CNH Capital Australia Pty Ltd v Sandgate Corporation Pty Ltd - [2006] WASC 78

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION: CNH CAPITAL AUSTRALIA PTY LTD -v- SANDGATE CORPORATION PTY LTD & ORS [2006] WASC 78

CORAM: MASTER SANDERSON

HEARD: 2 MAY 2006

DELIVERED : 10 MAY 2006

FILE NO/S: CIV 2644 of 2004

BETWEEN: CNH CAPITAL AUSTRALIA PTY LTD (ACN 069 132 396)
Plaintiff
AND
SANDGATE CORPORATION PTY LTD (ACN 079 140 613)
First Defendant
ARTHUR EDWARD BAKER
Second Defendant
ROLAND CHARLES BOCSO
Third Defendant

Catchwords:

Practice and procedure - Application for leave to amend statement of claim - Turns on own facts

Legislation:

Limitation Act 1935 (WA), s 38

Result:

Leave refused

Category: B

Representation:

Counsel:

Plaintiff:     Mr P S Bates
First Defendant             :     No appearance
Second Defendant         :     Mr B E S Lauri
Third Defendant           :     Ms J M Hill

Solicitors:

Plaintiff:     CBA Legal
First Defendant             :     No appearance
Second Defendant         :     Williamson & Co
Third Defendant           :     Deacons

Case(s) referred to in judgment(s):

Gould v Vaggelas (1984) 157 CLR 215
Morgan v Banning (1999) 20 WAR 474
Wardley Australia Ltd v State of Western Australia (1992) 175 CLR 514

Case(s) also cited:

Esanda Finance Corporation Ltd v Plessnig (1989) 166 CLR 131
O'Dea v Allstates Leasing System (WA) Pty Ltd (1983) 152 CLR 359

MASTER SANDERSON: This is the plaintiff's chamber summons seeking leave to re‑amend its statement of claim. A minute of re‑amended substituted writ and re‑amended statement of claim was filed 8 November 2005 (the "minute"). The heading on that minute indicates that it was filed pursuant to the order of Registrar Dixon made 19 April 2005. In fact, the order made by Registrar Dixon on that date required any minute to be filed by 17 May 2005. The reasons why the minute was not filed until 8 November 2005 are not presently of concern. However, it would appear that discussions had taken place between the solicitors for the parties with a view to agreeing to the form of the statement of claim without the necessity for the plaintiff to make an application.
When the matter came on for a status conference on 1 November 2005, it was apparent that agreement could not be reached and the learned Acting Principal Registrar ordered that the minute be filed. He also indicated to the plaintiff that it would be necessary to make an application for leave to amend in terms of the minute. That application was filed on 8 February 2006. The matter was mentioned in chambers on 1 March 2006 when programming orders were made by consent. Those orders anticipated the defendants filing their submissions by 3 March 2006 and the plaintiff filing responding submissions by 10 March 2006.
The parties provided unavailable dates. Largely because of a lack of coincidence between the respective available dates, the matter was not listed until 1 May 2006. The reasons why I have outlined the history of the matter will become apparent later in these reasons.
Turning to the minute, the document can be broken down into two separate and distinct parts. The first part comprises par 1 through to par 12 of the minute. These paragraphs concern four chattel lease agreements, all of which are pleaded to have commenced on 15 July 1999. It is only the pleading with respect to the fourth mentioned of these lease agreements which concerns the defendants. The goods the subject of this agreement were a Same Silver 90 Tractor with front end loader forks and rakes (the "tractor"). The pleading details the terms of the lease of the tractor, what are said to be the first defendant's defaults in relation to that lease leading to its termination and specifying the plaintiff's claim for damages pursuant to the terms of the lease. The second and third defendants are said to be liable as guarantors under the lease. As the lease is mentioned in the pleading, it is taken to be included in the pleading itself. A copy of the lease appears as an annexure to the plaintiff's outline of submissions filed 16 February 2006.
In the context of this application, the terms of the lease are of importance. The preamble to the lease is in the following terms:
"CASE CREDIT AUSTRALIA PTY LIMITED ('Case Credit'), of 31 – 67 Kurrajong Avenue, St Marys, New South Wales, OFFERS TO LEASE (the 'Offer') on the terms and conditions set out below, the goods described in Schedule 2 (the 'Goods') to be purchased by Case Credit (at the request of the Lessee) from the dealer named in Schedule 3 (the 'Dealer')."
Schedule 3 of the lease (appearing on page 9) names the dealer as Dominion Leasing & Finance Pty Ltd of 66 Briggs Street, Carlisle, WA.
On the face of it then, this is a simple straight‑forward lease agreement. The first defendant wished to acquire the tractor. Rather than purchase the tractor in its own right, it arranged for the plaintiff (who subsequent to entering into the lease changed its name) to acquire the tractor. The plaintiff was to acquire the tractor from the dealer. The first defendant would then have possession of the tractor which was to be owned by the plaintiff. The first defendant's obligations to the plaintiff while it had possession of and used the tractor were covered by the terms of the lease. All of this was a perfectly straight‑forward common commercial transaction. But there was a problem.
It is common ground between the parties that despite what the lease said, the tractor was never owned by the dealer. It is also common ground between the parties that the plaintiff believed the tractor was owned by the first defendant. So, by any measure, the lease does not represent the true position between the parties. There is further agreement that in fact, at all material times, the tractor was subject to a charge and owned by the National Australia Bank. The plaintiff says, and it may be accepted, that it was never aware that the National Australia Bank was the owner of the tractor.
The difficulty with the plaintiff's pleading in par 1 through to par 12 is that it proceeds on the basis that the lease was binding and effective. It entirely ignores the fact the plaintiff never owned the tractor. The second and third defendants say that as the lease was inoperative and ineffective, they cannot be liable on any guarantee related to the lease.
In answer to the second and third defendants' complaints, counsel for the plaintiff submitted that the question of the validity of the lease was a matter to be raised in the defence. It was said that the plaintiff had some form of title – the exact nature of which remained unexplained – that gave it rights to the tractor and meant the lease was enforceable. With respect, that submission was clearly wrong. On the uncontested facts, there was no lease agreement between the parties with respect to the tractor and any claim based on a purported agreement must fail.
There is an additional difficulty faced by the plaintiff. As I have indicated, none of the parties appear to have contemplated that the tractor was owned by the dealer. Yet, on the face of the contract, the parties proceeded on the basis that the dealer did own the tractor. At the very least it would have been necessary for the plaintiff to apply for rectification of the contract. There is no such plea found in the minute. But, in the context of this case, the failure to plead rectification is of no real consequence. A plea on the lease cannot succeed in any event.
So far as the third defendant is concerned, apart from the relatively modest amounts claimed against him in relation to the first three contracts, there is no basis upon which he can be liable to the plaintiff. With no valid lease in existence, there can be no valid guarantee. So, in large measure, that is the end of the case against the third defendant.
Paragraphs 13 to 32 of the minute plead a case against the second defendant in fraud and "negligence". Essentially, it is alleged that the second defendant made fraudulent misrepresentations to the plaintiff that the tractor was owned by the first defendant. Alternatively, it is said that these misrepresentations were negligent. The second defendant makes two complaints about the pleading.
First, it is said that the plaintiff pleads that it became aware of any fraud or negligent misstatement on 12 December 1999: see par 24 of the minute. That being so, it was said that any time for bringing the action expired on 11 November 2005. It was submitted that as these claims were not pleaded prior to that date, they are now statute barred and it is not open to the plaintiff to make such a plea. In response, the plaintiff submitted that the plea in relation to these matters had first been notified to the second defendant when the minute was filed and served on 8 November 2005. It was submitted that the operative date was 8 November 2005 and that no limitation defence could succeed. With respect, that formulation is at odds with the decision of the Full Court in Morgan v Banning (1999) 20 WAR 474 per Owen J at 476 and Wheeler J at 484 – 487. The amendment cannot override the effects of s 38 of the Limitation Act 1935 (WA) and can only operate from the date on which the cause of action was pleaded. There is nothing in the plea as it stands at present, or indeed as it stood at 12 November 1999, that could be said to raise a claim in fraud.
The High Court in Wardley Australia Ltd v State of Western Australia (1992) 175 CLR 514, at 533, warned against determining limitation questions in interlocutory proceedings "except in the clearest of cases". On the face of it, this is the clearest of cases.
Two other matters were raised by the second defendant. The first was the plea of estoppel found in par 29 and par 30 of the minute. Very little argument was directed to this aspect of the statement of claim. At present, I do not see how the plea could be maintained. If anything, the plea appears to be an answer to a claim by the first defendant that the lease was of no force and effect. To seek a declaration based upon the principles of estoppel is, in my view, misconceived. In its present form the pleading cannot stand.
Finally, the second defendant complained about the formulation of the damages claim. In essence, it was said that what is pleaded is a claim for expectation loss rather than reliance loss. Reference was made to the decision of the High Court in Gould v Vaggelas (1984) 157 CLR 215. The point is well made. The measure of damages pleaded is not the correct measure of damages in tort. That will require further consideration.
Based upon the above, it is difficult to see that the plaintiff can maintain any claim against the second and third defendants. If that is the case, it leaves the plaintiff the victim of what it alleges is an outrageous fraud on the part of the first and second defendants. For that reason, although I have doubts about whether or not a claim can be pleaded against the second defendant, I will allow the plaintiff to bring in a further minute of statement of claim. But that minute should not contain a claim based upon the existence of a valid lease agreement. In my view that claim is not open under any circumstances. It may be, however, that on a further examination of the facts the plaintiff is able to find some claim in equity which is not statute barred, or it may be able to frame the claim which can be maintained based on statute or common law. In my view, in the circumstances it is only fair that the plaintiff be given the opportunity to put such a case.
I will hear the parties as to the precise form of orders and as to costs.