Mannix Electrical Pty Ltd v Belport Pty Ltd - [2021] SASC 115

SUPREME COURT OF SOUTH AUSTRALIA
(Appeal to a Single Judge)
MANNIX ELECTRICAL PTY LTD v BELPORT PTY LTD
[2021] SASC 115
Judgment of the Honourable Justice Parker
5 October 2021
APPEAL AND NEW TRIAL - APPEAL - GENERAL PRINCIPLES - RIGHT OF APPEAL - WHEN APPEAL LIES
LIMITATION OF ACTIONS - GENERAL MATTERS - AMENDMENT OF ORIGINATING PROCESSES AND PLEADINGS OUTSIDE LIMITATION PERIOD - AMENDMENTS INTRODUCING NEW CAUSE OF ACTION OR PARTICULARISING CAUSE OF ACTION
This is an appeal against the decision of a Master to grant leave to the respondent to amend a statement of claim to change the pleaded date of certain events pursuant to r 69.2 of the Uniform Civil Rules 2020 (SA).
The Master held that the proposed amendment to change the date from “about 2013” to “July 2012” did not give rise to a new cause of action, even if it did, that cause of action arose out of substantially the same facts as the existing causes of action.
Further, the Master declined to exercise the Court’s discretion to disallow the amendment. The Master did so on the basis that his Honour was not satisfied that the appellant would suffer any prejudice sufficient to require the Court to disallow the amendment.
The appellant appealed to this Court on four grounds, which in substance contend that the Master erred in finding that the proposed amended pleading was just changing a date and was not in substance an amendment to plead a cause of action that is out of time. Further, that the Master should have found that the proposed amended pleading sought to introduce new causes of action, or alternatively, that the Master erred in finding that newly introduced causes of action arose out of substantially the same facts.
Held, per Parker J, granting leave to appeal but dismissing the appeal:
1.The amendment in relation to the Product Pricing Representation, the Best Possible Pricing Representation and to the Competitive Pricing Representation gives rise to a new cause of action. However, the additional allegations brought within the statement of claim by the amendment of the relevant date from “about 2013” to “July 2012” arise out of substantially the same facts as the preceding statement of claim.
2.Given the uncertainty in how the respondent will go about proving a breach of the Referral Representation, and the conclusion that the additional allegations covered by the amendment arise out of substantially the same facts, it is it is unnecessary to determine whether the amendment relating to the Referral Representation will give rise to a new cause of action.

Australian Competition and Consumer Act 2010 (Cth) sch 2 s 236; Supreme Court Civil Rules 2006 (SA) r 55(7); Supreme Court Rules 1947 (SA) ord 28 r 1(5); Uniform Civil Rules 2020 (SA) r 69.2, referred to.
Meredith v Commonwealth [2009] ACTSC 168; Swietlik v Central Linen Service (1991) 56 SASR 569, applied.
21st Century Promotions Australia Pty Ltd v Telstra Corporation Ltd [2000] SASC 353; Brook v The…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2021] SASC 115
Decision Date: 5 October 2021

CaseChat Overview and Summary

Mannix Electrical Pty Ltd appealed against an interlocutory decision of a Master of the South Australian Supreme Court, who had granted leave to Belport Pty Ltd to amend its statement of claim. The amendment sought to change the pleaded date of certain events from "about 2013" to "around July 2012". The primary legal issues the court had to decide were whether the amendment introduced a new cause of action and whether it was permissible to amend the originating process outside the limitation period. Additionally, the court had to determine if the amendment introduced new facts or merely particularised existing facts.

The court found that the amendment to the pleaded date did not introduce a new cause of action because the underlying facts and the contractual relationship between the parties remained unchanged. The amendment only brought additional transactions within the scope of the litigation, which were related to the same subject matter and governed by the same agreements and representations. The court noted that while the amendment might bring new transactions into the scope of the litigation, it did not change the essence of the claims made by Belport. The amendment did not introduce new facts but rather particularised the existing facts, thus arising out of substantially the same facts as the preceding statement of claim. Consequently, the court dismissed the appeal but granted leave to appeal on the basis that the case was arguable and raised a serious question. The court awarded costs to Belport on a standard basis.

The court's decision was based on the principle that amendments that do not change the underlying factual basis of the case and merely particularise existing facts can be allowed, even if they bring additional transactions within the scope of the litigation. The court emphasised that the essence of the case remained the same, and thus, the amendment did not introduce a new cause of action. The appeal was dismissed, and costs were awarded to Belport.

Orders

Orders of the court

Held, per Parker J, granting leave to appeal but dismissing the appeal:

1. The amendment in relation to the Product Pricing Representation, the Best Possible Pricing Representation and to the Competitive Pricing Representation gives rise to a new cause of action. However, the additional allegations brought within the statement of claim by the amendment of the relevant date from “about 2013” to “July 2012” arise out of substantially the same facts as the preceding statement of claim.

2. Given the uncertainty in how the respondent will go about proving a breach of the Referral Representation, and the conclusion that the additional allegations covered by the amendment arise out of substantially the same facts, it is it is unnecessary to determine whether the amendment relating to the Referral Representation will give rise to a new cause of action.

Background

Background to the litigation

This is an appeal against an interlocutory decision made by a Master of this Court. The Master granted leave under r 69.2 of the Uniform Civil Rules 2020 (SA) to amend a statement of claim to change the pleaded date of certain events from “about 2013” to “around July 2012”. Because it was an interlocutory decision, leave to appeal was required. For the reasons that follow, I granted leave to appeal but dismissed the appeal.Background Mannix carries on a business that includes the retail sale, supply and installation of air conditioning units. Belport has operated a store at Kidman Park since 2003 as a franchisee of Mannix and also a store at Marion from 2006 to 8 September 2018. The background to the franchise arrangements is that Mr Michael Costa was formerly employed by Mannix as a manager. He was invited to take over a Mannix store as an independent operator. Mannix agreed in about June 2003 that he could take over the Mannix business operated from premises at Kidman Park. Mr Costa then caused Belport to be incorporated on 2 July 2003. On about 31 July 2003 Mannix entered into a written distribution agreement with Belport. Under the distribution agreement, Belport was appointed as a non‑exclusive distributor for Mannix products in South Australia for a period of 11 months from 1 August 2003. Belport warranted that it would purchase products exclusively from Mannix, with the prices of the products being fixed by Mannix. Belport agreed to pay the sum of $4,333.33 per month plus GST to Mannix for a corporate advertising plan. Belport also agreed to make payments of $3,500 per month to the Mannix executive superannuation fund and to make further rental payments to Mannix of $1,250 per month in respect of plant and equipment. Belport also agreed to pay a licence fee of 2% of total sales in excess of $2,500,000 per annum. The distribution agreement expired on about 30 June 2004. However, Belport continued to make the payments of $4,333 per month plus GST in respect of the corporate advertising plan and to pay $1,250 per month to Mannix in respect of the rent of plan and equipment. Belport also continued to purchase products exclusively from Mannix. In about June 2005 Belport and Mannix entered the first licence agreement. In about September 2006 the parties agreed that Belport would open a second store in the Marion area. In about 1 October 2006 they entered into the second licence agreement. The initial period under the second licence agreement expired on 30 June 2007. However, the parties have continued to operate under that agreement which was not terminated until 30 November 2018. The agreement provided that if Belport continued to operate the business after the expiry of the agreement that would be on a month-to-month basis under the terms and conditions of the agreement. Under the second licence agreement Belport agreed to pay Mannix a management services fee of $5,000 per annum and a licence fee of $10,000. Mannix agreed to invoice Belport for the proportionate share of the amount paid by Mannix for Yellow and White Pages corporate advertising based on the total number of licensees. The proportionate amount was to be confirmed and agreed between the parties prior to the start of the financial year. The parties also agreed to comply with the provisions of the Franchising Code of Conduct.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

I am satisfied that the additional allegations brought within the statement of claim by the amendment of the relevant date from “about 2013” to “July 2012” arise out of substantially the same facts as the preceding statement of claim. The parties to the contracts are the same, as are the alleged terms and conditions and the representations relied upon by Belport. The subject matter of the contracts, while not identical in every instance, comprised the same subject matter, i.e. the supply of air conditioning units and related products for resale. The nature of the alleged breaches, albeit not their specifics, is also not changed. Thus, for example in the case of the Product Pricing Representation it is alleged that Mannix did not adhere to the representation that it would not charge Belport a price greater than 10% more than the price it had paid for an item. That allegation is not in any way affected by the change in dates made by the amendment. This is equally the case with the Best Possible Pricing Representation and the Competitive Pricing Representation. Conclusion The application for leave to appeal clearly gave rise to a serious question and the case was arguable. On that basis, I granted leave to appeal. However, for the reasons stated above, I dismissed the appeal and awarded costs on a standard basis in favour of Belport.

Ratio Decidendi

Legal Principle Established

Refshauge J also found that all the facts pleaded in the proposed amendments were new and none overlapped with the subsisting pleading. The representation was different and the person making the representation also differed, although the words used may have been the same or similar. The relationship would also have been different. His Honour found that the amendment did not arise out of the same or substantially the same facts. Consideration The amendment to the pleaded date from “about 2013” to “July 2012” does not in any way affect the underlying factual basis of the contractual relationship between the parties. The parties remain the same and the change in dates does not affect the agreements and representations that governed their commercial relationship. However, the effect of pleading the earlier date is to bring additional transactions within the scope of the litigation. The Master took the view that this simply amounted to the supply of further particulars. However, for the reasons that follow, I consider that whether a new cause of action is being alleged must be determined by reference to the additional transactions that will be brought within the scope of the litigation. The essence of the case alleged by Belport is that it had a standing arrangement with Mannix so that upon placing an order it would be supplied with goods for resale by it in accordance with the terms agreed in the second licence agreement and the series of oral representations made by Mannix. Belport alleges that it has been supplied goods by Belport other than in accordance with the agreed terms and representations. The amendment to the pleaded date from “about 2013” to “July 2012” will bring additional occasions within the scope of the litigation when goods were allegedly supplied contrary to the agreed terms and representations. The substance of the Product Pricing Representation is that Mannix had agreed to supply products to Belport at the price it had paid plus 10%. However, it is of central importance that Mannix supplied a range of different products to Belport albeit that they were all air conditioning units and related products. What items were supplied on any given occasion was dependent upon the order placed by Belport. It also appears that the price payable by Mannix to its suppliers for any particular item would have varied from time to time as would have the price charged by Mannix to Belport. Thus, whether or not any particular supply transaction involved a breach of the Product Pricing Representation will depend upon the price paid by Mannix for the particular item and also the price it charged Belport on that occasion. Accordingly, even if the allegations made by Belport are generally valid, it is possible that some transactions in the period covered by the change in the pleaded date may have given rise to a breach of the Product Pricing Representation and others may not. The answer to that question will depend upon a comparison in the case of each individual transaction of the price paid by Mannix and the price charged to Belport.