Valov v Dell and Others No. Scgrg-87-836 Judgment No. S108

VALOV v DELL AND OTHERS
[1999] SASC 108

Full Court: Doyle CJ, Olsson & Bleby JJ

DOYLE CJ: I agree with the order proposed by Bleby J and with the reasons he has given. There is nothing I wish to add to those reasons.
OLSSON J: I also agree.
BLEBY J: The appellant and the first respondent were husband and wife. They were plaintiffs in the action the subject of these proceedings which were commenced in 1987. The allegation in the proceedings is that the second respondents, whom I will call “the defendants”, are in breach of a non-competition clause contained in an agreement between the parties made on 15 December 1983. The agreement related to the purchase by the plaintiffs of a waste disposal business from the defendants.
There have been numerous interlocutory proceedings, including an application by the defendants for an order for security for costs against the then plaintiffs. That application, which was heard in 1996, was dismissed by a Master.
Since the proceedings have been commenced, the marriage between the plaintiffs has been dissolved and there have been proceedings in the Family Court of Australia, including orders relating to settlement of property.
By application dated 17 October 1996, the female plaintiff made an application for a number of orders, including an order that she be disjoined from the proceedings with no order as for costs. The power to make such an order would appear to derive from r28.02 of the Supreme Court Rules. That application was heard on affidavit by the Master who had previously that year rejected the application of the defendants for security for costs.
On 28 February 1997, for reasons which he then published, the Master indicated that he was prepared to make certain orders upon the female plaintiff giving an undertaking in an acceptable form, binding her to refrain from making any claim against the defendants and the male plaintiff in respect of any of the matters raised in the action. The undertaking was duly given, and on 4 March 1997 the Master made the following orders:
That the second plaintiff be disjoined from these proceedings;
That there be no order as to costs as between the second plaintiff and the defendants in respect of the costs of action to date;
That the second plaintiff be exempted from the requirement that she be joined as a defendant in this action;
That this action be stayed until further order provided that if the plaintiff pays into court the sum of $10,000 (or provides security for the payment of same to the satisfaction of the defendants, or in default of the agreement to satisfaction of the court) within 28 days from today, for a stay of proceedings be discharged;
That the first plaintiff pay the second plaintiff's and the defendant's costs of the application for disjoinder to be agreed or taxed;
That the defendant's application to have the costs paid into court be refused.

In support of her application for disjoinder, the female plaintiff had sworn an affidavit that she had never authorised the male plaintiff to instruct solicitors on her behalf, and that she did not know that she was a party to the proceedings.
The male plaintiff did not file an affidavit in opposition to the application. There was an affidavit filed by his solicitor in respect of certain other matters. The male plaintiff had sworn an earlier affidavit in connection with the application for security for costs when he had merely deposed to the fact that at the time litigation commenced, he had his wife's “approval and support”, and referred to the fact that she had sworn an affidavit verifying answers to the defendant's interrogatories in 1993.
The Master found as a fact that the female plaintiff was joined in the proceedings without her knowledge or consent, and that she had been afforded no indemnity for costs by the male plaintiff. The implication was that the female plaintiff had been wrongly joined as plaintiff. It was recognised, however, that by virtue of r27.02 of the Supreme Court Rules, had the female plaintiff been aware of the proceedings and had she refused to be joined as a plaintiff, she would have to have been joined as a defendant.
Although, in a sense, there were conflicting assertions in the affidavits as to whether or not the female plaintiff had consented to being a plaintiff in the proceedings, there was apparently no application by the male plaintiff to have the female plaintiff produced for cross-examination on her affidavit.
The Master was comforted, no doubt, in his finding by the fact that the male plaintiff did not oppose having his former wife discharged from the proceedings without her being joined as the defendant. An inference can be drawn from that consent that he acquiesced in the suggestion that she was wrongly joined and did not wish to participate in the action.
Whether the Master's finding was correct or not did not really affect the outcome of the application before the Master. The significant fact was that the appellant consented to the release of his wife from the proceedings and thereafter wished the action to proceed in his own name.
The order staying the action had been made at the suggestion of the defendants as the price to be paid by the male plaintiff for continuing the action alone against them. The male plaintiff appealed against the order of the Master, a single Judge of this Court. The appeal was lodged out of time, by about one week, and an extension of time in which to lodge the appeal was granted. The appeal was heard on 8 September 1997 and was dismissed on that day. One of the grounds of appeal before the single Judge was that the Master wrongly found, on a factual basis, that the female plaintiff was at all material times joined in the proceedings without her consent or knowledge. His Honour considered that by reference to the affidavit material, the finding was open and properly made.
Nothing which has been put to us now would cause me to disagree with the learned Judge's observation, although, as I have said, that finding by the Master is not critical to the orders that he made.
Another ground of appeal before the learned Judge was that the Master erred in law in holding that the first plaintiff should pay into court the sum of $10,000, or provide security for the payment of that sum. His Honour held that such an order was given in the exercise of the discretion of the Master and was correctly made.
An application for leave to appeal to this Court was filed on 12 November 1997, again out of time. That application came before a differently constituted Full Court which, on 3 April 1998, made an order extending the time within which to file the application for leave to appeal, and granted leave to appeal on one matter only, namely the correctness of the order staying the proceedings pending payment into court or provision of the security.
Rule 95.02(b) requires that an appeal in respect of leave to appeal which has been granted is to be filed within 14 days of the order granting leave. The appellant's notice of appeal was filed on 30 April 1998, almost two weeks out of time, although no point is taken now by the defendants that an order of another Master made on 13 January 1999 does not extend the time within which to lodge the appeal.
The order requiring security for costs and the staying of the action pending its provision was an order made in the exercise of the Master's discretion. The basis on which the Master proceeded to make the order was that the appellant wished to continue the action by himself in circumstances where his wife had been inappropriately joined as plaintiff, and where the appellant was then consenting to her removal as a party and to her no longer being liable to the defendants for costs of the action should they succeed. The Master said:
“In my view, it would be unjust to the defendants to allow the first plaintiff, at this late stage of protracted proceedings, to continue the action alone when the defendants had assumed that if they are successful in obtaining an order for the costs of the action, they would be able to obtain an order against both plaintiffs.”
The Master also made reference to the failure of the appellant to indemnify the third respondent in respect of costs which she might have to have paid to the defendants if they were successful, but that is not really material to the issue before the Court. Such an indemnity would only give the female plaintiff recourse to the appellant for any amounts which she was required to pay to the defendants. The granting of such an indemnity would not affect the defendant's recourse to her for enforcement for any order for costs which they might obtain.
Prior to the order removing the female plaintiff from the action, a great deal of time had elapsed since the commencement of the proceedings and substantial costs had been incurred. The defendants could reasonably have assumed that they would have recourse to both plaintiffs who were apparently promoting the claim, in respect of any order for costs that might be made in their favour. Their position was not necessarily the same as it would have been if the female plaintiff had been joined to the proceedings as a reluctant defendant under r27.02. If she were a reluctant defendant and took no part in supporting the appellant's claim against the defendants, she would be unlikely to suffer an order for costs against her, and the defendants would have been aware of that situation from the outset and would no doubt have prepared and managed their case accordingly.
Once the female plaintiff was dismissed from the proceedings, the defendant still faced the same claim. The potential reservoir to which they might have recourse for costs if they were successful had been reduced at a time when substantial costs had been incurred and the matter was almost ready for trial. They had made an application for security for costs against both plaintiffs a short time before and that application was no doubt Judged on the merits. A relevant factor may have been the financial position of both the then plaintiffs. The financial position of the plaintiffs as between themselves had been affected by orders of the Family Court.
This was not an order in the nature of an order for security for costs. What the Master took into account was that the disjoinder and the corresponding granting of immunity to the female plaintiff from any costs order placed the defendants in a weaker position than they originally were in respect of enforcement of any cost orders that they might obtain or had already obtained, and they had already obtained a number. Substantial costs, estimated at over $20,000, had been incurred already by the defendants.
In my opinion, the Master was entitled to take those factors into account. He was also entitled to take into account his own knowledge of the extraordinary dilatoriness with which the action had apparently been pursued - a dilatoriness which seems to have pervaded the appeal from his order as well - and the circumstances which he had previously considered in relation to the earlier refusal of the order for security.
There was nothing in his approach inconsistent with his previous refusal to grant security. The landscape of the action had changed significantly. If the appellant wished to proceed with the action without the female plaintiff, the Master was entitled, in my opinion, to give directions for the subsequent conduct of the action and to make those orders subject to terms as to costs or otherwise as he thought proper (r3.04(g)).
It was within his discretion to impose the conditions he did. The change in the environment of the action had been brought about by the improper joinder of the female plaintiff and her subsequent release. Whether I would have made the order complained of or an order in some other terms is not to the point. The order was within the proper exercise of the Master's discretion. The Judge who heard the appeal also considered that the order was within the exercise of the Master's discretion. With respect, that was a correct view of the exercise undertaken by the Master, and in my opinion, this Court has no reason to depart from the views expressed by the learned Judge. In my opinion, the appeal has no merit and should be dismissed.
May I express, in conclusion, my concern that the action has now been on foot for some 12 years. It is not our function in the context of these proceedings to enquire into the reasons for that, but there have been obviously appalling delays. One would expect from now on that there should be imposed very strict time limits on the future conduct of the action and its listing for trial.

[1999] SASC 108

4 March 1999