Phonesivorabouth v Tops Services Pty Ltd [1992] NTSC 22; 106 FLR 471 (14 April 1992)
[2]
COURT
IN THE SUPREME COURT OF THE NORTHERN TERRITORY OF AUSTRALIA
KEARNEY J
HRNG
DARWIN, 10 April 1992
#DATE 14:4:1992
Counsel for plaintiff: Mr Farquhar
Counsel for defendant: Mr Waters
ORDER
Appeal allowed.
JUDGE1
KEARNEY
J On 1 April 1992 the defendant filed a summons under Rule
11.05(2)(b) seeking leave to file a third party notice joining the Northern
Territory of Australia as a party to this action. The application came before
the Master on 2 April. There is no transcript of
the hearing before the
Master but in the result orders to the following effect were made:-
Defendant granted the leave sought,
to be exercised
within 14 days;
As soon as the third party notice is filed, the Master to
hold a Listing Conference;
The matter to proceed as soon as possible; and
Costs to be costs in the proceeding.
By Notice of Appeal filed 7 April
1992 the plaintiffs appealed against the
Master's decision, pursuant to Rule 77.05. The grounds stated are that the
Master erred
in the exercise of his discretion, in granting leave, in that he
failed to take into account "the full extent of the likely prejudice"
thereby
caused to the plaintiffs.
The appeal came on for hearing before me on 10 April. I reserved my
decision and rule upon
it today.
It is common ground that the appeal from the Master is by way of a hearing
de novo; see Rule 77.05(7) as construed
in Southwell v Specialised Engineering
Services Pty Ltd [1990] NTSC 27; (1990) 70 NTR 6. As pointed out in that case at p.8, it is
not necessary for the plaintiffs to establish some error by the Master in
coming to his
decision.
THE GENERAL BACKGROUND
Mr Farquhar of counsel for the defendant and Mr Waters of counsel for the
plaintiffs explained
the general background to this action. The plaintiffs
are tenants of the defendant, being sub-lessees of market and food stalls
on
Lot 5345 Town of Darwin. Their sub-leases provided for quiet enjoyment. On 8
November 1990 they all requested that their sub-leases
be extended for 3 years
from 30 May 1991. They claim that their sub-leases contained implied terms
that the premises were fit for
the preparation, cooking and sale of food, and
that the defendant would comply with statutory requirements relating to the
adequacy
and sufficiency of the stalls. On 8 March 1991 the Director of the
Northern Territory Fire Service ordered the defendant and the
plaintiffs to
cease operations and close all the stalls forthwith, because of alleged major
structural deficiencies in the stalls.
As a result, the plaintiffs allege a
breach of the covenant for quiet enjoyment and of the implied terms in their
sub-leases; they
claim they have been deprived of their livelihood and have
suffered loss of profits, and damage. They have other heads of claim
as well.
Mr Farquhar said that the defendant denied liability; and contended further,
that if the stalls were closed, they were closed
because of the requirements
of the Fire Service. Mr Waters said that the plaintiffs faced defences that
they had no on-going rights;
that they had not complied with statutory
notices; that there were no structural deficiencies; that the defendant had
complied with
all statutory requirements; and so on. The stalls closed on 8
March 1991. The plaintiffs issued their Writ on 28 May 1991.
THE DEFENDANT'S
SUPPORTING MATERIAL
The defendant's application to have the Northern Territory joined as a
third party, was made under Order
Mr Farquhar submitted that to do so
would avoid unnecessary duplication of litigation and the court having to sit
twice to deal
with the same issues.
He relied on the affidavit of Mr Henwood of 1 April 1992. In para 4 of
that affidavit Mr Henwood deposed,
inter alia, to his belief "on the basis of
my instructions" that if the defendant were found to be liable to the
plaintiffs, "the
defendant will contend" -
(a) That the Northern Territory of Australia, through
various named governmental bodies, was responsible
for that
liability or had contributed to it "by virtue of negligent
mis-statements" made by their officers; and
(b) Insofar
as the defendant's statements to the plaintiffs
were "misleading and deceptive", they were based on advice
from these governmental
bodies "which advice was negligent";
and, accordingly, insofar as the defendant was liable in
damages to the plaintiffs, the
Northern Territory of
Australia was liable in damages to the defendant "by reason
of the negligent advice".
In para 5 Mr
Henwood deposed that he believed the defendant wished to
claim damages from the Northern Territory of Australia for that "negligent
advice", in relation to expenditure it had incurred "in rectifying the alleged
defects." It can be seen that the matters in paras
4 and 5 appear to be
directed towards satisfying the requirements of Rule 11.01.
Mr Henwood deposed in para 6 of his affidavit
that much of the evidence to
be relied on by the defendant in establishing its Defence against the
plaintiffs, would be the same
as the evidence it would require to establish
its claim against the Northern Territory of Australia. Further, evidence to
be called
by the Northern Territory of Australia in defence to the claim in
the third party notice "would be required to be called in any event"
in the
trial of the action brought by the plaintiffs against the defendant.
Mr Henwood further deposed that apart from certain
interlocutory
proceedings in June and October 1991, the plaintiffs had taken no steps to
bring their action to trial, until 24 March
Paragraphs 9-11 of Mr Henwood's affidavit referred to alleged
negotiations between the defendant and the Northern Territory
of Australia, in
which they sought to resolve their dispute "and possibly as between it (that
is, the defendant) and the plaintiffs";
and that it was only on 27 March 1992
that "it appeared that the matter was unlikely to be resolved in the immediate
future." Hence
the defendant's application of 1 April 1992. I consider that
the information in paras 9-11 is relevant and admissible on this application.
THE PLAINTIFFS' SUPPORTING MATERIAL
Mr Waters relied on Mr Francis' affidavit of 7 April 1992. This
affidavit of course had
not been used before the Master, but I consider that
in light of the history referred to in paras 2-4 the plaintiffs should be
granted
special leave to rely on it, pursuant to Rule 77.05(7)(b). Para 6 of
the affidavit is irrelevant.
Para 12 deposes to the "significant
delay" in the determination of the
plaintiffs' claim, which would occur if the Northern Territory of Australia
were joined, in that
the trial date "will be delayed by a minimum of four to
six months." I interpose to say that I consider that would be a minimal
estimate, based on my experience. It was alleged that if the plaintiffs were
then successful in their action, they would then be
retaking possession during
the Wet season, while their major profit-making period of trading was the Dry
season. I observe that
it is impossible to be so precise as to when the
action will be heard and determined.
Para 13 referred to the delay by the defendant
in seeking to join in the
Northern Territory of Australia as third party; it could have done so earlier.
Mr Francis alleged that
the application of 1 April was a "deliberate ploy" to
further delay the resolution of the plaintiffs' claim, thus placing the
plaintiffs
"under considerable financial strain."
In para 14 Mr Francis considered, contrary to the opinion expressed by Mr
Henwood, that
the evidence required to be called by the defendant to establish
its Defence against the plaintiffs would not be the same as that
required to
establish its claim against the Northern Territory of Australia, because the
issues between the respective parties were
"substantially different." He
proceeded to spell out some of the details of these different issues. The
consequence, he said, of
joining in the Northern Territory of Australia as
third party would be a "much lengthier hearing" of the plaintiffs' claim, with
an increased risk of costs. Mr Francis also observed that the plaintiffs had
filed their list of documents on 19 February 1992 while
the defendant's list
was not filed until 1 April 1992, some 6 weeks later. Mr Francis contended
that the fact that negotiations
were continuing between the defendant and the
Northern Territory of Australia should not have prevented the joinder of the
Northern
Territory by the defendant within the time specified by Rule
11.05(2)(a); that is, by 2 August 1991.
THE DEFENDANT'S CASE
Mr
Farquhar submitted that the application of 1 April fell within the
scope of Rule 11.01(c) which provides:-
"Where a defendant
claims...
(c) that a question relating to or connected with the
original subject matter of the proceeding should be
determined
not only as between the plaintiff and the
defendant but also as between either or both of them and the
third party, the defendant
may join the third party ..."
He submitted that the crucial matter on the application was the balance of
convenience as between the
plaintiffs and the defendant. The advantage to the
defendant of joining in the third party was clear. The principal disadvantage
to the plaintiffs was the alleged delay. He noted that following the delivery
of the Defence on 5 July 1991 the plaintiffs were
late in giving discovery (19
February 1992); and submitted that therefore they could not now stress the
importance of time to them,
so as to tip the balance of convenience their way.
He submitted that weight should be given to what Mr Henwood had deposed to as
to the evidence being the same in the plaintiffs/defendant claims and the
defendant/third party claims, whereas Mr Francis was not
in a position to say
that that was not so. In any event, Mr Farquhar submitted, if delay to the
plaintiffs resulted from the joinder
of the third party, and the plaintiffs
ultimately succeeded in their action, the result of the delay they had
suffered would be that
their damages would be increased.
THE PLAINTIFFS' CASE
Mr Waters submitted that the material in Mr Henwood's affidavit did not
go far enough to establish that any question to be determined as between the
defendant and the Northern Territory of Australia, fell
within the terms of
Rule 11.01(c). I agree that the material in Mr Henwood's affidavit is not
very specific in that regard, and
that a draft third party notice, drawn in
accordance with Rule 11.02, might usefully have been annexed to his affidavit;
this would
have enabled a proper analysis of the nature of the questions
arising, to determine whether they fell within the scope of Rule 11.01(c).
Mr Waters noted the conditional phrasing of para 4 of Mr Henwood's
affidavit - that he believed "that the defendant will contend"
for the matters
there referred to - as further illustrating his point that Mr Henwood's
affidavit was inadequate to raise fairly
the issues required by Rule 11.01(c)
to be determined on this application.
Mr Waters submitted that the relief sought by the
defendant against the
Northern Territory of Australia was very different to that sought by the
plaintiffs against the defendant;
the former sounded in tort, while the latter
sounded in contract.
At best, Mr Waters submitted, for reasons which he spelled
out, only a
small part of the damages which the defendant might recover from the Northern
Territory of Australia, would relate to
the damages which the plaintiffs would
recover from the defendant, if they were successful. He submitted that the two
sets of claims
were not substantially the same; however, I observe that the
former requirement under the old Rules (Order 20 Rule 1(1)(c)) that
the
questions be "substantially the same" does not obtain under the modern
terminology of Rule 11.01(c), which requires only that
there be a "question
(with the third party) relating to or connected with" the subject-matter of
the plaintiffs' claim.
Mr Waters
submitted that the balance of convenience favoured the
plaintiffs. The defendant had not given a proper explanation why it had taken
so long for the question of joining in the Northern Territory to surface,
since its defence was filed on 5 July 1991; he pointed
to the 28-day
requirement of Rule 11.05(2)(a). CONCLUSIONS
The public policy sought to be advanced by allowing a third party
to be
joined in an action is the need to ensure finality in litigation and to avoid
multiple proceedings with their associated extra
costs. Further, by preventing
the same questions being tried twice, the possibility of different decisions
on the same issues being
given by differently-constituted courts is avoided,
that possibility being a matter calculated to bring the administration of
justice
into disrepute.
The grant of leave under Rule 11.05(2)(b) to file a third party notice
out of time is discretionary. In general,
there is a strong argument against
granting such leave where the effect of doing so would be to embarrass or
delay the plaintiff.
Nevertheless, it is a matter of balancing the
inconvenience to the plaintiffs of the inevitable delay which will be caused
by a
late joinder in this case, against the inconvenience to the defendant of
not having the claims of the plaintiffs and its claim against
the Northern
Territory of Australia heard at the same time.
In the light of the material adduced it is not clear to me that
this is a
case where the public policy which lies behind Order 11 would be advanced by
granting the application of 1 April. The
information in Mr Henwood's
affidavit is insufficiently specific. It may be that it will later become
clear that litigation between
the defendant and the Northern Territory of
Australia could most usefully and economically be heard and determined with
this action.
However, I see no reason at this stage why the plaintiffs'
legitimate interest in avoiding the delay which will unquestionably result
if
the third party notice is filed, should be infringed. It is possible that if
the defendant institutes proceedings against the
Northern Territory of
Australia promptly, and prosecutes those proceedings diligently, it may later
be in a position to seek to consolidate
that action with this action, or to
have the two actions tried together, under Rule 9.12.
In other words, at this stage and
on the material before me I consider
that the balance of convenience as regards granting leave to file a third
party notice, favours
the plaintiffs. If the plaintiffs become dilatory in
bringing their action to a hearing, while the defendant is diligent in
instituting
and prosecuting an action against the Northern Territory, it may
be possible later to see that it is clearly desirable that the actions
be
heard together; that can only occur when the matters in issue between the
defendant and the Northern Territory of Australia are
more clearly seen.
In light of the foregoing I allow the appeal, and set aside the Master's
decision and orders of 2 April 1992.
In lieu thereof, I order:-
That the defendant's application of 1 April 1992 be
refused.
That the plaintiffs have their
costs of the hearing
before the Master of 2 April 1992, and of this appeal, in
any event. I certify for counsel.