Beer & Ors v Australand Corporation (Qld) Pty Ltd & Ors [2010] QSC 369

SUPREME COURT OF QUEENSLAND CITATION: Beer & Ors v Australand Corporation (Qld) Pty Ltd & Ors [2010] QSC 369 PARTIES: In BS 1597/06: CHRISTOPHER RAYMOND PETER BEER AND DIANA JUDITH BEER (Plaintiffs) v AUSTRALAND CORPORATION (QLD) PTY LTD ACN 003 251 803 (First defendant) and XCONSULTANTS PTY LTD ACN 059 506 115 (Second defendant, by counterclaim) and DABID ROBERT BARBUTO (Third defendant, by counterclaim) AND In BS 2857/06: RONALD DESMOND TOLHURST (Plaintiff) v AUSTRALAND CORPORATION (QLD) PTY LTD ACN 003 251 803 (First defendant) and XCONSULTANTS PTY LTD ACN 059 506 115 (Second defendant, by counterclaim) and DABID ROBERT BARBUTO (Third defendant, by counterclaim) AND In BS 2856/06: ROBERT ARTHUR LIDBETTER (Plaintiff) v AUSTRALAND CORPORATION (QLD) PTY LTD ACN 003 251 803 (First defendant) and XCONSULTANTS PTY LTD ACN 059 506 115 (Second defendant, by counterclaim) and -- 1 of 11 -- 2 DABID ROBERT BARBUTO (Third defendant, by counterclaim) AND In BS 2846/06: BRIAN HENSTOCK (Plaintiff) v AUSTRALAND CORPORATION (QLD) PTY LTD ACN 003 251 803 (First defendant) and XCONSULTANTS PTY LTD ACN 059 506 115 (Second defendant, by counterclaim) and DABID ROBERT BARBUTO (Third defendant, by counterclaim) AND In BS 2843/06: RAYMOND WALALCE SIEBUHR (Plaintiff) v AUSTRALAND CORPORATION (QLD) PTY LTD ACN 003 251 803 (First defendant) and XCONSULTANTS PTY LTD ACN 059 506 115 (Second defendant, by counterclaim) and DABID ROBERT BARBUTO (Third defendant, by counterclaim) AND In BS 2844/06: PAUL ILMARI SIONEN AND LEE-ANNE TERRIE SIRONEN (Plaintiffs) v AUSTRALAND CORPORATION (QLD) PTY LTD ACN 003 251 803 (First defendant) and XCONSULTANTS PTY LTD ACN 059 506 115 (Second defendant, by counterclaim) and DABID ROBERT BARBUTO -- 2 of 11 -- 3 (Third defendant, by counterclaim) AND In BS 2842/06: ELETJE ALAN DOUMA (Plaintiff) v AUSTRALAND CORPORATION (QLD) PTY LTD ACN 003 251 803 (First defendant) and XCONSULTANTS PTY LTD ACN 059 506 115 (Second defendant, by counterclaim) and DABID ROBERT BARBUTO (Third defendant, by counterclaim) AND In BS 2642/06: WAYNE JOHN PEARCE (Plaintiff) v AUSTRALAND CORPORATION (QLD) PTY LTD ACN 003 251 803 (First defendant) and XCONSULTANTS PTY LTD ACN 059 506 115 (Second defendant, by counterclaim) and DABID ROBERT BARBUTO (Third defendant, by counterclaim) AND In BS 2638/06: PHILIP WORRALL AND GWENDOLINE JUNE WORRALL (Plaintiffs) v AUSTRALAND CORPORATION (QLD) PTY LTD ACN 003 251 803 (First defendant) and XCONSULTANTS PTY LTD ACN 059 506 115 (Second defendant, by counterclaim) and DABID ROBERT BARBUTO (Third defendant, by counterclaim) -- 3 of 11 -- 4 FILE NOS: BS 1597/06, 2844/06, 2638/06, 2642/06, 2842/06, 2843/06, 2846/06, 2856/06, 2857/06 DIVISION: Trial Division PROCEEDING: Application ORIGINATING COURT: Supreme Court at Brisbane DELIVERED ON: 28 September 2010 DELIVERED AT: Brisbane HEARING DATE: 1 September 2010 JUDGE: McMurdo J ORDER: In each proceeding the counterclaim against the plaintiffs should be struck out, from which it follows that the counterclaim as a whole will be struck out. CATCHWORDS: PROCEDURE – SUPREME COURT PROCEDURE – QUEENSLAND – PROCEDURE UNDER UNIFORM CIVIL PROCEDURE RULES AND PREDECESSORS – PLEADING – DEFENCE AND COUNTERCLAIM – where the plaintiffs have sued the first defendant, claiming damages for negligent misstatement – where it is at least arguable that third party proceedings against the second and third defendants would be out of time – where the first defendant has joined the second and third defendants by counterclaim and has counterclaimed against the plaintiffs for contributory negligence – whether the counterclaim against the plaintiffs is genuine so that there is a counterclaim to which the second and third defendants may be joined. Law Reform Act 1995 (Qld) s10 Limitation Act 1969 (NSW) s 74 Limitation Act 1985 (ACT) s 51 Limitation Act 2005 (WA) s 81 Limitation of Actions Act 1974 (Qld) s 42 Supreme Court Act 1995 (Qld) s 244(3) Uniform Civil Procedure Rules 1999 (Qld) r 178 Ainsworth & Anor v Criminal Justice Commission (1991) 175 CLR 564 Balnaves v Smith & Anor [2008] QSC 76 Benjamin v Currie [1958] VR 259 Birmingham Estates Company v Smith (1880) 13 Ch D 506 Christie v Bridgestone Australia Pty Ltd (1983) 33 SASR 377 Dewar v RE & DM Pierce Pty Ltd [2000] QSC 364 E Pellas & Co v The Neptune Marine Insurance Co (1879) 5 CPD 34 Fookes v Slaytor [1979] 1 All ER 137 Hercules Textile Mills Pty Ltd v K & H Textile Engineers Pty Ltd [1955] VLR 310 -- 4 of 11 -- 5 Harris v Gamble (1877) 6 Ch D 748 James v McCarthy [1958] QWN 32 The Lancashire and Yorkshire Railway Company v Greenwood & Sons (1888) 21 QBD 215 Newell v The National Provincial Bank of England (1876) 1 CPD 496 North Australian Aboriginal Legal Aid Service Incorporated v Liddle (1994) 118 FLR 109 O’Neill v Foster [2004] NSWSC 906 Podrebersek v Australian Iron and Steel Pty Ltd (1985) 59 ALR 529 Warner v Twining (1876) 24 WR 536 Watkins Limited v Plancorp No 6 Pty Ltd [1983] 2 Qd R 501 COUNSEL: D A Skennar for the plaintiffs L F Kelly SC with D O’Sullivan for the defendant V G Brennan for the third defendant, by counterclaim SOLICITORS: Slater & Gordan Lawyers for the plaintiffs McCullough Robertson Lawyers for the defendant McMahon Clarke Legal for the third defendant, by counterclaim [1] In each of these nine cases, the plaintiffs have sued the defendant, which I will call Australand, claiming damages for negligent misstatement. Their cases are that they were induced to purchase apartments from Australand on the basis of representations as to the likely rental return. The apartments were to be managed and let within an hotel at the Gold Coast. The rentals did not provide the return which is said to have been represented, and the plaintiffs say that they have suffered losses for which they should be compensated by an award of common law damages. [2] Australand defends these claims upon several bases. It denies that it made, or was responsible for, the alleged representations or that, at least in some respects, the brochures and other written material upon which the plaintiffs rely contained, upon a proper reading of them, such representations. Australand also denies that it ought to have known that the representations were wrong or otherwise unreliable because it relied upon the specialist advice of independent accountants, a company now called Xconsultants Pty Ltd. The employee of that company said to have been responsible for the relevant information and opinions was Mr Barbuto. [3] In each proceeding Australand has joined Xconsultants and Mr Barbuto, claiming that if Australand is liable to the plaintiffs, it should recover damages against them, or alternatively (as against Xconsultants), contribution from a tortfeasor which is also liable to the plaintiffs. Australand’s claims are clearly related to the plaintiffs’ cases against it. Ordinarily, such claims would be made by third party proceedings. However, as Australand seems to have apprehended, at least arguably third party proceedings here would be out of time. So Australand has joined Xconsultants and -- 5 of 11 -- 6 Mr Barbuto as defendants to a counterclaim. Necessarily, that required Australand to counterclaim also against the plaintiffs.1 [4] Mr Barbuto now applies to strike out the counterclaim against him. He contends that the pleading is defective and that no cause of action has yet accrued against him, because Australand’s claim against him is for damages and Australand will not suffer damage unless and until it is adjudged liable to the plaintiffs. He also contends that Australand’s counterclaim against the plaintiffs is not a counterclaim at all, so that there could be no counterclaim to which he could be joined. In my conclusion that last argument should be upheld so that it is unnecessary to consider the others. [5] Australand’s case against the plaintiffs is that their awards against Australand, if any, should be reduced for their contributory negligence. There is a suggestion of contributory negligence within Australand’s Defence, where it pleads that any reliance by the plaintiffs upon the alleged representations would have been unreasonable. However, it is within the counterclaim that Australand pleads that the plaintiffs suffered damage because they failed to take reasonable care. This case culminates with a plea within the counterclaim that: In the premises, by reason of section 10(6) of the Law Reform Act 1995 (Qld), any damages are to be reduced to the extent that the court considers [just] and equitable having regard to the Plaintiffs’ share in the responsibility for the damage. The relief counterclaimed by Australand against the plaintiffs is in these terms: And if it [be] liable to pay damages to the Plaintiffs, [Australand] claims the following relief: (1) a declaration that the Plaintiffs have suffered damage because of their own failure to take reasonable care; (2) a declaration that the damages able to be recovered by the Plaintiffs are to be reduced to the extent the court considers just and equitable having regard to the Plaintiffs’ share in the responsibility for the damage. [6] Australand’s contributory negligence case should have been pleaded within its Defence, because it is relevant, and only relevant, to the judgment upon the plaintiffs’ claim. The only relevance of contributory negligence is that it would provide a discretionary power, according to s 10(1) of the Law Reform Act 1995 (Qld), to reduce the damages recoverable by the plaintiffs. [7] The apparent explanation for Australand’s pleading contributory negligence within a counterclaim, and not within its Defence, is that it wants to make its case of contributory negligence appear to be something which is a genuine counterclaim, rather than a contrivance whereby Xconsultants and Mr Barbuto might be joined so that neither could have a defence that Australand’s claim was out of time. Section 42 of the Limitation of Actions Act 1974 (Qld) provides: 1 Uniform Civil Procedure Rules 1999 (Qld) r 178(1)(a). -- 6 of 11 -- 7 For the purposes of this Act, a claim by way of set-off or counterclaim shall be deemed to be a separate action and to have been commenced on the same date as the action in which the set-off or counterclaim is pleaded. That provision does not distinguish between defendants to a counterclaim according to whether they were or were not already parties to the proceedings. Therefore, if Australand was out of time to bring separate proceedings or third party proceedings against Mr Barbuto, nevertheless the counterclaim against him would be deemed to have been commenced when the plaintiffs commenced their proceedings, with the result that it would not be statute-barred. In some other jurisdictions, that potentially unfair result has been avoided by the corresponding provision distinguishing between defendants to a counterclaim according to whether they were already parties to the proceedings, and in the case of new parties brought in by a counterclaim, the limitation period continues to run until the counterclaim. 2 [8] Rule 178 of the Uniform Civil Procedure Rules provides, in part, as follows: 178(1) A defendant may make a counterclaim against a person other than the plaintiff (whether or not already a party to the proceeding) if – (a) the plaintiff is also made a party to the counterclaim; and (b) either – (i) the defendant alleges that the other person is liable with the plaintiff for the subject matter of the counterclaim; or (ii) the defendant claims against the other person relief relating to or connected with the original subject matter of the proceeding. (2) If a defendant counterclaims against a person who is not a party to the original proceeding, the defendant must – (a) make the counterclaim; and (b) serve the defence and counterclaim and the plaintiff’s statement of claim on the person within the time allowed for service on a plaintiff. (3) A person not a party to the original proceeding who is included as a defendant to a counterclaim becomes a party 2 Limitation Act 1985 (ACT) s 51; Limitation Act 1969 (NSW) s 74; Limitation Act 2005 (WA) s 81. The potential unfairness was explained by the New South Wales Law Reform Commission’s 1967 First Report on The Limitation of Actions, [341] as set out in O’Neill v Foster [2004] NSWSC 906, [52]. -- 7 of 11 -- 8 to the proceeding on being served with the defence and counterclaim. Australand says that its counterclaim is within subparagraph (1)(b)(ii), in that its claim against Mr Barbuto is for relief relating to or connected with the original subject matter of the proceeding. That connection is not disputed. And it says that subparagraph 1(a) has been satisfied because in each case the plaintiffs are included as parties to the counterclaim. [9] The procedure of a counterclaim is a creature of statute which originated in England in s 24(3) of the Judicature Act 1873 (UK) and in Queensland in s 4(3) of the Judicature Act 1876 (Qld). That provision has now been re-enacted, in identical terms, in s 244(3) of the Supreme Court Act 1995 (Qld), as follows: Or such equitable relief as defendant might obtain by cross bill (3) The said court and every judge thereof shall also have power to grant to any defendant in respect of any equitable estate or right or other matter of equity and also in respect of any legal estate right or title claimed or asserted by the defendant all such relief against any plaintiff or petitioner as such defendant shall have properly claimed by the defendant’s pleading and as such court or any judge thereof might grant in any suit instituted for that purpose by the same defendant against the same plaintiff or petitioner and also all such relief relating to or connected with the original subject of the cause or matter and in like manner claimed against any other person whether already a party to the same cause or matter or not who shall have duly served with notice in writing of such claim pursuant to any rule of court or any order of the court as might properly have been granted against any such person if the person had been made a defendant to a cause duly instituted by the same defendant for the like purpose. In Watkins Limited v Plancorp No 6 Pty Ltd, 3 McPherson J said that a primary purpose of this provision was to enable a defendant, in the action in which he is sued, to obtain relief against the plaintiff in respect of a claim by him which prior to this provision would have been required to be made the subject of a separate cross-action or cross-bill. Consistently with that purpose, any claim made by this procedure must be one for which the defendant could have maintained a separate action: E Pellas & Co v The Neptune Marine Insurance Co;4 Birmingham Estates Company v Smith; 5 Newell v The National Provincial Bank of England; 6 The Lancashire and Yorkshire Railway Company v Greenwood & Sons. 7 That follows from the terms of the section, by which the court is empowered to grant to any 3 [1983] 2 Qd R 501, 504. 4 (1879) 5 CPD 34. 5 (1880) 13 Ch D 506. 6 (1876) 1 CPD 496. 7 (1888) 21 QBD 215. -- 8 of 11 -- 9 defendant “… all such relief against any plaintiff … as such defendant shall have properly claimed by the defendant’s pleading and as such court or any judge thereof might grant in any suit instituted for that purpose by the same defendant against the same plaintiff …”. [10] Australand does not plead a cause of action in the traditional sense against the plaintiffs. But it might be said that it pleads a cause of action in that the availability of the declaratory remedy is itself a “new cause of action” in the sense discussed in Meagher Gummow & Lehane’s Equity Doctrines & Remedies (4th ed, 2002) at [19– 190], where the authors refer to several examples where a declaration was granted although there was no alternative remedy available to the plaintiff, including Ainsworth v Criminal Justice Commission.8 Moreover an advantage of declaratory relief, as the authors discuss at [19-180], is that it enables negative relief to be given, such as a declaration that the plaintiff has not contracted with the defendant or has not breached such a contract. Therefore in some circumstances, a declaration might be sought by and granted to a defendant, upon a counterclaim, which alleges that, contrary to what might be alleged on the plaintiff’s case, the defendant is not bound or liable in some respect. [11] However the difficulty here is in the nature of the question sought to be raised by the counterclaim against the plaintiffs. That question could only be relevant in the operation s 10(1) of the Law Reform Act 1995 (Qld) which is as follows: 10 Apportionment of liability in case of contributory negligence (1) If a person (the claimant) suffers damage partly because of the claimant’s failure to take reasonable care (contributory negligence) and partly because of the wrong of someone else – (a) a claim in relation to the damage is not defeated because of the claimant’s contributory negligence; and (b) the damages recoverable for the wrong are to be reduced to the extent the court considers just and equitable having regard to the claimant’s share in the responsibility for the damage. It is well established that contributory negligence must be raised and proved by a defendant: Hercules Textile Mills Pty Ltd v K & R Textile Engineers Pty Ltd;9 Benjamin v Currie; 10 Fookes v Slaytor;11 Christie v Bridgestone Australia Pty Ltd;12 North Australian Aboriginal Legal Aid Service Incorporated v Liddle. 13 In James v McCarthy14 Wanstall J accepted that it was a “well established rule of practice that contributory negligence must pleaded”, whilst reducing the award in that case where contributory negligence had not been pleaded but was otherwise raised by the 8 (1991) 175 CLR 564. 9 [1955] VLR 310. 10 [1958] VR 259, 263. 11 [1979] 1 All ER 137. 12 (1984) 33 SASR 377, 393. 13 (1994) 118 FLR 109. 14 [1958] QWN 32. -- 9 of 11 -- 10 defendant. 15 In the present cases then, Australand should plead the contributory negligence of the plaintiffs within its Defences. This is because the issue of contributory negligence is relevant, and only relevant, to the quantification of the plaintiffs’ judgment. [12] The legal consequence of contributory negligence cannot be determined in isolation. The exercise of the discretion under s 10(1) takes place in the context of findings not only as to the plaintiff’s fault and responsibility, but also as to the responsibility of the defendant for the plaintiffs’ damage. In Podrebersek v Australian Iron and Steel Pty Ltd,16 the High Court said: The making of an apportionment as between a plaintiff and a defendant of their respective shares in the responsibility for the damage involves a comparison both of culpability, ie of the degree of departure from the standard of care of the reasonable man (Pennington v Norris (1956) 96 CLR 10 at 16) and of the relative importance of the acts of the parties in causing the damage: Stapley v Gypsum Mines Ltd [1953] AC 663 at 682; Smith v McIntyre [1958] Tas SR 36 at 42-49 and Broadhurst v Millman [1976] VR 208 at 219, and cases there cited. It is the whole conduct of each negligent party in relation to the circumstances of the accident which must be subjected to comparative examination. The significance of the various elements involved in such an examination will vary from case to case; for example, the circumstances of some cases may be such that a comparison of the relative importance of the acts of the parties in causing the damage will be of little, if any, importance. Accordingly the appropriate extent of reduction of the plaintiffs’ damages could not be decided in advance of the determination of the plaintiffs’ case. Necessarily it must be decided as a step within that determination. [13] It can be seen then that in the present cases, there is no prospect of the grant of the declaratory relief which is Australand’s counterclaim against the plaintiffs. Once a judgment is pronounced in the action against Australand, there would be no remaining issue of contributory negligence. The plaintiffs might fail entirely in their claims against Australand, in which case of course, contributory negligence would be irrelevant. If a plaintiff were to succeed against Australand, any question involving contributory negligence would have been determined within the quantification of the plaintiff’s damages so that any proved contributory negligence would have had its impact within the judgment on the plaintiff’s claim. Either way there would be no occasion then for the grant of any declaratory relief against the plaintiffs. [14] The submissions for Australand cite what is said to be an example of a counterclaim of this kind, in Dewar v RE & DM Pierce Pty Ltd.17 Having found that there was no contributory negligence, the trial judge there dismissed a counterclaim which had 15 Which I held to be reasoning which was consistent with that and the other cases cited above, in Balnaves v Smith & anor [2008] QSC 76. 16 (1985) 59 ALR 529, 532-533. 17 [2000] QSC 364. -- 10 of 11 -- 11 pleaded that the plaintiff had failed to take care for his own safety. However, that failure by the plaintiff was relied upon on two legal bases. 18 It was pleaded within the defence as contributory negligence. It was also pleaded within the counterclaim as a breach by the plaintiff employee of his contract of employment with the defendant, under which, it was alleged, he was bound to take care for his own safety and for which he was liable to his employer for damages for breach of contract. It was not a case where contributory negligence was pleaded by a counterclaim. [15] In Watkins Limited v Plancorp No 6, McPherson J cautioned as to the misuse of the procedure of a counterclaim, where there was no proper claim against the plaintiff. He said: 19 It is, however, fundamental to s 4(3) of The Judicature Act that no counterclaim is maintainable against a non-party unless the plaintiff is also a party to it or unless the relief sought is claimed against the plaintiff as well as against the non-party … It is not to be supposed that in every case the ability of the defendant to frame a claim as one for a declaration against the plaintiff will justify a counterclaim of the kind here in question … . In the present case, Australand has sought to give its contributory negligence case the appearance of a distinct cause of action, by pleading the material facts under the heading of a counterclaim and by claiming declarations which could not determine the respective positions of the plaintiffs and the defendant and which could not be relevant or appropriate once the plaintiffs’ claim is determined. Australand’s Defence is deficient by its non-inclusion of the contributory negligence case, and its purported counterclaim against the plaintiffs is, in substance, no such thing. The counterclaim against the plaintiffs should be struck out, from which it follows that the counterclaim as a whole will be struck out. [16] I will hear the parties to any further orders including costs. 18 Ibid, [4], [40]. 19 [1983] 2 Qd R 501, 506. -- 11 of 11 --