Randwick CC v Burnett and Burnett

[2004] NSWSC 715

CITATION:	Randwick CC v Burnett & Burnett [2004] NSWSC 715
HEARING DATE(S):	12/07/04, 13/07/04, 14/07/04, 15/07/04, 16/07/04, 21/07/04, 22/07/04, 18/08/04
JUDGMENT DATE:	12 October 2004
JUDGMENT OF:	Shaw J at 1
DECISION:	(1) Accordingly, I propose to order and direct that: (a) leave to amend be granted as sought by the plaintiff and that the defence to the cross claim be amended accordingly; (b) subject to any other or further arguments, that the costs of this application for amendment (both in respect of the written and oral submissions) should be the costs of the defendants in the proceedings. (2) Further directions should now be given with a view to the just and expeditious dispossession of this matter, including the possible recall of witnesses so as to allow procedural fairness to the defendants in relation to the amendment that I have granted.
CATCHWORDS:	Interlocutory application - Application by plaintiff to amend its pleadings - Amendment arising out of cross claim filed by defendants to the effect that the defendants were entitled to certain gym equipment left in the premises and that, despite their request, they had been refused access to the equipment and the premises
LEGISLATION CITED:	9 Geo IV c 11 Impounding Act 1898 (NSW) Impounding Act 1993 (NSW) ss 3(a), 15, 20(5), 45(2), Legal Profession Act, 1987 (NSW) s198L Supreme Court Rules 1970 (NSW) Pt 20, r 1(2)
CASES CITED:	Baillie v Auburn M C (1919) 5 LGR 9 Banks v Ferrari [2000] NSWSC 874 (7 August 2000; revised 4 September 2000) Commonwealth Bank of Australia v Mehta (1991) 23 NSWLR 84 Hibbert v McKiernan [1948] 2 KB 142 Horton v Jones & Ors (No 2) (1939) 39 SR (NSW) 305 Ketteman v Hansel Properties Ltd [1987] 1 AC 189 Queensland v J L Holdings Pty Ltd (1977) 189 CLR 146 Woolworths v Waverley Council [1999] NSWSC 308 (20 April 1999)
PARTIES :	Randwick City Council John Robert Burnett & Carmel Burnett
FILE NUMBER(S):	SC 20947 of 1997
COUNSEL:	R B Wilson (Plaintiff) M J Stevens (Defendants)
SOLICITORS:	Bowen & Gerathy (Plaintiff) Corrs Chambers Westgarth Lawyers (Defendants)

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IN THE SUPREME COURT
OF NEW SOUTH WALES
COMMON LAW DIVISION
COMMON LAW LIST

SHAW J

Tuesday 12 October 2004

20947 of 1997


RANDWICK CITY COUNCIL (PLAINTIFF)

v

JOHN ROBERT BURNETT & CARMEL BURNETT (DEFENDANTS)
JUDGMENT

1 Shaw J: This case concerns an attempt by Randwick City Council (the plaintiff) to recover rents said to be owed by the defendants in relation to a gymnasium at Heffron Park within the area of Randwick Council and which has been variously described as located in Maroubra or Matraville. The critical question, which will need to be determined in due course, is whether the defendants are personally liable for that rent or whether they are protected by some corporate entity which, in point of law, may have been obliged to pay the rent. This defence is mounted despite the fact that it seems as a matter of practical reality, that the two personal defendants may have operated the gym at material times, although I make no final finding on this because the evidence is incomplete.

2 The gymnasium was variously described in its initial stages (more exotically) as Tarzan and Jane, then as Pace Gymnasium, and finally as Gold’s Gymnasium. The question of the corporate responsibility to make payments pursuant to a sub-lease will be the subject of further evidence and submissions before this court. I have an open mind about these questions and will be assisted by the submissions on questions of fact and law by counsel for the respective parties.

3 The present question is an interlocutory one, being an application by the plaintiff to amend its pleadings.

4 The application for amendment arises out of a cross claim filed by the defendants to the effect that the defendants were entitled to certain gym equipment left in the premises and that, despite their request, they had been refused access to the equipment and the premises. It is said by the defendants that the plaintiff has unlawfully converted the equipment.

5 Solicitors for the plaintiff have sought leave to file an amended defence for the cross claim based, in essence, on provisions of the Impounding Act 1993 (NSW) (the Act). The amendments are detailed but, in summary, contend that the plaintiffs sold the gym equipment lawfully, arising out of rights that were exercised in accordance with the provisions of the Act.

6 Reliance by the plaintiff upon this legislative provision was announced in the opening of counsel for the plaintiff on the first day of the trial. Thus, the defendants were given due notice of it, particularly in the light of the events that have since transpired. The trial proceeded for some days before me, but then was adjourned by consent because both parties felt the need to revisit the discovery process and to produce further documents. It is said by the defendants that the substantial fault was on the part of the plaintiff, but I do not need to express any opinion on that point for present purposes. The important point is that an adjournment has been granted and the matter will be resumed at a date to be determined either by agreement between the parties or by the court. Hence, it seems to me that any prejudice in terms of surprise, or to resort to a cliché of legal discourse, trial by ambush has been effectively negated by the stubborn reality of an adjournment which will obviously give the defendants adequate time to consider the new matter which is now sought to be pleaded. Moreover, the plaintiff has expressly and candidly indicated to the court that any witnesses previously the subject of cross-examination will be made available for further cross-examination if the amendment is granted, and that therefore the defendants will have every opportunity to explore these issues with witnesses whether they have been excused from further attendance or not. Finally, any detriment to the defendants can be dealt with by way of a carefully crafted costs order which would, depending upon the outcome of the proceedings, be designed to compensate for any costs thrown away by reason of the relatively belated application to amend the pleadings.

7 In my opinion, the determination of proceedings before this court should, if it can be avoided, not be determined on pleading points or matters of form but should be determined upon the substantial merits and justice of the particular case. I believe that is common ground. The defendants realistically recognise that the inclination of modern of courts is to allow amendment of pleadings at any stage of the case if prejudice can be obviated in the ways that I have suggested. Obviously, procedural fairness is paramount, but subject to that consideration, parties should be able to agitate all relevant issues reasonably open to them in the one proceeding, as distinct from encouraging multiple or subsequent proceedings raising further and other matters. The contemporary court system has its emphasis upon efficiency, expedition and the due resolution of all issues which are outstanding between parties. The times when curial proceedings were determined on the basis of bare technicalities or pleading points are over.

8 The practical, modern rules of this court, Part 20, rule 1(2), make it clear that all “necessary” amendments “shall” be made for the purposes of determining the real questions, correcting defects or avoiding multiplicity of proceedings. It follows that the court, in entertaining an amendment application, must balance considerations of prejudice; compensation by consequential and appropriate costs orders; whether the amendment is made for a proper purpose; whether adjournment allows for procedural fairness; whether the amendment would serve the administration of justice; and whether (and this seems to me to be the issue of substance in the present debate) the amendment would be “obviously futile”, the latter terminology having been used by Sir Frederick Jordan in Horton v Jones & Ors (No 2) (1939) 39 SR (NSW) 305 at 3110.

9 I think it is correct to identify the real and substantial ground of objection to the amendment of the proceedings by the defendants as being that the defence to the cross claim now sought to be propounded is either futile or not reasonably arguable. This argument depends upon a consideration of the Act. It is also suggested that the amendment is not made in “good faith”, that the plaintiff has not discharged the onus imposed upon it to persuade the court that an amendment should be granted at this late stage, that the defendant should not be put to the time, trouble and expense of meeting a late amended defence which is futile when they are “little people” as distinct from the plaintiff, being a governmental body with substantial resources. I have had regard to all of these contentions.

10 It is common ground that the determination of the question of whether an amendment should be allowed at this stage is a matter of discretion, a discretion however which must be exercised judicially and not in some unfettered or arbitrary way. It is obviously a discretion which must consider the due administration of justice and any prejudice to the parties resulting from such an amendment if it were to be allowed.

11 Counsel for the defendants cogently pointed to observations by Lord Griffith in Ketteman v Hansel Properties Ltd [1987] 1 AC 189 at 233, where his Lordship regarded as relevant factors as to the disallowance of the pleading amendment that the plaintiffs were “personal”, the trial was nearly ended, the merits of the case had been fully investigated, the defendants had been parties to the litigation for some years and that “they had no one but themselves to blame for not pleading limitation in the original defence if they had wished to do so”. Accordingly, it was held that there were “ample grounds” upon which the discretion could be exercised to deny a particular amendment of the pleadings, which was sought in that case.

12 There does seem to be a distinction drawn in the case law between commercial cases, for example between a developer and government, and on the other hand between an individual leading to “personal strain” which may justify the conclusion that costs are not an adequate remedy for prejudice caused by amendment sought to the pleadings: Queensland v J L Holdings Pty Ltd (1977) 189 CLR 146 at 155. In Commonwealth Bank of Australia v Mehta (1991) 23 NSWLR 84 at 107, Waddell AJA suggested that, perhaps, Lord Griffith had taken a “more unqualified view” of the discretionary tests than the other members of the House.

13 Paying due regard to all of these criteria, it is my view that I should focus upon the substance of the opposition to the amendments namely that the relevant legislation would not provide any reasonable defence to the cross claim at this late stage, that the defendant should not be put to the time, trouble and expense of meeting an amended defence which is futile or not reasonably arguable.

14 The defendants fundamentally rely upon s 45(2) of the Act which provides that:

If an item is sold or disposed of under a power conferred by this Act, the following provisions apply:
¤ the buyer obtains the ownership of the item,
¤ the item is discharged from any right, interest, trust or obligation to which it was subject immediately before sale,
¤ the person who was the owner of the item immediately before the sale or disposal ceases to have any claim in respect of the item or any right of action in respect of the sale or disposal except as specifically provided by this Act.

15 In reliance upon this provision, the plaintiff says that there was a duly appointed impounding officer who commenced investigation on 14 July 2003. It is said that she believed that the items in dispute had been left in the Heffron Park gymnasium after the occupants had left those premises. She made written inquiries to find out the name of the owner of those goods, and attended at the premises. She made enquiries with the Australian Securities & Investments Commission (ASIC). Those inquiries yielded only the result that there was a single telephone call from a man who identified himself by the surname Burnett. The advice given to the impounding officer was that nothing had been heard further about the “Gold’s gym equipment.”

16 The evidence then said that the impounding officer formed a belief that the goods had been left unattended and (arguably) abandoned. The impounding officer, it is attested, gave consideration to the requirement of the legislative regime and formed the belief that the results of her inquiries did not reveal the name and address of the owner of the goods and she did not otherwise know who the owner was. Subsequently, the council offered the goods for sale, and argues that this was a statutory duty imposed upon it. There is no doubt that goods were located in premises within the precinct of the Randwick City Council, that is to say within the “area of operations” defined by s 15 of the Act. Hence, it is said by counsel for the plaintiff, that the plaintiff has an arguable case as to the issue that it seeks to expressly plead.

17 It is further said that it was only when the relevant sales were effected earlier this year that the application of the statutory provisions to which I have referred became of possible relevance to the proceeding. As counsel rightly says, reference to this legislative provision was indicated with clarity at the commencement of the hearing of the trial before this court, and although it is fairly conceded that there has been delay in express reliance upon the statute in the pleadings, nonetheless the delay does not cause any irretrievable prejudice to the defendants.

18 The Act provides for the impounding of certain animals, motor vehicles and other things, to provide for their release or disposal and also had the effect of repealing the Impounding Act 1898 (NSW). The 1898 Act was a piece of consolidating legislation to deal with the laws relating to the impounding of livestock. Its focus was upon animals including cattle, horses and sheep. On the other hand, the Act of 1993 is a more compendious regime which has as one of its objects the empowering of authorised persons to impound and deal with not only animals but also “articles” in public places and places owned or under the control of certain public authorities, in circumstances where they have been abandoned or left unattended: see s 3(a).

19 A motion to enact an Impounding Act was put to the Legislative Assembly of NSW, as a part of four cognate bills in November 1992. Following consultation, the bills were reintroduced on 11 March 1993 with some changes, however, the Minister for Local Government harkened back to his earlier speech. In the later incorporation of the speech in Hansard (Legislative Assembly of NSW, 27 November 1992, 10389 at 10434 - 10435) it was said that:

Impounding officers will have power to impound an article abandoned or left unattended…. [although] the impounding authority must inquire who the owner is.

20 There is a significantly broader concept of “public place” than was contemplated in the definitions contained in the statutory predecessors of this legislation: W H Mocatta, Impounding Law, (Sydney, The Law Book Company of Australasia Ltd, 1910) at 63.

21 The provenance of the legislation lies in statutory laws of the United Kingdom intended to deal with “tortious liability for animals, distress damage feasant and the duty to fence”: see generally Glanville Williams, Liability for Animals, (Cambridge, Cambridge University Press, 1939).

22 In 1828, the Parliament of the United Kingdom passed legislation “to authorise the erection of Pounds and for regulating the impounding of Cattle” in the colony of New South Wales: 9 Geo IV c 11. Cattle that were not claimed were to be sold. The proceeds of the sale were to go Treasury “in trust” for the owners, and “after twelve months to be applied to the use of the poor” (perhaps being an early example of the Welfare State).

23 In Liability for Animals (above), the New South Wales 1898 legislation is noted by Glanville Williams at 122, as is the case law, which indicates that a council is liable in damages for breach by a pound-keeper of his or her statutory duties: Baillie v Auburn M C (1919) 5 LGR 9. This text, at 123, also notes that in some jurisdictions “rough justice” is allowed by permitting the landowner to kill the trespassing animals.

24 This is a topic of public law which has be characterised as “somewhat obscure”: W H Mocatta, Impounding Law, (Sydney, The Law Book Company of Australasia Ltd, 1910) at iv.

25 I shall now turn my attention to the substance of the argument put by the defendants as to why, so it is asserted, the amendment would be futile or not a reasonably arguable defence to the cross claim.

26 The first reason advanced by the defendants as to why the reliance upon the Act is not reasonably open or would be futile is that there was a failure to comply with the requirements of statutory notice under s 20(5) of the Act. This requires notice in writing of the fact that the item has been impounded and that it will be sold or disposed of within a stated period of not less than 28 days. There may be some substance in the defendant’s argument in this respect but in my view it is a matter to be determined at trial on the basis of a full consideration of the evidence and not on an interlocutory basis. I do not regard the point as precluding any reasonable or arguable basis of the defence which is sought now to be advanced.

27 It is then said by the defendants, and I think with greater force than the earlier point, that the goods were not to be found in a “public place” under the dictionary definition of the statute. However, in a somewhat circular fashion, the Act defines a public place as including:

a place which, although privately owned, is a place to which the public are permitted to have access for the purposes of business or leisure or to use as a thoroughfare.

28 It seems that the gym equipment had been removed to a storage facility operated by a private company, and it may be that these premises were not normally open to the public or were perhaps not a place under the control of the council. In my view, the defendants do have a plausible argument that, given the nature and character of the premises where the goods were stored, the premises should not be characterised as a “public place” within the meaning of the statute. However, I am unable to hold that the argument sought to be raised by the plaintiff is hopeless, futile or not reasonably arguable. In part, the ultimate adjudication of these matters will depend upon a full consideration of the evidence, which is not practicable at this stage in relation to an interlocutory application of this kind. In my view, and in the exercise of my discretion, I think that it is desirable that the plaintiff be allowed to agitate the issue even though at the end of the proceedings it might fail.

29 Then it is said that the plaintiff is not able to establish that the gym equipment was “abandoned”. The defendants have not asserted “ownership” of the goods but they have asserted a right to possession. And this seems sufficient to meet the definition of “owner” in the Dictionary section of the Act which states that an “owner of an animal or article means any person who alone or jointly is entitled, whether at law or in equity, to possession of the animal or article”.

30 Under s 15 of the Act the impounding officer is empowered to impound an article within his/her “area of operations” if the officer “believes on reasonable grounds that the article has been abandoned or left unattended” (my emphasis).

31 Although there are apparently no authorities directly in point under s 45(2) of the Act, two observations have been made by judges of this court as to s 15 of the Act in relation to the authorisation of an impounding officer to impound an article “on reasonable grounds”. In Banks v Ferrari [2000] NSWSC 874 (7 August 2000; revised 4 September 2000) Dowd J held at [109]:

It is not open to any person to abandon title to somebody else’s property. If the right to possession was the plaintiffs, then Malgrae, cannot abandon that right. In any event the defendant’s action in blocking access to the goods prevents it asserting that anyone abandoned the goods.

32 In Woolworths v Waverley Council [1999] NSWSC 308 (20 April 1999), Hidden J held at [47] and [47]:

In the Macquarie Dictionary the word "abandon" is defined, relevantly for present purposes, as "to cast away or leave personal property with no intention of reclaiming it, thereby making the property available for appropriation by any person". This is consistent with the legal notion of abandonment to be found, for example, in the law of larceny: Hibbert v McKiernan [1948] 2 KB 142.
….
Counsel for the defendant suggested that a trolley left in the street by a customer of the plaintiff might properly be described as "abandoned" by that customer. I do not agree. I accept the plaintiff's argument that the word should be confined to articles relinquished by their owner.

33 I accept the argument of the defendants that judicial comity would indicate that I should follow these dicta unless persuaded that they were wrong. I am not presently so persuaded, and it is obvious therefore that the plaintiff has some obstacles in its way in presenting the defence that is now propounded. However, I am unable to regard the plaintiff’s position as unarguable. The officers of the council made inquiries at two addresses at which the defendants might have been expected to be located. It seems that the defendants had gone from the gymnasium. Equipment was left. The unchallenged evidence is that the relevant officers of the council had a belief that the equipment had been abandoned. Hence, the only question is whether that belief was “reasonable”. It is at least arguable that that was a reasonable belief in the circumstances of the case.

34 It is said then that there was not a full and frank disclosure in the material filed before this court by the plaintiff, and in particular there is no explanation as to why the plaintiff did not inquire of its own solicitor acting in the matter and/or cause inquiries to be made from solicitors for the defendants acting in related matters to provide facilitation of notice of the impounding of the equipment. It is also said that the plaintiff failed to specify in its affidavit evidence the particular files which were examined by officers of the council. I regard the latter point as insubstantial. The fact is that the evidence indicates that relevant files were looked at. There was no cross examination of the council officers as to which particular files they examined. In my view, the evidence is sufficient to establish a reasonably arguable case.

35 As to good faith, it is suggested that the cross examination of the solicitor for the plaintiff indicated that she had not fully considered the (unreported) case law and all of the relevant statutory provisions before providing a certificate under s 198L of the Legal Profession Act, 1987 (NSW). There may have been some imperfections here. However, I am faced with a proposition put from the bar table by experienced counsel that his client has an arguable case, that he wants to amend the pleadings, that there is no real prejudice to the defendants which cannot be met by the adjournment which has already taken place and/or costs orders. Although certificates under that particular legislative provision are obviously of importance and should regarded as a solemn matter, I have formed the view that the matter is arguable and ought to be entertained by the court. It is true that the solicitor for the plaintiff conceded that the defendants asserted an entitlement to the possession of the goods, and contrasted this with ownership. It is true that the solicitor’s affidavit asserted that the defence was “reasonably arguable” although she conceded that she had only briefly looked at the unreported cases on these provisions of the Act. It may be that the defendants can make out a case that they had never abandoned the property. But it is nonetheless a case I think should be heard on the basis of full evidence and submissions and determined at the end of the trial rather than on an abbreviated interlocutory basis.

36 Accordingly, I propose to order and direct that:

(a) leave to amend be granted as sought by the plaintiff and that the defence to the cross claim be amended accordingly;

(b) subject to any other or further arguments, that the costs of this application for amendment (both in respect of the written and oral submissions) should be the costs of the defendants in the proceedings.

37 Further directions should now be given with a view to the just and expeditious dispossession of this matter, including the possible recall of witnesses so as to allow procedural fairness to the defendants in relation to the amendment that I have granted.

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Last Modified: 10/15/2004