Tiao v Lai - [2009] WASCA 169

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA

TITLE OF COURT : THE COURT OF APPEAL (WA)

CITATION: TIAO -v- LAI [2009] WASCA 169

CORAM: PULLIN JA

HEARD: 25 AUGUST 2009

DELIVERED : 25 AUGUST 2009

FILE NO/S: CACV 64 of 2009

BETWEEN: CHENG CHIH TIAO
HUI PING WANG
First Appellants
AUSTRALIAN CHINESE CONFUCIUS - MENCIUS SAINT TAO CENTRE INC
Second Appellant
AND
SHENG CHIN LAI
Respondent

ON APPEAL FROM:
Jurisdiction              :  SUPREME COURT OF WESTERN AUSTRALIA
Coram  :JOHNSON J
Citation  :LAI -v- TIAO [No 2] [2009] WASC 22
File No  :CIV 1442 of 2005
Jurisdiction              :  SUPREME COURT OF WESTERN AUSTRALIA
Coram  :JOHNSON J
Citation  :LAI -v- TIAO [No 2] [2009] WASC 22 (S)
File No  :CIV 1442 of 2005

Catchwords:

Practice and procedure - Appeal - Application for third party to be joined as an appellant - Turns on own facts

Legislation:

Nil

Result:

Application granted

Category: B

Representation:

Counsel:

First Appellants             :     Mr B D Campbell
Second Appellant          :     Mr G D Crocket
Respondent:     Mr K G Robson
Proposed Appellant       :     Mr M C Hotchkin & Mr P B Dobson

Solicitors:

First Appellants             :     Mony de Kerloy
Second Appellant          :     G D Crocket & Co
Respondent:     Tan & Tan
Proposed Appellant       :     Hotchkin Hanly

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

Homestyle Pty Ltd v City of Belmont [1999] WASCA 59
Krishell v Nilant (2006) 32 WAR 540
Lai v Tiao [2006] WASC 232
News Ltd v Australian Rugby Football League Ltd (1996) 64 FCR 410
State of Victoria v Sutton (1998) 195 CLR 291

PULLIN JA: This is an application by Level Holdings Pty Ltd for an order for leave to be joined as a party to the appeal. It was not a party to the proceedings which are under review. In those proceedings, the respondent was the plaintiff; the first appellants were the first defendants and the second appellant, the association, was the second defendant.
The statement of claim reveals the existence of a dispute within the association about who controlled it. One aspect of the claim was of concern to Level Holdings. In this regard, the statement of claim pleaded in effect that the first-named first appellant, Mr Tiao, purported to enter into a contract on behalf of the association with Level Holdings without authority.
It appears from other information provided to me that the contract involved Level Holdings carrying out development work which would lead to subdivisional approval and the creation of new lots and then, in consideration for Level Holdings carrying out this work, the association would ultimately transfer the title to five newly created lots to Level Holdings. The relief claimed is, inter alia, a permanent injunction restraining the first appellants (but not the association) from giving effect to or proceeding with the contract with Level Holdings.
On 19 April 2005 Master Newnes granted an interim injunction to the plaintiff. The terms of the injunction were that:
Until 5 pm on 13 June 2005, the first and second defendants be restrained and an injunction is hereby granted restraining them from giving effect to or further proceeding with the contract with Level Holdings.
On 13 June 2005 the interlocutory injunction was extended until further order and on that day Level Holdings, through counsel, appeared and foreshadowed a formal application to be joined as a party to the proceedings.
In November 2005 the plaintiff filed an amended statement of claim in which Level Holdings was referred to in only two paragraphs. One referred to the contract signed by the first-named defendant and the other pleaded that neither the board of the association nor its members authorised him to do so. The amended statement of claim did not seek a declaration that the contract was void and did not seek to permanently restrain the association from proceeding with the Level Holdings contract.
In July 2006 Level Holdings applied to Master Newnes, as Newnes JA then was, to be joined as a defendant to the proceedings. Master Newnes did not dismiss the application, but adjourned it after hearing submissions from the parties and a submission from the plaintiff that the proceedings only dealt with matters internal to the association and that Level Holdings would not be prejudiced if not joined.
As a result of that, the Master saw the essential issues as relating to the membership of the association, the control of its affairs and the validity of any acts done on its behalf. The Master noted that those issues fell to be determined solely by reference to the constitution.
The Master said that he was not persuaded at that stage that it was appropriate for Level Holdings to be joined as a defendant because Level Holdings was simply seeking to assist the first defendants to make good the proposition that they were authorised to act on behalf of the association. However, the Master said that witness statements had not been exchanged and that, when exchanged, they may cast a different complexion on the matter and it was therefore appropriate that the door be left open for Level Holdings to renew the application. He then adjourned the application sine die (see the Master's reasons in Lai v Tiao [2006] WASC 232).
Level Holdings was not served with any further pleadings or any witness statements. The matter then proceeded to trial before Johnson J and on 12 February 2009 Johnson J published her reasons and at [39] posed the question whether Mr Tiao was authorised by the board of the association to enter into the contract with Level Holdings. Her Honour found that there was no such authorisation. No formal orders were made on 22 February 2009.
In March 2009 the plaintiffs' solicitors filed a minute of proposed orders seeking declarations, one of which (proposed declaration 8) was that the Level Holdings contract was 'null and void' and seeking a permanent injunction against both defendants from giving effect to or proceeding with the Level Holdings contract.
On 8 May 2009 Level Holdings' solicitors wrote to the associate to Johnson J advising of Level Holdings' earlier application to be joined and stating that it had been refused on the basis that matters to be determined were to be decided solely by reference to the constitution. Level Holdings requested an opportunity to be heard about the proposed orders.
On 15 May 2009 Johnson J's associate responded in writing advising that her Honour did not need to hear from Level Holdings. On 22 May 2009 supplementary reasons were published by Johnson J. Her Honour declined to make a declaration in terms of the proposed declaration 8, but made declaration 7, which declared that Mr Tiao:
Was not authorised by the board or by members of the association to enter into the contract with Level Holdings in respect of the land.
Her Honour also made an order, order number 5, which read:
Once the association has held a general meeting, elected a board of directors, identified its financial position and passed a resolution at a validly convened general meeting which identifies the extent to which the development of the land under the Level Holdings contract need to be reversed, there be liberty to apply for an order that the first defendants do restore the land to its original condition as it stood prior to 11 May 2004 at their own cost.
Her Honour decided that, while the first-named defendant was not authorised to enter into the Level Holdings contract, any other questions as to the validity of the Level Holdings contract ought properly to be the subject of another proceeding. Her Honour made no order discharging the injunction granted by Master Newnes, which had been extended on 13 June 2005 until further order.
Level Holdings made a further attempt to intervene and sought leave to appear on 12 June 2009. Her Honour agreed to hear counsel for Level Holdings on that day. Her Honour indicated that she had not been aware that Level Holdings had been refused the opportunity to be joined as a party. Counsel for Level Holdings sought an order discharging the injunction granted by Master Newnes on 19 April 2005 and extended until further order on 13 June 2005. Her Honour declined to make such an order.
Level Holdings has now made it clear that it does wish to proceed to enforce the contract. If it does so and commences proceedings for specific performance, it will not be bound by the declaration, judgment and orders made in the proceedings under review in this appeal. However, if it succeeds in those proceedings then the embarrassing situation may develop where one judge, Johnson J, has concluded and declared by declaration 7 that Mr Tiao had no authority to enter into the contract on behalf of the association and another judge has found that he did have authority to act on behalf of the association.
Order 5 made by Johnson J may lead to more than embarrassment. If what is permitted under that order comes to pass, then the work carried out by Level Holdings may be undone and, if it is undone, then the likely consequence would be that the final process of subdivisional approval would not come to pass, there would be no titles issued and therefore Level Holdings could not obtain title to five lots. That would directly affect Level Holdings' claimed rights.
Further, her Honour's dismissal of the oral application to discharge the injunction of Master Newnes will also potentially lead to more than embarrassment. If Level Holdings commences separate proceedings, succeeded in establishing that its contract with the association was enforceable on the basis that Mr Tiao had authority to enter into it and obtained an order for specific performance, then such a decree could not be enforced, because the order made by Master Newnes prohibits the association from giving effect to or further proceeding with the contract. That situation would directly affect Level Holdings' claimed rights.
It is important to note that, at the time Level Holdings made its application to Master Newnes to be joined, Master Newnes understood that the proceedings involved, in effect, only the question of who controlled the association. As already mentioned, at that stage, although the injunction granted by Master Newnes restrained the association, no permanent order was sought in the action which would restrain the association from proceeding with the contract if Level Holdings could establish that Mr Tiao at least had ostensible authority to enter into the contract on behalf of the association.
However, on 12 June 2009 Johnson J indicated to counsel for Level Holdings that she intended that her reasons for decision be read as meaning that Mr Tiao had no ostensible authority to enter into the contract. If that is how the reasons should be read, then that would certainly give rise to potential embarrassment if another court, having heard an action by Level Holdings, concluded that there was ostensible authority, just as there would be embarrassment if that court concluded that Mr Tiao had actual authority.
Rule 5 of the Court of Appeal Rules 2004 (WA) states that those rules are to be read with the Rules of the Supreme Court 1971 (WA). Order 18 authorises the court to join necessary parties to proceedings and authorises the court to make such an order of its own motion. Although Level Holdings was not a party to the action, a non-party may appeal from a judgment with leave of the court: see Krishell v Nilant (2006) 32 WAR 540 [74] (McLure JA).
The respondent submits that this court should not order the joinder of Level Holdings because such an order should only be made where there is no other appropriate party. I do not accept that submission. Level Holdings clearly has an interest in seeking to set aside Johnson J's judgment, particularly declaration 7 and order 5, and to set aside, in effect, her Honour's order refusing to discharge the injunction of Master Newnes.
It is proper to make an order joining a party to proceedings to prevent injustice to a person whose rights may be directly affected by a judgment of the court: see Homestyle Pty Ltd v City of Belmont [1999] WASCA 59; News Ltd v Australian Rugby Football League Ltd (1996) 64 FCR 410, 423; and State of Victoria v Sutton (1998) 195 CLR 291.
If it is appropriate to make such an order in primary proceedings, then it is appropriate also to make an order in an appeal. In this case, if the appeal by the first appellants is dismissed, the potentially embarrassing and adverse direct affects on the claimed rights of Level Holdings referred to above will remain.