Smith v Charter Financial Planning Limited (Ruling No 1)
[2013] VCC 2029
•18 December 2013
| IN THE COUNTY COURT OF VICTORIA CIVIL DIVISION | Revised Not Restricted Suitable for Publication |
DAMAGES AND COMPENSATION LIST
GENERAL DIVISION
Case No. CI-13-03157
| CHRISTOPHER SMITH (in his own right and as EXECUTOR OF THE ESTATE OF THE LATE KELLEY GRANTHAM) | Plaintiff |
| v | |
| CHARTER FINANCIAL PLANNING LIMITED (ACN 002 976 294) | Defendant |
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JUDGE: | HIS HONOUR JUDGE MISSO | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 13 December 2013 | |
DATE OF RULING: | 18 December 2013 | |
CASE MAY BE CITED AS: | Smith v Charter Financial Planning Limited (Ruling No 1) | |
MEDIUM NEUTRAL CITATION: | [2013] VCC 2029 | |
RULING
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Subject: PRACTICE AND PROCEDURE
Catchwords: Proceeding brought against the wrong party – application for judgment by the defendant for judgment – concession by the plaintiff that the proceeding had been brought against the wrong party – application to substitute the correct party – responsibility for costs – alleged breach of overarching purpose and obligations
Legislation Cited: Civil Procedure Act 2010, s7(1), s8(1), s63; County Court Civil Procedure Rules 2008, r9.06
Ruling: See the Orders below.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr P Bingham | Maurice Blackburn Pty Ltd |
| For the Defendant | Mr Tesarsch | Norton Rose Fulbright Australia |
HIS HONOUR:
Introduction
1 The plaintiff commenced a proceeding by Writ against the defendant. By his Statement of Claim, he alleged, among other things, that Ms S Ryan was an authorised representative of the defendant. She had been retained to effect a policy of life insurance over the life of Kelley Grantham, deceased, through the defendant and with MLC Ltd. Ms Ryan failed to effect the policy, with the result that the estate of Ms Grantham has suffered loss, and now seeks to recover that loss from the defendant.
2 The defendant filed a Summons on 28 November 2013 seeking summary judgment pursuant to s63 of the Civil Procedure Act 2010 (“the Act”). The defendant submitted that the plaintiff has brought the proceeding against the wrong party; it should have brought the proceeding against “Jigsaw Support Services Limited”. The plaintiff conceded that it has in fact brought the proceeding against the wrong party.
3 The plaintiff filed a Summons on 12 December 2013 seeking to substitute Jigsaw Support Services Limited for the defendant.
4 Mr Bingham of Counsel appeared for the plaintiff. Mr Tesarsch of Counsel appeared for the defendant.
5 The plaintiff and the defendant filed the following affidavits in support of their respective summonses:
· The defendant filed two affidavits of Mr Edward John O'Brien, solicitor, sworn 28 November 2013 and 13 December 2013.
· The plaintiff filed an affidavit of Mr Michael Bates, solicitor, sworn 12 December 2013.
The principal proceeding
6 The following summary appears to me to be without controversy:
· The plaintiff and Kelley Grantham were a married couple;
· Ms Grantham died on 20 January 2013;
· The plaintiff alleges that Ms Ryan was an authorised representative of the defendant;[1]
[1]paragraph 4 of the Statement of Claim
· The defendant alleges that Ms Ryan was an authorised representative of AXA Financial Planning Ltd;[2]
[2]paragraph 5 (a) of the Defence
· Ms Ryan was engaged by the plaintiff and Ms Grantham to effect a policy of life insurance over the life of Ms Grantham. The policy was to be provided by MLC Ltd;[3]
[3]paragraph 11 of the Statement of Claim and paragraph 11 of the Defence
· Ms Ryan engaged in practice in the financial services industry. She did so through Empire Consolidated Holdings Group Pty Ltd, trading as Blue Horizon Partners;[4]
[4]paragraph 5 of the first affidavit of Mr O'Brien
· AXA Financial Planning Ltd appointed Blue Horizons Partners as its authorised representative;[5]
[5]paragraph 7 of the first affidavit of Mr O'Brien and exhibit EJO-1
· AXA Financial Planning Ltd appointed Ms Ryan as its authorised representative on 2 October 2008;[6]
[6]paragraph 7 of the first affidavit of Mr O'Brien
· AXA Financial Planning Ltd changed its name to Jigsaw Support Services Ltd. The date when that occurred is unknown, but it is believed to be after 2 October 2008;[7]
[7]paragraph 7 of the first affidavit of Mr O'Brien
· AMP Financial Services Ltd is a holding company for AXA Financial Planning Ltd, Jigsaw Support Services Ltd and the defendant;[8]
[8]paragraph 8 of the first affidavit of Mr O'Brien
· AMP Financial Services Ltd organised for the financial planning practice of AXA Financial Planning Ltd to be transferred to the defendant;[9]
· On 19 September 2012, Ms Ryan was appointed as an authorised representative of the defendant.[10]
[9]paragraph 8 of the first affidavit of Mr O'Brien
[10]paragraph 9 of the first affidavit of Mr O'Brien
7 There is no issue that although AXA Financial Planning Ltd, Jigsaw Support Services Ltd and the defendant are all legal persons, they are essentially subsidiaries of AMP Financial Services Ltd. There is also no issue that the policy was to be effected with MLC Ltd by Ms Ryan, through Jigsaw Support Services Ltd. The confusion appears to have arisen in the identification of the corporation of which Ms Ryan was an authorised representative and through which she operated in effecting the policy with MLC Ltd.
The Defendant’s Summons
8 The plaintiff conceded that it has brought the proceeding against the wrong party. He conceded that I should make an order excising the defendant from the proceeding. I propose to do that by simply giving the plaintiff leave to substitute Jigsaw Support Services Ltd for the defendant.
The Plaintiff’s Summons
9 The defendant submitted that because the plaintiff has brought the proceeding against the wrong party, that I should dismiss the plaintiff's proceeding altogether, and not give the plaintiff leave to substitute Jigsaw Support Services Ltd for the defendant.
10 I indicated at a reasonably early point in Mr Tesarsch’s submissions that I would not dismiss the proceeding, essentially for two reasons: firstly, Order 9.06 of the County Court Civil Procedure Rules 2008 permits substitution of a party; and secondly, dismissing the proceeding will require the plaintiff to commence a fresh proceeding which can hardly be consistent with s7(1) of the Act which provides that the overarching purpose of the Act is to facilitate the just, efficient, timely and cost-effective resolution of the real issues in dispute. Furthermore, s8(1) provides that the Court must seek to give effect to that overarching purpose.
11 In the circumstances, the defendant’s application to have the proceeding dismissed will inevitably put the plaintiff to the cost and expense of filing a fresh proceeding. I do not consider that to be consistent with the overarching purpose of the Act.
12 Therefore, I propose to give the plaintiff leave to substitute Jigsaw Support Services Ltd for the defendant.
Costs
13 Mr Bingham and Mr Tesarsch expended a great deal of effort in tracing through the conduct of the plaintiff and the defendant at a time before the plaintiff commenced the proceeding and until he decided to file the Summons seeking to substitute Jigsaw Support Services Ltd for the defendant.
14 Mr Bingham submitted the defendant should have determined whether it was the correct party to the proceeding before it filed an Appearance and a Defence. Alternatively, it should have determined whether it was the correct party within a reasonable time after filing its Appearance and Defence. It would then have been in a position to inform the plaintiff that he had brought the proceeding against the wrong party at a time which would have permitted the plaintiff and the defendant to seek orders by consent without either party incurring significant extra costs, or costs thrown away.
15 Mr Tesarsch submitted that the plaintiff could have, and should have, undertaken investigations which would have disclosed the identity of the correct party before it commenced the proceeding. He submitted that the defendant had incurred significant costs which should be paid by the plaintiff.
16 I have carefully read the written submissions which Mr Bingham and Mr Tesarsch provided me. I have also carefully read through the parts of the affidavits, and exhibits to those affidavits, which they took me to. I was mindful that Mr Tesarsch objected to the whole of Mr Bates’ affidavit, and the exhibits to his affidavit, because he submitted that the affidavit and the exhibits contained matters which were protected by legal professional privilege.
Disposition
17 Now that I have determined that I will give the plaintiff leave to substitute Jigsaw Support Services Ltd for the defendant, what I am left with is whether I should make an order for costs.
18 It is important to note that Mr Tesarsch informed me that the defendant’s solicitors are instructed to act for Jigsaw Support Services Ltd. Upon the plaintiff filing and serving an Amended Writ and Amended Statement of Claim, the defendant solicitors will file an Appearance and a Defence and will defend the proceeding for Jigsaw Support Services Ltd.
19 Mr Tesarsch submitted that the defendant should obtain an order for costs. I am persuaded that it should. However, I am not persuaded that in real terms, the defendant has incurred any costs which it would not have incurred had the plaintiff brought the proceeding against the correct party. However, I propose to make a number of orders, one of which will be to defer the calculation of costs to be determined by me at a later date.
20 My reasons for denying the defendant an order for costs at this stage are as follows.
21 The key to the Defence of the plaintiff's proceeding is Ms Ryan. The plaintiff alleges that her failure resulted in the policy not being effected. Ms Ryan says that despite her efforts to effect the policy, it was the conduct of the plaintiff and Ms Grantham that denied her the opportunity to take all the relevant steps to effect the policy.
22 The only person from whom the defendant could have obtained instructions to draft the Defence is Ms Ryan. Whether the defendant or Jigsaw Support Services Ltd is the correct defendant, it is difficult for me to understand how the instructions given by Ms Ryan will differ when Jigsaw Support Services Ltd is substituted for the defendant. It was a question which I put to Mr Tesarsch that, if I gave the plaintiff that leave, would the Defence be any different. Although he submitted that a review of the Defence might be required, I am not satisfied that in substance the Defence will be any different.
23 Should I be wrong about that, I propose to make orders adjourning the further hearing of the defendant’s application for costs for the purpose of determining whether the defendant has incurred costs relevant to meeting the application for substitution; whether the Defence to be filed by Jigsaw Support Services Ltd is different in any material way to the Defence filed by the defendant, and whether any additional work was required by the solicitor for the defendant in making, filing and serving Jigsaw Support Services Ltd’s Defence.
24 At present, the conclusion which I am attracted to is that the only material steps which Jigsaw Support Services Ltd will need to take, once the plaintiff has filed an Amended Writ and an Amended Statement of Claim, is to file an Appearance for Jigsaw Support Services Ltd and to substitute Jigsaw Support Services Ltd as defendant on the Defence.
25 Mr Bingham and Mr Tesarsch invited me to make a number of findings of fact relevant to when the plaintiff and the defendant acquired knowledge of the identity of the correct party to the proceeding; whether there was a failure to give effect to the overarching purpose and obligations by the solicitor for the plaintiff by bringing the proceeding against the defendant without investigating the identity of the correct party more assiduously; whether there was a failure to give effect to the overarching purpose and obligations by the solicitor for the defendant by not undertaking a similar assiduous investigation, and whether the effluxion of time leading up to the hearing of the summonses has compounded the costs incurred by both parties in progressing the proceeding by each incurring costs unnecessarily.
26 I will not undertake the exercise of examining the material in minutiae to make the sort of findings which Mr Bingham and Mr Tesarsch applied for me to make. To do so will involve me in an unreasonable exercise in what is, after all, a relatively simple interlocutory stoush which I think needs to be determined coolly, calmly and with a view to getting this proceeding back on the rails so that it progresses without being sidetracked, as it has been.
27 Whilst I make no observation about the integrity of the parties and their respective solicitors, it seems to me the very purpose of the Act is to avoid this sort of interlocutory stoush. If parties intend to engage in this sort of conduct, then they may inflict punishment upon themselves by having to bear their own costs, which they should not have incurred in the first place had cooler heads taken a pragmatic and practical approach to progressing the litigation.
28 I need to add that one of the other reasons why I consider that the defendant should obtain an order for costs is that the starting point in determining who should bear the cost of the summonses is the conduct of the plaintiff in bringing the proceeding against the wrong party. Whether the plaintiff was misled or made a mistake does not excuse him from exposure to an order for costs. However, the Act no longer permits a defendant to sit back with its arms folded and to allow a proceeding to progress uninterrupted in the knowledge that the proceeding has been brought against the wrong party. It is a question of balance between the undoubted onus borne by the plaintiff to get it right in the first place, which in some cases might be displaced, or be somewhat displaced, by the proven recalcitrance of a defendant not meeting the overarching purpose and obligations. However, I am less persuaded by the submissions made by Mr Bingham, that the failure of the plaintiff to get it right swings the responsibility onto the defendant.
Orders
29 I propose to make the following orders:
(1) The plaintiff has leave to substitute Jigsaw Support Services Ltd in lieu of the defendant pursuant to r9.06 of the County Court Civil Procedure Rules 2008.
(2) The plaintiff must file and serve an Amended Writ and Amended Statement of Claim reflecting the effect of Order 1 above on or before 4.00pm on _________.
(3) The plaintiff must effect service of a true copy of this Order and the Amended Writ and Amended Statement of Claim on Jigsaw Support Services Ltd on or before 4.00pm on ___________.
(4) Jigsaw Support Services Ltd must file and serve an Appearance and its Defence on or before 4.00pm on __________.
(5) The defendant’s application for costs is adjourned to be determined at 9:30am on __________. In support of that application, the defendant’s solicitor must file and serve a short affidavit stating:
(a) what amendments were necessary to the Defence filed by Jigsaw Support Services Ltd when it is compared to the Defence filed by the defendant;
(b) what additional work was necessary in the preparation, filing and service of the Defence filed by Jigsaw Support Services Ltd when compared to the preparation, filing and service of the Defence filed by the defendant;
(c) what additional work was necessary to meet the plaintiff’s application to substitute Jigsaw Support Services Ltd as defendant.
30 Additionally, I propose to make other interlocutory orders and to provide the parties with a date for trial.
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