Howlett v Hurburgh

[2002] TASSC 42

[2002] TASSC 42

CITATION:           Howlett v Hurburgh [2002] TASSC 42

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:  5 July 2002
DELIVERED AT:  Launceston
HEARING DATE/S:  22 April 2002
JUDGMENT OF:  Crawford J

CATCHWORDS:

Procedure - Supreme Court procedure - Tasmania - Practice under Rules of Court - Amendments - Statement of claim - Whether amendment introduced statute-barred cause of action.

Weldon v Neal (1887) 19 QBD 394, applied.

Aust Dig Procedure [276]

REPRESENTATION:

Counsel:
           Plaintiffs/Applicants:  J W Avery
           Defendants/Respondents:  D R Wallace
Solicitors:
           Plaintiffs/Applicants:  Avery Partners
           Defendants/Respondents:  Wallace Wilkinson & Webster

Judgment ID Number:  [2002] TASSC 42
Number of paragraphs:  14

Serial No 42/2002
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  CRAWFORD J
  5 July 2002

1. The plaintiffs applied for leave to amend their already amended statement of claim, by adding a claim for interest pursuant to the contract under which they had sued for work done and materials supplied. 

1. A brief history of the pleadings is as follows.  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

1. 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. 

1. 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.

1. 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

1. 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. 

1. 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. 

1. The interlocutory application I am determining was filed on 15 February 2002.  The plaintiffs seek leave to further amend their statement of claim by adding a new paragraph:

"18     The said contract provided, inter alia, that interest would be payable on monies due and owing at the rate of eighteen percent (18%) per annum compounded at six-monthly intervals."

They also seek to amend the relief sought at the end of the statement of claim, by amending the interest claim:

"And the plaintiff claims the sum of $74,021.20 together with interest thereon at the rate of eighteen percent (18%) per annum and Costs."

1. I note that neither the date from which interest is claimed, nor the calculations of the interest, are stated.  The plaintiffs' legal practitioner explained to me that AS2124 General Conditions of Contract provided in cl 42.9 for interest on an overdue payment at 18 per cent per annum, compounded at six monthly intervals.  He pointed out that the amended statement of claim, delivered in July 1991, pleaded that its conditions included the general conditions of AS2124, although he acknowledged that the claim for interest was not pleaded as depending on any of the conditions. 

1. The defendants' argument is that leave to amend should not be permitted for two alternative reasons.  Firstly, that the making of a claim for interest under a term of the contract approximately 15 years after the claim for interest could first have been made, is barred by the so-called rule in Weldon v Neal (1887) 19 QBD 394. Secondly, leave to amend should be refused in the exercise of my discretion.

1. 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.

1. Mr Avery, who appeared for the plaintiffs, did not seek to argue that the rule in Weldon v Neal does not apply, if I hold, as I do, that by the amendment the plaintiffs seek to raise a new cause of action. 

1. It is therefore unnecessary to consider the exercise of the discretion to allow the amendment.  However, I acknowledge that there was weight in the submission of Mr Wallace for the defendants that they would be likely to suffer prejudice by the amendment.  It is now approximately 15 years since the cause of action arose.  The interest rate of 18 per cent per annum, compounded each six months, may have been a reasonable rate at the time the contract was entered into, but I do not regard it as reasonable today.  I take judicial notice that interest rates have substantially reduced since the date of the contract.  In my view it is unjust that the defendants should be faced for the first time, in an action commenced nearly 15 years ago, with a claim for interest at that rate.

1. The application will be dismissed.