Lovett v Canbe Pty Ltd ATF Austin Family Trust 2 - [2017] SADC 138

DISTRICT COURT OF SOUTH AUSTRALIA
(Civil: Appeal Against a Master's Decision)
LOVETT & ANOR v CANBE PTY LTD ATF AUSTIN FAMILY TRUST 2 & ORS
[2017] SADC 138
Judgment of Her Honour Judge Bochner
12 December 2017
PROCEDURE - INFERIOR COURTS - SOUTH AUSTRALIA - DISTRICT COURT
Appeal from a Master - leave to amend pursuant to Rule 54 - appeal allowed.
District Court Civil Rules 2006 r 54; Limitations of Actions Act 1936 s 48, referred to.
House v The King (1936) 55 CLR 499; Tasmanian Sandstone Quarries Pty Ltd v Tasmanian Sandstone Pty Ltd [2009] SASC 111; Cowie v State Electricity Commission of Victoria [1964] VR 788, considered.

LOVETT & ANOR v CANBE PTY LTD ATF AUSTIN FAMILY TRUST 2 & ORS
[2017] SADC 138

On 1 April 2016, the plaintiffs issued proceedings against two defendants in relation to personal injuries that the first plaintiff had sustained on 2 April 2013. The first defendant filed a defence on 31 August 2016. When the plaintiffs sought to serve the summons and statement of claim on the second defendant, they discovered that they had named the wrong entity as the second defendant. The entity named in the summons and statement of claim was “Vines Retirement Village Pty Ltd ACN 111 725 592”. The entity that should have been identified as the second defendant was “The Vineyard Retirement Village Pty Ltd ACN 120 818 224”. Other than the actual naming of the second defendant, the description of the second defendant in the body of the statement of claim clearly identifies the correct entity, in terms of its address, its business, and its identity as the business at which the plaintiff was engaged at the time the injury occurred. It is clear that the plaintiffs intended to sue The Vineyard Retirement Village Pty Ltd ACN 120 818 224.
The plaintiffs sought to amend the summons and statement of claim, to correct the identity of the second defendant, by introducing as a party The Vineyard Retirement Village Pty Ltd ACN 120 818 224 (hereinafter referred to as the proposed second defendant). In their application, the primary order sought by the plaintiffs was leave to amend pursuant Rule 54 of the District Court Civil Rules 2006, with the amendment to take effect from the date of the issue of the summons and statement of claim. In the alternative, the plaintiffs sought leave to amend with the inclusion of a plea seeking an extension of time pursuant to section 48 of the Limitations of Actions Act 1936 (SA). Other orders were also sought on that interlocutory application, which are not relevant to the hearing of this appeal.
At the hearing of the matter before the Master, counsel for the plaintiffs set out the circumstances leading to the incorrect naming of the proposed second defendant and submitted that the error which led to the wrong party being identified was a genuine mistake, thus seeking to invoke the discretion conferred by Rule 54(7). The proposed second defendant put the plaintiffs to proof on the question of whether there had been a genuine mistake, but did not seek to make any submissions in relation to the exercise of the discretion. Specifically, the proposed second defendant submitted:
In respect of that position [that the amendment take effect from the commencement of the action] we can’t point to any specific prejudice on that issue either in terms of case flow management or in terms of actual prejudice. The test is one that there must be genuine mistake in the identification of the party and we’re in the court’s hands as to whether or not such a mistake has been made to satisfy the requirement of s 54(7)(b) (sic).[1]
[1] T6.4-11.
The Master’s decision
In his reasons for decision[2] the Master found that the error leading to the incorrect naming of the second defendant as opposed to the proposed second defendant was a genuine mistake, thus enlivening the discretion provided by Rule 54. He found, however, that the prejudice suffered by the proposed second defendant as a result of the delay in commencing proceedings against it was such that the amendment should operate only from the date that the application to amend was made, rather than to relate back to issue of the summons. He said:
I do not accept the submission on behalf of the plaintiffs that no prejudice to the proposed second defendant has been identified. If the amendment is granted and allowed to run retrospectively, the defendant will suffer prejudice as a result of the delay by the solicitors for the plaintiffs. In my view, the circumstances that the time for investigation of the incident has elapsed and that the incident is now some four and a half years ago, is sufficient prejudice to order that the amendment take effect from 4 July 2017.
[2] Decision No 34 of 2017.
The appeal
The plaintiffs now appeal from the decision of the Master, that the amendments should operate from the date of the application to amend, rather than relate back to the date of issue of the summons. I note that the Master’s finding that the error was caused by genuine mistake is not the subject of appeal; as a result, I do not address that finding or the evidence that supported it.
During the hearing of the appeal, the plaintiffs submitted that the Master erred in the exercise of his discretion in finding that the prejudice suffered by the proposed second defendant required that the amendment should only operate from the date of the application to amend. They submitted that the following principles apply:
·Once an amendment is made, and in the absence of an order to the contrary, the amendment takes effect as from the date of the filing of the original document to be amended.
·Rule 54(7)(b) gives the Court a discretion to allow an amendment which introduces a new defendant “against whom a fresh action would be statute barred if satisfied that the plaintiff’s failure to join the defendant arose from a genuine mistake.”[3]
·The Court has discretion to allow such an amendment to operate from the date of the application to amend, rather than from the date of the commencement of the action, if the justice of the case requires it.
·In considering how this discretion is to be exercised, it is for the defendant to put evidence before the Court as to the prejudice suffered should the amendment be allowed to take effect from the commencement of the proceedings.
[3] Rule 54(7)(b).
In their written submissions, the plaintiffs submitted that the Master applied the wrong test, in that he failed to consider the interests of the plaintiffs in considering the interests of justice.
In both their written and oral submissions, the plaintiffs submitted that the Master erred in the exercise of his discretion, by placing weight on the possible prejudice caused to the proposed second defendant, in the absence of any actual evidence from the proposed second defendant and in the face of the proposed second defendant’s submissions that it could point to none.
It is the plaintiffs’ position that in the face of the lack of evidence from the proposed second defendant, and indeed, its positive submission that it could point to no prejudice, the exercise of the Master’s discretion was plainly unjust and unreasonable.
Mr Tilley on behalf of the proposed second defendant confined his submissions very much to the matters that he put to the Master. In particular, he submitted that the proposed second defendant could not point to any prejudice to be suffered by it should the amendments relate back to the date of commencement of proceedings, either in relation to case management or in relation to “actual prejudice”.[4] He specifically sought to make no submissions in relation to the exercise of the discretion given by Rule 54.
[4] T5.22.
Consideration
The basis for an appeal from a District Court Master is set out in Rule 286. It is to be by way of rehearing. Where the appeal is in relation the exercise of a discretion, the principles laid down in House v The King[5] apply. While those principles are well known, it is worth setting them out:
The manner in which an appeal against an exercise of discretion should be determined is governed by established principles. It is not enough that the judges composing the appellate court consider that, if they had been in the position of the primary judge, they would have taken a different course. It must appear that some error has been made in exercising the discretion. If the judge acts upon a wrong principle, if he allows extraneous or irrelevant matters to guide or affect him, if he mistakes the facts, if he does not take into account some material consideration, then his determination should be reviewed and the appellate court may exercise its own discretion in substitution for his if it has the materials for doing so. It may not appear how the primary judge has reached the result embodied in his order, but, if upon the facts it is unreasonable or plainly unjust, the appellate court may infer that in some way there has been a failure properly to exercise the discretion which the law reposes in the court of first instance. In such a case, although the nature of the error may not be discoverable, the exercise of the discretion is reviewed on the ground that a substantial wrong has in fact occurred.[6]
[5] (1936) 55 CLR 499.
[6] (1936) 55 CLR 499 at 404-405.
Thus, I need to consider if the Master acted upon a wrong principle, took into account extraneous or irrelevant material, failed to take into account some material consideration, or whether on the facts the decision reached by him is unreasonable or plainly unjust.
The plaintiffs referred me to a number of authorities in the course of their submissions. In particular, I refer to the judgment of White J in Tasmanian Sandstone Quarries Pty Ltd v Tasmanian Sandstone Pty Ltd.[7] When discussing the predecessor of Rule 54, he said:
[184] The ordinary position is that, when an amendment is made under r 53.03, it takes effect on the date on which the proceedings were commenced. However, that is not an inflexible rule and, when the justice of the case requires, the Court may order that the amendment take effect from some other date.^{- 10}
(citations omitted)
[7] [2009] SASC 111.
I also refer to the decision of Gowans J in Cowie v State Electricity Commission of Victoria,[8] where, when considering the question of prejudice to the respondent in a similar application, he said:
It is for the respondent to place in evidence sufficient facts to lead the Court to the view that prejudice would be occasioned and it is then for the application to show that these facts do not amount to material prejudice.[9]
[8] [1964] VR 788.
[9] [1964] VR 788 at 793.
The effect of these authorities is twofold. Firstly, the starting place for the Court is that the amendment is to take effect on the date the proceedings were commenced, except where the justice of the case dictates otherwise. Secondly, when considering what the justice of the case demands, it is for the respondent to proffer evidence of prejudice that would eventuate should the amendments be given such an operation date.
I am of the view that in this matter the Master has made an error in the exercise of his discretion, in that the Master has operated from a presumption of prejudice, rather than on any evidence of prejudice relied upon the proposed second defendant. In reaching his decision, the Master said the following:
The proposed second defendant has not had the opportunity to consider the claim or to investigate the facts alleged in the statement of claim. Earlier investigation of the nature of the claim may have afforded an opportunity to collect facts and interview witnesses soon after the events in April 2013.
He made this finding in the absence of any evidence as to investigation by the proposed second defendant, and in light of its submission that it could point to no prejudice suffered by it should the amendment be allowed to relate back to the commencement of the proceedings.
In this, the Master fell into error. He took into consideration a presumption of prejudice and he failed to take into consideration the submissions of the proposed second defendant as to lack of prejudice.
In light of the submissions made by the proposed second defendant, both to the Master and to me, I find that the decision of the Master was clearly unreasonable and unjust. The proposed second defendant specifically submitted to the Court that it could point to no prejudice and declined to make submissions on the exercise of the discretion. As a result, the starting point for the Master should have been that the amendments were to take effect from the commencement of the proceedings. In the absence of any evidence that the justice of the case demanded a different date, this should also have been his concluding point.
The appeal is allowed.
At the hearing of this matter, the plaintiffs indicated that if the appeal were allowed, they would not seek a costs order. On that basis, I am prepared to make an order that there be no order as to costs. That order will be formally made within seven days, unless the parties contact my chambers during that period to indicate that an alternative costs order will be sought, in which case the matter will be listed for further directions.