Allen v Wilson
[2022] ACTSC 158
•28 June 2022
SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY
Case Title: | Allen v Wilson |
Citation: | [2022] ACTSC 158 |
Hearing Date: | 24 June 2022 |
DecisionDate: | 28 June 2022 |
Before: | McCallum CJ |
Decision: | (1) The application is dismissed. (2) The defendants are to pay the plaintiffs’ costs of the application. (3) Note that the defendants propose to circulate a further draft amended defence in accordance with these reasons within 14 days. (4) In the event that the plaintiffs do not consent to the filing of the further draft amended defence, grant leave to the defendants to relist the proceedings before McCallum CJ on a date convenient to the Court and the parties but no later than 14 days thereafter. |
Catchwords: | CIVIL PROCEDURE — PLEADINGS — Application to amend defence after close of pleadings — Where original defence included admissions — Requirement for leave to withdraw — Absence of explanation for seeking to withdraw previous admissions |
Legislation Cited: | Court Procedures Rules 2006 (ACT), rr 492, 501, 507 |
Cases Cited: | Aon Risk Services Australia Ltd v Australian National University [2009] HCA 27; 239 CLR 175 |
Parties: | John Thomas Allen ( First Plaintiff) Allegro Financial Pty Ltd ( Second Plaintiff) Kevin Wilson (First Defendant) Justin Wilson (Second Defendant) Burra Unity Pty Ltd (Third Defendant) |
Representation: | Counsel C McKeown ( Plaintiffs) W Buckland ( Defendants) |
| Solicitors KPW Lawyers ( Plaintiffs) Gabbedy Milson Lee ( Defendants) | |
File Number(s): | SC 459 of 2018 |
McCALLUM CJ:
These are proceedings in debt commenced as long ago as 10 October 2018. The dispute between the parties broadly arises out of an agreement to develop property in Queensland. The nub of the dispute as may be discerned from the existing pleadings is that, whereas the plaintiffs allege that certain amounts are due to them from the defendants by way of debt, the defendants seek to assert the existence of a joint venture which, if established, would inform the respective liabilities of the parties on a different basis.
The proceedings were due to be heard earlier this year but the hearing date was vacated on the application of the defendants in circumstances where they were unable to pay their solicitor. That solicitor went off the record and the solicitor who has brought the present application came onto the record sometime shortly afterwards.
On 9 May of this year, the proceedings were allocated a new hearing date on 12 September 2022 for four days. By application filed 7 June 2022, the defendants now seek leave to file and serve an amended defence. There is a complication in the application in that, during the hearing, it transpired that in fact only the first defendant had filed a defence to date. Separate defences had been prepared on behalf of each of the second and third defendants but, apparently due to oversight on the part of an agent charged with the task of attending to the filing of those defences, they did not make their way onto the Court file. That oversight can readily be cured, the plaintiffs having indicated their consent to a grant of leave to the late filing of the defences that were intended to be filed. The more substantive issue is whether those three defences should be permitted to be replaced with an amended defence in the form attached to the affidavit of Nigel Gabbedy affirmed 27 May 2022.
The amendment application is governed by two rules of the Court Procedures Rules 2006 (ACT) and expressly invokes those rules. Rule 501 provides that all necessary amendments must be made for the purpose of, among other things, deciding the real issues in the proceedings. Rule 507 provides that a party may amend a pleading after the close of pleadings only with the leave of the Court. It is not in dispute that the pleadings have closed.
An additional constraint on amendment brought to the attention of the Court by Mr McKeown, who appears for the plaintiffs (and which appears to have been overlooked in the drawing of the proposed amended defence) is rule 492, which provides that a party who has made an admission in a pleading may withdraw the admission only with the leave of the Court.
The proposed defence in respect of which leave is now sought transgresses that prohibition in a number of respects. As to those particular difficulties with the application, the parties addressed clauses 2, 3, 7, 12, 13 and 15 of the statement of claim as to which there were previously admissions and which the proposed amended defence would withdraw.
Before going to the detail of those clauses, it is helpful first to consider the proposed amendment to paragraph one of the original pleading and the existing defence to that paragraph. Paragraph one pleaded that:
“In about March 2016 the first plaintiff and the first defendant [each individuals] verbally agreed that:
a)In consideration for the first plaintiff, either directly or through the second plaintiff, providing monetary advances to or at the direction of the first defendant for its purchase of Lot 486, 9-11 The Peninsula Banksia Beach, Queensland and other commercial activities;
b)The first defendant agreed to build or cause to be built a residence upon a block of land owned by the first plaintiff, namely Lot 485, 5-7 The Peninsula Banksia Beach, Queensland, being land adjacent to Lot 486;
c)In accordance with certain building plans agreed upon by the first plaintiff and first defendant.
In the defence initially filed for the first defendant, that paragraph was admitted on behalf of the first defendant, who said further that he and the first plaintiff had agreed on the formation of a new company, Tranquillity Living, of which both men were agreed to be directors and shareholders. The pleading contends that the first defendant and the first plaintiff were to hold shares in the new company on a 50/50 basis and the profits from the joint venture were to be shared 50/50.
It is clear enough from that pleading that the defendants raised an issue as to the proper construction of the verbal agreement pleaded by the plaintiffs. It is equally clear that what was intended was to plead the existence of a discrete joint venture vehicle, the agreement as to which would have an impact on the way in which expenses and profits were to be shared between the parties.
Paragraph one of the proposed amended defence maintains the admission that there was an agreement arising from discussions between the two men in March 2016 but pleads out with considerably greater particularity the alleged terms of that agreement. At the hearing of the application, the Court was assured by Mr Buckland, who appears for the defendants, that those amendments are derived from evidence which has already been exchanged. The Court is not in a position to assess whether that is the case because the way in which the application was brought forward did not indicate or foreshadow for the benefit of the plaintiffs the likelihood that evidence would need to be compared with the new pleading. That basis for the application (that it was merely to bring the pleadings in line with the evidence) was not expressly articulated in the application.
If it is correct that the terms now pleaded out carefully and clearly in proposed paragraph one of the amended defence merely reflects the evidence as it has been exchanged, it would in my view be appropriate to grant leave to amend to that extent. Mr McKeown drew my attention to the principles stated in the decision of the High Court in Aon Risk Services Australia Ltd v Australian National University [2009] HCA 27; 239 CLR 175, which are painfully etched on the institutional memory of this Court. He referred in particular to [82] of the joint judgment where their Honours said:
“The need for amendment will often arise because of some error or mistake having been made in the drafting of the existing pleading or in a judgment about what is to be pleaded in it. But it is not the existence of such a mistake that founds the grant of leave under rules such as r 501(a), although it may be relevant to show that the application is bona fide. What needs to be shown for leave to amend to be given, as the cases referred to above illustrate, is that the controversy or issue was in existence prior to the application for amendment being made. It is only then that it is necessary for the court to allow it properly to be raised to enable a determination upon it.”
What that paragraph indicates, amongst other things, is that if a controversy can be shown, by reference to the evidence exchanged, to have been in existence prior to the bringing of an application to amend, it is appropriate and indeed “necessary” in the relevant sense for the Court to allow it properly to be raised to enable a determination upon it. At this stage of the proceedings, admittedly after an earlier date for hearing was vacated and after a mediation process but still some months short of the new hearing date, it would in my view be a triumph of punctiliousness over fairness to refuse that part of the amendment.
That said, a complication arises, as I have indicated, from the constraint on amendment where the proposed amendment would have the effect of withdrawing an admission previously made. The affidavit in support of the present application paid no attention to that difficulty.
That brings me to the admissions implicitly sought to be withdrawn by the proposed amendment. Paragraph two of the proposed amendment would deny the existence of a term of the agreement previously admitted. The term pleaded is that the first plaintiff would make payments “at the request of” the first defendant. The burden of the amendment is to withdraw that admission and to repeat one of the pleaded terms in proposed paragraph one, that is, paragraph 1(b)(v) which asserts instead that it was a term of the agreement that the first plaintiff would provide funds for the proposed construction “as necessary throughout the course of the building works on both lots”. The effect of allowing the amendment would accordingly be to raise a new issue as to whether payments made were “necessary” as opposed to whether they were made “at the request of the first defendant”.
The unfairness of permitting that issue to be raised now is compounded by the fact that paragraph three of the statement of claim specified the payments alleged to have been made by the first plaintiff at the request of the first defendant in accordance with the term pleaded in paragraph two, and that clause was previously admitted. It is now pleaded to in terms which omit that admission. Instead, the proposed amended defence seeks to characterise unspecified payments advanced by the first plaintiff by reference to the terms of the alleged joint venture. The most significant change there is that the proposed amended defence asserts that any contributions to or expenses met on behalf of Tranquillity Living Pty Ltd can only be claimed from that entity, whereas previously it was admitted that it was a term of the agreement that the first plaintiff would make payments at the request of the first defendant and it was admitted that one of the payments requested was a payment in the order of $170,000 made to “Tranquillity Homes” (evidently a reference to the joint venture vehicle).
As the evidence that has been exchanged in support of the pleadings has not been put before me, it is difficult to be confident as to the precise impact of the proposed amendment in paragraph three. What is clear is that, at the very least, it seeks to withdraw an admission both as to the content of the obligation of the first plaintiff to make payments and as to the payments in fact made. No explanation having been provided for withdrawing the earlier admissions, the proposed amendments in paragraphs two and three should not be allowed to that extent.
The next clause of the statement of claim which was previously the subject of an admission now implicitly withdrawn is clause 7 which asserted, again, that the first plaintiff made certain payments. The previous defence admitted that the payments were made but denied the characterisation of those payments contended for by the plaintiffs. The proposed amended defence is in different terms but the difference does not seem to me to raise the kind of unfairness that arises in relation to paragraphs 2 and 3. That part of the proposed amendment should be allowed.
Turning to the proposed amended defence to clauses 12, 13 and 15 of the statement of claim, it is extremely difficult to discern from the pleadings alone the extent of the difference between the proposed amendment and the existing pleading. What is clear is that the proposed amendment would have the effect of withdrawing an admission, again without explanation. Mr Buckland contended that, although the pleadings in response to those paragraphs of the statement of claim now offer a non-admission or denial where previously there was an admission, a proposed admission in response to paragraph 14 of the statement of claim goes further than before because it now admits the execution of an actual not merely a purported agreement. It is impossible to tell from the pleadings alone whether that narrows the scope of the withdrawal of the admission in the manner contended. I am not persuaded that the defendants should have leave to include those parts of the proposed defence to the extent that they withdraw those earlier admissions.
In short, to summarise the position I have reached, it is clear enough that the form of defence put forward in the application cannot be allowed in its present form. I do not make the mistake of assuming that Mr McKeown objected to the defence or proposed amended defence only on the basis that it withdrew admissions. Mr McKeown submitted that the changes were substantive and that the plaintiffs' affidavits responded to the existing pleading. He submitted, and I accept, that the plaintiffs should not have to go through the changes, request particulars and then discern whether any further evidence would be needed to respond to them. That would skew the balance too far in favour of the defendants. It follows that it will be necessary for the defendants, if they are to have leave to amend, to bring forward a new draft pleading which conforms to the requirements I have considered here.
To be clear, provided it is correct that the pleading-out of the terms of the agreement contended for by the defendants does no more than to bring the pleadings in line with the evidence that has already been exchanged, in my view the amendment should be allowed to that extent. Beyond that, however, it is clear that the proposed amendment seeks to withdraw admissions without explanation and so to trespass on the prohibition on amendment where there was no pre-existing controversy so far as the issues in the proceedings have been crystallised by the pleadings and evidence exchanged. Mr McKeown relied in that context on the last sentence of [94] of the joint judgment in Aon where the Court said:
“Where a party had had a sufficient opportunity to plead his or her case, it may be necessary for the court to make a decision which may produce a sense of injustice in that party for the sake of doing justice to the opponent and to other litigants.”
That, it seems to me, is the position in relation to the attempts to withdraw admissions previously made. In the result, the application must be refused in its present form. However, the defendants should be permitted to agitate a further application if a draft defence can be propounded in accordance with these reasons.
I make the following orders:
(1) The application is dismissed.
(2) The defendants are to pay the plaintiffs’ costs of the application.
(3) Note that the defendants propose to circulate a further draft amended defence in accordance with these reasons within 14 days.
(4) In the event that the plaintiffs do not consent to the filing of the further draft amended defence, grant leave to the defendants to relist the proceedings before me on a date convenient to the Court and the parties but no later than 14 days thereafter.
| I certify that the preceding twenty-two [22] numbered paragraphs are a true copy of the Reasons for Judgment of her Honour Chief Justice McCallum Associate: Date: |
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