Advanced Life Products Pty Ltd v Advanced Health Products & O'Neill [2011] QDC 159

1 [2011] QDC 159 DISTRICT COURT CIVIL JURISDICTION JUDGE ROBIN QC No 223 of 2011 ADVANCED LIFE PRODUCTS PTY LTD (ACN 102 284 015) Plaintiff and ADVANCED HEALTH PRODUCTS and Defendant PAUL O'NEILL Defendant and ANN O'NEILL Defendant BRISBANE ..DATE 13/07/2011 ORDER CATCHWORDS Uniform Civil Procedure Rules 1999, r 65, r 69, r 375 On application to amend claim and add a corporate defendant, Court entertains (but rejects) application by existing defendants to be removed from the proceeding - apparently a case of genuine uncertainty as to which of the defendants is truly liable -- 1 of 9 -- 2 ORDER 1 10 20 30 40 50 60 HIS HONOUR: Before the Court is an application by the plaintiff for joinder of a company called 'Advanced Health Products Pty Ltd' as second defendant, and consequential relief pursuant to Rule 375 to permit amendment of the claim and statement of claim. The application is strenuously resisted unless the addition of the proposed second defendant is accompanied by removal of the present defendants and the amended claim and statement of claim are shorn of anything resembling claims against them. The context is an unfortunate one of a father, who is the principal of the plaintiff, proceeding against a son, whose wife is the other existing defendant. They are sued as a single entity trading under the style of firm name 'Advanced Health Products'. There was a business name 'Advanced Health Products' registered, the identified person using the name being Mr O'Neill only, which led me to question the appropriateness of Mrs O'Neill being proceeded against. The state of public registers of that kind is not necessarily conclusive of the ways in which people are trading, so it would presumably have been possible for the couple to be trading under the business name rather than Mr O'Neill alone. The plaintiff is suing for the unpaid prices of goods supplied over some years to the beginning of 2009. At some point fairly early on the second defendant which has the name of the firm with „Pty Ltd‟ added was incorporated. There is nothing -- 2 of 9 -- 3 ORDER 1 10 20 30 40 50 60 to show that the plaintiff or Mr O'Neill Senior would have known anything about that. There is a hearsay affidavit from the solicitor asserting that he did not until communications preliminary to commencement of the proceeding attract assertions that the company was liable rather than individuals. Mr O'Neill Junior places before the Court documents related to the bank account of that company showing a payment in July 2007 of $9,729.95 to the plaintiff by NetBank transfer. That material on its own doesn't strike me as sufficient notice to the plaintiff that it is suing the wrong defendant. A creditor‟s concern will be to get paid, regardless of the identity of the payer from time to time (assuming this is discharged). ... HIS HONOUR: I was about to observe that the information about the payment in July 2009 came a little bit late, given that the claim was for the price of goods supplied between 2004 and January 2009. The proposed amended statement of claim indicates that the original had a cut-off date of January 2009. The amended statement of claim deletes January, so as apparently to bring in supplies later. My attempt to check the original statement of claim produced a surprising discovery that the statement of claim attached to the claim was entirely the wrong one, it shows a company -- 3 of 9 -- 4 ORDER 1 10 20 30 40 50 60 called JFO Investments Pty Ltd as plaintiff and Paul O'Neill alone as defendant and relates to an attempt to recover possession of 13 five kilogram silver bars, no doubt a confirmation of the unhappy family differences that see the parties here. My associate this minute has returned from an expedition to the Registry, which confirms that the appropriate statement of claim has been attached to JFO Investments Pty Ltd‟s claim in proceeding 224 of 2011, so we know where the missing one went. I fear it's a serious offence to unstaple things like that and fix them up. No doubt the glitch will be attended to in due course. The Court can be confident and is grateful for Mr Dowd's concession that the correct statement of claim was served. The matter boils down to the all-too-familiar situation of defendants sued in person asserting, "It's not me who might be liable. It's the company." Typically it's a company not worth suing. Whether or not that's the case so far as the second defendant is concerned is unknown. What is known is that in 2009 another company was brought into the picture replacing the second defendant. It has '(Aust)' in its name after the word 'Products' as a mark of distinction from the proposed second defendant. Mr Stunden for the plaintiff resisted Mr Dowd's attempt to have the present defendants removed from the proceeding, relying on technical objections such as the absence of a -- 4 of 9 -- 5 ORDER 1 10 20 30 40 50 60 Rule 444 letter, the absence of a formal application in that regard, which he interprets one of Mr Dowd's letters as foreshadowing, and the like. I would have been inclined to entertain such an application by Mr Dowd in the interests of efficiency and accede to it if I thought it had merit. The authorities relied on by Mr Stunden are powerful support for his contention that the existing defendants ought not to be removed. In particular, he refers to Raschke v. Suncorp Metway Insurance Limited [2005] QCA 161 at [28] where following statement of principle(from a New South Wales Court of Appeal judgment) is found. "According to well-recognised principles where a plaintiff who has sued multiple defendants, one or more of whom may be liable, shows prima facie that at least one defendant may be responsible, the Court is bound to hear the whole of the evidence before entertaining submissions by any other defendant that no case has been established against it. This is so even if the plaintiff has not called any evidence demonstrating the fault of the particular defendant. "The rationale of the rule as explained in Menzies v. Australian Iron and Steel (1952) 52 SR (NSW) 62 is that if the rule were otherwise the defendant against whom a prima facie case was shown might escape liability by addressing evidence to the effect that the defendant against whom the case had been dismissed was the party who was actually at fault. Indeed, that is what occurred in Hummerstone v. Leary [1921] 2 -- 5 of 9 -- 6 ORDER 1 10 20 30 40 50 60 KB 664, the case cited in Menzies. Obviously that would be inimical to the interests of justice." The principle Mr Stunden relies on is neatly expressed in the Laws of Australia, Civil Procedure at 5.4.250 as a principle, "that innocent defendants should not be dismissed from the action until the end of the case." From the Court's point of view today it's simply unknown what, if any, case the plaintiff may be able to make against Mrs O'Neill. In respect of her husband, there is his proprietorship of the business name and the apparent use of it in transactions or communications, a couple of which the Court has seen. They include what appears to be an acknowledgement that the amount sued for is owing in a communication addressed to 'Dad', signed 'Paul', which appears to effect a break between the two. Mr Dowd says the reference to 'AHP' ought to be construed as a reference to the company, Australian Health Products Pty Ltd. Given that there was at earlier times the business name, it seems to me there's a legitimate trial issue as to who the goods were being supplied to in the expectation of payment from that quarter. I'm not able to say that the case against Mrs O'Neill is so hopeless that the Court ought to terminate it at this stage, depriving the plaintiff of the opportunity of a trial in this connection. I think the test is that emerging from General -- 6 of 9 -- 7 ORDER 1 10 20 30 40 50 60 Steel Industries Inc v. The Commissioner for Railways, NSW (1964) 112 CLR, 125 at 129 which has often been referred to, including in a case which Mr Dowd referred the Court to, Isis Project Pty Ltd v. Clarence Street Limited [2004] NSW SC 222 at paragraph 10. I indicated to Mr Dowd that I would give reasons making it clear that the contention was strongly advanced today, as it has been in the months leading up to today, that the plaintiff has no business committing the defendants to the trouble and cost of this proceeding because they are the wrong defendant. Mr Dowd's written outline of argument sought indemnity costs on the assumption that this application would fail, or more correctly that his oral application within it to have the O'Neill's removed from the proceeding would succeed. He relied in the claim to indemnity costs on support for that on the course of correspondence, which forcefully makes the point. I think it's reasonable to treat the plaintiff from this point on, if not from an earlier point, as having had clear notice that it might be suing the wrong defendant so that it would not be at all well placed to resist a claim for indemnity costs should the O'Neills ultimately establish that they should not have been involved. The story has its confusing aspects. One which Mr Stunden relies on is allegedly conflicting assertions emanating from Mr Dowd as to which corporate entity associated with the defendants was the relevant one. A letter of 10th of December -- 7 of 9 -- 8 ORDER 1 10 20 30 40 50 60 2010 rather suggested it as Advanced Health Products {Aust) Pty Ltd, whereas a subsequent one, the 1st of March 2011 asserts that the letter of 22 December 2010 "advised that the proper defendant to these proceedings was Advanced Health Products Pty Ltd." It's very difficult to agree with that assertion since the letter didn't refer to that company at all as an indication that it's easy to get confused where entities have like names. One might refer to Mr Dowd's letter a week later which purported to serve the defence and counterclaim upon Advanced Health Products Pty Ltd, the intended reference obviously being to the plaintiff. It all produces a picture of confusion and possible obfuscation, which corroborates the claim in the plaintiff's camp that there is genuine uncertainty producing a context in which the intention that 'innocent defendants' may have to stay in to the end is appropriate. For what it's worth, there's acknowledgement in Rule 65(2) that circumstances may arise in which a plaintiff is uncertain which of multiple defendants is the one from whom there's an entitlement to relief. There will be an order in terms of the initialled draft, but this is subject to the parties being heard about the details of it. One proffered by Mr Stunden at his request contains an amendment in paragraph 2 to permit wider amendments than are -- 8 of 9 -- 9 ORDER 1 10 20 30 40 50 60 proposed in the draft amended claim, in particular some which Mr Stunden foreshadowed he will be seriously considering are claims of a Trade Practices Act nature against Mr O'Neill for what is asserted may be misrepresentations, in particular but without limitation, in the “Dear Dad” communication. I'll add to paragraph 2 “and otherwise, as it may be advised.” I'd apprehended that Mr Dowd might be troubled by the wide terms of the addition, but he's indicated he doesn't mind what the plaintiff does, that he already has it in mind to mount at the appropriate time a challenge to the validity of the amended statement of claim, which in the odd circumstances of today's matter may possibly stand as the original statement of claim. I think it's also worth confirming that it's emerged from today that if Mr Dowd can work up a more compelling case for removal of Mr and Mrs O'Neill or one of them from the proceeding, for example, by demonstrating compellingly that Mr O'Neill Senior had actual notice that he was not dealing with them, it's open then to make an application in that regard under Rule 69. In the circumstances, he's had the advantage of a dry run today. Order as per initialled draft. ----- -- 9 of 9 --