Smith v Crossman - [2001] WADC 248

JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
IN CIVIL

LOCATION: PERTH

CITATION: SMITH -v- CROSSMAN & ANOR [2001] WADC 248

CORAM: WISBEY DCJ

HEARD: 17 OCTOBER 2001

DELIVERED : 19 OCTOBER 2001

FILE NO/S: CIV 3527 of 1995

BETWEEN: ROLAND ANTONY SMITH
Plaintiff
AND
HARVEY RAYMOND CROSSMAN
First Defendant
IAN CHARLES RANDELL
Second Defendant

Catchwords:

Practice and procedure - Statement of claim - Amendment - Amendment setting up cause of action accruing subsequent to issue of writ

Legislation:

Nil

Result:

Amendment refused

Representation:

Counsel:

Plaintiff:     Mr S D Pentony
First Defendant             :     Mr R G S Harrison
Second Defendant         :     Mr A F Carles

Solicitors:

Plaintiff:     Hotchkin Hanly
First Defendant             :     Tottle Christensen
Second Defendant         :     Carles Solicitors

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

Ex parte Snowdon [1881] 17 Ch D 44
Mahoney v McManus (1981) 36 ALR 545
McLean v Discount and Finance Ltd (1939) 64 CLR 312

Case(s) also cited:

Dalgety Australia Ltd & Anor v de Vahl Rubin & Ors, unreported; FCt SCt of WA; Library No 5485; 24 August 1984
Hospital Contribution Fund of Australia v Hunt (1983) 33 ALR 365
Pickard v Sears (1837) 117 ER 179
Queensland v J L Holdings Pty Ltd (1997) 189 CLR 146
Sinclair v James (1894) 3 Ch 554
State of Western Australia v Bond Corporation Holdings Limited (1992) 37 FCR 150

WISBEY DCJ: The plaintiff and the defendants were joint and several guarantors of the obligation of Roland Smith & Co Pty Ltd (the company) in respect of accommodation arrangements between the company and the R & I Bank of Western Australia Ltd, now BankWest, (the bank) pursuant to a Deed of Guarantee and Indemnity dated 6 May 1992 in the event that the company defaulted in the repayment of advances made by the bank. The company defaulted when indebted to the bank in the sum of $946,021. It appears that the plaintiff was then the only guarantor of substance, and by arrangement, together with his wife Irene Margaret Smith, paid the bank the sum of $320,000 pursuant to a Deed of Settlement dated 18 September 1995, conditional on a release from his obligations pursuant to the guarantee. The bank has not recovered from either of the defendants, and has not evidenced a present intention of taking recovery action against them. The bank's right of recovery against the first and second defendants, being a claim pursuant to the deed of guarantee, remains viable. (See s 38(1)(e)(i) Limitation Act.)
It is against that background that the plaintiff issued a writ out of this Court on 15 December 1995 seeking $106,666.66 against each of the defendants, pursuant to his alleged right of contribution.
It is an understatement to say that the action has not proceeded with expedition, but on 5 December 2000 the plaintiff sought leave to amend his statement of claim in accordance with a minute of proposed amendment, subsequently substituted with a further minute dated 28 February 2001. The proposed amendments appear as par 11‑14 inclusive. Essentially it is sought to assert that the bank has released the first and second defendants from their obligations under the deed of guarantee, with the result that the plaintiff has been solely responsible for meeting the bank's demand and is entitled to contribution from each of the defendants.
The application to amend the statement of claim came before the Deputy Registrar on 6 March, and for the reasons which are on the file he dismissed the application. The basis of his decision essentially was:
(a)the first and second defendants remain presently liable to the bank, and as a consequence could not also be liable in respect of the payment made by the plaintiff;
(b)the matters the subject of the proposed amendments occurred after the issue of the writ, and the amendments would have the effect of allowing the plaintiff to plead a cause of action which was not complete as at the date of the issue of the writ.
The plaintiff, being dissatisfied with the decision of the Deputy Registrar filed a Notice of Appeal dated 7 March 2001, and as a consequence the application comes before me for consideration de novo.
The law relating to the right of contribution as between co‑sureties does not appear to be in a state of uncertainty.
In Ex parteSnowdon [1881] 17 Ch D 44 the Court of Appeal identified the following principles:
1.The right of a surety who has paid the creditor is to have contribution from his co‑sureties, that is to say, all the co‑sureties must bear the whole burden of the debt equally.
2.A co‑surety cannot know what is the debt due to him by his co‑surety until he knows what has been done in respect of the residue of the debt for which he is equally liable.
3.Until the whole of the debt has been paid by one surety, or so much of it as to make it clear that, as between himself and his co‑sureties, he has paid all that he ever can be called upon to pay, there can be no equitable debt from them to him in respect of it.
4.When the amount of the debt between the original creditor and debtor is ascertained, it may be that the sum which they as sureties are liable to pay is the whole of that amount, but, as between themselves each of them is only bound to pay their share.
5.The claim of one surety against another for contribution arises not when he has paid only his proportion of the amount for which he originally became surety, but arises when he has paid more than his proportion ‑ that is a surety has no claim against his co‑sureties until he has paid more than his share of the debt due to the principal creditor. If he has paid more than his proportion then he can call upon his co‑sureties for contribution although the amount may be nothing like the amount of the debt due by the principal debtor.
In McLean v Discount and Finance Ltd (1939) 64 CLR 312 Latham CJ at 328 and Starke J at 341 confirmed that the legal position in Australia is as set out above.
In Mahoney v McManus (1981) 36 ALR 545 at 549 Gibbs CJ stated:
"A surety is entitled to contribution from his co‑sureties so that the common burden is borne equally and so that no surety is required, as between himself and his co‑sureties, to pay more than his due share. The right arises whether the sureties are bound jointly, jointly and severally, or severally, and whether by the same or different instruments, and whether or not the sureties knew of each other's existence, provided they are liable in respect of the same debt. The right to contribution arises when a surety has paid or provided more than his proper share of the principal debt, but it may also be enforced by a surety who has not made payment; the circumstances in which a surety who has not made payment may enforce a claim to contribution have not been precisely defined, but it appears that he may at least do so as soon as the creditor has acquired a right to immediate payment from him. The amount of contribution recoverable depends on the number of sureties who are solvent at the time when contribution is sought and on the proportion for which each is liable… .
It should be remembered that the doctrine of contribution is based on the principle of natural justice that if several persons have a common obligation they should as between themselves contribute proportionately in satisfaction of that obligation. The operation of such a principle should not be defeated by too technical an approach to the question … ."
Although it is not relevant to the issue before me, I would observe that the statement of claim in its present form does not appear to plead a valid cause of action since there is no suggestion that the plaintiff has paid more than his appropriate share of the total debt; and it is not alleged that the bank gave a release in respect of the balance outstanding. Absent those factors and the plaintiff would not have a right to contribution.
The proposed amendments seek to plead a release by the bank of the balance of the debt subsequent to the issue of the writ herein. Such a plea would in effect set up a cause of action that was inchoate at the date of the issue of the writ, and consequently it would not be proper to allow the amendments.
In any event I agree with the defendants' submission that in present form the proposed amendments are imprecise and embarrassing.
The application to amendment the statement of claim is refused.