Dorotea Pty Ltd v Vancleve Pty Ltd

[1987] FCA 476

,

CATCHWORDS

PLEADING - SURISDICTION - Appeal from a refusal by the primary

judge to allow an amendment to the Defence and Cross-Claim

seeking to incorporate a plea of the time limitation

prescribed by s.82(2) of the Trade Practices Act - amendment

sought at a late stage in the proceedings - primary judge

enphaslmed prejudice caused by delay In recommencing in the

Supreme Court if proposed amendment was ultimately successful

- HELD in exercising his discretion the primary judge erred in

not taking into account the accrued jurisdiction of the Court

to determine all of the matters in dispute between the parties

once the jurisdiction of the Court was properly attracted.

Trade Practices Act 1974 ss.52, 82(2) and 86.

philip Morris Incorporated v. Adam P. Brown Male Fashions Pty

(1981) 148 C.L.R. 457 at 474 applied;

Adam p, Brown Male Fashions Ptv Ltd v. Philip Morris

Dorated (1981) 148 C.L.R. 170 applied;

Barqal Prop rietarv Ltd v. Force (1983) 154 C.L.R. 261 applied;

m t e r and 0- v. Equ and Eus Pulp Harketins Board (Vict)

(1942) 66 C.L.R. 557 applied;

clauqh v. m (1974) 4 A.L.R. 615 referred to;

DcHehon v. a(1986) 69 A.L.R. 527 applied:

Dorotca Pty Ltd v. christos Doufas Nominees Ptv Ltd C19863

2 Qd R 91 referred to;

Brisbane Unit Development Corporation Ptv Ltd v. Robertson

E19833 2 Qd R 105 referred to;

Cropper v. smith (1884) 26 Ch. 700 referred to.

Queensland G200 of 1986

v. Y A N c L ~ PTY LTD (as trustee for

Northrop. Jackson and Gummow JJ.

Brinbane

15th April 1907

IN THE FEDERAL COURT OF AUSTRALIA	)
)
QUEENSLAND DISTRICT REGISTRY	) No. G200 of 1986
)

DIVISION GENERAL )

On Appeal from the Federal Court of Australla

BETWEEN: DOROTEA PTY LTD

Appellant

AND: VANCLEVE PTY LTD

(as trustee for

THE VANCLEVE UNIT TRUST)

Respondent

CORAM : NORTHROP, JACKSON AND GUMMOW JJ

DATE : 15th Aprll 1987

PLACE : Brlsbane

MINUTES OF 0 -

UPON THE APPELLANT UNDERTAKING TO THE COURT that It wlll not

apply to have the Court exerclse Its dlscretlon not to hear

and determlne the clalms In the accrued ~urlsdlctlon, and

undertaklng that It wlll not otherwlse challenge the

jurlsdlctlon of the Court to hear and determlne all matters In

issue in these proceedlngs,

THE COURT ORDERS THAT:

1. The appeal be allowed and the appellant be granted

leave to amend the amended Defence and Cross-Clalm In

the manner set out In Exhlblt "B" to the affldavlt of

Warwlck Rutledge Chesters flled In the Court on 23rd

October 1986.

2. The appellant pay the costs occasloned by such

amendment and any costs thrown away by the fact th t

the pleading of s.82(2) of the Trade Practices Act 1 s

made now rather than when the Defence	was origlnally
dellvered.

3 .

The appellant pay the costs of the of the appeal.

m: Settlement and entry of orders I s Order 36 of the Federal Court Rules.

FCDI'SAL COURT OF

.

IN THE FEDERAL COURT OF AUSTRALIA	) )
PUEENSLAND DISTRICT REGISTRY	) No. G200 of 1986
)

GENERAL DIVISION r )

On Appeal from the Federal Court of Australia

BETWEEN: DOROTFA PTY LTD

Appellant

AND: VANCLEVE PTY LTD (as trustee for

THE VANCLEVE UNIT TRUST)

Respondent

CORAM : NORTHROP, JACKSON AND GUMMOW JJ

DATE : 15th Aprll 1987

PLACE : Brlsbane

REASONS FOR JUDGMENT

The Court: On 12th September 1984 Vancleve Pty Ltd (the

respondent to the appeal but whlch we shall descrlbe here as

"the applicant") instituted proceedlngs in the Court seeking,

on the grounds set out in the Statement	of Clalm, the
following relief:-

"(a) A declaration that three contracts entered into

between the Applicant and the Respondent (the

appellant) dated the 11th day of August, 1981

were rescinded or made vold by the Applicant on

or about the 7th September, 1982;

(b)	Repayment by the Respondent (the appellant) to
the Applicant of deposit monies of EIGHTEEN

THOUSAND EIGHT HUNDRED DOLLARS ($18,800.00),

2 .

NINE THOUSAND EIGHT HUNDRD DOLLARS ( $ 9 , 8 0 0 . 0 0 )

AND FIFTEEN THOUSAND THREE HUNDRED DOLLARS

($15,300.00) respectively;

( c )	Alternatively, damages pursuant to the provisions of the Trade Practices Act 1974;
(d)	Further or other rellef pursuant to Sectlon 87

of the Trade Prac€ices Act 1974."

The amended Statement of Claim filed on 17th October

1984 contalns allegations that on 11th August 1981 the

applicant as purchaser entered into three contracts to purchase lots from Dorotea Pty Ltd ("the appellant") in a

bullding unlts plan, the bulldlng to be named "Boulevard

North". It alleges that In order to Induce the applicant to

enter Into the agreements, representatlons were made to I by

an offlcer of the appellant's real estate agent, orally and In

writlng, as to the features of Boulevard North, and that these

representatlons, whlch induced the appllcant to enLer Into the

contracts, were untrue. It 1 s further alleged that the

representatlons were made fraudulently, and were mlsleadlnq

and deceptlve or llkely to mlslead or decelve. The amended

Statement of Clalm goes on to allege that the appllcant

resclnded the contracts by the glvlng of notlce of rescission

and that the appellant has refused to refund the deposits.

The appellant cross-clams for damages for breach of the

contracts, claimlng losses on resale and other losses. The

appellant also has ~olned as cross-respondents, persons who

are said to have guaranteed the performance by the appllcant

of its obligations under the contracts.

,. 3 .

As is apparent from the resume which we ave given,

the ~urlsdlctlon of the Court whlch is invoked by the

proceedings is (a) the (exclusive) jurisdiction conferred by s.86 of the Trade Practices Act 1974 In respect of the claims under Part VI of that Act, and -(b) the (concurrent) accrued

jurisdiction of the Court in respect	of the claims under the
general law.

At the time when the proceedings were Instituted,

there was in being Actlon No. 5160 of 1982 In the Supreme

Court of Queensland between the same partles whlch had been

commenced by the appllcant as plalntlff on 15th October 1982.

Although the pleadlngs In those proceedlngs are not before us

it is not dlsputed that, wlth some differences of expresslon,

the 1ssues arlslng In those proceedlngs are now the issues

arlslng 13 the the accrued ]urlsd:ctlon.

After the instltutlon of the present proceedlngs the

appellant applled to the Court by notlce dated 2nd October

1986 seeklng orders that the actlon be struck out r stayed.

pendlng the dlsposal of the Supreme Court proceedlngs o r that

those proceedlngs be stayed pendlng the applicant glvlng an

undertaklng to discontinue those proceedings and pay the

appellant's costs.

On 19th October 1984 the appllcant gave the Court

undertaking to discontinue the proceedings in the Supreme

Court and to abide by any order which that Court made in

an

relation to costs of those proceedings. The Undertaking

4 .

having been given, Spender J. went on to give dlrections a to

the future conduct of the proceedings, the directions being

designed to have the matter ready for trlal in February 1985.

It may be noted in passing that the proceedings In the Supreme

Court were discontinued on 17th-December 1984 and the

applicant was ordered to pay the appellant's costs, whlch it

has done.

The appellant dellvered a Defence and Cross-clalm on

17th October 1984 and an amended verslon of that pleadlng on

13th October 1985. In nelther verslon was reliance placed on

s . 8 2 ( 2 ) of the Trade Practices Act which provides that:-

" ( 2 ) An action under sub-section (1) may he commenced

at any tlme wlthln 3 years after the date on whlch

the cause of actlon accrued."

(See also, sir.ce 18th Decemrjer 199i, s.P7(1CA))

By notlce dated 23rd Pctober 1986, the appellant

sought Qrders for leave to amend the amended Defence and

Cross-claim by addlng a paragraph 4A a s follows.-

" 4 A .

(a) Insofar as the appllcants rely upon s.82(1) of the Trade Practices Act, thelr cause of actlon thereunder accrued more than three years prlor

to the date of commencement of this action;

(b) Insofar as the appllcants rely upon s.87(1) or

8 7 ( 1 A ) of the Trade Practices Act, they are

precluded from so doing by the matters referred

to In subparagraph (a) hereof."

The hearing of the motlon took place before Spender

J. and on 19th November 1986 was refused. The appellant,

having obtained leave to appeal, now appeals from that decision.

5.

Various matters have been urged In support f the appeal

but it 1s necessary, in our view, to deal only wlth one, namely

the contention that his Honour did not take lnto account that,

whether or not the plea raised by the proposed paragraph 4A was

successful, the whole of the matter might yet have proceeded to

judgment in this Court rather than in the Supreme Court. We might

say that the appellant made it clear before the primary Judge and

before us that i f the amendment were granted, it would not seek to

have the Court exerclse its dlscretlon to refuse to proceed	wlth
the clalms in the accrued ~urisdictlon.

In order to understand what 1s comprehended by the

submlsslon, ~t 1s necessary to turn to hls Honour's reasons for

~udqment, whlch we shall now do.

In thgse reasons hls honour sald that were It not- for:-

" . . the clrcumstance of the Supreme Court	proceedlnqs, and the manner In whlch the matter wa5
dealt wlth early In Its llfe In the Federal Court,
there would be much to be sald for the vlew that the amendment should be allowed, notwlthstandlnq the very
late stage at whlch It 1 s brought".
The reference to "the manner ln whlch the matter wab

dealt wlth early in Its life in the Federal Court" appears to

be a reference to the giving of the undertaklnq to dlscontlnue

the Supreme Court action to which we have referred.

His Honour said that he accepted that the fact that

the amendment sought was to raise a plea of the limitation

period did not mean that the principles applicable to leave to

amend generally were not applicable and proceeded:-

"In this particular case, the question of llmitatlon

was said not to be adverted to by the respondent at

any time up until the recent past. In all

probability, this point would not have arisen if the

trial had occurred in 1985. Had it been referred to

in late 1984 and, indeed, if it had been pleaded when

the defence was delivered in November 1984, what the

applicant would then have done	1s a matter of some
speculation.

I am satisfied that, by not having had the

opportunity to consider what ought properly to be

done in the light of that pleading at that tlme, It

has suffered, or may very well have suffered

prejudice that cannot be compensated by costs. If

the applicant 1s to recommence In the Supreme Court,

I am not satisfied that there would not be some delay

between now and a time the matters in the Supreme

Court are heard. At least five years extra delay to

the appllcant will have been occasloned If It chooses

to re-commence in the Supreme Court. That length of

time, in my opinlon, is pregnant wlth prejudice,

although many of the dlfflcultles are Imponderable."

What appears to underlle hls Honour's reasons 1 s the

vlew that If the terms of s . 8 2 ( 2 ) had been pleaded when the

Defence and Cross-clalm was flrst dellvered, the appllcant

would then have been abie, If It chose, to seek the leave of

the Court to be released from the undertaklng It :?ad, glven and

that the actlon In the Supreme Court would not have been

discontlnued I n December 1984. The action In the Supreme

Court would then have proceeded to	rial and should have been
dlsposed of by now.

Whilst we accept that if the plea of s . 8 2 ( 2 ) had been

made in the Defence and Cross-Clalm filed in 1984 the

applicant might have applied for leave to be released from Its

undertaking we are far from satlsfled that such leave would	or
should have been granted.

7.

Upon the institutlon of the proceedings in the Court,

the Court acquired jurisdiction to deal with, and was the only

court having jurisdiction to deal with, the whole of the

matter being the controversy between the parties (Barqal

Proprietary Limited v. Force (1983) 154 C.L.R. 261 at 2 9 8 ) .

The Court does not lose jurisdictlon over the clalms in the

accrued jurisdictlon because the plea of a tlme llmltatlon may

mean that the applicant will fail on the issue whlch attracted

federal ~urlsdlctlon (Carter v. Eqq and Eqq Pulp Marketlnq

Board (Vict.) ( 1 9 4 2 ) 66 C.L.R. 557, Phlllp Morrls Incorporated

v. Adam P. Brown Male Fashlons Pty Ltd (1981) 148 C.L.R. 457

at 474, McMahon v. Smith ( 1 9 8 6 ) 6 9 A.L.R. 527 at 5 3 1 - 5 3 2 ) .

Nor does there seem any particular reason why an applicant

should be permltted to be released from such an undertaklnq

glven to avold a multipllclty of proceedlnqs merely because

when a Defence 1s served It appears that a plea has been made

which, If perslsted ln, may defeat the clalm whlch attractd

the Court’s ~urlsdlctlon. Further we do not thlnk that there

is any reason why, If the appellant 1 s now permltted to plead

s . 8 2 ( 2 ) , new proceedlngs In the Supreme Court should be

commenced. Thls Court, as we have sald, has ~urlsdlctlon to

determine all issues In the proceedlnqs.

We are conscious that the order made by hls Honour

dealt wlth a question of practlce and procedure but the

resolution of the issue is one of importance. It is of

importance because, in the manner in whlch the applicant’s

case is pleaded, it will be necessary for the applicant to

establish that the representations sued on were made

. 8 .

fraudulently if It cannot rely on 5.52 of the Trade Practices

m. That I s so because paragraphs SA and 5B of the Defence

and Cross-Claim plead as a defence to the claim a term of the

contracts whereby the applicant acknowledged that It had not

relied on any representations by the appellant or its agents

In entering Into the contract. Such a term, If decisions of

the Supreme Court such as Dorotea Ptv Ltd v. Christos Doufas

Nomlnees Ptv Ltd C19863 2 Qd. R. 91 and Brlsbane Unit

Development Corporation Pty Ltd v. Robertson C19833 2 Qd. R.

105 correctly state the law, 1 s effectlve to bar rellance on

innocent mlsrepresentatlon under the general law. The term is

not effectlve, of course, to bar reliance on s.52.

In our view the prlmary Judge has erred In not taklng

into account the fact that the Court has ~urlsdlctlon to, and

should, contlnue to deal wlth the matter, and we regard che

case as one where the effect of the order appealed from has

been to create in~ustlce in the sense used i n Adam P. Brown

Male Fashlons Pty Ltd v . Phllip Morrls Incorpor-te$ (1981) 148

C.L.R. 170 at 177. In these clrcumstances we would allow the

appeal and set aslde	hls Honour's declslon refuslng leave to
amend.

It I s then a matter f o r the Court to exerclse its own

discretion on the application. In our view It is clear that the case is one where there is no reason why the amendment

should not be allowed. As Bowen L.J. said in Cropper v. Smith

(1884) 26 Ch. D. 700 at 710 In a passage adopted by McTlernan

A.C.J., Menzies, Glbbs and Mason JJ. in Cloush v. (1974)

9.

4 A.L.R. 615 at 618 in relation to an application for leave to

amend to add a plea of a limitation statute:-

"The principle according to whlch thls power 1s to be

exercised was stated by Bowen LJ In Cropper v. Smlth ... :

'I... the object of courts is to decide the rights of the

parties, and not to punish them for mlstakes they make

in the conduct of their cases .... I know of no kind of

error or mistake which, if not fraudulent or intended to

overreach, the court ought not to correct, if it can be

done without injustice to the other party . . . . as soon

as it appears that the way in which a party has framed

his case will not lead to a decision of the real matter

in controversy, It is as much a matter of right on hls

part to have it corrected, if it can be done wlthout

injustice, as anything else In the case is a matter of

rlght . "

It 1 s equally clear, however, that there should be

some terms Imposed on the grant of leave to amend. One such

term, of course, should be that the appellant pay In any event

any costs occasloned by the amendment and any costs thrown

away by the fact that a tlme llmltatlon 1s pleaded now rather

than when the flrst Defence and Cross-Clalm was dellvered.

Since It is llkely that the applicant would be out of tlme to

lnstltute fresh proceedings In the Supreme Court after 11th

August thls year, a further requlrement should be the glvlnq

of an undertaklng that the appellant wlll not apply to the

Court to seek to have the Court exerclse Its dlscretlon not to

hear the clalms in the accrued jurlsdlctlon, and wlll not

otherwise seek to challenge the Court's jurisdlction.

In our opinion the appeal should be allowed, the

order of the primary judge set aside and in lieu thereof it be

ordered that upon the appellant undertaking to the Court that

It will not apply to have the Court exerclse its discretion

not to proceed to hear and determine the claims in the accrued

.

.*

. . 10.

~urlsdiction, and undertaking that It wlll not otherwlse

challenge the jurisdlction of the Court to hear and determine

all matters in issue in these proceedlngs. the appellant be

granted leave to amend the amended Defence and Cross-Claim In

the manner set out in Exhibit "B" to the affidavlt of Warwick

Rutledge Chesters filed in the Court on 23rd October 1986. We

would also order that the appellant pay the costs occasloned

by such amendment and any costs thrown away by the fact that

the pleadlng of the tlme llmitatlon of the Trade Practlces Act

is made now rather than when the Defence was originally

delivered.

The appellant should pay the costs of the proceedlngs

before the prlmary Judge, but the respondent should pay the

costs of the appeal.

I certlfy thls and the 9

precedlng pages are a true copy of

the Reasons for Judgment hereln	of
the Court.
Associate: flsl&.

Date : 15th April 1987.

Counsel for the Appellant:

Mr E. Lennan Q.C. with Mr C. Newton

Solicitors for the Appellant:

McDonald Balanda and

Chesters

Counsel for the Respondent:

Mr J. Griffin Q.C. with

Mr J. Sheahan

Solicitors for the Respondent:

Hawthorn Cuppaidge and

Badgery

Date of hearing:

13th April 1987