Highpoint Shopping Centre Pty Ltd v Myer Store Limited
[2005] VSC 439
•3 November 2005
IN THE SUPREME COURT OF VICTORIA Not Restricted AT MELBOURNE
COMMERCIAL AND EQUITY DIVISION
No.2059 of 2002
HIGHPOINT SHOPPING CENTRE PTY LTD Plaintiff v MYER STORE LIMITED Defendant ---
JUDGE:
Hargrave J
WHERE HELD:
Melbourne
DATE OF HEARING:
3 November 2005
DATE OF JUDGMENT:
3 November 2005
CASE MAY BE CITED AS:
Highpoint Shopping Centre Pty Ltd v Myer Store Ltd
MEDIUM NEUTRAL CITATION:
[2005] VSC 439
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PRACTICE AND PROCEDURE- Pleadings- Application to amend pleading to rely upon defences under Limitations of Actions Act 1958 (Vic)- whether prejudice occasioned to defendant by amendment- whether leave to amend granted.
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APPEARANCES:
Counsel Solicitors For the Plaintiff Mr D.M.R. Derham QC
with Mr S.M. AndersonHolding Redlich For the Defendant Mr R. Peters Corrs Chambers Westgarth HIS HONOUR:
1 On 24 August 2005 Master Kings granted leave to the plaintiff to file and serve an amended reply and defence to counterclaim. By notice of appeal dated 30 August 2005 the defendant appealed against that order. On 5 October 2005 Master Kings gave leave to the plaintiff to file a further amended reply and defence to counterclaim and ordered that this pleading stand as the pleading which is the subject of the appeal from the earlier order granting leave.
2 The proposed amended pleading raises, for the first time, an allegation that certain claims raised by the defendant by way of set off and/or counterclaim are statute barred under the Limitation of Actions Act 1958 (Vic) and other legislation. The defendant opposes leave to amend to raise the limitation defences on the ground that if leave is granted it will suffer prejudice which cannot be compensated by an order for costs. The issue arises in the following way.
3 By lease dated 28 July 1974 the plaintiff leased to the defendant for a term of 40 years that part of the Highpoint Shopping Centre comprising levels one to five and a plant room in the centre. By clause 15(1) of the lease it is provided in substance that the defendant shall pay its proportionate share of any rates, assessments or taxes levied or assessed upon the centre. A proviso to clause 15(1) provides that in certain circumstances the defendant should directly pay the rates, assessments or taxes and the plaintiff would reimburse the defendant for any excess payment over its proportionate share.
4 It is apparent that in the period from approximately 1977 to 2000 neither party took account of this proviso. As a result, the defendant has overpaid the plaintiff in respect of its liability to pay a proportionate share of rates, assessments and taxes attributable to the shopping centre as provided for by Clause 15(1) of the lease. After the overpayments were realised by the parties, the defendant ceased paying its share of rates, assessments and taxes and sought to be reimbursed for some of the overpayments. As a result in 2002 the plaintiff commenced this proceeding.
5 In the proceeding the plaintiff makes a number of allegations. It is not necessary to traverse all of them. First, the plaintiff claims that the lease in its application to the period 1978 to 2000 was varied by conduct of the parties, such variation being to the effect that neither party would insist upon strict compliance with clause 15(1) of the lease unless and until reasonable notice was given (the “variation claim”).
6 Second, it is alleged by the plaintiff that the conduct of the defendant since 1977 has given rise to an understanding on the part of the plaintiff to the effect of the variation claim and that the defendant should not be allowed to depart from that assumption unless and until reasonable notice is given to the plaintiff (the “estoppel claim”).
7 The plaintiff alleges that a period of no less than 12 months would constitute reasonable notice for both the variation and the estoppel claim.
8 The defendant denies the variation and estoppel claims. Further, as I have said, both prior to and since the issue of the proceedings the defendant has ceased payment of its proportionate share of the rates, assessments and taxes. As a result the plaintiff's claims include monetary claims for an increasing amount of rates, assessments and taxes as they fall due.
9 In response to these monetary claims for debt or damages the defendant's defence has consistently sought to set off, in extinguishment of the plaintiff's monetary claims, a claim for restitution of the overpaid rates, assessments and taxes on the ground that these payments were made by mistake. Further, the defendant has consistently counterclaimed for the whole of the amount of the overpayments on this ground and other grounds.
10 Although the defendant's claims for restitution of the overpayments have been on foot since the initial defence and counterclaim was filed, and there have been a number of pleading amendments made by the plaintiff, it was not until August this year that the plaintiff first sought leave to further amend its reply and defence to counterclaim to allege that the defendant's claims, whether by way of set off or counterclaim, were statute barred.
11 There is one further claim by the plaintiff which I should mention. The plaintiff claims that the defendant is in breach of the lease in that it has granted certain concessions without first obtaining the written consent of the plaintiff, as required by clause 14(6) of the lease. A declaration to this effect is sought. With the exception of one concession, the defendant admits this allegation of breach of clause 14(6) of the lease.
12 As I have said, the defendant opposes the plaintiff being given leave to amend to plead limitation of action defences on the grounds of prejudice. The plaintiff relied on two affidavits to establish this prejudice, both sworn by Mark Foy. Mr Foy was, at relevant times, the Manager-Legal Services (Property) of the defendant's parent company. He swore in paragraphs 13 to 15 of his affidavit sworn on 23 August 2005 as follows:
“13.Had the Plaintiff pleaded a limitations of actions defence in its original Reply and Defence to Counterclaim, I would have advised the Defendant to pay the amounts invoiced by the Plaintiff and referred to in paragraph 12 under protest, and the Defendant would have done so.
14.If the Plaintiff is now permitted to amend its reply and defence to counterclaim as foreshadowed, the Defendant’s failure to pay invoices rendered to it by the Plaintiff in respect of council rates, water rates and land tax could have the effect of Myer having breached the Lease, which has various serious legal ramifications for the Defendant. For example, apart from having to pay the outstanding outgoing together with interest, clause 18(22) entitles the Plaintiff to unreasonably decline to give its consent to an assignment of the Lease if the Defendant has not “duly and punctually performed and observed all the covenants and agreements” contained in the Lease.
15.Accordingly, the Defendant would be materially prejudiced if the Plaintiff were permitted to make the amendments foreshadowed.”
13 I gave leave to counsel for the plaintiff to cross-examine Mr Foy. The principal focus of the cross-examination was directed at paragraph 13 of his affidavit. Mr Foy said in cross-examination that he was the lawyer within the legal department of the defendant’s parent company with the ultimate responsibility for this proceeding. He acknowledged that either of the variation claim or the estoppel claim had the capacity, if proved, to provide a complete answer to the defendant's set off and counterclaims. However, this did not cause him to advise the defendant to pay the amounts invoiced under protest. This was because he did not think that either the variation claim or the estoppel claim had any prospect of success.
14 Further, Mr Foy said that he believed that the advice to which he deposed in paragraph 13 of his affidavit would have been accepted by the defendant as he had a close working relationship with the decision maker to whom he reported, Mr Boyce, and that Mr Boyce usually accepted his advice.
15 As to paragraph 14 of his affidavit, Mr Foy frankly conceded that the defendant had admitted a breach of clause 14(6) of the lease and that this admission was made at an early stage of the proceeding.
16 The balance of the evidence in Mr Foy's affidavit concerned arithmetical matters which it is not necessary for me to consider.
17 There was no dispute between the parties as to the legal principles to be applied to the application for leave to amend. If the amendments sought raise a case or defence which is arguable, the party seeking it will ordinarily be granted leave unless the amendment will cause injustice to the other party.[1]
[1]See for example Cropper v Smith [1884] 26 Ch D 700 at 710; Queensland v J L Holdings (1997) 189 CLR 146.
18 No argument was addressed to me that the proposed limitation defences were not arguable.
19 As to injustice or prejudice which may be sufficient to cause a court to exercise its discretion to refuse an amendment, both parties relied upon the decision of the Court of Appeal of this Court in Wilson v Grimwade[2] a decision of the Court of Appeal. In that case the Court of Appeal considered a late plea of a limitation of actions defence. Tadgell JA said at p.632 as follows:
"It was common ground that the judge correctly identified the following relevant principles. First that in general a defendant should be permitted to amend a defence so that the court may decide all issues between the parties, provided that the amendment may be effected without injustice to the plaintiff. Secondly that, in order to resist an amendment in accordance with the first principle, a plaintiff must point to prejudice caused by conduct of the defendant in first filing a defence without relying on the statute of limitations and later seeking to file a defence which relied upon the statute. Thirdly that, in order that a defendant should be disentitled from amending, it is not sufficient if the prejudice relied on by the plaintiff results from an unreasonable act or omission on the plaintiff's own part." (Citations omitted.)
[2][1995] 2 VR 628.
20 In that case the prejudice to the plaintiff was categorised by the judge at first instance as such that “as a matter of probability” the defendant would suffer prejudice. Can the same be said of the prejudice relied upon by the defendant in this case?
21 Based on the evidence of Mr Foy to the effect that, if the plaintiff had pleaded the limitation defences earlier, the defendant would have paid the amounts invoiced under protest, the defendant relies upon three heads of prejudice.
22 First it is said that the defendant will be exposed to a claim for about $1.3m which may not be available to the plaintiff if the limitation defences are not able to be pleaded. In my view it is not a relevant prejudice to contend that, absent the amendment, a party opposing it would or may be successful at trial.[3]
[3]See for example Etna v Arif [1999] 2 VR 353 at [36] per Batt JA.
23 Second, it is contended that the defendant has been exposed to the consequences of a breach of the lease of the kind described in paragraph 14 of Mr Foy's affidavit. However, in the face of the admitted breach of Clause 14(6) of the lease, I am not persuaded that any injustice flows to the defendant on this aspect. I note that the risk of such further breaches occurring was taken by the defendant in the face of the variation claim and the estoppel claim. I make no comment as to whether Mr Foy was right to regard that risk as insignificant.
24 Third, it is submitted on behalf of the defendant that it has suffered prejudice because, had it paid the invoiced amounts under protest, it would not have been exposed to the risk of paying penalty interest on those amounts if it is unsuccessful at trial. In my view no injustice to the defendant has occurred or will, as a matter of probability, occur on this account. I am of this view for the following reasons.
25 In the first place, the defendant has had the use of the money it did not pay. No evidence was adduced to establish that it earned, from the use of that money, a lower rate than it may be obliged to pay under the provisions of either of ss. 58 or 60 of the Supreme Court Act 1986 (Vic). This prejudice has not been established.
26 Secondly, the Court has a discretion under ss. 58 and 60 of the Supreme Court Act 1986 (Vic) as to the award of interest. If the defendant only loses the case on the monetary claims against it by reason of the operation of the limitation defences, the Court will have a discretion to fix a rate below the penalty interest rate fixed under the Penalty Interest Rates Act 1983 (Vic), to order no interest be payable, or to order that interest only be payable for a specified period of time. In my view, any prejudice of the kind alleged by the defendant as to interest can, if proved at trial, be avoided by the exercise of the discretion of the trial judge under ss. 58 or 60, whichever is applicable. Of course it will be a matter for the defendant as to whether, if the occasion arises, it elects to call the necessary evidence to establish any such prejudice.
27 For the reasons stated the appeal should be dismissed.
28 I order that:
1.Pursuant to r. 60.01 that the appeal commenced by the defendant’s notice of appeal dated 30 August 2005 against the Order made by Master Kings on 24 August 2005 be heard by Justice Hargrave on 2 November 2005 notwithstanding that the Order made by Master Kings on 24 August 2005 has not yet been authenticated.
2.The defendant have special leave to rely on the second affidavit of Mark Roderick Foy sworn on 2 November 2005 on the hearing of the appeal.
3. The appeal is dismissed.
4. The defendant pay the plaintiff’s costs of the appeal including reserved costs.
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