Chung v Lamberts (Australia) Pty Ltd
[2001] QDC 359
To print this judgment please return to the case and click on the PDF icon
next to the
case name. For court use, a full PDF copy is required or preferred.
Exit Distraction Free Reading Mode
Please Note: You are about to print a copy of the onscreen
version of
this judgment. For court use, a full PDF copy of the judgment is required or preferred. Please
return to
the case for PDF printing options.
- Unreported Judgment
- Chung v Lamberts (Australia) Pty Ltd[2001] QDC 359
- Add to List
Chung v Lamberts (Australia) Pty Ltd[2001] QDC 359
Chung v Lamberts (Australia) Pty Ltd[2001] QDC 359
DISTRICT COURT OF QUEENSLAND
CITATION: | Chung & Ors v. Lamberts (Australia) Pty Ltd & Ors [2001] QDC 359 |
PARTIES: | john chung and MEI PACK CHUNG and JENNA CHUNG Plaintiffs LAMBERTS (AUSTRALIA) PTY LTD ACN 010700 277 Trading under the style or firm name of MacALLISTERS First Defendant JOHN RICHARDSON Second Defendant SHAMOOR PTY LTD ACN 070 157 667 Third Defendant roger anthony berther Fourth Defendant |
FILE NO/S: | D616 / 1998 |
DIVISION: | District Court |
PROCEEDING: | Application |
ORIGINATING COURT: | District Court Southport |
DELIVERED ON: | 10 August 2001 |
DELIVERED AT: | Southport |
HEARING DATE: | 22 June 2001 |
JUDGE: | Alan Wilson SC, DCJ |
ORDER: |
|
CATCHWORDS: | Uniform Civil Procedure Rules, Rule 192 – transition to new rules – addition of a third party – leave to add new party when that party is a solicitor on the record in the matter. |
COUNSEL: | Mr K. Howe of counsel for the respondent plaintiffs. Mr P. Sacre of counsel for the first and second defendants. Mr M. Liddy of counsel for the applicant second and third defendants. |
IN THE DISTRICT COURT OF QUEENSLAND
SOUTHPORTNo: D616 of 1998
john chung and MEI PACK CHUNG and JENNA CHUNG
Plaintiffs
LAMBERTS (AUSTRALIA) PTY LTD
ACN 010700 277 Trading under the style
or firm name of MacALLISTERS
First Defendant
JOHN RICHARDSON
Second Defendant
SHAMOOR PTY LTD ACN 070 157 667
Third Defendant
roger anthony berther
Fourth Defendant
REASONS FOR JUDGMENT – ALAN WILSON SC, DCJ
(Delivered the 10th day of August 2001)
The third and fourth defendants seek leave, under UCPR r 192, to issue a third party notice claiming indemnity and/or contribution under s 6 of the Law Reform Act 1995, against the firm of solicitors which has acted for the plaintiffs throughout the action. Leave is necessary under r 194 because the third and fourth defendants did not file the third party notice within 28 days after the time for their defence.
The plaintiffs’ claim in the action arises from a “vendor finance” agreement they entered into when they sold a fish and chip shop. The purchaser, it is said, was unable to obtain all the necessary finance and, under a variation of the original contract of sale, payment of the shortfall was postponed in exchange for security, from the purchaser, over a commercial property. The purchaser defaulted in payment and, it is alleged, the security turned out to be of no value. The first and second defendants are valuers. The third and fourth defendants are finance brokers who, it is claimed, arranged the loan and allegedly provided the plaintiffs with a valuation, prepared by the first and second defendants, upon which they say they relied. Those defendants deny the plaintiffs were entitled to rely upon the valuation because it was old, and not addressed to them. The plaintiffs say a loan application, prepared by the third and fourth defendants, contained a representation to the effect that the valuation, while prepared 12 months earlier, was unchanged; and, that the first defendant had advised the third and fourth defendants to that effect. The first and second defendants deny making any such representation. The third and fourth defendants say the plaintiffs were told an updated valuation could be obtained but allege the plaintiffs, for whatever reason, declined to do so.
In the proposed third party proceedings the third and fourth defendants allege that, notwithstanding the representation contained in the loan application, the plaintiffs’ solicitors were in breach of their duty to their own clients, the plaintiffs, in carrying out the transaction in that they failed to confirm the representation, directly, with the first and second defendants; failed to procure an “assignment” letter; and, failed to advise the plaintiffs to make further enquiries and undertake further investigations.
Initial default under the plaintiffs’ second mortgage occurred in about August 1996 and the property charged with that mortgage was sold by the first mortgagee in June 1997. The plaintiff initially sued only the first and second defendants, by a plaint issued in July of 1998. Those defendants filed defences in September and October 1998; and, sought particulars in the plaint which were delivered in December 1998. In April 1999 the plaintiffs filed an amended plaint, adding the third and fourth defendants. They delivered their defences in June 1999, and the first and second defendants delivered amended defences in July 1999.
In November 2000 the plaintiffs applied for an order referring the matter to mediation which came before his Honour Judge Hall in this Court on 15 December 2000. On that day, as his Honour’s reasons show, the third and fourth defendants gave the plaintiffs a draft third party statement of claim which had been threatened in earlier correspondence of 23 October 2000. Those defendants then objected to mediation at that time on the grounds that all necessary parties were not joined in the action. His Honour rejected that argument, describing it as an “Eleventh hour attempt to enlarge this action by increasing the parties” which could be done, he said, “by a separate action rather than by third party proceedings.” The matter went to mediation before Mr McMurdo QC in March 2001, and did not settle. On 29 May the plaintiffs tendered a request for trial dates and, on 18 June 2001, the third and fourth defendants filed this application.
Mr Liddy of counsel appeared for those defendants; Mr Chris Wilson for the respondent plaintiffs; and, Mr Sacre for the first and second defendants (who signified he wished to be heard only on the question of costs).
In written submissions Mr Liddy argued that the third and fourth defendants had a strong case, if the facts they alleged were made out, based upon the joint tort-feasors legislation and what he called “the developing doctrine of contribution between wrongdoers”: Burke v LFOT Pty Ltd (2000) FCA 1155. The issues raised in the proposed third party proceedings were, it was argued, in many cases the same as those raised in the existing action - e.g. the quantum of the loss suffered by the plaintiffs and issues of causation were identical; and, the reasonableness of the plaintiffs’ actions (where they allegedly relied upon the third party) is already in issue. All the issues raised in the proposed action arise out of the same transaction, and relate to the same loss, relevant to the principal proceedings. The three alternative nexus requirements stipulated under UCPR r 192 are satisfied. If leave is not given the Court would place itself in an embarrassing position because, potentially, this Court (differently constituted) would be required to make findings in respect of identical factual and legal issues after hearing differing evidence at two different times. The Court should grant leave unless the interests of justice dictate otherwise. The plaintiffs’ reliance upon delay as a cause of embarrassment was not, he submitted, forceful: the plaintiffs have not pursued their claim with any real urgency, and would be compensated, if necessary, by awards of interest, and costs.
The third and fourth defendants had, he said, instructed their lawyers to prosecute the third party claim expeditiously. All of the parties could seek directions, at any time. The proposed third party already had, as the plaintiffs’ solicitors, an extensive knowledge of the matter. The solicitors should not, however, use the fact of any conflict as a reason for non-joinder; once allegations were made which involved them it was always possible they would be embarrassed.
In additional oral submissions Mr Liddy said the plaintiffs were not, apparently, arguing that the third and fourth defendants did not have a cause of action against the proposed third party. As to the plaintiffs’ reliance upon delay, he said the issue had been raised as early as October last year (affidavit of Caroline Hinds, filed 20 June 2001) and, after his Honour Judge Hall ordered mediation the third and fourth defendants could take no further steps because the action was stayed: r 321. The only other step taken since the mediation process failed in March this year was the plaintiffs’ tender of a request for trial dates. The plaintiffs had also been guilty of delay - the third and fourth defendants were added 2.7 years after the property had been sold and the plaintiffs knew their security was valueless; and, they had not prosecuted the action with any alacrity. As to claims of hardship made by the plaintiffs in an affidavit of their solicitor, Mark Parker (filed by leave on 22 June 2001), it was submitted that hardship is only asserted in respect of one of the three plaintiffs; and, is not particularised. Pleadings have not, strictly speaking, closed: the plaintiffs have not delivered any reply to the defence of the third and fourth defendants. A reply would be necessary under the UCPR although the action straddles the old, and new rules; nevertheless it is unlikely the plaintiffs do not intend leading evidence to dispute that defence.
Mr Sacre, for the first and second defendants, said his clients did not object to the application to join and he wished to be heard on costs alone.
Mr Wilson, in written submissions, asserted that the pleadings have been closed since July 1999. R 192 is similar in all relevant details, he said, to the former RSC Order 17 Rule 1, and DCR Rule 130. The grant of leave is discretionary, and should not be made ready effectively to embarrass, or delay the plaintiffs: Henshaw v Sovereign Marine and General Insurance Co Ltd (1988) HKC 115 (Hong Kong Court of Appeal). In Wasley v Frost (1974) 7 SASR 506 Mitchell J noted that an application for leave to issue a third party notice made after pleadings are closed is less likely to be granted than one made immediately after filing the defence. In that proceeding the defendant’s lengthy delay in applying (12 months) told against them - in the present case the delay is, Mr Wilson said, about two years. In Wasley there was also a likely inconvenience to the defendant if the whole matter was not litigated in one action but, his Honour held, the inconvenience to the plaintiffs of having the action adjourned outweighed the inconvenience of refusing the defendant’s application. In the present case, Mr Wilson said, a mediation had been conducted and the matter was now entirely ready for trial.
Wasley was considered by Mackenzie J in Just J I Pty Ltd v Nomoheith Pty Ltd (2000) QSC 163 in which his Honour confirmed the discretionary nature of the grant of leave and the “strong argument” against leave, where the effect would be to embarrass or delay the plaintiff. The addition of the proposed third parties in that case would significantly lengthen the trial, and delay the hearing date. Whilst those factors are not decisive, his Honour observed that where a balance has to be struck, the last factor (i.e. a delay in the hearing date) is particularly to be considered, in a case where financial stress has been placed upon a party; and, he referred to Phonesivorabouth v Tops Services Pty Ltd (1992) 106 FLR 471.
In additional oral submissions Mr Wilson submitted that it told significantly against the third and fourth defendants that they waited until a trial date was requested before actually bringing this application - which had been, at least, flagged before his Honour Judge Hall in December last year; as Mackenzie J said in Just GI:
“However, if the third parties were joined the proceedings would be complex because of the variety of issues raised. The trial would be significantly lengthened and the hearing date significantly delayed. These are not decisive factors but where a balance has to be made the last matter particularly is one element to be considered, in a case where considerable financial stress has been placed upon a party, especially in a case where there seems to be little if any dispute that the pigs supplied were diseased.”
The hardship facing the plaintiffs included, Mr Wilson said, the need to find new solicitors - in circumstances where their present legal advisers were conducting the matter on a “speculative” basis.
It is not in issue that the proposed third party notice meets the strictures of r192. Hence, the discretion to grant or refuse leave involves an examination of those factors, identified in cases like Just GI which tell for and against a process which would add a party to an existing action; but may, also, prevent a duplication of actions, the need to make essentially the same questions the subject of litigation on two occasions (a necessity which would possibly result in different answers being given on different occasions to the same question) and, perhaps, save costs: Atkin’s Court Forms, 2nd ed Vol 37 page 266.
The learned authors of Williams Supreme Court Practice, Vol 1 2nd ed page 1263 suggest that, generally speaking, leave will not be granted where the effect would be to embarrass, or delay the plaintiff but, as Mackenzie J remarked (in the passage set out earlier) these are not decisive factors but, rather, elements to be considered in a balancing exercise.
In Wasley an order for speedy trial had already been made and, when the matter was set down for trial, a Deputy Master had warned the defendant that a mooted application to join a third party should be made without delay to avoid prejudicing that early trial. Otherwise, at page 508 Mitchell J confirmed the essential nature of the exercise here:
“On balance it seems to me the inconvenience to the plaintiffs of having the action delayed outweighs the inconvenience to the defendant having her application for leave to join third parties refused.”
In Henshaw the appeal concerned not the right to issue third party proceedings but, rather, a separate trial of issues arising between the defendant and the third party although, in the course of the judgment questions of delay in prosecution of the main action and prejudice to the plaintiff were touched upon. In Just GI the plaintiffs alleged their pigs had been infected by a disease introduced to their piggery by the defendant who sought to add a large number of third parties in, Mackenzie J said, four separate categories. The judgment (page 4, para 16) suggests there were a number of other reasons, besides delay, which told against the applicants:
“If the third party notices issue the effect will be that a simple case where the plaintiff alleges that pigs, warranted to be disease free or delivered subject to a condition of merchantable quality, will balloon into a case where the role of the first four third parties, with three potential separate interests, who may each wish to defend their own conduct inter se will be examined in detail. If one concentrates on the breach of warranty and of the condition of merchantable quality it is not easy to see why the resolution of issues relating to the quality of conduct of the first to fourth defendants can impinge on the plaintiff’s rights. Nor will there be much in common between the evidence in the case as between the plaintiff and the defendant and the issues as between the defendant and the first to fourth third parties on those claims.”
With Mackenzie J, I respectfully adopt the remarks of Kearney J in Phonesivorabouth:
“The public policy sought to be advanced by allowing a third party to be joined in an action is the need to ensure finality in litigation and to avoid multiple proceedings with their associated extra costs. Further, by preventing the same questions being tried twice, the possibility of different decisions on the same issues being given by differently constituted Courts is avoided, that possibility being a matter calculated to bring the administration of justice into disrepute.
The grant of leave…to file a third party notice out of time is discretionary. In general, there is a strong argument against granting such leave where the effect of doing so would be to embarrass or delay the plaintiff. Nevertheless, it is a matter of balancing the inconvenience to the plaintiffs of the inevitable delay which would be caused by a late joinder in this case, against the inconvenience to the defendant of not having the claims of the plaintiffs and its claim against the Northern Territory of Australia heard at the same time.”
This is a case in which it is clear that if the third and fourth defendants prove up the facts and matters alleged in their draft third party notice they have an arguable prospect of obtaining the relief they seek from the proposed third party, the plaintiffs’ solicitors. The plaintiffs have not, I find, vigorously prosecuted the action - e.g. over a year passed between the delivery of the amended defences of the first and second defendants (29 July 1999) and the plaintiffs delivery of further and better particulars, of the amended plaint, filed on 7 September 2000. The plaintiffs have had notice of the third and fourth defendants' desire to join their solicitors as a third party since, at least, October last year; and, much of the delay since then can be attributed to their insistence, before his Honour Judge Hall in December 2000, on referring the matter to mediation notwithstanding the third and fourth defendants’ announced intention to pursue this course - a quite unequivocal one: the third and fourth defendants’ solicitors letter 23 October 2000 says, in its second paragraph:
“We have now received instructions from our client to join your firm into the proceedings as a third party.”
Although the matter was not extensively ventilated in argument, it seems to me germane that once quite serious allegations have been made against the plaintiffs’ own legal advisers by two of the defendants, those solicitors faced either obvious embarrassment in continuing to act for their clients in the action or, at least, the potential for embarrassment at trial, both of which raised the need to examine the question whether they should continue to act. It might readily be anticipated that their remaining on the record, and taking instructions from the plaintiffs might interfere with the conduct of the trial itself, and lead to its adjournment.
Evidence of the potential for hardship to the plaintiffs, asserted by their present solicitor, is not forceful. There is nothing to suggest actual financial difficulty or, indeed, anything beyond the inconvenience of having to instruct new lawyers, albeit at a fairly late stage in the proceedings. The delay caused by those steps is, I think, the only issue of real moment that can be raised by the plaintiffs but that can be mitigated by directions (to which the third and fourth defendants volunteer to submit), and expeditious steps on their own behalves to retain new lawyers.
For these reasons I am, on balance, persuaded any inconvenience to the plaintiffs does not outweigh the other factors I have identified and the third and fourth defendants should have the leave they seek.
Mr Sacre, for the first and second defendants, sought the costs of his appearance for the first and second defendants - required, he submitted, because of the possibility that an order might be made instanter, and directions given for the future conduct of an action which included third party proceedings. All parties agreed that if leave was given, directions would be appropriate after delivery of the defence in the third party action. It is clear that directions under UCPR ch 10, Part 1 are desirable.
It was reasonable for the first and second defendants to attend on the hearing of this application (with which they were served); and, having regard to the history of the matter and the late stage at which the application was brought, also reasonable for the first and second defendants to contest it. They should have their costs but, the matter being interlocutory, in the cause.
I order:
- That the third and fourth defendants have leave to join Parker Simmonds (a firm) as a third party to these proceedings; and
- That the plaintiffs’ costs of and incidental to this application, including costs of attending the hearing on 22 June 2001, be their costs in the cause; and
- That the first and second defendants’ costs of and incidental to this application, including costs of attending the hearing on 22 June 2001, be their costs in the cause; and
- The costs of the applicant third and fourth defendants be reserved to the trial Judge hearing the third party proceedings, or further order.