What is the third party procedure?

The third-party procedure under Order 11 permits a party to be added to a proceeding where the third party’s liability is merely contingent on the defendant’s liability.

The third-party procedure enables liability between plaintiff and defendant, and defendant and third party to be determined concurrently, in the same proceeding. There can be no judgment against the third party until the court gives judgment against the defendant. There must be a nexus between all claims.

Although the claims are heard together, a third-party claim is still a separate and independent part of the proceeding between the plaintiff and defendant: Kheirs Financial Services Pty Ltd v Aussie Home Loans Pty Ltd [2010] VSCA 355 at [20]:

In Hordern-Richmond Ltd v Duncan ... Cassels J ... said: ‘The cause of action which entitles a defendant to bring a third party before the court is the liability of the third party to make contribution or pay an indemnity. That cause of action has not arisen until the liability of the defendant has been ascertained. Under [the relevant statute and Rules of Court] governing third-party proceedings, notice of them is given to a third party before liability is established. It is one of the peculiarities of that procedure which enables this to take place before there is any liability. But the plaintiff can never get a judgment against the third party; .... Neither, in such proceedings, could the defendant succeed and yet leave the plaintiff with judgment against the third party. It is only on the defendant’s being made liable that the defendant has any cause of action against the third party. Whatever for convenience of procedure may be the order for directions for the trial, however the witnesses may be called and heard, or whether the proceedings by the plaintiff against the defendant are tried at the same time as the proceedings by the defendant against the third party matters not. The position is quite clear. The proceedings by the defendant against the third party are independent of and separate from the proceedings by the plaintiff against the defendant, except that, when the defendant is made liable to the plaintiff, he then has his right open against the third party to establish, if he can, that he possesses a right to indemnity and contribution from that party’. ...

The full article (2137 words) considers:

Difference between third party claims and joinder
How long does a defendant have to issue a third-party notice?
Applicable tests
Avoiding delay in bringing a third-party application
Filing an application out of time
Relevant cases / authorities
Arguments for defendants bringing an application out of time
Contribution, indemnity or both?
Costs