| JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA LOCATION : PERTH CITATION : BEXTON AUSTRALIA PTY LTD -v- JUPITER NOMINEES PTY LTD [2003] WADC 118 CORAM : MACKNAY DCJ HEARD : 14 APRIL 2003 DELIVERED : 29 MAY 2003 FILE NO/S : CIV 4616 of 1999 BETWEEN : BEXTON AUSTRALIA PTY LTD (ACN 056 516 075) Plaintiff
AND
JUPITER NOMINEES PTY LTD (ACN 008 814 622)
Defendant
Catchwords: Practice - Western Australia - Practice under the Rules of the Supreme Court - Application to withdraw admission in defence - Whether good cause shown - Turns on own facts
Legislation: Nil
Result: Leave to amend granted
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Representation:
Counsel:
Plaintiff : Ms P A Cahill
Defendant : Mr G A Rabe
Solicitors:
Plaintiff : Jackson McDonald
Defendant : Ahern & Associates
Case(s) referred to in judgment(s):
Permanent Building Society v Wheeler & Ors, unreported; FCt SCt of WA; Library No 940115; 22 February 1994
Queensland v J L Holdings Pty Ltd (1997) 189 CLR 146
Sangora Holdings Pty Ltd v Dunstan, unreported; FCt SCt of WA; Library No 990172; 13 April 1999
Case(s) also cited:
Murran Investments Pty Ltd v Aromatic Beauty Products Pty Ltd & Anor [2000] FCA 1732
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1 MACKNAY DCJ: This action is brought by the plaintiff against the defendant for a sum of $5,800 and for damages of $32,776.06, a total of $38,576.06, the first being said to be due under an agreement between the parties and the second for a breach of it.
2 In a substituted statement of claim filed on 16 November 2000 the plaintiff alleges that at material times it conducted a business of the preparation and supply of detailed engineering drawings, and associated services, whilst the defendant was in the business of steel fabrication and erection, and had been engaged to provide steel fabrication works for a project at the Garden Island naval base. 3 The plaintiff then relevantly alleges: "4. By an agreement ('the Agreement') made between the parties on or about 8 March 1999, the Plaintiff agreed for a lump-sum price of $20,500.00 to prepare and provide to the Defendant shop detail drawings and related information ('the shop drawings') for the steel fabricated works for the project.
PARTICULARS OF AGREEMENT
The Agreement was made in writing: (1) On or about 5 March 1999, the Defendant delivered to the Plaintiff the following tender drawings, prepared by the consultants, for the purpose of the Plaintiff providing to it a quotation for the cost of preparing the shop drawings. … (2) The Plaintiff by a letter to the Defendant dated 8 March 1999 offered to prepare and provide the shop drawings for a lump-sum price of $20,500.00. (3) The Defendant by Purchase Order No. PO9401 dated 8 March 1999 accepted the offer." 4 It is alleged in par 5 of the substituted statement of claim that the "Agreement contained terms as follows", and a number of matters are then set out. 5 The defendant filed its defence (and a counterclaim alleging breaches by the plaintiff "of the Paragraph 4 Agreement" and seeking damages of
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$62,062) on 14 March 2001, and relevantly dealt with the allegations in par 4 of the substituted statement of claim as follows: "4. In relation to paragraph 4 of the statement of claim, the defendant:
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6 The defendant in par 5 then denied that the terms alleged by the plaintiff in par 5 of the substituted statement of claim formed part of the agreement. 7 The plaintiff subsequently, on 16 July 2001, filed a reply and defence to counterclaim, which included the following: "3. (1) … (2) (a) By the Plaintiff's letter dated 8 March 1999 the Plaintiff's General Terms and Conditions were incorporated in the Agreement. (b) Clause 8 of the General Terms and Conditions provided that the Plaintiff would, in the preparation of the shop drawings, exercise the standard of care normally exercised by the internationally recognised engineering organisations engaged in performing comparable services. (c) Clause 8 of the General Terms and Conditions further provided that the Plaintiff would not be liable to the Defendant for any loss, damage or costs arising out of or in connection with the provision of drawing services by the Plaintiff to the Defendant for the project except to the extent that it would bear the cost of the work of any of its drawings found to be deficient or defective."
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8 In September 2002 the plaintiff then filed a summons for directions in which it sought the trial of a preliminary issue as to whether the defendant was limited in its right to recover damages for any breach of the agreement by the general conditions alleged to have been incorporated into it.
9 The defendant's apparent response to that was to file a summons seeking to strike out the reply and defence to counterclaim on the basis that it might prejudice, embarrass or delay the fair trial of the action, the reason being put forward that in that pleading the "plaintiff asserts that the paragraph 4 'Agreement' contained terms and conditions other than those alleged in paragraph 4 of the statement of claim". 10 In the course of that hearing, counsel for the defendant sought an adjournment, in order to take further instructions, and the hearing was subsequently adjourned. 11 In a chamber summons filed in March 2003 the defendant then applied to amend its defence in accordance with a minute dated 20 March 2003. 12 In the minute the defendant seeks to make the following response to par 4 of the substituted statement of claim, in place of the plea set out above: "4. In relation to paragraph 4 of the statement of claim, the defendant a. denies that the agreement between the parties was the agreement pleaded therein and says that the agreement between the parties was an oral agreement made on or about 1 March whereby the Plaintiff agreed for a lump-sum price of $20,500 to prepare and provide to the Defendant shop detail drawings for the steel fabrication works for the HMAS Stirling Naval Base project (the 'Paragraph 4 Agreement');
PARTICULARS
i. during the last week of February 1999 David Asbury ('Asbury') for and on behalf of the Plaintiff attended at the Defendant's premises to discuss the work for which the
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13 Two affidavits were filed in support of the application. 14 In the first, sworn on 20 March 2003 by Mr Russell Lang, a director of the defendant, the following appears:
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5. I received that letter as referred to in paragraph 4(2) of the statement of claim and I sent off the purchase order referred to in paragraph 4(3) of the statement of claim and I have always admitted that the defendant's agreement with the plaintiff was for the plaintiff to do the work in question for the lump sum price of $20,500. 6. What I have always denied is that the agreement contained the terms referred to by the plaintiff at paragraph 5 of its statement of claim and those were the only terms relied on by the plaintiff at that time. 7. The importance of whether the agreement was formed by the exchange of the documents referred to in paragraph 4(2) and 4(3) or whether the agreement was made during a telephone discussion between myself and Dave Asbury prior to me receiving the plaintiff's letter of 8 March 1999 did not occur to me when I instructed my solicitor to admit paragraph 4 of the statement of claim. 8. Had the plaintiff at that time stated in its document that the contract between the plaintiff and the defendant incorporated the plaintiff's Terms and Conditions referred to in the letter of 8 March 1999, I would have strongly denied that in February 2000. 9. The first time that the importance of the letter of 8 March 1999 was brought to my attention was when my solicitor asked me about it in early November 2002 when the plaintiff sought to have a preliminary issue determined on the point. I immediately informed my solicitor that shortly after I gave all the drawings to the plaintiff, Dave Asbury, an employee of the plaintiff, he telephoned me to discuss the matter and during that discussion he offered I do the job for $20,500 and I accepted his offer. 10. When I received the letter of 8 March 1999, it confirmed what had already been agreed to between Dave and I during our earlier telephone discussion. I did not read the Terms and Conditions which were sent for my 'information'. I did not read them for the following reasons: …
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11. During my telephone discussion with Asbury, he did not refer to any terms and conditions that I had to agree with. I would not have agreed to the plaintiff doing the work had I known that it was contracting with me on the basis that it was not liable for any negligent work that they carried out for me. I accepted Asbury's offer to do the work for $20,500 without knowing anything about the plaintiff's 'Terms and Conditions'. By the time the letter of 8 March was received by me, there was as far as I was concerned a binding agreement already in place between the plaintiff and defendant and that letter confirmed that. 12. I sent the purchase order of 8 March 1999 to the plaintiff of the purchase order number allocated by my company to the job which had to be referred to by the plaintiff on its invoice in due course and to set out the order of preference in which I required the Plaintiff to perform the work. The purchase order was definitely not an acceptance of the plaintiff's offer to do the work. 13. I accept that in the light of the aforegoing I ought not to have instructed the defendant's solicitor to admit paragraph 4(2) and 4(3) of the plaintiff's statement of claim in July 2001, but the relevance of the sequence of events as to the formation of the contract at that time simply escaped me." 15 In the second affidavit the solicitor for the defendant, Mr Ahern, deposed that it was only after the receipt of advice from counsel, following the hearing of the plaintiff's application for a preliminary issue that "it became clear that a letter sent by the Plaintiff to the Defendant after the contract had been entered into in relation to the work the subject of these proceedings was now being relied on by the Plaintiff in a way which had not previously been clear to me". 16 On the hearing of the defendant's application for leave to amend the defence and counterclaim, counsel for the defendant relied heavily on the absence from the plea in par 4 of the substituted statement of claim of any reference to reliance on the plaintiff's general terms and conditions, as something which resulted in an absence of awareness on the part of the defendant's legal advisers of the potential significance of the plea.
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17 There was a deliberate decision made to admit the letter, on the basis that no issue ought be made of it, as it did not seem to matter, counsel conceded, and "it only mattered once the counterclaim was filed".
18 The defendant through counsel accepted that there had been a substantial delay in bringing an application to rectify the matter, resulting from a lack of appreciation of the effect of the additional plea in the reply and defence to counterclaim. 19 The plaintiff objected to the proposed amendment, counsel stated, on the basis that the original plea had been an admission, made consciously and for the sake of convenience, rather than as a result of a mistake, whilst the reasons put forward to support a withdrawal of the admission were insufficient, having regard to the relevant authorities. 20 Counsel for the plaintiff also referred to what she described as "the extreme delay" in bringing the application, and notwithstanding the absence of an affidavit making any complaint of prejudice by the plaintiff suggested there was "evident prejudice" to the plaintiff, in that the litigation had been conducted on the basis of the admission. 21 The general circumstances in which a party might be permitted to withdraw an admission were considered by the learned Chief Justice in Permanent Building Society v Wheeler & Ors, unreported; FCt SCt of WA; Library No 940115; 22 February 1994. 22 In Sangora Holdings Pty Ltd v Dunstan, unreported; FCt SCt of WA; Library No 990172; 13 April 1999 Steytler J (with whom Scott J agreed) said (12-13): "It is a serious matter to make an admission in a pleading. From that point onwards the admitted fact or facts cease to be in issue and the action proceeds upon that assumption. It may often be the case that, absent the admission, the action would have proceeded upon a different basis. It has consequently been said on a number of occasions that, as a matter of principle, a party who has made an admission in a pleading should not be entitled to withdraw that admission without good cause (see, for example, Divcon (Australia) Pty Ltd v Devine Shipping Pty Ltd [1996] 2 VR 79 at 80). The withdrawal of an admission will often even less readily be allowed if it has stood for a long time (see Davey v Harrow Corporation [1958] 1 QB 60 at 69) or when the withdrawal will cause significant prejudice to the other party (see Hamilton v Australian Telecommunications
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Commission [1989] 2 Qd R 18 at 20 and Permanent Building Society v Wheeler, unreported; FCt SCt of WA; Library No 940115; 22 February 1994 and see, generally, Seaman: Civil Procedure Western Australia para 20.14.2)." 23 The principle expressed by the High Court of Australia in Queensland v J L Holdings Pty Ltd (1997) 189 CLR 146, 155, that "(j)ustice is the paramount consideration in determining an application such as the one in question", that being an application for leave to amend which, if allowed, would delay the trial of a commercial dispute, is not without relevance, as is the stated reference to an absence of anything "which would indicate any personal strain which would justify the conclusion that costs are not an adequate remedy for prejudice caused by the amendment sought to the pleading". 24 Where an amendment involves the withdrawal of an admission, it is however clear that good cause must be shown, and the causing of prejudice can be a bar. 25 In the present action it is the case that, in regard to the plaintiff's claim, whether the contract was formed by an exchange of correspondence or in the course of a conversation, and subsequently confirmed by correspondence, would not appear to be of any moment. 26 A decision made by a party, or its director, not to contest such a point would be understandable. 27 It would not necessarily be something to be criticised. 28 Further, it would be only when the plaintiff sought to invoke the limiting provisions of its general conditions, in the reply and defence to counterclaim, that the matter would become significant. 29 In those circumstances the original decision would, in the absence of any other consideration, have an element of mistake in it such as to justify relieving the party from the unforeseen consequences thereof. 30 Mr Lang has deposed that the decision to instruct the defendant's solicitors to admit the form of the contract alleged came about in that way, and for present purposes I would act on the assumption that may have been the case. 31 No action was taken to remedy the situation for a substantial period of time after the reply and defence to counterclaim was filed.
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32 The defendant's solicitor has deposed that was through an oversight.
33 When the plaintiff sought to take advantage of the admission, by application for a preliminary issue, the defendant sought to strike out the plaintiff's latter pleading, on the basis that all the alleged terms of the agreement ought to have been pleaded in the statement of claim, and that reveals an apparent misapprehension of the relevant rules on the part of the defendant's advisers. 34 The plaintiff has not deposed as to any particular prejudice. 35 It is the case that the plaintiff has prosecuted the action for a substantial period on the basis of the admission. 36 However, the proposed amendment, if allowed, would have no discernible effect on the plaintiff's claim. 37 In regard to its defence to counterclaim I am unable to see that the amendment would unduly prejudice the plaintiff, having regard to its pleading and on a consideration of the nature of the defendant's counterclaim, and provided any necessary time is allowed to the plaintiff. 38 For those reasons I am of the view that the defendant ought have leave to amend its defence in accordance with the minute dated 20 March 2003. 39 I will hear from the parties as to the appropriate order to be made in relation to any costs thrown away by reason of the amendment. |