Cong and Anor v NT Construction Accounting Services Pty Ltd [2006] NTSC 49

PARTIES: CONG, Dinh Phuc

AND

THI, Le Lieu

v

NT CONSTRUCTION ACCOUNTING SERVICES PTY LTD

TITLE OF COURT: SUPREME COURT OF THE NORTHERN TERRITORY

JURISDICTION: SUPREME COURT OF THE TERRITORY EXERCISING TERRITORY JURISDICTION

FILE NO: LA15 of 2006 (20401213)

DELIVERED: 22 JUNE 2006

HEARING DATES: 6, 15, 16 JUNE 2006

JUDGMENT OF: MARTIN (BR) CJ

APPEAL FROM: LOCAL COURT DARWIN, 20401213, 11 April 2006

CATCHWORDS:

MAGISTRATES
Jurisdiction and procedure generally – application for leave to appeal against refusal to join party – final or interlocutory order – leave to appeal refused.

Local Court Act (NT), s 19; Local Court Rules (NT), r 1.12, r 4.04 and r 12.05; Supreme Court Rules (NT), r 9.03

Brown v Northern Territory of Australia [2005] NTSC 26; Nationwide News Pty Ltd v Bradshaw (1986) 41 NTR 1; Scott v Northern Territory (2005) 147 NTR 6, applied.
Carr v Finance Corporation Australia Ltd (1981) 147 CLR 246; Eatts v Dawson (1990) 93 ALR 497; Hall v Nominal Defendant (1966) 117 CLR 423; In The Matter of an Appeal by Luck (2003) 78 ALJR 177; Licul v Corney (1976) 180 CLR 213, followed.

Commercial Union Assurance Limited v White (unreported Northern Territory Court of Appeal delivered 21 November 1997), not followed.

REPRESENTATION:

Counsel:
1st and 2nd Appellant: A McLaren
Respondent: D Alderman

Solicitors:
1st and 2nd Appellant: A McLaren
Respondent: A Crane

Judgment category classification: C
Judgment ID Number: Mar0608
Number of pages: 12

IN THE SUPREME COURT
OF THE NORTHERN TERRITORY
OF AUSTRALIA
AT DARWIN

Cong and Anor v NT Construction Accounting Services Pty Ltd
[2006] NTSC 49
No. LA15 of 2006 (20401213)

IN THE MATTER of an application for leave to appeal under the Local Court Act:

BETWEEN

DINH PHUC CONG
First Appellant

AND:

LE LIEU THI
Second Appellant

AND

NT CONSTRUCTION ACCOUNTING SERVICES PTY LTD
Respondent

CORAM: MARTIN (BR) CJ

REASONS FOR JUDGMENT

(Delivered 22 JUNE 2006)

Introduction

[1] This is an application for leave to appeal against orders of the Local Court refusing an application by the defendants to join Mr Peter Cavenagh (“PC”) as a party to the proceedings. I will refer to the applicants in this Court as the defendants and to the respondent as the plaintiff.

Background – facts - pleadings

[2] The defendants carried on businesses in partnership known as “VN Farms” and “VN Mango & Vegetable Produce”. In about August 2001, after discussions with PC, the defendants agreed to purchase mangos grown on three properties for a total price of $220,000. It is the plaintiff’s case that the agreement was reached with the plaintiff through PC acting as the plaintiff’s disclosed or undisclosed agent. The defendants assert that the agreement was with PC personally and that no contract existed between the defendants and the plaintiff.

[3] According to the plaintiff, the defendants removed so many of the Bowen mango crop from the properties as they wanted and in August 2001 the plaintiff claimed from the defendants the contract sum of $220,000. The plaintiff has pleaded payments of $80,000 and $40,000 in September and October 2001 leaving a balance owing of $100,000.

[4] The defendants have pleaded that in September 2001 they reached agreement with PC to reduce the sale price to $160,000. The defendants agree that a total of $120,000 has been paid, but say that the balance owing was $40,000.

[5] According to the plaintiff’s pleadings, prior to September 2002 the parties agreed that the balance outstanding was $100,000 and that the plaintiff would forgo payment of so much of that amount as represented the value in services that the defendant would provide to the plaintiff in each of the years 2002 and 2003. Those services involved picking, packing and freight services with respect to the plaintiff’s Bowen mango crops for those years. The plaintiff has pleaded that it was an implied term of this compromise, “being an accord and satisfaction”, that if the defendants failed to provide services to the value of $100,000, after taking into account the value of the services provided, the balance would be immediately due and payable. The plaintiff also asserts that the defendants owed the plaintiff a duty of care.

[6] In essence it is the plaintiff’s case that in breach of the compromise the defendants failed to provide services to the standard required by the mango industry and, as a consequence of negligent and reckless services, the defendants caused the plaintiff to suffer damage. The plaintiff’s pleading asserts that by reason of the breach of the compromise and negligent performance of the agreement, the plaintiff is entitled to the balance owing of $53,026.11 or damages of at least that amount.

[7] The defendants deny the plaintiff’s case. It is pleaded in the defence that the defendants agreed to provide services to PC by way of washing, sorting, grading, packing and transporting of PC’s mangos as a means of paying off the balance of $40,000. The defendants have pleaded that they provided the necessary services between 16 October and 4 November 2002 and that excess services were provided because the total value of the services was $46,973.89. Notwithstanding that the defendants have pleaded that they dealt at all times with PC personally and that any contracts were made with PC and not the plaintiff, nevertheless the defendants have sought to “counterclaim” from the plaintiff the value of the excess services, namely, $6,973.89.

Applications to join PC

[8] The first Statement of Claim was filed on 14 January 2004. Judgment in default was entered in February 2004 but, after refusals by a Registrar and a Magistrate to set aside the judgment, the defendants successfully appealed to the Supreme Court. The default judgment was set aside by order of a Judge on 27 June 2005. The defence and counterclaim were filed on 29 June 2005.

[9] On 4 May 2004 the defendants filed the application to join PC as a party to the proceedings. That application was not heard until 30 November 2005. The plaintiff opposed the application as PC did not consent to being joined. On 1 December 2005 a Registrar ordered that PC be joined as a defendant.

[10] The plaintiff appealed against the order of the Registrar. That appeal was heard by a Magistrate in April 2006. Rule 4.04 of the Local Court Rules provides that the appeal to the Magistrate was by way of hearing de novo.

[11] In the course of the proceedings a number of affidavits were filed by the parties. The material before the Court includes evidence that two of the three properties from which the mangos were sourced were owned by PC and his wife. The third property was owned by the plaintiff.

[12] Notwithstanding that the defendants have pleaded that at all times they dealt with and contracted with PC personally, and that at no time did they enter into a contract with the plaintiff, the defendants submitted that PC should be joined as a party because he and his wife owned two of the properties. Counsel contended that, prima facie, PC and the plaintiff were jointly entitled to the proceeds of the sale of the mangos. However, the defendants have not produced any evidence that PC was jointly entitled with the plaintiff to the proceeds of the sale of the mangos harvested from his properties other than the fact that he was the joint owner of those properties.

[13] The application to join the wife of PC was not pursued. On 11 April 2006 the learned Magistrate dismissed the application to join PC. His Honour expressed the view that the issue of ownership of the farms from which the mangos were sourced was a “red herring” and observed that the defendants’ case that they did not enter into a contract with the plaintiff and contracted only with PC was a complete defence to the claim. His Honour also made observations about the problem of time limitations for proceedings stating that any claim or counterclaim that the defendants might have against PC “looks like it’s out of time …”.

Joinder – the Rules

[14] Rule 12.05 of the Local Court Rules provides that the Court may order the following persons to be joined as a party:

“(i) a person who ought to have been joined as a party;

(ii) a person whose presence before the Court is necessary to ensure that all questions in the proceeding are properly and completely determined;

(iii) a person in respect of whom there may exist a question arising out of, relating to or connected with a claim in the proceeding and it is just and convenient to determine the question between that person and a party as well as between the parties to the proceeding; …”

[15] In addition, r 1.12 enables the Local Court to adopt and apply Rules of the Supreme Court in the absence of appropriate Local Court Rules. On that basis counsel invoked r 9.03 of the Supreme Court Rules providing for compulsory joinder where the plaintiff claims relief to which another person is entitled jointly with the plaintiff:

“Joinder of necessary parties

(1) Except by order of the Court or as provided by or under an Act, where the plaintiff claims relief to which any other person is entitled jointly with him, all persons so entitled shall be parties to the proceeding, and a person who does not consent to being joined as a plaintiff shall be made a defendant.”

Joinder not appropriate

[16] The defendant’s case for joinder of PC is fundamentally flawed. First, it is the case for the plaintiff as pleaded that the original contract and subsequent compromise agreement were entered into between the plaintiff and the defendants. PC acted as the disclosed or undisclosed agent of the plaintiff and did not enter into any contract with the defendants in a personal capacity. On the plaintiff’s case, PC is not entitled to the benefit of any contract. Nor is PC liable for any detriment arising out of contracts between the plaintiff and the defendants.

[17] The defendants’ case as pleaded is that no contract of any type ever existed between the plaintiff and the defendants. Counsel for the plaintiff properly conceded during submissions that, if successful, such a case is a complete answer to the plaintiff’s claim.

[18] In addition, the defendants have pleaded that the contracts into which they entered were contracts between the defendants and PC personally. On the defendants’ case as pleaded, the plaintiff was not entitled jointly with PC to the benefits of the original contract because the plaintiff was not a party to that contract. In addition, the defendants have pleaded that they performed their obligations pursuant to the subsequent contract for the provision of services in satisfaction of the balance of the debt.

On the defendants’ case, any claim for restitution based on excess services is a claim against PC personally and not against the plaintiff.

[19] The defendants have not made out a case pursuant to r 9.03 of the Supreme Court Rules that the plaintiff has claimed relief to which PC is entitled jointly with the plaintiff. Similarly, the defendants have not made out a case that PC ought to have been joined as a party or that his presence before the Court as a party is necessary to ensure that all questions in the proceeding are properly and completely determined. If the matter proceeds to trial, as counsel for the plaintiff frankly conceded during submissions, PC will be an essential witness in the plaintiff’s case. Counsel also conceded that as the pleadings stand, at trial the plaintiff would be required to call PC in the plaintiff’s case and could not wait to call PC in rebuttal after the completion of the evidence called by the defendants.

Leave to appeal

[20] The application by the defendants to this Court is an application for leave to appeal. The principles governing applications for leave to appeal are not in doubt: Nationwide News Pty Ltd v Bradshaw (1986) 41 NTR 1; Scott v Northern Territory (2005) 147 NTR 6 per Mildren J [57] and [58]; Brown v Northern Territory of Australia [2005] NTSC 26. Similarly, the principles to be applied if leave to appeal is granted are not in doubt.

[21] In my opinion the defendants have failed to demonstrate that the interests of justice make it desirable to grant leave to appeal. To the contrary, in my view the decision of the Magistrate was correct. The defendants have pleaded a complete answer to the plaintiff’s claim. On the pleadings PC is not jointly entitled to the relief sought by the plaintiff and he is not a necessary party to the proceedings. It is a matter for the defendants whether they wish to pursue their substantive rights against PC personally in some other way that ensures that the issues related to any claim the defendants may have against PC are heard and determined at the same time as the proceedings by the plaintiff against the defendants.

Limitation Act

[22] An issue also arose as to whether any claim by the defendants against PC is barred by the provisions of the Limitation Act. As I have reached the view that the application fails on the merits, it is unnecessary for me to finally determine whether such a claim is out of time. It is sufficient for me to observe that the submissions of counsel for the defendants were misconceived. Those submissions endeavoured to link the commencement of the limitation period to the termination of the contract of compromise pleaded by the plaintiff. However, the substantive right which the defendants allege that they have to restitution is said by the defendants to arise under a contract with PC personally which was discharged in November 2002 upon performance by the defendants of their obligations. As the defendants’ claim would be by way of restitution based on the value of excess services rendered to PC personally, the calculation of the limitation period would not be related to the time at which, on the plaintiff’s case, the plaintiff terminated a different contract between the plaintiff and the defendants. On the defendants’ case interesting questions arise as to when the limitation period commenced which it is unnecessary for me to determine.

Final or interlocutory order

[23] Section 19 of the Local Court Act provides that a party to proceedings in the Local Court may seek leave to appeal to the Supreme Court “on a question of law” from a “final order” of the Local Court. Subsection (3) provides that a party may appeal with leave “from an order of the Court, (other than a final order)” in the proceedings. In other words, if the decision of the Magistrate was a “final order”, the defendants’ right to seek leave to appeal is limited to a question of law. If the order is not a final order, no such limitation exists.

[24] In Commercial Union Assurance Limited v White (unreported Northern Territory Court of Appeal delivered 21 November 1997), a single Judge of the Northern Territory Supreme Court had given leave to a party to join the appellant as a second defendant. The appellant sought leave to appeal on the basis that the order was not a final order. In the alternative, the appellant lodged a notice of appeal on the basis that the order was a final order giving rise to an appeal as a right.

[25] In a joint judgment, Gallop ACJ and Bailey J held that the order of the Judge giving leave to join the appellant was a final order:

“In our view, the order giving leave to the respondent to join the present appellant as a second defendant in the proceedings was a final order, and accordingly the appropriate process is by way of appeal as of right. We have come to that conclusion by reason of the fact that the order made is a final determination of the issue of whether leave should be granted to the plaintiff to join the second defendant or not. If leave had been refused, that would have been a final determination of the plaintiff’s right to join the second defendant. The order made was that leave be granted and that determines that question once and for all subject to the resolution of this appeal. We note that in the earlier case in this Court of Ceric v CE Heath Underwriting and Insurance (Australia) Pty Ltd (1994) 99 NTR 1, which likewise was an appeal from an order granting leave to a plaintiff to institute proceedings against an insurance company, the matter proceeded by way of appeal and not by way of application for leave to appeal.”

[26] Mildren J declined to deal with the issue:

“I do not think it is appropriate to decide whether or not this is an appeal from an interlocutory order. The issues raised by the appellant are sufficient to warrant the granting of leave, if necessary. Neither counsel sought to debate this question, and in those circumstances, this issue has not been adequately explored.”

[27] In view of the conclusion I have reached about the merits of the application, it is unnecessary for me to explore this question in detail. Contrary to the decision in Commercial Union, both counsel submitted that the order was interlocutory and not final.

[28] With respect to their Honours who thought otherwise in Commercial Union, in my view an order concerning the joinder of a party is an interlocutory order: Eatts v Dawson (1990) 93 ALR 497. Any order made on an interlocutory application finally disposes of the rights of the parties with respect to that particular application. However, the test is not whether the order finally disposes of the rights with respect to the particular application. The test is whether the order finally disposes of the rights of the parties in a principal cause between them and regard must be had to the legal rather than the practical effect of the decision: Hall v Nominal Defendant (1966) 117 CLR 423; Licul v Corney (1976) 180 CLR 213; Carr v Finance Corporation Australia Ltd (1981) 147 CLR 246; In The Matter of an Appeal by Luck (2003) 78 ALJR 177.

Conclusion

[29] For these reasons, leave to appeal against the order refusing the application to join PC is refused.

[30] The Magistrate also ordered that costs of the application to join PC be taxed and payable immediately. The defendants seek leave to appeal against that order and I will hear the parties further with respect to that application.
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