Norilya Minerals Pty Ltd v Ireland [No 2]

Case •

[2010] WASC 265

•

30 SEPTEMBER 2010

JURISDICTION     :   SUPREME COURT OF WESTERN AUSTRALIA

IN CHAMBERS

CITATION:   NORILYA MINERALS PTY LTD -v- ADAM JONATHON IRELAND as Named Executor of the Estate of DEAN EDWARD IRELAND [No 2] [2010] WASC 265

CORAM:   LE MIERE J

HEARD:   21 & 24 SEPTEMBER 2010

DELIVERED          :   30 SEPTEMBER 2010

FILE NO/S:   CIV 2232 of 1990

Consolidated by Orders dated 28 July 2009

BETWEEN:   NORILYA MINERALS PTY LTD

Plaintiff

AND

ADAM JONATHON IRELAND as Named Executor of the Estate of DEAN EDWARD IRELAND
CLARK ERVIN EASTERDAY
LEONARD LANCELOT IRELAND
First Defendants

KAYLENE HOLDINGS PTY LTD
Second Defendant

BRENDA ANNE EASTERDAY
Third Defendant

WEBGO PTY LTD
Fourth Defendant

FIM PTY LTD
Fifth Defendant

PAUL CHRISTOPHER IRELAND
Sixth Defendant

FILE NO/S              :CIV 2364 of 2007

BETWEEN              :NORILYA MINERALS PTY LTD

Plaintiff

AND

CLARK ERVIN EASTERDAY
LEONARD LANCELOT IRELAND
First Defendants

KAYLENE HOLDINGS PTY LTD
Second Defendant

BRENDA ANNE EASTERDAY
Third Defendant

WEBGO PTY LTD
Fourth Defendant

FIM PTY LTD
Fifth Defendant

PAUL CHRISTOPHER IRELAND
Sixth Defendant

Catchwords:

Practice - Amendment of defence - Withdrawal of admission - Discretion to allow amendment

Legislation:

Nil

Result:

Leave to amend defence

Category:    B

Representation:

CIV 2232 of 1990

Consolidated by Orders dated 28 July 2009

Counsel:

Plaintiff:     Mr S M Davies SC & Ms K F Banks-Smith

First Defendants           :     Mr J A Thomson & Mr S Vandongen

Second Defendant         :     Mr J A Thomson & Mr S Vandongen

Third Defendant           :     Mr J A Thomson & Mr S Vandongen

Fourth Defendant          :     Mr J A Thomson & Mr S Vandongen

Fifth Defendant            :     Mr J A Thomson & Mr S Vandongen

Sixth Defendant            :     Mr J A Thomson & Mr S Vandongen

Solicitors:

Plaintiff:     Norton Rose Australia

First Defendants           :     Bostock & Ryan

Second Defendant         :     Bostock & Ryan

Third Defendant           :     Bostock & Ryan

Fourth Defendant          :     Bostock & Ryan

Fifth Defendant            :     Bostock & Ryan

Sixth Defendant            :     Bostock & Ryan

CIV 2364 of 2007

Counsel:

Plaintiff:     Mr S M Davies SC & Ms K F Banks-Smith

First Defendants           :     Mr J A Thomson & Mr S Vandongen

Second Defendant         :     Mr J A Thomson & Mr S Vandongen

Third Defendant           :     Mr J A Thomson & Mr S Vandongen

Fourth Defendant          :     Mr J A Thomson & Mr S Vandongen

Fifth Defendant            :     Mr J A Thomson & Mr S Vandongen

Sixth Defendant            :     Mr J A Thomson & Mr S Vandongen

Solicitors:

Plaintiff:     Norton Rose Australia

First Defendants           :     Bostock & Ryan

Second Defendant         :     Bostock & Ryan

Third Defendant           :     Bostock & Ryan

Fourth Defendant          :     Bostock & Ryan

Fifth Defendant            :     Bostock & Ryan

Sixth Defendant            :     Bostock & Ryan

Case(s) referred to in judgment(s):

Aon Risks Services Australia Ltd v Australian National University [2009] HCA 27; (2009) 239 CLR 175

Briginshaw v Briginshaw [1938] HCA 34; (1938) 60 CLR 336

Laws v Australian Broadcasting Tribunal [1990] HCA 31; (1990) 170 CLR 70

Norilya Minerals Pty Ltd v Adam Jonathon Ireland as Named Executor of the Estate of Dean Edward Ireland [2010] WASC 260

Water Corporation v Cardno BSD Pty Ltd [2009] WASCA 212

  1. LE MIERE J:  The defendants apply for leave to amend their defence in accordance with a minute dated 3 September 2010 (the Minute).  The plaintiff (Norilya) does not object to the amendments except the amendments to [13(b)], [13(c)], [13(e)], [25A], [38], [40] ‑ [46], [46C] and [46D].

Background

  1. I have set out the background to this matter in my reasons for decision on the defendants' application for a stay until Norilya pays into court the amount due from it to the defendants pursuant to orders of the Court of Criminal Appeal, which was heard immediately before the present application:  see Norilya Minerals Pty Ltd v Adam Jonathon Ireland as Named Executor of the Estate of Dean Edward Ireland [2010] WASC 260.

  2. The trial is to commence on 11 October 2010.  The proposed amendments were provided to Norilya just prior to seven weeks before the commencement of trial.  I will consider each of the proposed amendments to which Norilya objects.

Paragraph 13(b)(c) and (e)

  1. Paragraph 12 of the statement of claim pleads that the representations made to Clifton and Batt by Dean Ireland, Clark Easterday and Leonard Ireland (the Prospectors) referred to in [6] ‑ [11] of the statement of claim were never withdrawn or otherwise disavowed by the Prospectors.  In [13] of their defence the defendants admit that the representation referred to in [10] of the statement of claim was never withdrawn or otherwise disavowed but otherwise deny [12] of the statement of claim.  The effect of the denial was that [13] of the defence was, arguably, pregnant with the affirmative proposition that the representations had been withdrawn or otherwise disavowed.  By letter dated 14 October 2009 Norilya's solicitors wrote to the defendants' solicitors stating:

    Our understanding of this plea is that your clients are not contending that the representations alleged by the plaintiff were ever withdrawn or disavowed by the first to third defendants.  Please let us know if this assumption is incorrect.

    The defendants' solicitors replied by letter dated 19 November 2009 stating:

    The plea does not admit the plaintiff's allegation as to representations and the defendants further say that those representations acknowledged by the defendants to have been made were not withdrawn or otherwise disavowed.

  2. Norilya submits that the effect of the proposed amendment is to withdraw the admission previously made that the representations were not withdrawn or otherwise disavowed.

  3. The general principles to be applied upon an application to withdraw an admission in a pleading include:

    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.

    4Where 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:  Water Corporation v Cardno BSD Pty Ltd [2009] WASCA 212 [19] ‑ [21].

  4. There is no evidence of the circumstances in which the defendants' solicitor came to write their letter dated 19 November 2009.  Counsel for the plaintiff submitted that the response of the defendants' solicitors in their letter dated 19 November 2009 is ambiguous but on one reading is an admission.

  5. The defendants submit that the withdrawal of the admission is based upon an internal document of Norilya.  There is a proper foundation for the amendments.  There is no significant relevant prejudice to Norilya.  The amendments to [13(b)], [13(c)] and [13(e)] will be allowed.

Paragraph 25A

  1. Paragraph 25 of the statement of claim pleads that the representations pleaded in [24] were made by and are to be inferred from the facts set out in the following three subparagraphs.  Paragraph 25(1) is:

    The sample numbers in the document were the same as the sample numbers allocated by Laurie Whitehouse in the presence of Dean Edward Ireland and Leonard Lancelot Ireland, to the knowledge of the plaintiff by Clifton and Batt, to the assay samples bagged on the site of the tenements between 13 and 17 June 1990 during the confirmation drilling.

  2. In their defence the defendants deny [24] of the statement of claim.  That is, the defendants deny that the representations pleaded in [24] of the statement of claim were made.  In their defence the defendants deny [25(2)] and [25(3)] of the statement of claim but do not plead to [25(1)].  Norilya submits that the defendants have admitted [25(1)] of the statement of claim because they have not pleaded to it.

  3. The defendants apply to amend their defence by inserting [25A] in which they deny that the inferences alleged in [25] of the statement of claim may be drawn.

  4. The defendants' solicitor has sworn that the failure of the defendants to plead to [25(1)] of the statement of claim was an oversight.  There is no evidence of any significant relevant prejudice to Norilya by reason of the amendment.  It is in the interests of justice that the amendment be allowed.

Paragraph 38

  1. Paragraph 6 of the statement of claim pleads that on 29 May 1990 at a meeting at the offices of Perilya Mines NL (Perilya) between Clifton and Batt on behalf of the Noranda Group and Perilya and the Prospectors, the Prospectors made to the Noranda Group and Perilya certain representations including:

    (5)the assay results of samples taken during the first drilling had shown the presence of gold at a level as high as 1.3 ppm.

    (6)the assay results of two of the samples taken during the first drilling had shown the presence of 1.01 gpt and 1.18 gpt of gold respectively.

  2. In [33] of the statement of claim Norilya pleads that the representations pleaded in [6(5)] and [6(6)] were false in that the true assay results of the first drilling had revealed only one sample of gold above the detection limit of 0.01 gpt, being 0.18 gpt.  In [38] of their defence the defendants deny [33] of the statement of claim.  The defendants now wish to amend [38] by inserting a new plea that the assay results of three check samples from the first drilling reported in the 'Whitehouse Report' dated April 1990 are recorded as showing gold levels above the detection limit of 0.01 gpt in each sample (0.38 gpt, 1.98 gpt, 0.49 gpt).

  3. Norilya says that the defendants have not previously sought to raise the 'check samples' as a matter supporting the denial of the representation made in relation to the phase one drilling and the amendment should not be permitted for three reasons.  First, because the plea is embarrassing in that it does not plead that the check samples in fact contained the gold levels referred to in [38], but only that certain matters were recorded in the April 1990 Whitehouse Report.  Second, it will require Norilya to investigate the allegation to determine the reliability or otherwise of the check samples.  Third, it is inconsistent with the way the defendants have repeatedly said they were putting their case, namely that the tenements did not contain naturally occurring gold and were salted.

  4. Counsel for the defendants submitted that the pleading is intended to say that the check samples in fact contained the gold levels referred to and not merely that they were recorded in the Whitehouse Report.  Counsel for Norilya accepted that the plea is to be understood that way and that removes the embarrassment point.

  5. Norilya's pleaded representation concerns what was represented by the Whitehouse Report given to Clifton and Batt at the 29 May 1990 meeting.  The Whitehouse Report itself refers to the check assay results from phase one drilling.  Mr Whitehouse is being called by Norilya as a witness.  Counsel for the defendants submitted that the significance of the reference to the check assay results in the Whitehouse Report had not been appreciated by the defendants until counsel had recently been retained for the trial.  There is no evidence of any significant relevant prejudice to Norilya by reason of the amendment.  It is in the interest of justices that the amendment be allowed.

The amendments to paragraphs 40 ‑ 46

  1. In [22] of the statement of claim Norilya pleads that on 22 June 1990 the Prospectors by Dean Ireland and Leonard Ireland represented to Norilya that:

    1.the assay results contained in a document were assay results of samples which comprised only material obtained from the hole RCH8 drilled on the tenements during the confirmation drilling, and

    2.the gold content measured by assay and reported as the assay results in the said document was gold which had occurred naturally in samples obtained from that hole.

  2. Norilya pleads that those representations were made by and are to be inferred from the fact that Dean Ireland, in the presence of Leonard Ireland, showed to representatives of Norilya the document containing the assay results and made statements to the effect that the assay results were assay results from hole RCH8.

  3. In [24] of the statement of claim Norilya pleads that on 26 June 1990 the Prospectors by Dean Ireland represented to Norilya that:

    1.the assay results contained in a document were assay results of samples which comprised only material from holes drilled on the tenements during the confirmation drilling;

    2.the gold content measured by assay and reported as the assay results in the said document was gold which had occurred naturally in samples from such holes.

  4. Norilya says that those representations were made by and are to be inferred from facts pleaded in [25(1)], [25(2)] and [25(3)].

  5. In [40] of the statement of claim Norilya pleads that the representation pleaded in [22] and [24] were false in that:

    1.such of the samples the subject of the assay results pleaded in [22] and [24] which were stated by the assay results to have revealed a content of gold did not comprise only material obtained from holes drilled on the tenements but included gold which had been added to such samples;

    2.the gold content revealed in the assay results pleaded in [22] and [24] was not gold which had occurred naturally in samples from holes drilled on the tenements but was gold which had been added to such samples.

  6. In [41] of the statement of claim Norilya pleads that those representations were made by the Prospectors fraudulently in that when each representation was made the Prospectors knew that it was false or did not believe that it was true.  Norilya then gives particulars of knowledge which is set out in paragraphs numbered 1 ‑ 16.  The following paragraphs of the particulars to [41] are important:

    (5)the samples submitted for assay which were the subject of representations did not only contain gold which had occurred naturally in material obtained from holes drilled on the tenements but included gold which had been added to such samples.

    (6)such of the samples the subject of representations which were submitted for assay and were reported to contain gold had had gold added to them after the samples had been taken from the drill holes on the tenements and before measurement of the gold content of those samples.

    (14)gold was added by or at the direction of the Prospectors to those samples submitted for assay which were reported to contain gold.

  7. In [45] of their defence the defendants deny [40] of the statement of claim, that is, they deny that the representations pleaded in [22] and [24] of the statement of claim were false.  In [46] of their defence the defendants deny [41] of the statement of claim, that is, that they made the representations pleaded in [22] and [24] of the statement of claim fraudulently.  The defendants plead that at the time of making the alleged representations they honestly believed them to be true and they did not make them fraudulently or with any intention to defraud or deceive.  The defendants deny that knowledge is to be inferred from [41] of the statement of claim as alleged and give particulars in [46.2.1] ‑ [46.2.15].  The particulars include:

    46.2.1As to paragraph 41(1):  The confirmation drilling was under the operational control of the first, second and third defendants so that they could maintain their tax concession as bona fide prospectors.  The site controls and sample testing were controlled by the supervising geologist Laurie Whitehouse nominated under the terms of the Acarus Option paragraph 2(b).

    …

    46.2.4As to paragraph 41(5):  The gold that was added to the samples was added during drilling.

    46.2.5As to paragraph 41(6):  Without the knowledge of the Dean Edward Ireland and the second and third defendants, gold was added to the samples via the drill rig as the holes were drilled.

    46.2.6As to paragraph 41(7):  Gold was added to the samples via the drill rig as the holes were drilled.

    46.2.7As to paragraph 41(8):  Others had the motive or opportunity to introduce or cause to be introduced gold to the samples.

    (a)There were five drilling programmes on the tenements as follows:

    •First Drilling ‑ 9th to 12th September 1988 (carried out by or for Dean Edward Ireland and the second and third defendants, drilled by Davies Drilling)

    •2nd Drilling ‑ 11th to 16th March 1990 (carried out by or for Dean Edward Ireland and the second and third defendants, drilled by Colby Drilling).  (These samples were salted.)

    •Confirmation Drilling ‑ 13th to 17th June 1990 (carried out by or for Dean Edward Ireland and the second and third defendants, Acarus observing/monitoring; Perilya observing, drilled by Colby Drilling).  (These samples were salted.)

    •Phase 4 ‑ 22nd July to 6th August 1990 (carried out by Perilya Mines NL, drilled by Colby Drilling).

    •Phase 5 ‑ 12th to 21st August 1990 (carried out by Police and Department of Minerals and Energy, drilled by Colby Drilling, funded by the plaintiff).

    (b)In March 1990 (2nd Drilling) and in June 1990 (Confirmation Drilling) there were drill programmes at Karpa Spring.  Each consisted of six drill holes.  The samples from each of those drill holes were 'salted' by introducing gold through the drilling rig.  The 'salting' was deliberate and done for profit.  It was designed to mislead with the objective of material gain (the 'Scheme').  The motive for the salting was to enhance the price of and demand for Perilya shares.  The people present at the tenements when both salting occurrences took place were Dean Edward Ireland, the third defendant and two drill crew members, namely Clive Rumens and Grant Hockley.  Neither Dean Edward Ireland nor Leonard Lancelot Ireland were participant in or knew of the salting occurrences.  As the salting gold was introduced at the drilling rig, only the drillers had the opportunity to salt.

    (c)The Scheme was not planned and executed by the defendant.  It was planned and executed by unidentified persons.  The perpetrators of the fraud required a range of special skills, knowledge and experience in relation to gold exploration operations.  In all probability, they were involved or associated with other persons possessed of skills, knowledge and experience in relation to the national and international share markets with a view to the facilitation of the Scheme.

  8. The defendants then state that the Scheme comprised of five components.  The second component is stated to be 'salting'.  In relation to salting the defendants give the following particulars:

    (ii)SALTING

    There were two salting events.

    A.The first salting event (during the 2nd Drilling) occurred before the tenement purchase.  Clive Stuart Rumens ('Rumens'), the driller for Colby Drilling on the tenements, and Grant Franklin Hockley ('Hockley'), the said driller's offsider, told Thomas Joseph Bridson ('Bridson'), a Director of Colby Drilling, that gold was being panned.  Bridson, pursuant to an agreement with Clifton, identified the tenements, the defendants and the panning of gold to Clifton.  Clifton made contact with the defendants as a representative of Perilya and Noranda Inc.  The defendants were already in negotiation with Acarus.  Perilya negotiated with Acarus to acquire an interest in the tenements.  The agreement between Acarus and the defendants (the Acarus Option) required a third (confirmation) drilling to take place.

    B.At the second salting event (during the Confirmation Drilling), Rumens and Hockley were the driller.  Clifton, Batt and two representatives from Acarus (Novotny and William Galbraith) were on the tenements observing.

  1. In [46] of the Minute the defendants deny [41] of the statement of claim and say, amongst other things, that no inference can or should be drawn that they made any of the representations pleaded in the statement of claim fraudulently or with any intention to defraud or deceive in the circumstances pleaded in [46A] ‑ [46H] of the Minute.  The Minute then deletes the particulars of honest belief in the current defence.  The new [46A] ‑ [46H] plead to each of the particulars of knowledge pleaded by Norilya in [41] of the statement of claim.

Paragraph 46A of the Minute

  1. In [46A] the defendants plead to [41(1)] of the statement of claim, that is the allegation that the Prospectors carried out or directed and controlled all of the drilling the subject of the representations.  In [46A] of the Minute the defendants say that they were contractually obliged to direct, control and pay for the costs of the third drilling by the terms of the Acarus Option but otherwise do not admit the allegations contained in [41(1)] of the statement of claim.  Counsel for Norilya submitted that the Minute withdraws the admission that the confirmation drilling was under the operational control of the Prospectors.

  2. The particulars given in [46.2.1] of the defence are equivocal.  The plea starts by stating that the confirmation drilling was under the operational control of the Prospectors.  However, it goes on to state that that was 'so that they could maintain their tax concession as bona fide prospectors' and that 'the site controls and sample testing were controlled by the supervising geologist Laurie Whitehouse nominated under the terms of the Acarus Option'.  Counsel for the defendants says that the plea in [46A] of the Minute sets out the defendants' response to the plea that the Prospectors carried out or directed and controlled the drilling in a way which makes clearer the defendants' case and condescends to greater detail.  Having regard to the equivocal nature of [46.2.1] of the defence there is no substantial relevant prejudice to Norilya from the amendment.  The amendment is in the interests of justice.  It makes clearer to Norilya and to the court what the defendants' response is to the plea in [41(1)] of the statement of claim.

Pleading by defendants concerning salting the tenements

  1. Norilya objects to the proposed amendment to [46] of the defence on the ground that the proposed amendments withdraw the admissions that the tenements were salted and withdraw the plea that the salting gold was added by 'either one or both of Clive Stuart Rumens or Grant Franklin Hockley' and that the method was that the salting was added through the drill rig.

  2. I do not accept that the proposed amendments involve the withdrawal of an admission that the tenements were salted for two reasons.  First, the allegation in the defence that the tenements were salted is maintained in the Minute.  In [46D(d)] of the Minute the defendants say:

    Gold was in fact added to the second and third drillings during the drilling process.

  3. The second reason is that the defendants' pleading in their defence that the tenements were salted is not an admission of a part of Norilya's case.

  4. A defendant may admit facts pleaded in the statement of claim by an express plea or by a failure to traverse.  Where facts are admitted by a defendant in those ways then they cease to be in issue in the proceedings and need not be proved at the trial.  However, an affirmative plea by the defendant is not an admission of the fact pleaded.  In Laws v Australian Broadcasting Tribunal [1990] HCA 31; (1990) 170 CLR 70 Mason CJ and Brennan J said:

    A defendant is entitled to put a plaintiff to proof of his or her cause of action and to raise alternative matters of defence which may possibly answer the plaintiff's claim, without asserting in an absolute sense the truth or correctness of the particular matters pleaded.  Accordingly, we do not regard the defences filed by the Tribunal as constituting admissions on the part of the Tribunal …(86).

  5. In its statement of claim Norilya pleads that gold was added by or at the direction of the Prospectors to the samples submitted for assay (statement of claim [41(14)]).  Norilya has further stated its case to be that the gold was added to the samples after the samples had been taken from the drill holes (statement of claim [41(6)]).  The defendants do not admit those allegations.  In [46] of their defence the defendants deny [41] of the statement of claim in which Norilya makes those allegations.  The defendants go on to make positive assertions in the particulars to [46] of their defence.  In those particulars the defendants assert that gold was added to the samples during drilling and more particularly that gold was added to the samples via the drill rig as the holes were drilled.

  6. Senior counsel for Norilya, Mr Davies SC submits that Norilya's case in relation to salting has relevantly two components.  The first component is that the tenements were salted.  The second component is that the tenements were salted by the Prospectors adding gold to the samples after the samples had been taken from the drill holes.  Mr Davies SC submits that the defendants' plea in their defence is an admission of the first component of Norilya's case, that is, that the tenements were salted.

  7. I do not accept that argument.  The functions of pleadings include defining the issues which are in dispute between the parties and that are to be decided by the court and determining the range of admissible evidence which a party is entitled to adduce at the trial.  Norilya's pleaded case is that the Prospectors added gold to the samples after they had been removed from the drill holes.  Norilya would not be permitted to adduce evidence at the trial that gold was added to the samples via the drill rig as the holes were drilled.  The defendants pleaded case is a different case than that pleaded by Norilya.  Mr Davies SC argues that the defendants' plea is an admission of that component of Norilya's case that the tenements were salted.  That argument characterises the defendants' denial of Norilya's case and an affirmative assertion of a different case as an admission of part of Norilya's case.  That mistakes the nature and effect of the defence.  The denial of facts asserted by the plaintiff and the asserting of different facts by the defendant is not, for the purposes of pleading, an admission of a substratum of facts which might be characterised in such a way as to be common to the case of both the plaintiff and the defendant.

  8. For the reasons stated, I find that the proposed amendments to [40] ‑ [46] of the defence contained in the Minute do not amount to a withdrawal of an admission that the tenements were salted.

Pleading by defendants concerning Rumens and Hockley

  1. Norilya also objects to the withdrawal of the plea that the salting gold was added by either or both of Mr Rumens or Mr Hockley.  In particular 40.3 to [40] of their defence the defendants say that salting gold was added by either one or both of Mr Rumens or Mr Hockley through the drill rig as the holes were being drilled and the samples generated at the bottom of the drill hole.  In the Minute the defendants delete those particulars.  In [46D(n)] the defendants say:

    It may be inferred from the above circumstances that unidentified persons associated with Colby Drilling introduced gold into the holes which they drilled for the second and third drillings through the process of drilling.

  2. The defendants' case in the Minute is a different, and wider, case than pleaded in their defence.  The defendants' case in their defence is that the salting was done by Mr Rumens and/or Mr Hockley.  The defendants' case in the Minute is that the salting was done by Mr Rumens, Mr Hockley or other unidentified persons associated with Colby Drilling.  That is not the withdrawal of an admission.  It is the withdrawal of their existing affirmative case on that point and its replacement with a different affirmative case on that point.

Amendment of pleadings

  1. In Aon Risks Services Australia Ltd v Australian National University [2009] HCA 27; (2009) 239 CLR 175 Gummow, Hayne, Crennan, Kiefel and Bell JJ made the following statements concerning leave to amend a pleading:

    An application for leave to amend a pleading should not be approached on the basis that a party is entitled to raise an arguable claim, subject to payment of costs by way of compensation.  There is no such entitlement.  All matters relevant to the exercise of the power to permit amendment should be weighed.  The fact of substantial delay and wasted costs, the concerns of case management, will assume importance on an application for leave to amend…

    A party has the right to bring proceedings.  Parties have choices as to what claims are to be made and how they are to be framed.  But limits will be placed upon their ability to effect changes to their pleadings, particularly if litigation is advanced.  That is why, in seeking the just resolution of the dispute, reference is made to parties having a sufficient opportunity to identify the issues they seek to agitate [111] ‑ [112].

  2. The defendants submit that, broadly speaking, there are three purposes for making the proposed amendments contained in the Minute:

    (a)the proposed amendments ensure that the defendants' case is properly pleaded and that positive allegations are not made by way of particulars under cover of denials;

    (b)the proposed amendments seek to state the defendants' case with greater clarity, to ensure that issues are properly joined; and

    (c)in a number of instances, the proposed amendments plead material provisions of various documents already referred to in the pleading, to ensure that the court and the defendants are properly informed of matters upon which the defendants rely.

  3. The defendants have explained the reasons or circumstances for the amendments being sought to be made at this time.  New counsel have been briefed for the trial.  Counsel have undertaken an examination of the pleadings and determined that the defendants should apply to amend the defence for the purposes to which I have referred.

  4. There is a proper basis for the amendments.  At the hearing of this application counsel for the defendants submitted that the proposed amendments to [46A] ‑ [46H] of the defence were based upon the witness statements or documents which Norilya proposed to adduce in evidence.  Counsel subsequently provided a schedule which demonstrates this to be the case in respect of the new allegations not already contained in the existing defence.

  5. I must consider any prejudice likely to be suffered by Norilya if the amendments are allowed.  Subsequent to the hearing of the application, with leave of the court, Norilya filed an affidavit of Ms Jennifer Hill, the solicitor with the conduct of the matter on behalf of Norilya, in relation to the effect of the amendments.  Ms Hill swears that it has been her understanding since approximately 2008 that it was common cause that the tenements were salted but that the issue between the parties was the method of salting.  Ms Hill's belief was formed from things said by the defendants, or their counsel, in affidavits or in court hearings which Ms Hill sets out in detail in her affidavit.  Ms Hill says that on the basis of her understanding and assumption she instructed each of the relevant experts retained by Norilya (including Dr Herbert) to assume that it was not in dispute that the tenements were salted and that the issue between the parties was the method of salting.  Ms Hill has reviewed the expert evidence filed on behalf of Norilya.  Ms Hill believes that the expert report of Mr Watling and the reports of Dr Herbert prepared for the criminal trial express an opinion as to whether the tenements were salted.  Norilya wishes to serve a further report of Dr Herbert, which at the time Ms Hill swore her affidavit on 24 September 2010, was in the course of being prepared and Norilya intends for the purpose of that report to withdraw its instruction to Dr Herbert that it is not in dispute that the tenements were salted.  Ms Hill states that on the basis that Norilya is permitted to serve and rely on the further report of Dr Herbert she believes that Norilya will be able to prove that the tenements were salted and the plaintiff will be in a position to proceed with the trial commencing 11 October 2010.

  6. Norilya will have leave to rely upon the further report of Dr Herbert.  Norilya will be able to adduce evidence that the tenements were salted.  Allowing the amendments to the defence will not cause significant relevant prejudice to Norilya and will not cause the trial to be delayed.

  7. In these actions Norilya alleges that the Prospectors fraudulently salted the tenements.  The gravity of the issues in these actions must be borne in mind in determining whether to allow the proposed amendments.  In Briginshaw v Briginshaw [1938] HCA 34; (1938) 60 CLR 336, 362 ‑ 363 Dixon J said:

    It is often said that such an issue as fraud must be proved 'clearly', 'unequivocally', 'strictly' or 'with certainty' … This does not mean that some standard of persuasion is fixed intermediate between the satisfaction beyond reasonable doubt required upon a criminal inquest and the reasonable satisfaction which in a civil issue may, not must, be based on a preponderance of probability.  It means that the nature of the issue necessarily affects the process by which reasonable satisfaction is attained.  When, in a civil proceeding, a question arises whether a crime has been committed, the standard of persuasion is, according to the better opinion, the same as upon other civil issues … But, consistently with this opinion, weight is given to the presumption of innocence and exactness of proof is expected.

  8. The gravity of the issues in these actions is relevant to the application for an amendment of the defence and is a factor favouring leave to amend to plead the defendants' case in a way that reflects trial counsel's formulation of the defence and evidence to be adduced by Norilya and contemporaneous documents.

  9. In all the circumstances, the defendants should be permitted to amend [40] ‑ [46] of their defence and to add the new paragraphs [46A] ‑ [46H].

Conclusion

  1. The defendants will have leave to amend their defence in accordance with the proposed minute of further amended defence dated 3 September 2010.

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Cases Cited

5

Statutory Material Cited

1

Norilya Minerals Pty Ltd v Ireland [2010] WASC 260
Water Corporation v Cardno BSD Pty Ltd [2009] WASCA 212
Laws v Australian Broadcasting Tribunal [1990] HCA 31