ABB Service Pty Ltd v Hetherington
[2001] WASCA 417
•20 DECEMBER 2001
ABB SERVICE PTY LTD -v- HETHERINGTON & ANOR [2001] WASCA 417
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2001] WASCA 417 | |
| THE FULL COURT (WA) | |||
| Case No: | FUL:51/2001 | 28 NOVEMBER 2001 | |
| Coram: | WHEELER J McLURE J | 20/12/01 | |
| 12 | Judgment Part: | 1 of 1 | |
| Result: | Application successful | ||
| B | |||
| PDF Version |
| Parties: | ABB SERVICE PTY LTD (ACN 000 095 250) KENNETH SYDNEY HETHERINGTON JULIE ANN HETHERINGTON |
Catchwords: | Indorsement of claim Defective but not a nullity Application for leave to amend Applicability of O 21 r 5(5) of Supreme Court Rules Turns on own facts |
Legislation: | Fair Trading Act 1987 (WA), s 79 Limitation Act 1935 Supreme Court Rules, O 2 r 1(1), O 2 r 1(2), O 6 r 1, O 6 r 1(1), O 20 r 19(1), O 21 r 5, O 21 r 5(2), O 21 r 5(5) Trade Practices Act, s 52 Trade Practices Amendment Act (No 1) 2001, s 82 |
Case References: | ABB Service Pty Ltd v Hetherington [2001] WASCA 235 Commonwealth v Verwayen (1990) 170 CLR 394 Maxwell v Murphy (1957) 96 CLR 261 Morgan v Banning (1999) 20 WAR 474 Ronex Properties Ltd v John Laing Constructions Ltd [1983] QB 398 Wardley Australia Ltd v Western Australia (1992) 175 CLR 514 Weldon v Neal [1887] 19 QBD 394 Bill Discount Services Pty Ltd v Dill-Macky, unreported; FCt SCt of WA; Library No 6700; 7 May 1987 Dye v Griffin Coal Mining Co (1998) 19 WAR 431 Hill v Luton Corporation [1951] 2 KB 387 Pontin v Wood [1962] 1 QB 594 |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA TITLE OF COURT : THE FULL COURT (WA) CITATION : ABB SERVICE PTY LTD -v- HETHERINGTON & ANOR [2001] WASCA 417 CORAM : WHEELER J
- McLURE J
- Applicant
AND
KENNETH SYDNEY HETHERINGTON
JULIE ANN HETHERINGTON
Respondents
Catchwords:
Indorsement of claim - Defective but not a nullity - Application for leave to amend - Applicability of O 21 r 5(5) of Supreme Court Rules - Turns on own facts
Legislation:
Fair Trading Act 1987 (WA), s 79
Limitation Act 1935
Supreme Court Rules, O 2 r 1(1), O 2 r 1(2), O 6 r 1, O 6 r 1(1), O 20 r 19(1), O 21 r 5, O 21 r 5(2), O 21 r 5(5)
Trade Practices Act, s 52
Trade Practices Amendment Act (No 1) 2001, s 82
(Page 2)
Result:
Application successful
Category: B
Representation:
Counsel:
Applicant : Mr P B O'Neal
Respondents : Mr P P McCann
Solicitors:
Applicant : Minter Ellison
Respondents : Deacons
Case(s) referred to in judgment(s):
ABB Service Pty Ltd v Hetherington [2001] WASCA 235
Commonwealth v Verwayen (1990) 170 CLR 394
Maxwell v Murphy (1957) 96 CLR 261
Morgan v Banning (1999) 20 WAR 474
Ronex Properties Ltd v John Laing Constructions Ltd [1983] QB 398
Wardley Australia Ltd v Western Australia (1992) 175 CLR 514
Weldon v Neal [1887] 19 QBD 394
Case(s) also cited:
Bill Discount Services Pty Ltd v Dill-Macky, unreported; FCt SCt of WA; Library No 6700; 7 May 1987
Dye v Griffin Coal Mining Co (1998) 19 WAR 431
Hill v Luton Corporation [1951] 2 KB 387
Pontin v Wood [1962] 1 QB 594
(Page 3)
1 WHEELER J: I have had the advantage of reading in draft the reasons to be delivered by McLure J. I agree with her Honour's reasons and have nothing to add.
2 McLURE J: The respondents apply for leave to amend the indorsement of claim on the writ. The application to amend arises as a result of an earlier decision of this Court in ABB Service Pty Ltd v Hetherington [2001] WASCA 235. The Court, constituted by Wheeler J and myself, found that the indorsement of claim failed to comply with O 6 r 1 and O 20 r 19(1) of the Supreme Court Rules ("SCR"). It was foreshadowed in the reasons that unless the respondents made application for leave to amend the indorsement of claim within 10 days from the date of handing down the reasons, the Court would order that the applicant have leave to appeal, the appeal be allowed and the indorsement of claim and the writ be struck out.
3 The writ in this action is dated 25 February 2000. The indorsement of claim is in the following terms:
"The plaintiff's claim is for damages:
1. pursuant to section 82(1) of the Trade Practices Act (Commonwealth) (the 'Act') for breach by the defendant of section 52 of the Act; and
2. for negligent misstatement;
with respect to representations made by the defendant between 1 July 1996 and 28 February 1997 in connection with a contract between the defendant and Monaveen Pty Ltd for the performance of civil engineering services and works."
4 The proposed amended indorsement is in form a substitution rather than an amendment by way of addition to or deletion from the existing indorsement. That is of no consequence, as the court is concerned with matters of substance not form. The proposed amendment is in the following terms:
"The plaintiff's claim against the defendant is in respect of negligent misstatements, and further or alternatively, deceptive or misleading conduct of the defendant in contravention of section 52(1) of the Trade Practices Act and/or section 10(1) of the Fair Trading Act which:
(Page 4)
- 1. Were comprised by false or misleading representations referred to in the Particulars hereto which were made by the defendant to the plaintiffs in connection with a contract ('the contract') between the defendant and Monaveen Pty Ltd ('Monaveen') which was entered into on or about 22 July 1996 for the performance by Monaveen of certain civil engineering works which formed part of the construction of a hot briquetted iron plant at Boodarie near Port Hedland in the State of Western Australia.
Particulars of Representations
1.1 On 22 July 1996 the defendant by Neil Tregea orally and by implication falsely represented to the plaintiffs by the first named plaintiff ('Ken Hetherington') that the defendant would pay Monaveen twice monthly progress payments, and further orally falsely represented to the plaintiffs by Ken Hetherington that the defendant would pay Monaveen mobilisation costs in the sum of $250,000 ('the July 1996 conduct').
1.2 On or about 25 September 1996 the defendant by Tregea orally and in writing, and by implication, falsely represented to the plaintiffs by Ken Hetherington that a provisional sum item associated with the contract was regarded as dayworks and would be paid for by the defendant.
1.3 On or about 28 October 1996 the defendant by Tregea orally and by implication falsely represented to the plaintiffs by Ken Hetherington that a quotation provided by Monaveen to the defendant in the amount of $790,000 in respect of the acceleration of the performance of the contract by Monaveen was considered to be reasonable and would be paid by the defendant.
1.4 On or about 21 November 1996 the defendant by Tregea orally and by implication, and in writing in the form of an amendment to the contract, falsely represented to the plaintiffs by Ken Hetherington that the proposed amendment to the contract was for Monaveen's benefit because it would assist Monaveen's cash flow.
1.5 On and between 6 and 13 December 1996 the defendant by Tregea and Gavin Duncan orally and by
(Page 5)
- implication and by writing in the form of an amendment to the contract falsely represented to the plaintiffs by Ken Hetherington that the defendant would regularly make payments to Monaveen in accordance with a schedule agreed between the defendant and Monaveen.
1.6 On 6 January 1997 the defendant by Tregea and Duncan orally falsely represented to the plaintiffs by Ken Hetherington and Ken Sharpe that the defendant would resume making payments under the agreed schedule when Monaveen recommenced work on site after a site-wide strike ended.
1.7 On or about 18 February 1997 the defendant by Tregea orally and by implication falsely represented to the plaintiffs by Ken Hetherington that the defendant would provide Monaveen with sufficient funds to pay wages and back pay which were then due and payable by Monaveen to its employees.
2. Caused the plaintiffs to suffer loss and damage on and after 27 February 1997 by reason of the circumstances that:
2.1 At all material times the plaintiffs were the sole shareholders and directors of Monaveen.
2.2 In reliance upon the July 1996 conduct the plaintiffs provided personal guarantees and mortgage securities of their real estate ('the Bank securities') to Monaveen's bank, the National Australia Bank, to secure Monaveen's indebtedness to the bank.
2.3 The plaintiffs extended and upstamped the Bank securities in reliance upon the conduct referred to in paragraphs 1.2 to 1.7 hereof.
2.4 The plaintiffs provided personal guarantees to trade creditors of Monaveen in reliance upon the July 1996 conduct.
2.5 In reliance upon the conduct referred to in paragraphs 1.5 to 1.7 hereon, the plaintiffs provided personal guarantees to the Australian Taxation Office in respect of certain tax liabilities owed by Monaveen to the Australian Taxation Office.
(Page 6)
- 2.6 On 27 February 1997 the National Australia Bank served demands for payment upon the plaintiffs pursuant to the Bank securities and subsequently exercised its rights in respect of some of the mortgage securities.
2.7 The National Australia Bank appointed a receiver and manager of Monaveen on 28 February 1997.
2.8 Subsequent to 28 February 1997 the Australian Taxation Office and the trade creditors referred to in paragraph 2.4 hereof served demands upon the plaintiffs for payment pursuant to their personal guarantees."
5 It was accepted by the parties that the proposed amended indorsement of claim complies with O 6 r 1(1) of the SCR which provides that a writ must be indorsed "with a concise statement of the nature of the claim made, and of the relief or remedy required in the action".
6 The applicant (correctly in my view) conceded that the writ is not a nullity. Order 2 deals with the effect of non-compliance with the SCR. Order 2 r 1(1) and (2) materially provide:
"(1) Where in beginning or purporting to begin any proceeding … there has, by reason of anything done or left undone, been a failure to comply with the requirements of these Rules … the failure shall be treated as an irregularity and shall not nullify the proceedings, any step taken in the proceedings, or any document, judgment or order therein.
(2) … the Court may, on the ground that there has been such a failure as is mentioned in paragraph (1), and on such terms as to costs or otherwise as it thinks just, … exercise its powers under these Rules to allow such amendments (if any) to be made and to make such order (if any) dealing with the proceedings generally as it thinks fit."
7 The Court's power in relation to amendment is contained in O 21 of the SCR . Order 21 r 5 materially provides:
(Page 7)
- "(1) … The Court may at any stage of the proceedings allow the plaintiff to amend his writ, or any party to amend his pleading, on such terms as to costs or otherwise as may be just and in such manner (if any) as the Court may direct.
(2) Where an application to the Court for leave to make the amendment mentioned in paragraph (3), (4) or (5) is made after any relevant period of limitation current at the date of the issue of the writ has expired, the Court may nevertheless grant such leave in the circumstances mentioned in that paragraph if it thinks it just to do so.
(3) …
(4) …
(5) An amendment may be allowed under paragraph (2) notwithstanding that the effect of the amendment will be to add or substitute a new cause of action if the new cause of action arises out of the same facts or substantially the same facts as a cause of action in respect of which relief has already been claimed in the action by the party applying for leave to make the amendment."
8 The applicant opposes the application to amend the indorsement of claim on the grounds that the Court does not have the power to grant leave to amend and, in the event it has the power, ought not in the exercise of its discretion grant leave in this case. On the question of power, the applicant says the Court does not have the power pursuant to O 21 r 5 of the SCR because the proposed amendment adds new causes of action which do not arise out of the same facts or substantially the same facts as the cause of action in respect of which relief has already been claimed.
9 The operation and effect of O 21 r 5 of the SCR and its relationship with the Limitation Act1935 was considered by the Full Court in Morgan v Banning (1999) 20 WAR 474. It is authority for a number of propositions which are not in dispute in this case. They are that:
(i) limitation provisions are concerned with the date of issue of the writ rather than with any subsequent proceeding;
(ii) an action which is in fact instituted out of time is able to be defeated by reliance upon the Limitation Act which the
(Page 8)
- Court has no power to override, whether by a procedural rule of "relation back" or otherwise;
- (iii) the phrase "cause of action" in O 21 r 5(5) describes the factual situation which will entitle a person to approach the Court for relief rather than the old "forms of action";
(iv) if the writ when issued, although defective, is not a nullity, and its terms are wide enough to encompass the amendment sought to be made to clarify or particularise or cure the defect, no question of limitation arises. Such an action is within time and subsequent steps, even those directed to defects in the original indorsement, are merely steps taken in a validly instituted action with respect to which it is not necessary to consider limitation issues;
(v) if the defective indorsement appearing on the writ, when issued, is not of a type which is capable of encompassing the amendments sought to be made after the expiry of the limitation period, so the amendments truly add an additional and time-barred cause of action then, whether leave to amend is granted or not, the new action remains time-barred.
10 In this case two limitation issues arise. The first issue is whether the limitation period for the trade practices claim had expired prior to the issue of the writ. The applicant says that may arguably be the case on the original and proposed amended indorsement.
11 The High Court in Wardley Australia Ltd v Western Australia (1992) 175 CLR 514 made it plain (at 533) that limitation questions of this kind should not generally be decided in interlocutory proceedings in advance of the hearing of the action.
12 It follows the Court must have the power to approve amendments to a writ or a pleading in such a case, notwithstanding it may be statute-barred. This is consistent with principle. When a statutory limitation bars the remedy rather the right, the remedy is not barred unless pleaded in the defence (Ronex Properties Ltd v John Laing Constructions Ltd [1983] QB 398 at 405) and can be waived (Commonwealth v Verwayen (1990) 170 CLR 394.) Further, the grant of leave to amend in these circumstances cannot affect a defendant's rights pursuant to a statutory period of limitation.
(Page 9)
13 The second issue is whether O 21 r 5(2) and (5) applies in this case. It will only do so if the relevant limitation period had not expired at the commencement of the action, but had expired by the time of making an application to amend to add a new cause of action.
14 No limitation issue arises in relation to the negligence claim. It is not suggested the limitation period of 6 years has expired. It may arise in relation to the trade practices claim.
15 At the date of the issue of the writ, an action for damages for breach of s 52 of the Trade Practices Act ("TPA") had to be commenced at any time within three years after the date on which the cause of action accrued. However, s 82 of the TPA was amended by the Trade Practices Amendment Act (No 1) 2001 ("Amendment Act") to provide that an action may be commenced within six years after the day on which the cause of action that relates to the conduct accrued. The amendment to s 82 commenced 28 days after Royal Assent to the Amendment Act was given on 28 June 2001.
16 If the amendment to s 82 of the TPA applies to the trade practices claim, then no limitation issue arises in relation to that claim. The Amendment Act is silent on whether the amendment to s 82 operates retrospectively, as to which see Maxwell v Murphy (1957) 96 CLR 261; Halsbury's Laws of Australia Vol 16 par 255 – 10. However, the question whether the amendment operates retrospectively was not argued and in the circumstances it is not necessary to determine the matter in this application.
17 The respondents also rely on the s 52 TPA equivalent in the Fair Trading Act 1987 (WA) ("FTA"). Section 79 of that Act, which deals with a claim for damages, still has a three-year limitation period. On the facts in the amended indorsement, the limitation period under s 79 of the FTA had expired by the time of the application to amend.
18 It appears to have been assumed for some time that the relation back doctrine as it applies to amendments to a writ and pleadings had the capacity to prejudice a defendant's rights under a statute of limitations in a situation where an action was commenced within the relevant limitation period and an application to amend was made after the expiry of the limitation period. The assumption explains the characterisation of the rule in Weldon v Neal [1887] 19 QBD 394 as a "rule of practice".
(Page 10)
19 However, it is clear in Morgan v Banning (supra) that the rules of court cannot and O 21 r 5(5) does not give the Court the power to override or affect a defendant's accrued rights under a statute of limitations.
20 The purpose of O 21 r 5(5) is to avoid an overly technical and rigid investigation as to the degree of coincidence between the matters in the relevant pleading and those in the proposed amendment: Morgan v Banning per Owen J at 477.
21 Whether a new cause of action arises out of the same facts, or substantially the same facts, as the cause of action in respect of which relief has already been claimed is a matter of impression involving questions of degree: Dye v Griffin Coal Mining Co per Owen J at 434.
22 In this case, the original indorsement identifies:
(i) the nature of the actions, being breach of s 52 of the TPA and negligence;
(ii) the nature of the wrongful conduct alleged against the defendant, being misrepresentations;
(iii) that there were a number of representations made by the applicant between specified dates;
(iv) the subject matter of the representations (a contract between the applicant and a third party); and
(v) the nature of the relief sought being damages.
23 I have previously concluded that the indorsement of claim did not comply with the rules. I said in my reasons in the application for leave to appeal that:
"The indorsement does not put the facts in a recognisable legal framework showing how the respondents' claims arise and the relationship between the claims and the loss. Without further information the reader is left to speculate as to how it is the respondents have a claim for damages against the applicant for representations made by the applicant about a contract between the applicant and a third party. There are a number of possible permutations and links which could theoretically give rise to a claim by the respondents against the applicant for breach of the pleaded causes of action. However, the respondents must state those links so they cannot subsequently be the beneficiary of such an open-ended plea in the event a limitation issue arises."
(Page 11)
24 In the proposed amendment the respondents plead seven representations made on different dates during the period identified in the original indorsement and pleads the conduct in reliance on the representations which is the basis of the claims for damages.
25 The applicant says the proposed amendments add new causes of action, rather than particularise, clarify or expand the existing pleading. The applicant's submission, as I understand it, is to the effect that as "cause of action" in O 21 r 5(5) means the factual situation which entitles a person to approach the Court, then as a result of the inadequacies in the current indorsement no cause of action in that sense is pleaded and any attempt to fill in factual gaps gives rise to a new cause of action which does not (alternatively, could not be shown to) have a sufficient factual overlap for the purposes of the subrule. This submission fails to recognise the differences between an indorsement of claim and a statement of claim.
26 Order 6 r 1(1) of the SCR does not require a plaintiff to plead a cause of action in the sense in which that phrase is used in O 21 r 5(5) of the SCR. The omission of material facts, per se, does not render an indorsement defective. It is to be expected that an indorsement will cover a narrower factual field and be of a greater level of generality than a statement of claim. As a result, it may be more difficult to determine whether a proposed amendment raises a new cause of action to which O 21 r 5(5) applies. In this case, the current indorsement was defective partly because of the limitation advantages flowing from its unacceptable generality.
27 However, the proposed amendments clearly fall within the parameters or framework of the current indorsement. In my assessment the current indorsement is wide enough to encompass the proposed amendments which clarify, expand and particularise the pleaded claims. Accordingly, I conclude that the proposed amendment does not add a new cause of action and thus no limitation issue under O 21 r 5(5) arises.
28 The next issue is whether the Court should in the exercise of its discretion grant leave to amend. A weighty factor against the grant of leave is that the respondents rely on the irregular generality of the indorsement of claim to potentially avoid issues under O 21 r 5(5) of the SCR. On the other hand, as a result of the defective indorsement, the respondents are forced at a relatively early stage in the action to provide the necessary material. Further, as the current pleading clearly provides an adequate (albeit defective) framework for the proposed amendment and because the proposed amendment relates to and relies on the same
(Page 12)
- material facts for each of the negligence, trade practices and fair trading claims, I would grant the respondents leave to amend their indorsement of claim in the terms of the Minute annexed to the application.
20
8
5