Harvey v CDM Australia Pty Ltd
[2001] WADC 8 (S)
•19 DECEMBER 2001
| JURISDICTION | : | DISTRICT COURT OF WESTERN AUSTRALIA IN CIVIL |
| LOCATION | : PERTH | ||
| CITATION |
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| CORAM | : HH JACKSON DCJ | ||
| APPLICATION TO | |||
| AMEND HEARD |
| ||
| SUPPLEMENTARY | |||
| DECISION | : 19 DECEMBER 2001 | ||
| FILE NO/S |
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| BETWEEN | : MURRAY HARVEY |
Plaintiff
AND
CDM AUSTRALIA PTY LTD
Defendant
Catchwords:
Application to amend Statement of Claim after judgment delivered
Legislation:
Limitation Act 1935, s 38, s 44
Result:
Application granted - Costs of trial already conducted to be paid by plaintiff to defendant - Assessment of damages to be listed before a different judge
[2001] WADC 8 (S)
Representation:
Counsel:
| Plaintiff | : | Mr L A Tsaknis |
| Defendant | : | Mr P B O'Neal |
Solicitors:
| Plaintiff | : | Hammond Worthington |
| Defendant | : | Bartlett & Co |
Case(s) referred to in judgment(s):
Bell v Lever Bros Ltd [1932] AC 161
Dye v Griffin Coal Mining Co Pty Ltd (1998) 19 WAR 431
F F Seeley Nominees Pty Ltd v El Ar Initiations (UK) Ltd (1990) 55 SASR 302
Good v Parry [1963] 2 QB 418
Introvigne v Commonwealth (1980) 32 ALR 251
Maloney v Commissioner for Railways (NSW) (1978) 18 ALR 147
Midland Bank Trust Co Ltd v Green (No 2) [1979] 1 WLR 460
Morgan v Banning (1999) 20 WAR 474
National Australia Bank Ltd v Nobile & Martelli (1988) 100 ALR 227
Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589
Queensland v J L Holdings Pty Ltd (1997) 189 CLR 146; 71 ALJR 294
Singh v Atombrook Ltd [1989] 1 WLR 810
Stage Club Ltd v Millers Hotels Pty Ltd (1981) 150 CLR 535
Stone James v Pioneer Concrete (WA) Pty Ltd [1985] WAR 233
Tony Sadler Pty Ltd v McLeod Nominees Pty Ltd (1994) 13 WAR 323
Water Board v Moustakas (1988) 180 CLR 491
Weldon v Neal [1887] 19 QBD 394
Case(s) also cited:
Blomley v Ryan (1956) 99 CLR 362
Busch v Stevens [1963] 1 QB 1
Caruso Australia Pty Ltd v Portec (Australia) Pty Ltd (1984) 1 FCR 311
Commercial Bank of Australia Ltd v Amadio (1983) 151 CLR 447
Commercial Developments Pty Ltd v Mercantile Mutual Insurance Ltd (1991) 5
WAR 208
Do Carmo v Ford Excavations Pty Ltd (1984) 58 ALJR 287
[2001] WADC 8 (S)
Fluor Australia Pty Ltd v State Energy Commission (1987), unreported; SCt of
WA; Library No 6682; 10 April 1987
Griffiths v Evans [1953] 2 All ER 1364
Hondros & Tholet v Chesson [1981] WAR 146
Hyams v Stuart King (a firm) [1908] 2 KB 696
Last v Rosenfeld (1972) 2 NSWLR 923
Matthews v Bayview Holiday Village Pty Ltd (1989) 2 WAR 167
Nocton v Lord Ashburton [1914] AC 932
Re Newen: Carruthers v Newen [1903] 1 Ch 812
Re River Steamer Company (1871) LR 6 Ch App 822
[2001] WADC 8 (S)
HH JACKSON DCJ
HH JACKSON DCJ:
Plaintiff's application to amend Statement of Claim after trial and judgment on issues of liability
Decision and reasons delivered by H H Jackson DCJ
1 The trial of this action came on for hearing before me on
21 August 2000. The dispute between the parties centred around the terms on which the defendant had employed the plaintiff during the period from 1 July 1993 to 1 July 1994. On the basis of his pleadings as to that issue, the plaintiff claimed $120,850.
2 The defendant pleaded that the terms of the plaintiff's employment
were different and that the defendant was not indebted to the plaintiff. Alternatively, if some aspects of the plaintiff's pleaded terms of employment were upheld, the defendant said some (albeit much smaller) sum was owing.
3 A few days before the first morning of trial and, therefore, obviously
before the plaintiff opened his case or evidence was called, the defendant moved to amend the defence by varying the basis on which it said the plaintiff had been employed.
Over the plaintiff's objection, I allowed such an amendment.
No material application was made by the plaintiff to vary his pleadings or to adjourn the trial.
The following exchange is recorded by the transcript as to how the trial of the matter should proceed:
"O'NEAL, MR:
The other thing that we propose to do, which both my learned friend and I have some considerable enthusiasm for, your Honour, is the idea of resolving first, the issue of liability in a sense of having the court determine at that stage what agreement, if any, applies to this arrangement and that subsequent to that, if necessary, then there be further proceedings to determine what amount, if any, is owing in the consequence of the finding about the agreement.
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So that there's no misunderstanding about it, both my learned friend and I agree that that doesn't mean that there won't have to be some evidence of financial matters and accounting for the factual matrix of the agreements. What we're not going to be arguing about is what, if anything, is owed."
Thus the parties indicated that the matter should first proceed to trial to determine the issues of the terms of the plaintiff's employment.
8 When that had been done, any questions which arose as to the extent
of the defendant's indebtedness to the plaintiff, and which were not resolved by agreement, could be brought back to the court for assessment pursuant to the findings as to the terms of employment.
9 It is important to note that the plaintiff's claim was that the defendant
was indebted to it (for an amount quantified in the Statement of Claim at $120,850) on the basis of the alleged terms of employment as pleaded by it. No alternative claim was made on the basis of the defendant's original version or of its final version of the terms of employment.
10 After the trial had been conducted on that basis and after I delivered
my reasons for judgment, Mr O'Neal for the defendant moved that the claim be dismissed with costs. However, Mr Tsaknis argued that there were a number of matters which should be further considered including the possibility of an application to amend the Statement of Claim, as has now been made.
11 It is clear that on the basis of the pleadings as they were at trial,
given my findings in favour of the defendant as to the terms of the contract of employment at the relevant time, the plaintiff's claim must be dismissed. Mr Tsaknis concedes as much.
Plaintiff's submissions
12 The plaintiff, in essence, however, says that on the basis of my
findings, there remains owing to him by the defendant a substantial sum of money. He, accordingly, seeks to amend his Statement of Claim to so plead. There is no doubt that to bring such a claim by issuing a new Writ would be available to him save for the existence of the statutory limitation period.
13 Thus the plaintiff now seeks leave to amend the Statement of Claim
by adding certain paragraphs which, in effect, allege that the terms of the plaintiff's employment by the defendant at the material dates were as I
[2001] WADC 8 (S)
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found them to be. He would then seek to have the court assess what, if
any, moneys are owing to him thereunder.14 The principles upon which leave to amend a Statement of Claim may
be given this late in the day and after the original limitation period has
expired require to be considered.15 Each side provided written submissions, with authorities,
supplemented subsequently by oral submissions. I do not intend now to canvass all of them but it should be said that in the case of the plaintiff, they deal with issues both factual and legal and that I do not accept all of what is said in either regard. However, I will limit my comments to those sufficient to deal with what I see as the issues necessary to be dealt with.
In the final analysis, the plaintiff argues, whether an amendment should be allowed is, as the High Court observed in Queensland v J L Holdings Pty Ltd (1997) 71 ALJR 294, a matter for the discretion of the trial judge who should be guided in the exercise of his or her discretion by his assessment of where justice lies.
The plaintiff argues that the interests of justice require that he be granted of leave to amend by reason of:
(a)
the nature and the lateness of the defendant's amendments which were made very soon before trial and omitted its previous reliance on a letter of 4 January 1993, the interpretation of which was thought to be the key issue between the parties, and raised for the first time the July 1993 agreement,
(b)
the length of time between commencement of the action and the filing of the defendant's original defence and the amendment, some five years,
(c)
that the amendment seeks to raise an issue on which the evidence of the defendant is complete, the amendment giving effect to the case pleaded by the defendant,
(d)
that the amendment would reflect the issues litigated at the trial: Water Board v Moustakas (1988) 180 CLR 491 at 497,
(e)
that the defendant is said to be a corporation with substantial assets and will not suffer any undue personal strain,
(f)
that the proposed amendment is of considerable importance to the rights of the plaintiff, who is an individual and not a corporation, and
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(g) that granting leave to amend is the only way in which the real merits of the plaintiff's case can be determined and an artificiality avoided. 18 Mr Tsaknis pointed out that the principles relating to amendments
have been applied to permit pleadings to be amended at the close of the evidence: National Australia Bank Ltd v Nobile & Martelli (1988) 100 ALR 227; after judgment, Midland Bank Trust Co Ltd v Green (No 2) [1979] 1 WLR 460; Singh v Atombrook Ltd [1989] 1 WLR 810; F F Seeley Nominees Pty Ltd v El Ar Initiations (UK) Ltd (1990) 55 SASR 302; and even on appeal, Introvigne v Commonwealth (1980) 32 ALR 251 at 260; Bell v Lever Bros Ltd [1932] AC 161 at 216; Maloney v Commissioner for Railways (NSW) (1978) 18 ALR 147 at 151.
19 He also argues that the defendant was never led to believe that if its
pleaded case was accepted, there would be no damages payable. That is
denied, in my view correctly, by the defendant.20 The plaintiff points out that the orders made by me envisaged that the
hearing on the question of damages would be determined later, and says that, accordingly, to proceed to an assessment of damages on the finding would be to complete the process originally envisaged. Splitting the trial in the manner that occurred meant, the plaintiff says, that the defendant has not, or ought not to have, incurred unnecessary costs which will be thrown away by preparing to meet a damages case based on the plaintiff's pleaded case.
21 Thus, the plaintiff argues that if the amendment is allowed the
defendant will not suffer prejudice in any real sense and that in any case if the defendant is able to show any prejudice it will be protected by the usual costs order that the plaintiff pay any of its costs incurred and thrown away. Again, as will be seen, I disagree.
22 The plaintiff argues that a chief purpose of O 21 r 5 is to ensure that
pleading defects be cured to avoid a multiplicity of proceedings and to ensure that all issues arising in the proceedings be determined. In any event, the rule in Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589 might be argued to bar fresh proceedings.
23 The plaintiff then argues that the proposed amendment is not
precluded by the provisions of the Limitation Act s 38(1)(b)(5) because of s 44(1) and s 44(3) of that Act applying where an acknowledgment or promise has been made or is contained by or in some writing signed by
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the party chargeable or by his agent duly authorised. Such an acknowledgment is said to arise from the defendant's own pleadings which are said to constitute an acknowledgment of a contract and a promise of payment thereunder. In addition, it is said that the defendant admitted the debt in evidence: Transcript 381-382 and 480.
24 I agree with Mr O'Neal that the transcript references do not support
that contention, and that to the contrary, all that evidence shows is that in one calculation of possible entitlement, without taking into account the cost of relevant marketing activities, a small positive balance was seen.
25 I do not accept that either in fact or in law the defendant by pleadings
through counsel or in evidence acknowledged indebtedness to the plaintiff
so as to start the statutory limitation period running again.26 In my view, the defendant denied such indebtedness whilst accepting
it is an (unquantified) possibility). That is not enough: Good v Parry [1963] 2 QB 418; Stage Club Ltd v Millers Hotels Pty Ltd (1981) 150 CLR 535.
27 The acknowledgment must be in writing and an admission that a debt
is due, or that it is outstanding and unpaid: Stage Club Ltd v Millers
Hotels Pty Ltd (supra).
An admission only of the possibility of a claim, and a willingness to examine it, is not an "acknowledgment": Good v Parry (supra).
29 An argument was also mounted that in the circumstances of this case,
the defendant would be perpetrating a fraud and benefiting from its own unconscionable behaviour if it is permitted to take the position either of pleading the amended defence more than six years after the debt is incurred as it has and amendment is now denied to the plaintiff or if the defendant is permitted to rely on the Limitation Act after failing to disclose the plaintiff's entitlements within that time and that such a fraud would again take the matter outside the Limitation Act provisions. It is argued that somehow, this calls for the exercise of the court's auxiliary or collateral equitable jurisdiction. In my view, it is quite obvious that there is no merit in those arguments, either in law or equity or fact in the present case.
Defendant's submissions
30 Mr O'Neal, opposing the plaintiff's application to amend, essentially
argues two main propositions: that the amendment sought would be
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barred by the provisions of the Limitation Act and that in any event, it
should be refused as a matter of discretion.31 Mr O'Neal argues that the effect of the proposed amended pleading
given the decision in Morgan v Banning is that the plaintiff is now
seeking to plead a new cause of action so that O 21 r 5(5) does not apply.32 Sub-rule (5) permits a new cause of action to be added or substituted
"if the new cause of action arises out of the same facts or substantially the same facts as a cause of action in respect of which relief has already been claimed in the action by the party applying for leave to make the amendment".
33 The expression "cause of action" describes a factual situation which
will entitle a person to approach the court for relief in distinction to the expression "form of action" which refers to the old categories of action: Morgan v Banning at 484. Unless the new cause of action to be pleaded arises from that same "basket of facts" as the case already pleaded, it will not be permitted by way of amendment if it is time barred.
34 In this case, the plaintiff alleged that in December 1992 or
January 1992 he agreed with the defendant that he would be given 50 per cent of the profit on all sales in his division, in consideration of his services. The agreement was particularised in detail.
35 That version was disputed by the defendant. In contradicting the
plaintiff's version of the facts, the defendant pleaded a different agreement made on 31 December 1992 and, by an amendment, a further agreement made in July 1993. Only one party's version of the facts could be true. The plaintiff denied the truth of the case pleaded by the defendant and alleged that Mr Della Maddelena "fabricated" the July 1993 agreement, and that there was no such discussion.
36 By the proposed amendment, the plaintiff seeks to adopt facts "which
he previously swore were untrue, and discard the cause of action which failed at trial. On any test, the plaintiff now wishes to substitute two new causes of action, being the two contracts pleaded by the defendant, arising out of facts which the plaintiff previously denied and contradicted". Once that is accepted, the question of any acknowledgment within s 44(3) of the Limitation Act arises because s 38(1)(c) of the Limitation Act 1935 provides a defence to the pleading of any new contract by the plaintiff as a cause of action unless there had been "such acknowledgment or promise ... made or contained by or in some writing signed by the party chargeable, or by his agent duly authorised": Section 44(3).
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37 There has not been, either in oral evidence, by pleading or in other
writing required by the Act, an acknowledgment of a debt due from the
defendant to the plaintiff.38 In the area of discretion, Mr O'Neal argues that the plaintiff should
have pleaded as he now seeks to do from the outset, as he could have done in the alternative and consistently with his own diary entries, and in any event, should have, at the latest, moved to amend the Statement of Claim prior to trial when the defendant amended the defence rather than then oppose the defendant's course of action. He argues that the plaintiff should depose on affidavit as to those matters.
39 Mr O'Neal argues that in any event, the proposed amendments do not
plead breach and further that they are not supported by an affidavit deposing as to the amount claimed and breach in respect thereof. As Mr O'Neal pointed out, neither in the transcript of the trial already conducted, in the proposed pleadings nor in any affidavit is an actual amount suggested by the plaintiff to be owing, let alone one which would establish the jurisdiction of this court. Nor is there evidence of any serious attempt to calculate such a figure. The amendment would be futile or has not been shown to be otherwise.
40 Mr O'Neal's submission is that notwithstanding both parties'
respective pleaded cases, the evidence at trial demonstrated that there was, in fact, a further term, at the very least, to be implied into each of the commission arrangements that the defendant entered into with its employees. That is, that the commission was to be claimed by the employee, and supporting documentation was to be provided. That permitted the defendant to check the calculation and provide for payment. No claim for payment was ever made by the plaintiff.
Conclusion on discretion issue
41 Litigation should be conducted so that the merits of the matter are
finally determined and it may be that the plaintiff is in fact owed some amount. The defendant amended in a major and ultimately successful way shortly before trial as to liability. Evidence has not been taken as to any quantum outstanding.
Notwithstanding the defendant's submissions, on balance, I think the interests of justice favour granting the plaintiff's application.
[2001] WADC 8 (S)
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43 Of course, even when O 21 r 5(5) permits and the principle in
Weldon v Neal [1887] 19 QBD 394 as now understood does not bar the amendment, there remains the discretionary question of whether, in the circumstances, it is just to permit the amendment.
44 The avoidance of cost and delay and the application of case
management principles in the conduct of the court are, or, at least may be relevant, but the principles are wider than that. It is clear that, as the majority of the Full Court of the Supreme Court said in Tony Sadler Pty Ltd v McLeod Nominees Pty Ltd (1994) 13 WAR 323 in considering whether it is just to grant belated amendments, the court will consider not only prejudice to the applicant, but prejudice to the public interest and prejudice to the opponent. The prejudice to the applicant of the refusal of leave does not predominate over prejudice to the public interest and the opponent.
45 Indeed, in Queensland v J L Holdings Pty Ltd (1997) 189 CLR 146; 71 ALJR 294 the High Court of Australia has made it clear that the ultimate aim is the attainment of justice and that neither principle nor authority justify using management considerations to shut out a party from litigating an issue that is fairly arguable. In that case, Kirby J sets out at length various matters in consideration of which might argue for or against the exercise of discretion in favour of a party seeking to amend pleadings:
"Amongst considerations which may tend to favour the extension of an indulgence to a party applying for it are the following: that this is the only way in which the true issues and the real merits, factual and legal, can be litigated and artificiality avoided; that the oversight which occurred is adequately explained as, for example, that it arose out of sudden and unexpected events; that the proposed amendment is of considerable importance to the rights of a party, particularly where it provides a complete answer to a claim; that any fault is that of the party's legal representatives; that the oversight was wholly accidental; that it was simply the product of unavoidable human error or, possibly, the outcome of the application to the case of fresh legal minds who perceived an important new point; that cost orders or the imposition of other conditions could adequately rebalance the competing claims to justice; and that the hearing date is sufficiently in the future to permit a party to meet the amendment, taking into account any consequences for the gathering of fresh evidence, the conduct of
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discovery or like pre-trial procedures and the loss of assigned hearing dates. Departures from a court ordered time-table, whilst relevant, are not decisive. Such orders are the servants of justice. They are designed to enhance its achievement in a way that an inflexible application of rigid rules could prevent. ...
Considerations which tend to argue against the grant of an indulgence include many which are the counterparts of the foregoing. Thus, the failure of a party to offer anything by way of explanation for a late application has been held relevant. So has the blamelessness of the resisting party and the extent to which the applicant is at fault in its breach of clear directions. Courts now take into account the strain which litigation may place upon those involved and the natural desire of most litigants to be freed, as quickly as possible, from the anxiety, distraction and disruption which litigation causes. In my view this is not a consideration limited to litigation by natural persons or involving private citizens. Because justice cannot be measured solely in monetary terms, costs orders are not necessarily an adequate balm to the other party. Thus, the proximity of the hearing is clearly a most important consideration. An opposing party is entitled to have taken into account the consequences of an indulgence, especially where it should cause disarray at the last minute to its preparation of the trial. Similarly, the length of time that the proceedings have been pending before the application is made will often be a relevant consideration. The longer the time, the more reasonable it may be to expect that the parties, or their lawyers, should have earlier appreciated, and raised, the point in issue. If a consequence of the indulgence is truly a necessity to postpone a trial date, this will be a most important consideration. Its importance increases with the congestion of court lists and the difficulty, particularly in the case of a lengthy trial of securing early replacement dates. The extent to which a new issue would give rise to a substantial and new case in reply is also relevant. So may be the nature of the litigation and whether it has been assigned to a special list designed to cater for the peculiarities and special needs of commercial cases, long trials and the like. Writers on effective case management repeatedly stress the importance of adhering to a 'firm, credible ... trial date' as an important element in securing the serious attention to a dispute which may help to promote its resolution. They call attention to
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the risks of 'litigation abuse' by which some litigants seek, at all costs, to avoid firm hearing times. Courts are entitled to react unfavourably to repeated default on the part of a litigant whose conduct has the effect of frustrating a proper timetable fixed for the trial. Justice will not necessarily require that a party should have multiple opportunities to plead and present its case. A court must accord justice to the particular litigant. But it must also maintain its responsible use of scarce public resources and consider, in a general way, the impact which its orders have on other litigants and on the public generally.
Whilst taking all of the considerations relevant to the circumstances of the case into account, the judge must always be careful to retain that flexibility which is the hallmark of justice. New considerations for the exercise of judicial discretion in such cases have been identified in recent years. But the abiding judicial duty remains the same. A judge who ignores the modern imperatives of the efficient conduct of litigation may unconsciously work an injustice on one of the parties, or litigants generally, and on the public. But a judge who applies case management rules too rigidly may ignore the fallible world in which legal disputes arise and in which they must be resolved."
Limitation Act and Order 21 Rule 5
That, however, leaves the question of the Limitation Act and the scope of O 21 r 5(5).
By O 21 r 5 of the Rules of the Supreme Court:
"5. Amendment of writ or pleading with leave
(1) Subject to - ...
(c) the following provisions of this Rule, the Court may at any stage of the proceedings allow the plaintiff to amend his writ, or any party to amend his pleading, on such terms as to costs or otherwise as may be just and in such manner (if any) as the court may direct.
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(2) Where an application to the Court for leave to make the amendment ... is made after any relevant period of limitation current at the date of issue of the writ has expired, the Court may nevertheless grant such leave in the circumstances mentioned in that paragraph if it thinks it just to do so. ... (5) An amendment may be allowed under paragraph (2) notwithstanding that the effect of the amendment will be to add or substitute a new cause of action if the new cause of action arises out of the same facts or substantially the same facts as a cause of action in respect of which relief has already been claimed in the action by the party applying for leave to make the amendment."
48 An amendment to the Statement of Claim, if granted, generally dates
back to the issue of the Writ. It is the date of issue of the Writ which is critical to whether an action is commenced within the time limited by the Limitation Act. Then there is the principle that the court will not permit a new cause of action to be added once the limitation period has expired: Weldon v Neal (supra). In Stone James v Pioneer Concrete (WA) Pty Ltd [1985] WAR 233, Burt CJ with whom Brinsden J agreed, said at 240:
"It seems as yet undecided whether subr (1) of that rule [O 21, r 5] gives authority to the court to allow an amendment to a statement of claim notwithstanding the expiry of a period of limitation in a case which does not fall within the subrules which follow it."
Franklyn J at 249 expressed the view more strongly that:
"There is authority in a number of ... cases for the proposition that [WA O 21, r 5(1)] should be given a wide interpretation and that such an amendment may be allowed under that rule should [O 21, r 5(5)] be found restrictive."
50 In that case, leave to amend was given, Franklyn J saying: "There is
no prejudice to the defendant other than its loss of the defence of the statute, which in view of the provisions of [O 21, r 2] is not a relevant factor."
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51 Mr Tsaknis argues that that is the position here save, a fortiori, that it was, he says, the defendant's late amendment which occurred outside the relevant statutory period which caused the problem.
52 That, I think, is to distort and oversimplify the position. First, to
allow the application will cause the defendant to have to litigate the issue of quantum which refusal would negate in light of the statutory limitation issue. Secondly, the cause of the plaintiff's problem is not the defendant's late amendment but the plaintiff's failure to plead in the same terms, at least in the alternative.
In Dye v Griffin Coal Mining Co Pty Ltd (1998) 19 WAR 431 Owen J, with whom Malcolm CJ and Kennedy J agreed, concluded:
"In light of the authorities, and as a matter of construction, I think the effect of the rules is that the rule in Weldon v Neal continues in force in truncated form, being qualified only to the extent that O 21, r 5 allows some amendments out of time for certain limited purposes. Relevantly, when confronted with a proposed amendment that seeks to add a cause of action that is otherwise statute barred, the court has a discretion to allow the amendment under O 21, r 5(5) if the conditions set out in that rule are satisfied. The general discretion in O 21, r 5(1) is limited to that extent.
It seems to me, therefore, that once the trial judge had decided that the amendments did not come within O 21, r 5(5), that was an end to the matter. His Honour was correct in deciding that O 21, r 5(1) does not confer on the court a general and further discretion to permit amendment, despite the expiry of the relevant limitation period."
As Owen J said in Morgan v Banning (1999) 20 WAR 474
at 476-477:
"But the question remains whether the writ covers a 'cause of action' which the plaintiff wishes to advance. This calls for a determination of the meaning of the phrase 'cause of action'. Problems arise when an amendment does, or may, introduce a new cause of action not encompassed within the writ as originally issued. ... Neither through the inherent jurisdiction or by rules of court could the court alter the operation of the Limitation Act. Order 21, r 5(2)-(5) is a case in point. These rules empower the court to permit an amendment, if it is just to
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do so. ... or to add or substitute a new cause of action even though the limitation period may have expired. It is not difficult to see how a correction of a name or the alteration of a capacity could be done without interfering with any rights that the defendant may have to raise a limitation defence. Adding or substituting a new cause of action is more problematic.
This issue falls away if the phrase 'cause of action' in O 21, r 5(5) is understood in a narrow sense as meaning the basket of facts which give rise to the right to approach the court for relief rather than as the description of the right to sue by reference to the old forms of action. This must be so or the rule would be in conflict with the statute and, thus, ultra vires. It is interesting to compare the position in England. The Limitation Act 1980 (UK), s 35(5)(a) contains words that are virtually identical to those in our O 21, r 5(5). The same words appear again in English O 20, r 5(5). Accordingly, the issue of construction with which we are confronted would not arise in England because there is a statutory recognition of the right to substitute a new cause of action so long as there is the requisite degree of coincidence in the facts.
This is not to say that O 21, r 5(5) is devoid of meaning or of an area of operation. It avoids an overly technical and rigid investigation as to the degree of coincidence which must be found to exist between the facts necessary to establish the cause of action as originally advanced and those contained in the proposed amendments before the power to permit the amendment can be exercised."
In Morgan v Banning (supra), Wheeler J commented:
"Whatever the rules of court may provide, an action which is in fact instituted out of time is able to be defeated by reliance upon the Limitation Act, which the court has no power to override, whether by a procedural rule of 'relation back' or otherwise.
The clearest observations on this point are those of Toohey J, with whom Deane J agreed, in Wardley Australia Ltd v Western Australia (1992) 175 CLR 514 at 559-562, where his Honour rejected the view that Weldon v Neal was no more than a 'rule of practice', and expressed the opinion that where an amendment seeks to introduce an 'admittedly new cause of
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action' a court has no power to ignore any statutory limitation period governing the bringing of that cause of action. Although these remarks were strictly obiter, they appear to me to stem from well understood principles governing the relationship between statutes and rules of court, and I would respectfully adopt them. Those remarks also make sense of occasional references in the authorities to the 'power' rather than the 'practice' of the court in permitting amendments after the expiry of limitation periods, including those which appear in Weldon v Neal itself.
... it is not immediately apparent why the rule in Weldon v Neal is often referred to as a 'rule of practice' that the court will not permit the Limitation Act to be defeated, or why O 21, r 5(5) appears to assume that the court has power to permit a cause of action to be added after the expiry of a limitation period.
The answer to both questions appears to me to lie in the ambiguity of the expression 'cause of action'. Not very long before Weldon v Neal, the Judicature Act 1873 (UK) had abolished the old rigid forms of action, but they still dominated - and to an extent continue to dominate - the discourse and thinking of courts and lawyers, leading to a lasting confusion in a number of contexts in which the expression 'cause of action' comes to be considered.
Diplock LJ discussed this phenomenon in the context of Limitation Act issues (although not in quite the context which is in issue here) in Letang v Cooper [1965] 1 QBD 232. His Lordship defined a 'cause of action' for limitation purposes (at 242-243) as follows:
"A cause of action is simply a factual situation the existence of which entitles one person to obtain from the court a remedy against another person. Historically, the means by which the remedy was obtained varied with the nature of the factual situation and causes of action were divided into categories according to the 'form of action' by which the remedy was obtained and the particular kind of factual situation which constituted the cause of action."
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His Lordship observed of the Judicature Act (at 243):
"... it was convenient for lawyers and legislators to continue to use, to describe the various categories of factual situations which entitled one person to obtain from the court a remedy against another, the names of the various 'forms of action' by which formally the remedy appropriate to the particular category or factual situation was obtained."
However, his Lordship warned that it must be remembered that the name of an old form of action could be considered to be no more than a convenient and succinct description of a particular category of factual situation; to forget this would, he said, 'encourage the old forms of actions to rule us from their graves'.
...
The confusion between the two concepts in the Weldon v Neal context has been exacerbated by two factors; first, it is not entirely clear from that decision whether 'cause of action' or 'form of action' is meant and, second, the Limitation Act itself tends to adopt the names of the old forms of action as convenient labels under which to group actions having specified periods of limitation. As to the second of these matters, while it may have led to some confusion, I do not think that it is possible to read the Limitation Act as intending to revive the concept of form of action. The breadth of the definition of 'action' tends to suggest otherwise and, more importantly, the purposes of the Limitation Act would not appear to be advanced by such a construction. A principal purpose, as I understand it, is to enable a defendant to know with finality what fact or facts are said to give rise to the action against him, rather than what label may be conveniently applied to those facts.
When one looks at the facts of Weldon v Neal, one can see that it was truly a new cause of action which was sought to be added to the statement of claim after the expiry of the limitation period. ...
It does appear that in the years since Weldon v Neal, the courts have experienced difficulty in defining precisely what constitutes a new 'cause of action' for the purposes of the rule, and it also appears to be the case that on occasion the rule has
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been applied to what may be seen as little more than a change of label, or the addition of particulars to facts already forming the basis of a claim, in a manner which may have been unduly rigid and capable of causing potential injustice to plaintiffs.
If I am correct in the view that the court's inability to permit the raising of a new cause of action (rather than a new description or new form of action) is as a result of a lack of power to do that which the statute of limitation prohibits, then O 21, r 5(5) and its equivalents can only be directed to curing the unduly rigid and narrow interpretation of Weldon v Neal which may be discerned in a line of authority. It is for that reason, I think, that r 5(5) permits amendment only 'if the new cause of action arises out of the same facts or substantially the same facts as a cause of action in respect of which relief has already been claimed in the action ...'. If the amendment is in that sense within the terms of the indorsement, no question of power arises.
The position now as I understand it is that the rule in Weldon v Neal applies to a cause of action which is truly new, and may not be abrogated without statutory authority. At least in a clear case, the court should refuse to allow the addition of a new cause of action in that sense. ...
Some of the views which I have expressed concerning O 21, r 5(5) may be thought to be inconsistent with a passage in the reasons of Owen J (with whom Malcolm CJ and Kennedy J agreed) in Dye v Griffin Coal Mining Co Pty Ltd (1998) 19 WAR 431. His Honour reached the conclusion that the rule in Weldon v Neal (at 439):
"... continues in force in truncated form, being qualified only to the extent that O 21, r 5 allows some amendments out of time for certain limited purposes: relevantly, when confronted with a proposed amendment that seeks to add a cause of action that is otherwise statute-barred, the court has a discretion to allow the amendment under O 21 r 5(5) if the conditions set out in that rule are satisfied."
The finding which appears to have been central to the decision in Dye is found in his Honour's next sentence: 'The general discretion in O 21, r 5(1) is limited to that extent.'
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Much of what I have said earlier is consistent with the reasoning in Dye. In particular, the definition of 'cause of action' in the broad sense in that case (at 434), and the understanding of the scope of O 21, r 5(5) as permitting the re-categorisation of facts rather than the addition of a different claim arising from different facts (at 437), I understand to be identical to the conclusions which I have reached. I do not think, when the reasons are read as a whole, that Owen J was asserting that O 21, r 5(5) permitted the addition of a new cause of action, properly understood, in the absence of statutory authority. Rather, it is my view that his Honour was (at 439) simply adopting the words of O 21 itself which, in the first part of r 5(5), appears to use the expression 'cause of action' in a narrower sense than is now commonly the case and as meaning essentially a 'form of action'. Read as a whole, it is my view that Dye supports the conclusions which I have reached."
56 As the plaintiff correctly points out, the grant of leave to amend
pursuant to O 21 r 5(5) will not require further evidence in respect of the matters the subject of the leave. The essence of the plaintiff's claim has always been that moneys are owed to him by the plaintiff arising from his employment by the defendant between 1 January 1993 and 1 July 1994. The dispute thus far has been about the terms of that employment. That is now resolved. In my view, the amendment proposed fall within the situations contemplated by the Full Court of the Supreme Court in Dye v Griffin Coal Mining Co Pty Ltd (supra) and in Morgan v Banning (supra) as one in which leave to amend may be granted without defying the provisions of the Limitation Act.
57 I have concluded that the present case falls within the terms of
O 21 r 5(5) and that the rule in Weldon v Neal (supra) does not, in the present case, bar the amendment sought.
Costs and possible futility
58 Two issues which arise for consideration in relation to whether the
application should be granted are whether appropriate orders as to costs would or would not adequately compensate the defendant for any prejudice it would thereby suffer and, secondly, whether to allow the application would be futile.
In respect of the first, I am satisfied that suitable costs orders could be made which would now so compensate the defendant.
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60 At the time of granting the application to amend the defence, I
ordered that the defendant pay any costs thrown away by reason thereof. In my view, not only was there no adjournment of the trial occasioned thereby, but the running of the trial in respect of length and witnesses called was not greatly affected thereby either. There may have been some modest effects, no doubt there were, and there may have been some modest effect on preparation, although it is to be recalled that the amendments were made only two working days before trial commenced. However, the plaintiff has agreed through counsel that any effects on trial were very limited.
61 The question which arises in the circumstances of this case, if the
plaintiff's application is granted, is that of the appropriate orders to make in relation to costs up to and including both trial and the present application and its consequential results. Mr Tsaknis argues that the defendant should only be entitled to an order for costs thrown away by the late amendment of the Statement of Claim. In my view, if such an order were made, those costs would include the vast bulk of the costs of preparation for and conduct of the trial on liability already heard.
62 In respect of the second, I can only accept that that is an issue for
determination in due course. However, Mr Tsaknis assures me that the plaintiff asserts a claim above the upper limit of Local Court jurisdiction of $25,000. He estimates that a further, say, two days of hearing would be required if the application were granted, along with preparation of accounting evidence and a pre-trial conference, if, of course, agreement was not otherwise reached.
63 In my view, the present situation falls within the scope of O 21 r 5(5)
as so explained and the proposed amendments do not plead a cause of action to which the Limitation Act could now be successfully pleaded as a defence.
64 Given what I have said above as to the exercise of discretion on
matters concerning the preponderance of the interests of justice, it follows that the amendments proposed should be allowed. I note, however, Mr O'Neal's criticisms concerning the issue of failing to plead breach. No doubt that can be attended to.
65 The plaintiff argues that if leave to amend is granted, the "usual
orders" which should be made as to costs are that the plaintiff pay any costs incurred and thrown away by the amendment but that the defendant pay the plaintiff's costs in opposing the application for leave to amend
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including costs reserved on 16 May 2001. However, the plaintiff also takes the view the trial already heard as to the terms of the plaintiff's employment should be regarded as a trial of a preliminary issue and that the costs of the preliminary issue should be reserved until the court has made findings as to what, if any, damages are payable to the plaintiff, had regard to any offers of compromise made and the timing of those offers, and considered those matters in the context4 of the defendant's late amendments to its defence.
Re-listing for assessment
66 Although it is not necessary here to say so, given my findings on
liability, it would perhaps be better if the matter of the assessment of whether any amount, and if so how much, is owing under the terms of employment as I found them to be listed before another judge.
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