Seymour v Lawson Jones & Fulton
[2002] QDC 7
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
- Seymour v Lawson Jones & Fulton[2002] QDC 7
- Add to List
Seymour v Lawson Jones & Fulton[2002] QDC 7
Seymour v Lawson Jones & Fulton[2002] QDC 7
DISTRICT COURT OF QUEENSLAND
CITATION: | Seymour & Ors v. Lawson Jones & Fulton (a firm) and Anor [2002] QDC 007 | |
PARTIES: | CAROLYN MARGARET SEYMOUR (First Plaintiff) And CAROLYN MARGARET SEYMOUR AND RONALD STANLEY CLARKE SEYMOUR (a firm) (Second Plaintiff) And BRESGATE PTY LTD (Third Plaintiff) v. LAWSON JONES & FULTON (a firm) (First Defendant) And PHILLIPS FOX (a firm) (Second Defendant) | |
FILE NO/S: | Plaint 4732 of 1998 | |
DIVISION: |
| |
PROCEEDING: | Application | |
ORIGINATING COURT: | District Court Brisbane | |
DELIVERED ON: | 5 February 2002 | |
DELIVERED AT: | Brisbane | |
HEARING DATE: | 30 January 2002 | |
JUDGE: | McGill DCJ | |
ORDER: | Claim by second plaintiff struck out: claim by third plaintiff dismissed; second and third plaintiffs removed as parties to the action; second and third plaintiffs to pay defendants’ costs of application | |
CATCHWORDS: | PARTNERSHIP – Liability of third party to partners – injury to one partner by the negligence of third party – partnership not entitled to recover loss from third party EMPLOYMENT LAW – Rights of employer against third party – action per quod servitium amisit – available only when relationship of employer and employee submits at time of injury to employee Argent Pty Ltd v. Huxley [1971] Qd.R. 331 Attorney General for New South Wales v. Perpetual Trustee Co Ltd (1952) 85 CLR 237 - considered Batt v. Wilkinson [1983] 2 Qd.R. 619 - cited Foodlands Association Ltd v. Mosscrop [1985] WAR 215 – followed General Steel Industries Inc v. Commissioner for Railways (NSW) (1964) 112 CLR 125 - applied Hebblewhite v. Email Metals Pty Ltd (Townsville writ 10/92, Cullinane J, 22/3/96, unreported) - applied Husher v. Husher (1999) 197 CLR 138 - cited Lago v. Lago [1983] 2 Qd.R. 29 - cited | |
COUNSEL: | T.C. Somers for the plaintiffs | |
SOLICITORS: | Creswick Middleton Lawyers for the plaintiffs | |
- [1]On 9 September 1987 Ronald Stanley Clarke Seymour was riding a motorcycle when he collided with a motor vehicle. He was at the time a member of an equal partnership between himself and his wife, which partnership carried on the business of reading electricity meters and doing certain other work for SEQEB. The physical work was done by Mr. Seymour and by employees of the business; his wife was concerned with bookkeeping and office work[1].
- [2]As a result of the injuries suffered by Mr. Seymour he was unable to work in the business. In order to make up for the loss of his physical work, additional labour was employed at a cost to the business of $400 per week. At the end of the 1987-88 financial year, the business was transferred to a company of which Mr. Seymour and his wife were shareholders, and sole directors. The company also employed additional labour at a cost of $400 per week to do work which would otherwise have been done by Mr. Seymour.
- [3]Mr. Seymour sued to recover damages in respect of his injuries, the action being brought in this court and coming on for trial in 1993. Negligence had been admitted by the defendant and defendant by election, and the trial judge, Kimmins DCJ, was concerned only with quantum of damages. He gave judgment in the sum of $187,959 together with interest of $34,360. This included amounts of $89,000 for past economic loss and $80,000 for future economic loss. His Honour said in the course of his reasons for judgment, p. 10:
“I find that the partnership was really the plaintiff. He made all the decisions and did all the actual physical work. The wife’s role was simply book work and looking after the home and children. The authority most at point is Batt v. Wilkinson [1983] 2 Qd.R. 619, a case which dealt with a claim by an injured partner for loss.”
Following that decision, His Honour assessed economic loss on the basis that the cost of replacement labour, $400 per week was recoverable, although this was reduced to $300 per week because of the effect of taxation.
- [4]An appeal to the Court of Appeal was successful: Seymour v. Gough [1996] 1 Qd.R. 89. The court declined to follow the decision in Batt v. Wilkinson (supra), and held that for the purpose of assessing damages for personal injuries suffered by a plaintiff who was in a business partnership, the extra expense incurred by the partnership was not to be treated as one incurred by the plaintiff alone, and that he was entitled to be recompensed only for his actual loss of income, that is, his share of the loss to the partnership. The situation was similar in respect of the loss suffered by the company; he was entitled to be recompensed for his actual loss of income in the circumstances, not for the loss to the company.
- [5]All members of the court preferred the principle in the decision of the Full Court in Lago v. Lago [1983] 2 Qd.R. 29 to that in Batt v. Wilkinson, although there was some difference in approach to the application of that principle; the majority position was that expressed by Pincus JA, essentially that the existence of a partnership or company to which the injured person has contributed labour may not simply be ignored: p. 93. Fitzgerald P and Pincus JA differed slightly in application of the principle to the circumstance of the case and produced slightly different figures for past and future economic loss; the third member of the court, Davies JA, preferred the approach of the President in respect of pre-trial loss of earnings and the approach of Pincus JA in respect of future loss of earnings, with the result that the judgment was reduced by $169,319, including interest. There is nothing in any of the reasons for judgment to suggest that any of their Honours considered it possible that any part of the loss to the partnership, or to the wife or to the company, might be recoverable by those separate entities.
- [6]There was apparently no application for special leave to appeal from that decision; there is no reference in the Queensland Reports to the outcome of any such application, from which I infer that none was made. It may be that, had there been such an application, the decision would have been overturned; the High Court has subsequently, in Husher v. Husher (1999) 197 CLR 138, adopted a different approach and in effect overruled Seymour v. Gough. That is cold comfort to Mr. Seymour.
- [7]The judgment of the Court of Appeal was given on 14 December 1994. On 6 September 1996 a writ was issued in the Supreme Court with Mr. Seymour’s wife as first plaintiff, the partnership comprising Mr. Seymour and his wife as second plaintiff, and the company to which the business was subsequently transferred as third plaintiff. There were originally five defendants, but there are now only two, the solicitors who were originally acting for Mr. Seymour in his action for damages, and a second firm which subsequently acted for him. The writ was renewed on 25 March 1998 and appearances of the remaining defendants were entered later that year. On 4 November 1998 the action was by consent remitted to the District Court at Brisbane.
The claims of the second plaintiff
- [8]A statement of claim delivered 5 August 1998 alleged that the second plaintiff suffered loss and damage as a result of the injuries suffered by Mr. Seymour through the negligence of the driver of the motor vehicle, that the second plaintiff retained the first defendant in about January or February 1988 to act in relation to advising what legal redress they had in damages or otherwise consequent upon the accident, and that there was negligence or breach of contract on the part of the first defendant in failing to advise what legal redress the second plaintiff had, in failing to advise proceedings on behalf of the second plaintiff, and in failing to commence proceedings on behalf of the second plaintiff. It was alleged that as a result the second plaintiff has lost all prospect of recovering damages from the defendants in the earlier action in respect of loss or damage sustained by the partnership as a consequence of the injury and resultant incapacity suffered by Mr. Seymour in the accident. On this basis the second plaintiff claimed damage for negligence or breach of contract, and on other bases. A similar claim was made by the second plaintiff against the second defendant, another firm of solicitors alleged to have been retained on 19 August 1991 by inter alia the second plaintiff.
- [9]Various allegations in the statement of claim were put in issue in defences, but for the purposes of the present application it is appropriate to assume that the facts pleaded in the statement of claim are correct. The present application is one by both defendants seeking to strike out the claims of the second (and third) plaintiffs, on the ground that they disclose no reasonable cause of action. The basis for this is that the claims assume that, as a result of some fault on the part of the first or second defendant, or perhaps both of them, the second plaintiff has lost the opportunity to recover damages sustained by it as a consequence of the injury to Mr. Seymour. The defendants submit that a partnership, one member of which is injured, has no cause of action against the tortfeasor responsible for the injury, and so nothing has been lost because no steps were taken to pursue any such cause of action.
- [10]The defendants rely on the statement of Gibbs CJ in Caltex Oil (Australia) Pty Ltd v. The Dredge “Willemstad” (1976) 136 CLR 529 at 546, that:
“A person cannot recover damages for economic loss caused to him by the death of, or injury to, a third person, unless the case is one in which the action per quod servitium amisit can be brought or unless recovery of that kind is permitted by statute such as Lord Campbell’s Act.”
It was submitted on behalf of the defendant that there was no relevant statutory basis for recovery in Queensland at the relevant time (or indeed ever) and counsel for the plaintiffs did not point to any statute on which reliance was placed. There was earlier authority in South Australia that an action per quod servitium amisit was not available in the case of injury to a partner: Dahm v. Harmer [1955] SASR 250.
- [11]That decision was followed and applied by Thomas J (as His Honour then was) in Karko v. Grier, (Toowoomba Writ 4/91, Thomas J, 7 July 1995, unreported). His Honour there said:
“There is a gap in the law that I am not allowed to fill. A partner is not a servant, and no per quod claim is available… To the extent that the partnership arrangement causes part of the loss attributable to [her] injury to be his loss, that loss is recoverable neither by her nor by him. This is a surprising conclusion, and I have resisted reaching it. It highlights the strange results that follow from the absence of any right of action per quod in favour of partners as distinct from companies, and the absence of any legislative remedies such as s.34 of the Wrongs Act 1956 (SA).”
- [12]The matter went to the Court of Appeal (Appeal 154/95) which did not interfere with this aspect of His Honour’s decision, although for other reasons the damages awarded to the plaintiff were reduced. The majority of the Court of Appeal simply applied without discussion the proposition that the plaintiff’s loss must be calculated on the basis that she was entitled to 50% of the net income of the partnership with the husband during her future working life. The third member of the court, Shepherdson J, analysed the authority relied on by Thomas J, and noted that in that case the result had been different for the injured husband from the outcome which was suffered by Mr. Seymour in the Court of Appeal. His Honour did not express any doubt about the proposition that no per quod action was available to the partnership, but did use the South Australian authority, and other New South Wales authority, to prefer a position which it seems to me has something in common with that more recently adopted by the High Court in Husher (supra). There is no suggestion anywhere in any of the judgments that the partnership was able to recover for economic loss by it.
- [13]The same position was adopted by the Full Court of Western Australia in Foodlands Association Ltd v. Mosscrop [1985] WAR 215. In Hebblewhite v. Email Metals Pty Ltd (Townsville writ 10/92, Cullinane J, 22/3/96, unreported), His Honour in reliance on the authorities to which I have referred concluded that the claim by a partnership in such circumstances was not maintainable at law and on that basis dismissed an application to add the wife of an injured plaintiff as a second plaintiff so that she and he together could claim the loss of profits sustained as partners so that the total losses sustained by the partnership would be recoverable. The tests which would be applied in a case such as that would be analogous to the test which would have been applied in the event of an application to strike out an existing claim had one been brought in circumstances where it was unnecessary to ask the court to amend the proceeding by adding a second plaintiff.
- [14]No authority was referred to by counsel for the plaintiffs to contradict any of these decisions. There was an analysis of various factual differences between the present case and Karco (supra), but these differences do not, in my opinion, detract from the highly persuasive authority of the clear statement by Thomas J in that case, nor do they detract from the persuasive effect of the other authorities to which I have referred. In my opinion, the law is clear: a partnership cannot bring a claim for economic loss suffered by it as a result of an injury suffered by a partner. That was the case at all material times in Queensland, so that if the defendants had ever advised the plaintiffs to pursue such a claim, the advice would have been wrong at law, and indeed it would have been possibly negligent to give such advice. Had such an action been commenced, the claim ought to have been struck out; had it not been, on the current state of the law the claim would certainly have failed.
- [15]In those circumstances the second plaintiff has clearly lost nothing as a result of any failure of the solicitors to advise the bringing of such an action, and any failure to commence such proceedings. Accordingly, the second plaintiff can have no claim against them as alleged in the statement of claim, because that turns on the proposition that the second plaintiff in fact had at one time a good cause of action against the other parties to Mr. Seymour’s action for damages arising out of the injury he suffered. The partnership did not, so the partnership’s claim against the solicitors must fail.
- [16]I am conscious that a claim of this nature is not to be struck out except in a very clear case, and am approaching the matter on the basis of the test applied in Dey v. Victorian Railway Commissioners (1949) 78 CLR 62, and General Steel Industries Inc v. Commissioner for Railways (NSW) (1964) 112 CLR 125. In my opinion, that test is satisfied in the present case. In arriving at that conclusion, I am particularly influenced by the circumstance that in Hebblewhite (supra) the Supreme Court refused to add an additional party on the basis that such a claim was not maintainable at law. Accordingly, the second plaintiff’s claim will be struck out.
The claims of the third plaintiff
- [17]The third plaintiff was the company to which the business was transferred at the end of the financial year. In the statement of claim it was alleged that Mr. Seymour was a director of the third plaintiff company and that as a result of the injury to Mr. Seymour, the third plaintiff sustained loss and damage. Similar allegations to those made by the second plaintiff were made in respect of the first and second defendants by the third plaintiff, and it is alleged that there were similar failures to give appropriate advice and take appropriate action in respect of the third plaintiff by each of the defendants. It was alleged that as a result the third plaintiff had lost all prospect of recovering damages from the defendants in Mr. Seymour’s action in respect of an action per quod servitium amisit as a consequence of the loss of profits and other financial loss occasioned by reason of the loss of the managerial skill, efficiency and industry of Mr. Seymour caused through the injury for which those defendants were responsible.
- [18]The defendants argument in respect of this claim is slightly different. Assuming that Mr. Seymour was at some stage an employee of the company, they submit that the per quod action is only available if he was an existing employee of the company at the time he was injured, and the action is not available to the company which takes on an employee after the injury has been suffered. It was submitted on behalf of the defendants that the crucial time for deciding whether there is such a cause of action is the date of the injury, and that the cause of action will not arise unless the injured person was an employee at that date.
- [19]On this point there is a surprising lack of direct authority. In Argent Pty Ltd v. Huxley [1971] Qd.R. 331, Hoare J said (at p. 333):
“An action per quod servitium amisit lies only where at the relevant time the relationship of master and servant existed between the plaintiff company and the person injured. Unless this relationship is established, a plaintiff company, even though it has in fact suffered substantial loss, can recover no damages.”
Unfortunately His Honour did not make it entirely clear just when the relevant time was, although the ordinary inference is that it was the time at which the injury was suffered.
- [20]There have been leading cases dealing with the per quod action in which some attention has been given to the nature and origins of the cause of action. In Attorney General for New South Wales v. Perpetual Trustee Co Ltd (1952) 85 CLR 237, Sir Owen Dixon, when discussing the origins and historical development of the action[2], said at p. 246:
“In each form of action the master’s right was to recover for the loss of services, not for the loss of the performance of a contract of service. During the greater part of the development of English law, these rules were regarded as the point of view of the remedy. They determined the scope of the remedy and the conditions in which it lay.”
At p. 247, after some discussion of the capacity of the King to pursue common law remedies, His Honour continued:
“Evidently why trespass lay for the King is that what may be called his sphere of personal control had been invaded by the seizing of his Chaplain who lay within it. It is because a forcible deprivation of the services of his servant amounts to a similar invasion of a master’s sphere of control that he might bring trespass, not because of the personal status of the servant.”
This suggests a reason why a cause of action arose, other than that the master suffered loss as a result of the wrong done to the servant, since the common law generally did not allow recovery for economic losses suffered through wrongs done to others. It was because the capacity of the master to exercise control over the servant meant the injury to the servant was seen as being indirectly an injury to the master for which the master was also entitled to be compensated. On that analysis, the action would only be available to someone who was a servant at the time of the injury; the person who injures another who is not a servant does not cause any injury to a person who subsequently becomes a master of the person injured.
- [21]The general rule, that where one person is prevented from fulfilling his obligations to another by reason of an injury wrongfully inflicted upon him by a third, the second has no right of action against the third in respect of the loss, was stated in the same judgment at p. 294 by Kitto J, but there was said to be an exception in the case where the obligations arose “out of a relationship of master and servant existing between” them. At p. 295, His Honour said:
“The speeches delivered by their Lordships in the case of the Admiralty Commissioners v. SS Amerika [1917] AC 38 explain how it is that the law concedes the existence of this quasi proprietary right or interest. Briefly stated, the explanation is that the law has perpetuated a notion which originally was or corollary of the ancient conception of the relationship of master and servant as one of status. That conception has gone, but the notion of a right in the master, as a species of property, that others shall not, by their wrongful acts, deprive him of the benefit of the relation between himself and his servant has not been abandoned. An infringement of that right entitles the master to recover damages.”
This also shows that the action was seen as vindicating a wrong done to the master, not provided compensation for loss suffered by the master in respect of a wrong done to someone else. Once the cause of action is seen in this way, it necessarily can only apply where the relationship of master and servant subsists at the time of the injury, because it will only be where that relationship subsists that there will be some interest to the master which will be capable of being injured by the injury done to the servant.
- [22]The decision of the High Court was confirmed on appeal by the Privy Counsel: (1955) 92 CLR 113. Viscount Simonds, speaking for the Judicial Committee, said at p. 122:
“From early days a master could maintain an action against a wrongdoer for the loss of the services of his servant and … this right … rested at bottom on the idea that the master had a quasi- proprietary interest in his servant’s services: and that idea is connected with ideas as to the status of a servant which originated in the rules of law applicable to villein status”.
That is consisted with the notion that recovery is allowed because injury to the servant is treated as injury to the master.
- [23]The High Court returned to the scope of the action in Commissioner for Railways (NSW) v. Scott (1959) 102 CLR 392. In that case the High Court, by a majority of four to three, declined to follow the decision of the English Court of Appeal in Inland Revenue Commissioners v. Hambrook [1956] 2 QB 641 to confine the cause of action to one for loss of services of a menial servant, and held that it was available whenever there was a relationship of master and servant. The cause of action has therefore subsequently been held in Australia to apply to a case, for example, of a managing director of a company which is in substance his alter ego: Marinovski v. Zutti Pty Ltd [1984] 2 NSWLR 571. On the other hand, in England, after decades of judicial disapproval, the cause of action was eventually abolished by statute[3].
- [24]In Commissioner for Railways v. Scott, Taylor J noted that Blackstone in his Commentaries (Book 3, p. 141-2) regarded the per quod action as one of:
“two species of injuries incident to the relationship of master and servant. The first of these was retaining a man’s hired servant before his time is expired, and the second was beating or confining him in such a manner that he is not able to perform his work. The latter point of injury, that of beating, confining or disabling a man’s servant, was said to depend upon the same principles as the first, that is, the property which the master has by his contract acquired in the labour of the servant”.
That is consistent with the approach adopted in the passages quoted from Perpetual Trustee Co case.
- [25]It is also established that the employer’s cause of action arises at the time of the injury to the employee: Ure v. Humes Ltd [1969] QWN 25.
- [26]In my opinion, it is consistent with these authorities to conclude that it is necessary for the relationship of employer and employee to subsist at the time of the injury of the employee for the cause of action per quod servitium amisit to arise in the employer. The employer does not suffer an injury at the hands of the wrongdoer by engaging as an employee someone who is already injured. In the present case, however, the evidence from the defendants is to the effect that Mr. Seymour only became an employee of the third plaintiff after the injury was suffered by him. It is true that there is no direct evidence of this, but the evidence that he became a director and shareholder in the company after the injury, and the evidence that he was working for the partnership at the time of the injury, and that the partnership subsequently transferred the business to the company, gives rise, in my opinion, to a clear inference that there was no relationship of employer and employee in existence between the third plaintiff and Mr. Seymour at the time Mr. Seymour suffered his injury. There is no evidence from the plaintiffs to contradict that proposition.
- [27]Although the statement of claim does not allege in terms that Mr. Seymour was an employee of the third plaintiff at the time when he was injured, it would be difficult to conclude on the pleading that it ought to be struck out on the basis that there was no cause of action maintainable by the third plaintiff. However, the defendants rely in the alternative on r. 293, and seek summary judgment for the defendants against the third plaintiff under that rule. Counsel for the third plaintiff conceded that he was not taken by surprise by that application, although the application form does not expressly rely on r. 293, as it ought to have if that rule were to be relied on. Nevertheless, in circumstances where counsel for the plaintiff conceded that he was not taken by surprise, I am prepared to treat the application as being in the alternative one for judgment under r. 293. In such circumstances I can take into account that the plaintiff had the opportunity to contradict by evidence the inference that it was not the employer of Mr. Seymour at the relevant time, and has not sought to do so.
- [28]In those circumstances, and in the light of the authorities to which I have referred, I conclude that the third plaintiff has no real prospect of succeeding on any part of its claim against either of the defendants. Both of those claims depend on the proposition that the third plaintiff has lost what would otherwise have been a good cause of action in respect of the injuries suffered by its employee, and a conclusion that such cause of action was never available to the third plaintiff because Mr. Seymour was not its employee at the relevant time is, in my opinion, necessarily fatal to those claims. I am also satisfied there is no need of a trial for the third plaintiff’s claims. I therefore give judgment for the defendants against the third plaintiff on the whole of the third plaintiff’s claims.
- [29]In these circumstances there is no longer any subsisting claim in the action by either the second plaintiffs or the third plaintiff. I therefore order that the second plaintiffs and the third plaintiff be removed as parties to the action. The action will remain on foot, with the first plaintiff as the sole plaintiff. I order that the second and third plaintiffs pay the defendants’ costs of and incidental to the application to be assessed.
Footnotes
[1] These and other background facts are taken from the judgments in Seymour v. Gough [1996] 1 Qd.R. 89.
[2] The master’s action originally lay in trespass vi et armis where the injury to the servant was intentional: G.H. Jones “Per Quod Servitium Amisit” (1958) 74 LGR 39 at 44.
[3] Administration of Justice Act 1982; see Fleming “Law of Torts” 9th ed., p. 753.