PPG Development Pty Ltd v Capitanio - [2016] SASC 169

SUPREME COURT OF SOUTH AUSTRALIA
(Magistrates Appeals: Civil)
PPG DEVELOPMENT PTY LTD v CAPITANIO
[2016] SASC 169
Judgment of The Honourable Justice Doyle
4 November 2016
PROCEDURE - SUPREME COURT PROCEDURE - SOUTH AUSTRALIA - PROCEDURE UNDER RULES OF COURT - AMENDMENT
A Magistrate granted the respondent permission to amend her defence. The application was made during the course of trial, and the grant of permission resulted in the trial being adjourned. The appellant appealed on various grounds contending that the Magistrate erred in the exercise of his discretion, including that the Magistrate applied an incorrect principle of law and failed to have regard to relevant prejudice. The appellant also contended that the decision was plainly unjust or unreasonable.
Held per Doyle J, allowing the appeal:
1. The Magistrate erred in the exercise of his discretion.
2. The respondent’s application to amend her defence is dismissed.
Magistrates Court (Civil) Rules 2013 (SA) r 80(1), r 3(1), referred to.
Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175; Cement Australia Pty Ltd v Australian Competition and Consumer Commission (2010) 187 FCR 261, discussed.
Channel Seven Adelaide Pty Ltd v Manock [2010] SASCFC 59; Duke Group Ltd v Arthur Young (1991) 55 SASR 24; Queensland v JL Holdings Pty Ltd (1997) 189 CLR 146; Tamaya Resources Ltd v Deloitte Touche Tohmatsu (2016) 332 ALR 199; House v The King (1936) 55 CLR 499; Poniatowska v Channel Seven Sydney Pty Ltd [2014] SASC 95, considered.

PPG DEVELOPMENT PTY LTD v CAPITANIO
[2016] SASC 169
Magistrates Appeal
DOYLE J:

On 15 September 2016, a Magistrate granted the respondent (the first defendant, Ms Capitanio) permission to amend her defence. The application was made during the course of the trial, and the grant of permission resulted in the trial being adjourned. The appellant (the plaintiff, PPG Development Pty Ltd) appeals against this decision.
Background
The plaintiff is in the business of property development. It sought to undertake a development in St Morris, involving the subdivision of properties at 23 Breaker Street (owned by the second and third defendants) and 25 Breaker Street (owned by the first defendant), and the creation of a third allotment (to be located at 25A Third Avenue[1]) across the rear of these properties. The development contemplated the sale of 23 Breaker Street (as reduced by the subdivision) and 25A Third Avenue, with the defendant continuing to own and reside at 25 Breaker Street.
[1] The property at 25 Breaker Street was a corner allotment, thus resulting in the third allotment at the rear of 23 and 25 Breaker Streets having a frontage on Third Avenue.
On 13 July 2014, the plaintiff entered into a deed with the first defendant to purchase a portion of 25 Breaker Street, being the portion of that property that was to become part of the third allotment, at 25A Third Avenue. The purchase price was $170,000. On 16 July 2014, the plaintiff entered into a deed with the second and third defendant to purchase the entirety of 23 Breaker Street for $530,000.
The deeds contemplated a process, to be managed by the plaintiff, leading to the obtaining of the relevant development approval by 1 March 2015, and settlement and completion by 1 April 2015. The defendants took on various obligations to facilitate and assist in completion of the subdivision and sale.
In her claim, the plaintiff alleges that the defendants breached their obligations in various ways. The claim against the second and third defendants was resolved prior to the commencement of the trial, and is not relevant for present purposes.
So far as the claim against the first defendant is concerned, the plaintiff alleges that the first defendant breached her obligations under the 13 July 2014 deed, or repudiated that deed, by refusing to provide necessary documentation and otherwise cooperate with the plaintiff to effect the sale of 23 Breaker Street and the third allotment, and by failing to demolish a garage located at the rear of her property and adjoining the third allotment.
The plaintiff claims that by reason of the first defendant’s breaches or repudiation of the deed, it is entitled to damages in the amount of $64,684.23 for the loss sustained by reason of its inability to conclude the sale of the development by the termination date contemplated in the deed.
The first defendant denies any breach or repudiation of the deed, and hence denies the plaintiff’s entitlement to any damages.
The trial
The trial of the plaintiff’s claim was initially listed for hearing on 20 June 2016. It was then rescheduled to occur over two days, 9 and 10 August 2016.
The trial commenced on 9 August 2016. The plaintiff was represented by counsel, Mr Roberts SC. The first defendant was represented by her solicitor, Mr Whatson.
The plaintiff called two witnesses, Mr Brooker and Mr Fabbro, both of whom were involved on the plaintiff’s behalf in progressing the development. Mr Brooker had relevant building and development expertise, and Mr Fabbro was a solicitor (and is the plaintiff’s solicitor in these proceedings). The plaintiff closed its case on 9 August 2016.
The first defendant then gave evidence in her own case. Her evidence continued through to the lunch break on 10 August 2016. The first defendant intended to call the second defendant, Mr Aslanidis, who had been present at Court on 9 August 2016, and on the morning of 10 August 2016. However, upon the resumption after the lunch break, Mr Whatson reported that Mr Aslanidis was no longer available because his understanding had been that the case was due to have finished in the morning. The Magistrate informed Mr Whatson that he should have had his witness available, and that he would have to find him straight away or otherwise close his case.
After a short adjournment to enable Mr Whatson to attempt to locate his client’s witness, the matter resumed with the witness not able to be located. While Mr Whatson indicated a preparedness to close his case after tendering some documents, the Magistrate said that he had reflected upon the matter, explaining:
… it seems to me that if I refuse the opportunity for you to call your witness there may be an appeal point there at a later time and so I have decided, without even hearing from you Mr Roberts, that reluctantly I will give the adjournment …
The Magistrate adjourned the trial to 15 September 2016, and ordered that the first defendant pay the plaintiff’s costs thrown away.
The application to amend
On the morning of 15 September 2016, Mr Manetta appeared for the first defendant. He commenced by announcing an application to amend the defence to raise a new defence. The application had not been foreshadowed to the plaintiff or the Court, and was made orally. The proposed amendment was described as a defence that the deed was void pursuant to s 70 of the Stamp Duties Act 1923 (SA), it being an instrument executed in order to avoid or evade the payment of the duty payable on a conveyance or sale.
Mr Roberts, for the plaintiff, objected to the Magistrate entertaining the application given that it was being made orally, without any supporting affidavit and without a document setting out the terms of the proposed amendment. However, the Magistrate permitted Mr Manetta to outline the nature of the amendment and then proceeded to hear submissions in relation to the application to amend.
In support of his client’s application, Mr Manetta advanced submissions to the following effect:
· The amendment raised a new issue of law, but it did no more than put a new legal complexion on the facts already in evidence.
· There was no allegation of anything fraudulent or dishonest by the plaintiff. The allegation was simply that the deed was prepared or structured for the purpose of avoiding an obligation to pay the stamp duty payable under s 68 of the Stamp Duties Act.
· The existence of the defence was not apparent until the evidence of Mr Fabbro (or an email of 8 August 2016, the day before his evidence), when it became clear that the plaintiff’s position was that stamp duty was not payable by the plaintiff. Prior to this, the first defendant had assumed that stamp duty (of approximately $32,000) would be payable, and indeed the obligation to pay stamp duty was advanced by the first defendant as a matter to be taken into account in the assessment of any loss suffered by the plaintiff.
In response, Mr Roberts relied upon the decision of the High Court in Aon Risk Services Australia Ltd v Australian National University[2] (as applied by the Full Court of the Supreme Court in Channel Seven Adelaide Pty Ltd v Manock[3]), and the emphasis in those decisions upon the disruption to a trial that an amendment would occasion, and the consequential imposition upon his client and waste of public resources. He contended that in light of Aon Risk Services an application to amend needed to be supported by an affidavit explaining the circumstances of the amendment so that the Court could be satisfied that it was not the result of some earlier deliberate decision to plead the case in a certain way, or some other tactical decision. Mr Roberts emphasised that Mr Whatson had been agitating the need to deduct the stamp duty payable in any loss calculation from at least March 2016, and that this made it critical that the failure to plead the proposed defence be explained to the Court.
[2] Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175.
[3] Channel Seven Adelaide Pty Ltd v Manock [2010] SASCFC 59.
Mr Roberts contended that the proposed new defence involved more than a mere question of law. He rejected the suggestion that the first defendant had already put in issue the stamp duty that was payable on the issue of damages, on the grounds it had not been pleaded by the first defendant. But in any event, Mr Roberts explained that the proposed amendment went beyond a mere allegation that stamp duty was payable by the first defendant; it required consideration of the purpose of the parties to the deed, and involved a serious allegation to the effect that his client was deliberately avoiding or evading stamp duty. It would thus require that he recall his client’s two witnesses, and that the first defendant present herself for additional cross-examination by Mr Roberts, and hence involve effectively restarting a trial that had been largely completed. Mr Roberts added that if the first defendant were permitted to amend, he would not be in a position to answer the new defence that day, and so the trial would need to be adjourned with the consequential imposition on his client, wastage of public resources, and impact upon the administration of justice.
Finally, Mr Roberts also pointed out that his client had already suffered one adjournment of the trial, and that despite the approximately six weeks that had passed since the last adjournment, the application had not been made until the morning of the resumed trial. He contended that against this background, permission to amend should not be granted, and certainly not without an explanation on oath justifying the late timing of the application.
In reply, Mr Manetta contended that Aon Risk Services did not require an explanation by affidavit in every case. He then proceeded to provide the following explanation from the bar table (over the objection of Mr Roberts):
The explanation is clear from objective and uncontroversial facts in this case that we were only told, for the first time, on the eve of the trial on 8 August that they said that it was their position stamp duty was not payable. We only heard that in evidence in the cross-examination of Mr Fabbro and we could not obtain statements from the defendants who were parties to the action until the action had compromised which didn’t occur until the day of the trial. It should be self evident that my client has not been represented by counsel to date, whilst the plaintiff has had the benefit of representation of senior counsel and that I have been engaged only recently after the adjournment of the trial. It should be self evident that’s why nothing of this issue had been raised during the adjournment. I have to get up to speed, I was brought in late and had to get up to speed. I must say I did practice tax law in another life and when I saw a deed relating to the transfer of land with no stamp on it – unstamped, alarms bells rang and it was the benefit of counsel’s advice that raised the possibility of the operation of s 68 …
The Magistrate’s reasons
After hearing argument, the Magistrate adjourned for about 45 minutes, before announcing his decision to grant the first defendant permission to amend. The Magistrate gave the following reasons for his decision:
I have considered the defendant’s application to amend its defence. I bear in mind the application was made on the third day of the trial and then on the first morning of the resumption after a six week adjournment.
In my deliberations I have considered the judgment of Bleby J in Channel Seven Adelaide Pty Ltd v Manock[4] and in particular his comments on the High Court’s decision in Aon Risk Services Australia Ltd v Australian National University[5] and the comments of Perry J in Duke Group Ltd (in Liq) v Arthur Young[6] and the principles expressed by him in the context of an application to amend pleadings during the course of a trial.[7] In particular his comments that:
…
1.   An amendment should be allowed at any stage to enable the real matters in controversy to be addressed, provided that the amendment can be made without injustice to the party.
2.   An amendment should be allowed during the course of a trial if it could have been pleaded when the defence was first filed provided that it does not give rise to prejudice to the other party which cannot be dealt with by an order for costs or an adjournment.
…
Bearing in mind the comments made in those judgments my decision is to allow the application for an amendment. But if there is any prejudice to the plaintiff then it is my order that the defendant should pay the plaintiff’s costs incurred as a result of the amendment.
[4] [2010] SASCFC 59 at [46].
[5] (2009) 239 CLR 175.
[6] (1991) 55 SASR 24 at 26.
[7]    As referred to by Parker J in Poniatowska v Channel Seven Sydney Pty Ltd [2014] SASC 95.
Following delivery of these reasons, and as foreshadowed, Mr Roberts sought an adjournment of the trial because he was not in a position to deal with the new defence on that day.
On the basis of an estimate that the trial would now take two days to complete, the Magistrate adjourned the trial until 29 November 2016 (an adjournment of approximately 10 weeks), with two days set aside.
The appeal
In the plaintiff’s notice of appeal it relies upon grounds of appeal which may be summarised as alleging that the Magistrate erred in:
1.   Failing to properly apply the principles enunciated in Aon Risk Services, and in particular in applying a test based upon the earlier inconsistent decision in Duke Group Ltd v Arthur Young.[8]
2.   Failing to consider the nature of the prejudice to be suffered by the plaintiff, and in particular prejudice that could not be dealt with by an order for costs, including as a result of the need for an adjournment of the proceedings.
3.   Granting permission to amend in circumstances where the terms of the amendment had not been articulated, the application was made orally and without forewarning, and no explanation was proffered for the delay.
4.   Granting permission to amend in circumstances where the proposed amendment sought to introduce a new and substantial issue that would require that the plaintiff recall its witnesses and that the first defendant be recalled for further cross-examination; the application was brought during the trial and would result in an adjournment of the trial if granted; the trial had earlier been adjourned on the application of the first defendant by reason of her inability to call a witness; there was no explanation for the delay; and there was a question whether costs would overcome the prejudicial effects on the plaintiff of the amendments and consequential adjournment.
[8]    Duke Group Ltd v Arthur Young (1991) 55 SASR 24 at 26.
In support of the appeal, the plaintiff relied upon an affidavit from Mr Fabbro. In that affidavit, Mr Fabbro summarised various matters appearing from the court record. He annexed copies of the 10 March 2016 and 7 August 2016 communications that had been referred in argument before the Magistrate, in which Mr Whatson had contended on behalf of the first defendant that stamp duty would be payable by the plaintiff and needed to be included in any calculation of the plaintiff’s loss.
Mr Fabbro also deposed that on the morning of 15 September 2016, the day set for resumption of the adjourned trial, he noticed in the Cause List that the matter was listed for both “trial” and “for hearing”. Wishing to seek clarification of the reason for the matter being listed in this way, Mr Fabbro telephoned Mr Whatson. Mr Fabbro said that he was informed by Mr Whatson that there was no application from his client, and that Mr Whatson otherwise gave no indication that there was to be an oral application for permission to amend later that same morning.
The first defendant relied upon an affidavit from Mr Whatson. In that affidavit, in addition to identifying various matters which are apparent from the court record, he acknowledged that in his conversation with Mr Fabbro on the morning of 15 September 2016 he was asked whether his client had filed any application and that he said that she had not done so. He added:
Whilst it is true to say that I did not foreshadow the oral application the subject of this Appeal, that is because Counsel had been briefed only a day or so prior to the resumption of trial. In the circumstances there was insufficient time to obtain instructions and draw and file the application.
The first defendant also relied upon the amended defence she had filed following the Magistrate’s order granting her permission to amend. That document included the following articulation of the new defence:
8A.In further answer to the whole of the claim, the defendant says that both the Deed and the Deed of Agreement, in similar terms dated 16 July 2014 between the plaintiff and the second and third defendants, have been executed by the plaintiff in order to avoid or evade the payment of the stamp duty payable upon conveyances of sale within the meaning of s. 70 of the Stamp Duties Act 1923 and that each deed is accordingly void pursuant to that section.
Particulars
a.   The said deeds respectively provide for two consecutive contracts of purchase of each of the two properties from the defendants to the plaintiff and from the plaintiff to third party purchasers without the plaintiff, in either case, taking a transfer of the legal title but rather with legal title passing directly from the defendants in each case to the third party at the direction of the plaintiff.
b. Under s 68. of the Stamp Duties Act 1923, the consequence of such a provision is that the ultimate Transfer is chargeable with two sets of ad valorem duty for which the plaintiff is obliged to contribute commensurately with the initial purchase of the properties by the plaintiff.
c.   By email, dated 8 August 2016 from the plaintiff’s solicitor to the first defendant’s solicitor, the plaintiff by its solicitors (the principal of whom, Michael Fabbro, is the director of the plaintiff) explained that the deed was designed to allow a direct transfer from the defendants to the third party purchasers so as to avoid the plaintiff having to pay any stamp duty at all.
d.   In a conversation on 31 March 2015 between Michael Fabbro and the third defendant, the plaintiff by Mr Fabbro refused to agree to paying a deposit and drawing up a contract of sale as between the parties – which the third defendant stipulated as a condition of any extension of the deed – on the ground that, if the plaintiff did so, there would have to be two conveyances of the property and two sets of stamp duty.
e.   The deeds are unstamped and have not been submitted to the Commissioner of Stamp Duties for assessment and the plaintiff never intended so to submit them.
Principles governing applications to amend

The principles governing applications to amend were considered in some detail by the High Court in Aon Risk Services.[9] In that case, at the commencement of a four week trial of an action brought in the Supreme Court of the Australian Capital Territory by Australian University (ANU) against its insurers and its insurance broker, Aon Risk Services Australia Ltd (Aon), ANU settled with the insurers. ANU then applied for an adjournment of the trial to make substantial amendments to its statement of claim against Aon. An adjournment was granted, and the application to amend was heard two weeks later. After reserving for 10 months, the primary judge granted ANU leave to amend. On appeal, a majority of the Court of Appeal dismissed the appeal.
[9] Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175.
The High Court unanimously allowed the appeal. In so holding, the Court was heavily critical of an approach to amendment applications that assumed something tantamount to a right to make amendments as long as they are arguable and subject to payment of any costs thrown away. The Court emphasised the need, in doing justice between the parties, to have regard to considerations such as the stage of the proceedings at which the amendment is sought to be made, the impact of the proposed amendment upon the progress of the litigation (and in particular the trial), and the additional strain imposed upon the opposing party (and its witnesses) by reason of any disruption or delay in the progress of the proceedings. The Court also emphasised the need to take into account the broader impact of any disruption in the progress of the proceedings upon other users of the Court system, judicial and court resources, and public confidence in the just and efficient resolution of legal proceedings.
French CJ explained:[10]
Save for the dissenting judgment of Lander J in the Court of Appeal, the history of these proceedings reveals an unduly permissive approach at both trial and appellate level to an application which was made late in the day, was inadequately explained, necessitated the vacation or adjournment of the dates set down for trial, and raised new claims not previously agitated apparently because of a deliberate tactical decision not to do so. In such circumstances, the party making the application bears a heavy burden to show why, under a proper reading of the applicable Rules of Court, leave should be granted.
In the proper exercise of the primary judge’s discretion, the applications for adjournment and amendment were not to be considered solely by reference to whether any prejudice to Aon could be compensated by costs. Both the primary judge and the Court of Appeal should have taken into account that, whatever costs are ordered, there is an irreparable element of unfair prejudice in unnecessarily delaying proceedings. Moreover, the time of the court is a publicly funded resource. Inefficiencies in the use of that resource, arising from the vacation or adjournment of trials, are to be taken into account. So too is the need to maintain public confidence in the judicial system. Given its nature, the circumstances in which it was sought, and the lack of a satisfactory explanation for seeking it, the amendment to ANU’s statement of claim should not have been allowed. The discretion of the primary judge miscarried.
It appears that a factor in the decision of the primary judge and of the Court of Appeal was the decision of this Court in JL Holdings. That case arose out of an entirely different factual setting. However, to the extent that statements about the exercise of the discretion to amend pleadings in that case suggest that case management considerations and questions of proper use of court resources are to be discounted or given little weight, it should not be regarded as authoritative. For the reasons set out more fully below, I would allow the appeal. I agree with the orders proposed in the joint judgment.
[10] Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175 at [4]-[6] (omitting citations).
Later in his reasons,[11] French CJ distinguished the earlier decision of the High Court in Queensland v JL Holdings Pty Ltd:[12]
Both the primary judge and the Court of Appeal in the present case regarded the decision of this Court in JL Holdings as determinative of the approach they should take to the amendment application. But that case was factually very different. As counsel for Aon pointed out in written submissions:
1.   The applicant had explained, and the Court had accepted, that the application was made late because a material fact had only recently been discovered.
2.   The application was made before a hearing date was fixed and, once it had been fixed, the period of six months intervening between the application and the commencement of trial meant that the hearing dates would not be imperilled.
3.   The point sought to be raised could not be avoided at trial, as it was apparent on the face of certain documents.
In reversing the decision of the Full Federal Court, which upheld the primary judge’s refusal to grant leave to amend the defence, this Court held case management principles to be relevant, but said that they could not be used to prevent a party from litigating a fairly arguable case.
[11] Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175 at [28] (omitting citations).
[12] Queensland v JL Holdings Pty Ltd (1997) 189 CLR 146.
The plurality (Gummow, Hayne, Crennan, Kiefel and Bell JJ) reasoned similarly:[13]
[13] Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175 at [98]-[103] (omitting citations).
Of course, a just resolution of proceedings remains the paramount purpose of r 21; but what is a “just resolution” is to be understood in light of the purposes and objectives stated. Speed and efficiency, in the sense of minimum delay and expense, are seen as essential to a just resolution of proceedings. This should not detract from a proper opportunity being given to the parties to plead their case, but it suggests that limits may be placed upon re-pleading, when delay and cost are taken into account. The Rule’s reference to the need to minimise costs implies that an order for costs may not always provide sufficient compensation and therefore achieve a just resolution. It cannot therefore be said that a just resolution requires that a party be permitted to raise any arguable case at any point in the proceedings, on payment of costs.
In the past it has more readily been assumed that an order for the costs occasioned by the amendment would overcome injustice to the amending party’s opponent. In Cropper v Smith Bowen LJ described an order for costs as a panacea that heals all. Such a view may largely explain the decision of this Court in Shannon v Lee Chun, which upheld a decision allowing the plaintiff to raise a new case at the second trial, but which imposed a condition as to costs. The modern view is that even an order for indemnity costs may not always undo the prejudice a party suffers by late amendment. In the present case it is difficult to see that such an order could be sufficient compensation, given that Aon would be required to again defend litigation which was, effectively, to be commenced afresh.
The views expressed by Lord Griffiths in Ketteman v Hansel Properties Ltd, that justice cannot always be measured in money and that a judge is entitled to weigh in the balance the strain the litigation imposes upon litigants, are also now generally accepted. In Bomanite Pty Ltd v Slatex Corporation Aust Pty Ltd, French J said of Bowen LJ’s statements in Cropper v Smith:
“… That may well have been so at one time, but it is no longer true today … Non-compensable inconvenience and stress on individuals are significant elements of modern litigation. Costs recoverable even on an indemnity basis will not compensate for time lost and duplication incurred where litigation is delayed or corrective orders necessary.”
In Ketteman Lord Griffiths recognised, as did the plurality in JL Holdings, that personal litigants are likely to feel the strain more than business corporations or commercial persons. So much may be accepted. But it should not be thought that corporations are not subject to pressures imposed by litigation. A corporation in the position of a defendant may be required to carry a contingent liability in its books of account for some years, with consequent effects upon its ability to plan financially, depending upon the magnitude of the claim. Its resources may be diverted to deal with the litigation. And, whilst corporations have no feelings, their employees and officers who may be crucial witnesses, have to bear the strain of impending litigation and the disappointment when it is not brought to an end. The stated object in the Court Procedures Rules, of minimising delay, may be taken to recognise the ill-effects of delay upon the parties to proceedings and that such effects will extend to other litigants who are also seeking a resolution in their proceedings.
The objectives stated in r 21 do not require that every application for amendment should be refused because it involves the waste of some costs and some degree of delay, as it inevitably will. Factors such as the nature and importance of the amendment to the party applying cannot be overlooked. Whilst r 21 assumes some ill-effects will flow from the fact of a delay, that will not prevent the parties dealing with its particular effects in their case in more detail. It is the extent of the delay and the costs associated with it, together with the prejudice which might reasonably be assumed to follow and that which is shown, which are to be weighed against the grant of permission to a party to alter its case. Much may depend upon the point the litigation has reached relative to a trial when the application to amend is made. There may be cases where it may properly be concluded that a party has had sufficient opportunity to plead their case and that it is too late for a further amendment, having regard to the other party and other litigants awaiting trial dates. Rule 21 makes it plain that the extent and the effect of delay and costs are to be regarded as important considerations in the exercise of the court’s discretion. Invariably the exercise of that discretion will require an explanation to be given where there is delay in applying for amendment.
The fact that an explanation had been offered for the delay in raising the defence was regarded as a relevant consideration in JL Holdings. Generally speaking, where a discretion is sought to be exercised in favour of one party, and to the disadvantage of another, an explanation will be called for. The importance attached by r 21 to the factor of delay will require that, in most cases where it is present, a party should explain it. Not only will they need to show that their application is brought in good faith, but they will also need to bring the circumstances giving rise to the amendment to the court’s attention, so that they may be weighed against the effects of any delay and the objectives of the Rules. There can be no doubt that an explanation was required in this case.
The plurality later added:[14]
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. Statements in JL Holdings which suggest only a limited application for case management do not rest upon a principle which has been carefully worked out in a significant succession of cases. On the contrary, the statements are not consonant with this Court’s earlier recognition of the effects of delay, not only upon the parties to the proceedings in question, but upon the court and other litigants. Such statements should not be applied in the future.
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.
In the past it has been left largely to the parties to prepare for trial and to seek the court’s assistance as required. Those times are long gone. The allocation of power, between litigants and the courts arises from tradition and from principle and policy. It is recognised by the courts that the resolution of disputes serves the public as a whole, not merely the parties to the proceedings.
Rule 21 of the Court Procedures Rules recognises the purposes of case management by the courts. It recognises that delay and costs are undesirable and that delay has deleterious effects, not only upon the party to the proceedings in question, but to other litigants. The Rule’s objectives, as to the timely disposal of cases and the limitation of cost, were to be applied in considering ANU’s application for amendment. It was significant that the effect of its delay in applying would be that a trial was lost and litigation substantially recommenced. It would impact upon other litigants seeking a resolution of their cases. What was a “just resolution” of ANU’s claim required serious consideration of these matters, and not merely whether it had an arguable claim to put forward. A just resolution of its claim necessarily had to have regard to the position of Aon in defending it. An assumption that costs will always be a sufficient compensation for the prejudice caused by amendment is not reflected in r 21. Critically, the matters relevant to a just resolution of ANU’s claim required ANU to provide some explanation for its delay in seeking the amendment if the discretion under r 502(1) was to be exercised in its favour and to the disadvantage of Aon. None was provided.
[14] Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175 at [111]-[114] (omitting citations).
The reasons of Heydon J were to similar effect, with his Honour heavily critical of the approach below in relation to the amendment application. His Honour made particular reference to the desirability of the efficient disposition of commercial litigation. His Honour said:[15]
… The litigation thus commenced was commercial litigation. While in general it is now seen as desirable that most types of litigation be dealt with expeditiously, it is commonly seen as especially desirable for commercial litigation. Its claims to expedition may be less than those of proceedings involving, for example, extraordinary prejudice to children; or the abduction of children; or a risk that a party will lose livelihood, business or home, or otherwise suffer irreparable loss or extraordinary hardship, unless there is a speedy trial. But commercial litigation does have significant claims to expedition. Those claims rest on the idea that a failure to resolve commercial disputes speedily is injurious to commerce, and hence injurious to the public interest. .…
Commercial life depends on the timely and just payment of money. Prosperity depends on the velocity of its circulation. Those who claim to be entitled to money should know, as soon as possible, whether they will be paid. Those against whom the entitlement is asserted should know, as soon as possible, whether they will have to pay. In each case that is because it is important that both the claimants and those resisting claims are able to order their affairs. How they order their affairs affects how their creditors, their debtors, their suppliers, their customers, their employees, and, in the case of companies, their actual and potential shareholders, order their affairs. The courts are thus an important aspect of the institutional framework of commerce. The efficiency or inefficiency of the courts has a bearing on the health or sickness of commerce.
[15] Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175 at [137] (omitting citations).
This modern approach to the Court’s discretion to grant a party permission to amend has been applied in numerous subsequent authorities. Leading examples include the decisions of the Full Court of the Federal Court in Cement Australia Pty Ltd v Australian Competition and Consumer Commission[16] (in which an application for permission to amend brought during the course of a trial was granted), and Tamaya Resources Ltd v Deloitte Touche Tohmatsu[17] (in which an application for permission to amend brought ahead of trial was refused).
[16] Cement Australia Pty Ltd v Australian Competition and Consumer Commission (2010) 187 FCR 261.
[17] Tamaya Resources Ltd v Deloitte Touche Tohmatsu (2016) 332 ALR 199.
In this Court, the principles in Aon Risk Services were summarised and applied by the Full Court in Channel Seven Adelaide Pty Ltd v Manock[18] in refusing an application to amend, despite the absence of any impact upon any proposed trial date. However, the significance of the modern approach is often most acute in the context of amendment applications that are likely to result in the postponement or adjournment of a trial.
[18] Channel Seven Adelaide Pty Ltd v Manock [2010] SASCFC 59.
By way of summary, the High Court decision in Aon Risk Services, and the authorities that have applied it, have now made it plain that in exercising its discretion upon any application to amend, the court must take into account a number of factors. The factors include:[19]
[19] This list is similar to the list compiled by Bleby J in Channel Seven Adelaide Pty Ltd v Manock [2010] SASCFC 59 at [46].
·    The nature and importance of the proposed amendment, including the extent to which it raises new issues of fact or law.
·    The merits of the proposed amendment, at least in the sense that the proposed amendment is arguable or tenable.
·    The stage of the litigation at which the application to amend is made, and the likely impact upon, or disruption to, the progress of the proceedings (and in particular the trial).
·    The explanation for the application to amend and its timing, and the fact and extent of any undue delay in this regard.
·    Whether the party has had a sufficient opportunity to plead their case earlier.
·    The time, cost and inconvenience associated with any delay or disruption of the proceedings.
·    The uncertainty and strain of litigation on the parties and their witnesses as a result of any disruption or delay likely to be occasioned by the amendment.
·    The impact of any delay and disruption upon judicial and court resources, and the access of other litigants to those public resources.
·    The impact upon the public’s confidence in the just and efficient administration of justice.
For completeness, I observe that there is nothing in the Magistrates Court (Civil) Rules 2013 (SA) relevant in this case that would warrant any departure from the principles set out in Aon Risk Services. While r 80(1) confers upon the Court a broad discretion to permit a party to amend their pleadings at any stage before final judgment, this is subject to r 3(1). This rule provides that in interpreting and applying the rules, the Court “must in all things promote the expeditious, economical and just conduct and resolution of an action or proceeding”.
Consideration of the appeal
As the present appeal involves a challenge to a discretionary decision of the Magistrate, it involves an application of the principles in House v The King.[20] It is thus not sufficient that I form the view that I would have exercised the discretion differently. Identification of error in this context requires a conclusion that the Magistrate erred as a matter of principle, failed to have regard to a relevant consideration, had regard to an irrelevant consideration, made a material error of fact, or otherwise arrived at a decision or outcome that was plainly unjust or unreasonable. This last category of error does not necessarily require an ability to identify the reason for the error; it is enough that the decision or outcome was one that no reasonable Magistrate could properly have reached.
[20] House v The King (1936) 55 CLR 499 at 504-505.

In a case such as the present, where the discretion in question related to a matter of practice and procedure, it is particularly important that the appellate courts observe the principles of appellate restraint in House v The King. The orderly conduct of litigation depends upon appellate courts respecting the broad discretions generally conferred upon the courts below in relation to matters of practice and procedure. That said, once error has been identified in accordance with the principles of House v The King, it is the duty of the court to intervene.
In my view, for the reasons that follow, the appellant in this case has established errors of the type required by the principles in House v The King. Essentially those errors reflect the matters set out in grounds of appeal 1, 2 and 4, as distilled by me earlier in these reasons. While ground of appeal 3 highlights some matters involving departures by the first defendant from the desirable approach to late amendment applications, I am not satisfied that they involved any error on the part of the Magistrate.
Grounds 1 and 2: error of principle and failure to have regard to relevant prejudice
While the Magistrate made reference to the decisions of the High Court in Aon Risk Services and the Full Court of the Supreme Court in Channel Seven Adelaide Pty Ltd v Manock, his reliance upon the passage extracted from the reasons of Perry J in Duke Group Limited v Arthur Young reveals an error of principle.
The approach articulated by Perry J is akin to the approach subsequently articulated by the High Court in Queensland v JL Holdings Pty Ltd. It involves an approach that affords parties something tantamount to a right to amend on condition that they pay the costs thrown away by reason of the amendments. It involves an approach that tends to overlook the fact that amendments often occasion prejudice both to the parties (and to the administration of justice more generally) in the form of disruption and delay that cannot be adequately compensated for by an order for costs. It thus involves an approach that is inconsistent with the High Court’s confirmation of the existence and significance of these forms of prejudice in Aon Risk Services.
While there may be some cases in which an amendment will not occasion delay or disruption productive of any material prejudice of the nature contemplated by the High Court in Aon Risk Services – for example, where the amendment is made early enough in the procedural life of a case not to imperil a trial date,[21] or where the amendment does not raise new issues of fact – that will rarely be so in the case of an application to amend that is made during the course of a trial and with the consequence that the trial must be adjourned for a significant period of time.
[21] This was the situation in Queensland v JL Holdings Pty Ltd (1997) 189 CLR 146. It was also significant in that case that the timing of the amendment was explained by the recent discovery of a new material fact.
It does not follow that such an amendment will never be permitted. To the contrary, there will continue to be circumstances in which the nature and importance of the amendment, and the explanation proffered for its timing, will result in a favourable exercise of the Court’s discretion despite the prejudice that will be incurred.[22] However, in exercising its discretion, the Court must always take into account the existence and significance of the various forms of prejudice identified by the High Court in Aon Risk Services.
[22] For example, Cement Australia Pty Ltd v Australian Competition and Consumer Commission (2010) 187 FCR 261.
It is apparent from the Magistrate’s reasons in this case that he did not take into account the prejudice identified by the High Court in Aon Risk Services in the exercise of his discretion. Having announced his decision to allow the application to amend, his Honour added that “if there is any prejudice to the plaintiff then it is my order that the defendant should pay the plaintiff’s costs incurred as a result of the amendment.” This approach involved two interrelated errors. It involved an error in failing to identify the prejudice relied upon by the plaintiff so as to take it into account in the exercise of the Court’s discretion. It also involved an error in confining consideration to prejudice of the nature that might be cured by an order for costs, or by assuming that all prejudice is capable of being so cured.
In this case it was inevitable that a favourable exercise of the discretion would result in an adjournment of the trial. In that circumstance, the Magistrate’s approach involved error in failing to properly apply the approach required by the High Court in Aon Risk Services, and by failing to identify and take into account the prejudice likely to be occasioned by the amendment.
Finally, I note that the Magistrate cited the reasons of Parker J in Poniatowska v Channel Seven Sydney Pty Ltd[23] in support of his application of the approach of Perry J in Duke Group Ltd v Arthur Young. While Parker J did refer to Duke Group Ltd v Arthur Young in considering the applications to amend with which he was concerned, a reading of Parker J’s reasons as a whole makes it plain that his Honour had regard to the broader considerations, and forms of prejudice, set out in Aon Risk Services. His Honour took into account these considerations in refusing permission to make various of the proposed amendments. It follows that the reasons of Parker J in Poniatowska v Channel Seven Sydney Pty Ltd are of no assistance to the first defendant on this appeal.
[23] Poniatowska v Channel Seven Sydney Pty Ltd [2014] SASC 95.
Ground 3: form of the application to amend and the evidence relied upon
The plaintiff complains that the Magistrate erred in granting permission to amend in circumstances where the terms of the amendment had not been articulated, the application was made orally and without forewarning, and no explanation was proffered for the delay.
Nothing turns on the fact that the application itself was made orally. While interlocutory applications should ordinarily be made in writing, it is common place – particularly during the course of a trial – that circumstances justify an application being made orally.
Of more significance in this case was the fact that the application was made without the terms of the amendment being articulated, and without warning. Despite the apparently late timing of the decision and instructions to apply to amend in this case, the first defendant ought to have proffered a version of the amendment so as to enable its nature and consequences to be considered with more precision. It will often be difficult to assess the extent to which an amendment gives rise to new factual issues (and the consequences in terms of delay and disruption likely to be associated with those new issues) without seeing the precise form and detail of the proposed amendments. Likewise, it will also often be difficult to assess the arguability or tenability of the proposed amendment without this detail and precision.
Further, the first defendant’s counsel or solicitor ought to have given the plaintiff’s counsel or solicitor some warning of the intention to apply to amend so as to give them the opportunity to consider their response and take instructions. Even if the prospect of an application to amend only arose a day or so before the resumption of the trial, and even if a final decision was awaiting formal instructions, there does not appear to be any good reason why the plaintiff’s advisors could not have been informed of the general effect of what was intended so that they could consider their client’s position. Giving the timing of the application, it was incumbent upon the first defendant’s advisors to do what they could to provide at least some notice to the plaintiff’s advisors. In this context, it is regrettable that the first defendant’s solicitor did not take the opportunity that arose when he was telephoned by the plaintiff’s solicitor before court on the morning the application was made to inform him at least that it was likely that the application would be made, and the general effect of the proposed amendment.
Despite the above, I do not consider that any of the departures by the first defendant from the desirable approach when making an application to amend of themselves meant that the Magistrate erred in the circumstances of this case in proceeding to entertain and determine the application. While Mr Roberts objected to the application being entertained, it is apparent from a reading of the transcript that Mr Roberts was not significantly prejudiced. He was in a position to, and did, make all relevant submissions that could be made on behalf of his client – albeit perhaps not quite with the level of detail or precision that he might have done had he received warning of the application and had available to him the terms of the proposed amendments.
That leaves the plaintiff’s complaint that the first defendant did not file any affidavit evidence to explain the delay in making the application to amend. In Aon Risk Services, the High Court emphasised the importance of an explanation of the circumstances giving rise to the amendment, and for any delay in bringing the application to amend. It will ordinarily be appropriate, if not necessary, that the party applying to amend adduce affidavit evidence addressing these matters. It will generally be unsatisfactory for these matters to be addressed simply by way of assertions from the bar table.
However, again, there can be no hard and fast rules. As subsequent authorities have explained, Aon Risk Services is not a one size fits all case, and there is no universal requirement that an application to amend be supported by an affidavit from the moving party or its legal advisor.[24] The nature or circumstances of the application may be such as to enable inferences to be drawn as to the explanation for the timing of the application. Alternatively, the exigencies of the circumstances in which the application is made may make it appropriate for the court to take a flexible approach in relying upon explanations proffered by counsel from the bar table. Further, while the absence of an affidavit explanation of the reason for the amendment and its timing may make it difficult for the court to be clear about the explanation, this will not always be fatal. There may be no reason to think that the timing was the result of some earlier tactical or deliberate decision to plead the case in a particular way, as opposed to oversight or an error of judgment on the part of those advising the party seeking to amend.
[24] Cement Australia Pty Ltd v Australian Competition and Consumer Commission (2010) 187 FCR 261 at [51]-[56]; cf Tamaya Resources Ltd v Deloitte Touche Tohmatsu (2016) 332 ALR 199 at [154]-[162], where the absence of an explanation on oath was significant, if not decisive.
In this case, it appears that the Magistrate was content to accept the assertions from Mr Manetta that the explanation for the timing of the application to amend was that he was only briefed a short period ahead of the resumption of the trial. I leave to one side for the moment the adequacy, or significance, of this explanation. Mr Whatson ought to have filed a short affidavit in support of the application to amend, deposing to the explanation ultimately given from the bar table by Mr Manetta. There is no reason this could not have been done. The affidavit need only have contained a few paragraphs by way of explanation. In my view, an explanation on oath from Mr Whatson was particularly desirable in this case given that he had been the solicitor (and counsel) in the matter through to the point Mr Manetta was retained, and had been agitating that stamp duty was payable for some time. He ought to have explained what consideration (if any) he gave to pleading the new defence, particularly in the six week period between the evidence of Mr Fabbro and the retention of Mr Manetta shortly prior to the resumption of the trial on 15 September 2016. While it might be inferred that Mr Whatson simply overlooked the defence now sought to be pleaded, this ought not to have been left to inference.
However, again, despite the first defendant’s departure from the preferable approach to late amendment applications, I do not consider that the Magistrate was in error by reason merely of his decision to entertain and determine the application in the absence of affidavit evidence from the first defendant. While the absence of such evidence made it difficult to be confident as to the precise circumstances of, and explanation for, the application to amend, and in particular whether any consideration had previously been given to the issue by Mr Whatson, it was nevertheless open to the Magistrate to accept Mr Manetta’s statement that his retainer a few days ahead of the resumed trial explained the fact and timing of the amendment.
Ground 4: decision plainly unjust or unreasonable
The Magistrate’s reasons are very brief. Indeed, other than mentioning the timing of the application, referring in general terms to the principles he applied in exercising his discretion, and then apparently concluding that there was no prejudice beyond that which might be addressed by an order for costs, his reasons do not provide any insight into the matters that he considered relevant in the exercise of his discretion.
The plaintiff does not challenge the adequacy of the Magistrate’s reasons. While it would have been preferable if the Magistrate had at least listed the more significant matters he took into account, it is appropriate to bear in mind that the Magistrate delivered his reasons after only a very short adjournment to consider the submissions made on the application. It was desirable that the Magistrate determine the application in the expeditious manner he did. To have reserved his decision for any significant period of time would itself have prejudiced the orderly progress of the trial.
Whilst the brevity of the Magistrate’s reasons is understandable in the circumstances, it nevertheless makes the task of this Court difficult. The only practical way for this Court to determine whether the discretion miscarried in the sense that the outcome was plainly unjust or unreasonable is to undertake a consideration of the matters the Magistrate ought to have taken into account and then consider whether, in light of those matters, the Magistrate’s decision to grant permission to amend was plainly unjust or unreasonable.
The nature and importance of the proposed amendment. The proposed amendment was of importance to the first defendant in that if made out it would establish a defence to the plaintiff’s claim. While largely an allegation of law, and overlapping to some extent with the existing joinder of issue (albeit not express in the pleadings) as to whether or not stamp duty was payable, nevertheless the proposed amendment did raise a fresh factual issue as to the existence of a purpose of avoiding or evading stamp duty, and hence the state of mind or motivation of the parties to the deed.
The merits of the proposed amendment. There will often be limits to the ability and appropriateness of the court giving detailed consideration to the merits of a proposed amendment. If the court is satisfied that the amendment is not arguable or tenable, this will weigh heavily against an exercise of the discretion to permit the amendment to be made. Here, there was no submission to the Magistrate that the proposed amendment was untenable. While a submission to this effect was made on appeal, I do not consider it appropriate to take that into account in determining whether the Magistrate erred. In any event, while I have some reservations about the merits of the proposed amendment, bearing in mind the limits of the court’s ability to form a detailed view as to the merits on an application such as the present, I am not satisfied that the proposed amendment is unarguable or untenable. I regard the merits of the proposed amendment as a neutral consideration.
The stage of the litigation, and the impact and disruption occasioned by the amendment. It was of particular significance in this case that the application to amend was made upon the resumption of a trial that had already been adjourned once by reason of the default of the first defendant, at a stage of the trial when the plaintiff had already closed its case, and with the result (if successful) that the trial would need to be adjourned.
If the application to amend had been made soon after the first adjournment, the plaintiff may well have been ready and able to address the new defence, and to have concluded the trial, on 15 September 2016. However, by first announcing the application on the morning of 15 September 2016, the first defendant ensured that success on her application would result in an adjournment of the trial, and consequential delay in finalising the matter.
It was also significant that the amendment would cause disruption to the orderly progress of the trial in the sense that it would require the plaintiff to recall witnesses, and require that the first defendant be recalled for further cross-examination by counsel for the plaintiff.
The explanation for the application to amend and its timing. As mentioned, it would have been preferable for an explanation to be provided by way of affidavit, presumably by Mr Whatson, rather than relying upon assertions from the bar table by counsel for the first defendant. However, in the circumstances that occurred, the Magistrate was entitled to rely upon the assertions made from the bar table. The Magistrate was entitled to proceed on the basis that the reason for the timing of the application was that the application to amend was the product of counsel having been retained only a short time prior to the resumption of the trial.
However, I do not consider that this was an entirely satisfactory or complete explanation of the delay. There was and remains no explanation, from Mr Whatson or otherwise, as to what consideration, if any, was given to the issue prior to Mr Manetta’s involvement. In circumstances where Mr Whatson was aware (at least from the conclusion of Mr Fabbro’s evidence on 9 August 2016, if not earlier) that the parties were at odds as to whether or not stamp duty was payable, he ought to have given consideration to the issue now sought to be raised. While the first defendant presumably invites an inference that the matter was simply overlooked up to the time of Mr Manetta’s involvement, this ought to have been the subject of direct evidence rather than being left to inference.
In any event, even assuming the above inference can be drawn (which I assume in the first defendant’s favour), the explanation is not an entirely satisfactory one. It does not entirely neutralise the issue of delay. While courts are reluctant to visit parties with the consequences of oversight by their legal representatives, it is relevant that there is no explanation for the late timing of the application to amend beyond a lack of due diligence by the moving party’s advisors.[25] By way of contrast, in Queensland v JL Holdings Pty Ltd the explanation for the late timing lay in the recent discovery of a new fact rather than mere oversight. Certainly the courts should not be too willing to permit amendments simply because they are the product of further or more detailed consideration being given to an issue by a party’s legal representative, or the product of a fresh set of eyes. As to this last consideration, while a relevant consideration, the retention of new counsel should not operate to reset the litigation clock or otherwise give the party in question a licence to amend. To so hold would be to undermine the approach required by Aon Risk Services.
[25] Tamaya Resources Ltd v Deloitte Touche Tohmatsu (2016) 332 ALR 199 at [158]-[164], citing Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175 at [25] per French CJ, and at [131] per Heydon J.

On the facts here, while Mr Manetta may well have greater experience or knowledge in relation to matters of stamp duty than Mr Whatson, I consider that to be of little moment. Mr Whatson had conducted the litigation through to the retainer of Mr Manetta, including acting as counsel for the first two days of the trial. He obviously regarded himself as competent to do so, and I see no reason to question this.
In summary, it was appropriate to proceed on the basis that the late timing of the amendment was the product oversight on the part of Mr Whatson, and was not the product of any tactical or deliberate decision not to raise the defence at some earlier point in time. However, in the absence of any explanation from Mr Whatson, the first defendant’s position remains somewhat unsatisfactory, particularly as to the approximately six week delay between Mr Fabbro giving evidence and the application being brought on 15 September 2016.
Sufficient earlier opportunity to plead. Related to the views expressed above is my conclusion that the first defendant had ample earlier opportunity to plead the defence now sought to be pleaded. The issue could have been pleaded prior to the commencement of the trial, given that Mr Whatson was aware that there was a dispute between the parties as to whether stamp duty was payable. But further, and in any event, the first defendant certainly had ample opportunity to apply to amend to plead the issue following the first adjournment of the trial. If, as I accept, the explanation for the failure to plead the issue during this period was merely oversight, then this does not negate the proposition that the first defendant had sufficient opportunity to plead the issue. From at least the conclusion of Mr Fabbro’s evidence, the facts upon which the decision to amend was ultimately made were known to Mr Whatson. It follows that there was sufficient earlier opportunity to plead the defence.
The time, cost and inconvenience associated with any delay or disruption. The time, cost and inconvenience associated with the adjournment of the trial were significant matters in this case. The litigation was essentially commercial in nature and thus, in the language of Heydon J from Aon Risk Services,[26] had a significant claim to expedition and efficiency.
[26] Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175 at [137].
Whenever a trial is adjourned there is inevitably a level of duplication and inefficiency in preparing again for the resumption of trial. While some of these costs will be captured by an order that the amending party pay the opposing party’s costs thrown away, it is unlikely that any such order will provide full compensation. And, of course, there will be no compensation for the additional diversion of the party (or their employees) from their usual activities.
In the context of a commercial dispute such as the present where the quantum in issue is relatively modest (approximately $64,000), the time, cost and inconvenience associated with a further adjournment is a very material consideration.
The uncertainty and strain of litigation. Related to the above is the additional uncertainty and strain of litigation likely to be associated with the adjournment of the trial required by the first defendant’s amendment. The prolonged uncertainty is a relevant consideration in any litigation, particularly in commercial litigation. Again, this is a matter that was emphasised in the passage extracted earlier from the reasons of Heydon J in Aon Risk Services.[27]Further, as the plurality in that case explained, the fact that the plaintiff is a corporation does not mean that it is immune from the strain and stress associated with litigation, and hence with any delay or disruption in the resolution of that litigation.[28]
[27] Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175 at [137].
[28] Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175 at [101].
Impact upon judicial and court resources. As the High Court in Aon Risk Services emphasised, the delay and disruption occasioned by an adjournment of the trial not only impacts the plaintiff, but also results in an additional call on judicial and court resources. There is thus an inevitable consequence in terms of the impact upon others seeking to use those resources.
Impact upon public confidence in the efficient administration of justice. Delay and disruption not only impact the public in the sense of resulting in wastage of public resources, they also serve to undermine public confidence in the ability of the courts to administer justice in an efficient manner when the courts are seen to acquiesce in that delay and disruption. The public concerns over the courts’ ability to determine commercial disputes in an efficient and proportionate manner are notorious. It is important that the courts be astute to avoid outcomes that serve to fuel those concerns. In this case, where there had already been one adjournment of the trial, and the effect of the amendment would be to require a further adjournment, there was a real risk of harm to the public confidence in the just and efficient administration of civil justice.
Taking into account all of the above matters, I am satisfied that the Magistrate erred in granting the first defendant permission to amend. The proceedings were essentially commercial in nature, and there had already been an adjournment of the trial occasion by the first defendant. The proposed amendment would inevitably result in the cost and delay associated with a further adjournment. It would also require the recalling of three witnesses and hence disruption to the orderly progress of the trial. The adjournment would subject the plaintiff to a further period of uncertainty, and expose it (or at least its two key witnesses) to the further stress and strain of continued litigation and having to give further evidence. There would be a material wastage of court and judicial resources, and a detrimental impact on the public’s confidence in the courts’ ability to resolve commercial disputes in a just and expeditious manner.
While there is no basis for me to conclude that the late timing of the application was the result of any tactical decision by the first defendant, or any earlier deliberate decision not to plead the defence sought to be pleaded, it remains unsatisfactory that the application to amend was not brought earlier, and within sufficient time to permit the plaintiff to be ready to address it at the resumed trial. It is relevant that the late timing was likely the product of an oversight by the first defendant’s legal advisor, which was not corrected until the retention of counsel a few days before the resumed trial. But this is not a complete answer, or at least does not entirely neutralise the delay in making the application.
In my view, all of the above matters ought to have weighed heavily in this matter. Given the modest dollar sum at stake in the proceedings, it was clear that permission to amend would result in disproportionate and intolerable delay and disruption, and associated expense and prejudice. Despite the importance of the amendment from the first defendant’s perspective, and despite the breadth of the Magistrate’s discretion, I consider that in the circumstances of this case the only reasonable outcome was to dismiss the application to amend. It follows that the Magistrate erred in allowing the application to amend.
Disposition of the appeal
As the plaintiff has established error on the part of the Magistrate, it is appropriate that this Court set aside the decision of the Magistrate and exercise afresh the discretion reposed in the Magistrate.
If I were to do so on the basis of the facts and circumstances as they were at the time the Magistrate exercised the discretion, it would follow from my reasons above that I would dismiss the application to amend.
However, in determining whether I ought to give effect to this outcome in my disposition of the appeal, the first defendant contends that there would be an artificiality in approaching this Court’s fresh exercise of the discretion in this way. The artificiality would arise from the fact that much of the prejudice associated with the adjournment of the trial has now been incurred, and cannot be reversed; and that, as the plaintiff’s counsel accepts, it is likely that the plaintiff will be ready to address the new case, and complete the trial, during the two days set aside for the resumption of the trial at the end of this month. The first defendant’s counsel contends that I should therefore approach the re-exercise of the discretion on the basis that there will be no significant additional prejudice if this Court were to now exercise the discretion in favour of the first defendant.
In opposing the contention that I should treat the prejudice associated with the adjournment of the trial that has already been incurred as irrelevant, or as having been neutralised, counsel for the plaintiff relied upon the following passage from the reasons of French CJ in Aon Risk Services:[29]
It might be said that the adjournment effected by the primary judge’s decision to entertain the amendment application and to allow written submissions to be filed and evidence to be put on, and the subsequent delay in his decision, rendered academic any concern about further waste of court resources or inefficiencies flowing from the amendment ultimately being allowed. It might be said that, in those circumstances, to refuse the amendment would be punitive. It is true that a punitive response to the substance of a late amendment application is not appropriate. But neither is a party to be rewarded by weighing in its favour the disruptive consequences of its own application. In any event the granting of the amendment in this case, at the time it was granted, meant that there would still be further delay while interlocutory processes flowing from the new claims were put in place. Aon had to prepare a new defence. The further delay, in the circumstances of this case, would be such as to undermine confidence in the administration of civil justice. This factor was not taken into account by the primary judge, nor by the Court of Appeal. The discretion of the primary judge miscarried and the Court of Appeal was in error in not allowing the appeal. In the circumstances, giving proper weight to the factors to which I have referred, the application for the amendment should have been refused.
[29] Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175 at [35].
In my view this passage, and indeed the outcome in Aon Risk Services, does provide some support for an approach that focuses upon the circumstances as they pertained at the time the application was first made, and thus not treating as neutral any prejudice that might already have been incurred by reason of the “disruptive consequences of [the moving party’s] own application.” The disruptive consequence expressly mentioned by French CJ was the passage of time associated with the time taken to hear argument and then deliver reasons on the amendment application. But the same logic would apply to the passage of time associated with an adjournment flowing from an incorrect decision by the primary judge and the time taken to appeal that decision. Certainly there was no suggestion in Aon Risk Services that the Court should re-exercise the discretion solely by reference to the circumstances as they existed at the time of the appeal and disregarding any incurred prejudice as irrelevant or neutral.
On the other hand, there is some support for the first defendant’s approach in Cement Australia v Australian Competition and Consumer Commission.[30] In that case, the trial judge granted an application by the ACCC to amend its claim and a consequential adjournment of the trial. On appeal, the Full Court of the Federal Court upheld the trial judge’s decision. But the Court added that if it were to conclude otherwise, and hence be called upon to exercise the discretion afresh, it could not ignore the opportunity the opposing party (Cement Australia) had had to prepare to meet the ACCC’s proposed amended case by reason of the adjournment already obtained.
[30] Cement Australia Pty Ltd v Australian Competition and Consumer Commission (2010) 187 FCR 261.
As the Court explained:[31]
Even if the court were to conclude that the trial judge’s discretion had miscarried so that it fell to this court to exercise the discretion afresh, there would be powerful discretionary reasons to decline to exercise that discretion by disallowing the amendment to the ACCC’s statement of claim. If this court were called upon now to exercise this discretion, the court could not ignore the circumstance that the Cement Australia parties have had the benefit of an adjournment to consider their position in light of the amendment and to take such steps as they deem fit to meet the ACCC’s reformulated case against them. To insist that the trial proceed to a decision otherwise than on the real merits of the case would be entirely out of proportion to any prejudice suffered by the Cement Australia parties in light of the terms on which the adjournment was granted.
Counsel for the Cement Australia parties argued that this court, if it was satisfied that the trial judge’s decision was vitiated by error, should approach the fresh exercise of its discretion on the basis of the facts as they appeared at trial, rather than at the present time.
[31] Cement Australia v Australian Competition and Consumer Commission (2010) 187 FCR 261 at [73]-[74].
After referring to the passage from French CJ’s reasons extracted above, the Court concluded:[32]
There is, in our respectful opinion, nothing in the observations of French CJ which supports the view that this Court should not have regard to the facts as they presently appear in the exercise of its discretion to grant leave to appeal or to refuse the ACCC’s application for leave to amend its statement of claim.
[32] Cement Australia v Australian Competition and Consumer Commission (2010) 187 FCR 261 at [76].
It is difficult to reconcile these obiter observations with the reasons of French CJ in Aon Risk Services. On my reading of French CJ’s reasons, his Honour took the view that the moving party on an application to amend ought not be entitled to take advantage of (and hence be rewarded by) the disruptive consequences of their own actions. In my view, treating incurred prejudice as irrelevant or neutral upon a re-exercise of the discretion to amend would be to do precisely that. In particular, if I were to re-exercise the discretion in the first defendant’s favour, and dismiss the appeal, on the basis that the remaining prejudice (or prejudice not yet incurred) was not sufficient to outweigh the factors in favour of the application to amend being allowed, this would be to permit the first defendant to achieve an outcome that she ought never to have been able to achieve. It would also have the consequence, or at least the practical effect, of insulating the Magistrate’s erroneous decision from appeal.
For these reasons, I consider that in the ordinary course an appellate court should approach the re-exercise of a discretion that has miscarried by placing itself in the shoes of the original decision maker and exercising the discretion in accordance with the facts and circumstances as known to the original decision maker, subject only to the principles governing the reception of fresh evidence. While the courts have from time to time shown a preparedness to depart from the strict application of this conceptual approach, and the obiter observations of the court in Cement Australia v Australian Competition and Consumer Commission contemplate such a departure in the circumstances of the application to amend in that case, for the reasons I have set out, I do not regard it as appropriate to do so in this case.
Further, and in any event, the prejudice that has already been incurred in this case is not the only matter that weighs against an exercise of the discretion in favour of permission to amend. There remains some prejudice that can be avoided – for example, some of the additional work associated with preparing to meet the proposed new defence, the strain upon the plaintiff’s witnesses associated with being required to give evidence again, the uncertainty associated with a new issue being introduced into the matter, the disruption to the ordinary and orderly progress of a trial associated with witnesses needing to be recalled on particular issues, and the additional time and expense required to complete the trial if it is enlarged to include the proposed new defence. There remains also the history that the first defendant’s conduct of the litigation has already occasioned one adjournment of the trial, and the fact that the delay in bringing the application (and in particular the approximately six week period between the first attempt to hear the trial and the retainer of Mr Manetta a couple days prior to the intended resumption of the trial on 15 September 2016) has not been satisfactorily explained.
In my view it is appropriate that I re-exercise the discretion by refusing permission to make the proposed amendment to the defence.
I thus make the following orders:
1.   Appeal allowed.
2.   Orders of the Magistrate dated 15 September 2016 set aside.
3.   First defendant’s application to amend her defence is dismissed.