Maamary v Pepsico Australia Pty Ltd & Ors

Court of Appeal (NSW)|2001-08-31|Before: Mason P, Giles JA, Studdert J

The application to Gibb DCJ 29 Still represented by Konstan Lawyers, the appellant filed a notice of motion returnable on 14 August 1998. Only counsel's description of the notice of motion was available on appeal, namely - " … it sought at [sic: an] order that the matter be restored to the list, the costs order made by Garling [sic] be set aside, the defendant and Kentucky Fried Chicken give discovery of documents, leave be granted to the plaintiff to amend the statement of claim if necessary to name the [sic] Kentucky Fried Chicken in the event orders 1 and 4 are not granted 30 After three hearing dates without progress, the notice of motion was stood over generally. In April 1999 the appellant changed his solicitors. In September 1999 he filed an amended notice of motion, the terms of which were not revealed. In March 2000 the notice of motion was twice further amended, in its final form claiming orders - "1. Pursuant to Part 18 Rule 3(4) the Court set aside the order of Garling DCJ made on 29 May 1998.

Pursuant to Part 17 Rule 1 and Part 17 Rule 4 the Plaintiff have leave to amend the Ordinary Statement of Claim to name Kentucky Fried Chicken Pty Limited (ACN 000 587 780) as the Defendant.

The Court make such directions as it deems appropriate for the hearing of the matter.

Alternatively, pursuant to Section 60C of the Limitation Act 1969 (NSW) the limitation period to commence proceedings against Kentucky Fried Chicken Pty Limited (ACN 000 587 780) be extended until 28 days following the making of this order.

Costs of this Motion be costs in the cause. 6. Costs of proceedings number 3257 of 1997 be costs in proceedings against Kentucky Fried Chicken Pty Limited (ACN 000 587 780).

In the alternative that the Plaintiff's former solicitor Simon Konstantinidis [sic] of Konstan Lawyers pay the Plaintiff's costs of and incidental to this Motion together with any costs that the Plaintiff is ordered to pay of any other party at the hearing of this Motion."

31 The second respondent and the third respondent were named in the notice of motion in its final form as the second defendant and the third defendant. This was erroneous, but effectively they were identified as respondents to the applications. 32 The applications came before Gibb DCJ on 11 May 2000. Mr Romaniuk appeared for the appellant. Mr Hull appeared for the first respondent. There was a question over service of the notice of motion on the second respondent, but in due course Mr Hull announced that the second respondent had the same insurer as the first respondent and that he appeared for it also. Mr Johnson appeared for the third respondent. 33 After Mr Romaniuk had given a brief explanation of the applications to her Honour and the affidavits had been identified, her Honour retired to read the affidavits. 34 The explanation included that there had been a concession before Garling DCJ "that it was the wrong defendant", and that "his Honour said well in those circumstances I will dismiss, the proceedings were dismissed not struck out". In answer to her Honour, Mr Romaniuk agreed that "the amendment is subject to setting aside Judge Garling's order", and that the alternatives were "dismiss [sic] and amend" (in context, meaning set aside the order of Garling DCJ and then amend pursuant to Pt 17 r 4 to substitute the second respondent for the first respondent as defendant) or "start again under s 60C" (in context, meaning obtain an extension of the limitation period under s 60C of the Limitation Act 1969 and bring fresh proceedings against the second respondent.) 35 That Garling DCJ had dismissed the proceedings, not struck them out, was not correct. His Honour had at all times spoken of striking out, and had made his order in those terms. That there had been the concession was also incorrect, but linking "dismiss [sic] and amend" as one alternative effectively abandoned any contention that the first respondent was the proper defendant. Indeed, an affidavit by the appellant's new solicitor read on his behalf included that it appeared that the second respondent "was in fact the occupier of the premises in which the Plaintiff was injured on 18 June 1994", and annexed an amended draft amended statement of claim in which the second respondent was named as the only defendant and was alleged to have been the occupier of the Canterbury Road premises. 36 The applications to set aside the order of Garling DCJ and name the second respondent as the defendant were not the subject of formal reasons. The transcript, from the time of her Honour's return to the bench, records - "HER HONOUR: Putting it at its bluntest why should I mitigate the solicitor's damages? ROMANIUK: Very good question your Honour but I think my friend wants to tender some documents. HULL: Your Honour, the only point of tendering these is that the defendant Pepsi Co - I don't necessarily want to launch into my submissions without knowing what it is I have got to meet. HER HONOUR: Perhaps if we just work backwards for a moment, in circumstances where the transcript reveals that the plaintiff's solicitor in effect consented to the strike out what discretion would I have to set aside the decision of Judge Garling? ROMANIUK: Only if your Honour were satisfied that there was no relevant prejudice, that the plaintiff himself wasn't at fault and that it was appropriate to bring the proceedings back into foot. I accept what your Honour says but the discretion to strike back in could take into account the larger circumstances. HER HONOUR: But it would be reinstating something which is still on the face of it bad in law. ROMANIUK: Exactly and that would be cured by the associated application to amend. HER HONOUR: That's the second -- ROMANIUK: The second. HER HONOUR: And I would have to form the view first that I should reinstate the plaintiff's action because it was not the plaintiff's fault but the plaintiff's solicitor's fault that it was struck out. To do so I would have to form the view that there is no prejudice in so doing but I would be reinstating something which is on the face of it then and on the face of it now bad in law. That would seem to me to be not an appropriate case for the exercise of discretion to reinstate because I would be doing so - the only circumstance in which I could reinstate it would be by reference to an assumption about the later conduct of proceedings then reinstate it. ROMANIUK: Yes and that assumption could in effect be made fact because the application will then follow in time -- HER HONOUR: Yes but it's an assumption about what I will then do and I can't even turn my mind to what I will then do until I have in fact done step one so it would be a hypothetical future factor that would offset a patent prejudice to a defendant who is not properly before the court then or now. ROMANIUK: I accept your Honour's analysis to that -- HER HONOUR: And that really is the end of Mr Hull in that guise. HULL: I adopt those submissions. ROMANIUK: I think my friend wanted to tender a document and then I'll -- HER HONOUR: Mr Hull has just ceased to exist in a sense, we are now dealing with a second application which is to commence proceedings against Kentucky Fried, Mr Hull in his Pepsi Co capacity having vanished into the ether. There is one proceeding with two defendants and that it is your wish to commence one of them obviously requires no leave." 37 It is evident from what followed that by "a second application which is to commence proceedings against Kentucky Fried" her Honour meant the application to extend the time for commencing proceedings against the second respondent. Her Honour did not otherwise address the application to name the second respondent as the defendant, that is, substitute the second respondent for the first respondent as defendant. As I have indicated, continuing the proceedings against the first respondent had been effectively abandoned, and amendment to substitute the second respondent for the first respondent as defendant had been acknowledged as dependent on first setting aside the order made by Garling DCJ. 38 The debate then turned to the application for an extension of the limitation period for proceedings against the second respondent and the application for an order for costs against the third respondent. The orders made on the latter application were not the subject of appeal. As to the former application, in due course her Honour gave reasons in which she declined to extend the limitation period. In essence, her Honour considered that it was not just and reasonable to do so when the appellant, through his lawyers, had known of his rights and of the identity of the second respondent as the correct defendant since April 1998 and, again through his lawyers, had neglected to pursue his rights against the second respondent.

The appeal 39 The grounds of appeal were stated under four headings. Under the heading "Restoring the Proceedings", ground 1 was that Gibb DCJ erred in refusing to exercise her discretion to set aside the order made by Garling DCJ. Under the heading "Substitution", grounds 2 and 3 were that her Honour erred in failing to give reasons for rejecting what was described as the application to substitute the second respondent for the first respondent and in rejecting that application. Under the heading "Limitation", grounds 4, 5 and 6 were that her Honour erred in various ways in relation to the extension of the limitation period. Under the heading "Incompetent Representation", ground 7 was that the appellant was incompetently represented at the hearing of the applications. 40 The substantive orders sought on appeal were "that the second respondent be substituted for the first respondent" (presumably with a prior order setting aside the order made by Garling DCJ); alternatively "extend time for the appellant to commence proceedings against the second respondent"; alternatively again "a new hearing of the applications be ordered". Apart from the expected orders as to costs, orders were sought for "[c]osts against the third respondent whatever be the outcome of the application" and that the third respondent "indemnify the appellant against any order for costs made against the appellant". The appellant's submissions on appeal confined the orders against the third respondent to orders as to the costs of the appeal, and appeared to further confine them to any costs of the appeal which the appellant might be ordered to pay. 41 The third respondent did not appear on the hearing of the appeal. We were informed that he was aware of the appeal but, through his solicitors, took the view that he had "no locus standi". There was no proof of service of the notice of appeal on the third respondent. For reasons which will appear, I do not think his status or non-appearance matter.

Restoring the proceedings 42 Part 18 r 3 was amended with effect from 1 January 2000 by the omission from subrule (4) of the words "on the court's own motion". It was common ground that Garling DCJ had acted on his own motion - the first respondent had not applied for an order that the proceedings be struck out. As at August 1998 there was provision for an order made under subrule (1) to be set aside, and as at 11 May 2000 there was even more ample provision for setting aside an order made under subrule (1). 43 Part 18 r 3 was amended again with effect from 1 September 2000 by the omission of subrules (2), (3) and (4). The second and third respondents, which were jointly represented on appeal and which I will jointly refer to as the respondents, submitted that the appeal was by way of rehearing (Supreme Court Act 1970, s 75A(5)), that the law to be applied was the law applying at the date the appeal was heard (eg Marsland v Andjelic (No 1) (1993) 31 NSWLR 162), and that with the omission of subrule (4) this Court could not order that the order made by Garling DCJ be set aside, and should not otherwise intervene because there was no power so to order on a fresh hearing in the District Court. 44 This is an unattractive submission. It is also not correct. At the time the appellant applied to have the order made by Garling DCJ set aside, whenever the precise application was made in the period August 1998 - March 2000, there was power to set aside the order. By s 30(1)(b) and (c) of the Interpretation Act 1987 the amendment or repeal of a statutory rule, which the rules of the District Court were and are, does not affect anything duly commenced or any right acquired thereunder. The appellant is continuing by way of appeal his application for an order that the order made by Garling DCJ be set aside (if it matters, the summons for leave to appeal was filed on 5 June 2000), and if there be a fresh hearing in the District Court that will also be a continuation of his application; further, by making his application the appellant acquired a right to have it duly dealt with. The jurisdiction of a court which has already been invoked will only be excluded by clear and unambiguous language, and s 30(1)(b) and (c) positively preserves the power, see Seltsam Pty Ltd v McGuiness (2000) 49 NSWLR 262 at 266. Rodway v The Queen (1990) 169 CLR 575, on which the respondents particularly relied, is distinguishable because in the present case the appellant had acquired a right to have his application duly dealt with. It was not a case of a matter of procedure in his proceedings. 45 Why, then, did Gibb DCJ refuse to set aside the order made by Garling DCJ? Her Honour thought that she would be "reinstating something which is still on the face of it bad in law", by the expression "on the face of it bad in law" apparently having in mind "that the plaintiff's solicitor in effect consented to the strike out" and thereby that the claim against the first respondent was bound to fail because it was conceded that the first respondent had not been the occupier of the Canterbury Road premises. The appellant's response implicitly accepted that the claim against the first respondent was bound to fail, and was to the effect that reinstatement had to be seen as a step to amendment to substitute the second respondent for the first respondent as defendant. But her Honour regarded the prospect of amendment as "an assumption about the later conduct of the proceedings", and was not prepared to make the assumption in order to take what she referred to as step one, setting aside the order made by Garling DCJ. That is how I understand the rather Delphic observation - "Yes but it's an assumption about what I will then do and I can't even turn my mind to what I will then do until I have in fact done step one so it would be a hypothetical future factor that would offset a patent prejudice to a defendant who is not properly before the court then or now." 46 With respect, this reasoning was flawed. It was understandable that her Honour first referred to the proceedings as bad in law, even though it had not truly been a situation of consent to the striking out and the affidavits showed that it had not been conceded that the first respondent had not been the occupier of the Canterbury Road premises, because as I have indicated the appellant's claim against the first respondent had been effectively abandoned before her Honour. But it was not correct to regard amendment to substitute the second respondent for the first respondent as defendant as an illicit assumption. 47 If, following reinstatement of the proceedings by setting aside the order made by Garling DCJ, an order substituting the second respondent for the first respondent as defendant would be made, there was utility in setting aside the order made by Garling DCJ. Whatever the effect of the order made by Garling DCJ, it was not dismissal of the applicant's claim, and Gibb DCJ may have been misled by the incorrect assertion by Mr Romaniuk that the proceedings were dismissed not struck out. Reinstatement would mean that the application for an order substituting the second respondent for the first respondent as defendant could be entertained. The two applications were indeed to be seen together, and insisting on success in the first without regard to the second and refusing to consider the second until there had been success in the first was erroneous. 48 The exercise of her Honour's discretion under Pt 18 r 3(4) therefore miscarried. This Court must either re-exercise the discretion or return the proceedings to the District Court for that to occur. But what this Court should do is vitally affected, for reasons which will by now be apparent, by the question of amendment to substitute the second respondent for the first respondent as defendant. I turn to that question.

Substitution 49 Gibb DCJ did not err by failing to give reasons for rejecting an application to substitute the second respondent for the first respondent as defendant. On her Honour's reasoning, she did not get to that application because she declined to set aside the order made by Garling DCJ. I consider the reasoning to have been flawed, but it explained why her Honour did not accede to the application. 50 Part 17 r 1 of the District Court Rules liberally provides for amendment in proceedings. Part 17 r 4 relevantly provided and still provides - "4.(1) Where any relevant period of limitation expires after the date of filing of a statement of claim and after that expiry an application is made under rule 1 for leave to amend the statement of claim by making the amendment mentioned in any of subrules (3), (4) and (5), the Court may in the circumstances mentioned in that subrule make an order giving leave accordingly, notwithstanding that the period has expired. (3) Where there has been a mistake in the name of a party and the Court is satisfied that the mistake was not misleading nor such as to cause reasonable doubt as to the identity of the person intended to be made a party, the Court may make an order for leave to make an amendment to correct the mistake, whether or not the effect of the amendment is to substitute a new party. … (5A) An amendment made pursuant to an order made under this rule shall, unless the Court otherwise orders, relate back to the date of filing of the statement of claim." 51 Was there a mistake in the name of a party? In Bridge Shipping Pty Ltd v Grand Shipping SA (1991) 173 CLR 231 the High Court considered a rule empowering amendment which included, "(4) A mistake in the name of a party may be corrected under paragraph (c), whether or not the effect is to substitute another person as a party". The defendant to a claim that goods had been damaged in transit cross-claimed against the owner of the vessel, then ascertained that the vessel had been chartered to the carrier of the goods and applied to substitute the charterer for the owner. McHugh J, with whom Brennan and Deane JJ agreed, said (at 259-61) - "The concluding words of sub-r. (4) 'whether or not the effect is to substitute another person as a party' enable a plaintiff to substitute one person for another person as a party to the action. Those words also imply that the fact that the plaintiff intended to sue the person who was sued does not prevent the sub-rule applying provided that there was a mistake in the name of the person sued. Moreover, a plaintiff may make 'a mistake in the name of a party' not only because the plaintiff mistakenly believes that a certain person, whom the plaintiff can otherwise identify, bears a certain name but also because the plaintiff mistakenly believes that a person who answers a particular description bears a certain name. Thus, a plaintiff may make a mistake 'in the name of a party' because, although intending to sue a particular person whom the plaintiff knows by sight, the plaintiff is mistaken as to that person's name. Equally, the plaintiff may make a mistake 'in the name of a party' because, although intending to sue a person whom the plaintiff knows by a particular description, eg the driver of a certain car, the plaintiff is mistaken as to the name of the person who answers that description. In both cases, the plaintiff knows the person intended to be sued by reference to some property or properties which is or are peculiar to that person but is mistaken as to the name of that person. In the first case, the properties which identify the person are personal characteristics; in the second case, they are the properties which are of the essence of the description of that person. But for the purpose of sub-r. (4) that distinction is irrelevant. In both cases, the plaintiff was mistaken only as to the name of the person intended to be sued. There is no warrant for treating sub-r (4) as dealing only with the case where the properties which identify the party are inherent properties. That is, there is no warrant for treating sub-r. (4) as dealing only with the case where the plaintiff says: 'The person I wish to substitute as a party is that entity which I identified by certain inherent properties peculiar to it but whose name I mistakenly believed was X.' The sub-rule applies equally to the case where the plaintiff says: 'The person I wish to substitute as a party is that entity which I identified by reference to certain properties which are true of it and of no one else and whose name I mistakenly believed was X'. In both cases, a mistake in the name of the party has occurred and can be seen to have occurred only because the person sued does not have or is not identified by some property or properties which is or are peculiar to the person intended to be sued and to no one else. Rule 36.01(4) is a remedial rule and should be given a beneficial interpretation. It is proper to give it the widest interpretation which its language will permit [Holmes v Permanent Trustee Co of New South Wales Ltd (1932) 47 CLR 113 at p 119]. It should be interpreted to cover not only cases of misnomer, clerical error and misdescription but also cases where the plaintiff, intending to sue a person he or she identifies by a particular description, was mistaken as to the name of the person who answers that description." 52 The enquiry, then, is into whom the claimant intended to sue. On the evidence in Bridge Shipping Pty Ltd v Grand Shipping SA, it was held that there had not been a mistake in the name of a party because the defendant had intended to sue the owner of the vessel and was not mistaken as to the entity which answered the description of the carrier. McHugh J distinguished Lloyd Steel Co (Aust) Pty Ltd v Jade Shipping SA (1985) 1 NSWLR 213, in which the plaintiff's solicitor intended to sue the carrier and believed as a result of searches of the Lloyd's Register that the defendant was the carrier. 53 The present case is of the Lloyd Steel Co (Aust) Pty Ltd v Jade Shipping SA kind. I have no doubt that Mr Santone, for present purposes to be equated with the appellant, intended to sue the occupier of the Canterbury Road premises. The appellant's right of action was against the occupier; Mr Santone asked the legal searcher for the name and address of the companies trading at the premises; and the statement of claim alleged that the defendant was the occupier of the premises. The mistake was as to the name of the entity which answered the description of the occupier of the premises. In my opinion, there was a mistake in the name of a party. 54 Should the Court be satisfied that the mistake was not misleading nor such as to cause reasonable doubt as to the identity of the person intended to be made a party? This was really not addressed either in the evidence or in submissions. From the affidavit of Mr Santone, the first respondent and the second respondent "shared a common address and common directors". Gibb DCJ was told by Mr Hull that they had the same insurer, and he appeared for both companies before her Honour; he also appeared for both companies in the appeal. The relationship is underlined by the first respondent's invitation to submit an offer of settlement. That the appellant intended to sue the occupier of the Canterbury Road premises would have been obvious to the respondents, and was emphasised by the correspondence in which the appellant asked who the occupier was if it was not the first respondent. I do not think the naming of the first respondent as defendant misled either of the respondents or caused reasonable doubt as to the identity of the person intended to be made a party: on the contrary, it seems to me that there was a conscious enjoyment by the respondents of the appellant's mistake. No evidence from the respondents' side asserted that they or either of them had been misled or caused to doubt the identity of the person intended to be made a party. This requirement of Pt 17 r 4(3) is in my opinion satisfied. 55 An order giving leave to amend to correct the mistake is discretionary. As was said of other aspects of a rule equivalent to Pt 17 r 4 in McGee v Yeomans (1977) 1 NSWLR 273 at 280, there is a general discretion to allow an amendment, notwithstanding that it raises a barred cause of action, whenever justice so requires, and - "The Court hearing the application will necessarily have regard to the hardship of the plaintiff, if the amendment is refused, and the prejudice to the defendant, if it is granted. It must also consider all other relevant circumstances, such as the fault of the plaintiff or his advisers, the period of time since the limitation has expired, and the defendant's knowledge of the new cause of action or the new capacity." 56 The respondents, or at least the second respondent, submitted that substitution of the second respondent for the first respondent as defendant should be refused in the exercise of the discretion. They said that the identity of the second respondent as occupier had been known since April 1988, that there had been failure properly to prosecute a claim against it since that date, and indeed that the appellant's notice of motion was never served on the second respondent. (There was no finding as to this, or evidence on which it could be found one way or the other: as I have indicated, the question over service of the notice of motion on the second respondent went away when Mr Hull appeared for it as well as the first respondent.) There was reference to presumptive prejudice, and actual prejudice was asserted in that the appellant's psychological condition was said to have deteriorated since April 1998. 57 The respondents globally imported for this purpose their written submissions in relation to extension of the limitation period. They suggested that Gibb DCJ's exercise of discretion on that matter should be transposed to an exercise of discretion as to amendment. I do not agree: the issues are not the same, and the circumstances to which regard is to be had and the weighing-up process in exercising the discretion are not the same. I have outlined in the preceding paragraph what I believe to be the principal available considerations extracted from the written submissions. I am unimpressed by them or anything else able to be gleaned from the written submissions. Refusing an order giving leave to amend to correct the mistake would be an unwarranted hardship on the appellant when, as I have said, it must have been obvious to the respondents that the appellant intended to sue the occupier of the Canterbury Road premises. The respondents must have known which of them was the occupier, and while the appellant's lawyers were less than vigilant in his interests the respondents can not have been in doubt before or after April 1988 that he was endeavouring to prosecute his proceedings against the occupier. I do not consider that material prejudice to the respondents, relevantly the second respondent, should be presumed or has been established, certainly not such as to call for an exercise of discretion against the appellant.

Restoring the proceedings and substitution 58 In my opinion an order should be made that the appellant have leave to amend the statement of claim by substituting the second respondent for the first respondent as defendant. It can only be made if there is reinstatement of the proceedings. Thus I return to Pt 18 r 3(4). In the circumstances of this case, I consider it a proper exercise of the discretion under that rule that the order made by Garling DCJ should be set aside. Even if the order was properly made as matters stood and occurred on 29 May 1998, which I doubt, the subsequent application for an order substituting the second respondent for the first respondent as defendant called for reconsideration of the striking out, and there should be reinstatement so that the leave to amend can take effect. This Court can and should make the orders, and there is no point in returning the proceedings to the District Court for a fresh hearing.

Limitation and incompetent representation 59 These grounds were not fully argued. The appellant did not seek an extension of the limitation period if he could revive and pursue his claim against the second respondent as substituted defendant. It is not appropriate, therefore, to enter upon these grounds, but silence should not be taken as endorsement of Gibb DCJ's reasons for declining to extend the limitation period.

Costs 60 Gibb DCJ ordered that the third respondent pay on an indemnity basis the appellant's costs "in respect of the dismissal of paragraphs 1 and 4 of the Notice of Motion before me today", and that he pay other costs of the respondents in respect of the notice of motion. The appellant was not ordered to pay any costs of the respondents in respect of the notice of motion. 61 It does not follow that the orders sought as to the costs of the appeal should be made against the third respondent. He had ceased to act for the appellant in 1999. Whatever his defaults to that time whereby the applications which ultimately came before Gibb DCJ had to be made, the appeal was not occasioned, in anything other than a "but for" sense, by anything he did or failed to do. The appeal followed the conduct of the applications by the appellant's later lawyers and flowed from the manner in which her Honour decided the applications. In my opinion, no reason has been shown to make the orders sought against the third respondent. 62 In any event, the appellant is entitled to have his costs of the appeal and should not be ordered to pay any costs of the appeal. If the appellant confined the orders against the third respondent to any costs of the appeal which he might be ordered to pay, there is no occasion for making the costs orders sought against the third respondent. 63 When the appellant was not ordered by Gibb DCJ to pay any costs in respect of of the notice of motion, his success in the appeal should not carry with it any different order for those costs.

(1) Appeal allowed. (2) Set aside the dismissal by Gibb DCJ of the claims to orders 1 and 2 in the further amended notice of motion heard by her Honour on 11 May 2000. (3) Set aside the order striking out the proceedings made by Garling DCJ on 29 May 1998. (4) Grant leave to amend the statement of claim by substituting Kentucky Fried Chicken Pty Ltd for Pepsico Australia Pty Ltd as defendant. (5) First and second respondents pay the appellant's costs of the appeal and have a certificate under the Suitors Fund Act if qualified. 64 STUDDERT J: I agree with Giles JA.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.

CITATION : Maamary v Pepsico Australia Pty Ltd & Ors [2001] NSWCA 375 FILE NUMBER(S) : CA 40411/00 HEARING DATE(S) : 31 August 2001 JUDGMENT DATE : 26 October 2001

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