Aon Risk Services Australia Limited v Australian National University
[2009] HCATrans 72
[2009] HCATrans 072
IN THE HIGH COURT OF AUSTRALIA
Office of the Registry
No C1 of 2009
B e t w e e n -
AON RISK SERVICES AUSTRALIA LIMITED
Appellant
and
AUSTRALIAN NATIONAL UNIVERSITY
Respondent
FRENCH CJ
GUMMOW J
HAYNE J
HEYDON J
CRENNAN J
KIEFEL J
BELL J
TRANSCRIPT OF PROCEEDINGS
AT CANBERRA ON TUESDAY, 28 APRIL 2009, AT 10.17 AM
Copyright in the High Court of Australia
MR J.T. GLEESON, SC: May it please the Court, I appear with MR N.J. OWENS for the appellant. (instructed by Corrs Chambers Westgarth)
MR B.W. WALKER, SC: May it please the Court, I appear with my learned friend, MS J. OAKLEY, for the respondent. (instructed by Sparke Helmore)
FRENCH CJ: Yes, Mr Gleeson.
MR GLEESON: Your Honours, dealing with the JL Holdings point first, we submit that the majority below and the University in their submissions gives a narrow and cramped conception to justice in the context of late applications to amend pleadings and adjourn the case. According to the University and the majority, a party can do this. A party can turn up at the final hearing which has been fixed for some time after careful case management and tell the court it wishes to add a raft of new claims to the case and it wishes to substantially reformulate its only existing claim. The party can then, after a short adjournment to formulate a pleading, tell the court that it needs a vacation of the complete hearing date because it does not yet have evidence to support its new case. The party then can require the preparation of the matter on both sides to go back to square one and the whole process of case management starts again.
GUMMOW J: You say that, but if the limitation statute has not yet told, what is the significance of Anshun estoppel here in similar offences?
MR GLEESON: On that question, your Honour, if we are successful in the appeal on the JL Holdings point, this matter would go to trail on the pleading as it stood at the date of the application. Whether the University has filed a separate set of proceedings within time and served them within time is not within our knowledge. That is not a matter they sought to prove before either court below.
GUMMOW J: I am not worried about what they did or did not do, I am trying to think of it conceptually. One is sitting there is a practice judge and these people come up here and they are down there brawling as usual, one has to take a broader view of it and part of the broader view is the Anshun estoppel principles; what part do they play in the forming the judge’s approach?
MR GLEESON: They play this part, your Honour. The University was able to propound at most a proposed amended pleading. It did not have any evidence to support the pleading. The judge, taking a practical approach to the matter, could not have formed any view about two things; firstly, whether the matter had strength as opposed to being barely arguable and, second, as to what savings there might be by hearing the whole lot together even on a later date. If we are correct in our contention and they start again, AON would argue that Anshun estoppel does apply. AON would contend that these points were so blindingly obvious from the outset of the matter that if they were to be taken, they should have been taken in the case. Whether AON would succeed on Anshun estoppel would depend upon whether that argument was accepted.
We would submit, frankly, if the explanation offered by the University in defence to Anshun was the same as it was here, ie, we refuse to give any explanation, the Anshun Case would be a strong one. Critical to what I have just put to your Honours is that this was a case where the new point and the reformulation of the old point were blindingly obvious from the outset, which leads to the next relevant fact. I am still putting this from the University’s perspective. They assert that although they made a deliberate decision not to bring it at the outset, they are not required to give the court a full and frank explanation of their conduct and they say that a party in their position can simply say to the court and to the opponent, “Over to you. You have to prove that I am doing something tricky, nefarious, or improper. If you do not, I must be allowed to go ahead.”
The only exceptions the University recognises, apart from natural person defendants, are two. One is where the resisting party can prove actual prejudice viewed narrowly, namely, the loss of a witness or a document or, as I have said, that the opposing party can prove tricky, nefarious or improper tactics on the other side. If you cannot prove those two matters, according to the University, the amendment must be allowed and the adjournment must occur.
KIEFEL J: Are you saying that they are contending for something approaching a right?
MR GLEESON: Yes, a right to amend as long as they can say it is arguable on the face of the pleading and as long as the resisting party cannot prove one of those two matters. They have a right to amend notwithstanding the loss of the hearing and everything that follows.
KIEFEL J: Will you be addressing the question of whether or not this can constitute a right and what might weigh against viewing it, a right in a fuller way at some point in your argument?
MR GLEESON: Your Honour, could I seek to do it immediately and say our submission is that while the discretion to amend and allow a vacation is of course unfettered, there are a series of principles which ought to guide that ‑ ‑ ‑
HAYNE J: You say it is unfettered, why?
MR GLEESON: Subject to the series of principles that I am about to proffer to your Honours as guides which would be useful for trial courts around the country, guides which remove the concept of the right but which reflect more specifically the various requirements of justice. Could I offer your Honours at the outset those principles and then come to the facts of this particular case.
HAYNE J: Are these principles going to be related to the applicable rules?
MR GLEESON: To the rule of court?
HAYNE J: Yes.
MR GLEESON: Yes.
HAYNE J: Is that not the starting point, the rule of Court, and the series of questions that is then tendered by the relevant rules?
MR GLEESON: I will do it through that framework, your Honour, although I will want to submit that the more general principles I will be offering will be of guidance not just under these rules but under the rules in the various courts of the country which are broadly similar in today’s terms. Within the rules, the Court Procedures Rules 2006 (ACT), one commences with rule 21 where the overriding purpose of all rules “is to facilitate the just resolution of the real issues” in the proceedings “with minimum delay and expense” and two objectives are then set out in sub‑rule (2) and importantly under sub‑rule (3) it is a positive obligation upon the parties to help the court achieve those objectives.
I will just stop with those for the moment. Could I offer these principles that we contend for. The first principle concerns an amendment which involves the loss of a hearing date. We submit that an amendment which involves the loss of the hearing date and the preparation of the case starting all over again would usually be recognised as contrary to the purposes in rule 21 and, accordingly, usually to be rejected even if the point is barely arguable. That is the first matter we put.
The second matter we put as a principle concerns candour. We submit that under rule 21(3) and otherwise as part of the parties’ duty to help the court achieve its objectives at the very essence of that is candour and a failure by a moving party to give a full and frank explanation for a late departure from a deliberate tactical decision will be contrary to the purpose of the rules and ordinarily lead to the application being rejected. We place that on the rule but also on the most fundamental principles of the relationship between the parties and the court and the court’s authority over the parties.
GUMMOW J: What about the law of privilege?
MR GLEESON: The law of privilege - this is a person seeking an indulgence from the court, and to do that they must put before the court relevant material to explain why they are in the position they are in. If that requires a waiver of privilege, we submit that is the price for the application. We have given your Honours in our submissions a reference to, for example, the patent applications, where an application to amend a patent under authority in the Federal Court will carry with it a burden to waive privilege in order to establish the circumstances.
GUMMOW J: Whereabouts is that?
MR GLEESON: Our reply submissions page 3, footnote 16, and paragraph 15 of our submission.
GUMMOW J: Thank you.
MR GLEESON: On that point, factually, we submit that although the University hints there might have been something in the privileged communications which it might have wanted to reveal, its solicitor never asserted that in evidence and, indeed, the University was quite prepared in evidence to waive privilege in part. Your Honours will see that in Mr Owens’ affidavit, volume 2, page 332, paragraph 14 – quite happy to waive that privilege, but not to explain to the court the basic fact, what had gone on for two years before by way of a decision not to raise these claims in the face of their blindingly obvious character. That is the second proposition.
The third – and I am still with rule 21 for the moment – concerns real issues. We submit that the time for the identification of the real issues in the proceedings, which may include joining separate causes of action in the one proceeding, is at the outset. It is at the outset so that – as the English cases say – there can be a level playing field. The level playing field involves each side being able to prepare its case and investigate the other side’s case against a common identification of the real issues.
Where a party chooses deliberately, without explanation, to leave an issue out of the proceedings until the hearing and then turns up and says “I think I want to add this into the issues”, we submit that the court is not bound to regard that as one of the real issues in the proceedings, to use the language of rule 21(2)(a), and that there is no injustice to that party in allowing it to self‑define the real issues at such a late stage.
HAYNE J: When they are stripped of the intensifying epithets, the proposition seems to be, be it right or be it wrong, that rule 21, when it speaks of just resolution of real issues, is speaking of resolution in circumstances where the parties have a sufficient opportunity to identify for themselves the issues they will tender for consideration.
MR GLEESON: Yes, subject to any other court rules or case management directions designed to ensure that that process has occurred, occurred fairly, and that the preparation of the evidence, whether discovery, inspection, affidavits or the like, can be done against a background of such identification.
Your Honours, the fourth principle that we offer, and it is not just based on rule 21 but it is every rule and it is fundamental to the court system, we submit that where a court either by way of rule or a direction – remembering that directions are orders – lays down how the pre‑trial process is to be conducted with a view to getting to a hearing speedily and fairly, those rules and orders are important aids to the administration of justice, as your Honours Justices Hayne and Gummow described them in Jackamarra that we have referred to, and serious departures from those rules are not to be treated lightly.
The court should not sanction serious departures from the imposed case management regime absent good explanation and good cause. That, we submit, is a fundamental guiding principle which should be brought to bear in the exercise of the discretion.
FRENCH CJ: The rules expose a number of factors or norms, if you like, just resolution, timely disposal, minimum delay and expense. Do you accept that there will from time to time be a tension between those different factors and that the function of the court in dealing with an application such as that which was made in this case is to give them each their appropriate weight and make an evaluative decision?
MR GLEESON: We do and we would proffer, respectfully, that what two of your Honours, Chief Justice French and Justice Gummow, said when sitting the Full Federal Court in Bomanite, upholding an exercise of discretion by Justice Lockhart to refuse an amendment, gives effect to that type of process. In that case your Honour Justice Gummow identified the eight matters which Justice Lockhart had identified as relevant to the discretion. They did pull in some directions a little bit.
GUMMOW J: What is the citation?
MR GLEESON: It is 32 FCR 379. The relevant passage in your Honour Justice Gummow’s judgment commences at the foot of page 385 where eight factors were mentioned. Factors (i), (ii), (iii), (v) and (viii) would point against allowing the amendment. The other factors would, in part at least, point in the other direction and your Honour held, at page 387 at about point 5, that there was no error of fact, law or misconception of the nature of a discretion in proceeding in that fashion.
That case is a little like the present in that it was blindingly obvious to the party that its case was moving forward to trial on a particular basis and it sought to amend that at the last minute. Your Honour Chief Justice French dealt with the matter, we would submit correctly, at pages 391 and following. What your Honour said at the foot of page 391 concerning costs, whether they are the salve they might once have been thought to be, we would respectfully submit is correct. To the extent your Honour dealt with Cropper v Smith on page 392 we would put a submission in those terms.
GUMMOW J: Bomanite seems to have been cited by counsel in JL, but did not make it to the judgment.
MR GLEESON: Yes, your Honour. One of our submissions about JL is this, that – I will come to it now. Clearly enough, the four Judges sitting in JL took a different view of at least one evaluative matter to that which your Honour Justice Kiefel did as trial judge. Your Honour had considered that not only was the proposed amendment late and contrary to the entire way in which the case was being prepared for trial, but it could not comfortably be accommodated within the trial period and would necessitate a vacation.
On the argument on JL as the transcript reveals, the moving party’s counsel put at the outset that it was not an adjournment case. They said that your Honour Justice Kiefel had it wrong and it could all be accommodated within the hearing. It was a long hearing. It was a small point. Indeed, it was going to arise in any event, even without being pleaded, and therefore it was not an adjournment case.
For that reason, as the transcript of JL reveals, although Bomanite was cited, although Sali in the High Court was cited, which was a square adjournment case, they were put to one side as being not relevant and that emerges, we submit, in the judgment of JL itself. In JL those cases are put to one side because it is said not to have involved the prospect of the loss of the hearing, having to start the case again, et cetera.
HAYNE J: But the critical element of JL is the four sentences appearing - I would have thought – at 189 CLR, particularly at page 154 at about point 2 or thereabouts of the page, the four sentences:
However, nothing in that case suggests that those principles might be employed, except perhaps in extreme circumstances, to shut a party out from litigating an issue which is fairly arguable. Case management is not an end in itself. It is an important and useful aid . . . ultimate aim of a court is the attainment of justice –
and the hinge about which those sentences turn is, I would have thought, the proposition that if the point is fairly arguable leave should go.
MR GLEESON: Your Honour, if JL turns on a hinge – if I could respectfully marginally paraphrase what your Honour just put – if it turns on a hinge that if you can turn up at any time at the hearing and say, “I’ve got a point which is fairly arguable and has some relationship to what are currently the issues, I have a right to be allowed to run it at the time I now want to run it, namely now, as opposed to decisions I might have made earlier or other places I could run it” then you must be allowed to do it as a matter of right unless you fall within the narrow exceptions I have identified of specific prejudice or proven tricky conduct, we submit JL is wrong.
GUMMOW J: That paragraph Justice Hayne referred to is reiterated in the penultimate paragraph of the joint reasons, the second‑last sentence of it:
should not have been allowed to prevail . . . from raising an arguable defence ‑ ‑ ‑
MR GLEESON: Your Honour, the difficulty we submit arising from JL – and can I put it squarely since we are challenging it in various ways – it oscillates between a broad principle and a narrow principle. The broad principle is the one two of your Honours have just identified to me which constitutes the right theory. Once you prove it is arguable, which is not hard, your claim to be able to run it now at this hearing must be given absolute weight, absent the two matters I have mentioned.
If that is what it stands for at that level we submit it is wrong because it has collapsed a number of different principles which ought to govern the discretion into only one and rigidified it into a rule. If however JL stands for what we would call the narrower proposition – and can I just take your Honours to that part of it – then the case poses less difficulty. If your Honours would go back to page 152, in the second full paragraph, the applicants explained their delay on a ground of recent discovery of the material.
Your Honour Justice Kiefel accepted the explanation but with some questioning as to the diligence which underlay it, but it was a case where the applicant put forward an explanation, that is they were prepared to be frank with the court – and if that involves waiving privilege so be it – and they were prepared to have their full explanation tested and they achieved perhaps a credit for their explanation. Then in the extracted passage, your Honour Justice Kiefel formed a view as to whether the amendments would jeopardise the hearing. When one then comes over to page 154 where your Honour Justice Hayne took me - if I could start at the beginning of the second paragraph:
It may be said at once that in the passage which we have cited from Sali v SPC Ltd Toohey and Gaudron JJ are not to be taken as sanctioning any departure from the principles established in Cropper v Smith and accepted in Clough and Rogers v Frog. Sali v SPC Ltd was a case concerning the refusal of an adjournment in relation to which the proper principles of case management may have a particular relevance.
So there is an acceptance there that if it is an adjournment case, not just an amendment case, there may be a particular relevance to case management principles. Then they move to the passage your Honour Justice Hayne put to me. Now, we submit, reading the case more narrowly, it is being viewed as a case where the amendment does not involve an adjournment and the next paragraph we submit bears that out because the Court differed from your Honour Justice Kiefel and said that it could all be accommodated within the hearing and, indeed, about 12 lines down say they thought the point would be come up at the hearing anyway.
FRENCH CJ: Now, this was a case dealing with an application within the framework of the Federal Court Rules which of course had a fairly open textured framework, albeit it was no doubt designed to facilitate a case management approach, but you did not have these sorts of normative statements or purposes set out in the rules themselves as I recall.
MR GLEESON: Yes.
FRENCH CJ: That is the basis upon which it was dealt with in JL Holdings too.
MR GLEESON: Yes.
HAYNE J: Was the amendment rule that was engaged the 1881 form of amendment -all necessary amendment for the purpose of determining real question or issue, or was the rule then in some other form?
MR GLEESON: We have those rules here, your Honour.
HAYNE J: Well, perhaps if you come back to it, Mr Gleeson, but the point of my question and intervention is this, that if we come to questions about JL, what is said there has to be understood against the background of the rules that were then engaged and, in particular, the points which you seek to make in this matter depend at least in part upon giving some understanding to just resolution of real issues.
MR GLEESON: Yes.
HAYNE J: And whether just resolution is a question that turns only on considerations of fair arguability. Does it turn upon that and considerations of sufficiency of opportunity to formulate? These questions are in play if, as I suspect to be the case, the rules are now different. That is why I say I think the relevant starting point is the rule.
MR GLEESON: JL was decided under Order 13.2 of the Federal Court Rules which provided:
All necessary amendments shall be made for the purpose of determining the real questions raised by or otherwise depending on the proceeding ‑ ‑ ‑
HAYNE J: That is rule 28(11) of the 1881 English Rules renumbered and put in, so it is the rule that is engaged in Cropper v Smith and those old cases.
MR GLEESON: Yes.
HAYNE J: Now, the rule with which we are concerned is cast differently, maybe to no different effect, but it is cast differently.
MR GLEESON: We do accept that the current case should be decided within the context of the current rule and we are putting that real issues are not simply, as I say, anything which someone at any time in the hearing says they wish to add to what is otherwise before the court and has been properly and fairly brought to the court through the pre‑trial process and unless it is fairly arguable it will be rejected on other grounds, it will just be dismissed as futile, so it has to be fairly arguable, that is a minimum, we submit. The identification of the issues early is also relevant to it and we submit that where there is no evidence even to support the case, that also would bear upon whether it be allowed at the state of the hearing.
Your Honours, could I just complete the other principles that we would proffer and then move to a couple of aspects of the facts. The fourth principle I had mentioned was the importance of compliance with court rules and orders. The fifth principle we offer is that prejudice has a fuller conception than has sometimes been recognised in the cases and prejudice can include not just actual proven loss of a witness or a document but can include the very loss of the hearing date itself, thereby defeating a legitimate expectation that the rights would be determined there and then.
Prejudice can include all of the evils flowing from additional delay where the hearing is adjourned and the matter must start again. We rely upon Jackamarra v Krakouer 195 CLR 516, paragraphs 29 to 30 in the judgment of two of your Honours dissenting on the facts but, we submit, correctly stating the principle.
GUMMOW J: Paragraph?
MR GLEESON: Paragraphs 29 to 30, 29 emphasising the evil of delay and 30 the importance of court orders. There are three further principles I would offer at this stage: Number six is that costs have a limited role as a salve. Some forms of prejudice they cannot cure. Even with other forms, the costs order will not be assessed until the end of the day. It will be difficult to work out what was additional and what would have been incurred in any event and a litigant with a claim of $15 to $30 million, as here, is not likely to be much troubled about a costs order.
The seventh principle is one of efficient use of public resources. In the JL scale, that is given not much weight. We submit it is important. The ACT Supreme Court allocated substantial pre‑time case management dates and a four‑week hearing period to this case. The entirety of that has been wasted. All the case management directions are wasted because it is all has to start again.
FRENCH CJ: What is your concept of efficiency? It can be an economic term. One does not want to throw it around too loosely. What do you mean by it in this context?
MR GLEESON: What I mean by it is that where the community has allocated its resources to enable the court to exercise its jurisdiction over the parties in the matter – the present case is one of State and subsequently federal jurisdiction – the court has then decided to allocate case management time and four weeks of hearing to the matter. As a result of the University’s conduct, if this decision stands, a further several weeks is needed for a hearing at some future date and all case management has to happen again.
FRENCH CJ: You are really just labelling it. You say inefficiency is when?
MR GLEESON: Duplication is what I mean; it all has to be done twice, and that means twice as many resources allocated to these parties and it means that when the four weeks were set aside for this hearing, other litigants could not get their matter on. That is normally part of life but they could not get their matter on here for no gain. No one got their matter on. Your Honours, we do not suggest you read it all, but if you read the transcript of what happened at this trial, it is a sorry tale. The first two days were properly used for remediation, we accept that is proper, but day three was the foreshadowed amendment.
FRENCH CJ: Ordinarily mediation should take place sufficiently far in advance that if it is going to be resolved you are not losing a trial date.
MR GLEESON: That would be ideal, but of itself we are not blaming the University for it happening then. Day three the University says “We want to amend.”, they do not have a pleading. Day eight of the trial they produce a pleading with no evidence. Day eleven there is an argument about the amendment and when AON opposes the amendment, the University says “We want to put on written submissions in reply”. The written submissions in reply are directed to come on three weeks later. At that point the judges were respectfully asked by AON “What about the balance of the hearing?”, and the judge says “That is all gone”. So 20 days of hearing has been lost because of the University conduct of not identifying this issue early. The eighth matter and the last at this stage ‑ ‑ ‑
HAYNE J: Just before you leave that point, is all that captured by rule 21(2)(b) or is there more to it than that, the reference not only to timely disposal of the proceedings, but reference to timely disposal of all other proceedings in the court? Is your point larger than that or different from that?
MR GLEESON: That is it. The final point at this stage concerns the apparent strength of the case. In a number of the cases, including Bomanite, one of the relevant matters in the discretion was whether a party could identify not merely a barely arguable case but one with some real strength on the evidence. If a party, as with the University here, cannot even produce any evidence, all one can say is it may not be hopeless, but who knows? If a case falls into that category, we submit it has a particularly weak claim for the indulgence. Your Honours, there are three factual matters that I wish to emphasise about this case if I could do that now.
GUMMOW J: Before you do that. Are you going to be taking us to the Commonwealth v Verwayen?
MR GLEESON: Yes, could I do that now. your Honour.
GUMMOW J: Which in a way is a prelude to the JL in a sense.
MR GLEESON: It is.
GUMMOW J: In particular, what Justice Gaudron said at 485 of 170 CLR.
MR GLEESON: In Justice Gaudron’s judgment at 485 we wish to draw attention to the statement at about point 6.
Although the doctrine is analogous to general principles of estoppel, it operates because there is no injustice in holding a party to a changed relationship where that relationship is referable to a deliberate failure to take an available point. Conversely, if the failure is not deliberate, there is no injustice . . . in allowing that point to be taken later if disadvantage to the other side can be avoided by adjournment or an order as to costs.
We would also refer to what your Honour says at the foot of that page and over the page where her Honour ‑ ‑ ‑
GUMMOW J: That is the sentence beginning “Ordinarily”.
MR GLEESON: Yes. However, what her Honour considered as significant was that in that case admitting negligence in the defence –which your Honour described as a deliberate act – was regarded as changing the relationship between the parties. Here we rely on that by analogy in that the deliberate act of the University not to sue AON upon anything other than the narrowest case was something which changed the relationship in the sense that the entirety of the pre‑trial preparation was done against that background.
GUMMOW J: If you rely on 485 and 486, where does it fit in your scheme which you have taken us to at various points? Does it fit into any of those points or not? Is there an extra point? It is important because Justice Kiefel invited you to think about rights.
MR GLEESON: Yes.
GUMMOW J: Your Honour, I really should add it to point two which concerned lack of candour. Point two was that the failure by the moving party to give a full and frank explanation for a late departure from a deliberate decision would usually be decisive against amendment. What I was contemplating there was that in some circumstances, notwithstanding the deliberate decision, the court would at least consider the explanation, but absent explanation, one falls back on, it is not a hardship to you to hold you to the course you have deliberately adopted.
With respect to Justice Lander, who we submit is correct, that point is really the essence of his Honour’s decision. That can be found at page 516, paragraphs 235 and 236 and we submit those two paragraphs are sufficient to dispose of the entire application in this case but there are additional matters of course. Your Honours in Verweyan could I also draw attention to one or two other lines.
GUMMOW J: That is Justice Toohey and Justice Dawson, is it?
MR GLEESON: Yes. Justice Dawson, at page 456, cited, apparently with approval, Ketteman which was closer to the present, as in it was a late application at the trial. At 460, point 4 his Honour, like Justice Gaudron, noted that this was a deliberate course of action which had been pursued consistently for a considerable period of time.
At 461, at the end of the large paragraph, his Honour, we submit, drew the very inference that Justice Lander drew here, which the University seeks to criticise a little. Justice Lander drew, we submit, a fair inference –this is page 512, paragraph 225 and paragraph 226 on the next page – that the failure by Mr Owen to offer any explanation for why this matter, so obvious, was being raised only now led to the inference that any explanation that could be offered would have been insufficient, to put it lightly, and that one could properly infer a deliberate decision earlier on to run the narrow case. That, we submit, is an inference that Justice Dawson drew in Verwayen.
In Justice Toohey’s judgment at the foot of page 464, his Honour made a statement which supports our sixth principle concerning the limited character of costs as a salve. His Honour noted at 465, in the middle, that of course Verwayen was a case where there was no appeal from the order giving leave to amend the defence and for that reason it was necessary to approach the matter through the eyes of estoppel, waiver, election or the like. We, of course, are taking it at the earlier juncture. It is the amendment itself which should not have been allowed.
Before your Honours leave Verwayen, could I simply note in Justice Brennan’s judgment at 427 some statements of his Honour that we will rely upon in relation to the second issue – namely, the significance of the pronouncing of judgment as a point at which “the existing rights of the parties are merged” or otherwise altered in character. I will come back to that.
GUMMOW J: What do you get out of Justice Dawson?
MR GLEESON: The significance, although this is in a different context, of the deliberateness of the course of action and the failure to offer any explanation for why it had been taken, those being relevant matters which in this context produced a “detriment” – that is the foot of page 461 – which was sufficient to create an estoppel – that is the top of 462. So that their conduct, deliberate, unexplained and AON’s reliance upon it in preparation for trial, were sufficiently material to found in that case an estoppel.
GUMMOW J: What is the relationship between Verwayen and the rules of court we are dealing with in this case?
MR GLEESON: I’m sorry, Your Honour?
GUMMOW J: What is the relationship between the principles said to be estoppel and Verwayen and the principles you have been explaining to us in construing the ACT rules?
MR GLEESON: This is an anterior case because in Verwayen the ‑ ‑ ‑
GUMMOW J: But you always had the backup of a possible estoppel? Do you see what I am asking?
MR GLEESON: I see, your Honour.
GUMMOW J: I mean, one answer in Verwayen is, well, why did you not appeal? You did not appeal, goodbye.
MR GLEESON: Yes, that is what we are doing.
GUMMOW J: I know, but you are trying to approach the case on your factual situation. We have to think more widely. I am trying to encourage you to think conceptually. Is there an estoppel backup in these situations? Is that what Verwayen means?
MR GLEESON: The difficulty with whether there is an estoppel backup is depending upon the judgments in Verwayen. What is the point at which the deliberate pursuit of one course of action has caused sufficient detriment to the other in order to generate a minimum equity which would preclude the claim altogether. In the present case, viewed through those eyes, the difficulty for AON is that the detriment AON pointed to – and it is the first matter I wanted to come to was Ms Carr’s affidavit and that affidavit is found at page 387 and we would have to concede if it were purely estoppel, that there would be some difficulty in saying these matters would create such a detriment that there would be an estoppel to be utilised against the cause of action.
What the affidavit demonstrates – and I come back to what I put to Justice Hayne about how the real issues were determined and then acted upon – was that there was an extensive course of pre‑trial preparation done by reference to particular pleadings, particularly paragraphs 5 and 6 through to 8. It was not a small amount of work done. To the extent third parties were asked for their documents, paragraph 9, that was done by reference to a set of pleadings. Paragraph 13, there was a conference of loss adjustors to which AON was not an active party because it did not need to be on the current pleadings. Paragraph 14 has been accepted by all judges below as an accurate summary of what AON will have to do. It will have to start its preparation of the entire case again.
Now, we are submitting that in the context of amendment at least – this is our proposition 1 – if it is a late amendment, loss of the hearing, and the whole preparation has to start again - paragraph 14 - ordinarily the application should be refused. Can I add one aspect there just on prejudice. The University’s approach has been you cannot prove prejudice merely by proving paragraph 14; you have to prove that there is now a witness dead who was formerly alive, or a document missing that was formerly available. Real world experience suggests you will not know until you do the paragraph 14 exercise the extent of the deficiencies in meeting the new case, and you will not know that until you get their evidence.
We do not know what witnesses they will even call, and so we would approach prejudice through this perspective. Could the University prove there is no possibility of AON suffering prejudice when it carries out the task of preparing this case from scratch? If the answer is no, as it is, that would be enough to refuse the amendment. Your Honours, that was the first ‑ ‑ ‑
HAYNE J: That confines the focus of prejudice to prejudice within the litigation. Is there any prejudice which arises by reason of pendency of the proceeding alone?
MR GLEESON: The prejudice arising from pendency is that we have referred to in our reply submissions at paragraph 19, namely that AON does not exist to defend legal proceedings although it must do so as an incident of its business. Any proceedings involve a diversion of resources, economic and management, away from its business. Its financial position is rendered and remains heavily clouded financially while ever this claim is not determined and so, as I put under proposition 1, the loss of the hearing defeats the legitimate expectation of AON that for better or worse it would have finality on this claim within a reasonable period after October 2006. We do submit a broader conception of prejudice is relevant and that of course cannot be cured by costs.
CRENNAN J: Are you saying once a party has a paragraph like paragraph 14 accepted in evidence there is some shifting of the onus somehow?
MR GLEESON: That 14 would create of itself a powerful factor against the amendment and the adjournment, and then when the court is identifying the relevant considerations one would need to say, “What else is there that really is in favour of the amendment in the face of this very real prejudice?”, and then when one comes to the present case where they are simply being held to their own deliberate decision and they will not be frank with the court, there is very little to be said against the weight of paragraph 14.
KIEFEL J: Do you say that that approach is available on the current state of Australian authority or do you – I am not sure whether this is an alternative argument, but in your submissions you rely upon the approach more recently taken in English courts which put the onus squarely upon the moving party for the amendment.
MR GLEESON: There are some strands in Australian authority which point in the direction but we could not say it is established. One strand we pointed to is Justice McHugh in Brisbane South Health, in the context of limitations, identifying the various prejudices that emerge when the period expires. I just want to also give your Honours ‑ ‑ ‑
GUMMOW J: Is that the judgment of the Court in that Brisbane Case?
MR GLEESON: (1996) 186 CLR 541 at 551 is the extract from Justice McHugh that is in paragraph 70 of our submissions. Also, in Brisbane South Health – could I refer to what your Honour Justice Gummow said with Justice Toohey at page 547, admittedly in the context of the extension of limitations, but that because it was a discretion to grant the extension and “not a discretion to refuse” an extension:
on well established principles an applicant must satisfy the court that grounds exist for exercising the discretion in his or her favour. There is an evidentiary onus on the prospective defendant to raise any consideration telling against the exercise of the discretion. But the ultimate onus of satisfying the court that time should be extended remains on the applicant.
The other authority that I wish to refer to in answer to your Honour Justice Kiefel’s question was - we have provided a New South Wales Court of Appeal decision, Itek.
GUMMOW J: All I am suggesting to you is that Brisbane South Health seems to have been elevated as conveying something beyond what was understood at the time, I think.
MR GLEESON: What we seek to rely upon it for is simply the ‑ ‑ ‑
GUMMOW J: I do not mean just by you, I mean by State courts, generally, for some reason.
MR GLEESON: Yes. Your Honour, I accept it is in the context of extension of limitations and I accept what is said in the case. Justice McHugh does give some support to a broader conception of prejudice.
GUMMOW J: That is two out of - Justice Dawson agreed with him, I think, to some extent.
MR GLEESON: Yes.
GUMMOW J: Justice Kirby dissented. I do not think Justice Toohey and I endorsed what he said, so why the continued fuss?
MR GLEESON: I cannot assist your Honour further on that.
GUMMOW J: Anyhow, you want to take us to Itek Graphix.
MR GLEESON: Itek v Elliott 54 NSWLR 207. It is in the context of an extension of time. In the judgment of Justice Ipp ‑ ‑ ‑
GUMMOW J: There it is, Brisbane South Regional Health followed.
MR GLEESON: Yes. Could I refer to paragraphs 88 to 91. In paragraph 88 his Honour says that in the context:
the justice of the case may be such that the failure to explain the delay and to prosecute the case with the requisite diligence will result in an extension of time being refused.
And in 91:
A deliberate decision to allow a statutory limitation period to expire would be a powerful factor against the grant of leave. Where a deliberate decision to allow the period to expire has been made, ordinarily it will be difficult to provide an explanation for that decision sufficiently cogent to warrant the grant of leave.
I rely upon that in terms of the importance of deliberate conduct, the need for some particular strong explanation where it is deliberate conduct.
FRENCH CJ: Just before you go on, on the question of prejudice in this case, so far as Ms Carr’s evidence was concerned, I think she was cross‑examined, but there does not seem to be a finding at the level of a primary judge in relation to that. Justice Penfold, I think, in the Court of Appeal accepted that there were wasted costs and so forth but said it could all be cured by costs. That is really the approach that was taken when the issue was considered for the first time in the Court of Appeal.
MR GLEESON: Yes. It was an error in his Honour’s exercise of discretion to ignore the evidence at all and in the Court of Appeal the majority dealt with it the way your Honour has just said.
GUMMOW J: That brings you to an important question really. We are not sitting on appeal from the primary judge. You have to persuade us that the Court of Appeal itself made some mistake in perceiving its role when sitting on appeal from the primary judge, do you not?
MR GLEESON: Yes, your Honour.
GUMMOW J: You cannot just do it all over again.
MR GLEESON: No, we accept that. The way we would put that is that in Justice Penfold’s judgment, the relevant passages are on pages 468 to ‑ ‑ ‑
GUMMOW J: Then the question arises, if you do succeed in showing error on the part of the Court of Appeal, what happens then?
MR GLEESON: We ask this Court then to hold that in the light of the eight principles I have mentioned the correct exercise of discretion was to refuse the amendment.
FRENCH CJ: The only correct exercise.
MR GLEESON: Yes. At 468 to 470, Justice Penfold starts at paragraph 58, which we read and submit is an agreement with what Justice Lander concluded at page 513, paragraphs 226 to 230 and 516, paragraphs 235 to 236, that is, that her Honour has accepted that when one actually looks at the evidence, which the trial judge never did, the evidence of Mr Owen, and the documents, et cetera, this could not be said to be a case of mistake, it is a case of deliberate conduct.
The University urges your Honour in their submissions to read paragraph 58 as not agreeing with Justice Lander but as merely saying that is one way of looking at the matter. The University urges that when one reads paragraphs 59 to 60 her Honour is never forming a view as to whether this was a deliberate tactic used at the early stage of the proceeding. We submit that her Honour has agreed with Justice Lander and her language should be so read. Therefore, we do not see any error prior to paragraph 60. The error emerges in paragraph 61.
Her Honour refers to a submission put for AON that because you did not explain your tactics the discretion was not enlivened. I do not put that submission. That erects a fetter. The softer submission was also being put, namely, that a failure to provide an explanation for why you have changed deliberate tactics was highly relevant to the discretion. Now, what her Honour says is – goes on:
the applicant did not identify any basis for punishing the respondent. In particular, there was no suggestion that the respondent’s approach, in the sense of what matters were pleaded against which defendants, and when, was aimed at achieving an end that could not otherwise have been achieved legitimately in these proceedings (if, for instance, the initial pleadings had been in the form of the second further amended statement of claim).
That, we submit, is the error. What her Honour has said is – and this is the origin of the tricky and nefarious submission made by the University – once it is arguable you must allow it as a matter of right unless you can prove an abuse of process in a Walton v Gardiner or Williams v Spautz sense, which, of course, we never alleged.
We could not say that had this been in the original document it would have been an abuse of process. We could not say what was the reason why the University deliberately disavowed this claim at the outset. We do not know. We do not know because they did not tell the court why. But what her Honour here is ruling is unless the opponent can prove that there is an abuse of process ‑ ‑ ‑
GUMMOW J: Does she use those words?
MR GLEESON: No, that is what I am taking from the words “was aimed at achieving an end that could not otherwise have been achieved legitimately in these proceedings”. Paragraph 62 I will ignore for the moment, that is about our separate abuse of process case. Then in 63 her Honour says:
In the absence of any particular basis for punishing the respondent, I cannot see a justification for moving from the implication of principle –
her Honour says (e) of JL - I believe her Honour means (b) as set out back on page 467 –
that tactical decisions may be punished in some cases to the conclusion that a tactical decision should be punished in this case.
So ultimately what her Honour has said is, we submit, “I agree with Justice Lander that they deliberately decided to run a narrow case up until the hearing. I agree they haven’t given any explanation for the change but, as I read JL Holdings I am not permitted to give that fact any significant weight in the discretion”. That, we submit, is an error of law. Then her Honour goes on to paragraph 64:
I cannot see any particular case management consideration affecting this case that would outweigh principle (a).
What her Honour is doing is working through the five principles in paragraph 54. We submit, that contains an error because, as I have mentioned, case management in this case critically involved the proposition of a fair identification of the real issues early and it also involved our loss of the hearing and the importance that has. Then her Honour moves to prejudice and in 66 her Honour deals with Ms Carr’s affidavit. The Court will see at about line 40 that because we could not prove a problem with specific witnesses, then we should simply rest with costs and losing our day in court and having to start again were of no relevance.
Her Honour in 67 – again there is probably a typographical error – says she finds the case falls within principle (d). She probably means principle (e) on page 467. So if I then come to that paragraph (e) on page 467, her Honour has erected the right; once it is arguable, you must allow it no matter when it is raised unless there is proof of specific prejudice. So the whole discretion has been collapsed into that single rule and we challenge that in law.
In the Chief Justice’s judgment, which is a brief judgment between 457 to 458, it is difficult, with respect, to identify whether his Honour is proffering an independent strand of reasoning. At the foot of 457 the Chief Justice notes that the University had offered an explanation that:
the additional claims only became highlighted as potential issues during mediation.
At 458 his Honour says that was not entirely persuasive. He then agrees with Justice Lander that there was unreasonable delay and the explanation was not satisfactory, but then apparently does not agree with the inference found at the foot of page 512. We respectfully criticise paragraph 14 of the Chief Justice’s reasons as inadequate. In circumstances where they refused to give an explanation, what his Honour has done, with respect, is engage in circular reasoning. The inference he would draw, absent their explanation, is that they were conscious that they couldn’t resist an indemnity costs order if the only explanation was, for example, a misplaced hope that on mediation the issues would be resolved.
So what he has done is to postulate a possible explanation, one that they never gave, namely, we did not raise the issue earlier because we just hoped that we would have a good mediation and we would not have to actually do the work to sue AON properly. No one gave evidence of that. The Chief Justice has said, well, look, if that was the explanation, I would have met that with an indemnity costs order but nothing more and therefore I infer that that is why they did not give me an explanation. We submit his Honour is not engaged in the task of dealing with the evidence. Your Honours, there are two further factual matters that I wanted to cover ‑ ‑ ‑
HEYDON J: Mr Gleeson, when was mediation ordered or agreed? If it is inconvenient now, an answer later will be ‑ ‑ ‑
MR GLEESON: It was done without a court order proffered by the University about a week before the hearing.
GUMMOW J: Does that appear in the record? If it does not, it had better be an agreed fact.
MR GLEESON: I will remedy that, your Honour. Your Honours, could I just deal with the two further factual matters and then ‑ ‑ ‑
FRENCH CJ: Paragraph 16 of the Chief Justice’s judgment, that aligned him with Justice Penfold, I think, so far as the prejudice and costs issues are concerned.
MR GLEESON: Yes.
HAYNE J: Just as for the date of mediation, page 331, paragraph 9, is that the requisite information or is it not?
MR GLEESON: Yes. So that is the full answer. It was done with the court’s leave and it was a mediation on that date. Your Honours, there are two further factual matters and then I have to come back to the English cases that your Honour Justice Kiefel raised.
The first factual matter is this. The University in fact sought to persuade the trial judge that they fell within JL Holdings in that they had only recently discovered the new case and that that was a factor in their favour in the exercise of discretion. We submit that what Justice Lander correctly found was that that explanation, that submission, was false and so the University’s lack of candour included that it proffered to the court a characterisation of its conduct which was exploded as false on its own evidence.
Can I show your Honours why that submission is correct. In volume 2 at page 227, after the orders were made disposing of the insurers, the submission put by the University’s counsel was that they needed an adjournment as a consequence of three matters; firstly, the settlements – this is line 18 – secondly, they had just received a number of affidavits from the insurers in the previous week and they had received further discovery documents from the insurers that week, and, thirdly, because of what were described as the contents of discussions they had had with the insurers in the mediation, and for those reasons it was said to be necessary to seek leave to amend, to obtain and ultimately serve additional evidence, and it was suggested council might have to retire from the case.
FRENCH CJ: There was never any later mention of that, was there, or any explanation as to why that might be necessary?
MR GLEESON: That is correct, your Honour. If I could just take it one step further, at 228 between lines 7 to 20:
As we understood matters until the recent receipt of documents and affidavits and the like, and indeed Chubb has a section 28 defence as well, from the university’s perspective, against a background of having Aon as its retained brokers for a period of some years prior to the fire, declared value, the significance of declared value, was and is one of the integers of the calculation of premium.
It is now apparent that declared value has a critical significance to underwriters different from merely the basis of a premium.
FRENCH CJ: This is the question of reinsurance, is it not?
MR GLEESON: Yes.
FRENCH CJ: But that came out in the correspondence I think, did it not?
MR GLEESON: It did. The short point I am making is that this was put to the court on the basis of, we have only just found this out. We got documents last week, and these insurers who previously we thought were taking a section 28(3) point of we would require some adjustment of premium because of value, were now, lo and behold, going to a much more powerful and damaging section 28 defence. The page goes on; they need to make some inquiries. On page 230 at line 25 “the underwriting evidence now discloses” this real point. It is going to take “time for your Honour to embrace the full detail of it”, it has “taken me something in the order of some days and weeks to come to understand it”, and so the new case is foreshadowed. At page 231 at lines 15 to 20 the brief summary is given:
if the underwriters are right with their defences, we should have known about that in advance –
and taken steps to avoid it.
Now, that was put forward from the Bar table as recent discovery, “We’ve got a good explanation for why we didn’t raise it earlier. There’s a whole new case to be run”. When the evidence came on Mr Owen’s affidavit, which is found at pages 330 and following, contained the glaring omissions. Paragraphs 2 to 4 indicate that the solicitor in charge of the matter between 2004 and 2006 was a Mr Will. No evidence was called from Mr Will to bear out counsel’s submission that he did not know about this point earlier on. In paragraph 7 the witness refers to the “affidavit evidence” and says in paragraph 8 it was sent to counsel. Nowhere does the witness assert, “I learnt something from that affidavit that I didn’t know before”.
Paragraph 10 refers to the discovery. Again, there is no assertion that that provided any new information. Paragraph 12 refers to the mediation and says it was “confidential” with no assertion that anything was passed in the mediation which was new, no assertion that the University would like to put it before the court if it could get the confidentiality lifted and no evidence of any request to lift the confidentiality. We then have paragraph 14, “Counsel said we now have to do it”.
So, in other words, on the face of that affidavit, even had there been no cross‑examination, the explanation offered to the court, we submit, was shown to be false. What then happened was that his Honour Justice Lander correctly reviewed the primary documents which the trial judge had not done and at pages 393 to 394 was the very first taking of the point by Chubb as early as October 2003 – that is the valuation point.
HEYDON J: I am sorry, what page are we on?
MR GLEESON: I am sorry, your Honour, on pages 396 to 397. That is October 2003. Both points are taken. At the top of 397 the point is taken that the policy only covers Schedule C. In paragraph 9 Chubb say, “That point will probably be swamped by our big point which is you misrepresented value”. The point is then advanced in some considerable detail. At page 399, paragraph 20, Chubb asserts that its section 28(3) right is to reduce its liability “to a maximum of $US5 million” because it would have bought reinsurance above that had it known of the true value position.
The losses were in the order of $60 to $70 million. Chubb had 50 per cent. The University was being told that even converting to Australian dollars of, say, 8 million, its main insurer claimed it could reduce its liability from in excess of 30 million to 8 million. That was known to the University at the outset.
That is why the point was blindingly obvious and that is why for the University to tell the court that they only thought this was about premium was clearly wrong. The points are then taken squarely in the defence also in the letter at pages 402 to 403 and, accordingly, Justice Lander was inevitably correct in concluding this was a party who deliberately knew of the point and chose not to take it. In terms of the cross‑examination of Mr Owen, the critical parts are at page 256, paragraphs 25 to 35, the deliberate and necessary decision to omit any reference to the need to amend. At page 263, he knew the points the insurers were taking when he took over the file, including value points. Could I go to 275, which deserves a little emphasis. It is hard to put it more clearly than line 30:
Was that a deliberate decision taken by the ANU, namely not to sue Aon in respect of the undervalued, declared value of the properties?‑‑‑I think the answer to that is yes.
At 277, lines 20 to 30, he asserted that something was said in the mediation, still without any attempt to reveal what it was or to get confidentiality waived. The re‑examination at 279 did not take up any material matters. So, in our submission, not only did the court not have an explanation, but to the extent a submission was made the evidence exploded it and it is hard to think why a court would not regard that with graveness. Your Honours, the final factual matter ‑ ‑ ‑
BELL J: Perhaps just before you move to that, Mr Gleeson, the third defendant ACE all along took a different position. Its defence was an adjustment to the premium position, was it not?
MR GLEESON: Yes.
BELL J: And it was not a party to the mediation that took place on 6 November, or it was?
MR GLEESON: It was not.
BELL J: So that at some earlier stage the University and ACE had come to a compromise?
MR GLEESON: Yes.
FRENCH CJ: There was an agreement noted by the court, I think, and orders disposing of the proceedings.
MR GLEESON: Yes.
BELL J: Is there any significance to the different position taken by ACE in terms of your contention about the blindingly obvious nature of the undervaluation aspect of the Schedule C claim?
MR GLEESON: They must have known that ACE was taking a lesser position and Chubb and CGU were taking positions which, if successful, would destroy most of the cover.
BELL J: Is there any evidence about when the agreement with ACE was arrived at?
MR GLEESON: Could I check that, your Honour. It was 9 May 2006, page 370, line 25. What that pleads is that on 9 May there was an agreement to pay an additional $11.5 million, in addition to 1.5 already paid, but then on 15 November the plaintiff agreed to accept a further 1.25 million in final settlement. So it seems that something was still outstanding with ACE.
FRENCH CJ: You have slightly mischaracterised, I think, the ACE defence in your chronology, have you not, on 31 March 2005. Perhaps that is a matter to be checked later.
MR GLEESON: Your Honour, it was a defence to adjust premium, page 57.
FRENCH CJ: Yes, I am not sure it denied that all the buildings were insured. Anyway, I remember there was some discrepancy between that and the defence as filed.
MR GLEESON: The denial of the buildings is in paragraph 19 on page 56 and the premium adjustment is paragraph 20 on page 57.
FRENCH CJ: All right.
MR GLEESON: Your Honours, the final factual matter was – could your Honours go to paragraphs 12 and 13 of the University’s submissions. What is there said by way of concession is that because the new claims swamped the old, one does not really need to bother about the change that was made to the old and that the University now accepts that the new claims were enough to require a vacation of the hearing plus the indemnity costs order, and in effect that is now an accepted error in the trial judge’s discretion which entitled the Full Court to intervene.
We submit that of course is not the only error. There is the failure to deal with matters like the deliberate decision and the lack of explanation, but even on this matter we submit that does not give the change its true significance. If your Honours look at the new matters, the new claims are the failure to advise on appropriate insurance in relation to deductibles and claim limits – that is the first one; appropriate declared values – that is the second; and negligence in performing valuations – that is the third.
What is not made clear from that is that the deductible claim, as it is called, is in fact sought to be pleaded by the University as part of its answer to the PNI claim. It is a part of the reframing of the original claim. The result is that nothing from the original claim remains as it was, everything has been refashioned.
Could I just show your Honours that in comparison to two pages. At pages 96 to 97 there is the old claim and that is the simple claim that the preceding insurance covered Schedule C and PNI, you were engaged to arrange renewal. In the alternative we plead you did not get cover for the PNI. That is paragraph 31 over the page. The new case at pages 372 to 375, paragraph 25 says, we were unable to recover anything from the insurers in respect to the certain buildings, that is the PNI buildings. Paragraph 26 says, in breach of obligation you fail to place insurance over the buildings.
So this is the PNI case, but in its new fashion paragraphs (a) through to (i) completely refashion what the nature of the duty is. Paragraph (j) is an allegation that insurance was placed without instructions and (l) to (o) is the deductible claim. So when the University failed to explain why this was only being raised now, that failure extended to why were you reworking the whole of even the PNI claim.
Finally, on that topic, if I could just refer your Honours to the first part of the new pleading, which is paragraphs on pages 334 to 342. The new case starts by alleging a contract in 1999, alleges a whole lot of new terms, alleges a whole lot about value and particularly on page 341 particularises 11 communications which the University had in its possession from 2002, and they are said to be the particulars of the breach by the broker, and that is a breach going to both the PNI and the Schedule C. So the submission we make is that even the reformulation of the old case is substantially infected by the new material and unexplained. Your Honours, the remaining matters on the first point of the appeal were these.
GUMMOW J: You have taken us through the Court of Appeal but do you not have to show Justice Gray was wrong too?
MR GLEESON: Yes. Justice Gray – it is pages 433 to 434. At paragraphs 39 to 40 his Honour says AON failed to make out inconsistency between the old claim and the new claim. That overlooks the point I have just sought to make about the deductible and it ignores completely the balance of the new claims. In paragraph 42, his Honour refers to the attempt to explain the delay by reference to the matters that I took your Honours to from the transcript ‑ the affidavits, the discovery and the mediation. Indeed, his Honour records at line 20 over the page – this is the submission by the university that:
it was said that AON’s involvement in the declared values . . . had consequences which the plaintiff’s lawyers had not appreciated. This further led to consideration of claims -
His Honour makes an error in 43 by saying he is prepared to accept the explanations in general although not being 100 per cent satisfied. Stopping at that point, his Honour has not even referred to Mr Owen’s affidavit, nor to the cross‑examination, nor to the documents and defences taking the point under section 28(3) very early on.
Now, that is not only an error of fact which has caused his Honour’s discretion to miscarry within House v King. We would go so far as to say that having not referred to the critical evidence in the case on the issue, it was an error of law to merely accept a submission. But on either basis his Honour has failed to carry out the exercise.
Then his Honour says they are triable issues. He says he takes into account other litigants might have lost out. On the other hand there has been a saving of time. What his Honour has not had regard to are a series of the matters I referred to this morning, not had regard to the deliberate decision, the failure to explain, the broader conception of prejudice, the time at which the real issues are identified and so on.
GUMMOW J: Paragraph 38, the primary judge – …..the starting point, I suppose, your side’s submission that the plaintiff was now seeking to bring an entirely new case.
MR GLEESON: Yes. That is what Justice Lander dealt with correctly at page 507.
FRENCH CJ: He almost seems to imply that the new pleading is within the four corners of the old.
MR GLEESON: Yes, well we submit that that is just wrong on a reading of it. The only pleading is we had certain insurance, we asked you to renew, you did not, you got something less than it. That is the case that was run, a simple case and it can be met.
The new case is you had a duty to do a whole range of things in respect to our renewal, including in effect becoming a positive steward. “Steward” is the word they use. You needed to go and tell us that we were proceeding deliberately but on an inadequate basis as to the sort of cover we needed, including you needed to advise us on deductibles. Now, that case, we submit, can never be made under the current plea. His Honour’s full analysis of the new pleading is at pages 484 to 485.
The English authorities that we have briefly referred to in our submissions are in our supplementary folder of authorities which we have handed up. Behind tab 4 is Savings and Investment Bank Ltd v Fincken [2004] 1 All ER 1125, the English Court of Appeal. The relevant passages are on pages 1145 to 1146. The case touches on some of the issues I have referred to this morning. At letter b is a case where there was no explanation for the point not being raised at the right time and at letter h the court is grappling with the real dispute. Perhaps I will go back to letter f:
It is not as though the liquidators’ case in these proceedings has been inadequately analysed so that the amendment requested, although late, is necessary to give coherence to that case, in order that ‘the real dispute can be adjudicated upon’. On the contrary, the amendments are merely further examples of that ‘real dispute’ –
But then down at letter h, the amendments raise in their own way an entirely new case concerning new issues, raising new avenues of inquiry, and at paragraph [76] the point is put squarely, is it enough that they have a prospect of success:
That may be a suitable test where an amendment comes at a reasonably early stage . . . however, the proper rule or guideline calls for a sliding scale: the later the amendment, the more it may require to commend it.
FRENCH CJ: This is linked into the Civil Procedure Rules at [78]?
MR GLEESON: Yes. Then the loss of the trial date is regarded as a material consideration in paragraph [77]. We also offer the Court, behind tab 7, the decision in Worldwide Corporation Ltd v GPT Ltd, 2 December 1998. Pages 20 to 21 deal with the problem of last‑minute amendments in a manner consistent with our submission.
We have also offered the Court behind tab°2 a decision from the Federal Court of Appeal in Canada. The relevant parts supportive of our submission are between pages 11 through to 15 of the reprint. If I go straight to page 14 for how the discretion was exercised which shows the principles. The amendment was not allowed. It represented a “radical departure”. It is an amendment not supported by evidence and an attempt to introduce questions which the court would not permit.
FRENCH CJ: That is made again within a particular rules framework?
MR GLEESON: Yes. The Canadian rules tending to follow the earlier English Rules. The American position we have instanced at tab 5, Court of Appeals for the Seventh Circuit, Tamari. The relevant passage is on the last page in the last column.
GUMMOW J: This Merck v Apotex Case went to the Supreme Court of Canada on the actual patent.
MR GLEESON: Could we check that, your Honour?
GUMMOW J: The Merck Case you took us to in the Federal Court of Canada went to the Supreme Court eventually.
MR GLEESON: We will check whether that related to the amendment issue.
GUMMOW J: It did not, no. What do we get out of Merck? I do not quite understand. What was going on?
MR GLEESON: That the amendment was being made very late to introduce ‑ ‑ ‑
GUMMOW J: It is an infringement suit.
MR GLEESON: An infringement suit to introduce a different view of the matter to that which had been adopted throughout the entire ‑ ‑ ‑
GUMMOW J: What do you mean by a different view of the matter?
MR GLEESON: As is found in paragraph 47, page 14 over to page 15, the amendments sought to repudiate admissions made in previous pleadings sought to challenge the process by which Apotex obtained its NOC which involved a question of bioequivalence. It questioned a construction of the patent. It sought to raise a different construction of the patent to that which had been adopted previously and an amendment which was not supported by any expert evidence making it an appropriate construction to adopt.
GUMMOW J: Counsel seems to have made an affidavit about this. I really wonder what the utility is of these foreign decisions, without knowing much more about their procedures.
MR GLEESON: Your Honours, finally on JL, in relation to Cropper v Smith, we have provided a written submission analysing that Lord Justice Bowen was in fact in dissent and when the case when the House of Lords, although his decision was upheld on a patent ground, it was not given approval on the question of amendment itself. It was peculiar case where there were two alleged infringes of the patent who were partners; one put in particulars of objection to the validity of the patent, the other was silent. The trial ran. The court found the patent was invalid but gave an injunction against the partner who did not put in particulars on invalidity on the ground that that was an important document and a deliberate decision had been taken not to file it.
The House of Lords overturned the actual decision on the ground that because of the in rem character of the patent, the fact that it had been declared invalid in the very suit between the same parties made something of a nonsense of an order declaring someone to be an infringer of such a patent, but as to the pure amendment issue, did not give any support to what Lord Justice Bowen said. Therefore on amendment questions, we submit, Cropper v Smith in fact is supportive of the proposition that deliberate decisions adhered to in the course of litigation ordinarily should not permit amendments. Your Honours, can I move to the second ground, if that is convenient?
FRENCH CJ: Yes.
MR GLEESON: Can I first identify the relevant documents.
GUMMOW J: On this question of abuse of process, we might have been taken to what we said in Batistatos 226 CLR 256 on this subject. Abuse of process is a word used in many senses in the law and we need to be precise about what we are doing. At one stage it is a tort, another stage it is something else in procedural matters.
MR GLEESON: The sense in which we seek to use it here is as follows. If one party identifies its claims in a pleading to which another party responds by way of a defence which contains various traverses and the parties by consent ask the court to enter a judgment in the proceedings on the plaintiff’s claim, the defendant is taken to have withdrawn the traverses, and the parties are in agreement that a judgment should be entered vindicating a success by the plaintiff on the claim. If that happens, as happened here, we submit the consequence is, as between the university and CGU, an issue estoppel has been created in particular, but not only, an issue estoppel that the relevant policy of insurance covered both the Schedule C and the PNI properties and that it was constituted in the form alleged by the University.
The University having succeeded on that allegation it cannot, in the same proceedings or otherwise against a different party, ask a court to find the exact opposite, namely, it was not covered. The abuse of process arises by reason of the inconsistency between the judgment it obtained and the one it now seeks to obtain. Your Honours, the critical document is - at page 71 there is the amended statement of claim.
FRENCH CJ: What part does the issue estoppel play in that logic? It is not a sort of thing floating free in space, it is something that defines what CGU can or cannot do, subsequently.
MR GLEESON: What it means is – we submit the effect of the judgment is CGU cannot subsequently say that policy did not cover the PNI properties and the University, conversely, has obtained the benefit of having that issue closed between the two of them. That is an issue which could arise in other contexts, eg, a different loss event in the same year and the issue has been closed. It is critical to our argument that that issue has been closed. Your Honours, the document at 71 ‑ ‑ ‑
HAYNE J: Closed generally or closed as between the identified parties?
MR GLEESON: Two steps. Firstly, it is closed as between those identified parties, the University and CGU and, secondly, we submit that the law would not permit the University to reopen that issue and seek the exact opposite determination upon it between at least it and AON, another party, a party who was there in the same proceedings against whom the very same issue had been raised. There were various ways the University could have dealt with this issue. What your Honours see at page 71 is the amended statement of claim in the form of June 2005.
Could I note for completeness that the extant document at the time of the consent order is in fact the document at tab 10 in the index which is not reproduced but is materially in the same form for the purposes of this issue. If the Court needs it it is in our additional folder behind tab 10 but for the moment I will deal with the document in the appeal book form.
The critical allegation is found at page 73, paragraph 8 where there is an allegation of an “agreement” being a “contract of insurance” whereby there was coverage against certain loss. The contract is said to be made “in writing and comprised” of certain documents. Critical to those documents is document F which is a letter annexing two lists of buildings, the first being Schedule C and the second being PNI. That is the identified contract in writing and comprising those documents.
BELL J: Paragraph 8 pleads the contract of insurance in relation to the first, second and third defendants.
MR GLEESON: Yes.
BELL J: The court, by consent, dismissed the proceedings against Chubb, the first defendant. How does that stand with this contention?
MR GLEESON: The answer to that is rule 1614 of the Court Procedures Rules which is that a dismissal where the matter has not been determined on the merits does not prevent it being sued upon again.
GUMMOW J: Do we have that?
MR GLEESON: Could I provide your Honours with a copy of 1614.
FRENCH CJ: Chubb had paid out substantial quantities, had it not?
MR GLEESON: Chubb had paid substantial quantities and one might infer there is likely to have been some other agreement between Chubb and the University and, indeed, the University alleges it got a further payment from Chubb as a price for that dismissal. At page 77, paragraph 13 alleges the indemnity against the losses occurring at the premises to property therein. Paragraph 16 alleges the fire, 17 alleges the loss to property and paragraph 18 on page 89 claims the indemnity as per those paragraphs.
Then, as we have seen, the claim against AON is a true alternative claim, page 98, paragraph 31. If the defendants are right in their defences, then those properties not being insured, you are responsible. The relevant defence at the time of judgment by CGU is the document commencing at page 129.
FRENCH CJ: These amended defences were filed immediately prior to the consent judgments being made?
MR GLEESON: Yes. The precise order was they were filed first, and that is apparent from page 222 to 223, and then after they had been filed the court was asked to make the orders in the short minutes – that is page 225, line 20 – but not make the order granting leave because that had already occurred. So we accept that the order of events is the amended defence is on the court record and then the parties ask the court by consent to enter the judgment, which is at page 155.
All I need from the CGU defence is at page 131. There is a denial that the contract was evidence by the documents set out in the particulars. There is an assertion it was comprised of a lesser series of documents, therefore the PNI is not covered. That is the first defence. There are various other defences. On page 133, paragraph 10, there is a defence about reasonable dispatch. The section 28(3) defence starts on page 135 at the top. On page 137 there is a defence about something called NIFS. The full pleading of section 28 defence is page 137 at the bottom over to 139. What CGU sought, page 139, paragraph (e) was reduction of its liability to nil or, alternatively, reduction to a specified amount.
Now those being the extant pleadings, the question is whether, at page 155, by asking for a judgment to be entered against the defendant in that sum the court vindicated the plaintiff’s claim on two matters. Firstly, that the contract was the contract alleged which covered the PNI and, secondly, whether there was any vindication in relation to section 28(3). These are the authorities that we submit are of assistance on the point. Firstly, it is uncontroversial ‑ ‑ ‑
FRENCH CJ: Sorry, before you go to those, can I just ask how the sum of $750,000 relates to the claimed liability of CGU?
MR GLEESON: Yes. All we know is what is now asserted, so I should go back to the new pleading at page 370. Paragraph 22 alleges the 750,000 amount. The earlier payment by CGU is at the foot of page 363, 3.57 million. Then the allegations which are made, page 372 to 373 are an affirmative allegation that they were unable to recover anything from any of the insurance in respect to the PNI buildings. That is paragraph 25 and that seems to be linked to paragraph 26. That is because you failed to place insurance for those buildings. It is the affirmative allegation of the policy not covering the PNI.
Then in relation to the section 28 case, paragraph 27 seems to allege, the cover you obtained for us was liable to be reduced pursuant to section 28, which seems to assert that in law it was actually reduced under that section. Then in terms of the claims for relief, paragraph 30(a) says, because the PNI was not insured, we have received nothing for the PNI policies. Then paragraph 30(c) over the page says we have “not received payment of the first and second defendant’s proportions of the amounts . . . under the heading” – it is confusing – “Not on PNI List”. That is the old Schedule C.
Then the claim for relief is, on page 381, $17 million as the damages because the PNI properties are not insured. Then over the page there are two heads of damages which seem to be some version of a claimed reduction under section 28(3) in relation to Chubb and CGU.
As I have taken the Court through it, the CGU defence had at least four claims. It had PNI, 28(3), reasonable dispatch and NIFS. The assertion that is now sought to be made is “Because of your negligence, we recovered nothing under the consent judgment for PNI, and there was a 28(3) reduction applied to us in the settlement”.
GUMMOW J: Are you running a case differently now to that which you ran in the Court of Appeal? I am looking at page 521, paragraph 252 of Justice Lander’s reasons:
no higher than it was a relevant consideration ‑ ‑ ‑
MR GLEESON: Can I seek to explain what happened there, your Honour? There was some confusion in the Court of Appeal, which may have been engendered on our side, as to whether AON was seeking to strike out the existing pleading, or relying upon this as an independent reason why the new pleading was doomed to failure. When counsel said “We are putting it as a relevant consideration”, counsel for AON meant it provides an independent reason why you would not allow the new pleading because it has this fundamental legal problem with it. If the point were good it would have a consequence for the existing pleading, but that existing pleading was not squarely being challenged. In my respectful submission, that is the sense in which paragraph 252 reflects what AON was seeking to do.
GUMMOW J: Then Justice Lander says in paragraph 254:
the trial judge was not called upon the consider any applications to strike out –
et cetera.
MR GLEESON: That is the point I am making, that it arose in the context of “Should they be given leave to amend the new pleading?” Answer one: JL; answer two: it has a legal problem that is fundamental to it. Paragraph 254 is correct. There was no allegation to strike out the earlier pleading. Your Honours, these are the authorities ‑ ‑ ‑
HAYNE J: Just before you come to the authorities, the new pleading contains within it a paragraph saying that the compromise reached was a reasonable compromise, does it not?
MR GLEESON: It does, but with respect that is not on a reading of it an allegation of the type the Court dealt with in Unity Insurance Brokers. In Unity Insurance Brokers the Court – and there was a majority and a minority judgment – said that if the broker’s negligence means that you should have recovered X, but because of that negligence you are placed in a position of peril with a doubtful policy, and you settled up your claim against the insurer, got the best you could, provided the settlement was reasonable, you could claim the difference as a measure of loss.
The dissenting judgment of Justices Gummow and Kirby said that that was not an available measure of loss and what needed to be proven was what was the actual legal position, vis-à-vis for instance the section 28(3) claim being invoked by the insurer. Although this pleading invokes reasonable compromise, they are not in fact saying that because we faced various defences from the insurers, it was reasonable to settle. We got the best sum we could and what we want the Court to vindicate is that our reasonable settlement provides a measure of loss.
What they really want – which is why I emphasised paragraphs 25 through to 27 - is they want the second court to rule that they in fact were entitled to in law and recovered nothing in respect of two of the insurers’ defences. So to win on paragraphs 25 and 27, the second court must pronounce that in law the policy never covered the PNI properties and that in law there was a section 28(3) reduction of a certain amount. In effect, they have taken ‑ ‑ ‑
HAYNE J: Well, that seems to be an argument that says that the plea of reasonable compromise is irrelevant and liable to be struck out. That is that the claim that is now propounded is we recovered all we could as a matter of law and if that is the plea then reasonable compromise does not have anything to do with it.
MR GLEESON: Correct, that is our analysis of it.
HAYNE J: Well, by what right do you re‑characterise the pleading, Mr Gleeson, in this way by saying that it is a plea of “We recovered all we could” as distinct from “We made a settlement, we did a reasonable settlement”?
MR GLEESON: Because the claims – the losses which are then identified, and I took your Honours to paragraph 30(a) and (c) and the claims in 35 - are consistent only with the view that they are saying we lost on those two issues because they ask for the whole of the PNI damages. Your Honours see that from paragraph 35(a). I just focus on that one for a moment, $17 million. They say “Please pay us $17 million” which is the amount that your Honours will see on page 385. Page 385 has at the top what is called “not on PNI” which is the old Schedule C. That totals $37 million, and then it has the PNI of $17 million.
So the damages claim we are asked to meet is pursuant to this settlement and this consent order we had no legal entitlement to recover anything for the PNI and we did recover nothing for the PNI. In effect, as we would characterise it, the case they are seeking to prove is the one that the dissenting judgment in Unity Brokers said was the available measure of loss. Your Honours, these are the authorities. Firstly - I will be as brief as I can - Goucher v Clayton (1865) ‑ ‑ ‑
GUMMOW J: This is all very complicated. You had better explain it quickly or slowly, just explain it.
MR GLEESON: Goucher v Clayton (1865) 13 WR 336 is authority for this proposition. It was a patent case where in the first infringement suit the alleged infringer chose not to assert invalidity. He was subsequently sued on later acts of infringement and asked to be able to assert invalidity. Vice‑Chancellor Wood at page 337 held that he would be permitted to do that, notwithstanding he had submitted to judgment in the first case, but the critical reason being – and this is about 10 lines from the bottom on 337:
Had there been an assertion of the validity of the patent on one side, and a denial on the other, then the Court would have held the defendants to be estopped by their submission to the judgment. This, however, did not appear by the record.
So if an assertion is made of a claim, if it is disputed but the disputing party submits to judgment, the consent judgment is treated as determining that issue in favour of the claimant party.
HEYDON J: This is as between the same parties in both actions.
MR GLEESON: Yes. The first step in the argument is to establish the effect between the same parties.
GUMMOW J: Wait a minute. Look at the argument of Rolt, QC:
two of the present defendants were not partners in the firm at the time of the action –
It was not a company, was it, Clayton, Shuttleworth, & Co 1854? It could be a joint stock company.
MR GLEESON: It appears to be a firm, your Honour.
GUMMOW J: I think so. We have to be fairly careful in thinking about identity of parties, do we not? Privity of interest and so on, would that be involved?
MR GLEESON: Yes. What we take from it is, had you put an assertion of validity of the patent on the record, had you abandoned that by consenting to judgment, that issue is determined against you. The second case to similar effect is in a small supplementary bundle we have handed up, Ennis v Rochford (1884) 14 LR IT 285.
GUMMOW J: You had better tell us what it is about. It is no good just hopping to passages in these old cases.
MR GLEESON: It stands for the proposition that if you are sued in the first suit for a liability’s executrix ‑ ‑ ‑
GUMMOW J: That is an Irish case, Justice Heydon points out.
MR GLEESON: Yes, it is still good. If the suit against you depends upon an allegation that you are the executrix and that is a point which you either challenge or could have challenged but do not and you submit to a judgment against you, you cannot in the second set of proceedings reopen that issue. That is what I get from it. Can I come then to High Court authority.
GUMMOW J: What do you get from Ennis v Rochford? It is no good taking us to old cases, just reading it speedily and sitting down because we have got to go away and think about it. If we do not have your assistance, our thoughts may turn against you.
MR GLEESON: The proposition we contend for is that where in the first action an essential traverse is either taken on the record but then the defendant submits to judgment or one which was essential to be taken in the first case and not taken, then the consent to judgment closes that issue between those two parties. I am still only between those two parties.
GUMMOW J: When you say “closes the issue”, what, founds a plea or res judicata or ‑ ‑ ‑
MR GLEESON: A plea of estoppel that if there is a contention raised in the second proceeding contrary to that in the first, it can be met by a plea of estoppel which will be a good plea.
HEYDON J: Issue estoppel or res judicata?
MR GLEESON: Yes, issue estoppel.
GUMMOW J: Was that expression used in 1884?
MR GLEESON: Estoppel was used.
GUMMOW J: Of course it was. Was issue estoppel in use in 1884? I thought it only came into full use in the 1920s ‑ ‑ ‑
MR GLEESON: Yes, your Honour is correct, with respect.
GUMMOW J: ‑ ‑ ‑ as a result of Hoystead’s Case in this Court.
MR GLEESON: Yes, it is still good. If the suit against you depends upon an allegation that you are the executrix and that is a point which you either challenge or could have challenged but do not and you submit to a judgment against you, you cannot in the second set of proceedings reopen that issue. That is what I get from it. Can I come then to High Court authority.
GUMMOW J: What do you get from Ennis v Rochford? It is no good taking us to old cases, just reading it speedily and sitting down because we have got to go away and think about it. If we do not have your assistance, our thoughts may turn against you.
MR GLEESON: The proposition we contend for is that where in the first action an essential traverse is either taken on the record but then the defendant submits to judgment or one which was essential to be taken in the first case and not taken, then the consent to judgment closes that issue between those two parties. I am still only between those two parties.
GUMMOW J: When you say “closes the issue”, what, founds a plea or res judicata or ‑ ‑ ‑
MR GLEESON: A plea of estoppel that if there is a contention raised in the second proceeding contrary to that in the first, it can be met by a plea of estoppel which will be a good plea.
HEYDON J: Issue estoppel or res judicata?
MR GLEESON: Yes, issue estoppel.
GUMMOW J: Was that expression used in 1884?
MR GLEESON: Estoppel was used.
GUMMOW J: Of course it was. Was issue estoppel in use in 1884? I thought it only came into full use in the 1920s ‑ ‑ ‑
MR GLEESON: Yes, your Honour is correct, with respect.
GUMMOW J: ‑ ‑ ‑ as a result of Hoystead’s Case in this Court.
MR GLEESON: Yes. Can I come to Hoystead’s Case [1926] 1 AC 155, pages 165 to166, which was the next one.
GUMMOW J: It is really the judgment of Justice Higgins in this Court, is it not, which was upheld in the Privy Council?
MR GLEESON: Yes, your Honour.
GUMMOW J: Anyhow, go on.
MR GLEESON: So, at a level of principle, pages 165, at the bottom to page 166 identify the relevant principle. Hoystead was then explained by this Court in Brewer v Brewer (1953) 88 CLR 1 at pages 15 to 16.
Brewer was a case where the husband sought the dissolution of marriage alleging the wife’s adultery. The wife did not offend the proceeding, was called by the judge as a witness, admitted the adultery and made no allegations against the husband. The order was made on an undefended basis. The Court held that in the second proceedings the wife could not be heard to put any allegation against the husband inconsistent with adultery. Again it is still between the two parties.
GUMMOW J: What was the second proceeding?
MR GLEESON: A maintenance proceeding where the wife sought to obtain some maintenance or better maintenance on the ground that she was either not guilty of adultery or that the husband had connived him and it was held that she was not permitted to run that sort of case because that would be inconsistent with the matter which she had allowed to be determined against her by consent in the first proceeding. In the judgment of Justice Fullagar at pages 15 to 16 an explanation is given for Hoystead, Hoystead being a case where, although the point had not been argued on the first appeal and there was no express decision on it, nevertheless it was a point which could not be decided in favour of the party consistent with the decision in the first case. The Commissioner had allowed the point to be assumed against him. He was therefore seeking an order which on the face of it was in direct conflict with the order which had been made previously. The point in question was the groundwork of the decision.
To succeed on this issue we need to establish two propositions. The first is, the consent judgment has the effect as between the two parties that the issue is closed and that CGU, for example, cannot argue in the future that this policy covered PNI. The second issue we need to establish is that the court would regard as abhorrent an inconsistent decision not just between those two parties but as against a new party, my client. To take that step, we rely upon Rippon v Chilcotin, which is in our supplementary bundle of the supplementary folder at tab 3, a decision of the New South Wales Court of Appeal.
Justice Handley gave the leading judgment, particularly paragraphs 17 and 21 through to 27. The essential point there was that in the first action a claim was made that the purchaser relied upon certain documents and the purchaser failed on that claim. In the second action the purchaser raised that same issue of reliance but against a different party, an accounting firm. The court at paragraph 21 said that the judgment for:
the vendor on the [first] cause of action for misleading and deceptive conduct created a cause of action estoppel against any claim against the vendor for negligent misrepresentation –
citing your Honour Justice Gummow’s judgment in Trawl Industries. But then the court moved to whether relief could also be obtained by the third party, the accountants, and held that it could, paragraphs 22 through to 27.
To succeed on this issue we need to establish two propositions. The first is, the consent judgment has the effect as between the two parties that the issue is closed and that CGU, for example, cannot argue in the future that this policy covered PNI. The second issue we need to establish is that the court would regard as abhorrent an inconsistent decision not just between those two parties but as against a new party, my client. To take that step, we rely upon Rippon v Chilcotin, which is in our supplementary bundle of the supplementary folder at tab 3, a decision of the New South Wales Court of Appeal.
Justice Handley gave the leading judgment, particularly paragraphs 17 and 21 through to 27. The essential point there was that in the first action a claim was made that the purchaser relied upon certain documents and the purchaser failed on that claim. In the second action the purchaser raised that same issue of reliance but against a different party, an accounting firm. The court at paragraph 21 said that the judgment for:
the vendor on the [first] cause of action for misleading and deceptive conduct created a cause of action estoppel against any claim against the vendor for negligent misrepresentation –
citing your Honour Justice Gummow’s judgment in Trawl Industries. But then the court moved to whether relief could also be obtained by the third party, the accountants, and held that it could, paragraphs 22 through to 27.
HAYNE J: This as a species of what was done in Reichel v Magrath, is it?
MR GLEESON: Yes. Usually a Reichel v Magrath Case is a party loses on an issue in case one and by changing the form of the action or the parties seeks to run the same issue in case two. We say this is another species. The party has won in issue one - see the consent judgment, then wishes to assert in case two that it has lost on that issue.
GUMMOW J: Is there any consideration of Reichel? Yes, at paragraph 15, so it is abuse of process.
MR GLEESON: Yes.
HAYNE J: But what engages Reichel is judicial determination in action one followed by relitigation in action two, is it not, and the difficulty here is settlement in action one, litigation in action two?
MR GLEESON: I have accepted we have to get over two steps. The first step which is essential is that what occurred in stage one, a consent judgment being as efficacious as a judgment on the merits but leaving the question what issues have been closed by it, we have to succeed on that and then we have a Reichel v Magrath argument.
FRENCH CJ: You have a kind of spectrum of responses to re-litigation. Res judicata, issue estoppel, Anshun estoppel and then you move into the territory of abuse of process once you are out of privity of parties and so forth.
MR GLEESON: I do not wish to abandon Anshun, it was the next case I was coming to. I submit that in Anshun itself, which is 147 CLR 589, there is support for the proposition that it was the inconsistency between the previous judgment and the present claim which is what created the abuse. At page 603 the Court ‑ ‑ ‑
HAYNE J: Just before you come to the particular dicta, did Anshun arise out of successive pieces of litigation, the first one of which was tried to judgment?
MR GLEESON: Yes.
HAYNE J: You were going to page 603, I think.
MR GLEESON: Could I go first to page 596 to identify the inconsistency? It is the last two paragraphs in 596. In the first action the authority sought contribution as did the other party and orders were made for a 90/10 division. It was held that to, in the second action, seek an indemnity which would give 100 per cent protection, as opposed to 10 per cent, would create a judgment if successful inconsistent with that entered in the first action. It was the inconsistency between the judgments, the court said, which was regarded as an importance. Then, at 602 to 603 contains the classic passage. So, if the consent judgment has closed these issues then we have the clearest case of what is now being sought as the exact opposite to what was obtained in the first case. Your Honours, I note the time.
AT 12.15 PM LUNCHEON ADJOURNMENT
UPON RESUMING AT 2.16 PM:
FRENCH CJ: Yes, Mr Gleeson.
MR GLEESON: Your Honours, in relation to the additional cases raised by the Court, Spalla v St George Motor Finance [2004] FCA 1699 we submit is a case similar to Rippon v Chilcotin in the sense that a third party to the original action was entitled to assert that it was an abuse for the losing party in the first action to reopen the same issue even though the identity of the parties had changed. For example, paragraph 76 is a finding of abuse which the St George parties were entitled to rely upon even though they had not been joined in the first action, as appears from paragraphs 9 to 13.
As to O’Halloran 159 FLR 260, we refer to paragraph [109] which indicates that the abuse argument failed because in all the earlier cases the person characterised as the abuser had been a party to the earlier proceedings whereas that was not the case here. Your Honour Justice Heydon also referred to the fact that in most of the cases, or perhaps all, the abuser was usually the loser in the previous proceeding and your Honour had noted that also at paragraph [108]. As I put this morning, that does not limit the principle. In a case like the present it can be the winner who perversely wishes to assert it was the loser.
The one authority we have where it was a winner who sought to do this is Anshun itself for the reason I mentioned this morning, that the claim for a contribution had succeeded but it was held to be an abuse to, as it were, throw that to one side and set up a different winning claim, one that would have earned more money. Can I conclude on the abuse by indicating that what we submit is important ‑ ‑ ‑
GUMMOW J: Well, what is the abuse?
MR GLEESON: The abuse is in the first proceeding asking the court to enter a judgment on a statement of claim which asserts as a fundamental element that the insurance contract includes the PNI properties ‑ ‑ ‑
FRENCH CJ: The abuse has to do with the continuance of the proceeding against AON, does it not?
MR GLEESON: Continuing against AON a proceeding directly inconsistent with that which was obtained from the first court. We submit that the importance of making sure that if you take out consent ‑ ‑ ‑
GUMMOW J: Is there some notion of approbation and reprobation, election or what?
MR GLEESON: Yes, a square inconsistency notion that in the first case having persisted to judgment and asking the court to pronounce upon the rights of the parties by reference to a statement of claim which asserted as a fundamental element that the contract covered Schedule C plus PNI properties and taking a judgment on that claim, to then in the second claim assert the exact opposite, namely, we were not covered for the PNI. That is the first and that is the most critical element of the abuse.
GUMMOW J: But they are against different parties.
MR GLEESON: Yes, asking the second court to declare against different parties, that is why ‑ ‑ ‑
GUMMOW J: I am sure insurance companies before today have said that a standard policy means one thing in a litigation of X, and then in litigation of Y they have said it means the other thing. No one ever says they cannot do that.
MR GLEESON: Here what they have done is ask the court to pronounce upon a specific issue; does this policy – this is the insured – provide us with cover for the whole of our property which includes Schedule C properties plus PNI? They have gone to judgment on that claim. Yes, there was a traverse by the insurer. The insurer said, “I consent to judgment on your claim”. That having been done, they ask in the second proceeding against the broker for the court to find the exact reverse, namely, the policy covered less.
GUMMOW J: Is it critical that there has been some merger into a judgment or some cause of action?
MR GLEESON: Yes.
CRENNAN J: So would it have made a difference if the proceedings were simply discontinued?
MR GLEESON: Yes, it would have. That is dealt with in an authority I wish to give your Honours next, which is Isaacs v The Ocean Accident Corporation ‑ ‑ ‑
HAYNE J: Just before you come to this, does it depend upon there being competing judicial determinations?
MR GLEESON: Yes.
HAYNE J: Does it not matter that the first one is simply a consent judgment for money upon which the court does not pass?
MR GLEESON: That is the characterisation we differ with for the reason I wish to show from Isaacs [1958] SR (NSW) 69. Issacs dealt with a different case where the consent judgment, as your Honours will see from the foot of page 74, was carefully sought on the basis that the parties filed an anterior agreement with the court with their causes of action and defences merging into that agreement and then they asked the court, without admission of liability, which was noted on the record, to enter a judgment for the amount. In that context the passage from Spenser Bower is quoted on the middle of page 75 and the court said at about point 7:
A reference to those terms of settlement makes it clear that they were the result of a compromise ‑ ‑ ‑
GUMMOW J: This was a demurrer. This is not an abuse of process case, is it?
MR GLEESON: It is a demurrer asserting what is called an estoppel by reason of the effect of the judgment. Question one is, what is the effect of the judgment into without admission of liability? At page 75, point 8, the court says that:
by their express agreement, removed from the Court’s consideration any question of the liability of the plaintiff, Isaacs, to the now defendant, Winslett. That agreement was filed in the court record of the proceedings and was adopted and acted upon by the court through the entry of judgment pursuant to its terms. The court only directed judgment to be so entered on the footing that the liability of Isaacs was left unascertained and undetermined.
We accept that great care has to be taken in the entry of consent judgments; they should not be treated lightly. If you proceed by this route, there is a benefit and a burden. By merging your cause of action and defences in the settlement agreement which is anterior to the judgment, no issue estoppels will be created. All there will be is a res judicata on the actual order. Had the University wished to proceed by this route, it could have. The burden would have been that in later proceedings CGU could assert that the PNI property was not insured. This was a course which was not taken. The second way they could have done it is demonstrated by the House of Lords decision in Dinch v Dinch (1987) 1 WLR 252.
GUMMOW J: I am not sure what you rely on Isaacs for.
MR GLEESON: For the proposition that Justice Hayne put to me, why is this not just a settlement where the court is just entering a judgment for a money sum. I am putting an answer to that. But had the parties proceeded by the Isaacs route, the court would have been giving judgment for a debt arising from an agreement. The causes of action would have merged in the agreement and the court would simply be pronouncing that, “You have agreed that a sum of $100 is payable. I give judgment for it.” What they did here was not that. They asked the court to give judgment on the claim, the claim being extant to the moment before the judgment was entered. That is what brings it into line with the cases I mentioned this morning, Ennis, Brewer and Goucher as cases where, when the judgment is entered on the claim and the defendant concedes the claim, that gives rise to the issue estoppel and therefore gives rise the court’s determination on that issue.
HAYNE J: Sorry, was there motion for judgment on admission, was there? Is that what you are saying? You have used a number of expressions which seem to me to carry with them the notion that the judgment that was entered was on motion for judgment on admissions. Now, is that what procedurally happened?
MR GLEESON: No. It was a motion for judgment by consent, by consent at a time when the plaintiff’s claim was extant in the particular form I have identified. The issue we tender is, if the defendant has a traverse on its pleading but it allows judgment to go by consent on the plaintiff’s claim, has the issue been determined thereby in the plaintiff’s favour. The final cases I wanted to mention was – I referred your Honours to Dinch v Dinch in the House of Lords. For the importance, at page 255 of the Weekly Law Reports letter C, of the care which much be taken:
in the drafting of consent orders [in this case] in matrimonial proceedings to define with precision exactly what the parties were intending to do in relation to –
what might be other claims. In the absence of care, the entry of the orders by consent was taken to close off all claims for ancillary relief. The second route that was available to the University if it wished to keep the matter alive was to frame the consent orders so as to preserve as question, which the court was not pronouncing upon, the coverage for the PNI properties. That was not done. The third route was to amend its statement of claim to delete any claim that its policy covered the PNI policies. That also was not done. But the fourth route is the route which the court dealt with in James Hardie v Seltsam 196 CLR 53 in a different context at paragraphs 40 to 41.
What the University could have done is to say that we have reached an agreement with the insurer that the policy does not cover PNI. We reached an agreement on a payment which will protect us for the rest of our rights but give us nothing for that. We wish to have a consent judgment entered which in terms reflects that we have lost on the PNI claim. Had they done so, as your Honour Justice Gummow said at paragraph 41, they would have had to do so on motion at which AON could be heard and taken steps to oppose the entry of that judgment. In that event, the court would only pronounce once on the issue and there would be no inconsistency.
Our final submissions on this topic are these. We ask your Honours in the end to ask one question. In these proceedings could the University have recovered a judgment on its claim for $750,000 on a contested basis without the court having to determine that the cover extended to the PNI. If not, then the inconsistency arises.
Two final matters. Your Honour Justice Gummow referred us to Batistatos 226 CLR. We refer to paragraph 15 where the judgment refers to Justice McHugh’s three categories of abuse in Rogers v The Queen. We submit the present case is a category three case and the disrepute arises from the entry of inconsistent judgments.
Finally, in Justice Lander’s dealing with this issue at page 518, we would disagree respectfully with paragraph 244 as an accurate characterisation of the case. Although the defence was amended, that occurred prior to the entry of judgment and we submit that it is simple, if you are a defendant and you allow a consent judgment to go against you on a claim and you do not ask for your defence to be determined, you have lost that defence. That is the cases I referred to this morning.
In paragraph 245, second line, where his Honour says “PNI schedule”, we submit he means Schedule 3, he has the reverse case there. When his Honour then says that there is no evidence as to how the judgment sum was arrived at, we have offered the Court the decision in McLaurin’s Case 104 CLR 381 ‑ ‑ ‑
GUMMOW J: That is a tax case.
MR GLEESON: A tax case in a very different context.
GUMMOW J: That is a tax case about inseverability for revenue purposes.
MR GLEESON: I accept that. At page 391 your Honours may find that the second paragraph is of assistance in terms of the general principle where there are settlements which are unapportioned as between individual amounts. We submit that having taken a consent judgment for a single amount against a claim which covered both PNI and Schedule C, the University cannot identify how the judgment is properly apportioned between those two claims. If your Honours please, they are our submissions.
FRENCH CJ: Thank you, Mr Gleeson. Yes, Mr Walker.
MR WALKER: May it please the Court, the first part of the case is where we rely on the rules, the Rules of Court. They govern the position but they do not do so in any historical vacuum. As has been remarked in the reasons of the courts below, as has been remarked already in arguments today, the terms of rules 501, 502 may tolerably be regarded as 21st century equivalents with very little difference from the 19th century precursors which have been discussed. In between, there was the 20th century which at sufficiently regular intervals revisited the matters which are at the heart of the language of rule 501, to which I will be coming back.
On the other hand, the case law has remarked that some things have changed, including the view of the incomplete or false panacea which might once have been thought, in accordance with Lord Justice Bowen’s famous statement, to have been the cure‑all for the difficulties in the nature of prejudice raised by amendments. That has been caught up with by the rule makers and in some jurisdictions by legislatures. In this case it is governed by rule 21. It is clear that the Court of Appeal below in these proceedings took that into account.
The significant thing that we would draw to attention in rule 21 is not some newfangled, new or previously unknown element in the proper administration of civil justice. The thing we would seek first to highlight is the thoroughly 19th century Judicature Act approach to the nature of the exercise involved. Do not dismiss cases, do not encourage non-suits in order that new proceedings may commence, do not have a multiplicity of proceedings either in the same court or in different courts, seek to avoid multiplicity of proceedings and seek to have all the real issues between the parties resolved properly just once.
That is why, in our submission, the opening words of rule 21(1), which govern in this case, are words which ought to govern the outcome in this case – that is, the appellate review of the Court of Appeal of the Australian Capital Territory Supreme Court because in relation both to the result and the considerations that their Honours self‑evidently gave to the matter, all three of them – although they disagreed on the result – it is clear that they directed themselves to the question whether their understanding and application of rule 501, and perhaps rule 502, would be such as to facilitate the just resolution of the real issues in civil proceedings – and then the all‑important expressions, which are 19th century, I stress, with minimum delay and expense.
I say “19th century”, though your Honours would be aware that the 19th century phrase was actually just quick and cheap, whereas the quip has it “You must be careful not to forget the comma” – a quip that is obviously related to the concerns about case management that this Court has looked at several times but, most importantly, in JL Holdings itself. In rule 21(2) there is a very deliberate, slightly unusual, detailed explication of how that overriding purpose, as the equivalent is called in New South Wales, is to be carried out.
Now, exactly the same expression is repeated at the heart of rule 21(2), namely, an:
objective of achieving –
(a) the just resolution of the real issues of the proceedings -
Then (b) there is the explicit entry of reference to “other proceedings in the court”, the reference that in former days was sometimes referred to as the interests of the court’s list, or is still referred to as the interests of other litigants, and might be more generalised as the interests of society in the orderly administration of justice by a court system.
Now, in our submission, those are the texts and they are not pedantic, narrow or idiosyncratic. They can be seen to include not only the Judicature Act reforms still completely current and important and at the heart of the matter, namely, the just resolution of the real issues, but they also include that which the judges had already referred to that have now been set out, codified in rule 21, that it is relevant to take into account – indeed, it is mandatory to take into account – the timely disposal of other proceedings in the court and the cost effect on other proceedings, not just on the parties before the court.
Now, in our submission, understood in that fashion, namely, as an application of a procedural kind which was expressly to be undertaken in order to achieve that purpose or those objectives, one then comes to the terms of rule 501, which though old fashioned are still entirely current, and they use the expressions which had been given meaning by a course of authority in which JL Holdings takes its place.
Your Honours, I do not wish to repeat what we have already written in our written submissions, but it is, in our submission, critical to note that the language of rule 501 is on its face mandatory. Now, this is a textual response to an answer we feel obliged to offer to Justice Kiefel’s question about the nature of any so‑called right. Our response starts with the text of the rules which does not talk in terms of rights or entitlement, it is addressed to the court:
All necessary amendments of a document must be made for the purpose of –
(a) deciding the real issues in the proceeding; or
(b) correcting any defect or error in the proceeding; or
(c) avoiding multiple proceedings -
those three being alternative, that is, each one of them being sufficient in any given case.
Now, the notion of something that must be made could give rise – bereft of a long culture of practice in the courts, against which one might construe the language – it could give rise on the face of things to the notion that somebody who asks a court to do something which a court is told must be done is somebody who is in the position of enforcing a right. In our submission, that would be a relatively sterile route for us to take in our argument because it is clear that whether one calls it a discretion, properly so‑called or not, it is clear that there are in some cases difficult, that is, borderline evaluative assessments that have to be made, and that in all cases something in the nature of a balance is struck; it may be a clear balance, it may be a close balance.
For those reasons the power, as it is normally called, to permit amendments to be made involves what can be called a procedural discretion, or at least an assessment involving evaluations upon which reasonable minds might well differ, of a balance to be struck between factors which may contend one against the other.
Now, it is for those reasons, in our submission, that one probably does have to go to rule 502, though we confess it is possible that 502 has nothing to do with a case of this kind. Just to explain that latter comment - 501 talks about all necessary amendments must be made. Then 502 grants a power to give leave or to direct an amendment to be made in any way the court considers appropriate, and furthermore at any stage of a proceeding, yet obviously is discretionary, the word is “may”.
It could be that textually one simply says that 501 and 502 must be read together, they are the complete armoury. It is 502 that specifies that this can occur at any stage of the proceeding. It is 502 that refers to that which it considers appropriate and it is 502 that explains that the making of an amendment may be either pursuant to leave or by reason of a direction permitted or compelled. If that be true then 501 and 502 are all read together much as we put in our written submission and there is no difficulty in seeing 501 as importing a true discretion, but a discretion which as we have also put it in our written submission can amount in an appropriate case to be exercised pursuant to what we have called a “qualified imperative”.
The imperative is it must be made if it is necessary in the sense explained. It is qualified because obviously these are rules, adjectival or ancillary, in relation to the doing of justice which could not in any purposive way be read so as to permit a result which would disserve justice, that is which would work in justice.
It is for those reasons, in our submission, that the all‑important qualifications on the imperative imported by the word “must” in 501, present what would ordinarily be called the prejudice argument in an ordinary amendment application.
Now, there may be other arguments to which we will come a bit later which are not so much prejudice as are questions of discipline. In our submission, that is an inappropriate concept or word to introduce when one has provisions such as rule 21 in this case, but I will come back to that.
In relation to prejudice, in our submission because it could not be said that an amendment would be necessary which would visit injustice on the party resisting the amendment, it must be that the court, as part of the assessment of whether an amendment should be permitted, will be taking into account from the beginning and throughout the exercise the question of prejudice. The courts below in these proceedings did just that. At first instance an error was committed, not in relation to the understanding of the prejudice, but as to the understanding what could or should be done in order to alleviate it.
That was corrected by the Court of Appeal. I want to address the question of prejudice immediately so as to dispose of it once and for all, now. The first question which arises is a question of a conceptual approach in general terms - is prejudice a matter that casts some doubt on the onus lying on the parties seeking leave to amend as being the party who must succeed to discharge the onus? The answer is no, not at all. The onus clearly is on somebody who seeks leave for an amendment to be permitted to make out the case for that order to be made.
But, the evidence, or for that matter, the argument – that is the argument which can proceed with or without evidence, depending upon the nature of things – obviously falls to be considered in light of the capacity of the parties to adduce or to know certain matters. Thus, for example, if there is nothing on the face that shows that there is something that the once upon a time panacea would not cure, namely, the administration of sufficient costs, then plainly something in the nature of, as the judges have put it, an evidentiary burden does shift to the resisting party to show that this is not the ordinary case where sufficient costs will permit justice to be done by the real issues being litigated after an amendment has been permitted.
HAYNE J: Why is pendency of the litigation not a prejudice in itself? A corporation would have to show the contingent liability in its books, would it not – possibly provision for it?
MR WALKER: Yes, and in our submission, the same would be true of many people who as natural persons have dealings, for example, with their bankers. In other words, dependency of litigation, like the exposure to liability, whether litigated or not, is something which can be seen to be a disadvantage, in that general sense a prejudice, from the very beginning. That, in our position, is not something which is necessarily to be reflected in the automatic finding in all cases that if an amendment adds any time of an appreciable length to litigation then there can be no amendment because there is a prejudice that cannot be cured.
That is because, obviously, the nature of that kind of prejudice is intensely circumstantial and peculiar to particular people and particular situations. There are many corporations for whom what I will call standard litigation cannot be said one way or the other to matter as to whether this one goes on another six months or that one settles tomorrow. It will depend on the scale of things.
There are individuals for whom any litigation will amount to the kind of strain that in the quite extraordinary factual situation in a somewhat different setting of the estoppel argument of Verwayen will certainly always supply prejudice of a kind that costs or money cannot cure but, in our submission, the Court would be taking a misstep if it were to proceed on the basis that because litigation which amounts usually to a demand for money or moneys worth when it is civil proceedings and because it is pending with the uncertainty of it being pending that is not known.
Because that is a state of affairs that creates uncertainty about a natural person’s or corporation’s financial position it would be taking a misstep to say that that amounts to the kind of prejudice which will defeat an amendment application under rule 501 in light of rule 21 and it must be so because it is in the nature of things that practically every amendment will require something further to be done and in many cases that will require more time to be spent, not always, but in many cases.
FRENCH CJ: You accept it is a relevant factor.
MR WALKER: Of course.
FRENCH CJ: And the other, I suppose, connected factor in a sense is just the matter of being able to get on with business.
MR WALKER: Yes.
FRENCH CJ: The non-quantifiable burden – or maybe in part quantifiable, I suppose – of having to, as it were, gear up for litigation, be ready to go, you have got your lawyers, the relevant executives, all the rest of it, and suddenly it is off for months and months and months because the case has changed.
MR WALKER: It is very often referred to.
FRENCH CJ: That was not even considered in this case, was it?
MR WALKER: There is, I think, no reference to it in the most important place one would expect to find it, that is in the arguments addressed on behalf of AON below. It is different here, but AON is the one who would know – AON is probably not a stranger to litigation internationally. AON is the one who would know if there is what at case management level in first instance court is called executive distraction is proving to be a difficulty. Ms Carr’s affidavit is where one would expect to find a reference to that kind of consideration, if it was anything above what might be called the doing of business.
That is why, in our submission, it is a circumstantial matter, not lending itself to a general rule to be pronounced, but because all litigation requires some attention by clients and because clients who are not by profession litigators or litigants will therefore have people distracted from other more primary or desirable occupations by litigation, therefore dependency of litigation and any amendment which would protract the dependency of litigation is beyond power. In our submission, that is the kind of general rule that ought to be avoided.
What could not be resisted and we do not resist is that such considerations are relevant if the circumstances of and material available concerning a particular case make it so and to treat all litigants as people or corporations or corporations with people who are by definition vexed by litigation is, in our submission, to gainsay the general approach to amendment which these rules continue. These rules do not speak in terms of banning any amendment that will take extra time in the litigation. They talk about necessary amendments being those that must be made.
It is for those reasons, in our submission, that the comparisons in question called up by the prejudice issue in an amendment application need to be carefully analysed in any particular case. We start with the notion that there are real issues in proceedings. If before amendment, an amendment necessary in the sense that they will permit the decision of real issues, if before amendment one examines the amount of time that would have been spent in a case, one is examining the amount of time that would have been spent in determining either issues which were not real or not all the real issues.
HAYNE J: Well, how do you read the expression “the real issues”? Your written submission seems to equate it in the last line of page 4 over to the top of page 5 as simply arguable. Do you give any different meaning?
MR WALKER: Yes. All the cases require the matter to be raised in good faith. That is not an issue in these proceedings though, so that the demonstration of bad faith will disqualify. My learned friend used several times the expression “barely arguable” by which I understood him to mean arguable without showing anything more.
HAYNE J: Assume for the purpose of debate that the issues which the University sought to raise were fairly, as distinct from barely, arguable ‑ ‑ ‑
MR WALKER: Thank you.
HAYNE J: ‑ ‑ ‑ how do you relate that proposition, if at all, to the rules reference to the real issues in the proceedings?
MR WALKER: Your Honours, we would answer the question what are real issues by giving content to the epithet “real”, namely, raised in good faith and arguable.
KIEFEL J: But “issues” implies strongly that which is joined between the parties.
MR WALKER: And that is the epithet I have dealt with. As to the noun, “issues” means these are things which are particulars of the dispute between the parties.
KIEFEL J: But that really takes you, and the rule takes you, to the outline of which has been provided by the proceedings themselves. The rule does not suggest that it is a real claim brought by a party, which is something which must be the subject of amendment. because if that were the case, then you would have to go back to the position of the right of a party to litigation to assert any claim.
MR WALKER: Yes.
KIEFEL J: A real issue, I think, has to be understood as something quite different from the right of a party to bring what is effectively a fresh claim.
MR WALKER: Yes, is the short answer. I am going to come to rule 501(c) because of what Justice Kiefel has just raised. But while dealing with rule 501(a) can I make this clear. In talking about issues in the proceedings we cannot be talking about that which has already been joined on the preceding pleadings. It could not be that this is a rule talking about amendments necessary to be made to the documents which already set up an issue. It must include adding issues as well as subtracting issues. It must include different ways of putting a claim as well as shrinking a claim. It is for those reasons that the expression “real issues in the proceeding” – and I am stressing the phrase “in the proceeding” – cannot be used so as to read the notion of necessary amendments as to those which are literally unnecessary because the documents in the proceeding already convey the point.
HAYNE J: But how does this expression intersect, if at all, with notions of party autonomy, that it is for the parties to choose the battleground on which they will fight? In that context, although expressed in radically different circumstances, I have in mind Sir Garfield Barwick’s statements in Ratten’s Case that a criminal trial is not an inquiry ‑ ‑ ‑
MR WALKER: Into the truth.
HAYNE J: ‑ ‑ ‑ into truth of guilt or innocence. The parties choose their battleground.
MR WALKER: Yes. Party autonomy can no longer be taken literally and it has probably been a long time since it has been literally universally true. However, it is of the first importance that courts do not tell a plaintiff what he, she or it wants, and courts do not tell a defendant how he, she or it may answer the plaintiff’s claim, of the first importance because of the impartial adjudicative role of a court. It is similar to, though perhaps not as obvious or grand, as the principle in criminal proceedings that the prosecution is separate from the judicial function.
So in that sense party autonomy, that is, it is ultimately for the plaintiff to wish to sue and how, and it is ultimately for the defendant as to whether to defend and how, that remains true, but it is not true that it is uncontrolled because there comes a point – there come several points – at which a plaintiff will be told, no you cannot, that is, there will be no trial on the merits, there will be no contest on this, and they obviously include the hopeless case, that is, the cause of action unknown to law, the hopeless case because it is, for example, met by an irrefragably good plea such as res judicata or a limitation period or an illegality point.
Or there are a number of other ways in which a trial on the merits may be avoided, and we do not need to catalogue all of them. At the moment, obviously, we are talking about the avoidance of a trial on the merits of a claim by us against AON that the position we got ourselves into, or we were got into, with our insurers is a result of AON not having done what we paid them to do. That is what the position of the appellant in this case is designed to avoid a trial on the merits of. It wishes to have tried on the merits probably nothing, but it accepts that it will be tried on the merits some issue concerning their mandate in obtaining insurance by reference to the nature of the premises and plant in question.
We wish to expand that by saying that what we call, I hope not tendentiously, the real issues in the proceedings are whether we have suffered a shortfall in hoped for indemnity from our insurers by reason in law of your breach of duty, be it contractual or tortious, you, AON, by reason of your responsibilities not fully met concerning proper advice, et cetera, in relation to premises and valuation.
KIEFEL J: But underlying your approach, and whilst this might stand completely apart from notions of autonomy and how a party chooses their claims and their allegations, is it not implied in your approach that there is some right to make assertions, to expand assertions, unless good reason is shown to the contrary? What I am looking for is whether or not you put forward a proposition of some inherent right in a party to expand – may not be the correct word – but to flesh out their claim to the fullest extent unless something affecting the other party to the process weighs sufficiently against it? Is that an approach one that you contend for; and two, if so, do you see as inherent in the approach in JL Holdings?
MR WALKER: Yes. The beginning of my answer is to say that we would resist any watershed difference being introduced between the position of the plaintiff at the point before he, she or it commences the proceedings ‑ ‑ ‑
KIEFEL J: What do you mean by “watershed”?
MR WALKER: And thereafter, that is that up to the point of commencement there is a right and no one would deny it, it is called access to justice. There is a right to come to court. The court cannot say “No, do not come”. There is a right to come to court and say, “I wish to sue this defendant on these causes of action”.
KIEFEL J: It may be called different things, perhaps a right to invoke the process of the court.
MR WALKER: That is what I am talking about, that is all I am talking about.
KIEFEL J: So you accept that that is the limitation, that once that has occurred ‑ ‑ ‑
MR WALKER: There is no right to insist that there is a cause of action never previously known to the law obviously.
KIEFEL J: No. All right, the point is after that matter has been invoked.
MR WALKER: No.We would resist there being as it were a watershed at that point, that everything now runs in a different direction and that thereafter you are in a position of being as it were a humble petitioner, a person in default seeking an indulgence. Both of those may be fair descriptions of how it would be wise or politic to approach an amendment application but the rule is not expressed in such a way. The rule is expressed in terms of amendments being necessary – and there are three functional ways in which it can be shown to be necessary – see (a), (b) and (c). It does not say that they “may” be made, it says they “must” be made. This is language which is unmistakable in the contrast it presents with the usual language of power or discretion in court rules.
KIEFEL J: That reading of it leaves the power effectively in the hand of the litigant in (a) ‑ ‑ ‑
MR WALKER: Certainly not.
KIEFEL J: ‑ ‑ ‑ because if you read real issues in that way any expansion is the issue that you wish to put forward whereas issue must be taken to be that already joined and ‑ ‑ ‑
MR WALKER: That would mean that no one could ever raise a new defence and it would mean that no one could ever put forward, for example, a contract claim next to a negligence claim in the case against a professional if they had not done it at the beginning.
HEYDON J: No, does not rule 501 operate in the way Justice Kiefel indicated and rule 502 ‑ ‑ ‑
KIEFEL J: Yes.
HEYDON J: ‑ ‑ ‑ deals with the problem you have just mentioned.
MR WALKER: That is a possibility which I tried to recognise in what I said earlier, that maybe they travel in this way, that 501 deals with the necessaries and 502 deals with the rest.
KIEFEL J: That is the discretion, and the important aspect about that is the power of the court is maintained in both 501 and 502 if you read it distributively.
MR WALKER: Yes.
KIEFEL J: If you read 501 in the way you do, power has shifted back to the litigant.
MR WALKER: I want to avoid that. Your Honours will recall I also offered a reading of 501 and 502 that suggested that perhaps they do have to go together, but I certainly accept that one reading is that 501 deals with those that are necessary in the sense as described by (a), (b) and (c) and they are ones that must be made. However, that is an unattractive reading because ‑ ‑ ‑
GUMMOW J: Well, 501 itself has a number of operations.
MR WALKER: Yes.
GUMMOW J: Rule 501(b) is directed to the registrar, I imagine. Suppose the pleading has the wrong filing number on it ‑ ‑ ‑
MR WALKER: Yes.
GUMMOW J: It does not have to…..the Court, does it?
MR WALKER: It may well be the misspelling of a name, which may not be the Registry’s fault, I hasten to say, but the litigant’s fault.
GUMMOW J: No. In the documents that have been filed. That is a world away from deciding the real issues and whoever drafted 501 bundled too much together.
MR WALKER: Perhaps. They certainly bundled up disparate things but that is not unknown in rules. A rule covers a number of different situations that may or may not overlap. For example, the document in a proceeding – these are amendments to documents – may by an error be regarded as an unsafe way in which a real claim or real defence should be articulated and then an amendment would be made under rule 501. Rule 501(c) is important because – and it goes back to the Judicature Act reforms – that is a provision by which an issue that could be raised in another proceeding, a fresh proceeding, is commanded to be permitted to be raised by amendment in the current proceedings and it is, in our submission, a clear indication that 501 is available to raise matters that have not hitherto been joined between the parties.
We submit that real issues in (a) also include, though are certainly not limited to, matters which have not already been joined between the parties. If they had been effectively joined between the parties, it is difficult to see how the amendment could be necessary for the purpose of deciding them and it is that combination of the word “necessary” for the purpose and “deciding” that gives a content to the expression “real issues in the proceeding” which, with respect, leads us to reject the suggestion that Justice Kiefel has asked me to consider, namely, that 501(a) refers to issues which are already joined.
KIEFEL J: That is narrowing it a little.
MR WALKER: It will include them but it is not limited.
KIEFEL J: I said within the framework of the proceedings. The real issues there referred to have regard, do they not, to what is already within the four corners of the dispute or which can fairly be said to arise from what has already been joined in issue between the parties and I think Cropper v Smith may have been such a case.
MR WALKER: Quite. And to make it concrete in this case we say AON should bear the shortfall between what we can get from the insurers and what we would have got had AON done its job properly. We wish to amend and obtained leave to amend to add further grounds of complaint about the way or grounds in which, the particulars in which they had not done their job properly. We accept, as has been held against us, particularly in the Court of Appeal, that the ways in which we have sought to add to that complaint are substantial and considerable and are not conveyed by the previous pleading. That is why an amendment application was made. But the four corners of the dispute still are, we asked you, AON, or, you, AON, were our broker, these were our insurers. We have been very disappointed with what we get from our insurers. We say you have failed to perform your obligations, to our loss, to our detriment, and there are a number of common law claims and other claims that we wish to advance in order to obtain compensation for that. In short, to obtain our right against them, a civil right between the parties.
That is what the administration of civil justice turns on and is involved in, namely, assessing whether or not a right of ours has been infringed, whether AON is a wrongdoer. That is the dispute which is raised between the parties and which we submit the pleadings before the amendment did not completely convey. We accept that. There has to be an amendment in order for us to put as claims to be contested and thus become issues between the parties concerning the full ambit, as we now put it, of the ways in which AON failed to perform its obligations owed to us.
Now, Justice Gummow asked my learned friend about how at this stage of the exercise there may or may not be anything to be gained from consideration on Anshun. Well, there is this to be gained. Anshun turns, amongst other things, on an assessment after the event of what was or was not reasonable in the sense explained by the authorities from Henderson v Henderson onwards to have been done, particularly including by the raising of contentions, the joinder of issue, the advancement of claims, in the previous proceedings which having concluded now give rise to the claim of an estoppel.
In our submission, one cannot assess that which is reasonable in terms of an argument preventing a claim now being made for the first time, as in Anshun itself, the claim on the contractual indemnity, without taking into account amendment. By definition, what is reasonable to have been done in Anshun was that they could have, by amendment, included in their cross‑claim the contractual indemnity and not confine themselves to the statutory contribution claim which they were seeking to contradict by the contractual indemnity.
KIEFEL J: Does this part of your argument mean that you might come within rule 501(c)?
MR WALKER: Yes.
KIEFEL J: And how would you put the argument to the judge before whom the application for leave to amend is brought if you are arguing the avoidance of multiplicity of proceedings?
MR WALKER: Your Honour, there is no magic or difficulty when one is asserting either a new cause of action or a new or different breach of the same contract you have already sued on.
KIEFEL J: I am only really asking ‑ ‑ ‑
MR WALKER: That is how you would put it. You would say we wish to raise another breach.
KIEFEL J: I know that is the contention. I am trying to break it down to logical premises that you might have to make to the primary judge. You would say if we are not given leave to amend, it is our intention to go to trial on this and bring separate proceedings or bring separate proceedings in parallel with this. Is that what would be argued?
MR WALKER: Well, I certainly would not, if I were there, be putting it quite like that, your Honour, but I would ‑ ‑ ‑
KIEFEL J: Shorn of politeness the essential ‑ ‑ ‑
MR WALKER: No, not just politeness. You would certainly not try to make the prospect of multiple proceedings worse than they in fact are. Consolidation provisions exist precisely in order to make multiple proceedings more bearable than they would otherwise be.
KIEFEL J: That is for later. What I am trying to understand is, in a case such as this, what positive or negative aspects would you be putting to a judge in relation to an argument under rule 501(c).
MR WALKER: You would say that we presently do not sue them for the following breaches of their contract, and they have been held against us in the Court of Appeal what it is we are adding, advice on the importance of proper values, et cetera. We would say to the judge that is something we can still sue them for. There is no law that having commenced proceedings alleging (a) you cannot commence proceedings alleging (b) against somebody.
The rule says you are to avoid multiple proceedings by making necessary amendments. If there are proceedings between ANU and AON alleging breach of contract No 1, then upon ANU saying that they want to sue AON for breach of contract No 2, all other things being equal – that is, in the absence of any reason why that should not happen, which finds reflection in the rules or in judge‑made law which co‑exists with the rules, then in order to avoid that multiplicity of proceedings, breach 1, breach 2, there should be an amendment so as to permit or even direct ANU to amend its documents and proceedings so as to allege breaches 1 and 2 against AON in the same proceedings.
GUMMOW J: And that, you say ‑ ‑ ‑
MR WALKER: That is (c).
GUMMOW J: That application is an exercise of reasonable diligence on our part ‑ ‑ ‑
MR WALKER: Yes.
GUMMOW J: ‑ ‑ ‑ to avail ourselves of this facility under 501(c) and provide – if that fails, you say, “We at least tried” when there is a later Anshun plea.
MR WALKER: Yes. However, in our submission, an Anshun plea would become quite difficult – that is, would become not necessarily plainly reflective of what I will call common sense justice – if there were also operating a document that said, “Once you have commenced proceedings you really cannot expect to get amendments so as to avoid either multiple proceedings or so as to add issues which are real issues because that will be extending dependency of proceedings, et cetera, et cetera”.
In our submission, what that would really say is that Anshun would be reduced to this. Everybody has one go at suing only and it is not the one set of proceedings; it is the initiation, the commencement, of the proceedings. That is if you are a plaintiff. The same would be true, distressingly, if you were a defendant, even if the amendment you wanted to raise was one which raised, for example, an illegality of a kind which raised public policy, which in turn meant that there could be no question of waiver.
In our submission, the late discovery of a plea like that may well bring in its train a devastating costs order but, in our submission, it would be contrary to the interests of justice in the most basic sense for the case to go ahead and be decided on the basis that there was one and one only opportunity for the defendant to put on the defence and that was within the time limited by the rules for the putting on of a defence.
BELL J: I do not think anyone is saying that.
MR WALKER: No, but, your Honour, unless rules 501 and 21 are read so as to permit rather than strangle the possibility of amendment then that will be effectively where one goes – that once you had one go you are in real difficulty as soon as it can be seen that your amendment will add to the length of time in any appreciable way for a proceeding to be concluded.
BELL J: In the conduct of litigation commonly amendments are applied for and granted in circumstances which do not give rise to that concern. The issue raised by this proceeding is that this was the third day of the trial that had been listed for some time, is it not?
MR WALKER: Yes, it had. There had been, however, of course, the mediation, a mediation which produces not only an amendment of our pleading, but an amendment of the defendant’s pleading, and when I say defendant I do not mean AON, I mean an insurer. Your Honours will have, I think, already seen the Chubb amendments. You can compare in volume 1 of the appeal book pages 42 and 43 to volume 1 of the appeal book, pages 123 through to 126 and it can be seen that from an initial concentration on the special position of the Mount Stromlo assets in relation to the bushfire damage, there was the very considerable expansion to which evidence in October went – October before November 2006 when the fixture was – but after the mediation and just before the consent orders were pronounced, as my friend has pointed out, there was an amendment to expand issues in that sense.
KIEFEL J: Justice Lander referred to this as a – I may not be quoting it accurately – a curious aspect of the procedure in the trial. Can you enlighten us to why the defendant needed to amend at this point?
MR WALKER: No, I am sorry, I cannot. The insurer defendant, no.
KIEFEL J: It is a course with which the plaintiff consented?
MR WALKER: Yes. What was preserved in the both Chubb and CGU pleadings are issues to which I will come in relation to the second argument, if you do not mind, rather than deal with it now. I can enlighten you about that position, but why it was thought necessary to amend pleadings rather than, for example, record things in what is sometimes called a side letter, I have really no idea. I do not know. It may be that it is because these proceedings had attracted very considerable publicity in this city and the pleadings would be on the public record concerning the position the insurer took, but that is speculation, I stress, on my part. Your Honours, it is for those reasons at 501(a) and (c), in our submission, were engaged in this case.
GUMMOW J: These rules apply in the Magistrates Court as well, do they not?
MR WALKER: Yes, your Honour.
GUMMOW J: They seem to be a merger to some degree of the previous Supreme Court Rules and the previous Magistrates Court Rules, is that right?
MR WALKER: Yes, it is.
GUMMOW J: With some influence from Queensland as well?
MR WALKER: Yes.
GUMMOW J: And the Queensland rules are of general application too, are they not?
MR WALKER: Queensland, I think, like New South Wales to a degree now have what might be called overlapping application; some rules are not applicable in some courts, but there are common rules I think to all courts.
GUMMOW J: The trouble is 501 is not addressed to anyone in particular.
MR WALKER: We put that it is addressed to the court. Why we say that is because it can hardly be suggested it is addressed to the party.
GUMMOW J: Is it addressed to a particular initiation by any particular party?
MR WALKER: No. It certainly does not. For example, it does not ‑ ‑ ‑
GUMMOW J: It really is a not a good way to draft rules of court.
MR WALKER: No, and it does not even say, as one would have been used to by now, whether the court does it on application or of its own motion. But, your Honours, it must be addressed to the court because there seems to be no question that it requires a court order in order for a pleading to be amended. If it was simply addressed to the parties then the parties would presumably set down to say, “Well, I am doing a rule 501 amendment now and it does not matter what you think, I am entitled to, indeed, I am obliged to under 501”. It does not work that way. An application is made for leave to amend, it is resisted or not; if it is resisted it is determined by a judge, and that judge has made an order under or for the purposes of rule 501. Now, the oddities of 501 in that regard are one of the reasons we put earlier the argument, well, perhaps you have got to read it with 502.
GUMMOW J: It is not a question of read with, it is a question of which you read first.
MR WALKER: Quite.
GUMMOW J: I think you may read 502 first.
MR WALKER: It may be that 501 is simply a subset, what I call the qualified imperative in certain cases from the general proposition that appropriate amendments are within the power of the court to permit or direct.
FRENCH CJ: Well, when you look at order 13 of the Federal Court Rules, which I think was in issue in JL Holdings, order 13.2(1) reflects the language of 502, and order 13.2(2) is just 501 without the alphabetical subdivisions.
MR WALKER: Without the (a), (b) and (c), yes. It is language that has been around for a while ‑ ‑ ‑
FRENCH CJ: As Justice Hayne pointed out, I think, earlier, yes.
MR WALKER: Yes.
HAYNE J: Well, it is the combination of about three rules in the 1881 rules.
MR WALKER: That is right.
HAYNE J: You can see it in the 1952 Rules of this Court in order 29.
MR WALKER: Yes. Now, your Honours, if one were looking at 502 and not 501 then in this case the question is whether there has been an error within the meaning of House v The King or in Re Will of Gilbert Deceased, but this Court ought to correct in the way the Court of Appeal looked at and corrected the exercise by Justice Gray of that discretion. In our submission, because it is impossible even if just looking at 502 to avoid looking at 501 when it comes to the amendment of a pleading, being the amendment application in question, it is impossible not to see it, it is therefore appropriate for those matters to have been taken into account as they were. All the courts below said, our application raised a real issue, pace the question that Justice Kiefel has asked me to consider in relation to whether to be real issue it must already be in the proceedings.
For those reasons, in our submission, whether you bundle 501 and 502 together, whether you go through 502 into the subset of 501, or whether you recognise that 501 talks of a qualified imperative and 502 makes it clear that it involves the value of assessments familiar to us in procedural discretions, any of those ways all come to the question whether or not it was appropriate for the courts below to consider the matter as they did in relation to prejudice, because that is the point upon which special leave was obtained in this case, namely, whether there had been an overstatement of the role of the prejudice argument.
Now, in our submission, the first thing to be done in relation to the prejudice argument is to note that it is really rule 21 plus the evident and obvious purpose of rules 501 and 502 that mean that, in our submission, you must, as courts always have, consider the question of prejudice.
To put it simply and to repeat myself, it is to avoid that which is intended to help the administration of justice become a way of visiting injustice. For those reasons, in our submission, it cannot be said that there is anything in JL Holdings that needs reconsideration by this Court concerning the relevance, I stress the relevance, of prejudice and therefore it cannot be said that there was any error in the court below in this case in the fact that prejudice was considered to be relevant.
In relation to JL Holdings, it has to be said that there has not been any elaboration in address today of why this Court should, as to any particular utterance in the plurality of reasons in that case, grant leave to reopen its correctness so as to reconsider it and to alter it as authority. Particularly that is so, in our submission, when one considers that the matters in question in this case really raise matters that have been consistently spoken of in this Court from the very beginning or virtually from the very beginning.
In our list of authorities we drew to your Honours’ attention an authority which was not considered in JL Holdings itself. It was considered by Justices Toohey and Dawson in Verweyan and the authority is Shannon v Chun (1912) 15 CLR 257. At the risk of being provocative of my friend, I should point out that at least the reporters in that case ‑ see the first sentence of the headnote ‑ did then think that it stood for something which I have to point out my learned friend does say is erroneous and if JL Holdings were understood to stand for that, then JL Holdings should be reconsidered. It is fair to point out that there is, at least according to the headnote writers, an authority to that effect.
HEYDON J: Headnotes do not count for anything really.
MR WALKER: No, they do not but ‑ ‑ ‑
HEYDON J: What does Justice Barton say, for example?
MR WALKER: At page 260 he goes first in relation to what he calls the principles in the last paragraph in that page to Lord Justice Bramwell in Tildesley v Harper who asked to be allowed to say that this humble branch of learning is very familiar to his Lordship:
My practice has always been to given leave to amend unless I have been satisfied that the party applying was acting mala fide, or that, by his blunder, he has done some injury to his opponent which could not be compensated for by costs or otherwise.
In our submission, it is useful that that homely word “blunder” is used because it shows, as it were, the inexcusable or inexplicable step or misstep that alas still happens, just as it must in his Lordship’s day.
HEYDON J: The evidence never demonstrated in this appeal whether there was a blunder.
MR WALKER: No, and we have to come to that. In fact, there is a finding against us that it was not a mistake; I need to point that out. Then, of course, there is Lord Justice Bowen in Cropper v Smith. The fact of it being a dissent is dealt with by Mr Justice Barton. There is an extended quote. Then down at the foot of that page of 261 one sees that that extended quote ends with something which, in our submission, has not been supplanted by any of the authorities or so‑called modern updating of the matter that my learned friends have referred to:
In one sense we should be taking away an advantage from them, but only an advantage which they had obtained by a mistake of the other side, contrary to the true bearing of the law on the rights of the parties.
For this case, and because I forgot to deal with the matter that Justice Heydon has noted. may I point out that we rely upon the nature of the state there as being a decision taken earlier in the proceedings of which you now repent and which you wish to change or reverse.
On the top of page 262 Mr Justice Barton continues that extended quote with something which is germane to that question of mistake, lines 3 and 4:
It does not seem to me material to consider whether the mistake of judgment was accidental or not, if not intended to overreach.
So the notion of a non‑accidental mistake he picks up what we have tried to put in our written submissions; most mistakes in litigation are probably the result of deliberation that one now thinks or one successor thinks should have resulted in a different outcome.
BELL J: The concept of “overreaching” in this context, what ‑ ‑ ‑
MR WALKER: We think that means what we have tried to capture in our discussion in our written submissions of Justice Penfold’s findings, namely, trying by some deliberate tactic to obtain something by way of forensic advantage that you could not legitimately have obtained had you, for example, set out to make the claim of the kind we now claim from the very beginning. It is very difficult in this case to put any more flesh on those abstract bones because nobody has come up with a suggestion as to how anybody could have calculated that it would be a good idea to hold these new claims back as against AON until after the mediation.
We have racked our brains and we come up with nothing. I suppose my friend can say, well, I would say that, would I not, but he has not either and Ms Carr has not come up with anything and Mr Stitt did not come up with anything to put to Mr Owen and that would not have been for want of willingness to put something unattractive. Nothing has been suggested ever as to any calculation, clever or otherwise, pseudo clever or otherwise, that could possibly explain why we would not have done it and that is why blunder, in our submission, is appropriate, accidental or not, as Lord Justice ‑ ‑ ‑
HAYNE J: How does that fit with the notion of deliberate decision not to sue? See page 275.
MR WALKER: Your Honour has seen how we try to deal with that in our written submissions. There are in fact no facts actually found as to somebody saying, “Well, I’ve got this cause action against AON and I decide not to mount it”. It seems to be a finding based first and quite wrongly on the deliberate decision not to include in the affidavit an explanation beyond what was included. Put that to one side, because it then goes on clearly to hold that there was a deliberate decision not to sue. The best we can offer by way of an explanation, we think, with respect, that is a complete answer to the point is that the material available below, particularly in the Court of Appeal, means that can only mean that the pleading originally put was that which deliberation produced.
CRENNAN J: It is a common experience that the main focus in litigation like this of the insurers, the brokers sometimes added, I would venture, in a very routine unconsidered way.
MR WALKER: Yes. Particularly when it is what I call a claim over – I do not say this by way of excuse but explanation – when it is the claim over, that it is in the alternative. If you fail in your principal claim against the insurers, this then is what you do to try and retrieve the situation and you see in the familiar way, the pleading at all stages against AON takes the form of, if which is denied, the position between us and the insurers is as they say – and then they actually go to the extent of reproducing insurer’s pleadings against the ANU – then AON will, in that case, be liable, et cetera.
I have already drawn to attention that there was the revamping of the initial focus by at least one of the insurers on Mount Stromlo which has been expanded to an undervaluing of all the many premises and assets, so the focus did change and not only on our side, but in relation to what we get from Shannon v Chun, in our submission, there is not a suggestion in any of the three sets of reasons here that their Honours regarded it as a hallmark of an appropriate failure in getting leave to amend, that there had been a changed view of the case.
Shannon v Chun was a very large change in the case from what I will call a simple loan contract to an entirely new contract in consideration of the repayment of some borrowings, entirely in relation to giving up stakes in a brick‑making enterprise, an entirely different approach which was held outside the pleadings but evidence was permitted to be given of it and the question now was whether there ought to be an amendment to permit the verdict to stand.
KIEFEL J: I can understand you saying that the evidence might not go so far as to say that there was a deliberate decision in the sense of a conscious choice between an election in the full sense knowing both choices available and one possibility is that the plaintiff saw the relationship with AON as being as it originally pleaded, that is to say that was as much as they saw in the relationship and they pleaded exactly what they saw.
MR WALKER: That is right. And that was deliberate in the sense ‑ ‑ ‑
KIEFEL J: In the sense that that was the decision made.
MR WALKER: Yes.
KIEFEL J: But if you were going to come along later and say “We have now changed our minds about that, we now think it was something quite different” ‑ ‑ ‑
MR WALKER: Or more, yes.
KIEFEL J: Or more, or different.
MR WALKER: Yes.
KIEFEL J: Do you not have to explain why that was not apparent to you, particularly through the course of proceedings and when it became apparent to you?
MR WALKER: It would be a good idea always to do so. Authorities do not support that you have to in order to obtain leave to amend, and in many cases it will be inexplicable in the sense that all you can say is “I didn’t think of it”, and it will include exposing very often privileged dealings to an end which, in our submission, is one where the law of diminishing returns sets in. How much cross‑examination does one permit, for example, as to whether a solicitor or barrister was as stupid as he or she is now depicting?
In our submission, it is a fairly unrewarding prospect that one would have factual enquiries as to whether somebody had overlooked something or whether or not there is a sufficiently good negligence case with no reasonable defences so that the court should allow this to go off into the professional negligence list rather than to continue the substantive proceedings.
KIEFEL J: But if it am not wrong I think the cross‑examination proceeded at least to this point, that it was pointed out that the defence of the insurers, at least two of them, had thrown up the question of valuation.
MR WALKER: Yes, and ‑ ‑ ‑
KIEFEL J: And it must have been obvious to any reasonable solicitor that it was an issue.
MR WALKER: Let me volunteer more. The cross‑examiner deployed the correspondence that my learned friend went to today, so that at the very beginning of the controversy there was a statement by Chubb to ANU about the undervaluation point.
Now, I am bound to point out that the pleading they first put on, to which I have made reference several times, was not quite as expansive as their earlier correspondence, but the point is well made that the undervaluing of the declared values for the policy – that was made fair and square both before and in relation to Mount Stromlo at the beginning of the proceedings and later in the evidence it became clear that, for the section 28 purposes, in terms of what I will call underwriting response to be reconstructed for that claim, the use of the undervaluing generally across the campus became relevant.
But the fact that somebody has made a mistake has to be put in the context which is what the mistake is about. It is about what their clients’ rights may be ‑ ‑ ‑
KIEFEL J: But the court does not know it is a mistake. Without some form of explanation, the court cannot say, “Here is a mistake. I will therefore act upon it in that way”. The court is left to draw any number of inferences.
MR WALKER: As Lord Justice Bowen said, there can be mistakes, accidental or not. It is difficult to understand why somebody whose lawyers are completely thoughtless, that is, feckless - just reach for the nearest precedent off the shelf – this will be particularly true for the defendant, or perhaps somebody who just lived with Bullen and Leake without thinking about a case as a plaintiff.
KIEFEL J: But they may have thought that ‑ ‑ ‑
MR WALKER: Why should they get more of the hearing of an amendment application – more likely to get an amendment than somebody who worried away about the particular cases and made a misjudgment which they later repent, or their successors later repent?
KIEFEL J: There was a change of solicitor here, was there not?
MR WALKER: The individual, yes; the individual, not the firm.
KIEFEL J: Who have the control of the litigation?
MR WALKER: Yes, not the firm. I should not let that comment hang there to my advantage without pointing – it is not to my advantage because there is no evidence that there was anything in the nature of a rethink upon the file changing hands. Far too much time elapsed. I do not rely on that.
But our point is this. The qualities of a mistake which include the way in which a mistake was committed, a completely thoughtless mistake may in certain contexts be regarded as more or less reprehensible. It is difficult to see why one would regard that as having any relevance to why there should or should not be an amendment in that case, compared to whether there should or should not be an amendment in a case where somebody agonised – did not behave negligently but simply got something wrong in the sense that they now wish, either for more abundant caution or because they have got a more mature view of the matter, to raise something else as well or differently.
Exploration of these differences in equality of the former belief deliberately formed, whether carelessly or carefully, is, in our submission, quite collateral to and unuseful for the purposes of considering whether or not in the purpose of serving the just resolution of the real issues in the proceedings between the parties there should be an amendment. That, in our respectful submission, was practically inappropriately summed up by Justice O’Connor in Shannon at the foot of 263 of 15 CLR.
Speaking of the rule which was the rule that had been talked about in Cropper, the text is contained at the top of 262. We know that it is the same in New South Wales; see what Justice Barton says at 262. So Justice O’Connor at the foot of 263 says:
That being the real matter in controversy –
that is the expression from the rule –
the plaintiff at the second trial wished to put his case in the most effective way, and it was the duty of the Court to allow him to do so, by means of an appropriate amendment, provided that the amendment could be made without injustice to the defendant.
That is, in our submission, a very important way to introduce the question of prejudice. It has to do with the avoidance of injustice, which obviously one reads into all of these rules.
Then there is the reference to needing an adjournment and then there is the reference to costs, and in fact in Shannon what had happened in this case had also happened; there had been a misapprehension in the courts below of the importance of the costs question and it was corrected in the High Court. Justice Isaacs at page 265 uses characteristic language, in the middle of that page:
There is not only a power, but even an imperative duty cast by the legislature on the Court, to let no formality stand in the way of solid justice . . . The object is to avoid multiplicity of actions and this would be defeated if the course suggested by the appellant were followed.
Courts have always refused to limit their action under similar provisions so long as bona fides exists and no injustice is occasioned.
Your Honours, it would appear that that really is a rather squarer target for our learned friends in terms of seeking leave to reopen it. In JL Holdings, in our submission, however, bearing in mind the principles and they are called principles – which their Honours in that case borrowed from Lord Justice Bowen and Lord Justice Bramwell in Cropper and Tildesley respectively, given the nature of those principles, nothing is needed from this Court so as to qualify them, particularly when there are the rules we have here which expressly in rule 21 include the possibility of the needs of other proceedings; that is other litigants, to be taken into account.
In relation to prejudice, all I need to say then factually about this case is that still there is no attempt to demonstrate that there has been any prejudice in the usual sense that the lapse of time will have effected the evidentiary resources available to AON. After all, in terms of the obligations undertaken by contract, and what was done in relation to ensuring all of these premises and plant as to the basic transaction, that has been afoot between these parties since the commencement of proceedings. There are different aspects of that that now need to be re‑examined; see Ms Carr’s affidavit. That, in our submission, is a matter, which for an insurance broker is something which plainly, if it had been the cause of any worry in a Verwayen sense, has not been the subject of any evidence to that effect.
Similarly, if it has been the cause of any embarrassment in dealing with its bankers, or in terms of its compulsory disclosure for the regulation of corporations or securities - if their securities are traded - there has been no evidence and they are the ones who would be able to say whether that caused any embarrassment. We are familiar with expedition applications being made in order to have things determined, for example, for certain accounting periods. None of that has been done in this case, and so for those reasons ‑ ‑ ‑
FRENCH CJ: One thing that plainly was not relevant in the primary judge’s consideration was loss of the trial date. That had long gone.
MR WALKER: Yes. There is nothing that can be done to ameliorate that position. It was as simple as this. He reserved on the application for leave to amend.
FRENCH CJ: Yes.
HEYDON J: Which is an extraordinary thing to have done. These are Chambers applications; they are supposed to be disposed of in open court ex tempore.
MR WALKER: Yes, and given that the amendment application was accompanied by or was intimately involved with an adjournment application, I am afraid there is no avoiding the fact that this was in truth reserving on an adjournment application, and that is even more problematic for the reasons Justice Heydon has asked me to consider and there is nothing I can say about that except that as the Chief Justice has pointed out ‑ ‑ ‑
HEYDON J: Except that you were partly responsible for it. Did you not ask – your side – ask for leave to put on written submissions in three weeks after the oral argument?
MR WALKER: That is so, your Honour. That is so, yes. What I cannot – I do not think there is any further detail I need to add to that but it does not necessarily follow that it was at our instance that there was to be a reservation of judgment on the adjournment application. What I will have found out is whether that followed after an indication that there was going to be a period for the judge to consider matters.
FRENCH CJ: By the time the matter got to the Court of Appeal I know they were being asked to review, in effect, a discretion exercised by the primary judge, but there is no escaping the reality that Ms Carr’s evidence, for example, is largely in a practical sense irrelevant because even if a pleading stayed unamended you have a trial 15 months later, you have to do it all over again in terms of getting ready for it.
MR WALKER: I know. I am sorry, there is nothing I can say against that.
FRENCH CJ: It does not work against your case.
MR WALKER: Well, it is a sad potential of all adjournments - of all vacations of hearing dates. Now, the final thing I need to say about prejudice which is not prejudice suffered by the party but which is made relevant by rule 21 is that some criticism is expressed in the submissions in reply against us that we have gone so far as to suggest that the loss of a hearing date may be beneficial. This is our learned friend’s written reply, paragraph 20.
Well, we certainly did not raise that suggestion ourself as I think your Honours may have observed in our written submissions. That was from Justice Lander. That is the only reference by the four judges, members of this Court, three of them full‑time members of this Court, that is the only reference to something which would fit within that part of rule 21. There was no reference to the state of the lists, there was no reference, as it were, to a backed‑up queue for hearing where it was imperative therefore that an adjournment be resisted and the amendment that would require the adjournment thus be refused in order that time be used so that it could not be seen that people were being deprived of hearing dates.
There was nothing of that kind at all. If there were, then of course rule 21 makes it relevant and it would have been relevant but there was nothing about that and there has been no reliance upon that in this case. There is nothing general or presumptive about those matters, in our submission, and it is not true that all waiting lists in all courts around this country are uniformly clogged.
HEYDON J: You are not suggesting that the Supreme Court of the Australian Capital Territory is not extremely busy, are you?
MR WALKER: No, I am not. Your Honour should not proceed on that basis at all, no.
HEYDON J: In other words, whether it be a point of Mr Gleeson or a wrong rejection of an argument by Justice Lander, it does seem to me to be a very serious issue, this question of all other proceedings in the court having been affected.
MR WALKER: Yes. There is no question that ‑ ‑ ‑
HEYDON J: This may not arise until one gets to – if one ever does – to the re‑exercise of a discretion.
MR WALKER: Quite so. There is no doubt about the seriousness. See Bomanite, which is a late filing of evidence case, not an amendment case, but there is no question about the seriousness of a court deliberately with case management setting a time when justice will be done. In this case, it goes back to something Justice Hayne asked my learned friend this morning. Reasonable opportunity is not a guarantee that you will get all the time in the world to do anything you want to do as it occurs to you from time to time in litigation; of course not.
There is, as it were, the date with destiny element to a hearing once it is fixed. You should be there, and you should be there subject to good excuses, such as all the witnesses have been to Mexico recently, you should be there ready to start. That is why two of the three judges in the Full Court of the Federal Court in Bomanite upheld the exercise of discretion by Justice Lockhart.
HAYNE J: In the end, Mr Walker, it comes to whether being ready for trial against AON on one basis, does an intervening settlement of claims against other parties mean that you can then turn around and reformulate the case against AON to the extent and in the manner proposed?
MR WALKER: I think that, with great respect, is a fair way to put it to me, yes, your Honour, yes. There are a number of aspects ‑ ‑ ‑
HAYNE J: But you say, of course, yes; Mr Gleeson says, no, where are we going?
MR WALKER: I am not going to say, of course, but yes, your Honour understands where I stand. It is paragraphs 198 and 199, by the way, are the references to the effect of the vacation of hearing date by Justice Lander. They can only be read as a considered refutation in this case, and I do stress, in this case, in this court, at that time, that is, in the ACT Supreme Court at that time, a refutation that the rule 21 references to other proceedings should have conduced against the amendment being permitted, and I stress that was Justice Lander who was otherwise against us.
Now, can I deal with the very great significance of the settlement against the other parties. First of all, in the best of all possible worlds I suppose, people would not sue each other at all. In a world nearly as good as that, when they do sue each other, all the real issues would be accurately without rancour stated early so that the case could settle. Presumably the letter before action would do that. That does not always happen either. In the next of the best possible worlds, next down the list, one will have sufficient crystallising by pleadings or whatever process is appropriate of the issues between parties and then perhaps with the assistance of an expert such as a mediator, there can be an early disposal of the case before any of the other resources are engaged.
This case, alas, falls into something which is by no means the best possible worlds, but a not unknown world for litigation, that is, the door of the court room literally being an occasion and place where discussions finally kick off – I do not say they had not been had before but they finally proceed in a way which result in settlements.
We know that there was a settlement with ACE that did not need to be mediated but it was not consummated until the first week of the hearing. We know there were settlements with the other two insurers which were reached as a result of mediation before Mr McHugh and which were consummated by the consent orders which underlie the second part of my learned friend’s appeal.
Now, the significance, of course, is that on any view of it, and I do not say this meant necessarily an adjournment, but on any view of it the reasonableness of a compromise may become relevant, on one view would become relevant, in the claim against AON and the reasonableness of the compromise would in particular focus on the reasonableness of the amount achieved in the settlement.
According to the transcript I have been shown – not in your Honours’ books – of the argument in the Court of Appeal an explanation was given in the Court of Appeal for Mr Garling’s reference before Justice Gray to the possibility or likelihood of him having to return his brief and it was given, as your Honours might expect, in relation to justifying the advice he gave to produce the reasonableness of the sum for which the compromise was agreed and there does not seem to be any other aspect to it. That was referred to in a passage between members of the bench and Mr Garling on the argument of the appeal.
That in itself may give rise to something in the nature of an adjournment but that has not been explored in any of the facts below but it is an example of how a hearing date can come to need to be vacated where three of the four parties, what might be called the principal defendants – I do not mean that AON is unimportant, far from it – but the principal defendants, the people against whom the primary recourse is made, have reached agreement with the plaintiff.
In our submission, it ought not to be held against the plaintiff any more than it ought to be held against any of the insurers that it was not until then or with the assistance of the mediation that that happened. That is just how it did happen. It would have been better to have happened earlier but that is how it happened. It is for those reasons, in our submission, that there is not quite so stark a position given to the concomitant application to adjourn or vacate the hearing date as might appear from some of the descriptions our learned friend has put against us.
This is not a matter of 10 days of hearing and still they are arguing about amendments. This is a case where there had been a hearing date which eventually came to be vacated which was very usefully employed in disposing of three claims against three of the four defendants and in such a way that because the fourth claim was in the nature of a claim over there would have necessarily have been some evidentiary and perhaps pleading effect - ultimately there was a pleading effect, as you have seen – to incorporate the reasonable compromise claim against AON.
In our submission, it is for those reasons there is no House v The King error, certainly no shocking outcome shown, no irrelevant consideration, failure to take into account relevant consideration, error of law, error of fact, involved in first ‑ ‑ ‑
HEYDON J: I have to differ with you there. It seems to me to be a shocking outcome.
MR WALKER: Your Honour, at first sight the combination of these events, including the settlement after the hearing date has commenced, seem to be the very thing that case management ought to avoid. I accept that.
HEYDON J: Perhaps I should correct myself. If the primary judge had heard oral argument quickly and decided that the amendments should be allowed and an adjournment should be granted, I would regard that as a shocking outcome within House v The King. But, of course, that is not quite what happened.
MR WALKER: No. It is that aspect of the outcome I understood that your Honour is putting to me. Your Honours, it ought not to be regarded, in our submission, as shocking in that sense because the evidence to which we have referred in our written submission, in particular at paragraph 6, did include the change of position being produced by what had occurred at the mediation and that in turn involved the notion that that could not be fully explained. My learned friend says, well, there was not even and there should have been an attempt to obtain consent in order for that to be relaxed.
That is as may be, but it is to be recalled that there are two other parties – the two other insurers apart from ACE – Chubb and CGU which were entitled to that confidentiality as well. Bearing in mind that AON barely participated in the mediation, what is clear is that what passed between ANU and the two insurers with which it reached settlements, that produced its desired transformation of its claim over against AON.
KIEFEL J: Could I ask you in relation to the amendments which the first defendant was allowed to make to its defence at the last moment which we briefly touched upon, could the matters that it was allowed to raise be relied upon by the plaintiff in its claim for having mitigated its loss later on as against AON?
MR WALKER: I am not sure, your Honour, because ‑ ‑ ‑
KIEFEL J: That is to say, that the first defendant’s defence was broadened and so the acceptance of the money was seen to be in the context of a claim which was much broader than it had been before.
MR WALKER: It is certainly true that the defence of the reasonableness of the settlement would involve a consideration of the ‑ ‑ ‑
KIEFEL J: Breadth of the defences.
MR WALKER: ‑ ‑ ‑formidable nature of the insurer’s position concerning what they would have done for the purposes of the section 28 questions by way of underwriting had they not been misled concerning values, yes. In that it may be – and I speculate I think – that the broadening of the position of Chubb at least could add to justification for what was done in relation to that settlement, yes.
Now, your Honours, it is for those reasons, in our submission, that there is within the meaning of the rules and according to the decision of this Court in JL Holdings insufficient ground to overturn what the Court of Appeal did. I stress, without going back to it, your Honours have not heard any argument as to what it is in JL Holdings that either mistakes how rules of this kind should be construed – that, in our submission, is the primary question – or pronounces something in the nature of a so‑called principle – and the word “principle” is used in this context – which this Court would now wish to disavow. If JL Holdings could be seen ‑ ‑ ‑
GUMMOW J: Wait a minute. It is this notion of “right”, is it not?
MR WALKER: Your Honour, I am not quite sure that it can be said that JL Holdings stands for a right. There are references to principles and extreme circumstances.
GUMMOW J: Shutting out a party from litigating an issue that is clearly arguable.
MR WALKER: Yes.
GUMMOW J: Shutting the applicants out from raising an arguable defence, thus precluding the determination of an issue between the parties. That seems to be critical.
MR WALKER: Your Honours will have seen that the plurality refers, as set out ‑ ‑ ‑
GUMMOW J: You would say that that was doing no more than what the High Court did in 15 CLR, even though they did not know it when they were writing 189 CLR.
MR WALKER: Page 152, just after halfway down, a quotation from Justice Kiefel at first instance – it is significant the word “right” there is emphasised with the inverted commas. In our submission, it is not picked up as a matter that where in these reasons their Honours say there is a right.
Now, I hope will not be convicted of playing semantics. I have tried to give full weight to the “must” in 501, plus the fact that it is a judicial decision which involves a balance, plus the fact that it involves doing justice in the particular case in order to come up with the notion of the qualified imperative, namely, that the overriding aim of it all is the just resolution of the real issues in the proceedings.
If, and only if, I am right that the real issues may include those which have not already been joined in the documents sought to be amended, then it would appear to follow that in a case such as the present where we already sue for the shortfall and we are trying to add extra grounds for getting the same shortfall, then that well and truly matches what rule 501 says in paragraphs (a) and (c), and I ‑ ‑ ‑
FRENCH CJ: Except that 501 is read subject to 21 so that in a sense the mandate is made a little – if I can use a metaphor – spongy by that reading.
MR WALKER: Yes, I accept that.
FRENCH CJ: Is the outcome in this case perhaps not an indication that it may be necessary to correct what seems to have been taken from JL Holdings – and perhaps not correctly – about the quasi entitlement of a party to amend at any stage in the proceedings?
MR WALKER: Yes.
HAYNE J: While still on that subject matter and the relationship between 501 and 502, a subject I know you have dealt with, if you see 501 as amalgamating three separate ideas that were treated in separate rules in the 1881 form, what is also notable in the 1881 form of rules is that there was an additional treatment, a separate treatment of the general power to amend. Only because I have the 1952 Rules of this Court in Court, Order 29, rule 1(1):
The Court or a Justice may, at any stage of the proceedings, allow a party to amend his endorsement or pleadings in such manner, and on such terms, as is just.
Sub‑rule (2):
All such amendments shall be made as are necessary –
et cetera. The notion of right arises if it is a necessary amendment which again engages the matters Justice Kiefel ‑ ‑ ‑
MR WALKER: I am obviously chary of embracing the word “right” because it depends ultimately on the decision of a judge which has to do with a balancing of the interests of justice. At that point, if it is not a discretion strictly so‑called, it is indistinguishable from a discretion in the way it needs to be argued and determined. However, obviously, we do not give up the obvious semantic content, the proper and natural meaning of the word “must” in 501.
HAYNE J: But 502(1) must be read against also, the succeeding sub-rules in 502 which I did not have access to earlier, such for example as 502(4):
If there is a mistake in the name or identity of a party, the court must give leave for, or direct the making of, amendments –
et cetera.
MR WALKER: Yes, so there is the correcting the record aspect.
HAYNE J: Yes.
MR WALKER: A court of record cannot have something that it knows to be wrong on what I will call its record. That is really quite different – worlds apart from, as it were, pursuant to party autonomy what are parties allowed to bring up and require the court system to deal with. We have never said there is anything in the nature of a right because it always depends upon being able to satisfy the requirements of rule 501, at the very least, probably 502 as well, and always in light of rule 21.
Your Honours, what do we say about Verwayen in this context? The first thing is that the most remarkable thing about Verwayen, we would respectfully submit that which should pervade any understanding of what it stands for, is that it is not a consideration of the Commonwealth’s amendment application and that many of the matters that informed the estoppel found in that case could have, and with great respect should have, found reflection in a swingeing refusal of the amendment application. However, that was not to be.
There are some references to amendment applications and one finds, for example, Justice Dawson at 170 CLR 456 referring to Shannon v Lee Chun as well as Tildesley v Harper and Cropper v Smith describing in relation to that form of rule which is not materially different, that is, that looks to those amendments necessary for the purpose of determining the real question in controversy and saying at about point 7 on the page:
The usual terms which are imposed are an order for costs or an adjournment. In granting leave to amend, a court is concerned with the raising of issues and not with their merits.
That casts some light on what it means to be a real issue, or bona fide:
Of course, an amendment which is futile because it is obviously bad in law will not be allowed. But it is no ground for refusing an amendment that it raises a claim or defence which ought not to succeed. That will be an issue upon trial. An amendment may, however, be refused because it is made at such a late stage that neither costs nor an adjournment can compensate the other side for the failure to raise the issue at an earlier.
There is a reference to Ketteman. So, this is not unreconstructed 19th century material or early 20th century if you look at the date of Shannon.
One does not find in Verwayen, obviously, any more detailed exposition by any of their Honours of the law governing the interpretation and application of the court rules concerning amendment applications. However, my learned friend sought to engage Verwayen a bit more widely and we would say this in particular about it. It is to be recalled in Verwayen that the Commonwealth had admitted negligence at an earlier stage before it sought following political as well as litigious assurances that it would not raise limitations, making the application successful to amend so as to plead the statute.
That gave rise, of course, as Justice Gaudron pointed out at page 485, I do not need to take you to it, that changed the relationship between the parties before the amendment application, which was the detriment, as it were, that gave rise to the estoppel being made permanent, there was a relationship between the Voyager survivor and the Commonwealth whereby the Commonwealth was liable in damages to the survivor with merely a sum to be assessed and that that relationship was totally overthrown, or threatened to be totally overthrown, by the step it had taken in the litigation.
There is nothing of that kind in this case. The relationship between these parties is that there is an admitted contractual relationship, contentious as to its scope of responsibility.
So AON admit that there was a contract. They dispute that it covered all the responsibilities that we contend for. They dispute the tortious liability. They have paid us nothing, we want money from them. That relationship is the same before the amendment as after the amendment. There is no difference of any kind or on anything like the scale of that which was threatened in Verwayen.
I should point out just by reference without taking you to it that Justice Toohey referred to in quite similar terms as Justice Dawson did to the power and responsibility of the Court in relation to amendments at pages 464 to 465, citing again authorities starting with Cropper including Shannon and including Ketteman v Hansel Properties.
Justice Gummow asked my learned friend does Verwayen mean there is an estoppel backup where amendments have been permitted. The short answer is no there ought not to be, at least from the point of view of a consideration of the law of amendment. That is because the same dictates of conscience or considerations of fairness or reasonableness that inform the estoppel that Verwayen stands for should not be permitted to contradict the conclusion the Court came to when allowing the amendment.
In other words to raise a claim either as plaintiff or defendant, which is such as to give rise for the purpose of an estoppel argument to an unconscientious position or a position which is so unfair that the Court should pronounce the estoppel is, in our submission, antithetical to the interests of justice permitting the amendment in the first place because exactly the same kind of facts, that is prejudice which cannot be overcome by costs or an adjournment would then be true. So the relationship between the two ought not to be seen that they ever go as a pair, that is the two sides of one coin. Can I move then to the question of the abuse of process claim ‑ ‑ ‑
FRENCH CJ: How long do you expect to be on that element of your argument, Mr Walker?
MR WALKER: About 10 minutes, I think.
FRENCH CJ: We might hear from you tomorrow morning on that, Mr Walker.
MR WALKER: May it please the Court.
FRENCH CJ: The Court will now adjourn to 9.15 tomorrow and these proceedings to 10.15.
AT 4.16 PM THE MATTER WAS ADJOURNED
UNTIL WEDNESDAY, 29 APRIL 2009
4
0