LK Smith Holdings Pty Ltd v Fja Holdings Pty Ltd

LK Smith Holdings Pty Ltd and another v Fja Holdings Pty Ltd and another involved a dispute between the plaintiffs, who were shareholders and directors of a company, and the defendants, who were also involved in the company. The plaintiffs initiated proceedings in 2021, alleging issues related to the sale of an agricultural equipment manufacturing business. The litigation had been slow and had intermittent periods of inactivity. The court was required to determine whether the filing of an amended statement of claim by the plaintiffs was considered an effectual step in the proceeding, and whether a mediation held on 27 February 2023 constituted a step in the proceeding under the Uniform Civil Procedure Rules 1999 (Qld). Furthermore, the court had to decide whether the plaintiffs needed leave to file the amended statement of claim, if the new claim arose from the same or substantially the same facts as the originally pleaded case, and if leave to amend the statement of claim should be granted.

The court found that the amended statement of claim was filed within two years from the time the last step was taken in the proceeding and was, therefore, an effective step in the proceeding. The court also ruled that the plaintiffs required leave to file their amended statement of claim. However, leave to file the amended statement of claim was granted, with an order that the amendments take effect from 27 February 2025. The court considered various factors in reaching its decision, including the fact that the critical conversations relied upon by the plaintiffs occurred between individuals who had been involved in the case from the outset, and that most of the remaining potential witnesses were contactable. The court also found that some of the amendments to the plaintiffs' case arose from the defence and counterclaim filed by the defendants. The court further held that aspects of the unfairness and prejudice could be dealt with by the defendants at trial in cross-examining the plaintiffs' witnesses, and that the issue of costs thrown away could be compensated to a large degree by an award of costs in the defendants' favour.

The court concluded that the weight of the consequences of delay in raising this new claim and prejudice ought to be carried by the plaintiffs, and that some of this prejudice could be adequately addressed by granting leave and ordering that the amendments take effect from 27 February 2025, pursuant to r 387 of the UCPR. This would allow the defendants to plead any limitation defences, and leave the issue about whether or not the cause of action has expired to trial.