Order 6 rule 2
43 That said, it is now necessary to consider the construction and application of O 6 r 2. It provides two bases, each again discretionary (John Cooke & Co Pty Ltd v The Commonwealth (1922) 31 CLR 394 at 411), for joinder. The second basis, in r 2(b), is emphatic of this discretion which falls to be considered having regard to the subject matter, scope and purpose of O 6 as whole and as part of the Federal Court Rules: The Queen v Australian Broadcasting Tribunal: Ex Parte 2HD Pty Ltd (1979) 144 CLR 45 at 49. The first basis, in r 2(a) involves considerations which have been the subject of over a century of judicial decisions. It requires not just the existence of a common question of fact or law in each proceeding which might be brought separately against two or more persons, but also that 'all rights to relief claimed' are in respect of or arise out of the same transaction or series of transactions (cf: Stroud v Lawson [1898] 2 QB 44 at 52).
44 The claims arising in the ASS proceedings are, of course, distinct from those in the Bank proceedings. Each of the guarantors, in the Bank proceedings, has pleaded a set off the quantification of which requires a decision inthe ASS proceedings. So, in this way, there is a common question of fact in the two proceedings as presently constituted, namely what is the quantum, if any, due by ASS to the Bank both under the facility agreement and in light of the determination of ASS's claim for damages (see e.g. Wood v Cross Television Centre Pty Ltd [1962] NSWR 528 at 532 per Walsh J).
45 In Payne v Young (1980) 145 CLR 609 the High Court considered its analogical rule which, as Barwick CJ emphasized (145 CLR at 614) spoke of '… plaintiffs in whom any right to relief is alleged to exist'. The operation of O 6 r 2(a)(ii) is different and less liberal for it requires 'all the rights to relief' to be in respect of or to arise out of the same transaction or series of transactions.
46 Here the rights to relief claimed by the Bank against Ms Nader are legally and factually independent of the claims by the Bank against the guarantors other than Marie and Josephine Saklaoui for the purposes of O 6 r 2(a) because none of the other guarantors participated in the transactions between each of Marie and Josephine Saklaoui, Ms Nader and the Bank. As Mason J said in Payne v Young (1980) 145 CLR 609 at 618 (see too per Barwick CJ at 614-615, Stephen J at 615 and Aickin J, whose decision at first instance was affirmed, at 611) of the amendment to the English rules in 1898:
'The object of the amendment was to allow several plaintiffs to join separate causes of action where under the old rule as interpreted by judicial decision they could not do so. Subject to the two limitations expressed in pars. (a) and (b) of the rule, it permits the joinder of separate causes of action which have accrued to different plaintiffs. The effect of the rule was, in my opinion, correctly stated by Vaughan Williams L.J. in Stroud v Lawson when he said ([1898] 2 QB at pp 54-55):
"I do not think that the rule means that the whole of a transaction must be involved in each of the causes of action joined. I think that, if there was a transaction or series of transactions in respect of which one plaintiff was interested up to a certain point, and other plaintiffs were interested, not only up to that point, but in respect of the entire transaction or series of transactions from beginning to end, under this rule they might joint their separate causes of action in one action, because there would be one transaction or series of transactions in respect of which the various plaintiffs all claimed a right to relief. Their remedies or damages might be different, but they would be claiming relief in respect of the same transaction or series of transactions."
To these observations I would add the comment that the rule may well authorize the joinder of separate causes of action accruing to various plaintiffs against different defendants, so long as the causes of action arise out of the same transaction or series of transactions.
The consequence is that under par. (a) of the rule joinder of separate causes of action accruing to different plaintiffs is authorized when the relief claimed is in respect of, or arises out of, the same or a particular series of transactions. Joinder is not authorized when the relief claimed is in respect of, or arises out of, two or more different series of transactions, when the participation of each individual plaintiff is limited to participation in one series of transactions, the other plaintiffs not participating in that series.'
47 In Stroud v Lawson [1898] 2 QB 44, the plaintiff sued four defendants, three individuals and a company. Two causes of action were pleaded; first that the three individuals had by deceit induced the plaintiff to become a member of the company. Secondly, the plaintiff sued all four defendants, not in his personal capacity but on behalf of himself and all other shareholders in the company, seeking to have the payment of a dividend declared ultra vires as being paid out of capital, not profits, and claiming that the individual defendants should pay the money back to the company. Chitty LJ observed that in substance there were two plaintiffs claiming on two separate and distinct causes of action ([1898] 2 QB at 51, 52) even though the payment of the impugned dividend was one of the fraudulent devices which were said to have induced the plaintiff to become a shareholder. The distinctness of capacities is now addressed by O 6 r 1 but the reasoning is still relevant for present purposes.
48 As AL Smith LJ said ([1898] 2 QB at 50-51), according to the terms of the analogical predecessor of O 6 r 2 the plaintiff could not join the two causes of action which he put in different capacities unless they both arose out of the same transaction. His Lordship continued:
'The right to relief which he claims in a representative capacity in the second part of the statement of claim is quite independent of any fraud on the part of the defendants. The two causes of action and the nature of the relief claimed are wholly distinct and separate.'
49 For present purposes, the reasoning of Chitty LJ is also helpful. He said ([1898] 2 QB at 52 and Vaughan Williams LJ took the same approach at 55):
'The mere circumstance that he makes the declaration and payment of a dividend out of capital an element in the fraud alleged as the basis of the first-mentioned cause of action does not in my opinion shew that the two causes of action arise out of the same transaction. It seems to me that they arise out of different transactions, though they have that one feature in common.'
50 The Bank argued that the requisite commonality was to be found in the fact that it sued all guarantors on a common debt which they jointly guaranteed or in which they were concerned and that this distinguished its case from Payne v Young (1980) 145 CLR 609.
51 But here, the Bank's claim against each guarantor and, in particular, against each of Marie and Josephine Saklaoui, depended on its having entered into relationships based in contract and in interests in land (viz: its mortgages). That is, the Bank relies on the reality and validity of those dealings as its primary case. Next, the Bank has now been given leave to amend to allege against, inter alios, Marie and Josephine Saklaoui, that each was guilty of fraud in proffering her guarantee, mortgage and signature of the certificate when, on this alternative, there will be no real or valid guarantee or mortgage.
52 Obviously, the two above ways of the Bank putting its case against the guarantors are distinct and involve different transactions or series of transactions. This not just because of the legal distinction between a claim under a valid and binding guarantee and or mortgage, and a claim that the Bank was the victim of a fraud because those instruments have been avoided or were void ab initio. It is also because there are six different guarantors, each with his or her own circumstances and, in substance, cases within the overall context of the Bank proceedings.
53 At first blush, the proposed claim against Ms Nader might have the requisite commonality under O 6 r 2(a) only with the Bank's cases against Marie and Josephine Saklaoui. But that argument does not stand examination, for the Bank's 'transactions' with Marie and Josephine Saklaoui are quite different from its transactions with the other guarantors, if for no other reason than the involvement of Ms Nader. But there are also other reasons for the distinctiveness of the transactions so as to entail that they do not satisfy O 6 r 2(a)(ii). The proposed claim against Ms Nader is framed against her as an individual who is alleged to be solely liable for her own alleged fraud and other tortuous and statutory liabilities, all of which depend on a finding that each of the transaction or transactions on the face of the guarantees, mortgages and certificates was not as it appeared, viz: valid, correct and enforceable (see too Richardson v Trautwein (1942) 65 CLR 585 at 590 per Rich J, 593 per Starke J, 598 per McTiernan J, 601-602 per Williams J).
54 Of course, it is possible, and indeed a commonplace to allege inconsistent matters in different counts against different parties based on a cause of action arising out of the one transaction. Indeed, s 2(1) of the Law Reform (Miscellaneous Provision) Act 1946 (NSW) specifically envisages that this may occur where it is uncertain which of two or more persons, if not all of them, is responsible for the relief for which the plaintiff or applicant claims (Chadwick v Bridge (1951) 83 CLR 314 at 319 per Dixon J, Williams, Webb, Fullagar and Kitto JJ agreeing in separate reasons at 320-321). As Dixon J observed (83 CLR at 318) the words of the statutory right to bring an action in tort are similar to O 6 r 2(a). But the issue there was uncertainty as to what the identity of the vehicle which allegedly injured the plaintiff was (see: 83 CLR at 319-320). And there is no analogue to O 6 r 2(b) in that legislative provision which explicitly creates a general discretion in the court to grant leave (see the discussion concerning the relatively recent introduction of the analogues of O 6 r 2(b) in Newman v Hold Pty Ltd [2001] VSC 282 at [2]-[4] and the cases there cited by Mandie J).
55 Here it can be said that the Bank is uncertain as to who has caused it the loss or damage claimed. Dixon J said (83 CLR at 319):
'It is, I think, not a proper way of construing s 2 to take every paragraph of the section separately and deal with it as if each paragraph was to cover a different case. The purpose of the paragraphs is to make plain how the general policy of the provision operates and to ensure as far as language may do that plaintiffs are not to be defeated because of their uncertainty at the commencement of the action as to the correct party against whom they ought to claim.'
56 In Birtles v Commonwealth [1960] VR 247 at 250 Adam J observed that an overly technical approach to the construction of an analogue to O 6 was "… out of harmony with the modern concept that litigation is no mere game of chess to be lost by one false move …" and that errors are, usually, curable. That is certainly the case, and in instances involving the related, but distinct, discretion to permit amendment, the court takes a liberal and facultative approach to ensuring that the real issues are litigated. There, an amendment will be allowed in the ordinary case, no matter what kind of error or mistake occurred unless it was fraudulent or intentionally exaggerated: Queensland v JL Holdings Pty Ltd (1997) 189 CLR 146 at 152-153; Cropper v Smith (1884) 26 Ch D 700 at 710.
57 In BHP Billiton Ltd v Schultz (2004) 221 CLR 400 at 422 [15] Gleeson CJ, McHugh and Heydon JJ said of a statutory discretion to be exercised according to the interests of justice:
'The interests of justice are not the same as the interests of one party, and there may be interests wider than those of either party to be considered.'
58 I am of opinion that because O 6 r 2(b) creates a similarly wide discretion, it is appropriate, to consider whether the Bank can bring itself within the terms of O 6 r 2(a) before considering the catch-all discretion in r 2(b).
59 So, if here, the only parties to the Bank proceedings had been Marie and Josephine Saklaoui the Bank's position may have brought it within the words of O 6 r 2(a)(ii). But because the Bank proceedings involve four other existing respondents this is not the case here because the 'transaction' or 'transactions' in which Marie and Josephine Saklaoui are involved is not related to and does not arise from the cases of the other guarantors (see too Marino v Esanda Ltd [1986] VR 735 at 740 per Tadgell J; Re The Thai Silk Company Ltd and Arkitex Fabrics Pty Ltd (31 May 1989 unreported, Federal Court of Australia) per Hill J at [22]-[23]; Dean-Willcocks v Air Transit International Pty Ltd (2002) 55 NSWLR 64 at 7-72 [21]-[27]).
60 For these reasons I am of opinion that the Bank's application to join Ms Nader does not satisfy O 6 r 2(a).