Vintage Developments Pty Limited v GHD Pty Limited (No 3) [2007] FCA 72 (7 March 2007)

Last Updated: 8 March 2007

FEDERAL COURT OF AUSTRALIA

Vintage Developments Pty Limited v GHD Pty Limited (No 3) [2007] FCA 72

VINTAGE DEVELOPMENTS PTY LIMITED (ACN 067 567 006) AND ERROL INVESTMENTS PTY LIMITED (ACN 001 183 277) v GHD PTY LIMITED (ACN 008 488 373), HUNTER VALLEY ESTATES PTY LTD (ACN 010 857 717) AND GRANT HEATON JOHNSTON

NSD 1262 OF 2005

BENNETT J
7 MARCH 2007
SYDNEY

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	NSD 1262 OF 2005

BETWEEN:	VINTAGE DEVELOPMENTS PTY LIMITED (ACN 067 567 006) First Applicant ERROL INVESTMENTS PTY LIMITED (ACN 001 183 277) Second Applicant
AND:	GHD PTY LIMITED (ACN 008 488 373) First Respondent / Cross–Claimant HUNTER VALLEY ESTATES PTY LTD (ACN 010 857 717) Second Respondent / Cross–Respondent GRANT HEATON JOHNSTON Third Respondent

JUDGE:	BENNETT J
DATE OF ORDER:	7 MARCH 2007
WHERE MADE:	SYDNEY

THE COURT ORDERS THAT:

1. The applicants and the third respondent are to bear their own costs of the notice of motion dated 9 December 2005.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	NSD 1262 OF 2005

BETWEEN:	VINTAGE DEVELOPMENTS PTY LIMITED (ACN 067 567 006) First Applicant ERROL INVESTMENTS PTY LIMITED (ACN 001 183 277) Second Applicant
AND:	GHD PTY LIMITED (ACN 008 488 373) First Respondent / Cross–Claimant HUNTER VALLEY ESTATES PTY LTD (ACN 010 857 717) Second Respondent / Cross–Respondent GRANT HEATON JOHNSTON Third Respondent

JUDGE:	BENNETT J
DATE:	7 MARCH 2007
PLACE:	SYDNEY

REASONS FOR JUDGMENT

1 On 11 May 2006, the Court granted leave to the applicants (together ‘Vintage’) to join Grant Johnston (‘Mr Johnston’) as a third respondent to these proceedings: Vintage Developments Pty Ltd v GHD Pty Limited [2006] FCA 531 (‘Vintage (No 1)’). Leave to join Mr Johnston was granted because the pleadings disclosed an arguable case against him and I was not satisfied that the pleaded cause of action was outside the limitation period. At issue are the costs of Vintage’s notice of motion for leave to effect the joinder. Mr Johnston submits that those costs should be costs awarded in his favour or, in the alternative, costs in the cause. Vintage seeks an order that Mr Johnston pay 50% of its costs.

2 The matters raised by Mr Johnston in opposition to Vintage’s motion for joinder may be summarised as follows. An amended application and further amended statement of claim naming Mr Johnston as a respondent was filed by Vintage on 2 December 2005. The limitation period for a cause of action against Mr Johnston expired on 4 December 2005. Leave had not then been given to authorise amendments which pleaded a cause of action against Mr Johnston. By notice of motion dated 9 December 2005, Vintage relevantly sought leave to join Mr Johnston pursuant to O 6 r 2 of the Federal Court Rules. Mr Johnston submitted that such leave should be refused because the case proposed to be pleaded against him was statute barred. I rejected that submission: Vintage (No 1) at [33].

3 An appeal by Mr Johnston to the Full Court was dismissed: Johnston v Vintage Developments Pty Limited [2006] FCAFC 171. The Full Court granted leave to Vintage to file an amended application and further amended statement of claim in the form filed on 2 December 2005 nunc pro tunc.

4 Vintage submits that it is appropriate for Mr Johnston to pay a proportion of its costs because:

• it succeeded on the motion for joinder;
• four additional grounds of opposition to joinder, with no prospects of success, were unreasonably included in Mr Johnston’s written submissions;
• there was a sound basis in the evidence for pleadings directed against Mr Johnston;
• Mr Johnston was urged by Vintage, for reasons which were ultimately consistent with the findings of the Court, to consent to his joinder prior to the hearing of the motion. It was unreasonable for Mr Johnston to contest the joinder.

5 Mr Johnston submits that no order as to costs should now be made as there has been no final order; a limitation defence may ultimately be successful. If orders as to costs are made, Mr Johnston submits that Vintage should pay his costs. He submits that a case should have been pleaded against him at the outset of these proceedings, in which case the motion for joinder would have been unnecessary.

6 Additional grounds of opposition, unrelated to the limitation period, were included in Mr Johnston’s submissions and were unsuccessful. That must, however, be balanced with the fact that a substantive dispute would not have arisen but for Vintage’s failure to seek the Court’s leave to file and serve an amended application and further amended statement of claim on 2 December 2005 pleading a cause of action against Mr Johnston. As the Full Court observed, the Court ought to have been asked to grant such leave (Johnston at [34]). Further, the need to file a motion seeking the Court’s consent to join Mr Johnston would have been avoided in its entirety had Mr Johnston originally been named as a respondent in these proceedings.

7 Mr Johnston’s submission that it is inappropriate now to make an order as to costs is not accepted. If Mr Johnston is ultimately successful in raising a limitation defence, such success will not be founded on the procedural irregularity the subject of argument in Vintage (No 1) and Johnston which has now been cured.

8 The appropriate order is that Vintage and Mr Johnston should each bear their own costs of Vintage’s motion for leave to join Mr Johnston.

I certify that the preceding eight (8) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Bennett.

Associate:

Dated: 7 March 2007

Counsel for the Applicants:	R P L Lancaster
Solicitor for the Applicants:	Baker & McKenzie
Counsel for the First Respondent:	B McManus
Solicitor for the First Respondent:	Colin Biggers & Paisley
Counsel for the Second Respondent:	K Morgan
Solicitor for the Second Respondent:	Horton Rhodes
Counsel for the Third Respondent:	J E Richards
Solicitor for the Third Respondent:	Shand & Associates
Date of Hearing:	29 March 2006 and 7 April 2006
Date of Final Submissions:	18 May 2006
Date of Judgment:	7 March 2007