23 Mr Ian Jones, who appeared on behalf of the sixth defendant, submitted that the effect of Rule 11.16(1) was that in order to entitle a third party to issue a third party notice, any relief or remedy claimed in the third party notice must relate to or be connected with the original subject matter of the claim against that third party (pursuant to Rule 11.01(b)) or involve a question which relates to or is connected with the subject matter of the proceeding against the third party, (pursuant to Rule 11.01(c)).
24 Mr Jones submitted that it is not sufficient for the claim by the third party to have the connection, described in Rules 11.01(b) and (c), with the claim originally made by the plaintiff against the defendant. Rather, the relevant connection described in Rules 11.01(b) and (c) must be with the claim asserted by the defendant against the third party.
25 On the other hand Mr Cawthorn, who appeared with Mr Belmar for the third party, submitted that in order to entitle the third party to make a claim against a person who is already a party to the proceeding, it is sufficient if the claim so asserted either seeks relief or remedy which relates to or is connected with the original subject matter of the proceeding by the plaintiff against the defendant, (pursuant to Rule 11.01(b)), or involves a question which relates to or is connected with the original subject matter of the proceeding by the plaintiff against the defendant, (Rule 11.01(c)).
26 Mr Cawthorn submitted that the claim sought to be made by Murdoch against the sixth defendant, mirrors the claim made by the five plaintiffs against the sixth defendant. Accordingly, he submitted that the claim contained in the third party notice at the least involves a "question relating to or connected with the original subject matter of the proceeding", pursuant to Rule 11.01(c).
27 The competing submissions in this case thus raise the question as to the meaning of the words: "The original subject matter of the proceeding" in Rules 11.01(b) and (c). In essence, the issue is whether in the context of a claim for relief by a third party against another party, the phrase: "The original subject matter of the proceeding" attaches to the original claim made by the plaintiff against the defendants or on the other hand, whether it attaches to the character of a claim made against the third party by the defendant which joined the third party in the proceeding.
28 For the reasons which I shall set out below, I am of the opinion that the latter construction, which is that contended for by Mr Jones, is correct. In other words, properly construed, where a third party seeks to assert a claim against another person pursuant to the provisions of Rule 11.01(b) or (c), that claim must either seek relief or a remedy which relates to or is connected with the subject matter of the proceeding against that third party, (Rule 11.01(b)) or involve a question which relates to or is connected with the subject matter of the proceeding against that third party, (Rule 11.01(c)).
29 That conclusion follows I consider, from both the drafting of Rule 11 and also from the consideration of the underlying scheme of that rule.
30 Standing alone, Rule 11.01 applies to the proceeding by the plaintiff against the defendant. In such a proceeding it enables the defendant to make a claim against a third party. Rules 11.15 and 11.16 then provide for a third party to make a similar claim. For that purpose, Rule 11.16(1) provides that Rule 11 applies as if the third party were a defendant. Rule 11.01 speaks in terms of the "defendant" and the "plaintiff". As applied to a claim to be brought by a third party, Rule 11.16(1) equates the third party, which wishes to bring the claim, with the position of the defendant in Rule 11.01.
31 It seems clear that Rule 11.16(1) by thus transforming the third party into the defendant, in order to incorporate the scheme in Rule 11.01, similarly transforms the defendant to the action into the plaintiff for the purposes of Rule 11.01. Thus it follows that the phrase: "The original subject matter of the proceeding" as it appears in Rules 11.01(b) and (c), relates to the subject matter of the proceeding asserted by the defendant against the third party, where it is the third party who seeks to rely on it to make a claim against another person pursuant to Rule 11.
32 Mr Cawthorn sought to avoid this conclusion by contending that the claim by his client against the sixth defendant was made under Rule 11.15, and not Rule 11.16. Thus he submitted that Rule 11.16(1) has no application to the third party proceeding which his client sought to bring against the sixth defendant. However, if that submission was correct, it would deprive Rule 11.16(3) of any effect. Clearly, Rule 11.16 is intended to apply to any claim sought to be made by a third or subsequent party, whether against a person who was a party to the proceeding or not.
33 The third party proceedings prescribed by Rule 11.01 require that there be a relevant connection between the claim by the plaintiff against the defendant and the claim to be asserted by the defendant against the third party. In other words, the third party proceedings in Rule 11.01, comprehend a claim against another person by a defendant in response to the claim made against the defendant by the plaintiff. By definition, the third party is not a respondent to a claim brought by a plaintiff against a defendant. The third party is only a respondent to the claim brought against it by the defendant.
34 Rule 11.15 and 11.16 provide to a third party the same rights under Rule 11.01 as those provided by Rule 11.01 to the defendant who has joined the third party. Those rights are to make a claim against another person, whether a party to the action or not, which responds to the claim brought against a third party. Thus, in my view the underlying scheme and purpose of Rule 11.01 also supports the construction contended for on behalf of the sixth and eight defendants and the plaintiffs, namely that other than in the case of claims for contribution or indemnity, the claim under Rule 11 by a third party must either seek relief or remedy which relates to or is connected with the subject matter of the claim against the third party, Rule 11.01(b) or involve a question connected with the original subject matter of the claim against the third party, Rule 11.01(c).
Discretion
35 The conclusion which I have reached concerning the construction of Rule 11 in respect of this application is, I note, supported by observations made by the learned author of Civil Procedure Victoria, Mr Neil Williams QC, at paragraphs 11.01.45 and 11.15.0. The views there expressed by the learned author fortify me in the conclusion which I have so far reached.
36 Mr Cawthorn did not submit that if I were to construe Rule 11.01 in the manner thus contended for by the plaintiffs and the sixth and eighth defendants, the third party notice served by his client would conform with the requirements of Rule 11.01. It is clear that the relief or remedy claimed by Murdoch under the third party notice against the sixth defendant is not substantially the same as the relief or remedy claimed against Murdoch by the seventh defendant. Further, it is clear that the claim which Murdoch seeks to make against the sixth defendant does not involve a question relating to or connected with the subject matter of the claim made by the seventh defendant against Murdoch for the purposes of Rule 11.01(c).
37 The claim by the seventh defendant against Murdoch is in debt. It arises out of the equity loan facility agreement entered into between Murdoch and the seventh defendant. The claim sought to be made by Murdoch against the sixth defendant, which I have summarised above, is of an entirely different nature and does not involve any relevant question relating to or connected with the subject matter of the claim by the seventh defendant against Murdoch.
38 For those reasons, I hold that the third party proceeding sought to be brought by the second third party against the sixth defendant is not a claim authorised by Rule 11 of the Rules of the Supreme Court.
39 The conclusion which I have reached so far is sufficient to dispose of this appeal. However if I had come to the opposite conclusion, namely that Rule 11.01 does authorise the service of a third party notice, nonetheless I would have allowed the appeal and dismissed the application of the second third party to serve that notice, in the exercise of the court's discretion.
40 There has been considerable delay by the third party in asserting her claim against the sixth defendant. In her affidavit in support of the application, Mrs Murdoch has deposed that she first became aware of the fraudulent acts of De Stefano in April 2000. The plaintiffs' solicitors thereafter offered that she participate as a plaintiff in the proceeding. However at that time she was unwilling to be involved with such an action because of the potential costs.
41 Subsequently, she was served with the third party notice by the seventh defendant in December 2002. Again, she did not then choose to assert her claim against the sixth defendant. A mediation took place in May 2004 but the claim against the third party by the seventh defendant was not resolved.
42 The second third party then sought to make an application for summary dismissal in respect of the claims made against both the fifth defendant and herself. Those applications were refused by Master Evans in September 2004.
43 An application by the seventh defendant to sever the proceedings against the fifth defendant and against the third party was refused in November 2004. It was only after those interlocutory steps failed that the third party sought to assert the claim against the sixth defendant, which is contained in the third party notice.
44 No doubt the third party had her own reasons not to prosecute the claim earlier. However the principal proceedings have now been on foot for in excess of five years. They have been set down for trial in April 2006 on an estimate of a trial lasting approximately ten weeks. In that context and in light of the circumstance that the third party had been joined in the proceeding for approximately two years before she sought to assert the claim set out in the third party notice, it is self-evident that there has been considerable delay by her in making the claim.
45 The claim which the third party seeks to make against the sixth defendant is in many respects similar to the claim by the plaintiffs against the sixth and eighth defendants. If the third party were to make those claims in the context of the current proceeding, a number of the issues contained in it would be common with the issues and claims made by the current plaintiffs against the sixth and eighth defendants.
46 However, there are other issues involved in the claim to be made by the third party against the sixth defendant which are not common with the claims made by the plaintiffs against the sixth and eighth defendants. In particular, there is a significant issue as to whether the third party or First Spectrum Pty Ltd, or some other person, had the relevant legal interest in the amounts paid to De Stefano's trust account and which are the subject of the claim sought to be made by the third party notice. There is also an issue as to how that amount was constituted. In her affidavit the third party states that the whole of the sum of $1,034,000 consisted of the proceeds of the sale of real estate at Clifton Hill. However, there is other material which suggests that only $700,000 was realised from that sale. In addition, the claim by the third party may also involve issues as to the tracing of the funds alleged to have been lodged by the third party with the first defendant.
47 I would expect that a number of interlocutory steps need to be taken in respect of the issues arising from the claim thus sought to be made in the third party notice. In addition, the sixth defendant will need to investigate the claim and prepare its case in response to that claim. The sixth defendant would also seek to join the eighth defendant, Crown Ltd as a third party to that claim. Thus, if the third party were permitted to make the claim in the proceedings, it would, I consider, have the potential to significantly disrupt and encumber the progress of the proceeding to trial.
48 In addition, First Spectrum Pty Ltd desires to make the same claim against the sixth defendant as is made by the third party, but as an alternative to the third party. That potential claim by First Spectrum Pty Ltd arises because of the issue relating to whether the First Spectrum Pty Ltd, or Murdoch, owned the funds which were lodged with the first defendant's trust account. Thus First Spectrum Pty Ltd has applied by summons to be joined as a ninth defendant to these current proceedings.
49 If the third party were permitted to make the claim within the current proceedings, which is asserted by the third party notice, it may be necessary to permit First Spectrum Pty Ltd to also make that claim as an alternative, albeit as a ninth defendant.
50 The procedure thus proposed would have the effect that the third party Murdoch would be making a claim as a third party which is in reality a claim made by a plaintiff. At the same time, First Spectrum would make the same claim as an alternative to Murdoch, either as a ninth defendant or as an added third party.
51 To say the least, such a set of proceedings would be quite extraordinary. More importantly, it would inevitably complicate and burden the interlocutory steps to be taken in the present action and add an unnecessary layer of complexity to the trial of this proceeding in April next year. There is no guarantee that the interlocutory steps which need to be taken in the claim to be asserted by Murdoch and/or First Spectrum, could be undertaken and completed without interfering with the progress of the existing action to trial.
52 On the other hand, there is no reason why the claim sought to be asserted by the third party and First Spectrum Pty Ltd against the sixty defendant could not be made in a separate action issued by both those parties as plaintiffs. Such a procedure would be manifestly far simpler, and would not entangle and burden the progress of the existing action. It must be remembered that it is the third party who seeks an indulgence from the court by seeking leave to assert its claim by a third party notice. She has delayed for a considerable time before deciding to make that claim against the sixth defendant. In my view it is only just that she should not be permitted to bring that claim in the existing proceeding where by doing so she may significantly disrupt the progress of the existing proceeding to trial. To permit her to do so would be unfair and unjust to the existing parties, and in particular to the plaintiffs.
53 The third party and First Spectrum Pty Ltd are of course at liberty to bring an action by separate proceeding. If they were to bring such an action, the question as to whether such an action would be either consolidated with the present proceeding, or the question whether the trial of the two actions would be heard at the same time, would be a matter for the Listing Master or for the Judge allocated to the management of the present proceeding.
54 However and in any event, as I have already remarked, the third party and First Spectrum may bring an action independently of these proceedings. While that course of procedure may not be as convenient to them, any such inconvenience is significantly outweighed by the potential disruption to the current proceedings and by the unfairness to the parties to those proceedings if I permitted the third party to make the claim in the present proceedings.
55 For those reasons, it is in any event, not appropriate to give leave to the third party to bring a third party notice against the sixth defendant, even if contrary to the views which I expressed earlier, such a notice is otherwise authorised by the rules. Thus, for that additional reason, the appeal from the order of Master Kings should be allowed.
First Spectrum Pty Ltd
56 As I stated above, First Spectrum Pty Ltd has also issued a summons seeking to be joined as a party to these proceedings. A proposed amended third party notice has been exhibited to the affidavit of Ms Murdoch, who is a director of that company. That document makes it plain, as I have already stated, that First Spectrum Pty Ltd, would be seeking to assert the same claim as that sought to be asserted by the third party against the sixth defendant but as an alternative to the third party.
57 It was considered necessary to seek to join First Spectrum on that basis in the event that a court determines that First Spectrum and not Murdoch have the legal interest in the sums claimed against the sixth defendant. In view of the conclusion which I have reached about the third party notice, it would follow that there would be no purpose in acceding to the application made by First Spectrum.
Conclusion
58 For the reasons which I have so far expressed, I have thus come to the conclusion that the appeals of the sixth and eighth defendants should be allowed.
59 Accordingly and subject to hearing from counsel I propose the following orders: