Yarrum Equities Pty Ltd v McConville
[2011] QDC 287
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- Unreported Judgment
- Yarrum Equities Pty Ltd v McConville[2011] QDC 287
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Yarrum Equities Pty Ltd v McConville[2011] QDC 287
Yarrum Equities Pty Ltd v McConville[2011] QDC 287
DISTRICT COURT OF QUEENSLAND
CITATION: | Yarrum Equities Pty Ltd v McConville and Anor [2011] QDC 287 |
PARTIES: | Yarrum Equities Pty Ltd (Plaintiff/Respondent) v Mark Andrew McConville And Tracey Lee McConville (Defendants/Applicants) |
FILE NO/S: | D2995/08 |
PROCEEDING: | Application |
ORIGINATING COURT: | District Court, Southport |
DELIVERED ON: | 30 November 2011 |
DELIVERED AT: | Southport |
HEARING DATE: | 21 November 2011 |
JUDGE: | Newton DCJ |
ORDER: | Application to file and serve Third Party Notice refused with costs. Application for order to dispense with signature on Request for Trial Date granted with costs. |
CATCHWORDS: | PRACTICE – joinder of parties – application by defendants to file and serve third party notice outside prescribed period – whether leave should be granted – relevant considerations. Uniform Civil Procedure Rules 1999 MGM Containers Pty Limited v Wockner [2006] QCA 502. Phonesivorabouth v Tops Services Pty Ltd (1992) 106 FLR 471. |
COUNSEL: | Mr IR Kennedy for the plaintiff/respondent. Mr AP Hodgson for the defendants/applicants. |
SOLICITORS: | McLaughlins Solicitors for the plaintiff/respondent. AP Hodgson & Associates for the defendants/applicants. |
- [1]This is an application for leave to file a Third Party Notice against Gordon Russell who was the solicitor retained by the defendants to act on their behalf in the purchase of a property the subject of the plaintiff’s claim. The plaintiff’s claim against the defendants is based on a breach of contract.[1] The factual basis of the plaintiff’s claim in this proceeding can be summarised as follows:[2]
- (a)The defendants entered into a contract with the plaintiff to purchase a property being sold by the plaintiff (“the First Contract”);
- (b)The defendants’ breached the First Contract by failing to pay the balance deposit within the time required under the first contract and the plaintiff elected to terminate the First Contract;
- (c)The defendants then entered into a second contract with the plaintiff to purchase the same property (“the Second Contract”) and failed to settle on the Settlement Date;
- (d)The plaintiff elected to terminate the Second Contract; and
- (e)The plaintiff resold the property to a third party (“the Third Contract”) and is claiming the difference in the resale value between the First Contract and/or Second Contract and the Third Contract.
- [2]The defendants’ proposed Third Party Notice[3] indicates that the essence of the defendants’ claim against Mr Russell is that he allegedly failed to advise them of the risks associated with entering into the Second Contract without the protection of a finance clause and making the contract conditional upon the sale of the defendants’ property in Victoria. In his affidavit,[4] Mr McConville states that:
“At all materials times the Third Party was retained to act in our best interests and contrary to same, advised ourselves to enter into the second contract without the protection of the finance clause and ancillary sale clause of our property in Victoria. At no material times did the Third Party advise not to enter into the contract and their failure to protect our interests including those relevant clauses, I very much believe is a breach of retainer or a breach of duty.”
- [3]The plaintiff resists the defendants’ application and brings a cross-application for the following orders:
- That pursuant to Rule 467(2) of the Uniform Civil Procedure Rules 1999 (Qld) (“the UCPR”), a Request for Trial Date be dispensed with.
- Alternatively, that pursuant to Rule 469 of the UCPR, the signature of the defendants on a Request for Trial Date by dispensed with.
- That the proceeding be allocated a date for trial.
- That the defendants pay the plaintiff’s costs of and incidental to this application to be assessed on the standard basis.
- [4]It is submitted on behalf of the applicants that the third party was retained by them to act on their behalf with respect to the conveyance the subject of these proceedings.[5] The third party advised the applicants to enter into the Second Contract without the protection of the finance clause and the ancillary sale clause.[6] Having been retained to act in the best interests of the applicants, the third party failed to ensure that the clauses protecting their interest in the First Contract were carried over to the Second Contract. This failure of the third party is said to constitute a breach of duty owed by the third party to the applicants. Because the applicants are unable to rely on the clauses that were not included in regards to the Second Contract, the breach of duty of the third party has resulted in loss to the applicants. The applicants submit that the relief sought by them against the third party is an indemnity against, or at least a contribution to, the damages sought by the respondent.
- [5]The applicants contend that there is an established duty of care between solicitor and client and that the quantum of damages would follow the result of the original proceedings. The part of the contract that would have been breached would also be determined by the result of the original proceedings. The only issue that would remain is whether the third party’s failure to ensure the protective clauses were contained within the Second Contract was a breach of duty of care, should the failure to have them included have resulted in the breach.[7]
- [6]In MGM Containers Pty Limited v Wockner [2006] QCA 502, the respondent issued proceedings against the appellant, its former solicitor, for damages for breach of contract and negligence arising out of the respondent’s purchase of a shopping centre. The appellant sought leave to file and serve third party proceedings against additional advisors retained by the respondent to advise it in the transaction. Chesterman J (as he then was), stated that:
“Even with the similarities between the respondent’s complaints against the appellant, and its complaints against SPG, there is bound to be an expansion of the issues in dispute at the trial and the evidence relevant to them if the third parties are joined. There will be an increase in complexity, length of trial and, consequently, cost. I do not know that one can be too critical of the qualification that those increases will be ‘considerable’. The adverb is more pejorative than descriptive.
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.”[8]
- [7]In Phonesivorabouth v Tops Services Pty Ltd the rationale for joining third parties was expressed in the following passage:
“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 different 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 will 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.”[9]
- [8]In his affidavit,[10] Mr Kennedy states that as the respondent’s primary claim is based on the applicants’ breach of the First Contract, which did contain a finance clause and was conditional upon the sale of their property in Victoria, the applicants’ are unable to claim an indemnity from the third party in respect of the First Contract on the grounds asserted.[11] Mr Kennedy further states that it is not alleged in the amended defence that the failure to settle the Second Contract was as a result of the absence of these clauses and therefore the loss occasioned by the applicants’ breach of the First Contract and Second Contract does not result from the alleged breach of retainer or breach of duty or negligence of the third party (Mr Russell).[12] Therefore, it is suggested, the issues raised by the applicants’ in the Third Party Notice are unlikely to be central to the current proceeding or indeed relevant to such proceeding.[13]
- [9]Mr Kennedy considers that, as the Third Party Notice is a claim against a solicitor in his professional capacity, it is likely that his professional indemnity insurer will be notified of the claim and will seek to conduct the defence of the claim on behalf of the third party.[14] Mr Kennedy has experience in acting for professional indemnity insurers for solicitors in respect of claims in negligence and breach of retainer. It has been his experience that professional indemnity insurers tend to defend claims vigorously and are highly likely to file a defence to the third party claim and are also likely to bring interlocutory applications in order to strike out or dismiss claims to limit their liability under the policy of insurance.[15] Mr Kennedy also considers that it is likely that the third party himself will wish to vigorously defend the third party claim as the outcome of a successful claim may result in a significant increase in his premiums with his professional indemnity insurer.[16]
- [10]Should the third party be joined and file a defence to the third party claim, a duty of disclosure will arise as between the third party and the applicants: Rule 202(1) UCPR. Should the third party deny the allegations made by the respondent (plaintiff) against the applicants (defendants) in its amended statement of claim, a further duty of disclosure will arise as between the third party and the respondent (plaintiff), further delaying the proceedings and at further cost to the respondent: Rule 202(2) UCPR.[17]
- [11]If the application for joinder is refused, Mr Kennedy considers that the respondent will require only two witnesses at the trial and that the applicant will be likely to call two witnesses (themselves). In those circumstances, Mr Kennedy estimates the duration of the trial at two days.[18] However, if leave is granted to join Mr Russell as a third party, Mr Kennedy estimates the duration of the trial is likely to increase to at least three days in order to address the separate issues raised by the Third Party Notice.[19]
- [12]The claim and statement of claim in this proceeding were filed on 27 October 2008 and the defence was filed on 24 December 2008. According to Mr Kennedy, the first statement of claim was advanced solely on the basis of the breach of the Second Contract by the applicant. On 6 January 2011, an amended claim and statement of claim were filed on behalf of the respondent to include the claim on the basis of the First Contract. Mr Kennedy states that as the allegations in the proposed Third Party Notice relate solely to Mr Russell’s alleged failure to include certain clauses in the Second Contract, the Third Party Notice could have been filed when the defence was filed. The amendment to the claim and statement of claim in January 2011 has not given rise to any new issue in respect of which the applicant is seeking to file a Third Party Notice.[20] Mr Kennedy points to a delay of nearly three years from the time when the Third Party Notice could have been filed to the bringing of this application for leave to file the Third Party Notice.[21] Mr Kennedy states that no explanation has been provided for this delay in the supporting affidavit of Mr McConville.[22]
- [13]Should leave be granted to file the proposed Third Party Notice, Mr Kennedy considers that there will be an increase in the complexity of issues to be dealt with at the hearing, further delay in the proceeding being allocated a trial date, and an increase in the legal costs payable by the plaintiff.[23]
- [14]It is submitted on behalf of the applicants that the issues raised against the third party would result in a duplication of processes if the applicants were to pursue a separate claim against the third party. Such a claim would not be of a distinct nature.[24] It is further submitted that the claim against the third party by the applicants is already a simple matter and may result in a more simple issue when the pleadings and interlocutory steps related to the third party have been completed. It is contended that the addition of the third party would not “be a considerable addition to the complexity, length and, consequently, cost of trial…”.[25]
- [15]This application involves a balancing exercise between two conflicting principles, both of which are important:
- 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; and
- 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.[26]
- [16]On the material before me, I think it clear that the duration of the trial will significantly increase should the joinder of the third party be permitted. This will inevitably result in increased costs to the respondent. There will also be delay in having the matter listed for hearing should the third party be added to the action. Some increase in the complexity of the issues to be dealt with at the hearing may also be expected. The period of delay of nearly three years from when the Third Party Notice could have been filed to the date of this application cannot be overlooked. In all of the circumstances, I am not persuaded that it is appropriate to grant leave to file a Third Party Notice against Mr Russell in this proceeding.
- [17]The application is refused.
- [18]With respect to the cross-application by the plaintiff for an order that a Request for Trial Date be dispensed with (pursuant to Rule 467(2) UCPR) or, alternatively, for an order that the signature of the defendants on a Request for Trial Date be dispensed with (pursuant to Rule 469 UCPR), I note the statement in the affidavit of Mr Hodgson that the matter is not ready for trial until the application to join the third party is heard.[27] That stage has now been reached. Accordingly, I order that the signature of the defendants on a Request for Trial Date be dispensed with and that the matter be listed in the callover to be held in the District Court at Southport on 13 December 2011 at which time trial dates will be allocated.
- [19]In relation to costs, I order that the applicants are to pay the respondent’s costs of and incidental to the application for leave to join Mr Russell as third party to be assessed on a standard basis. I further order that the respondents (defendants) are to pay the costs of and incidental to the application to dispense with the signature of the defendants on a Request for Trial Date to be assessed on a standard basis.
Footnotes
[1] Affidavit of Ian Robert Kennedy, a principal of McLaughlin’s Solicitors, solicitors on the record for the plaintiff, filed 18 November 2011, paragraph 5.
[2] Ibid, paragraph 6.
[3] Exhibit “A” to the affidavit of Mark Andrew McConville, sworn 2 November 2011 and filed 4 November 2011.
[4] Sworn 2 November 2011 and filed 4 November 2011, para 13.
[5] Ibid, paras 8 and 9.
[6] Ibid, para 13.
[7] Outline of Written Submissions on behalf of the Applicants, para 11, page 2.
[8] Paras 26 and 27.
[9] Per Kearney J at para 22.
[10] Above n 1.
[11] Ibid, para 8.
[12] Ibid, para 9.
[13] Ibid, para 10.
[14] Ibid, para 11.
[15] Ibid, para 12.
[16] Ibid, para 13.
[17] Ibid, para 15.
[18] Ibid, para 16.
[19] Ibid, para 17.
[20] Ibid, paras 20 and 21.
[21] Ibid, para 23.
[22] Ibid, para 24.
[23] Ibid, para 25.
[24] Above n 7, para 13.
[25] Ibid, para 15.
[26] MGM Containers Pty Ltd v Wockner [2006] QCA 502, per Chesterman J at paras 27 and 28.
[27] Affidavit of Anthony Paul Hodgson, sworn 21 November 2011, para 3.