Raiz & Versa-Tile Pty Limited v Vickers & Patel & M.O.F.S. Pty Limited [2003] ACTSC 109 (12 December 2003)

Last Updated: 22 January 2004

DANNY-GLEN RAIZ AND VERSA-TILE PTY LIMITED v PETER GREGORY VICKERS AND CHANDRA PATEL AND M.O.F.S. PTY LIMITED

[2003] ACTSC 109 (12 December 2003)

PROCEDURE - pleadings - amendment - raising of new cause of action outside limitation period

TRADE PRACTICES - whether cause of action assignable

Civil Law (Wrongs) Act 2002

Law Reform (Misrepresentation) Act 1977

Trade Practices Act 1974, s 52; s 53A

Fair Trading Act 1992, s 46

Weldon v Neal (1887) 19 QBD 394

Nectaria Nominees Pty Limited v Commonwealth of Australia [1992] ACTSC 128; (1992) 111 FLR 459

State of Western Australia v Wardley Australia Limited (1991) 30 FCR 245

Cockerill v Westpac Banking Corporation (1991) 32 FCR 36

Park v Allied Mortgage Corporation Limited (1993) ATPR 46-105

Dawson v Great Northern and City Railway Co [1905] 1 KB 260 at 270-1

Defries v Milne (1913) 1 Ch 98

Poulton v The Commonwealth [1952] HCA 70; (1953) 89 CLR 540 at 602

Chapman v Luminis Pty Limited (No. 5) [2001] FCA 1106

No SC 20 of 2003

Coram: Master Harper

Supreme Court of the ACT

Date: 12 December 2003

IN THE SUPREME COURT OF THE )

) No SC 20 of 2003

AUSTRALIAN CAPITAL TERRITORY )

BETWEEN: DANNY-GLEN RAIZ

First Plaintiff

VERSA-TILE PTY LIMITED

Second Plaintiff

AND: PETER GREGORY VICKERS

First Defendant

CHANDRA PATEL

Second Defendnat

M.O.F.S. PTY LIMITED

Third Defendnat

ORDER

Coram: Master Harper

Date: 12 December 2003

Place: Canberra

THE COURT ORDERS THAT:

1. The application be adjourned to 6 February 2004 for further submissions.

1. This is an application by the plaintiffs for leave to make a number of amendments to the statement of claim, which has already been amended twice.

2. The first plaintiff is a medical practitioner specialising as an anaesthetist. I take it that he is the controlling director of the second plaintiff, although no relationship between the plaintiffs is pleaded.

3. It is pleaded that on 1 July 1997 the third defendant entered a partnership agreement with a company named Oslead Pty Limited (whose Australian company number should in my view be inserted where the company is first mentioned at paragraph 4 of the statement of claim). The partnership business was to be the provision of surgical services under the name Canberra Surgicentre.

4. Some confusion in following the factual allegations contained in the statement of claim arises from the wording of paragraph 6, which asserts that the first plaintiff was, as well as being an anaesthetist:

A director and employee South Canberra Anaesthesia Pty Limited (`South Canberra Anaesthesia') a company incorporated in the Australian Capital Territory trading as Capital Anaesthetics (hereinafter `Capital Anaesthetics')

5. Again, it is my view that the Australian company number of South Canberra Anaesthesia Pty Limited should be included. The name of the company does not appear again in the statement of claim, so that there seems no purpose in the abbreviation which follows it. Because of the inclusion of that abbreviation, it is unclear whether the second abbreviation `Capital Anaesthetics' is intended to refer, where those words are used subsequently in the pleading, to the company or the business name.

6. It is then pleaded that in August 1997, the third defendant and Oslead Pty Limited agreed to assign to Capital Anaesthetics a share in the partnership. Confusingly, there was in evidence a copy of the assignment agreement, but showing the assignee, described as the incoming partner, as Capital Anaesthetics Pty Limited ACN 078 501 881. No reference in the assignment agreement is made to South Canberra Anaesthesia Pty Limited. It seems to me that paragraph 6 should be amended to overcome this confusion.

7. It is asserted that the first defendant was a director and secretary of the third defendant and that the second defendant was an agent of Oslead Pty Limited. The plaintiffs allege that various representations were made to the first plaintiff and to `Capital Anaesthetics', which, on the basis of the assignment agreement, seems to be intended to refer to Capital Anaesthetics Pty Limited ACN 078 501 881, by the first and second defendants, which were misleading and deceptive. In reliance on the representations, the plaintiffs assert that Capital Anaesthetics entered the assignment agreement, and lost money; and that the first plaintiff lent money to Capital Anaesthetics to assist it in joining the partnership, and also lost money.

8. The major amendment sought by the plaintiff is to clause 32 of the statement of claim, which is presently in the following terms:

On or about 7 December 1999 Capital Anaesthetics assigned its interest in the partnership to Versa Tile Pty Ltd which company continued to trade as Capital Anaesthetics.

It is this assignment upon which the entitlement of the second plaintiff to bring the action is grounded. There is no evidence as to when the second plaintiff was incorporated but it seems clear that it had nothing to do with the partnership or with the defendants until the assignment.

9. Whilst there was no documentation in evidence in relation to the asserted assignment of 7 December 1999, the case of the plaintiffs is that the assignment was of all of the assignor's rights and interests: its interest in the partnership was no more than one of its assets. It appears from correspondence between the solicitors for the parties that the drafting of clause 32 was capable of giving rise to an unintended and unnecessary issue, namely whether or not the cause of action fell within the assignor's interest in the partnership. To overcome this problem, the plaintiffs seek to amend clause 32 so as to read as follows:

On or about 7 December 1999:

(a) Capital Anaesthetics assigned to Versa Tile Pty Limited:

(i) all its rights and interests; including

(ii) its interests in the partnership

(b) Versa Tile Pty Limited;

(i) became a partner in the partnership business; in addition or in the alternative

(ii) took an assignment of all Capital Anaesthetic's interests and in particular its interests in the partnership; and

(iii) commenced to trade as Capital Anaesthetics and continued to do so until termination of the partnership.

10. Less contentious amendments are also sought to clause 25, which presently reads as follows:

Further and in the alternative the plaintiffs are entitled to recission of the assignment agreement and other relief under the Law Reform (Misrepresentation) Act and seek relief therein.

The first amendment is the substitution of the second plaintiff for the plaintiffs, which is not opposed. The second issue relates to the title of the legislation. With effect from 1 November 2002, chapter 13 of the Civil Law (Wrongs) Act 2002 replaced the Law Reform (Misrepresentation) Act 1977: the operative provisions remain identical. The question is whether the name of the Act should be changed in the statement of claim. Counsel for the second defendant submits not, because the earlier legislation was in force at the time of the conduct complained of. I think that this is correct: if I am wrong, it would make no difference, because the intention of the paragraph is clear.

11. There is some room for argument as to whether the proposed amendment to clause 32 would add a cause of action outside the limitation period. In the absence of a specific power in the rules, this would be impermissible: Weldon v Neal (1887) 19 QBD 394. However, Order 32 gives the Court a discretion to permit an amendment which would have this effect. The applicable sub-rules are:

1(6) If an originating application identifies a cause of action arising out of any facts, an amendment may be made having the effect of adding or substituting a new cause of action arising out of the same or substantially the same facts and specifying the relief claimed in respect of that new cause of action.

(7) Where-

(a) any relevant period of limitation has expired after an action has commenced; and

(b) after that expiration, an application for leave to amend a document in accordance with sub-rule... 6 is made;

(c) leave may be given notwithstanding that the period of limitation has expired if the Court considers it just to do so.

12. Counsel for the plaintiffs submitted in the first instance that whilst the asserted representations were made prior to the assignment agreement in August 1997, and thus more than six years ago, the damage was probably suffered within the limitation period.

13. Counsel for the plaintiffs further submitted that the amendment did not give rise to a new cause of action, because it arose out of the same or substantially the same facts as the existing cause of action. Counsel relied upon a decision of this Court, Nectaria Nominees Pty Limited v Commonwealth of Australia [1992] ACTSC 128; (1992) 111 FLR 459, in which Higgins J, as his Honour then was, permitted the plaintiffs to add a count under sections 52 of the Trade Practices Act 1974 outside the limitation period imposed by that Act, where the original action, commenced in time, had been brought pursuant to s 53A of the Act. The fresh count relied on the facts originally pleaded. His Honour took the view that as the same facts were relied on, the amendment would not be regarded as raising a new cause of action so as to give rise to any inconsistency with the rule in Weldon v Neal. His Honour referred to the decision of the Federal Court of Australia in State of Western Australia v Wardley Australia Limited (1991) 30 FCR 245, where the Court, constituted by Spender, Gummow and Lee JJ, drew a distinction between the concept of a cause of action and the wider concept of a matter. The Court's jurisdiction extended to the determination of all claims and issues comprising the whole of the matter. Hence the Court had power to permit amendments within the `matter' before the Court unfettered by the rule in Weldon v Neal.

14. His Honour also referred to Cockerill v Westpac Banking Corporation (1991) 32 FCR 36, where Pincus J, following Wardley, said:

... once it is accepted that limitation provisions are complied with by the timely institution of a suit relating to an identifiable matter, it would seem to follow that elaborations of the matter by the making of additional claims, or claims by or against additional parties, within its scope, are unaffected by time limitation provisions.

15. Whilst the concept of `matter' is of particular relevance in the Federal Court in determining the limits of its jurisdiction (the term is rooted in Chapter III of the Constitution and has no precise or immediate counterpart in the general law: Wardley at 266). Higgins J had no difficulty in applying the principle in a trade practices action in this Court.

16. A more fundamental issue which arose during argument is whether a trade practices cause of action (or, as here, its equivalent under the Fair Trading Act 1992) is capable of assignment. In Park v Allied Mortgage Corporation Limited (1993) ATPR 46-105, Davies J said:

In my opinion, a right to claim damages under sections 82 and 87 of the Trade Practices Act 1974 is, in general, a bare right of action which cannot be assigned. I am not speaking of an assignment such as may occur on the bankruptcy or death of a person or on the merger of a company into another entity. Absent such special circumstances, a right to claim under sections 82 and 87 cannot, in my opinion, be assigned... The section does not allow for the award of damages in respect of a loss which was not suffered by any party to the proceedings.

His Honour referred in support of his conclusion to Dawson v Great Northern and City Railway Co [1905] 1 KB 260 at 270-1, Defries v Milne (1913) 1 Ch 98 and Poulton v The Commonwealth [1952] HCA 70; (1953) 89 CLR 540 at 602.

17. Von Doussa J followed Park in Chapman v Luminis Pty Limited (No. 5) [2001] FCA 1106 noting at paragraph 204 that it had been consistently held in the Federal Court that the cause of action created by s 82 of the Trade Practices Act cannot be assigned and must be enforced by action by the person who suffers loss or damage. His Honour noted at paragraph 207 that the applicable provisions of the Fair Trading Acts were in terms indistinguishable from s 82. The provision in the Territory appears to be s 46 of the Fair Trading Act 1992.

18. Although no authority has been cited in relation to the provisions of the Law Reform (Misrepresentation) Act 1977 upon which the plaintiffs rely, my provisional view would be that a cause of action under that Act falls into the same general class as a cause of action under the Trade Practices Act or the Fair Trading Act, and is not capable of assignment other than by death, bankruptcy or similar circumstances.

19. It follows that I am provisionally of the view that the causes of action pleaded by the second plaintiff, including any fresh cause of action which would follow if the amendment to paragraph 32 were granted, are incapable of assignment. As the second plaintiff claims solely in its capacity as an assignee, it would follow that the second plaintiff's action against the first and second defendants could not succeed.

20. The third defendant has not appeared and there is no evidence that it has been served. It did not participate in the hearing of the application. I have not considered whether or not the second plaintiff's claim against the third defendant would also be bound to fail if my provisional conclusion is correct.

21. If I am correct, the amendments sought would be futile, and it seems inevitable that the first and second defendants would succeed in an application for summary judgment against the second plaintiff. As the application before me is simply one by the plaintiffs seeking amendments to the statement of claim, and there is no application by the first and second defendants, fairness dictates that I should publish my provisional conclusions, and permit the second plaintiff an opportunity to make further submissions. Although the issue as to whether the second plaintiff's cause of action was capable of assignment arose during argument, it was not dealt with in the written submissions and there may be further considerations to be taken into account before the Court arrives at a final decision.

22. Having regard to the conclusions I have provisionally reached, it is inappropriate for me to make any orders until the parties have had an opportunity to consider these reasons.

23. The application will be adjourned to the first motion day in the New Year, 6 February 2004, for further submissions.

I certify that the preceding twenty-three (23) numbered paragraphs are a true copy of the Reasons for Decision herein of Master Harper.

Associate:

Date: 12 December 2003

Counsel for the plaintiff Mr I W Nash

Solicitor for the plaintiff Bradley Allen

Counsel for the first defendant Mr E A Lucas

Solicitor for the first defendant Colquhoun Murphy

Counsel for the second defendant Mr I Gillespie-Jones

Solicitor for the second defendant Gillespie-Jones and Co

Date of hearing 14 November 2003

Date of decision 12 December 2003