Caffey v LeattHayter [No 2]
[2013] WASC 287
•2 AUGUST 2013
CAFFEY -v- LEATTHAYTER [No 2] [2013] WASC 287
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2013] WASC 287 | |
| 02/08/2013 | |||
| Case No: | CIV:1258/2012 | 24 JULY 2013 | |
| Coram: | BEECH J | 24/07/13 | |
| 9 | Judgment Part: | 1 of 1 | |
| Result: | Application to amend allowed in part and disallowed in part | ||
| B | |||
| PDF Version |
| Parties: | ROSE ANGELA CAFFEY as trustee for THE CAFFEY FAMILY TRUST ROSE ANGELA CAFFEY JAMES DALE CAFFEY GEOFFREY RICHARD LEATTHAYTER JOSCELYN ROYSTON LEATTHAYTER SEASIDE CORPORATION PTY LTD |
Catchwords: | Practice and procedure Amendment of pleadings Application to amend defence close to trial Nature and extent of prejudice to each party Turns on own facts |
Legislation: | Nil |
Case References: | Aon Risk Services Australia Ltd v Australian National University [2009] HCA 27; (2009) 239 CLR 175 Burke v LFOT Pty Ltd [2002] HCA 17; (2002) 209 CLR 282 |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
- IN CHAMBERS
- First Plaintiff
ROSE ANGELA CAFFEY
JAMES DALE CAFFEY
Second Plaintiffs
AND
GEOFFREY RICHARD LEATTHAYTER
First-named First Defendant
JOSCELYN ROYSTON LEATTHAYTER
Second-named First Defendant
SEASIDE CORPORATION PTY LTD
Second Defendant
Catchwords:
Practice and procedure - Amendment of pleadings - Application to amend defence close to trial - Nature and extent of prejudice to each party - Turns on own facts
Legislation:
Nil
Result:
Application to amend allowed in part and disallowed in part
Category: B
Representation:
Counsel:
First Plaintiff: Mr G D Cobby
Second Plaintiffs: Mr G D Cobby
First-named First Defendant : Mr J C Yeldon
Second-named First Defendant: Mr C J Graham
Second Defendant: Mr J C Yeldon
Solicitors:
First Plaintiff: Henry Sklarz
Second Plaintiffs: Henry Sklarz
First-named First Defendant : Cullen Babington Hughes
Second-named First Defendant: Cornerstone Legal
Second Defendant: Cullen Babington Hughes
Case(s) referred to in judgment(s):
Aon Risk Services Australia Ltd v Australian National University [2009] HCA 27; (2009) 239 CLR 175
Burke v LFOT Pty Ltd [2002] HCA 17; (2002) 209 CLR 282
- BEECH J:
(These reasons were delivered orally and have been edited from the transcript).
The application
1 This action is listed for trial for 10 days commencing on 12 August. The first-named first defendant and the second defendant (amending defendants) have applied to amend their defences. In substance, the amendments add three pleas:
(1) that the plaintiffs were contributorily negligent in the manner in which they ran the business after they acquired it: pars 16A and 16B of the minutes;
(2) that the plaintiffs were contributorily negligent in their conduct in deciding to enter the sale agreement and the steps they took and did not take before doing so: pars 6A to 6D; and
(3) that the plaintiffs' accountant, Charles Ridolfo, is a concurrent wrongdoer and the plaintiffs' recoverable loss against these defendants should be reduced accordingly: pars 20 to 29.
2 The second-named first defendant in substance joined in the application today, indicating that she would wish to adopt similar pleas should leave be granted.
3 To provide some context, it is convenient to outline the nature of the plaintiffs' claim.
The plaintiffs' claim
4 The plaintiffs' claim in the action can be broadly summarised as follows. In essence, the claim is that the defendants engaged in misleading and deceptive conduct upon which the plaintiffs relied in entering into and performing an agreement under which the first plaintiff acquired a business from the second defendant.
5 The plaintiffs claim they entered into the agreement to purchase the business and took various other steps in reliance on misleading and deceptive conduct of the defendants arising, in broad summary, from an information memorandum provided to the plaintiffs by the defendants' agent and from statements made by Mr Leatt-Hayter, the first-named first defendant.
Procedural history
6 It is convenient to outline some of the history of these proceedings.
7 The sale agreement was entered into in August 2009. The business was sold on or about 30 October 2009.
8 This action was commenced by the plaintiffs in February 2012.
9 The sale agreement expressly contemplated a due diligence process before the first plaintiff, as purchaser, became unconditionally bound to acquire the business. The defendants pleaded the due diligence process in their defences of June 2012.
10 In July 2012, the plaintiffs discovered the due diligence report prepared by Charles Ridolfo. In this application, the relevant defendants propose to plead in the amendments the subject of this application that, in the report, Charles Ridolfo made certain implied representations, and those representations were misleading or deceptive.
11 In October 2012, programming orders were made in the action for witness statements to be provided by the end of January 2013 and the trial bundle to be completed by March 2013.
12 In or about November 2012, provisional trial dates were reserved from 17 June to 26 June 2013.
13 In December 2012, by consent, extensions were given to the dates for compliance with the orders of October 2012.
14 In December 2012 and January 2013, the plaintiffs filed and served their witness statements.
15 In February 2013, the defendants applied for further and better discovery. That led to an issue emerging about the pleadings, in particular about the defendants' defences. In February and March 2013, the defendants further amended their defences to plead, relevantly, that any loss suffered by the plaintiffs was due to the way in which the plaintiffs had conducted the business after they acquired it.
16 The plaintiffs applied to strike out those amendments on the ground that they would cause delay, and thus prejudice, in that they would prevent the trial proceeding in June 2013. That application was ultimately resolved by consent on terms that the action was listed for trial in August 2013.
17 Although the action had not been listed for trial in June, dates had been reserved and it is, in my view, a reasonable conclusion that, but for the defendants' amendments in February and March 2013, the action would have been listed for trial on the June dates that had been reserved.
Amendments: legal principles
18 The principles relevant to an application to amend are not in doubt in this application. There is no right to amend to introduce an arguable case subject only to payment of the other side's costs. The discretion to permit or disallow an amendment is exercised by reference to all of the circumstances of the case, the interests of the parties, the interests of other litigants and the public interest. In Aon Risk Services Australia Ltd v Australian National University [2009] HCA 27; (2009) 239 CLR 175, the High Court explained the principles.
19 By way of summary:
(a) the effect of an amendment on the court and on other litigants is relevant;
(b) there is no right to amend to introduce an arguable case and it is wrong to say that only in extreme cases would a party be shut out from litigating an arguable case;
(c) justice requires that parties have a proper opportunity to plead their case but limits may be placed on repleading when delay and cost are taken into account;
(d) a just resolution does not mean that a party will always be permitted to raise any arguable case at any point in the proceedings on payment of costs, even indemnity costs;
(e) the inevitable strains of litigation must be taken into account in weighing the adverse consequences of delay. This applies to natural persons and to other litigants;
(f) the nature and importance of the amendment to the party amending must be taken into account;
(g) attention must be given to the extent of the delay and the costs associated with it, the prejudice which might reasonably be assumed to follow from it and any prejudice which is shown;
(h) the point in the litigation relative to the trial may be an important consideration;
(i) where a discretion is sought to be exercised in favour of a party, an explanation will be called for;
(j) the point can be reached where a party has had a sufficient opportunity to put its case.
Explanation for the delay
20 In this case, the amending defendants rely on an affidavit of their solicitor, Ms Rebecca Conder, to explain the delay. In essence, the reason for the delay in pleading what is now proposed is that new counsel was appointed and, when he considered the case, new matters were sought to be introduced. Evidently, the points the subject of these amendments had not occurred previously to the amending defendants' solicitor or previous counsel. Otherwise, the amending defendants have had ample opportunity to plead that Charles Ridolfo was a concurrent wrongdoer.
21 I turn to the question of prejudice to the plaintiffs.
Prejudice to the plaintiffs
22 In my view, the prejudice to the plaintiffs in relation to the proportionate liability defence is of a different character to any prejudice in relation to the contributory negligence claims. Counsel for the plaintiffs accepted, properly in my view, that the contributory negligence claims do not raise any substantive new factual material that would lead to any necessity for the adjournment of the trial.
23 The plaintiffs say that if the amendment is permitted, they would plead fraud in the reply, invoking s 82(1B)(c)(ii) of the Trade Practices Act 1974 (Cth). That section provides that there is no reduction for contributory negligence where the loss is fraudulently caused. The amending defendants accept that the plaintiffs will be permitted to make that plea and that that would not necessitate an adjournment of the trial. In the circumstances, I am satisfied that the plea does not add so substantially to the matters in issue as to cause any substantial prejudice to the plaintiffs, and I would allow the amendment in those respects.
24 The position in relation to prejudice is, in my view, different in relation to the concurrent wrongdoer defence. If the amendment to introduce the concurrent wrongdoer plea is permitted, the plaintiffs will face a choice of either letting the trial go on without joining Charles Ridolfo, or joining Charles Ridolfo as a further defendant.
25 If the plaintiffs were to allow the trial to go on without Charles Ridolfo, in my view, the plaintiffs would be prejudiced. They would then need to bring separate proceedings against Charles Ridolfo. In those proceedings, the findings in this action would not be binding against Charles Ridolfo. In any case, in my view, it is very unlikely that the plaintiffs would choose this course, given that the extent of the alleged responsibility of Charles Ridolfo is unclear, and could be up to 90%, with the amending defendants saying that they are liable only for 10%. That 10% takes into account the alleged contributory negligence of the plaintiffs themselves, as well as the responsibility of Charles Ridolfo. Counsel for the amending defendants was not in a position to identify how much of that 90% was said to be the responsibility of Charles Ridolfo.
26 The amending defendants accept, and it is in my view clear, that were the plaintiffs now to join Charles Ridolfo that would unquestionably necessitate the adjournment of the trial.
27 It is convenient now to deal with some submissions made by the second-named first defendant. She submits that it was open to the plaintiffs to add Charles Ridolfo as a defendant at an early stage, but the plaintiffs chose not to do so. As far as it goes, that may be accepted. However, in my view, once a defendant alleges that Charles Ridolfo is legally responsible for a part of the loss, an indeterminate portion up to 90%, then the question of joinder of Charles Ridolfo arises in a fundamentally different framework.
28 The second-named first defendant further submits that if the court finds that Charles Ridolfo is in fact a concurrent wrongdoer, no prejudice has been suffered by the plaintiffs. Rather, the plaintiffs will be free to subsequently pursue Charles Ridolfo, should they choose to do so. I do not accept that submission.
29 In my view, the plaintiffs would be substantially prejudiced in not having had the liability of Charles Ridolfo determined between the plaintiffs and Charles Ridolfo and between the plaintiffs and the defendants in the one proceeding. That gives rise to prejudice in more than one respect. There is the need for the expense and other costs of further proceedings. Further, there is the prospect of different findings.
30 The second-named first defendant also submits that the effect of the amendment is that the amending defendants have the onus of proving the liability of Charles Ridolfo. That means, the submission continues, that no prejudice would attach to other parties because 'it would not be their responsibility to adduce any further evidence'. I reject those submissions. In my view, it would be fundamentally unjust to the plaintiffs to proceed in the way that these submissions invite. That is because the plaintiffs have a right to lead evidence, including potentially expert evidence, in answer to the contention of existing defendants that some other party, namely, Charles Ridolfo, is legally responsible for some proportion of the plaintiffs' loss. To proceed as invited by the second-named first defendant would severely undermine that right.
31 Consequently, in determining this application, I proceed on the footing that the plaintiffs would be prejudiced if they did not join Charles Ridolfo, and that if they join Charles Ridolfo, the trial would inevitably need to be adjourned. The second of those propositions was, as I have said, accepted, rightly in my opinion, by counsel for the amending defendants.
32 The prejudice to the plaintiffs from any necessary adjournment must be viewed against the background of the history of these proceedings, as I have outlined. Provisional trial dates for June 2013 have already been displaced as a result of amendments made by all of the defendants earlier this year.
33 Further, the first plaintiff's affidavit in opposition to the application reveals the nature and extent of the prejudice that the plaintiffs would suffer from any adjournment of the trial. The first plaintiff is suffering considerable stress and anxiety, and is on anti-depressants in consequence in part, at least, of these proceedings.
34 Further, the proceedings give rise to financial hardship to the plaintiffs who have been required to increase their overdraft significantly in order to fund the action and are unable to continue or complete renovations to their family home. Given the nature and extent of the prejudice to the plaintiffs, costs would not compensate them for the prejudice they would suffer from an adjournment of the trial.
35 For the sake of completeness, I mention this point, although it was not firmly pressed by the defendants. There may have been a suggestion that because Mr Ridolfo is the first plaintiff's brother it could be inferred that the plaintiffs, in any case, will not join Charles Ridolfo. In circumstances where there is, at the least, a likelihood of liability insurance on the part of Charles Ridolfo, I am not satisfied that it would be safe to proceed on such a basis.
36 I turn to the question of prejudice to the defendants.
Prejudice to the defendants
37 The amending defendants submit that they will be prejudiced if the application to amend is refused, in that their liability might be found to be for a greater amount and to a greater extent than would be the case if their plea of Charles Ridolfo as a concurrent wrongdoer was permitted to stand. I accept that that is the consequence or, at least, likely consequence, of refusal of the application. That, in itself, must be weighed carefully in the exercise of the discretion.
38 It may perhaps be that the amending defendants could bring subsequent proceedings for contribution against Charles Ridolfo. However, there is, at the least, room for considerable doubt as to whether the liability would be coordinate, in the sense necessary to give rise to a right to contribution in equity. See, for example, Burke v LFOT Pty Ltd [2002] HCA 17; (2002) 209 CLR 282. The plaintiffs accept correctly, in my view, that if leave to amend is refused, there may very well be no subsequent claim available to the defendants against Charles Ridolfo.
39 In weighing the extent of that prejudice to the defendants, it should be noticed that the defendants can put their case that the plaintiffs' conduct in relation to the due diligence process makes the plaintiffs partly responsible for any loss suffered by the plaintiffs, and justifies reduction in the damages.
The disposition of the application
40 In the end, there seems to me to be considerations pointing in opposing directions in the exercise of this discretion. The matter seems to me to be one that is reasonably finely balanced.
41 I have weighed carefully the prejudice to the defendants that would result from a refusal of the application to amend. Nevertheless, on balance, I consider that justice requires that the application be refused. In my view, the defendants have had ample opportunity to make the plea that they now wish to make, if so advised. To permit the amendment at this very late stage would cause very substantial prejudice to the plaintiffs, arising from the consequential need to adjourn the trial. For those reasons, I refuse the application to amend the defences by adding pars 20 to 29 of the minutes.
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