Federal Court of Australia

Hillier v Martin (No 17) [2022] FCA 1156

ORDERS

THE COURT ORDERS THAT:

1.    Pursuant to r 9.05 of the Federal Court Rules 2011 (Cth) (FCR), leave is granted to the applicant to join as respondents to the within proceedings, Stephen Bradley Williams, Norman Waterhouse Lawyers (a Firm), and Norman Waterhouse Lawyers Pty Ltd.

2.    FCR 9.05(3) is dispensed with.

3.    Pursuant to FCR 1.32 and 1.35, the joinder of parties pursuant to order 1 hereof, is to take effect from 23 May 2022.

4.    Pursuant to FCR 16.53, leave is granted to the applicant to file and serve by on or before 4 October 2022, an amended statement of claim in terms of annexure JH-77 (fourth amended statement of claim) annexed to the affidavit of James Hillier sworn and filed on 23 May 2022:

(a)    Subject to the applicant pleading particulars of the fourth respondent’s knowledge pleaded in [72H] of the fourth amended statement of claim; and

(b)    The applicant is granted leave to plead in the fourth amended statement of claim an application pursuant to s 48 of the Limitation of Actions Act 1936 (SA) to extend the time within which the causes of action introduced into these proceedings by the fourth amended statement of claim may be served.

5.    Pursuant to FCR 16.53 leave is granted to the applicant to file a further amended originating application filed on 5 July 2021 to reflect the relief sought in the fourth amended statement of claim to be filed in accordance with order 4 hereof, by on or before 4 October 2022. For the avoidance of doubt, the additional relief claimed in the further amended originating application reflecting the new causes of action now sought in the fourth amended statement of claim is taken to have been claimed as at 23 May 2022.

6.    The costs of the applicant’s interlocutory application dated 16 May 2022 are reserved.

7.    The first and second respondents’ costs thrown away by reason of order [5] hereof is reserved.

8.    The matter is listed for a Case Management Hearing at 9.00am (ACDT) on Wednesday 2 November 2022.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

O’SULLIVAN J:

Introduction

1    On 22 August 2022, I delivered my decision on the applicant’s interlocutory application filed 16 May 2022, amended by leave of the Court on 14 June 2022 (joinder application), in which I indicated I would grant leave to the applicant to join to these proceedings (joinder order) Stephen Bradley Williams (Mr Williams) a legal practitioner and a Partner in the legal firm Norman Waterhouse; the legal firm Norman Waterhouse (Norman Waterhouse); and Norman Waterhouse Lawyers Pty Ltd (NW Pty Ltd), as fourth, fifth and sixth respondents respectively (together the proposed respondents): Hillier v Martin (No 14) [2022] FCA 984.

2    When I delivered my decision, the applicant identified an outstanding issue about the date upon which the joinder order was to take effect. In their submissions on the merits of the application, the applicant had sought an order, relying on r 1.35 of the Federal Court Rules 2011 (Cth) (FCR), that contrary to FCR 9.05(3), the date upon which the joinder order is to take effect is 28 April 2022. No argument on the point was developed during the argument by the applicant or the proposed respondents, however the proposed respondents opposed any order that the joinder order take effect on 28 April 2022.

3    Under those circumstances, I ordered the applicant and proposed respondents to file and serve written submissions on the issue of the date the joinder order is to take effect and listed the matter for argument on 20 September 2022.

4    Following the argument on 20 September 2022, I made orders, amongst others that:

    Pursuant to FCR r 9.05, leave is granted to the applicant to join as respondents to the within proceedings, Stephen Bradley Williams; Norman Waterhouse Lawyers (a Firm); and Norman Waterhouse Lawyers Pty Ltd;

    FCR 9.05(3) is dispensed with; and

    Pursuant to FCR 1.32 and 1.35, the joinder of parties is to take effect from 23 May 2022.

5    After making those orders, I indicated that I would publish reasons for making the order that the date the joinder order is to take effect is 23 May 2022. These are those reasons.

6    I also made an order granting leave to the applicant to plead s 48 of the Limitations of Actions Act 1936 (SA). In these reasons, I also explain the basis for making that order.

Principles - date of joinder

7    FCR 9.05(3) provides:

9.05    Joinder of parties by Court order

…

(3)    If a person is joined as a party under this rule, the start date of the proceeding for the person is the date on which the order is made.

8    FCR 1.32 and 1.35 provide:

1.32    Court may make any order it considers appropriate in the interests of justice

The Court may make any order that the Court considers appropriate in the interests of justice.

…

1.35    Orders inconsistent with Rules

The Court may make an order that is inconsistent with these Rules and in that event the order will prevail.

9    In Lee v Parker (No 2) [2022] FCA 582, Halley J considered whether an order should be made pursuant to FCR 1.35 that contrary to FCR 9.05(3) the start date for proceedings to which new plaintiffs had been joined should be the date of the commencement of the proceedings and not the date of the order joining the new plaintiffs to the proceedings.

10    The principle by which an amendment takes effect from the date the proceedings in question were commenced is commonly referred to as the “relation-back principle”. One of the concerns with the relation-back principal is that it may operate to the prejudice of a party joined as a respondent to proceedings as it may deprive that party of a defence that the action is statute barred for limitations.

11    At [112] of Lee, Halley J referred to the judgment of the Full Court (Allsop CJ, Murphy and Lee JJ) in Ethicon Sàrl v Gill [2018] FCAFC 137; (2018) 264 FCR 394 at [47]. One of the issues before the Full Court was a point of principle raised by the respondents to those proceedings that the operation of the relation-back principle would deprive some of the respondents of a limitation defence. The Full Court observed that it was an overgeneralisation to say the “usual position” is that an amendment of a statement of claim takes effect from the commencement of the proceeding and that although it is undoubtedly the case that amendments often take effect from the commencement of the proceeding, that occurs in circumstances where the amendment is to add a claim between existing parties that arises out of the same or substantially the same facts, which is as an amelioration of the rule of practice established by Weldon v Neal (1887) 19 QBD 394. The Full Court continued by referring to the “usual position” explained by Brereton J in Street & 7 v Luna Park Sydney Pty Ltd [2006] NSWSC 230 at [46] to [47]:

It is true that ordinarily “an amendment, duly made, takes effect, not from the date the amendment is made, but from the date of the original document which it amends” [Baldry v Jackson [1976] 2 NSWLR 415, 419 (Samuels JA)]. Since Baldry v Jackson, there has been considerable judicial discussion of this “relation-back” doctrine, in the context of limitation periods [Liff v Peasley [1980] 1 All ER 623, 641-643 (CA); [1980] 1 WLR 781, 802-804; Ketteman v Hansel Properties Ltd [1987] AC 189 (HL); Wenham v General Credits Ltd (NSWSC, McLelland J, 16 December 1988, unreported); Fernance v Nominal Defendant (1989) 17 NSWLR 710 (NSWSC); Wardley Australia Ltd v State of Western Australia (1992) 175 CLR 514, 559-562 (HCA); Morgan v Banning (1999) 20 WAR 474 (WASC, FC); Agtrack (NT) Pty Ltd v Hatfield (2003) 7 VR 63 (VCA); Agtrack (NT) Pty Ltd v Hatfield (2005) 218 ALR 677 (HCA)]. Generally, these cases have dealt with the relation-back doctrine in the context of two categories of amendments: those which would add a new defendant after the applicable limitation period against that defendant had expired, and those which would introduce a new cause of action after the limitation period for its commencement had expired.

As to the first, it is clear that the relation-back principle does not apply to an amendment which adds a party: where a party is added, proceedings against it are commenced only at the date of its joinder, so that the relation-back doctrine does not deprive a party joined after expiry of a limitation period of its limitation defence [Liff v Peasley; Ketteman v Hansel Properties; Wenham v General Credits; Fernance v Nominal Defendant].

12    Halley J continued: at [116], that he was not persuaded that an order should be made dispensing with FCR 9.05(3) with the result that the date of the commencement of the proceedings to which new plaintiffs had been joined was the date the amended originating process was filed and not the date the original proceedings were commenced. In so doing, his Honour was exercising his discretion to dispense with FCR 9.05(3), the source of which is, at least, FCR 1.32 and 1.35.

The parties’ submissions

13    In making the joinder application the applicant had sought leave to file and serve a fourth amended statement of claim: Annexure JH-77 to the eighth affidavit of James Hillier sworn and filed on 23 May 2022 (eighth Hillier affidavit).

14    At the argument on 20 September 2022, the applicant informed the Court that it now sought an order that the joinder order take effect from 23 May 2022, which is the date the applicant had filed the eighth Hillier affidavit.

15    The first and second respondents and the proposed respondents opposed an order that the joinder order take effect from 23 May 2022.

16    The first and second respondents did not advance any submissions as to why they opposed such an order, other than joining with the proposed respondents’ submissions.

17    Apart from opposing such an order, the proposed respondents put forward alternative dates of 7 June 2022 or 9 June 2022, those dates being the dates the proposed respondents filed their written submissions on the question of joinder, and the applicant filed his written submissions respectively. The third respondent has taken no active part in these proceedings.

The proposed respondents’ submissions

18    The proposed respondents submit that the applicant has not demonstrated a good reason to depart from FCR 9.05(3) and that the Court should not order that the joinder order take effect on a date which deprives them of limitation defences that would otherwise be available to them. They refer to Dudley (Liquidator) v RHG Construction Fitout and Maintenance Pty Ltd [2019] FCA 1355 [44] where Jackson J said that r 9.05(3) evidences an intention to depart from the principle that if a new respondent is joined to an existing action, for the purposes of limitation of actions, the joinder is automatically taken to have effect from the filing of the originating applications.

Consideration - backdating the joinder order

19    I set out the history of this application in Hillier v Martin (No 14) at [1], [11]-[20], [24]-[36].

20    The applicant’s application to join the proposed respondents to the proceedings was filed on 16 May 2022 and served on the first and second respondents as well as the proposed respondents. It was amended by leave granted on 14 June 2022 to add Norman Waterhouse (a Firm) to the proposed respondents.

21    An application to join a party to proceedings is often made ex parte. However, given the application to join the proposed respondents was directed at the first and second respondents’ solicitors, it was entirely appropriate to serve the joinder application on the proposed respondents.

22    Had it been the case that the application proceeded ex parte, in principle, it may well have been that the orders joining the proposed respondents to these proceedings could have been made following the filing of the eighth Hillier affidavit on 23 May 2022.

23    The proposed respondents sought the opportunity to make submissions in opposition to any order joining them to the proceedings. The consequence was that although the joinder application was made on 16 May 2022, argument on the application was delayed until 14 June 2022, at which time judgment was reserved.

24    Judgment was further delayed by an ultimately unsuccessful application by a non-party, Thomas Patrick Martin, to re-open argument for the purpose of him making submissions and tendering evidence on the joinder application: Hillier v Martin (No 13) [2022] FCA 939. Judgment in this matter was delivered on 22 August 2022.

25    There is nothing in FCR 9.05 that excludes it from the operation of FCR 1.32 and 1.35. Had it been intended that there be a limit on the operation of the discretion contained in either of those rules, it would have been easy to do so. The reference by the proposed respondents to the observations of Jackson J in Dudley do not assist them.

26    I note that in McAlister v New South Wales and Ors [2014] FCA 702; (2014) 223 FCR 1, Edmonds J considered an application by a non-party to be joined to existing proceedings. His Honour held that the Court did not have power under FCR 9.05 to join a non-party to proceedings on that non-party’s application: at [21]. His Honour continued that even if he was of the view that the Court did have power, he was not satisfied that the threshold requirements in FCR 9.05(1)(b)(i) or (iii), which in that case needed to be satisfied in order to engage the power to order a joinder, had been met. In answer to a submission that the general power in FCR 1.32 allowed his Honour to make the joinder order notwithstanding the preconditions in FCR 9.05(1)(b) had not been satisfied, his Honour considered that if there was power under FCR 9.05 for a non-party to be joined as a party on its own application, a general power such as FCR 1.32 should not be exercised in a way that transcends the threshold requirements which FCR 9.05 placed on the exercise of the discretion under the specific power: at [23].

27    The decision in McAlister may be understood in the context of his Honour considering the operation of FCR 1.32 against the non-satisfaction of threshold requirements in FCR 9.05(1)(b)(i)-(iii). The threshold requirements are prescriptive and the exercise of the discretion consequent upon an application pursuant to FCR 9.05(1) is conditioned on satisfaction of those threshold requirements. It is against that background that the general provision in FCR 1.32 which empowers the Court to make any order it “… considers appropriate in the interests of justice” falls to be considered. It is difficult to see why in circumstances where the threshold requirements in FCR 9.05(1) and/or (2) are not met such that the discretion in FCR 9.05 is not enlivened, it is otherwise in the interests of justice to join a non-party to proceedings on that non-party’s application. It is that reasoning which seems to have led his Honour to the conclusion he reached.

28    The operation of FCR 1.32, and the power in the Court to make any order it considers appropriate “in the interests of justice”, is to be contrasted with the power in FCR 1.35 which allows the Court to make an order that is “… inconsistent with these Rules and in that event the order will prevail”. It does not seem that FCR 1.35 was referred to or relied upon in McAlister, although in Lee v Parker (No 2) FCR 1.35 was the subject of Halley J’s consideration as to whether the joinder orders his Honour made in that matter should take effect from the date the original proceedings were commenced.

29    It is important to note that as part of the proposed respondents’ submissions in opposition to the joinder application in this matter, the proposed respondents had submitted, albeit faintly, the cause of action in conspiracy alleged in the fourth amended statement of claim may be out of time. There was no positive submission by the proposed respondents that that was the case, although the matter was raised. I noted in Hillier v Martin (No 14) at [99] that should that be the case, the respondents and proposed respondents would have the opportunity to plead a limitation defence.

30    It is also important to note that I am informed by the parties that on 28 April 2022 the applicant filed proceedings in the Supreme Court of South Australia alleging, what I am told, are similar allegations against Mr Williams. I was also informed by the applicant that the reason for filing those proceedings on that date was against the possibility, not accepted by the applicant, that the cause of action in conspiracy and the second limb of Barnes v Addy (1874) LR 9 Ch App 244, both of which form part of the fourth amended statement of claim, may be the subject of a time bar which was due to expire on 29 April 2022.

31    In the eighth Hillier affidavit, the applicant deposed to his intention to instruct his solicitors to apply to cross-vest those Supreme Court proceedings to this Court if necessary.

32    The consequence of the applicant seeking an order that the joinder order take effect as from 23 May 2022, is that if in fact there is a potential limitation defence available to the first and second respondents and the proposed respondents as of 29 April 2022, that potential limitation defence is not removed by the joinder order taking effect as from 23 May 2022.

33    During the argument on 20 September 2022, Counsel for the proposed respondents was unable to point to any prejudice that would be suffered by his clients if the joinder order took effect from 23 May 2022. So too, Counsel for the first and second respondents was unable to point to any prejudice.

34    In Lee, Hally J identified five reasons why he was not persuaded to make such an order. Relevant to this matter are the first, third and fifth reasons: Lee [117], [119] and [121]. In summary, those reasons are:

(a)    The effect of making such an order would be to permit a plaintiff to overcome a limitation period by joining parties to existing proceedings to advance claims that they may have otherwise been precluded from pursuing if they had commenced new proceedings: [117];

(b)    The explanation for the delay in the matter before his Honour was not compelling in the sense that it did not account for the whole of the delay in joining the new parties as plaintiffs: [119]; and

(c)    Although there was a substantial overlap in the claims made by the parties who were to be joined to the proceedings as new plaintiffs and the common factual matrix giving rise to the new plaintiff’s respective claims, weighed in favour of making a relation-back order, that was outweighed by the prejudice to a respondent in not being able to rely on a potential limitation defence that might have arisen between the time the proceedings commenced on the joinder of the new parties as plaintiffs to the proceedings.

35    There are number of reasons why I consider it is in the interests of justice that the joinder order should take effect from 23 May 2022.

36    First, Brereton J observed in Street & 7, in the passage to which the Full Court referred in Ethicon at [47], the relation-back principle does not apply to an amendment which adds a party so that the relation-back doctrine does not deprive a party joined after expiry of a limitation period of its limitation defence. However, if the joinder order takes effect from 23 May 2022, that will not permit the applicant to overcome a limitation period defence by joining parties to existing proceedings in order to advance claims that he may have otherwise been precluded from pursuing if he had commenced new proceedings. To that extent, the respondents and the proposed respondents suffer no prejudice.

37    Second, had the application not been the subject of argument and the consequent need to reserve the decision, it is likely the joinder order would have been made earlier.

38    Third, although there has been a delay in bringing the joinder application, I dealt with that delay in setting out part of the history of this matter in Martin v Hillier [2022] FCA 351 at [10]-[22] and Hillier v Martin (No 14) at [7]-[10]. I accept that the delay in bringing the joinder application has been explained by the applicant and that in this case, the delay is not a reason either to refuse to make the joinder order or to refuse to make an order that it take effect on 23 May 2022.

39    Fourth, there is a common factual matrix applicable to at least the first respondent, as well as the proposed respondents. However, unlike the position in Lee: at [121], there is no suggestion that by ordering the joinder order to take effect from 23 May 2022, that will remove the ability of the respondents and the proposed respondents to plead limitation defences, if so advised.

40    Finally, the applicant also seeks an order granting leave to file a further amended originating application to reflect the additional parties and the new cause of action and relief the applicant claims in the fourth amended statement of claim. The order granting leave to file a further amended originating application will take effect from 23 May 2022. For the avoidance of any doubt, it is the additional relief claimed in the further amended originating application reflecting the new causes of action now sought in the fourth amended statement of claim that will take effect from 23 May 2022.

41    It is for these reasons that in the exercise of my discretion, I dispensed with FCR 9.05(3) and ordered that in the interests of justice, the joinder of the proposed respondents is to take effect from 23 May 2022.

Oral application for leave to file a further amended fourth statement of claim

42    At the hearing on 20 September 2022, the applicant also sought leave, orally, to file the proposed fourth amended statement of claim with a further amendment so as to plead s 48 of the Limitation of Actions Act 1936 (SA).

43    The first and second respondents opposed leave being granted to the applicant to plead s 48 of the Limitations of Actions Act as part of the proposed fourth amended statement of claim. No grounds were advanced in support of their opposition.

44    The proposed respondents also opposed the grant of leave and sought the opportunity to consider the text of any pleading in advance of leave being granted so as to form a position on the terms of the proposed amendment.

45    I declined to give them that opportunity. A pleading of s 48 under the Limitation of Actions Act will either raise matters sufficient to give rise to a potential entitlement to an extension of time within which to commence proceedings, or it will not. The pleading of s 48 of the Limitation of Actions Act in the circumstances of this matter does not require the provision of the proposed pleading to either the first and second respondents nor to the proposed respondents in advance of leave being granted. The first and second respondents, as well as the proposed respondents, will have sufficient time before they are required to file and serve their defences to the fourth amended statement of claim and to consider the s 48 amendment.

46    There is no suggestion of any prejudice to the respondents or the proposed respondents in the event the applicant pleaded s 48 of the Limitation of Actions Act. It is for the reasons I have set out, that in the exercise of my discretion, I granted leave to the applicant to plead s 48 of the Limitations of Actions Act.

Associate:

Dated:    18 October 2022

SCHEDULE OF PARTIES