AED Oil Ltd v Puffin FPSO Ltd (No 4)
[2010] VSC 65
•11 March 2010
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMERCIAL AND EQUITY DIVISION
COMMERCIAL LIST
No. 8380 of 2009
| AED OIL LIMITED (ACN 110 393 292) | Plaintiff |
| v | |
| PUFFIN FPSO LIMITED (COMPANY REGISTRATION NO. C37772) (INCORPORATED IN MALTA) | Defendant |
| PUFFIN FPSO LIMITED (COMPANY REGISTRATION NO. C37772) (INCORPORATED IN MALTA) | Plaintiff by counterclaim |
| v | |
| AED OIL LIMITED (ACN 110 393 292) AED SERVICES PTE LTD | First Defendant by counterclaim Second Defendant by counterclaim |
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JUDGE: | JUDD J | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 24 February 2010 | |
DATE OF JUDGMENT: | 11 March 2010 | |
CASE MAY BE CITED AS: | AED OIL LTD v PUFFIN FPSO LTD (NO. 4) | |
MEDIUM NEUTRAL CITATION: | [2010] VSC 65 | |
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PRACTICE AND PROCEDURE – Amendment of pleadings – Inherent jurisdiction of the court to prevent abuse of process or injustice – Objectives of the power to grant leave to amend – Factors to be taken into account in decision to grant leave – Orderly and timely disposition of the issues between the parties – Unfair prejudice to the responding party – Failure to provide adequate explanation for late amendments - Efficient trial management and allocation of court resources – Supreme Court (General Civil Procedure) Rules 2005 (Vic), rr 1.14, 36.01, Supreme Court Act 1986 (Vic), s 29(2).
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| APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff and First Defendant by Counterclaim | Mr J J Gleeson SC with Mr N Pane | Corrs Chambers Westgarth |
| For the Defendant and Plaintiff by Counterclaim | Mr J G Santamaria QC with Dr J P Moore | Freehills |
| For the Second Defendant by Counterclaim | Mr J Digby QC with Mr A T Strahan | Mallesons Stephen Jaques |
HIS HONOUR:
This proceeding was commenced by AED Oil Ltd (‘AED Oil’) to support an application for an injunction restraining Puffin FPSO Ltd (‘Puffin’) from appointing a receiver under a guarantee. The guarantee, given by AED Oil to Puffin, secured performance by AED Services Pte Ltd (‘AED Services’) of its obligations under an amended and restated FPSO Charter Contract dated 17 May 2007. Under a Deed of Novation and Amendment, a Charter Contract, dated 3 March 2006, was novated from AED Oil to AED Services and AED Oil bound itself to guarantee due performance by AED Services of its obligations under the Charter Contract. The Charter Contract set out the terms under which the “Front Puffin”, a floating production storage and off-loading vessel, was leased and chartered by Puffin to AED Services for deployment in an oil field located in the South Timor Sea.
The injunction had been sought by AED Oil in circumstances where Puffin had made demand upon AED Oil for amounts claimed to be payable under a tax indemnity in favour of Puffin under the Charter Contract. The demand also included some outstanding invoices for charter fees. The claim under the tax indemnity was in respect of goods and services tax (‘GST’) and income tax. The amount claimed in respect of GST related to past transactions. The obligation to pay the tax had arisen and was calculable. A condition of the injunction was that an amount calculated by reference to that liability was paid into court. No allowance was made, when arriving at an amount to be paid into court, by reference to income tax. Puffin had not filed any income tax returns. Subject to any extension of time granted by the Commissioner of Taxation, Puffin’s returns are overdue.
Under the Charter Contract, AED Services, as the party liable to indemnify Puffin for its tax liabilities, had responsibility for the management of Puffin’s obligations to comply with taxation laws, including the preparation and filing of income tax returns. Since the injunction was granted, the parties, in consultation with the Commissioner of Taxation, appear to have reached agreement about the extent of Puffin’s liability for GST. There remains a dispute over the amount of income tax payable by Puffin.
The dispute over income tax has inhibited the filing of income tax returns by Puffin. AED Services and its legal and accounting advisers calculated Puffin’s income tax liability based upon an approach to the depreciation of the “Front Puffin” which assumes that the asset, or parts of it, should be depreciated by reference to the anticipated life of the Puffin oil field in which the “Front Puffin” was deployed. Puffin and its legal and accounting advisers contended that depreciation should take place over a longer period exposing Puffin to a much greater liability to income tax than AED Services had calculated. While the parties have adjusted their positions from time to time it has been apparent since the commencement of the proceeding that the income tax dispute is referrable to differences over depreciation.
The tax indemnity was integral to Puffin’s demands made on AED Oil. Without an indemnity the tax liability of Puffin is of no consequence to AED Services, or to AED Oil as guarantor. The significance of the indemnity was not overlooked by AED Oil in its application for an injunction. It argued that there was a serious question to be tried as to whether Puffin had lost its right to claim under the indemnity. AED Oil alleged a failure by Puffin to comply with obligations under cl 15.9(ii) of the Charter Contract to provide assistance to enable AED Services to manage Puffin’s tax affairs. It also alleged that Puffin had breached an obligation under cl 15.10(ii)(c), which required Puffin to refrain from making any admission in relation to its tax liability.
Since the commencement of this proceeding Puffin has delivered a defence and joined AED Services as a defendant to counterclaim. It also counterclaimed against AED Oil. By its amended counterclaim dated 29 January 2010, Puffin sought declarations to support its demands made on AED Oil and to validate its refusal to sign income tax refunds prepared by AED Services reflecting its tax calculations. Puffin also sought a declaration to the effect that the preparation by Puffin of its own tax returns would not deny to it the benefit of the tax indemnity.
It was not until December 2009 that AED Oil first notified Puffin of its intention to make substantial amendments to its defence to counterclaim to rely upon representations alleged to have been made by Puffin to AED Oil. The alleged representations have undergone some modification since first articulated in a draft amended defence in December, and now find expression in the proposed amended defences prepared by AED Oil and AED Services. The issue on this application is whether leave should be granted to permit AED Oil and AED Services to amend their defences to counterclaim to rely upon the representations.
The representations as pleaded in paragraph 4B of the proposed amended defence of AED Oil, to which I shall refer to collectively as ‘the representations’, are as follows:
4B.Between approximately January 2006 and 3 March 2006 Puffin FPSO represented to AED Oil that:
(a)the FPSO to be constructed by modifying the vessel m.v. Gerrita was field specific and could not be used on any other project without significant modification;
(b)because the FPSO was field specific and could not be used on any other project without significant modification, it had to recover the capital cost of the FPSO conversion (“the conversion cost”) over the term of the Charter Contract;
(c)the effective life (that is, the estimated period an asset can be used by any entity for a taxable purpose under section 40,105 of the Income Tax Assessment Act 1997) of the assets reflected in the conversion costs (collectively, “the Field Specific Assets”) was the period over which AED Oil agreed to reimburse Puffin FPSO for the capital cost of the Field Specific Assets;
(d)it would arrange its affairs so as to minimise tax payable by it;
(e)it would minimise the tax payable over the term of the Charter Contract by depreciating the FPSO consistently with it being field specific and having an effective life corresponding with the period over which it was to be reimbursed for the capital cost of the Field Specific Assets.
The representations, uniformly pleaded by AED Oil and AED Services, are employed by them in an attempt to prevent Puffin from claiming under the tax indemnity for any tax liability it may incur by reason of its failure to fulfil the representations or depart from common assumptions to similar effect. AED Oil raises an estoppel, alleges a breach of s 52 of the Trade Practices Act1974 (Cth) and a collateral contract. It also employs the representations to establish a common intention as an aid to the construction of the Charter Contract and as a basis to imply terms into the contract. The approach adopted by AED Services is substantially the same although not identical. The ‘representation case’ advanced by AED Oil is contained in paragraphs 4B to 4X of its proposed amended defence. The ‘representation case’ advanced by AED Services is at paragraphs 24 to 43 of its proposed amended defence.
The particulars sub-joined to the alleged representations identify Petter Hoie as the agent of Puffin responsible for making the representations on Puffin’s behalf. The representations are said to be partly in writing and partly oral. The AED companies rely upon numerous emails from Mr Hoie. They also rely upon conversations between Mr Hoie and David Dix, a director of AED Services and AED Oil. Puffin submitted that a review of the emails demonstrated that the oral component of the representations was of paramount importance if AED Oil and AED Services were to establish their case. There is substance to that submission.
On 23 October 2009 Mr Hoie entered into an agreement (‘Settlement Deed’) with AED Oil, AED Services and others which recorded the terms of a compromise of other proceedings commenced in this Court and in the Supreme Court of Western Australia. Clause 8 of the Settlement Deed provides:
8 Equinox Parties not to act against AED
Each and all of the Equinox Parties agree and warrant that they will not act against the interest of AED, AED Services, Puffin IS or David Dix or any other director, officer or employee of AED save as compelled by a court of Australia.
Puffin has sought the cooperation of Mr Hoie to obtain instructions in relation to the proposed amendments. Mr Hoie has indicated his willingness to assist but declined to do so because he is constrained by his agreement with AED Oil and AED Services. The AED companies have declined to release Mr Hoie from his obligations.
Puffin opposed leave to amend on a number of grounds. First, it argued that there was no proper explanation for the delay by AED Oil in advancing its representation case. The relationship between AED Oil and AED Services is such that there is no material distinction for the purpose of this application. Mr Dix is a director of both entities. AED Oil is the holding entity of AED Services. Puffin submitted that the explanation advanced by AED Oil failed to explain why Mr Dix had not brought the allegations to the attention of the solicitors for AED Oil when it must have been apparent to him that recovery under the tax indemnity was crucial to Puffin’s demands. Puffin relied upon AON Risk Services Australia Ltd v Australian National University[1] and, in particular, passages from the joint judgment of Gummow, Hayne, Crennan, Kieffel and Bell JJ:[2]
It is the extent of the delay and the costs associated with it, together with the prejudice which might reasonably be assumed to follow and that which is shown, which are to be weighed against the grant of permission to a party to alter its case. Much may depend upon the point the litigation has reached relative to a trial when the application to amend is made. There may be cases where it may properly be concluded that a party has had sufficient opportunity to plead their case and that it is too late for a further amendment, having regard to the other party and other litigants awaiting trial dates. Rule 21 makes it plain that the extent and the effect of delay and costs are to be regarded as important considerations in the exercise of the court's discretion. Invariably the exercise of that discretion will require an explanation to be given where there is delay in applying for amendment.
…
An application for leave to amend a pleading should not be approached on the basis that a party is entitled to raise an arguable claim, subject to payment of costs by way of compensation. There is no such entitlement. All matters relevant to the exercise of the power to permit amendment should be weighed. The fact of substantial delay and wasted costs, the concerns of case management, will assume importance on an application for leave to amend. Statements in J L Holdings which suggest only a limited application for case management do not rest upon a principle which has been carefully worked out in a significant succession of cases. On the contrary, the statements are not consonant with this Court's earlier recognition of the effects of delay, not only upon the parties to the proceedings in question, but upon the court and other litigants. Such statements should not be applied in the future.
A party has the right to bring proceedings. Parties have choices as to what claims are to be made and how they are to be framed. But limits will be placed upon their ability to effect changes to their pleadings, particularly if litigation is advanced. That is why, in seeking the just resolution of the dispute, reference is made to parties having a sufficient opportunity to identify the issues they seek to agitate (footnote omitted).
[1](2009) 239 CLR 175 (‘AON’).
[2]Ibid [102], [111-2].
The second limb of Puffin’s challenge to the proposed amendment invoked the inherent jurisdiction of the court to prevent an abuse of process and injustice. Puffin submitted that leave to amend should be refused because to allow the amendment would have the effect of eroding public confidence and would very likely bring the administration of justice into disrepute. At the heart of this ground was the conduct of the AED companies by enforcing the restraint upon Mr Hoie and depriving Puffin of access to his assistance, while proposing to rely upon his communications to establish their case. Puffin relied upon State Bank of New South Wales Ltd v Stenhouse Ltd[3] in which Giles CJ described the jurisdiction of the Supreme Court of New South Wales to stay proceedings for abuse of process. He said,
This Court’s jurisdiction to stay its proceedings for abuse of process extends to all those categories of cases in which the processes of the Court, which exist to administer justice with fairness and impartiality, may be converted into instruments of injustice or unfairness (Walton v Gardiner (1993) 177 CLR 378 at 395 per Mason CJ, Deane and Dawson JJ). It is important that freedom of access to the Courts should be preserved, and that defendants should not be encouraged to seek a stay on flimsy grounds for tactical reasons (Williams v Spautz (1992) 174 CLR 509 at 519 per Mason CJ, Dawson, Toohey and McHugh JJ), but the fundamental policy considerations informing the jurisdiction are that the Court must ensure that its processes are used fairly as between the parties to the litigation and that the Court must avoid the erosion of public confidence through concern that its processes may lend themselves to oppression and injustice. So there have been identified as aspects of abuse of process first, oppression and unfairness to the other party to the litigation and, secondly, that the matter complained of will bring the administration of justice into disrepute (Rogers v The Queen (1994) 181 CLR 251 at 256 per Mason CJ; s86 per McHugh J; see also Hunter v Chief Constable of the West Midlands Police (1982) AC 529 at 536 per Lord Diplock and Walton v Gardiner at 393).
While the facts of that case are quite different to the present case, the principles so explained are equally applicable to the exercise of the jurisdiction in this Court.
[3](1997) ATR 81-423, 64,086.
The AED companies argued that the restraint, freely entered into by Mr Hoie as part of a comprise, was not a matter that should be taken into account on an application for leave to amend. They argued that the authorities made it clear that public policy did not require confidentiality obligations to give way to a litigant’s desire to seek the cooperation of a person bound by such an obligation to assist in the preparation of their case.
The cases[4] referred to by the applicants have only limited relevance to the issues arising in this application. Puffin does not challenge the validity or enforceability of the restraint. Mr Hoie makes no such challenge. This case is not a contest between a contractual obligation of confidentiality and the ability of a litigant to obtain the cooperation of a witness bound by such a contractual obligation. Properly characterised, this is a case which concerns the proper exercise of the discretion to allow an amendment and the power to prevent an abuse of process. The AED companies, as the beneficiaries of the confidentiality obligation, have asked the court to exercise its discretion to permit them to advance a case based on communications made by Mr Hoie, while at the same time enforcing a contractual right to prevent Mr Hoie from assisting Puffin, against whom the representation case is advanced, from obtaining his instructions or assistance about the new case.
[4]AG Australia Holdings Ltd v Burton & Anor (2002) 58 NSWLR 464; Richards v Kadian (2005) 64 NSWLR 204.
To hold Mr Hoie to his bargain and prevent him from providing instructions to Puffin will substantially interfere with Puffin’s ability to respond to the allegations. It will disrupt the orderly preparation by Puffin of its case for trial. While there are steps that may be taken by Puffin to, in effect, obtain in court evidence from Mr Hoie at an early stage in the trial so as to inform itself of his responses to the allegations, such a course would be disruptive, an inefficient use of court resources and manifestly unfair to Puffin.
The prejudice to Puffin, so identified, may be sufficient to disturb the binding nature of the contract between Mr Hoie and the AED companies on public policy grounds, although I am not required to determine a challenge to the enforceability of the restraint. I am of the opinion, however, that the prejudice to Puffin and the likely disruption to the trial process, including the impact on the allocation of court resources, are matters to be taken into account in the exercise of my discretion to allow the amendment. I have not been directed to any authority to the contrary.
In AON, the High Court held that the amendment power under consideration did not invest the court with a discretion to grant or refuse leave to amend that was at large. The court held that the discretion was to be exercised having regard to the objectives to be sought in the exercise of the power. The relevant power to amend in that case was found in r 502(1) of the Court Procedures Rules 2006 (ACT). Rule 21(1) expressed, as the purpose of the rules under consideration, that they were to facilitate the just resolution of the real issues in civil proceedings with minimum delay and expense. Rule 21(2) provided that the rules were to be applied by the courts in civil proceedings with the objective of achieving the just resolution of the real issues, the timely disposal of proceedings and at a cost affordable to the respective parties. The High Court said,[5]
[5]AON (2009) 239 CLR 175, [89]-[90].
A power is given to the court by r 502(1) to permit the amendment of pleadings "in the way it considers appropriate". Rule 21(2) specifies, in pars (a) and (b), the objectives to be sought by the exercise of the power conferred by r 502(1). In this setting, some care is called for in describing the grant or refusal of an application to amend in such a way as to suggest a very wide discretion in the decision whether to permit amendment. The observations by Gleeson CJ, Gaudron and Hayne JJ in Coal and Allied Operations Pty Ltd v Australian Industrial Relations Commission are apposite:
“Discretion” is a notion that “signifies a number of different legal concepts”. In general terms, it refers to a decision-making process in which “no one [consideration] and no combination of [considerations] is necessarily determinative of the result”. Rather, the decision-maker is allowed some latitude as to the choice of the decision to be made.
Their Honours went on to point out that the latitude as to choice may be considerable or it may be narrow. Given the terms of r 21, it could not be said that the latitude as to the choice of decision, as to whether to grant or refuse leave to amend, was at large. The objectives in r 21(2) are to be sought in the exercise of the power given by r 502(1).
The overriding purpose of r 21, to facilitate the just resolution of the real issues in civil proceedings with minimum delay and expense, is stated in the rules of other courts in Australia, although those purposes and the obligations cast upon the court and the parties may be stated in somewhat different terms (footnotes omitted).
The Supreme Court (General Civil Procedure) Rules 2005 (Vic) do not include a rule in precisely the same terms as r 21. Rule 1.14 of the rules of this Court provides:
1.14 Exercise of power
(1) In exercising any power under these Rules the Court—
(a)shall endeavour to ensure that all questions in the proceeding are effectively, completely, promptly and economically determined;
(b)may give any direction or impose any term or condition it thinks fit.
(2)The Court may exercise any power under these Rules of its own motion or on the application of a party or of any person who has a sufficient interest.
Section 29(2) of the Supreme Court Act 1986 (Vic) requires that every court, subject to the provisions of this or any other Act:
… must so exercise its jurisdiction in every proceeding before it as to secure that, as far as possible, all matters in dispute between the parties are completely and finally determined, and all multiplicity of proceedings concerning any of those matters is avoided.
The applicable rule under which the applicants made their applications was r 36.01 which provides:
36.01 General
(1) For the purpose of—
(a)determining the real question in controversy between the parties to any proceeding; or
(b) correcting any defect or error in any proceeding; or
(c) avoiding multiplicity of proceedings—
the Court may, at any stage order that any document in the proceeding be amended or that any party have leave to amend any document in the proceeding.
In Re AWB Ltd (No 7),[6] Robson J said,
[6][2009] VSC 413, [17] – [25].
Despite the difference in wording in the rules under consideration in AON Risk Services Australia Limited v ANU,[7] the following principles can be drawn from the decision.
The reference to “the real question in controversy” in r 36.01 refers to the real question in controversy that exists at the time of the application to amend.[8] It does not encompass a new claim or issue although it arises out of the same general matter being litigated. An unduly narrow approach should not be taken to what are the real issues in controversy.[9] They may extend beyond the existing pleadings.[10] In Etna v Arif,[11] Batt JA (with whom Charles and Callaway JJA agreed) said that r 36.01(1) should “be read, and as, in substance, comprehending questions potentially within the ambit of the controversy or lis between the parties.”[12]
A distinction should be drawn between those circumstances where the rules mandate that an amendment should be allowed and those where a discretion is granted to the court. Section 29(2) of the Supreme Court Act 1986 and r 1.14 (1)(a) are expressed in mandatory terms even though the power to allow an amendment under r 36.01 is expressed in discretionary terms.[13]
Where the court has a discretion to amend, the discretion is not at large but the objectives in r 1.14 should be sought to be achieved through the exercise of the discretion.[14] Similarly, s 29(2) of the Supreme Court Act 1986 also guides the court in the exercise of its discretion.
The High Court in AON Risk Services Australia Limited v ANU[15] also accepted that issues of case management were relevant to the exercise of the discretion to allow an amendment. The court said that case management involved an acceptance “that the conduct of litigation is not merely a matter for the parties but is also one for the court and the need to avoid disruptions in the court’s lists with consequent inconvenience to the court and prejudice to the interests of other litigants waiting to be heard...”[16]
The court also accepted “that justice cannot always be measured in money and that the court is entitled to weigh in the balance the strain the litigation imposes upon litigants...”[17] In so doing, they rejected the notion that an award of costs is a complete panacea for any delay or disruption caused by an amendment.[18]
The court confirmed that the onus is on the party seeking the amendment and that “generally speaking, where a discretion is sought to be exercised in favour of one party, and to the disadvantage of another , an explanation will be called for.”[19]
The ACT rules include the objective of achieving a “just resolution of the real issues in civil proceedings.” Although those words are not found in the Victorian equivalent, in my opinion, the same principle applies under our rules.
As mentioned above, the court’s powers under r 36.01 are expressed to be discretionary. On the other hand, s 29(2) of the Act and r 1.14(1)(a) are expressed in mandatory terms. In my opinion, the direction to the court that it must exercise its jurisdiction in every proceeding before it so as to secure that, as far as possible, all matters in dispute between the parties are completely and finally determined and that all multiplicity of proceedings concerning any of those matters is avoided, requires the discretion in r 36.01 to be exercised accordingly. The mandatory direction in r 1.14 (1)(a) also governs the exercise of the discretion in a similar fashion.
[7](2009) 239 CLR 175.
[8]Ibid at [71] per Gummow, Hayne, Crennan, Kiefel and Bell JJ; [31] per French CJ and [119] per Heydon J; a similar conclusion had been reached in this court in Etna v Arif [1999] 2 VR 353.
[9]Ibid [83] per Gummow, Hayne, Crennan, Kiefel and Bell JJ.
[10]Ibid [71] per Gummow, Hayne, Crennan, Kiefel and Bell JJ.
[11][1999] 2 VR 353.
[12]Ibid [33].
[13]Ibid [67]-[85] per Gummow, Hayne, Crennan, Kiefel and Bell JJ; [31] per French CJ and [119] per Heydon J.
[14]Ibid [89]-[90] per Gummow, Hayne, Crennan, Kiefel and Bell JJ.
[15](2009) 239 CLR 175.
[16]Ibid [93] per Gummow, Hayne, Crennan, Kiefel and Bell JJ citing with approval Toohey and Gaudron JJ in Sali v SPC Ltd (1993) 667 ALJR 841 at 849.
[17]Ibid [98] and [100]-[101] per Gummow, Hayne, Crennan, Kiefel and Bell JJ.
[18]Ibid [100]-[101] per Gummow, Hayne, Crennan, Kiefel and Bell JJ and [25] per French CJ.
[19]Ibid [103] per Gummow, Hayne, Crennan, Kiefel and Bell JJ.
But for the AED parties’ stated intention to enforce the restraint to prevent Mr Hoie from providing instructions and assistance to Puffin in relation to the representation case, I would allow the proposed amendments. It is surprising that the representation case was not at the forefront of the case advanced by AED Oil to resist Puffin’s demands under the guarantee. However, the mere failure by AED Oil to provide a satisfactory explanation as to why Mr Dix did not provide instructions about the representation case at a much earlier time would not, in my view, justify a refusal of leave in the circumstances of this case. This is so notwithstanding the obvious centrality of the tax indemnity to the proceeding from its inception.
I accept the evidence of Mr Leder that AED’s legal advisers were not acquainted with the relevant facts until early December 2009 and thereafter acted with reasonable expedition. His evidence does not, of course, explain why Mr Dix did not instruct his lawyers about those matters at an earlier stage. Had he done so, and had the amendments been made prior to the restraint on Mr Hoie, Puffin would not be prejudiced in its ability to have the assistance of Mr Hoie. In this respect the delay by the AED parties in seeking this amendment has had the effect of imposing on Puffin a very significant disadvantage that would not have existed had the application been made in a timely manner and prior to the restraint.
The intervening event of the Settlement Deed, coupled with an inadequate explanation as to why Mr Dix did not provide earlier instructions, gives to the delay an entirely different complexion. An object of the power to allow an amendment is to ensure a fair trial. Another object is to facilitate the efficient disposition of the issues in dispute. To grant leave to the AED parties, permitting them to now introduce their new representation case, would be to permit a trial of those issues which was manifestly unfair. This is because (1) the AED parties intend to enforce the restraint; (2) the communications by Mr Hoie are crucial to the representation case; and (3) Mr Hoie has indicated his willingness to assist Puffin if permitted to do so. To those factors I would add the adverse impact on the efficient management of the trial and allocation of court resources. The inability of Puffin to conduct its defence to the representation cases in an orderly and timely manner will compromise the ability of the court to assist in the orderly and timely disposition of the issues between the parties in this case.
As a separate consideration, I am of the opinion that, just as a proceeding may be stayed as an abuse of process, leave to amend may be refused to achieve that objective. To allow the amendment while the restraint is enforced would be to permit the trial process to be employed as an instrument of injustice.
I refuse the applications by AED Oil and AED Services for leave to amend their respective defences by the inclusion of the representation cases.
Puffin also challenged, as untenable, paragraph 4AB in the proposed amended defence of AED Oil, and a similar allegation in paragraph 44 in the proposed amended defence of AED Services. By those and the following paragraphs the applicants seek to invoke an obligation on Puffin to use reasonable endeavours to minimise its tax liability and a corresponding breach. Puffin submitted that the obligation only arose under cl 15.1(c) of the Charter Contract once AED Services had made a request that Puffin negotiate certain matters in good faith. Puffin argued that the failure in the pleadings to address the precondition was not inconsequential. It argued that it was too late for any request to be made. No relevant request had been made and therefore the allegation of a failure to use reasonable endeavours was bound to fail.
Presumably, Puffin will rely upon the requirement of a request as a precondition to the obligation to use reasonable endeavours. AED Services may concede that there was no request and allege that none was necessary or it may allege that there was a relevant request. It is appropriate to await the conclusion of pleadings on the issue. I am not satisfied that the allegation is so untenable as to justify the refusal of leave.
Finally, Puffin contended that paragraph 4X(a)(iv) of AED Oil’s amended defence, alleging an implied term in the Charter Contract, expressed a term that purports to deal with the same subject matter as an express term but in a manner inconsistent. Puffin alleged that the allegation was untenable because no such term could be implied having regard to the principles enunciated in BP Refinery (Westernport) Pty Ltd v Shire of Hastings.[20] In my view it is premature to now attempt to decide whether the implied term is in truth inconsistent with an express obligation. That determination should await trial.
[20](1997) 180 CLR 266, [282-3].
Accordingly, I will give leave to AED Oil and AED Services to file and serve amended defences in substantially the form of the documents presently propounded by them, save for those allegations which depend upon representations alleged to have been made by Mr Hoie. As presently advised the relevant paragraphs are 4B to 4X in the proposed amended defence of AED Oil and paragraphs 24 to 43 in the proposed amended defence of AED Services.
CERTIFICATE
I certify that this and the 12 preceding pages are a true copy of the reasons for Judgment of Judd J of the Supreme Court of Victoria delivered on 10 March 2010.
DATED this 11th day of March 2010.
Associate to Justice Judd
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