Rebenta Pty Ltd v Peter Wise

[2004] NSWSC 830

CITATION:	Rebenta Pty Ltd v Peter Wise [2004] NSWSC 830
HEARING DATE(S):	06/09/04, 07/09/04
JUDGMENT DATE:	7 September 2004
JUDGMENT OF:	Shaw J
DECISION:	The Court orders that: 1. The plaintiff file a further amended statement of claim in the form of exhibit 1 forthwith; 2. The defendant file a defence within 28 days; 3. The defendant file any further evidence, including any expert evidence, arising out of the amendment within 28 days. The Court notes that the plaintiff has already informed the court that it does not wish to rely on any further evidence in relation to the amendment; 4. The plaintiff granted leave to file any evidence in reply within 28 days from receipt of evidence of the defendant; 5. The defendant is granted liberty to apply for any further interlocutory orders, for example, further discovery, the issue of subpoenas and the like, within 28 days; 6. The defendant file any expert building evidence within 28 days and direct pursuant to Part 36 rule 13CA, that there be a conclave of experts so as to produce a joint report within 28 days thereafter; 7. Matter is to be referred to the list Judge; 8. Costs occasioned by the late amendment to the statement of claim should be the defendant's costs in the proceedings, including costs thrown away as the result of the vacation of the hearing dates; 9. Costs incurred in relation to the late evidence served by the plaintiff reserved.
CATCHWORDS:	Claim in the nature of an allegation of professional negligence against a solicitor, who formerly acted for the plaintiff - Interlocutory judgment - Seeking to amend the Statement of Claim
LEGISLATION CITED:	Supreme Court Rules 1970 Part 20 r 1(2), r 4(1) and (5), Part 36 r 13CA
CASES CITED:	Air Link Pty Ltd v Paterson (No 2) (2003) 58 NSWLR 388 AT [45] Black v May, Councillors and Citizens of South Melbourne (1964) 38 ALJR 309 at 310 Clough & Rogers v Frog (1974) 48 ALJR Cropper v Smith (1884) 26 Ch D 700 at 710 Golski v Kirk (1987) FCR 143 McGee v Yeomans [1977] 1 NSWLR 273 Proctor v Jetway Aviation Pty Ltd [1984] 1 NSWLR 166 Queensland v J L Holdings Pty Ltd (1997) 189 CLR 146
PARTIES :	Rebenta Pty Ltd Peter Wise
FILE NUMBER(S):	SC 20349 of 1998
COUNSEL:	J Kelly SC (Plaintiff) G Rich (Plaintiff) D R Pritchard (Defendant)
SOLICITORS:	F A Hunt, Piper Alderman Solicitors (Plaintiff) R Chalmers, Mallesons Stephen Jaques (Defendant)

- 10 -

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

SHAW J

7 September 2003

20349 OF 1998


REBENTA PTY LIMITED (Plaintiff)

v

PETER WISE (Defendant)
(INTERLOCUTORY) JUDGMENT

1 SHAW J: In September 1998, the plaintiff (Rebenta Pty Limited) commenced proceedings by way of Statement of Claim in the Supreme Court of New South Wales. On 21 February 2000, the defendant (a solicitor) filed a defence. A number of other amended Statements of Claim have been filed by the plaintiff, namely in December 2000, November 2003 and February 2004.

2 The claim is in the nature of an allegation of professional negligence against a solicitor, who formerly acted for the plaintiff. It concerns the purchase of the Bronte Inn in 1987 and subsequent negotiations for its sale. It is alleged that the end of August 1995, the plaintiff instructed the defendant’s solicitor to act on its behalf in relation to a development proposal for the Bronte Inn in conjunction with a company styled Ocean View Apartments Pty Ltd and other joint venture partners. It is said that the defendant drafted a Project Management Agreement (PMA) which was dated 18 December 1995.

3 The gist of the claim for negligence is that the plaintiff says that it instructed the defendant to give notice under the PMA on 12 April 1996 but that he delayed in doing so until 22 April 1996. It is alleged that had the plaintiff been able to terminate the agreement it would not have been forced to seel the Bronte Inn site at an “under value” of $7 million and would have been able to develop the site and make a profit which was ultimately made by the joint venture. It seems that the plaintiff shared in the relevant profit, but claims that it would have had the whole of the profit had it developed the property by itself. It is said that the solicitor/defendant misconstrued the PMA, and in particular clause 5.4 thereof. That clause, which is critical in the litigation, provides:

In the event that Council [which is defined as meaning the Waverley Council] refuses to grant Development Consent or has not granted and Building Consent by 28 February 1996 either party may by notice in writing to the other terminate this Agreement and neither party shall have any right or action or claim for damages or specific performance against the other.

4 The plaintiff alleges that the entitlement to terminate was as of right and that there was a failure on the part of the solicitor to carefully read and appreciate the effect of the relevant clause of the PMA. It is alleged that what happened is that the solicitor gave notice of termination and that this could be said to be an election to affirm the contract.

5 All of these matters remain open to be determined upon the evidence and nothing I have said indicates any concluded view about them, but rather is an attempt to briefly record the controversy between the parties.

6 The case was set down for trial before this Court commencing on 6 September 2004 with an estimate of ten days for the hearing. This listing was preceded by a number of conferences before the Court on 17 December 2003, 25 February 2004, 28 April 2004 and finally a “call-up” before the list judge on 14 May 2004 when the current hearing date was set. Evidence has been filed subsequently to the call-up and that evidence has been stigmatised by the plaintiff as “late evidence”. This is a topic to which I shall return. However, in a preliminary way I should note the submission of the defendant that they are “severely prejudiced” by the late service of the number of affidavits, two weeks before the hearing date, and that the defendant alleges that it is unable to meet the affidavits in time for the defendant’s counsel to cross-examine expert witnesses to be called on behalf of the plaintiff.

7 Quite apart from the late evidence filed and served by the plaintiff, a development occurred at or about 4.00 pm on Wednesday 1 September 2004, two business days prior to the hearing. A proposed amendment of the Statement of Claim was served upon the solicitors for the defendant at that time. In essence, the new paragraph to the Statement of Claim was proposed in the following terms:

The defendant failed to advise the plaintiff that Development Consent, for the purposes of clause 5.4 of the Agreement, was not granted by Waverly Municipal Council on or before 28 February 1996;”
Consequential amendments are also sought.

8 The plaintiff says that this amendment raises only a question of law and is minor in its content and effect.

9 On the other hand, the defendant urges that it has not had the opportunity to put on the evidence in relation to this issue and that there is only passing reference in its evidence to the approval of the development application. The defendant says that its legal team was concentrating on the building application rather than focussing on the development application until the events of last Wednesday afternoon. The defendant says that it requires time to conduct a detailed factual inquiry into the estoppel referred to in the defendant’s affidavit of 13 August 2003, and that this had not previously been done because it was perceived that there was no need to do so.

10 It is said that to enable the defendant to respond to the plaintiff’s proposed Amended Statement of Claim, the defendant would need to carry out a detailed factual inquiry into the events between 18 December 1995 and 27 February 1996 which would involve the review of discovery documents, reviewing Council records in relation to the approval of the development application, possible inquiries made of the Council as to its approval processes, interviewing potential witnesses including the defendant and others, and putting on additional evidence in relation to the proposed amendment by the plaintiff.

11 Accordingly, the defendant says that it is unable to meet the proposed amendment to the Statement of Claim in time for the hearing on 6 September 2004 given the late service of this amendment. It is further said that if the amendment were allowed, the defendant would need at least twenty-eight days to file and serve any evidence to be relied on.

12 In summary, the defendant opposes the amendment of the pleadings sought by the plaintiff, but says in the alternative that if that amendment were granted then it would need an adjournment, the vacation of the hearing dates and the opportunity to put on further evidence to prepare for the trial. A party should be permitted to raise an arguable defence provided any prejudice to other parties could be compensated by costs: Queensland v J L Holdings Pty Ltd (1997) 189 CLR 146. The court expressly endorsed the judgment of Bowen LJ in Cropper v Smith (1884) 26 Ch D 700 at 710-711 - where his Lordship emphasised that “Courts do not exist for the sake of discipline, but for the sake of deciding matters in controversy” - and the earlier decision of the High Court in Clough & Rogers v Frog (1974) 4 ALR 615, which was a case in which applications for leave to amend defences were allowed by the High Court even though the applications were first made only 2 days before the hearing and some 5 years after the proceedings were commenced. (See also: Air Link Pty Ltd v Paterson (No 2) (2003) 58 NSWLR 388 AT [45]).

13 Moreover, the ration of the High Court’s decision in Queensland v J L Holdings is that, in circumstances such as the present, the paramount consideration is the attainment of justice and that principles of case management cannot, “except perhaps in extreme circumstances”, be employed to shut a party out from litigating an issue which is fairly arguable: at 154.

14 It is perhaps superfluous to say that this course of events is regrettable. Nevertheless, it is important that difficult and hard fought proceedings are determined upon the real issues that the parties desire to raise rather than being determined upon deficiencies in the pleading. The relevant rule, of the Supreme Court Rules 1970, applicable to the determination of the question of amendment is Part 20 Rule 1(2) which provides:

All necessary amendments shall be made for the purpose of determining of the real question raised by or otherwise depending on the proceedings, or of correcting any defect or error in any proceedings, or of avoiding multiplicity of proceedings.

15 The general principle to be applied is that the amendment would ordinarily be allowed unless it causes prejudice to the other party that cannot be compensated for by appropriate consequential orders including orders for costs and an adjournment. It is also true that the amendment should not be contrary to the interests of the administration of justice. The procedural question is one for the general discretion of the trial judge.

16 Subject to one matter to which I shall refer, I am disposed to grant leave to allow the amendment but, in deference to the points raised by the defendant, adjourn the proceedings subject to consequential orders as to costs.

17 The question of difficulty is as to whether the amendment is statute barred, a point raised by the defendant. Broadly speaking, the question is whether the amendment raises a new cause of action which is out of time or whether, as contended by the plaintiff, it is merely a question of law concerning the construction of the words “has not granted Development Consent”, amounting only to a particularisation of a pre-existing pleading which would serve the purpose of narrowing the issues between the parties.

18 It appears from the judgment of the Court of Appeal in McGee v Yeomans [1977] 1 NSWLR 273 that the provisions of the rules of this Court, upon their proper construction, have displaced the earlier law and have substituted a general discretion to allow an amendment, notwithstanding that it raises a statute barred cause of action whenever justice so requires. Similarly, in Proctor v Jetway Aviation Pty Ltd [1984] 1 NSWLR 166 the Court of Appeal took the view that the relevant rules empowered the Court to amend a Statement of Claim effectively to include a cause of action despite a statutory limitation period and that such a limitation does not deprive the Court of its power effectively to amend the Statement of Claim.

19 More recently in Air Link Pty Ltd v Paterson (No 2) (2003) 58 NSWLR 388 these principles, in a more complicated context of federal legislation, were affirmed by a majority of the Court to the effect that an amendment to the original action permitted pursuant to the Court rules meant that the action was deemed to have commenced when the original Statement of Claim was filed.

20 In the circumstances, I do not regard the amended pleading as a new cause of action in substance or in reality, but rather an elaboration of the case previously mounted by the plaintiff. If I am wrong about this, I would exercise a discretion to allow the question to be litigated nonetheless on the broad basis that where a party raises a bona fide question it is in the interest of the administration of justice to have that matter agitated in a single proceedings rather than to artificially shut it out and have the Court close its eyes to a point which responsible legal advisers advance as reasonably arguable.

21 I accept the submission of the plaintiff to this effect. The proposed amendments do not raise a new cause of action. On the contrary, the plaintiff relies on the same causes of action: negligence and breach of retainer. The purpose of the new amendments is to add an additional reason why the defendant’s advice and conduct was negligent and/or in breach of contract. That does not amount to a new cause of action. It is no different, for example, from a case in which it is initially alleged that a driver was negligent because he failed to keep a proper lookout, and the plaintiff later seeks to amend by alleging that the driver was also speeding. Although a new fact has been pleaded, it does not amount to a new cause of action. It is merely and additional particular of negligence: Black v May, Councillors and Citizens of South Melbourne (1964) 38 ALJR 309 at 310; Golski v Kirk (1987) 14 FCR 143.

22 Alternatively, I am of the view that, in any event the cause of action (if it be distinguishable from the matters already pleaded) arises out of “the same or substantially the same facts” as the existing claim and would allow the amendment in accordance with Part 20 rule 4 (1) and (5) of the Supreme Court Rules.

(1) Where any relevant period of limitation expires after the date of filing of a statement of claim and after that expiry an application is made under rule 1 for leave to amend the statement of claim by making the amendment mentioned in any of subrules (3), (4) and (5), the Court may in the circumstances mentioned in that subrule make an order giving leave accordingly, notwithstanding that that period has expired. ….

(5) Where a plaintiff, in his statement of claim, makes a claim for relief on a cause of action arising out of any facts, the Court may order that he have leave to make an amendment having the effect of adding or substituting a new cause of action arising out of the same or substantially the same facts and a claim for relief on that new cause of action.

23 The critical words “the same or substantially the same facts, should not be construed in an overly restrictive fashion and it is not necessary that the facts relied upon to establish the “new” cause of action be identical: McGee v Yeomans [1977] 1 NSWLR 273 at 284-285 and the cases there cited. In the present case, the only fact that is different is the particular error of construction made by the defendant in interpreting the very same clause.

24 Further, and in any event, I would exercise, in the interests of justice and the compendious resolution of this controversy, a discretion to allow the amendment in accordance with McGee v Yeomans [1977] 1 NSWLR 273 at 278-280.

25 Thus, I would allow the amendment and grant the adjournment, and vacate the hearing dates, which have been allocated. The adjournment is necessary and appropriate on the basis put by the defendant’s counsel in the following terms:

If the Court determines that it is in the interests of justice that the amendment be allowed, the Court would only do so on the basis that the interests of justice also require that Mr Wise be given a reasonable opportunity to properly defend the further allegations made in the further amended statement of claim. To do otherwise would be a denial of natural justice and procedural fairness to Mr Wise, especially in the context of so many indulgences over such a long period of time having been granted to Rebenta.
As experienced counsel, I informed the Court that I do not believe that I am in a position to fairly and properly conduct the defence of Mr Wise, if the amendment is allowed and no adjournment is obtained. The matters about which the further factual enquiries need to be undertaken are matters which would have to be put to Ms Phillips in cross examination, especially having regard to the number of credit issues in the case.

26 In my view, the costs occasioned by the late amendment to the Statement of Claim should be the defendant’s costs in the proceedings, including costs thrown away as the result of the vacation of hearing dates.

27 One further issue arises. Reference has been made to Part 36 Rule 13CA of the rules of this Court which refers to the possibility of a conference between expert witnesses. Although the consensus is belated, it seems to be agreed between the parties that in the light of technical disagreements between competing experts that such a conference would be desirable. Even though the Court has power to make such a direction of its own motion under this rule, I am fortified by the fact that both parties agree that this would be a useful process in order to limit the time for hearing and make more efficiently the trial process.

28 Accordingly, I would propose to direct the expert witnesses who have been obtained by both the plaintiff and the defendant to confer, to endeavour to reach agreement on outstanding matters and to provide the Court with a joint report specifying matters agreed and matters not agreed and the reasons for any non-agreement. I make no direction as to whether that conference should be held with or without the attendance of the legal representatives of the parties, but note that an expert so directed may apply to the Court for further directions.

29 I also order and direct that the defendant file any further evidence which responsive to the amendment of the Statement of Claim within twenty-eight days of these orders.

30 In the circumstances, it seems to me unnecessary to go through the rights and wrongs of the late evidence, which has been filed by the plaintiff, because the adjournment will give ample opportunity for that evidence to be considered and replied to, if necessary. Any costs incurred in relation to the late evidence should be reserved for later consideration.

31 In addition to the other orders foreshadowed in this judgment (which orders I now formally make), I gratefully adopt, with minor modifications, the orders suggested by counsel for the defendant. Accordingly, I:

(a) direct the plaintiff to file a further amended statement of claim in the form of exhibit 1 forthwith;

(b) direct the defendant to file a defence within 28 days;

(c) direct the defendant to file any further evidence, including any expert evidence, arising out of the amendment within 28 days. The Court notes that the plaintiff has already informed the Court that it does not wish to rely on any further evidence in relation to the amendment;

(d) grant leave to the plaintiff to file any evidence in reply within 28 days from receipt of evidence of the defendant;

(e) grant liberty to the defendant to apply for any further interlocutory orders, for example, further discovery, the issue of subpoenas and the like, within 28 days;

(f) direct the defendant to file any expert building evidence within 28 days and direct pursuant to Part 36 rule 13CA, that there be a conclave of experts so as to produce a joint report within 28 days thereafter;

(g) direct that the matter is to be referred to the list Judge;

(h) direct that costs occasioned by the late amendment to the statement of claim should be the defendant’s costs in the proceedings, including costs thrown away as the result of the vacation of the hearing dates; and

(i) direct that costs incurred in relation to the late evidence served by the plaintiff be reserved.

32 The proceedings are adjourned accordingly, and the matter should be returned to the list judge for any further or consequential directions and/or the allocation of another hearing date.

**********

Last Modified: 09/09/2004