Kimberley N.Z.I. Finance Ltd v Torero Pty Ltd
[1988] FCA 385
•19 Jul 1988
LIMITED DISTRIBUTION
CATCHWORDS
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PRACTICE AND PROCEDURE - pleadings - amendment - relevant principles - embarrassing plea - amendment not permitted - notice to admit facts - no response - deemed admission - leave to withdraw admission and file response out of time.
Trade Practices Act 1974 s.52
v Smith (1884) 26 Ch.D.700 v Secretary of State for Defence (1980) 1 ~ l l ER 166
KIMBERLEY N.Z.I. FINANCE LIMITED v TORERO PTY LTD, STEVEN ALICK
NASEL, FRANK LEONNE AGNELLO
TORERO PTY LTD V TRAYDA PTY LTD
No. WAG 99 of 1 9 8 5
19 JULY 1988
FRENCH J.
PERTH
IN THE FEDERAL COURT ) LIMITED DISTRIBUTION
OF AUSTRALIA ) WESTERN AUSTRALIA 1 DISTRICT REGISTRY 1 GENERAL DIVISION
) NO. WAG 99 Of 1985
B E T W E E N : KIMBERLEY N.Z.I. FINANCE LIMITED
Applicant
and
TORERO PTY LTD
First Respondent
STEVEN ALICK MASEL
Second Respondent
FRANK LEONNE AGNELLO
Third Respondent
TORERO PTY LTD
Cross Claimant
TRAYDA PTY LTD
Cross Respondent
MINUTE OF ORDER
JUDGE MAKING ORDER: FRENCH J.
DATE OF ORDER: 19 JULY 1988
WHERE MADE: PERTH THE COURT ORDERS THAT:
The application for leave to amend the statement of claim is refused.
2 . The time limited for the applicant to respond to the respondents' motion to admit facts be extended to 21 July 1988.
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3 . The applicant pay the costs of today's directions
hearing in any event to include the costs of senior counsel to be taxed.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT ) LIMITED DISTRIBUTION OF AUSTRALIA ) WESTERN AUSTRALIA ) DISTRICT REGISTRY ) GENERAL DIVISION ) NO. WAG 99 of 1985 B E T W E E N : KIMBERLEY N.Z.I. FINANCE LIMITED
Applicant
and
TORERO PTY LTD
First Respondent
STEVEN ALICK MASEL
Second Respondent
FRANK LEONNE AGNELLO
Third Respondent
TORERO PTY LTD
Cross Claimant
TRAYDA PTY LTD
Cross Respondent
CORAN: FRENCH J. 19 JULY 1988
REASONS FOR JUDGMENT
ON APPLICATION TO AMEND STATEMENT OF CLAIM The applicant, which is a finance company, says that it
has advanced $820,000 to a land developer, Trayda Pty Ltd, to
finance the construction of 10 home units on a block of land at
Maylands. It made the advance, so it says, on the basis of
representations that the units had been pre-sold to other parties.
In these proceedings, it is not the developer that is sued but the
represented purchaser of four of the units, a company called
L .
Torero Pty Ltd. Also sued are its two directors Messrs. Masel and
Agnello.
The causes of action alleged against them are misleading and deceptive conduct in contravention of s.52 of the - Trade Practices Act and fraudulent and negligent mis-statement.
The substance of the case as presently pleaded rests upon misrepresentations said to have been made by the respondents relating to the enforceability of four contracts between the first respondent and the developer of the land and the intention of the first respondent to perform those contracts. Paragraph 24 of the amended statement of claim alleges:-
"24. At all material times, the Second and Third Respondents on behalf of the First Respondent represented to the Applicant that the Trayda contracts were valid and enforceable, and further that the First Respondent would duly perform the same in accordance with the terms thereof."
These representations are said to have been falsifled by matters pleaded in para.29:-
"29. The representations referred to in paragraphs 21 and 24 hereof were false in that at all material times prior to the settlement date and therafter ,
the Second and Third Respondents on behalf of the First Respondent did not in fact believe that the Trayda contracts were valid and enforceable, and the First Respondent did not intend to perform the same in accordance with the terms thereof or at
all. " By para.15, in support, no doubt, of the fraud and
negligence claims, it is pleaded that the respondents were or ought to have been aware that the applicant would not have agreed to provide the finance for development "unless each of the ten
units in the development had in fact been pre-sold pursuant to
binding and enforceable written contracts for sale".
Also relevant for present purposes is para.36 of the
amended statement of claim which alleges:-
"At all material times prior to the settlement date, the said false representations made by the First, Second and Third Respondents to the Applicant and referred to in
paragraphs 21 and 2 4 hereof, formed part of a scheme, arrangement or understanding on the part of the First Respondent which was intended to mislead and deceive the Applicant which did in fact mislead and deceive the Applicant."
That paragraph is presently supported by some six paragraphs of particulars.
The appllcant seeks leave to further amend the amended
statement of clalm in relation to the paragraphs set out above. The amendment is opposed by the respondents. The grounds for that
opposition relate not to prejudice arising from the lateness of the amendments, but to what is said to be their embarrasslng nature and their inability to support any reasonable cause of
action.The principles governing the discretion to give leave to
amend are well established. The question is not determined by
deciding whether the need for the application is the fault of the
applicants or their advisors. The purpose of litigation is to decide disputes justly, according to law. In relation to amendments generally that purpose was elaborated by Bowen LJ in
Cropper v - Smith (1884) 26 Ch.D. 700 at 710:-
"Now, I think it is a well established principle that the ob~ect of Courts is to decide the rights of the parties,
and not to punish them for mistakes they make in the conduct of their cases by deciding otherwise than in accordance with their rights ... I know of no kind of error or mistake which, if not fraudulent or intended to
overreach, the Court ought not to correct, ~f it can be done without injustice to the other party. Courts do not exist for the sake of discipllne, but for the sake of deciding matters in controversy, and I do not regard
seems to me that as soon as it appears that the way in such amendment as a matter of favour or of grace ... It which a party has framed his case will not lead to a decision of the real matter in controversy, it is a s much a matter of right on his part to have it corrected, if it can be done without injustice, as anything else in the case is a matter of right."
The acceptance of that general proposition does not detract from the proper role of pleadings. Their purpose remains one of vital importance, namely "to define the issues and thereby to inform the parties in advance of the case they have to meet and
s o enable them to take
steps to deal with it" - Farrell v
Secretary of State for Defence (1980) 1 All ER 166 at 173.
The rules of Court empower amendment at any stage in proceedings - 0.13 r.2(1) and the
power must be exercised in
accordance with the duty that the Court has under 0.13 r.2(2):-
"All necessary amendments shall be made for the purpose of determining the real questions raised by or otherwise depending on the proceeding, or of correcting any defect or error in any proceeding ...."
In essence, the Court should be prepared to permit at any stage in the proceedings, such amendment as is necessary to enable the real question in dispute to be decided. That principle is subject to the qualification that amendment will not be permitted where it will result in unfair prejudice to a party which cannot be remedied. Further, it would be futile to permit amendments which are vague or embarrassing or otherwise do not comply with the minimum requirements of the rules of pleading. Against that background I turn to each of the proposed amendments.
Paragraph 15
This paragraph as amended would read:-
"At all material times, the Second and Third Respondents on behalf of the First Respondent were aware, or
alternatively, ought to have been aware, that the
Applicant would not have agreed to provide the finance for the development, unless each of the ten units in the development had in fact been pre-sold pursuant to binding and enforceable written contracts for sale and - unless it was clear that there were no grounds for doubting that such contracts would be performed and that Ermay would not have to attempt to sell any of the units on the open market." (proposed amendment underlined)
In its present form, it is said that para.15 suffers from the difficulty of its subjunctive expression. The amendment cannot however be resisted on that basis, which may open a wider ground
of objection to the whole paragraph. It is too late In the day
for the respondents to take an objection to the amendment which is in substance an objection to the pleading as it presently stands, The element introduced by the amendment however, raises
considerable difficulties of construction. The new plea asserts an additional condition or conditions to be fulfilled before the applicant would agree to provide flnance for the development. The
language used however leaves the reader to guess whether what is being propounded is a matter of objective fact, i.e. the existence of the relevant "grounds for doubting", or a sub~ective state of mind, that is to say, it being "clear" in the mind of some person or persons unknown that there were no grounds for doubting. Absolute certainty being generally unattainable in human or even cosmic affairs, the exclusion of all "grounds for doubting" verges on the absurd. In my opinion the plea proposed is embarrassingly uncertain and should not be permitted.
Paragraph 24(b)
It is propo sed to re-designate pa ra.24 as 24(a) and to
add new sub-paras.24(b) and (c). They introduce additional
representations attributed to the first respondent. The proposed
new sub-para.24(b) reads:-
"At all material tlmes the Second Respondent, on behalf of the First Respondent, represented that there was no reason for the Respondents to doubt that the First Respondent would proceed with the purchase of the four units the subject of the Trayda contracts."
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It is supported by particulars in three paragraphs. The reference to a representation "at all material times" is plainly embarrassing. The respondents to this claim in which the applicant presently seeks damages in excess of $1 million, are entitled to have the alleged representation clearly spelt out in the body of the pleading. They are not to be thrown back for that purpose on the shifting sands of particulars which do not support
the substantive plea. The proposed particulars to sub-para.24(b)
run to three paragraphs. The first alleges that in March 1984 the
third respondent on behalf of the first respondent informed one
O'Neill for the applicant, that the first respondent would proceed
with the purchase of the four units for $375,000. That does not
support the representation pleaded i.e. "that there was no reason
for the Respondents to doubt that the First Respondent would
proceed with the purchase". The other two particulars rely upon
conduct said to convey such a representation by implication.
Whether or not they can support that implication is highly
debatable. But In my opinion, implied representations are to be
pleaded as such, not to be found lurking in the particulars. None
of the particulars support the allegation that the representation
was made "at all material times". I will therefore not allow the
proposed new para.24(b). Paragraph 24( c) This new paragraph, Including its particulars, would
read as follows:-
"At all material times the Second Respondent represented on behalf of the First Respondent that Trayda would not have to attempt to sell any of the units the subject of the Trayda contracts on the open market.
PARTICULARS
On 5 January 1984 the Second Respondent represented to the Applicant that Trayda had sold unit nos. 1, 2, 9 and 10 and thereby impliedly represented that Trayda did not have to sell any of the units on the open market and did not at any time thereafter inform the Applicant that this representation of fact was no longer true."
Again, the reference to "all material times" is embarrassing and insupportable, having regard to the particulars. The fact that the representation is to be implied is found only in the particulars. The implication as a matter of logic does not follow necessarily from the pleaded representation. The amendment is embarrassing and will not be allowed.
Sub-paragraphs 29(b) and (c)
In view of my decision in relation to sub-paras.24(b)
and (c), it follows that the amendments by which the applicant seeks to introduce sub-paras.29(b) and (c) to falslfy the representations set up by the proposed amendments to para.24, will
not be allowed.
Sub-paragraph 36(vii)
Sub-paragraph 36(vii) is also dependent on the introduction of sub-para.24(b) and for that reason no amendment will be permitted.
Sub-paragraph 36(viii)
The proposed additional particular to para.36 would
read:-
“The Respondent agreed with Trayda on or about 18 July 1984 that Trayda would repurchase unit 2 and therefore the First and Second Respondents knew that Trayda would have to attempt to sell unit 2 on the open market.”
As presently stated it embodies a non sequitur and will
not be allowed.
In the event, none of the proposed amendments will be
allowed.
Notice to Admlt Facts
A question was also raised about the applicant’s failure
to respond to a notice to admit facts which was served on its
solicitors on or about 15 June 1988. The applicant asked for an
extension of time to respond to the notice, as, on a failure to
respond, it is deemed to have admitted the relevant facts. The
relevant rule is 0.18 r.2 which provides:-
“2(1) A party to a proceeding may, by notlce served on another party, require him to admlt, for the purpose of the proceeding only, the facts or documents specified in the notlce.
2(2) If, as to any fact or document specified in the notice, the party on whom the notice is served does not,
within 14 days after service, serve, on the party serving the notice to admit facts or documents, a notice disputing that fact or document, that fact or document shall, for the purpose of the proceeding, be admitted by the party on whom the notice to admit facts or documents
is served in favour of the party serving the notice.
2(3) A party may, with the leave of the Court, withdraw
an admission under sub-rule ( 2 ) . "
In the circumstances the respondents were unable to point to any pre-~udice arising from the effective withdrawal of the deemed
admission and In the circumstances I think the appropriate course is to permit the applicant to withdraw its deemed admissions and to file a response to the notice, provided it is filed and served by 21 July 1988.
I certify that this and the preceding
nine (9) pages are a true copy of the
Reasons for Judgment of his HonourJustice French.
Associate: U k9-k
Date : IY 1qss
Counsel for the Applicant: Mr B. Wheatley Solicitors for the Applicant: Messrs. Corser & Corser
Counsel for the Respondents: Mr M.S. MacDonald
Solicitors for the Respondents: Messrs. MacDonald Rudder
Date of Hearlng: 19 July 1988
Date of Judgment: 19 July 1988
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