Plaintiff v Defendant

(a) join A and B Management Pty Ltd (AB Management) as the second defendant to the proceeding (Joinder Application);

(b) amend the statement of claim to:

(i) join AB Management as second defendant and plead claims against it in negligence, breach of contract, and breach of a consumer guarantee (AB Management Amendment Application);

(ii) include additional claims[1] against the defendant (Nautilus) for misleading and deceptive conduct, unconscionable conduct and a claimed estoppel (Nautilus Amendment Application).

2 The application is supported by the affidavit of the plaintiff's solicitor, Ms Goldberg, affirmed on 22 June 2023 (Goldberg Affidavit). The plaintiff also relied upon a written outline of submissions filed 19 July 2023 (Plaintiff's Outline), which was supplemented by oral submissions from counsel for the plaintiff at the hearing.

(a) opposed the Joinder Application and the AB Management Amendment Application; and

(b) consented to the Nautilus Amendment Application.

4 As things transpired, the determination of the AB Management Amendment Application was not the subject of any real controversy. This was because the parties each accepted that the AB Management Application stands or falls with the success or otherwise of the Joinder Application. That is to say, if the Joinder Application is unsuccessful then the AB Management Amendment Application necessarily falls away. On the other hand, if the Joinder Application is successful, Nautilus did not take any issue with the amendments sought to be made introducing the claims against AB Management (AB Management Amendments).

5 Nautilus did not file any affidavit material but relied upon a written outline of submission filed 19 July 2023 (Nautilus Outline), which was supplemented by oral submissions from counsel for Nautilus.

6 The proposed amendments were set out in the draft amended statement of claim exhibited to the Goldberg Affidavit (Proposed ASOC).

7 For the reasons that follow the plaintiff will be granted leave to join AB Management as the second defendant and will be granted leave to amend the writ and statement of claim so as to include the AB Management Amendments and the amendments the subject of the Nautilus Amendment Application (Nautilus Amendments).

8 In this proceeding the plaintiff makes a number of claims against the defendant marine insurer, Nautilus, in connection with its refusal to indemnify the plaintiff under an insurance policy between the plaintiff and Nautilus (Policy) in respect of the loss and destruction of the plaintiff's Long Reef 60 luxury motor cruiser yacht named 'Chicago' (Vessel) and its contents (Contents). The Vessel was completely destroyed on 12 February 2022 after it ran aground at Red Rock Beach in New South Wales during a voyage from the Gold Coast to Coffs Harbour, and after its skipper, Mr Trevenna, and his single crew member, were directed by the New South Wales Water Police (Water Police) to abandon the Vessel following failed rescue attempts by the Water Police and others.

9 The market value of the Vessel is alleged in paragraph 31 of the statement of claim to be in excess of $1.8 million and the market value of the Contents is alleged to be not less than $60,000.

10 AB Management is alleged by the plaintiffs to be in the business of managing boats, including delivering boats and supplying skippers to skipper boats for boat owners. Very broadly, the plaintiff alleges that it paid a $25,000 fee to AB Management for it to arrange for a skipper to deliver the boat from North Queensland to Sydney for the purpose of resale. The skipper for the journey from the Gold Coast to Coffs Harbour was Mr Trevenna.

11 By its defence Nautilus alleges, among other things, that:

(i) the Vessel must be under the control of a professional skipper when in use and under way, including whilst on anchor at any overnight anchorage when the Vessel is away from its normal berth (Professional Skipper Condition); and

(ii) if the currently named and agreed skipper between the plaintiff and Nautilus (who is not Mr Trevenna) changes in the future the plaintiff is required to forward a curriculum vitae of the new proposed skipper for underwriter's consideration prior to the new skipper taking command of the Vessel (Approved Skipper Term).

(b) The plaintiff's claim for indemnity under the Policy (Indemnity Claim) was refused because the plaintiff failed to comply with the Professional Skipper Condition and the Approved Skipper Term.

(c) It was a further term of the Policy that there be no coverage under the Policy for direct physical loss or damage to the Vessel and its contents attributable wholly or in part to a lack of reasonable care (Reasonable Care Warranty).

(d) The loss and damage to the Vessel and its contents occurred by reason of Mr Trevenna's failure to take reasonable care to, among other things:

(i) ensure the Vessel had sufficient fuel;

(ii) properly manage the fuel consumption of the Vessel; and

(iii) take appropriate measures to navigate the Vessel to a safe harbour upon realising the Vessel had insufficient fuel to complete its journey.

(e) The total engine failure on the Vessel occurred because the Vessel ran out of fuel.

(f) Mr Trevenna would not have been approved by Nautilus as an approved skipper under the Approved Skipper Term.

(g) By reason of the alleged breaches of one or more of the Professional Skipper Condition, the Approved Skipper Term, and the Reasonable Care Warranty, Nautilus is discharged from liability under the Policy.

12 The plaintiff disputes Nautilus' position and alleges, among other things, that:

(a) Mr Trevenna was a professional skipper within the meaning of the Policy;

(b) Mr Trevenna would have been approved under the Policy;

(c) the Reasonable Care Warranty refers to reasonable care on the part of the plaintiff;

(d) in any event, Mr Trevenna did not fail to take reasonable care;

(e) the Vessel did not run out of fuel; and

(f) Nautilus is not entitled to refuse to indemnify the plaintiff under the Policy.

13 By the joinder of AB Management and the allegations in the Proposed ASOC against it, the plaintiff seeks to bring claims against AB Management alleging, among other things, that:

(a) AB Management was aware of the Approved Skipper Term in the Policy.

(b) AB Management breached a duty of care owed to the plaintiff:

(i) to ensure that Mr Trevenna, who was supplied by AB Management to skipper the Vessel, was recorded as an approved skipper for the purposes of the Approved Skipper Term prior to taking command of the Vessel;

(ii) further and alternatively, to ensure that the plaintiff had a sufficient opportunity to cause Mr Trevenna, who was supplied by AB Management to skipper the Vessel, to be approved for the purposes of the Approved Skipper Term prior to taking command of the Vessel.

(c) AB Management breached an implied term of its contract with the plaintiff and a consumer guarantee under the Australian Consumer Law (ACL)[2] by failing to ensure the matters referred to in the preceding paragraph and by failing to instruct Mr Trevenna not to depart, or alternatively not preventing Mr Trevenna from departing, from the Gold Coast with the Vessel before he had been approved for the purposes of the Approved Skipper Term.

(d) If Nautilus is entitled to deny indemnity under the Policy, then by reason of AB Management's breach of duty, breach of contract, and breach of the consumer guarantee under the ACL, the plaintiff will suffer loss and damage. It is alleged that if Mr Trevenna had been noted as an approved skipper it followed that Nautilus would not have contended that Mr Trevenna was not a professional skipper for the purposes of the Professional Skipper Condition. It is alleged that the plaintiff's loss comprises the replacement value of the Vessel and the value of its Contents at the time it was lost less any amount that Nautilus is required to pay to the plaintiff by way of indemnity under the Policy. As is apparent, a substantial part of the loss claimed is the value or benefit that would have been received under the Policy in the event that it is determined that Nautilus is entitled to deny indemnity under the Policy.

14 The parties each filed outlines of submissions, which were supplemented by oral submissions during the hearing. I have considered the detail of the written and oral submissions, which is not necessary to recite in terms. Briefly and in substance, the parties submitted as follows.

15 The plaintiff confirmed that the application was brought under r 9.06(b)(ii) of the Supreme Court (General Civil Procedure) Rules 2015 (Vic) (Rules). The plaintiff submitted that the threshold requirements of the rule were satisfied and that it was clear that the residual discretion should be exercised in favour of the plaintiff. The plaintiff referred to a number of well-rehearsed principles and observations in past cases regarding the terms and operation of the rule, which were not relevantly controversial.[3]

16 The questions between the plaintiff and AB Management that may exist between the plaintiff and AB Management that arise out of, are related to, or are connected with, the claims in the proceeding were said to include whether AB Management ought to have acted so as to enable the plaintiff to satisfy the Approved Skipper Term before causing the Vessel to commence its journey, and the question of the amount of alleged loss that flows from any alleged breach of duty or breach of contract by AB Management. During oral submissions it became clear that a central allegation by the plaintiff in the proposed claim against AB Management is that the alleged breaches of duty and breaches of contract by AB Management caused loss to the plaintiff, including any amount that it would otherwise have received under the Policy in the event that the court determines that Nautilus has a good defence to the Indemnity Claim and is not required to indemnify[4] the plaintiff under the Policy.

17 The plaintiff submitted that it was just and convenient to determine the questions in the same proceeding because it will avoid a multiplicity of proceedings; eradicate or minimise the risk of inconsistent findings; avoid inefficiency and duplication of costs; be unlikely to add significantly to trial preparation, duration or delay; and will reduce demand on court resources.

18 In the context of multiplicity of proceedings, it was submitted that if the Joinder Application was not successful then it would be necessary to commence a separate proceeding against AB Management, which was also referred to in paragraph 14 of the Goldberg Affidavit.

19 During exchanges with counsel for the plaintiff in connection with the claimed risk of inconsistent findings, it was submitted, in substance, that it was likely that in a separate proceeding AB Management would contend that the Policy responded and that Nautilus was not entitled to deny indemnity. It was said that the questions that may exist and arise between the plaintiff and AB Management in any separate proceeding include questions regarding whether or not Mr Trevenna was a professional skipper within the meaning of the Policy; whether or not Mr Trevenna would have been an approved skipper as required by the Approved Skipper Term; and whether or not Mr Trevenna failed to act with reasonable care as alleged by Nautilus. As is apparent, given the current pleadings, these matters all relate to the broader question of whether or not Nautilus is liable to indemnify the plaintiff under the Policy.

20 In the context of overlapping issues, the plaintiff further submitted that there was extensive factual overlap in connection with the issues between the plaintiff and the defendant and the issues between the plaintiff and AB Management. In this context reference was also made to issues of causation and loss, and the fact that the entire litigation against both parties arises from the loss of the Vessel.

21 It was further submitted that the claim against AB Management arises directly from the defence of Nautilus. That is, it arises as a consequence of Nautilus alleging that it is discharged from liability by reason of, among other things, Mr Trevenna not being a professional skipper, Mr Trevenna not being approved pursuant to the Approved Skipper Term, and Mr Trevenna failing to exercise reasonable care in breach of the Reasonable Care Warranty.

22 The plaintiff submitted that there was little or no prejudice to Nautilus that would arise from the proposed joinder. It contended that the delay was minimal and inconsequential, that any increase in the scope of the proceeding and any associated increase in costs were not substantial. The plaintiff submitted that the prejudice that it would suffer if the joinder was not allowed was significant and vastly outweighed any prejudice that would be suffered by Nautilus given the matters earlier referred to.

23 Insofar as Nautilus relied upon the postponement of the planned mediation, the plaintiff submitted that this was not significant and could be alleviated in any event. It was said that such a mediation should be able to take place by about September 2023 or not long thereafter.

24 With respect to the claimed absence of an explanation for the claimed delay by the plaintiff in bringing the application, counsel for the plaintiff responsibly acknowledged that it ought to have been better explained, and informed the court from the Bar table that, in essence, it had resulted from a greater focus on the issues in the case by solicitors and counsel in the lead-up to a proposed mediation. Whilst the position with the explanation was accepted to be relevant, the plaintiff's end point was that, for the reasons referred to in its written and oral submissions, r 9.06(b)(ii) was engaged and the court's discretion should be exercised in favour of the joinder of AB Management as the second defendant.

25 Nautilus also referred to a number of the observations made in decided cases regarding the terms and operation of the rule, which were also not relevantly controversial. In addition, Nautilus emphasised in part the obligations of the court in ss 8 and 9 of the Civil Procedure Act 2010 (Vic) (CP Act) when exercising its powers or making any orders. In this context the primary emphasis was in relation to delay, time, efficiency, cost, and related considerations.

26 When addressing why it was said not to be just and convenient to allow the joinder, counsel for Nautilus placed emphasis on three points, whilst also relying upon other matters raised in the Nautilus Outline. The three points were: the delay in the making of the application and the absence of a sufficient explanation; the delay to be occasioned by the joinder of AB Management at this stage in the proceeding; and the inconvenience and additional costs and expenses to be incurred if the joinder proceeds and the claims against Nautilus and AB Management are heard and determined in the same proceeding.

27 In the context of delay, it was submitted that it 'looms large', with Nautilus emphasising in part that the plaintiff had been aware of Nautilus' defence since late November 2022 and had not raised this issue until June 2023. It was further submitted that a review of the interlocutory steps since the commencement of the proceeding revealed that the plaintiff has not acted sufficiently diligently and expeditiously, and that there had been more than ample time for this issue to be addressed earlier than it had been.

28 Contrary to the position of the plaintiff, Nautilus submitted that there was very little commonality in the facts and legal issues for resolution in the existing proceeding when compared to those that will arise in the proposed claim by the plaintiff against AB Management. In this context emphasis was placed upon, among other things, the different contracts and construction issues, including matters said to be only relevant between the plaintiff and Nautilus, and matters said to be only relevant between the plaintiff and AB Management.

29 On the topic of the claims proposed to be brought by the plaintiff against AB Management, it was submitted in substance that bringing the claims now was premature because the issue of Nautilus' liability under the Policy had not yet been determined. That being so, it was contended that the commencement of the plaintiff's claim against AB Management could and should await the determination of the liability issue in this proceeding and that the plaintiff's multiplicity of proceedings contention was therefore somewhat obscure.

30 Nautilus submitted that the scope of the proceeding would be increased and would result in Nautilus incurring additional and unnecessary costs, including in connection with having to be present during parts of the trial that were dealing only with matters as between the plaintiff and AB Management.

31 Towards the close of oral submissions, counsel for Nautilus also submitted that the issue of the value of the Vessel was not a common issue that was likely to be in dispute because it was likely to be, or may be, agreed between the plaintiff and Nautilus. In this context attention was drawn to paragraph 31 of the statement of claim in which it is alleged that the value of the Vessel at the relevant time was in excess of $1.8 million, and Nautilus' non-admission plea in response, that also included a statement that the issue was under investigation.

32 The end point from Nautilus' perspective was that, having regard to the matters referred to in its written and oral submissions, and taking into account the court's obligations under ss 8 and 9 of the CP Act, it was neither just nor convenient for the questions that may exist between the plaintiff and AB Management to be determined at the same time as determining the questions in the proceeding between the plaintiff and Nautilus.

9.06 Addition, removal, substitution of party

At any stage of a proceeding the Court may order that -

(a) any person who is not a proper or necessary party, whether or not that person was one originally, cease to be a party;

(b) any of the following persons be added as a party -

(i) a person who ought to have been joined as a party or whose presence before the Court is necessary to ensure that all questions in the proceeding are effectually and completely determined and adjudicated upon; or

(ii) a person between whom and any party to the proceeding there may exist a question arising out of, or relating to, or connected with, any claim in the proceeding which it is just and convenient to determine as between that person and that party as well as between the parties to the proceeding;

(c) a person to whom paragraph (b) applies be substituted for one to whom paragraph (a) applies.

34 In S Pirrie Equities Pty Ltd v Venetian Media Group Pty Ltd,[5] Elliott J recently addressed a number of principles and observations regarding the terms and operation of r 9.06, which I gratefully adopt:

[77] Where a proceeding has already been commenced, a party must seek leave of the court to add a party under rule 9.06 of the Rules. Rule 9.06 aims to enhance the efficient and economic resolution of proceedings,[6] including by preventing multiplicity of actions and enabling a court to determine disputes between all parties in a single proceeding, so as to avoid the same or substantially the same questions or issues being tried twice.[7] Accordingly, rule 9.06 should not be given a narrow construction which would exclude from its operation any particular class of cases.[8]

[78] Rule 9.06(b) sets out 2 alternative tests for when a party may be joined to a proceeding:

9.06 Addition, removal, substitution of party

At any stage of a proceeding the Court may order that -

...

(b) any of the following persons be added as a party -

(i) a person who ought to have been joined as a party or whose presence before the Court is necessary to ensure that all questions in the proceeding are effectually and completely determined and adjudicated upon; or

(ii) a person between whom and any party to the proceeding there may exist a question arising out of, or relating to, or connected with, any claim in the proceeding which it is just and convenient to determine as between that person and that party as well as between the parties to the proceeding;

[79] Under either limb of rule 9.06(b), ordinarily the merits or prospects of the claim sought to be brought against a party are not relevant to the question of whether they ought to be joined.[9] However, where the claims made against a party that is proposed to be joined under rule 9.06(b) are "obviously bad in law or futile"[10] or have "no real prospects of success",[11] the application will usually be refused.

[80] The first test, which is contained in rule 9.06(b)(i), is narrow and contains within itself 2 alternative limbs:

(1) "A person who ought to have been joined as a party". Under this limb, the party seeking to join a party must prove that their presence is required to enable the proceeding to continue. This limb is comparable to the requirements for joinder of necessary parties under rule 9.03 of the Rules if the plaintiff does not join the person as a party, the court will, on objection by the defendant, stay the proceeding until this is done.[12]

(2) "A person ... whose presence before the Court is necessary". This limb authorises the court to add as a party a person who could have been joined originally (in accordance with rule 9.02 of the Rules).[13] The person need not be necessary in the sense that the court will not allow the proceeding to continue unless the person is made a party, rather, they need only be necessary in that their presence will aid in achieving finality and avoiding a multiplicity of proceedings.[14]

[81] In relation to the second limb of rule 9.06(b)(i), the Privy Council has provided further clarity on when it will be "necessary" to join a party to help achieve finality and avoid multiplicity of proceedings in the context of the equivalent English provisions. As articulated by Lord Diplock in Pegang Mining Co Ltd v Choong Sam (No 1):[15]

A better way of expressing the test is: will [the person's] rights against or liabilities to any party 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?

[82] This test was approved and further clarified by the Full Federal Court in News Ltd v Australian Rugby Football League Ltd as follows:[16]

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. ... The requirement of a direct effect on rights or liabilities differentiates the case where a person ought to be joined, from other cases where the effect of the order on non-parties can be characterised as only indirect or consequential.

[83] Rule 9.06(b)(ii) was introduced to overcome the limitations of rule 9.06(b)(i), and the test it sets out is therefore much broader in scope.[17] As observed in Boral Resources (Vic) Pty Ltd v Robak Engineering and Construction Pty Ltd:[18]

It is plain that [rule 9.06(b)(ii)] is to have a wide construction. That can be deduced from its words and from the circumstances in which the rule was introduced.

[84] An applicant who seeks to invoke the court's jurisdiction under rule 9.06(b)(ii) must prove that:[19]

(i) there are two entities namely the person to be added as a party and a party to the proceedings;

(ii) between the two entities there may exist a question arising out of or relating to or connected with any claim in the proceeding;

(iii) it is just and convenient to determine that question between the proposed party and the other party as well as between the parties to the proceeding.

[85] However, even if the above elements are established, the court retains a discretion as to whether or not to make an order under rule 9.06(b)(ii).[20]

[86] In relation to the requirement that there be a question arising out of, relating to or connected with a claim in the proceeding between a party to the proceeding and the entity to be joined, the Rules define "question" as:[21]

... any question, issue or matter for determination by the Court, whether of fact or law or of fact and law, raised by the pleadings or otherwise at any stage of a proceeding by the Court, by any party or by any person not a party who has a sufficient interest.

[87] It is not necessary that the "question" amount to a cause of action; rather, there need only be "a justiciable controversy" between a party to the proceeding and the entity that is sought to be joined.[22]

[88] Nor is it necessary that the question between the proposed additional party and the party applying for its addition already exist between the original parties to the proceeding. It has been recognised that such a construction would "undesirably fetter the operation" of rule 9.06(b)(ii).[23] As is evident from the language of the rule itself, it is sufficient that the question "aris[es] out of", "relat[es] to" or is "connected with" any claim in the proceeding.[24]

35 As was observed by the plaintiff, in Boral Resources (Vic) Pty Ltd v Robak Engineering & Construction Pty Ltd (Boral),[25] Tadgell JA emphasised that a 'cardinal object' of r 9.06 was the avoidance of multiplicity of proceedings, noting later in his reasons that the court also needs to be satisfied that there is substance to the contention that 'there may exist a question' as required in r 9.06(b)(ii).[26] Reference to the cardinal object referred to by Tadgell JA was also underscored by Elliott J in Ubertini v Saeco International Group SpA (No 6).[27]

36 Because the central issue between the parties was in relation to the Joinder Application, and Nautilus acknowledged (appropriately) that there was no issue between the parties regarding the Nautilus Amendments, or AB Management Amendments if the Joinder Application was successful, it is neither necessary nor desirable to address in any detail the terms of r 36.01 of the Rules or relevant principles and observations regarding the same. I recently addressed and set out relevant principles on this topic in Business Service Brokers Pty Ltd v Optus Mobile Pty Ltd (No 3),[28] to which I refer but do not repeat.

37 It is not controversial that the court must have regard to the relevant provisions of the CP Act when addressing case management matters, including applications for joinder and applications for leave to amend. This was emphasised in part by Kyrou and McLeish JJA in Northern Health v Kuipers (Northern Health),[29] where the CP Act was described as '... pivotal to the resolution of disputes about case management issues in civil proceedings to which the Act applies ...', and it was stressed that '... it is important that ... trial judges engage with the Act's provisions in balancing the competing interests of the parties and those of the administration of justice more generally.'[30]

38 Their Honours were also swift to recognise that procedural rulings must often be made promptly with succinct reasons, noting that engaging with the provisions of the CP Act '... does not mean that trial judges must set out each applicable provision of the Act and state reasons in relation to it ... [but that] it must be apparent from the reasons for the ruling - either expressly or inferentially - that the judge took into account the applicable provisions.'[31]

39 Nautilus consented to leave being granted to the plaintiff to make the Nautilus Amendments, which were marked up in paragraphs 1 to 62 of the Proposed ASOC and the relevant part of its prayer for relief.

40 Leave will be granted to the plaintiff to make the Nautilus Amendments substantially in the form of the amendments in those paragraphs.

41 As I have said, the central issue for determination is the question of joinder. Having regard to the evidence, the terms of the Proposed ASOC, the principles and observations referred to above, the terms of the parties' written and oral submissions, the court's obligations in ss 8 and 9 of the CP Act, and the objects referred to in s 9 of that Act, it is in my view clear that leave ought to be granted to the plaintiff to join AB Management as the second defendant to the proceeding, and that leave should be granted to the plaintiff to amend the statement of claim to include the proposed claims against AB Management substantially in the form of the amendments in paragraphs 63 to 90 of the Proposed ASOC.[32] I elaborate below as to why below.

42 This requirement of r 9.06(b)(ii) is plainly satisfied, as was common ground between the parties. In the application under consideration, the 'person' is AB Management, and the 'party' is the plaintiff.

A question that may exist between AB Management and the plaintiff arising out of, relating to, or connected with, any claim in the proceeding

43 For the reasons that follow, the 'question' requirement of r 9.06(b)(ii) is also well satisfied. It is to be noted in this context that r 1.13(1) of the Rules defines 'question' as follows:

... any question, issue or matter for determination by the Court, whether of fact or law or of fact and law, raised by the pleadings or otherwise at any stage of a proceeding by the Court, by any party or by any person not a party who has a sufficient interest.

44 As became apparent during the constructive exchanges with counsel for each of the parties during the hearing, a central question that may exist between the plaintiff and AB Management in the claim proposed to be brought by the plaintiff against AB Management is whether Nautilus is obliged to indemnify the plaintiff under the Policy. In substance, this is because if, as Nautilus contends, Nautilus is not liable to indemnify the plaintiff under the Policy, at the heart of the damages claim to be made by the plaintiff against AB Management is a claim that AB Management's alleged breaches of duty and contract caused it to lose the value and benefit of the indemnity under the Policy. Of itself, this is a significant matter in the context of the current application.

45 By its statement of claim[33] the plaintiff alleges, among other things, that Nautilus' refusal to indemnify the plaintiff under the Policy is wrongful. By way of relief the plaintiff seeks, among other things, a declaration that Nautilus is liable to indemnify it under the Policy and an order that Nautilus pay to it an amount equal to the market value of the Vessel and its Contents, less the $10,000 excess that is payable (Indemnity Amount).

46 The grounds upon which Nautilus denies that it is liable to indemnify the plaintiff are numerous and include the alleged breaches of the Professional Skipper Condition, the Approved Skipper Term, and the Reasonable Care Warranty as earlier referred to.

47 In the proposed claim against AB Management the plaintiff alleges, among other things, that if Nautilus is entitled to deny indemnity under the Policy as it alleges, then the plaintiff will suffer loss by reason of AB Management's alleged breaches of duty and breaches of contract.[34] The particulars of the loss and damage make plain that the central and most significant component of the loss and damage claimed is the loss of the value of the Indemnity Amount.[35] So much is apparent from the particulars in paragraph 81 of the Proposed ASOC, which are in the following terms:[36]

Particulars

If Mr Trevenna had been noted as an approved skipper for the Approved Skipper Term, it follows that Nautilus would not have contended that Mr Trevenna was not a professional skipper for the purpose of the Professional Skipper Condition.

MHL's loss comprises the replacement value of Chicago and the replacement value of its contents at the time of the Occurrence. Such loss is subject to any reduction of that loss that occurs through the indemnity under the Policy or any other contribution that Nautilus is required to make towards that loss.

Further particulars of loss and damage will be provided before trial.

48 It is therefore clear that an important and central question that 'may exist' between the plaintiff and AB Management is whether Nautilus is liable to indemnify the plaintiff under the Policy. Plainly enough, the question arises out of, is related to, or connected with, the plaintiff's Indemnity Claim in the proceeding against Nautilus.

49 In turn, and keeping in mind the various bases upon which Nautilus denies that it is liable to indemnify the plaintiff under the Policy, it follows that there are other subsidiary or related questions that may arise between the plaintiff and AB Management that arise out of, are related to, or are connected with, the plaintiff's Indemnity Claim in proceeding against Nautilus. It is sufficient to mention the following:

(a) What, if any, steps were taken and when by the plaintiff and AB Management to notify Nautilus of Mr Trevenna being the skipper?

(b) Whether one or more of the steps taken by the plaintiff or AB Management satisfied the Approved Skipper Term.

(c) Whether Mr Trevenna would have been or should have been approved as a skipper by Nautilus under the Approved Skipper Term.

(d) Whether Mr Trevenna was a 'professional skipper' within the meaning of that expression as used in the Policy, and whether the Professional Skipper Condition was satisfied.

(e) The value of the Vessel and its Contents at the time of its loss. It is to be noted in this context that, notwithstanding the submissions made by counsel for Nautilus, the pleadings as they stand show that this is in issue between the plaintiff and Nautilus. In any event, even if it was agreed between the plaintiff and Nautilus in this proceeding, the result would not change. This is because there may exist a question between the plaintiff and AB Management in the proposed claim to be brought against it regarding the value of the Vessel and its Contents, and this is a question arising out of, or relating to, or connected with the plaintiff's Indemnity Claim made in this proceeding. I add for completeness that the fact that this issue may at some stage in the future be resolved between the plaintiff and Nautilus does not at this point advance Nautilus' position on this application.

(f) What caused the alleged loss proposed to be claimed by the plaintiff from AB Management, including whether it arose due to a failure by Mr Trevenna to exercise reasonable care as is alleged by Nautilus against the plaintiff?

50 Whilst the above matters are not intended to be exhaustive, it is in my view clear that not only may there exist questions between the plaintiff and AB Management that arise out of, relate to, or are connected with the claims in the proceeding, given the terms of the proposed claims against AB Management in the Proposed ASOC, it is at least likely that a number of them will arise for determination.

Whether it is just and convenient to determine the questions that may exist between the plaintiff and AB Management in the proceeding

51 This requirement of r 9.06(b)(ii) is satisfied because in the circumstances of this case it is just and convenient to have the questions determined at the same time as the questions and claims in the proceeding between the plaintiff and the defendant are determined. In this context I draw attention to the following.

52 First, given the matters referred to above, if separate proceedings are to be commenced against AB Management there is a risk of inconsistent findings, and that risk is real. If the Joinder Application is not successful, it was submitted by the plaintiff and it is apparent, that separate proceedings will need to be brought, which was also referred to in the Goldberg Affidavit. This carries with it a risk of inconsistent findings.

53 To take one example, a substantial part of the proposed claim against AB Management is premised upon an adverse outcome of the plaintiff's Indemnity Claim against Nautilus that is currently the subject of this proceeding. That is to say, a very substantial part of the loss claimed against AB Management is an amount equal to the value of the indemnity that otherwise would have been paid out under the Policy. If the indemnity issue is not addressed and determined in a proceeding that binds all three parties, any finding as between the plaintiff and Nautilus on the topic will not bind AB Management. Consequently, it will be open to AB Management in any separate proceeding brought by the plaintiff against it to allege that Nautilus was in fact liable to indemnify the plaintiff under the Policy, notwithstanding that it has been determined otherwise in a case as between the plaintiff and Nautilus.[37] It is readily apparent that the risk of, or potential for, inconsistent findings exists. The point is further underscored when regard is had to the various bases upon which Nautilus contends that it is not liable under the Policy, including its allegations in relation to the Professional Skipper Condition, the Approved Skipper Term, and the Reasonable Care Warranty.

54 Second, if separate proceedings are required to be issued it will self-evidently involve a multiplicity of proceedings and all that this entails in terms of costs, resources, time, duplication and related matters. Justice Tadgell's observations regarding the cardinal object of the rule resonate loudly in this context.[38]

55 Third, if separate proceedings are issued it seems likely, if not inevitable, that questions will then arise as to whether such proceedings should be managed and heard together. This prospect will not emerge if the claims against the second defendant are brought in this proceeding.

56 Fourth, this proceeding was commenced on 7 October 2022, is not particularly well advanced, and is well short of a trial date. For example, no pre-trial directions have yet been made in relation to numerous steps, including: witness statements of the plaintiff; witness statements of the defendant; expert reports of the plaintiff; expert reports[39] of the defendant; agreed chronology; list of issues; objections to evidence; court book preparation; plaintiff's outlines of opening submissions; defendant's outlines of opening submissions; and related matters. Whilst I accept that there will be some increase in scope and potential costs, that can be assisted by management, potentially including not being present for parts of the trial that do not concern Nautilus.

57 Having regard to these matters, it seems unlikely that any delay in advancing the proceeding to trial will be substantial or materially prejudicial to any of the parties. It is also likely that appropriate directions can be given to ensure future substantial relevant steps proceed efficiently in parallel for all parties following the joinder of AB Management.

58 Fifth, although I accept it is correct and regrettable that it has not been sufficiently explained as to why a joinder issue did not arise earlier than June 2023 given that the defence was filed in late November 2022, when it is considered in all of the circumstances, including the matters referred to above, I do not consider that this weighs sufficiently heavily in the balance against the plaintiff on this application, whether considered alone or in combination with any other circumstances.

59 Sixth, I do not accept Nautilus' contention that there is 'very little commonality' between issues arising in the claim between the plaintiff and Nautilus and issues arising in the proposed claim between the plaintiff and AB Management. I reach this conclusion because of the matters I have earlier referred to regarding the questions that may exist between the plaintiff and AB Management. In any event, such commonality as there is, and however it is characterised, there is nothing material about it that weighs against the joinder. On the contrary, it weighs in favour.

60 Further, even if the only question that 'may exist' between the parties was whether Nautilus is liable to indemnify the plaintiff under the Policy (partly or wholly), that question alone would be sufficient to justify the joinder, provided it was just and convenient and the circumstances warranted the discretion to be exercised in favour of the plaintiff.

61 Seventh, in the circumstances of this case the matters that I have raised regarding multiplicity of proceeding and risk of inconsistent findings are material and weigh significantly in the balancing exercise that I am to undertake in addressing both the question of whether it is just and convenient to allow the joinder, and in the exercise of my residual discretion if I am so satisfied, which I am. Even taking Nautilus' submissions regarding delay, explanation, expense, and related matters at their highest, in the circumstances that I have referred above they are, in my view, outweighed by considerations of multiplicity and risk of inconsistent findings, which of course is not to suggest that they are not relevant and proper to be taken into account.

62 Eighth, in undertaking my analysis and arriving at my conclusions I have been cognisant of the court's obligations under the CP Act and have sought to give effect to the overarching purpose, and I have had regard to the objects referred to in s 9 of the CP Act, including those emphasised by Nautilus and which focus upon timing, delay, efficiency, diligence and related matters. Taking all of the relevant matters into account, including those in ss 8 and 9 of the CP Act, in my view it is clear that ordering that AB Management be joined as the second defendant, and granting leave to the plaintiff to file and serve an amended statement of claim substantially in the form of the Proposed ASOC, well serves the overarching purpose of the CP Act by facilitating the just, efficient, timely and cost-effective resolution of the real issues in dispute. As I have said, in so concluding I have taken into account the matters raised by Nautilus, including those regarding delay, expense and the scope of the proceeding.

63 Ninth, having regard to the issues that arise as a result of the bases upon which Nautilus contends that it is not liable to indemnify the plaintiff, there is some force in the plaintiff's contention that the introduction of the claims against AB Management will not unreasonably expand the scope of the proceeding in a way that should result in the refusal of the application. This is so whether these matters are viewed in isolation or in connection with any one or more of the circumstances raised by the parties. I note in this context that Nautilus' defence raises questions regarding the professional capability of Mr Trevenna, and whether or not he exercised reasonable care in connection with the skippering of the Vessel. In addition, this proceeding is in a managed list in the Commercial Court and its interlocutory steps will continue to be actively managed. This means that the court is well placed to facilitate the future efficient conduct of the proceeding.

64 Tenth, whilst relevant, I consider there to be little persuasive force in Nautilus' contentions regarding the loss of the scheduled mediation date. If a mediation is to occur, in my view it is better that this take place with all three parties involved rather than the plaintiff and Nautilus alone. Further, and as I observed during the hearing, it will be open to the parties, or one or more of them, to seek to have an early mediation following the joinder of AB Management. Should that occur then, if it is agreed, on the material before me at this point there appears to be little impediment to such a mediation proceeding. If it is not agreed then any application regarding the same will be determined on its merits in the light of the then prevailing circumstances and submissions made - recognising of course that AB Management is not currently before the court and its position on this and any other matter is understandably unknown.

65 Eleventh, to the extent that it was contended that bringing the claim at this point against AB Management is premature because the liability issue has not been determined, I do not accept that submission. The plaintiff has made the Indemnity Claim and it has been denied on the grounds set out in the defence of Nautilus. As deposed to in the Goldberg Affidavit, the plaintiff now seeks to bring what might loosely be described, at least in part, as an alternative claim, and such a course is not only permissible[40] but in my view well serves the overarching purpose and the objects in s 9(1)(a)-(g) of the CP Act.

66 Insofar as the submission was maintained that the plaintiff should await the hearing and determination of its claim against Nautilus before commencing any proceeding, in my view this would not be consistent with the overarching purpose or well serve the objects in s 9 of the CP Act to which I have referred. It also carries the risk of multiplicity of proceedings and inconsistent findings for the reasons that I have earlier referred to.

67 The court's discretion under r 9.06(b)(ii) is enlivened because the requirements of the rule have been satisfied. That discretion is to be exercised judicially, also taking into account the court's obligations under the CP Act. Having regard to the matters referred to above, in the circumstances, it is clear that the discretion to join AB Management as the second defendant ought to be exercised in favour of the plaintiff.

68 As earlier mentioned, it was confirmed by counsel for Nautilus that if the Joinder Application was successful there was no separate opposition to the AB Management Amendments being made. That was an understandable and appropriate position for counsel for Nautilus to take.

69 In any event, I am satisfied that the amendments are necessary for the purpose of determining the real question in controversy between the parties and for the purpose of avoiding multiplicity of proceedings. In being so satisfied I have taken into account the principles and observations regarding amendment referred to in paragraph 36 above and the court's obligations under ss 8 and 9 of the CP Act. Granting the plaintiff leave to make the AB Management Amendments well serves the overarching purpose.

70 I am satisfied that there may exist between the plaintiff and AB Management questions arising out of, or relating to, or connected with, the plaintiff's Indemnity Claim against Nautilus in the proceeding which it is just and convenient to determine between the plaintiff and AB Management, as well as between the existing parties to the proceeding.

71 Subject to addressing the precise form of orders with the parties, I propose to make orders as follows:

(a) AB Management Pty Ltd be joined as the second defendant to the proceeding.

(b) The plaintiff has leave to file and serve:

(i) an amended writ to reflect the joinder of AB Management Pty Ltd as the second defendant; and

(ii) an amended statement of claim substantially in the form exhibited to the affidavit of Ms Goldberg affirmed on 22 June 2023.

(c) By 4:00pm on 4 August 2023 the plaintiff file and serve the amended writ and statement of claim.

(d) By 4:00pm on 1 September 2023 the first defendant file and serve a defence to the plaintiff's amended statement of claim.

(e) By 4:00pm on 15 September 2023 the plaintiff file and serve any reply.

(f) The directions hearing be adjourned to 10:00am on 20 September 2023 before Connock J.

(g) There is liberty to apply.

72 I will hear from the parties in relation to the question of costs.

[1] And some other revisions to the existing allegations.

[2] Being Schedule 2 to the Competition and Consumer Act 2010 (Cth).

[3] Relevant principles and observations are addressed later in these reasons.

[5] [2023] VSC 253. I refer also to the observations of Gillard J regarding multiplicity and inconsistent findings in Tatterson v Wirtanen [1998[ VSC 88, [86]-[88].

[6] Construction, Forestry, Mining and Energy Union v Boral Resources (Vic) Pty Ltd [2013] VSCA 378, [13] (Beach JA, with whom Osborn JA agreed).

[7] Tatterson v Wirtanen [1998] VSC 88, [86] (Gillard J). See also Supreme Court Act 1986 (Vic), s 29(2).

[8] Ubertini v Saeco International Group SpA (No 6) [2014] VSC 294, [43].

[9] Main Road Property Group Pty Ltd v Pelligra & Sons Pty Ltd [2007] VSC 43, [77] (Bell J).

[11] Countrywide Austral Pty Ltd v Emergency Media Pty Ltd [2018] VSC 540, [31] (Riordan J).

[12] D L Bailey and J K Arthur, LexisNexis, Civil Procedure: Victoria (online at 15 May 2023) [I 9.06.3].

[15] [1969] 2 Malayan LJ 52, 56.2, cited in Boral Resources (Vic) Pty Ltd v Robak Engineering and Construction Pty Ltd [1999] VSCA 66; [1999] 2 VR 507, 525 [66] (Chernov JA, with whom Batt JA agreed). See also Stuart v Mordialloc Sporting Club Inc [2021] VSC 244, [272] (Randall AsJ).

[16] [1996] FCAFC 870; (1996) 64 FCR 410, 525.2 (Lockhart, von Doussa and Sackville JJ).

[17] Tatterson v Wirtanen [1998] VSC 88, [28]-[29] (Gillard J), cited in Stuart v Mordialloc Sporting Club Inc [2021] VSC 244, [268]; Re Moneysaver Free Coupons Pty Ltd (in liq) [2021] VSC 279, [244] (Randall AsJ).

[18] [1999] VSCA 66; [1999] 2 VR 507, 525 [68].

[19] Tatterson v Wirtanen [1998] VSC 88, [30].

[20] Stuart v Mordialloc Sporting Club Inc [2021] VSC 244, [315] (Randall AsJ), citing Tatterson v Wirtanen [1998] VSC 88, [30] (Gillard J).

[21] Rule 1.13(1) (definition of "question"). See also Boral Resources (Vic) Pty Ltd v Construction, Forestry, Mining and Energy Union [2013] VSC 572, [33] (Digby J).

[22] Re Moneysaver Free Coupons Pty Ltd (in liq) [2021] VSC 279, [246] (Randall AsJ), citing C_GU Insurance Ltd v Blakeley_ [2016] HCA 2; (2016) 259 CLR 339, 363 [64] (French CJ, Kiefel, Bell and Keane JJ).

[23] Boral Resources (Vic) Pty Ltd v Robak Engineering and Construction Pty Ltd[1999] VSCA 66; [1999] 2 VR 507, 512 [21]-[22] (Batt JA).

[25] [1999] VSCA 66; [1999] 2 VR 507, 509, [5].

[27] [2014] VSC 294, [43], as it has been in other cases.

[28] [2022] VSC 283.

[29] [2015] VSCA 172.

[30] Ibid [22]. Considerations of this kind were further referred to in Mandie v Memart Nominees Pty Ltd [2016] VSCA 4 [36]-[48] (Kyrou, Ferguson and McLeish JJA), and more recently reinforced in Billington v Sussan Corporation Australia Pty Ltd [2020] VSCA 12, [25] (Beach, Kaye JJA and Croucher AJA).

[31] Northern Health [2015] VSCA 172, [22].

[32] And that part of the prayer for relief in the Proposed ASOC relating to AB Management.

[33] And the proposed statement of claim incorporating the Nautilus Amendments that Nautilus has consented to.

[34] See, for example, paragraphs 81 and 90 of the Proposed ASOC.

[36] The particulars to paragraph 90 of the Proposed ASOC, which relate to the loss and damage for the breach of contract claim and breach of consumer guarantee claim refer to and repeat the particulars to paragraph 81 of the Proposed ASOC.

[37] And, of course, assuming that there is a proper and legitimate basis for making such a contention.

[39] Which is not to ignore the expert report that I was informed by counsel for Nautilus was prepared by the defendant in the lead-up to the proposed mediation, but noting that this was not prepared pursuant to orders for expert reports by way of evidence in the proceeding - although no different result would follow if it had been.