Plaintiff v Defendant

Supreme Court of Victoria|2009-04-22|Before: EVANS

PRACTICE AND PROCEDURE - Joinder of defendant pursuant to Wrongs Act 1958 Part IVAA s.24 AL(1) - proceeding relating to an apportionable claim (s.24 AL (1) - proceeding involving an apportionable claim (s.24AI) - party to such a proceeding (s.24A(3) ) - pleading invoking Part IVAA must allege material facts raising arguable case for apportionment of liability - effect of default judgment in proceeding against concurrent wrongdoer AL (2) ).

1 In this proceeding the Plaintiff, Suncorp-Metway Ltd ('Suncorp') has sued as the registered mortgagee of land to recover the amount due under the mortgage as a debt and possession of the mortgaged land.

2 The Defendants, Dimitrios Panagiotidis ('Dimitrios') and Vasiliki Panagiotidis ('Vasiliki') the registered proprietors of that land deny that they executed the mortgages.

3 Dimitrios has made a counterclaim against Suncorp seeking to have the mortgage set aside on the grounds that it would be unconscionable for it to retain the benefit of it. He also seeks inter alia damages from it under the Trade Practices Act and for negligence. The damage alleged to have been suffered though not co-extensive is substantially the same in respect of each of the causes of action.

4 He also counterclaims (inter alia) for damages from persons who were not parties to the proceedings.

5 The first, Global Edge Finance Group Pty Ltd ('Global') was a finance broker engaged by Dimitrios to supply a financial service to him by acting as his agent in respect of an application by Dimitrios to Suncorp for finance.

6 The damages alleged to have been suffered by reason of Global's actions is co-extensive with that alleged to have been suffered by reason of Suncorp's negligence.

7 Global's liability depends on the allegation that Christopher Efstathiou was at all material times its servant or agent in his dealings with Dimitrios which led to the execution of the mortgage and the advance of moneys pursuant to it to third parties. Efstathiou is not made defendant to the counterclaim.

8 The next two defendants to the counterclaim, Olivia Villarosi ('Villarosi') and Steve Kyriacou ('Kyriacou') are alleged inter alia to have fraudulently misrepresented their intentions in seeking from him a loan of $50,000.00. In doing so they set in motion the train of events which led to the execution of the mortgage and the advance of moneys pursuant to it.

9 Various other bases of liability are alleged against each of them. Damages claimed on each basis are substantially co-extensive with those alleged against Suncorp and Global.

10 The Registrar of Titles ('the Registrar') is joined as the fifth defendant to the counterclaim. The counterclaim does not make discrete allegations against the Registrar and no damages are sought against him.

11 Vasiliki also makes a counterclaim against Suncorp and the Registrar. In it she claims against Suncorp breaches of various duties, negligence and payments made without her authority or in excess of its mandate from an account opened without her authority.

12 There is no allegation in relation to any of the causes of action pleaded that she has suffered loss and damage. There is, however, a claim for damages made in the claim for relief. The nature of some of the causes of action cannot be easily discerned as there is a tendency to plead duty upon duty so that it is not clear where one cause of action ends and the next one begins (see paragraphs 29A, 29B). It is clear that negligence is pleaded. Damage is the essence of a cause of action in negligence and must be pleaded. Allegations of excess of mandate founded in contract do not require an allegation that damage has been suffered unless it is intended to allege that actual damage has been suffered as seems to be the case here.

13 The counterclaim should be repleaded so that each cause of action upon which Vasiliki intends to rely is clearly and fully pleaded.

14 Vasiliki's claim against the Registrar is made pursuant to s. 110 of the Transfer of Land Act 1958. That section entitles the person who sustains loss or damage (whether by deprivation of land or otherwise) by reason (inter alia) of any amendment of the Register (s 110(b)), error, omission or misdescription in the Register (s 110(c)) or the registration of any other person as proprietor (s. 110(e)) to an indemnity in respect of it. The indemnity may be enforced in an action against the Registrar for recovery of damages (s. 110(2)). She alleges that she has suffered loss and damage in that she has lost the whole or part of the value of her estate or interest in the land.

John D. Snodgrass ('Snodgrass') was at all material times a solicitor carrying on practice under the name 'John D. Snodgrass and Associates'. Suncorp alleges in a third party notice filed 10 March 2009 that Snodgrass acted or purported to act as solicitor for Dimitrios and Vasiliki in relation to the loan and mortgage and oversaw the settlement of those transactions. In the course of doing so, and subsequently it alleges, he made certain representations to it on which it relied and has, as a result suffered loss and damage. The notice also claims, pursuant to Part IV of the Wrongs Act 1958 ('the Act), contribution by Snodgrass in respect of any amount it is obliged to pay (inter alia) to the defendants in respect of their counterclaims. Snodgrass has filed an appearance in the proceedings.

16 Global has applied to join as defendants to the claim and/or counterclaims Efstathiou, Villarosi, Kyriacou and Snodgrass pursuant to s. 24AL(1) of Part 1VAA of the Act which is in the following terms:-

s. 24 AL(1)

Joining non-party concurrent wrongdoer in the action.

(1) Subject to sub-section (2), the court may give leave for any one or more persons who are concurrent wrongdoers in relation to an apportionable claim to be joined as defendants in a proceeding in relation to that claim.

17 Part IVAA is silent as to who may apply for an order for joinder pursuant to the section. It is not contended against Global that it does not have standing to make the application.

18 There is no definition of 'proceeding' in Part IVAA but in Part IV, s. 23A(3) 'action' is defined as including a proceeding commenced by way of counterclaim. It was not contended that a claim by Counterclaim was not a proceeding to which Part IVAA applies. I will proceed on the footing that a counterclaim is a proceeding within the meaning of s. 24AL(1).

19 An 'apportionable claim' is defined in s. 24 AE of the Act as one to which Part IV AA applies. Section 24 AF provides as follows:

(a) a claim for economic loss or damage to property in an action for damages (whether in tort, in contract, under statute or otherwise) arising from a failure to take reasonable care;

20 In Solak v Bank of Western Australia,[1] Pagone J expressed his opinion (obiter) as to the proper approach in determining whether or not a proceeding relates to an apportionable claim under Part IV AA and similar regimes as follows:

'the factual precondition to the operation of the relevant statutory regimes does not depend upon how a claim is pleaded but whether the statutory precondition exists, namely whether the claim arises from a failure to take reasonable care. In Dartberg Pty Ltd v Wealthcare Financial Planning Pty Ltd ((2007) [2007] FCA 1216; 164 FCR 450) Middleton J said that the words arising from the failure to take reasonable care should be interpreted broadly (ibid) [29]. In my view the State regimes providing for the apportionment of liability between concurrent wrongdoers require a broad interpretation of the condition upon which the apportionment provision depends to enable courts to determine how the claim should be apportioned between those found responsible for the damage. The policy in the legislation is to ensure that those in fact who caused the actionable loss are required to bear the portion of the loss referable to their cause. That task ought not to be frustrated by arid disputes about pleadings.'

21 The original proceeding by Suncorp against Dimitrios and Vasiliki involves a claim for debt and possession of land. These are not apportionable claims. (See Commonwealth Bank of Australia v Witherow,[2] a claim for a debt). Accordingly, the application to join Efstathiou, John D. Snodgrass & Associates, Kyriacou and Villarosi as defendants to that claim will be dismissed.

22 Global is the subject of a claim for contribution filed by Vasiliki dated 3 November 2008 in respect of Suncorp's claim against her. It is not the proper subject of a claim for contribution pursuant to Part IV of the Wrongs Act 1958 as it does not involve a claim for damage. The distinction between a claim for debt and one for damage is indeed made in Part IV itself (see s. 24AA).

23 The claim made against Global by Dimitrios in his counterclaim includes claims based on a failure to take reasonable care. Those claims are for economic loss and arise in an action for damages (a proceeding by way of counterclaim for damages) and are, therefore, apportionable claims. As Global is a person against whom such a claim is made it clearly has standing to make an application pursuant to s. 24AL(1) to join as defendant to the counterclaim by Dimitrios any person who can be said to be a concurrent wrongdoer in respect of that claim.

24 Dimitrios' counterclaim against Suncorp raises (inter alia) a claim based on a failure by it to take reasonable care and as such is a proceeding in relation to an apportionable counterclaim. Suncorp has served on Global a notice filed 19 December 2008, claiming contribution in respect (inter alia) of that claim.

25 Vasiliki's counterclaim for damages against Suncorp though defectively pleaded raises ('inter alia') a claim based on a failure by it to take reasonable care and as such is a proceeding in relation to an apportionable claim.

26 By notice filed 19 December 2008, Suncorp made a claim against Global for contribution or indemnity in respect of the apportionable claim made by Vasiliki against it. Global thereby became a party to Vasiliki's proceeding by counterclaim.

27 No matter how broadly it is viewed, Vasiliki's claim against the Registrar is clearly not one in relation to an apportionable claim. It arises pursuant to statute from an amendment error omission or misdescription in the register or the registration of another person as proprietor and not from a failure to take reasonable care. Indeed s. 110(3) of the Transfer of Land Act 1958 requires her to establish that her loss was not caused or substantially contributed to by the failure, neglect or wilful default of (inter alia) her legal practitioner or agent.

28 The statute provides a scheme in s. 109(3) for apportioning responsibility for the amount, if any, the Registrar pays in satisfaction of the indemnity. It is pursuant to that section that Global is exposed to liability pursuant to a Notice served on it by the Registrar. The Registrar could have applied to have it joined as a co-defendant pursuant to s. 110(2).

29 The claim made against it in that notice is one for a debt, pursuant to s 109(3)(a).

30 The application to join Efstathiou as a defendant to the second defendant's counterclaim against the Registrar pursuant to s.24 AL(1) will be dismissed.

31 Global in turn has filed a third party notice addressed to Efstathiou seeking contribution from him in respect of the Registrar's claim. There is no proof that that notice has been served on Efstathiou.

32 The power of the court to make an order for joinder pursuant to s. 24AL(1) is expressed in terms which confer a discretion but do not expressly indicate considerations relevant to the exercise of that discretion.

33 The purpose of Part 1VAA is revealed in s. 24AI (1) which is in the following terms:

s. 24AI. Proportionate liability for apportionable claims

(1) In any proceeding involving an apportionable claim -

(a) the liability of a defendant who is a concurrent wrongdoer in relation to that claim is limited to an amount reflecting that proportion of loss or damage claimed that the court considers just having regard to the extent of the defendant's responsibility for the loss or damage; and

(b) judgment must not be given against the defendant for more than that amount in relation to that claim.

s.24AI. (3)

In apportioning responsibility between defendants in the proceeding the court must not have regard to the comparative responsibility of any person who is not a party to the proceeding unless the person is not a party to the proceeding because the person is dead or, if the person is a corporation, the corporation has been wound-up.

35 It is necessary therefore to have any concurrent wrongdoer in relation to an apportionable claim made defendant to that claim unless that person is not already a party to the proceeding involving that claim (cf s. 24AL(1) 'proceeding in relation to that claim') in order that the court may have regard to that person's responsibility.

36 In my view, s. 24AI(3) clearly contemplates that a person is a party to the proceeding 'involving the apportionable claim' if it is sought to make that person liable in respect of the apportionable claim whether as a defendant to it, as a third party or as defendant to a notice from another defendant to such a claim. If it was intended that the expression should be confined to defendant to such a proceeding, the legislature would have used the word 'defendant' instead of the word 'party' in that subsection.

37 The intent of the joinder provision is, I apprehend, to ensure that all persons sought to be made responsible for an apportionable claim are before the court even if that is only formally so in the case of a defendant not served or who does not appear after being served. Consistent with that intention the expression 'proceeding involving an apportionable claim' should be interpreted more broadly as meaning the proceeding which incorporates both claims and counterclaims. Thus a party to such proceeding may not necessarily be a 'defendant' to the apportionable claim but still be included in the assessment of the comparative responsibility for the loss the subject of that claim.

38 The next question to be determined is whether or not any of the persons sought to be joined as defendant to counterclaim is already a party to a proceeding involving an apportionable claim.

39 Global has filed a third party notice addressed to Efstathiou seeking (inter alia) contribution or an indemnity from him in respect of any liability it has to Dimitrios. If that notice has been served on him he has become a party to the proceeding by way of counterclaim by Dimitrios which involves an apportionable claim as a person upon whom a filed third party notice is served becomes a party to the proceeding pursuant to Supreme Court (General Civil Procedure) Rules 2005 R.11.01. As there is no evidence of service on him of that notice it will be necessary to consider later the question of whether or not to order joinder of him pursuant to s.24 AL (1).

40 Snodgrass has been served by Suncorp with a third party notice and has filed his appearance to it. The notice seeks (inter alia) contribution or indemnity from him in respect of, (inter alia) the counterclaims by each defendant against it which are apportionable claims. It is not necessary in these circumstances to order joinder of him to either of the proceedings by way of counterclaim as he is by operation of the Rules a party to the proceeding.

41 If Efstathiou has not been served with any of the claims made against him by third party notice then it would be necessary for Global to have him joined as a defendant to Dimitrios' Counterclaim in order for the court to have regard to his comparative responsibility for the 'loss' suffered by Dimitrios. Thus the legislation itself provides a powerful reason why the discretion in s. 24AL(1) to order joinder be exercised in Global's favour.

42 In its defence to Dimitrios' counterclaim Global pleads in paragraph 34 and 35 in general terms as follows:-

Further, Dimitrios' claim in this proceeding is an apportionable claim within the meaning of Part IV AA of the Wrongs Act (Vic) 1958 and involves claims for loss and damage which Dimitrios has suffered (which are not admitted but are denied) due to acts or omissions on the part of two or more persons acting independently of each other or jointly.
In the premises if and insofar as Global Edge is liable to Dimitrios (which is not admitted but is denied) its liability is limited to an amount reflecting that proportion of the loss and damage claimed that the Court considers just having regard to the extent of Global Edge's responsibility for the loss and damage.

43 In Atkins v Interprac Financial Planning Pty Ltd,[3] Hargrave J appeared to accept the proposition, agreed to by the parties, that an applicant under s. 24AL(1) must put forward a pleading which raises an arguable case that the party to be joined is a concurrent wrongdoer.

44 In P & V Industries Pty Ltd v Secombs,[4] Judd J stated that applicants for joinder under s. 24AL(1) 'must plead in answer to an apportionable claim by way of defence... the material facts upon which they rely to contend for an apportionment of liability.'

45 Global's defence to Dimitrios' counterclaim fails to identify Efstathiou or anyone else as a joint or independent wrongdoer or the basis for making the assertion of any such concurrent wrongdoing. It should be amended to do so.

46 It is evident from Dimitrios' counterclaim against Global what will be the material facts if found against it upon which Global will assert that Efstathiou is a concurrent wrongdoer but it should plead them in order to make it clear who it refers to in its current enigmatic pleading and the extent to which it adopts the allegations made by Dimitrios in doing so for the purposes of invoking the provisions of Part IVAA.

47 Although it seems that the basis for joinder of Efstathiou is the case which Dimitrios seeks to make against Global as a joint tortfeasor with Efstathiou, Global, in its defence (filed 28 December 2008)to the contribution notice filed by the Registrar on 4 November 2008 alleges in paragraphs 16-18, that Efstathiou was also an independent wrongdoer.

48 If Global intends to pursue that allegation then its amended defence to Dimitrios' counterclaim should include such an allegation as another basis for joinder of Efstathiou as a defendant to that counterclaim. It should also amend the defence to the contribution notice in order to delete the reference to Efstathiou as the sixth defendant to that notice as the notice is not and could not be addressed to him.

49 As there is in Dimitrios' counterclaim against Global a clear basis for joinder of Efstathiou pursuant to s. 24AL, it is not necessary to examine the affidavit filed and served in support of the application to determine if there was any factual basis for the joinder. In argument before me the affidavit was not read into evidence but I took it to be part of the materials upon which Global intended to rely as counsel for the second defendant addressed a submission as to its inadequacy without condescending to a close examination of its contents. In these circumstances, I do not propose to examine its contents.

50 Global's liability to contribute to the loss if any which Dimitrios and Vasiliki have suffered as a result of the conduct of Suncorp depends on the actions of Efstathiou being found to be those of its servant or agent. The allegations made by Dimitrios against Global in his counterclaims and adopted by Suncorp for the purpose of its notice of contribution against Global are based on Global being responsible jointly with Efstathiou for his wrongdoing in failing to take reasonable care.

51 For these reasons, Efstathiou should be joined as a defendant to Dimitrios' counterclaim if he has not become a party to the proceeding already.

52 Global is not a defendant to this counterclaim. It raises an apportionable claim against Suncorp but not against the Registrar as I have already noted.

53 It is not strictly necessary to join him as a defendant to this counterclaim as Efstathiou will become a party to the proceeding involving an apportionable claim when joined as defendant to Dimitrios' counterclaim. Global could raise any basis for Efstathiou to make a contribution to Vasiliki's loss to which her counterclaim against Suncorp relates in its defence to Suncorp's contribution notice filed 19 December 2008. I could not locate any such defence on the court file.

54 Nevertheless, I will order his joinder to Vasiliki's counterclaim on the basis of the allegations made against Global by Suncorp if he has not already become a party to the proceeding.

55 Villarosi, not being a party to the original proceeding became a party to it on service on her of Dimitrios' defence and counterclaim (Supreme Court (General Civil Procedure) Rules 2005, R10.04(3)). As such she is a party to a proceeding involving an apportionable claim and it is not necessary to join her as a defendant to Vasiliki's counterclaim in order that her comparative responsibility for Vasiliki's loss which is the subject of her apportionable claim against Suncorp could be determined. Global could have formally stated the basis on which it asserts her comparative responsibility should be considered in a notice of contribution filed by way of service on her (Supreme Court (General Civil Procedure) Rules 2005, R6.12(1)).

56 However, on 23 June 2008 Dimitrios entered judgment against Villarosi in default of appearance for damages to be assessed.

57 The judgment was not and could not have been one for liability to be assessed. The assessment it authorised will proceed on the footing that she is liable for the whole of the damage suffered by Dimitrios.

58 It is reasonably arguable that Dimitrios' claim against Villarosi is an 'apportionable claim' within the meaning of Part IVAA as one arising from her failure to take reasonable care in dealings which caused Dimitrios' economic loss.

59 In Godfrey Spowers (Vic) Pty Ltd v Lincolne Scott Australia Pty Ltd,[5] Ashley JA said, of Part IVAA at [95]

'In cases to which it applies a plaintiff, is only able to obtain judgment against a so-called 'concurrent wrongdoer' in an amount reflecting that proportion of the plaintiff's loss or damage which the court considers just having regard to the extent of the particular defendant's responsibility for the loss or damage. Judgment must not be entered against the defendant for any greater sum.'

60 In deciding whether or not a claim is apportionable the court the court is not confined by the pleadings but will determine that question on the facts found.[6]

'The court is not to give leave for the joinder of any person who was a party to any previously concluded proceeding in relation to the apportionable claim.'

62 In the Godfrey Spowers decision Ashley JA expressed the view, at [58], that the prohibition against joinder contained in s. 24AL(2) of Part IVAA related to any proceeding which had been previously concluded by judgment. He went on to say, at [59], that the protection afforded by that sub-section is a part of a regime which attempts to ensure that the party who has been made liable by judgment is freed from further attack - whether by the plaintiff or a concurrent wrongdoer.

63 Both Dimitrios and Vasiliki's counterclaims clearly involve apportionable claims against others as pleaded. These proceedings are arguably proceedings relating to such claims within the meaning of s.24AL (2).The scheme of Part IVAA to limit liability in respect of such claims would be frustrated by the entry of judgment against one of the parties who is proportionately liable, putatively, for the loss claimed.

64 One way of avoiding such a consequence would be to treat the party entering judgment as having elected to treat the person against whom judgment has been entered as being solely responsible for the loss claimed. It may be that the entry of judgment was ill considered and that an application to set it aside should be made.

65 Insofar as the application relates to Villarosi (and, as it will be seen, to Kyriacou) the judgment obtained may well be another answer to the joinder application. For the reasons given above it is not necessary for me to express a concluded view on the point.

66 Kyriacou was served with Dimitrios counterclaim and thereby became a party to the proceeding and a party to the proceeding involving the apportionable claim made by Vasiliki in her counterclaim against Suncorp. As a result it is not necessary to join him as a defendant to that counterclaim.

67 On 24 February 2009 an Associate Judge ordered that judgment in default of defence be entered against Kyriacou in favour of Dimitrios. Rule 21.04 of the Supreme Court (General Civil Procedure) Rules 2005 authorises the court, in the circumstances therein described, to give judgment, not authorise its entry.

68 The order does not specify the relief which would be the subject of the judgment. Dimitrios sought various declarations, an order for compensation, an order that the mortgage be set aside, damages pursuant to statute, interest and costs. In respect of the claims for compensation and damages only interlocutory judgment for compensation and/or damages to be assessed could have been given.

69 Application should be made for the judgment to be set aside for these reasons and for those expressed above in respect of the judgment entered against Villarosi.

70 When the parties have had an opportunity to digest these reasons, I will make orders in conformity with them. I will require evidence as to whether or not Efstathiou has become a party to the proceeding before I do so.

[2] [2006] VSCA 45 at [10], per Maxwell P.

Court (General Civil Procedure) Rules 2005

(Supreme Court (General Civil Procedure) Rules 2005

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