel for the first defendant submitted:
(a)The damage was not suffered until 23 June 1998, being the date when this court ruled that the plaintiff and Deming were entitled to judgment against the first defendant on the counterclaim on the basis that the notice of surrender was ineffective having not issued within a reasonable time of the circumstances entitling its issue having arisen: Ross Ambrose Group Pty Ltd v Renkon Pty Ltd [1998] TASSC 72.
(b)Alternatively, the third party having delivered a defence to the statement of claim in February 1997 waived any irregularity in the statement of claim.
(c)The general rule in Weldon v Neal does not apply as the waiver is a sufficiently peculiar circumstance to justify departure.
(d)Alternatively, the terms of the third party notice are wide enough to include a common law claim for damages albeit that the relief claimed is limited to the amount the plaintiff might recover in its action.
Alternatively, even assuming that the cause of action set out in the statement of claim goes beyond the nature of the action specified in the third party notice:
(e)An indorsement of claim although determining the essential nature of the action "does not define nor necessarily form part of the definition of the issues for trial. That is done by the pleadings": Renowden v McMullin (supra) at 596.
(f)A statement of claim going beyond the perimeter of the originating process is merely irregular and not void.
(g)The statement of claim has not been struck out and so as things stand at the moment there is on foot a timely action by the first defendant against the third party for damages for negligence.
(h)As a new cause of action is not being introduced neither the Limitation Act nor the rule in Weldon v Neal is relevant.
(i)The first defendant has had ample opportunity to apply to have the statement of claim struck out as irregular for going outside the perimeter of the third party notice. It has not done so.
When did the cause of action accrue?
A cause of action in negligence is complete when actual damage is suffered as a result of the breach of the duty of care: Sutherland Shire Council v Heyman (1984-1985) 157 CLR 424 at 489 - 494. Damage which is prospective or contingent only is not enough to complete the cause of action: Wardley Australia Ltd v Western Australia (1992) 175 CLR 514 at 530 - 531. The submission by the first defendant that the damage was prospective or contingent only until June 1998 when the court ruled that the notice of surrender was ineffective is at odds with its counterclaim against the plaintiff and Deming, where damages in the nature of interest are claimed for the withholding of the $1,000,000 surrender payment. I assume, as there is no reason to do otherwise, that damage had been suffered by the first defendant by being kept out of the $1,000,000 and, accordingly I find that damage was first suffered by the time the notice of surrender was rejected in 1992. The first defendant's cause of action in negligence against the third party accrued more than six years ago.
Waiver
The question of whether or not any defect in the statement of claim was waived by the delivery of a defence and the taking of further steps in the proceeding, does not fall to be determined by me on this application. If the statement of claim is a nullity, the defect cannot be cured by waiver or otherwise: MacFoy v United Africa Co Ltd (1962) AC 152 at 160. If the pleading of the common law action in negligence is a nullity because the claim has not been indorsed on the third party notice, there is no common law claim and the limitation period having now expired the claim cannot be introduced. If, on the other hand, any defect in the statement of claim is a mere irregularity then until the statement of claim is struck out there is on foot a timely action and the third party's only ground of opposition to the application, namely, the limitation point, cannot succeed. Waiver would only have been relevant if I had before me an application to strike out the statement of claim. No such application has been made.
Should the first defendant have confined its statement of claim to the scope afforded by the content of the third party notice?
I accept the submission of counsel for the third party that as a claim commenced by a third party notice could only otherwise have been commenced by writ, the third party notice is the equivalent of a writ. In this case, the third party notice issued pursuant to the Rules of the Supreme Court 1965. Under O18 r58 the third party notice was required to "state the nature and grounds of the claim … and the nature and extent of any relief … claimed". Under O18 r59 the third party upon being served was entitled to enter an appearance and under O18 r60 a failure to do so resulted in a deemed admission of liability. Under the third party procedure pleadings could be ordered to be delivered in the same way they would have been required to be delivered by the rules had the proceeding been commenced by writ. Under O3 r7 a plaintiff issuing a writ was required to indorse it either with a statement of claim or, alternatively, a statement of the nature of the claim made and the relief or remedy sought. A third party notice only differed in that, in addition to stating the nature of the claim and specifying the relief, grounds also had to be stated. I apply the same principles that apply to the delivery of a statement of claim under an indorsement on a writ to a statement of claim delivered following the issue of a third party notice.
In Renowden v McMullin (supra), Barwick CJ and McTiernan J were in dissent in the result, but there was no disagreement from the other judges as to what they said applies to the statement of claim originally delivered following the service of a writ. At 595 they cited with approval what had been said by Dowse B in Moore v Alwill (1881) 8 LR Ir (C.L.) 245, namely:
"The statement of claim is the specific way of stating the claim he has endorsed on the writ."
At the same page Barwick CJ and McTiernan J said:
"… the indorsement marks out the perimeter or range of the area within which the plaintiff may express his claim in a formal fashion in his statement of claim …
The basic nature of the claim in respect of which the action has been commenced may not be changed, however much room there is under the rules for variation in the statement of facts, or the extent of the remedy or relief sought."
In this case, the first defendant could not have brought its claim against the third party merely by delivering a statement of claim. Firstly, there had to be a proceeding against the third party filed and served, whether that be by third party notice or writ. No reason was advanced as to why a claimant should have greater scope in delivering a statement of claim pursuant to a third notice than he would have had had he commenced his action by writ. Counsel for the first defendant advised that he had found no authority in support of the proposition that the scope for the statement of claim was wider under a third party notice than under a writ. I can think of no reason why there should be greater scope. Accordingly, I proceed on the basis that the first defendant was confined by the terms of its third party notice when it delivered its statement of claim.
Was the third party's statement of claim within the perimeter of the notice?
Although the relief or remedy sought was a contribution or indemnity, the third party notice went on to advise that the claim was made:
"… on the ground that the matters referred to in the Defence to Counterclaim arise out of and were caused or contributed to by the negligence and/or breach of contract by you".
Counsel for the third party submitted, however, that as the notice was for a contribution or indemnity it must, on its face, be taken to have been confined to a statutory claim under the Wrongs Act. I reject this submission. The third party notice incorporated by reference to it the plaintiff's amended statement of claim of August 1994. That document was delivered with the notice. The plaintiff's claim against the first defendant was for rent and interest under a lease. It was not alleged that the first defendant was a tortfeasor. The Wrongs Act, s3(1)(c), so far as is relevant provided at the time of the issue of the third party notice:
"Where damage is suffered by a person as the result of a tort (whether a crime or not)
a tortfeasor who is liable in respect of that damage may recover contribution from any other tortfeasor who is, or would, if sued by the person by whom the damage was suffered at the time when the cause of action arose, have been, liable in respect of the same damage (whether as a joint tortfeasor or otherwise) …".
The only reasonable interpretation of the third party notice was that it was a claim against the third party for damages for negligence and breach of contract, albeit that for reasons undisclosed the first defendant was limiting the extent of the damages claimed to such amount as the plaintiff might recover against it in the action. The cause of action pleaded in the statement of claim was within the ambit of the third party notice.
The statement of claim, however, extended the potential quantum of the damages sought to be recovered and in this sense went beyond the perimeter of the notice. An amendment to the third party notice to now claim damages at large, however, would not be adding a cause of action and so could not offend the rule in Weldon v Neal.
Is a statement of claim which goes beyond the scope of an indorsement void or merely irregular?
That which is a nullity cannot be cured. In MacFoy v United Africa Co Ltd (supra) at 160, Lord Denning said:
"If an act is void, then it is in law a nullity. It is not only bad, but incurably bad. There is no need for an order for the court to set it aside. It is automatically null and void without more ado, though it is sometimes convenient to have the court declare it to be so … But if an act is only voidable, then it is not automatically void. It is only an irregularity which may be waived. It is not to be avoided unless something is done to avoid it. There must be an order of the court setting it aside: and the court has a discretion whether to set it aside or not." [emphasis added]
A statement of claim going beyond the perimeter of an indorsement on a writ is not incurably defective. As Barwick CJ and McTiernan J said in Renowden v McMullin (supra), at p597:
"If the statement of claim … should exceed the indorsement, the statement of claim would be struck out … unless the indorsement can be amended." [emphasis added]
The statement of claim is not a nullity. Even if it was, no consequence of substantive impact would follow. For reasons which have already been given the third party notice was wide enough to encompass the damages claim at common law. The rule in Weldon v Neal would not prevent the notice now being amended to set damages at large and when that is done the statement of claim could be redelivered as a matter of right.
Conclusion and order
The only ground of opposition to the amendment was the assertion to grant the amendment would be to contravene the rule in Weldon v Neal. The rule does not apply as no new cause of action is being added. If the amendment is not made the third party will have a continuing opportunity, to be exercised at its leisure, to apply to have the statement of claim struck out, as at least so far as quantum is concerned, for exceeding the perimeter of the claim specified in the notice. Notwithstanding the amendment application, there has been no application to strike out the statement of claim. I consider that the justice of the case is best served by now removing the third party's opportunity to have the statement of claim struck out. There will be an order that the first defendant have leave to amend the third party notice by making the addition sought, namely, by adding the words:
"AND TAKE NOTICE the Firstnamed Defendant claims to be entitled to damages and costs against you arising from your negligence on the grounds that you failed to properly advise the Firstnamed Defendant in or about the month of May 1991 in respect of the Firstnamed Defendant's rights and obligations against and to the Plaintiff and the Defendant to the Counterclaim arising from the said Agreement dated 30th June 1989."
0
2
0