Singleton v Freehill Hollingdale & Page No. Scciv-00-77

SINGLETON and Anor v FREEHILL HOLLINGDALE & PAGE
[2002] SASC 132
Civil

PERRY J. Although this action was commenced in January 2000, regrettably it has not proceeded further than a series of arguments over the plaintiffs’ pleadings. In their present application, the plaintiffs seek leave to file a further amended statement of claim.
The plaintiffs filed a statement of claim at the same time as the issue of the inter partes summons on 28 January 2000. On 12 April 2000, pursuant to SCR r 53.01(1)(a), the plaintiffs filed an amended statement of claim.
Subsequently, on 25 May 2000 the plaintiffs lodged a further amended statement of claim, purporting to do so pursuant to SCR r 46.20(1). For good measure, by an application filed on 31 May 2000, the plaintiffs sought leave, to the extent that leave might be required, to file the further amended statement of claim.
By an application filed on 14 June 2000, the defendant sought a number of interlocutory orders. Some of the matters, but not all of them pursued in that application, came on for hearing before Olsson J in July 2000. That part of the application which Olsson J dealt with sought orders that the plaintiffs’ claim be dismissed, or alternatively stayed on grounds which Olsson J summarised as follows:
“... on the grounds that the Further Amended Statement of Claim, on the face of it, does not disclose any viable cause of action - the pleaded circumstances reveal the existence of a situation as between the plaintiffs which constitutes unlawful maintenance and champerty, and in any event the defendant is entitled to invoke the ‘Anshun’ principle against the plaintiffs.”[1]
[1] See the reasons for judgment (unreported) of Olsson J dated 17 August 2000, judgment [2000] SASC 278, para 2.
Olsson J dealt with the defendant’s application, notwithstanding the fact that, arguably, the further amended statement of claim had not been regularly filed.
After hearing argument, Olsson J dismissed that part of the defendant’s application which he had at that stage brought on for hearing.[2]
[2] See the reasons for judgment referred to in footnote 1.
By leave, the defendant lodged a notice of the appeal to the Full Court from the decision of Olsson J.[3] The notice of appeal complains that Olsson J erred in failing to find that the arrangements between the plaintiffs pursuant to which the proceedings were instituted constituted unlawful maintenance and champerty. The notice further complains that the learned judge erred in holding that the plaintiffs’ claim was otherwise maintainable.
[3] See Notice dated 24 November 2000, Court File Document 29.
The appeal has not yet come on for hearing. Orders have been made extending the time for setting down the appeal, the currently effective order providing that the time for setting down be extended until further order.
In the meantime, the plaintiffs have propounded yet another edition of a proposed statement of claim based on the statement of claim considered by Olsson J but with some changes.
This further proposed edition of the statement of claim, which I will described as “the proposed statement of claim”, is annexed to an affidavit of Ms Jane Taylor[4] filed in support of an application by the plaintiffs dated 7 November 2001 seeking an order that the plaintiffs be given leave to file the proposed statement of claim.
[4] Court File Document 40.
It is that application which has come on for hearing before me. The defendant opposes the application
Although I have heard argument on the merits of the application, for reasons which I have come to, I have reached the view that it is inappropriate for me to determine the application. Rather, I have reached the view that the proper course is to refer the application for hearing to the Full Court pursuant to s 49(1) of the Supreme Court Act 1935. I have in mind that the referred application be heard at the same time as the appeal.
For the benefit of the Full Court, and to elucidate the reasons why I consider that course to be the appropriate course to follow, I will set out the relevant background facts and the nature of the arguments advanced on the application.
Background
In early 1998, the plaintiff, Duke Group Ltd (“Duke”) formerly Kia Ora Gold Ltd (“Kia Ora”), made a successful takeover bid for Western United Ltd. The takeover had disastrous consequences for Duke, which ultimately became the subject of a winding up order.
In 1992, the liquidator of Duke commenced an action in this Court against a firm of accountants (“Nelson Wheeler”), and against a number of directors or former directors of Duke, amongst whom was the plaintiff Mr Singleton. The Kia Ora directors were sued on the basis that they had breached fiduciary and statutory duties owed by them as directors. As for Nelson Wheeler, it was alleged that it had acted in breach of fiduciary duties and was negligent in furnishing a report relied upon by shareholders of Kia Ora in approving the takeover offer.[5]
[5] The full circumstances giving rise to the proceedings are set out at length in the judgment of the trial judge, Mullighan J: see Duke Group Ltd (In Liq) v Pilmer and Ors (1998) 144 FLR 1.
The defendant to this action, Freehill Hollingdale and Page, a firm of solicitors, was not party to the proceedings brought by the liquidator of Duke.
Relevantly for present purposes, the trial judge, Mullighan J, held the directors of Duke, including the plaintiff Mr Singleton, liable to pay damages to Duke for breaches of statutory and fiduciary duties which they owed as directors of Duke, in relation to the takeover.
Various of the parties appealed to the Full Court, which gave judgment on 13 August 1999.[6] The Full Court varied the trial judgment in certain respects which are not relevant for present purposes, whereupon, by leave, a further appeal was taken to the High Court by Nelson Wheeler.
[6] Duke Group Ltd (In Liq) v Pilmer and Ors (1998-99) 73 SASR 64.
The High Court varied the judgment of the Full Court, but not so as to interfere with the liability of the plaintiff Mr Singleton to Duke. So that the directors of Duke, including the plaintiff Mr Singleton, remain liable to Duke upon the basis of the judgment pronounced by Mullighan J as varied by the Full Court.
In the present proceedings, the plaintiffs, Mr Singleton and Duke, allege the breach by the defendant of various duties which they assert were owed by the defendant as solicitors advising Duke and Duke’s directors, including the plaintiff Mr Singleton, in connection with the takeover. In particular, the plaintiffs assert that negligence on the part of the defendant caused Mr Singleton to suffer damages, namely, a loss by reason of the judgment entered against him pursuant to the appeal judgment, which is for an amount now in the order of $188 million.[7]
[7] The judgment sum as against Nelson Wheeler was substantially reduced by the High Court. A question arises as to whether the directors, including Mr Singleton, although not party to the High Court appeal, may take advantage of that reduction.
The plaintiffs also assert that the defendant is a joint tort feasor who is liable to indemnify Mr Singleton or make contribution with respect to the damages awarded against him, the entitlement to contribution or indemnity arising by virtue of s 25 of the Wrongs Act 1936.
Central to the arguments advanced on the application to strike out the statement of claim is an understanding of the assignment which was effected by a deed of assignment dated 24 December 1999 by Mr Singleton to the second plaintiff, Duke.
Essentially, Mr Singleton assigned to Duke any claim, cause of action, chose in action or right available to Mr Singleton arising from his position as a director of Duke or as a defendant and judgment debtor in the Nelson Wheeler action. In consideration of the assignment, Duke undertook not to take any action to enforce the judgment pronounced against Mr Singleton in the Nelson Wheeler action.
The plaintiffs do not plead that Mr Singleton was paid any amount in respect of the judgment in the Nelson Wheeler action. The plaintiffs nonetheless seek to recover as damages the sum of $188 million, none of which Mr Singleton has paid. Given the terms of the assignment, he is never likely to pay any part of the judgment moneys. Mr Evans, who appeared for the plaintiffs before me, conceded that no moneys were ever likely to be paid by Mr Singleton.
Put shortly, the defendant maintains that the failure by Mr Singleton to plead in the proposed statement of claim that he has made a payment to Duke, or that he is likely to make a payment to Duke, is fatal to all of the causes of action pleaded against the defendant. Mr McNamara QC, who appeared for the defendant, contended that in those circumstances there is no right to contribution, expressed as an obligation to pay money, either under the Wrongs Act or in equity, and that the same circumstance is equally fatal to the claim for damages.
He contended that the most that the plaintiffs could possibly obtain from the court, if a proper basis was established, was a declaration that the defendant was liable to contribute to the judgment against Mr Singleton to such extent as might be found by the court to be appropriate.
He maintained that this was an action where the nature of the relief sought should be made clear, because once it was made clear in the statement of claim, the plaintiffs claims will be shown to be illusory, in the sense that the court should not make a bare declaration when, in the absence of any payment by Mr Singleton to Duke, or the prospect of any such payment, the declaration could never result in any payment from the defendant.
He further contended that the assignment did not give Duke any rights above those which might be exercised by Mr Singleton, and that the joinder of Duke as a co-plaintiff was no answer to the argument which he put forward.
The argument has considerable weight, particularly bearing in mind a number of authorities to which he referred, notable among which were certain observations made by Professor Glanville Williams in his well known work Joint Torts and Contributory Negligence.[8]
[8] Stevens & Sons (1951) at 148 et seq. See also Common Form Judgments and Orders in the Civil Jurisdiction (1999) (Supreme Court of South Australia) page 2.
Mr McNamara QC contended that the points which he was raising before me were different from the points decided by Olsson which are the subject of the appeal to the Full Court.
I raised with counsel at the outset of the hearing before me that it might be more sensible to bring on the appeal from the judgment of Olsson J before dealing with the new edition of the statement of claim. I pointed out, however, that it was clearly unsatisfactory for the Full Court to be considering a statement of claim which was not the statement of claim which the plaintiff would ultimately wish to propound.
Mr McNamara QC responded by indicating, to quote his argument in transcript:
“It’s become common ground to a limited extent between the parties that when the matter goes to the Full Court there should be a statement of claim before the Full Court which the plaintiff is actually propounding as opposed to the statement of claim which the plaintiff was propounding when the arguments were put before Olsson J.”
While he confirmed that he would confine himself to arguments which were not put to Olsson J, some of those arguments were arguments which could have been put before Olsson J, and do not depend upon changes in the two statements of claim in question.
There is, however, a new ground of claim advanced in the proposed statement of claim. That is an alternative claim for equitable contribution as opposed to contribution under the Wrongs Act.
Given that counsel for the plaintiffs did not demur from the course suggested by Mr McNamara QC, not without some hesitation, I allowed the arguments to proceed.
However, having further considered the matter, I have now reached the view that it would be inappropriate for me to give a judgment on the application, simply so that the parties can bring a separate appeal from that judgment and confront the Full Court with appeals from rulings made with respect to two different statements of claim. On reflection, it seems to me that a better course would be simply to refer the present application to the Full Court for it to consider it, if it is disposed to do so, either in conjunction with the appeal from Olsson J or in lieu thereof.
Certainly, it seems to me that it would be much less confusing for the Full Court to hear all arguments in the context of one statement of claim. The best method to achieve that result, in my view, without further complicating or delaying the matter, is to take the course which I have just indicated.
I propose, therefore, to exercise my power to reserve the case for the consideration of the Full Court pursuant to s 49(1) of the Supreme Court Act. The “case” to be reserved will be the plaintiffs’ application for leave to file a proposed statement of claim. If that should more accurately be described as a “point in a case”, s 49(1) is nonetheless equally of application to support the course which I propose.
As this course was not canvassed with counsel during the hearing before me, I will allow them to be heard on the matter further, following publication of these reasons, before I make a formal order, which will be in terms to be discussed with them.
I will remain seized of the matter for the time being in order to make consequential orders to have the matter brought before the Full Court without further delay.

[2002] SASC 132

23 April 2002