Supreme Court of SA|1993-12-24|Before: Matheson J

AMP FIRE AND GENERAL INSURANCE CO LTD v. DAVID BALFOUR, PATRICK JAMES COURTNEY AND PAUL SAUNDERS No. SCGRG 93/68 Judgment No. 4365 Number of pages - 8 Practice - joinder of parties (1993) 61 SASR 492 [1993] SASC 4365 (24 December 1993)

COURT IN THE SUPREME COURT OF SOUTH AUSTRALIA MATHESON J

CWDS Practice - joinder of parties - plaintiff jockey injured in race as a result of fall - allegation that fall caused by negligence of another jockey - action against jockey and trainer to whom he was indentured - trainer indemnified under insurance policy, but dispute as to whether jockey entitled to indemnity

joinder of insurer should have been ordered - Supreme Court Rules, r 27. J N Taylor (In Liquidation and J N Taylor Finance Pty Ltd (In liquidation) v Alan Bond and Others (1993) 59 SASR 432 and Mullett and Another v Gabriel and Another ; , applied.

HRNG ADELAIDE, 15 December 1993 #DATE 24:12:1993 Counsel for appellants: Mr M A W Birchall Solicitors for appellants: Scales and Partners Counsel for respondent: Mr T P Kavanagh Solicitors for respondent: Caldicott and Co

JUDGE1 MATHESON J This is an appeal from an order of his Honour Judge Bowen Pain, Master of the Supreme Court, granting the plaintiff leave to join AMP Fire and General Insurance Co. Ltd. as a defendant. The plaintiff, Patrick James Courtney, who I will refer to hereafter as the respondent, was at all material times a jockey. In his More Explicit Statement of Claim filed on 15 July, 1993, he alleges that on 20 January, 1990 he was retained to ride, and did ride the horse, "Signorelli" in Race 6 at Victoria Park Race Course. The first and second defendants in the action were a horse trainer and an apprentice jockey respectively. The respondent alleges that the second defendant was at all material times employed by and indentured to the first defendant. The first defendant Balfour entered a horse called "Bay Regent" in the race, and the respondent alleges that he instructed and/or retained the second defendant, Saunders, to ride the horse. It is convenient now to set out paragraph 10 of the More Explicit Statement of Claim: "During the said race a collision occurred between Signorelli and Bay Regent which caused Signorelli and the Plaintiff to fall whereupon the Plaintiff sustained injury and suffered loss and damage. Bay Regent and Signorelli started the race alongside each other at the Barriers. Signorelli was at Barrier position 5 and Bay Regent was at Barrier position 6. Both horses initially raced straight until the Second Defendant gradually shifted Bay Regent in towards the running rail. When Bay Regent was about 3 parts of a length of ahead of Signorelli the Second Defendant (rode) Bay Regent across the path of Signorelli. A rear hoof of Bay Regent came into contact with a front hoof of Signorelli causing Signorelli to lose its footing and fall." 2. The respondent, who at the time of the collision was a leading jockey, suffered grievous injuries. He alleges that his injuries were caused by the negligence of the first defendant and/or the negligence of the second defendant. I am informed that he relies on the decision in Johnston v. Frazer (1990) 21 NSWLR 89. The first defendant Balfour has filed a defence denying that the second defendant was his servant or agent or that he was vicariously liable for any negligence. The second defendant Saunders has been served, but has not entered an appearance. 3. On 14 October, 1993, the respondent filed an application for an order granting him leave to add AMP Fire and General Insurance Co. Ltd. as a defendant, and in an affidavit sworn herein on the same date, Mr T P Kavanagh, solicitor for the plaintiff said, inter alia: "4. The second defendant has failed to enter an Appearance or Defence in respect to this matter. I am instructed by the plaintiff and verily believe that the second defendant would not have anywhere near sufficient funds to satisfy a judgment in this matter. He is only a young man of limited means. As far as I am aware, he does not own any real property. 5. I am instructed by the plaintiff and verily believe that the Australian Trainers Association on behalf of all horse trainers including the first defendant arranged for a public liability policy to cover all race horse trainers licensed by the South Australian Jockey Club Incorporated. That policy of insurance was underwritten by AMP Fire and General Insurance Company Limited. 6. I am further instructed that the said policy is endorsed to include in the definition of 'the insured' in the policy:-

(f) any person in the service of The Insured including those indentured to them as apprentices. 7. By letter from Scales and Partners solicitors dated 22 July 1993 we were informed that AMP Fire and General Insurance Company Limited was not prepared to indemnify Mr Saunders in this matter ... 8. I have been provided with a copy of (a) public liability policy which I believe to be the public liability policy for horse trainers and apprentices which was in place on the date of the accident namely 20 January 1990. ... The policy covers apprentices. 9. Considering the stand taken by AMP Fire and General

Insurance Company Limited I am instructed to seek leave from this Honourable Court to join AMP Fire and General Insurance

Company Limited as a defendant to this claim. 10. I am further instructed to seek consequential orders to amend the Statement of Claim filed herein to seek a declaration pursuant to Section 31 of the Supreme Court Act that AMP Fire and General Insurance Company Limited is liable to indemnify the second defendant for any loss sustained in consequence of any judgment in favour of the plaintiff." 4. An application for directions was heard by Judge Bowen Pain on 14 October. Mr A J Redford appeared on behalf of the defendant Balfour, and Mr Britton appeared with Mr Kavanagh for the respondent. I quote from Mr Redford's affidavit sworn herein on 21 October, 1993 as to what happened at that hearing: "5. I said to Mr Britton that AMP Fire and General Insurance Co Ltd was not my client and that I would need to get instructions in relation to that application. 6. The matter was then called on before Judge Bowen Pain. During the course of the hearing, Mr Britton drew Judge Bowen Pain's attention to the fact that there had been no Appearance filed by the second defendant and that the plaintiff would attend to obtaining a judgment against the second defendant in default of that Appearance. Judge Bowen Pain indicated that the request for the filing of a More Explicit Defence was hopelessly out of time and chastised me for taking out an application for a More Explicit Statement of Claim so long after the receipt of the Rule 46.20 Notice. I indicated to Judge Bowen Pain that I had not taken out an application at an earlier stage as I was awaiting the receipt of Rule 46.15 Particulars which may have cleared up the issues which I had in doubt. 7. I indicated to Judge Bowen Pain that I had only just received the Application seeking the joining of the appellant herein and that I was without instructions and was not in any position to determine the appellant's attitude. 8. As a consequence of this exchange, Judge Bowen Pain made the

following orders: (a) That within fourteen days the plaintiff file and deliver a More Explicit Statement of Claim which addresses the matters raised in the letter of Scales and Partners dated 12th October 1993. (b) That within fourteen days of receipt of the More Explicit Statement of Claim the first defendant is to file an(sic) More Explicit Defence which addresses the matters raised in the Rule 46.20 Notice dated 14th October 1993. (c) Leave to the plaintiff to file a Reply within ten days of the receipt of the More Explicit Defence. (d) Adjourned to 9:00 am on 19th October 1993." 5. On 18 October, the respondent filed a fresh application seeking an order granting him leave to join AMP Fire and General Insurance Co. Ltd. as a defendant, and in a further affidavit sworn on the same day, Mr Kavanagh asked that the application be made specially returnable before Judge Bowen Pain at 9 a.m. on 19 October as the matter had been specifically adjourned to that date for the application to be heard. The application was not endorsed as required by Rule 67.04(4), and was not served on the solicitors for Balfour two clear days prior to the hearing as required by Rule 67.04(2). I do not think the respondent had to serve Saunders, as he had not entered an appearance, or to serve the appellant (see Rule 27.06(d) where the word "may" is used). It must be remembered that his Honour adjourned the application in the presence of Mr Redford on 14 October to 9 a.m. on 19 October. I would be prepared if asked, to make an order nunc pro tunc dispensing with compliance with the relevant rules. 6. It is necessary now to quote again from Mr Redford's affidavit: "9. Unfortunately, I did not properly hear the last part of the order of Judge Bowen Pain and noted that the matter had been adjourned to 9:00 am on 20th October 1993. 10. On the 15th day of October 1993, I caused to be sent to my instructing solicitors in Melbourne a letter advising them of the orders made together with a copy of the application referred to in paragraph 4 herein requesting that I have their urgent instructions as to the appellant's attitude to the said application. 11. On Monday the 18th of October 1993 I was required to attend a funeral in Millicent and therefore was away from work and unable to obtain instructions on that date. 12. On Tuesday the 19th October 1993 I did not attend the adjourned hearing time as a consequence of my failure to note the correct date. 13. At or about 4:00 pm on Tuesday 19th October 1993, I received instructions from the Melbourne solicitors to the effect that the appellant opposed any order that it be joined as a third defendant and further that in the absence of any conflict of interest that my firm had instructions to act on behalf of the appellant in that application." 7. In the absence of any explanation as to why Mr Redford was not in attendance, Judge Bowen Pain, inter alia, granted leave to the plaintiff to join AMP Fire and General Insurance Co. Ltd. as a defendant in this action. Perhaps understandably in all the circumstances, he did not give reasons. It is convenient here to refer to the remarks of O'Loughlin J in Mullett v. Gabriel [1989] SASC 1647; (1989) 52 SASR 330. At p 333, he said: "The mere absence of reasons does not, of itself, determine the fate of appeals from masters of this Court; the absence of reasons will not inhibit interference by an appellate court if it is obvious that, on the facts, the discretion has miscarried. This view reflects the parallel situation arising on appeals against sentence. In House v The King (supra) in their joint judgment, Dixon, Evatt and McTiernan JJ said (at 505): 'If the judge acts upon a wrong principle, if he allows extraneous or irrelevant matters to guide or affect him, if he mistakes the facts, if he does not take into account some material consideration, then his determination should be reviewed and the appellate court may exercise its own discretion in substitution for his if it has the materials for doing so. It may not appear how the primary judge has reached the result embodied in his order, but, if upon the facts it is unreasonable or plainly unjust, the appellate court may infer that in some way there has been a failure properly to exercise the discretion which the law reposes in the court of first instance. In such a case, although the nature of the error may not be discoverable, the exercise of the discretion is reviewed on the ground that a substantial wrong has in fact occurred.'" 8. The rule of court governing joinder of parties is Rule 27 and is as follows: "27.01 Two or more persons may be joined as plaintiffs or defendants in any proceedings: (a) where: (i) if separate proceedings were brought by or against each of them, a common question of law or of fact would arise in

all the proceedings; or (ii) all rights to relief claimed in the proceedings, whether they are joint, several or alternative, are in respect of, or arise out of, the same transaction or series of transactions; or (b) where the Court gives leave to do so. 27.02 Unless the Court otherwise orders, a plaintiff who claims any relief to which any other person is jointly entitled shall join as parties to the proceeding all persons so entitled, and any of them who do not consent to be joined as a plaintiff shall be made a defendant. 27.03 Where all of the persons who should or could be parties in those proceedings are not joined as parties, any party may apply to the Court for such order as may be just to join any person who is not already a party or is not already a party in that capacity. 27.04 Where any joinder of parties or of causes of action or any

matter raised by a counterclaim will unduly complicate embarrass or delay a fair trial of the proceedings or is otherwise

inconvenient, the Court may disjoin parties or may order separate trials or make such other order as is just. 27.05 The Court may upon application, or of its own motion, join any person to the proceedings as a party upon such terms and conditions as the Court may prescribe at any time including after the determination of the plaintiff's entitlement to relief, but before the grant of remedy, if: (a) that person claims an interest in the subject matter of the proceedings; (b) that person has a claim or defence that raises a question of law or fact the decision of which might affect the proceedings; (c) the Court will require that person's co-operation to implement an effective decree; (d) that person has a right to joinder under an enactment or Rule; (e) that person ought to be joined as a party, or his presence before the Court is necessary, to ensure all matters in dispute in the proceedings may be effectually determined and adjudicated upon; (f) there exists between that person and a party to the proceedings a question or issue arising out of, relating to or connected with any relief or remedy sought in the proceedings, which in the opinion of the Court it would be just and convenient to determine as between him and that party as well as between the parties to the proceedings. 27.06 Where an application is made pursuant to the above Rule: (a) it shall be accompanied by an affidavit setting out the precise grounds and terms upon which joinder is sought; (b) it together with any supporting affidavits shall be served on all parties; (c) on its hearing the Court may: (i) determine whether joinder is appropriate at that stage of the proceedings or at all; (ii) determine upon what terms and conditions any joinder shall be permitted; (iii) direct that security be given for costs; (iv) give all necessary directions. (d) the Court may give directions to allow a person who is proposed to be joined as a party to be heard on the application, and if so such person shall be bound by any order then made for his joinder as a party. 27.07 Any order for joinder made pursuant to this rule may be varied or discharged at any time before judgment." 9. The submission on behalf of the appellant AMP Fire and General Insurance Co. Ltd. was put in this way. The respondent has no direct cause of action against the appellant. The respondent claims that the defendant Saunders is entitled to an indemnity from the appellant, and it has not been granted. However, Saunders has not made a claim against the appellant, or sought indemnity. The defendant Balfour has indemnity, but he says that Saunders was not riding as his employee, and denies that he is vicariously liable for any negligence of Saunders. The appellant submits that if the respondent succeeds in establishing that Saunders was negligent, and that at the relevant time he was Balfour's employee, Balfour will be indemnified, and the respondent's claim will be met. If the appellant fails against Balfour, but succeeds against Saunders, he can enter judgment against Saunders and take steps to execute his judgment. Saunders may then wish to make a claim under the policy. If liability is then denied by the appellant, his claim can be litigated as a separate and discrete matter. As the action stands and with the appellant joined as a defendant, the trial will involve a range of issues that are irrelevant to the respondent's claim against Saunders. Finally, the appellant submits that its joinder was sought on a ground upon which it ought not to have been joined at that stage of proceedings. The joinder will raise issues that may never be relevant and will prolong the trial. 10. I was referred to the case of J.N. Taylor Holdings Limited (In Liquidation) and J.N. Taylor Finance Pty. Ltd. (In Liquidation) v. Alan Bond and Others (1993) 59 SASR 432. The facts were succinctly summarised in the headnote as follows: "The plaintiff companies, both in liquidation, sued three of their former directors alleging breaches of their duties as directors. Each of the directors held policies of insurance indemnifying them in respect of any wrongful act committed by them in their capacity as directors of the plaintiff companies. Of the three directors, one was bankrupt and the other two had left the country. In the case of the bankrupt defendant, the trustee in bankruptcy had already agreed to assign to the plaintiff companies that defendant's right to indemnity under the policy, subject to the consent of the insurer. The liquidator of the plaintiff companies wrote to the insurer inquiring whether the insurer accepted liability to indemnify the directors in respect of the plaintiff companies' claims. The insurer replied denying any liability to indemnify the directors. The plaintiff companies thereupon sought leave to join the insurer as an additional defendant to the proceedings on the grounds that they were entitled to seek, by way of declaration, an order that the insurer was obliged to indemnify the directors in respect of any judgment in favour of the plaintiff companies arising out of any wrongful act within the terms of the policy. The judge at first instance refused leave on the grounds that the question raised by way of the application for declaratory relief was, at that stage, theoretical in that no judgment had been obtained against the defendant directors. The plaintiff companies appealed from that decision." 11. The Full Court (King CJ, Prior and Perry JJ) allowed the appeal and ordered the joinder of the insurer. They held, inter alia, that the statutory source of the Court's jurisdiction to grant declaratory relief is to be found in s.31 of the Supreme Court Act 1935 and that it is not necessary that the plaintiff have a cause of action against the defendant. The facts in that case seem to me more clearly to require the joinder of the insurer than the facts here, but there is much in the judgment of King CJ that has assisted me in deciding this appeal. 12. King CJ said at pp.441-442: "... that the joinder of the insurer would be likely, in the event of a judgment against the defendant directors, to obviate the need for a long trial of an action against the insurer in which much the same factual ground would have to be covered. That is the cogent consideration in favour of joinder. A number of considerations against joinder require consideration. Joinder involves embroiling the insurer in these proceedings although, if it is not joined, the occasion for proceedings against it may never arise. That is an important factor in the exercise of the discretion: AMP Fire and General Insurance Ltd v Dixon [1982] VicRp 83; (1982) VR 833. It cannot prevail, however, against other compelling considerations: Hordern-Richmond Ltd v Duncan (1947) l KB 545; Mayne Nickless Ltd v Pegler (1084) 1 NSWLR 228; Reinecke v Incorporated General Insurances Ltd (1974) 2 SA 84; Corti v Rodwell [1985] VicRp 26; (1985) VR 287. It was argued that the insurer has defences to any claim on the policy which make it unnecessary to embark on an inquiry as to whether there have been wrongful acts by the directors ... If such defences are pleaded by the insurer, they can be determined, if appropriate, as preliminary issues and, if determined in favour of the insurer, the insurer's involvement in a long and expensive trial thereby avoided. There is also a question whether the efficient conduct of the trial would be prejudiced by joinder ... I appreciate the difficulties in the trial which would result from the proposed joinder. Most of those difficulties would confront the plaintiffs. They would run the risk of proving too much, for example that the wrongful act was dishonest fraudulent or reckless, or that it amounted to conflict or preferment in relation to related companies. The plaintiffs are prepared to accept these problems as the price of avoiding the prohibitive cost of a second trial on the issues arising out of the directors' conduct. In the exercise of the discretion, the court must be guided, in my opinion, by the overriding principle that multiplicity of proceedings is to be avoided. That principle is embodied in s27 of the Supreme Court Act ... The trial of the issues affecting the insurer's liability at the same time as those affecting the directors' liability would undoubtedly render the trial more complex and present difficulties to both the court and the parties. In the final analysis, however, I think that the need to avoid the prospect of a second long and complex trial, must outweigh other considerations. Justice will best be served, in my opinion, by the trial and determination of the issue of the insurer's liability to the defendant directors concurrently with the trial and determination of the issue of the defendant directors' liability to the plaintiffs. I have reached the conclusion that the insurer should be joined on the basis of the claim for a declaration that it is liable to indemnify the directors." 13. There is another passage in the judgment of King CJ in J.N. Taylor Holdings Ltd v Bond that is apposite, mutatis mutandis. At pp.430-440, his Honour said: "Once it is accepted that the plaintiffs' claim to declaratory relief is within jurisdiction, it follows, in my opinion, that the insurer could have been joined as a defendant, subject to the power of disjoinder in r 27.04, and the claim pursued against it in these proceedings. The right to the declaration sought arises out of the same transaction or transactions as the plaintiffs' claim against the directors, namely the conduct by the directors of the affairs of the companies. The criterion in r 27.01(a)(ii) is thereby satisfied. In addition the criterion in r 27.01(a)(i) is satisfied because there is a common question of law and fact

namely the alleged breaches of duty on the part of the directors. That being so r 27.03 authorises the joinder of the

insurer in the discretion of the court. The argument before us turned on r 27.05, but it seems to me that that is concerned, or at least primarily concerned, with intervention by a party which seeks to be joined (Tetra Molectric Ltd v Japan Imports Ltd (1976) RPC 547; astro Exito Navegacion SA v Southland Enterprise Co Ltd (1982) l QB 1248), and with joinder of the court's own motion. Paragraphs (e) and (f) may be applicable where an application is made by an existing party. If so the joinder would be further warranted by par (f)." 14. It seems clear that the trial of the issues in the case at the bar, with or without the joinder of the appellant, will not be over lengthy or complicated. It is also clear that additional issues will need to be tried as a result of the joinder, for example, the meaning of the relevant part of the insurance policy and the failure of Saunders to give notice or make a claim. However, and notwithstanding the forceful and able submissions of counsel for the appellant, the order appealed from was reasonably open. I am not persuaded that his Honour's discretion has miscarried. I think all issues, including those arising under the insurance policy, can conveniently be dealt with at the same time. The appeal will be dismissed. As was pointed out at the hearing before me, the appellant has the right to apply to discharge the order for joinder under rule 27.07, but in stating that I do not wish to be understood as indicating that such an application should succeed on the material before me.

Supreme Court Act 1935

(In liquidation) v Alan Bond and Others

At a glance

Court

Decision date

Before

Source

Judgment (14 paragraphs)

AMP FIRE AND GENERAL INSURANCE CO LTD v. DAVID BALFOUR, PATRICK JAMES COURTNEY AND PAUL SAUNDERS No. SCGRG 93/68 Judgment No. 4365 Number of pages - 8 Practice - joinder of parties (1993) 61 SASR 492 [1993] SASC 4365 (24 December 1993)

Parties

Legislation Cited (2)

Cases Cited (4)