Jowett Motor Group Pty Ltd v Pentana Solutions Pty Ltd

[2022] VCC 2118

IN THE COUNTY COURT OF VICTORIA

AT Melbourne

COMMERCIAL DIVISION

 Revised
Not Restricted
Suitable for Publication

Case No. CI-20-01601

Jowett Motor Group Pty Ltd (ACN 069 648 433)

Plaintiff/Defendant by Counterclaim
v
Pentana Solutions Pty Ltd (ACN 053 303 757)	Defendant/Plaintiff by Counterclaim

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JUDGE:	HER HONOUR JUDGE A RYAN
WHERE HELD:	Melbourne
DATE OF HEARING:	29 November 2022
DATE OF RULING:	7 December 2022
CASE MAY BE CITED AS:	Jowett Motor Group Pty Ltd v Pentana Solutions Pty Ltd
MEDIUM NEUTRAL CITATION:	[2022] VCC 2118

RULING
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Subject:PRACTICE AND PROCEDURE – Amendment of pleadings

Catchwords:              Plaintiff’s application to amend statement of claim after the close of evidence

Legislation Cited:      Civil Procedure Act 2010; County Court Civil Procedure Rules 2018

Cases Cited:Cargill Australia Limited v Viterra Malt Pty Ltd (No 18) [2018] VSC 772; Loutfi v C Czarnikow Ltd [1952] 2 All ER 823; Perpetual Trustees Australia Limited v Schmidt & Anor [2010] VSC 67; Ralph v Strutton [1969] Qd R 348

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr S Rubenstein with Ms V Holt	Maddocks
For the Defendant	Mr P Wallis KC with Mr N Kotzman	KCL Law

HER HONOUR:

1The trial in this proceeding ran for eight days over a period from 13 September to 29 September 2022.  Following the hearing, the parties filed and served extensive written submissions as well as reply submissions.

2The matter was relisted on 29 November 2022 for closing oral submissions. At the start of the hearing, the plaintiff sought leave to file and serve a proposed further amended statement of claim in the form marked “Annexure A” to the plaintiff’s closing submissions dated 11 November 2022. The defendant does not oppose the proposed amendments save for those contained in paragraph 15. This paragraph pleads new and additional representations relating to the plaintiff’s claim that the defendant engaged in misleading and deceptive conduct in contravention of section 18 of the Australian Consumer Law (“ACL”).

3When asked why the plaintiff was making its application now rather than at the start of the proceeding, senior counsel for the plaintiff said the need to amend had fallen out of preparing closing submissions.  The purpose of the amendment was to make the claim against the defendant more precise.

4For the reasons that follow, I was not persuaded that the plaintiff should have leave to introduce the further representations pleaded in sub-paragraphs 15(f) to (i) of its proposed further amended statement of claim.

The proposed amendments

5The plaintiff seeks to amend paragraph 15 of its further amended statement of claim as follows (amendments underlined):

“15.Further or alternatively, in or about early March 2019, Pentana represented to JMG that by implementing the DMS, JMG would:

(a)       achieve improved efficiency;

(b)       increase profitability;

(c)       streamline operations;

(d)       reduce costs; and

(e)       increase sales;

(f)provide improved accuracy, time saving and process efficiency;

(g)provide improved functionality for every area of the business;

(h)provide improved integration in real time; and

(i)provide improved automated workflows.

(the Representation).”

Plaintiff’s submissions

6The plaintiff advances five reasons in support of its proposed amendments.  First, it says the amendment relates to express written representations, and there is no debate about the content of their wording.  The relevant representations are set out on page 5 of a document entitled “Dealer Management System: Cloud Solution” and referred to by the parties as the Service Level Agreement (“SLA”).[1]  The SLA was provided to the plaintiff’s managing director, Mr Jowett by the defendant in early March 2019.  The SLA was signed by Mr Jowett on behalf of the plaintiff, together with a Master Licence Agreement, on 15 March 2019.  The defendant agreed to supply its licensed software system and provide associated support services to the plaintiff in exchange for the payment of prescribed investment and licence fees.

[1]Exhibit “P2” and Court Book (“CB”) 1057

7The statements sought to be relied upon by the plaintiff are set out on page 5 of the SLA and are as follows:[2]

“eraPower is no ordinary Dealer Management System. It is designed through continuous consultation with users and industry stakeholders, applying the highest attention to detail proving [sic] Dealerships improved:

1. Accuracy, time saving and process efficiency

2. Functionality for every area of the business

3. Integration in real-time

4. Automated workflows

5. Flexibility to access from any browser”

[2]CB 1061

8Secondly, the plaintiff submits these statements are substantially similar to the statements made in the executive summary on page 3 of the SLA and pleaded as representations in the existing amended statement of claim in sub-paragraphs 15 (a) to (e).[3]  It submits the defendant cannot be surprised by responding to statements which are substantially similar to the existing pleaded case.

[3]CB 1059

9Thirdly, the plaintiff notes that the SLA is the defendant’s own document, which it has possessed for the duration of the proceeding. The SLA was exhibited to Mr Jowett’s first witness statement and been in evidence since 19 November 2021. It was also exhibited to Mr Marshall’s (the plaintiff’s Chief Financial Officer) and Mr McDuffie’s (the defendant’s Business Development Manager) witness statement. The SLA has been produced by both parties in the proceeding and is the source of the existing representations.  The plaintiff says the proposed representations were put to Mr McDuffie in cross-examination, who agreed that they were fair and accurate statements made by the defendant.[4]

[4]Transcript (“T”) 598, lines 1-26

10Fourthly, the plaintiff says it opened its case on the basis that the proposed representations were made regarding the nature of the dealer management system.[5]  Senior counsel for the plaintiff noted that he had read verbatim the representations contained in the SLA in his opening submissions.[6]  The proposed amendments reflect the case put at trial.

[5]T6.3-9; T33.10-31

[6]T34.1-2

11Fifthly, the plaintiff contends the defendant has not been prejudiced in the way it ran its case at trial, where representations of this nature were already before the Court in the existing pleading. It says that the defendant does not sufficiently articulate how it would have run its case differently in respect of the proposed amendments. 

Defendant’s submissions

12The defendant opposes the proposed amendments to paragraph 15. Counsel relies on paragraphs 10 to 14 of the defendant’s written reply submissions dated 25 November 2022, and brief oral submissions made at the hearing on 29 November 2022.

13The defendant observes that courts have emphasised that conduct said to be misleading or deceptive must be clearly and precisely identified in the interests of fairness to a defendant.[7]

[7]Citing Butcher v Lachlan Elder Realty Pty Ltd (2004) 218 CLR 592 at [32] (Gleeson CJ, Hayne and Heydon JJ); Miller and Associates Insurance Broking Pty Ltd v BMW Australia Finance Ltd (2010) 241 CLR 357 at [5] (French CJ and Kiefel J)

14The defendant submits no explanation has been proffered by the plaintiff as to its delay in its application to amend its statement of claim. The defendant says it is totally unsatisfactory for the plaintiff to expand its pleaded representations in its closing submissions after the closing of evidence where the defendant does not have an opportunity to answer.

15In response to the plaintiff’s submission that it opened its case by referring to the representations, senior counsel for the defendant says it is one thing to refer to particular statements in the documentation, and another thing to rely on the statements as a pleaded representation and seek relief in respect of the statements.

16In its reply submissions, the defendant said the following:[8]

“JMG submits that it ‘referred to’ the proposed further representations. This is as high as the submission can go. During openings, the Court asked Counsel for JMG, ‘Where are the representations?’, to which Counsel responded, referring to the alleged representations on page 3 of the SLA (as originally pleaded), ‘By implementing this proposed solution you will achieve the following…’. Counsel for JMG went on to read numerous other  parts of the SLA to ‘just highlight[] parts of this document’. The Court then asked Counsel for JMG, ‘You don’t plead any oral representations, do you? You’re only relying on those matters you took me to earlier in the other document?’, being the alleged representations on page 3 of the SLA (as originally pleaded). Counsel for JMG answered in the affirmative.”

[8]At [12], citations omitted

17The defendant says it risks suffering prejudice by reason of the late amendment because it does not know what it would have done differently had it been pleaded from the start of the trial.  Counsel gave the example of seeking to lead further evidence-in-chief or undertaking further re-examination of Mr McDuffie where the defendant bears the evidentiary onus to show that it had a proper basis for the making of the alleged representations as to future matters.[9]

[9]Citing Australian Competition and Consumer Commission v Woolworths Ltd [2019] FCA 1039 at [90] (Mortimer J), upheld on appeal in Australian Competition and Consumer Commission v Woolworths Group Ltd (2020) 281 FCR 108

18The defendant did not respond to the proposed representations in its written closing submissions. If the Court allows the proposed amendment to paragraph 15, the defendant reserves its rights to make supplementary written submissions in answer to the further representations alleged.

Relevant principles

19Rule 36.04(1)(b) of the County Court Civil Procedure Rules 2018 provides that:

“A party may amend any pleading served by that party … at any time by leave of the Court or with the consent of all other parties.”

20The general principles relating to applications to amend pleadings were succinctly outlined by Elliott J in Cargill Australia Limited v Viterra Malt Pty Ltd (No 18) as follows:[10]

“In deciding whether to grant leave to a party to amend its pleadings, the court must consider whether the proposed amendments facilitate the identification of the real issues in dispute and the just resolution of the proceeding.

The power to grant leave to a party to amend its pleading to raise an arguable issue is a discretionary power. There is no right or entitlement for a party to amend its pleading subject to the payment of costs referable to the amendment.  The nature and importance of the proposed amendments must be considered. This factor must be weighed against case management considerations such as cost, delay and the potential for unfair prejudice to other parties to the proceeding, the court and other litigants that might arise if the proposed amendments are allowed.

Further, in exercising the power to grant leave, the court may give any direction or impose any term or condition it thinks fit.”

[10][2018] VSC 772 at [32]-[34], citations omitted

21In Perpetual Trustees Australia Limited v Schmidt & Anor,[11] J Forrest J observed that following Aon Risk Services Australia Ltd v Australian National University:[12]

“(a)courts must now consider the wider public interest and the efficient use of limited court resources when deciding whether to grant applications to amend pleadings;

(b)that parties will not be permitted to raise any arguable case in any stage of proceedings subject only to payment of costs; and

(c)amendments that produce delay impact on the entire court system and affect parties desirous of utilising that particular court system.”

[11] [2010] VSC 67 at [112]

[12] (2009) 239 CLR 175 (“Aon Risk Services”)

22The Court must also take into account the relevant provisions of the Civil Procedure Act 2010 (“the Act”) addressing case management matters, including when dealing with applications for leave to amend.[13] It is important for judicial officers to engage with the Act’s provisions in balancing the competing interests of the parties and those of the administration of justice more generally.

[13]See Connock J in Business Service Brokers Pty Ltd v Optus Mobile Pty Ltd (No 3) [2022] VSC 283 at [28], citing Northern Health v Kuipers [2015] VSCA 172

23Other considerations include whether there is an irreparable element of unfair prejudice to the defendant caused by the amendments that cannot be adequately compensated for, and whether a satisfactory explanation has been given by the plaintiff for seeking the amendment at the time it is sought.[14]

[14]Namberry Craft v Watson [2011] VSC 136 at [38] per Vickery J, citing Aon Risk Services at [5] per French CJ

24Where an application to amend is made after the closing of a case and before judgment, the court will be reluctant to grant amendments at such a late stage unless there is very good ground and strong justification for so doing.[15]  An amendment made for the first time after the trial has concluded and when many decisions relating to the presentation of the parties case of fact have been made, including decisions about what evidence should be put forward, what should not be tendered and what submissions should be, faces special difficulties.[16]  It can be accepted that pleadings may be amended after the close of evidence providing the new facts raised by the amendment were the subject of evidence and the other party had an opportunity to litigate them. In such a case, the amendment may be permitted so that the pleadings reflect the conduct of the trial and the issues litigated between the parties.[17]

[15]Loutfi v C Czarnikow Limited [1952] 2 All ER 823 at 823 per Sellers J (“Loutfi”)

[16]        Mercantile Mutual Insurance v Farrington (1996) 44 NSWLR 634, per Bryson J at 651

[17]        Lactos Fresh Pty Ltd v Finishing Services Pty Ltd [2006] FCA 219 at [116]-[123] per Weinberg J

25In Ralph v Strutton,[18] the Full Court of the Queensland Supreme Court upheld the trial judge’s decision to refuse leave to amend a statement of claim at the end of the trial.  Counsel for the plaintiff had sought leave towards the end of his closing address to add a further particular of negligence.  The application was refused by the trial judge on the ground that the trial had not been fought on the issue raised by the new particular and had it been pleaded, further evidence might have been called by the defendant.  After referring with approval to the approach taken by Seller J in Loutfi, the Full Court said the following:[19]

“It is true that some of the evidence led at the trial was consistent with the case sought to be made by the amendment requested but in view of the wide nature of the allegations in the statement of claim as they already stood, the evidence was not necessarily related to a case based on the amendment sought. Counsel for the respondent submits that if the amendment had been made the case was one where it is probable that evidence on the point could and would have been led by the defendant and this appears to be the position. Certainly one could not say that further evidence would not have been called. In these circumstances it cannot be said that the judge's discretion to refuse the amendment was wrongly exercised.”

[18][1969] Qd R 348

[19]At 361 per Hoare J

26Courts will not refuse leave to amend merely due to lateness in and of itself, but will refuse leave as a result of the lateness, where the consequential prejudice to the other party is incapable of remedy.[20]  Where prejudice is raised by another party, the party seeking to amend must satisfy the Court that the amendment would not cause any injustice which would outweigh the consideration that the amendment is necessary.[21]

[20]Gold Peg International Pty Ltd v Kovan Engineering (Aus) Ltd [2004] FCA 1601 at [14] per Crennan J

[21]Williams Civil Procedure Victoria [I 36.01.175], citing Moore v TWT Ltd (1991) 105 FLR 350

Consideration

27In determining whether to grant leave to the plaintiff to amend, the primary question is where do the interests of justice best lie?

28I accept the defendant’s submission that merely referring to the statements in the SLA listing the proposed further representations during the plaintiff’s opening was not enough to put the defendant on notice that the misleading and deceptive conduct claim also relied upon those statements.  Nor is it sufficient, in my view, that the questions asked of Mr McDuffie in cross-examination about those statements put the issue squarely into controversy such that the defendant should have been aware that these additional representations had become a triable issue.

29While the defendant could not precisely articulate how it would have run its case differently had the plaintiff amended its pleading earlier, the plaintiff has not satisfied me that amending the pleading now would not unfairly prejudice the defendant in responding to the plaintiff’s case.  In particular, the defendant has not had the opportunity to lead evidence at trial to meet its evidentiary onus as to representations made as to future matters regarding these new representations.  The defendant may have sought to lead further evidence-in-chief and possibly re-examined Mr McDuffie in a different way.

30Had the plaintiff sought to amend at the start of the hearing, then the position may have been different. But it is now too late where the potential damage is already done in that the defendant conducted its defence at trial, including preparing written witness statements, on the basis of the existing pleadings.  Had the defendant been put on notice of the proposed amendments at an earlier time, then it may have conducted its defence differently. The fact that it is now unable to do so points to the irreparable prejudice the defendant would suffer if the amendment were permitted.

31I consider the potential prejudice to the defendant in allowing the introduction of new and further representations after trial far outweighs any potential prejudice to the plaintiff by not allowing the amendment sought.  The amended representations  to some extent mirror those already pleaded in paragraph 15.  Senior counsel for the plaintiff noted that the new statements were not dissimilar from the existing representations.[22]  If the new representations are substantially similar, as is conceded, then the prejudice to the plaintiff in not allowing them seems marginal.

[22]T841.20-25

32Additionally, I was not persuaded that the explanation for the delay given by the plaintiff for the late amendment, namely, that it only fell out when preparing final submissions and was part of tidying up the case, is a sufficiently satisfactory one which justifies the grant of leave at this late stage.  The plaintiff could have made an application to amend at an earlier time, for example, after its opening when reference was made to these additional statements but chose not to do so.

33Overall, I am not persuaded that the plaintiff has established sufficient grounds to justify leave being given to amend paragraph 15 of its statement of claim after the close of evidence.

Conclusion

34For the reasons given above, I consider that the interests of justice in this case dictate that the amendments sought to paragraph 15 be refused.

35I will make the following orders:

(a)   The plaintiff has leave to file and serve its further amended statement of claim substantially in the form of “Annexure A” of its closing submissions dated 11 November 2022, save that leave to include sub-paragraphs 15(f) to (i) is refused.

(b)   Costs reserved.

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Certificate

I certify that these 10 pages are a true copy of the Reasons for Ruling of Her Honour Judge A Ryan delivered on 7 December 2022.

Dated:   7 December 2022

Associate to Her Honour Judge A Ryan