Murgolo v AAI Ltd t/as AAMI

1. [1]

   On 25 May 2018 Gaetano Murgolo (the plaintiff) brought proceedings by way of statement of claim against AAI Ltd (“AAI”) (the first defendant) and Proline Building – Commercial Pty Ltd (“Proline”) (the second defendant). As against AAI Mr Murgolo claims damages pursuant to s 601AG of the Corporations Act 2001 (Cth) in respect of liability that he alleges was owed to him by Class Welding Pty Ltd (ACN 003 796 825) (“Class Welding”) for a workplace injury which occurred on 19 January 2012. He claims that, by an insurance policy made on or about 4 February 2011, AAI agreed to indemnify Class Welding in respect of all liability that the company became legally liable to pay for compensation for personal injury, subject to the terms and conditions of the policy. That company is now deregistered.

2. [2]

   By notice of motion filed on 23 October 2018, AAI seeks orders that the statement of claim be dismissed pursuant to r 13.4 of the Uniform Civil Procedure Rules 2005 (NSW) (“UCPR”) on two distinct bases: that the proceedings are statute barred by virtue of s 50C(1) of the Limitation Act 1969 (NSW) and that the principle of res judicata applies.

3. [3]

   By notice of motion filed on 16 November 2018 Proline seeks, in reliance upon of s 50C(1) of the Limitation Act, either summary dismissal pursuant to r 13.4 of the UCPR or that the statement of claim be dismissed or struck out pursuant to UCPR r 14.28.

4. [4]

   The hearing came before me on 16 February 2019. Mr Dooley SC with Mr Lee appeared for Mr Murgolo, Mr McCulloch SC with Mr Perla appeared for AAI, and Mr Gambi appeared for Proline.

5. [5]

   Mr Murgolo relied on his affidavit sworn 12 February 2019 and the affidavits of Pierre Joseph Safi sworn on 12 February 2019 and 19 February 2019 (with annexures). AAI relied on the affidavit of Brian George Moroney sworn on 17 December 2018 (with annexures) and a letter dated 13 February 2012 from Proline to the plaintiff’s solicitor. That letter stated that at that time Mr Murgolo was not an employee of Proline but a contractor company that Proline engaged and that the incident on 19 January 2012 was a result of a contractor, Class Welding Pty Ltd, failing to secure an acrow prop that hit the plaintiff as another contractor’s employee. Proline relied on the affidavit of Nicole Ross Cerisola affirmed on 5 November 2018 (with annexures).

6. [6]

   During the hearing counsel for Proline sought, and was granted, leave to withdraw its notice of motion. Leave to do so was opposed by senior counsel for the plaintiff. I granted leave to Proline to withdraw its notice of motion at which time both Proline and Mr Murgolo sought costs of the motion. I reserved the question of costs and have dealt with that issue below at [107]–[112].

7. [7]

   In order to understand the basis of AAI’s complaint it is necessary to trace the unfortunate procedural history of Mr Murgolo’s claim since his accident on 19 January 2012. Much of the facts before me were not in dispute.

8. [8]

   On 19 January 2012, Mr Murgolo was working as a labourer or excavator driver on a building site at Miranda Public School. He was working at the direction of Proline. Proline was operating the building site as a subcontractor pursuant to a contract made with Class Welding (NSW) Pty Ltd (ACN 125 758 769) (“Class Welding (NSW)”) on 28 September 2011. That contract was for the supply, fabrication and installation of metal roofing using devices known as “acrow props.”

9. [9]

   It is alleged that an unsecured acrow prop fell or “dismantled” and struck Mr Murgolo on the left shoulder and arm.

10. [10]

    Records show that at that time the directors of Class Welding (NSW) (Mario Peter Zammit and Mario Albert Zammit) were also the directors of Class Welding, the first defendant in these proceedings.

11. [11]

    By statement of claim filed on 19 February 2013, Mr Murgolo commenced proceedings against Class Welding (“the 2013 proceedings”). Pursuant to s 347 of the Legal Profession Act 2004 (NSW), Mr Murgolo’s solicitor Zac Tayyar from Fortis Law Group certified that

12. [12]

    The verifying affidavit to the 2013 statement of claim was not sworn by Mr Murgolo as the plaintiff. Rather, it was also sworn by his solicitor Mr Tayyar who swore that:

13. [13]

    On 25 June 2013, Mr Murgolo’s solicitor filed a notice of motion seeking orders that leave be granted for Mr Murgolo to join GIO General Limited as a defendant in the proceedings pursuant to s 6 of the Law Reform (Miscellaneous Provisions) Act 1946 (NSW) and that leave be granted to substitute GIO General Limited for Class Welding pursuant to UCPR r 6.29(b). Leave was also sought to file an amended statement of claim.

14. [14]

    In support of Mr Murgolo’s motion, Mr Tayyar swore an affidavit on 25 June 2013 in which he deposed that he had known that Class Welding was in liquidation prior to filing the statement of claim and that he was advised by the liquidator that Employers Mutual NSW Limited was the insurer of Class Welding at the time. He later learned that Employers Mutual was Class Welding’s workers compensation insurer and not the Public Liability Insurer. Further enquiries had revealed that GIO General Limited was the public-liability insurer for Class Welding at the relevant time.

15. [15]

    Mr Tayyar further deposed that on 12 March 2013 he had sent a letter to GIO Limited’s solicitor, Moray and Agnew, serving the statement of claim, the statement of particulars, the plaintiff’s general case management document and a copy of a certificate of currency noting that the matter was further listed for mention on 29 May 2013 and that a defence needed to be filed within 28 days.

16. [16]

    On 11 April 2013, Moray and Agnew, the solicitors which represent GIO Limited, responded to this letter by seeking service of the plaintiff’s medical evidence and documents in support as required by UCPR r 15.12 as well as proof of formal service.

17. [17]

    On 1 May 2013, Moray and Agnew wrote a further letter to Mr Tayyar seeking further and better particulars noting that it was assumed that Mr Tayyar would allow a reasonable time after the provision of these answers to file a defence.

18. [18]

    On 26 June 2013, David Howarth at Moray and Agnew wrote to Mr Murgolo’s solicitor again. The following documents were enclosed:

    1. (1)

       A letter from Proline addressed to Class Welding (NSW) dated 21 September 2011 in relation to the project at Miranda Public School attaching documents including the trade contract;

    2. (2)

       A Trade Contract Agreement – schedule dated 28 September 2011 for a contract between Proline and Class Welding (NSW);

    3. (3)

       Safe work method statement completed by Class Welding (NSW) and submitted by Proline dated 28 September 2011;

    4. (4)

       Subcontractor/supplier safe work method statement checklist dated 20 October 2011 completed by Proline in relation to safe work method statement completed by Class Welding (NSW).

19. [19]

    After enclosing the above documents the letter went on in these terms:

20. [20]

    On 26 June 2013 Mr Tayyar replied to Mr Howarth in these terms:

21. [21]

    On 27 June 2013 Mr Howarth wrote a further letter to Mr Tayyar in these terms:

22. [22]

    There was no evidence before me that there was any reply to this letter.

23. [23]

    On 27 August 2013, Mr Murgolo was given leave to amend the statement of claim substituting Class Welding for Class Welding (NSW) as the defendant.

24. [24]

    No defence was ever filed by Class Welding (NSW) in the 2013 earlier proceedings.

25. [25]

    On 10 March 2014, Mr Murgolo obtained default judgment against Class Welding (NSW) in the sum of $946,242.96 as assessed by Hidden J.

26. [26]

    Class Welding (NSW) was not insured. It was deregistered with ASIC on 17 November 2017. This judgment in the sum of $946,242.96 thus remains unsatisfied.

27. [27]

    Class Welding was insured. It was deregistered with ASIC on 10 August 2016. By the operation of s 601AG of the Corporations Act Mr Murgolo may recover from Class Welding’s insurer an amount that was payable to the company under the insurance contract if Class Welding had a liability to him and the insurance contract covered that liability immediately before deregistration.

28. [28]

    On 11 March 2016, there was a creditors meeting in respect of the debts owed by Class Welding (NSW). The minutes of that meeting show that it was chaired by Marc Galler. The only other persons in attendance were another employee of the chartered accountants and an observer as well as the two directors of Class Welding (NSW) Mario Peter Zammit and Mario Albert Zammit. The following is included in the notes of that meeting:

29. [29]

    On 20 September 2017 Mr Murgolo received advice from senior counsel in light of this information.

30. [30]

    On 25 May 2018, Mr Murgolo commenced proceedings by way of statement of claim against AAI and Proline arising out of the same workplace accident. In relation to AAI, the 2018 proceedings plead and rely upon the identical circumstances that Mr Murgolo relied upon in commencing the 2013 proceedings. The 2018 statement of claim asserts (at [9]) that it was Class Welding which entered into the contract with Proline and had done so “inadvertently describing itself as Class Welding (NSW) Pty Limited and it had properly intended to enter into the contract in the contract in the corporate identity of Class Welding Pty Limited”.

31. [31]

    In his affidavit sworn on 12 February 2019 Mr Murgolo deposed that he instructed Mr Tayyar in about February 2012 that the people on the site supplying the metal roofing worked for Class Welding. He stated that he instructed Mr Tayyar to file a statement of claim against Class Welding and that sometime later he received a call from Mr Tayyar who told him that “we had sued the wrong Class Welding” and that Mr Tayyar was “going to change the name on the Claim”.

32. [32]

    Mr Murgolo further deposed that after default judgment was entered, whenever he contacted Mr Tayyar about his money he was told “it is a hard case and we are working hard on it”. He was subsequently informed that Class Welding (NSW) was not insured and had no assets. Mr Murgolo stated that he was aware there was going to be a liquidators meeting and that “sometime after this meeting, Zak advised me that he would now pursue a claim against Class Welding”.

33. [33]

    Finally, Mr Murgolo deposed “If I had been advised in 2013 that the correct defendant to maintain the proceedings against was Class Welding I would not have given instructions to substitute the defendant to Class Welding NSW.”

34. [34]

    In his affidavit sworn on 12 February 2019 Mr Pierre Safi, the principal of Fortis Law Group, deposed that Mr Tayyar was under his employment as a senior associate at the relevant time but that since one August 2018 he was no longer employed by Fortis Law group. Mr Safi states: “Mr Tayyar’s departure was not under amicable circumstances. I have no contact with Mr Tayyar nor have we communicated since 1 August 2018. He is currently receiving Workers Compensation.”

35. [35]

    The Fortis Law Group acts for Mr Murgolo in the 2018 proceedings.

36. [36]

    Division 6 of Part 2 of the Limitation Act concerns the statutory limitation periods in relation to personal injury claims.

37. [37]

    Section 50C(1)(a) of the Limitation Act relevantly provides:

38. [38]

    It was common ground that the determination of this motion for summary dismissal turns on the proper construction of s 50D(1)(b) of the Limitation Act. Section 50D provides:

39. [39]

    For the purpose of the hearing of the notice of motion, Mr Murgolo conceded that the elements in s 50D(1)(a) (that the injury concerned has occurred) and s 50D(1)(c) (that the injury was sufficiently serious to justify bringing the proceedings) were discoverable within the three-year period. The issue in dispute is when the fact that the injury was caused by the fault of the defendant was discoverable within that period.

AAI’s submissions

1. [40]

   AAI’s motion was based on two alternate arguments: that the proceedings against it were statute barred or that the doctrine of res judicata applied.

2. [41]

   AAI submitted that Mr Murgolo’s claim is statute barred because his claim against Class Welding was discoverable by him well prior to the three-year period ending on 25 May 2015. AAI accepts that it bears the onus of establishing that the cause of action was discoverable before the relevant time, namely before 25 May 2015.

3. [42]

   AAI relied upon the available inference that Mr Murgolo was given advice as to the prospects of success of his claim as against Class Welding prior to commencing proceedings against it in 2013 and that he subsequently gave instructions to his legal representatives to commence those proceedings.

4. [43]

   AAI pointed to the fact that Mr Murgolo knew that there were only two possibilities as to who the contract with Proline was with: Class Welding or Class Welding (NSW). Mr Murgolo sued both of these entities well before the discoverability period expired. All the requisite knowledge for the purposes of s 50D(1)(b) was therefore held at that time. Mr Murgolo cannot “unknow” the earlier fact that the injury was caused by the fault of Class Welding.

5. [44]

   AAI submitted that, in making an evidentiary statement on 2 October 2018 for the purposes of these proceedings Mr Murgolo referred to Class Welding – as opposed to Class Welding (NSW) – as being the first defendant. He stated at [22] of his evidentiary statement: “I understand from working on the site for over 4 months, that [Class Welding] were contracted by Proline to erect scaffolding and acrow props at the School”. It was submitted that, a fortiori, Mr Murgolo must also have held this same knowledge in 2012.

6. [45]

   It was submitted that the question of whether Mr Murgolo knew it was Class Welding which was the cause of the injury or fault, did not require him to know precisely how the cause of action fit together; he just needed to know each of the integral elements. He did not have to “tie all the pieces together” to know that he had a protected cause of action. Further, it was submitted that because Mr Murgolo’s solicitor certified, pursuant to s 347 of the Legal Profession Act 2004, that he had reasonable grounds for believing on the basis of provable facts that the 2013 proceedings had reasonable prospects of success, all of the constituent elements must have been present for the purposes of s 50D(1)(b).

7. [46]

   AAI submitted that the present case can be distinguished from Baggs v The University of Sydney Union [2013] NSWCA 451 because Mr Murgolo always knew of the identity of the defendant. He did not come to learn later on that he had made a mistake. Counsel for AAI submitted this is a case where Mr Murgolo was “right the first time” and “had just gone off on a frolic”. This case is to be determined solely on the elements in s 50D(1)(b). It is no part, nor could it be part, of Mr Murgolo’s cause of action to “super-add” elements in the nature of a complaint about any conduct of any other person, namely, a complaint that he was misled by his or Class Welding’s solicitors.

8. [47]

   As to Mr Murgolo’s understanding and knowledge at the time that the 2013 statement of claim was filed (in which Class Welding is named as the defendant), AAI submitted that it is to be borne in mind that Mr Murgolo has not sought to demonstrate that he was labouring under any mistake at that time nor or that there were any vitiating factors.

9. [48]

   AAI further argued that Mr Murgolo should have made an application for preliminary discovery had he had doubt as to which entity was the appropriate one to sue.

10. [49]

    The was AAI’s primary submission that the fact of the creditor’s meeting was irrelevant to this issue but in any event “it was a form of de facto creditors’ examination, not conducted in the usual and proper way when the only attendees at the meeting were the plaintiff's solicitor and the two directors.”

11. [50]

    The second submission of AAI was that because Mr Murgolo has already obtained default judgment as against Class Welding (NSW) in respect of the identical subject matter, the present proceedings are an abuse of process. There has been no application to set aside the default judgment nor is there a contention that the judgment was obtained irregularly. When Mr Murgolo obtained judgment against Class Welding (NSW), his cause of action against Class Welding merged into the judgment and, as such, it is an abuse of process for him again to proceed upon that cause of action, this time against AAI.

12. [51]

    Reliance was placed on the decisions in Tomlinson v Ramsey Food Processing Pty Limited (2015) 256 CLR 507; [2015] HCA 28 and Zetta Jet Pte Ltd v The Ship “Dragon Pearl” [2018] FCAFC 132. I shall consider these decisions in my consideration below.

Plaintiff’s submissions

1. [52]

   Counsel for Mr Murgolo submitted that it is important to appreciate that this is not a hearing of a separate question. Rather, AAI is required to establish that the 2018 proceedings are doomed to fail by demonstrating that his contentions as to the date of discoverability are manifestly hopeless.

2. [53]

   As for the discoverability issue, Mr Murgolo contended that the date of discoverability is 20 September 2017 (the date of the creditors’ meeting) or a date shortly thereafter.

3. [54]

   It was submitted that the court could not be satisfied to the requisite standard that Mr Murgolo knew, or ought to have known, that Class Welding was at fault prior to his solicitor, Mr Tayyar, being informed of this after the creditors meeting on 11 March 2016. He subsequently received advice from Senior Counsel on 20 September 2017.

4. [55]

   It was submitted that the correspondence between the respective solicitors on 26 and 27 June 2013 demonstrates that there was an issue as to the correct defendant. By engaging his solicitors, Mr Murgolo took all reasonable steps to ascertain the correct identity of the defendant. The failure of the solicitors to properly maintain proceedings against the correct defendant or provide correct advice to him in respect of the same is not his fault for the purposes of s 50D(1)(b): citing Baker-Morrison v State of New South Wales (2009) 74 NSWLR 454; [2009] NSWCA 35 (“Baker-Morrison”) at [57]–[59]. It was submitted that there was no submission that Mr Murgolo ought to have “second guessed” the advice of his solicitor.

5. [56]

   Mr Murgolo’s primary submission on the res judicata issue is that these proceedings involve different parties to the 2013 proceedings. He submitted that res judicata requires exactly the same parties or their privies, which is not the case in the present proceedings.

Consideration

1. [57]

   The test to be applied by a court when considering summary dismissal is clear. It has been variously expressed as a claim being “so obviously untenable that it cannot possibly succeed”, “manifestly groundless”, or “so manifestly faulty that it does not admit of argument”: General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125 at 128–129. In Dey v Victorian Railway Commissioners (1949) 78 CLR 62 at 91 Dixon J observed that before summary intervention can be justified, the case must be a very clear one and there must be no real question of fact or law to be determined.

2. [58]

   In Agar v Hyde (2000) 201 CLR 552 Gaudron, McHugh, Gummow and Hayne JJ stated the following at [57]:

3. [59]

   In O'Brien v Bank of Western Australia Ltd [2013] NSWCA 71 the Court of Appeal (Beazley P with whom Macfarlan and Ward JJA agreed) observed at [3]:

4. [60]

   Limitation questions should generally not be decided in interlocutory proceedings except in the clearest of cases: Wardley v State of Western Australia (1992) 175 CLR 514 at 525. I am satisfied that I would only grant AAI’s motion if it can clearly establish that the proceedings have been brought against them out of time. I am also satisfied that in this case the question turns on the meaning of s 50D(1)(b) of the Limitation Act rather than any disputed evidence. If I accept AAI’s construction of s 50D(1)(b) then the factual issue of what was said at the creditors’ meeting on 11 March 2016 is not relevant.

5. [61]

   It is with these principles in mind that I consider AAI’s motion that the proceedings against it be dismissed on the basis that they are statute barred.

6. [62]

   Section 50C(1)(a) of the Limitation Act relevantly provides that an action for damages that relates to personal injury to a person is not maintainable if brought after the expiration of a limitation period of 3 years running from and including the date on which the cause of action is discoverable by the plaintiff. Section 50D(1) provides that a cause of action is discoverable by a person on the first date that the person knows or ought to have known each of three specified facts as set out in sub-sections (a), (b) and (c).

7. [63]

   Mr Murgolo’s concessions for the purposes of the motion that the proceedings have been brought outside the three-year period from when he knew the facts in s 50D(1)(a) (that the injury concerned has occurred) and s 50D(1)(c) (that the injury was sufficiently serious to justify bringing the proceedings) were properly made.

8. [64]

   As regards s 50D(1)(a), Mr Murgolo asserted in his evidentiary statement dated 2 October 2018 that he had a conversation with Mr Stephen Brennan of Proline on the day of the incident in which he said to him, inter alia, “I am seriously injured”. He saw a medical practitioner that day and the following day told Mr Brennan that he was unable to attend work because he was injured from the incident the day before. He subsequently completed a Westpac Income Protection – First Notice of Claim nominating the date of the injury as being 19 January 2012 and that he suffered a “tear of tend[ons] to left shoulder” and could not lift his left arm.

9. [65]

   As regards s 50D(1)(c), Mr Murgolo particularised his injury and claim in his Statement of Particulars dated 19 February 2013. He claimed for various injuries to his left arm and shoulder arising in surgery as well as psychological injury. Putting to one side who the injury was caused by, I am satisfied that Mr Murgolo “knew” that any damages that could be recovered would be large enough to be worth the time and trouble of suing.

10. [66]

    That leaves the only remaining issue of whether s 50D(1)(b) is satisfied in this matter. This turns on the question of when Mr Murgolo “knew” or “ought to have known” that the injury was caused by the fault of Class Welding. The meaning of “know” in this statutory context was considered by Basten JA in Baker-Morrison. His Honour (with whom Ipp and Macfarlan JJA agreed) observed the following at [45]

11. [67]

    Basten JA was therein considering the question of whether knowledge of “fault of the defendant” in s 51D(1)(b) should be construed as knowledge of a cause of action against the defendant. His Honour had earlier stated at [28]:

12. [68]

    And at [39]:

13. [69]

    In Bostik Australia Pty Ltd v Liddiard & Anor [2009] NSWCA 167, the same approach was taken by the Court of Appeal on the question of the identity of the defendant(s). It was held (at [38]–[39]) that it is not sufficient for the purposes of s 50D(1)(b) that the plaintiff knows the facts necessary to establish the fault of the defendant; he or she must also know that, as a matter of law, that person is liable to pay damages.

14. [70]

    In State of NSW v Gillett [2012] NSWCA 83, the Court of Appeal empanelled five judges to consider whether Baker-Morrison was wrong, as was contended by the State. The State’s argument was that for the purposes of s 50D(1)(b), the necessary knowledge is of “facts” sufficient to establish that a person has a cause of action and not whether the defendant is legally liable. Beazley P with whom the other members of the court agreed, held at [94] and [95]:

15. [71]

    Campbell JA further observed at [131]:

16. [72]

    Another decision of the Court of Appeal concerning the meaning of s 50D(1)(b) of the Limitation Act is Baggs v University of Sydney Union [2013] NSWCA 451. That case concerned when the plaintiff “knew” that the injury was caused “by the fault of the defendant”. Ms Baggs brought proceedings for injuries she sustained following a fall down a flight of stairs during a fire drill in the Wentworth Building at the University of Sydney on 21 May 2003. Within days of the fall she lodged a workers’ compensation claim against the University. It was not until 31 March 2010 that she was advised that it was in fact the Union, rather than the University, which was the occupier of the building in 2003. Her evidence was that at all times she believed that the Sydney University Union was at fault but she also thought that the Union was a part of the University of Sydney.

17. [73]

    Meagher JA (with whom Macfarlan and Hoeben JJA agreed) noted (at [13]) the observations of Beazley P in Gillett at [94]–[95] (extracted above at [70]) and held (at [28]) that the primary judge erred in concluding that Ms Baggs knew that her injury was caused by the fault of the Union. His Honour went on to state:

18. [74]

    More recently in Smith v Hunter New England Local Health District [2016] NSWSC 248 Adamson J summarised the principles in relation to s 50D(1)(b) as follows at [58]:

19. [75]

    None of these decisions concerned the question that arises in this matter, although the principles derived from them concerning the meaning of “know” in s 50D(1) are pertinent.

20. [76]

    The first of the two questions to be determined is at what time did Mr Murgolo first believe that a case against Class Welding (as opposed to Class Welding (NSW)) could be established on the balance of probabilities (to adopt the meaning of “know” as explained by Basten JA in Baker-Morrison at [45])? If it was within the discoverability period then the second question is, what is he relevance of his solicitor’s actions and the letters from GIO on 26 and 27 June 2013 to the question of when that fact was discoverable?

21. [77]

    Turning to the first question, I am satisfied that Mr Murgolo believed that a case against Class Welding could be established on the balance of probabilities by the commencement of the 2013 proceedings at the latest. This means that I am satisfied that he knew of the relevant facts in s 50D(1)(b) of the Limitation Act at least five years prior to the commencement of the 2018 proceedings. I have based this finding on the following evidence.

22. [78]

    Mr Murgolo commenced proceedings against Class Welding on 19 February 2013. It is to be inferred that Mr Murgolo was given advice as to the prospects of success of that claim and that Mr Murgolo subsequently gave instructions to his legal representatives consistent with that advice to commence the proceedings. Section 347 of the Legal Profession Act 2004 required Mr Murgolo‘s solicitor, Mr Tayyar, to certify that there were reasonable grounds for believing on the basis of provable facts and a reasonably arguable view of the law that the claim for damages have reasonable prospects of success. Although it was again Mr Tayyar, as opposed to Mr Murgolo, who swore the affidavit verifying that the allegations of fact in the statement of claim were true, it is again to be inferred that he did so based on instructions from Mr Murgolo.

23. [79]

    There is other contemporaneous documentation to establish that Mr Murgolo believed at that time that the injury was caused by Class Welding. For example, he filed a General Case Management document on 19 February 2013 signed by his solicitor which specifically pleaded that it was Class Welding which owed a duty of care to him and breached that duty of care and it was due to Class Welding’s negligence that he suffered serious injury, loss and damage.

24. [80]

    Even more problematic for Mr Murgolo is the fact that more recently, in his evidentiary statement dated 2 October 2008, he states that he understood back at the time of the accident that it was Class Welding (rather than Class Welding (NSW)) which was contracted by Proline to erect the scaffolding and acrow props at the Miranda Pubic School. On Murgolo’s own case he submits that he knew Class Welding was the defendant as at the date of the accident.

25. [81]

    Mr Murgolo’s argument on this motion for summary dismissal was that he did not really know that Class Welding was the defendant until the creditors’ meeting on 11 March 2016 at the earliest. The difficulty with this contention is that it requires the court to make a finding that although Mr Murgolo “knew” that Class Welding was the defendant by 19 February 2013 at the latest, that he subsequently changed his position and, for the purposes of s 50D(1)(b) of the Limitation Act, he ”un-knew” it by the time his solicitor amended the 2013 statement of claim to remove Class Welding as the defendant in the proceedings on 25 August 2013.

26. [82]

    Although it is to be accepted that a plaintiff can be wrong about who the defendant should be either prior to proceedings being commenced or during them, I am unable to accept the plaintiff’s position that he “knew” the relevant fact shortly after the accident, apparently “un-knew” it at the time that Class Welding was removed as the defendant in the 2013 proceedings and then later still “knew” it again sometime after the creditors’ meeting in 2016.

27. [83]

    In circumstances where I am satisfied that Mr Murgolo knew the identity of Class Welding as the defendant by 13 February 2013 at the latest, the second question is whether the actions of his then solicitor, or the solicitor for GIO or the directors of Class Welding (NSW) are relevant to the question of that discoverability.

28. [84]

    Reliance was placed by counsel for Mr Murgolo on the exchange of correspondence between Mr Murgolo’s solicitor and Moray and Agnew on 26 and 27 June 2013 extracted above at [18]–[21] It is common ground that at that time documents were provided to Mr Murgolo’s solicitor which supported the proposition that Class Welding (NSW) might be the relevant party to the contract with Proline rather than Class Welding. In the 27 June 2013 letter to Mr Tayyar, Mr Howarth drew Mr Tayyar’s attention to the fact that the contract and other contemporaneous documents named Class Welding (NSW) as the contracting party with Proline rather than Class Welding. After suggesting to Mr Tayyar that it appeared to the solicitor for the GIO that Mr Murgolo may have sued the wrong party, the letter goes on to state that “it is not our interpretation that matters since we do not act for the plaintiff and we do not act for Class Welding (NSW) Pty Limited”. The 27 June 2013 letter to Mr Tayyar goes on to state:

29. [85]

    After indicating that GIO’s position, in the event that it was joined as a defendant, would be to file a defence in reliance upon the documents already provided to Mr Tayyar, the letter goes on to state that “[i]f you were to provide us with evidence that suggested otherwise we might have to reconsider that position.” Mr Howarth then repeats, “[i]t remains though a matter for the plaintiff to decide which defendant or defendants he wishes to sue and which evidence he chooses to rely upon or reject”. It is further stated, “[a]s we have indicated we do not know what evidence you relied upon in suing Class Welding Pty Limited. It could well be that the evidence you relied upon is entirely contrary to what we sent you yesterday, but until we see it, we simply do not know.”

30. [86]

    The solicitor for GIO had no instructions to act for either Class Welding or Class Welding (NSW). What he did have were the documents which disclosed that Class Welding (NSW) was stated to be the contracting party with Proline. Mr Tayyar was informed by Mr Howarth that it was a matter for the plaintiff to make decisions about how best to proceed rather than for the GIO.

31. [87]

    It is to be inferred that doubt must have arisen after that time on the part of Mr Tayyar as to the identity of the defendant in the proceedings. There is no evidence that he responded to the letter from GIO. The evidence discloses that the next step taken was to tell Mr Murgolo that he had sued the wrong party and to discontinue proceedings against Class Welding and commence them against Class Welding (NSW). There is no evidence before the court, and nor was it suggested there would ever be, as to why, presuming any doubt existed at that time on the part of Mr Tayyar, he did not add Class Welding (NSW) as a second defendant in the 2013 proceedings so that the issue of the correct defendant could have then been resolved as between those defendants. But that did not happen. Instead, the proceedings were discontinued as against Class Welding and Class Welding (NSW) was substituted as the defendant as opposed to added as a second defendant.

32. [88]

    I have considered the question of whether the fact that Mr Murgolo may have been misled by his then solicitor into discontinuing proceedings against Class Welding in August 2013 is relevant to the discoverability of the identity of the defendant in this matter. I am satisfied that it is not relevant. On the evidence before me, most of which was not in dispute, Mr Murgolo first “knew” that Class Welding had caused the injury he suffered shortly after the accident. The fact that he was later advised by his solicitor to discontinue proceedings against Class Welding does not alter that fact.

33. [89]

    As for the notes of the creditor’s meeting on 11 March 2016, I am satisfied that the only relevance of them is that they triggered the 2018 proceedings. It was not suggested that Mr Murgolo would or could rely on any fraudulent concealment on the part of Class Welding in this matter: see s 55(1)(b) of the Limitation Act.

34. [90]

    I have not been asked to consider a separate question under r 28.2 UCPR. Rather, if AAI is successful on its motion the proceedings against AAI are summarily dismissed. AAI can only succeed if Mr Murgolo’s claim against it is “so obviously untenable that it cannot possibly succeed”. I am satisfied that this test is established in the present matter.

35. [91]

    In circumstances where I am satisfied that the plaintiff knew that Class Welding was the defendant as at 19 February 2013 at the latest, there is no need for me to consider any question of constructive notice.

36. [92]

    In addition to reliance upon the relevant limitation period, AAI also argued that, in any event, the proceedings against it were an abuse of process based on principles of res judicata. In Jackson v Goldsmith (1950) 81 CLR 446 at 466–467; [1950] HCA 22 Fullager J described this rule as:

37. [93]

    AAI relied upon the default judgment against Class Welding (NSW) as raising this principle in the present matter. The two arguments raised at the hearing in response to this argument were that that decision was a default judgment and that, in any event, it was entered against a different party.

38. [94]

    The principles of res judicata were considered by the High Court in Tomlinson v Ramsey Food Processing, in the context of considering whether an issue estoppel arose in that case. The court made the following observations as to the doctrine generally at [20]–[21] (footnotes omitted):

39. [95]

    The decision in Tomlinson v Ramsey was considered by the Federal Court (Allsop CJ, Moshinsky and Colvin JJ) in Zetta Jet Pty Ltd v The Ship “Dragon Pearl” (No 2), a decision relied upon by AAI. Counsel for Zetta Jet Pty Ltd unsuccessfully sought an adjournment of a five-day hearing on the first day of the hearing. No evidence was led and the proceedings were dismissed. The ship was sold and Zetta Jet brought proceedings to arrest the vessel. The issue in Zetta Jet was whether principles of res judicata applied in circumstances where the claims in rem in the original proceedings were not dismissed “on the merits”. The court referred (at [16]) to Tomlinson v Ramsay Food Processing and the passage I have extracted above and then observed that in that case “[n]o distinction was drawn between a case where the disputed rights and obligations were upheld and one where they were dismissed.”

40. [96]

    The court went on to observe at [18]:

41. [97]

    And at [20]:

42. [98]

    The court observed at [27] that:

43. [99]

    The Court noted the distinction between a permanent stay or dismissal as being interlocutory in nature as opposed to a default judgment at a final hearing (at [31]–[34), before concluding at [35]:

44. [100]

    Finally, the court observed at [51]–[51]:

45. [101]

    Having regard to the principles derived from these decisions I am satisfied that the judgment entered against Class Welding (NSW) merged the cause of action into the judgment and the fact it that was a default judgment does not undermine the application of the principle of res judicata. But this does not answer Mr Murgolo’s principal argument that the judgment was entered against a different party.

46. [102]

    In Petersen v Maloney (1951) 84 CLR 91 at 102, the High Court stated that acceptance of payment into court by a party which is alternatively liable in full satisfaction operates as a res judicata. It was stated:

47. [103]

    It was common ground that there has been no payment of the judgment debt owed by Class Welding (NSW) to Mr Murgolo. It remains unsatisfied.

48. [104]

    AAI relied upon the fact that Mr Murgolo has not taken any steps to “impugn, set aside, vary or otherwise deal with” the default judgment and that the cause of action now pleaded against Class Welding merged into the judgment against Class Welding (NSW) thus it does not matter that the parties were different. AAI further noted that prior to the enactment of s 5 Law Reform (Miscellaneous Provisions) Act 1946, judgments were entered in solidum but that s 5(1)(a) provides that where damage is suffered by any person as a result of a tort, “judgment recovered against any tort-feasor liable in respect of that damage shall not be a bar to an action against any other person who would, if sued, have been liable as a joint tort-feasor in respect of the same damage”. I do not accept that this provision is relevant to this alternate argument raised by AAI.

49. [105]

    The significant difficulty with AAI’s reliance upon the principle of res judicata in this matter is that although that principle could be relied upon by Class Welding (NSW) it is Class Welding that seeks to rely upon it instead.

50. [106]

    Although it was strictly not necessary for me to deal with this alternate argument, I am not satisfied that the principle of res judicata arises in this matter given that it is not the same party which has had judgment entered against it (Class Welding (NSW)) which now seeks to rely on it. Nor do I consider the proceedings against AAI to be an abuse of process. Rather, the proceedings have simply been brought out of time.

Costs – Proline

1. [107]

   AAI’s notice of motion seeking summary dismissal of the proceedings against it was filed on 23 October 2018

2. [108]

   At a directions hearing before the Registrar on 30 October 2018 orders were made that Mr Murgolo’s evidence be filed and served on or before 25 January 2019. Proline was to file its notice of motion to dismiss the proceedings on or before 16 November 2018. The plaintiff’s affidavits were filed nearly three weeks late on 12 February 2019.

3. [109]

   Proline sought its costs thrown away caused by the late service of the plaintiff’s evidence. It was submitted that because of the late service of this evidence, Proline had to file a notice of motion seeking short service of the subpoena, and that in response to their necessarily late notice to produce around 1600 pages of documents were received on 18 February 2019, just before the hearing on 20 February 2019. Proline’s alternate application was that there either be no costs order or that the costs be reserved for the trial judge.

4. [110]

   Mr Murgolo sought costs of the motion on an indemnity basis forthwith on the basis of Proline’s forensic decision to withdraw its notice of motion.

5. [111]

   Section 98(1)(a) of the Civil Procedure Act 2005 (NSW) provides that costs are in the discretion of the court. Section 98(1)(b) provides that the court has “full power to determine by whom, to whom and to what extent costs are to be paid”. This discretion is subject to the qualification that it “must be exercised judicially in accordance with established principle and factors directly connected with the litigation”: Oshlack v Richmond River Council (1998) 193 CLR 72; [1998] HCA 11 at [65], per McHugh J. Among the fetters on the discretion to award costs are the rules of the court contained in Part 42 of the UCPR. The usual rule is that costs follow the event, unless it appears to the court that some other order should be made: UCPR, r 42.1.

6. [112]

   I have had regard to the late service of Mr Murgolo’s evidence and the fact that this led to Proline receiving information relevant to the motion only days before the hearing. In the circumstances I propose to order that each party pay its own costs of the Proline motion.

Costs – AAI

1. [113]

   AAI has been successful. The usual costs order would be that costs follow the event. I propose to make an order that Mr Murgolo is to pay AAI’s costs. The parties have leave to approach the court within 14 days should a different costs order be sought by either of them.

Orders

1. [114]

   I make the following orders:

   1. (1)

      The proceedings against the first defendant are dismissed summarily under Uniform Civil Procedure Rules 2005 (NSW) r 13.4.

   2. (2)

      The plaintiff is to the pay the first defendant’s costs of the first defendant’s motion.

   3. (3)

      The parties have leave to approach the court within 14 days should a different costs order be sought by either of them

   4. (4)

      Leave is granted for the second defendant to withdraw its notice of motion.

   5. (5)

      Both the plaintiff and the second defendant are to pay their own costs thrown away of the second defendant’s motion.

   6. (6)

      The proceedings are listed before the Registrar on 2 May 2019.