PARTIES: ROSS AMBROSE GROUP PTY LTD (ACN 009 501 759)

Procedure - Supreme Court procedure - Tasmania - Practice under Rules of Court - Amendments - Whether defective endorsement of third party notice due to a lack of particularity can be remedied by a statement of claim - Whether proposed amendment, if allowed, would introduce a statute barred cause of action.

Marshall v London Passenger Transport Board [1936] 3 All ER 83, followed.

Rules of the Supreme Court 1965 (Tas), O18, r 58.

Judgment Number: [2003] TASSC 12

1 This is an appeal from the Master. In 1989, Renkon Pty Ltd ("the first named defendant") took a lease of property from Ross Ambrose Group Pty Ltd ("the plaintiff"). A day prior to its execution, the parties agreed that in the event that a restrictive covenant on the property was not removed within two years, the first named defendant might surrender the lease whereupon the plaintiff would pay it $1,000,000 less certain adjustments. The covenant was still subsisting two years later, but the first named defendant took no action to surrender the lease until a further 15 months had elapsed. It then purported to surrender the lease and paid no further rent. The plaintiff did not accept the surrender and sued the first named defendant for rent and interest by a writ dated 20 November 1992.

2 The first named defendant sought to set off such part of the $1,000,000 as was necessary to extinguish the plaintiff's claim, and counterclaimed the balance, plus damages, including damages in the nature of interest for the wrongful withholding of the $1,000,000. By way of defence to the counterclaim, the plaintiff pleaded inter alia that it was an implied term of the agreement concerning the restrictive covenant that any notice of surrender, should the covenant not be removed within two years, had to be given within a reasonable period of time thereafter and that by failing to give notice before the expiration of a further 15 months, the first named defendant had lost its right to enforce the agreement for surrender.

3 In late 1996, the first named defendant obtained leave to join its solicitors ("the third party") as a third party. The notice was served, and delivered with it were copies of the plaintiff's statement of claim, the first named defendant's counterclaim and the plaintiff's defence to the counterclaim. By the third party notice, the first named defendant recited the nature of the plaintiff's claim and of the defence and counterclaim, and copies of all three documents were referred to in the notice as being delivered therewith. The notice asserted that:

"... the Firstnamed Defendant claims to be entitled to a contribution and or a complete indemnity or indemnity in such amount as may be found to be just and equitable from you to the extent of the whole of any sum that the Plaintiff may recover from the Firstnamed Defendant upon its claim on the ground that the matters referred to in the Defence to Counterclaim arise out of and were caused or contributed to by the negligence and/or breach of contract by you and says that as a result of your negligence and/or breach of contract the Firstnamed Defendant has been deprived of proper grounds of defence to the Plaintiff's claim."

It also asserted that the first named defendant claimed to be indemnified by the third party against liability for any costs of the action and of the third party proceedings.

4 Early the following year, the first named defendant delivered a statement of claim in the third party proceedings. It was dated 9 January 1997. In it the first named defendant pleaded that it had sought legal advice from the third party prior to the expiration of the two year period referred to above and had been wrongly advised that there was no remedy available to it should the covenant not be removed and that the lease could not be negated. As the result of that advice, the first named defendant pleaded that it took no action to surrender the lease until taking independent advice 15 months later. A number of defences raised by the plaintiff in answer to the counterclaim, including a plea that the clause (cl 2(c)) requiring payment of $1,000,000 was a penalty, were recited, and by par25 of the statement of claim against the third party it was pleaded:

"25 Should this Honourable Court adjudge the aforesaid defences or any of them to apply then the Firstnamed Defendant will suffer loss and damage and is at risk of suffering further damages which are attributable to the breach of contract and/or negligence of the [Third] Party.

PARTICULARS OF BREACH OF CONTRACT/AND OR NEGLIGENCE

(a) Failed to properly advise the Firstnamed Defendant in that the advice referred to in paragraph 15 hereof was wrong as by virtue of the matters referred to in paragraph 17 hereof, the Firstnamed Defendant had as of 1st July 1991 a legal right to surrender the Lease pursuant to the terms of the First Agreement and to seek payment of monies from the Plaintiff and the Defendant to the Counterclaim as a consequence thereof;

(b) Failed to properly advise or advise at all the Firstnamed Defendant that Clause 2(c) of the First Agreement had no legal force or effect.

(c) Negotiated and settled on behalf of the Firstnamed Defendant and put before the Firstnamed Defendant for its due execution the First Agreement containing Clause 2(c) when such terms carried no legal force or effect.

5 By par26, the first named defendant claimed against the third party:

"26 AND the Firstnamed Defendant claims against the [Third] Party:

(a) Damages for breach of contract and/or negligence;

(b) Costs, including all costs that the Firstnamed Defendant may be ordered to pay in respect of any proceedings herein;

(c) Such further or other orders as the Court deems appropriate."

6 The third party delivered a defence to the statement of claim against it on or about 3 February 1997. In June 1998, as the result of an order for the trial of certain issues separately, the questions raised by the first defendant's counterclaim, its defence and reply were tried before Wright J before any other questions or issues in the action. Wright J, on 23 June 1998, gave judgment for the plaintiff against the first named defendant on the counterclaim. The third party notice claimed only a contribution or indemnity to the extent that it might be found indebted to the plaintiff, inclusive of costs, together with the costs of the third party proceedings, whereas the statement of claim delivered pursuant to it claimed damages at large at common law. By an application filed on 30 November 1999, the first named defendant sought leave to amend the third party notice to bring it into conformity with the statement of claim by adding the words:

"AND TAKE NOTICE the Firstnamed Defendant claims to be entitled to damages and costs against you arising from your negligence on the grounds that you failed to properly advise the Firstnamed Defendant in or about the month of May 1991 in respect of the Firstnamed Defendant's rights and obligations against and to the Plaintiff and the Defendant to the Counterclaim arising from the said Agreement dated 30th June 1989."

It appears that no reliance is now placed on a cause of action in contract.

7 It is common ground that any cause of action the first named defendant has against the third party for breach of contract or negligence as its solicitors, accrued at the time the purported notice of surrender was rejected in 1992, that is more than six years before the date of the application which was granted by the Master and which is the subject of the appeal by the third party now before me.

8 It is submitted on behalf of the third party that the notice instituted an action against it for contribution or indemnity only and not for damages for breach of contract and/or negligence. To now amend it so as to include a claim in negligence at common law, it is submitted, would be to permit the institution of an action which is barred by the Limitation Act 1974, in direct contravention of the rule in Weldon v Neal (1887) 19 QB 394, for there are no "very peculiar circumstances" which might, as Lord Esher MR conceded at 395, empower the court to allow such an amendment.

9 I agree with the Master when he expressed the view that "the only reasonable interpretation of the third party notice was that it was a claim against the third party for damages for negligence and breach of contract, albeit for reasons undisclosed the first defendant was limiting the extent of the damages claimed to such amount as the plaintiff might recover against it in the action". It had been submitted to him that as the claim was for contribution and indemnity, the notice must be taken to have been confined to a statutory claim under the Wrongs Act 1954. This it clearly was not, for at the time of the application that Act (then known as the Tortfeasors and Contributory Negligence Act 1954) gave to a tortfeasor who is liable in respect of damage suffered by a person as the result of a tort a right of contribution from another tortfeasor, whereas the plaintiff's claim against the first defendant was not in tort but by virtue of the lease.

10 It is common ground that a third party notice is the equivalent of a writ for the purposes of commencing an action. Rules of the Supreme Court 1965, O3, r2, which applied at the time the third party proceedings were instituted, provided:

"2 (1) Any writ of summons, the endorsement of claim whereon does not contain a statement sufficient to give notice of the nature of the claim and of the remedy or relief sought in the action, may, on the application of the defendant before appearance, be set aside."

This is in substance the same as the rule applicable to the form of the notice, O18, r58(1), which provides:

"(1) The notice shall state the nature and grounds of the claim or the nature of the question or issue sought to be determined, and the nature and extent of any relief or remedy claimed."

The cases concerning endorsements on writs are therefore of great assistance in determining the nature of the case made on a third party notice.

11 In Renowden v McMullen [1970] HCA 24; (1970) 123 CLR 584, a writ had been sufficiently endorsed with claims for breach of contract and negligence. The statement of claim delivered thereafter was confined to claims for negligence and did not plead breach of contract. After the expiration of the limitation period, an attempt was made to amend the statement of claim to allege breach of contract. The majority of the court (Kitto, Menzies and Owen JJ) held that the plaintiff had effectively abandoned his claim in contract and could not now institute what would amount to a new cause of action. Barwick CJ and McTiernan J took a contrary view and held that the endorsement had raised the cause of action and that non-reliance on it in the original statement of claim did not amount to an abandonment of it. They made a number of observations about the requirements of the endorsement, including (at 595):

"The indorsement on the writ not being a statement of claim is not in the nature of a pleading. In our opinion, it should not be construed as such but read for what it is, namely, a notice of the nature of the plaintiff's claim, of the cause thereof and of the relief sought in the action. It suffices if it conveys that information generally and without particularity save where and to the extent to which particularity is indispensable to notify the required elements of the indorsement, eg on some occasions identification of the instrument upon which a claim is founded. But insufficiency of the indorsement does not render the writ a nullity. Hill v Luton Corporation (1951) 2 KB 387; Pontin v Wood (1962) 1 QB 594. On the other hand, the indorsement marks out the perimeter or range of the area within which the plaintiff may express his claim in a formal fashion in his statement of claim whether as originally filed or as sought to be amended see Cave v Crew (1893) 62 LJ Ch 530, United Telephone Co v Tasker (1888) 59 LT 852, Moore v Alwill (1881) 8 LR Ir (CL) 245; 15 Ir LT 45, at p55. 'The statement of claim is the specific way of stating the claim he has endorsed on the writ' per Dowse B in Moore v Alwill (supra)."

12 Mr Procter SC relied on this case for the proposition that a claim for damages at common law not having been expressly made in the third party notice, such a claim contained in the statement of claim did not fall within the perimeter marked out by the notice and could accordingly be struck out. Although no such application has been made to strike out the statement of claim against the third party, Mr Procter submits that the third party should not be deprived of the right to make such an application by the court permitting the first named defendant to amend the notice as it now seeks to do.

13 If it be the case that the claim of negligence expressed in the statement of claim does exceed the perimeter of the notice, which would appear to be the case at least insofar as the remedy sought is concerned, the argument nevertheless founders on the principle that such a defect has been cured by the delivery within the period of limitation of the statement of claim in its present form.

14 In Marshall v London Passenger Transport Board [1936] 3 All ER 83, the Court of Appeal held that a writ, the endorsement of which was defective for lack of particularity, could be remedied by the statement of claim. At 90, Romer LJ said:

"It is not sufficient for the plaintiff to indorse his writ merely with a claim for damages. Plainly, that would be insufficient. Nor, in my opinion, is it sufficient for a plaintiff to indorse his writ with a claim for damages for breach of contract or damages for negligence without giving the defendants some indication of the contract which he, the plaintiff, alleges has been broken, or some idea of the duty which he says the defendants have failed to perform. In the present case, as Mr Gage has pointed out and indeed he is relying upon the fact, the writ merely claims damages for negligence. That, in my opinion, is insufficient, but the difficulty occasioned by that is at once remedied, or remedied very shortly afterwards, by the statement of claim being delivered by the plaintiff, in which he made it clear that the negligence he was suing on was negligence on the part of the defendants' driver in not driving the tramcar with reasonable care. Having so made it clear, I think the plaintiff has remedied his want of observance of the provisions of the rules relating to his indorsement ... ."

15 The same principle was applied in Batting v London Passenger Transport Board [1941] 1 All ER 228 where Sir Wilfred Greene MR said, at 229 - 230:

"It is true that the writ as issued and served did not specify any particular class of negligence, and in so doing, as appears from the judgment of this court in Marshall v London Passenger Transport Board (supra), the writ was in point of form defective, but, when the statement of claim was delivered, the plaintiff made it clear what her writ meant, namely, that the negligence of which she complained was the negligence alleged in the original statement of claim, that is to say, negligent driving, and nothing else."

See also Hill v Luton Corporation (supra) and Pontin v Wood (supra).

16 In my opinion therefore the third party was given clear notice of the nature of the first named defendant's claim against it for damages for negligence at common law by the delivery in time of the statement of claim and could not succeed in an application to strike it out. The first named defendant's application to amend the third party notice may be unnecessary, but it was made, perhaps out of an abundance of caution, in order to regularise the proceedings, the making of such an order is not beyond power and it is entirely appropriate in the circumstances. The appeal is dismissed.