Trade Practices Commission v Westco Motors (Distributors) Pty Ltd

[1981] FCA 51

Re: TRADE PRACTICES COMMISSION
And: WESTCO MOTORS (DISTRIBUTORS) PTY. LIMITED trading as WESTCO MOTORS N.S.W.
(1981) 58 FLR 384
No. G34 of 1979
Practice and Procedure - Practice

COURT

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
Sheppard J.(1)

CATCHWORDS

Practice and Procedure - joinder of additional respondents - jurisdiction to permit joinder where respondents are not necessary parties - Federal Court Rules Order 6 Rules 2 and 8.

Practice - Joinder of additional defendants - Jurisdiction to permit joinder - Federal Court Rules, O. 6, rr. 2, 4, 8; O. 29, r. 5; O. 64, r. 1.

HEADNOTE

Upon an application to join as defendants persons said to having been knowingly concerned in a contravention of the Trade Practices Act 1974,

Held: (1) The proposed defendants could not be joined by the plaintiff under O. 6, r. 8 as they were neither persons who ought to have been joined as parties nor persons whose joinder as parties was necessary to ensure that all matters in dispute in the proceeding might be effectually and completely determined and adjudicated upon.

Vandervell Trustees Ltd. v. White, (1971) AC 912; Amon v. Raphael Tuck & Sons Ltd., (1956) 1 QB 357; The Result, (1958) P 174; Gurtner v. Circuit, (1968) 2 QB 587; Bradvica v. Radulovic, (1975) VR 434; McIntosh v. Williams, (1979) 2 NSWLR 543, referred to.

(2) Joinder might be made pursuant to O. 6, r. 2 (a) without leave if the joinder were of respondents in a proceeding which was within that part of the rule. Order 6, r. 4 which provided that the court might grant leave under r. 2 before or after joinder had the effect that for all other joinders, being those joinders under r. 2 (b), the applicant required leave whether they be joinders in proceedings not falling within r. 2 (a) or joinders sought to be made after the commencement of proceedings in proceedings otherwise within r. 2 (a).

(3) The jurisdiction to allow joinder of the additional defendants under O. 6. r. 2 (b) should be exercised.

HEARING

Sydney, 1981, March 9; May 5. #DATE 5:5:1981

APPLICATION.

Application for leave to amend statement of claim and to join additional defendants.

G. G. Masterman Q.C. and P. Neil, for the plaintiff.

G. E. Fitzgerald Q.C. and R. E. Cooper, for the defendant. Cur. adv. vult.

Solicitor for the applicant: B. J. O'Donovan, Commonwealth Crown Solicitor.

Solicitors for the respondent: Boyd House & Partners.

J. ISLES

ORDER

1. The proceedings continue under the Rules of Court which came into force on 1 August, 1979.

2. Leave be given to the plaintiff to join as defendants in the proceedings Cyril William Anderson and Donald Claude Blair.

3. The plaintiff have leave to file an amended statement of claim in terms of the document initialled and dated by Sheppard J and left with the papers.

4. Costs of the argument on the questions of joinder and amendment to be costs in the proceedings.

Order accordingly.

JUDGE1

The plaintiff in this matter seeks to file an amended Statement of Claim. By the amendment the plaintiff seeks to join as defendants two persons, Messrs. Anderson and Blair, not yet parties to the proceedings. The plaintiff also seeks to add a further paragraph to the Statement of Claim in which is made an additional allegation of breach by the existing defendant, as well as by the defendants to be added, of s.48 of the Trade Practices Act 1974. The additional defendants are said to be persons who have been, directly or indirectly, knowingly concerned in or party to the contraventions of the Act alleged against the existing defendant - see s.76 of the Act.

The application is opposed upon the basis that there are questions concerning the Court's jurisdiction to permit the joinder of the new defendants, and also on the ground that it ought not to allow the amendment or the joinder by reason of matters going to the exercise of its discretion.

Before I proceed, there is a preliminary matter to be dealt with. The action was commenced by summons filed on 29 June, 1979. That was before the existing rules came into force on 1 August, 1979. Rule 1 of Order 64 provides that proceedings commenced prior to the date when the existing rules came into operation are to continue under the repealed rules, "subject to any order or direction of the Court or a Judge". Thus, at the time that this matter was argued the existing rules had no application. To that extent the argument in this matter proceeded upon a false basis. It was only after I had prepared these reasons that I noticed that the matter had been commenced before the coming into force of the existing rules. I thereupon spoke to both counsel about the problem. Having obtained instructions, they have agreed that I should make an order pursuant to Order 64 Rule 1 that the proceedings henceforth continue under the new or existing rules. If that be done the new rules will hereafter apply and the rules relied upon by counsel for the plaintiff for the joinder of the new parties will be applicable. As a first matter, therefore, I order by consent that the proceedings continue under the Rules of Court which came into force on 1 August, 1979.

A formal consequence of the making of that order will be that the parties will respectively become applicant and respondent instead of plaintiff and defendant. I have not, however, thought it necessary to change their titles in this judgment.

I return to deal with the questions of substance which are in issue. In the submission of counsel for the plaintiff there is jurisdiction to permit the joinder of the new defendants. Reliance was placed cumulatively and alternatively upon the provisions of Rules 2 and 8 of Order 6 of the Rules. I deal first with submissions concerning the applicability of Order 6 Rule 8. So far as it is relevant the Rule provides as follows:
"8.(1) Where a person who is not a party -

(a) ought to have been joined as a party; or

(b) is a person whose joinder as a party is necessary to ensure that all matters in dispute in the proceeding may be effectually and completely determined and adjudicated upon,
the Court, on application by him or by any party or of its own motion, may order that he be added as a party and make orders for the further conduct of the proceeding."

In the submission of counsel for the defendant the new defendants are neither persons who ought to have been joined as parties or persons whose joinder as parties is necessary to ensure that all matters in dispute in the proceeding may be effectually and completely determined and adjudicated upon. In my opinion that submission is sound. The breaches of the Act to be relied upon against each of the defendants are separate and independent breaches. If the defendants are liable for the penalties for which the plaintiff sues their liability will be several and not joint. The action as presently constituted is one in which the existing defendant is sued for penalties for breaches of s.48 of the Act. The action is properly constituted as to parties and there is no person other than the first defendant who is interested or concerned in the relief which is claimed. All matters in dispute in the proceeding may be effectually and completely determined and adjudicated upon in the proceedings as they are presently constituted.

My conclusion in this regard finds support in some of the judgments of the members of the House of Lords in Vandervell Trustees Limited v. White (1971) A.C.912. The Court was there concerned with the then equivalent of the English Rules, Order 15 Rule 6(2). The wording of the rule was similar to that of the rule now under consideration. It may be that there was less connection between the causes of action of the defendants in that case than there is in the present. It may be also true to say that it was inappropriate, because of the provisions of the income tax legislation there in question, for the two causes of action and the two defendants to be joined at all in the one set of proceedings. But Lord Morris said that the matters in dispute between the executors and the trustees could be effectively and completely determined and adjudicated upon in the absence of the other party (p.930). It followed that in his opinion the presence of the other party was not shown to be "necessary" within the meaning of the rule. Viscount Dilhorne expressed a similar view (p.936), adding that the rule does not give power to add a party whenever it is just or convenient to do so. I refer also to what was said by Lord Wilberforce (p.940).

In saying what I have I do not wish to be taken as accepting without qualification the dictum of Devlin J.(as he was) in Amon v. Raphael Tuck & Sons Limited (1956) 1 Q.B. 357 at p.380. His Lordship said:
"The court might often think it convenient or desirable that some of such persons should be heard so that the court could be sure that it had found the complete answer, but no one would suggest that it is necessary to hear them for that purpose. The only reason which makes it necessary to make a person a party to an action is so that he should be bound by the result of the action, and the question to be settled therefore must be a question in the action which cannot be effectually and completely settled unless he is a party."

Although that dictum has been applied in later cases - see for example, The Result (1958) P.174 - it has also been criticised. I refer to Gurtner v. Circuit (1968) 2 Q.B.587 at pp.595 and 602. On the other hand it should be noticed that Gurtner's case was decided before Vandervell and that the two judges critical of what Devlin J. had said in the Amon case were Lord Denning M.R. and Diplock L.J. (as he was). Lord Denning's view of the rule was not accepted by some of the members of the House of Lords in Vandervell; and, although Lord Diplock was a member of the Bench which decided Vandervell, he found it unnecessary to express a view on the meaning and effect of the rule. All I wish to say about Gurtner and cases in which it has been followed since Vandervell was decided (I refer to Bradvica v. Radulovic (1975) V.R.434 and McIntosh v. Williams (1979) 2 N.S.W.L.R. 543) is that it and the other cases to which I have referred are cases very different from the present. They are cases in which the rights and/or liabilities of other parties were plainly involved.

I turn to consider Order 6 Rule 2. It provides as follows:
"Two or more persons may be joined as applicants or respondents in any proceeding -
(a) where -
(i) if a separate proceeding were brought by or against each of them, as the case may be, some common question of law or of fact would arise in all the proceedings; and

"(ii) all rights to relief claimed in the proceeding (whether they are joint, several or alternative) are in respect of or arise out of the same transaction or series of transactions; or

(b) where the Court gives leave so to do."
Rule 4(1) provides that the Court may grant leave under Rule 2 before or after the joinder. Rule 4(2) provides than an applicant may apply for leave under Rule 2 either before or after the filing of his originating process and may apply without serving notice of the motion on any person on whom the application has not been served.

I was at first inclined to think that the provisions of Rule 2 afforded the plaintiff no assistance. But on reflection I think that the case is one which comes within Rule 2(b). Originally I read the rule as if it provided that an applicant might join two or more persons as respondents where there was some common question of fact or law or where the rights to relief claimed were in respect of or arose out of the same transaction or series of transactions, and Rule 2(b) applied to other classes of cases. Plainly the present case falls within Rule 2(a) so that if the joinder had been made originally, it would have been proper. That might lead one to think that a case such as this does not fall within Rule 2(b).

But one has to consider the operation of Rule 4. It enables the Court to grant leave before or after the joinder. In those circumstances it would seem to me that a case which otherwise falls within Rule 2(a) may also fall within Rule 2(b) if the parties sought to be added were not originally joined. What it comes down to is that an applicant may join pursuant to Rule 2(a) without leave if the joinder is of respondents in a proceeding which is within that part of the rule. For all other joinders he requires leave, whether they be joinders in proceedings not falling within Rule 2(a), or joinders sought to be made after the commencement of proceedings in proceedings otherwise within that provision. Senior counsel for the existing defendant did not put a positive submission to the contrary, although he said - and I agree - that the matter is not clear.

In the course of argument reference was made to the distinction which there is between Rules 2 and 8. There is a question as to the need for Rule 8, if Rule 2 has the effect contended for by counsel for the plaintiff. But I think the explanation is to be found in the historical development of Rule 8 which was a provision designed originally to overcome pleas in abatement. I have also taken into account the fact that after Vandervell's cases the English equivalent of Rule 8 was amended to enable the court to permit joinder of another party where it was just or convenient so to do. These two matters must be given weight, but they do not persuade me that the interpretation of the rule which I think should be adopted is incorrect. I should add that neither counsel was able to refer me to any authority which is in point, notwithstanding that I gave leave to both counsel to put in written submissions after I reserved my decision. My own researches have not brought forth any relevant authority.

I should perhaps mention that if I had been against the application which is now made, the position could have been overcome by the commencement by the plaintiff of separate proceedings against the new defendants and consolidation of the existing proceedings and the new proceedings. Without wishing to pre-empt any future exercise of discretion by any of the Judges of this Court including myself I would have thought that this would have been a clear case for the making of an order pursuant to Order 29 Rule 5 the words of which follow closely those of Order 6 Rule 2. The matters I have decided are therefore, to a degree, academic.

For the above reasons I am satisfied that I have jurisdiction to allow the joinder of the additional defendants. The question is whether I should exercise my discretion in favour of doing so. This matter has been mentioned on a number of occasions. The parties have been endeavouring to arrive at an agreed statement of facts. Their endeavours in this respect have apparently failed. In the course of their discussions the legal representatives of the plaintiff raised with those of the existing defendant the question of whether that defendant would be able to meet any judgment entered against it. Eventually a letter was written by the solicitor for the plaintiff to the solicitors for the defendant. It was in the following terms:
"I refer to proceedings in the Federal Court of Australia on 5 February 1981 and to a telephone conversation between Mr. Bayliss of your office and Mr. Brown of my office on 13 February 1981.
I am instructed that if the present proprietor of Westco Motors N.S.W., viz. Westco Australia Pty. Limited, is willing to give an enforceable undertaking in writing preferably by deed, that it will pay any penalties or costs which the Court might impose on the defendant then the plaintiff will not seek to join Messrs. Anderson and Blair as second and third defendants nor to amend its statement of claim by alleging that Messrs. Anderson and Blair were concerned in the alleged contraventions of Section 48 of the Trade Practices Act 1974 by the defendant company.
The other proposed amendments of the statement of claim however will stand.
Please advise me of your instructions as soon as possible."

Counsel for the existing defendant said that this revealed that improper pressure was being brought to bear upon a company which is a stranger to the proceedings and to the alleged breaches of the Act which are relied upon. He submitted that this demonstrated that the application now made to join the new defendants was being made, not for the purpose of joining them but in an improper endeavour to persuade the company which is a stranger to the proceedings to give the undertaking which is referred to in the letter.

Counsel for the existing defendant cross-examined the plaintiff's solicitor who had sworn an affidavit in support of the application to amend. I express no view as to the propriety or otherwise of the matters which are referred to in the letter. I am concerned with an application made by the Trade Practices Commission to add two defendants against each of whom it is said that he is in breach of provisions of the Act. Allegations to this effect are made in the amended statement of claim. They appear to have some support in what is said in the judgment of Franki J. in Ron Hodgson (Holdings) Pty. Limited v. Westco Motors (Distributors) Pty. Limited 29 A.L.R. 307. Moreover the Commission might, without any leave, commence separate proceedings against the new defendants and seek, as I have mentioned, an order consolidating them with the existing proceedings. The practicalities of the situation are such that notwithstanding resentment which is felt by the existing defendant, the company independent of the proceedings and the legal representatives for those parties, the only sensible thing to do is to permit the joinder which is sought.

Insofar as the new paragraph of the amended statement of claim is concerned, there is no submission by counsel for the existing defendant that it would suffer any embarrassment as a result of its addition. My jurisdiction to permit the amendment is clear.

For the reasons I have given I propose to give leave to the plaintiff to file the amended statement of claim subject to one further matter which I now mention. In my opinion the provisions of paragraph 10 and of the particulars appended to paragraphs 13, 14 and 15 are imprecise in that they do not indicate, in the case of paragraph 10, to whom the motor vehicles were supplied, and in the case of the particulars which of the various companies is being referred to.

Discussion took place about further directions to be given in relation to the filing of the defences to the amended statement of claim, interrogatories, discovery and trial on affidavit evidence. I would prefer to give directions about these matters after the new parties have been served and have had an opportunity of considering their position. It will then be possible to make appropriate directions which will bind both the existing parties and the new ones as well. The matter will be stood over to a suitable date for further directions.

The costs of the argument which has taken place on the question of joinder and amendment will be costs in the proceedings.