National Australia Bank Ltd v Taylor
[2003] WASC 240
NATIONAL AUSTRALIA BANK LTD -v- TAYLOR & ORS [2003] WASC 240
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2003] WASC 240 | |
| Case No: | CIV:1942/1996 | 18 NOVEMBER 2003 | |
| Coram: | MASTER SANDERSON | 4/12/03 | |
| 11 | Judgment Part: | 1 of 1 | |
| Result: | Leave to amend refused | ||
| B | |||
| PDF Version |
| Parties: | NATIONAL AUSTRALIA BANK LTD (ACN 004 044 937) MALCOLM CHARLES TAYLOR WILLIAM LLOYD YOUNG GLENDA JOY YOUNG PHILIP ANTHONY JONES MALLOPH PTY LTD FIOCCO HOPKINS RATTIGAN (A FIRM) |
Catchwords: | Practice and procedure Application for leave to amend defence and counterclaim Turns on own facts |
Legislation: | Nil |
Case References: | BHP Iron Ore Pty Ltd v Westraint Resources Pty Ltd [2002] WASCA 18 British American Tobacco Australia Ltd v The State of Western Australia [2003] HCA 47 Hawkins v Clayton Utz (1988) 164 CLR 539 Hazcor Pty Ltd & Ors v Kirwanon Pty Ltd (1995) 12 WAR 62 Morgan v Banning (1999) 20 WAR 474 Wardley Australia Ltd v The State of Western Australia (1992) 175 CLR 514 Adam v Shiavon [1985] 1 Qd R 1 Banque Commerciale SA v Akhil (1990) 169 CLR 279 BP Refinery Pty Ltd v Hastings Shire Council [1978] 52 ALJR 20 Brook v Flinders University of South Australia (1988) 47 SASR 119 Burstall v Beyfus (1884) 26 Ch D 35 Daimler Co Ltd v Continental Tyre and Rubber Co (Great Britain) Ltd [1916] 2 AC 307 Dismore v Milton [1938] 3 All ER 762 Doundoulakis v Antony Sdrinis & Co [1989] VR 781 Famel Pty Ltd v Burswood Management Ltd (1990) ATPR 41-004 Ferguson v Eakin, unreported; SCt of NSW CA; 27 August 1997 Geary Nominees Pty Ltd v Pargas Nominees Pty Ltd (1986) 8 ATPR 47,898 Gorton v Commonwealth [1992] 2 Qd R 603 Howarth v Adey [1996] 2 VR 525 Neilson v Bundaberg Sugar Co Ltd [1985] 1 Qd R 313 North West Water Ltd v Binnie & Partners (A Firm) [1990] 3 All ER 547 Orr v Ford (1989) 167 CLR 340 Packer v Meagher [1984] 3 NSWLR 486 Palmdale Insurance Co (In Liq) v L Grollo & Co Pty Ltd [1986] VR 408 Potts v Mobil Oil Australia Ltd (1990) ATPR 41-021 Pullen v Gutteridge [1993] 1 VR 27 Rajski v Powell (1987) 11 NSWLR 522 Re Wm Train & Co Pty Ltd, unreported; SCt of Vic; No 8341 of 1994; 24 January 1995 Ronex Properties Ltd v John Laing Construction Ltd [1983] QB 398 Shell Co of Australia Ltd v Esso Australia Ltd [1987] VR 317 Stephenson v Garrett [1898] 1 QB 677 Stone James (A Firm) v Pioneer Concrete (WA) Pty Ltd [1985] WAR 233 The State of Queensland v J L Holdings (1997) 189 CLR 146 UTSA Pty Ltd (In Liq) v Ultra Tune Australia Pty Ltd & Ors [1996] 21 ACSR 457 UTSA Pty Ltd (In Liq) v Ultra Tune Australia Pty Ltd & Ors [1997] 1 VR 667 Weldon v Neal (1887) 19 QBD 394 White v Eurocycle Pty Ltd (1995) 64 SASR 461 Wintle v Conaust (Vic) Pty Ltd [2001] VSC 315 |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
- IN CHAMBERS
- Plaintiff
AND
MALCOLM CHARLES TAYLOR
First Defendant
WILLIAM LLOYD YOUNG
Second Defendant
GLENDA JOY YOUNG
Third Defendant
PHILIP ANTHONY JONES
Fourth Defendant
MALLOPH PTY LTD
Fifth Defendant
FIOCCO HOPKINS RATTIGAN (A FIRM)
Third Party
(Page 2)
Catchwords:
Practice and procedure - Application for leave to amend defence and counterclaim - Turns on own facts
Legislation:
Nil
Result:
Leave to amend refused
Category: B
Representation:
Counsel:
Plaintiff : Mr C G Colvin SC
First Defendant : No appearance
Second Defendant : Mr P G Clifford
Third Defendant : No appearance
Fourth Defendant : No appearance
Fifth Defendant : No appearance
Third Party : No appearance
Solicitors:
Plaintiff : Mallesons Stephen Jaques
First Defendant : No appearance
Second Defendant : Slater & Gordon
Third Defendant : No appearance
Fourth Defendant : No appearance
Fifth Defendant : No appearance
Third Party : No appearance
Case(s) referred to in judgment(s):
BHP Iron Ore Pty Ltd v Westraint Resources Pty Ltd [2002] WASCA 18
(Page 3)
British American Tobacco Australia Ltd v The State of Western Australia [2003] HCA 47
Hawkins v Clayton Utz (1988) 164 CLR 539
Hazcor Pty Ltd & Ors v Kirwanon Pty Ltd (1995) 12 WAR 62
Morgan v Banning (1999) 20 WAR 474
Wardley Australia Ltd v The State of Western Australia (1992) 175 CLR 514
Case(s) also cited:
Adam v Shiavon [1985] 1 Qd R 1
Banque Commerciale SA v Akhil (1990) 169 CLR 279
BP Refinery Pty Ltd v Hastings Shire Council [1978] 52 ALJR 20
Brook v Flinders University of South Australia (1988) 47 SASR 119
Burstall v Beyfus (1884) 26 Ch D 35
Daimler Co Ltd v Continental Tyre and Rubber Co (Great Britain) Ltd [1916] 2 AC 307
Dismore v Milton [1938] 3 All ER 762
Doundoulakis v Antony Sdrinis & Co [1989] VR 781
Famel Pty Ltd v Burswood Management Ltd (1990) ATPR 41-004
Ferguson v Eakin, unreported; SCt of NSW CA; 27 August 1997
Geary Nominees Pty Ltd v Pargas Nominees Pty Ltd (1986) 8 ATPR 47,898
Gorton v Commonwealth [1992] 2 Qd R 603
Howarth v Adey [1996] 2 VR 525
Neilson v Bundaberg Sugar Co Ltd [1985] 1 Qd R 313
North West Water Ltd v Binnie & Partners (A Firm) [1990] 3 All ER 547
Orr v Ford (1989) 167 CLR 340
Packer v Meagher [1984] 3 NSWLR 486
Palmdale Insurance Co (In Liq) v L Grollo & Co Pty Ltd [1986] VR 408
Potts v Mobil Oil Australia Ltd (1990) ATPR 41-021
Pullen v Gutteridge [1993] 1 VR 27
Rajski v Powell (1987) 11 NSWLR 522
Re Wm Train & Co Pty Ltd, unreported; SCt of Vic; No 8341 of 1994; 24 January 1995
Ronex Properties Ltd v John Laing Construction Ltd [1983] QB 398
Shell Co of Australia Ltd v Esso Australia Ltd [1987] VR 317
Stephenson v Garrett [1898] 1 QB 677
Stone James (A Firm) v Pioneer Concrete (WA) Pty Ltd [1985] WAR 233
The State of Queensland v J L Holdings (1997) 189 CLR 146
UTSA Pty Ltd (In Liq) v Ultra Tune Australia Pty Ltd & Ors [1996] 21 ACSR 457
UTSA Pty Ltd (In Liq) v Ultra Tune Australia Pty Ltd & Ors [1997] 1 VR 667
(Page 4)
Weldon v Neal (1887) 19 QBD 394
White v Eurocycle Pty Ltd (1995) 64 SASR 461
Wintle v Conaust (Vic) Pty Ltd [2001] VSC 315
(Page 5)
1 MASTER SANDERSON: This is the second defendant's application for leave to amend his defence and counterclaim in terms of a minute of amended defence and counterclaim annexed to the chamber summons. (By the same chamber summons the second defendant's solicitors, who had also been acting for the third defendant, applied for leave to cease acting for the third defendant. I made this order and it was not subject to any argument by any of the parties). The second defendant sought further consequential orders. The plaintiff objects to the proposed amended defence and counterclaim on a number of different grounds. To understand the nature of the application and the objections raised by the plaintiff it is necessary to say something about the facts of the case and the present pleadings.
2 The present action was commenced by the plaintiff on 2 September 1996. The second defendant filed a defence and counterclaim on 11 October 1996. In an affidavit sworn 28 July 2003 and filed in support of his application the second defendant says that in or about April 1999 he instructed his present solicitors and was advised to file an amended defence and counterclaim. The second defendant says he accepted that advice and instructed his solicitors to proceed accordingly. The second defendant also relied upon an affidavit of Robert Alexander Lees sworn 21 July 2003. Mr Lees is a solicitor who has had conduct of this action on behalf of the second defendant. Mr Lees says that in March 2000 he advised the plaintiff's solicitors that the second defendant would seek leave to file and serve an amended defence and counterclaim. He thereafter briefed counsel and took certain other steps with respect to the second defendant's position. For various reasons the amended defence and counterclaim was not finalised until December 2001. A copy of the proposed amended defence and counterclaim was forwarded to the plaintiff's solicitors under cover of a letter of 25 January 2002. On 12 February 2002 the plaintiff's solicitors advised the second defendant's solicitors that they would not consent to the second defendant's defence and counterclaim being amended as proposed. This application was not brought until 29 July 2003 - some 18 months after an amendment had been foreshadowed.
3 There is no doubt there has been an extraordinary delay between the second defendant foreshadowing an amendment to the defence and counterclaim and actually making the application. That delay is largely unexplained. Mr Lees does say in his affidavit (par 13) that the second defendant advised that he had been suffering from financial difficulties and was unable to provide his solicitors with funds to allow an application to be made at an earlier time. The second defendant does not deal with
(Page 6)
- this issue in his affidavit. In my view, the second defendant's explanation for the delay in making this application is too brief and consequently inadequate. However, that does not mean in and of itself that the amendment should not be permitted. But the application must be measured against a background of lengthy delay inadequately explained.
4 The plaintiff's claim against the second defendant is for money due under a guarantee of debts owed to the plaintiff by Computerised Holdings Pty Ltd ("Computerised"). The plaintiff also seeks possession of the property of the second defendant pursuant to the terms of a mortgage provided by way of security for the guarantee. By his existing defence the second defendant does not admit that money is due or that demands have been made. Further, he says that he was induced to enter into the guarantee and mortgage by representations made by the plaintiff that were misleading and deceptive. The representations are alleged to concern the financial affairs of Moreay Nominees Pty Ltd ("Moreay"), the vendor of an abattoir business and land sold to Computerised. Moreay was a customer of the plaintiff. The representations are alleged to comprise a failure to disclose to the second defendant the financial circumstances of the plaintiff's customer Moreay when the second defendant agreed to guarantee borrowings by Computerised from the plaintiff to purchase the business and land of Moreay. The same representations are relied upon as the foundation for a counterclaim in misleading or deceptive conduct, misrepresentation and negligence on the part of the plaintiff.
5 It is important to note that the existing defence is confined to putting the plaintiff to proof of the terms of the guarantee and mortgage, proof of the demands and establishing what amount is due under the guarantee and mortgage. The defence and counterclaim also raise issues as to the representations allegedly made by the plaintiff to the second defendant prior to the second defendant entering into the guarantee and mortgage. On the pleadings the plaintiff relies upon certificates of indebtedness to establish the amounts due under the guarantee and mortgage. No issue is raised on the pleadings, as they presently stand, as to the underlying state of accounts of Computerised.
6 Turning then to the proposed amended defence and counterclaim, I should make two preliminary points. First, amendments are proposed which would reflect the fact that the second defendant's solicitors are no longer acting for the third defendant. To that extent the amendments are uncontroversial. Secondly, the amendments to which objection are taken are found in the counterclaim. No significant amendment to the defence
(Page 7)
- is proposed. I mention this point because it is plain that the second defendant seeks to set off any amount to which it is found to be entitled under causes of action raised in the proposed amended counterclaim against any amount to which the plaintiff is entitled on its claim. I will have more to say on this question later in these reasons.
7 The amendments to which objection is taken are to be found in par 18 through to par 37 of the proposed amended defence and counterclaim. By par 18 it is pleaded that Computerised went into liquidation on 29 September 1985. By par 19 it is pleaded that by deed of assignment executed on 5 December 2001 Computerised assigned the causes of action set out in the counterclaim to the first and second defendants (or perhaps but more correctly to the plaintiff by counterclaim and to the second defendant by counterclaim). The plaintiff objects to the way that par 19 is pleaded. It is said that the paragraph is not a proper plea of an agreement. This is an objection taken to form not substance. If necessary the plaintiff can call upon the second defendant to produce a copy of the deed of assignment and that document will speak for itself. In my view, there is no substance in this objection.
8 By par 20 and par 21 it is pleaded that prior to 13 March 1995 Moreay was the proprietor of a business known as Tip Top Abattoir ("the business") and was a customer of the plaintiff. By par 22 it is pleaded that as at the middle of 1994 Moreay was having difficulty meeting its financial obligations to the plaintiff. By par 23 it is pleaded that on or about 12 December 1994 Computerised entered into a contract of sale to purchase the business from Moreay. It is pleaded that the purchase price was $4.5 million which was payable by the assumption of $4.5 million of Moreay's debt. By par 24 the second defendant pleads that on or about 14 February 1995 Computerised entered into agreement with the plaintiff for the provision of banking facilities. Particulars of these banking facilities are provided. By par 26 it is pleaded that the contract of sale between Computerised and Moreay was settled on 13 March 1995. None of these paragraphs, all of which are by way of background, are controversial.
9 It is par 27 to par 29 which are central to the amended counterclaim made by the second defendant against the plaintiff. By par 27 it is pleaded that instead of payment $4.5 million to Moreay at settlement the plaintiff in fact paid an amount of $4,734,435 out of Computerised's account - an overpayment of $234,435. This is said to be a breach of an express term of the banking facilities provided by the plaintiff to Computerised. By par 28 it is pleaded that there were further terms which
(Page 8)
- were to be implied in the banking facility agreement. By par 29 it is pleaded that the plaintiff breached these implied terms. Without going into detail it is alleged by the second defendant that the plaintiff transferred funds out of the accounts of Computerised to reduce Moreay's debt to the plaintiff, used Computerised's funds to pay other creditors of Moreay, misappropriated $55,000 which was otherwise due to Computerised and failed to deposit certain amounts in Computerised accounts. Particulars of these four transactions are provided. By par 30 it is pleaded that as a consequence of these matters Computerised suffered loss and damage. As well as the direct financial loss suffered by Computerised the second defendant pleads that Computerised was forced into administration and subsequently liquidation when, if the plaintiff had not breached the loan facility contract, the company would have been solvent. It is further said that Computerised has lost the opportunity to earn further profits.
10 I should pause at this point to say that, other than the objection taken to the form of par 19, the plaintiff did not complain as to the way in which the counterclaim was pleaded. Nor could it have done so. The pleading is clear and properly particularised. The plaintiff's objections related to substance not form.
11 The remaining pleaded causes of action all relate back to the facts pleaded in par 27 and par 29. By par 31 to par 35 the second defendant pleads a claim in tort for breach of a duty of care. By par 35A and par 35B the second defendant makes a claim for damages for deceit. By par 36 the second defendant makes a claim in conversion. None of these paragraphs pleads any additional material facts above and beyond those pleaded in relation to the breach of contract claim.
12 The prime objection raised to these amendments by the plaintiff is that all the causes of action are statute barred and accordingly leave should not be granted to amend. It is said by the plaintiff that all of these causes of action accrued in 1995. That is when the alleged loss was suffered. Particular reliance was placed upon what was said by the Full Court in BHP Iron Ore Pty Ltd v Westraint Resources Pty Ltd [2002] WASCA 18 per Steytler J at 87 - 91. The second defendant responds to this limitation argument in a number of different ways. First it is said that if a limitation defence is open it must be pleaded. Unless and until the defence is pleaded a party is entitled to maintain their claim. That being so, it is said that leave to amend ought be granted and the question of whether any limitation defence is made out should be left for trial. Further, it is said that loss is sustained when the losses become known or
(Page 9)
- manifest. Here it is said that the loss did not become known or manifest until February 1999 or, alternatively, when the plaintiff completed discovery in 1999. Reference is made to par 4 to par 11 of the second defendant's affidavit sworn 28 July 2003. As a variation on this submission counsel for the second defendant relied upon the doctrine of preclusion as explained by Deane J in Hawkins v Clayton Utz (1988) 164 CLR 539 at 589 - 590. On this basis it was said that it was only when the facts known to the wrongdoer were revealed - that is in February or November 1999 - that the cause of action commenced to run. Thirdly, it was submitted that amendment should be allowed under O 21 r 5 because the cause of action now pleaded arise out of substantially the same facts as had been pleaded in the original defence and counterclaim.
13 It is convenient to take the second defendant's submissions in reverse order. This is not a case where it can be said that the causes of action now sought to be pleaded in the counterclaim arise out of the same or substantially the same facts as have already been pleaded. As I have indicated above, the second defendant's present defence and counterclaim deals with matters which occurred prior to the plaintiff extending credit facilities to Computerised. All of the facts now sought to be pleaded relate to matters which occurred after the loan facilities had been extended. In my view, there is no basis at all upon which these amendments could be permitted under O 21 r 5: see Morgan v Banning (1999) 20 WAR 474.
14 This is not a situation where the doctrine of preclusion would operate. For that doctrine to apply the wrongful action or breach of duty by one person must not only cause the unlawful injury to another but, while its effect remains, preclude that other from bringing proceedings to recover the damage to which he is entitled. Deane J in Clayton Utz (supra) gives an example of a person who is falsely imprisoned and because the false imprisonment continues for six years after the cause of action accrued could not take action. A person in such a situation is doubly wronged. But that is not the case here. The second defendant pleads that he was a director of Computerised. There is nothing in the evidence which establishes that the alleged wrong on the part of the plaintiff precluded the second defendant from taking action in relation to that wrong. It is true that Computerised went into administration and then into liquidation but at any stage it would have been open for the second defendant to have obtained third party discovery from Computerised. In my view, there is no basis at all upon which it could be said that the doctrine of preclusion would assist the second defendant in the circumstances of this case.
(Page 10)
15 Finally, there is the question of whether or not the limitation issue should be dealt with at this stage or left to the trial Judge. The second defendant relies upon what was said by Mason CJ, Dawson, Gaudron and McHugh JJ in Wardley Australia Ltd v The State of Western Australia (1992) 175 CLR 514 at 533. Their Honours were there dealing with a question as to whether or not an amendment which pleaded a cause of action which was outside the time limit ought to have been allowed. At the conclusion of their reasons their Honours had this to say:
"We should, however, state in the plainest of terms that we regard it as undesirable that limitation questions of the kind under consideration should be decided in interlocutory proceedings in advance of the hearing of the action, except in the clearest of cases. Generally speaking, in such proceedings, insufficient is known of the damage sustained by the plaintiff and of the circumstances in which it was sustained to justify a confident answer to the question."
16 It is, I think, open to question how far these comments by their Honours, which are clearly obiter, are to be taken. Steytler J made no reference to the Wardley decision in his reasons although the case was cited in argument. Moreover, in British American Tobacco Australia Ltd v The State of Western Australia [2003] HCA 47 all members of the Court seemed to accept that a limitation point could properly found an application for summary judgment. It is not easy to reconcile the differing approaches which have been taken by courts from time to time.
17 In any event, I am satisfied in this case the position is clear. The way in which the second defendant seeks to plead these causes of action makes it plain that the causes of action must have arisen in 1995. There is no grounds for saying that the causes of action arose when the second defendant obtained discovery from the plaintiff or when the second defendant inspected the bank records. It is the rights of Computerised that the second defendant is seeking to enforce. Computerised, being entitled to possession of the bank records must be taken to have been aware of any cause of action when it arose. It arose more than six years ago and it is now statute barred.
18 Having reached that conclusion it is not strictly speaking necessary for me to deal with the other grounds of objection raised by the plaintiff. However, I should say something about the claim for a set off. In my view, the second defendant cannot set off in law or in equity any claim assigned to him by Computerised against claims made by the plaintiff.
(Page 11)
- There is simply no mutuality. Furthermore, Computerised's claim is not so bound up with the guarantee and mortgage relied upon by the plaintiff that it would be unconscionable that the plaintiff's claim should proceed without allowing the set off. Furthermore, the claims are not inseparably connected. See generally, Hazcor Pty Ltd & Ors v Kirwanon Pty Ltd (1995) 12 WAR 62 at 67 - 69.
19 For these reasons I am not prepared to allow the second defendant to amend in terms of the minute of proposed amended defence and counterclaim. However, I will permit amendment to reflect that the second defendant's solicitors no longer represent the third defendant. I will hear the parties as to the precise form of orders and as to costs.
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