New South Wales Supreme Court CITATION : State Bank of NSW Ltd v White & Anor [1999] NSWSC 887 CURRENT JURISDICTION : Common Law FILE NUMBER(S) : 13264/96 HEARING DATE(S) : 31 August 1999 JUDGMENT DATE : 2 September 1999 State Bank of New South Wales Limited (Plaintiff) PARTIES : David Stewart White (First defendant) Lesleigh Whaite (Second defendant) JUDGMENT OF : Master Harrison Mr L J Aitken with Ms C I Smith (Plaintiff) COUNSEL : N/A (First Defendant) Mr McQuillen (Second defendant) Ms Sancia de Jersey Abbott Tout (Plaintiff) SOLICITORS : Mr P McKell McKells (Second Defendant) CATCHWORDS : Leave to file cross claim ACTS CITED : Supreme Court Act 1970 CASES CITED : Payne v Young & Ors (1979-80) 145 CLR 609 Permanent Trustee Australia Ltd & Anor v Dowd 11 ACSR 68 DECISION : See para 13 5 THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION MASTER HARRISON THURSDAY, 2 SEPTEMBER 1999 13264/96 - STATE BANK OF NEW SOUTH WALES LIMITED DAVID STEWART WHITE & ANOR JUDGMENT (Leave to file cross claim) 1 MASTER: By notice of motion filed 23 April 1999 the second defendant/cross claimant seeks orders that D S & L White Carrying Pty Limited (the company) be added as a cross claimant and that leave be granted to add the company as a party to these proceedings. The second defendant/cross claimant relied on two affidavits of Peter Brian McKell sworn 17 March 1999 and 31 May 1999. The plaintiff did not rely upon any affidavit evidence. It opposed the order sought. There was no appearance of David Stewart White the first named defendant. 2 The statement of claim pleads a cause of action which arose as between the State Bank of New South Wales Limited as plaintiff and David Stewart White and Lesleigh White as defendants. The defendants mortgaged to the plaintiff by way of third party mortgage the whole of the land and improvements contained in Certificate of Title Folio Identifier 15/702410 being the property known as 23 Shand Close Illawong (the property) to secure certain advances made by the plaintiff to D S & L White Carrying Pty Limited. 3 On about 19 July 1989 the funds were placed in the company account. It is pleaded that the company failed to repay the moneys advanced under the mortgage. The plaintiff has claimed a monetary sum of $442,273.50 and possession of the property from the defendants. 4 A cross claim has been filed by Lesleigh White as cross claimant against the plaintiff as cross defendant. The proposed amended cross claim names Lesleigh White as the first cross claimant and D S & L White Carrying Pty Limited (the company) as cross claimant and the plaintiff as cross defendant. The company had been deregistered but has now been "registered". The company consents to being joined as a cross claimant (Ex A). The company has not been named as a defendant in the statement of claim. It is a new party that is seeking to cross claim against the plaintiff. The plaintiff has not pleaded a cause of action against the company nor does it seek any judgment or orders against it. 5 Part 6 of the Supreme Court Rules (SCR) refers to cross claims. Part 6 r 6 provides: "Conduct of proceedings generally 6(1) Subject to this Part, the proceedings on a cross-claim shall follow as nearly as may be the course of proceedings on the originating process in respect of which the cross-claim is filed. (2) Subject to this Part, and without limiting the generality of subrule (1), these rules apply to a cross-claim and the proceedings arising from it as they apply to the originating process in respect of which the cross-claim is filed and the proceedings arising from it. (3) Subrules (1) and (2) apply as if— (a) the cross-claim were the originating process in respect of which the cross-claim is filed; (b) the cross-claimant were a plaintiff; and (c) the defendant to the cross-claim were a defendant. (4) A plaintiff in an originating process need not enter an appearance to a cross-claim in the same proceedings. (5) An appearance entered by a party to the proceedings shall, upon service of a cross-claim on him, operate as an appearance to the cross-claim. (6) Subject to this Part, the trial or hearing and all other steps in the proceedings on the cross-claim shall as far as practicable be carried on together with the trial or hearing and similar steps in the proceedings on the originating process in respect of which the cross-claim is filed." 6 The second defendant referred to Part 8 r 8 of the SCR. Part 8 refers to causes of action and parties. Part 8 r 8 states: "Addition of parties (1) Where a person who is not a party— (a) ought to have been joined as a party; or (b) is a person whose joinder as a party is necessary to ensure that all matters in dispute in the proceedings may be effectually and completely determined and adjudicated upon, the Court, on application by him or by any party or of its own motion, may order that he be added as a party and make orders for the further conduct of the proceedings. (2) A person shall not be added as a plaintiff without his consent. (3) Without limiting the generality of subrule (1), where a person not a party to proceedings for possession of land is in possession (by himself or by a tenant) of the whole or any part of the land, the Court, on application by him, may order that he be added as a defendant and make orders for the further conduct of the proceedings." 7 It is pleaded in the proposed cross claim (and by the cross claim already filed) that in February 1990 the first defendant, as a director of the company, breached his duties by releasing funds belonging to the company to the plaintiff for the purposes of crediting an account with the plaintiff in the name of Gregory J White Pty Limited. It is pleaded that the plaintiff participated in a dishonest and fraudulent scheme by the first defendant whereby the plaintiff and/or Gregory J White Pty Limited received a benefit and that the company is entitled to an equitable set off for the amount the plaintiff is claiming against the second defendant. It is also pleaded that the funds on term deposit as at 2 August 1989 was approximately $350,000 standing to the credit of the account of the company and at that time the plaintiff waived the mortgage. 8 It is my view that the company cannot be joined as a defendant under Part 8 r 8 as the plaintiff has not sought any orders or judgment against it. In these circumstances the joinder of the company is not necessary. 9 The second defendant submitted that a cross claim which names a new party as a cross claimant would permit proceedings on the cross claim to follow as nearly as may be the course of the proceedings on the originating process in respect of which the cross claim is filed. The second defendant submitted that the company may be the true owner of some of the funds and should be permitted to be a cross claimant so as to allow all the issues to be heard and determined. The second defendant referred to Payne v Young & Ors (1979-80) 145 CLR 609 which involved the interpretation of O.16 r 1 of the High Court Rules. I did not find this case helpful. The plaintiff submitted that a new party cannot be a cross claimant. 10 In Permanent Trustee Australia Ltd & Anor v Dowd 11 ACSR 68 at 73 McLelland CJ in Equity held that a cross claim is a claim for relief under s 78 of the Supreme Court Act 1970 (see definition in Part 1 r 8 of SCR) and the capacity to file such a claim is limited to "the defendant in any proceedings". The word defendant is defined in s 19(1) of the Supreme Court Act to include "any person entitled to attend any proceedings". 11 It is my view that the dispute currently pleaded is a cause of action between the plaintiff and defendants in relation to obligations arising out of a third party guarantee. There is no basis for the company being entitled to attend these proceedings. Had the plaintiff joined the company as a defendant and sought relief against it, the company could have cross claimed against the plaintiff. 12 If the company has a cause of action against the State Bank, it can commence fresh proceedings. It may then be appropriate for these matters to be ordered to be heard together. It is my view that the company should not be permitted to cross claim against the plaintiff. Accordingly, the motion should be dismissed. Costs should follow the event. 13 The orders I make are: (1) The second defendant's notice of motion filed 23 April 1999 is dismissed. (2) The second defendant is to pay the plaintiff's costs. ********** Last Modified: 09/02/1999 DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. 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