Stockland South Beach Pty Ltd v Judith Lorraine Hare as trustee for the Hare Property Trust
[2015] WADC 14
•13 FEBRUARY 2015
JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
IN CIVIL
LOCATION: PERTH
CITATION: STOCKLAND SOUTH BEACH PTY LTD -v- JUDITH LORRAINE HARE as trustee for THE HARE PROPERTY TRUST [2015] WADC 14
CORAM: BRADDOCK DCJ
HEARD: 20 JUNE 2014
DELIVERED : 13 FEBRUARY 2015
FILE NO/S: CIV 3893 of 2010
BETWEEN: STOCKLAND SOUTH BEACH PTY LTD
Plaintiff
AND
JUDITH LORRAINE HARE as trustee for THE HARE PROPERTY TRUST
First DefendantHARE PAUL ALEXANDER SYDNEY
Second Defendant
Catchwords:
Appeal from registrar - Order 18 r 6(1) - Joinder of parties to action - Order 18 r 6(2) - 'Necessary party to the action' - Order 1 r 4B - Submission to jurisdiction - Waiver - Irregularity - Lack of power
Legislation:
Rules of the Supreme Court 1971 O 1 r 4B, O 18 r 6(1), O 18 r 6(2)
Result:
Appeal allowed
Set aside order of registrar dated 11 April 2013 joining second defendant
Representation:
Counsel:
Plaintiff: Mr M Solomon
First Defendant : Mr C Biris
Second Defendant : Mr S Davies SC
Solicitors:
Plaintiff: Norton Rose Fulbright Australia
First Defendant : No appearance
Second Defendant : Chris Stokes & Associates
Case(s) referred to in judgment(s):
Brealey v Board of Management Royal Perth Hospital (1999) 21 WAR 79
Elovalis v Elovalis [2008] WASCA 141
Lois Nominees Pty Ltd v Hill [2011] WASC 53
News Ltd v Australian Rugby Football League Ltd (1996) 64 FCR 410
Pegang Mining Co Ltd v Choong Sam [1969] 2 MLJ 52
Qantas Airways Ltd v AF Little Pty Ltd [1981] 2 NSWLR 34
Vandervell Trustees Ltd v White [1971] AC 912
Wurth Australia Pty Ltd v Burgess [2012] WASC 504
BRADDOCK DCJ:
Background
On 13 September 2007 the plaintiff (Stockland) entered into a contract for the sale of an apartment in a complex to be built at North Coogee and to be known as Islands Apartments. The purchaser named in the contract was the first defendant (Mrs Hare). The schedule to the contract shows Mrs Hare 'as trustee for the Hare Property Trust'. The signature on the contract, apparently that of Mrs Hare, was witnessed by the real estate agent, Hans Rudie Schutte. It would appear that the property was under construction or to be constructed. A settlement date was set pursuant to the contract as 10 June 2010. Mrs Hare did not settle the purchase of the property on that date and has not settled since.
Stockland issued proceedings by writ of summons against Mrs Hare for breach of contract in December 2010. When she filed a defence in August of 2011, Mrs Hare denied that she entered into the contract. Mrs Hare claimed that her husband had signed the contract purportedly on her behalf and she denied he had authority to do so.
In March of 2013, Stockland applied to join Mr Hare as second defendant to the proceedings. A chamber summons was supported by affidavit, submissions were filed and, on 11 April 2013, a deputy registrar ordered, amongst other things, that Mr Hare be joined as a second defendant. Mr Hare was ultimately served in October 2013. On 4 November 2013, Mr Hare filed an unconditional appearance through his solicitors. On 5 November, Mr Hare requested further and better particulars of the statement of claim. On 8 November 2013, counsel appeared for Mr Hare at a directions hearing.
Mr Hare and Mrs Hare are married to each other, a fact admitted by Mrs Hare on 19 February 2014, in an amended substituted defence.
In March of 2014, Mr Hare applied to the registrar to set aside his joinder to the action. That application was dismissed on 17 March 2014. Mr Hare lodged an appeal against that decision, the matter which now is to be determined.
Set out below is a chronology. From that chronology, it is obvious that, prior to Mr Hare being served with the proceedings pursuant to the order for joinder made in April of 2013, the limitation period against him in relation to the failure to settle on the contract had expired. The time for any other action against him based upon breach of warranty of authority or similar at the time of signing the contract would also presumably have expired.
CHRONOLOGY
13.09.2007
Contract signed
10.06.2010
Settlement due
15.12.2010
Writ filed
19.07.2011
Statement of claim
04.08.2011
D1 defence
14.03.2013
Application for leave to join D2
11.04.2013
DR orders D2 joined
24.04.2013
Amended writ
24.09.2013
Order substituted service D2
04.11.2013
D2 memorandum of appearance
05.11.2013
D2 Request for further and better particulars
07.11.2013
D1 substituted defence
08.11.2013
Directions
19.02.2014
Amended substituted defence
26.02.2014
Application to set aside joinder
12.03.2014
Affidavit McKinnie
17.03.2014
Application dismissed
23.03.2014
Appeal notice
Issues raised upon this appeal
1.Whether Mr Hare was rightly joined in the action against Mrs Hare pursuant to O 18 r 6(2) of the Rules of the Supreme Court 1971.
2.Whether Mr Hare submitted to the jurisdiction for the purposes of curing or waiving any irregularity in the joinder.
3.Whether provisions of O 18 r 6(1) operate to save the joinder if there has been a non or misjoinder of proper parties.
Argument of the appellant Mr Hare
It was common cause between Mr Hare and Stockland that there was no power to join Mr Hare to this action under O 21 r 5 or O 21 r 1 or O 18 r 4.
Mr Davies SC for Mr Hare accepted that the only power to join Mr Hare in the action was to be found in O 18 r 6 of the Rules of the Supreme Court.
Order 18 r 6(2)(b) provides that a court may order any person, who ought to have been joined as a party or whose presence before the court is necessary to ensure that all matters in dispute in the cause or matter may be effectively and completely determined and adjudicated upon, be added as a party.
Mr Davies SC argued that it was not necessary to join Mr Hare in the current situation. The action of Stockland against Mrs Hare was based upon a breach of contract for the purchase of an apartment. If Stockland succeeded against Mrs Hare, that would dispose of the matter as against her and have no effect upon Mr Hare, his rights or interests. The claim against Mr Hare, by contrast, he argued, is one of breach of warranty of authority, in relation to his use of Mrs Hare's name on the contract. Only if Stockland failed against Mrs Hare would it be relevant. It was not necessary for any other party to be joined to determine the breach of contract claim against Mrs Hare. Whilst Mr Davies SC conceded it was inconvenient, the position was that the action against Mr Hare was an entirely different action, in law. Accordingly, it was not necessary that Mr Hare be joined in order to determine 'all matters in the cause or matter', because the matter against each of them was quite separate and distinct: Wurth Australia Pty Ltd v Burgess [2012] WASC 504 [57].
Mr Davies SC argued that if there were no power to join Mr Hare, then the order for a joinder was a nullity, not an irregularity and could not be waived. Further, O 18 r 6(1) did not operate to save the joinder in these circumstances. On its proper construction, O 18 r 6(1) provided that a cause was not to be defeated by the joinder of an unnecessary party or the absence of a party being joined, but the court could still determine the issues between the parties who were joined in the matter. It did not, he asserted, confer any wider power.
In any event, he argued that to seeking further and better particulars did not confer jurisdiction, neither did the entry of appearance amount to a waiver.
There arose at the time of oral argument an issue as to the quantum of the claim and this court's jurisdiction, but ultimately this was not pursued. Further and better particulars of damages were provided after the date of argument, well within the jurisdiction of the District Court, and consequential submissions conceded this resolved that issue.
Submissions on behalf of Stockland
Mr Solomon argued that, on the face of it, Mrs Hare had entered into the contract and it was her signature. He said that it later emerged that Mr Hare signed in her name.
He submitted that the word 'necessary' was not to be viewed in isolation, but in the light of the terms and objects of the rule and O 4 r (1). He referred to Corboy J in Wurth, and Vandervell Trustees Ltd v White [1971] AC 912.
He accepted that there was no debate but that the plaintiff must come within the provisions of O 18 r 6(2), and no other provision was relied upon.
His argument was that Stockland could sue Mrs Hare and be unsuccessful, then separately sue Mr Hare and also be unsuccessful. It was therefore 'necessary' to determine the matters in dispute together, applying a liberal construction to the terms of the rule.
The issues raised against Mr Hare he asserted were integral or 'subjacent' to the subject matter of the action. He referred to the Qantas Airways Ltd v AF Little Pty Ltd [1981] 2 NSWLR 34; Elovalis v Elovalis [2008] WASCA 141; Lois Nominees Pty Ltd v Hill [2011] WASC 53. On that basis he said that Mr Hare was properly joined.
Davies SC in reply
Stockland's agent on the sale of the apartment, Mr Schutte, always knew that Mr Hare signed the contract for the purchase, as he witnessed the document. Accordingly, Stockland also had this knowledge.
He referred to Corboy J's reasoning in Wurth v Burgess [57], in particular at [57(d)] and [57(e)], that a party cannot be joined merely because it is thought to be just or convenient, the test imposed by the rule is necessity. It requires that the proposed party's rights against or liabilities to any existing party in respect of the subject matter of the action will be directly affected by any order that may be made in the action. In Wurth Corboy J quoted Pegang Mining Co Ltd v Choong Sam [1969] 2 MLJ 52, 525. The rights/liabilities are required to be directly affected, not consequentially or indirectly and this imposed an important qualification. So, accepting the requirement for beneficial interpretation and the consideration of disputes subjacent to the pleadings, the focus is on the rights and liabilities of the proposed defendant and not a looser concept of 'interests'.
He relied upon the fact that Beech J did not follow the reasoning of Mahoney J in the NSW case of Qantas v Little. Beech J was considering the interpretation of O 18 r 6 and accepted that O 18 r 4 and O 18 r 6 served different purposes, but he did not accept that this supported a broader construction of O 18 r 6: LoisNominees [37].
Discussion
Stockland is faced with a particular practical problem in this case: that of the limitation period against Mr Hare. The determination of this appeal requires the consideration the interpretation of the rules, in the context of the facts.
As senior counsel for Mr Hare rightly pointed out, the agent who negotiated and witnessed the contract presumably could not have failed to notice the fact that he was dealing with Mr Hare, not Mrs Hare. Hence, from the time that the writ was issued, the need to consider his authority to contract in the name of his wife must have been apparent, on any proper consideration of the facts.
Stockland needs to maintain the joinder of Mr Hare because of the inability now to proceed independently to issue a writ against him and join those proceedings to those it initially commenced. That it would be convenient, and possibly just, to do so, is not the test under O 18 r 6, the full text of which is as follows:
6.Misjoinder and nonjoinder of parties
(1)No cause or matter shall be defeated by reason of the misjoinder or nonjoinder of any party; and the Court may in any cause or matter determine the issues or questions in dispute so far as they affect the rights and interests of the persons who are parties to the cause or matter.
(2)At any stage of the proceedings in any cause or matter the Court may on such terms as it thinks just and either of its own motion or on application -
(a)order that any person who has been improperly or unnecessarily made a party or who has for any reason ceased to be a proper or necessary party, to cease to be a party;
(b)order that any person who ought to have been joined as a party or whose presence before the Court is necessary to ensure that all matters in dispute in the cause or matter may be effectually and completely determined and adjudicated upon, be added as a party,
but no person shall be added as a plaintiff without his consent signified in writing or in such other manner as may be authorised.
(3)An application by any person for an order under subrule (2) adding him as a defendant must, except with the leave of the Court, be supported by an affidavit showing his interest in the matters in dispute in the cause or matter.
In Wurth Australia v Burgess Corboy J set out an overview of the provisions in the rules concerning amendments, and the authorities:
55Order 21 r 5 RSC confers a general power on the court to allow a plaintiff to amend its writ and any party to amend its pleadings. However, the rule is expressed to be subject to O 18 r 6, r 7 and r 8. In Lois Nominees, Beech J held that an amendment to add a party was governed entirely by O18 r 6, r 7 and r 8; that is, the power to permit an amendment conferred by O 21 r 5 did not apply in relation to a proposed amendment to add or remove a party. Accordingly, the consequential amendment to the writ on leave being granted under O 18 r 6(2) is effected pursuant to O 18 r 8(1).
56 In Lois Nominees, Beech J summarised the scheme created by O 18 and O 21 as follows [82]:
Order 21 governs amendment generally. Amendment to add a new party requires leave: O 21 r 1(3). The court has general power under O 21 r 5 to permit amendment of a writ or statement of claim on such terms as are just. That general power is subject to, among other things, O 18 rr 6, 7 and 8. That means that the general discretion to permit amendment does not apply to an application to amend so as to add a new party. Applications to add a new party are governed by O 18 rr 6, 7 and 8. Order 18 r 4 is not directed to amendment of a writ or statement of claim. It concerns joinder of parties. It does not itself permit amendment of a writ or statement of claim to add new parties.
…
57I consider the following propositions to be relevant to the determination of an application made pursuant to O 18 r 6(2)(b):
(a)The rule is designed to avoid unnecessary technicality so that the parties may litigate the real issues between them in an expeditious, efficient and cost effective way: Elovalis v Elovalis [2008] WASCA 141 (S) [6]. Consequently, the phrase 'all matters in dispute' should be given a beneficial interpretation. The phrase should be afforded the widest interpretation that the language of the rule will permit.
(b)Further, the phrase gives the rule an 'elastic' application. The rule is not to be construed so that the matters in dispute are limited to matters arising on the existing pleadings. The disputed matters for the purpose of the rule may include disputed issues of fact that are 'subjacent' to the pleadings: Elovalis [7].
(c)In Amon v Raphael Tuck & Sons Ltd [1956] 1 QB 357, Devlin J observed that the expression 'the cause or matter' in the then equivalent English rule referred to the action 'as it stands between the existing parties' - '[i]f it were otherwise, then anybody who showed a cause of action against either a plaintiff or defendant could, of course, say that the question involved in his cause of action could not be settled unless he was made a party' (369; see also, at 378). Similarly, Adams J in Birtles v Commonwealth of Australia [1960] VR 247 held that the reference to 'cause' in the then equivalent Victorian rule referred to the existing cause or matter against the original defendant (251).
(d)Although O 18 r 6(2) is to be interpreted beneficially, the test imposed by the rule is necessity; a party cannot be joined merely because it is thought to be just or convenient: The Hancock Family Memorial Foundation Ltd v Fieldhouse [No 3] [2010] WASC 223; Vandervell Trustees Ltd v White [1971] AC 912, 935 - 936 (Viscount Dilhorne).
(e)The rule requires the court to consider whether the proposed parties' rights against or liabilities to any existing party in respect of the subject matter of the action will be directly affected by any order that may be made in the action: Pegang Mining Co Ltd v Choong Sam [1969] 2 MLJ 52, 55 - 56; News Ltd v Australian Rugby Football League Ltd (1996) 64 FCR 410, 524 and Homestyle Pty Ltd v City of Belmont [1999] WASCA 59 (Templeman J, with whom Malcolm CJ and Owen J agreed). In a passage that was cited with approval in Homestyle and more recently by the Court of Appeal in Cheng Chih Tiao v Sheng Chin Lai [No 2] [2010] WASCA 189, the Full Court of the Federal Court in News Ltd v Australian Rugby Football League observed, in relation to the test identified by the Privy Council in Pegang Mining, that (525):
The test involves matters of degree, and ultimately judgment, having regard to the practical realities of the case, and the nature and value of the rights and liabilities of the third party which might be directly affected. The requirement that a third party's rights against, or liability to, any party to the proceedings be directly affected is an important qualification that recognises that many orders of a court are likely to affect other people to a greater or lesser extent. This is particularly so with remedies in the nature of an injunction: see Silktone Pty Ltd v Devreal Capital Pty Ltd (1990) 21 NSWLR 317 at 322 per Kirby P. The requirement of a direct effect on rights or liabilities differentiates the case where a person ought to be joined, from other cases where the effect of the order on non-parties can be characterised as only indirect or consequential.
(f)The focus in considering an application to join a defendant is on the rights and liabilities of the proposed defendant and not on 'some looser concept of "interests"': Alinta Asset Management Pty Ltd v Essential Services Commission [2007] VSC 32 (Hollingworth J) (and see Amon at 379 and the comments of Edelman J in Martin Bruce Jones as Receiver and Manager of Miami Waterfront Developments Pty Ltd v Miami Waterfront Developments Pty Ltd [2012] WASC 483 [13] - [14]). An order that directly affects a third person's rights against or liabilities to a party should not be made unless the person is also joined as a party: News Ltd (524). Consequently:
Where, before trial, a question arises whether a necessary party has been joined, attention should be directed to the orders sought in the proceedings. It is the effect of the orders upon the third party that must be determined. The test is not whether the conduct of the third party is raised in the pleadings between the existing parties, or whether the third party is a party to a contract, the meaning or effect of which is pleaded as a matter relevant to the ascertainment of the rights between those parties. (News Ltd at 525).
Stockland's claim in the action as it originally stood was for damages for breach of contract, costs and interest.
On those pleadings, the first issue the plaintiff will have to establish is whether Mrs Hare contracted with the Stockland. If this question is answered in the affirmative, the plaintiff will succeed against her and that result will not affect Mr Hare in any relevant manner. It cannot affect his rights or his liabilities in relation to Stockland, the property itself or Mrs Hare, directly. If Stockland fails to establish that it contracted with Mrs Hare, the resulting orders would not directly affect Mr Hare. He claims no interest in the property, he is not liable under any guarantee or for any finance arrangement in connection with the property.
As the situation stood, in the original action, Mr Hare had at the outset no interest in the property and no liability to Stockland. Whatever might come out of that action could not impact those matters. Hence the argument was raised that the issue of his authority was 'subjacent' to these pleadings, by which it seems is meant 'hiding beneath'.
Undoubtedly, there is an evidential link between the two issues in that Mr Hare is now apparently accepted by Stockland to have been instrumental in the formation of the contract. From a tactical and evidential point of view, Stockland wishes to proceed against both of them together. Stockland does not assert that Mrs Hare signed the contract and argues that joinder is 'necessary' to prevent sequential failure against both defendants, relying upon an 'elastic interpretation' of the rule and the provisions of O 1 r 4B:
4B.Case flow management, use and objects of
(1)Actions, causes and matters in the Court will, to the extent that the resources of the Court permit, be managed and supervised in accordance with a system of positive case flow management with the objects of -
(a)promoting the just determination of litigation; and
(b)disposing efficiently of the business of the Court; and
(c)maximising the efficient use of available judicial and administrative resources; and
(d)facilitating the timely disposal of business; and
(e)ensuring the procedure applicable, and the costs of the procedure to the parties and the State, are proportionate to the value, importance and complexity of the subject matter in dispute; and
(f)that the procedure applicable, and the costs of the procedure to the parties, are proportionate to the financial position of each party.
(2)These rules are to be construed and applied and the processes and procedures of the Court conducted so as best to ensure the attainment of the objects referred to in subrule (1).
In Lois Nominees, Beech J considered the various provisions in O 18 in the context of joining the insurers of a defendant. His decision ultimately was one based upon O 18 r 4, not O18 r 6. Beech J said, at [36]:
Order 1 rule 4B(2) does not mean that whenever an alternative construction could be identified, however tenuous, it must be chosen if it better advances the purposes of order 1 rule 4B(1). It does not amount to a license to rewrite the rules under the guise of interpretation.
To determine whether a matter is 'necessary' so as to enable it to be joined in any particular case requires that the consideration of both the factual background and the legal claim: Wurth [57(e)]. For example, in Qantas v Little, the action concerned a construction contract involving brickwork. The matter in dispute was who was responsible for the failure or instability of the structure. In this context, Glass JA referred to 'disputed issues of fact which are subjacent to the pleadings'. It is not hard to see how this might apply to an issue of the instability of structure involving the architects, the engineers and builders.
The test of necessity is based upon a consideration of the rights and liabilities of the proposed defendant rather than the convenience of the plaintiff or the available remedies. It must be remembered that it is not only a plaintiff who may seek to join a defendant, but proposed defendant may wish to be joined where interests are affected.
A plaintiff commencing the proceedings has the ability to consider the merits of its various options. In this situation, the failure of Stockland to commence proceedings against Mr Hare and Mrs Hare jointly or separately at the outset has now affected exercise of the remedies open to Stockland. Those were matters entirely within Stockland's control. For the purposes of this decision the fact that a separate claim against Mr Hare is statute barred is irrelevant.
It is not whether the conduct of Mr Hare may be raised in the trial that determines this issue. The orders originally sought will have no effect upon him. Logically, damages awarded against Mrs Hare for breach of contract could not impinge upon the rights of Mr Hare directly. No other order could be made which could affect him. A beneficial interpretation of the rule does not extend to joining parties for the convenience of a plaintiff. The objects of O 1 r 4B cannot override the text and purpose of O 18 r 6(2). The passage from News Ltd v Australian Rugby Football League Ltd (1996) 64 FCR 410, at 525, quoted by Corboy J in Wurth at [57(f)] above is apposite.
For these reasons, I am not persuaded it can be said for the purposes of O 18 r 6(2) to have been 'necessary' to joint Mr Hare.
Waiver and O 18 r 6 (1)
Absent power pursuant to O 18 r 6(2) the joinder would be a nullity not an irregularity and thus incapable of cure by waiver.
Stockland relied upon O 18 r 6(1) to argue that misjoinder would nevertheless constitute an irregularity capable of being waived by conduct.
In my view, that argument is misconceived. Order 18 r 6(1) simply does not say that. It operates to permit the determination of issues between parties properly joined in a cause, whether or not there are parties who should have been joined or have been joined in error. The wording and the purpose are clear – it preserves the rights of proper parties to have their cause adjudicated. It does not, in its terms, confer any power to add or remove a party, but preserves the existing action. It is r 6(2) which expressly deals with the addition or removal of parties, whether on application or by the court's own motion.
The waiver alleged was by entering an appearance and seeking further and better particulars of claim. Counsel for Mr Hare argued that both were necessary for Mr Hare to contest the joinder and assess the jurisdiction of the court: Brealey v Board of Management Royal Perth Hospital (1999) 21 WAR 79, 87. In as much as Mr Hare had to consider and seek to set aside the joinder to these proceedings, he needed to appear to seek orders. He was not contending that the court had no jurisdiction over him, or the subject matter of the proceedings at all. But the request for particulars was a broad one, canvassing the details of the claim pleaded against Mr Hare, not only the amount in issue for the purposes of jurisdiction. It appears to me to be a determined step in the proceedings to obtain precise details of the nature of the claim and indeed the matters relied upon.
If the position were that there was an irregularity in the manner in which Stockland proceeded against Mr Hare, I would be inclined to the view that Mr Hare had waived any such irregularity in seeking the extent of particulars which he did.
Disposition of this appeal
I am not persuaded that it can be said that the joinder of Mr Hare in these proceedings was necessary as required by O 18 r6(2) of the Rules of the Supreme Court.
My reasons for reaching this conclusion can be summarised:
(a)'Necessity' in this context means necessary to ensure that all matters in dispute in the original action against Mrs Hare are adjudicated. That claim was for damages for breach of contract. Joining Mr Hare added a completely separate cause of action which was not required to determine the first, and in my view was not 'subjacent' to that claim. There is an obvious evidential issue facing Stockland in proof of the contract. It may be that running the two issues together would assist Stockland and be convenient but that is not the same as resolving all issues in the original action.
(b)The focus on an application under O 18 r 6(2) is upon the rights and liabilities of the person to be joined and how those might be directly affected by the orders capable of being made in the action. The arguments advanced for Stockland were directed to Stockland's position and not that of Mr Hare in the action.
(c)The rules cannot be interpreted as a matter of convenience, applying the reasoning in the Court of Appeal in Homestyle and Tiao, and giving full weight to the need for beneficial interpretation that the rules require.
(d)Order 18 r 6(1) does not convert a nullity into an irregularity.
As the rules do not provide for joinder in these circumstances, the registrar did not have power to make the order in question. In the absence of power, such order was a nullity, thus could not be remedied by waiver.
I would allow the appeal, set aside the order of the deputy registrar made on 11 April 2013 joining Mr Hare.
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