NCON Australia Ltd v Spotlight Pty Ltd

[2011] VSC 98

IN THE SUPREME COURT OF VICTORIA Not Restricted

AT MELBOURNE

COMMERCIAL AND EQUITY DIVISION

No. 8246 of 2009

NCON AUSTRALIA LIMITED (ARBN 099 019 851)	Plaintiff
v
SPOTLIGHT PTY LTD (ACN 005 180 861)	Defendant

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JUDGE:	Robson J
WHERE HELD:	Melbourne
DATE OF HEARING:	15 - 18, 21 - 25 and 28 February and 1 - 2 March 2011
DATE OF RULING:	16 February 2011
CASE MAY BE CITED AS:	NCON Australia Ltd v Spotlight Pty Ltd
MEDIUM NEUTRAL CITATION:	[2011] VSC 98

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PRACTICE AND PROCEDURE – application to amend defence – amendment of defence sought once trial had started – whether such an amendment should be allowed – amendment sought included issues at heart of the dispute – amendment allowed

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	DR R L Dean Dr M R Sharpe	Peter G Richards
For the Defendant	Mr R Garratt QC Ms R B Sion	Cornwall Stodart

HIS HONOUR:

1. I propose to allow the requested amendment to the defence for the following reasons.

1. The plaintiff opened the case on the basis that two agreements were made between the plaintiff and the defendant; a services agreement and a rental agreement.  The plaintiff also opened the case on the basis that, according to the pleadings, the defendant had admitted both those agreements were entered into and that they constituted concluded contracts.  The case was also opened on the basis that the defendant would argue that only one contract was entered into constituted by both the services agreement and the rental agreement.  I understand the defence to the amended statement of claim of 8 October 2010 as admitting that the agreements constituted a contract.

1. My understanding was supported by the fact that the defendant pleaded a repudiation, which is only relevant to a concluded contract, and that plea was not qualified by characterising it as an alternative to an earlier plea.  The defendant also pleaded that the agreement could not proceed because the financier had not agreed to the proposal.  The defendant further pleaded that there was a breach of a term of the agreement and therefore the defendant was not obliged to proceed.

1. The defendant, however, had written a letter in May of 2009 which made it clear that the defendant’s position was that a concluded agreement had not been reached, and in particular the letter stated that there was no rental agreement agreed to and the financing had not been arranged.  In addition, the plaintiff candidly conceded that the witness statements that they received indicated that the defendant took the position that no agreement had been reached.  As such, the plaintiff is not taken completely by surprise by the proposed amended defence.

1. The defence as it stands does not plead that the agreements were not binding because there was an absence of agreement on essential terms.  There is, however, the ambiguous plea that the defendants otherwise denied the matters in paragraphs 2B and 3.  This plea does raise uncertainty over the ambit of the defence.

1. The authorities on a defendant seeking to withdraw an admission state that a heavier onus than normal falls on the person seeking to make the amendment.  In the case of Water Corporation v Cardno BSD Pty Ltd,[1] the Court refers to the following principles which apply here:

   [1][2009] WASCA 212.

1.        The court has a broad discretion to permit or refuse an amendment       which has the effect of withdrawing an admission; the ultimate      question must always be what is in the interests of justice in the       circumstances of the case.

2.        But it is a serious matter to make an admission in a pleading and           ordinarily a party should not be permitted to withdraw an admission        in a pleading without good cause.

3.        In determining whether or not to permit an amendment to withdraw     an admission, relevant considerations will generally include:

(a)       the circumstances in which the admission was made;

(b)       the reason it is sought to be withdrawn;

(c)       the significance of the admission;

(d)      the time for which it has stood on the record; and

(e)       any prejudice that is likely to be suffered by the other side   that cannot appropriately be compensated by an order for   costs.[2]

[2][2009] WASCA 212, 19.

1. The Court went on to say, at

As with any other application to amend a pleading, where an application is made late in the day and requires that dates set down for trial be vacated, the applicant bears a heavy burden to show why leave should be granted.  In such a case the public interest in the timely and efficient resolution of legal proceedings and the effective use of court resources is also a relevant consideration.[3]

[3][2009] WASCA 212, 21.

1. In my opinion the issues sought to be raised by the defendant in the proposed amended defence go to the heart of the dispute between the plaintiff and the defendant.  The defendant is not seeking to raise a limitation defence or a waiver defence or something which might succeed but otherwise does not go to the heart of the matter.  The Court has a duty to ensure the real issues between the parties are reviewed.[4]

   [4]Supreme Court (General Civil Procedure) Rules 2005, 36.01.

1. The defendant has already indicated that it will cross-examine Mr Gill about damages, and I can imagine those sort of questions will, by their very nature, seek to identify that the agreement had not been concluded.  For the Court to make findings about such issues would be artificial in the extreme if it did not also make the reciprocal finding about whether in fact an agreement had been reached.

1. However, the amendments must come at a price, and that price may be significant.  The defendant must pay the costs thrown away by reason of the amendment, and they will also compensate the plaintiffs for the delay.  The defendant will pay a days costs of this proceeding.  I also intend to reserve the question of costs generally in the circumstances that if the defendant succeeds on the amendment defence, in particular the allegation that the rental agreement was not a completed contract, I would be open to hearing evidence which would be improper to hear at this stage, that, for example, the plaintiff may have taken a different course if the amended defence had been pleaded at the outset.  In that case I would be open to argument about where the costs should fall.

1. Orders were made accordingly.