Smith v Smith - [2017] SASC 126

SUPREME COURT OF SOUTH AUSTRALIA
(Civil)
SMITH v SMITH
[2017] SASC 126
Judgment of Judge Roder a Master of the Supreme Court
29 August 2017
PROCEDURE - SUPREME COURT PROCEDURE - SOUTH AUSTRALIA - PROCEDURE UNDER RULES OF COURT - PARTIES - JOINDER OF PARTIES
PROCEDURE - SUPREME COURT PROCEDURE - SOUTH AUSTRALIA - PROCEDURE UNDER RULES OF COURT - AMENDMENT
Application for the re-joinder of a party to the proceedings and permission to file a second summons and statement of claim.
Inheritance (Family Provision) Act 1972 ; Supreme Court Act 1935 s 27, referred to.
Zerella v Zarella [2014] SASC 100; Tyne v UBS AG (No 2) [2017] FCAFC 5; Re: Dowling [2013] NSWSC 1040; Lucas v Konakas [2014] NSWSC 786; In re: Kuhl [1933] SASR 394, considered.

SMITH v SMITH
[2017] SASC 126

This action commenced on affidavits. On 17 May 2016 Judge Bochner ordered that it proceed on pleadings. A statement of claim (FDN19) was filed on 15 July 2016. Objections were taken. There was an application to amend and an application by the defendants to strike out.
On 15 February 2017 Judge Bochner ordered that two parties – Lachmarden Pty Ltd and Dema Vista Pty Ltd (“Dema Vista”) be disjoined.
Her Honour refused the amendment that had been proposed but gave permission to the plaintiff to file a second statement of claim.
The matter has now been before the court on a further five occasions. One adjournment was occasioned by a suggestion of mine that has been shown not to have been helpful. Currently before me is FDN38, which is the plaintiff’s application:
1.   To re-join Dema Vista.
2.   To join Adam Brooke Smith.
3.   For permission to file a second summons and second statement of claim.
The proposed second summons and second statement of claim are respectively FDN36a and FDN36b.
The application is opposed by the defendant and by Dema Vista. The first basis of opposition to the re-joinder of Dema Vista is that the application is made for an improper ulterior purpose, namely to obtain information and documents which the plaintiff has unsuccessfully sought previously and is not entitled to in this action.
I am not persuaded that the evidence makes that good. Further, even if that is the ambition of the plaintiff any such risk can be controlled by orders about disclosure of documents.
As I understood the submissions, it was agreed that Mr Adam Brooke Smith should be joined as a defendant (indeed, Judge Bochner indicated in her reasons that that joinder is necessary). Mr Stevens for the defendant submitted that Adam Brooke Smith should be joined in two separate capacities – both as executor and as beneficiary. I do not think that that is correct. The proposed pleading identifies Mr Adam Brooke Smith as being both an executor and a beneficiary. That is all that is required by Rule 314(10). It is not necessary that he be identified in both capacities in the summons. As a defendant named in the summons, he is bound by the proceedings in all of the capacities in which he is identified in the statement of claim.
I further accept that – on the proposed new pleading FDN36b – Dema Vista is an appropriate party to the action. The proposed pleading puts the assets of the estate in issue. The issue is an allegation that Dema Vista owed the deceased $210,000. That allegation is denied.
In Zerella v Zarella[1] Bampton J held that the value of a debt said to be owed by a trustee to the deceased was a matter directly relevant to the subject matter of proceedings under the Inheritance (Family Provision) Act 1972 and that it was appropriate to order joinder of the trustee to those proceedings so that it would be bound by any finding as to the value of the debt. I consider that that reasoning must extend to the question of the existence of a debt.
[1] [2014] SASC 100.
Judge Bochner ordered that Dema Vista be disjoined, because the pleading proposed at that stage did not squarely raise the issue. FDN36b does now raise the issue. I consider that Zarella is authority for the proposition that Dema Vista can be re‑joined as a defendant.
Before me, Mr Stevens for the defendant, relied on issues which had not been considered in Zarella and which were not agitated before Judge Bochner. First, Mr Stevens sought to rely on Rule 245. That rule provides:
245—Extension of judgment to bind non-party
(1)The Court may, on application by a party to an action involving the administration of the estate of a deceased person, the administration of a trust, or a transaction or proposed transaction relating to property, order that a judgment in the action extend to a person who was not a party to the action at the time judgment was given.
(2)The Court must allow the person to be bound by the judgment a reasonable opportunity to be heard on the application.
Mr Stevens argued that it is not necessary for Dema Vista to be re-joined as, in the event that the plaintiff’s contention as to the debt is successful, an order could be made under Rule 245 binding Dema Vista to the judgment.
Next, Mr Stevens argued that the modern understanding of abuse of process is such that a person who is aware of proceedings but does not participate in them may be prevented from disputing the outcome in subsequent proceedings. Mr Stevens relied on cases such as Tyne v UBG AG (No 2),[2] Re: Dowling,[3] and Lucas v Konakas.[4]
[2] [2017] FCAFC 5.
[3] [2013] NSWSC 1040.
[4] [2014] NSWSC 786.
The point that was sought to be made was that Dema Vista is on notice of the proceedings and chooses not to be a party. In those circumstances, Mr Stevens submitted, Dema Vista would be prevented from disputing the outcome of the proceedings and so need not be joined as defendant.
I do not accept that an application for provision out of an estate under the Inheritance (Family Provision) Act is “an action involving the administration of the estate of a deceased person”. I do not think that Rule 245 could be applied in the way suggested by Mr Stevens. No question of administration arises in the action. It is true that the outcome of the action will have an effect on how the estate is administered, but that does not, in my opinion, mean that the action involves the administration of the estate. In any event, I consider that Mr Morcombe QC’s submission is correct. The Rule is a post-judgment procedure. A plaintiff who wishes to – and is otherwise entitled to – join a defendant to the existing proceedings should not be forced, by the existence of this Rule, to proceed without that defendant, in the hope that, having achieved a judgment in the action, a further order will be made in its favour under Rule 245.[5]
[5] I respectfully agree with the commentary in Civil Procedure South Australia in respect of the predecessor of the Rule – [REP r 85.03.5].
Mr Stevens described as the procedure under Rule 245 as being based on an “established probate precedent”. I do not accept that submission. The established probate practice in South Australia for binding non-parties to an outcome involves the citation to see proceedings. The procedure is described by Napier J in In re: Kuhl.[6] There was never a probate requirement for an application subsequent to judgment for an order binding non-parties.
[6] [1933] SASR 394.
I accept that the current understanding of what may be an abuse of process can encompass an attempt by a person who has stood by and not participated in litigation subsequently asserting in other proceedings that that person is entitled to take a position contrary to the outcome of the earlier proceedings. Again, for the reasons advanced by Mr Morcombe QC I do not think that that is a reason to refuse joinder – if otherwise justified – to the current proceedings. A plaintiff who is prepared to take the risk of joining the additional defendant to the current proceedings should not have to rely on the possibility – or, even, probability – of a finding of abuse of process in later proceedings.
Section 27 of the Supreme Court Act 1935 requires the Court to avoid multiplicity of actions “as far as possible”. It appears to me that joinder of Dema Vista – given the currently proposed pleading – is likely to achieve that. I accept Mr Morcombe QC’s submission that Rule 74(1)(a), (d) and (e) authorise the proposed re-joinder. I consider that Rule 74(1)(b) is also relevant. Given the provisions of s 27, Rule 74 and the decision in Zarella, I consider it appropriate to allow the re-joinder of Dema Vista.
That said, I consider that the proposed statement of claim is still defective. A party joined as a defendant should be able to understand the basis on which it is joined and what is sought against it. That allows it to opt to submit to the decision of the Court or to oppose. Without a prayer for relief, a defendant might be in a quandary. I consider that the plaintiff should seek declaratory relief against Dema Vista. I allow the proposed joinders and amendments, subject to the inclusion of a claim for relief in respect of Dema Vista.
A number of costs orders have already been made in this action. Usually a party amending has to bear the costs of the amendment. In this case there is an application by the plaintiff for indemnity costs against the defendant. I have reserved that question. Both parties criticise each other in respect of the delays and associated costs of this application. As I have indicated, I am, at least to some extent, probably responsible for one of the delays. Mr Morcombe QC asked me not to rule on costs at this stage. He has indicated that there are difficulties in obtaining instructions. In my opinion, it is appropriate to reserve all outstanding questions of costs to the trial Judge (recognising, of course, that the Judge may refer some or all of those questions back to a Master).