KJ Renfrey Nom P/L v Crystalcorp Developments P/L No. Scgrg-00-316

[2000] SASC 373

KJ RENFREY NOMINEES PTY LTD  V  CRYSTALCORP DEVELOPMENTS PTY LTD

[2000] SASC 373

1................ JUDGE BURLEY:.......... In this matter the defendant has applied for leave to amend the defence, set-off and counterclaim, which I shall refer to as the defence. The proposed amendment is set out in the affidavit of Mr Bannister, sworn on 25 October 2000. The proposed amendment is as follows:-

“A.If contrary to the defendant’s assertion, the agreement referred to in paragraph 22 hereof was not an agreement to arbitrate, then, in the alternative, the defendant says:-

1...... the agreement was an agreement between the parties to have the issue of the alleged outstanding monies on progress claims 1 to 15 made subject to a binding expert determination; and

2...... in the further alternative, that the agreement was a covenant to be bound by the determination of Mr Popplewell as to what, if any monies were owing under progress claims 1 to 15 in circumstances where Mr Popplewell was not a party to the dispute.”

1. The application for leave to amend was opposed by the plaintiff. Mr Lane, counsel for the plaintiff, initially advanced submissions that the proposed amendment constituted an illegitimate withdrawal of an admission that had previously occurred in the defence in circumstances where, had a proper application for leave to withdraw an admission been made, that leave would have been refused. He also advanced submissions that the alternative pleading proposed by the defendant contradicted other aspects of the defendants defence in circumstances where under the provisions of Rule 46.09 the alternative plea could not be said to be legitimate.

2. I think that his argument is better dealt with by reference to the provisions of Rule 46.09.  That rule provides:

   “46.09(1)  A party shall not plead an allegation of fact or a new ground or claim inconsistent with his previous pleading.

   (2) Subclause (1) hereof does not affect the right of a party to make allegations in the alternative or to amend or apply for leave to amend a pleading.”

3. The cases referred to by the learned author in ‘Civil Procedure South Australia’ at pp8529 and 8535 remind me that pleading in the alternative can fall into two categories;  one where the court will allow an alternative pleading and one where the court will not. Examples are given in the commentary under Rule 46.09 of both.

4. In my view the proposed pleading contended for by the defendant should be characterised, in the circumstances of this case, as being an inconsistent pleading which cannot be pleaded in the alternative. That conclusion arises on the following facts. The claim by the plaintiff is for a money sum said to be due under a construction contract entered into between the plaintiff and the defendant. In the statement of claim at paragraphs 21-24 an arbitration agreement is referred to. That has been included in the statement of claim because the plaintiff has rightly anticipated that the defendant would rely upon the arbitration agreement and its implementation in order to limit the claim for money said by the plaintiff to be due by the defendant pursuant to the contract.

5. The defendant in its defence refers to the arbitration agreement, in particular at paragraph 32 of the defence. The defendant, subject to the set-off and counterclaim later pleaded in the defence, admits paragraphs 21, 22 and 23 of the statement of claim. The defendant has thereby admitted the existence of the arbitration agreement pleaded at paragraph 21 of the statement of claim. The qualification to the admission does not affect the admission of the existence and the entering into of the arbitration agreement by the defendant. In other words, what is pleaded subsequently in the set-off and counterclaim does not detract from the unequivocal admission of the existence of the arbitration agreement.

6. The next point to be observed is that the trial of this matter, which was listed for commencement at 10.15 today, only involved part of the matters in dispute between the parties. A previous order has been that the matter proceed to trial by reference to the issues raised in paragraphs 21-24 of the statement of claim. Those issues, according to the plaintiff’s case, give rise to the granting of relief in paragraphs 1 and 2 of the prayer for relief at the end of the plaintiff’s statement of claim. Those paragraphs are as follows:

   “1..... A declaration that the Report referred to in paragraph 23 above is not an award within the meaning of the Commercial Arbitration Act 1986.

2...... In the alternative, an order pursuant to section 42 of the Commercial Arbitration Act1986 that the award constituted by the Report be set aside.”

1. In order to embark upon and decide the issues raised in paragraphs 21-24 of the statement of claim it is inevitable that I will make a finding that an arbitration agreement as referred to in paragraph 21 of the statement claim was entered into between the parties. The defendant, by its counsel, has informed me that if given leave to amend as sought, the subject of the amendments do not form part of the court’s determination as to the first part of the trial.

2. That means that I will proceed to a determination of the issues raised by paragraphs 21 to 24 of the statement of claim on the basis that an arbitration agreement has been entered into but, if the amendment is allowed, the defendant would be in a position to argue in the alternative at the subsequent parts of the trial that such an arbitration agreement had not been entered into. I do not think that the defendant should be permitted to proceed in such a way.

3. Even if the matter is not as I have characterised it in these reasons, I have no doubt that the type of pleading which is sought to be pursued by the defendant by way of an amendment is an inconsistent pleading which is not contemplated by the cases as being allowable.  An appropriate test in most, if not all, cases is to ask whether the facts underlying the alternatives are the same.  If they are, the alternative pleading is probably allowable;  if not, the alternative should not be allowed because a factual contradiction arises.  It does so in this case:  the defendant cannot say that it did and that it did not enter into the arbitration agreement.

4. For these reasons the application for leave to amend will be refused.