Federal Court Allows Joinder of Additional Defendants and Amendment

OUTCOME: Allowed

—CATCHWORDS.

Practice and procedure - joinder of additional respondents - jurisdiction to permit joinder where respondents are not necessary parties - Federal Court Rules Order 6 Rules 2 and 8.

Trade Practices Commission v. [RESPONDENT] (Distributors) [RESPONDENT] trading as_WESTCO MOTORS N.S.W.

No. N.S.W. G 34 of 1979

Coram: [NAME] J Date: 5 May, 1981 . [NAME]

IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY G. 34 of 1979 [RESPONDENT]

In the matter of - THE TRADE PRACTICES ACT [POSTCODE]

[RESPONDENT] and

[RESPONDENT]

[COMPANY] trading as_WESTCO MOv0xS ".S.W.

Defendant

JUDGE MAKING ORDER: Sheppard J. DATE OF ORDER > 2 May, 1981 WHERE MADE : Sydney

THE COURT ORDERS THAT :

1. The proceedings continue under the Rules of Court which came into force on 1 August, 1979.

2. Leave be given to the [RESPONDENT] to join as [NAME] in the proceedings [RESPONDENT] and [RESPONDENT] 3lair.

3. The [RESPONDENT] have leave to file an amended statement of claim in terms of the document initialled and dated dy Sheppard J and left with the papers.

4, Costs of the argurent on the questions of joinder and amend-

ment to be costs in the proceedings.

IN THE FEDERAL COURT OF AUSTRALIA }

NEW SOUTH WALES DISTRICT REGISTRY G. 34 of 1979 [RESPONDENT]

In the matter of -

[RESPONDENT] 1974

[RESPONDENT] COMMISSION

[RESPONDENT] and [RESPONDENT] [NAME] as #[NAME] [RESPONDENT] Defendant ; 5 May, 1981 CORAM: SHEPPARD J. 2

JUDGMENT (On application for leave to amend Statement

of Claim and to join additional [NAME])

The [RESPONDENT] in this matter seeks to file an amended Statement of Claim. By the amendment the [RESPONDENT] seeks to join as [NAME] two persons, [RESPONDENT]. [NAME] and [RESPONDENT], not yet parties to the proceedings. The [RESPONDENT] also seeks to add a further paragreph to the Statement of Claim in which is made an additional allegation of breach by the [NAME], as well as by the [NAME] to

be added, of s.48 of the Trade Practices Act 1974. The

additional [NAME] are said to be persons who have beer, directly or indirectly, knowingly concerned in or party to the contraventions of the Act alleged against the [NAME] - see s.76 of the Act.

The application 1s opposed upon the basis that there are questions concerning the Court's jurisdiction to permit the joinder of the new [NAME], and also on the ground that it ought not to allow the amendment or the joinder by reason of matters going to the exercise of its discretion.

Before I proceed, there is a preliminary zatter to be dealt with. The action was commenced by summons filed on 29 June, 1979. That was before the [NAME] rules came into force on 1 August, 1979. Rule 1 of Order 64 provides that proceedings commenced prior to the date when the [NAME] rules came into operation are to continue uncer the repesled

rules, "subject to any order or direction of the Court or a

tt

Judge ". Thus, at the time that this matter was argued the

[NAME] rules had no application. To that extent the argu-

ment in this matter proceeded upon a false basis. It sas only after I had prepared these reasons that I Loticed that the matter had been commenced before the coming into force of the [NAME] rules. I thereupor svoke to both counsel

about the problem. Having obtained instructions, they have

agreed that I should make an order pursuant to Order 64 Rule 1 that the proceedings henceforth continue under tne new or [NAME] rules. If that be done the new rules will here- after apply and the rules relied upon by counsel for the [RESPONDENT] for the joinder of the [NAME] will be applicable. As a first matter, therefore, I order by consent that the proceedings continue under the Rules of Court which came into force on 1 August, 1979.

A formal consequence of the making of that order will be that the parties will respectively become apvlicant and respondent instead of [RESPONDENT] and defendant. I have not, however, thought it necessary to change their titles 1n this judgment.

I return to deal with the questions of substance which are in issue. In the submission of coursel Zor tne plaintif? there is jurisdiction to permif the joinder of tue new Jefendants. Reliance was placed cumulatively and alternatively upor: the fro- visions of Rules 2 and 8 of Order 6 of the Rules. I deal first with submissions concerning the applicability of Order 6 Rule 8. So far as it 1s relevant the Rule vrovides as follovs:

"8.(1) Where a persor who 1s not a party - (a? ought to have been joined as a party; or

(b) 1s a person whose joinder as a party is necessary to ensure that all matters in dispute in the vro- ceeding may be effectually and completely determined and adjudicated upon, the Court, on application by hin or ey aly party or of its own motion, may order that he be added as a party and make : fal " orders for the further conduct of the proceeding.

In the submission of [NAME] the ney

defe.idants are ne1ther persons who ousht to ave been joined

2A.

as parties or persons whose joinder as parties is necessary to ensure that all matters in dispute in the proceeding may be effectually and completely determined and adjudicated upon. In my opinion that submission, i8 sound. The breaches of the Act to be relied upon against each of the [NAME] are separate and independent breaches. If the [NAME] are liable for the penalties for which the [RESPONDENT] sues their liability will be several and not joint. The action as presently constituted is one in which the [NAME] is sued for penalties for breaches of s.48 of the Act. The action is properly constituted as to parties and there is no person other than the first defendant who is interested or concerned in the relief which is Claimed. All matters in dispute in the proceed- ing may be effectually and completely determined and adjudicated upon in the proceedings as they are presently constituted.

My conclusion in this regard finds support in some of the jguagments of the members of the [NAME] in [COMPANY] v. [NAME] (1971) A.C.912. [ADDRESS] was there concerned with the then equivalent of the English Rules, Order 15 Rule 6(2). The wording of the rule was similar to that of the rule now under consideration.

It may be that there was less connection [RESPONDENT] the causes

3.

of action of the [NAME] in that case than there is

in the present. It may be also true to say that 1¢ was inappropriate, because of the provisions of the income tax legislation there in question, for the two causes of action and the two [NAME] to be joined at all in the one set of proceedings. But Lord [RESPONDENT] said that the matters

in dispute [RESPONDENT] the [NAME] and the [NAME] could be effectively and completely determined and adjudicated upon an the absence of the other party (p.930). It followed that in his opinion the presence of the other party was not shown to be "necessary" within the meaning of the rule. [NAME] expressed a similar view (p.936), adding that the rule does not give power to add a party whenever [NAME] 1s gust or convenient to do so. I refer also to what was said by Lord wilterforce (p.940),

In saying what I have I do not wish to be taken as accepting without qualification the dictum of [NAME] J.(as he was) in [NAME] v. [COMPANY] (1956) 1 «u.5. 357 at p.380. His Lordship said:

"The court might often think it convenient or desirable that some of such persons should be heard so that the court could be sure that [NAME] had found the complete answer, but nce one would sugeest that it 1s necessary to hear then for that purpose, The only reason whicn makes [NAME] necessary to make a verson a party to an action 1s so that he should be cound by the result of the action, and the juestion to be settled

therefore must be a question in the action which

cannot be effectually ana completely settled unless he 1s 2 party."

Although that dictum has been applied in later cases - see for example, The Result (1958) P.174 - [NAME] has also been criticised. I refer to Gurtner v. Circuit (1968) 2 92.5.587 at pp.595 and 602. On the other hand it should be noticed that Gurtner's case was decided before [NAME] and that the two judges critical of what Devlin J. had said in the

[NAME] case were Lord [NAME] M.R. and [NAME] L.J. (as he was).

Lord [NAME] view of the rule was not accepted by some of the members of the [NAME] in [NAME]; and, although Lord Diplock was a member of the Bench which decided [NAME], he found it unnecessary to express a view on the meaning and effect of the rule. All I wish to say 2pout [NAME] and cases in which it has been followed since [NAME] was decided (I refer to Bradvica v. Radulovic (1975) V.2.434 and McIntosh v. Williams (1979) 2 N.S.W.L.R. 543) 1s that it and the otner cases to which I have referred are cases very different from the present. They are ceses in which tne rights and/or liabilities of other parties were plainly iunvolved.

I turn to consider Order 6 Rule 2. It provides as follows:

"[NAME] may be joined as applicants or respondents in any proceeding -

(a) where -

(i) aif a separate proceeding were brought by or against eacn of them, as the case may be, some common question of iaw or of fact would arise in all tne pro- ceedings; and

"(ii) all rights to relief claimed in the proceeding (whether they are joint, several or alternative) are 1n respect of or arise out of the same transaction or series of transactions; or

(b) where the Court gives leave so to do." Rule 4(1) provides that the Court may grant leave under Rule 2 before or after the [NAME]. Rule 4(2) vrovides than an applicant may apply for leave under Rule 2 either before or after the filing of his originating process and may apply without serving notice of the motion on any person on whom the application has not been served.

I was at first inclined to think that the provisions of Rule 2 afforded the [RESPONDENT] no assistance. But on reflection I think tnat the case 1s one which comes within Rule 2(b). Originally I read the rule as if it proviced that an applicant might join [NAME] as responaents where there was 'some common question of fact or law or where the rights to relief claimed were in respect of or arose out cf the same transaction or series of transactions, and Rule 2(b) appliec to other classes of cases, Plainly the present case falls within wle 2(a) so that 1f the [NAME] had been mace originally, it woula have ceen proper. That might lead one to think that a case such as this does not fall within ~wle 2(c).

But one has to consiser the operation of Rule 4, It enables the Court to grant leave berore or after the

concer. In those circumstances [NAME] weuid seem to ne

that a case which otherwise falls within Rule 2(a) may

also fall within Rule 2(b) if the parties sought to be

added were not originally joined. What it comes down to

is that an applicant may goin pursuant to Rule 2(a) without leave 1f the [NAME] is of respondents in a proceeding

which 1s within that part of the rule. For all other goinders he requires leave, whether they be jgoincers in proceedings not falling within Rule 2(a), or goinders sought to be made after the commencement of proceedings in pro- ceedings otherwise within that provision. [NAME] did not put a positive submission to the contrary, although he said - and I agree - that the matter 1S not clear.

In the course of argument reference was made to the distinction whicn there 18 [RESPONDENT] 2 and 8. There is a question as to the need for Rule 8, if Rule 2 has the effect contended for by counsel for the [RESPONDENT]. But I think the explanation is to be found in tne historical development of Rule 8 which was a provision designed originally to overcome pleas in abatement, I have also taken into account the fact that after [NAME] cases the Englisn eguivalent of rule 8 was amended to enadle the court to permit goiander of another party wnrere it was gust or convenient so to do, These two matters must ce wiven weight, but tney do not persuade me that tae

anterpretation of the rule which I think should be acopted

is incorrect. I should add that neither counsel was able to refer me to any authority which is in point, notwithstanding that I gave leave to both counsel to put in written submissions after I reserved my decision. »siy own researches have not brought forth eny relevant authority.

I should perhaps mention that 1f I had been against the application which 1s now made, the position could have been overcome by the commencement by the [RESPONDENT] of separate proceedings against the new [NAME] and consolidation of the [NAME] proceedings and the new proceedings. without wishing to pre-empt any future exercise of discretion by any of the Judges of this Court including myself I would have thought tnet tnis would have been a clear case for the making of an order pursuant to Order 29 Rule » the words of whicn follow closely those of Order 6 Rule 2, The matters I have decided are therefore, to a degree, academic,

For the above reasons I am satisfied that I have jurisdiction to allow the [NAME] of the additional [NAME]. The question 18 [NAME] I shculd exercise my dascretion in favour of doing so. This tatter hes been mentioned on a numter of occasions. The perties have been endeavouring to arrive at an agreed statement cf fzcte.

t Ss 8 respect lave ay.egrently failed. In

the course of their discussions the legal representatives of the [RESPONDENT] raised with those of the [NAME] the question of whether that defencant would be able to meet any judgment entered against [NAME]. Eventually

a letter was written by the solicitor for the [RESPONDENT] to the solicitors for the defendant. It was in the following terms:

"I refer to proceedings in the Federal Court of Australia on 5 February 1981 and to a telephone conversation [RESPONDENT] [NAME] of your office and Mr. [RESPONDENT] of my office on

13 February 1981.

I am instructed that if the present proprietor of [RESPONDENT] [NAME]., viz. [RESPONDENT] [COMPANY], is willing to give an enforceable undertaking 1n writing preferably by deed, that [NAME] will pay any penalties or costs which the Court might impose on the defendant then the [RESPONDENT] will not seek to join Messrs. [RESPONDENT] and [RESPONDENT] as second and third [NAME] nor to amend its statement of claim by alleging that Messrs. [NAME] and [NAME] were concerned in the alleged contraventions of Section 48 of tne Trade Practices Act 1974 by the defencant company.

The other proposed amendments of the statement of claim however will stand.

Please advise me of your instructions as soon as possible."

[NAME] saic that this revealed tnat anproper pressure was being brounht to bear upon a company which 1s a stranger to tne proceedings and to the alleged breaches of the Act which are relied upon. He submitted that this demonstrated that the application now made to

goin the new [NAME] was cteing made, not for the purpose

of joining them but in an improper endeavour to persuade

the company which is a stranger to the proceedings to

Zive the undertaking which is referred to in the letter. [NAME] cross-examined

the [RESPONDENT]'s solicitor who had sworn an afficavit in

support of the application to amend, I express no view

as to the propriety or otherwise of the matters which are

referred to in the letter. I am concerned with an applic-

ation made by the [NAME] to add two

[NAME] against each of whoa it 1S said thet he 1s in

breach of provisions of the Act. Allegations to this effect

are maae in the arended statement of claim. They appear to

have some support in what 1s said in the jJudgrent of Franki J.

in [NAME] [NAME] ([COMPANY]) [COMPANY] v. [NAME]) [COMPANY] 29 A.L.R. 307. Moreover the

Commission might, without any leave, co'nnence separate pro- ceedings against the new [NAME] and seek, as [NAME] mentioned, an order consolidating them with the [NAME] proceeaings. The practicalities of the situetion are

such that notwitnstanaing resentment whicn is felt by the [NAME], the company independent of the proceed- ings and the legal representatives for those parties, the only sensible thing to do 1s to permit the joinder shich

1s sought.

10.

Insofar as the new paragrapn of the amended statement of claim is concerned, there 1S no submission by counsel for tne [NAME] that [NAME] would suffer any embarrassment as a result of its addition. My guris- diction to permit the amendment is clear.

For the reasons I have given I propose to give leave to the [RESPONDENT] to file the amended statement of claim subgect to one further matter which I now mention, In my opinion the provisions of paragraph 10 and of the particulars appended to paragrephs 13, 14 and 15 are imprecise in that they do not indicate, in the case of paragraph 10, tc whom the motor vehicles were supplied, and in the case of the particulars which of the various companies 1s being referred to.

Discussion took place about further directions to be given in relation to the filing of tne defences to the amended statenent of claim, «interrogatories, Giscovery and trial on affidavit evidence. I would prefer to give directions about these matters after the [NAME] have bee served ana have had an opportunity of considering their position, It will then be possible to make appropriate cirections wnicn will bind both the [NAME] parties «nd the new ones as well. The matter will be stoca over to a suitable date for further directions.

The costs of the argument whicn has taken place on the

question of [NAME] and amendment will te costs in the I certify that this and the '© preceding pages are rte copy of tha 1oa3ens for

proceedings.

judgment heroin of Tne riorourable Mr Justice Sneppard. a fon [NAME]

11, Dated ¢ May, igs /