Witlox Nominees Pty Ltd v John Tsapsalis Nominees Pty; Ltd and Ors

[2009] VCC 643

IN THE COUNTY COURT OF VICTORIA Revised

Not Restricted

AT MELBOURNE
CIVIL DIVISION

COMMERCIAL – GENERAL DIVISION

Case No. CI-08-03461

WITLOX NOMINEES PTY LTD	Plaintiffs
(ACN 006 808 573)
v
JOHN TSAPSALIS NOMINEES PTY LTD	Defendants
(ACN 005 304 996) & OTHERS

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JUDGE:	HIS HONOUR JUDGE SACCARDO
WHERE HELD:	Melbourne
DATE OF HEARING:	29 May 2009
DATE OF RULING:	9 June 2009
CASE MAY BE CITED AS:	Witlox Nominees Pty Ltd v John Tsapsalis Nominees Pty Ltd & Ors
MEDIUM NEUTRAL CITATION:	[2009] VCC 0643

RULING

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Catchwords: PRACTICE AND PROCEDURE – parties – apportionable liability – concurrent wrongdoers – whether joinder of additional defendants constitutes an abuse of process.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiffs	Ms C Dew	Obst Legal Pty Ltd
For the Defendants	Mr M Morrison	Marshalls & Dent
HIS HONOUR:

1          In this proceeding, the plaintiffs bring a claim against the fourth defendant alleging that it failed, whilst acting in the capacity as the plaintiffs’ solicitor, to exercise the care expected of a competent solicitor both in:

(i)	providing advice to the plaintiffs;
(ii)	preparing documentation in the form of a loan agreement, mortgage and guarantee;

with respect to a business loan (“the loan”) which was to be made by the
plaintiffs to the first defendant.

2          It is alleged by the plaintiffs that the second and third defendants were at all material times guarantors of the loan.

3          The allegations as to breach, relied upon by the plaintiffs in their claim against the fourth defendant are set out in paragraphs 36 and 37 of the Amended Statement of Claim dated 31 March 2009.

4          The fourth defendant seeks to join to the proceedings two additional defendants, Anthony Sinclair and Angelos Tsaptsalis. It is asserted that the joinder is necessary because the proceeding commenced by the plaintiffs against the fourth defendant is one which is governed by Part IVAA of the Wrongs Act 1958 (“the Act”) and that the proposed fifth and sixth defendants are concurrent wrongdoers in respect of the proceeding. The plaintiffs oppose the fourth defendant’s application.

5 In dealing with the question as to whether leave should be granted pursuant to the provisions of s.24AL of the Act to join additional defendants to the proceeding, I am of the opinion that the issues about which I must be satisfied are:

(i)	the fact that this is a proceeding to which Part IVAA of the Act applies;
(ii)	that the proposed defendants are concurrent wrongdoers pursuant to the definition within s.24AH of the Act;
(iii)	that the joinder of the proposed defendants is appropriate, in that the claim made against them is one which would not constitute an abuse of process if the order proposed is made.

Is the Claim against the Fourth Defendant one to which the Provisions of Part
IVAA of the Act Apply?

6          It was submitted on behalf of the plaintiffs that the claim made against the fourth defendant was not a claim to which Part IVAA of the Act applied because it was not a claim for damages but was rather a claim for a sum certain. In making this submission, the reliance was placed by the plaintiffs upon the decision of the Court of Appeal in Commonwealth Bank of Australia v Witherow [2006] VSCA 45.

7          I do not accept this submission. Whilst it may be that the claim instituted by the plaintiffs against the first, second and third defendants involves a claim of a type similar to that involved in Witherow, I am of the opinion that the claim made by the plaintiffs against the fourth defendant is an action of a type all together different.[1]

[1]             Insofar as one aspect of the claim is based on a breach of duty of care, it is appropriate in my opinion to categorise the loss flowing from that breach as being an entitlement to damages which is in effect the claim made by the plaintiffs in paragraph 40 of the Amended Statement of Claim.

8          Having regard to the fact that the cause of action pleaded against the fourth defendant includes a claim arising from a failure to take reasonable care, I am of the opinion that the factual preconditions to the operation of the statutory regime imposed by Part IVAA of the Act are established.

Are the Proposed Defendants Concurrent Wrongdoers?

9          It is alleged by the fourth defendant that the proposed fifth and sixth defendants are concurrent wrongdoers for the following reasons:

(i)	Anthony Sinclair, whilst acting as a broker in respect of the loan, made misrepresentations to the plaintiffs which induced the loan;
(ii)	Angelos Tsaptsalis, who is the son of the second and third defendants, in witnessing guarantees which were purportedly signed by his parents, made representations to the plaintiffs which were false if the assertion made by the second and third-named defendants that they did not sign the guarantee is accepted;

10 If the allegations made by the fourth defendant against the proposed additional defendants are made out, I am satisfied that the defendants would be regarded as concurrent wrongdoers pursuant to the definition of that term as contained in paragraph 24AH of the Act.

Does the Proposed Joinder of the Additional Defendants Constitute an Abuse of Process?

11        In opposing this application, it is submitted on behalf of the plaintiffs that the joinder of the defendants is misconceived for the reason that:

(a)  The claim made against the proposed fifth defendant asserts:

(i)      that the fifth defendant was at all material times acting as a broker for the plaintiffs when, in the absence of evidence to the contrary, a presumption exists that he was the broker for the first and second defendants;

(ii)      that the fifth defendant was at all material times acting as the agent of Growth Corp Solutions Pty Ltd, and not in his own capacity;

(iii)     that there is no evidence that the fifth defendant was in breach of any industry practice with which he should have complied with whilst acting as a mortgage broker;

(iv)     that the material relied upon by the fourth defendant in making this application is such that I should not be satisfied that the joinder of the proposed fifth defendant is justified.

(b) In respect to the application for leave to join the sixth defendant, it is submitted on behalf of the plaintiffs, that as the mere witness to the loan agreement entered into between the first and second defendants the sixth defendant owed no duty to the plaintiffs, and in the circumstances, there was no basis upon which proceedings could be maintained against him.

12        I am satisfied that the standard of proof which the fourth defendant is required to meet as to whether the proposed proceedings constitute an abuse of process is similar to that which arises when considering whether a proceeding should be dismissed on the grounds that the pleadings constitute an abuse of process. It follows that I should not disallow the joinder of the proposed defendants on the basis that the joinder would constitute an abuse of process unless it is clear that the joinder would result in a proceeding which was vexatious or frivolous.[2]

[2]             see Dey v Victorian Railways Commissioners (1949) 78 CLR 62

13        Whilst I consider that the way in which the fourth defendant has particularised the breaches which are relied upon by it as against the proposed fifth and sixth defendants will involve complex proofs which may be difficult to make out, I am not satisfied that the proposed proceedings amount to an abuse of process. This finding effectively overcomes the submissions made on behalf of the plaintiffs against a proposed joinder of the fifth and sixth defendants.

14        In the circumstances, I consider that it is appropriate to make an order that Anthony Sinclair and Angelos Tsaptsalis be joined as the fifth and sixth defendants to these proceedings.

The Form of the Order

15        An issue arises as to the form of the order which is appropriate in this proceeding, and in particular whether I should order that the fourth defendant deliver a pleading additional to that which is contained in its present Defence.

16        In the matter of Cowan v Greatorex and Anor. [2008] VSC 401, Hollingworth J observed that in circumstances where:

“… the defendant does not wish to seek declaratory or other relief against the additional party, it should not be forced to bring a counterclaim simply in order to bring the additional party before the court. It can seek the joinder of the additional party as a necessary defendant under r 9.06(b), notwithstanding that the plaintiff opposes that course.”

Her Honour continued:

“I agree with Judd J[3] that it is not necessary for an existing defendant to deliver a pleading to the additional defendant at the time of ordering joinder, although it may be necessary to do so subsequently. What procedure should be followed after joinder will depend on the facts of each case. For example, whether or not the plaintiff will wish to bring a claim against the concurrent wrongdoer, once it has been joined as a defendant, will vary from case to case. Whether and how the concurrent wrongdoer may wish to participate in the proceeding will vary from case to case. Case management issues, including further pleadings and discovery, can be resolved by appropriate directions, once such decisions and steps have been taken. …”

[3]             Her Honour was referring to the decision of Judd J in P & V Industries Pty Ltd v Secombs (a firm) [2008] VSC 209.

17        I note that both Judd J in P & V Industries, and Hollingworth J in Cowan, did not consider it necessary, when making an order that a defendant be given leave to join one or more additional defendants to a proceeding pursuant to Part IVAA of the Act, that the defendant should be required to deliver a pleading against the proposed additional defendants. I can see no reason why, in the circumstances of the present application, I should not adopt a similar course.

18        In the circumstances, I propose to make the following orders:

(1)	That Anthony Sinclair be added as the fifth defendant in this proceeding.
(2)	That Angelos Tsaptsalis be added as the sixth defendant in this proceeding.
(3)	That the costs of this application be costs in the cause.
(4)	By consent that the trial date in the proceeding be vacated and that the matter be referred to the Judge in charge of the list for further directions.

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