PNG Printing Co Pty Ltd v Thompson [1991] PGNC 153; [1993] PNGLR 81 (10 July 1991)

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PRACTICE - Injunction granted against defendant in these proceedings between existing parties - Intervener (the present employer of the defendant) seeks to be joined to cross claim for damages from injunction - Whether "sufficient interest" in the cause or matter - Principles discussed - National Court Rules O 5 rr 2, 5, and 8.

The plaintiff sued the defendant for damages for breach of contract of employment. He successfully obtained an injunction against the defendant, restraining him for six months from being involved in the sales, servicing or promotion of Nashua photocopying or facsimile machines whilst in the employ of Daltek Pty Ltd. The defendant was a former employee of the plaintiff but was at the time of action employed by Daltek Pty Ltd.

Daltek sought to be joined as a second defendant to enable it to cross-claim against the plaintiff for alleged damages suffered as a result of the injunctive order affecting the defendant and further damages in costs attaching the plaintiff's undertaking as to damages given on its application for injunctive orders against the defendant.

N1>1. The intervener is able to sue on either the undertaking or any other cause of action as of right, as it may be advised. It is not precluded from instituting separate proceedings and pleading any such right which it may assert notwithstanding the success or otherwise of the plaintiff's case. The only reason which makes it necessary to add a party to an action is so that the party may be bound by the result of the trial. The question to be settled must be a question which cannot be effectually and completely settled unless that party is so joined; Miguel Sanchez & Compania SL v Owners of The Result [1958] P 174 adopted.

N1>2. The intervener has insufficient interest in the cause or matter as it presently stands between the existing parties to justify an order that it be joined as a second defendant.

BROWN J: By notice of motion, the intervener, Daltek Pty Ltd, sought to be joined as a second defendant in proceedings instituted by the plaintiff seeking damages from the defendant for alleged breach of a term of a contract of employment. In support of the notice of motion, an affidavit by a director of Daltek deposed to the present employment by that company of the defendant, Andrew Thompson. Daltek says that the company has suffered loss as a consequence of an injunction originally given in the plaintiff's favour on 28 February 1990 whereby the defendant Thompson was restrained for a period of six months from the 30 November 1989 from being involved directly or indirectly in the sales, servicing, or promotion of Nashua photocopying or fascimile machines whilst in the employ of Daltek. The plaintiff company had previously employed the defendant in that field.

Daltek pleaded to be joined as a second defendant so that, at the hearing of the plaintiff's claim, it could effectively cross-claim against the plaintiff for damages which it alleges it suffered as a result of the injunctive order affecting Andrew Thompson. Further, Daltek seeks to claim damages in costs against the plaintiff, relying on the plaintiff's undertaking as to damages given on its application for the injunctive orders against Andrew Thompson.

Mr Frizzel, for the intervener, stated that Daltek was a third party affected by the injunction. The plaintiff, having given an undertaking as to damages, is consequently liable to the intervener as a party likely to have suffered damage as a result of its loss of Mr Thompson's services as an employee. Consequently, it would be appropriate to join Daltek as a defendant in these proceedings for Daltek is entitled to take proceedings on its own account. Mr Frizzel further referred me to O 5 r 2 of the National Court Rules as supporting his argument that the parties with an interest should be joined in the one set of proceedings.

Mr Steele, for the plaintiff, opposed the application, stating that it was incompetent and misconceived. He stated that the Court had no jurisdiction to grant the application or, in the alternative, that in the exercise of discretion, it should not do so in these circumstances. He stated that the plaintiff's undertaking as to damages related to damages suffered by the defendant, Andrew Thompson, as between the parties, and that the intervener had no right to benefit in that undertaking given by the plaintiff to the Court.

Mr Steele argued that the relevant rules were O 5 r 2 (b) and O 5 r 8 (1)(b). Leave is required in relation to the first mentioned rule, and r 8 (1)(b) relates to the case where 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. Mr Steele relied on r 8(1)(b) as the specific rule in these circumstances. He said that, in the absence of any contractual relationship, Daltek cannot be joined in these proceedings for the plaintiff owes no duty to Daltek under the undertaking as to damages. The general power under r 2(b) must be read subject to the specific provision in r 5(1) or, if under r 2, then the specific provision is r 8. Mr Steele referred me to the White Book, where it defines cause or matter dealing, as it does, with the action between the existing parties and the case law touched on, which included Montgomery v Foy, Morgan & Co [1895] UKLawRpKQB 128; [1895] 2 QB 321 and Miguel Sanchez & Compania SL v Owners of The Result [1958] P 174.

In the first mentioned case, there was a dispute between the respective parties as to the right to moneys deposited for freight. While the Court ordered that the shippers of cargo should be added as defendants in the action in order that they might claim against the plaintiff damages for short delivery and injury to cargo, such joinder does not establish a general rule. Mr Steele distinguished that case. I am inclined to agree with him. The second case mentioned is authority for the plaintiff's assertion that the words "cause or matter" in the National Court Rules mean the action as it stands between the existing parties. The legal rights sought to be asserted by the party seeking to be joined were unaffected by the plaintiff's claim in the "cause or matter". The Court found that the only reason which makes it necessary to add the name of a party to an action is so that that party may be bound by the result of the trial, and the question to be settled must be a question which cannot be effectually and completely settled unless that party is so joined. The test which Mr Steele suggested the Court should apply is whether, by refusing to accede to the intervener's request to be joined, the Court's order would directly affect the intervener's legal rights and not just his commercial interest. The plaintiff asserts that the matters in the affidavit of Daltek's director relate to commercial interests and not legal rights. In the case of Montgomery v Foy, Morgan & Co, joinder was permitted to enable the intervener to claim pursuant to a legal right. Mr Steele says that it is difficult to assert a legal right in the absence of any undertaking in favour of the intervener by the plaintiff.

I am satisfied that allowing the joinder of the intervener in these circumstances would protract this litigation. The intervener is able to sue, perhaps on either the undertaking or any other cause of action, as of right. It is not precluded from instituting proceedings and pleading any such right which it may assert notwithstanding the success or otherwise of the plaintiff's case. I adopt the reasoning in Miguel Sanchez.

The intervener's argument is of no interest to the defendant, Mr Thompson. The intervener is not estopped from seeking to ground a cause of action on the undertaking, if the intervener considers the undertaking includes "strangers", even were the present litigation to be concluded. There may arise an argument over the issue of estoppel if the plaintiff was successful against any damages claimed by Mr Thompson, but I need not consider that possibility here. The intervener was also aware of the circumstances of the defendant's prior employment before it engaged the defendant and, consequently, may be seen to be in full knowledge of the possible effect of an injunctive order in the nature of that threatened by the plaintiff at the time it engaged Mr Thompson in employment.

I, consequently, find the intervener has insufficient interest in the cause or matter as it presently stands between the existing parties to justify an order that it be joined as a second defendant. I, accordingly, refuse leave to join the intervener, and the motion must fail. The plaintiff/respondent shall have his costs of his application to be agreed or taxed.

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National Court of Papua New Guinea

PNG Printing Co Pty Ltd v Thompson [1991] PGNC 153; [1993] PNGLR 81 (10 July 1991)

PNG Law Reports 1993