Queensland v JL Holdings Pty Ltd
[1996] FCA 932
•29 OCTOBER 1996
CATCHWORDS
APPEAL - Practice and procedure - Amendment - Defence - Interference with discretion of primary judge - Relevance of case management.
The Land Act of 1962 (Q) ss 343, 345
Decor Corporation Pty Ltd v Dart Industries Inc (1991) 33 FCR 397
Sharp v Deputy Federal Commissioner of Taxation (1988) 88 ATC 4184
Adam P Brown Male Fashions Pty Ltd v Philip Morris Inc (1981) 148 CLR 170
Bank of New Zealand v Spedley Securities Ltd (1992) 27 NSWLR 91
United Motors Retail Ltd v Australian Guarantee Corporation Ltd (1991) 58 SASR 156
Sali v SPC Ltd (1993) 67 ALJR 841
The Commonwealth v Verwayen (1990) 170 CLR 394
Bomanite Pty Ltd v Slatex Corp Aust Pty Ltd (1991) 32 FCR 379
Cohen v McWilliam (1995) 38 NSWLR 476
FAI General Insurance Co Ltd v Burns (15 August 1996, unreported)
Singer v Berghouse (1994) 181 CLR 201
Cudgen Rutile (2) Pty Ltd v Chalk [1975] AC 520
Attorney-General (NSW) v Quin (1990) 170 CLR 1
Gronow v Gronow (1979) 144 CLR 513
Clough v Frog (1974) 48 ALJR 481
STATE OF QUEENSLAND and SOUTH BANK CORPORATION v J L HOLDINGS PTY LTD SG 1 of 1994
COURT:Whitlam, Carr and Sundberg JJ
PLACE:Melbourne
DATE:29 October 1996
IN THE FEDERAL COURT OF AUSTRALIA )
QUEENSLAND DISTRICT REGISTRY ) No SG 1 of 1994
GENERAL DIVISION )
BETWEEN:STATE OF QUEENSLAND
(First Respondent)
AND
SOUTH BANK CORPORATION
(Second Respondent)
Appellants
AND:J L HOLDINGS PTY LTD
(Applicant)
Respondent
COURT:Whitlam, Carr and Sundberg JJ
DATE:29 October 1996
PLACE:Melbourne
MINUTES OF ORDER
The Court orders that:
The applicants have leave to appeal from the decision of Kiefel J made on 28 August 1996 refusing leave to amend paragraph 25 of their defence.
The appeal be dismissed with costs.
The appellants pay the respondent's taxed costs of the application for leave to appeal and of the appeal.
Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA )
QUEENSLAND DISTRICT REGISTRY ) No SG 1 of 1994
GENERAL DIVISION )
BETWEEN:STATE OF QUEENSLAND
(First Respondent)
AND
SOUTH BANK CORPORATION
(Second Respondent)
Appellants
AND:J L HOLDINGS PTY LTD
(Applicant)
Respondent
COURT:Whitlam, Carr and Sundberg JJ
DATE:29 October 1996
PLACE:Melbourne
REASONS FOR JUDGMENT
WHITLAM and SUNDBERG JJ:
Background
The proceeding in which this application for leave to appeal is made concerns land across the river from the Brisbane CBD at the base of Kangaroo Point Cliffs. The land is Crown land, and part of it ("the reserve") is held by the Brisbane City Council in trust pursuant to s 334 of The Land Act of 1962 (Q) ("the Act"). The Council called for tenders to develop the land, and the appellant JL Holdings Pty Ltd ("JLH") became the preferred developer. The Council proposed to grant JLH a thirty year lease of the reserve. Section 343 of the Act provides that a trustee holding Crown land in trust cannot lease it without the approval of the Minister. JLH claims that in late 1989 the Minister gave written approval to a lease agreed upon by the parties, but that when the lease was submitted for the endorsement of his approval under s 345, he wrongfully refused to endorse it.
The legislation
Section 343(1) of the Act provides in part that
... The trustees of land granted in trust ... shall not lease or agree to lease the whole or any part of the land under their control without the approval in writing of the Minister first had and obtained.
The application for approval must be accompanied by a draft of the proposed lease: sub-s (3). The Minister may, in his absolute discretion, refuse to approve the proposal or, if satisfied of certain matters, may approve the proposal subject to such conditions, reservations and modifications as he deems fit. Section 345 provides in part as follows:
When a lease under this Division has been duly executed in accordance with the terms and conditions approved by the Minister the original and all other executed copies of such lease shall be forwarded to the Minister for endorsement thereon of his approval of the lease.
...
A lease to which this Division applies which is not endorsed with the Minister's approval shall have no validity or effect in law and in the case of a lease with respect to land granted in trust shall not be capable of registration under "The Real Property Acts, 1861 to 1960".
The proceeding
The respondents are the State of Queensland ("the State") and South Bank Corporation ("SBC"). The statement of claim, which is 169 pages long, pleads a range of causes of action - breach of copyright, breach of agreement for lease, breach of lease, inducement to breach lease, civil conspiracy, defamation, negligence, breach of statutory duty, estoppel, contravention of s 45D of the Trade Practices Act and fraud. In the "Introduction" to the pleading (pars 1-36) JLH alleges that in late 1989 the Minister approved in writing the lease of the reserve pursuant to s 343, that an agreement for lease was executed by the Council and JLH on or about 5 December 1989, and that when the lease documentation was forwarded for endorsement of the Minister's approval under s 345, he refused to approve it. As a result of the refusal, the proposed development did not proceed.
The copyright and defamation causes of action are of no relevance to the present application. It is alleged that the Minister's refusal to endorse his approval was a breach of the agreement for lease (pars 43 to 46). Under the breach of lease cause of action JLH alleges that by reason of representations made by the State that the Minister would endorse his approval on a lease of the reserve, upon which representations JLH relied, the State is estopped from denying that a lease was completed or retreating from its promise that the Minister would endorse the lease. The State is alleged to have repudiated the lease, which repudiation JLH has accepted (pars 47-62). Under the inducement cause of action it is alleged that the State induced the Council not to perform its obligations under the lease (pars 63-69). The State and SBC, one of JLH's competitors, are then alleged to have conspired to injure JLH by arranging for the Minister to refuse to endorse his approval on the lease (pars 70-74). The negligence cause of action is based on the claim that the State was negligent in representing to JLH that the Minister would endorse his approval (pars 87-105A). Under the misfeasance cause of action it is alleged that once the Minister's approval under s 343 had been obtained and a lease executed in accordance with that approval, the Minister was obliged to endorse his approval under s 345, and that his refusal to do so was in breach of statutory duty and constituted misfeasance in a public office (pars 106-113E). The estoppel cause of action claims that by reason of the State's representations JLH assumed and expected that the lease would be endorsed, that JLH relied on the representations, and that the State is estopped from retreating from its promise that the Minister would endorse his approval. JLH claims damages and equitable compensation (pars 114-121). The s 45D claim is that the predominant purpose of the conspiracy referred to was to injure JLH and suppress it as a competitor of SBC (pars 122-136). The fraud cause of action claims that at a time when the Minister invited JLH to make a submission to him as to whether he should endorse the lease, the State represented that the Minister had not yet made up his mind whether to do so and that he would give consideration to the submission, whereas in fact it had already been decided that the Minister would not endorse the lease (pars 136AA-136AG). JLH's primary claim for relief is for loss of the profits, alleged to be in the range of $40 to $44 million, it would have made had the proposed development proceeded.
In their defence the respondents deny most of the essential allegations, but in paragraph 25 admit that the Minister did not endorse his approval on the lease and say that he was not required by s 345 so to do.
The application for leave to amend
The respondents applied to amend their Defence in several respects, one of which was to add to paragraph 25 a number of reasons why the Minister was not required to endorse his approval. One of the reasons was
if approval under section 343 of the Land Act had previously been given on the terms of the LAC letter of 26 October 1989 (which is not admitted), then:
(i)the lease documentation referred to in paragraph 26 was not in accordance with that approval:
PARTICULARS
(1)No approval under section 343 was given to the Deed of Variation between the Applicant and the Council dated 26 February 1990;
(2)No approval under section 343 was given to the lease documentation, insofar as it provides for commencement on 1 April 1990 ... and rental payments being deferred until after commencement;
(ii)section 345 confers upon the Minister a discretion to endorse the lease documentation, which was not exercised in the Applicant's favour.
An affidavit in support of the application was sworn by the solicitor in the Office of the Crown Solicitor who had the care and conduct of the case. She swore that she had only recently become aware of the discrepancy between the terms of the draft lease and the executed lease submitted for approval under s 345 when junior counsel drew it to her attention. She said the discrepancy was not readily apparent because the statement of claim does not disclose that the deed of variation had been entered into, and a copy of the lease forwarded for s 345 endorsement had not been included in the bundle of documents delivered with the statement of claim.
Primary judge's ruling
Kiefel J gave leave to the State to make a number of amendments to its defence, but refused leave in relation to the additions to paragraph 25. Her Honour observed that at about the time leave was sought, a trial date, at the commencement of the court year in 1997, had been given to the case. Four months had been allocated. She said that the most relevant consideration in deciding whether to grant leave was whether the amendment would jeopardise the hearing date. If it would, that could amount to severe prejudice to the applicant since the case was unlikely to be relisted until the following year. She noted that the case had been the subject of substantial case management. That part of her Honour's reasons relating to paragraph 25 is short and can be set out in full:
These amendments touch on what has always been regarded as a core issue - the effect of s 345 of the Land Act 1962 (Qld). At present the defence does not admit that any approval in writing was given pursuant to s 343 of that Act and denies that the Minister was then required to endorse approval under s 345. The new matter sought to be raised in paragraph 25, by way of particularisation of that latter allegation (but nevertheless raising a substantial new allegation), is that the applicant never submitted a lease for approval which was in accordance with the prior approval. It is said that it was only recently discovered that there was a material discrepancy
between the two. I have no reason to doubt the explanation. But it is not said why it took so long to uncover the matter when the documents had been with the respondents for a long time. The principal contention for [JLH] was that the matter was covered by my judgment of 3 November 1995 with respect to amendments to the defence then sought. It is not the same issue with which I was then concerned. Nevertheless the principles which there applied ought also to be applied here. The respondents have persisted in maintaining that the questions surrounding the prior approval were really not in contention. It is of some importance now that, it seems to me, it has real potential to require substantial issues of fact to be raised by way of reply. It places this proposed amendment in a different category. I do not have the same level of assurance about the effect of the amendments and the pleadings cannot be permitted to remain open in this way so close to trial. [JLH] also points out that it might have joined its then solicitors who are responsible for the leases. Given the existence of professional indemnity insurers, one could say that this may have been a real possibility. In any event for the reasons otherwise given I consider that leave to raise this new allegation ought to be refused.
The earlier amendment application
In November 1995 her Honour had been asked for leave to amend the defence so as to add an allegation that no valid application for lease approval under s 343 had been made because a requisite particular of the application, namely the purpose to which the rent to be paid was to be applied, had not been provided. Leave was refused, mainly because of the risk that JLH would join the Council as a respondent alleging negligence in relation to the provision of the information required by s 343 to be supplied. Her Honour considered that by early 1996 the case would be substantially ready for hearing, and a joinder would cause a postponement of the hearing. She also said that if the amendment were made, it was likely that JLH would file a reply alleging estoppel.
Principles on grant of leave
Leave to appeal from an interlocutory decision will ordinarily only be granted if the decision is attended with sufficient doubt to warrant it being considered by the Full Court, and if substantial injustice would result if leave were refused, supposing the decision to be wrong: Decor Corporation Pty Ltd v Dart Industries Inc (1991) 33 FCR 397 at 398-399. But that is only the general rule, and there will always be cases raising special considerations which must be determined on their particular facts. Even within the confines of the general rule, the sufficiency of the doubt in respect of the decision and the question of substantial injustice are not isolated considerations. They bear upon each other, and the degree of doubt which is sufficient in one case may be different from that required in another. See Sharp v Deputy Federal Commissioner of Taxation (1988) 88 ATC 4184, at 4186.
Should leave be granted?
Assuming the decision below to be wrong, the respondents would, in our view, suffer a substantial injustice if they were not allowed to raise the new plea. Assuming in favour of JLH that s 345 requires the Minister to endorse his approval of the lease in a case where an approval under s 343 has been given, that obligation will only attach where the lease that is forwarded to the Minister for endorsement is "in accordance with the terms and conditions approved by the Minister" under s 343. That is the issue the amendment seeks to raise - that the deed of variation caused the lease no longer to accord with the terms and conditions approved under s 343. In view of the potential injustice involved in denying the respondents the opportunity to ventilate that issue, we think there is sufficient doubt as to the correctness of the refusal of leave to amend to justify a reconsideration of the matter. We would grant leave to appeal.
Disposition of appeal
An appellate court must exercise particular caution in reviewing a discretionary decision relating to practice and procedure: Adam P Brown Male Fashions Pty Ltd v Philip Morris Inc (1981) 148 CLR 170 at 177. The need for caution in this case is underlined by the fact that since November 1994 the case has been managed by the primary judge, who is to be the trial judge. In Bank of New Zealand v Spedley Securities Ltd (1992) 27 NSWLR 91 at 95, after referring to the need to exercise caution in the review of interlocutory orders, Kirby P said:
There are special reasons in the present case to exercise such restraint. The litigation between the parties is self-evidently most complex. The desirability of a measure of judicial case management is self-evident .... Necessarily, the time that can be devoted by a busy appellate court to mastering the detail of such complex litigation is more limited than that available to a trial judge who bears responsibility for conducting its management and, perhaps, its trial. In the nature of the appellate process upon interlocutory orders, this Court visits only those issues which the parties bring to it. It may therefore enjoy a perspective of the whole litigation which falls far short of that enjoyed by a judge in the position that Cole J had. Therefore, to the reasons of good sense, practicality and principle which Jordan CJ collected in [Re the Will of F B Gilbert (Deceased)] must be added, in this case, the additional consideration which applies to complex litigation. This Court should conserve its intervention in interlocutory orders made in such cases to instances where legal principle or the urgent demands of justice require intervention. Otherwise, the Court of Appeal will become an obstacle to proper management of such litigation and its determination according to law.
The respondents relied on the oft-cited passage from the judgment of Bowen LJ in Cropper v Smith (1884) 26 Ch D 700 at 710-711 as to the court's generosity in relation to amendments, so that the real matter in controversy will be decided. It will be recalled that his Lordship said that an amendment was "not a matter of favour or grace" but "a matter of right ... if it can be done without injustice". See also Clough v Frog (1974) 48 ALJR 481. But times
have changed since 1884, and even since 1974: United Motors Retail Ltd v Australian Guarantee Corporation Ltd (1991) 58 SASR 156 at 157-158; Sali v SPC Ltd (1993) 67 ALJR 841 at 849. In Ketteman v Hansel Properties Ltd [1987] AC 189 at 220 Lord Griffiths, with whom Lords Templeman and Goff agreed, said:
Another factor that a judge must weigh in the balance [in deciding whether to grant an amendment] is the pressure on the courts caused by the great increase in litigation and the consequent necessity that, in the interests of the whole community, legal business should be conducted efficiently. We can no longer afford to show the same indulgence towards the negligent conduct of litigation as was perhaps possible in a more leisured age. There will be cases in which justice will be better served by allowing the consequences of the negligence of the lawyers to fall upon their own heads rather than by allowing an amendment at a very late stage of the proceedings.
On the question of injustice to the party opposing the grant of leave to amend, Bowen LJ said that costs was the "one panacea which heals every sore in litigation". But costs are not these days seen as the "healing medicine" they once were. Lord Griffiths in Ketteman at 220, responding to a submission that "there is no injustice if the other side can be compensated by costs", said:
justice cannot always be measured in terms of money and in my view a judge is entitled to weigh in the balance the strain the litigation imposes on litigants ..., the anxiety occasioned by facing new issues, the raising of false hopes, and the legitimate expectation that the trial will determine the issues one way or another.
See also The Commonwealth v Verwayen (1990) 170 CLR 394, at 464-465, 482; Bomanite Pty Ltd v Slatex Corp Aust Pty Ltd (1991) 32 FCR 379 at 387 and Cohen v McWilliam (1995) 38 NSWLR 476 at 500.
Delay can itself have serious consequences for an applicant. As Mahoney P said in FAI General Insurance Co Ltd v Burns (15 August 1996, unreported):
In commercial litigation time and justice are ordinarily closely related. A plaintiff is entitled to have his money and it may be needed for ordinary business purposes or for particular commitments. If, because of procedural delays, that money is not available, a plaintiff who has a just claim may be ruined while he is pursuing it. Therefore, in the Commercial Division, it is particularly important that litigation be conducted without avoidable delay.
Grounds of appeal
With those cautionary observations in mind we turn to the four grounds of appeal. The first is that there were insufficient reasons to refuse leave to amend at a time six months prior to the commencement of the trial. The second is that the judge proceeded upon a misconception of the facts, namely that the amendments had real potential to require substantial issues of fact to be raised by way of reply. The third is that the judge gave too much weight to the possibility that the applicant may have sued its then solicitors if the point had been raised earlier. The fourth is that the judge gave no or no sufficient weight to the fact that the proposed amendment was fatal to the bulk of JLH's claim.
The first ground invites us to substitute our own discretionary judgment for that of the primary judge. In Singer v Berghouse (1994) 181 CLR 201 at 212 Mason CJ, Deane and McHugh JJ approved this passage from the judgment of Kirby P in an earlier case:
Unless appellate courts show restraint in disturbing the evaluative determinations of primary decision-makers they will inevitably invite appeals to a different evaluation which, objectively speaking, may be no better than the first. Second opinions in such cases would be bought at the cost of diminishing the finality of litigation in a troublesome area and, sometime at least, with a burden of costs upon the estate which should not be encouraged.
In Cohen v McWilliam (1995) 38 NSWLR at 501, after referring to the above passage and listing a number of matters to be weighed in the balance by a judge in the course of coming to a discretionary decision, Cole JA said that "any review of a discretionary decision does not permit [the appeal court] to substitute its own weighting for that of the primary judge for, ... objectively speaking, the different evaluation may be no better than the first".
The primary judge, who has managed the case since 1994, was in a much better position than we are to assess the impact of the amendment on the proposed starting date of the trial, and the effect of the abandonment of that date on JLH and on the efficiency of the Brisbane registry's disposition of cases. Plainly one matter her Honour was entitled to take into account was that the proposed amendment had real potential to require substantial issues of fact to be raised by way of reply. Having just mentioned "the principles" referred to in her judgment of 3 November 1995, her Honour obviously contemplated a reply by the respondents contending that the appellants were estopped from asserting the matter the subject of the amendment. The appellants claimed there could be no estoppel against the requirements of the Act: Cudgen Rutile (2) Pty Ltd v Chalk [1975] AC 520 at 533. But Mason CJ has doubted that this principle is of general application: Attorney-General (NSW) v Quin (1990) 170 CLR 1 at 17-18. The material before her Honour showed that the State knew of the deed of variation as early as 1990. The Minister's refusal to endorse the lease was not based on or influenced by the effect of the deed. In those circumstances it is most unlikely that JLH would not plead an estoppel were leave to amend given. Mason CJ's observations are sufficient to show that the plea would not necessarily fail on the law. The plea would certainly have raised new issues of fact with the potential, as her Honour said, to interfere with the trial date.
What we have said about the first ground shows there is no substance in the second. The third ground, like the first, invites us to substitute our own discretionary judgment for that of the primary judge. The fact that a trial judge has given excessive weight to some factor is an insufficient basis for an appellate court to substitute its own discretion for that of the trial judge: Gronow v Gronow (1979) 144 CLR 513 at 537. Further, this ground involves a misunderstanding of what her Honour said. Far from giving too much weight to the possibility that JLH might have sued its solicitors, she appears not to have relied on that factor at all, but on the reasons "otherwise given", in refusing the amendment.
The final ground of appeal is another invitation to us to impose our own discretionary judgment. A complaint that inadequate weight has been given to a factor no more justifies interference than does a complaint that excessive weight has been accorded to a matter. Moreover, this ground depends on the respondents' making out their claim that the proposed amendment would be fatal to the bulk of JLH's claim. Unlike the limitation defence considered in Clough v Frog (1974) 48 ALJR 481, which the High Court said would, if established, be a "complete answer", the claim here sought to be raised may be defeated by an estoppel.
Conclusion
Unless we are to mouth the repeated cautions about discretionary judgments, case management, efficiency, practice and procedure, and the advantages of the managing judge, only to ignore them when it comes to the crunch, this appeal must be dismissed.
I certify that this and the preceding twelve pages are a true copy of the reasons for judgment of Justices Whitlam and Sundberg
........ ........ ........ ........ ........ ........ .
Associate
29 October 1996
IN THE FEDERAL COURT OF AUSTRALIA )
QUEENSLAND DISTRICT REGISTRY ) No. SG 1 of 1994
GENERAL DIVISION )
On appeal from a judge of the Court
B E T W E E N : J L HOLDINGS PTY LTD
(Applicant)
Respondent
and
STATE OF QUEENSLAND
(First Respondent)
Appellant
and
SOUTH BANK CORPORATION
(Second Respondent)
Appellant
CORAM: Whitlam, Carr & Sundberg JJ.
PLACE: Melbourne
DATE: 29 October 1996
REASONS FOR JUDGMENT
CARR J:
Introduction
This is an application, by the first and second respondents to the principal application, for leave to appeal against part of an interlocutory order made by a judge of the Court. The order allowed the respondents to make certain further amendments to its amended defence, but refused such leave in respect of one further defence which the respondents wish to raise. That part of the order is the subject of this application. The respondents' notice of motion for leave to amend was filed on 3 July 1996 at a time when a date for the hearing of the principal application had not been fixed. The order at first instance was made on 28 August 1996 by which time the principal application
had been listed for hearing for a period of four months commencing on 18 February 1997.
Factual Background
The principal application concerns certain land at Kangaroo Point, Brisbane ("the Land"). The Land, which is reserved for certain purposes, is owned by the Brisbane City Council as trustee under the Land Act 1962 (Qld) ("the Act"). Sections 343 to 345 of the Act contain provisions relating to the leasing of reserved land held on trust under the Act. Section 343 relevantly operated in the present matter to prohibit the Brisbane City Council from leasing or agreeing to lease the Land without the approval in writing of the Minister for Lands. The applicant's case is that on 23 October 1989 it obtained the Minister's written consent to a proposed lease of the Land. [The proposed lease was to extend to other lands owned by the Brisbane City Council, but it is not necessary otherwise to refer to those lands]. The proposal put to the Minister involved the development of the Land by the applicant into an amusement park. Section 345 of the Act provides for the Minister's approval to be endorsed on a lease. By the time a lease of the Land was executed, there had been a change of government in Queensland. The applicant contends that the new government had decided that there should not be a lease of the Land. The applicant pleads that when it submitted the duly executed lease of the Land for endorsement by the Minister, the Minister wrongly refused to endorse his approval on that document. Section 345 relevantly provides:
"A lease to which this Division applies which is not endorsed with the Minister's approval shall have no validity or effect in law and in the case of a lease with respect to land granted in trust shall not be capable of registration under "The Real Property Acts, 1861 to 1960"."
The applicant makes a number of claims, including claims for damages for breach of lease, for breach of agreement for lease, for misfeasance in public office by the Minister, for civil conspiracy and for contravention of s.45D of the Trade Practices Act 1974 (Cth). The pleadings are more particularly described in the reasons for judgment of Sundberg J. We were told from the bar table at the hearing of the application for leave to appeal that the amount claimed is about $60 million.
Part of the applicant's case is that once the Minister has given his or her approval in writing to the proposed lease under s.343 of the Act, then the Minister or the Minister's successor to that office is obliged to endorse his or her consent on the executed lease. The respondents have always contended to the contrary. In an affidavit in support of the motion to amend, the respondents' solicitor says that it was recently discovered that between the time when the Minister was said to have approved the lease under s.343, but before the lease was submitted to the Minister for endorsement under s.345, the parties to the lease executed a deed of variation which effected what is contended to be a material variation to the lease. If leave to amend were granted, the respondents wish to argue that since s.345 requires that the lease submitted for the Minister's final endorsement must be "in accordance with" the proposed lease approved under s.343, the statutory scheme was not complied with in this matter, with the result that the applicant cannot contend that the Minister was obliged to endorse his consent under s.345.
The Decision at First Instance
The learned primary judge dealt with this part of the motion to amend in the following
terms:
"The Land Act Amendments
These amendments touch on what has always been regarded as a core issue - the effect of s.345 of the Land Act 1962 (Qld). At present the defence does not admit that any approval in writing was given pursuant to s.343 of that Act and denies that the Minister was then required to endorse approval under s.345. The new matter sought to be raised in paragraph 25, by way of particularisation of that latter allegation (but nevertheless raising a substantial new allegation), is that the applicant never submitted a lease for approval which was in accordance with the prior approval. It is said that it was only recently discovered that there was a material discrepancy between the two. I have no reason to doubt the explanation. But it has not said why it took so long to uncover the matter when the documents had been with the respondents for a long time. The principal contention for the applicant was that the matter was covered by my judgment of 3 November 1995 with respect to amendments to the defence then sought. It is not the same issue with which I was there concerned. Nevertheless the principles which there applied ought also be applied here. The respondents have persisted in maintaining that the questions surrounding the prior approval were really not in contention. It is of some importance now that, it seems to me, it has real potential to require substantial issues of fact to be raised by way of reply. It places this proposed amendment in a different category. I do not have the same level of assurance about the effect of the amendments and the pleadings cannot be permitted to remain open in this way so close to trial. The applicant also points out that it might have joined its then solicitors who are responsible for the leases. Given the existence of professional indemnity insurers, one could say that this may have been a real possibility. In any event for the reasons otherwise given I consider that leave to raise this new allegation ought to be refused."
The expression "reasons otherwise given" seems clearly to be a reference to the following passages at the commencement of her Honour's reasons for judgment:
"The respondents seek leave to further amend their defence. At about the time that leave was sought, trial dates were allocated for the hearing of this matter for four months at the commencement of the court year in 1997. The matter has been the subject of substantial case management. In the latter part of 1995 and again earlier this year the focus of directions hearings has been the definition or limitation of issues in the proceedings, although this principally concerned the statement of claim. In that process the respondents were alerted to the extent of non-admissions contained in their pleading and to the fact that issues were not squarely raised. The matter was left for some time on the basis that the respondents would
review their pleading. Leave was most recently sought by them to amend their defences in November 1995. When the matter came before me in March and May 1996 it was anticipated that subject to a plea of limitation and mitigation the pleadings were closed. What is now sought extends beyond the matters foreshadowed and is explained by new Counsel having considered the pleadings afresh. Nevertheless the respondents may be reproached for not attending to these matters earlier. Whether leave to amend is to be granted is not however to be resolved by punishing the respondents. I have, in the context of this case, where there is only a period of about six months from the time that leave was sought to the commencement of the hearing, taken the view that the most relevant consideration is whether the amendments would jeopardise those hearing dates. If that were the case, I would be inclined to disallow the amendments. Such an approach takes account that the loss of the hearing at that time could be said to amount to severe prejudice to the applicant, particularly since the matter, I would think, would be unlikely to be relisted until the following year. It also takes account of a shift in attitude and that in these times a party's "right" to present their case or their defence is viewed as subject to some limitation.There are a number of amendments which correct the failure to make admissions as to fact. Largely these are not the subject of objection to leave being granted. In dealing with the amendments sought I have used the headings referred to by the respondents, the applicants for leave. I have then identified where leave is not granted." (Emphasis added)
Whether leave to appeal should be granted
In Decor Corporation Pty Ltd v. Dart Industries Inc (1991) 33 FCR 397 at pp.398-400 a Full Court of this Court reviewed several of the cases on the question of whether leave should be granted to appeal against an interlocutory decision. These were described as not laying down any rigid rules (which would be contrary to the unqualified terms of s.24(1A) of the Federal Court of Australia Act 1976 (Cth) which confer an unfettered discretion in that regard) but as providing "general guidance" which a court should normally accept. The Court referred also to the important distinction between an interlocutory decision determining a substantive right and one on a point of practice, the latter requiring "a tight rein" (an expression from the well-
known passage in In Re the Will of F.B. Gilbert (dec.) (1946) 46 S.R. (N.S.W) 318 at p.323).
As mentioned above, the respondents seek leave to appeal from an interlocutory order which concerns a matter of practice and procedure. The approach to be adopted in such matters is to be found in a passage in the majority judgment of the High Court of Australia in Adam P Brown Male Fashions Pty Ltd v. Philip Morris Inc. (1981) 148 CLR 170 at p.177. After noting that appellate courts exercise particular caution in reviewing decisions pertaining to practice and procedure, and citing the cases which range on either side of the argument that not only must there be error of principle but (cumulatively) the decision appealed from must work a substantial injustice to one of the parties, their Honours said:
"For ourselves, we believe it to be unnecessary and indeed unwise to lay down rigid and exhaustive criteria. The circumstances of different cases are infinitely various. We would merely repeat, with approval, the oft-cited statement of Sir Frederick Jordan in In Re the Will of F B Gilbert (Deceased) (1946) 46 S.R. (N.S.W.) 318 at p.323 [I omit the quotation and a reference to two further authorities].
...
It is safe to say that the question of injustice flowing from the order appealed from will generally be a relevant and necessary consideration."
With the greatest of respect to the learned primary judge, and fully understanding the long interlocutory history of the matter and the position in which her Honour and the parties appeared to have been placed, my reading of her reasons indicates what I consider to be an error of principle. I refer to the sentences which I have underlined in the passages set out above. My construction of those reasons is that leave to amend
was refused because the most relevant consideration was said to be whether the amendments would jeopardise the hearing dates. In circumstances where the matter was unlikely to be relisted until the following year, such delay "could be said to amount to severe prejudice to the applicant".
In my opinion, her Honour erred in principle in focusing on the "severe prejudice to the applicant" of a delay in the hearing to the apparent exclusion of the potential injustice to the respondents in not being permitted to introduce the proposed defence. In my view, shutting the respondents out from such a defence (one which cannot be said to be obviously futile) amounts to a potential injustice to the respondents which should have been weighed most carefully against the prejudice to the applicant flowing from the anticipated delay in the hearing. The potential injustice to the respondents arose out of being precluded from relying on a defence which, if maintained at the hearing, might defeat at least some of the claims made against them. As Sir Samuel Griffith C.J. observed in the civil case of Rowe v. Australian United Steam Navigation Co Ltd (1909) 9 CLR 1 at p.6:
"... the right of every man to a fair hearing before he is condemned lies at the root of the tree of justice". [I acknowledge Priestley JA's judgment in Cohen v. McWilliam (1995) 38 NSWLR 476 at pp.477 and 483 as my source for this quotation].
In Henderson v. Amadio Pty Ltd (unreported, Full Court Judgment No. 518 of 1995, 15 June 1995 at p.5), Northrop J referred to the question of injustice mentioned in Adam P Brown and said:
"It is often put that, in order to satisfy that requirement, there must be some substantial or manifest injustice arising from the existence of the
order from which leave to appeal is sought. It is also a well known general principle that normally applications for leave to amend a pleading should be granted unless substantial injustice is caused to the opposing party which cannot be overcome by an adjournment or by the awarding of costs. This is so because of the need to ensure that justice is done between the litigants. Justice can only be done if the real issues between the litigants can be determined from the pleadings as finally determined to illustrate what is at issue between the parties and what the rights of the parties then are."
Similarly in Caruso Australia Pty Ltd v. Portec (Australia) Pty Ltd (unreported, Federal Court, 13 February 1986) - [a case cited with approval by Davies J in National Australia Bank Ltd v. Nobile (1988) 100 ALR 227 at p.236, a passage which in turn was cited with approval by the Full Court of this Court in Londish v. Gulf Pacific Pty Ltd (1993) 45 FCR 128 at p.141] Muirhead J said:
"The powers of this Court to amend pursuant to Order 13, r.2 are more than wide, they tend to be remedial in that "all necessary amendments shall be made for the purpose of determining the real questions raised by or otherwise depending on the proceedings, or of correcting any defect or error in any proceeding, or of avoiding multiplicity of proceedings". Consideration of the authorities indicates that an amendment should only be refused where bad faith is demonstrated or where the consequential injury or prejudice to the other party is incapable of remedy. And this reasoning applies to amendments sought during trial or on the eve of trial."
In Londish (at p.142) the Full Court rejected an interpretation of two authorities, relied upon by the applicant/respondent to the motion in this matter, as representing a "rolling back" of these long accepted principles. The authorities were the House of Lords decision in Ketteman v. Hansel Properties Ltd [1987] AC 189 (and in particular at p.220) and Sheppard J's decision in Commissioner of Taxation v. Brambles Holdings Ltd (1991) 28 FCR 451. As the Full Court pointed out, in the former case Lord Griffiths reiterated the principle thus:
"Whether an amendment should be granted is a matter for the discretion of the trial judge and he should be guided in the exercise of the discretion by his assessment of where justice lies. Many and diverse factors will bear upon the exercise of this discretion."
An assessment of where justice lies must involve weighing the degree of injustice to one party flowing from the exercise of the discretion to allow the amendment against the degree of injustice to the other party flowing from a decision to refuse the amendment. It may well also involve other factors, depending upon the circumstances, such as the public interest in the efficient administration of justice. As Priestley JA observed in Cohen v. McWilliam at p.478, there is nothing "particularly modern (or wrong)" in taking efficiency into account, but nothing obliges a Court to give decisive weight to that factor. I am not suggesting that is what happened at first instance in this matter. My only point is that the weighing process to which I have just referred does not seem to have been engaged in.
If I am correct in identifying what I consider to be an error in point of legal principle, then leave to appeal should be granted: Lovell v. Lovell (1950) 81 CLR 513 at p.532. The exercise of the discretion thus having been vitiated, this Court should exercise the discretion afresh: Londish at p.143.
Should the appeal be allowed?
The applicant says that to allow the proposed amendment will work an injustice to it. The first injustice which it identifies mirrors the reasons of the learned primary judge i.e. that the proposed amendment carries the potential for further substantial issues of fact and the likelihood that the trial date will be vacated. The respondents say that this
will not be the case. The respondents say that they are simply pointing to a deficiency in the applicant's case and they do not foresee putting any further evidence before the Court. I shall work on the assumption that further substantial issues of fact will arise. However, I do not think that, even if there is a need for:
.the filing of a reply (if none has been filed) or
.an amendment to the reply;
.the adducing of further evidence;
.obtaining further discovery; and
.the issue of subpoenas for further production of documents before trial;
those factors are determinative. In my view, the situation can be remedied by making orders expediting discovery, production of documents by third parties, amendment of the applicant's pleadings and the like. Orders could also be made for this issue to be dealt with, not in the first week of the trial, as counsel for the respondents anticipated, but later at a more convenient part of the hearing or even at the end of the proposed four month hearing. Furthermore, in exercising the discretion afresh, I would have suggested the addition of rigorous conditions. In Cohen v. McWilliam, Priestley JA listed some 63 relevant cases in a schedule at the end of his reasons for judgment. At p.479 his Honour observed that there was:
"... not one example in the schedule where a litigant has been shut out by procedural default from litigating (sometimes on severe conditions) a defence which the Court felt was arguable".
The conditions which I have in mind include orders to the effect that the respondents pay (regardless of the outcome of the case) all the applicant's additional costs incurred by reason of the expedition of the matters of amendment of pleadings, revisiting of witnesses for further proofing, obtaining further discovery and further documents under subpoena. Those directions would all be designed to ensure that the trial date was not vacated, that the issue was properly ventilated at an appropriate time during the course of the hearing and all of this at the expense (on a solicitor and client basis) of the respondents.
Secondly, the applicant says that it would be unjust to allow the proposed amendment because, had the amendment been made earlier, it would have sued its former solicitors for having occasioned the variations to the lease documentation which might enable the respondents to escape liability in the present proceedings. This would appear to be a matter which her Honour may have taken into account but, as I read her reasons for judgment, was by no means determinative. It may well be that her Honour did not take it into account at all, as Sundberg J suggests. The respondents say that the applicant has never disclosed the date upon which it first discovered this alleged neglect by its former solicitors. The matter is said by them to be relevant to the question when the limitation period expired. In fact the respondents contend that the limitation period for that proposed cause of action has not yet expired. In my view, it is impossible to determine upon the material before us whether the applicant is prejudiced in the manner alleged. There is some substance in the respondents' submission that all that the applicant has said to date is that it would have to give consideration to suing those solicitors. There is also substance, in my view, in the argument that there may well be insufficient causal connection between the proposed amendment and the prejudice alleged by the applicant. The applicant, so it was put, was always faced with the task of proving that it had complied with the statutory
formula for obtaining endorsement to its lease. The applicant must have been aware of the amendments to the lease upon which the respondents now seek to rely. If the making of those amendments justified the Minister's refusal to endorse the lease then the applicant must have been aware of that matter, through its solicitors, for some considerable time. I think that there is some merit in these submissions. Finally, it would seem that the Minister did not refuse to endorse the lease until 4 October 1991. The relevant limitation period in Queensland is six years and it is not sufficiently clear in my view, that the limitation period for suing the former solicitors has expired.
These were the main matters raised on behalf of the applicant. There were many others, including an often repeated assertion that the learned primary judge was in a far better position than we are to assess the matter. This was due, so it was put, to her Honour having had the management of all the interlocutory proceedings since 4 November 1994, having heard detailed and complex interlocutory "arguments" and having delivered four sets of reasons for judgment on interlocutory matters. I acknowledge her Honour's distinct advantage in that regard. I have considered all the matters which the applicant has put forward, but I do not propose to deal with the various matters point by point. I have had regard to the interlocutory history of the application and in particular to what transpired in relation to the pleadings at various stages. The respondents are clearly responsible for the situation which has developed. But their application to amend was made over seven months before the date upon which the hearing has been scheduled to start. I regard that as a most significant factor. There are far better sanctions for procedural default than potential injustice.
In my opinion, the interests of justice lie in allowing the appeal, granting leave to the respondents to amend their defence as sought, but on the rigorous terms referred to above and any others which will reasonably adjust the situation brought about by the respondents' belated application to amend. The basic thrust of those conditions would be that the dates for the trial (which is due to start in just under four months time) should not to be vacated, unless the trial judge sees fit so to order, and that any expense incurred by the steps required to enable the trial dates to be retained, be borne by the respondents in any event.
I certify that this and the preceding nine
(9) pages are a true copy of the Reasons for
Judgment of Justice Carr.
Associate:
Date: 28 October 1996
Counsel for the Appellants: Mr R Hanson QC and Mr J McKenna
Solicitor for the Appellants: Crown Solicitor for the State of
Queensland
Counsel for the Respondent: Mr T Gray QC and Mr T Matthews
Solicitors for the Respondent: Minter Ellison Baker O'Loughlin
Date of Hearing: 11 October 1996
Date of Judgment: 29 October 1996
Counsel for the Appellants: R Hanson QC and J McKenna
Solicitor for the Appellants: B T Dunphy, Crown Solicitor for the State of Queensland
Counsel for the Respondent: T Gray QC and T Matthews
Solicitors for the Respondent: Minter Ellison Baker O'Loughlin by their agents Dunhill Madden Butler
Date of Hearing: 11 October 1996
Place of Hearing: Melbourne
Date of Judgment: 29 October 1996
4
21
0