FEDERAL COURT OF AUSTRALIA

Suncorp-Metway Limited (ACN 010 831 722) v Sapuppo [2001] FCA 708

PRACTICE AND PROCEDURE - joinder of parties - whether O 52 r 14(2) the Federal Court Rules justifies joinder on appeal of a party to the trial where that party’s commercial interests only are affected

Federal Court Rules, O 52 r 14

News Limited v Australian Rugby Football League Limited (1996) 64 FCR 410 considered

Pegang Mining Co Limited v Choong Sam [1969] 2 MLJ 52 considered

Morrell v Mercantile Mutual Insurance Australia Limited (1999) 21 WAR 451 considered

Re Trade Practices Commission v Milreis Pty Ltd (1978) ALR 17 considered

SUNCORP-METWAY LIMITED (ACN 010 831 722) v SEBASTIAN ANTHONY SAPUPPO, AUSTRALIAN PACIFIC PROFESSIONAL INDEMNITY INSURANCE CO LTD (ACN 072 266 909) AND ALEVTINA RIBCHENKOV

Q 60 OF 2001

DRUMMOND J

6 JUNE 2001

BRISBANE

THE COURT ORDERS THAT:

1.                  The applicant be joined as second respondent to appeal proceedings Q 60 of 2001.

2.                  The costs of the notice of motion be reserved to the Full Court.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

REASONS FOR JUDGMENT

1                     I have before me a motion by a bank, Suncorp-Metway Limited, for joinder as a respondent to an appeal.  Mrs Ribchenkov, the sole present respondent, supports the bank’s application.

2                     At trial, Mrs Ribchenkov sued the bank in order to set aside a mortgage she gave it with respect to a third party indebtedness to the bank.  She also sued the first appellant, a solicitor, who was found at trial to have undertaken the duty of giving her independent advice with respect to the mortgage documents before she signed them.

3                     By cross-claim, the solicitor, the first appellant, sued his indemnity insurer, now the second appellant, for indemnity against the Mrs Ribchenkov’s claim against him.  The bank cross-claimed against the solicitor, but at trial failed and there is no appeal brought by the bank against the trial judge’s decision in that respect.

4                     At trial, Mrs Ribchenkov was successful only in part in her claim against the bank.  She obtained a declaration that it would be unconscionable for the bank to enforce the mortgage against her in respect of two advances made after the initial advance given at about the time Mrs Ribchenkov executed the mortgage documents.  The trial judge, however, gave judgment for the bank against Mrs Ribchenkov for the sum of $190,079 by his first order.

5                     By his second order, he ordered that judgment be entered in favour of Mrs Ribchenkov against the solicitor in the same amount.  By his third order, he ordered that the bank pay to Mrs Ribchenkov the costs of and incidental to the issue of whether the bank was entitled to pursue her in respect of the sums constituting the two advances I have already referred to.  By his fourth order, he ordered that Mrs Ribchenkov pay to the bank the costs of and incidental to the claim by the bank based on the initial advance; and by the sixth order, his Honour ordered that the solicitor pay to Mrs Ribchenkov the costs she was ordered to pay to the bank pursuant to the fourth order.  By the seventh order, he ordered the solicitor pay the costs of Mrs Ribchenkov of her action against him and, by the eighth order, he ordered that the solicitor’s professional indemnity insurer indemnity the solicitor against the judgment given by order 2 in favour of Mrs Ribchenkov against the solicitor and in respect of the costs which he was also ordered by the sixth order to pay to Mrs Ribchenkov.

6                     By their appeal, the solicitor and his indemnity insurer now challenge the second, sixth, seventh and eighth orders of the trial judge to which I have referred.  They have not joined the bank as a party, hence the present application.

7                     The solicitor for the present appellants described the non-service of the bank as an oversight but, in truth, the solicitor’s position is that there is no entitlement on the part of the bank to be joined pursuant to O 52 r 14 the Federal Court Rules.  Reference was made in support of that submission to a number of authorities.  It is sufficient to refer to News Limited v Australian Rugby Football League Limited (1996) 64 FCR 410 to the passage at 524 where the Court cited a dictum of Lord Diplock in a Malaysian appeal to the Privy Council, Pegang Mining Co Limited v Choong Sam [1969] 2 MLJ 52.  In the course of this dictum Lord Diplock said, referring to earlier authority, that:

“… a party may be added if his legal interest will be affected by the judgment in the action but not if his commercial interests only would be affected.”

8                     At 525, the Full Court also said this:

“In our opinion, the question should be decided according to the test proposed by Lord Diplock.  The test involves matters of degree, and ultimately judgment, having regard to the practical realities of the case, and the nature and value of the rights and liabilities of the third party which might be directly affected.  The requirement of a third party’s rights against, or liability to, any party to the proceedings be directly affected is an important qualification that recognises that many orders of a court are likely to affect other people to a greater or lesser extent.”

9                     This was said in a case in which the question was whether orders made at trial should be set aside because of the non-joinder in the action of persons said to be necessary parties.

10                  Reliance was also placed on a decision of the Full Court of Western Australia in Morrell v Mercantile Mutual Insurance Australia Limited (1999) 21 WAR 451.  The plaintiff who was successful at trial in a motor car case sought to take part in an appeal between the insured defendant and the insured’s indemnity insurer.  The plaintiff’s application to be joined as a party to the appeal was rejected, the court saying this at 458:

“… whether or not the defendant was insured and, if so, whether the insurer was liable to indemnity the defendant, are issues which do not affect the liability of the defendant insured to the plaintiff.  For relevant purposes, the existence of insurance increases the commercial chance of the plaintiff actually recovering the amount of a judgment in the event that the insurer is liable to indemnify the defendant.”

11                  If the Federal Court joinder rule went no further than O 52 r 14(1), those authorities would provide substantial support for the opposition by the present appellants, the solicitor and his indemnity insurer, to the bank’s joinder on the basis that it might be said that only the commercial interests of the bank might be affected in so far as retention of the judgment by Mrs Ribchenkov against the solicitor would afford it an assurance of payment of its own judgment for the same amount against Mrs Ribchenkov if the judgment in favour of the solicitor against the indemnity insurer in turn stands.  But the Federal Court Rules, so far as I can gather, are significantly wider than the Malaysian rule which is set out in Re Trade Practices Commission v Milreis Pty Ltd (1978) ALR 17 at 22 and also wider than the Western Australian rule which is set out at 455 of the report in Morrell.

12                  Order 52 r 14(1) is in common form in so far as it provides that:

“Each party to the proceeding in the court appealed from who is affected by the relief sought by a notice of appeal or is interested in maintaining the judgment under appeal shall be joined as a party appellant or respondent to the appeal.”

13                  But sub-rule (2) of that rule goes on to provide that:

“The court or a judge may order the addition or removal of any person as a party appellant or respondent to an appeal.”

14                  That seems to me to confer on the Court a discretion to permit joinder in an appeal that extends beyond, and is not to read down by reference to, the range of joinders provided for by r 14(1). 

15                  It is common ground that Mrs Ribchenkov, by her pleadings, raised a claim against the solicitor for an indemnity in respect of any liability that might be found against her in favour of the bank.  Orders 2 and 6 made by the learned trial judge to which I have referred plainly give effect to her success on that particular issue, she having been found liable to the bank by the judge’s Orders 1 and 4.  The bank has the advantage that, whether or not Mrs Ribchenkov can satisfy the bank’s judgment against her from her own resources, the solicitor must himself satisfy the bank’s judgment indirectly, by force of these two orders which the bank seeks to maintain despite the solicitor’s appeal.

16                  That, in my opinion, is sufficient to justify that joinder of the bank so that it will be in the position to support the maintenance by Mrs Ribchenkov of her judgment for indemnity against the solicitor in respect of her liability to the bank in the sum I have already referred to and for costs.

17                  I will therefore make an order in terms of par 1 of the bank’s notice of motion.

18                  I note that, notwithstanding this, the notice of appeal filed on behalf of both the solicitor and his insurer includes a challenge to the learned trial judge’s eighth order that the insurer indemnify the solicitor.  They have the same legal representative on the appeal.  This indicates that the appeal against the eighth order will not proceed because the dispute between the solicitor and his insurer has now been resolved.

Associate:

Dated:              12 June 2001