Kemp v Tiirikainen (No 3)
[2021] ACTSC 167
SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY
Case Title: | Kemp v Tiirikainen (No 3) |
Citation: | [2021] ACTSC 167 |
Hearing Date: | 23 July 2021 |
DecisionDate: | 23 July 2021 |
Before: | Mossop J |
Decision: | See [17] - [18] |
Catchwords: | PRACTICE AND PROCEDURE – PLEADINGS – Application to amend statement of claim – where amendment would introduce new claim for exemplary damages and raise new factual issues – where application was made just prior to trial date – where no adequate explanation for the amendment provided – application dismissed PRACTICE AND PROCEDURE – SUBPOENAS – Application to set aside subpoenas to produce documents and give evidence issued by the plaintiff – where subpoenas are related to issues raised by the plaintiff’s unsuccessful pleading amendment application – first subpoena set aside – second subpoena not set aside – not possible to conclude that the second subpoena lacked a legitimate forensic purpose at time of application |
Cases Cited: | AON Risk Services Australia v Australian National University (2009) HCA 27; 239 CLR 175 Harris v Digital Pulse Pty Ltd [2003] NSWCA 10; 56 NSWLR 298 |
Texts Cited: | JD Heydon, Heydon on Contract (Lawbook Co, 2019) |
Parties: | Graham Kemp ( Plaintiff) Mark Tiirikainen and Ian Sutherland trading as S&T Lawyers (First Defendant) Charles Giles (Second Defendant) |
Representation: | Counsel D Hassall ( Plaintiff) M Karam with D Thomas (First Defendant) |
| Solicitors Nelson & Hill Lawyers ( Plaintiff) McInnes Wilson Lawyers (First Defendant) | |
File Number: | SC 328 of 2018 |
MOSSOP J:
Introduction
Before me are two applications. The first is an application brought by the plaintiff to amend the plaintiff’s Amended Statement of Claim. The second is an application by the first defendant to set aside two subpoenas.
Important aspects of the context in which these applications are to be decided are that:
(a)the proceedings were commenced on 4 December 2017 in the Magistrates Court and subsequently transferred to the Supreme Court;
(b)the current version of the Statement of Claim is the Amended Statement of Claim dated 15 June 2018;
(c)the proceedings have been previously listed for trial commencing on 28 April 2020 but that trial was adjourned as a consequence of the late service of evidence by the plaintiff;
(d)in December 2020 the proceedings were listed for hearing on 26 July 2021;
(e)as a result of the likely unavailability of the trial judge the proceedings are likely to be adjourned until Wednesday, 28 July 2021; and
(f)the proceedings are estimated at two to three days in length.
Proposed amendment to pleadings
The proposed amendment to the pleadings is to add a single paragraph. That paragraph made a claim for exemplary damages and particularised the basis for that amendment. The basis for the claim for exemplary damages was “the first defendants failed to adequately supervise the second defendant in his role as their employed solicitor or to educate him so as to avoid the breaches of duty, including fiduciary duty … and negligence … and further, he was held out by the first defendants to all the world as a competent and trustworthy solicitor and officer of the court cognizant [sic] of his duties and responsibilities as such when he was not”.
The failure to adequately supervise and educate the second defendant raises issues not currently pleaded. Insofar as the proposed amendment includes reference to negligence, the pleading is somewhat curious in that on 28 April 2020 the solicitors for the plaintiff had indicated that they did not intend to press any cause of action arising out of negligence but maintained the claim for breaches of fiduciary duty and breaches of retainer.
The explanation for the late amendment is given in an affidavit of Nathan Kuster, an employed solicitor of the plaintiff’s solicitors. The affidavit says that at a conference between plaintiff’s solicitor and counsel on 5 July 2021 “It became apparent to the Plaintiffs [sic] Solicitors and counsel that there had been an oversight in the preparation of Amended Statement of Claim dated 15 June 2018”. That oversight was said to be the omission from the Amended Statement of Claim of a previously pleaded claim for aggravated and exemplary damages in the original Statement of Claim.
The affidavit is unsatisfactory in that it identifies a conclusion, namely that there had been an oversight, without identifying the basis for that conclusion and without providing direct evidence that would support the conclusion. There was, for example, no direct evidence from the drafter of the Amended Statement of Claim identifying that the removal of the claim for aggravated and exemplary damages was an oversight, rather than a deliberate forensic decision. Further, there is no explanation in the affidavit as to why the proposed claim for aggravated damages is different to the claim for aggravated or exemplary damages that was previously pleaded. That is of particular significance in circumstances where the proposed amended pleading appears to raise new issues not currently reflected in the Amended Statement of Claim.
Mr Kuster was not cross-examined about his evidence. It is significant that he was not challenged on his evidence and I should accept it as far as it goes. However, brief conclusory evidence such as this does not need to be accepted uncritically by the court. An application to amend pleadings will be most persuasive when the court perceives that the evidence in support of that application is telling the full story. That is not the case here.
Counsel for the plaintiff submitted that the amendment was to correct an oversight. He pointed to the Originating Claim which made reference to a claim for exemplary damages. That Originating Claim remains unamended notwithstanding the transfer of the proceedings to the Supreme Court and the filing of subsequent pleadings. He submitted that as a result of the Originating Claim, the defendants had been on notice of a claim for exemplary damages since the commencement of the proceedings. He submitted that the original Statement of Claim included a claim for aggravated and exemplary damages and also included a claim in negligence particularised as including a failure to supervise and review the work of the second defendant, failing to ensure that the second defendant complied with proper practice, failing to ensure that the second defendant was regularly reminded of his obligations to not disclose certain material and failing to take all other steps necessary to ensure that certain material was kept confidential.
Counsel for the plaintiff submitted that the facts and matters referred to flow from the existing pleading, that it was not novel or surprising that it clarified and reinforced what was referred to in the Originating Claim and earlier pleading and that the failure to include it was an oversight. He submitted that the plaintiff would pay the first defendant’s costs arising from the amendment.
The first defendant opposed the amendment. It pointed to the history of the proceedings which have been referred to briefly above and the considerations relevant to whether or not an application for leave to amend should be granted and submitted that in the circumstances all relevant considerations tended against the granting of the application.
The principal relevant considerations appear to be as follows:
(a)The stage of the proceedings at which the application for amendment is made: The application is made very late shortly prior to the commencement of the trial. Although notice was given of the intention to seek leave to amend on 9 July 2021, in light of the very extensive history of the proceedings and the adjournment of the trial in 2020, the application to amend is appropriately characterised as being very late.
(b)The circumstances giving rise to the need to amend and the explanation for the delay: As I have indicated the evidence as to the reason for the late amendment is less than compelling. It is not sufficient to disclose a mistake on the part of counsel or solicitor who drafted the amended pleading. No allocation of responsibility is possible. It provides no explanation for the reason why different grounds for the claim for exemplary damages are now sought to be pleaded when compared to the original version of the pleading.
(c)The prejudice to the opponent: The prejudice arising from the amendment would be the need at very short notice to investigate a different range of factual allegations to that which the defendant was previously facing. The evidence of Mr Hill indicates that this may take some time and would involve the adjournment of the hearing. Prejudice to the first defendant arises from the inability to bring the matter to a conclusion. The prejudice would not be completely removed by way of a costs order. As the decision in AON Risk Services Australia v Australian National University (2009) HCA 27; 239 CLR 175 makes clear, costs are not a suitable balm for all adjournments.
(d)The wider public interest in the efficient use of limited court resources: This is a factor which tends against the granting of leave to amend as at worst it would require a further adjournment of the proceedings. At best, it would require that the proceedings be part heard and further time and resources be devoted to them, after proper investigation could be made of the new allegation.
(e)Whether the amendments set up a new or different case from that which the opponent was prepared to meet: As I have pointed out, the proposed amendment introduces a new subject matter for the proceeding namely the extent of education of the second defendant by the first defendant.
(f)Whether the amendment would be futile or bad at law: The first defendant contended that a claim for exemplary damages was not open because such a remedy was not available for equitable wrongs, relying on JD Heydon, Heydon on Contract (Lawbook Co, 2019) at [26.180] and on the decision in Harris v Digital Pulse Pty Ltd [2003] NSWCA 10; 56 NSWLR 298 (Harris). Counsel for the plaintiff submits that his client wishes to contend that the decision is wrong.
(g)Whether the amendment reintroduces a claim that has been abandoned: It is very clear that for many years and including at the previous hearing the plaintiff was not pursuing any claim for exemplary damages. He seeks now to reintroduce such a claim. He says that this was as a result of an oversight but the evidence on this point is not compelling and the precise meaning of “oversight” is not elaborated upon or explained.
For the purposes of this application, it is unnecessary to go into the prospects of the plaintiff overturning the decision in Harris. The other factors present in this case make it a compelling one for refusal of leave. The lateness, the new factual aspects that it would introduce into the proceedings, the very unsatisfactory procedural history of the matter and the absence of a persuasive explanation for the lateness of the amendment all, in my view, compel the conclusion that the application should be refused.
Application to set aside subpoenas
That leaves the first defendant’s application to set aside the subpoenas. There are two subpoenas. One is to Mr Tiirikainen, the surviving member of the firm which is the first defendant. The schedule to the subpoena makes it very clear that what is being targeted are documents relevant to the training or education of the second defendant when he was a solicitor or when he was a law clerk employed by the firm. I was told that he was employed as a solicitor between 2005 and 2012. Any employment as a law clerk would have been prior to that.
Having regard to the refusal of the application for leave to amend the pleadings, in my view, this subpoena should be set aside insofar as it seeks the production of documents. That is because, having regard to its terms, it lacks a legitimate forensic purpose and, having regard to the evidence of Mr Hill in relation to what would be necessary to comply with it, would have the effect of delaying or preventing the resolution of the proceedings.
The subpoena also seeks that Mr Tiirikainen attend to give evidence. Insofar as the plaintiff intends to call him to give evidence relating to the training and education issues the subject of the schedule in the subpoena, the subpoena to attend should be set aside for the same reasons as the requirement to produce documents. Insofar as it is possible that Mr Tiirikainen might be called to give evidence in the plaintiff’s case of matters not directed to the training and education issue, I would also set the subpoena aside because the calling of such evidence is contrary to the history of procedural directions in this matter requiring affidavit evidence to be served and the absence of any notice prior to the issuing of subpoena that, in addition to affidavit evidence, the plaintiff also sought to call one of the defendants. Orders requiring the service of evidence, including expert and affidavit evidence had been made on at least 20 June 2019, 22 May 2020 and 19 October 2020. The history of procedural directions, the absence of notice that the plaintiff would attempt to call him in its case and the absence of any adequate explanation of what evidence Mr Tiirikainen would be required to give, apart from evidence in relation to education and training, make it appropriate to discharge the subpoena. If, notwithstanding the refusal of leave to amend, there is some proper basis upon which, notwithstanding the absence of notice, he might be called to give evidence in the plaintiff’s case, then that is a matter which can be agitated in front of the trial judge.
The subpoena to the ACT Law Society is in a somewhat different position. No application has been made by the Law Society to discharge the subpoena. The subpoena seeks evidence relating to proceedings brought by the Law Society against the second defendant in 1985 and 2020 and the application made by the second defendant for readmission in 2005. This material is less obviously clearly tied to the education and training issue. Given the prolixity of the pleadings, I am not in a position to completely appreciate the scope of the pleadings or the issues that arise. I cannot say that the material to be produced would be irrelevant to those issues or that the subpoena lacks a legitimate forensic purpose in circumstances where the pleadings are not amended. I recognise that the production of a significant volume of material on the 27 July 2021 may make it difficult for that material to be digested, particularly in circumstances where counsel for the first defendant will be appearing by video link. Further, having regard to the procedural directions earlier served and the absence of any direct relevance of the proceedings to the matters identified in the Statement of Claim, there are likely to be real obstacles to the admission of the material, although I cannot say that it would inevitably not be admitted. The circumstances are, in my view, not sufficient to warrant the setting aside of the subpoena at the instance of the first defendant. Any difficulties that arise as a result of the production of documents are matters which can be dealt with by the trial judge. By adopting this approach, I do not wish to be seen as giving encouragement to any procedure which has the potential to delay the final resolution of the matter or the orderly conduct of the hearing next week. I have only taken the approach that I have done because I am not satisfied that it is appropriate to take the drastic step of setting aside the subpoena.
Orders
The orders of the Court are:
1. The application in proceeding dated 16 July 2021 is dismissed.
2. The subpoena issued to Mark Martin John Tiirikainen is set aside and the application in proceeding dated 21 July 2021 is otherwise dismissed.
[Further submissions were heard on costs].
In these proceedings, the first defendant has been successful on the plaintiff’s Application in Proceeding dated 16 July 2021. The first defendant has only been partially successful on its application to set aside two subpoenas. That latter application was largely subordinate to and consequential upon the contest in relation to the amendment of the pleadings. In my view, rather than attempt any apportionment, the appropriate means of dealing with the cost of that application is to identify them as being the first defendant’s costs in the cause. I will therefore make the following additional orders:
3. The plaintiff is to pay the first defendant’s costs of the application in proceeding dated 16 July 2021.
4. The costs of the first defendant’s application in proceeding dated 21 July 2021 are the first defendant’s costs in the cause.
| I certify that the preceding eighteen [18] numbered paragraphs are a true copy of the Reasons for Judgment of his Honour Justice Mossop Associate: Date: 20 September 2021 |
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