Howlett v Hurburgh
[2004] TASSC 79
•6 August 2004
[2004] TASSC 79
CITATION: Howlett v Hurburgh [2004] TASSC 79
PARTIES: HOWLETT, Colin Horace
HOWLETT, Roslyn Gladys
t/as C H & R G HOWLETT
v
HURBURGH, Joan Helen
HURBURGH, Donald
CONTAS PTY LTD
TITLE OF COURT: SUPREME COURT OF TASMANIA
JURISDICTION: ORIGINAL
FILE NO/S: 1169/1987
DELIVERED ON: 6 August 2004
DELIVERED AT: Hobart
HEARING DATES: 4 August 2004
JUDGMENT OF: Evans J
CATCHWORDS:
Procedure – Supreme Court procedure - Tasmania – Practice under Rules of Court – Amendments – Statement of claim – Amendment introducing statute barred cause of action - Exercise of Court's discretion – Not appropriate in the circumstances.
Weldon v Neal (1987) 19 QBD 394; Ritchie & Parker Alfred Green & Co v Gornalle [2000] TASSC; Agtrack (NT) Pty Ltd v Hatfield [2003] 7 VR 63, referred to.
Supreme Court Rules 2000 (Tas), r427.
Aust Dig Procedure [276]
REPRESENTATION:
Counsel:
Plaintiffs: D J Porter QC
First and Second Named Defendants: P G J Zeeman
Third Named Defendant: D R Wallace
Solicitors:
Plaintiffs: Avery Partners
First and Second Named Defendants: Murdoch Clarke
Third Named Defendant: Wallace Wilkinson & Webster
Judgment Number: [2004] TASSC 79
Number of Paragraphs: 9
Serial No 79/2004
File No 1169/1987
COLIN HORACE HOWLETT and ROSLYN GLADYS HOWLETT
t/as C H & R G HOWLETT v JOAN HELEN HURBURGH,
DONALD HURBURGH and CONTAS PTY LTD
REASONS FOR JUDGMENT EVANS J
6 August 2004
The plaintiffs apply for leave to amend their statement of claim. The application is opposed insofar as it involves the insertion of the following paragraphs which would, in summary, add a claim for interest at 18 per cent, compounded half yearly, on the amount found to be due to the plaintiffs on their claim against the defendants for payment for work done and materials supplied in 1987. The paragraphs are:
"18It was an express term of the contract that progress payments would he made in three separate claims and payment would be made within 7 days of the receipt of an approved claim.
19By clause 42.1 of AS 2124, it was an express term of the contract that within 28 days after receipt by the Superintendent of the claim for payment, or within 14 days of issue by the Superintendent of the Superintendent's payment certificate whichever is the earlier, the Defendants would pay to the Plaintiffs the amount due to the Plaintiffs.
20By clause 42.9 of AS 2124, it was an express term of the contract as follows:
'if any moneys due to either party remain unpaid after the date upon which or the expiration of the period within which they should have been paid then interest shall be payable thereon from but excluding the date upon which or the expiration of the period within which they should have been paid to and including the date upon which the moneys are paid. The rate of interest shall be the rate prescribed in the Annexure and if no rate is prescribed the rate shall be 18 percent per annum. Interest shall be compounded at six monthly intervals.'
21The applicable rate of interest under the contract was 18% per annum.
22The Plaintiffs say that of the $57,731‑58 outstanding:
(a) $19,783‑08 was claimed in the account dated 16th July 1987 and ought to have been paid on or before the 31st July 1987; and
(b) $37,948‑50 was claimed in the amendments to the statement of claim in this action made on 12th July 1991 and ought to have been paid by the 31st July 1991.
and the plaintiffs claim:
AThe sum of $57,731‑58.
BInterest of $350,722‑57 being compound interest on $19,783‑08 from the 1st August 1987 to 1st February 2004, calculated at 18% pa at six monthly intervals, together with continuing interest at that rate.
CInterest of $358,735‑44 being compound interest on $37,948‑42 from the 1st August 1991 to 1st February 2004, calculated at 18% pa at six monthly intervals, together with continuing interest at that rate."
The plaintiffs first applied to amend their statement of claim by adding a similar claim for interest in early 2002. That application was dismissed by Crawford J on 5 July 2002, Howlett v Hurburgh [2002] TASSC 42. Crawford J dismissed the application as he concluded that the proposed amendment would introduce a new cause of action claiming interest outside the limitation period applicable to that claim and that to allow this would breach the rule derived from Weldon v Neal (1987) 19 QBD 394.
With effect from 7 May 2003, the Supreme Court Rules 2000 were amended by the insertion of subr(2A) in r427 which, for relevant purposes, now reads as follows:
"427 ¾ (1) At any time before judgment, the Court or a judge may grant leave to a party to amend any process or pleading in such a manner and on such terms as may be just.
(2) Subject to subrule (3), the pleadings may be amended as necessary for the purpose of determining the real questions in controversy between the parties.
(2A) The Court or judge, despite the expiry of any relevant limitation period after the day on which proceedings commenced, may grant leave under subrule (1) if it is satisfied that any other party to the proceedings would not, as a result of granting leave, be prejudiced in the conduct of his or her claim or defence in a way that could not be fairly met by an adjournment, an award of costs or otherwise."
On its face, r427(2A) abrogates the rule in Weldon v Neal; counsel did not submit otherwise. No doubt emboldened by this change to r427, the plaintiffs have again applied to amend their statement of claim by including the interest claim. Whilst, on this occasion, the proposed amendments set out the interest claim in far more detail than the proposed amendments that were before Crawford J, the basis for the claim remains the same. The claim is made pursuant to cl 4.21 of the contract between the parties.
The following summary of the history of this action is taken from Crawford J's reasons for judgment:
"The action was commenced by writ filed on 8 September 1987. At that time only the second and third defendants were named as defendants. Annexed to the writ was a statement of claim. It pleaded that on 12 March 1987 the plaintiffs agreed with the second and third defendants to carry out work at a subdivision for an agreed price of $92,538. It was a condition of the agreement that it would be varied in the event of variations to the work being requested by the second and third defendants and carried out by the plaintiffs. The plaintiffs claimed $39,621, being for the following:
Agreed contract sum $ 92,538 Add amount for cost of variations 37,864 $130,402 Less deductions for variations 1,781 $128,621 Less paid by defendants 89,000 Balance due
$ 39,621
The 11 paragraphs of the statement of claim made no mention of interest. However, the relief sought at the end of the statement of claim was in these terms:
'And the plaintiff claims the sum of $39,621.00 together with interest thereon at the rate prescribed under the Supreme Court Civil Procedure Act 1965 [sic] and Costs.'
The interest claim was not asserted as being made pursuant to any clause in the contract but under the Act (of 1932, not 1965). It provided in s34(1) that upon all debts or sums certain recovered in any action the jury, or if there was no jury, the judge, might allow interest to the party recovering such debt or sum at a prescribed rate from the time when such debt or sum was payable if payable by virtue of some written instrument and at a date or time certain or, if payable otherwise, then from the time when demand of payment was made in writing, giving notice to the debtor that interest would be claimed from the date of such demand or any later date. The statement of claim did not plead the factual basis upon which the claim under the Act for interest was based.
The second and third defendants delivered a defence on 21 December 1987. They pleaded that the agreement was in writing dated 12 March 1987 and included a term that its conditions would be in accordance with 'Australian Institute of Engineers AS2124', which was no doubt, a reference to a standard form of contract. They pleaded that further works were undertaken that amounted to variations under AS2124. Essentially, their accounting in the defence of monies due was as follows:
Agreed contract sum $ 92,538.00 Add amount for cost of variations 15,204.40 $107,742.40 Less deduction for variations 1,119.20 $106,623.20 Less six month maintenance retention sum and penalty for seven weeks delay in completion 7,487.12 $ 99,136.08 Less paid
$ 99,000.00
Although not stated, the figures in the defence appear to accept that $136.08 was owing by the second and third defendants.
On 12 July 1991, on the application of the plaintiffs, the first defendant was added as a defendant and amendments were made to the statement of claim, so that (inter alia) the amount claimed became $74,021.20 instead of $39,621. The amended statement of claim stated that the contract price for carrying out the work was $92,538 and that it was a term of the contract that its conditions included the general conditions of contract contained in Australian Standard AS2124-1986 ('AS2124'). Clause 40.1 of AS2124 provided for the second defendant, as superintendent, to direct variations to the work. In summary, particulars of the amount claimed were as follows:
Agreed contract sum $ 92,538.00 Add amount for cost of variations 70,483.20 $163,021.20 Less paid by defendants 89,000.00 Balance due
$ 74,021.20
Once again, the 17 paragraphs of the amended statement of claim made no mention of interest, but the relief sought at the end of the pleading was in these terms:
'And the plaintiff claims the sum of $74,021.20 together with interest thereon at the rate prescribed under the Supreme Court Civil Procedure Act 1965 [sic] and Costs.'
As before, the interest claim was not asserted as being made pursuant to any clause in the contract but under the Act, and the basis upon which it was claimed to be payable under the Act was not stated.
The defendants delivered an amended defence on 9 August 1991. The documents making up the contract, including AS2124, were admitted, as was the contract sum of $92,538. Essentially, their accounting of monies was as follows:
Agreed contract sum $92,538.00 Add amount for cost of variations 15,204.40 $107,742.40 Less deduction for variations 1,509.60 $106,232.80 Less seven weeks delay at agreed penalty rate of $300 per week 2,100.00 $104,132.80
The defendants claimed to have paid a total of $104,387.12, a sum $254.32 greater than had been due."
As to whether the proposed new claim for interest under a term of the contract was barred by the rule in Weldon v Neal, Crawford J said, at par11:
"The claim for interest in the existing statement of claim purports to be based on statute and not on a term of the contract between the parties. For that reason, the claim for interest the plaintiffs now wish to raise is based on a new cause of action in a technical sense, as that expression was originally used by Susan Campbell in her article Amendments and Limitations: The Rule in Weldon v Neal (1980) 54 ALJ 643 at 645, which is that of a new cause of action involving a change in the legal categorisation of a plaintiff's claim. The term has been adopted in a number of cases and was referred to by the members of the Full Court in Ritchie & Parker Alfred Green & Co v Gornalle [2000] TASSC 8. The Chief Justice, in par3, said that an amendment will normally be refused if it introduces a new cause of action in a technical sense, and the limitation period has expired. By the Limitation Act 1974, s4(5) it is provided that an action shall not be brought to recover arrears of interest in respect of any sum of money after the expiration of six years after they became due."
Counsel for the plaintiffs submits that it is incorrect to categorise the proposed new interest claim as a new cause of action as it is consequential upon the plaintiffs establishing an entitlement pursuant to their core claim for the payment of an amount for work done and materials supplied. Whilst it is correct to say that the plaintiffs' recovery of interest pursuant to their proposed new claim is dependent upon the success of their core claim, this does not mean that the new claim does not amount to a new cause of action that is not encompassed by the existing statement of claim. The proposed new claim is not mentioned in the existing statement of claim which, insofar as it mentions interest, merely includes in the relief sought a claim for interest "at the rate prescribed under the Supreme Court Civil Procedure Act". I am quite unable to construe this claim or any other part of the existing statement of claim as a claim pursuant to cl 42.1 of the contract for interest of 18 per cent compounded at six monthly intervals. The plaintiffs' two applications to amend their existing statement of claim recognise that the proposed new claim is not encompassed by the statement of claim. Plainly, if the plaintiffs now instituted fresh proceedings against the defendants claiming interest on the basis of cl 42.1, the claim would fail if the defendants relied on a limitation defence. Accepting that in consequence of r427(2A), this does not bar the Court from allowing the amendment sought, I turn to the exercise of the discretion. In Agtrack (NT) Pty Ltd v Hatfield [2003] 7 VR 63, the Court of Appeal (Victoria) addressed the impact on the discretion to allow the amendment of pleadings of Supreme Court Rules (Vic), r36.01(6), a rule in very similar terms to r427(2A). Ormiston JA, agreed with by Chernov JA and O'Bryan AJA, said, at 91:
"I am not persuaded that the new Rule was intended to have other than a procedural effect, or to do more than alter the nature of the discretion to be applied to a much broader discretion when considering amendments, which might otherwise appear to defeat limits laid down in limitations legislation."
and at 92:
"My prima facie conclusion therefore is that O.36.01(6) was intended only to have a procedural effect designed to ensure the proper and fair consideration of applications to amend pleadings where, if the amending claim had been brought independently and out of time, that claim would have been automatically rejected as statute-barred pursuant to existing authority. The Court now in the exercise of its discretion may look at the totality of the circumstances to resolve whether it is in fact fair to permit that claim to be introduced by way of amendment."
I agree with and adopt these comments. Returning to the facts of this case, it is beyond argument that the amendment sought by the plaintiffs seeks to introduce into the statement of claim a very substantial new claim. The core amount that the plaintiffs have sought to recover has varied as follows:
8 September 1987 $39,621 12 July 1991 $74,021 Currently
$57,731
By the proposed new claim, the plaintiffs, in addition, seek interest on the core amount claimed at 18 per cent compounded half yearly. As calculated to 1 February 2004, this claim totals $709,458.01. In my view it would do the defendants a gross injustice to allow the plaintiffs to amend their statement of claim so as to add such a substantial claim at this stage. It is not to the point that from the outset it has been open to the plaintiffs to pursue such a claim. I infer the defendants first received notice that the plaintiffs sought to claim interest on this basis in early 2002, that is, some 15 years after the action was instituted. Had this claim been included in the plaintiffs' statement of claim at an early stage, it is reasonable to assume that the defendants would have done all they could to expedite the hearing of the action and thereby avoid the risk of being found liable for interest at a rate which, for much of the time since 1987, is excessive, to say the least. As it is, the defendants acquiesced to the plaintiffs conducting this action in a most dilatory manner until 1999 when the defendants applied to have the action dismissed for want of prosecution. In the course of the Full Court hearing referable to that application, the plaintiffs' counsel did not dispute that the plaintiffs' delays were inexcusable and inordinate, Howlett v Hurburgh [2000] TASSC 171 [3]. In these circumstances I am not persuaded that the Court should now exercise its discretion to allow the amendment in issue and I decline to do so.
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