Pave Wealth Services Pty Ltd v Danielle Jones as executrix of the estate of Michael Frederick Jones
[2019] WADC 21
•20 FEBRUARY 2019
JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
IN CIVIL
LOCATION: PERTH
CITATION: PAVE WEALTH SERVICES PTY LTD -v- DANIELLE JONES as executrix of the estate of MICHAEL FREDERICK JONES [2019] WADC 21
CORAM: LEMONIS DCJ
HEARD: 6 & 13 FEBRUARY 2019
DELIVERED : 20 FEBRUARY 2019
FILE NO/S: CIV 2379 of 2015
BETWEEN: PAVE WEALTH SERVICES PTY LTD
Plaintiff
AND
DANIELLE JONES as executrix of the estate of MICHAEL FREDERICK JONES
First Defendant
WOTIF PTY LTD
Second Defendant
Catchwords:
Practice and procedure - Application to amend statement of claim after action listed for trial - Application granted in part
Legislation:
Fair Trading Act 1987 (WA)
Rules of the District Court 2005 (WA)
Rules of the Supreme Court 1971 (WA)
Trade Practices Act 1971 (Cth)
Result:
Application granted in part
Representation:
Counsel:
| Plaintiff | : | Mr G J Douglas |
| First Defendant | : | Mr D Huggins |
| Second Defendant | : | Mr D Huggins |
Solicitors:
| Plaintiff | : | Douglas Cheveralls Lawyers |
| First Defendant | : | Huggins Legal |
| Second Defendant | : | Huggins Legal |
Case(s) referred to in decision(s):
Aon Risk Services Australia Ltd v Australia National University [2009] HCA 27; (2009) 239 CLR 175
Australian Securities and Investments Commission v ActiveSuper Pty Ltd (in Liq) [2015] FCA 342
Belgravia Nominees Pty Ltd v Lowe Pty Ltd [2017] WASCA 127
David Clarke Air Conditioning Pty Ltd ATF David Clarke Air Conditioning Trust v Quann [2016] WASC 73
DM Drainage & Constructions Pty Ltd as Trustee for DM Unit Trust t/as DM Civil v Karara Mining Ltd [No 3] [2018] WASC 398
Hightime Investments Pty Ltd v Lungan [No 2] [2010] WASC 296
Idoport Pty Ltd v National Australia Bank Ltd [2000] NSWSC 599
J & A Vaughan Super Pty Ltd (Trustee) v Becton Property Group Ltd [2014] FCA 581
McGrath v HNSW Pty Ltd [2014] FCA 165
Medical Benefits Fund of Australia Ltd v Cassidy [2003] FCAFC 289
Sino Iron Pty Ltd v Mineralogy Pty Ltd [2014] WASC 406
The Pilbara Infrastructure Pty Ltd v BGC Contracting Pty Ltd [2007] WASCA 257
Western Australia v Wardley Australia Ltd (1991) 30 FCR 245; [1991] FCA 314
LEMONIS DCJ:
The plaintiff applied by chamber summons dated 17 January 2019 for leave to amend the Amended Statement of Claim (ASOC) in terms of the minute of proposed re‑amended statement of claim dated 17 January 2019. The application is supported by an affidavit of the plaintiff's solicitor, Mr Douglas, sworn 16 January 2019.
On 19 November 2018, this matter was listed for trial commencing 5 March 2019. Accordingly, by reason of r 48A(2)(b) of the Rules of the District Court 2005, the plaintiff cannot amend any of its pleadings without leave of the court.
The application first came on for hearing before me on 6 February 2019. At the hearing, I was concerned that the terms of the proposed amendment did not enable a sensible assessment to be made of the prejudice to the defendants caused by the late amendment. I therefore directed the plaintiff to provide a further minute of its proposed amendment by Monday 11 February 2019, with the application to come back before me on 13 February 2019.
On 11 February 2019, the plaintiff filed an outline of submissions which incorporated a further set of the proposed amendments to the ASOC. They are set out in the Annexure to these reasons.
Overview of the proceedings
By the ASOC, the plaintiff claims damages pursuant to s 87 of the Trade Practices Act 1974 (Cth) and, or in the alternative, damages pursuant to s 10 of the Fair Trading Act 1987 (WA). The ASOC alleges the conduct complained of is constituted by representations made between September 2009 (par 7A of the ASOC) and 29 April 2010 (par 7 of the ASOC). The Fair Trading Act1987 applies because the acts or omissions complained of occurred before the day on which the Fair Trading Act 2010 pt 10 came into force, being 1 January 2011. The Trade Practices Act applies because the acts or omissions complained of occurred before the commencement of sch 7 of the Trade Practices Amendment (Australian Consumer Law) Act (No. 2) 2010, which is also 1 January 2011.[1]
[1] Section 3D of the Fair Trading Act 1987; s 6 of sch 7 of the Trade Practices Amendment (Australian Consumer Law) Act (No. 2) 2010.
The first defendant is a party to the proceedings in her capacity as the executrix of the estate of the late Michael Frederick Jones. It is Mr Jones' alleged conduct that founds the plaintiff's claim in these proceedings. The plaintiff alleges Mr Jones was at all material times the managing director of the second defendant.[2]
[2] Paragraph 5 of the ASOC.
The proposed amendments seek to introduce two separate matters. First, reliance on s 51A of the Trade Practices Act in respect of certain of the alleged representations. Second, to make a claim for accessorial liability against the first defendant in respect of the claim made against the second defendant pursuant to the Trade Practices Act.
The plaintiff also seeks to amend the prayer for relief in the ASOC to make a claim pursuant to s 82 of the Trade Practices Act, instead of the currently pleaded s 87. This amendment is not controversial and properly identifies the legislative basis for the plaintiff's claim pursuant to the Trade Practices Act.
Explanation for the delay
Mr Douglas' affidavit sets out the plaintiff's explanation for the delay in bringing the application. It is to the effect Mr Douglas was only instructed shortly prior to 19 November 2018 and upon review of the matter 'it became apparent to [him] that the previous solicitors had failed to plead accessorial liability under the Trade Practices Act and that this was an important alternative claim' (par 6 of Mr Douglas' affidavit). Mr Douglas also says that he received most of the documents from the plaintiff's previous solicitor in early January and as at the date of swearing his affidavit, had not received all of the discovery (also at par 6).
The defendants contend Mr Douglas has not provided a full explanation as he has not explained why the previous solicitors had not considered making the proposed amendments. However, experience often shows that upon new solicitors taking over matters, a different approach to the claims made can arise. The plaintiff has brought the application promptly upon deciding the amendments were necessary. Accordingly, to the extent I am prepared to grant leave to amend, I do not decline to do so on the basis of an inadequate explanation of the delay.
Chronology of pleadings
It is useful to set out a brief chronology of the filing of the writ and the pleadings:
1.On 29 June 2015 a writ of summons was filed with a general indorsement of claim;
2On 1 June 2016 a memorandum of appearance was filed;
3.On 8 July 2016 a statement of claim was filed;
4.On 18 August 2016 a defence was filed;
5.On 29 August 2016 a reply was filed;
6.On 15 December 2017 an amended defence was filed;
7.On 19 January 2018 an amended reply was file;
8.On 30 January 2018 the ASOC was filed; and
9.On 6 February 2018 an amended defence was filed.
The statement of claim filed 8 July 2016 alleged that Mr Jones acting personally and/or on behalf of the second defendant made the representations pleaded at par 7b of the statement of claim. The pleaded representations in par 7b remain the same in the ASOC filed 30 January 2018 and in the form of the minute of the proposed re‑amended statement of claim now put forward by the plaintiff.
Paragraph 11 of the ASOC sets out the material facts relied on in support of the allegation that the representations and each of them were misleading. Paragraph 11 remains the same in the ASOC filed 30 January 2018 and in the form of the minute of proposed re‑amended statement of claim.
The defendants' current solicitors commenced acting on 31 August 2017, after the defence was originally filed on 18 August 2016. By the amended defence filed 15 December 2017, the defendants raised for the first time that certain matters pleaded at pars 7 and 11 of the ASOC were contrary to O 20 r 2 of the Rules of the Supreme Court 1971 (RSC).
Grounds for opposition
The defendants oppose the amendments on three grounds:
1.the amendments are contrary to O 20 r 2 of the RSC;
2.the amendments seek to introduce claims that are statute barred;
3.in respect of the accessorial liability plea, the plaintiff has failed to plead sufficient particulars so as to allow the defendants to be aware of the case they have to meet.
Applicable legal principles
As Vaughan J explained in DM Drainage & Constructions Pty Ltd as Trustee for DM Unit Trust t/as DM Civil v Karara Mining Ltd,[3] the overriding principles concerning amendment of pleadings were considered by the High Court in Aon Risk Services Australia Ltd v Australian National University.[4]
[3] DM Drainage & Constructions Pty Ltd as Trustee for DM Unit Trust t/as DM Civil v Karara Mining Ltd [No 3] [2018] WASC 398 [18].
[4] Aon Risk Services Australia Ltd v Australia National University [2009] HCA 27; (2009) 239 CLR 175.
His Honour referred to the observations made by Beech J, as his Honour then was, summarising the principles in Aon in the context of the Rules of the Supreme Court 1971 (WA) (RSC) in Hightime Investments Pty Ltd v Lungan [No 2][5] as including:
[5] Hightime Investments Pty Ltd v Lungan [No 2] [2010] WASC 296 [52].
(1)The effect of an amendment on the court and other litigants is relevant.
(2)There is no right to amend to introduce an arguable case and it is wrong to say that only in extreme circumstances would a party be shut out from litigating an arguable case.
(3)Justice requires that the parties have a proper opportunity to plead their case, but limits may be placed on re-pleading when delay and cost are taken into account.
(4)A just resolution does not mean that a party will always be permitted to raise any arguable case at any point in a proceeding on payment of costs, even indemnity costs.
(5)The inevitable strains of litigation must be taken into account in weighing the adverse consequences of delay - this applies to natural persons and other litigants.
(6)The nature and importance of the amendment to the party seeking to amend must be taken into account.
(7)Attention must be given to the extent of the delay, the costs associated with it, the prejudice which might reasonably be assumed to follow from it and any prejudice that is shown.
(8)The point in the litigation relative to the trial may be an important consideration.
(9)Where a discretion is sought to be exercised in favour of a party, an explanation will be called for.
(10)The point can be reached where a party has had a sufficient opportunity to put its case.
Vaughan J also referred to two additional matters in the context of the RSC offered by Edelman J (as his Honour then was) in Sino Iron Pty Ltd v Mineralogy Pty Ltd.[6] The additional matters were:
(1)O 1 r 4A provides that a goal of the Supreme Court's practice and procedure is the elimination of delay; and
(2)O 1 r 4B provide for the principles of case flow management, including:
(a)the just determination of litigation as well as the following (which are, in any event, aspects of this par (a));
(b)the efficient disposition of the court's business, the efficient use of judicial resources, the timely disposal of that business and proportionality.
[6] Sino Iron Pty Ltd v Mineralogy Pty Ltd [2014] WASC 406 [31
In addition to these matters, the court should not grant leave to amend a pleading into a form which is defective and which ought be struck out. In that respect, the modern approach to case management does not deny the need for pleadings to define with clarity and precision the issues or questions which are in dispute between the parties and fall to be determined by the court.[7]
The Trade Practices Act claim and accessorial liability
[7] David Clarke Air Conditioning Pty Ltd ATF David Clarke Air Conditioning Trust v Quann [2016] WASC 73 [11].
As explained, the proposed amendments relate to the plaintiff's claim pursuant to the s 52 of the Trade Practices Act. Section 52 is in pt V of the Trade Practices Act. It provides: 'A corporation shall not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive.' Here, the relevant conduct is alleged to be constituted by the representations pleaded at par 7b of the ASOC.
To establish a contravention of s 52, it is unnecessary to prove that a party who made a representation knew or intended it to be misleading or deceptive (McGrath v HNSW Pty Limited).[8]
[8] McGrath v HNSW Pty Ltd [2014] FCA 165 [32].
Section 51A is an interpretative provision directed to representations with respect to future matters. For the purposes of this application it is sufficient to set out the terms of s 51A(1), which relevantly provide: '…where a corporation makes a representation with respect to any future matter (including the doing of, or refusing to do, any act) and the corporation does not have reasonable grounds for making the representation, the representation shall be taken to be misleading'.
Section 51A does not create a cause of action.
The relevant cause of action is pursuant to s 82(1). It relevantly provides that: 'a person who suffers loss or damage by conduct of another person that was done in contravention of a provision of [Part V] may recover the amount of the loss or damage by action against that other person or against any other person involved in the contravention.' (emphasis added).
Section 82 is in pt VI. Section 75B provides that a reference in pt VI to a person involved in a contravention of a provision of pt V shall be read as a reference to a person who falls within any of the four criteria identified in s 75B(1)(a), (b), (c) and (d).
The plaintiff by its proposed amendment relies upon s 75B(1)(c), to the effect that Mr Jones was knowingly concerned in or a party to the contraventions alleged against the second defendant, that is, it is a claim for accessorial liability.
The general principles relating to accessorial liability as provided for by s 75B are helpfully set out in Australian Securities and Investments Commission v Active Super Pty Ltd (in Liq).[9] By way of summary:
1.in order for a person to be knowingly concerned in a statutory contravention, the person must have been an intentional participant, with knowledge of the essential elements constituting the contravention;
2.actual knowledge of the essential elements constituting the contravention is required; imputed or constructive knowledge is insufficient;
3.proof of actual knowledge may be derived from direct evidence, but also can be established by a matter of inference from all the circumstances found to be proved;
4.the requisite actual knowledge must be present at the time of the contravention. A later acquisition of knowledge of the essential matters is not sufficient.
[9] Australian Securities and Investments Commission v ActiveSuper Pty Ltd (in Liq) [2015] FCA 342 [397] ‑ [411].
Additionally, the alleged accessory must have done some positive act amounting to participation (see J & A Vaughan Super Pty Ltd (Trustee) v Becton Property Group Ltd).[10] For completeness, I should mention that there appears to be disagreement in the Federal Court as to whether it is necessary to establish that the alleged accessory knew the representations were false, or only that the alleged accessory knew of matters that enabled the misrepresentations to be characterised in that way (see Medical Benefits Fund of Australia Ltd v Cassidy.)[11] That disagreement has no bearing on this application.
[10] J & A Vaughan Super Pty Ltd (Trustee) v Becton Property Group Ltd [2014] FCA 581 [9], [22] and the authorities referred to at those paragraphs.
[11] Medical Benefits Fund of Australia Ltd v Cassidy [2003] FCAFC 289 [15], [16].
The important distinction between a claim that a person has engaged in misleading and deceptive conduct, and a claim a person is involved in the misleading and deceptive conduct of another, is that in order for a person to be involved the person must have been an intentional participant, with knowledge of the essential elements constituting the contravention.
The critical issue which arises on this application is whether the proposed amendments adequately plead a basis for the allegation that Mr Jones knew that the alleged representations were false.
The plaintiff's case on the existing pleadings
The plaintiff's case can be summarised as follows. The second defendant as trustee of the Prosperity Unit Trust operated a financial services business (pars 3 ‑ 4 of the ASOC). On 12 January 2010, the plaintiff and the second defendant entered into an agreement (Agreement) pursuant to which the plaintiff purchased a client base of the second defendant's business (par 8 of the ASOC). On or about 29 April 2010, pursuant to the Agreement, the plaintiff paid to the second defendant the sum of $525,000 (par 10 of the ASOC). In the period between 13 November 2009 and April 2010, Mr Jones acting personally and/or on behalf of the second defendant made representations in the terms pleaded at par 7b of the ASOC. Further, the same representations were made in the period between September 2009 and 13 November 2009 (par 7A of the ASOC). In reliance upon the representations, the plaintiff entered into the Agreement on 12 January 2010 (par 8 of the ASOC).
The alleged representations at par 7b of the ASOC can broadly be grouped into the following categories, some of which overlap:
1.representations concerning the revenue or earnings from the client base – A, E, F, G, H;
2.representations concerning the likely retention of clients – B, C;
3.representations concerning the characteristics of the client base – D, E, G;
4.representations concerning the second defendant's business – A, I;
5.representations as to the value of the client base being bought –J; and
6.representations as to what would occur upon the handover of the client base – I, K.
Paragraph 11 of the ASOC sets out the basis upon which it is alleged the representations or each of them were misleading. This is pleaded by reference to varying different dates – the settlement date (pars 11a and 11b of the ASOC), the date of the agreement (par 11b and 11g of the ASOC), the date when the representations were made (pars 11c – f, h of the ASOC), at or after settlement (pars 11i and 11j of the ASOC) or an unspecified date (par 11k of the ASOC).
There are two principal difficulties with the ASOC. First, the dates on which the representations were made, and are alleged to be misleading, vary over an approximate eight month period from September 2009 to April 2010. Second, the plaintiff pleads that acting in reliance on the representations it entered into the Agreement on 12 January 2010, yet the plaintiff pleads the representations were made in the period through to April 2010.
During the hearing held on 13 February 2019, counsel for the plaintiff said a pre-contractual representations case is the only case that is really going to work.[12] The plaintiff needs to clarify its position in this respect urgently.
[12] See ts 13 February 2019, page 53.
Disposition
51A Amendment
By the proposed new pars 11A and 11B, the plaintiff seeks to invoke the operation of s 51A of the Trade Practices Act. At the hearing held on 6 February 2019, the defendant's counsel fairly conceded he expected an aspect of the plaintiff's case was that certain of the representations were with respect to future matters and the defendants did not suffer any prejudice from the introduction of the s 51A plea.[13]
[13] See ts 6 February 2019, page 16.
The proposed amendments relate to the representations at pars 7b F, G, I and K of the ASOC. Having reviewed the terms of those paragraphs, in my view they arguably plead representations in respect of future matters. Given there is no substantive prejudice by reason of the amendments made by pars 11A and 11B, I will allow those amendments, subject to the remarks I make below concerning O 20 r 2 of the RSC and the availability of limitation defences. To ensure the defendants have sufficient detail regarding the s 51A plea, I will also order the plaintiff to provide particulars of the allegation made at par 11B that the second defendant had no reasonable grounds for making the representations.
Plea of involvement in s 52 claims
I appreciate O 20 r 13(1)(b) of the RSC does not require a party to include, in a pleading, particulars of an allegation of knowledge. However, as explained above, I directed the plaintiff to provide a further more detailed minute of its amendments to enable a sensible assessment to be made of the prejudice to the defendants by reason of their lateness.
Further, pleadings relating to s 75B are sufficiently analogous to a plea of fraud so as to require that quite specific particulars be provided by the plaintiff (Idoport Pty Ltd v National Australia Bank Ltd).[14] It is important there is clarity for allegations of such a nature and the extent of ambiguity in the proposed amendment is a relevant consideration in deciding whether to grant leave.[15]
[14] Idoport Pty Ltd v National Australia Bank Ltd [2000] NSWSC 599 [43].
[15] Idoport [43], [53].
Paragraph 11C sets out the accessorial liability claim now sought to be brought against the first defendant. I assess the proposed plea having regard to the particulars provided as part of par 11C.
Paragraph 11C is particularised as follows:
[Mr Jones] was:
(i)at all material times the Managing Director of the Second Defendant; and
(ii)aware that the Representations were false.
Particulars of Mr Jones' knowledge are also provided. They allege that Mr Jones' knowledge that the representations were false is:
inferred from [Mr Jones'] specific knowledge of the identity and financial circumstances of each of the clients comprising the Client Base.
This knowledge is then alleged to arise from the circumstances and documents referred to at a – e of the particulars of knowledge.
The circumstances and documents pleaded in support of the plea are directed to Mr Jones' knowledge of the clients themselves at an overall level. In effect, the circumstances and documents are directed to Mr Jones professing to others to have knowledge of the client base. For example, c alleges Mr Jones stated to the plaintiff's bank that 'The base I am selling …has been with us for over 20 years and has a 99% retention rate' and that Mr Jones monitored this every month.
The critical aspects of the plaintiff's case as pleaded at par 7 and par 11 of the ASOC are directed to the characteristics of the clients, their retention rate and the revenue earned from them. The allegation found in par 11C that Mr Jones knew of the identity and financial circumstances of the clients is not directed to client retention or revenue. While there is a reference to revenue projection at particular b and to retention at particular c, the amendment does not allege Mr Jones knew of matters which revealed that the representations as to the retention rate and revenue were misleading. The amendment also does not allege that Mr Jones knew of matters which revealed that the represented characteristics of the clients were misleading.
Further, the matters alleged at par 11C particulars a to e are broadly consistent with the representations. In this respect, at the hearing on 13 February 2019, counsel for the plaintiff suggested that the plaintiff's case was that the communications to the plaintiff's bank particularised at b, c and d of par 11C were also misleading.[16] Accordingly, in the particularised communications, Mr Jones is not making statements to other parties which are materially different to that which he conveyed to the plaintiff.
[16] See ts 13 February 2019, page 46.
The proposed amendments do not appear to have any connection to the alleged handover representations at 7b I and K. In addition, in respect of those representations which are now alleged to be in respect of future matters - pars 7b F, G, I and K of the ASOC – there is no plea Mr Jones knew the second defendant did not have reasonable grounds for making the representations.[17]
[17] See McGrath [32].
The proposed amendments also have to be considered against the extent and apparent ambiguity of the claims made in the existing ASOC.
In this overall context, in my view, the proposed amendments lack sufficient precision and detail to give to the first defendant fair and proper notice of the case now sought to be brought.
I appreciate this is an important amendment from the plaintiff's perspective. I have read the proposed amendments several times in an attempt to discern sufficient detail of the case to be brought. However, having done so, I remain of the view that they lack sufficient precision and detail. In the circumstances of this case, I consider it is incumbent on the plaintiff to give to the defendants a precise and clear basis for the accessorial liability claim it now wishes to run. The need to do so is reinforced (not reduced) given that a trial is currently listed to commence on 5 March 2019.
I therefore consider the proposed amendments are defective and leave should not be given to allow them. Further, in the exercise of my discretion, I would not allow an amendment in such terms at this late stage because of the prejudice to the first defendant. It must be kept in mind that Mr Jones passed away prior to the commencement of this action and therefore the defendant's solicitors cannot obtain instructions from him as to his state of knowledge. Additionally, until now, the issue of Mr Jones' knowledge has not been raised in the proceedings.[18]
[18] This is to be compared with the position in DM Drainage, where a question of the defendant's knowledge, albeit in a different context, was wrapped up in an existing plea – see [27].
However, I am not saying that an accessorial liability claim is unarguable or cannot be brought. I will give to the plaintiff a further opportunity to formulate an accessorial liability claim by way of a further application to amend.
Additional matters
Given my ruling, I only propose to address the defendants' objections that the amendments are:
1.contrary to O 20 r 2 of the RSC; and
2.statute barred;
in so far as those objections apply to the s 51A plea introduced by the new pars 11A and 11B.
Order 20 r 2
Order 20 r 2 sets out what may be included in a statement of claim by reference to the writ. Relevantly, the rule provides:
2.Statement of claim, content of
…
(2)A statement of claim must not contain any allegation or claim in respect of a cause of action unless that cause of action is mentioned in the writ or arises from facts which are the same as, or include or form part of, facts giving rise to a cause of action so mentioned.
(3)Subject to subrule (2) a plaintiff may in his statement of claim alter, modify or extend any claim made by him in the indorsement of the writ without amending the indorsement.
…
The defendants allege at par 13 of their further amended defence that the allegations made at pars 7b A, C, D, E, F, G, I and J and 11 c, d, e, f, j and k of the ASOC are contrary to O 20 r 2. The defendant's counsel has indicated he intends to seek a ruling at trial that the plaintiff is therefore precluded from running a case based on these allegations.
Order 2 r 1(1) provides that a failure to comply with the requirements of the RSC does not nullify any step taken in the proceedings or any document. Order 2 r 1(2) provides that the court may, on the ground there has been a failure as mentioned in O 2 r 1 (1), set aside a document. Order 2 r 1(2) also provides the court with remedial powers consequent upon an irregularity. Order 2 r 2(1) requires an application to set aside any document for irregularity to be brought within a reasonable time and before the party applying has taken any fresh step after becoming aware of the irregularity. The defendants have not made any application to set aside the ASOC for irregularity.
The effect of O 2 was not argued before me. There appears to be differing views as to whether O 2 operates so as to provide that an irregular step is valid unless and until set aside (see The Pilbara Infrastructure Pty Ltd v BGC Contracting Pty Ltd ).[19]
[19] The Pilbara Infrastructure Pty Ltd v BGC Contracting Pty Ltd [2007] WASCA 257 (7 November 2007) [49] ‑ [52].
The proposed s 51A plea is directed to the representations already pleaded in the ASOC and clarifies the plaintiff's claim with respect to those representations concerning future matters. Accordingly, whether or not the s 51A plea contravenes O 20 r 2 will need to be considered in conjunction with whether the ASOC is irregular and should be set aside.
Further, an analysis of the application of O 20 r 2 to this case is bound up with an analysis of the available limitation defences. Both require an assessment of the terms of the indorsement contained on the Writ.[20] In addition, the existence of limitation defences will likely affect whether, and on what terms, a court will exercise its remedial powers under O 2 r 1(2). The defendants have not yet pleaded any limitation defences, although at the hearing on 13 February 2019, counsel for the defendants indicated they would now do so.[21]
[20] Belgravia Nominees Pty Ltd v Lowe Pty Ltd[2017] WASCA 127 [10], [11], [46].
[21] See ts 13 February 2019, page 57, 58.
In these circumstances, I will not refuse leave on the basis of the O 20 r 2 objection. As part of my orders, I will preserve the defendants' ability to apply to set aside the ASOC (or part of it) as a consequence of the introduction of pars 11A and 11B.
The above remarks are subject to one important qualification. The RSC do not allow the Court to prevent a defendant from invoking and relying on a limitation defence (see Belgravia Nominees Pty Ltd v Lowe Pty Ltd).[22]
[22] Belgravia [34] – [36], [46].
Claims statute barred
Section 82(2) of the Trade Practices Act provides that an action under subsection (1) may be commenced at any time within six years after the day on which the cause of action that relates to the conduct accrued.
A failure to bring a claim within the prescribed period does not extinguish the cause of action. It is for the defendants to assert non‑compliance with s 82. The need for compliance with s 82(2) may be waived by the defendants and an estoppel may prevent the defendants denying such a waiver (see Western Australia v Wardley Australia Ltd; Wardley Australia Securities Ltd and Lawrence Robert Connell).[23]
[23] Western Australia v Wardley Australia Ltd (1991) 30 FCR 245; [1991] FCA 314 at [41], [42].
I am conscious of the caution expressed by the Court of Appeal in Belgravia[24] that generally speaking limitation issues are best decided at trial with the consequence that an amendment will only be disallowed on the basis of such a defence in the clearest case.
[24] Belgravia [47].
The amendments proposed by paragraphs 11A and 11B so as to rely on s 51A of the Trade Practices Act are in respect of representations which are in the existing ASOC. As I explain above, s 51A is in effect an interpretative provision which does not of itself create a cause of action. The representations to which pars 11A and 11B refer have been pleaded since 8 July 2016 and there is no corresponding limitation defence. I do not consider it appropriate to consider in isolation whether the proposed plea to introduce s 51A is itself statute barred.
Accordingly, I will not refuse leave on the basis of the limitation objection. As part of my orders, I will preserve the defendants' ability to plead a limitation defence to pars 11A and 11B.
Proposed orders
I propose to make the following orders:
1.The plaintiff has leave to amend the amended statement of claim to:
1.1insert new paragraphs 11A and 11B as set out in the plaintiff's submissions filed 11 February 2019; and
1.2substitute '82' for '87' in 'a' of the prayer for relief.
2.By 21 February 2019, the plaintiff file and serve a re-amended statement of claim in accordance with the leave granted.
3.The grant of leave pursuant to order 1 is without prejudice to the defendants' ability to plead a limitation defence in respect of the amendments introduced by paragraphs 11A and 11B, and to bring any application pursuant to Order 2 r 2 as a consequence of those amendments.
4.By 25 February 2019, the plaintiff file and serve:
4.1any further application to amend to allege an accessorial liability claim;
4.2particulars of the allegation at paragraph 11B that the second defendant did not have reasonable grounds for making the representations pleaded in 7b F, 7b G, 7b I and 7b K.
5.By 27 February 2019, the Defendants file and serve a defence to the re-amended statement of claim.
6.The application for leave to amend dated 17 January 2019 otherwise be dismissed.
I will hear the parties on the dates provided for in the proposed orders and also on costs.
I also urge the parties to promptly consider whether they need to make any further amendments to their pleadings in light of the matters raised at the hearing of the application.
ANNEXURE
I certify that the preceding paragraph(s) comprise the reasons for decision of the District Court of Western Australia.
ED
Associate to Judge Lemonis
20 FEBRUARY 2019
12
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