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  • Unreported Judgment

Villinger Group Ltd v Redmond

 

[2009] QSC 60

 

SUPREME COURT OF QUEENSLAND 

PARTIES:

FILE NO:

Trial Division

PROCEEDING:

Application

ORIGINATING COURT:

DELIVERED ON:

20 March 2009

DELIVERED AT:

Brisbane

HEARING DATE:

3 March 2009

JUDGE:

Daubney J

ORDER:

1. That the application for leave to file third party notices be dismissed with costs.

CATCHWORDS:

PROCEDURE – SUPREME COURT PROCEDURE – QUEENSLAND – PROCEDURE UNDER RULES OF COURT – PARTIES – THIRD PARTY AND SIMILAR PROCEEDINGS – where first and third defendants sought leave to file third party notices - where in the principal proceedings the plaintiffs made claims against the first defendant in contract, negligence and for breach of fiduciary duty for amounts advanced under mortgage transactions as a result of representations – where claims were also made against the third defendant as a knowing party to the first defendant’s breach - where delay bringing the application – whether leave should be granted.

Uniform Civil Procedure Rules 1999 (Qld)

Barnes v Addy (1874) LR 9 Ch App 244

MGM Containers Pty Ltd v Wockner [2006] QCA 502

Just GI Pty Ltd v Pig Improvement Co Aust Pty Ltd [2001] QCA 48

COUNSEL:

D A Atkinson for the plaintiff

D Kent for the first and third defendants

SOLICITORS:

McCullough Robertson Lawyers for the plaintiff

Russell and Company for the first and third defendants

[1] This is an application by the first and third defendants pursuant to Rule 194 of the Uniform Civil Procedure Rules (UCPR) for leave to file a third party notice.  A settlement has been reached in the principal proceeding between the plaintiffs and the second defendant, and it is therefore convenient to refer to the present applicants as ‘the defendants’. 

[2] The application, as filed, sought leave to file third party notices against seven parties, but at the hearing of the application the defendants limited themselves to seeking leave only in respect of two of the proposed third parties, namely Ian David Lazar and Business Acquisitions Australia Pty Ltd.  The application is opposed by the plaintiffs.

[3] The principal proceeding was commenced by a claim and statement of claim issued on 15 October 2007.  The first and second plaintiffs are companies which are effectively controlled by the third plaintiff.  The first defendant is a solicitor who practised in partnership with the second defendant and who is also the sole director and shareholder of the third defendant.  In essence, the plaintiffs contend that the first defendant, whom they allege was retained in his capacity as a legal adviser, advised the plaintiffs in respect of advancing money on mortgage lending transactions from which the plaintiffs would derive very high rates of return.  It is pleaded that the first defendant made a range of representations, including as to the security of the loans, which induced the plaintiffs to advance funds into a number of these mortgage lending transactions, with the plaintiffs’ funds for the transactions being paid into the solicitor’s trust account.  The plaintiffs’ claims are for principal amounts advanced, and interest claimed to have accrued thereon, which the plaintiffs contend are now due and owing under the various transactions.  The claims against the first defendant are brought by way of causes of action in contract, for money had and received, in negligence, and for breach of fiduciary duty.  As to the third defendant, the claim concerns sums which were paid to the third defendant in circumstances where the first defendant was the only director and shareholder of the third defendant, the third defendant did not appear to have any relationship with the borrowers, and the plaintiffs were not informed of the payments out of the trust account to the third defendant, giving rise, it is alleged, to an entitlement to recover from the third defendant as a knowing party to the first defendant’s breach of fiduciary duties, under the principles in Barnes v Addy (1874) LR 9 Ch App 244. 

[4] The defendants have denied the claims.  In the initial defence filed on 26 November 2007 (at a time when the third defendant had not been joined), the first defendant pleaded, inter alia, that he had informed the third plaintiff of an ‘investment opportunity being made available by Mr Lazar’ and of some of the details of that investment opportunity, including ‘that Mr Lazar stated that he would obtain an overall return of 40 per cent per annum’ for the third plaintiff.  The defence also pleaded the payment of monies in connection with at least one of the transactions sought to be impugned by the plaintiffs as having been ‘remitted to the first plaintiff on or about the dates stipulated by Business Acquisitions Australia Pty Ltd’. 

[5] Subsequent amendments to the statement of claim have shored up allegations of the specific direction of certain of the funds from the solicitor’s trust account to Business Acquisitions Australia Pty Ltd, while further amended defences filed on behalf of the defendants have continued to contain allegations concerning the first defendant passing on to the third plaintiff representations which had been made by Mr Lazar. 

[6] In terms of the chronology of the proceeding, which is being managed on the Supervised Case List, it is appropriate to record:

  1. The claim and statement of claim were filed on 15 October 2007;
  2. The defence, containing the assertions to which I have just referred concerning Mr Lazar and Business Acquisitions Australia Pty Ltd, was filed on 26 November 2007;
  3. An amended statement of claim was filed on 15 May 2008;
  4. An amended defence of the first and third defendants was filed on 21 July 2008; and
  5. By the time the matter was mentioned in a Supervised Case List review on 1 October 2008, the parties considered it appropriate for a mediation to be convened, and orders to give effect to that were made.  The mediation was held on 28 November 2008.

[7] Rule 194 relevantly requires a defendant to seek leave to file a third party notice unless the third party notice is filed and served within 28 days of the time allowed for filing a defence or such longer period as the plaintiff agrees.

[8] The time for the present defendants to file third party notices against Mr Lazar and Business Acquisitions Australia Pty Ltd without leave has long passed. The plaintiffs do not agree to any extension of the time for filing third party notices. The authorities make it clear that the exercise of discretion on an application for leave such as this requires a balancing exercise;  as Chesterman J (as he then was), with whom Williams and Keane JJA agreed, said in MGM Containers Pty Ltd v Wockner [2006] QCA 502 at [27]:

 

‘The applications called into question two conflicting principles.  The first is that there are good reasons why a third party should be joined in an action where a defendant has an arguable case for contribution or indemnity from the third party against a plaintiff’s claim.  Such a joinder ensures finality in litigation, avoids multiple proceedings with associated extra cost, and obviates the possibility that there might be different decisions given on the same issues if tried by different courts.  The second principle is that a plaintiff should be allowed to prosecute its action and obtain judgment without being delayed or inconvenienced by the defendant’s endeavours to offset its liability.  See Phonesivorabouth v Tops Services Pty Ltd (1992) 106 FLR 471.’

[9] The inherent nature of the balancing exercise can be discerned in the observations made by Chesterman J at paragraph [28] of his judgment:

 

‘The applications judge was obliged to choose which of these competing principles to apply.  Both are important but they pull in different directions.  There was, I think, no “right” answer to the applications which Philippides J had to decide.  A decision in the circumstances of this case could have gone either way and each would have been justified by one of the principles I have mentioned.  Her Honour was right to consider that the delay by the appellant in applying for leave to join the third parties was relevant, as was the added inconvenience and expense to which the respondent would be exposed should the joinder be allowed.  Also relevant was the further delay to the trial of the respondent’s action, should the joinder have been permitted.  These factors tended to attract the operation of the second principle and had to be balanced against the factors which were relevant to attract the operation of the first principle.  Neither set of factors can be said to have been predominant.’

[10] See also Just GI Pty Ltd v Pig Improvement Co Aust Pty Ltd [2001] QCA 48, per Williams JA at [17]. 

[11] In the judgment at first instance in the MGM Containers matter, Philippides J usefully set out a catalogue of matters to which regard might expect to be had when considering applications of this nature.  Her Honour’s approach was endorsed by the Court of Appeal.[1]  After referring to the inherent balancing exercise, her Honour identified the following factors for consideration:

  1. The extent of delay by the defendant in bringing the application, and whether there has been a satisfactory explanation for any such delay;
  2. Whether the issuing of the third party proceedings would unduly complicate the hearing of the matter, having regard to the complexity of the issues which would be required to be determined at trial, and also having regard to the additional length and cost of the proceedings;
  3. Whether the issuing of the third party proceedings would unduly delay finalisation of the extant proceeding; and
  4. Whether it is available to the defendant to bring separate proceedings  against the proposed third parties, and whether the issues that arise in the proposed third party proceedings are of a distinct nature from those raised in the defence.

[12] In terms of the delay in bringing this application, it will be apparent from my brief overview of the pleaded cases that Mr Lazar and Business Acquisitions Australia Pty Ltd have, or ought to have, been ‘on the radar’ since late 2007.  The solicitor for the applicant defendants has sworn an affidavit in which he gives some explanation for the reasons for the delay in making the application for leave to issue third party proceedings, but such explanation as he gives is limited to the period after the mediation in November 2008.  The affidavit refers to matters since then such as delay resulting from the solicitor, and other personnel in his law firm, being on leave during January 2009.  There is, however, in my opinion a very considerable period of delay (in the context of these proceedings) in bringing this application which has not been satisfactorily explained at all.

[13] Further, I consider that the issuing of the third party proceedings would further complicate the matter, and would certainly add to the length and cost of the proceeding, not only because of the separate issues which would be raised against the third parties but also simply by virtue of the participation in the trial by the legal representatives of the proposed third parties.

[14] I am conscious, of course, of the degree of undesirability of the defendants being required to pursue Mr Lazar and Business Acquisitions Australia Pty Ltd through separate proceedings.  I am also, however, conscious of the fact that the present claim against the present defendants is now ready to be set down for trial.  It is inevitable that an order granting leave for third party proceedings to issue would not only delay the matter being brought to trial but, by reason of the fact that such a trial would necessarily be of significantly greater duration than that presently required for the present proceeding, some further delay would be occasioned in order to allocate the block of time necessary to accommodate a more complex and lengthy trial.

[15] In all the circumstances, my view is that the balancing exercise involved in this application calls for the application to be dismissed with costs.

Footnotes

[1] See the judgment of Chesterman J at [20].

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Editorial Notes

  • Published Case Name:

    Villinger Group Ltd v Redmond

  • Shortened Case Name:

    Villinger Group Ltd v Redmond

  • MNC:

    [2009] QSC 60

  • Court:

    QSC

  • Judge(s):

    Daubney J

  • Date:

    20 Mar 2009

Litigation History

No Litigation History

Appeal Status

No Status