Harris v Western Australian Exim Corporation

HARRY WALTER HARRIS, RONALD RAYMOND ROWE, LIMTHONO PTY LIMITED, LIMETOWN PTY
LIMITED, VARAYER PTY LIMITED and GOGO STATION PTY LIMITED v. ESTERN AUSTRALIAN
EXIM CORPORATION
No. WAG76 of 1992
FED No. 1086/94
Number of pages - 17
Practice and Procedure
(1994) 129 ALR 387 (1994) ATPR 41-412

COURT

IN THE FEDERAL COURT OF AUSTRALIA
WESTERN AUSTRALIA DISTRICT REGISTRY
GENERAL DIVISION
HILL J

CATCHWORDS

Practice and Procedure - power of court to permit amendment to plead a statute barred cause of action - whether power under O.13 Federal Court Rules 1977 (Cth) or whether legislation expressly amending section of limitation required - whether limitation matter of procedure or substantive law - whether power to amend be exercised.

Practice and Procedure - interlocutory injunction sought to restrain respondent exercising power of sale under mortgage - whether arguable case to be tried - whether balance of convenience supported maintenance of status quo.

Practice and Procedure - Rule in Weldon v Neal - amendment of statement of claim to plead cause of action otherwise statute barred under State law - whether court lacked power to permit amendment - whether O.13 r.2 of Federal Court Rules conferred power - whether express legislation amending limitations period required - whether limitation law procedural or substantive.

Federal Court of Australia Act 1976 (Cth): s.59(2B).
Federal Court Rules 1977 (Cth): O.13 rr.2, 2(3).
Fair Trading Act 1987 (WA): s.79.

Weldon v. Neal (1887) 19 QBD 394; discussed.
Wardley Australia Limited v. State of Western Australia (1992) 175 CLR 514; discussed.
Australian Iron and Steel Limited v. Hoogland (1961-62) 108 CLR 471; followed.
State of Western Australia v. Wardley Australia Limited (1991) 30 FCR 245; discussed.
Australia and New Zealand Banking Group Ltd v Larcos (1987) 13 NSW 286; discussed.

HEARING

PERTH, 31 October - 1 November 1994
#DATE 3:11:1994
#ADD 15:5:1995

Counsel and Solicitors RL LeMiere with PF Fletcher
for Applicant: instructed by Solomon Brothers

Counsel and Solicitors WS Martin with SR Boyle
for Respondent: instructed by Clayton Utz

ORDER

THE COURT ORDERS THAT:
1. Leave be granted for an appropriate form of statement of claim to

be filed and served to take into account as well the other pleading matters which were resolved during the course of the hearing and are not within these reasons.

Application for strike out dismissed.

THE COURT DIRECTS THAT:

The application for interlocutory injunction come back before Hill

J at a date to be nominated when form of the injunction can be discussed.

Application for interlocutory injunction be stood over until 16

November 1994 at 12.30 pm Sydney time for telephone directions.

The motion for discovery be stood over to 3 May 1995.

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

JUDGE1

HILL J Before the Court are four motions; one brought by the respondent to proceedings Western Australian Exim Corporation, ("Exim") and three brought by the applicants Mr HW Harris, Mr RR Rowe, Limothono Pty Limited, Limetown Pty Limited, Varayer Pty Limited and Gogo Station Pty Limited ("the applicants").

In logical order these are: a motion by the applicants for leave to file an amended application and statement of claim; a motion brought by the respondent (by way of a strike out application) that the proceedings be dismissed; a motion brought by the applicants seeking an interlocutory injunction restraining Exim from exercising its power of sale under mortgages given to it over a pastoral lease, stock and other assets at Gogo Station in the Kimberley area of Western Australia to secure the repayment of $4.5 million vendor finance in respect of the purchase by the applicants of Gogo Station and assets pertaining thereto; and a motion by the applicants for further discovery.
The motion for leave to file and serve an amended statement of claim was opposed on two principal bases. The first raised technical pleading matters which have now been resolved and I need say nothing in these reasons about those matters. The substantial issue is whether the applicants should be permitted to amend their pleadings to raise, for the first time, a claim against the respondents based upon a breach of s.10 of the Fair Trading Act 1987 (WA) ("the Fair Trading Act"). That claim is based, subject to two matters, upon the same factual matters as the existing claim brought which relies upon what are alleged to be breaches on the part of Exim of s.52 of the Trade Practices Act 1974 (Cth) ("the Trade Practices Act").
The possible need to rely upon the State legislation comes about because in its strike out application Exim alleges that it is the Crown in the right of the State of Western Australia and thus outside of the purview of the Trade Practices Act. The parties are in agreement that, if the application be permitted to proceed against Exim under the Fair Trading Act, an act to which Exim is admittedly subject, there will be no point in my deciding the question whether Exim is the Crown in the right of the State. There are, however, two factual matters which were not pleaded in the original statement of claim to which reference will later be made.
On any view of the matter, if proceedings were now to be commenced for relief based upon breaches by Exim of the Fair Trading Act, such proceedings would, as a consequence of s.79(2) of that Act, be statute barred as some five years have now lapsed since, it is alleged at least, that loss was first suffered by the applicants, or some of them, arising out of breaches alleged to have been committed by Exim.
Prima facie the Court would seem to have power to permit the amendment. Order 13 r.2 sub-rr.(1) to (7) of the Federal Court Rules provide:

"2 (1) Subject to the following provisions of this rule, the Court may, at any stage of any proceeding, on application by any party or of its own motion, order that any document in the proceeding be amended, or that any party have leave to amend any document in the proceeding, in either case in such manner as the Court thinks fit.

(2) All necessary amendments shall be made for the purpose of determining the real questions raised by or otherwise depending on the proceeding, or of correcting any defect or error in any proceeding, or of avoiding multiplicity of proceedings.

(3) Where an application to the Court for leave to make the amendment mentioned in subrules (4),

(5), (6) or (7) is made after any relevant period of limitation current at the date of commencement of the proceeding has expired, the Court may, nevertheless, grant such leave in the circumstances mentioned in that subrule if it thinks it is just to do so.

(4) Where there has been a mistake in the name or identity of a party, an amendment to correct the name of the party may be made notwithstanding that the effect of the amendment is to substitute another person as a party.

(5) Where an order to correct a mistake in the name of a party has the effect of substituting another person as a party, the proceeding shall be taken to have commenced with respect to that person on the day the proceeding commenced.

(6) An amendment to alter the capacity in which a party sues may be made if the new capacity is one which that party had at the date of the commencement of the proceeding or has since acquired.

(7) An amendment may be made notwithstanding that the effect of the amendment will be to add or substitute a new claim for relief or another foundation in law for a claim for relief if the new claim for relief or foundation in law for that claim arises out of the same facts or substantially the same facts as those already pleaded to support existing claims for relief by the party applying for leave to make the amendment."

Those rules, and particularly O.13 r.2(3), are specifically authorised by s.59(2B) of the Federal Court of Australia Act 1976 (Cth) ("the Federal Court Act").
Senior counsel submits, however, that O.13 r.2(3) does not empower the Court to allow a pleading amendment which would permit the applicants to raise, for the first time in the proceedings, a claim for relief under the Fair Trading Act which, if commenced in proceedings today, would be statute barred. The submission is made notwithstanding that both ss.59(2B) and O.13 r.2(3) were obviously added and amended to overcome the rule in Weldon v Neal (1887) 19 QBD 394 consequent upon the decision of the High Court in Wardley Australia Limited v State of Western Australia (1992) 175 CLR 514.
The effect of the submission, if accepted, is that these amendments fail to achieve their purpose. Shortly put, the submission is that the amendments are at least ineffective in the case of proceedings based upon alleged breach of s.10 of the Fair Trading Act, because s.79 of that Act has not been amended by them. If there had been an attempt on the part of the Commonwealth Parliament to amend s.79, then no doubt a question of inconsistency could have arisen under s.109 of The Constitution. No such question was raised by counsel for Exim.
Sub-sections 79(1) and (2) of the Fair Trading Act, provide as follows:

"(1) A person who suffers loss or damage by conduct of another person that was done in contravention of a provision of Part II (s.11 excepted), Part III, Part V or Part VI, may recover the amount of the loss or damage by action against that other person or against any person involved in the contravention.

(2) An action under subsection (1) may be commenced at any time within 3 years after the date on which the cause of action accrued."

The submission is based largely upon comments made by Toohey J with whose judgment Deane J agreed in Wardley. Before setting out these comments it is necessary to retrace the history of the issue.
The starting point is the decision of the Queen's Bench division in Weldon v Neal. In that case the plaintiff had claimed originally for slander, been non-suited, sought a new trial and additionally to amend the statement of claim to set up a fresh claim against the defendant based upon assault, false imprisonment and other causes of action which, at the time of the proposed amendment, were barred by the Statute of Limitations (The Limitation Act (1623) 21 Jac 1, c 16) although not barred at the date of the writ. It was held that the amendments should not be allowed because, in the words of Lord Esher, (at 395):

"... it would be allowing the plaintiff to take advantage of her former writ to defeat the statute and taking away an existing right from the defendant, a proceeding which, as a general rule, would be, in my opinion, improper and unjust. Under very peculiar circumstances the Court might perhaps havepower to allow such an amendment, but certainly as a general rule it will not do so."

At the time Weldon v Neal was decided, the Statute of Limitations provided relevantly that (in s.3):

" all actions ... upon the case (inter alia) shall be commenced and sued within the time of limitation hereafter expressed ... within 6 years next after the cause of such actions or suit, and not after". (Limitation Act of 1623 21 Jac 1 C 16).

It will be noted that in Weldon v Neal it was not suggested that the amendment, if allowed, would have been futile or ineffective. The Court, indeed, assumed necessarily that if the amendment were made it would have had the effect of stripping the defendant of the limitation defence. Rather, the Court was of the view that to remove the defence would be unjust and that the ordinary power of the Court to admit amendments to pleadings should not be used in an unjust way. The question was not one of power but of the exercise of power: cf Hall v Meyrick (1957) 2 QB 455 at 481.
In the United Kingdom the somewhat belated reaction to Weldon v Neal taken more than 75 years later was an amendment to the rules of the High Court to similar effect to those in O.13 r.2(3) of the present Federal Court Rules (see Rules of the Supreme Court 1965 O.20 r.5(2)), such amendment being authorised by s.99(1) of the Supreme Court of Judicature (Consolidation) Act 1925 (UK): see now s.59(2B) of the Federal Court Act.
In Rodriguez v RJ Parker (male) (1967) 1 QB 116 it was argued, inter alia, that the provisions of RSC O.20 r.5 were ultra vires. That argument was rejected on the basis that English law regarded the Law of Limitations as a matter of procedure; the Statutes of Limitations were procedural not substantive. Thus, O.20 r.5 was a rule for regulating and prescribing the procedure and practice to be followed in the High Court in a matter in which the High Court had jurisdiction. A similar approach was taken by the Court of Appeal in Mitchell v Harris Engineering Company Ltd (1967) 2 QB 703.
Russell LJ, with whose reasons Davis LJ agreed, at 720 in that case accepted, as must be the case here, that rules of court, at least on their own, could not alter the period of time laid down in a statute within which an action must be brought. But that was not what the rule did. At the heart of these decisions lies the principle expressed by Denning MR in Mitchell that once a writ is amended the writ speaks from the date of the amendment so that if there were a defective writ in existence before the expiration of the limitation period, which is amended to include the cause of action otherwise statute barred, the defect is cured and thus the action is brought within the time; cf Hill v Luton Corporation (1951) 2 KB 387 and Pontin v Wood (1962) 1 QB 594 cited by Denning MR at 718. Most state Supreme Courts have adopted rules similar to RSC O.20 r.5(2); cf Pt.20 r.4 of the New South Wales Supreme Court Rules (1970) and O.21 r.5 of the Supreme Court of Western Australia Rules. It has also been accepted in state law that any amendment to a pleading will take effect from the date of the original pleading subject to special order and that amendments of the kind which I have discussed above operated to abrogate the rule in Weldon v Neal; see, for example, McGee v Yeomans (1977) 1 NSWLR 273 and Proctor v Jetway Aviation Pty Ltd (1984) 1 NSWLR 166.
In this Court the rules of court permitted in wide terms amendments to pleadings generally but took no specific account of the Weldon v Neal problem. An issue thus arose as to whether the rule in Weldon v Neal continued to apply in this Court. Jenkinson J in Stohl Aviation v Electrum Finance Pty Ltd (1984) 5 FCR 187 assumed, although without deciding, that the rule was to be observed. Toohey J in Metropolitan Oils (Pty) Ltd v Beringer (1987) 71 ALR 327 at 330 suggested that the broad language of this Court's rules might have displaced the rule in Weldon v Neal but that as a judge sitting at first instance he should apply it.
That too was the approach which I adopted in Zoneff v Elcom Credit Union Ltd (1990) 94 ALR 445 at 465. On appeal in that case the Full Court of this Court expressed the view that some flexibility was required so that there was no absolute rule but that in any event it would not have been appropriate on the facts of Zoneff to have permitted the pleading to be amended. Other cases to have considered the question in this Court prior to Wardley are summarised in the judgment of Beazley J in Mahfoud v Minister for Immigration, Local Government and Ethnic Affairs (1993) 43 FCR 217 at 220.
In Wardley the question arose whether an amendment should be made to a statement of claim, otherwise based upon a breach of s.52 of the Trade Practices Act, to plead additional misrepresentations which induced the State of Western Australia, it was said, to give an indemnity. At first instance, French J struck out the amendment on the ground that it pleaded a cause of action outside the time limit prescribed by s.82(2)(i). There were a number of issues; the first was whether the cause of action in fact arose outside the time limitation period. This being a factual issue the High Court was of the view that it should not be decided in interlocutory proceedings but should await the trial. The second issue, which only became relevant if otherwise the time limited by the Trade Practices Act had run, was whether the amendment could be permitted, having regard to the terms of the then rule.
The majority of the High Court, Mason CJ, Dawson, Gaudron and McHugh JJ, expressed the view that there was no occasion to discuss the power of the Court to permit amendment. Their Honours added, by way of comment, that an examination of the concept of "matter" in Ch.III of The Constitution, as reflected in s.86 of the Trade Practices Act, would not be of significant assistance in the resolution of the Weldon v Neal issue, a comment directed to a view which had been expressed by the Full Court of this Court in deciding that the then rules sufficed to permit an amendment to the pleading.
Brennan J, likewise, found it unnecessary to consider whether the then rules left any room for the operation of the Weldon v Neal principle. Toohey J, with whose reasons on this point Deane J agreed, did address what his Honour referred to as the question of "power" of this Court to amend the statement of claim. His Honour (at 559-560) summarised the reasons of the Full Federal Court and indicated that the Court had been in error in relation to the application of the rules to s.82(2). In so doing his Honour appears to have concentrated largely on the relevance of s.86(1), determining the jurisdiction of this Court by reference to "any matter arising under this Act". His Honour said of this Court's decision (at 561-562):

"But the reasoning blurs notions of jurisdiction and power; importantly, it fails to accord due weight to a limitation provision expressed in the Act itself. 'Jurisdiction', it has been said means, 'the authority which a court has to decide matters that are litigated before it or to take cognisance of matters presented in a formal way for its decision'. In the exercise of its jurisdiction, a court has powers expressly or impliedly conferred by the legislation governing it and 'such powers as are incidental and necessary to the exercise of the jurisdiction or the powers so conferred'. Once the Federal Court is seized of a matter under the Act, its powers in respect of that matter are measured, not only by the Act itself but also by the Federal Court of Australia Act 1976

(Cth) and by whatever is incidental and necessary to the exercise of that jurisdiction and to the exercise of any powers conferred by legislation. But what is 'incidental and necessary' cannot override a clear statutory prohibition such as appears in s.82(2) of the Act.

When the Federal Court is faced with an application to amend a statement of claim by introducing allegations that, though they may relate to a time after the relevant limitation period has expired, do no more than expand the cause of action already pleaded, there is no difficulty in treating O.13 r.2 as wide enough to permit such an amendment. But when, as here, the proposed amendment introduces an admittedly new cause of action, the position is quite different. Section 82(2) presents a statutory barrier to any new cause of action; to this barrier, reference to express, implied or incidental powers provides no answer. Even though it is inappropriate to argue by analogy from decisions on other statutes, it is apparent that the legislature, in enacting s.82(2), chose the language used in those statutes. I agree with Hill J when he said in Magman International ((1991) 32 FCR 1 at 22) 'Reference to s.86 of the Act, and the conferral upon this court of jurisdiction to hear any 'matter' arising under Div.1 or 1A of Pt.V of the Act, tell us nothing which assists the interpretation of s.82(2).'

And I would go further and say that those considerations tell us nothing which assists the interpretation of O.13 r.2. Section 82(2) strikes only at a cause of action under s.82(1), namely, action to recover loss or damage suffered by conduct done in contravention of Part IV or V of the Act. As the appellants argued, a 'matter' may support several causes of action, federal and non-federal. Section 82(2) operates only to bar an action under s.82(1). The appellants argued further that the Wardley Sunday Soundness Representation was not part of the 'matter' of which the Federal Court became seized when proceedings were commenced. That 'matter', it was said, related to a substratum of facts concerning only the Wardley Saturday Representations. Any debate as to the 'matter' before the Federal Court is a diversion from the issues truly raised by the question of the Court's powers to amend the statement of claim. 'Matter' is relevant to jurisdiction. It bears upon the extent of the Court's jurisdiction when faced with several causes of action, some federal and some non-federal. But the 'matter' is not relevant to the operation of s.82(2) of the Act. 'Matter' may serve to confer jurisdiction upon the Federal Court but jurisdiction brings with it no mandate to ignore a clear statutory prohibition on the bringing of an action after a period of years."

The submission of the respondent, based upon these comments, is that absent provisions contained in the Fair Trading Act or a statute amending that Act, the reasoning of Toohey J applies for, it is submitted, the Federal Court Rules even if supported by amendment of the Federal Court Act cannot override a clear statutory prohibition and the incidental and necessary power would be of no avail.
Although the submission at times suggested that the question may turn upon the inability of the Court to "overrule" a State statute, it was conceded that the same result would follow and for the same reasons if the question in Wardley were now to arise after the rules of the Court authorised by the amendment to the Federal Court Act had been amended to provide specifically for power to make such an amendment.
I do not think that the comments of Toohey J support the submission. First, the power of the Court in respect to a matter of which it is seized is, as Toohey J observed, measured not only by the conferral of jurisdiction but by the Federal Court Act and the Rules authorised thereby. These powers are now specific and formulated so as to make it perfectly clear that the Court does have power.
If his Honour is to be taken as saying that Parliament, in order to confer power upon the Court to make rules dealing specifically with pleading amendments to add causes of action otherwise statute barred, had to pass legislation which expressly, or as a matter of construction, amended the statute imposing the limitation period, then there are two answers. First, if the limitation be one which is properly to be characterised as a matter of procedure then, with respect, there would be no need to amend the statute imposing the limitation period to empower the Court to make an amendment. Second, if the limitation were one which barred not merely the remedy but also the right such that it was properly to be construed as one of substantive law, then the specific authorisation by Parliament in the Federal Court Act could be seen as operating to amend all statutes imposing such limitations, state or federal, to the extent necessary for amendments of the kind which the rules of the Court dealt with. The second view would give rise to a possible inconsistency argument under s.109 of The Constitution but, as I have already said, counsel for Exim expressly disclaimed reliance on the constitutional issue.
Of the two possible answers I think the former is the correct one. No submission was actually made to the effect that the limitation in s.79(2) of the Fair Trading Act was other than a matter relating to procedure. As Windeyer J in Australian Iron and Steel Limited v Hoogland (1961-62) 108 CLR 471 observed, statutory provisions imposing time limits on actions take various forms and have different purposes. His Honour said (at 488):

"It may be that there is a distinction between Statutes of Limitation, properly so called, which operate to prevent the enforcement of rights of action independently existing, and limitation provisions annexed by a statute to a right newly created by it. In the latter case the limitation does not bar an existing cause of action. It imposes a condition which is of the essence of a new right. The distinction was adverted to in The Crown v McNeil (1922) 31 CLR 76 at 96, 100; and in Maxwell v Murphy (1957) 96 CLR 261; and see Gregory v Torquay Corporation

(1911) 2 KB 556, at 559 affirmed (1912) 1 KB

442. It seems that under the common law system of pleading, when a limitation is annexed by a particular statute to a right it creates, the plaintiff should allege in his declaration that the action was brought within time. On the other hand it is for the defendant to plead the Statute of Limitations as a defence to an action on a common law cause of action, as if he does not it is assumed that he intends to waive it: Chapple v Durstan (1830) 1 C and J 1 at 9 (148 ER 1131 at 1314).

However, when issue is joined on a plea of the statute, the burden of proving that the action is within time is on the plaintiff: see cases referred to by Dixon J, as he then was, in Cohan v Cohan (1929) 42 CLR 91 at 97. And, even when a time limit is imposed by the statute that creates a new cause of action or right, it may be so expressed that it is regarded as having a purely procedural character, as a condition of the remedy rather than as an element in the right; and in such cases it can, it seems, be waived, either expressly or in some cases by estoppel."

On the one hand, the remedy is created by s.79 in sub-sec.(1) in absolute terms, such that sub-sec.(2) may be seen to be merely procedural. The contrary argument would be that sub-sec.(2), by providing that an action under sub-sec.(1) may be commenced at any time within 3 years after the date on which the cause of action accrued, necessarily required that no action could be brought thereafter and that the new right conferred by the sub-section was conferred by reference to the remedy in sub-sec.(2) which was limited in terms of time: cf Maxwell v Murphy.
The Full Court of this Court in Wardley, reported as State of Western Australia v Wardley Australia Limited (1991) 30 FCR 245, was of the view that the limitation in s.82(2) of the Trade Practices Act, which is in precisely the same language as s.79(2) of the Fair Trading Act, was procedural rather than substantive. Thus the Court, comprising Spender, Gummow and Lee JJ, said (at 259):

"In our view, in stating that an action under subs (1) may be commenced at any time within the three year time limit specified in s.82(2), that latter provision is to be regarded as having a procedural character. That is to say, s.82(2) is a condition of the remedy rather than an element in the right and a prerequisite to jurisdiction which cannot be waived. It follows that it is for the defendant to assert non-compliance, rather than for a plaintiff to assert compliance with s.82(2) as an element of the cause of action."

Nothing of the judgment of the full High Court in Wardley casts doubt on this proposition. Another way of looking at the matter is to say that all s.79(2) requires is that the action under s.79(1) be commenced within three years of the cause of action accruing. An action has, in the present circumstances, been commenced. True, that action was based on another cause of action but an amendment to the pleading operates, as I have said, retrospectively to the date of the original pleading: cf additionally Australia and New Zealand Banking Group Ltd v Larcos (1987) 13 NSWLR 286 at 289 per Rogers J and Baldry v Jackson (1976) 2 NSWLR 415 at 419.
Thus, s.79(2) has been complied with and the right conferred by sub-sec.(1) has not been destroyed.
Further support for the view I take is to be found in the judgment of Rogers J in Larcos (above). In that case the question arose whether the Supreme Court of New South Wales had power to amend, pursuant to the Supreme Court Rules (1970) Pt.20 r.4, a pleading to add a count under the Trade Practices Act alleging damages for breach of s.52 after the three year period had expired.
No reliance could be placed on any statutory authorisation of the rules because, clearly, the State of New South Wales could not purport to amend or override an Act of the Commonwealth Parliament. His Honour held that the Court, however, did have power to permit the amendment to the pleading. In so holding his Honour said (at 295):

"To find the true solution, it is necessary to go back to first principles. The cross-claim if amended is to be treated as having been in that form all along. If so treated, the proceedings have been commenced in time. The Court has always had the power to grant the relevant amendment. The rule in Weldon v Neal as to how the discretion in granting the relevant amendment should be exercised was formulated by the judges. That judge made rule directing the withholding of amendments is no longer to be treated as governing the exercise of discretion. In other words, whatever the practical effect may be, flowing from the accepted consequences of amending a pleading, Pt.20 r.4, did no more than bring about a change of practice. The subject matter of the rule was the exercise of discretion in granting amendments. It did not seek to, as indeed it could not, alter Commonwealth legislation providing for limitations of actions."

That decision, with which, with respect, I agree, was given before Wardley was decided in the High Court. It proceeded on the basis, as can be seen from the above quotation, that the matter was one of procedure rather than substance.
The consequence is that I would hold that this Court has power to make the amendment proposed. In my view, no injustice arises to the respondent in the present circumstances. Despite the considerable lapse of time between the commencement of the action and now, little appears to have been achieved. In essence, I am satisfied that the factual matters relied upon under the Fair Trading Act are identical, subject to the two matters to which I have already adverted that are raised for the first time in the proposed pleadings. The true purpose of the amendment is to eliminate the difficulty that the respondent may not really be amenable to suit under the Trade Practices Act.
It is true that two additional groups of representations are also sought to be relied upon in the amended proceeding, namely, a representation which goes to cattle numbers and certain oral representations which are said to have been made.
As to the former, the facts upon which the allegations are based are said to have emerged only late in the proceedings. In any event, from the affidavit material which I have seen there is little which is new that can be said to arise that would be of prejudice to Exim. As to the oral representations alleged to have been made, these arise for decision substantively as well by way of a reply to a defence of the respondent and, as such, add little to the overall factual dispute between the parties.
In my view it is desirable, so as to do justice to the parties, that the statement be amended. I would accordingly grant leave for an appropriate form of statement of claim to be filed to take into account, as well, the other pleading matters which were resolved during the course of the hearing and are not within these reasons.
I turn next to deal with the strike out application. First, it was said that Exim is the Crown in the right of the State is not amenable to suit under the Trade Practices Act: cf Bradken Consolidated Limited v Broken Hill Proprietary Company Limited (1978-79) 145 CLR 107. However, it emerged that the respondent had never sought, in its defence filed almost two years ago, to deny liability on the basis that it was not amenable to suit, nor has any discovery been given of any factual material going to the point, notwithstanding that it was conceded that the issue would depend in part upon factual matters relating to the activities of Exim.
In those circumstances I indicated my refusal to deal with this part of the application. In any event, the parties are agreed that, if I were to permit amendment to the statement of claim, the strike out application becomes academic, save as to one issue, namely a question whether the proceedings are in any event statute barred.
This question turns upon a submission that the cause of action had to have accrued, that is to say loss had to have been suffered by the applicants as at the date when the contract with Exim was entered into. According to the statement of claim this contract was entered into on 26 June 1989. However, the respondents assert that there was an earlier and identical agreement executed between the parties on 9 June 1989, that being a date outside the three year limitation period. A copy of this agreement is before the Court in an affidavit sworn to by the Managing Director of Exim. Whether it be correct that the loss had to have been incurred at the date of the contract for at least some of the applicants, need not be gone into here. Issues of fact are involved and the High Court has made it abundantly clear that it would not be appropriate to deal with such a matter on a motion to strike out: see Wardley. For this reason I would dismiss the application for strike out.
I turn then to deal with the application for interlocutory relief. There is no dispute between the parties as to the relevant principles to be applied. The applicant must show that there is an arguable issue to be tried and that the balance of convenience favours the grant of interlocutory relief. Although the Court will commence with the existence of the arguable issue before proceeding to the balance of convenience, the two issues are to some extent interdependent. The more the balance of convenience favours an injunction, the less significance may be given to the strength of the arguable case. Conversely, the weaker the applicant's case may be, the more significant it will be for the applicant to show that the balance of convenience favours the grant of injunctive relief.
The present is a case where almost every matter of fact is in issue between the parties and in the comments which follow as to the facts I make, of course, no factual findings. I have not seen the witnesses, affidavits in form, often inadmissible for the purposes of a final hearing, have been read and there has been no testing of the evidence.
Suffice it to say that, whether or not it was on 9 June 1989 or 26 June 1989, the applicants entered into a contract to purchase Gogo Station. An agreement to purchase was entered into. That agreement was to purchase a pastoral lease, plant, improvements and all stock on the premises for an overall purchase price of $12.5 million, apportioned in the contract as follows:

"(a) pastoral lease and fixed improvements $1,515,000;

(b) cattle $10,450,381;

(c) plant and equipment $466,619;

(d) new improvement materials $18,000; and

(e) horse plant $50,000."

Rainmist Pty Limited was to purchase the lease; Mr HW Harris 2000 old steers; Mr Rowe, Limthono Pty Limited, Limetown Pty Limited and Varayer Pty Limited, in stated shares, the balance of cattle, horse plant, plant and equipment and new improvement materials. However, all of the applicants were jointly and severally liable to the purchase price. Clause 7.1(e) of that contract contained a representation in the following terms:

"to the best of the Vendor's knowledge, information and belief there are not less than 35,000 Cattle situate on the Pastoral lease on the Adjustment Date.

The contract guaranteed there to be not less than 33,000 head excluding 989 branded and unmarked calves. Clause 8.2 provided for compensation to the purchaser at the rate of $290 per head if there were a shortfall. According to Mr HW Harris, whose evidence is, in various respects, corroborated by Mr BM Harris and Mr NF Harris, the Harris brothers had been, most of their working lives, engaged in farming and breeding cattle although not in Western Australia. Mr HW Harris saw an advertisement for Gogo Station, responded to it and in due course received an advertising brochure which stated:

"Gogo is being sold fully stocked. There are 35,000 to 36,000 head of grown cattle on the station, including about 17,500 breeding stock and about 14,000 steers 2 years and older, plus this season's calves ... The station also carries about 100 well-bred working horses and 70 broodmares."

Mr Harris received, at or about the same time, a video the sound track of which, I am told, substantially reproduced what was printed in the brochure. To this point there is no controversy between the parties.
Mr Harris then says that he formed the view from the brochure and the video that Gogo Station had a carrying capacity of 35,000 to 36,000 head. He interested his brothers in the proposition and they flew to Fitzroy Crossing for an inspection of Gogo Station in April 1989. There is considerable dispute as to what was said and done at this inspection which involved as well a Mr Crosse, an employee of the agents responsible for negotiating the sale of Gogo Station, and a Mr Coulthard, then an employee of the respondent, a manager of Gogo Station, and later an employee of the applicants.
Mr Harris says that he made known his lack of knowledge of the Western Australian agricultural system and the role of the Pastoral Board and that there was discussion about a particular paddock that had been destocked but was said to be going to be allowed to be restocked after the next inspection by the appropriate officer. He says that he was not shown numbers of areas of the station that are said to have been land degradated. This degradation later resulted in the property, it is said, being required to be destocked down to 14,600 head in total.
There were later negotiations in May 1989 including a conversation with Mr Crosse in which it is said that further representations were made which were, it is said, relied upon as to the number of stock and carrying capacity which Mr Crosse is said to have said was 35,000. These alleged representations are vital to the applicants' case, particularly on the issue of reliance, because on 23 May 1989 Mr Harris sent a fax to Mr Coulthard which referred to soil degradation and, inter alia, said that the prospective purchasers estimated a carrying capacity of 25,000 head and recognised that approximately 10,000 male stock were being run on the station as part of Exim's TB programme.

Mr Harris says that the facsimile upon which Exim in its defence would clearly rely heavily, was sent:

"... partly with a view to establishing a negotiating position and partly to reflect the fact that he and his brothers had some reservations about the advertised carrying capacity."

He says that, in subsequent conversations Mr Coulthard made representations which reassured him. Among these was a statement, denied by Mr Coulthard, that

"This is the Western Australian government you're dealing with. They couldn't afford to advertise a property to have a carrying capacity of 35,000 if the carrying capacity was only 25,000."

There was a subsequent visit or visits by Mr Harris and his brothers to the Agricultural Department, following which on 24 May 1989 an offer was submitted initially of $10 million and later increased to $12.5 million, with a deposit of $8 million and the balance over 5 years at 6% interest, and finally, on 30 May 1989, the $12.5 million with a deposit of $8 million and the balance over 5 years at 10% interest. This latter offer was ultimately accepted and incorporated in the contract ultimately entered into.
I do not propose to canvass what is said in affidavits filed on behalf of various witnesses for Exim, suffice it to say that most of the allegations made by the applicant are disputed and different versions of conversations and events are proferred.
It is the applicants' case that they were induced by the representations in the brochure and video and by the oral representations to which reference has been made, to enter into the contract and associated mortgages and that they suffered loss in that the carrying capacity was over-stated, cattle numbers were down from those represented and there was considerable land degradation which required destocking.
The parties in the proceedings, in the form in which the applicants propose to amend them, are at issue on these matters. The amount of $4.5 million vendor finance fell due for payment this year and interest was paid, as I understand it, to the date that amount fell due. Exim proposes to cross-claim in these proceedings for the amount due to it and proposes, unless restrained, to enter into possession of its security and exercise its power of sale.
The applicants for their part, in addition to damages which they say were occasioned to them by the alleged breaches of s.52 of the Trade Practices Act or s.10(1) of the Fair Trading Act, apply for orders pursuant to s.87 of the Trade Practices Act or s.77 of the Fair Trading Act, varying the contract by reducing the purchase price to reflect the true value of the property and varying the security documents in terms consistent therewith. There are also claims for damages in negligence and of breach of contract, to which reference need not be made.
Exim defends the proceedings for interlocutory injunctive relief against it on a number of grounds. It argues first that the proceedings are statute-barred, in that the relevant contract was entered into on 9 June 1989 outside the three year limitation period. As I have already said, I do not think that it is appropriate at this stage for that matter to be determined, having regard to factual issues which need to be resolved. Particularly, it may be relevant to know whether the agreement of 26 June 1989 operated as a discharge of the agreement of 9 June.
In any event, the present case leaves open the possibility that the loss may not have been suffered, at least so far as the securities are concerned, at the date they were entered into. More importantly, the limitation period on actions for damages is not specifically relevant to claims for relief for alteration of the security documents and contract under s.87 of the Trade Practices Act or s.77 of the Fair Trading Act, as the case may be.
Next, it is submitted that the applicants' claim might adequately be compensated for in damages. This is to some extent true, for example, the contract itself deals specifically with stock numbers and the evidence on this question is, in any event, somewhat equivocal.
There are, however, a number of answers to this general submission. First, Exim is in liquidation, its only substantial asset is its claim for the principal under the present proceedings and its only liability, substantially, the present claim. Second, there is clearly an arguable issue and, as is conceded, the affidavits filed by the applicants and those filed by the respondent are in conflict. There are clearly arguable issues of fact that must await the trial. I should say, incidentally, I reject the submission that was made, I assume not seriously, that I should prefer the affidavit evidence of the witnesses for Exim to the affidavit evidence of the applicants.
What is more significant in this case is that the balance of convenience clearly supports the maintenance of the status quo pending the hearing. This is so because the very subject matter of the proceedings, so far as at least the proceedings relate to varying the security documents, would, if no injunction were granted, disappear, for the reason that the security itself would have been realised. This is a very powerful consideration, as the decision of the Full Court of this Court in Trade Practices Commission v Santos Limited (1992) 38 FCR 382 shows. In addition, there is no real prejudice to Exim, as it has, on any view of the matter, abundant security. Conversely, if it realised the security and distributed the proceeds to the Government, the applicants would be left to unravel what had happened.
An undertaking was consequently proffered by counsel for Exim to hold the proceeds of sale pending the hearing. While overcoming the problem of the applicants' need to unravel liquidation distributions if successful, the undertaking itself merely demonstrates the lack of prejudice to Exim in the grant of interlocutory relief.
Finally, it was submitted on behalf of Exim that the applicant should pay into court moneys on the basis of Inglis v Commonwealth Trading Bank of Australia (1971-72) 126 CLR 161. The cases under the Trade Practices Act in this Court make it clear that the rule, as enunciated in the High Court, that a mortgagor seeking to restrain the exercise by a mortgagee of rights contained in the mortgage which, prima facie, the mortgagee is entitled to exercise, should bring into Court the principal of that mortgage, is not inflexible and that, depending upon the circumstances, the Court can mould an order so as to do justice between the parties. This is particularly so where the security itself is under attack. It seems to me that, to do justice between the parties in such a way as will preserve the rights of both parties until trial and given the amount of security which Exim holds in relation to its claim for the moneys owing to it, it would be appropriate to make injunctive relief conditional upon the applicants bringing up to date arrears of interest, if any, and continuing to pay interest at the times specified in the mortgage, treating that mortgage as not yet having expired.
On the giving of such an undertaking, which has already been foreshadowed, and the usual undertakings as to damages, I would grant interlocutory relief pending further order restraining Exim from entering into possession or exercising its power of sale. I do not propose to make an order today but rather direct that the matter come back before me at a date to be nominated when the terms of the injunction can be discussed if there is any dispute between the parties as to them.
The final motion was an application for discovery. I understand that the parties, in effect, agree that if the statement of claim has to be amended then additional discovery in any event has to be given and, at least in discussion with counsel, there appeared to be no point in my ruling on the motion and indeed no argument was ultimately addressed to it. I would merely stand it over until the direction date already set on 3 March 1995. All parties will have liberty to apply.

[1994] FCA 1086

03 NOVEMBER 1994