Macquarie International Health Clinic Pty Ltd v Sydney Local Health District; Sydney Local Health District v Macquarie Health Corporation Ltd (No 6) - [2014] NSWSC 1549

Supreme Court

New South Wales

Amendment notes

Medium Neutral Citation: Macquarie International Health Clinic Pty Ltd v Sydney Local Health District; Sydney Local Health District v Macquarie Health Corporation Ltd (No 6) [2014] NSWSC 1549
Hearing dates: 4, 12, 19 and 26 September 2014
Decision date: 06 November 2014
Jurisdiction: Equity Division
Before: Kunc J
Decision:
Plaintiff's amendments allowed; Defendant's late evidence permitted to be relied upon

Catchwords: Practice and procedure - Application to amend pleadings during course of long and complex proceedings - No issue of principle - Civil Procedure Act 2005 (NSW), ss 56, 57, 58, 60 and 62
Cases Cited: Kelly v Mina [2014] NSWCA 9
Ken Tugrul v Tarrants Financial Consultants Pty Limited ACN 086 674 179 [No 5] [2014] NSWSC 437
Macquarie International Health Clinic Pty Ltd v Sydney South West Area Health Service [2010] NSWCA 268
Macquarie International Health Clinic Pty Ltd v Sydney Local Health District; Sydney Local Health District v Macquarie Health Corporation Ltd [2013] NSWSC 764
Category: Interlocutory applications
Parties: Plaintiff: Macquarie International Health Clinic Pty Ltd
Defendant: Sydney Local Health District
Representation: Counsel: Mr R. Dubler SC, Mr S. Phillips, Mr A. Harding (Plaintiff)
Defendant: Mr G.K. Burton SC, Mr H. Stowe, Mr G. Antipas (Defendant)
Solicitors: Plaintiff: S Moran & Co
Defendant: Bolzan & Dimitri

File Number(s): 2000/34949
Publication restriction: No

Judgment

Summary

This is the second contested application by the plaintiff ("Macquarie") to amend its pleadings in circumstances where the proceedings have been already dealt with both at first instance and by the Court of Appeal. By an order of the Court of Appeal the matter has returned to a judge of this division to conduct an inquiry into the damages, on the basis specified by that Court, for which the defendant (the "Health District") might be liable to Macquarie.

I dismissed Macquarie's first application to amend (Macquarie International Health Clinic Pty Ltd v Sydney Local Health District; Sydney Local Health District v Macquarie Health Corporation Ltd [2013] NSWSC 764 (the "First Amendment Judgment")). That first application was made shortly after I began to case manage the proceedings (the matter first coming before me on 22 May 2013). The hearing of the proceedings had not yet begun.

In contrast to the timing of that first amendment application, the application which is the subject of this judgment was heard over four days when the hearing was well advanced but far from complete. The argument commenced on what would otherwise have been the thirty ninth day of the hearing and continued over three weeks (the second, third and fourth days taking place on consecutive Fridays at the conclusion of other lists I was managing on those days). The second and third days were also devoted to hearing a contested application by the Health District to rely on certain expert reports that had been served out of time. Given the practical and discretionary considerations involved, the two applications had to be considered together.

At the conclusion of the argument on the afternoon of 19 September 2014 I informed the parties that I proposed to grant both Macquarie's application for leave to amend and the Health District's application to rely on its late filed reports. Those conclusions were subject to hearing any further argument to the extent that the parties were unable to agree upon the final form of conditions which Macquarie had proffered during the course of the hearing as conditions upon which it submitted leave to amend should be granted.

On 26 September 2014 I heard short further argument in relation to those conditions of leave. I then made orders setting out the formal resolution of the two applications. These are the reasons for those orders. The orders are set out in Schedule 1 to this judgment (including a minor amendment made under the slip rule on 29 October 2014).

The reasons for granting the Health District's application may be summarised as follows. In case managing these proceedings the Court has indicated more than once that special care would be taken to ensure that the Health District was not disadvantaged by the lack of an adequate opportunity to meet Macquarie's case because of the exigencies of the dates fixed for hearing. The Court accepts the Health District's explanation for the delay in preparing Messrs Gower's and Arnott's reports. That delay arises from the complexity of the issues rather than any unreasonable delay or lack of diligence on the part of the Health District, its advisers or experts. The fact that the grant of leave will result in the proceedings going over to 2015 to give Macquarie's experts sufficient time to deal with those reports is not a reason to deny the leave. The desideratum of completing the proceedings this year in accordance with the current trial plan cannot be elevated to an end in itself where adherence to it would work a real injustice to one or both of the parties.

The reasons for granting Macquarie's amendment application may be summarised as follows. The amendments are "necessary" within the meaning of s 64(2) of the Civil Procedure Act 2005 (NSW) (the "Act") to determine the real question raised by these proceedings, being the amount of damages payable by the Health District to Macquarie in respect of being kept out of possession of the carpark site and the hospital site between 17 March 2000 and the date of being restored to possession (which, by agreement, the parties accept in practical terms means the date of my final judgment in this inquiry). The amendments should therefore be allowed unless considerations identified in s 58 of the Act warrant a contrary result. In this case they do not.

Macquarie's damages claim raises complex legal and factual issues. The Health District has been held liable to Macquarie and the sums at stake are potentially huge. The explanations offered by Macquarie as to why the amendments are being sought at this stage of the proceedings are accepted by the Court. The application does not represent a decision by Macquarie to resile from earlier forensic decisions advisedly made not to advance the case now sought to be advanced by the proposed amendments.

The Health District will not suffer any irremediable prejudice if the amendments are granted. It will have a proper opportunity to respond to the amended case and that opportunity will not, given the length of the proceedings in any event, significantly delay when the case would otherwise have been likely to finish in 2015. The Health District will have the benefit of an order for costs thrown away and security for that order. There is no suggestion that the costs the Health District will incur in meeting the amended case will be disproportionate to either the sums at stake or the amount of costs it has incurred or will incur. Given these circumstances it would not be just to deny the application and thereby compel Macquarie to advance a case which it no longer wishes to propound.

To avoid repetition

Paragraphs [2] to [55] of the First Amendment Judgment set out the relevant history of these proceedings up to the date of that judgment and what I consider to be the applicable legal principles governing the Court's power to permit Macquarie's amendment. Those paragraphs are incorporated by reference into these reasons and I will not repeat them. However, before considering the current applications it is necessary to set out the history of these proceedings since the First Amendment Judgment (including the course of the hearing of those applications) and to draw attention to a relevant decision of the Court of Appeal which was delivered after the First Amendment Judgment.

Events since the First Amendment Judgment

In October 2012 the Chief Judge in Equity had fixed the damages inquiry for hearing for 10 days commencing on 17 June 2013. On 26 April 2013 the Chief Judge vacated the hearing fixed to commence on 17 June 2013 and refixed it for three weeks before me commencing on 14 October 2013. It will be noted that, in the course of that process, the estimate for the length of the hearing had increased from two to three weeks.

When the matter came before me for the first time on 22 May 2013 it was obvious that, even without Macquarie's first proposed amendment, three weeks would be insufficient for the hearing of evidence and the making of submissions on the inquiry. I therefore reallocated the three weeks commencing on 14 October 2013 to be devoted entirely to the taking of evidence. After allowing a period of time for written submissions I fixed an additional week commencing on 2 December 2013 for submissions. Thus the allocated hearing time had increased again from three to four weeks.

On 28 May 2013 I heard Macquarie's first amendment application. I delivered the First Amendment Judgment on 13 June 2013 declining Macquarie's application.

Further directions hearings then ensued. On 6 August 2013, when it became apparent that the matter would not be ready to proceed on 14 October 2013, that hearing date was also vacated. The Court directed the parties to work co-operatively on a trial plan which would have the hearing commencing on 10 February 2014, being the start of the second week of the new term. The proceedings were fixed for six weeks for evidence and then two weeks of oral submissions commencing on 19 May 2014. This represented another doubling of the total expected hearing time from four to eight weeks.

Matters next came to a head at a directions hearing on 17 December 2013. Without going into the details or apportioning blame, Macquarie's evidence was being filed behind schedule and the Health District was submitting, with some justification, that the late service of Macquarie's material meant that the Health District would have real difficulty preparing to meet that evidence in time for a trial commencing in February 2014.

At the directions hearing on 17 December 2013 I formed the view that, as a matter of case management, there were really only two possibilities. The first was to proceed in what I have at various times referred to as the "traditional way", namely not fixing a hearing date until the evidence was closed from all parties. With no disrespect to anyone, given the complexity of the issues that had developed and, in particular, the interrelated nature of the evidence from a number of experts in different disciplines (see further paragraph [46] below), my view was and remains that it would not be an exaggeration to say that if that "traditional" course had been followed the trial might not have commenced for at least another twelve to eighteen months. The second possibility was to commence the trial in February 2014 at least to the point of Macquarie's case being finalised and the openings having taken place. If it could not then continue, a realistic timetable for the further conduct of the proceedings could then be determined.

I took the latter course. I summarised my rationale for doing so as follows (Transcript 17 December 2013, pages 23 and ff):

HIS HONOUR: Gentlemen I will tell you what I propose to do and you can think about the practical ramifications and directions, if any, that need to be made over the morning tea adjournment. There are a number of issues that weigh upon how in my view this matter should proceed.

One is the Plaintiff has a substantial claim. It ought to be afforded all appropriate opportunities to formulate and present the claim that it wishes to advance. That entitlement, of course, is not limitless and must come to an end in terms of how long the Plaintiff gets to do that.

Another factor is that, in allowing the Plaintiff the opportunity to present its case fully and in the way it wishes to do, the Defendant must, of course, be given an opportunity properly, not in a hurried or pressured way, to respond to the case the Plaintiff makes.

Another matter I take into account is how long this whole exercise has been running through the Court this year. I am not going to apportion blame but the fact is we have had a number of substantial directions hearings. I think I have tried to leave it to the parties to drive their own bus in term of being realistic and sensible and in terms of the timetable they have agreed upon, allowing adequate time for thing to be done. They have not always been able to be met. To some extent perhaps because of the fault of the parties, to some extent or perhaps the fault of experts. I don't need to go into it beyond a great deal of effort has been taken up in various case managing conferences.

The next thing I take into account is on now I think the two occasions this matter has been set down for hearing that I have been party to it had to be vacated and the parties were invited to put a line in the sand in terms of the date next year and the Court has done everything it can to accommodate the parties on the basis of the information and assurances they have provided. That has an impact upon the use of the Court resources, having regard to other litigants who have a claim on Judges' times, [sic] time to have their disputes resolved.

I am conscious of the principles in relation to applications [of] this kind which I dealt with in my earlier judgment. They apply in my view just as much to applications to read evidence late or rely on evidence late as they do to formal amendments to pleadings.

Weighing all those factors up and dealing with the matter dare I say in the broad it seems to me that what should happen is this; this case is going to start on 10th February. It is going to start on the 10th February. The Plaintiff by the 10th February or indeed by the 3rd when it is supposed to put on its outline of opening submissions is quite simply going to have to get all its evidence together, prepare its submissions and nail its colours to the mast and open the case accordingly. So, if nothing else, some time in the week of the 10th February we will all be appraised of exactly what case the Plaintiff wants to make.

For that purpose I will grant leave now for the reports the subject of the motion to be relied upon. I am not going to make any directions in relation to any additional material the Plaintiff wishes to rely upon. It can prepare and serve that material on the Defendant as it becomes available.

The Defendant will have to take their own course in terms of trying to meet it but I do not expect the Defendant to go outside a rational, prudent and sensible level of activity to try and deal with that material.

It may be that the result of the Defendant's activity looking at that material may be no more than to identify precisely the prejudice or difficulties they have in meeting that material. We will deal with all of that after the Plaintiff has opened its case on the 10th February.

Everybody then knows exactly what the Plaintiff's case is.

...

What I wish to make very clear is that the Plaintiff, in being granted this leave today, must understand that the Court will approach with considerable sympathy the Defendant's position in the week of the 10th February insofar as the Defendant is able to demonstrate a proper basis for being able to say it is prejudiced once the Defendant understands precisely what the Plaintiff's case is.

The priority, it seems to me, to case manage this case properly in accordance with the requirements of ss 5658 is now to require the Plaintiff to prepare, put on, articulate and crystallise its case and open its case and nail its colours to the mast, and we'll do that through the opening submissions and written submissions and opening on the 10th February then we will see where we get to.

A number of things could then happen in the week of 10th February after the Plaintiff has opened and nailed its colours to the mast. The Court will then explore with the parties the extent to which the available court time can be used, notwithstanding the fact the Defendant may need to put on further material. It may be, for example, that a deal of lay evidence can be got out of the way. It rather depends on what the nature of the Defendant's difficulties are, if any, but we will explore the extent to which things can be done in the court time available assuming the Defendant says it cannot meet the whole of the Plaintiff's case as ultimately articulated.

Another thing that might happen is the whole thing gets vacated and adjourned so the Defendant has an appropriate opportunity to deal with what the Defendant needs to deal with in the light of the case that by then will be etched in marble by the Plaintiff and not to be altered.

In doing so, of course, the Plaintiff will have to recognise that there will be a significant risk of adverse costs order for costs thrown away and it may be some of the time set aside will have to be devoted to arguing merits of who pays for the vacation of some or all of the hearing if that is in fact what occurs.

The final hearing of the damages inquiry commenced on 10 February 2014. The parties had filed written opening submissions and addressed those submissions over three days. I refer further to how Macquarie opened its case at paragraphs [63] to [70] below.

On 12 February 2014, at the conclusion of the opening submissions, a number of orders were made on the Health District's application, and not opposed by Macquarie, including:

(1) Leave to Macquarie to rely on various experts' reports that had been filed in the period since 17 December 2013.

(2) An order that Macquarie not rely on further affidavits or reports in chief without leave.

(3) A timetable for the Health District's further expert and lay evidence including an order for "responding expert reports consequential upon financial analysis as soon as possible with confirmation of dates to be provided by 12 April 2014".

(4) Expert conclaves and consequential conclave reports to be completed by 29 April 2014.

(5) Vacating the hearing dates from 13 February to 20 March 2014.

(6) Requiring a draft trial plan to be filed by the parties by 7 May 2014.

(7) Listing the hearing to recommence for six weeks commencing on 12 May 2014 and concluding on 20 June 2014, with two further weeks fixed for final addresses commencing on 11 August 2014 after the exchange of the submissions.

There were further difficulties with the preparation of evidence. This necessitated further directions hearings on 16 April and 1 May 2014. On 1 May the Court indicated that the May-June fixture would stand and the parties were to plan to use that time to deal with as much evidence as possible. The parties were directed to provide a further trial plan by 9 May 2014.

On 8 May 2014 the Health District submitted a further draft trial plan. It demonstrated that all of the evidence (in particular, the expert financial and damages evidence) would not be able to be taken during the May-June fixture but that such evidence as was ready or likely to be ready would fill most of that time. It was proposed that the balance of the evidence, including expert conclaves, would be completed so as to enable the rest of the evidence to be taken in the fortnight already allocated for final submissions commencing on 12 August 2014. Further time would have to be found for final submissions.

The hearing recommenced on 12 May 2014 as scheduled. After two days of reading time, evidence began to be read and objections dealt with on 14 May 2014. On 15 May 2014, after further discussion between the parties and the Court as to how the trial could most efficiently be conducted, the Court formally reallocated the weeks of 11 and 18 August 2014 from final submissions to hearing further evidence. The week of 25 August 2014 was also allocated to complete the hearing of the evidence. On 16 May 2014 the Court formally fixed the weeks of 10 and 17 November 2014 for the hearing of final addresses after the filing of written submissions. The total time allocated for the trial had therefore increased to eleven weeks.

The hearing continued through to 20 June 2014, with most of the days fixed being used. Consistently with their duties under s 56 of the Act, the parties, to their credit, co-operated to ensure that as many witnesses as possible were dealt with. There were two further days of evidence on 5 and 6 August before the scheduled resumption on 11 August 2014. The same procedure was then followed to deal with all such evidence and witnesses as were available.

As at 4 September 2014 (the date Macquarie's motion for leave to amend was heard) there had been 37 days of hearing. The joint tender bundle consisted of 74 lever arch folders of material and 40 individual exhibits had been tendered. Twenty six lay and expert witnesses had given evidence (including concurrent evidence) and the transcript had just passed 2000 pages in length. However, a considerable amount of both expert and lay evidence had yet to be heard including critical and substantial evidence on the integers leading to, and the ultimate calculation of, damages and the cross-examination of Macquarie's principal, Dr Thomas Wenkart.

The course of the present applications

On Monday, 26 May 2014 (day 10 of the hearing), the following occurred (Transcript pages 565-566):

DUBLER:

...

I think I listed the next area of debate between us is over Mr Lister and the hospital valuation and the mesne profit case on the hospital site. That arose in this way. The hospital valuer has been late. The hospital valuer was meant to be done with Mr Wolf, this is the evidence of Ms Penny Moran, that Mr Wolf finally got around to informing us that he didn't have professional indemnity insurance that would allow him to value it at that level. Mr Lister has been engaged, a well qualified expert in the field who, apparently, has knowledge of every hospital in Australia. He is preparing a report which includes, and we have advised the other side of this, his valuation of the hospital for financing purposes and also, to provide a valuation of the market value of the rent, which would be the classic description of mesne profits.

That will be a vastly different figure from the lost profits figure. It will be a vastly reduced figure. It will involve only a question of the valuation of the site as the market value for the rental site. The current timetable puts forward my learned friend's valuation in reply with a time for that and conclaves in July and evidence in August is the current draft timetable.

Subject to one thing, we will be applying to amend to permit us to do so in our pleading. The one thing is confirmation that the figure will be positive. As your Honour will understand, it has to get above the ground rental. We have very good indications there would be a positive number, but that is stopping us, obviously, doing a pleading.

I have informed my learned friend that as soon as we can do it, perhaps at a time prior to the final report, but it may make sense to do the application when the report lands. We are completely up front about that, in the sense, your Honour, that is no doubt a claim that needs amendment application. It needs do come within the principles of an amendment application. We will do that as soon as we can.

We had apprehended that prior to the letter that your Honour read because the issue of prejudice in the real sense has been managed by reports in reply and an August hearing date for the valuers, that it may not be opposed. We take that as being no longer the case, or we were misunderstood before, that we would proceed as soon as we can with that.

...

HIS HONOUR: Mr Burton?

BURTON: Firstly, my learned friend hasn't informed me in advance of the application to amend in relation to the valuer. The first we knew about the valuer was when we were given the letter of instruction, I think, last Friday.

HIS HONOUR: This is on the mesne profits case?

BURTON: Yes and indeed, on advancing the finance timeline by a year because what Mr Lister was being asked to do is repeat the security valuation he has done late and just recently for 1 April '03 to redo it at 1 April '02. It is unclear what he has been told about the state of the hospital at that point, whether that is now predicated on a more advanced state on this new build.

...

I note in passing that Mr Dubler SC's expectation recorded in the transcript just quoted, that the amended claim for mesne profits for the hospital site would be a materially lower amount, has not been realised. The range of the amended claim in relation to the hospital site is from about $7,000,000 to about $140,000,000. At the high end it is near the high range of Macquarie's existing case. At the time he first raised it, I took Mr Dubler SC to be implying that the possible reduction of the claim would be a matter favouring grant of the amendment. While I have considered the argument that the lack of reduction in the claim points against granting the amendment (i.e. an argument to the effect that the amendment doesn't really change anything but creates prejudice), I do not think that is correct. It is a neutral or irrelevant factor in the exercise of the Court's discretion.

On 28 May 2014 my associate received an email from Mr Dubler SC on behalf of Macquarie:

... could you kindly inform his Honour that the parties have reached an accommodation on the matters in dispute raised on Monday afternoon.

This has been recorded in a document which I attach.

The main effect of the accommodation is that:

(1) We will not need to pursue any contested amendment application on Monday;

(2) The parties have reached an understanding as to expert reports for which the leave is required;

(3) There will in due (sic) be introduced an alternative claim for mesne profits in respect of the Hospital Site.

The parties intend to revert to the trial plan and commence the lay witnesses for the defendant.

Macquarie referred to this in submissions as the "May agreement". To the extent it evidenced what might be described as an agreement it was clearly dependent on Macquarie's evidence in support of its mesne profits case for the hospital site being provided reasonably promptly. Through no fault of Macquarie, in circumstances described in the next paragraph, that did not occur.

From around 22 May 2014, according to uncontested evidence from Macquarie's solicitor, Macquarie sought input from its various experts as to the calculation of what Macquarie contends represents mesne profits in respect of the hospital site including Messrs Lister (hospital valuer), Coleman (financial accountant), Lonergan (financial accountant), Anderson (hospital expert) and Milou (car park valuer). Because of the need to prepare experts' reports in sequence (see paragraph [46] below), the first report that had to be completed was Mr Lister's. Despite Mr Lister's original advice to Macquarie's solicitor on 22 May 2014 that his report would be available in four weeks and notwithstanding frequent follow ups by Macquarie's solicitor, Mr Lister's final report was not provided to Macquarie until 29 August 2014.

On 22 July 2014 without prejudice communications (privilege in relation to which was waived for the present application) commenced between the parties in relation to Macquarie's latest proposed amendments. This was entirely appropriate. As I discussed more fully in my judgment in Ken Tugrul v Tarrants Financial Consultants Pty Limited ACN 086 674 179 [No 5] [2014] NSWSC 437 at [62]-[77], the Court expects parties, consistently with their duties under s 56 of the Act, to try to resolve issues by consent before interlocutory motions are filed.

The parties' negotiations centred on the conditions of leave upon which the Health District might consent to Macquarie's amendments and the impact of those amendments upon the future course of the hearing, including the utilisation of days already fixed. A major practical issue was when Macquarie could provide its reports in support of its proposed amended claim for mesne profits for the hospital site.

By 14 August 2014 (day 30 of the hearing) it became apparent that Macquarie's desire to amend its case would not be able to be resolved by consent. I made directions for the filing by Macquarie of an appropriate notice of motion and for the parties to put on evidence in relation to that motion. The hearing date for the motion was fixed for 4 September 2014. In the meantime, the Court continued hearing evidence in the main proceedings.

The Court heard Macquarie's application on Thursday, 4 September 2014 (day 38 of the hearing). At the end of the day I indicated that I would give the result, although not necessarily deliver a judgment, at 9.30am the following Monday, 8 September 2014.

The next day, Friday, 5 September 2014, my associate received a letter from Macquarie's solicitor which included:

In response to the request raised by His Honour, the Plaintiff opposes leave being granted to the Defendant to rely upon the recently served reports of Messrs Arnott and Gower both dated 3 September 2014 and Mr Gower's report of 1 August 2014 and intends [sic] filing an affidavit which sets out the basis for opposing such leave.

The Plaintiff has commenced considering the length of time which is likely to be required to respond to and otherwise deal with the Arnott and Gower reports (should, contrary to the above, leave be granted to the Defendant to rely upon such material). The affidavit referred to above will also address those matters.

Further, the Plaintiff has come to the view that, while the issues of precisely what evidence is to be relied upon, and the time which will be required to deal with such evidence, remain unclear, its application for leave to amend is likely to be premature. The Plaintiff therefore wishes to withdraw its application to amend while reserving the right to renew such application once the above issues have been clarified and the position with respect to the defendant's evidence in response to the plaintiff's existing case is better known.

Accordingly, the Plaintiff respectfully requests that His Honour not rule on the Notice of Motion filed on 21 August 2014, but that the matter still be listed at 9:30 AM on Monday, 8 September 2014 for directions to bring in a timetable for the service of the above affidavits and any affidavits in reply and dates for hearing of the issue of leave to rely upon the additional evidence proposed to be led by the Defendant.

On Monday, 8 September 2014 (day 39 of the hearing) I acceded to the request in Macquarie's solicitor's letter and gave Macquarie time to file evidence concerning its capacity to respond to the Health District's reports from Messrs Arnott (finance expert) and Gower (financial accountant). The proceedings were stood over to the following Friday, 12 September 2014.

On Friday, 12 September 2014 (day 40 of the hearing) the Court proceeded to hear the Health District's application for leave to rely on Messrs Arnott's and Gower's expert reports. It was apparent that Macquarie's application and the Health District's application were, at least to some extent, interdependent and could not be considered separately. I therefore gave the parties leave to reopen their arguments on Macquarie's amendment application to the extent necessary to take into account matters arising from the Health District's application. There was some cross-examination on that day of experts and others in relation to consideration of the Health District's reports and the time that Macquarie would require to respond to them, as well as related issues. There was further argument.

The argument continued the following Friday, 19 September 2014 (day 41 of the hearing). The Court heard further evidence from some of the experts and the parties' solicitors in relation to the applications. At the end of the argument I indicated that both parties' applications were successful, subject only to my hearing any further argument concerning the precise form of the conditions which Macquarie had proffered as a condition of it being given leave to amend.

On Friday, 26 September 2014 (day 43 of the hearing) the Court heard some short argument in relation to the form of the conditions upon which Macquarie would be given leave to amend. Later that day the Court made orders resolving the two applications in the form set out in Schedule 1 to this judgment.

A recent judgment

Since I delivered the First Amendment Judgment the Court of Appeal has considered the proper approach to an amendment application under s 64 of the Act in Kelly v Mina [2014] NSWCA 9 ("Kelly") per Barrett JA, with whom Ward and Leeming JJA agreed:

44. The appellant says that the judge's decision to refuse leave to amend affected the result of the trial in a fundamentally adverse way entailing miscarriage of justice that requires correction of the interlocutory decision: Gerlach v Clifton Bricks Pty Ltd [2002] HCA 22; (2002) 209 CLR 478 at [4] - [8].

45. The amendment application was governed by s 64 of the Civil Procedure Act 2005 which, in subsection (1), provides that, at any stage of proceedings, the court may order that any document in the proceedings be amended, or that leave be granted to a party to amend any document in the proceedings. Section 64(2) then provides:

"Subject to section 58, all necessary amendments are to be made for the purpose of determining the real questions raised by or otherwise depending on the proceedings, correcting any defect or error in the proceedings and avoiding multiplicity of proceedings.

46. The judge's decision was obviously discretionary, so that appellate intervention will be warranted only upon the principles stated in House v The King [1936] HCA 40; (1936) 55 CLR 499 at 505. The fact that the decision was a decision on a matter of practice and procedure means that this Court should be slow to interfere and ought not to reverse the judge's decision unless convinced that it is plainly erroneous: Adam P Brown Male Fashions Pty Ltd v Philip Morris Inc [1981] HCA 39; (1981) 148 CLR 170. As Bryson JA said in State of New South Wales v Mulcahy [2006] NSWCA 303 at [3], "such appeals are, appropriately, kept on a tight rein".

47. Particularly in light of the opening words of s 64(2), it is not controversial that the provisions in Part 6 Division 1 of the Civil Procedure Act were binding on the primary judge and that, in accordance with s 58, his Honour was bound to seek to act in accordance with the dictates of justice and, in so doing, to have regard to s 56 concerning the "overriding purpose" of the Act and rules of court in their application to civil proceedings; also that, in addressing the amendment application in the particular statutory context, his Honour was required to take into account a combination of factors identified by the High Court in Aon Risk Services Pty Ltd v Australian National University [2009] HCA 29: (2009) 239 CLR 175 and usefully summarised by Vickery J in Namberry Craft Pty Ltd v Watson [2011] VSC 136 (at [38]) as follows:

...

(a) Whether there will be substantial delay caused by the amendment;

(b) The extent of wasted costs that will be incurred;

(c) Whether there is an irreparable element of unfair prejudice caused by the amendment, arising, for example, by inconvenience and stress caused to individuals or inordinate pressures placed upon corporations, which cannot be adequately compensated for, whatever costs may be awarded;

(d) Concerns of case management arising from the stage in the proceeding when the amendment is sought, including the fact that the time of the court is a publicly funded resource, and whether the grant of the amendment will result in inefficiencies arising from the vacation or adjournment of trials;

(e) Whether the grant of the amendment will lessen public confidence in the judicial system; and

(f) Whether a satisfactory explanation has been given for seeking the amendment at the stage when it is sought."

48. As this Court has emphasised more than once, Part 6 Division 1 of the Civil Procedure Act made substantive and important changes to the law so that considerations of promptness and efficiency in the conduct of civil litigation are afforded a new and special importance which may sometimes provoke a sense of injustice in a party who has failed to proceed with despatch: see, for example, Dennis v Australian Broadcasting Corporation [2008] NSWCA 37; Baulderstone Hornibrook Engineering Pty Ltd v Gordian Runoff Ltd [2008] NSWCA 243 at [160]- [161]; Hans Pet Constructions Pty Ltd v Cassar [2009] NSWCA 230; Halpin v Lumley General Insurance Ltd [2009] NSWCA 372; Bi v Mourad [2010] NSWCA 17; Richards v Cornford (No 3) [2010] NSWCA 134.

The decision in Kelly confirms that in adjudicating upon Macquarie's application the Court is exercising a statutory power informed by the factors which the Court of Appeal found to have been summarised in the decision of Vickery J to which their Honours referred. I set out my understanding of the statutory regime in paragraphs [38] to [55] of the First Amendment Judgment. Nothing in Kelly suggests my understanding is in error and I will proceed so to apply s 64 of the Act and the related provisions. I will also take into account the factors identified by Vickery J. In doing so it will be apparent that, in large part, those factors overlap or raise the same subject matter as the relevant provisions of the Act. A summary of the decisive matters which I have taken into account unencumbered by cross-referencing to the various statutory provisions is set out in paragraphs [7] to [9] above.

The attribution of fault

Before turning to consider the parties' respective applications, I will make a general observation in relation to one aspect of the parties' evidence and submissions.

The Court received lengthy affidavit evidence from each party's solicitor as well as submissions setting out in great detail the interlocutory twists and turns relating to each party's preparation of its evidence. That evidence was byzantine in its complexity. However, to anyone familiar with large scale, complex commercial litigation, it would not come as a surprise. Each legal adviser has obviously been acting thoroughly and diligently in their client's interests. Every delay has sought to be explained and, where possible, fault attributed to some conduct of the other party. Every polite, but nonetheless minatory, letter or submission warning the opposing party or alerting the Court to the dire consequences for the orderly conduct of the proceedings of the other parties' delay in the preparation of its evidence or the provision of some documents was written or made.

In making these observations I emphasise that I am not being critical of the parties or their legal advisers. Nevertheless, viewed from the Court's perspective of closely case managing what has become a very large and complex piece of commercial litigation, the Court sees no basis in the evidence to conclude that in matters relevant to the present applications either party or its experts has been other than diligent in attempting to deal with the exigencies of the litigation as they presented themselves. There is nothing in the material which has been adduced on either application which would warrant the conclusion that any particular conduct of either party was so unreasonable or otherwise so open to serious criticism that it should sound in the adverse exercise of the Court's discretion against either party.

For this reason, and to prevent what will already be a long judgment becoming even longer, I do not propose to set out in any detail, or at all unless otherwise necessary, every interlocutory measure and counter-measure (real or threatened) which was detailed and argued about in the course of the hearing of these applications. I have taken them into account, but only for the purposes of ultimately concluding that the exercise of the Court's discretion in these applications does not turn on the critical attribution of blame or fault to either party in relation to the preparation of its evidence for either the case as pleaded or the case which Macquarie wishes to advance if its amendment application is granted.

The Health District's application

Before considering Macquarie's application it is convenient to deal with the Health District's application. That is because the outcome of that application is relevant to the exercise of the Court's power under s 64 of the Act in relation to Macquarie's application.

While I discuss the complexity of these proceedings in paragraph [116] below, one aspect of that complexity is especially relevant to considering both the Health District's and Macquarie's application. The complexity arises from the interdependence of various experts' evidence.

There is no dispute between the parties that the reports and conclaves of the various experts in relation to Macquarie's lost profits case on both the carpark and especially the hospital site must proceed in the following sequence:

(1) Expert evidence of costs.

(2) Expert evidence of revenue and profitability.

(3) Next is the issue of the financial capacity of the plaintiff to complete the carpark and to build the hospital. The experts in this area take as assumptions the costs inputs and also revenue inputs from the carpark experts.

(4) The issue of overall feasibility and valuation. This is material placed before a banker in the process of seeking finance for the hospital development. This issue overlaps with the issue of profitability and revenue inputs and damages. In relation to valuation there are experts who value the hospital on completion, the hospital lease on an unimproved basis and a valuation of the carpark.

(5) All of the foregoing then feeds into the financing evidence in order to assess the likely prospects of Macquarie obtaining finance. Those experts depend on the prior expert reports as to costings, financial capacity, revenue inputs, valuation and viability. Finance experts also then assess the likely finance model for the project.

(6) The final step in the process is for the forensic accountants, taking into account of all of the foregoing and in particular the likely finance model, to perform the assessment of damages. A consequence of this process is also that as anterior experts reach their final positions, those final positions become assumptions in the reports of later experts.

On 11 February 2014 the Health District's solicitor deposed in an affidavit that it was his understanding that Mr Gower was likely to require twelve to fourteen weeks to prepare a financial analysis report and that Mr Arnott estimated that he would require one week after receiving Mr Gower's report to complete his report. Twelve to fourteen weeks from 11 February 2014 was 6 - 20 May 2014.

As is set out in paragraph [19] above, orders were made on 12 February 2014 to progress these proceedings. An order was made for the Health District's "responding expert reports consequential upon financial analysis as soon as possible with confirmation of dates to be provided by 12 April 2014". While there was some hope that those reports would be produced (and consequential conclaves would take place) in time for the hearing fixed to recommence on 12 May 2014 for six weeks, the Health District did express some pessimism about the possibility.

Difficulties with the preparation of the financial and other evidence led to the directions hearings and reorganisation of hearing dates set out in paragraph [20] above. I shall next set out some more matters of detail which need to be read with that paragraph.

By 12 April 2014 the Health District had neither served any expert reports consequential upon financial analysis nor had it confirmed the date by which those reports were to be provided. On 15 April 2014 Macquarie's solicitor wrote to the Health District's solicitor asking for urgent confirmation of the date on which those reports would be served.

On 29 April 2014 the Health District's solicitor provided to Macquarie's solicitor a proposed timetable foreshadowing service of the Health District's experts' reports:

(1) Mr Gower (financial capacity) by 23 May 2014.

(2) Mr Palassis (hospital feasibility) by 30 May 2014.

(3) Mr Arnott (finance) by 3 June 2014.

(4) Mr Gower (damages) by 10 June 2014.

On 8 May 2014 Mr Burton SC, for the Health District, sent to my associate a draft trial plan which stated:

The defendant's current estimate on completion of reports and completion of reports and conclaves for the above experts is by mid-July (with the reports being served progressively during that period from mid-June, expected to be in the order financial capacity, feasibility/valuation, finance, damages).

On 14 May 2014 Mr Burton SC informed the Court that Mr Gower's report on financial capacity would not in fact be served until mid-July 2014 and this was a "realistic estimate". He went on to say that Mr Palassis and Mr Arnott could not complete their reports until Mr Gower had done his financial capacity report.

Mr Gower's report on financial capacity (being a report of some 40 pages with seven volumes of supporting material) was served after close of business on 1 August 2014. One month later on 3 September 2014 the Health District served Mr Arnott's report on financing. On 4 September 2014 the Health District served Mr Gower's report on damages.

The Health District has explained that the delay in those three experts' reports was due to "the amount, disorder and complexity of material to analyse, and slightly longer periods for each other expert given the complexity of the material including the analysis from Mr Gower on financial capacity and Mr Palassis on feasibility". Macquarie submits that none of that is its fault so that, to the extent the delay in Messrs Gower's and Arnott's reports causes consequential disruption to the trial, it cannot be laid at the feet of Macquarie.

Consistently with what I have said in paragraphs [40] to [43] above, I do not consider it either practical or helpful in determining these applications to engage in a minute historical analysis to determine "fault". The Health District's explanation for the delay in the reports is proper and adequate. While the delay in the provision of the reports is unfortunate, I am not satisfied that it is the product of any lack of proper diligence on the part of the Health District and its experts. In adopting the course which the Court did on 17 December 2013, the Court was conscious that the Health District had to be given every proper opportunity to respond to Macquarie's case after the opening in February 2014.

Given the complexity of the issues and the need for expert reports to follow a particular order, the Court accepts the Health District's explanation for the delay and gives leave for the Health District to rely upon the reports of Messrs Gower and Arnott. That decision is also made recognising that a significant consequence, further developed in the next paragraph, is that the proceedings will not be able to be completed in the time allocated this year. While that is regrettable, the highly desirable ambition of completing the proceedings in the time fixed in 2014 cannot be such an end in itself that it is to be adhered to notwithstanding the extent to which such adherence may work an injustice on either or both parties.

Macquarie adduced evidence, which I accept, that if Messrs Gower's and Arnott's reports were to be relied upon, both the complexity of those reports and the availability of Macquarie's own experts would mean that the conclaves between those experts and subsequent conclave reports (the Court having made the case management decision from the outset that conclaves and conclave reports would be undertaken in lieu of reports in reply) would not be able to take place before December 2014 at the earliest and more probably during February 2015. This means that even if Macquarie's amendment application were to be disallowed, the case will not finish this year and will continue into 2015.

The Health District strongly submitted that any inability of Macquarie's experts to deal with the remaining evidence on the existing case during 2014 should not in itself be a reason for granting Macquarie's amendment on the basis that the proceedings would go over to 2015 in any event. Several reasons were advanced for this including that any such inability was not the fault of the Health District. It was also said that Macquarie's delay in referring Mr Gower's first report (served on 1 August 2014) to its own experts because of Macquarie's belief, based on the "May agreement", that its amendment application would be granted, was unreasonable.

I accept that difficulties with the availability of Macquarie's experts are not the fault of the Health District. However I am not persuaded that the timing issues would be much different even if Macquarie had submitted Mr Gower's first reports to its own experts as soon as it had been received. In any event, I am satisfied that Macquarie's solicitor's decision to hold back from forwarding Mr Gower's first report to Macquarie's experts in the belief that there was a proper basis to expect Macquarie's amendment application would be allowed by consent and the costs of what might be an unnecessary analysis would be saved, was not so unreasonable as to support an adverse outcome in the exercise of the Court's discretion in relation to Macquarie's amendment application.

For the purposes of the exercise of the Court's discretion in dealing with Macquarie's amendment application, it follows that the Court considers the fact that even the unamended case will continue into 2015 is a highly relevant matter. In saying this, the Court wishes to make it clear that in and of itself it would be an insufficient reason to grant Macquarie's amendment application. Nevertheless it remains an important matter which must be taken into account.

Macquarie's proposed amendments

To understand the impact of Macquarie's proposed amendments, it is helpful to begin with how Macquarie opened its case at the commencement of the hearing on 10-12 February 2014. Macquarie's case is divided between its claim in relation to the carpark site and its claim in relation to the hospital site.

Macquarie's claim for damages in relation to the carpark site is made up of a primary case with a series of alternatives. The primary case is that Macquarie would have continued to operate the carpark but for the wrongful eviction by the Health District in March 2000. It would have built a second stage for the carpark to increase the total number of spaces and, by July 2004, the carpark would have enjoyed the patronage of Macquarie's completed adjacent private hospital. In this scenario Macquarie submits its lost profits for the period in question plus Court interest is approximately $72,600,000.

There are a number of alternative scenarios then advanced, including if the private hospital were never built or the second stage of the carpark were never built. Further alternative scenarios are considered depending upon different town planning contingencies that will require the Court to make findings of fact as to what would have happened. There is a claim for the lost opportunity to earn profits in the alternative.

As a further alternative to its lost profits case, Macquarie pursued for the carpark, but not the hospital site, an alternative figure based upon an assessment by Macquarie's expert, Mr Milou, of market rent for the carpark. Macquarie submitted this represented the traditional method of assessing damages or mesne profits in a trespass case. On the plaintiff's primary case that assessment yields damages of $72,000,000. Invoking other alternatives, Macquarie has an ultimate fall back case (on the scenario that Macquarie would have been prevented by law from operating the carpark other than as a 600 space carpark) giving a reasonable rent and damages figure of approximately $10,000,000.

In its written opening submissions, Macquarie put its primary claim in relation to the hospital site:

The plaintiff claims that had it remained in possession of the site over the period in question then it would have built a hospital. Today it would be the owner of a profitable business of significant value. When compared with the financial position it is in now, being required to build the hospital after judgment, it is in a substantially worse financial position. The extent of this loss is set out in the report of Mr Coleman. This covers the matters of lost profits, escalation costs and approval costs. The claim for reliance losses is not otherwise pursued.

Depending on various scenarios as to how Macquarie would have financed the construction of the hospital, Macquarie's primary case in relation to the hospital site assessed its damages in the range of $170,000,000 to $250,000,000.

As an alternative, Macquarie pleaded a claim for the lost opportunity to earn profits leading to the same result. It invited the Court to adjust its losses based on the evidence as to the likelihood of events coming to pass and for vicissitudes.

Significantly for present purposes, Macquarie's claim was met by a general defence in the nature of a demurrer on the part of the Health District that insofar as Macquarie claimed damages for the lost opportunity to earn profits, this was not a claim for damages for trespass known to the law. The burden of this part of the Health District's defence was that since the proceedings were an inquiry into damages for trespass, the only applicable measure of damages for that wrong was mesne profits.

Macquarie's application involves proposed amendments to its second further amended points of claim on the damages inquiry and its amended reply to the Health District's points of response. The relevant parts of those documents showing the proposed amendments are set out in Schedule 2 to this judgment.

Reflecting how Macquarie's application came to be argued, it is convenient to divide its proposed amendments into three categories.

The first category of amendment (the "excavation costs amendment") relates to the hospital site:

13. Upon being put back in possession, the plaintiff will, and is obliged to, construct the Private Hospital which will require the plaintiff to:

(a) apply for statutory approvals at its cost ("the Private Hospital Approval Costs") because the previous approvals for the Private Hospital have lapsed;

(b) re-perform some of the excavation works already performed by the Plaintiff and incur additional costs in doing so ("the Excavation Costs") as such works have been wasted because during the Defendant's unlawful possession of the site since March 2000 it covered parts of the site with hardstand concrete.

Particulars

The plaintiff relies upon the particulars (i)(c),(ii) and (iv)-(vi) to paragraph 5(d) above and the expert reports of Mr Meredith dated 19 May 2014 (paragraph 8.16) and 28 May 2014 (joint report), report of Mr Coleman dated 3 February 2014 at paragraph 83 and a further report of Mr Meredith to be served.

...

16. In the premises pleaded in paragraph 10 to 15 above, the plaintiff's estimate of its claim for damages (or the lost opportunity to earn profits) for being kept out of the Private Hospital site is as follows:

(a) mesne profits lost profits for the period from 1 July 2004 to the date of completion of the Private Hospital in June 2016;

(b) the Private Hospital Approval Costs;

(c) the Private Hospital Escalation Costs;

(d) the Excavation Costs.

Particulars

The plaintiff relies on the following expert reports and other matters:

As to (a), the plaintiff repeats the particulars to paragraph 12 above.

As to (b), the plaintiff relies upon the expert reports of Mr Barker dated 20 December 2013 (paragraphs 2.12-2.7 and 8.5-8.51) as amended in his report dated 29 May 2014.

As to (c) the plaintiff relies upon the particulars to paragraph 5(d) above and the expert reports of Mr Barker dated 2 August 2013 and Mr Meredith dated 19 May 2014 and 28 May 2014 (joint report).

As to (d), the plaintiff repeats paragraph 13(b) above.

The evidence which Macquarie wishes to adduce to support its excavation costs amendment, if allowed, is of relatively limited scope. There appeared to be acceptance on the part of the Health District that the evidence was relevant to Macquarie's existing pleaded case and there was no submission from the Health District that matters arising from the amendment would cause any particular difficulty or disruption to the then timetable for the conduct of the hearing. The excavation costs amendment was not at the forefront of the Health District's opposition to Macquarie's application.

The second category of amendment (the "mesne profits amendment") related to both the carpark and the private hospital site. It involved the abandonment of the loss of profits case in relation to both, the introduction of a claim for what was said to be mesne profits in relation to the hospital site and an articulation of how those mesne profits were to be calculated which was, obviously enough, new in relation to the hospital site but also involved an amendment as to how it was said mesne profits were to be calculated in relation to the carpark.

The critical amendment to the claim in relation to the carpark was:

9. [not used] In the premises pleaded in paragraph 5 to 8 above, the plaintiff's estimate of its claim for damages (or the lost opportunity to earn profits) for being kept out of the Car Park to the estimated date of completion of stage 2 of the Car Park is as follows:

lost profits for the period from 18 March 2000 to the date of completion of stage 2 of the Car Park in June 2014;

the Car Park Approval Costs.

Particulars

The plaintiff relies upon the expert report of Mr Milou dated 31 July 2013 and the expert report of Mr Barker dated 2 August 2013.

9A. In the alternative to paragraph 9(a),Tthe plaintiff claims damages for trespass, being a claim for mesne profits measured by the difference between the market rent for the Car Park and the rent and outgoings payable under the Car Park Sub-Lease over the period 17 March 2000 to the date possession is restored, or alternatively, measured by applying a reasonable rate of return per annum on the market value of the Car Park Lease and/or Car Park Sub-Lease over the period 17 March 2000 to the date possession is restored or alternatively, measured in the manner pleaded at paragraph 2(2) (c) (ii) of the Reply.

Particulars

The plaintiff relies upon the expert reports of Mr Milou dated 31 July 2013, 10 December 2013, 29 April 2014, 5 May 2014, two (one Joint Report and one Final Assessment report) dated 27 June 2014 a further valuation report to be served and the matters pleaded at paragraph 2(2) (c) (ii) of the Reply.

The critical amendment in relation to the claim for the hospital site was:

12. The plaintiff claims damages for trespass, being a claim for mesne profits measured by applying a reasonable rate of return per annum on the market value of the Hospital Site over the period 17 March 2000 to the date possession is restored, or alternatively, measured by the market rent for the Hospital Site over the same period or alternatively, measured in the manner pleaded at paragraph 2(2) (c) (ii) of the Reply. In the premises, the plaintiff is entitled to damages for lost profits from the operation of the Private Hospital, or the lost opportunity to earn profits on the operation of the Private Hospital, from 1 July 2004 up until the date that the plaintiff is restored to possession, which is yet to occur, and the Private Hospital is constructed and open in the future, which is estimated to take approximately 3 years to construct after approvals.

Particulars

To be supplied by way of an expert report or joint expert report from Mr Coleman and/or Mr Lonergan and a separate expert report from Mr Lister and the Plaintiff relies upon the matters pleaded at paragraph 2(2) (c) (ii) of the Reply.

The third category of amendment (the "compensation provision amendment") might be considered a sub-category of the second. In each case it will be noted that the proposed amendments referred to in paragraphs [75] and [76] above refer to the matters pleaded at paragraph 2(2)(c)(ii) of Macquarie's reply. While categorised as an amendment to Macquarie's reply, the proposed pleadings made it clear that it also had an impact on Macquarie's case in chief. The relevant proposed amendment to the reply is:

(ii) in the premises pleaded at (i) above, the plaintiff would have in any event suffered loss and damage by reason of the conduct and trespass of the defendant to be measured by the loss suffered by being kept out of the use of the payment it would have received upon an assignment or reletting on termination for the period of the dispossession, by the plaintiff's mesne profits claim remaining or being assessed from the dates of the hypothetical assignment or reletting on termination until judgment or repossession (whichever comes first), or alternatively, by applying a reasonable rate of return per annum on the market value of the Hospital Lease, the Car Park Lease and the Car Park Sub-Lease from the date that the plaintiff would have or could have received such capital sum in consequence of any alleged hypothetical further Notice of Default that could not have been remedied or in consequence of any hypothetical termination until judgment or repossession (whichever comes first).

This amendment invokes a compensation provision which is identical in each of the carpark and hospital site leases. The hypothetical factual context in which the proposed appeal to those compensation provisions arises is the Health District's case that given, as the Court of Appeal found, Macquarie was in breach of essential terms of those leases, the Health District would in any event have issued compliant notices of default with which Macquarie would have been unable to comply, leading to a valid termination of the leases (as opposed to the notices of default which the Health District had in fact issued and which were found to be defective by the Court of Appeal). Macquarie's answer in this hypothetical world is that such a termination would have engaged the compensation provisions which, taking the hospital lease as an example, provide:

Compensation for Termination

17.9 If this lease is terminated under this clause 17, the Landlord must use all reasonable endeavours to relet the Premises to an unrelated party for the balance of the Term on the same or substantially the same terms as this lease (but including reserving a premium for the reletting and in so doing shall observe the same duties a mortgagee would have in disposing of mortgaged property in the event of a default) and if the Premises or any part are relet by the Landlord at any time prior to the Expiry Date, then the Landlord must pay to the Tenant within 30 days of receipt by the Landlord 90% of the net proceeds including a premium of the reletting which relates to the period from termination to the Terminating Date (apportioned, if necessary, by an expert appointed by the President of the Institute of Arbitrators) but less any rent which would have been payable during that period under this lease.

Section 64(2) - are the amendments necessary?

The starting point of the analysis of the amendment application is to determine whether Macquarie's proposed amendments are "necessary amendments" for the purposes of s 64(2) of the Act. It will be recalled that s 64(2) provides that "subject to s 58, all necessary amendments are to be made for the purpose of determining the real questions raised by or otherwise depending on the proceedings, correcting any defect or error in the proceedings and avoiding multiplicity of proceedings" (emphasis added). The quality of "necessity" will be satisfied if the amendment is required to be made for one of the purposes identified in s 64(2).

Insofar as the first of those purposes is concerned, the real question raised by or otherwise depending on these proceedings is identified by considering the Court of Appeal's order which is the genesis for the inquiry. That order was:

(13) Order that there be an inquiry before a Judge or Associate Judge other than Nicholas J as to the amount of damages which are payable by [the Health District] to [Macquarie] ... in respect of being kept out of possession of the carpark site and the hospital site between 17 March 2000 and the date of being restored to possession.

The order generates the real question raised by or otherwise depending on this part of the proceedings (the inquiry) as, to put it shortly, "what is the amount of damages payable by the Health District to Macquarie for the trespass which the Court of Appeal declared to have occurred?".

All three categories of proposed amendment are necessary for the purpose of determining the question in these proceedings as posed by reference to the Court of Appeal's order. There did not appear to be any real dispute that the excavation costs amendment met that description. Nor did the Health District ever submit in terms that the mesne profits amendment and the compensation provision amendment were not necessary within the meaning of s 64(2).

The Health District was correct not to make such a submission. Its attack on the amendments was focused on the discretionary considerations engaged by the otherwise mandatory s 64(2) being subject to s 58 of the Act. I also observe for completeness that, given the evidence of oversight by Macquarie's legal team (see paragraph [151] below), the compensation provision amendment was also necessary to correct an error, being the lawyers' omission to plead those particular provisions.

The excavation costs amendment is necessary because it is in the nature of a claim for consequential loss, comparable to a claim arising against a trespasser who has damaged the land which then requires repair on possession being restored. The new (in the case of the hospital site) and amended (in the case of the carpark site) claims for mesne profits are obviously necessary, given such a measure is the traditional measure for damages in trespass. The cases make it clear that what represents mesne profits depends upon the facts of each case, so the different methods of calculation posed by Macquarie are unsurprising. The compensation provision amendment is also obviously necessary because, given the hypothetical termination scenario raised by the Health District, it clearly may have an impact upon the amount of damages in trespass for which the Health District may be liable to Macquarie.

Section 58 - the dictates of justice

The legal onus to persuade the Court that proposed amendments should be allowed always rests on the applicant for those amendments. However, given the mandatory terms of s 64(2) ("all necessary amendments are to be made"), once the amendments are identified as "necessary", the reference to s 58 both requires the Court to consider the provisions of s 58 and throws at least a persuasive onus onto the respondent to the application to persuade the Court that, by reason of the considerations encompassed by s 58, otherwise "necessary" amendments should not be allowed.

Section 58(1) requires the Court when deciding whether to make an order for the amendment of a document and the terms on which any such order should be made, to seek to act in accordance with the dictates of justice. Section 58(2) sets out how the dictates of justice are to be determined in any particular case.

Section 58(2)(a) and s 56 - the overriding purpose

Section 58(2)(a) requires the Court to have regard to the provisions of s 56 of the Act. For present purposes I consider the relevant provisions of s 56 to be:

(1) The overriding purpose of this Act and of rules of court, in their application to civil proceedings, is to facilitate the just, quick and cheap resolution of the real issues in the proceedings.

(2) The court must seek to give effect to the overriding purpose when it exercises any power given to it by this Act or by rules of court and when it interprets any provision of this Act or of any such rule.

(3) A party to civil proceedings is under a duty to assist the court to further the overriding purpose and, to that effect, to participate in the processes of the court and to comply with directions and orders of the court.

It is apparent from that extract that in exercising the power under s 64 to allow an amendment, the Court must seek to give effect to the overriding purpose of the Act and the rules of court, namely to facilitate the just, quick and cheap resolution of the real issues in the proceedings. In doing so the Court bears in mind that a party does not have a "right" even to make a "necessary" amendment (because the otherwise mandatory nature of s 64 is expressly subject to s 58 of the Act) and that the rules do not require that any arguable case be allowed at any point of the proceedings subject only to the payment of costs.

Insofar as s 56(1) calls attention to the "real issues in the proceedings", the Court proceeds on the basis that the real issues in these proceedings are any issues of fact or law which are genuinely in dispute and may rationally affect the determination of the question of the amount of damages for which the Health District may be liable to Macquarie for trespass. It is the resolution of those issues which the Court, in exercising its discretionary power in relation to the proposed amendment, must seek to facilitate.

Of course, s 56(1) does not authorise the resolution of those real issues at any cost. It points to their "just, quick and cheap" resolution. I observed in paragraph [95] of the First Amendment Judgment that ""just, quick and cheap" is an inter-related rather than simply cumulative notion (an example of hendiadys albeit with three words) and must take into account the position of both parties to the litigation". In the context of the present application some further elucidation is required.

The notion of "just" itself includes considerations of the speed with which the litigation can be determined ("justice delayed is justice denied") and the expense of the process itself (for example, the cost of seeking relief may be so prohibitive as to put access to justice out of the reach of the litigant). But the just resolution of proceedings is not exhausted by appeals to speed and economy. It includes the determination of proceedings according to law, their conduct in accordance with judicial norms of impartiality and fairness and ensuring that parties are on notice of the issues to be litigated and are given an adequate opportunity to meet those issues in such way as they think fit.

As for "quick and cheap", these are desiderata which must be considered in the context of the particular case. Speed and economy are relative. In the case of costs, this is expressly recognised by s 60 of the Act which invokes the importance of issues being resolved "in such a way that the cost to the parties is proportionate to the importance and complexity of the subject matter in dispute". Translating those considerations to the present case, even in its unamended form Macquarie's case is a highly complex claim for many millions of dollars that was going to engage the Court and the parties in several weeks of hearing over three tranches up to the end of this year. Although there is no evidence of this, from the Court's own observation and experience it is apparent that the parties have invested many hundreds of thousands if not millions of dollars in legal fees in the proceedings.

Against the background of this exposition, the Court is satisfied that to allow the amendments will facilitate the just, quick and cheap resolution of the real issues in these proceedings, matters of speed and economy being understood in the context of a long and expensive case. As I develop in more detail throughout the balance of these reasons, it will be just because:

(1) It will enable Macquarie to litigate the case which it now wishes to litigate rather than require it to continue with a case that it does not wish to press without causing irrevocable prejudice to the Health District.

(2) The Health District can be given an adequate opportunity to gather such further evidence as it considers it requires to meet the amended case and will not suffer any irremediable prejudice.

It will be quick in the relative sense of a necessarily long case:

(1) The amendment will not add to the length of the case significantly, or perhaps at all, over the time it would otherwise now have taken in its unamended form into the first half of 2015.

(2) The Health District can gather the further evidence it requires to meet the amended case without creating undue delay in what would otherwise have been the timeframe for the resolution of these proceedings.

It will be cheap in the relative sense of cost efficiency given a case that is obviously very expensive for the parties to run:

(1) There is no evidence that the costs which the Health District says it will incur in meeting Macquarie's amendments are disproportionate to the costs the Health District has incurred or will incur if the amendments are not allowed.

(2) The Health District will be reimbursed any costs thrown away by reason of the amendments and will have the advantage of security for those costs.

Sections 58(2)(a) and 57- case management objects

Section 58(2)(a) of the Act also requires the Court to have regard to the provisions in s 57 of the Act. Section 57 provides:

(1) For the purpose of furthering the overriding purpose referred to in section 56 (1), proceedings in any court are to be managed having regard to the following objects:

(a) the just determination of the proceedings,

(b) the efficient disposal of the business of the court,

(c) the efficient use of available judicial and administrative resources,

(d) the timely disposal of the proceedings, and all other proceedings in the court, at a cost affordable by the respective parties.

(2) This Act and any rules of court are to be so construed and applied, and the practice and procedure of the courts are to be so regulated, as best to ensure the attainment of the objects referred to in subsection (1).

In relation to the just determination of the proceedings (s 57(1)(a)) I repeat what I said in paragraph [93] above.

In the circumstances of this case there is little practical difference between considering the efficient disposal of the business of the Court and the efficient use of available judicial and administrative resources (ss 57(1)(b) and (c)). Whether Macquarie's application was granted or not it appears that most, if not all, of the dates set aside for these proceedings through to the end of the year will be able to be used. Moreover, notwithstanding the fixture of some matters in my diary for 2015, the Court has available capacity in the first half of the year to complete the proceedings in any of the ways foreshadowed by the parties without undue delay and without having to disrupt already fixed matters. There is therefore nothing in these considerations that militates against the granting of the amendments. The amended proceedings will be able to be disposed of efficiently without disrupting the Court's existing schedule.

Section 57(1)(d) draws attention to "the timely disposal of the proceedings, and all other proceedings in the Court, at a cost affordable by the respective parties". This consideration engages the same factual sub-strata as two of the criteria identified by Vickery J (see paragraph [38] above):

(a) Whether there will be substantial delay caused by the amendment; ...

(d) Concerns of case management arising from the stage in the proceeding when the amendment is sought, including the fact that the time of the Court is a publicly funded resource, and whether the grant of the amendment will result in inefficiencies arising from the vacation or adjournment of trials.

It is therefore convenient to consider together s 57(1)(d) and the two matters raised by Vickery J to which I have just referred.

I have already set out in paragraph [98] above my reasons for the conclusion that, from a perspective of case management, the proceedings, even if the amendments were granted, will be able to be disposed of efficiently, will not result in the vacation or adjournment of many dates already fixed for these proceedings and will not result in disruption to any other matters already fixed before me. An important feature arising from the stage of the proceedings at which the amendment is sought is that the Court has not yet heard from the financial and damages experts. It would be a significant factor against the granting of the amendments if to do so were to involve the recalling of experts in relation to whom considerable court time had already been expended.

Insofar as the timely disposal of the present proceedings is concerned I am not satisfied that to grant the amendment would result in a substantial delay compared to the position that will apply if the amendment was not granted. With the benefit of having heard from some of the experts about how long they required to consider various reports and to be able to participate in conclaves, the Court invited the parties to prepare trial plans taking into account scenarios including what time was likely to be required to complete the existing case on the assumption that no amendments were allowed through to how long it was expected to complete the case on the assumption that all amendments were allowed. A middle position was whether or not the compensation provision amendment was included among the amendments permitted to be made.

Taking up the Court's invitation, the Health District produced a trial plan scenario analysis. The first scenario looked at what would be required to complete the existing case on the assumption that none of the amendments were allowed. That scenario had various expert and factual evidence being given in February 2015 with the closing addresses over 10 days in April 2015. An alternative scenario prepared by the Health District dealt with Macquarie's amended case including the compensation amendments. That resulted in lay oral evidence being given in March 2015, conclaves and reports of experts occurring during April 2015 and any remaining expert oral evidence being given during May 2015. Closing addresses would take place in July 2015. Therefore, on the Health District's analysis, the difference to the end date of the proceedings between granting and not granting the amendments was the case concluding in April or July.

Macquarie responded to the Health District's scenario. In relation to the first scenario (amendments not granted) Macquarie submitted the defendant's analysis was too optimistic and that the remaining oral evidence would not be ready to be given until some time in March, resulting in closing addresses taking place in May 2015. On the other hand, Macquarie submitted that the Health District's analysis of the time required to complete the amended case was pessimistic and should be able to be completed (including closing addresses) by May. On this analysis the Health District submitted that either option would conclude in May 2015. Being pessimistic, the Health District accepted that the amended case would conclude with closing addresses in July.

Both parties, correctly, accepted that such timing estimates could not be given with scientific precision. The Court would not hold the parties to them as such. The history of these proceedings demonstrates that timing estimates, even those given in good faith with the best will in the world, can be very unreliable.

However, the Court is satisfied that two general conclusions can safely be drawn. First, the Court is satisfied that the likely difference between when the case ends in its unamended and amended form will not be more than two or three months. In a matter which has been going as long as this (as I observed in the First Amendment Judgment, longer than the Trojan War) with even the damages inquiry scheduled to be held in tranches over most of a year, such an additional delay, if it eventuates, is not significant and does not militate against allowing the amendments.

Second, even if the amended proceedings conclude two or three months later than the unamended proceedings otherwise might, there is no basis for concluding that the actual number of hearing days for the amended case will much exceed those that will be required for the unamended case. While, again, the matter cannot be approached with absolute scientific precision, Macquarie contended (and this is reflected in the conditions of leave it proposed and which were ultimately made) that there would be some reduction in hearing days between its unamended and amended cases because, in the latter, some of its evidence would no longer be pressed. On the other hand, it must be recognised that additional days will be required to deal with factual matters which the Health District has indicated it will wish to explore in relation to the amended case (especially in relation to the compensation provision amendment).

Doing the best I can and looking at it as a matter of impression, the Court is satisfied that there will be something of a "swings and roundabouts" effect where time saved in the reduction in Macquarie's case will be consumed by extra material which the Health District wishes to adduce. There is unlikely to be a significant addition in the number of hearing days that will be required to hear the amended case over the unamended case. However, because of the time taken to prepare the necessary evidence, some of those hearing days will take place later for the amended case than they would if the case continued in its present form.

The Court notes that s 57(1)(d) refers to the timely disposal of proceedings "at a cost affordable by the respective parties". Neither party suggested they would not be able to afford the consequences of the amendment. However, the Court has taken into account three matters in relation to costs.

First, Macquarie adduced evidence from one of its solicitors that Macquarie would likely incur $1,600,000 in additional costs which it would not otherwise incur if leave to amend were to be granted. While some reasoning was offered in support of this estimate, and without suggesting that it was other than bona fide, it seemed to me to be necessarily so impressionistic as to be of little value. All the Court could, and did, draw from it was that if the amendments were allowed, Macquarie expected that there would be a real saving to it in legal fees, including for hearing time which Macquarie said would be saved.

Macquarie's evidence on this point was countered by what was quite fairly described by the Health District's solicitor as "estimating as best [he] could" that the Health District would incur an additional $1,600,000 in legal fees that it would not otherwise have incurred to meet the matters raised by Macquarie's amended case. With no disrespect, and understandably given the time pressures that surrounded the hearing of the application, the Health District's solicitor's estimate was obviously based on little more than an instinctive feeling that the Health District would have to spend as much as Macquarie saved. Again, all the Court can really conclude is that there will undoubtedly be additional costs for the Health District in meeting Macquarie's amended case if it is allowed, not least because of the factual issues raised by the compensation provision amendment.

The ultimate result of this aspect of the parties' arguments was that they cancelled each other out in the discretionary equation.

The second aspect as to costs which the Court has taken into account is that the Health District did not submit that it could not afford the financial consequences if the amendment was granted. Even accepting the Health District's solicitor's estimate of an additional $1,600,000 in costs to be incurred, there was no evidence from the Health District as to the total costs which it had incurred in the proceedings to support a submission that an additional $1,600,000 was so disproportionate to those costs that it would work a significant injustice on the Health District. Nor was there any evidence of financial difficulty from the Health District. For the purposes of the exercise of its discretion, the Court notes that there is no reason not to grant the amendment based upon a concern for the Health District arising from the financial consequences for it of the amendment.

The third question in relation to costs which the Court has taken into account is the practical consequences of Macquarie's entirely proper concession that an order should be made, if leave to amend were granted, to pay the Health District's costs thrown away by reason of the amendment. There is no evidence before the Court as to what the quantum of the costs thrown away might be. There is some reason to think that, in the overall context of litigation of this size and complexity, those costs may not be great. Nevertheless, the Court raised with Macquarie the possibility of security being provided to support any order for Macquarie to pay the Health District's costs thrown away. Macquarie has taken up that suggestion and, as part of the conditions of leave, has offered up an unencumbered property in Paddington owned by Dr Wenkart which the Court accepts on the evidence had a market value as at 1 July 2013 of $1,275,000. The provision of such security is a factor weighing in favour of the amendments being allowed.

Section 58(2)(b)(i) - the complexity of the proceedings

The Court considers that while not mandatory, in the exercise of its discretion it is relevant to take into account "the degree of difficulty or complexity to which the issues in the proceedings give rise" (s 58(2)(b)(i) of the Act). I have already dealt with one major aspect of that complexity in terms of the only rational order in which much of the expert evidence can be prepared and dealt with through conclaves and court hearings (see paragraph [46] above).

However, there can be no doubt that, more generally, the proceedings are factually and legally complex. While it is simple enough to say that the traditional measure of damages for trespass is mesne profits, how those profits are calculated in any particular case is not entirely clear. Much depends on the peculiar facts of the individual case. Both the case in relation to the carpark and, especially, the hospital site raise numerous difficult questions of fact, law and mixed questions of fact and law. Macquarie's written opening submissions dealt with 39 separate issues which the parties agreed the Court will have to determine. To the extent that either party found it necessary to amend during the course of the proceedings, the complexity of preparing and running this case is a significant factor in favour of permitting any such amendment (subject, of course, to other discretionary factors). The complexity of the proceedings and the large sums of money at stake, especially in circumstances where liability has been established, are factors which favour Macquarie's proposed amendments being allowed.

Section 58(2)(b)(ii) - the parties' approach to the proceedings

Section 58(2)(b)(ii) invites (but does not require) the Court to consider "the degree of expedition with which the respective parties have approached the proceedings, including the degree to which they have been timely in their interlocutory activities". The complexity of these proceedings generally neutralises the adverse impact any lack of expedition may have had on Macquarie's application.

It would be impossible sensibly to take into account, and the evidence before me does not permit this, the history of the parties' conduct in the proceedings at first instance and then before the Court of Appeal. I have set out in the First Amendment Judgment and in these proceedings, the procedural history of the damages inquiry. I have taken into account the undoubted delays in Macquarie "getting its house in order" leading up to the presentation of its opening submissions in February 2014. Nevertheless, much of that delay is ultimately attributable to the difficulty and complexity of the issues in the proceedings. There has been delay on both sides, most recently on the part of the Health District in the preparation of its expert evidence for reasons which the Court has readily accepted. Ultimately, this consideration is not one which weighs decisively for or against Macquarie's amendment application.

Section 58(2)(b)(iii) - delays beyond the parties' control

Section 58(2)(b)(iii) of the Act invites (but does not require) attention to "the degree to which any lack of expedition in approaching the proceedings has arisen from circumstances beyond the control of the respective parties". While by no means the most important or decisive factor, the Court has given some weight in Macquarie's favour to the fact that Mr Lister took much longer than he promised in preparing his critical report in relation to the mesne profits amendment.

Section 58(2)(b)(iv) - the duty of co-operation

Section 58(2)(b)(iv) refers to the non-mandatory consideration of "the degree to which the respective parties have fulfilled their duties under s 56(3)" of the Act. This is the duty of the parties to assist the Court to further the overriding purpose. In this application it is a neutral or irrelevant factor. From the Court's point of view both parties have done their best to assist the Court in furthering the overriding purpose. The best evidence of this is the fact that nearly all of the dates which have been set aside for the hearing of these proceedings this year, including later in the year, have been and will be used. The parties, to their credit, have effectively co-operated to ensure that the wastage of court time, which particularly in long cases sometimes does occur, has been kept to a minimum.

Section 58(2)(b)(v) - use of procedural matters

This discretionary consideration set out in s 58(2)(b)(v) is not relevant to Macquarie's amendment application.

Section 58(2)(b)(vi) - the degree of injustice

Section 58(2)(b)(vi) directs attention to, but does not make mandatory, consideration of "the degree of injustice that would be suffered by the respective parties as a consequence of any order or direction". This criterion presupposes that some injustice may be suffered by one or both parties as a result of an order or direction which the Court may make. It requires consideration not of the fact of injustice but the degree of injustice. The inquiry invites and encompasses one of the matters identified by Vickery J referred to in Kelly which I will therefore also consider under this heading:

(c) Whether there is an irreparable element of unfair prejudice caused by the amendment, arising, for example, by inconvenience and stress caused to individuals or inordinate pressures placed on corporations, which cannot be adequately compensated for, whatever costs may be awarded.

The Health District submitted that the principal injustice that would be visited upon it if the amendments were allowed is the extension of the hearing into next year and the need to expend further significant costs in meeting Macquarie's amended case. It was submitted that there was an irreparable element of unfair prejudice because of the inconvenience and additional financial expenditure that would be imposed upon the Health District and its executive in circumstances where the Health District was a publicly resourced body charged with spending on health care. Reference was also made to what was said to be the injustice to the Health District of having to recall Dr Horvarth and Mr Wallace to give evidence in relation to the compensation provision amendment.

The Court does not accept that, even if all of the matters raised by the Health District are considered matters of injustice, their degree is such as to militate against allowing what the Court has determined are necessary amendments. Most importantly, the Court does not accept that the Health District's status as a publicly funded health care body raises any particular special consideration. For example, there was no evidence before the Court that the Health District would be unable or less able to fulfil its statutory duties owing to any additional financial burden caused by having to meet Macquarie's amended case. In any event, the Health District has been found liable to Macquarie in trespass. Special pleading does not sit well in the mouth of a wrongdoer.

Even without reference to the Health District's counsel's memorandum of 2009 setting out the legal and factual issues raised by Macquarie's potential reliance on the compensation provisions (see paragraph [350] of the Court of Appeal's judgment set out in paragraph [152] below), the terms of the compensation clauses themselves are sufficient to satisfy the Court that the Health District will have to consider and investigate factual and legal issues which it has hitherto not been required to take into account. This will take time and involve the expenditure of funds. However, in and of itself the necessity to respond factually and legally to matters raised by an amendment, if granted, does not constitute injustice or disadvantage militating against the granting of the amendment. Something more is required. For example, it may be at the time the amendment is sought critical witnesses have been cross-examined differently to how they would have been if the subject matter of the amendment had been in issue and a valuable forensic advantage has been lost. Alternatively, relevant injustice might arise if other factors meant that the proceedings had to be concluded in a timeframe within which the respondent could not investigate and deal with the ramifications of the amendment. Another injustice might be that the costs of responding to the amendment would be seriously disproportionate to the sums of money at stake.

None of those types of injustice applies in the present case. The Court is satisfied that in circumstances where the proceedings will be continuing into 2015 even if the amendment application were not granted, the Health District will have sufficient time to gather evidence and raise whatever legal issues it might wish to raise in response to Macquarie's proposed amendments. While the Court accepts that it will be necessary for the Health District to recall Dr Horvath (the Chief Executive of the Health District at the relevant time) and Mr Wallace (Dr Horvath's deputy at the relevant time) in relation to the hypotheticals arising from Macquarie's reliance on the compensation provisions, that evidence will be required to address a discrete, and not excessive, number of topics. Insofar as having to recall them may be categorised as injustice, it is ameliorated by the fact that, for its own purposes, the Health District has indicated that it wishes to call all of its relevant board members who are still available to support Dr Horvath's and Mr Wallace's evidence already given that, in the hypothetical world being explored by the damages inquiry, the Health District would have terminated Macquarie's leases as soon as possible in any event relying on the breaches found by the Court of Appeal. Those directors will now almost certainly also have to address hypothetical factual matters arising from Macquarie's proposed reliance on the compensation provisions.

Finally in relation to the degree of any injustice to the Health District, the Court notes that in some cases conditions proffered or imposed in relation to the grant of an amendment may be decisive as to whether or not an amendment is allowed. That is because conditions can ameliorate or eliminate what might otherwise be an injustice consequent on the grant of an amendment. With the exception of the condition for security to be given for costs thrown away, this is not such a case. The conditions proffered by Macquarie and those ultimately imposed after argument are a factor (but not in and of itself determinative) that the Court has considered in favour of the amendment because they ensure clarity about the factual scope of the amendment and will achieve other efficiencies in the conduct of the litigation in relation to the matters which are the subject of the conditions.

Turning to the position of Macquarie, no relevant injustice will be visited on it if its application is granted. However insofar as the dismissal of its application would be an "order or direction" for the purposes of s 58(2)(b)(vi) of the Act, the Court considers that a significantly greater degree of injustice would be suffered by Macquarie if its amendment application were refused than will be visited on the Health District if Macquarie's application is granted. To refuse the application would have the consequence of Macquarie being required to run its case in a way which it no longer wishes to do. This is an outcome which the Court should strive to avoid if any prejudice to the Health District can be avoided or at least minimised.

Section 58(2)(b)(vii) - other matters - fresh evidence not reasonably attainable

The first of the other matters which the Court considers relevant in the circumstances of this case concerns whether the expert evidence upon which Macquarie now wishes to rely in support of its mesne profits case for the hospital site was not reasonably attainable earlier. The history of this aspect of the matter is set out in paragraphs [144] to [148] below where the Court considers Macquarie's explanation for the making of its application at this stage of the proceedings. It is clear from Macquarie's explanation that the expert insight that the hospital lease had a value over and above the contract rent came late.

I infer from Macquarie's solicitor's evidence before me, its indefatigable prosecution of the proceedings over many years and its own self-interest, that Macquarie had made every effort to obtain expert evidence in support of its case but that none of that evidence until March 2014 offered a basis for the mesne profits case in relation to the hospital site which Macquarie now wishes to advance. The Court is therefore satisfied that the expert evidence in support of that case is fresh evidence not reasonably obtainable earlier. This is a factor which militates in favour of granting Macquarie's amendment application, at least insofar as it relates to the hospital site and to the extent the same valuation methodology is also sought to be applied to Macquarie's existing mesne profits case in relation to the carpark.

Even if I am wrong in drawing the inference in the previous paragraph the evidence does not support an inference that the expert evidence was reasonably obtainable earlier. If the Court cannot be satisfied one way or the other then the factor becomes irrelevant or neutral.

Section 58(2)(b)(vii) - other matters - wasted costs

The next additional matter which the Court considers relevant in the circumstances of the case is the second of the considerations identified by Vickery J, namely the extent of wasted costs that will be incurred.

In this regard I repeat what I have said in paragraphs [110] to [114] above on the question of costs. Furthermore, the Court notes that neither party, but in particular the Health District, has sought to quantify what it says the costs wasted by the amendments will be. While there will undoubtedly be some costs thrown away to the extent that Macquarie will now not read some of its evidence which the Health District has presumably prepared to meet, that will be ameliorated by the order which Macquarie accepted should be made to pay the Health District's costs thrown away by reason of the amendment. Furthermore, Macquarie is providing security for such costs. No submission was put by the Health District that the value of the security property ($1,250,000) would be inadequate. No other item of potential wasted costs (for example, time taken in Court that would now be made otiose) was identified.

For these reasons the Court does not consider the extent of wasted costs - whatever it may ultimately be - to be a factor which counts against Macquarie's amendment application.

Section 58(2)(b)(vii) - other matters - public confidence in the judicial system

Another matter which the Court considers relevant in the circumstances of the case is the fifth consideration identified by Vickery J, namely whether the grant of the amendment will lessen public confidence in the judicial system. The parties noted, but did not expressly address, this consideration, leaving it for the Court to come to its own views. For the reasons which follow the Court is satisfied that the grant of the amendment will not lessen public confidence in the judicial system.

In considering this aspect of the matter, and Macquarie's amendment application generally, the Court has taken into account the long history of these proceedings (particularly since an inquiry into damages was ordered), Macquarie's earlier amendments to its case and the time that Macquarie generally has had to identify and prepare its case on damages. I have given special weight to the very firm indication which the Court gave to Macquarie in December of last year that the Court expected Macquarie to "nail its colours to the mast", which it apparently proceeded to do in February this year. The Court also understood that all of these matters informed a proposition which was forcefully put by the Health District as central to its opposition to Macquarie's application, namely that if the application was allowed the Court would be seen to be "encouraging opportunistic serial amendment as particularised cases fade in attractiveness, for private forensic advantage - in other words, making up the case as one limps along hoping for something better in the next version".

The Court has given careful consideration to these matters, particularly in the light of an understanding that a party does not have a "right" to an amendment whenever an arguable case presents itself. Nevertheless, the Court is of the view that public confidence in the judicial system will be maintained if what the public sees is the Court acting fairly to both parties by applying recognised legal principles rather than succumbing, explicitly or implicitly, to an opponent's (or even the Court's) understandable frustration when interlocutory applications arise which, if granted, will disrupt the orderly passage of proceedings to their conclusion.

In relation to the present application, for the reasons set out in this judgment, the Court is of the view that the application of the relevant principles, which take into account the positions of both parties, supports the granting of Macquarie's amendment application.

Furthermore, the Court is of the view that in a case such as the present, where proper explanations for the amendment have been proffered, no significant court time will have been wasted and no irremedial prejudice is visited on the Health District, not to allow the amendment would lessen confidence in the judicial system. This would be because a party involved in factually and legally complex litigation, suing for very large sums of money in circumstances where the Court has already decided that it is entitled to compensation for a wrong done to it, would be compelled to advance a case that it no longer wishes to advance. The Court does not consider that to be a just outcome in the circumstances of this case or one which would encourage public confidence in the judicial system.

Section 58(2)(b)(vii) - other matters - the reasons for the amendment application

The next other matter which the Court considers relevant in the circumstances of the case is the very important issue summarised by Vickery J as "whether a satisfactory explanation has been given for seeking the amendment at the stage when it is sought". At [55] of the First Amendment Judgment I formulated this consideration slightly more widely: "the reasons for the amendment application and why the subject matter of the application had not been pleaded earlier, including whether a forensic decision had been made not to do so". There is no difference of substance between the two formulations.

The Health District challenged the adequacy, but not the veracity, of the explanations offered by Macquarie as to why its proposed amendments were being sought now and not earlier.

The reasons for the delay in advancing the excavation costs amendment can be summarised as follows:

(1) Prior to attending conferences with and receiving conclave reports from the quantity surveying and construction cost and town planning experts retained by Macquarie (Messrs Meredith, Nash and Barker) in the period from late May, June or July 2014 (in the contexts of such experts preparing to give concurrent evidence in the proceedings) none of Macquarie's advisers were aware of, or considered, the existence of a possible head of damages for consequential loss in the form of the costs required to be expended to restore the land to its prior state of excavation consequent upon the Health District performing work which has covered over the prior excavation to the land and no forensic decision had been taken not to advance such a claim.

(2) As a result of the conferences and receipt of reports referred to in the preceding sub-paragraph, it became apparent to Macquarie's advisers that there may be a category of costs, not covered by any specific pleading, which Macquarie would incur in preparing the hospital site for the construction of the hospital on re-entry, namely the costs of having to re-perform excavation and other earthworks previously undertaken by Macquarie in the period 1997-1999 as a result of the site being covered in hard stand concrete by the Health District after its re-entry, which re-entry has been declared by the Court of Appeal to have constituted a trespass.

(3) In about mid-late July 2014 Macquarie's counsel asked Mr Meredith, on an informal basis, to provide an informal estimate of the costs likely to be incurred in bringing the hospital site to the same state it was in at about March 2000 and subsequently to prepare a report of such costs.

(4) In about late July 2014 Macquarie's counsel advised their client that in their view there was at least another arguable basis for claiming the excavation costs and prepared an appropriate draft amendment which was included in the proposed amended pleading provided to the Health District's senior counsel on 4 August 2014.

The Court accepts the foregoing as a proper and adequate explanation of why the excavation costs had not been considered earlier. These proceedings are heavily dependent on expert evidence and the Court accepts that it is entirely possible for experts to raise matters after they have prepared their reports but prior to giving concurrent evidence in court which raise additional issues in the minds of a party's lawyers. There is nothing in the explanation which militates against the excavation costs amendments being allowed.

Macquarie's explanation for the delay in relation to the mesne profits claim was as follows. On 14 January 2014 the Macquarie served a report from its banking expert Mr Batiste. This was one of the reports which I gave leave to the Macquarie to rely upon at the conclusion of the openings in February 2014. In general terms Mr Batiste's report was to the effect that the hospital development would have been fundable and he proposed what, in his expert opinion, he considered would have been the terms and conditions for a loan that would be imposed by a lender. Those terms and conditions included that any proposal would need to be supported by a valuation. It therefore became apparent to Macquarie's legal advisers that, as part of the hypothetical exercise, a valuation of the hospital would be required. The fact that this necessity arose out of Mr Batiste's report explains why the valuer, Mr Lister, did not begin to play his current role in the proceedings until after the case had been opened in early February 2014 (see also the transcript extract in paragraph [25] above).

On 28 March 2014 Macquarie's solicitor provided Mr Lister with a letter of instruction. His expert report was received on 6 May 2014 and served on the Health District the next day. Around the same time after receipt of Mr Lister's first report a conference occurred between Mr Lister and Macquarie's counsel which resulted in Macquarie becoming aware for the first time of an expert opinion (being from Mr Lister) that the hospital site had a market rental value in excess of the contract rent, although what that value was had not yet been quantified.

It was the receipt of Mr Lister's informal, unwritten advice in conference that led to a further letter of instruction being issued to him on 22 May 2014 to quantify the market rental value. That letter of instruction was also immediately provided to the Health District. On 26 May 2014 Mr Dubler SC, on behalf of Macquarie, informed the Court in general terms of the proposed mesne profits amendment (see the transcript extracted in paragraph [25] above). It was Macquarie's solicitor's unchallenged evidence that prior to those mid-May exchanges with Mr Lister, Macquarie was not aware of the availability of any expert evidence that the hospital site had a market rental value in excess of the contract rent.

Mr Lister originally informed Macquarie's solicitor that he would require four weeks from 22 May 2014 to complete a further expert report. A draft of this report was received on 1 July 2014 but it did not include his assessment of market rent under the hospital lease and its capital value from March 2000. Despite being followed up on numerous occasions by Macquarie's solicitor, his final expert report was not received until 29 August 2014 and was served on that day on the solicitor for the Health District. As it happened, the final valuation, while to some extent dependent upon Mr Lister's work, was for reasons of expertise ultimately undertaken by Messrs Coleman and Lonergan in their report served on 1 September 2014.

Mr Dubler SC accepted that the Court could find, and it does find, that Macquarie had made a deliberate forensic decision to mount its lost profits case in relation to the hospital site and seek to argue that such a calculation either fell within the concept of mesne profits or was a legally valid alternative basis upon which to assess Macquarie's damages in trespass. However, the Court also accepts that until May 2014, through no fault of its own (see paragraph [130] above), Macquarie did not have an evidentiary basis to assert what might be described as a more traditional mesne profits measure of damages that yielded a result greater than the contract rent. In those circumstances, the Court does not consider Macquarie to have made a forensic decision of the kind which would count against allowing the amendment. The situation, for example, would be different if in pleading and opening the lost profits case Macquarie had had available to it evidence which supported a traditional mesne profits claim greater than the contract rent but less than the lost profits figure and had made a forensic decision to advance the latter rather than the former because the latter was a higher figure.

Insofar as Macquarie seeks to assert the new methodology in relation to its existing mesne profits claim in relation to the carpark site, the Court is also satisfied that methodology was not known to Macquarie until Mr Lister's input in mid-May 2014.

Accordingly, the Court accepts that Macquarie's explanation in relation to the lateness of the mesne profits amendment is a proper and adequate one. In those circumstances the delay in Macquarie's bringing of the mesne profits amendment is satisfactorily explained and does not constitute a factor militating against the granting of its amendment application.

In relation to the compensation provision amendment, the evidence was that this was first thought of in connection with amending Macquarie's reply but it then became apparent that it would also need to be included in Macquarie's claim in chief. Macquarie's solicitor was frank in her explanation, namely that the matters set out in paragraph 2(2) of the proposed amended reply were only first considered in early August 2014 and, to that extent, had been overlooked by Macquarie's legal advisers. Macquarie made clear in its submissions that it did not intend to suggest that Macquarie's advisers were not aware of the existence of the compensation clauses, but that it was the case that they had not considered the possibility of pleading them in reply until recently and no forensic decision with their client had been made previously about such a possible pleading.

In challenging the adequacy of this explanation, the Health District drew attention to the fact that the compensation clauses of the carpark and hospital leases had been the subject of consideration in a limited manner in the Court of Appeal (Macquarie International Health Clinic Pty Ltd v Sydney South West Area Health Service [2010] NSWCA 268):

Compensation clauses: effect of subsequent events

349. Following delivery of the first judgment in July 2008, Macquarie became aware for the first time that Area Health did not accept and in fact intended to dispute the validity of the compensation clauses (affidavit of P W Moran 22 September 2009 par 15).

350. On 16 September 2009, Macquarie commenced proceedings in the Equity Division (4450/09) seeking a declaration that the compensation clauses are valid, and in the alternative a declaration that Macquarie is entitled to restitution at general law. A document prepared on behalf of Area Health by Mr Burton and his junior Mr Bruckner dated 21 December 2009 for the purposes of those proceedings (Truncated Bundle tab 7) set out contentions of Area Health supporting the invalidity, inapplicability and/or ineffectuality of the compensation clauses in the circumstances of this case.

351. In my opinion, the contention of Area Health, raised for the first time after delivery of the first judgment, that the compensation clauses are invalid, inapplicable and/or inefficacious in the circumstances of this case, is a matter not reasonably foreseeable by Macquarie or the primary judge, which materially affects the question of whether the decision of the primary judge on relief against forfeiture and restitution was correct.

352. In relation to damages for personal injuries, where evidence is sought to be led of events happening after judgment as showing that the award was incorrect, the following approach is supported by the decision of Lord Wilberforce in Mulholland v Mitchell [1971] AC 666. His Lordship stated that the matter was one of discretion and degree, and continued as follows (at 679 - 680):

Negatively, fresh evidence ought not to be admitted when it bears upon matters falling within the field or area of uncertainty, in which the trial judge's estimate has previously been made. Positively, it may be admitted if some basic assumptions, common to both sides, have clearly been falsified by subsequent events, particularly if this has happened by the act of the defendant. Positively, too, it may be expected that courts will allow fresh evidence when to refuse it would affront common sense, or a sense of justice.

353. This approach has been followed by this Court in Radnedge v Government Insurance Office of New South Wales (1987) 9 NSWLR 235 and Doherty v Liverpool District Hospital (1991) 22 NSWLR 284. See also Barder v Caluori [1988] AC 20, Murphy v Stone-Wallwork (Charlton) Limited [1969] 1 WLR 1023, Livesey (formerly Jenkins) v Livesey [1984] UKHL 3; [1985] AC 424, Vernon v Bosley (No 2) [1999] QB 18.

354. In my opinion, if the compensation clauses are invalid or inapplicable or ineffectual, Macquarie would have an arguable case for some relief on the basis of relief against forfeiture/ unjust enrichment/ restitution: cf Clancy v Salienta Pty Limited [2000] NSWCA 248; (2000) 11 BPR 20,425, especially at [202] - [252] per Giles JA, and cases there cited. The invalidity and/or inapplicability and/or ineffectuality of clauses manifestly intended to provide some restitution and to prevent unjust enrichment could itself be a ground for granting this kind of relief.

355. Accordingly, had Macquarie's s 129 case failed, in my opinion it would have been appropriate to set aside the primary judge's decision on relief against forfeiture, and to refer all questions of relief against forfeiture/ unjust enrichment/ restitution to be decided in the fresh proceedings. This course would have had the additional advantage of ensuring that possibly embarrassing questions of issue estoppel did not arise in those proceedings.

The Equity Division proceedings referred to in paragraph [350] of the Court of Appeal's judgment were apparently discontinued and Macquarie received a partial costs order because the issues raised were not required to be determined. The document referred to in paragraph [350] setting out the Health District's contentions in relation to the compensation clauses was also tendered in evidence before me to explain the factual and legal issues (including an argument that the clauses were void for uncertainty) which the Health District said it would wish to raise if Macquarie was permitted to amend to rely upon the compensation provisions.

The Health District's challenge to the inclusion of the compensation provisions was, therefore, twofold. First, I understood the Health District's submission to be that Macquarie's explanation was inadequate because the compensation provisions had been within the cognisance of Macquarie's legal advisers. Second, to allow the amendment would open up significant legal and factual issues which would require exploration.

As to the first of these, the fact that the compensation provisions had generated the litigious activity which they had in 2009 and 2010 does not detract from the validity of the explanation for their omission from the damages inquiry. Because of the way the Court of Appeal decided the case, it was not necessary for the compensation provisions to feature any further. A great deal of litigious water has passed under the bridge in the last four years and, in a case of such complexity, I accept the explanation that the potential role of these particular clauses in the context of the damages inquiry had been overlooked by Macquarie's legal advisers. Where there has been such an oversight on the part of a party's legal advisers, if it can be cured by an amendment which does not cause irremediable prejudice to the other party, then the Court will generally be disposed to permit such an amendment rather than to visit the consequences of their error on the lawyers' client.

Insofar as the Health District sought to rely on the need to explore new issues of fact and law raised by the compensation provision amendments, I consider these in paragraphs [125] to [126] above and paragraph [159] below.

Section 58(2)(b)(vii) - other matters - a different forensic course by the respondent

The final other matter which the Court considers relevant in the circumstances of this case is whether the Health District would have taken a different forensic course (including raising different legal issues, calling additional evidence and pursuing other lines of cross-examination) had the proposed new issue been pleaded before the hearing had commenced.

The Health District did not contend that it would have taken a different course in relation to any witness who has already given evidence, other than pointing to the need for additional evidence from Dr Horvath and Mr Wallace. As the Court has already observed (see paragraph [101] above), key factual and expert witnesses as to the integers which factor into damages, as well as damages themselves, have not yet engaged in conclaves (in the case of experts) or given their evidence and been cross-examined.

In those circumstances, and contrary to the Health District's submissions, the Court is not persuaded that the steps which the Health District will now have to take to meet Macquarie's amendments, particularly in relation to the compensation provisions, militate against allowing the amendments. Insofar as it needs to investigate and raise different factual and legal issues in answer to the amended claim, the proceedings have not reached the point where the Health District will be foreclosed from doing so or is disadvantaged by forensic decisions it has already made during the course of the hearing. On the contrary, the Court is satisfied that the Health District can be given that opportunity without undue disruption to the trial dates fixed for 2014 or without significantly extending what will likely otherwise be the end date for the proceedings in 2015.

Amendments

07 November 2014 - The words "amendments are allowed", amended to read "amendments are not allowed"

Amended paragraphs: 95(1)

Decision last updated: 07 November 2014

Medium Neutral Citation:	Macquarie International Health Clinic Pty Ltd v Sydney Local Health District; Sydney Local Health District v Macquarie Health Corporation Ltd (No 6) [2014] NSWSC 1549
Hearing dates:	4, 12, 19 and 26 September 2014
Decision date:	06 November 2014
Jurisdiction:	Equity Division
Before:	Kunc J
Decision:	Plaintiff's amendments allowed; Defendant's late evidence permitted to be relied upon
Catchwords:	Practice and procedure - Application to amend pleadings during course of long and complex proceedings - No issue of principle - Civil Procedure Act 2005 (NSW), ss 56, 57, 58, 60 and 62
Cases Cited:	Kelly v Mina [2014] NSWCA 9 Ken Tugrul v Tarrants Financial Consultants Pty Limited ACN 086 674 179 [No 5] [2014] NSWSC 437 Macquarie International Health Clinic Pty Ltd v Sydney South West Area Health Service [2010] NSWCA 268 Macquarie International Health Clinic Pty Ltd v Sydney Local Health District; Sydney Local Health District v Macquarie Health Corporation Ltd [2013] NSWSC 764
Category:	Interlocutory applications
Parties:	Plaintiff: Macquarie International Health Clinic Pty Ltd Defendant: Sydney Local Health District
Representation:	Counsel: Mr R. Dubler SC, Mr S. Phillips, Mr A. Harding (Plaintiff) Defendant: Mr G.K. Burton SC, Mr H. Stowe, Mr G. Antipas (Defendant) Solicitors: Plaintiff: S Moran & Co Defendant: Bolzan & Dimitri
File Number(s):	2000/34949
Publication restriction:	No