Cormie v Orchard & Ebsworth & Ebsworth [2001] QSC 272

,:I, ~~39J . . SCO\ ·~7ct State Reporting Queensland Government ~ .. Bure au ~ Department oi justlre :ind Atte<my-G=ral Transcript of Proceedings Copyright in this transcript is vested in the Crown. Copies thereof must not be made or sold without the written authority of the Director, State Reporting Bureau. SUPREME COURT OF QUEENSLAND CIVIL JURISDICTION MULLINS J No 512033 of 1998 ANNETTE CHRISTINE CORMIE and MARK RAYMOND ORCHARD and EBSWORTH & EBSWORTH (a firm) BRISBANE .. DATE 20/07/2001 JUDGMENT Floor, The Law Courts, George Street, Brisbane, a. 4000 1 REVISED COPIES ISSUED State Reporting Bureau Oat~/"{-/ 0 I Plaintiff First Defendant Second Defendant Telephone: (07} 3247 436-0 Fax: (07) 3247 5532 -- 1 of 17 -- 20072001 Tl/CAL14 M/T 1/2001 (Mullins J) HER HONOUR: The plaintiff retained the first defendant as her solicitor in or about September 1990, to act on her behalf in a personal injuries action for damages for an injury sustained to her back during a fall in Moree in the State of New South Wales in or about July 1985. An action was commenced in the Moree District Court on 15 July 1991. That action was settled in November 1995 for $60,000. The plaintiff alleges that she settled the action because it appeared that it had not been commenced within time and that if the action had been commenced within time the plaintiff would have recovered damages in excess of $160,000. She is, therefore, pursuing the first defendant in these proceedings, which were commenced on 24 December 1998, for damages for the lost opportunity to pursue her New South Wales claim for damages or settle it at a reasonable amount. In or about November 1995 the plaintiff contacted Ebsworth and Ebsworth, which were the second defendant in these proceedings and to whom I shall refer as the second 1 10 20 30 4 defendant, to investigate the possibility of the plaintiff making a claim for professional negligence against the first· 50 defendant. The plaintiff alleges that the second defendant failed to advise her that she had six years to commence proceedings against the first defendant from June 1991 and that the 2 JUDGMENT 60 -- 2 of 17 -- 20072001 Tl/CALl4 M/T l/2001 (Mullins J) second defendant gave negligent or misleading or deceptive advice that the limitation period for an action against the first defendant expired on 3 July 1994. The plaintiff, therefore, in these proceedings sued the second defendant in the alternative to the first defendant on the basis that, as a consequence of the negligence and/or misleading or deceptive advice of the second defendant, the plaintiff lost an entitlement to claim against the first defendant for damages for the loss of opportunity to pursue a claim for damages for personal injuries in the New South Wales action. The plaintiff's claims against the first and second defendants were in the alternative, as the plaintiff's action against the second defendant was only necessary to pursue if the plaintiff's claim against the first defendant '· was Statute barred. Paragraph l9A of the third further amended statement of claim suggests that the plaintiff believed that her action against the first defendant was Statute barred. Paragraph 19A states: 1 10 20 30 40 - 50 "Had the plaintiff been advised of the matters in the preceding paragraph [about commencing proceedings against the first defendant at any time up until 2 July 1997] she would have commenced proceedings within the relevant limitation period for damages for loss of opportunity against the first defendant and recover damages for loss of opportunity against the first defendant, assessed as a minimum of 1 per cent to a maximum of 100 per cent of the likely award of damages for personal injuries calculated in paragraph 21 below." 60 3 JUDGMENT -- 3 of 17 -- 20072001 Tl/CAL14 M/T 1/2001 (Mullins J) By 9 May 2001 the pleadings in the current proceedings were closed and a request for trial date had been filed. The solicitors for the plaintiff concluded that, because the first defendant had not raised the limitation period in its defence in these proceedings, the plaintiff could not succeed against the second defendant and obtained the plaintiff's instructions to discontinue the claim against the second defendant. It is necessary to refer in full to the correspondence which passed between the plaintiff's solicitor and the second defendant's solicitor. The letter from the plaintiff's solicitor to the second defendant's solicitor, dated 9 May 2001, without formal parts states: "Based on the current pleadings and given that the matter has now been certified as ready for trial, our client offers to discontinue her claim against your client with each party bearing its own costs. The offer is open until 4.00 p.m. on Friday 18 May 2001. No such offer is being made to the first defendant." The le~ter sent in response by the second defendant's solicitors, dated 9 May 2001, without formal parts states: "I have your letter of 9 May 2001. Your offer to settle is accepted. I enclose Discontinuance against the Second Defendant for your execution and return without delay. You will be advised of its filing date in due course." 4 JUDGMENT 1 10 20 30 4 . 50 60 -- 4 of 17 -- 20072001 Tl/CAL14 M/T 1/2001 (Mullins J) The Notice of Discontinuance, which was prepared by the second defendant's solicitors, is based on Form 27 of the UCPR. It was executed on 9 May 2001 by the second defendant's solicitors under the statement, "The second defendant consents to this discontinuance." It was executed by the solicitors for the plaintiff on 11 May 2001 and subsequently filed in the Court. On 9 May 2001 Mr Dearlove, of the second defendant's solicitors, informed Mr Miller, of the first defendant's solicitors, by telephone that the plaintiff had offered to discontinue proceedings against the second defendant and that the second defendant will be taking no further part in the action and that a Discontinuance would be filed in the Court. On 11 May 2001 the plaintiff's solicitors sent a letter to the first defendant's solicitors in the following terms: 1 10 20 30 "As a matter of courtesy we advise that our client has 40 discontinued her claim against the second defendant. Our client is proceeding with her claim against your client." It is conceded by the plaintiff that her solicitors deliberately abstained from informing the first defendant of the reason why the claim was discontinued against the second defendant as it would have brought the first defendant's attention to the limitation period not being pleaded. On 30 May 2001 the action by the plaintiff against the first defendant was set down for a four day trial commencing on 30 5 JUDGMENT . 50 60 -- 5 of 17 -- 20072001 Tl/CAL14 M/T 1/2001 (Mullins J) July 2001. During the preparation for trial the first defendant realised that his defence did not plead the limitation period. By a letter dated 3 July 2001 the first defendant's solicitors gave notice to the plaintiff's solicitors of an intention to amend the defence to plead that the plaintiff's cause of action against the defendant was Statute barred prior to the issue of the writ. The plaintiff filed an application on 3 July 2001 seeking leave to bring the application and leave to amend the defence and plead that the plaintiff's action was Statute barred. That application was returnable on 12 July 2001. As the action had been discontinued against the second defendant the application was not served on the second defendant. On 12 July 2001 her Honour, Justice Atkinson, gave leave to the first defendant to amend the application in terms 1 10 20 30 agreeable between senior counsel for the first defendant and 4 the plaintiff, ·adjourned the application until 19 July 2001 and gave directions that the application, affidavits and submissions be served on the second defendant. The amended application was filed on 16 July 2001. Paragraphs 2A and 2B of that amended application seek: "2A. That pursuant to rules 309(2) and 304(2) of the Uniform Civil Procedure Rules 1999, the filing of the purported notice discontinuance in exhibit "MH2" to the Affidavit of Michal Horvath sworn 12 July 2001 did not effect any discontinuance by the plaintiff of her claim 6 JUDGMENT . 50 60 -- 6 of 17 -- 20072001 Tl/CAL14 M/T 1/2001 (Mullins J) against the second defendant Ebsworth & Ebsworth (a firm). 2B. In the alternative to 2A, that Ebsworth & Ebsworth (a firm) be joined as second defendant." The main issue on the amended application is whether the first defendant should be given leave to amend to plead the limitation defence. It is common ground between the plaintiff and the first defendant that the amendment for which the first defendant applies would raise, or arguably would raise, a complete defence to all of the plaintiff's claims against the first defendant. The second defendant responded to this amended application and appeared on the hearing of the application on 19 July 2001. The matter which requires examination on whether the requisite leave should be given to the first defendant is th~ question of prejudice to the plaintiff. Arguably the plaintiff would be prejudiced if she had compromised her claim against the second defendant on the basis that the first defendant was not intending to plead the limitation defence. It is, therefore, necessary to consider the effect of the 1 10 20 30 40 Notice of Discontinuance. The first defendant's submission · 50 is that the Notice of Discontinuance was required, by Rule 304(2), to be with the consent of the first defendant. Form 27 specifically notes that if there is more than one defendant each must sign the consent in the terms of the consent set out in the form of the Notice of Discontinuance. 60 7 JUDGMENT -- 7 of 17 -- 20072001 Tl/CAL14 M/T 1/2001 (Mullins J) It was, therefore, an irregularity that the Notice of Discontinuance that was filed did not contain the written consent of the first defendant. It was argued by the plaintiff and the second defendant that the first defendant had, in fact, consented to the discontinuance as a result of the fact of discontinuance being conveyed to the first defendant's solicitors·on 9 May 2001 by the second defendant's solicitors and confirmation in writing by the plaintiff's solicitors to the first defendant's solicitors on 11 May 2001 and there was both no opposition expressed by the first defendant to discontinuance of the claim by the plaintiff against the second defendant and no insistence by the first defendant that it formally consent in writing to the discontinuance. Rule 371(1) of the UCPR expresses that a failure to comply with the rules is an irregularity and does not render the step taken a nullity, but the Court is given power under 1 10 20 30 rule 371(2) of the UCPR to make orders in respect of that 4 irregular step, including declaring that it is either effectual or ineffectual. The order sought in paragraph 2A of the amended application is analogous to such an order that the filing of the notice · 50 of discontinuance was ineffectual. There was no obligation on either the plaintiff or the second defendant to disclose to the first defendant why the discontinuance was being effected. Despite the failure of the plaintiff to seek the formal written consent of the first defendant to the 8 JUDGMENT 60 -- 8 of 17 -- 20072001 T02/JW4 M/T 1/2001 (Mullins J) discontinuance, contemporaneous notice of the fact of discontinuance to the first defendant meant that the first defendant could easily have sought to have the notice set aside at the stage of being advised about it. In those circumstances, when the first defendant had no objection to the notice of discontinuance at the time it was filed, it is too late for the first defendant two months later, when it realises why the plaintiff discontinued against the second defendant, to seek to rely on the lack of written consent from the first defendant to the discontinuance. I therefore will not grant the order sought in paragraph 2A of the amended application. Paragraph 2B of the amended application raises the issue of what is the true effect of the agreement between the plaintiff and the second defendant that resulted in the filing of the notice of discontinuance. The UCPR has not changed the nature of discontinuance which was reflected in order 31 rule 1 of the Rules of the Supreme 1 10 20 30 40 Court. Order 31 rule 1(2) provided that discontinuance · 50 shall not be a defence to any subsequent action for the same cause. That is also now expressly embodied in rule 310(1) of the UCPR. Discontinuance is not the same as obtaining judgment. 9 JUDGMENT 60 -- 9 of 17 -- 20072001 T02/JW4 M/T 1/2001 (Mullins J) There is a distinction between discontinuance of a proceeding and compromising the underlying rights of action. In "The Owners of the Cargo of the Kronprinz" v. "The Owners of the Kronprinz" (1887) 12 Appeal cases 256, after a collision between the ship Kronprinz and the ship Ardandhu, the owners of the Kronprinz brought an action for damages in the Admiralty Division against the owners of the Ardandhu. The solicitors for both parties then signed a document in which it was stated that the solicitors for the defendant consented to the action being discontinued without costs on the ground of inevitable accident. On the following day an order was made in the registry in the terms that, "Upon consent of both solicitors it is ordered that this action be discontinued without costs on the ground of inevitable accident." 1 10 20 30 An action was then brought by the owners of the cargo of the 4 Kronprinz against the owners of the Ardandhu for damage arising out of the same coliision. That action was tried and it was found both vessels were to blame and the plaintiffs were entitled to recover half their damages from the defendants. · 50 The owners of the Ardandhu then brought an action for limitation of liability and obtained judgment limiting their liability and paid the corresponding sum into Court. Both the owners of the cargo of the Kronprinz and the owners of 10 JUDGMENT 60 -- 10 of 17 -- 20072001 T02/JW4 M/T 1/2001 (Mullins J) the Kronprinz made a claim in respect of that fund. The cargo owners objected to the claim by the owners of the Kronprinz. The issue which was ultimately determined on appeal was the meaning of the agreement between the parties in relation to the discontinuance of the first action and the effect of the order which carried it out. All that the Court was construing was the agreement and the order. Lord Halsbury stated, at pages 259-260: "But it is important to observe that the parties entering into the arrangement were the two solicitors, who must be taken to be familiar with the effect and meaning of the forms which they were using. It being conceded that as matter of law the form which they adopted was one which allowed all matters to be open and did not conclude the rights of the parties, the question of the form which they used becomes very material in construing their meaning. It would have been easy to have said that 'this action should be dismissed;' and if they had said that, it is admitted that as between these two parties a bar would have been created which would have prevented any further proceeding. But they deliberately (for people must be supposed to intend the reasonable consequences of their acts) adopted language which can only be used if it is the intention of the parties to leave themselves at large so as to reassert their rights if they please. 11 Lord Halsbury therefore concluded that it was competent for the owners of the Kronprinz to make the claim despite the agreement and order as to discontinuance. The other Law Lords agreed. Lord Herschell referred to the reliance on the use of the words "on the ground of inevitable accident" and then stated at page 262: 11 JUDGMENT 1 10 20 30 40 - 50 60 -- 11 of 17 -- 20072001 T02/JW4 M/T 1/2001 (Mullins J) "I will concede, for the purpose of the argument, that those words do point in the direction of such an agreement; but then it is impossible to shut one's eyes to the fact that the rest of the language used and the form which the transaction took point as strongly, and as it seems to me much more strongly, in the other direction, namely that the parties have adopted a means 1 of carrying out the object in view which prima facie 10 imports, whether you look at the terms of the agreement or at the order itself, that there shall not be a bar. 11 The second defendant asserts that the exchange of correspondence and filing of the notice of discontinuance amounted to an agreement to compromise the plaintiff's action against the second defendant and foreshadows that if the plaintiff attempts to rejoin the second defendant to the action that the second defendant would seek to amend its agreement to plead the compromise. The offer made by the plaintiff on 9 May 2001 was to discontinue her claim against the second defendant with each party to bear its own costs. The plaintiff's solicitors specifically used the word discontinue and must be taken to have used it within the meaning of the UCPR. But for the words "your offer to settle is accepted" in the second defendant's letter in response, there would be no issue that there was merely a discontinuance. The only offer however which the second defendant was purporting to accept was that made by the plaintiff, namely the offer to discontinue. 12 JUDGMENT 20 30 4 - 50 60 -- 12 of 17 -- 20072001 T02/JW4 M/T 1/2001 (Mullins J) I therefore conclude that the use of the words "to settle" in the second defendant's letter of 9 May 2001 cannot alter the nature of the offer which was being accepted by the second defendant. It was an offer to discontinue, which was accepted and carried into effect by the signing and filing of the notice of discontinuance. If the second defendant was intending to seek to compromise the plaintiff's underlying rights of action against it, it did not make a counter offer in those terms. The second defendant simply accepted what was offered by the plaintiff and all that resulted was a discontinuance which is not a bar to the plaintiff's seeking to pursue the same cause of action against the second defendant. I therefore find that if the plaintiff sought to rejoin the second defendant as a defendant in the action the notice of discontinuance does not prevent the plaintiff from doing so. 1 10 20 30 40 I find that the exchange of correspondence between the solicitors for the plaintiff and the second defendant dated 9 May 2001 and the signing and filing of the notice of discontinuance did not amount to a compromise of the plaintiff's right of action against the second defendant. · 50 I note that the limitation period for the plaintiff's pursuing the cause of action which it claims against the second defendant has not yet expired. 13 JUDGMENT 60 -- 13 of 17 -- 20072001 T02/JW4 M/T 1/2001 (Mullins J) It has been necessary to make findings on the matters raised by the plaintiff by way of prejudice in order to determine whether the leave to amend the first defendant's defence should be given. The plaintiff's opposition was based on speculation as to what the second defendant might do if sought to be rejoined to this action. The second defendant's opposition to the 1 10 amended application was to the same effect. In order to 20 avoid speculation as to possible prejudice, I have dealt with the issues. Apart from the status of the agreement to discontinue, other submissions were made by the plaintiff against the leave to 30 amend being given to the first defendant. There is no reason offered by the first defendant as to the failure to seek to make the amendment at an earlier stage in the action. The failure to plead the limitation defence was obviously an oversight, having regard to the terms of 4 paragraph 19A of the plaintiff's statement of claim and the structure of that statement of claim having alternative claims against the first and second defendants. It does not take the plaintiff by surprise that the first defendant seeks to plead the limitation defence because the plaintiff's alternative pleading against the second defendant was premised on the basis that she was time-barred from suing the first defendant. Although the leave to amend . 50 to plead that the plaintiff's action against the first 60 14 JUDGMENT -- 14 of 17 -- 20072001 T3/PAF23 M/T 1/2001 (Mullins J) defendant is statute barred is made less than ten days out from the trial, the lateness should not prevail over the injustice of precluding the first defendant from pleading what appears to be an unarguable defence when the plaintiff is still in a position to pursue her alternative claim against the second defendant, if she chooses to. It is argued that the plaintiff will be prejudiced in that, if the amendment were allowed, the trial set down for 30 July 2001 will be aborted causing delay, inconvenience, personal strain and wasted expense. Any wasted costs thrown away by the adjournment of the trial can be dealt with by a costs order. 1 10 20 30 The first defendant has conceded that it must bear the plaintiff's costs thrown away if the trial is adjourned. The delay in bringing the action to trial, if the trial that is due to start on 30 July 2001 is adjourned, must be considered in the context that the plaintiff has been in a 40 position to consider taking action against the first defendant since she settled the New South Wales District Court action in November 1995. On the basis that the plaintiff is not prejudiced from · 50 pursuing her alternative claim against the second defendant, I consider that the justice of the matter requires that leave be given to the first defendant to plead the limitation defence. It is for the plaintiff to choose whether she wishes to rejoin the second defendant to the 60 15 JUDGMENT -- 15 of 17 -- 20072001 T3/PAF23 M/T 1/2001 (Mullins J) action. I will, therefore, not grant relief in the exact terms sought by paragraph 2B of the amended application. I propose to order that, subject to the plaintiff within seven days of today making a written request to the Registrar of the Court that Ebsworth and Ebsworth (a firm) be joined as second defendant in the action, it is ordered that Ebsworth and Ebsworth (a firm) be joined as second defendant in the action. I also propose to order that the first defendant be granted leave to bring the amended application filed on 16 July 2001, and that the first defendant be granted leave to amend his defence in accordance with Exhibit BJMS to the affidavit of Brockwell John Miller filed on 5 July 2001. I consider that the first defendant should pay the plaintiff's and the second defendant's costs of the amended application, to be assessed. I will.hear submissions from the parties on the form of orders and costs before I pronounce the orders. HER HONOUR: The orders that I make are: (1) the first defendant be granted leave to bring the amended application filed on 16 July 2001; 16 JUDGMENT 1 10 20 30 4 . 50 60 -- 16 of 17 -- 20072001 T4/RAG18 M/T 1/2001 (Mullins J) 1 (2) the first defendant be granted leave to amend his defence in accordance with Exhibit BJMS to the affidavit of Brockwell John Miller filed on 5 July 2001; (3) subject to the plaintiff within seven days of today making a written request to the Registrar of this Court that Ebsworth & Ebsworth (a firm) be joined as second defendant in the action, it is ordered that Ebsworth & Ebsworth (a firm) be joined as second defendant in the action; (4) the first defendant pay the costs of the amended application of the plaintiff and the second defendant to be assessed on an indemnity basis; (5) I certify that senior counsel was required for the application. 17 JUDGMENT 10 20 30 40 . 50 60 -- 17 of 17 --