Conridge v Lorenzo Flammia Trading as Manna & Flammia Solicitors

Judgment - ex tempore 1HER HONOUR: These are proceedings brought by Mr Peter Conridge against two solicitors. Each solicitor has moved the Court for orders dismissing the proceedings summarily or striking out the pleadings. 2Mr Conridge's claims arise out of a loan transaction in which he and his ex-wife, Mrs Lidia Conridge, advanced $700,000 to Mr Antonio Caradonna. Mr Conridge intended that the funds were to be advanced against the security of mortgages over four properties owned by a third party, Mr Vella. Mr Caradonna already owed Mr and Mrs Conridge $950,000 at that time. A benefit of their making the further advance was thought to be that the four mortgages would secure not only the further advance, but also the earlier loans. 3In short, Mr Conridge alleges that the transaction entailed an element of fraud in that the third party mortgagor, Mr Vella, did not in fact execute the mortgages. When the loan was not repaid, proceedings were brought by Mr and Mrs Conridge against Mr Vella to enforce the mortgages, but those proceedings were evidently compromised out of court when Mr Conridge accepted it to be the case that the mortgages had been forged after seeing handwriting evidence relied upon by Mr Vella in the proceedings. 4The recovery proceedings against Mr Vella having been unsuccessful, Mr Conridge has turned his attention to the lawyers involved in the transaction. The second defendant, Mr Bisley, was retained by Mr and Mrs Conridge to act for them in respect of the loan and mortgage transaction. Mr Conridge alleges that, in doing so, Mr Bisley breached a duty of care owed to them in failing to take certain steps that would have protected them against the fraud. 5The first defendant, Mr Flammia, is in a more curious position. He is sued on the basis that he is alleged to have represented himself to the Conridges and to Mr Bisley as being the solicitor for Mr Caradonna and Mr Vella in the loan transaction. The representations are said to arise from documents faxed from Mr Flammia's practice; a chain of correspondence; the allegation that Mr Flammia witnessed Mr Vella's signatures on the mortgages; and the further allegation that the documents sent from his office included a caveat purportedly consented to by Mr Vella. 6On the strength of those allegations Mr Conridge seeks to make as against Mr Flammia a claim based in negligent representation (it being alleged that the representations were relied upon by the Conridges and Mr Bisley) and, alternatively, a claim that Mr Flammia negligently operated his practice by allowing access to his letterhead, facsimile machine and other resources to the unknown fraudster. 7No defence has yet been filed by either defendant, but it appears from the material before me that Mr Flammia will deny any involvement in the transaction whatsoever, and will contend that his name was used in the transaction by a person unknown, without his authority. 8The present proceedings were commenced on 27 March 2012, the sixth anniversary of the date on which the funds were advanced by Mr and Mrs Conridge. The statement of claim names only Mr Conridge as a plaintiff. He is now divorced from Mrs Conridge, a circumstance which has given rise to a series of interesting legal questions. 9The first defendant's notice of motion, filed 26 September 2012, seeks summary dismissal or alternatively striking out of the pleadings on the basis of the fact that Mrs Conridge is not a party to the proceedings. The first defendant contends that Mr and Mrs Conridge are jointly entitled to the relief claimed and, accordingly, that in accordance with rule 6.20 of the Uniform Civil Procedure Rules the proceedings cannot be maintained and should be dismissed. 10Before dealing with that issue I should mention the position of the second defendant. In support of his notice of motion filed 18 October 2012, Mr Bisley adopts the same position as is taken by the first defendant, Mr Flammia, as to the consequences flowing from the commencement of the proceedings by Mr Conridge alone. Separately, however, Mr Bisley relies on the existence of a deed of release allegedly entered into between Mr Conridge and himself. 11Having read the material relied upon in support of Mr Bisley's application, I raised with those representing him the issue whether it would be appropriate to deal with the allegations concerning the deed before the pleadings are closed. Although it does not appear to be in dispute that Mr Conridge in fact signed the deed, the submissions foreshadow there being raised an issue as to whether there is any equity to have the deed set aside, based on allegations of unconscionable conduct on the part of Mr Bisley in procuring Mr Conridge's execution of the deed at a time when Mr Bisley was continuing to act for Mr Conridge in the recovery proceedings against Mr Vella. I formed the view that it would not be appropriate to determine that dispute without seeing what defence is pleaded to the statement of claim by Mr Bisley and whether any matter sustaining the allegation of an equity to set aside the deed is properly articulated in any reply. 12Upon my having raised that issue Mr Chiu, who appears for Mr Bisley, very fairly agreed to a course of deferring that part of Mr Bisley's motion abiding the closure of the pleadings. There is attached to that issue an alternative claim in the notice of motion for security for costs. It was agreed that that issue should also be deferred. Accordingly, the hearing before me today proceeded on the agreed basis that I would deal only with the issues raised by rule 6.20. As already indicated, those issues are interesting and complex enough. 13Rule 6.20 provides: (1) Unless the court orders otherwise, all persons jointly entitled to the same relief must be joined as parties in any claim for that relief that is made by any one or more of them. (2) Unless the court orders otherwise, any other such person is to be joined: (a) as a plaintiff, if he or she consents to being a plaintiff, or (b) as a defendant, if he or she does not consent to being a plaintiff. (3) Despite subrule (1), a person may not be joined as a party to proceedings in contravention of any other Act or law. 14The defendants say, first, that both Mr and Mrs Conridge are jointly entitled to the same relief as against each defendant. Secondly, it is contended that it is therefore necessary for Mrs Conridge to be either a plaintiff or a defendant in the proceedings "unless the Court orders otherwise." Implicit in that second proposition, I think, was the contention or premise that that requirement ought to have been complied with at the time the proceedings were commenced. That in turn raises an issue concerning the statute of limitations, to which it will be necessary to return. 15Thirdly, the defendants contend that the Court would not "order otherwise" in the present case in circumstances where Mr Conridge has evidently made what was characterised in the defendants' submissions as a deliberate decision not to comply with the rule. It is necessary to consider each of those propositions in turn. 16Are Mr and Mrs Conridge jointly entitled to the same relief? Unguided by authority, I would have had some doubt as to whether that is necessarily the case. It may accepted that the present claim is pleaded, in substance, on a joint basis, drawing no distinction between the two, either as clients of Mr Bisley or in their reliance on Mr Flammia's alleged representations. However, whilst I can readily accept that each was jointly entitled to the same relief against Mr Caradonna and Mr Vella, as joint creditors and joint mortgagees respectively, the notion of a joint cause of action in tort is more difficult. Apart from anything else, it may be that the relief to which each is entitled (for the purpose of the rule) depends on the damage suffered by each. For reasons which will emerge later in this judgment, Mrs Conridge may be said not to have suffered the same damage as Mr Conridge, having regard to the terms on which, following upon their divorce, they have settled their property affairs by orders of the Family Court. 17Further, it is not clear to me whether a duty of care owed to two persons gives rise to a situation where each is jointly entitled to the same relief, or whether rather the position is that they are concurrently entitled to the same relief: cf Manzo v 555/255 Pitt Street Pty Limited (1990) 2 ACSR 809; (1990) 21 NSWLR 1 at 9A per Hodgson J. 18However, one of the authorities to which I was referred during argument in the present case suggests that my unguided view may be wrong. The defendants relied on the decision of the Court of Appeal in Churchill v Connolly [2004] NSWCA 212. In that case, in the judgment of Young CJ in Equity at [31], his Honour expressed the view that there was "little doubt" where a husband and wife had retained a solicitor that the right prosecuted by the husband against the solicitor was "a joint right" so as to attract the operation of a rule equivalent to the rule under consideration in the present case. 19Although it is not necessary to decide this issue for present purposes, having regard to the remarks of the Chief Judge in Equity in Churchill, with which both Beazley JA and Hodgson JA agreed (at [1] and [2] respectively), it is appropriate for me to accept the premise at least so far as Mr Bisley is concerned that Mr and Mrs Conridge's joint retainer of him results in their being jointly entitled to the same relief against him for the purpose of rule 6.20. The position may be different as against Mr Flammia but, as already stated, it is not necessary for me to decide that issue. 20The second proposition relied upon by the defendants is that, on a plain application of rule 6.20, it was necessary for Mrs Conridge to be joined as a party in Mr Conridge's claim for relief. As I have already indicated, it seemed to be a premise of the defendants' argument that that ought to have happened at the time of commencement of the proceedings. Leaving aside the complication of the application of the statute of limitations, I think it is clear enough that the rule is broad enough to contemplate the addition of a party in the position of Mrs Conridge at a later point in time than the commencement of the proceedings, either as a plaintiff with her consent or, in the absence of such consent, as a defendant. So much is clear from the language of the rule itself. It is a procedural rule. The defendants do not suggest the existence of any substantive principle of law vitiating the competence of proceedings commenced in breach of it. 21The position is complicated by the fact that the proceedings were commenced arguably on the last day on which they could be commenced in accordance with the statute. It will be necessary to consider that issue in considering whether the Court should "otherwise order", the third issue raised by the defendants, to which I now turn. 22In considering that issue, it is necessary to give some attention to the dealings between the parties. After being served with the statement of claim, the solicitor for the first defendant, Mr Alder, raised in correspondence the existence of rule 6.20. He asserted that Mrs Conridge had to be joined to the proceedings either as a plaintiff or as a defendant and requested the solicitor for Mr Conridge to confirm his intention in that respect. There followed a series of exchanges between the solicitors which focused primarily on the plaintiff's contention that Mrs Conridge was negotiating to "transfer her interest in this matter" to Mr Conridge. Later correspondence reveals that that was evidently a reference to a proposal that Mrs Conridge would assign to Mr Conridge any cause of action she had against either solicitor. 23To a degree, the correspondence concerning the alleged assignment distracted both parties. Although, as the argument unfolded, I did not hear from the parties fully on this issue (and indeed perhaps discouraged them from addressing me fully on it), it is at least clear enough to me that there is a strong argument that there was no valid assignment of Mrs Conridge's chose in action. The question is whether that matters in the present circumstances. 24The purpose of rule 6.20, it seems to me, is to protect a defendant against the risk of multiple proceedings and to ensure that, in any single proceeding, all of the necessary parties are joined. As already noted, it is not a substantive rule of law as to the competence of a proceeding commenced otherwise, and there does not appear to be any such substantive rule: see Churchill at [33] (last sentence). 25The judgment of the Chief Judge in Equity in Churchill sheds some light on the way in which Courts have approached the enforcement of the protections offered by the rule. His Honour said: 31 There seems little doubt that the right against the solicitor was a joint right. Procedurally, in accordance with District Court Rules Part 7 r3, where the plaintiff claims an amount to which any other person is entitled jointly with him all persons so entitled shall be parties to the action. Part 7 r7 provides that no action is to be defeated by reason of non-joinder of any person as a party. Identical rules appear in the Supreme Court Rules as respectively Part 8 r3 and Part 8 r7. 32 The technicalities involved with joint contracts (to take a simple example) were very great before the Judicature Act system and indeed Professor Glanville Williams was easily able to produce a full book on the subject in his "Joint Obligations" (Butterworths, London, 1949). Most of the problems occurred with joint defendants, it being an almost sacred rule that a defendant who was jointly liable on a contract together with other defendants could successfully plead in abatement and force the plaintiff to add the co-obligors as defendants so that it would be clear who had to contribute to the damages; see Glanville Williams op cit Chapter 2. There are not as many authorities dealing with problems where there were or should have been joint plaintiffs. 33 However, in cases where there had been a reluctant co-plaintiff the court has been content with merely adding the co-contractor as a defendant so that it is possible for all the parties to be bound by the action; see eg Burnside v Harrison Marks Productions Ltd [1968] 1 WLR 782. There does not seem to be any rule that a joint right can only be enforced by action brought by all the holders of the joint right. 34 Accordingly, the addition of the wife as a defendant on the third day of the hearing was sufficient to cure any problem with Part 7 r3. Thus it is not necessary to make a decision as to whether Part 7 r7 overrides or trumps Part 7 r3. 35 In Kenya, which has the same rules, there is a decision in Lochab Bros v Kenya Furfural [1985] Law Reports of the Commonwealth, Commercial 737, 750, that a deliberate non-compliance with Part 7 r3 entitles the Judge to dismiss the action notwithstanding Part 7 r7. That is because rule 7 applies to a "mere" non-joinder and does not govern the case where it is necessary to have all holders of the right before the Court for the Court to be able to adjudicate on the issue. A similar decision was reached by the Court of Appeal for East Africa in Qureshi v Patel (1951) 18 EACA 1. 36 These authorities are weakened by the fact that they appear to have proceeded on a misunderstanding of the decision of Kanti Chandra Tarafdar v Radhu Rahman Sarkar (1930) 17 AIR (Cal) 461, which was evidently not available in East Africa, but is available in the Law Courts Library, Sydney. My present view is that I would follow the court in Kenya, but I should not decide the question until it arises for direct decision. 26The defendants relied on those passages, particularly the remarks at [35], to support the contention that Mr Conridge's alleged deliberate non-compliance with the rule warranted my dismissing the proceedings, notwithstanding the existence of rule 6.23, which provides that proceedings are not defeated merely because of the misjoinder or non-joinder of any person. 27The decisions referred to by the Chief Judge in Equity in Churchill in the passages set out above bear some attention in that context. The decision of Lochab Bros v Kenya Furfural (1985) L.R.C. (Comm.) 77 CA referred to at [35] is a decision of the Court of Appeal of Kenya. That was a case in which receivers had commenced what the Court held were incompetent proceedings. The appellant had obtained judgment against the respondent and, in execution of that judgment, had seized certain assets belonging to the respondent. Before those assets were sold, a floating charge over the same assets crystallised and the receivers were appointed. The receivers filed an objection to the execution of the appellant's judgment, but the debenture holders who had appointed them were not joined as parties to that proceeding. It was in those circumstances that the Court held that the rule which, as I understand it, was the equivalent of rule 6.23 did not save the proceeding. The reason was that the legal holders of the assets, that is, the debenture holders, were necessary parties and so it was not appropriate for the Court to do anything other than to dismiss the receiver's application. 28Interestingly, as cryptically and more tactfully hinted at in the judgment of the Chief Judge in Equity in Churchill at [36], the decision of Kanti Chandra Tarafdar v Radhu Rahman Sarkar (1930) 17 AIR (Cal) 461, although evidently relied upon by one of the judges in Lochab in reaching that conclusion, in fact has no bearing on the issue. 29What then remains to be considered is whether in the present case there was deliberate non-compliance with rule 6.20 and whether, if that be the case, I should dismiss the proceedings. That issue must be considered with an understanding of the context in which the remarks in Churchill set out above were made and, as I have said, an understanding of the vice sought to be protected against by the rule. 30It does not seem to me that it can be said of the two people having a claim to relief against the two solicitors in the present case that they are in the position of the receivers discussed in Lochab. 31If Mr and Mrs Conridge had sued jointly, they would jointly be entitled to any damages recovered against either solicitor, but their divorce and the orders of the Family Court have intervened. The material before the Court includes those orders, which provide in order 1.8 that Mrs Conridge was to assign to Mr Conridge her purported cause of action against the defendants in the present proceedings (see exhibit A at page 351, order 1.8). It was common ground before me that those orders, although conditional at the time they were made upon certain events, are now binding on Mr and Mrs Conridge. 32Further, unlike the position of the receivers in Lochab, Mr Conridge has a cause of action in his own right. It remains the case that, if the defendants have any liability to Mr Conridge, they are liable to him regardless of the intervention of the orders of the Family Court adjusting (as between him and Mrs Conridge) their rights to their formerly jointly held assets. 33As already noted, the position is complicated by the limitation issue. Any claim Mrs Conridge may have against the solicitors is now plainly statute-barred. It may therefore be that by the time she came to give effect to any assignment as alleged, there was nothing to assign. 34I acknowledge that, in Churchill, Young CJ in Equity appeared to entertain the view that the assignment of a jointly held chose in action against a solicitor may amount to the "adding of a new cause of action outside the limitation period". For my part I fail to see why, as a matter of substantive justice or as a matter of legal principle, the fact of Mrs Conridge's being now precluded from prosecuting her claim against the solicitors should strangle Mr Conridge's cause of action or preclude him from prosecuting any action. There is no suggestion that his action was brought out of time. 35I am fortified in that conclusion by the fact that the Limitation Act 1969 at s 14 speaks in terms of whether an action is maintainable after the lapse of a certain period by reference to the position of "a plaintiff". Mrs Conridge does not seek to be a plaintiff and evidently does not consent to be a plaintiff or wish to maintain any action. 36Neither of the vices protected against by rule 6.20 of suffering multiple claims or not having all necessary parties present so as to be bound by a verdict or judgment arises in the present case. 37One aspect of the allegation that the plaintiff deliberately did not comply with rule 6.20 arises from the correspondence concerning the alleged assignment which, as I have said, to a degree distracted the parties from what might have been a simpler way forward in the present case. 38I should note in that context Mr Beaumont put a forceful submission to the effect that the evidence relied upon by both Mr and Mrs Conridge as to her agreement to assign any cause of action was to some extent inconsistent with some of the contemporaneous documents. This was put as a matter going to my discretion whether to "otherwise order". Mrs Conridge asserted that from an early point in time she had agreed to assign her cause of action. Her affidavit included reference to an affidavit sworn by her as early as December 2009 in the family law proceedings, stating that she was not proposing to proceed with any claim against Mr Bisley and that, should the applicant wish to do so, and in the event that he was successful, he could retain those proceeds. Further, she states that from an early point in the property settlement negotiations, she had conversations with Mr Conridge to the following effect: 22. From early in our property settlement negotiations, and throughout, I had conversations with Peter about the claim regarding Bisley and Flammia to the folloinw effect:- Me: "I want no part of any claim against the solicitors for the loans. I am not interested in fighting insurance companies for five years to hopefully get our money back. All I want is the shop and my house. You can do what you want and keep whatever you get. You pay the costs and indemnify me of any costs from any claim you bring and I will do the same for you with the shop." [ie our Blockbuster Warilla Video Store, which since 26/02/13 now belongs wholly to me]. Peter: "All right, if I do go on with it. I'll do it without you but we will need to sort out and agree on the finer details. That will include documents to assign me your rights to claim against the solicitors and to give up any claim against any successful proceeds of any litigation. You will probably also be required to produce an Affidavit of your knowledge of the matter and agree to appear in court if required". Me: "Yes that's fine. Get your solicitor to write to my solicitor with the details and they can sort out the wording. You will have to indemnify me against any costs in the event that you lose and costs are awarded against you". Peter: "Yes, that's ok." Me: "Good, I'm pleased at least that part is settled". 39Finally, she states that as at 16 March 2012, she said to Mr Conridge words to the effect: 24 On 16/03/12 in a phone conversation I said to Peter words to the effect of:- [Leave in???] "I want no part of the claims against Bisley and Flammia. These are yours and you can pursue them and retain the benefit of them if you wish. I have already agreed and I will sign whatever you want once all matters are resolved and we have finally settled". 40Perhaps inconsistently with those contentions, some of the correspondence identified by Mr Beaumont in argument suggests that, even as at the date the proceedings were commenced, or at least as late as 21 March 2012, it was contemplated that Mrs Conridge may be a plaintiff in the proceedings. To some extent it is difficult to assess the measure of any inconsistency, because many of the documents do not enable me to draw firm conclusions as to Mrs Conridge's position, as opposed to the position being stated by someone else, and it is not possible to know the extent to which any statement by any other person was based on something Mrs Conridge herself had said. 41Importantly, as at 21 March 2012, it is clear that Mrs Conridge was refusing to join as a plaintiff in the proceedings (see page 218 of exhibit A). As already noted, the proceedings were commenced shortly after that date. 42That is perhaps a long way of explaining that I am not persuaded that Mr Conridge deliberately failed to comply with rule 6.20. That is partly because I think he was proceeding on a different premise, that is, that it would not be necessary for Mrs Conridge to be joined because he would have an assignment of her chose in action (whether or not that belief was legally misconceived). It is also partly because I do not accept the implicit premise of the defendant's contentions that the rule must necessarily be complied with as at the date of commencement of the proceedings. The vices sought to be protected against by the rule can be protected against if a party is joined even during the hearing, as occurred in Churchill at [34] of the judgment. 43For those reasons I am not persuaded that I should dismiss the proceedings on the basis that Mrs Conridge is not a party to the proceedings. The question in my mind is whether it is appropriate now to make an order joining her as a defendant, given that she does not consent to be a plaintiff, or whether I should "otherwise order". 44Mr Beaumont very fairly acknowledged in the course of argument that there was no risk of her suing the present defendants in any later proceedings, since her action, if she still has any (having purported to assign it), is statute-barred. 45In all the circumstances, I am persuaded that it is appropriate for me to make an order in the terms contemplated by rule 6.20(2), namely, that Mrs Conridge, if she is a person jointly entitled to the same relief as claimed by Mr Conridge, is not to be joined as a party in his claim. Costs 46I have today heard and determined the first defendant's application to have the proceedings dismissed or the pleadings struck out and part of the second defendant's application for the same relief. 47The defendants have each been unsuccessful in their applications and ordinarily costs would follow that event. Mr Beaumont has submitted however that the defendants should either have their costs or have their costs until a few days ago, on the following basis. The defendants contended that the proceedings were liable to be dismissed for failure to comply with rule 6.20. The only opposition to that proposition was the plaintiff's contention that Mrs Conridge's cause of action had been assigned to him. Until Tuesday of this week, the plaintiff did not seek an order in the terms I have indicated I will make, that is, effectively to dispense with compliance with the rule. 48As recorded in my principal judgment delivered earlier this afternoon, I think each of the parties to a degree distracted himself with the issue of whether there had been a valid assignment of a chose in action by Mrs Conridge to Mr Conridge. The simple proposition seems to me to be that the plaintiff has successfully defended the defendants' applications and he should have at least part of his costs. 49I am concerned about the costs incurred in what I considered to be a very difficult argument put by the plaintiff that there had been a valid assignment as asserted. I have considered whether in that circumstance I should award the plaintiff only a portion of his costs. On balance, however, having considered the reasons for which I rejected the relief sought by the defendants, I do not think this is a case for severing out individual issues. I think it is fair for the plaintiff, having succeeded in defending applications to dismiss his claims summarily, to have his costs of the argument heard today. As I have indicated, that represents the costs of defending the first defendant's motion and the costs of that part of the second defendant's motion that has been determined, part of that motion having been deferred for the reasons explained in my principal judgment. The reasonableness of the amount of those costs claimed by the plaintiff is a matter for assessment.