Day & Ors v Markfair Pty Ltd [2004] QDC 34

DISTRICT COURT OF QUEENSLAND CITATION: Day & Ors v Markfair Pty Ltd [2004] QDC 034 PARTIES: LESLEY DAY & ORS Plaintiffs v MARKFAIR PTY LTD t/a INVESTLEND (AUST) ACN 065 542 761 & ORS Defendants FILE NO/S: D4905/2001 DIVISION: PROCEEDING: Application ORIGINATING COURT: District Court, Brisbane DELIVERED ON: 17 March 2004 DELIVERED AT: Brisbane HEARING DATE: 30 September 2003 JUDGE: McGill DCJ ORDER: Application dismissed. Order that the tenth defendant pay the plaintiffs’ costs of and incidental to the application, to be assessed. CATCHWORDS: PRACTICE – Joinder of parties – separate trials for different plaintiffs – whether appropriate – UCPR r 68. Bishop v Bridgelands Securities (1990) 25 FCR 311 – applied. Borg v Northern Rivers Finance Pty Ltd [2003] QSC 112 – followed. Hagan v Bank of Melbourne Ltd [1994] 2 Qd R 507 – distinguished. COUNSEL: D A Skennar for the plaintiff M M Varitimos for the fifth defendant B D O’Donnell QC for the tenth defendant SOLICITORS: Hall Payne Lawyers for the plaintiff Reichman Lawyers for the second defendant Primrose Couper Cronin Rudkin for the fourth defendant Cranston McEachern for the fifth defendant Russell & Co for the tenth defendant. -- 1 of 7 -- 2 [1] This is an application for an order under r 68 that the trial of the claims by the first and second plaintiffs (Mr and Mrs Day) be heard separately from the trial of the claims by the third and fourth plaintiffs (Mr and Mrs Osborne). There are ten defendants to the action, the tenth being 25 individuals practising in partnership as a firm of solicitors. The tenth defendant has made the application, and it was supported by the fifth defendant. The second and fourth defendants neither supported nor opposed. It was opposed on behalf of the plaintiffs. Background [2] The plaintiffs claim to have been victims of real estate marketers on the Gold Coast, having purchased as a result of a campaign of high pressure salesmanship and misrepresentation home units which were well over their true market value. The first to ninth defendants are various companies and individuals alleged to have been associated with this process, including the company which was the vendor of the units, the fifth defendant; both the Days and the Osbornes bought units in a particular building from the fifth defendant. Most of the defendants have not filed notices of intention to defend, and on 3 March 2003 the plaintiffs obtained default judgment against the first and eighth defendants. [3] The statement of claim1 alleges that units such as the ones they purchased were being marketed during 1997 and 1998 by a system devised and implemented by the various defendants, and that the particular properties purchased were marketed to the plaintiffs using that scheme. Details of the scheme are pleaded.2 They included telemarketing, a seminar about investment in real estate and negative gearing, individual in-house consultations, assistance in visiting the Gold Coast to look at units being marketed by these defendants, and a consultation with a financial adviser assigned to them by those operating the scheme: para 16.3. It is alleged that, as part of the scheme, when prospects arrived at the Gold Coast they would be met by a “runner” who was part of the scheme, who would introduce them to the financial adviser, and show them units being sold through the scheme. If the prospects agreed to purchase residential units they would be introduced to a solicitor to act for them on the conveyance of the unit.3 It is alleged that the solicitor would be “chosen from a panel of firms that had solicited such referrals from [the company operating the scheme] and the first defendant”: para 16.3(v). [4] Each of the Days and the Osbornes went thorough the scheme (separately) and each agreed to purchase a unit, and each was referred to the same individual solicitor employed by the tenth defendant. It is alleged that the solicitors knew of the scheme and agreed to participate in it, knew that the purpose of the scheme was to induce people such as the plaintiffs to purchase marketed properties in the belief that they were paying their market value, and believed that they would be unlikely to purchase the properties if they knew the “actual” fair market value of the marketed properties: para 16.5. 1 I have referred to the amended statement of Claim filed 1 November 2002. 2 They appear to be describing the same scheme considered by Kiefel J in ACCC v Oceana Commercial Pty Ltd [2003] FCA 1516. The first and fourth defendants were two of the respondents in that proceeding. It involved a unit in a different building, and a different solicitor. Her Honour did not consider whether there was any breach by that solicitor of duties owed to the client: para [304]. 3 Statement of claim para 16.3(s). -- 2 of 7 -- 3 [5] It is alleged that on or about 29 August 1998 the Days retained the solicitors to act on their behalf and to advise them in connection with their contract to purchase a unit. The pleading goes on to allege the solicitors knew prior to the date of settlement various things, or ought to have known them, and that in breach of the terms of the retainer the solicitors failed to give certain advice to the Days, or failed to warn them of various things. It is further alleged that the solicitors’ failures were negligent, and in breach of the solicitors’ fiduciary duties. It is also alleged that the solicitor allowed one of the other defendants, a representative of the first defendant, to remain in his office during the whole of the Days’ consultation with him on 29 August 1998. [6] The allegations, so far as they concern the solicitors, made by the Osbornes are similar; on or about 11 August 1998 they retained them to act on their behalf and to advise them in connection with the contract by which they purchased a unit. Again it is alleged that between that date and the date of settlement the solicitors knew or ought to have known various things, and had failed to warn or advise the Osbornes of various matters, that the failures were negligent and that there was a breach of fiduciary duty. Again it is alleged that a representative of the first defendant remained in the office during the consultation. [7] The defence of the tenth defendant admits each retainer but only in respect of acting in relation to the conveyance of the properties to the plaintiffs. It is denied that the retainers extended to advising them generally in connection with the purchase, and it is alleged that each of the plaintiffs was told orally and in writing that they were not being provided by the solicitor with advice in relation to commercial or financial aspects of the purchase of the property. It is admitted that some but by no means all of the things the solicitors are alleged to have known or ought to have known were in fact known, either throughout the relevant period or prior to settlement, but it is denied that the solicitors knew or ought to have known or had reason to suspect the other matters alleged. It is alleged that the solicitor did inform the Days and the Osbornes of the correct identity of the vendor of the property, but it is otherwise admitted that he did not do the things alleged in paragraphs 22, 23, 30.5 and 30.6 not to have been done, although it is denied that that amounted to a breach of the retainers. It is also denied that those omissions amounted to a breach of any duty owed to the plaintiffs, or breach of any fiduciary duty. It is alleged that the solicitor informed the Days and the Osbornes that the tenth defendant accepted a number of referrals from the first defendant. [8] There are only two differences in the pleaded cases against the tenth defendant; in paragraph 30.6(h) it is alleged that the tenth defendant failed to advise the Osbornes that there was no cooling off period for property purchases in Queensland, and in paragraph 30.6(i) it is alleged that the employed solicitor represented that the property was a good deal and a good investment, and that the lender would value the property to ensure that the purchase price paid by them reflected fair market value of the property, and if it did not, the lender would not lend the money to purchase the property. The latter allegation appears to be denied on behalf of the tenth defendant, so in that respect again there is some area of dispute about what was said. It is not alleged that the former additional advice was given, so this simply raises some additional question about whether there was an obligation to give that advice in the circumstances. -- 3 of 7 -- 4 [9] In the reply4 the Days admit they were provided with a copy of a letter relied on by the tenth defendant as showing the limited nature of the retainer, and the Osbornes also admit they were provided with a copy of such a letter. The Days admit that they executed a document entitled “questionnaire”; no such document is alleged to have been signed by the Osbornes. It appears that both sets of plaintiffs deny that the solicitors informed them of the correct identity of the vendor. In other respects however, there is no factual issue raised on the pleadings as to what passed between the solicitor and either the Days or the Osbornes. Submissions for the applicant [10] Senior Counsel for the tenth defendant emphasised such differences as exist between the positions of the Days and the Osbornes, but they are very limited. Reference was made to the fact that they were buying different units, a matter not obviously likely to loom large in the resolution of the action. It was submitted that the allegations of breach of fiduciary obligations must be related to the individual circumstances of the relationship between the client and the solicitor, but it is not obvious to me how there is any material difference between the relationship in the case of the Days and the Osbornes. Certainly nothing to suggest any such difference arises from the pleadings. Each plaintiff has a separate case of reliance it is true, but both are asserting that they suffered loss as a result of a failure to disclose, apparently on the basis that, had they been informed about what was going on, they would not have proceeded with the transaction. Each plaintiff will have to prove that, but it is an obvious enough proposition and it would be surprising if that proved to be particularly contentious at the end of the day. [11] There are some differences in the losses, but general principles about how losses are calculated in these circumstances will be equally applicable in both matters. The amended defence alleges that the Osbornes sold their property in May 2003, so there is that difference. Further, the tenth defendant alleges a failure to mitigate against both sets of plaintiffs, on the basis that both were entitled to be reimbursed for their loss from the Auctioneers and Agents Fidelity Guarantee Fund, and that they unreasonably failed to claim from the fund and in that way mitigate their loss. There may be some difference in relation to their personal circumstances, but essentially the same issue will arise in both matters, namely whether it was unreasonable not to take that course, and what the outcome might have been had it been taken. [12] So far as the claims against the tenth defendant are concerned therefore, there is a considerable overlap in the matters in issue in the claims. The case is one where there is very little dispute on the face of the pleadings about what actually happened face to face between the respective plaintiffs and the solicitor. The real factual dispute is going to be about what the solicitors knew at various times. Although there is not a complete overlap in the time periods relevant to the Days’ claim and the Osbornes’ claim, there is a substantial overlap, and anything the solicitors knew or ought to have known at a time which is relevant to the Osbornes is something they also knew or ought to have known at a time which is relevant to the Days. Overall so far as the action against the tenth defendant is concerned it seems to me 4 Amended reply of the plaintiffs filed 16 October 2003. -- 4 of 7 -- 5 that there would be considerable saving of time and effort in having both sets of claims heard in the one trial. [13] The case against the other defendants is one of misleading and deceptive conduct. Representations are alleged to have been made at seminars conducted by one of the defendants, which are alleged to have been in the same terms in respect of both sets of plaintiffs. Although they attended separate seminars, it is alleged that the seminars were conducted according to a script: para 16.3(l). It is alleged that both sets of plaintiffs were the recipients of similar representations in the course of the individual consultations, and when they came to the Gold Coast separate representations were made to each of them by the fourth defendant which are alleged to have been in the same terms, the only difference being the difference of $1,000 in the purchase price of the two units that the respective plaintiffs were looking at. They were then introduced by him to different representatives of the first defendant (the third defendant in the case of the Days, and the second defendant in the case of the Osbornes) against whom similar representations are alleged, although the purchase price was as before slightly different, and the second defendant represented that it was reasonable to apply a capital growth rate of ten percent per annum to the purchase price when assessing the benefits of the purchase, whereas the figure used by the third defendant was eight percent. As a result of this and the price difference the projections of what the property could be sold for in five or ten years produced different figures. [14] Although representations were made to different people at different times, and generally by different people, in circumstances where it is alleged that this whole process was part of a scheme to market these units in a particular way, and significantly above their true market value, this is neither surprising nor it seems to me particularly significant. I do not consider however that this would prejudice the conduct of the action, or the conduct of the defence, in any significant way. The plaintiffs allege that this was part of the scheme, and are entitled to lead evidence of what happened in both cases as part of the evidence to prove the fact of the scheme. [15] It was submitted that there would be some difficulty because of confidentiality and legal professional privilege in relation to the defence of the separate claims, but both sets of plaintiffs have released to each other their confidential information,5 and the privilege is after all the privilege of the plaintiffs, not the privilege of the tenth defendant. If there is any difficulty it would be one that the plaintiffs can overcome. I do not regard that as a significant impediment to a single trial. [16] The tenth defendant’s solicitor has deposed to the tenth defendant not wishing to be placed in a position of having to attack the credit of one former client in the presence of another former client. The plaintiffs as parties will all be entitled to be present in court during the cross-examination of each of them, but I do not see that that is a major problem, in a case where on the face of the pleadings there is little dispute as to what was actually said (in the case of the Days, virtually none). This does not seem to me to be a case where issues of credit will prove important. The case against the solicitors really turns on what the solicitors knew at the relevant time, and whether their obligation to their clients required them to protect their client’s interests by passing on what they knew. This it seems to me is not a case 5 Affidavit of Truong sworn 23 September 2003 para 22. -- 5 of 7 -- 6 which is going to turn on precisely what was or was not said between the solicitor and the client. The plaintiffs’ case is that the solicitors should have said various things but didn’t. The solicitors’ case essentially is that they didn’t say those things, but did not have to. I do not regard this as a substantial objection. [17] It was submitted that the strength or weakness of one set of plaintiffs’ claims against the tenth defendant may well affect the prospects of the other plaintiffs. However, I have some difficulty in seeing how that applies, when at least on the face of the pleadings there is a very considerable overlap in the claims, and they do not depend to any great extent on what passed expressly between the plaintiffs and the employed solicitor when he saw them. There is some difference in that respect, but it is not a very great one. The position is simply that one set of plaintiffs alleged that there was some particular representation made, which the other plaintiffs do not allege. I cannot see how that difference is going to prejudice the tenth defendant in the conduct of the case, or what effect it would have on the case of the other plaintiffs. I do not think that any difficulty would be caused by that relatively minor difference between the two cases, and would not expect it to create any real problem for the trial judge either. [18] The other issue which was raised in the course of the argument was the question of whether evidence of what happened to one set of plaintiffs would be admissible in relation to what happened to the other set of plaintiffs. In respect of this, it is I think of some importance that it is alleged that there was a scheme or system by which various defendants were marketing unit developments on the Gold Coast. Details of the scheme are pleaded, and as I indicated earlier the involvement of solicitors on referral from the participants in the scheme in a particular way was part of the scheme. Plainly evidence of what happened to each of the plaintiffs is admissible to prove the fact of the scheme, as would be evidence from any other person who had been involved in the same scheme.6 There may well be other evidence which is admissible on this point, but in circumstances where the case as pleaded as a scheme case, it must be relevant, to prove the fact of the scheme, to show that more than one particular party was dealt with in the same way, or at least essentially in the same way. It seems to me that splitting this into two trials would simply mean that all the evidence would have to be given twice. I would not regard that as improving efficiency, or producing any change in fairness. [19] Counsel for the fifth defendant opposed the application essentially on the basis that the evidence by Mr and Mrs Day would not be admissible in relation to the case of Mr and Mrs Osborne and vice versa. I do not agree; in my opinion it is admissible to prove the scheme, and (probably) as a proper application of similar fact evidence. I was referred to the judgment of Mackenzie J in Borg v Northern Rivers Finance Pty Ltd [2003] QSC 112. In that case his Honour dealt at [84]-[86] with the question of admissibility in relation to the evidence of various different people to whom the same sort of thing had been sold in the same sort of way by salesmen who were alleged to be engaged in misleading and deceptive conduct. I respectfully agree with his Honour’s approach, and consider that it should be appropriate to adopt it in the present case. However, ultimately that will be a matter to be determined by the trial judge. It is not appropriate at this stage for me to be making any ruling on admissibility of any particular piece of evidence. 6 ACCC v Oceana Commercial Pty Ltd [2003] FCA 1516 at [60]. -- 6 of 7 -- 7 [20] I have been referred to a number of cases, including Hagan v Bank of Melbourne Ltd [1994] 2 Qd R 507, where Ryan J cited with approval the following passage from the judgment of Wilcox J in Bishop v Bridgelands Securities (1990) 25 FCR 311 at 314: “The basic principle, as it seems to me, is that the court should take whatever course seems to be most conducive to a just resolution of the disputes between the parties, but having regard to the desirability of limiting, so far as practicable, the costs and delay of the litigation. Considerations of cost and delay may often support the grant of leave [to join]; but, in my opinion, leave ought not to be granted unless the court is affirmatively satisfied that joinder is unlikely to result in the unfairness to any party. Secondly, regard must be had to practical matters. For example, it would normally be inappropriate to grant leave for the joinder of applicants who are represented by different solicitors. … Similarly, although all applicants might propose to rely on some common or similar facts, there may be such differences between the evidence intended to be relied upon in support of the claims of particular applicants as to make it inexpedient to join the claims. The discreet material may overbear that which is common to all the claims. Again, there may be cases in which the sheer number of the claims, if a joinder is permitted, will impose an undue burden on the respondent.” [21] It is necessary to bear in mind however that his Honour was speaking of a situation where the question was whether a discretion to join should be exercised; I am dealing with an application under a rule where the question is whether a discretion to separate should be exercised, and in that situation it is necessary for me to be affirmatively persuaded that the separation ought to occur. Subject to that however his Honour’s reference to the various factors is useful. As usual, a consideration of costs and delays supports the status quo. The plaintiffs are represented by the same lawyers; indeed, I understand that that is an essential requirement for joinder of plaintiffs. I do not consider that the discreet material overbears that which is common to all the claims, and the various plaintiffs are not so numerous as to impose an undue burden on either the defendants or the trial judge. I am not persuaded that any injustice will be suffered by the defendants. [22] Senior Counsel for the tenth defendant relied on a decision of Robin DCJ in Jonsson v State of Queensland [2001] QDC 095. In my opinion however the facts of that case are quite different from the facts of the present. Hagan (supra) appears to have been a case where the precise terms of the oral representation were contentious and important. I do not regard it as authority that in all cases where people received separate representations there must be separate trials. [23] In all the circumstances I think that this is a clear case where the claims of the two sets of plaintiffs ought to be tried together. The application is dismissed. I will order the tenth defendant to pay the plaintiffs’ costs of and incidental to the application to be assessed. I will make no order in respect of the fifth defendant’s costs. -- 7 of 7 --