Grundy, Arthur Henry and Anor v Lewis, John Bertram and Ors Headship Pty Ltd and Anor v Grundy, Arthur Henry and Ors

[1998] FCA 1212

IN THE FEDERAL COURT OF AUSTRALIA
QUEENSLAND DISTRICT REGISTRY	QG 168 of 1993

BETWEEN: 

ARTHUR HENRY GRUNDY and RITA NELL GRUNDY
APPLICANTS

AND:

AND BETWEEN

JOHN BERTRAM LEWIS
FIRST RESPONDENT

HEADSHIP PTY LTD ACN 010 645 708
SECOND RESPONDENT

CHAMBERG PTY LTD
THIRD RESPONDENT

GRAEME ARTHUR SCHMIDT and PETER THOMAS MAKER
FOURTH RESPONDENTS

BY ORIGINAL ACTION

HEADSHIP PTY LTD ACN 010 645 708
FIRST CROSS-CLAIMANT

CHAMBERG PTY LTD
SECOND CROSS-CLAIMANT

ARTHUR HENRY GRUNDY and RITA NELL GRUNDY
FIRST CROSS-RESPONDENTS

EARLE GRUNDY
SECOND CROSS-RESPONDENT

JUDGE(S):

COOPER J

DATE OF ORDER:

21/09/98

WHERE MADE:

BRISBANE

THE COURT ORDERS THAT:

1. The application be dismissed.

Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA
QUEENSLAND DISTRICT REGISTRY	QG 168 of 1993

BETWEEN: 

ARTHUR HENRY GRUNDY and RITA NELL GRUNDY
APPLICANTS

AND: 

AND BETWEEN:

JOHN BERTRAM LEWIS
FIRST RESPONDENT

HEADSHIP PTY LTD ACN 010 645 708
SECOND RESPONDENT

CHAMBERG PTY LTD
THIRD RESPONDENT

GRAEME ARTHUR SCHMIDT and PETER THOMAS MAKER
FOURTH RESPONDENTS

BY ORIGINAL ACTION

HEADSHIP PTY LTD ACN 010 645 708
FIRST CROSS-CLAIMANT

CHAMBERG PTY LTD
SECOND CROSS-CLAIMANT

ARTHUR HENRY GRUNDY and RITA NELL GRUNDY
FIRST CROSS-RESPONDENTS

EARLE GRUNDY
SECOND CROSS-RESPONDENT

JUDGE(S):	COOPER J
DATE:	21/09/98
PLACE:	BRISBANE

REASONS FOR JUDGMENT

The fourth respondents seek leave to further amend their defence.  They wish to allege that the applicants on 11 July 1994 compromised their claim by agreeing some but not all of the valuation issues arising in the proceedings.  The application is opposed.

On 20 May 1994 Drummond J directed the valuers for the parties to confer on a without prejudice basis.  This they did on 11 July 1994.  Thereafter, the solicitors for the fourth respondents prepared a document entitled “Points of Agreement” and sought the agreement of the other parties that the documents represented what had occurred at the meeting.  The valuers were unable to agree the value of the piggery or the value of the property and sawmill at Kumbarilla although the documents record a purported agreement of certain elements of the piggery valuation and the highest use upon which the Kumbarilla property ought to be valued.

Drummond J subsequently ordered that a further conference be held between the valuers to attempt to resolve the valuation issues.  That conference was to be held on 22 August 1994.  In the result the valuation issues were never finally resolved between the valuers.

The applicants have never executed the points of agreement.  They have never expressly agreed to compromise their claim in any binding way in the manner alleged by the fourth respondents or at all.  The correspondence puts forward the points of agreement as a record of what was agreed at the meeting.  The only acknowledgment from the applicants which might be construed as agreement with that assertion is a post script to a letter from the applicants’ solicitors dated 14 August 1994 to the fourth respondents’ solicitors.  That post script records:

“We have now been instructed to consent to the heads of agreement.”

The points of agreement document was not discussed between the parties after September 1994.  It was next mentioned by the solicitor for the fourth respondents in conversation with counsel for the applicants on 24 October 1997.  As a result of this conversation the fourth respondents’ solicitors wrote to the plaintiffs’ solicitors in the following terms:

“Turning to the matter generally, we discussed with Mr Logan at court the points of agreement document prepared by us following the meeting of valuers in 1994.  There has been no formal acknowledgment by the parties that the document we prepared reflects the matters agreed to by the valuers following their conference.  In the circumstances, we enclose a copy of the points of agreement document and enquire as to whether your client agrees that it reflects the matters agreed to by the valuers at their conference.  If this is the case, we would be grateful if you could initial the document and return it to us.

In the event that your client does not agree that the document accurately reflects those matters agreed to by the valuers, we would be grateful if you could indicate to us those areas of disagreement.”

On 21 November 1997 a copy of the points of agreement was forwarded with the comment:

“We look forward to hearing from you with respect to those matters with which your expert valuer disagrees.”

On 30 January 1998 the fourth respondents’ solicitors wrote a letter which in part said:

“There is a dispute between the parties as to the market value of both the timbered property and the piggery at the relevant times (‘the valuation issues’).  Without attempting to create an exhaustive list, this dispute extends to factual matters relating to:

1.the state of repair of the piggery at the date of the alleged sale;

2.the general condition of the piggery at the date of the alleged sale;

3.the state of health of the pigs at the date of the alleged sale;

4.the profitability of the piggery at the date of the alleged sale;

5.the general condition of the timbered property including the amount of millable timber on it at the date of the transfer of the mortgage;

6.the general condition of the timbered property following the alleged default by the mortgagee.

With the above matters in mind, our clients are of the view that an exchange of statements which address the valuation issues will assist the parties to finalise their valuation evidence and also clarify the areas of dispute with respect to the valuation issues.  Accordingly, our client proposes that statements be exchanged which address the issues referred to above as well as those specifically referred to in the pleadings as follows:

1.The applicants’ amended statement of claim - filed on 11 October 1994:

paragraphs 4(b), 11, 12 and 16.

2.The first to third respondents’ amended defence and cross claim - filed on 4 April 1996:

Paragraphs 5, 11, 12, 13, 21 and 26.”

On 2 February 1998 the solicitors for the first, second and third respondents wrote to the applicants’ solicitors a letter which included:

“We are instructed that our clients support the appointment of a Court expert in relation to the issues concerning:

1.The value of the timbered property and the mortgage transferred to the Applicants;

2.The value of the Westbrook Piggery; and

3.The state of health of the herd at the time of the sale of the Westbrook Piggery.”

On 3 February 1998 the solicitors for the applicants wrote to the fourth respondents’ solicitors a letter which included:

“Given the ‘valuation issues’ which have arisen we believe it is necessary to have an exchange of statements at an early time in respect of the evidence in chief of the parties as to the alleged condition and state of repair of the piggery and the timbered property at each of the relevant times.  We suggest that if this were done the valuers already engaged by each of the parties could prepare their valuations assuming each position at each relevant time so there could be a substantially higher degree of certainty that each valuer was making each relevant assessment on the same basis.”

On 4 February 1998 a directions hearing was held at which one of the issues for determination was the provision of witness statements prior to the trial.  Counsel for the fourth respondents handed up written submissions which said in part:

“1.      A major part of the trial will be taken up with evidence, both factual and expert opinion, bearing upon the condition and value of:

(a)the ‘piggery land’;

(b)the ‘piggery business’;

(c)the ‘timbered property’;

(d)the ‘sawmill’;

as each of those terms is defined in the amended statement of claim filed on 11 October 1994.

3.In respect of each of those valuation issues, there are substantial factual disputes between the parties as to the true state of the thing to be valued.  Take the ‘piggery business’ by way of example.  There are disputes as to the state of health of the pigs, the profitability of the piggery, the condition of the premises used in the piggery (including what facilities had been built to accommodate the pigs), etc.  A similar range of factual disputes exist in respect of each of the other things to be valued.”

There is nothing in the material to suggest that it was any part of the fourth respondents’ defence that the applicants had contractually compromised part of their claim against both the first to third respondents and themselves by agreement to certain matters on 11 July 1994.

As at 4 February 1998 the valuation issues and the need for witness statements in respect of them were treated as being at large and in issue between the parties.

The question of any binding agreement was first raised after counsel for the applicants opened his clients’ case.  Objection was taken that evidence inconsistent with the points of agreement was inadmissible because of the agreement.  There is nothing to suggest that the applicants’ solicitors or counsel had been previously advised that such an objection would be taken.  After considering their position the fourth respondents advised that they would seek leave to amend their defence to raise the issue.  That amendment was formulated and filed on 8 September 1998.  The application was argued on 17 September 1998, the twelfth day of the trial.

The fourth respondents submit that there has not been shown by the applicants any prejudice which cannot be remedied by an order for the costs thrown away by the amendment.  In those circumstances it is submitted that the amendment should be allowed:  Queensland v JL Holdings Pty Ltd (1997) 189 CLR 146 at 155.

In Ketterman v Hansel Properties Ltd [1987] AC 189, Lord Griffiths said:

“justice cannot always be measured in terms of money and in my view a judge is entitled to weigh in the balance the strain the litigation imposes on litigants, particularly if they are personal litigants rather than business corporations, the anxieties occasioned by facing new issues, the raising of false hopes …”

Their Honours in the High Court did not disapprove of this statement.  Rather they pointed out that the case before them did not involve personal strain on personal litigants.  It was, as their Honours pointed out, a dispute of a commercial nature between a developer and the government.

The present case is a substantial one between personal litigants; it involves on the applicants’ part a claim to recover a substantial part of their life’s work as reflected in the loss of their farm asset.  The applicants are senior citizens; they are now retired pensioners.  They are engaged in litigation which was set down for 20 sitting days and which counsel for the fourth respondents indicates may require a further 20 sitting days to complete without taking into account any further delay or time necessary to litigate the issues raised by the proposed amendments.

I am satisfied from observing the applicants in the witness box that the litigation to date is taking a strain on them.  I am not persuaded that they can afford a 20 day trial let alone a 40 day trial even without having to incur the further costs and expense of responding to the proposed amendment.

The case has not been prepared on the basis of the proposed amendment.  I am advised that the agreement is denied and that issues of authority and estoppel will arise if it is alleged that the applicants were by their valuer or solicitor contractually bound to a partial compromise.

These proceedings were instituted in 1993.  There has been ample time since September 1994 to amend the defence if justice required that the fourth respondents be allowed to raise this arguable defence.  I have looked at the issues sought to be raised.  I have real doubts that attempts directed by the Court to resolve differences between expert witnesses, who do not in the result agree the values of the properties in question, amount to a compromise by agreement of such elements of the valuation or valuation process as the valuers may agree in without prejudice discussions in an attempt to agree values.  Further, the dollar figures involved are likely to be overwhelmed by the costs thrown away by the amendment and the need for further valuations or different valuations to those presently done.

The applicants had a reasonable expectation that this trial would proceed to a conclusion on the present pleadings, including the fourth respondents’ defence.  If the fourth respondent wished to raise the matter, then they should have done so not later than 4 February 1998.

In my view, there is nothing in the decision of JL Holdings which would require me to grant the application.  I do not refuse the application to punish the fourth respondents for delay.  In my view, the balance is heavily in favour of refusing the application because it would be unjust to the applicants to further delay the proceeding in order to allow the fourth respondents to raise substantial issues which do not amount to a complete defence to the applicants’ claims against them.  It leaves in issue part of the calculation of the value of the two properties.  There is no evidence that the fourth respondents have prepared on other than the basis shown in the pleadings.  I am sure that the valuation evidence which they will call will be in accordance with the points of agreement.

For the reasons expressed above, the application to further amend the fourth respondents’ defence by the addition of a proposed paragraph 14A is refused.

I certify that this and the preceding six (6) pages are a true copy of the Reasons for Judgment herein of the Honourable Justice Cooper.

Associate:

Dated:  21 September 1998

Counsel for the Applicants:	Mr J A Logan
Solicitor for the Applicant:	Flehr & Associates
Counsel for the Fourth Respondents:	Mr B D O’Donnell QC
Solicitor for the Respondent:	Clayton Utz
Date of Hearing:	17 September 1998
Date of Judgment:	21 September 1998