Landmark Operations Ltd v J Tiver Nominees Pty Ltd - [2008] SASC 133

SUPREME COURT OF SOUTH AUSTRALIA
(Applications Under Various Acts or Rules: Civil)
LANDMARK OPERATIONS LTD v J TIVER NOMINEES PTY LTD & ORS
[2008] SASC 133
Reasons for Decision of The Honourable Justice Sulan
16 May 2008
PROCEDURE - SUPREME COURT PROCEDURE - SOUTH AUSTRALIA - PROCEDURE UNDER RULES OF COURT - AMENDMENT
Applicant applied to amend pleadings - application would have had the effect of expanding the scope of the factual dispute - application was made very late - discussion of principles relevant to exercise of discretion - application refused.

PROCEDURE - SUPREME COURT PROCEDURE - SOUTH AUSTRALIA - PROCEDURE UNDER RULES OF COURT - EVIDENCE
Applicant applied to admit expert report - provision of report did not comply with the Supreme Court Rules - report not delivered in accordance with orders of a Judge - several sections were not relevant to the case as pleaded and consequently inadmissible - remaining sections should not be admitted in an absence of an application to call the witness - identification of principles applicable to that application - application refused.
Supreme Court Act 1935 s 27; Supreme Court Rules 1987 r 3.04, r 38, r 46A, r 53.09, r 67.01; Trade Practices Act 1974 (Cth) s 52, referred to.
Coonawarra Premium Vineyards Ltd v Nugan Group Pty Ltd & Anor [2006] SASC 5; Duke Group (in liq) v Arthur Young (Reg) & Peat Marwick Hungerfords (Third Party) & Ors (1991) 4 ACSR 355, applied.
Hillier & Carney v Lucas [2000] SASC 331; McCormack v Major (Unreported, Supreme Court of South Australia, Full Court, White ACJ, Cox and Mohr JJ, 12 October 1992); State of Queensland and Anor v J L Holdings Pty Ltd (1997) 189 CLR 146; Trebilcock v The Nominal Defendant (1991) 58 SASR 213, discussed.
Mehta v Commonwealth Bank of Australia (1990) ATPR 41-026; Williams v Australian Telecommunications Commission (1988) 52 SASR 215, considered.

LANDMARK OPERATIONS LTD v J TIVER NOMINEES PTY LTD & ORS
[2008] SASC 133
Civil
SULAN J
Background

The plaintiff in this action is a specialist financier to the agricultural industry and also provides agronomic services. The second to sixth defendants are natural persons who, at all relevant times, carried on a farming business. They are all members of the Tiver family. The first to fifth defendants are the registered proprietors of certain land on which the farming business was conducted. The first defendant is a trustee company for the John Tiver Family Trust.
In late 2001, the plaintiff and the second to sixth defendants entered an agreement pursuant to which the plaintiff provided certain loans and credit facilities. The second to sixth defendants have failed to repay the amounts owing in accordance with the terms of the agreement. The plaintiff is suing for damages associated with the alleged default by the second to sixth defendants. The defendants have filed a counterclaim seeking, inter alia, damages for various breaches of duties said to be owed to them by the plaintiff.
By a notice for specific directions dated 11 April 2008, the defendants in this action have applied for leave further to amend their defence and counterclaim, and to rely on a report of Mr Aberdeen, a loss assessor, in support of such amendment. I understand that the defendants also seek to rely upon the Aberdeen report at the trial, although the notice of 11 April 2008 was not expressed in that way.
Applicable principles
In Williams v Australian Telecommunications Commission,[1] King CJ explained the purpose and function of pleadings:[2]
The fundamental purpose of pleadings is to provide a structure or framework for the litigation designed to promote a just outcome. Pleadings achieve this purpose by performing two basic functions. The first is to define the issues between the parties thereby providing the basis for the determination of questions as to discovery before trial and admissibility of evidence at trial and of questions as to what the litigation has decided for the purposes of the Rules as to res judicata and issue estoppel. The second function is to give the parties fair notice of the case to be made against them at trial thereby minimising the risk of injustice resulting from surprise.
[1] (1988) 52 SASR 215.
[2] Ibid 216.
The Full Court considered the principles applicable to amendments of pleadings in Duke Group (in liq) v Arthur Young (Reg) & Peat Marwick Hungerfords (Third Party) & Ors.[3] Matheson J noted the importance of s 27 of the Supreme Court Act 1935,[4] which provides, inter alia, that the Court has power to grant all remedies:
… so that, as far as possible, all matters so in controversy between the parties may be completely and finally determined, and all multiplicity of legal proceedings concerning any of such matters avoided.
[3] (1991) 4 ACSR 355.
[4] Ibid 365.
That purpose is given effect in relation to amendments of pleadings in r 53.09 of the Supreme Court Rules 1987, which states:
For the purpose of determining the real question in controversy between the parties to any proceedings, or of correcting any defect or error in proceedings, the Court may at any stage of the proceedings, and either of its own motion or on the application of any party to the proceedings, order any document in the proceedings, not being a judgment or order, to be amended on such terms and in such manner as the Court thinks fit.
I note that r 46A.02, r 46A.03 and r 46A.05 are also of relevance to this application. Those rules provide, relevantly, that:
46A.02All pleadings are to:
(a)be as brief as the nature of the case permits;
(b)plead only the material facts relied upon and not the evidence or arguments by which they are to be proved; …
…
46A.03In an action where damages for personal injuries are not claimed the Statement of Claim must plead, but plead only:
(a)the material facts relied upon to constitute any cause of action, or grounds for an extension of time or other relief sought;
(b)such further material facts as are necessary to give other parties fair notice of the case which they will have to answer;
(c)the general nature of the legal causes of action;
(d)any statutory provisions relied upon; and
(e)the general nature of the relief sought.
…
46A.05
(2)The Defence must plead, but plead only:
(a)what parts, if any, of the Statement of Claim are admitted;
(b)the material facts relief upon to constitute any ground of defence on which the defendant bears an evidentiary or a legal onus of proof;
(c)such further material facts as are necessary to give other parties fair notice of the defendant’s case which they will have to meet;
(d) any defences in law; and
(e) any statutory provisions to be relied upon by the defendant.
…
Rule 3.04(b) confers upon this Court very wide powers to amend any step in a proceeding where it is just to do so. Conversely, r 67.01(6) provides that no interlocutory order shall be made after an order has been made that the action proceed to trial, unless special circumstances exist which require an order to be made in the interests of justice.
The application by the defendants is very late. I consider that r 53.09 enables me to consider the merits of the defendants’ application, and to allow the proposed amendments if that is appropriate. The lateness of the application, and the consequences of that, are, however, highly significant factors.[5]
[5] State of Queensland & Anor v J L Holdings Pty Ltd (1997) 189 CLR 146, 170-2 (per Kirby J).
The leading High Court authority on the principles upon which an application to amend a pleading should be assessed is State of Queensland & Anor v J L Holdings Pty Ltd.[6] The majority identified that the “paramount consideration” was the justice of the application.[7] The majority said: [8]
Case management is not an end in itself. It is an important and useful aid for ensuring the prompt and efficient disposal of litigation. But it ought always to be borne in mind, even in changing times, that the ultimate aim of a court is the attainment of justice and no principle of case management can be allowed to supplant that aim.
[6] (1997) 189 CLR 146.
[7] Ibid 155.
[8] Ibid 154.
Kirby J, who concurred with the order of the majority, discussed in greater detail the considerations favouring and arguing against a grant of leave.[9]
[9] Ibid 169-71.
The circumstances of that case, which led to the amendments being permitted[10] may be clearly distinguished from the present case. First, the application was made in this case approximately six weeks before the rescheduled trial date, the trial having originally been listed for February 2008. The application in J L Holdings was some six months before the trial. Secondly, the amendments sought by the defendants raise complex issues of fact which do not arise on the present pleadings. Thirdly, as I will explain below, the proposed amendments do not advance the defendants’ case in a coherent manner. My refusal to permit them to amend their pleadings as proposed will not, in my view, prevent them from litigating an issue or issues that are fairly arguable. Finally, contrary to the position in J L Holdings, and for the reasons I discuss later in this judgment, permitting the defendants to make the proposed amendments would result in prejudice to the plaintiff which could not be compensated for by costs.
[10] Ibid 154-5.
There are further factors militating against the grant of leave. This action was commenced in 2005, and has been listed for trial on more than one occasion, most recently in February 2008. I observe that a similar application was made at the commencement of the February trial, which was refused by the then trial Judge. That trial was not completed due to the indisposition of the trial Judge. The defendants took over the conduct of the case in October 2007. In an affidavit filed on 11 April 2008, Mrs Tiver deposed that the new aspects of the case came to light only at that time. I do not accept that submission. The facts were entirely within the knowledge of the defendants. Even if I accepted that the absence of certain pleas only came to their attention in October 2007, that does not explain why an application was not made until February. During submissions, it was contended for the defendants that they were alerted to the new issues by the Aberdeen report, the first version of which was provided in February. However, that submission is inconsistent with the affidavit of Mrs Tiver. The application before me was filed in April. The application, on any view of the facts, is extraordinarily late, with no satisfactory explanation.
The proposed amendments vary in their character. Having discussed the general principles to be applied, it is necessary to turn to each of the proposed amendments.
Proposed amendments
It was not immediately apparent from the defendants’ application and proposed Further Amended Defence which paragraphs are the subject of the application. I understand from the submissions made to me that the affected paragraphs are 7A, 7B, 7C, 7D, 14A, 14B, 14C, 25D, 35A, 35B, 37.4, 41C, 45M, 45N and 45O. I will deal with each group of amendments separately.
Paragraphs 7A, 7B, 7C and 7D
In proposed paragraphs 7A, 7B, 7C and 7D, the defendants plead that during the negotiations to refinance, Landmark made certain representations. The pleaded representations concern the relative profitability of feedlot dairy farming and cash cropping:
7AThe negotiations to refinance the Tivers were conducted between John and Margaret Tiver and Peter Robinson and/or John Secomb of Landmark in late 2001.
7BDuring negotiations representations were made in the course of trade and commerce by Landmark that
7B1    cash cropping income was more profitable than feedlot dairying.
7B2   The Tivers should cease feedlot dairying and convert to cash cropping (together the “Representations”).
7CPeter Robinson told John and Margaret Tiver at a meeting held at the Cavan Landmark office on November 1^st 2001(R) they should change their business from feedlot dairying to cash cropping, that Landmark could supply all merchandise for cash cropping along with the services of their top agronomist and that they would be assured of making more profit than from feedlot.
7D     The Representations were made in the course of trade and commerce.
[emphasis added].
The present defence pleads the oral terms of the contract in paragraph 13, and pleads that these were contained in statements made during discussions between John and Margaret Tiver and Peter Robinson and/or John Secomb on various dates in November 2001. In my view, proposed paragraph 7A does no more than articulate the content of paragraph 13 in slightly different terms.
Proposed paragraphs 7B and 7C plead representations made by Landmark and its representatives to John and Margaret Tiver. As it presently stands, the Defence and Counterclaim pleads representations made by Landmark to the Tivers in paragraph 25A, which is located in the section of the document entitled ‘Counterclaim’. Paragraph 25A pleads that:
25A. In November 2001 Landmark represented to the Tivers that:
25A.1        it had expertise in cash cropping;
25A.2        it was able to provide expert advice including agronomical advice;
25A.3the Tivers should convert from dairy and feed cropping farming to cash cropping;
25A.4it would provide the support funds and advice required for the Tivers to convert to cash crop farming;
25A.5        it would provide information for crop farming.
In my view, the gravamen of the pleaded representations in proposed paragraphs 7B and 7C is similar to those in paragraph 25A. I would not allow an amendment to plead representations that are already pleaded. There is, however, the notable exception that proposed paragraphs 7B1 and 7C, in the passages I have emphasised, expressly plead that Landmark represented that cash cropping would be more profitable than feedlot dairy farming. Paragraph 7C also pleads the representation that Landmark could supply all merchandise for cash cropping.
The sub-paragraphs to paragraph 25A plead representations made as to the expertise of Landmark, and the services it would provide. The advice pleaded in sub-paragraph 25A.3 is of a different nature to the remaining sub-paragraphs. I have some reservations about the way in which that pleading is framed, which I will address later in these reasons; however, it appears that the gravamen of the plea, taken in the context of paragraph 25 and the pleading as a whole, especially paragraphs 13, 27, 28 and 43, is that Landmark encouraged the Tivers to engage in cash cropping, and then provided them with inadequate advice, in breach of various pleaded duties. I note that originally the Tivers had pleaded in their first defence and counterclaim as an oral term of the contract that Landmark required the Tivers to change their farming practices. That was abandoned, so that it is presently pleaded as an oral term that the Tivers would change their farming practices. In other words, the plea that Landmark required a change of farming practices was abandoned in an earlier amendment to the pleadings.
The plea that Landmark represented that it “could supply all merchandise for cash cropping” is unclear on its face. In light of the pleas contained in paragraphs 28 and 43A, and the text immediately preceding paragraph 43, I understand “merchandise” to mean the chemicals, fertilisers and seeds required for cash cropping. It is presently pleaded that Landmark, or its associated entities, supplied those items. An amendment in the terms proposed would therefore not alter the defendants’ case in any substantial way. Further, none of the breaches of duty pleaded by the defendant relate to the provision of chemicals, fertilisers, seeds or other merchandise, so there is no relevance to that representation in any event. I would refuse leave to amend the pleadings to that effect.
The plea that Landmark represented that cash cropping would be more profitable than feedlot dairy farming is of an entirely different character. If it is proved that that statement was made, proving that it was a misrepresentation will require a comparison between the predicted profitability of cash cropping and the projected profitability of feedlot dairy farming. This may be a complex task. For example, the defendants have pleaded elsewhere that they did not earn as much money from cash cropping in certain years as Landmark had forecast. Determining whether any statement about the profitability of cash cropping was a misrepresentation would require, at the very least, an investigation of the basis for the statement, the figures to which Landmark had regard, and whether there was any reason why the defendants did not make the profit predicted by Landmark. On the other hand, the relative predicted profitability of feedlot dairy farming would also need to be proved. Mr Aberdeen has calculated these figures in his report. However, counsel for the plaintiff has indicated that the factual premises for the Aberdeen calculations are contested. This issue would also require investigation at trial. Further, the defendants have not pleaded that there was no reasonable basis for the statement, which would be necessary in any event if they were to establish that there had been a misrepresentation.
Mr Hoffmann QC, who appeared for the plaintiff, submitted that if I were to allow the amendments, it would not be possible for the trial to proceed because there would be further arguments about the adequacy of the pleadings and the requirement to plead material facts. There would also be a need for further discovery, third party discovery, non-party discovery and further expert evidence.
Mr Hoffmann submitted that both applications belied a desire on the part of the Tivers to conduct an enquiry into their dairy business during the 1990s. He contended that this would necessitate an enquiry into the profitability of the Tivers’ dairy business, whether the assumptions made by Mr Aberdeen could be proved, and what a reasonable and competent dairy person would have done, requiring expert evidence to be called. I accept that submission.
Mr Hoffmann submitted that no order for costs could compensate the prejudice that Landmark would suffer, first because of the accrual of interest on the debt for which Landmark alleges the defendants are liable and, secondly, because of the additional costs Landmark would incur in dealing with the amendments. Mr Hoffmann contended that, on the plaintiff’s case, there was a substantial shortfall in the value of the defendants’ assets compared to the value of the debt.
At this point, it is useful to consider the comments made by Olsson J in Duke Group v Arthur Young. Olsson J, with whom Duggan J agreed on this point, set out the following principles relevant to assessing amendments:[11]
1.An amendment should be allowed at any stage of proceedings to enable the real matters in controversy between the parties to be addressed, provided that the amendment can be effected without injustice to the other parties.
2.An amendment ought to be permitted if it could have been pleaded when the defence was first filed, provided that its allowance, at the stage when application is made for leave to amend, does not give rise to prejudice to the plaintiff which cannot be redressed by an order for costs or for an adjournment.
3.An amendment to pleadings ought not to be permitted in circumstances where, if pleaded initially, it could have been struck out as a plea which is patently bad in law or on some other ground.
4.As to any plea wanting in particularity, before trial the usual (although not invariable) order is to allow defects to be cured by directing appropriate particulars to be given. On the other hand, in the case of such a plea sought to be made by way of amendment after the commencement of a trial, there is a discretion to refuse the amendment if, to allow it, would inevitably give rise to an application for better particulars with the resultant disruption of the orderly progress of the hearing. (It should be recorded that the validity of this lastmentioned approach was questioned on the hearing before the Full Court but, in my opinion, the formulation of it is patently beyond reproach.)
[11] Duke Group (in liq) v Arthur Young (Reg) & Peat Marwick Hungerfords (Third Party) & Ors (1991) 4 ACSR 355, 382-3.

The fourth principle enunciated by Olsson J, although expressed in relation to amendments sought after the commencement of trial, is equally apt to this application. The plea is embarrassing, and would no doubt lead to a further application by the plaintiff. At this late stage, that is a factor which militates against the grant of leave in any event.
Olsson J then went on to state[12] that the underlying principle was, in his view, best expressed by Rogers CJ in Mehta v Commonwealth Bank of Australia:[13]
The lodestar which guides the court is whether an amendment is necessary for the purpose of determining the real question in controversy between the parties. As soon as it appears that the way in which a party has framed its case will not lead to a decision of the real matter in controversy, it is a matter of right to have the pleading corrected. The fact that the application is late in the proceedings is relevant only on the question whether the prejudice occasioned by it is curable. The exercise of the power is conditioned by one overriding qualification. The other party must be placed in as good a position as it would have been had the mistake of judgment not been made. If the prejudice cannot be cured the amendment must be refused. It is not a relevant type of prejudice that allowance of the amendment will, or may, deprive the other party of a success which it would achieve were the amendment refused. [References omitted].
[12] Ibid 383.
[13] (1990) ATPR ¶ 41-026, 51,420-1.
These comments, and the second principle identified by Olsson J in the above passage, emphasise the importance of protecting the respondent to an application from prejudice. The importance of avoiding prejudice to the respondent was also identified by Kirby J in J L Holdings.[14]
[14] State of Queensland & Anor v J L Holdings Pty Ltd (1997) 189 CLR 146, 170-2.
It is my view that to allow the defendants to amend their pleadings to plead a representation that cash cropping would be more profitable than feedlot dairy farming would raise new and contentious issues for determination at trial, with consequent effects on discovery and the parties’ ability to prepare for trial. Consequently, I am disinclined to permit an amendment to that effect. I observe that if the defendants are successful, some or all of the questions I have identified above may arise for determination in assessing their loss.
Further, the prayer for relief does not seek any remedy based upon a misrepresentation as to the relative profitability of the two forms of farming. Consequently, I do not consider that an amendment would aid the defendants’ case in any event, nor assist in ensuring that the real issues are joined between the parties. For these reasons, I would not permit the defendants to amend their pleadings to plead a representation as to the profitability of cash cropping.
Paragraph 7D is of a different nature. It appears to support a claim pursuant to s 52 of the Trade Practices Act 1974 (Cth) (“the TPA”). The prayer for relief as it presently stands seeks relief pursuant to that section in relation to the allegations regarding the agronomic advice. Although paragraph 7D refers to “the Representations”, proposed new paragraph 25D, which pleads the corresponding breach of duty, pleads a breach of s 52 arising solely from the representation as to the relative profitability of the two forms of farming. The effect of proposed paragraph 7D would, therefore, be solely relevant to the defendants’ proposed case regarding relative profitability. For the reasons earlier expressed, I have not allowed the defendants to amend to introduce that plea. Paragraph 7D is, therefore, of no relevance to the case as presently pleaded.
Consequently, I would not allow an amendment in terms of any of proposed paragraphs 7A, 7B, 7C and 7D.
Paragraphs 14A, 14B and 14C
The second group of proposed additions are contained in proposed paragraphs 14A, 14B and 14C. Because those paragraphs are referred to in later proposed amendments, it is necessary to set them out in full:
14A.Landmark agreed to offer the finance facility set out in paragraphs 8 to 14 herein on the following basis:
14A.1Landmark and its associated entities were at all material times involved in both live cattle export and also in providing products and services to the dairy industry;
14A.2The defendants has [sic] an interest in ensuring the continuation of the trade of live export of cattle;
14A.3The defendants had, prior to 2001, been in the dairy industry and in particular had dairy herds for the provision of milk to the general public;
14A.4The defendants dairy herd had been adversely affected prior to 2001 by the provision of toxic chemicals by a supplier;
14A.5The affect [sic] of the chemicals caused contamination of some milk supplies and genetic defects in the dairy herd;
14A.6The release of the information referred to in paragraphs 14A.4 and 14A.5 herein to the general public would have caused damage to Landmark’s live export and dairy business;
14A.7The defendants had not been able to refinance their existing debts as at November 2001 with other financiers that had been approached in the period prior to November 2001;
14A.8Landmark was or should have been aware that if the defendants dairying business was liquidated, the toxic chemical event referred to in paragraphs 14A.4 and 14A.5 herein would have become public knowledge;
14A.9As a consequence of the matters herein and to protect its own interests;
14A.9.1 Landmark offered the finance facility;
14A.9.2The facility included the provisions referred to in paragraphs 13.1 and 13.2 herein.
14BAt the time of offering the finance facility referred to in paragraphs 8 to 14 herein, Landmark;
14B.1Was aware that Luke Rowley of Hunt & Hunt solicitors of Adelaide acted for the defendants with respect to issues relating to the defendants then current finance arrangements;
14B.2Was aware that Luke Rowley of Hunt & Hunt solicitors of Adelaide was assisting the defendants to obtain refinance of their debts;
14B.3Instructed Hunt & Hunt solicitors of Adelaide to act for them with respect to preparation of the documents for the said finance facility.
14CThe defendants relied on the Representations made at the meetings at Landmarks Cavan office when they accepted and entered into the finance facilities.
Paragraph 14A pleads events relating to the “Toxic Tallow” event. I observe that paragraph 14A is referred to in proposed paragraph 41C, and both paragraphs provide a basis for the relief sought in proposed paragraphs 45M, 45N and 45O. I will address those paragraphs later in these reasons. I consider that to enable the defendants to plead the circumstances of the toxic tallow event would greatly expand the scope of the factual issues to be determined at trial. I have noted earlier the prejudice that would be suffered by the plaintiff if the scope of the factual dispute were to be expanded at this late stage.
Conversely, both Mr and Mrs Tiver submitted to me that they did not intend to go into the toxic tallow event in any detail, and that it provided a context and a basis for Mr Aberdeen’s calculations, as it showed they were moving forward from a period of financial difficulty. I accept Mr Hoffmann’s submission that the gravamen of proposed paragraph 14A is to demonstrate a motive for Landmark to provide finance to the defendants. That is not necessary for the defendants’ defence or counterclaim in any event. Further, I accept Mr Hoffmann’s submission that the proposed amendment is scandalous, as it pleads an ulterior motive for Landmark’s conduct which is discreditable and irrelevant to the facts in issue. For these reasons, I would not permit the insertion of proposed paragraph 14A.
Paragraph 14B pleads Landmark’s knowledge of the involvement of Mr Luke Rowley, who is presently retained by Landmark as a solicitor, in the negotiations between the plaintiff and the defendants, and that Mr Rowley in fact acted for the defendants. The proposed pleadings do not support any part of the prayer for relief. Nor could they, in the absence of a pleading to the effect that there was some collusion between the solicitor and the plaintiff. No such allegation is made. I would not permit the proposed amendments.
Paragraph 14C pleads reliance on the representations made by Landmark. The representations are presently pleaded in paragraph 25A, which I have set out above. As it presently stands, the Defence and Counterclaim pleads reliance on the representations made by Landmark to the Tivers in paragraph 25B, which is located in the section of the document entitled ‘Counterclaim’. Paragraph 25B pleads that:
25B. The Tivers accepted the offer of finance from Landmark in the expectation of receiving funds and advice from Landmark for the purpose of cash cropping and did so in reliance on the expertise that Landmark professed to have in agronomy and also in rural financial management.
I understand “the Representations” in proposed paragraph 14C to refer to proposed paragraph 7B, which I have not allowed the defendants to add. In any event, paragraph 25B pleads reliance on the representations set out in sub‑paragraphs 25A.1, 25A.2, 25A.4 and 25A.5. Proposed paragraph 14C is, therefore, unnecessary. I would not permit the defendants to amend their pleading in terms of proposed paragraph 14C.
At this point, I observe that any statement made to the effect pleaded in sub‑paragraph 25A.3 would not appear to be in the nature of a representation, although it is pleaded as such. I understand from paragraph 13 of the defence that the defendants’ case is that it was an oral term of the contract for the provision of the finance facility that the Tivers would change their farming activities to cash cropping. The plaintiff denies any oral term. However, it appears at present that there is an inconsistency in the Defence between sub‑paragraphs 13.1 and 13.2 and sub-paragraph 25A.3.
There is a further feature of paragraphs 25A and 25B which is of some significance. I observe that paragraph 43A of the defendants’ present pleading pleads that the agronomic advice provided by Landmark was misleading and deceptive, pursuant to s 52 of the TPA. The representations in paragraph 25A, which I have set out above, are pleaded in paragraph 45 to support a claim of unconscionable conduct within the meaning of various statutory provisions. It would appear, therefore, that as the pleadings presently stand, it is not part of the defendants’ case that the representations pleaded in sub-paragraphs 25A.1, 25A.2, 25A.4 and 25A.5 were misleading and deceptive within the meaning of s 52 of the TPA.
The remaining proposed amendments are pleaded in the section of the document entitled ‘Counterclaim and Set Off’.
Paragraph 25D
Proposed paragraph 25D pleads:
The Representations made to the Tivers were misleading and deceptive and were in breach of section 52 of the trade practices act in that cash cropping was not more profitable than feedlot dairying and feedlot dairying was more profitable than cash cropping
I have not allowed the defendants to amend to plead the representations referred to, which were proposed to be pleaded in paragraphs 7B and 7D. Consequently, I would not permit an amendment in terms of proposed paragraph 25D.
I note that proposed paragraph 25D only sought to plead that the representation as to relative profitability was in breach of s 52 of the TPA. I reiterate my understanding that it is no part of the defendants’ case that the representations pleaded in sub-paragraphs 25A.1, 25A.2, 25A.4 and 25A.5 were misleading and deceptive within the meaning of s 52 of the TPA.
Paragraphs 35A and 35B
Proposed paragraph 35A pleads:
Further, and in the alternative the defendants state that the requirements of Landmark to change their farming practices to cash cropping and beef cattle caused them economic loss in that had they continued with farming dairy cattle the defendants would have continued to operate at a profit and would have been able to meet interest and principal repayments to the plaintiff or other financiers.
In my view, this proposed pleading suffers from the same deficiencies as the proposed amendment to plead the representation as to the relative profitability of cash cropping and feedlot dairy farming. The same investigations of fact would be required at trial. Further, as I observed earlier, the plea that Landmark required a change in farming practices was abandoned in an earlier amendment. The reference to a “requirement” therefore introduces an inconsistency to the pleadings. For the reasons I expressed earlier, I would not allow an amendment in terms of proposed paragraph 35A.
Proposed paragraph 35B pleads:
Further, as a result of relying on the Representations of Landmark the defendants have suffered loss and damage in an amount in excess of $8,000,000 as shown in Aberdeen Consultings report on the financial situation of the Tivers at chart 5.1.
I observe that proposed paragraph 35B is not in a permissible form in any event. It is not permissible merely to refer to documents in lieu of pleading those parts of their contents that are material facts, even where those documents are expert reports.[15]
[15] Coonawarra Premium Vineyards Ltd v Nugan Group Pty Ltd & Anor [2006] SASC 5, 5-6.
I understand “the Representations” to refer to proposed sub-paragraphs 7B1 and 7B2. For the reasons outlined above, I have not given leave for that paragraph to be inserted.
As I observed earlier, the content of proposed paragraph 7B2 is presently pleaded at sub‑paragraph 25A.3. Leaving aside the representation pleaded in proposed sub‑paragraph 7B1, which was impermissible in any event, the gravamen of proposed paragraph 35B is that, as a result of relying on Landmark’s statement that they should change their farming practice to cash cropping, the defendants suffered loss and damage.
At present, no part of the prayer for relief refers specifically to paragraph 25A. However, paragraph 45 refers to paragraph 25A compendiously, as follows:
45. The conduct of Landmark complained of in paragraphs 25 to 43A above has been and is:
45.1 Conduct in connection with the supply or possible supply of goods or services to a person or persons, including the provisions of agronomical and associated advice and the purchase of goods for the purposes of farming; and/or
45.2 The acquisition of such goods and services from entities associated with the plaintiffs;
45.3 Unconscionable within the meantime [sic] of sections 51AA and/or 51AC of the Trade Practices Act and/or section 12CA of the ASIC Act, and/or section 57 of the Fair Trading Act.
The orders sought by the defendants include, inter alia:
47. The defendants counterclaim and orders sought are as follows:
…
47.3A Orders under section 83 of the Fair Trading Act, section 80 of the Trade Practices Act, section 12GD of the ASIC Act enjoining Landmark from the enforcement of its securities;
47.4 Orders under section 84 of the Fair Trading Act, section 87 of the Trade Practices Act, section 12GM of the ASIC Act for compensation and/or to prevent or reduce the loss and damage suffered by the defendants;
47.4A Orders under section 85 of the Fair Trading Act, section 82 of the Trade Practices Act, and/or section 12GF of the ASIC Act for recovery of loss and damage.
The conduct which is permissibly referred to in proposed paragraph 35B – namely, the statement that the defendants should change their farming practice to cash cropping, which is presently pleaded in paragraph 25A.3 – has thus already been pleaded to constitute unconscionable conduct within the meaning of various statutory provisions, giving rise to claims for various forms of relief.
Proposed paragraph 35B is unclear and embarrassing. It does not purport to relate to any aspect of the present prayer for relief, and does not articulate which of the pleaded duties is said to be breached. However, the conduct to which it permissibly refers has already been pleaded as part of the defendants’ case. I would therefore not permit the defendants to amend their pleadings in terms of proposed paragraph 35B.
Paragraph 37.4
Paragraph 37 of the existing Counterclaim pleads that Landmark breached its equitable duties to the defendants and pleads particulars of unconscionable conduct. Proposed paragraph 37.4 adds a further particular, namely the use of the solicitor referred to at paragraph 14B.
I have not permitted the proposed addition of paragraph 14B. Consequently, I would not permit the proposed addition of paragraph 37.4.
Paragraph 41C
Proposed paragraph 41C appears in a section headed ‘Landmark’s duties and breaches’. It pleads:
In the circumstances pleaded in paragraph 14A herein, in providing finance to the defendants at all when the defendants would not have been offered a finance facility by the plaintiffs had the circumstances set out in paragraph 14A herein not been apparent.
The proposed pleading is incomplete and embarrassing. It does not plead a breach of duty, although it appears to particularise conduct that appears from the tenor and context of the pleading to be asserted as a breach of duty. I would not permit an amendment in those terms.
I note that in their proposed amended Defence and Counterclaim, the defendants have purported to make a consequential amendment by referring to paragraph 41C in paragraph 46.2. Having disallowed proposed paragraph 41C, I would not permit the consequential amendment.
Paragraphs 45M, 45N and 45O
Proposed paragraphs 45M, 45N and 45O plead the following:
45MBy reason of the matters pleaded in paragraph 41C herein, the Tivers relied upon the provision of the finance facility, as evidence or confirmation that they could continue their farm in the manner set out in the finance facility.
45NIf the Tivers had known that finance would not have been provided but for the matters set out in paragraph 14A herein, they would have:
45N.1realised that they did not have sufficient equity in the properties for usual credit terms;
45N.2taken steps to sell land or other assets to reduce their indebtedness to their then financiers;
45N.3 not increased their indebtedness;
45N.4 remained dairy farmers.
45OThe Tivers have suffered loss and damage by reason of the breach of fiduciary duty by Landmark for which they are entitled to equitable compensation. The compensation is a money sum that would restore the Tivers to the position they would be in if they had taken the steps pleaded in paragraph 45N.
I pause here to indicate what I understand to be the gravamen of this pleading. Proposed paragraph 14A, which I have not permitted to be added, purported to plead that the plaintiff offered the finance facility as a consequence of the “Toxic Tallow” event, and the interest that the plaintiff had in preventing the release of that information, which would have occurred if the defendants’ business was liquidated. Proposed paragraph 41C was incomplete and could not be added to the pleading in any event, but appeared to suggest that the plaintiff had breached its duties by providing the finance facility in circumstances where it would not have been provided but for the occurrence of the “Toxic Tallow” event. Proposed paragraphs 45M, 45N and 45O plead that the defendants relied to their detriment on the very fact of the finance facility having been provided. I observe that the existing paragraphs 45C to 45L plead, inter alia, that Landmark breached its fiduciary duties to the Tivers by procuring two unrealistically high valuations of the Tivers’ land, upon which the Tivers relied to their detriment. The reliance on those valuations is pleaded in equivalent terms to paragraph 45N and its sub-paragraphs. However, I note that proposed paragraph 45N.4 contains the additional plea that the Tivers would have remained dairy farmers but for the provision of the finance facility. With respect to this part of the defendants’ proposed amendment, I refer to the comments I made in the context of proposed new paragraph 14C.

In my view, proposed paragraphs 45M, 45N and 45O are embarrassing. The plea rests in large part on the Tivers’ lack of knowledge of Landmark’s reasons for providing a finance facility. However, the actual knowledge or beliefs of the Tivers is not pleaded. Further, and more significantly, it is not pleaded how Landmark’s provision of a finance facility which was sought by the Tivers can constitute a breach of fiduciary duty. On the defendants’ pleading, the parties were, at that stage, conducting negotiations. There is no basis pleaded for me to regard those negotiations, and the consequent agreement, as being other than at arm’s length. In the absence of any pleading as to how Landmark could be said to owe a fiduciary duty to the Tivers at that stage of their commercial relationship, I would refuse leave to amend the pleading in the terms of proposed paragraphs 45M, 45N and 45O.
Summary
I would therefore refuse the defendants’ application to amend their pleadings in its entirety. I turn now to consider the admissibility of the Aberdeen report.
Admission of Aberdeen reports
Background to reports
It is necessary to set out in some detail the sequence of events leading to the provision of the 9 April report. On 27 August 2007, Anderson J ordered, inter alia, that the defendants file and serve any expert report upon which they intended to rely on or before 2 November 2007. That order was made by consent at a time when the defendants were represented. On 25 October 2007, the time for providing any expert report was extended to 12 November, and on 14 November 2007 the time was again extended to 21 November 2007. A report prepared by Mr Aberdeen, dated 10 February 2008, was provided to the solicitor for the plaintiff on 11 February 2008. On 4 February 2008, the defendants provided the plaintiff’s solicitor with a report regarding the toxic tallow event.
During the aborted trial in February, the defendants applied to admit that report and to call Mr Aberdeen as a witness. That application was not allowed. The trial Judge gave two reasons for this: first, that the premise of the report was inconsistent with a premise pleaded in the defence, and, secondly, that it had not been demonstrated that Mr Aberdeen had the requisite expertise to give the opinions expressed therein.
On 18 March 2008, a second report, dated 13 March 2008, was filed as an exhibit to an affidavit of Mrs Tiver. The report was prepared by Mr Aberdeen upon receipt of an instructing letter from Mr Benjamin Tiver, which was appended to the report. Finally, on 15 April 2008, a report dated 9 April was filed as an exhibit to an affidavit of Mrs Tiver. Again, an instructing letter of Mr Tiver is appended to the report. Relevantly, the letter states:
We ask you to assume as proven the following:
That Landmark made it clear to the Tiver family during our conferences with them leading up to our signing of the finance agreement with them on 7^th December 2001, that Landmark would not finance the continuation of our feedlot dairy and that we would have to sell enough dairy cattle to raise $400,000 to be paid into the term loan account by the end of February 2002.
That Landmark gave verbal assurances to the Tiver family during those conferences that we would do as well financially out of cash cropping as we had out of dairying.
That Landmark also gave us verbal assurances at the time that they would make available to us the services of their most qualified and experienced agronomists to advise us on the current best practices for cash cropping.
Content of the 9 April report
The 9 April report is entitled “Assessment of Losses incurred by the Tiver Family due to Acts of Landmark”. The introduction states that sections 3, 4 and 5 were “essentially the same text as was in the Financial Situation Report (amended version)”. It appears that report is intended to supersede the 10 February and 13 March reports. In the introduction, Mr Aberdeen stated that he had spent three days with the Tiver family in January 2008 collecting information for a report on the Tivers’ financial situation, and subsequently met with the Tivers and spoke with them on the telephone.
Relevance of report
The gravamen of the defendants’ counterclaim at present is that the plaintiff breached various duties owed to them by the provision of allegedly negligent agronomic advice and allegedly incorrect valuations of their assets.
Much of the Aberdeen report of 9 April 2008 purports to compare the present financial position of the Tivers (having changed to cash cropping) against their estimated financial position had they continued to operate the feedlot dairy. I have not allowed the defendants to amend their pleadings so as to enable that factual issue to be ventilated. Those parts of the Aberdeen report which purport to engage in that comparison are consequently inadmissible. Further, those parts of the report which are based upon the factual premise that Landmark made a representation to Margaret and John Tiver about the relative profitability of the two forms of farming are inadmissible.
Further, there are several respects in which the report is premised on an incorrect, misleading or unpleaded factual basis. That is, in part, due to the assumptions which Mr Aberdeen was asked to make in the instructing letter, which I have set out above. Because the report purports to deal with a variety of issues, I will consider each section separately.
Sections 1 and 2
Section 1 merely identifies the content of the report and outlines how Mr Aberdeen collected data for it. Section 2 is an “Executive Summary”. It summarises the major thesis of the report - namely, the comparison of the Tivers’ present financial position with the estimated financial position had they remained in dairy farming - and the conclusions drawn. That section is inadmissible for the reasons I have already expressed.
Section 3
Section 3 is entitled “Financial Outcomes from the Cash Cropping Program”. In that section, Mr Aberdeen has appended documents which purport to summarise the income and expenses of the Tiver cropping business for the financial years from 1999 to 2006. I note that the agreement with Landmark was made in 2001, so figures prior to that are irrelevant in any event. Mr Aberdeen states that he has relied upon the Tiver family accounts which he understands to have been discovered. Section 3 of the report may be relevant to the pleaded case, in particular to the assessment of damages. On the assumption that all relevant documents have been discovered, I would not rule section 3 of the report inadmissible at this stage.
Section 4
Section 4 of the report is entitled “Problems with the Cropping Program”. That section refers to several sub-paragraphs of paragraph 43 of the Further Amended Defence and Counterclaim. Paragraph 43 pleads that:
In breach of the independent duty and care and the continuing duties, and of the contractual duties, the agronomical and associates [sic] advice was negligent, inaccurate and not tailored to the needs of the Tivers in that: …
That plea is particularised in sub-paragraphs 43.1 to 43.15.
Mr Hoffmann submitted that the only relevance of the Aberdeen report might be the observations about the agronomic advice and the alleged deficiencies therein, which were in section 4 of the report. I consider that the matters referred to in section 4 may be relevant to the case as pleaded. I would not rule section 4 of the report inadmissible at this stage.
Section 5
Section 5 is entitled “A Comparison between Cropping and the Feedlot Dairy”. For the reasons I have given earlier, that topic is not admissible. There is no part of the section that is relevant to the pleaded case.
Section 6
Section 6 is entitled “Basis for Alleged Negligence/Breach Claim”. Again, much of this section is inadmissible as it purports to compare the profitability of the two forms of farming. Subsection 6.5 purports to address the negligence arising from the representation regarding the provision of expert agronomical advice. Although that is a relevant issue for trial, the matters discussed by Mr Aberdeen are either discussed more adequately in section 4, or are inadmissible - for example, the comments about the expertise of the agronomist Landmark provided to the Tivers. Section 6.6 addresses the negligence said to have arisen because of Landmark’s failure to warn the Tivers of the risks associated with cash cropping. That is not part of the defendants’ pleaded case. Section 6 is therefore inadmissible in its entirety.
Section 7
Section 7 is entitled “Assessment of Losses Incurred”. The chapter purports to calculate the loss suffered to the Tivers by the acts of Landmark which are alleged on the Tivers’ case. However, those calculations have been based upon the impermissible premise that the Tivers have suffered a loss which is referable to their estimated financial position had they continued in dairy farming. Further, many of the heads of loss purported to be calculated are neither pleaded nor proposed to be pleaded. Section 7 is inadmissible in its entirety.
Prejudice to the plaintiff
As I have observed above, the Aberdeen report, even in its earlier incarnations, was provided to the plaintiff extremely late and in a contravention of a series of orders made as to its delivery date.
Mr Hoffmann submitted on behalf of the plaintiff before the trial Judge, following an application by the defendants in respect of an earlier version of the report, that the admission of the report would be prejudicial to the plaintiff, as it would be unable to commission an answering report unless the trial were aborted, in circumstances where it could not be compensated by an order for costs.
I accept the force of that submission in relation to those sections of the report which are premised on the proposed amendments. I have not permitted the amendments and, consequently, those parts of the report are inadmissible.
The rules relating to the provision of expert reports, and the consequence of non-compliance, are set out in r 38, which provides, relevantly:
38.01
…
(7) Other than with the leave of the Court, no party is to adduce expert evidence at a trial unless:
(i)    prior to preparing the expert report the expert has been provided with a copy of the current practice direction issued by the Registrar entitled “Guidelines for Expert Witnesses in Proceedings in the Supreme Court of South Australia”
(ii)     The expert includes an acknowledgement at the commencement of the expert report that he or she has been provided with and has read the copy practice direction referred to in (i) prior to preparing the expert report; and
(iii)     The following matters are set out in the report or reports delivered or disclosed in accordance with this Rule, or in particulars delivered in accordance with subrule (8):
(a)the substance of that expert’s evidence;
(b)the qualifications of the expert; and
(c)particulars identifying the material upon which the expert bases his or her expert opinion.
…
38.01A
…
(2) Any report of an expert obtained by a party and which is to be delivered under Rule 38.01 is to:
(a)     set out with reasonable particularity all of the qualifications of the expert which are relied upon to qualify him or her to give the report;
(b)     set out separately each of the factual findings or assumptions upon which the opinions are based;
(c)     set out separately from the factual findings or assumptions each of the opinions which the expert expresses; and
(d)     comply with any Practice Direction published about the contents and form of reports from experts.
…
(5) Unless the trial Judge otherwise allows expert evidence-in-chief at the trial is to be given only by tendering reports from the expert which comply with the Rules and the expert swearing that the reports are correct.
…
38.02   Where a party fails to comply with any of the requirements of Rule 38.01 in respect of a report of an expert:
(1)(a)    The Court at any time may adjourn any hearing or trial at the cost of the party in default or his solicitor;
(b)The Court at any time may direct that evidence from that expert not be adduced by that party at the trial of the action;
…
Where a party has failed to comply with r 38.01, r 38.02(1)(b) provides that the Court may direct that evidence not be adduced from that witness. Conversely, the effect of r 38.01(7) is that in the event of non-compliance with r 38, a party may still call an expert witness with the leave of the Court. In Hillier & Carney v Lucas,[16] Lander J, with whom Duggan and Bleby JJ agreed, considered that r 38 conferred an “unfettered discretion” on a trial Judge to admit expert evidence in spite of non-compliance with r 38, and discussed the principles to be applied.[17]
[16] [2000] SASC 331.
[17] Ibid 28-36.
Nevertheless, the importance of ensuring compliance with court orders as to the delivery of reports, and the relevance of that to the exercise of the discretion, was emphasised in McCormack v Major.[18] The obligation to provide expert reports was also discussed in Trebilcock v The Nominal Defendant.[19]
[18] (Unreported, Supreme Court of South Australia, Full Court, White ACJ, Cox and Mohr JJ, 12 October 1992), 7-10.
[19] (1991) 58 SASR 213.
In my view, the admissibility of the evidence of Mr Aberdeen is properly a matter to be addressed at trial. Ordinarily, r 38.01A(5) provides that the expert’s report will constitute his or her examination-in-chief. However, as I noted above, it is still open to the defendants to seek leave of the Court to call Mr Aberdeen at trial. I do not consider it appropriate to admit even section 3 or section 4 before the question of the admissibility of Mr Aberdeen’s oral testimony is considered. That will require a consideration of Mr Aberdeen’s qualification as an expert witness on those limited topics, and an exercise of the discretion to permit evidence to be adduced in spite of non‑compliance with r 38 in accordance with established principles.
However, I emphasise that there are several sections of the report, which I have identified above, which are inadmissible in any event. Any application at trial to admit the evidence of Mr Aberdeen must, therefore, be limited to the topics raised in section 3 and section 4 of the report.
Summary
I would dismiss the application to rely on the Aberdeen report. If the defendants apply to call evidence from Mr Aberdeen at trial in spite of non‑compliance with r 38, that application must be limited to the topics in section 3 and section 4 of the report. As I have refused the defendants leave to amend their pleadings, the topics of the other sections of the report are inadmissible in any event.