Walters v Kemp (No 2)
[2014] ACTSC 251
•26 September 2014
SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY
Case Title: | Walters & Ors v Kemp (No 2) |
Citation: | [2014] ACTSC 251 |
Hearing Dates: | 15, 18 September 2014 |
DecisionDate: | 26 September 2014 |
Before: | Burns J |
Decision: | See [16], [21], [22] |
Category: | Interloutory application |
Catchwords: | CIVIL PROCEEDINGS – Application to Join a Third Party as a Defendant – whether third party is a concurrent wrongdoer – whether third party is a necessary and proper party – whether third party is subject to advocates’ immunity – whether claim against third party is obviously untenable – whether claim against third party is statute barred CIVIL PROCEEDINGS – Application to Amend Further Amended Defence and Counterclaim – whether new causes of action arise out of the same facts or substantially the same facts – whether causes of action are statute barred – allegation that facts relevant to the cause of action were deliberately concealed – whether proposed amendments should be refused on discretionary grounds |
Legislation Cited: | Civil Law (Wrongs) Act 2002 (ACT) s 107J (2), chapter 7A Court Procedures Rules 2006 (ACT) rules 223 (2), 503 |
Cases Cited: | Alpine Holdings Pty Ltd v Feinauer [2008] WASCA 85 David Anthony Ward Walters & Ors t/as Elringtons v Graham Ronald Kemp [2014] ACTSC 100 |
Parties: | David Anthony Ward Walters, David Major, Carlos Turini, David Lizhong Chen and Matthew Bridger trading as Elringtons (ABN 35 055 173 116) (Plaintiffs) Graham Ronald Kemp (Defendant / Counter Claimant) Chris Whitelaw (Third Party) |
Representation: | Counsel Mr Weetman (Plaintiffs) Mr Clynes (Defendant / Counter Claimant) Mr Stretton SC (Third Party) |
| Solicitors Boettcher Law (Plaintiffs) Charles Filgate Giles & Associates (Defendant / Counter Claimant) Moray & Agnew Lawyers (Third Party) | |
File Number: | SC 228 of 2011 |
Burns J:
I have two applications in these proceedings, both filed by the defendant/counter claimant, who for ease of reference I will refer to as Mr Kemp. The plaintiffs are a firm of legal practitioners, who for convenience I will refer to as Elringtrons.
The first application seeks orders that Mr Kemp have leave pursuant to r 223 (2) of the Court Procedure Rules 2006 (ACT) (Court Procedures Rules) and s 107J (2) of the Civil Law (Wrongs) Act 2002 (ACT) (the Wrongs Act) to join Mr Chris Whitelaw as a defendant to his counterclaim. This application follows on from orders that I made on 23 May 2014 in which I refused an application by Mr Kemp to strike out a portion of Elringtrons’ Reply to Mr Kemp’s Further Amended Defence and Counterclaim in which Elringtrons pleaded that Mr Whitelaw, counsel briefed by Elringtrons to advise and appear for Mr Kemp in the O’Brien dispute (for a history of which see my reasons of 23 May 2014), was a concurrent wrongdoer pursuant to chapter 7 A of the Wrongs Act. Mr Whitelaw was represented by counsel on the hearing of this application, and opposed the orders sought.
The second application seeks orders that Mr Kemp have leave to amend his Further Amended Defence and Counterclaim in accordance with a draft document provided to the Court. In part, the amendments Mr Kemp seeks would follow on from, and be necessitated by, an order granting leave to join Mr Whitelaw as a defendant to Mr Kemp’s Counterclaim. However the amendments are not limited to those which would be required by Mr Whitelaw becoming a defendant to the Counterclaim. Mr Kemp also now seeks to expand his claim against Elringtrons by adding additional causes of action. Elringtrons opposes the orders sought by Mr Kemp.
There is a degree of urgency which requires an immediate decision with respect to these applications. On one view of the matter, a limitation deadline is approaching, being the sixth anniversary of the handing down of the decision in a building dispute, which I will refer to as the O’Brien dispute for convenience, in the Magistrates Court on 30 September 2008 (for an explanation of the O’Brien dispute see my reasons of 23 May 2014).
The first application
The legislative provisions relevant to the present application are found in the Court Procedures Rules:
210Necessary parties
Each person whose presence as a party is necessary to enable the court to adjudicate effectively and completely on all issues in dispute in a proceeding must be included as a party to the proceeding.
220Court may include party if appropriate or necessary
(1)The court may order that a person be included as a party to a proceeding if –
(a)the person ought to have been included as a party; or
(b)including the person as a party is necessary to enable the court to adjudicate effectively and completely on all issues in dispute in the proceeding.
(2)The court may make an order under this rule –
(a)at any stage of the proceeding; and
(b)on application by the person or a party to the proceeding or on its own initiative; and
(c)whether the person to be included should be a plaintiff or defendant.
Note 1Pt 6.2 (Applications in proceedings) applies to an application for an order under this rule.
Note 2Rule 6901 (Orders may be made on conditions) provides that the court may make an order under these rules on any conditions it considers appropriate.
223Including parties – procedure
(1)An application by a person to be included as a party to a proceeding must be supported by an affidavit showing the person’s interest in –
(a)the issues in dispute in the proceeding; or
(b)an issue in dispute to be decided between the person and a party to the proceeding.
(2)An application to include a person as a defendant must be served on all active parties to the proceeding and on the person.
Note 1Pt 6.2 (Applications in proceeding) applies to an application made under this rule.
Note 2Active party is defined in the dictionary.
Section 107J of the Wrongs Act is also relevant:
107JIncluding non-party concurrent wrongdoer
(1)In a proceeding in a court involving an apportionable claim, any number of people may be included as defendants.
(2)However, a person may be included as a defendant only with the court’s leave.
(3)The court must not give leave for a person to be included as a defendant if the person was a party to a previously concluded proceeding in relation to the claim.
Mr Kemp submits that in circumstances where Elringtrons are alleging that Mr Whitelaw is a concurrent wrongdoer, then Mr Whitelaw is a necessary and proper party to Mr Kemp’s Counterclaim.
Mr Whitelaw opposes the application for him to be joined as a defendant to Mr Kemp’s Counterclaim. Counsel appearing for Mr Whitelaw argued two grounds in support of the proposition that Mr Kemp’s application should be refused. First, he submitted that any claim against Mr Whitelaw would be doomed to fail due to Mr Whitelaw’s entitlement to rely upon advocates’ immunity: see D’Orta-Ekenaike v Victoria Legal Aid (2005) 223 CLR 1. Secondly, he submitted that any claim against Mr Whitelaw would now be statute barred.
In response to Mr Whitelaw’s first submission, Mr Kemp argues that advocates’ immunity does not apply to a claim for breach of fiduciary duty. He also submits that decisions such as D’Orta-Ekenaike v Victoria Legal Aid can be distinguished on the basis that they established that advocates’ immunity is grounded in the public interest in finality of litigation, but that in the present case he does not propose making any collateral attack upon the decision in the Magistrates Court, which he accepts as correct. He submits that the present case is one where the litigation should never have been commenced. As such, this is not a “wrong result” case, but is a case where there was never any proper basis for pursuing litigation and the case was doomed from commencement. Finally, he submits that the question of whether the actions of Mr Whitelaw are subject to the protection of advocates’ immunity should not be determined summarily in the course of an application to add Mr Whitelaw as a party, and that it is a triable issue which should be determined after taking evidence.
I recognise that I have little by way of evidence before me at the present time concerning Mr Whitelaw’s involvement in the O’Brien dispute. Mr Whitelaw swore an affidavit on 9 September 2014 in which he deposes to his recollection of his involvement in the O’Brien dispute. Not surprisingly, his recollection is significantly affected by the passage of time since the events in question. Mr Whitelaw ceased practice as a barrister in June 2007, and now works as a freelance journalist and photographer in Queensland. The proposed pleadings against Mr Whitelaw allege that on or shortly prior to 14 January 2002 he was retained by Elringtrons on behalf of Mr Kemp to act for, advise and appear for him at a hearing in the Magistrates Court arising out of the O’Brien dispute. The proposed pleadings allege that in these circumstances Mr Whitelaw came under a fiduciary duty to Mr Kemp and owed to him a fiduciary duty in relation to the provision of those legal services, and that he further owed Mr Kemp a duty of care in contract and in tort to provide the legal services with due care and skill. The proposed pleadings further allege that Mr Whitelaw, in the circumstances, knew or ought to have known that certain advice given to Mr Kemp by Elringtrons was wrong and had been given negligently by Elringtrons, and that certain actions by Elringtrons in the O’Brien dispute had been performed negligently by Elringtrons and in breach of their fiduciary duty to Mr Kemp.
In Donnellan v Woodland [2012] NSWCA 433 Beazley JA, with whom Barrett, Hoeben JJA and Sackville AJA agreed, said concerning whether issues of advocates’ immunity can, or should, be determined prior to the taking of evidence:
6A preliminary question arises as to whether the advocates' immunity issue should be determined prior to any consideration of the other issues raised on the appeal. If, as I understand it to be the case, the principle underlying advocates' immunity is that of finality of litigation: see D'Orta-Ekenaike, there is an argument that a claim brought against a legal practitioner for negligence in the conduct of litigation should be determined, in the first place at least, by reference to the immunity. If the immunity applies, the question whether there is negligence becomes moot. That is another way of saying that the immunity is an immunity from suit.
7Against that approach is the argument that it may not be possible to determine whether the immunity attaches unless the negligent conduct is identified. Whilst the pleadings are the obvious starting point, they may not sufficiently enable that identification to be made. That was the position in Alpine Holdings Pty Ltd v Feinauer[2008] WASCA 85, discussed below. If the correct position is that the immunity should be determined prior to the determination of the question of negligence, an immunity claim ought properly be able to be dealt with on the pleadings by way of a strike out application pursuant to the Uniform Civil Procedure Rules 2005 (UCPR), r 13.4 or r 14.28. This was the view of this Court in Bott v Carter[2012] NSWCA 89, especially at [11]. Bott v Carter itself involved an application to strike out the statement of claim. As the result in Alpine Holdings demonstrated, that may be a contestable result.
8When there has been a full hearing of a matter, the practice of the courts appears to have been to determine the negligence claim first and then to determine whether advocates' immunity protects the practitioner from liability for negligence: see, for example, Chamberlain v Ormsby t/as Ormsby Flower[2005] NSWCA 454 and Symonds v Vass[2009] NSWCA 139; 257 ALR 689. In the latter case, on the decision of the majority, the matter was remitted to the Common Law Division because inadequate findings had been made in respect of the negligence claim to enable the Court to determine whether the immunity applied.
9For myself, I am not satisfied that there is a single correct approach. Rather, it will depend upon the circumstances of the particular case. If the pleadings on their face alleged negligence in the conduct of litigation falling into one of the three categories of consequence that flow from a practitioner's negligence: see D'Orta-Ekenaike at [70], discussed below at [166], it may be possible that the immunity question can be determined on the basis of the conduct alleged in the pleadings. There is a question, in any event, as to the extent of the reach of the immunity. As Basten JA, at [11], observed in Bott v Carter, “the immunity does not extend to all activities undertaken by legal practitioners, even in relation to disputes which may give rise to litigation”. However, not every case will be so clear cut.
[citations omitted]
Whilst her Honour’s comments were specifically directed towards the conduct of the appeal then before the Court of Appeal, much of what she says has application to the way in which this issue should be dealt with at first instance. In the course of her decision Beazley JA referred to a number of cases where a claim for advocates’ immunity had been considered. One of those cases was Alpine Holdings Pty Ltd v Feinauer [2008] WASCA 85, where the appellants successfully brought a claim for damages for misleading and deceptive conduct. On appeal, the amount of damages awarded by the trial judge was substantially reduced. The appellants brought proceedings in negligence against their solicitor alleging that he had been negligent in respect of advice given as to the likely quantum of damages and in relation to an offer of settlement made between trial and appeal. The solicitor, the respondent to the proceedings, sought to strike out the claim on the basis that his actions were the subject of advocates’ immunity. Concerning this case, Beazley JA said:
201In dealing with the advice given in respect of the offer of settlement, the Court (Steytler P and Newnes AJA) considered that it was not certain where the line was appropriately drawn as to the application of the immunity. Their Honours explained their concerns as follows:
“86 As matters stand, it is, in our view, arguable that the second claim does not fall within the immunity. In the first place, the advice in relation to the settlement was arguably not connected with ‘work done out of court which leads to a decision affecting the conduct of the case in court’ or ‘work intimately connected with work in court’. That is, it did not affect the conduct of the appeal in court, nor was it connected with any work that would or might be done in court, except in the general sense that it determined whether or not there was ultimately any litigation to proceed to court. In that sense, however, it might be thought not to differ in principle to advice on the prospects of success before action on which a decision is based as to whether or not to commence proceedings. We do not think it could be suggested in light of the modern authorities that advice of the latter kind would attract the immunity.
87 It is also arguable, having regard to the justification for the immunity as described by the majority in D'Orta-Ekenaike, that there is no occasion for the application of the immunity in the present case as the claim does not involve any derogation from, or undermining of, the principle of the finality of court decisions by requiring the re-opening of earlier litigation. It is not alleged that the decision of the Court of Appeal was wrong or that the negligence of the defendant brought about a decision of the court that would otherwise have been different. The claim does not require reconsideration of the correctness of the decision of the Court of Appeal. That decision is simply the basis upon which the claim is founded."
202In the result, the Court held that the trial judge had erred in striking out the statement of claim as it was arguable that the plaintiff's claim was not defeated by advocates' immunity. As is apparent from the manner in which the Court expressed their opinion in these paragraphs, the Court, at the most, raised questions as to the reach of the immunity. Their Honours did not engage in any analysis of, nor was it necessary to determine whether advocates' immunity applied. For that reason and with respect to their Honours,no assistance is to be gained from that case in the determination of this case.
One thing which is clear from the decision of the Court of Appeal in Donnellan v Woodland is that much may depend upon the facts as determined by any court where a claim of advocates’ immunity is raised. On the face of it, Mr Whitelaw is a proper and necessary defendant to Mr Kemp’s Counterclaim, as Elringtons have pleaded that he is a concurrent wrongdoer. In my opinion, before refusing Mr Kemp’s application to join Mr Whitelaw as a defendant to his counterclaim on the basis that advocates’ immunity attached to the actions of Mr Whitelaw in the O’Brien proceedings, I would have to be satisfied that the proposed proceedings against Mr Whitelaw are so obviously untenable that they could not succeed: General Steel Industries Inc v Commissioner for Railways(NSW) (1964) 112 CLR 125.
Mr Kemp’s submission that advocates’ immunity does not apply to a claim for breach of fiduciary duty may be doubted: see Young v Hones (No.2) [2013] NSWSC 1429, and Goddard Elliot (a firm) v Fritsch [2012] VSC 87, both of which are quoted with approval by Davies J in Stillman v Rushbourne [2014] NSWSC 730. Similarly, his submission that advocates’ immunity does not apply because there is no collateral attack on the decision of the Magistrates Court in the O’Brien dispute may also be doubted: see Donnellan v Wood at [207] to [208].
In my opinion it is inappropriate to attempt to determine the issue of advocates’ immunity at this point in the proceedings. The proposed proceedings against Mr Whitelaw by Mr Kemp faces considerable hurdles, to the extent that it may be doubted whether they will ultimately succeed, but it is not so obviously untenable that Mr Kemp should be deprived of the opportunity, on the basis of a claim for advocates’ immunity by Mr Whitelaw, of proceeding with his claim.
I now turn to the submission made by Mr Whitelaw that any claim against him would be doomed to failure as statute barred. In my opinion this is not presently an issue. The question of the application of the provisions of the Limitations Act 1985 (ACT) (the Limitations Act) will not arise until such time as Mr Whitelaw raises a limitation issue in any defence to the Counterclaim. It is the primary position of Mr Kemp that any claim in negligence against Mr Whitelaw is not presently statute barred, because his damage did not accrue until the publication of the decision in the O’Brien dispute by the Magistrates Court on 30 September 2008. This is a matter of dispute by Mr Whitelaw, on the basis that Mr Kemp paid fees owing to Mr Whitelaw on a number of occasions between May 2002 and September 2005. This is a dispute that I do not presently need to resolve, for the reasons which I will come to in a moment. On the face of it, any claim in breach of contract against Mr Whitelaw is statute barred. Mr Kemp, however, has foreshadowed that he proposes meeting any defence by Mr Whitelaw based upon the provisions of the Limitations Act by relying upon the provisions of s 33 of that Act. As I understand it, Mr Kemp will allege that there was a deliberate concealment of facts relevant to a cause of action available to him such that his claims in both negligence and contract will not be statute barred. In these circumstances, it is inappropriate to refuse leave to join Mr Whitelaw as a defendant to the Counterclaim on the basis that the application of the Limitations Act will make any such proceedings futile.
Mr Kemp will be granted leave to join Mr Whitelaw as a defendant to the Counterclaim.
The second application
To this point in time, Mr Kemp’s Counterclaim against Elringtons has been based upon a claim of a breach of fiduciary duty. Mr Kemp now proposes expanding his claim against Elringtons to include claims in negligence and contract, albeit based upon the same facts. Elringtons submit that these amendments should not be allowed as any causes of action in negligence or breach of contract arising out of the O’Brien dispute are statute barred by reason of s 11 of the Limitation Act. Alternatively, Elringtons submit that I should refuse the amendments on discretionary grounds.
Mr Kemp relies on rules 502 and 503 of the Court Procedures Rules:
502Amendment – of documents
(1)At any stage of a proceeding, the court may give leave for a party to amend, an originating process, anything written on an originating process, a pleading, an application or any other document filed in the court in a proceeding in the way it considers appropriate.
(2)The court may give leave, or give a direction, on application by the party or on its own initiative.
Note 1Pt 6.2 (Applications in proceedings) applies to an application for leave or a direction under this rule.
Note 2Rule 6902 (Leave may be given on conditions) provides that, if the court gives leave under these rules, it may give the leave on the conditions it considers appropriate.
(3)The court may give leave to make an amendment even if the effect of the amendment would be to include a cause of action arising after the proceeding was started.
(4)If there is a mistake in the name or identity of a party, the court must give leave for, or direct the making of, amendments necessary to correct the mistake, even if the effect of the amendments is to substitute another person as a party.
(5)This rule does not apply in relation to an amendment of an order.
NoteSee r 6906 (Mistakes in orders of court certificates) for amendment of orders.
(6)This rule is subject to rule 503 (Amendment – after limitation period.
503Amendment – after limitation period
(1)This rule applies in relation to an application for leave in a proceeding to make an amendment mentioned in this rule if a relevant period of limitation, current at the date the proceeding was started, has ended.
NotePt 6.2 (Applications in proceedings) applies to an application for leave under this rule.
(2)The court may give leave to make an amendment correcting a mistake in the name or identity of a party, even if the effect of the amendment is to substitute a new party, only if –
(a)the court considers it appropriate; and
(b)the court is satisfied that the mistake sought to be corrected –
(i) was a genuine mistake; and
(ii) was not misleading or likely to cause any reasonable doubt about the identity of the person intending to sue or intended to be sued.
(3)The court may give leave to make an amendment changing the capacity in which a party sues, whether as plaintiff or counter-claiming defendant, only if—
(a) the court considers it appropriate; and
(b) the changed capacity in which the party would then sue is a capacity in which the party might have sued on the day the proceeding was started b the party.
(4)The court may give leave to make an amendment to include a new cause of action only if –
(a) the court considers it appropriate; and
(b) the new cause of action arises out of the same facts or substantially the same facts as a cause of action for which relief has already been claimed in the proceeding by the party applying for leave to make the amendment.
I am satisfied that the new causes of action Mr Kemp proposes pleading arise out of the same facts or substantially the same facts as his cause of action in breach of fiduciary duty. As Elringtons correctly submit, however, r 503 of the Court Procedures Rules only permits a new cause of action to be pleaded after a limitation period has ended, where the relevant limitation period had not expired at the date of the commencement of the proceedings. It is arguable that any cause of action in negligence available to Mr Kemp did not accrue until 30 September 2008, meaning that the limitation period for that cause of action has not yet expired. The same could not be said with respect to any cause of action in contract. Mr Kemp, however, has foreshadowed that he will allege a deliberate concealment of facts by Elringtons relevant to his proposed causes of action in both negligence and contract such that the limitation period has not expired by virtue of the operation of s 33 of the Limitation Act. On the face of it, this would satisfy the requirements of r 503 (1) of the Court Procedures Rules. Of course, it will only become finally apparent whether there has been a concealment of a fact or facts relevant to either of these causes of action after the taking of evidence, but prima facie the allegation that facts relevant to such a cause of action were deliberately concealed will be sufficient to satisfy the requirements of r 503 (1).
Elringtons further submits that the proposed amendments should be refused on discretionary grounds. They refer to the fact that these proceedings have been on foot for some three years, and that they are virtually ready for trial. They also submit that any expansion of the case as pleaded by Mr Kemp will inevitably lead to further delay and costs. It does not appear to me inevitable that significant further costs will be occasioned by the amendments proposed by Mr Kemp. The new causes of action arise out of the same facts and circumstances as his present claim in breach of fiduciary duty. I accept that some further costs and delay may be occasioned by these amendments, but I would expect both to be minimal.
Mr Kemp will be given leave to file a Second Further Amended Defence and Counterclaim in the same form as that provided to the Court, with a revised date as at 14 September 2014.
I propose reserving costs at this time. If any party seeks a different order as to costs, they may apply to have the matter relisted within seven days of publication of these reasons.
| I certify that the preceding twenty-two [22] numbered paragraphs are a true copy of the Reasons for Judgment of his Honour Justice Burns. Associate: Date: 26 September 2014 |
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