Boral Resources (SA) Ltd v Civil Mining Solutions Pty Ltd - [2018] SASC 151

Supreme Court of South Australia
(Magistrates Appeals: Civil)
BORAL RESOURCES (SA) LTD v CIVIL MINING SOLUTIONS PTY LTD & ORS
[2018] SASC 151
Judgment of The Honourable Justice Doyle (ex tempore)
17 September 2018
MAGISTRATES - APPEAL AND REVIEW - SOUTH AUSTRALIA
MAGISTRATES - COMMENCEMENT OF PROCEEDINGS - AMENDMENT OF INITIATING PROCESS
The plaintiff sought leave to amend its statement of claim to plead an alternative claim. The Magistrate declined the plaintiff’s application on the bases that the amendments involved: (i) an alternative case that was impermissible because it involved advancing factually alternative cases in circumstances where the plaintiff knows one of those is false; and (ii) an alternative case based upon the hypothesis of the defence case without pleading the material facts upon which it was based.
The plaintiff appeals the Magistrate’s refusal to grant leave to amend.
Held (per Doyle J) allowing the appeal:
1.       The Court’s obligation to promote the just, expeditious and economical resolution of claims requires that not too strict or technical an approach is taken to pleadings.
2.       The alternative case sought to be pleaded by the plaintiff was sufficiently clearly and adequately pleaded. It was not an impermissible alternative claim.
3.       Appeal allowed.
Magistrates Court (Civil) Rules 2013 (SA) rr 3, 80(1), referred to.
Hicks v Hicks (2016) 125 SASR 34; Riverland Fruit Cooperative Ltd (in liq) v 007 953 380 Pty Ltd [2008] SASC 258; Groves v Groves [2011] QSC 411, considered.

BORAL RESOURCES (SA) LTD v CIVIL MINING SOLUTIONS PTY LTD & ORS
[2018] SASC 151
Civil
DOYLE J (ex tempore):

This is an appeal from a decision of a Magistrate refusing the plaintiff permission to amend its statement of claim.
Background
The plaintiff’s claim relates to materials that it alleges that it supplied, on credit, to a customer on the standard form terms and conditions set out in a credit application and guarantee. The plaintiff claims that it provided materials to the value of $87,270.95 for which it has not been paid. It claims this sum (together with amounts for interest and costs) by way of debt or damages. It claims this sum from either the first defendant (Civil Mining Solutions Pty Ltd, or ‘CMS’) as customer, or the second or third defendants as guarantors.
More particularly, in its statement of claim, the plaintiff alleges that on 5 September 2013 CMS applied to the plaintiff to open a credit account, in relation to the supply of materials by the plaintiff to CMS, by submitting a completed application form. It further pleads that on or about the same date it agreed to open a credit account for CMS on the terms and conditions set out in the application; and the second and third defendants agreed to guarantee CMS’s payment obligations under that credit account.
The plaintiff then pleads that between November 2016 and February 2017 it supplied CMS with, and invoiced CMS for, materials to the value of $87,270.95. It pleads that in breach…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2018] SASC 151
Decision Date: 17 September 2018

CaseChat Overview and Summary

Boral Resources (SA) Ltd initiated proceedings against Civil Mining Solutions Pty Ltd (CMS), alleging that it had supplied materials on credit under a credit account agreement but had not been paid. The plaintiff sought to amend its statement of claim to include an alternative hypothesis that the second credit application form had been accepted, thereby making CMS liable under the guarantee that formed part of that agreement. The Magistrate refused permission to amend the statement of claim, and the plaintiff appealed this decision. The central legal issue was whether the plaintiff should be granted permission to amend its statement of claim to include the alternative hypothesis that the second credit application form had been accepted. The Court needed to determine whether the proposed amendments were adequate to identify the issues raised by the alternative case, provide the defendants with fair notice of the plaintiff's case, and avoid any impermissible inconsistency or ambiguity.

The Court considered that the function of pleadings is to define the issues in the case and ensure that the other party has fair notice of the case it is required to meet. It held that the alternative case sought to be pleaded was an entirely orthodox plea which arose out of the defendants' response to the plaintiff's initial claim, and was adequately pleaded to warrant permission to amend being granted. The Court emphasised the importance of not taking too strict or technical an approach to pleading disputes and noted that doing so tends to undermine the Courts' obligation to promote the just, expeditious and economical resolution of claims. The Court found that the interests of justice strongly favoured the plaintiff having permission to amend to plead its proposed alternative case.

The Court allowed the appeal, set aside the orders of the Magistrate, and granted the plaintiff permission to amend its statement of claim in the terms of the proposed amended statement of claim, but with the variation proposed during the course of the hearing of this appeal. The Court emphasised the importance of particularising the allegation of rejection of the second credit application insofar as it intended to rely upon any positive act of rejection. However, events in this respect had been overtaken by the plaintiff’s application during the hearing of the appeal to replace its proposed allegation of rejection of the second credit application with an allegation to the effect that the plaintiff did not ever communicate acceptance of the second credit application and continued to supply goods pursuant to invoices addressed to CMS without complaint, with the result that the materials were supplied under the first credit agreement. The Court considered this to be a useful clarification of the plaintiff’s proposed amendments and so proposed to give leave to amend in those terms.

Orders

Orders of the court

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Background

Background to the litigation

This is an appeal from a decision of a Magistrate refusing the plaintiff permission to amend its statement of claim.Background The plaintiff’s claim relates to materials that it alleges that it supplied, on credit, to a customer on the standard form terms and conditions set out in a credit application and guarantee. The plaintiff claims that it provided materials to the value of $87,270.95 for which it has not been paid. It claims this sum (together with amounts for interest and costs) by way of debt or damages. It claims this sum from either the first defendant (Civil Mining Solutions Pty Ltd, or ‘CMS’) as customer, or the second or third defendants as guarantors. More particularly, in its statement of claim, the plaintiff alleges that on 5 September 2013 CMS applied to the plaintiff to open a credit account, in relation to the supply of materials by the plaintiff to CMS, by submitting a completed application form. It further pleads that on or about the same date it agreed to open a credit account for CMS on the terms and conditions set out in the application; and the second and third defendants agreed to guarantee CMS’s payment obligations under that credit account. The plaintiff then pleads that between November 2016 and February 2017 it supplied CMS with, and invoiced CMS for, materials to the value of $87,270.95. It pleads that in breach of the credit account agreement (in the case of CMS), and in breach of the guarantee (in the case of the second and third defendants), the amounts owing in respect of these materials have not been paid. In their amended defence, the defendants admit the fact of the first credit account agreement and guarantee, but plead that they were subsequently “withdrawn” and “replaced” on or about 7 July 2015 by the provision of a second credit application executed by a related corporate entity by the name of Civil Mining Group Pty Ltd (CMG).[1] The defendants plead that the plaintiff acknowledged receipt of the second credit application and did not ever inform the defendants that it had been rejected. The defendants further plead that the invoices rendered after this date by the plaintiff were incorrectly addressed to CMS rather than CMG.[1] A company subsequently placed into liquidation. The defendants thus deny liability for the amounts claimed on the basis that the contractual arrangements relied upon by the plaintiff (that is, the credit account agreement with CMS, and the guarantees with the second and third defendants) were no longer in force at the time the goods in question were provided. The amended defence also pleads that the initial guarantee was in any event unenforceable on the grounds that, at the time it was executed, the second and third defendants had not received legal advice and were not aware of its terms and conditions (apparently on the basis that they were illegible on the copy they executed). There is also an unparticularised allegation of coercion and that the amounts in the relevant invoices were excessive, incorrect and did not take into account the part payment of some of the invoices rendered to CMS by CMG.

Evidence

Evidence Before The Court

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Decision

Reasons for decision

DOYLE J

In summary, while the plaintiff’s proposed amendments to introduce an alternative case could have been more carefully or precisely pleaded, I consider that they are adequate to identify the issues raised by that alternative case and to provide the defendants with fair notice of the plaintiff’s case in that regard. And I do not consider there to be any impermissible inconsistency or ambiguity in the hypothesis underpinning the proposed alternative case. In my view, the interests of justice strongly favour the plaintiff having permission to amend to plead its proposed alternative case.Conclusion For these reasons, I consider it appropriate to allow the appeal. I would have been inclined to make it a condition of the permission to amend that the plaintiff particularise its “rejection” of the second credit application insofar as it intended to rely upon any positive act of rejection (as opposed to a legal conclusion that it did not accept that that application in the sense necessary to give rise to a legally enforceable contract). However, events in this respect have been overtaken (or pre-empted) by the plaintiff’s application during the hearing of the appeal to replace its proposed allegation of rejection of the second credit application with an allegation to the effect that the plaintiff did not ever communicate acceptance of the second credit application and continued to supply goods pursuant to invoices addressed to CMS without complaint with the result that the materials were supplied under the first credit agreement. I consider this to be a useful clarification of the plaintiff’s proposed amendments and so propose to give leave to amend in those terms. I make the following orders:1. Appeal allowed.2. Orders of the Magistrate dated 22 June 2018 set aside.3. The plaintiff has permission to amend its statement of claim in the terms of the proposed amended statement of claim exhibited to the affidavit of Ms Georges dated 23 January 2018, but with the variation proposed during the course of the hearing of this appeal.

Ratio Decidendi

Legal Principle Established

Established by: DOYLE J

The second ground for refusing permission was that the proposed amendments sought to introduce an alternative claim based upon the hypothesis that the second credit application had been accepted, but did not plead any material facts upon which the allegation was based. This was said to be contrary to the reasoning of Bleby J in Riverland Fruit Cooperative Ltd (in liq) v 007 953 380 Pty Ltd.[3] The Magistrate explained:In my view the plaintiff has not pleaded any material facts upon which the Court might find that the second application was accepted by the plaintiff. If this is so then the consequence is, in accordance with the reasoning in Riverland the pleading would not be compliant with [the Rules] and would be liable to be struck out on that basis alone. Moreover, not only does the plaintiff rely on the amended defence at [6]-[8] to establish the material facts underpinning this alternative, the plaintiff appears to have misunderstood the nature of those paragraphs in the amended defence. Nowhere do the defendants plead that the second application was accepted by the plaintiff and so even if the plaintiff was able to rely on the material facts contained in the amended defence, the facts pleaded do not go to establishing the second application was accepted by the plaintiff. The material facts underpinning the plaintiff’s alternative argument would still not be established and would be liable to be struck out.[3] Riverland Fruit Cooperative Ltd (in liq) v 007 953 380 Pty Ltd [2008] SASC 258 at [27]-[28].Consideration In my view, when addressing pleading disputes such as the present one, it is important to not to take too strict or technical an approach. To do so not only tends to give pleadings a status and function they do not deserve, but also tends to undermine the Courts’ obligation to do what they can to promote the just, expeditious and economical resolution of claims. In the case of the Magistrates Court, this obligation is contained in rule 3 of the Magistrates Court (Civil) Rules. The function of pleadings is to define the issues in the case, and to ensure that the other party has fair notice of the case it is required to meet. Here, there is little doubt in my mind about the nature of the alternative case sought to be advanced by the plaintiff. Its primary case is that the agreement arising out of the first credit application remained in force at the relevant time; that there was no enforceable agreement arising out of the second credit application because it had “rejected” that second credit application. Its alternative case is that if there was an enforceable agreement arising out of the second credit application, then the second defendant is liable under the guarantee that formed part of that agreement. There may have been a basis for requiring that the plaintiff to particularise its allegation that the second credit application form was “rejected”. But even if that were so, I do not think that was a sufficient basis for refusing the amendments in their entirety, as opposed to, for example, making permission to amend conditional upon particularisation of the “rejection”. In my view, the alternative case sought to be pleaded was an entirely orthodox plea which arose out of the defendants’ response to the plaintiff’s initial claim, and was adequately pleaded to warrant permission to amend being granted.