CTI Joint Venture Company Pty Ltd v CRI Chatswood Pty Ltd [2011] NSWLEC 91 | Case summary

EX TEMPORE Judgment 1HIS HONOUR : The decision as to whether a party sought to be joined in proceedings is a "necessary" party is a decision that, in some cases, is attended with some difficulty. This is one such case. 2The essential question to be determined in the substantive proceedings is whether the subdivision of land effected upon registration of Deposited Plan 1094273 on 8 January 2010 ( the Deposited Plan ) was development that contravened s 76A(1) of the Environmental Planning and Assessment Act 1979 ( the EPA Act ). The case which the applicant in the proceedings, CTI Joint Venture Company Pty Ltd ( JV Co ), seeks to make, expressed at a level of generality, is that the subdivision effected by registration of the Deposited Plan contravened the EPA Act in that - (i) in the case of lots 105 and 107, the boundaries of those lots do not accord with those shown for them on the plan identified in the development consent granted on 22 August 2005 ( the consent ) permitting the creation of lots as stratum lots, as is required by condition A2 of the consent; and (ii) easements required to be created upon registration of the plan of subdivision by conditions E1 and E2 of the consent have not been created. 3The first respondent to the proceedings, CRI Chatswood Pty Ltd ( CRI ), is alleged by JV Co to have been responsible for preparing and procuring registration of the Deposited Plan. It is claimed that the responsibility of CRI in this regard was shared with the third and fourth respondents. 4By notice of motion dated 16 May 2011, CRI now seeks to join four further respondents to the proceedings. Those sought to be joined are Hard & Forester Pty Ltd ( H & F ), Pierre Hartzenberg, Grinsell & Johns Pty Ltd ( G & J ) and Gordon Wren. 5JV Co opposes the joinder of the parties sought by CRI. Each of the four potential respondents has been served with the notice of motion. Each has appeared on the hearing of the notice of motion by solicitor or counsel. All four have opposed joinder. For their part, the second, third and fourth respondents to the proceedings have neither consented to nor opposed the joinder sought by CRI. The fifth respondent, the Registrar-General, has filed a submitting appearance in the proceedings. 6Evidence filed on behalf of CRI in support of its notice of motion is not in contest. That evidence establishes, at least at a level of persuasion sufficient for the purpose of the present motion, that - (i) in November 2006, CRI retained H & F to perform survey work relevant to the land that is the subject of dispute among the parties; (ii) Mr Hartzenberg, a surveyor and director of H & F, signed a certificate endorsed on the Deposited Plan, certifying that survey work had been carried out in accordance with the Surveying and Spatial Information Regulation 2006; (iii) G & J was engaged by CRI in May 2007 to provide certifying services in respect of development to be carried out upon the land that is the subject of the dispute among the parties; and (iv) Mr Wren, an accredited certifier and director of G & J, signed the subdivision certificate endorsed on the Deposited Plan, certifying that the provisions of s 109J of the EPA Act had been satisfied in relation to the subdivision so far as it related to Lots 105, 106 and 107, among others. 7By its amended statement of claim, JV Co seeks a number of mandatory orders. Paragraph 4 of the relief sought is an order that requires CRI, together with the third and fourth respondents, to take all necessary steps: (i) to correct the boundary description of lots 105 and 107 as created by the Deposited Plan; and (ii) to create and cause to be recorded in the Deposited Plan further easements benefiting lots 106 and 107 in the Deposited Plan. JV Co does not seek any order or relief against either the individuals or the companies that CRI seeks to join. 8The evidence filed on behalf of CRI also indicates that if JV Co is successful in obtaining the orders that it seeks, with consequent loss and damage sustained by it, CRI may take action to recover its loss and damage from those parties it seeks to join in these proceedings. The proceedings for recovery of loss and damage are likely to be founded in actions in contract or tort. 9The application for joinder is brought pursuant to the Uniform Civil Procedure Rules 2005 (UCPR), r 6.24(1). That rule relevantly provides as follows: " 6.24 Court may join party if joinder proper or necessary (1) If the court considers that a person ought to have been joined as a party, or is a person whose joinder as a party is necessary to the determination of all matters in dispute in any proceedings, the court may order that the person be joined as a party." 10The principle to be applied in an application of the present kind is found in statements of high authority. The principle in its most succinct form is that articulated by Lord Diplock in Pegang Mining Co Ltd v Choong Sam [1969] 2 MLJ 52 (at 55 - 56) where, by reference to the English rule, his Lordship said this: "It has sometimes been said ... that a party may be added if his legal interests will be affected by the judgment in the action but not if his commercial interests only would be affected. While their Lordships agree that the mere fact that a person is likely to be better off financially if a case is decided one way rather than another is not a sufficient ground to entitle him to be added as a party, they do not find the dichotomy between 'legal' and 'commercial' interests helpful. A better way of expressing the test is: will his rights against or liabilities to any person to the action in respect of the subject matter of the action be directly affected by any order which may be made in the action?" 11That formulation of the test was approved and adopted by the full Federal Court in News Ltd v Australian Rugby Football League Ltd (1996) 64 FCR 410 where their Honours said (at 525): "In our opinion, the question should be decided according to the test proposed by Lord Diplock. The test involves matters of degree, and ultimately judgment, having regard to the practical realities of the case, and the nature and value of the rights and liabilities of the third party which might be directly affected. The requirement that a third party's rights against, or liability to, any party to the proceedings be directly affected is an important qualification that recognises that many orders of a court are likely to affect other people to a greater or lesser extent ... . Where, before trial, a question arises whether a necessary party has been joined, attention should be directed to the orders sought in the proceedings. It is the effect of the orders upon the third party that must be determined. The test is not whether the conduct of the third party is raised in the pleadings between the existing parties, ... ." 12The test articulated by Lord Diplock and the observations made in relation to it in News Ltd v Australian Rugby Football League Ltd were adopted as appropriate by McHugh J in State of Victoria v Sutton [1998] HCA 56; (1998) 195 CLR 291. His Honour there stated (at 316): "The rules of natural justice require that, before a court makes an order that may affect the rights or interests of a person, that person should be given an opportunity to contest the making of that order. Because that is so, it is the invariable practice of the courts to require such a person to be joined as a party if there is an arguable possibility that he or she may be affected by the making of the order. That practice also assists in avoiding duplication of hearings on the same issues and in avoiding the spectre of inconsistent decisions by courts or the judges of the same court." 13Applying these principles, CRI says that joinder of the surveyors and certifiers is "necessary" within the meaning of the rule. It submits that by reason of paragraph 4 of the relief sought in the amended statement of claim and the matters pleaded in support of that relief, the actions of the surveyors and certifiers in relation to the Deposited Plan are directly challenged. Each of them was responsible for the form of that plan. A determination that the Deposited Plan is not a plan that accords with the stratum subdivision plan identified in condition A2 of the consent necessarily reflects, so it submits, directly upon the actions of and certificates given by each of the parties sought to be joined. 14According to the submission, the last proposition is well demonstrated by reference to the terms in which the subdivision certificate given by Mr Wren was signed. As I have earlier indicated, that certificate, endorsed on the Deposited Plan, certifies that the provisions of s 109J of the EPA Act have been satisfied in relation to the subdivision. Subsection (1)(c) of that section proscribes the issue of a subdivision certificate where development consent for subdivision has been granted unless "the applicant has complied with all conditions of the consent" required to be complied with before a subdivision certificate may be issued in relation to that plan. A determination in the substantive proceedings that conditions A2, E1 and E2 have not been complied with, necessarily has the consequence that the certificate given by Mr Wren is, at the very least, inaccurate. Indeed, JV Co pleads (at [27]) in support of the orders sought that CRI, together with the third and fourth respondents, "procured, permitted or allowed the issue of the subdivision certificate" in breach of s 109J(1)(c). 15All the parties resisting joinder essentially relied upon and adopted the submissions made on behalf of JV Co. Without intending disservice to the submissions made on behalf of these parties, the essence of them is summarised in the following paragraphs. (1) The joinder of parties allowed by the rule is discretionary. Relevant to the exercise of that discretion are the provisions of Divs 1 and 2 of Pt 6 of the Civil Procedure Act 2005. (2) As no relief is sought against the surveyors or certifiers, their joinder in the proceedings is not necessary. Related to this submission is the proposition that, in general, an applicant or plaintiff is entitled to select those parties against whom it wishes to proceed. However, it was not contended that the absence of any relief being sought against the surveyors and certifiers was, itself, a matter determinative of the present application. (3) Neither the rights of the surveyors or certifiers against, nor liabilities to, any party to the proceedings will be directly affected by any order that may be made in the proceedings. It was submitted that, at best, any determination in favour of JV Co and any order made in accordance with those sought would only have an indirect affect upon the surveyors and certifiers. It followed that the test for joinder articulated in the authorities to which I have earlier referred was not satisfied. (4) Assuming success on the part of JV Co in the present proceedings and subsequent action by CRI against the surveyors or certifiers, the risk of inconsistent judgments was, "at most, marginal". This submission was made, as I understood it, on the basis that in any subsequent action by CRI, founded in either contract or tort, a determination would be necessary upon a much wider range of facts and circumstances than is necessary to be determined in the present proceedings. (5) Reliance by CRI upon the Registrar-General's practice directions for amendment of deposited plans, as justifying joinder, is misplaced. Those practice directions cannot override or govern any order that the Court may make, particularly in circumstances, as here, where the Registrar-General is a submitting respondent to the proceedings. There is no basis, in fact, for any apprehension that either he or any other of the present parties will fail to comply with any orders that may be made by the Court requiring rectification of the Deposited Plan. (6) In exercising the discretion as to joinder, it is relevant that these proceedings were commenced and set down for hearing in circumstances of urgency. Interlocutory injunctions have been granted and the matter fixed for hearing for 4 days to commence on 27 June 2011. Thus, so it is argued, the joinder of additional respondents has the potential to disrupt preparation of the matter for hearing and jeopardise the hearing date. (7) If CRI was to maintain an action in contract or tort against the surveyors or certifiers, this Court would not have jurisdiction to entertain that claim. Such a claim is neither incidental to the exercise of jurisdiction granted by ss 16 and 20 of the Land and Environment Court Act 1979 ( the Court Act ) ( National Parks and Wildlife Service v Stables Perisher Pty Ltd (1990) 20 NSWLR 573 at 582) nor would such a claim be "ancillary" within the meaning of s 16(1A) of the Court Act ( Arnold v Minister Administering the Water Management Act 2000 [2008] NSWCA 338; (2008) 73 NSWLR 196 at [73] - [75]. 16While there is substance in these submissions, I have decided that they do not determine the outcome of CRI's notice of motion. The existence of a discretion under the rule, in circumstances such as the present, is recognised as are the requirements of Divs 1 and 2 of Pt 6 of the Civil Procedure Act , particularly the provisions of s 56 that require the "just, quick and cheap" resolution of the real issues in the proceedings. However, it is in the context of considering submissions by JV Co numbered (3) and (4) that I favour the application for joinder. 17A determination in favour of JV Co and orders generally in accordance with those that it seeks would, so it seems to me, have the potential to affect directly the potential liability of the surveyors and certifiers to CRI, as well as any of the other present respondents who, in accordance with the case as pleaded, "procured, permitted or allowed" the plan to be registered in the form of the Deposited Plan. Applying the earlier recited observations by McHugh J in State of Victoria v Sutton , "there is an arguable possibility" that either or both of those entities, together with the respective directors sought to be joined, "may be affected" by the making of the orders sought by JV Co. That arguable possibility is demonstrated by the example earlier given when referring to the subdivision certificate signed Mr Wren pursuant to s 109J of the EPA Act. 18While the relief claimed by JV Co is reflected in orders sought to operate in personam , that circumstance does not militate against the judgment operating in rem . As I have indicated at the outset, essential to the success of JV Co in the substantive proceedings is a determination that the registration of the Deposited Plan has, in relevant respects, been procured in breach of the EPA Act. A determination to that effect would, so it seems to me, be a judgment in rem : P E Bakers Pty Ltd v Yehuda (1988) 15 NSWLR 437 at 445-6 (per Hope JA, Samuels and McHugh JJA agreeing). Operation of the judgment as one in rem would mean that in any subsequent proceedings of the kind foreshadowed, the surveyors and certifiers could not challenge the determination that the Deposited Plan, which they were instrumental in preparing and certifying, failed to comply with the consent and therefore would, when registered, be in breach of the EPA Act. 19Such a determination would, very obviously, be a material determination in any proceedings that CRI might institute. While it is accepted that such a finding would not be the only finding necessary to be made in such proceedings in order to sustain a right of action by CRI, its materiality to the ultimate determination in such proceedings could not seriously be disputed. It is by reference to this circumstance that the "arguable possibility" of affect upon the surveyors and certifiers exists if the orders sought are made. 20Equally relevant to the exercise of my discretion favourable to the joinder of the proposed respondents is the possibility of inconsistent decisions by different courts. I accept that submission (7) made on behalf of JV Co is correct, namely that this Court would not have jurisdiction to entertain any action in contract or in tort arising from the registration of the Deposited Plan in breach of the EPA Act. Even if I be wrong in suggesting that the critical determination in the present proceedings would operate as a judgment in rem , the finding that the Deposited Plan was prepared in breach of the EPA Act must also be a critical finding in any relevant claim made by CRI against the surveyors or certifiers. That circumstance leaves open a possibility, which is not remote, that there may be inconsistent judgments between that delivered by this Court in the present proceedings and that delivered by a court having jurisdiction to determine the foreshadowed claim by CRI. 21I recognise the discretionary consideration weighing against joinder as it is articulated in submission (6) advanced by JV Co. However, it must be remembered that the joinder sought by CRI does not itself give rise to any new issue for determination in these proceedings, as presently pleaded, and no change in the relief sought is foreshadowed by JV Co. Thus, I would assume that the surveyors and certifiers would seek to rely upon or perhaps supplement, if it is relevant so to do, the evidence to be relied upon by CRI in opposing the relief that is sought. 22Although reference was made in the course of submissions on behalf of JV Co to the possibility of evidence going back for some years, detailing the relationship between CRI on the one hand and the surveyors and certifiers on the other, it is not presently apparent to me how the course of dealing between those parties would be relevant to the issues to be tried in the present proceedings. The case, in the substantive proceedings, would seem to be essentially a documentary case, directed to the differences, if any, between the consent, including the documents that it incorporates by reference, and the Deposited Plan. Evidence may also be admissible if directed to the interpretation of plans ( Ancher, Mortlock, Murray & Woolley Pty Ltd v Hooker Homes Pty Ltd [1971] 2 NSWLR 278) or if it is directed to any discretionary defence that is pleaded and available to any of the respondents. 23The hearing is not due to commence for another 5 weeks. Subject to any contrary argument that might be raised, I would have thought that this would provide sufficient time for the surveyors and certifiers to prepare any case in support of that prepared by the present respondents to resist the claim made by JV Co, if that be their intention. 24For these reasons I propose to order that each of H & F, Pierre Hartzenberg, G & J and Gordon Wren be joined as respondents in these proceedings. Once I have made the formal order for joinder, it will be necessary that the parties bring in draft Short Minutes directed to the service upon the newly joined respondents of pleadings and affidavits filed to date, copies of orders and directions made for the preparation of the matter for hearing and any further directions necessary to accommodate the provision of evidence to be led on behalf of the newly joined respondents: UCPR 6.32. 25I have not heard argument as to the costs of CRI's notice of motion. It is appropriate that I should reserve that question. However, this leads me to observe that, at the conclusion of the substantive proceedings, it may be necessary to consider a special order as to costs, as those costs relate to CRI and arising from its joinder of the additional respondents, whatever the outcome of the proceedings may be. This is because joinder was resisted both by JV Co (the joinder serving no practical purpose for it) and also by the parties sought to be joined. However, it would be inappropriate at this point in time to foreshadow the manner in which the costs discretion will be exercised at the conclusion of the final hearing. 26The orders that I make are as follows:

CTI Joint Venture Company Pty Ltd v CRI Chatswood Pty Ltd

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