Idameneo (No. 123) Pty Limited v Khouri

REASONS FOR JUDGMENT 1 There are two matters presently before the Court. The first in point of time is the matter of Idameneo (No. 123) Pty Ltd (ACN 002 968 185) ('Idameneo') v Khouri, which now bears the Federal Court identification number NSD 746 of 2008. The second matter is a matter commenced in this Court by Mr Khouri in which the parties are Khouri v Idameneo (No. 123) Pty Ltd (ACN 002 968 185). That matter is identified in this Court as proceeding NSD 456 of 2008. 2 Idameneo is referred to in the Statement of Claim in proceedings NSD 746 of 2008 as a 'corporation carrying on a business inter alia providing premises from which medical practitioners render medical services'. As part of its business, it contracts with health services professionals for them to leave the premises at which they have previously worked and move to premises which it provides, on the basis of a profit-sharing arrangement in respect of the use of its own premises. 3 Mr Khouri is a dentist. It is said that he formerly conducted a dental practice at an address in George Street, Sydney. 4 On 2 September 2002, it is said that two agreements were entered into between Idameneo and Mr Khouri, one called a Sale Deed or Sale of Practice Deed and the other called a Practitioner Contract. These documents, as I understand it, embody the relationship established between the parties, under which Mr Khouri left the place at which he previously worked and commenced to work at premises said to have been leased by Idameneo at, as I would understand it, Bankstown, Fairfield and Dapto. 5 In paragraph 29 of the Statement of Claim, in proceeding NSD 746 of 2008, it was alleged that it was a term of the Sale Deed that during the 8-year term of the Sale Deed, Mr Khouri would render dental treatment from Idameneo's premises. In paragraph 30, it was alleged that in breach of the term pleaded in paragraph 29, Mr Khouri rendered dental treatment from premises other than Idameneo's premises. 6 It will be seen from the provisions of the Statement of Claim to which reference has been made that the case instituted by Idameneo in the Supreme Court against Mr Khouri was one for breach of contract. The prayers for relief contained in the Statement of Claim included damages and in the alternative, restitution in respect of an amount of $500,000, said to have been paid by Idameneo to Mr Khouri as part of the arrangement, or a proportion thereof. 7 Following the institution by Idameneo of its breach of contract proceedings, Mr Khouri instituted proceeding NSD 456 of 2008 in this Court against Idameneo, by an Application filed 4 April 2008. In that application, relief was sought by Mr Khouri under the Independent Contractors Act 2006 (Cth) ('Independent Contractors Act'). The prayers for relief contained in the Application included an order varying the Sale of Practice Deed by deleting a reference to an 8-year term and replacing it with a reference to a 5-year term, and an order varying the terms of the Practitioner Contract by making a similar amendment, reducing the term from 8 years to 5 years, and other relief under the Independent Contractors Act. 8 On 13 May 2008, it would appear that an order was made by consent in the Supreme Court for the transfer of Idameneo's proceeding to the Federal Court. This followed the filing of a Notice of Motion on 4 April 2008 seeking, as I understand it, the transfer into the Federal Court of the Supreme Court proceeding. 9 On 21 July 2008, both matters came before the Court as presently constituted, whereupon a number of orders and directions were made, including an order that the two matters be heard together, with evidence in one matter to be evidence in the other, to the extent that it was relevant. Given the findings made by the High Court in relation to the invalidity of cross-vesting legislation in Re Wakim; ex parte McNally (1999) 198 CLR 511 ('re Wakim'), there may have been some doubt as to the validity of the consent order for transferral of the Supreme Court proceedings into the Federal Court. The Supreme Court's order for transfer bears a notation 'that the court has not investigated whether the Federal Court has jurisdiction'. Whatever may have been the situation at that time, it seems to me that the two proceedings, when taken together in this Court, constitute one matter in relation to which the Court has jurisdiction: see generally per Gummow and Hayne JJ in re Wakim at [137] et seq. 10 The two matters have a long history in this Court. On 21 July 2008, the matters were fixed for hearing on 10 December 2008, with an estimate of four days but on the basis that the hearing would continue until concluded. On 10 November 2008, an order was made vacating those hearing dates. 11 On 23 April 2009, an order was made fixing the matters for hearing on 7 December next, with an estimate of five days but on the basis that the hearing would continue until concluded. On 12 August 2009, the solicitors for Idameneo served certain documents on the solicitors for Mr Khouri, including a proposed Amended Statement of Claim in proceedings NSD 746 of 2008 in which Idameneo was the plaintiff (now applicant). On 20 August 2009, the solicitors for Idameneo wrote to the solicitors for Mr Khouri seeking to ascertain whether or not Mr Khouri consented to or opposed the filing by Idameneo of the proposed Amended Statement of Claim. The solicitors for Mr Khouri responded on 21 August 2009, indicating that Mr Khouri opposed the filing by Idameneo of its proposed Amended Statement of Claim. 12 The proposed Amended Statement of Claim had a twofold purpose. Firstly, it was directed at adding four additional respondents to proceedings NSD 746 of 2008, being Dental Corporation Pty Ltd (ACN 124 730 874), Nicholas Thliveris, George Nikopolous and Mark Evans. The second purpose of the proposed Amended Statement of Claim was to introduce into the proceedings two new causes of action: firstly, one for inducing breach of contract, otherwise referred to as an alleged knowing interference in contractual relations, and the other for conspiracy, so that it may be alleged that Mr Khouri and the so-called 'DCP Respondents', being the four proposed additional respondents, conspired to cause injury to Idameneo by devising a plan to cause Mr Khouri to cease to provide dental services to Idameneo and instead to provide dental services to Dental Corporation Pty Ltd. 13 On 31 August 2009, Idameneo filed a Notice of Motion, returnable for 9:30am today, at which it proposed to move the Court for an order that Idameneo have leave to file the Amended Statement of Claim. The matter came before the Court for directions on 9 September 2009 in circumstances where it was suggested that the motion may not be able to proceed to a hearing today. As it transpires, an Amended Notice of Motion was filed on 9 September 2009, seeking not only leave to file the Amended Statement of Claim, but also an order that Dental Corporation Pty Ltd, Nicholas Thliveris, George Nikopolous, referred to as 'Nikolopolous', and Mark Evans be joined as respondent. 14 Order 6, rule 8 of the Federal Court Rules makes provision for the Court to order that a person be added as a party where the person ought to have been joined as a party or was a person whose joinder as a party was necessary to ensure that all matters in dispute in the proceeding may be effectually and completely determined and adjudicated upon. In relation to the matters in dispute in the two proceedings, there was no necessity for the joinder of the proposed additional respondents, nor were they persons who ought to have been joined. 15 On occasions, the Court is called upon to allow amendments to a Statement of Claim in which additional parties are named, and on occasions, amendments are allowed, the supposition being that the Court is both exercising its power under Order 6 rule 8 to add additional parties and also under Order 13 rule 2 to allow amendments to a document in the proceeding. 16 Senior counsel for Idameneo draws the Court's attention to Order 13, rule 2(2) and (7), which relevantly provide: '(2) All necessary amendments shall be made for the purpose of determining the real questions raised by or otherwise depending on the proceeding, or of correcting any defect or error in any proceeding, or of avoiding multiplicity of proceedings. … (7) An amendment may be made even if the effect of the amendment is to add a new claim for relief … if the new claim for relief …: (a) arises out of the same facts or substantially the same facts as those already pleaded to support an existing claim for relief by the party applying for leave to make the amendment; …' 17 Attention has also been drawn to s 22 of the Federal Court of Australia Act 1976 (Cth) ('the Federal Court Act'), which relevantly provides: '22. The Court shall, in every matter before the Court, grant either absolutely or on such terms and conditions as the Court thinks just, all remedies to which any of the parties appears to be entitled in respect of a legal or equitable claim properly brought forward by him or her in the matter, so that as far as possible, all matters in controversy between the parties may be completely and finally determined, and all multiplicity of proceedings concerning any of those matters avoided.' 18 It does not seem to me, having regard to the rules quoted or s 22, that the proposed new causes of action should be incorporated and the disputes in relation to them should be incorporated in the existing matters, which are listed for hearing on 7 December next. Mr Khouri is not, in my view, a necessary party to any action in tort for inducing breach of contract. It would be fair to say that in relation to the claim of alleged conspiracy, that he would be a necessary party to that cause of action. 19 I do not intend in these reasons to elaborate all the principles relating to res judicata, issue estoppel and Anshun estoppel that may arise. I would refer to my consideration of those matters in JF Keir Pty Ltd v Sparks [2008] FCA 611 at [55] and following, and also to the decision of the High Court in Ramsay v Pigram (1968) 118 CLR 271. It does not seem to me that there are any relevant issues relating to possible estoppels which will prejudice the opportunity of Idameneo to bring fresh proceedings for the torts which it alleges or wishes to allege in an appropriate Court independently of the present proceedings. 20 There are other considerations which militate against leave being granted to Idameneo to add the proposed additional respondents and to introduce the new causes of action in the present proceedings. In Kowalski v MMAL Staff Superannuation Fund Pty Ltd [2009] FCAFC 117 ('Kowalski') at [45] - [53], a Full Court, comprising Spender and Gilmour JJ and myself, addressed the recent judgment of the High Court in Aon Risk Services Australia Limited v Australian National University [2009] 258 ALR 14 under the heading 'Pursuit of the interests of justice in relation to amendments to pleadings'. True it is that the facts of that case do not correspond with the facts of this case or, for that matter, with the facts in State of Queensland v JL Holdings Pty Ltd (1997) 189 CLR 146. However, the matters of principle that were there enunciated are, in my opinion, equally applicable to this case. The question is what is the proper application of the principles to the facts of this case? 21 The evidence before the Court on the hearing of the amended motion includes a communication in writing from Idameneo to Mr Khouri of 3 July 2007, which had a series of headings, namely, 'Notice of Serious Breach', 'Breach of Clause 6.2(b) - weeks absent', 'BREACH OF CLAUSE 6.2(b) - 50 HOURS PER WEEK', 'BREACH OF CLAUSES 6.2(c) AND 6.2(d) OF THE SALE DEED' and 'BREACH OF CLAUSES 6.2(a) and (d) - DENTAL CORPORATION PTY LIMITED AND NORMANBY CAPITAL PTY LIMITED'. Under the last-mentioned heading, paragraph 15 provided: '15. It has come to our attention that you are involved with an entity called Dental Corporation Pty Limited ("DCP") and its promoter, Normanby Capital Pty Ltd ("Normanby"). You are listed as one of three contact persons on a document which appears to have been targeted at dental practitioners. The business purpose of DCP is to acquire dental practices and to provide services to dental practitioners in order to establish a core group of dental practitioners who will in turn contribute to the growth of DCP. Your involvement with DCP is clearly related to dentistry practice and is contrary to the previous statements you have made to the Company.' 22 A later communication dated 9 July 2007 from the solicitors for Idameneo to Dental Corporation Pty Limited, care of Normanby Capital Pty Limited, addressed the relationship between Idameneo and Mr Khouri. Particular attention has been drawn to paragraphs 7 to 14 and 19 of that communication. It is unnecessary to incorporate all the detail of each of those paragraphs in these reasons for judgment. It is sufficient to draw attention to paragraphs 13 and 14 which included the following: '13. In these circumstances DCP is not entitled to say it did not know of the existence of the contractual arrangements of Dr Khouri … 14. The DCP document clearly evidences a knowledge of Dr Khouri's contractual arrangements with Idameneo and constitutes an attempt to induce Dr Khouri to continue to breach the contract he has with Idameneo. Nothing could be clearer from the fact that DCP has nominated Dr Khouri as a contact for DCP in relation to a business model very similar to Idameneo's.' 23 In paragraph 19(a) an undertaking was sought from Dental Corporation Pty Limited, Normanby Capital Pty Limited and each of their related bodies corporate and their respective officers to 'henceforth cease and desist to attempt to induce Dr Ray Khouri who is a party to a contract with Idameneo to continue to be in breach of that contract and to break that contract'. 24 Ms Bailey of Massey Bailey, the solicitors for Idameneo, gave evidence under cross-examination on the hearing of the amended notice of motion to the effect that at the time when she wrote the letter of 9 July 2007 to which reference has been made, she was of the opinion that a cause of action was then available to Idameneo to seek relief against Dental Corporation Pty Limited and others for the tort of inducing breach of contract. Notwithstanding that opinion, no claims for inducing breach of contract were made against any parties in the proceedings instituted by Idameneo against Mr Khouri in the Supreme Court on 4 February 2008 or any other proceedings until the amendments to the Statement of Claim in this matter were proposed in the communication from the solicitors for Idameneo to the solicitors for Mr Khouri of 12 August 2009. 25 Ms Bailey is the solicitor on the record for Idameneo in the matters presently before the Court. She was aware of the fact that on 27 August 2008 Mr Khouri filed a Verified List of Documents and that one of the documents discovered by Mr Khouri was a short Deed of Indemnity between Dental Corporation Pty Limited and Mr Khouri of 23 April 2007. Ms Bailey obtained a copy of the Deed of Indemnity in September 2008 and in December 2008 she obtained a copy of a contract of employment between Dental Corporation Pty Limited and Mr Khouri along with certain additional documents. 26 Ms Bailey did not give any detailed attention to the documents which she obtained in September and December 2008 until March/April 2009. Once Ms Bailey turned her mind to the issues regarding the proposed new causes of action she proceeded to seek senior and junior counsel's advice. This culminated in the preparation of a draft Amended Statement of Claim which was ultimately submitted to the solicitors for Mr Khouri, in the manner previously described, on 12 August 2009. 27 Mr Khouri opposes the joinder of the proposed additional respondents and opposes the grant of leave to Idameneo to file an Amended Statement of Claim seeking to raise the two new causes of action in tort in the current proceedings which are, of course, contract proceedings overlaid by issues arising under the Independent Contractors Act. 28 It is true that it is almost three months before the date fixed for hearing of the matters presently before the Court. However, it does not seem to me that the proposed causes of action in tort form part of the matter which is the subject of the two proceedings which are before the Court and which are due to be heard on 7 December 2009. There is no evidence as to the likely effect of the addition of new respondents and the filing of an Amended Statement of Claim upon the ability of the parties to hold the hearing date of 7 December 2009 or the ability of the parties to complete the case, with the proposed new causes of action added, in the five days estimated as the likely duration of the hearing. 29 The uncontested evidence of a partner in the firm of solicitors representing Mr Khouri is that the proceedings have taken an emotional toll on Mr Khouri and he is anxious to have them dealt with as soon as possible. 30 I cannot imagine that the hearing will be able to be concluded in the same period of time as currently estimated if the new parties and new causes of action are added. Furthermore, I cannot be confident that the necessary interlocutory steps, including pleadings and discovery and inspection, could be concluded in a timely manner to allow the hearing of the matter to commence on the appointed day in December. Having regard to the principles summarised in Kowalski, to which reference has been made, it would seem to me that in the exercise of the Court's discretion an order ought not to be made adding the proposed additional parties and allowing the fresh causes of action to be raised in the exercise of the Court's pendent jurisdiction. 31 In my opinion the application should be dismissed. I certify that the preceding thirty-one (31) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Graham.