West Australian Construction Industry Redundancy Fund Ltd v Ortin
[2001] WASC 231
WEST AUSTRALIAN CONSTRUCTION INDUSTRY REDUNDANCY FUND LTD -v- ORTIN & ORS [2001] WASC 231
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2001] WASC 231 | |
| Case No: | CIV:1722/1999 | 7 & 17 AUGUST 2001 | |
| Coram: | MASTER SANDERSON | 29/08/01 | |
| 13 | Judgment Part: | 1 of 1 | |
| Result: | Directions made in terms sought by third and fourth defendants | ||
| B | |||
| PDF Version |
| Parties: | WEST AUSTRALIAN CONSTRUCTION INDUSTRY REDUNDANCY FUND LTD (ACN 009 404 273) MARIA MICHELLE ORTIN RONALD GRAHAM O'CONNOR COUNTRY WIDE HOMES LTD GEORGE JASPER JACKSON McDONALD (A FIRM) MARTIN PAUL BANNING DOUGLAS FRANK BREWER ESCON LANE PTY LTD JOHN ANDREW MILLER DONALD CAMPBELL-SMITH |
Catchwords: | Practice and procedure Summons for third party directions Application by third parties for order dismissing summons Turns on own facts |
Legislation: | Fair Trading Act 1987 (WA) Supreme Court Rules, O 19 r 4 Trade Practices Act 1974 |
Case References: | Albion Insurance Co Ltd v Government Insurance Office (NSW) (1969) 121 CLR 342 Bell Group NV (In Liq) v Aspinal (1998) 19 WAR 561 Birmingham and District Land Co v London and North Western Railway Co (1886) 34 Ch D 261 Esanda Finance Corporation Ltd v Putnin, unreported; SCt of WA; Library No 940532; 28 September 1994 Merryweather v Nixon [1799] 8 Term Rep 186 Re La Rosa; Norgard v Rodpat Nominees Pty Ltd (1991) 31 FLR 83 Smith v Cock [1911] AC 317 Albion Insurance Co Ltd v Government Insurance Office (NSW) (1969) 121 CLR 342 Baxter v France (No 2) [1895] 1 QB 591 Bell Group NV (In Liq) v Aspinall (1998) 19 WAR 561 Bialkower v Acohs Pty Ltd (1998) 83 FCR 1 Birmingham & District Land Co v London & North Western Railway Co (1886) 34 Ch D 261 Butler v Dunn Monumental Masons Pty Ltd (1996) 5 Tas R 487 Commercial Developments Pty Ltd v Mercantile Mutual Insurance (Workers Compensation) Ltd (1991) 5 WAR 208 Cummings v Lewis (1993) 41 FCR 559 Dillingham Constructions Pty Ltd v Steel Mains Pty Ltd (1975) 49 ALJR 233 Hanave Pty Ltd v LFOT Pty Ltd (1999) 168 ALR 318 Merryweather v Nixan (1799) 8 Term Rep 186 Myers v N & J Sherick Ltd [1974] 1 WLR 31 Parramatta City Council v Sandell [1973] 1 NSWLR 151 Pioneer Concrete (NT) Pty Ltd v Watkins Ltd (1983) 48 ALR 365 Smith v Cock [1911] AC 317 Standard Securities Ltd v Hubbard [1967] 2 All ER 622 Trade Practices Commission v Manfal Pty Ltd (1991) 33 FCR 382 |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
- IN CHAMBERS
- Plaintiff
AND
MARIA MICHELLE ORTIN
First Defendant
RONALD GRAHAM O'CONNOR
Second Defendant
COUNTRY WIDE HOMES LTD
Third Defendant
GEORGE JASPER
Fourth Defendant
JACKSON McDONALD (A FIRM)
Fifth Defendant
MARTIN PAUL BANNING
First Third Party
(Page 2)
- DOUGLAS FRANK BREWER
Second Third Party
ESCON LANE PTY LTD
Third Third Party
JOHN ANDREW MILLER
Fourth Third Party
DONALD CAMPBELL-SMITH
Fifth Third Party
Catchwords:
Practice and procedure - Summons for third party directions - Application by third parties for order dismissing summons - Turns on own facts
Legislation:
Fair Trading Act 1987 (WA)
Supreme Court Rules, O19 r 4
Trade Practices Act 1974
Result:
Directions made in terms sought by third and fourth defendants
Category: B
(Page 3)
Representation:
Counsel:
Plaintiff : No appearance
First Defendant : No appearance
Second Defendant : No appearance
Third Defendant : Mr P C S Van Hattem
Fourth Defendant : Mr P C S Van Hattem
Fifth Defendant : No appearance
First Third Party : Mr K J O'Toole
Second Third Party : In person
Third Third Party : Mr C R Coulson
Fourth Third Party : Mr C R Coulson
Fifth Third Party : In person
Solicitors:
Plaintiff : No appearance
First Defendant : No appearance
Second Defendant : No appearance
Third Defendant : Freehills
Fourth Defendant : Freehills
Fifth Defendant : No appearance
First Third Party : Kevin James O'Toole & Associates
Second Third Party : In person
Third Third Party : Coulsons
Fourth Third Party : Coulsons
Fifth Third Party : In person
Case(s) referred to in judgment(s):
Albion Insurance Co Ltd v Government Insurance Office (NSW) (1969) 121 CLR 342
Bell Group NV (In Liq) v Aspinal (1998) 19 WAR 561
Birmingham and District Land Co v London and North Western Railway Co (1886) 34 Ch D 261
Esanda Finance Corporation Ltd v Putnin, unreported; SCt of WA; Library No 940532; 28 September 1994
Merryweather v Nixon [1799] 8 Term Rep 186
(Page 4)
Re La Rosa; Norgard v Rodpat Nominees Pty Ltd (1991) 31 FLR 83
Smith v Cock [1911] AC 317
Case(s) also cited:
Albion Insurance Co Ltd v Government Insurance Office (NSW) (1969) 121 CLR 342
Baxter v France (No 2) [1895] 1 QB 591
Bell Group NV (In Liq) v Aspinall (1998) 19 WAR 561
Bialkower v Acohs Pty Ltd (1998) 83 FCR 1
Birmingham & District Land Co v London & North Western Railway Co (1886) 34 Ch D 261
Butler v Dunn Monumental Masons Pty Ltd (1996) 5 Tas R 487
Commercial Developments Pty Ltd v Mercantile Mutual Insurance (Workers Compensation) Ltd (1991) 5 WAR 208
Cummings v Lewis (1993) 41 FCR 559
Dillingham Constructions Pty Ltd v Steel Mains Pty Ltd (1975) 49 ALJR 233
Hanave Pty Ltd v LFOT Pty Ltd (1999) 168 ALR 318
Merryweather v Nixan (1799) 8 Term Rep 186
Myers v N & J Sherick Ltd [1974] 1 WLR 31
Parramatta City Council v Sandell [1973] 1 NSWLR 151
Pioneer Concrete (NT) Pty Ltd v Watkins Ltd (1983) 48 ALR 365
Smith v Cock [1911] AC 317
Standard Securities Ltd v Hubbard [1967] 2 All ER 622
Trade Practices Commission v Manfal Pty Ltd (1991) 33 FCR 382
(Page 5)
1 MASTER SANDERSON: This is the third and fourth defendants' application for third party directions. It is brought pursuant to O 19 r 4 of the Supreme Court Rules. The third party proceedings have something of a history and to understand the way in which this application unfolded, it is necessary to set out that history in some detail.
2 By chamber summons filed 8 September 2000, the third and fourth defendants sought leave pursuant to O 19 r 1(2) to issue third party notices against the presently named five third parties. The application was supported by an affidavit of David Ronald Goodman sworn 7 September 2000. The application came on for hearing on 7 December 2000 and I made orders largely in terms of the application. Despite the provisions of O 19 r 2(1), the application was made inter partes although no direction was made that a summons should be issued and served. No doubt this was done out of an abundance of caution and no criticism of the third and fourth defendants is to be made for not complying strictly with the rules. A conditional appearance was filed by the first third party on 20 December 2000 and a summons seeking an order that the third party notice against the first third party be struck out was filed the following day. An unconditional appearance was filed by the third third party and the fourth third party on 21 December 2000 and a conditional appearance was filed by the fifth third party on the same day. The second third party filed a conditional appearance on 6 February 2001 together with a summons to strike out the third party notice against the second third party. The third and fourth third parties also took out a chamber summons dated 6 February 2001 seeking to strike out the third party notices against them.
3 The applications of the first through to fourth third parties came on for hearing in chambers before the Acting Master on 19 April 2001. On 28 May 2001, the learned Acting Master delivered oral reasons and dismissed all four applications. With respect to the fifth third party, it does not appear as though his chamber summons was listed for hearing at the same time as the other third parties' summonses. That is a procedural matter which has no real bearing on the outcome of this application.
4 It is, I think, a fair summary of the arguments put by the third parties to the learned Acting Master to say that it was submitted that the third and fourth defendants had no cause of action against any of the third parties. It was also argued that there was no basis upon which an order joining the third parties could have been made in the first instance. In other words, the Acting Master was asked to review the decision to issue the third party notices and then, if he determined that the third party notices should stand, to summarily set aside each of them.
(Page 6)
5 The learned Acting Master dismissed all of the third parties' applications. During the course of his reasons he said:
"On the facts of this case I am not prepared to look behind the reason of the learned master. He was prepared to grant leave on the basis of what was before him, and I consider it inappropriate for me now to examine the issues again. This is all the more so as I consider the propositions put forward by the third parties are not as clear as they may seem. In the circumstances I do not consider it appropriate to strike out any of the notices …
The grant of leave does not bind the court at a later stage to give third party directions. Even if the notice is within O 19 r 1, the court has a discretion as to whether or not it will give directions. A refusal to give such directions necessarily brings the third party proceedings to an end, it being unnecessary for the court to make an express order dismissing them …
The issues which the court will need to take into consideration in deciding what if any directions should be made may be wider than the issues before me, and I consider it would be unfair to the parties to deal with that question until all the issues can be properly canvassed."
6 The third and fourth defendants then issued the summons for directions which is now before the Court. The summons first came before the Court on 22 June 2001 when orders were made programming it to a special appointment. The matter then came on again on 7 August 2001, when, in line with par 1 of a minute of proposed directions filed by the third and fourth defendants, I ordered that they file and serve a statement of claim in the third party proceedings within seven days. That was duly done and the matter came on for argument. It was argued by all of the third parties that I should make no order for directions which would, effectively, summarily dispose of the third party proceedings. On behalf of the third and fourth defendants, directions were sought which readied the matter for trial. No order was sought in relation to the trial itself - that is to say, the third and fourth defendants did not seek an order that the trial of the third party proceedings take place immediately after the trial of the action between the plaintiffs and the defendants. Indeed, as that action has already been entered for trial, it may be that the primary action and the third party proceedings could not be brought into line. Be that as it may, it is relevant to note that no order was sought as to the timing of the trial of the third party proceedings.
(Page 7)
7 It was the primary submission of counsel for the third and fourth defendants that it was not now open to the third parties to argue that no orders should be made on the summons for directions. It was submitted that this argument had been put to the learned Acting Master and lost. No appeal had been lodged against the learned Acting Master's decision and that was the end of the matter. On behalf of the third parties, it was submitted that there had, in reality, been no determination by the learned Acting Master of the merits of their strike-out application. Rather, the Acting Master's decision made it plain that he had stood over the question of whether the third party notices should be effectively set aside to be determined on the summons for directions. The third parties contended they were entitled to have their application considered on the merits.
8 On balance, I am satisfied that the third parties' approach is correct. On analysis, the form of O 19 is rather curious. A third party notice can be issued in one of two ways. First, a defendant can issue a notice after filing an appearance, but before filing a defence. If this approach is adopted, then no leave to issue the notice is required. Alternatively, if a defence has been filed, then the defendant must obtain leave to issue the third party notice. The application for leave is made ex parte, but, as I have noted above, the Court may direct the application be made by summons. This does not, of course, involve the proposed third party appearing before the Court to oppose the application. Rather, it provides an opportunity to other parties to the proceedings to make submissions about whether or not third party proceedings should be initiated. If those proceedings were to have an adverse effect upon the conduct of the action between the plaintiff and the defendant, this may provide a ground for refusing leave. As a plaintiff in such a situation has an interest in whether or not the application should be granted, it is appropriate for that party to be heard: see Esanda Finance Corporation Ltd v Putnin, unreported; SCt of WA; Library No 940532; 28 September 1994.
9 Once the third party notice is issued and served, it is open to the third party to enter a conditional appearance under O 12 r 6(1). If that is done, then under O 12 r 6(2) the third party is obliged to apply by summons within 14 days to set aside the notice. On return of that summons, the third party can seek to have the notice set aside "on the ground of any informality or irregularity which renders the originating process or service thereof invalid". This procedure does not entitle the third party to reargue the question of whether or not leave ought to have been granted to issue the third party notice. It is only in the case where there has been material non-disclosure during the course of the application for leave or when fresh evidence is available that the notice will be set aside: see Bell Group NV
(Page 8)
- (In Liq) v Aspinal (1998) 19 WAR 561 at 569 - 570. Thus, once leave is given and a third party notice is duly issued and served, the third party cannot, by the conditional appearance, simply attack the basis upon which the leave was granted. Nor can the decision to grant leave be appealed. If the notice is to be set aside, some other mechanism must be used. Order 19 r 6 allows for the Court to set aside a third party notice "at any stage of the proceedings". Precisely why this rule is necessary or what it adds given that it has long been the case that, on a summons for directions, the Court can refuse to give directions thereby effectively terminating the third party proceedings, is open to question. The situation where a defendant does not issue a summons for directions is covered by O 19 r 4(2). If a defendant does not issue a summons for directions, a third party may do so and seek to have the third party notice set aside. In any event, it is clear that either pursuant to O 19 r 6 or at the hearing of a summons for third party directions, it is open to a third party to seek to have the notice set aside. It is then that the third party can put its case as to why the third party proceedings should not progress.
10 What has happened in this case can, I think, best be viewed in this way. What was before the Acting Master, at least with respect to the first, second and fifth third parties was a summons taken out in conjunction with a conditional appearance. The fact that the Acting Master dismissed those summonses does nothing more than deal with the issues raised by the conditional appearance. It is true that the third and fourth third parties did not issue a conditional appearance and, strictly speaking, their application should have been viewed in a different light. However, a reading of the decision of the Acting Master makes it plain that he did not approach the matter in that way. Rather, he considered whether or not the initial decision to allow issue of the third party notices should stand. The learned Acting Master concluded that he should not review that decision and in reaching that conclusion he was clearly correct. But he left open the prospect that the third parties might still seek to set aside the third party notices. He anticipated any such application would be made in the course of dealing with a summons for directions. That is the way the third parties have approached the matter and, in my view, they have adopted the correct course. They are entitled to have the merits of their position considered.
11 Before dealing with the submissions made by the third parties, it is convenient if I set out the nature of the claim against the proposed third parties. This can conveniently be summarised by quoting from the affidavit of Mr Goodman filed 7 September 2000 in support of the
(Page 9)
- application for leave to issue the third party notices. Relevantly, it reads as follows:
"5 The Plaintiff claims against the Third and Fourth Defendants damages for alleged negligence and breaches of the Trade Practices Act ('TPA') and Fair Trading Act ('FTA') in causing the Plaintiff to lend to Espanol Holdings Pty Ltd ('Espanol') an amount of $1,050,000 to enable Espanol to purchase 10 strata units numbered 20 to 29 at lot 1982 Newman Drive, Newman ('the Units'), in consideration of being granted a first mortgage over the Units.
6 By a notice pursuant to Order 19 Rule 8 dated 20 July 2000 and amended on 4 August 2000, the First Defendant, Mrs MM Ortin, alleged that she is a guarantor for Espanol and that Espanol entered into the transaction to purchase the Units (and borrow the money referred to in paragraph 5 above) because of the misleading and deceptive conduct of the Third and Fourth Defendants (in breach of the TPA and FTA) in sending a facsimile advising that finance had been granted on or about 5 February 1998.
7 Mrs Ortin says further that but for the facsimile, Espanol would not have entered into the transaction to purchase the units, and would not have borrowed any monies from the Plaintiff.
8 Mrs Ortin claims an indemnity or contribution from the Third and Fourth Defendants for the Plaintiff's claim.
9 The claim set out in the notice of 20 July 2000 is essentially the same as the claim made by Espanol and Mrs Ortin against the Third and Fourth Defendants in action number CIV 1172 of 1999 ('the Espanol Action'). The Third and Fourth Defendants in this action are the Fifth and Sixth Defendants in the Espanol action.
10 Banning, Brewer, Escon Lane, Miller and Campbell-Smith are respectively the First, Second, Third, Fourth and Seventh Defendants in the Espanol Action.
(Page 10)
- 11 By notices dated 17 April 2000 in the Espanol Action, the Third and Fourth defendants claimed a contribution from Banning, Brewer, Escon Lane, Miller and Campbell-Smith in respect to the allegations made by Espanol and Mrs Ortin on the grounds set out in those notices.
12 I believe that the Third and Fourth Defendants, on the same grounds and for the reasons set out in the notices dated 17 April 2000 in the Espanol Action, are entitled to a contribution to any amounts that the Third and Fourth defendants may be ordered to pay in this action, and their costs, in equity and at law, in such proportions as the court deems fit."
12 The third and fourth defendants' amended statement of claim, by its first 37 paragraphs, identifies the parties and essentially repeats the claims made in the Espanol action. Paragraph 39 then reads as follows:
"The third parties are liable to contribute to Ortin in respect of her liability (if any) to the plaintiff in the action because that liability (if any) constitutes loss or damage of Ortin:
(a) by conduct of Banning, Brewer, Campbell-Smith and Escon Lane in contravention of TPA s52 and/or FTA s10, in which Banning, Brewer and Miller were involved; and
(b) incurred as the proximate and foreseeable consequence of the breaches by Banning, Brewer and Campbell-Smith of duties of care and fiduciary duties owed to Ortin."
13 Against this, the third parties say that there is not sufficient nexus between the claim brought by the first defendant ("Ortin") against the third and fourth defendants and the third party proceedings brought by the third and fourth defendants. Referring to O 19 r 1(b), it was submitted that a defendant must establish that it was entitled to relief or remedy relating to or connected with the original subject matter of the action and substantially the same as the relief or remedy claimed by the plaintiff. The first third party, in particular, placed reliance upon what was said to be a lack of sufficient connection between the action brought by the plaintiff against Ortin and Ortin against the third party.
14 (I should pause at this point to clarify the way this matter has proceeded. The plaintiff issued proceedings against the first through to
(Page 11)
- fifth defendants. The claim by the plaintiff against Ortin related to the alleged guarantee provided by her. Ortin then sought an indemnity from the third and fourth defendants. It is in relation to that claim that the third party proceedings were issued. As counsel for the third and fourth defendants pointed out during the course of the hearing, it may well be that properly described the present first to fifth third parties should be described as to the first to fifth fourth parties. Be that as it may, it is the claim brought by Ortin against the third and fourth defendants which is now the subject of the third party proceedings by the third and fourth defendants against the first to fifth third parties.)
15 On behalf of the first third party, it was said that there was nothing in the third party notice which established the existence of a right of contribution or indemnity on the part of the third and fourth defendants against the first third party. Put another way, it was said that the relief claimed by the third and fourth defendants against the first third party was not substantially the same as the relief claimed by the plaintiff against the third and fourth defendants. On that basis, it was said that there was no nexus such as would justify allowing the third party proceedings to continue.
16 Counsel for the third and fourth third parties put the position in a slightly different way. It was submitted that for a defendant to pursue third party proceedings he must establish that he is entitled to a contribution or an indemnity from the third party: Birmingham and District Land Co v London and North Western Railway Co (1886) 34 Ch D 261. Thus, parties who share a co-ordinate liability are entitled to seek contribution, each from the other, for any payment or other detriment incurred in meeting that liability, so the burden is shared properly amongst those liable for it: see Albion Insurance Co Ltd v Government Insurance Office (NSW) (1969) 121 CLR 342 at 349 - 351. At common law, there was no right of contribution as between wrongdoers. In this case, Ortin says that the third and fourth defendants breached the Trade Practices Act 1974 or the Fair Trading Act 1987 (WA). In turn, the third and fourth defendants say that the third parties breached one or other of those two statues. In other words, the third and fourth defendants' claim for indemnity arises if both the third and fourth defendants and the first to fifth third parties are wrongdoers. In such a situation, it was submitted, no right of contribution arises: see Merryweather v Nixon [1799] 8 Term Rep 186.
17 In equity, co-ordinate liabilities arise when the parties share an obligation: see Smith v Cock [1911] AC 317 per Lord Mersey at 326; Re
(Page 12)
- La Rosa; Norgard v Rodpat Nominees Pty Ltd (1991) 31 FLR 83. It was submitted that the third and fourth defendants' claim for contribution against the third and fourth third parties was not founded on any shared or common obligation to Ortin. Rather, it was said contribution was sought merely because the parties are defendants in the Espanol action.
18 The second and fifth defendants, who appeared in person at the hearing, adopted the submissions put by counsel for the other third parties. In addition, each filed submissions which I have taken into account in determining this application.
19 The position of the third and fourth defendants can be summarised in this way. If Ortin has suffered loss, it is her liability to make repayment to the plaintiff under the guarantee. Although two actions are on foot, Ortin can only ever suffer one loss. If the third and fourth defendants are liable to the plaintiff in respect of that loss, and in the Espanol proceedings the third parties are also liable to Ortin with respect to that loss, then the third and fourth defendants are entitled to a contribution. It is therefore proper and appropriate that the third party notices stand.
20 In my view, there is no basis for setting aside these third party notices. With respect to counsel for the first third party, in my view, the question is not whether there is any relationship between the claim brought by the plaintiff against the third and fourth defendants and the claim by the third and fourth defendants against the third parties. The question is whether there is any connection between the claim brought by Ortin against the third and fourth defendants and the claim brought by the third and fourth defendants against the third parties. That connection clearly exists.
21 The more difficult question is whether or not there is a so-called "co-ordinate liability" between the third and fourth defendants and the third parties. The precise meaning to be attached to the phrase "co-ordinate liabilities" is not entirely clear. It is discussed by French J in the La Rosa case (supra). His Honour refers to Meagher, Gummow and Lehane: Equity, Doctrines and Remedies (2nd ed) at 101. There, the learned authors have summarised the position as follows:
" … the proper view appears to be that contribution may be recovered where the liabilities of co-obligors to the principal claimant are such that enforcement by him against either co-obligor would diminish the obligor in his material substance to the value of the liability. Any alternative or additional
(Page 13)
- requirement in the doctrine of contribution of similarity or consubstantial nature between n the liabilities to which the co-obligors are exposed would produced intolerable uncertainty and obscure the true object of the doctrine."
22 That formulation of the principle is consistent, I think, with the position put by counsel for the third and fourth defendants. Any contribution made by the third and fourth defendants to Ortin in these proceedings will necessarily diminish the liability of the third parties to Ortin in other proceedings. In that sense, it is proper that the third party proceedings remain on foot. Furthermore, I am not entirely sure that common law principles would preclude a contribution as between the third and fourth defendants and the third parties in a situation such as this. I have referred to the La Rosa decision above. Without going into the very complex facts of that case, part of the argument revolved around the question of whether contribution proceedings could be instituted where both parties were said to be wrongdoers because both, it was alleged, had breached the Trade Practices Act. French J left the position open. Merryweather v Nixon (supra) involved joint tortfeasors who had acted intentionally and in concert. It may be stating the principle too widely to say that common law will never countenance contribution between wrongdoers even in a situation where the wrong by both involves a breach of the Trade Practices Act. In any event, if this is the position at law, it is a matter which can be determined at trial.
23 There remains then the question of whether I should exercise my discretion and make the orders sought by the third and fourth defendants in their minute of proposed directions. As I have already indicated, the directions do not deal with the mode of trial of the action., They simply ready the third party proceedings for hearing. That being the case, I am satisfied that it is proper to make the directions as sought. Subject to hearing from the parties as to the precise form of the orders and as to costs, I propose to make orders in terms of the summons for directions.
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