Rogers v Gulf Western Corporation Pty Ltd
[2011] WADC 30
•17 FEBRUARY 2011
JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
IN CIVIL
LOCATION: PERTH
CITATION: ROGERS -v- GULF WESTERN CORPORATION PTY LTD [2011] WADC 30
CORAM: PRINCIPAL REGISTRAR GETHING
HEARD: 17 FEBRUARY 2011
DELIVERED : 17 FEBRUARY 2011
FILE NO/S: CIV 1108 of 2007
BETWEEN: GEOFFREY NEIL ROGERS
Plaintiff
AND
GULF WESTERN CORPORATION PTY LTD
First DefendantJOHN EDWARD TELFER
Second Defendant
Catchwords:
Practice and procedure - Late application to add further plaintiffs
Legislation:
Nil
Result:
Application allowed
Representation:
Counsel:
Plaintiff: Mr T J Palmer
First Defendant : Mr H J Ginbey
Second Defendant : Mr H J Ginbey
Solicitors:
Plaintiff: Lawton Lawyers
First Defendant : Ginbey & Co
Second Defendant : Ginbey & Co
Case(s) referred to in judgment(s):
Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175
Christmas Island Resort Pty Ltd v Geraldton Building Co Pty Ltd (No 5) (1997) 18 WAR 334
Fletcher v St George Bank Limited [2010] WASC 75
Macmahon Contractors Pty Ltd v Woodside Energy Ltd [2008] WASC 271
Queensland v JL Holdings (1997) 189 CLR 146
Staley v Pivot Group Pty Ltd [2009] WASC 204
Wiltrading (WA) Pty Ltd v Lumley General Insurance Ltd (2005) 30 WAR 290
Youlden Enterprises Pty Ltd v Heath Solutions (WA) Pty Ltd (2006) 33 WAR 1
PRINCIPAL REGISTRAR GETHING: [This judgment was delivered extemporaneously on 17 February 2011 and has been edited from the transcript.]
The application before me is an application by the plaintiff pursuant to a chambers summons dated 10 December 2010 for leave to amend the writ of summons and the statement of claim in terms of a minute dated 10 December 2010. In summary terms, the amendments seek to add three gentlemen, Geoffrey Neil Rogers, Martin Rogers and Stephen Rogers, trading as Stemargeo Mining, a firm, as a second plaintiff (the Partnership). Mr Geoffrey Neil Rogers is the existing first plaintiff. The amendments to the statement of claim purport to set out the second plaintiff's cause of action.
In support of the application, the plaintiff filed an affidavit of Thomas Chin, a solicitor for the plaintiff, that affidavit being sworn 13 December 2010. The defendant did not put on any opposing affidavit evidence.
The application takes as its context a claim which arose in the latter part of 2005. In July 2010 the action was listed for a four day trial commencing 22 November 2010. However, by application dated 5 November 2010, at the request of the first and second defendants, the trial listing was vacated. The reason for the trial dates being vacated was basically the medical condition of the second defendant which led to difficulties with his lawyer being able to fully prepare for the trial of the action.
In relation to a late application for leave to amend, the authorities, as I understand them, direct me to adopt a two stage process. The first stage is to look at whether or not the amendment in question complies with the relevant rules in relation to pleadings. The second stage is to look at discretionary considerations.
Rules of pleading
Dealing with the first stage, the starting point when considering an application for leave to amend is that the court will not grant a party leave to make an amendment which does not disclose a reasonable cause of action. Fletcher v St George Bank Limited [2010] WASC 75 at [29]; Sinclair v James [1894] 3 Ch 554 at 557. Neither will the court grant leave to make an amendment which could be struck out as defective on any of the grounds sets out in the Rules of the Supreme Court1971 (WA) ("RSC") O 20, r 19(1)(b) to r 19(1)(d): Hooker Corporation Ltd v Commonwealth of Australia (1986) 65 ACTR 32 at 38. Further, in determining the adequacy of the pleading, it is fundamental that a party is entitled to a statement of the opponent's case sufficiently clear to allow the party a fair opportunity to meet it: Dare v Pulham (1982) 148 CLR 658 at 664; Banque Commerciale SA, En Liquidation v Akhil Holdings Ltd (1990) 169 CLR 279 at 286. A pleading may therefore be struck out where it is vague, ambiguous or pleaded at too greater a level of generality so as to leave the other party in doubt as to how to respond to the pleadings: Frank Jasper Pty Ltd & Anor v Deloitte Touche Tohmatsu (a firm) & Ors [2006] WASC 24 [11]. In relation to late pleading, amendments of this kind ought to be fully particularised: Fletcher v St George Bank Limited [2010] WASC 75 [30].
Pleadings deficiencies
The defendants raised six objections to the pleadings. In order to consider these, it is necessary to refer to the statement of claim. In par 4 of the substituted statement of claim, it is pleaded that on 7 September 2005, pursuant to an advertisement in the West Australian Newspaper that the first plaintiff, Mr Geoffrey Neil Rogers, contacted a director of the first defendant, one Martin Banning, to arrange for a meeting between them. The meeting occurred on or about 9 September 2005. The people present at the meeting were the first defendant (which I take to be a reference to Mr Banning on behalf of the first defendant) and the second defendant, Mr Telfer, on behalf of the defendants, and the first plaintiff and his brother, Stephen Rogers.
In par 5 of the substituted statement of claim, it is alleged that certain representations were made by Mr Banning on behalf of the first defendant and the second defendant to the first plaintiff and Stephen Rogers. It is then alleged in par 6 and par 7 that in reliance on the written representation in the newspaper advertisement and the oral representations, the first plaintiff entered into a business sale contract with the first defendant and the second defendant.
The primary paragraph sought to be inserted is par 8A. It is in the following terms:
Further, on or about early October 2005, in reliance on the Written Representation particularised in paragraph 4 above and the oral representations pleaded in paragraph 5 above and induced thereby, the First Plaintiff and his brothers, Stephen Rogers and Martin Rogers (to whom the oral Representations had been communicated by the first plaintiff and Stephen Rogers) formed a partnership which they styled Stemargeo Mining (the "Partnership") to exploit the lease.
The particulars provided:
The First Plaintiff, Stephen Rogers and Martin Rogers each agreed that each would contribute capital of $100,000 to the partnership and would share the profits of the partnership equally and the First Plaintiff agreed to permit the partnership to exploit the lease.
The first pleading deficiency is that it is not clear the capacity in which Stephen Rogers attended the meeting in par 4 and par 5 of the substituted statement of claim. The plaintiff's response to that is that capacity is a question of law not fact. I agree with that submission. The defendant knows the case it has to meet is that Stephen Rogers attended the relevant meeting.
The second deficiency is that is that the causal nexus between the making of the written and oral representations and their reliance on any subsequent damage by the Partnership is not sufficiently pleaded. In my view, with two caveats which I will refer to shortly, the pleading in par 8A is sufficient to put the defendant on notice of the case it has to meet at trial. It is then a question of fact at trial whether or not there is sufficient causal nexus between the alleged conduct of the defendants and any losses suffered by the Partnership.
In submissions, counsel for the defendant raised the issue of whether or not there needed to have been a contract between the defendants and all members of the partnership. In my view, and on the authorities as I understand them, it is not fatal to a claim for misleading conduct that there is no contractual relationship between the parties. On that basis I am satisfied that the defendants have sufficient understanding of the case they have to meet at trial. It is open to the defendants to plead in their defence that there is an insufficient causal nexus.
The third deficiency is that in par 8A the particulars of the formation of the partnership are inadequate. I agree with that submission: there ought to be fuller particulars in relation to the formation of the partnership.
The fourth deficiency is again in par 8A; it is that there ought to be full particulars of the communication to Martin Rogers. I agree with that submission.
The next deficiency is in par 13. Paragraph 13 pleads the loss or damages. The proposed amendment is to the commencement of that paragraph, essentially to say that the first plaintiff and/or the Partnership suffered the loss and damage which is currently set out in par 13. In my view, par 13 ought to be re-pleaded on a basis that makes it clear what losses were suffered by the first plaintiff and what losses were suffered by the Partnership.
The final deficiency is that the prayer for relief again does not make it clear what claims the first plaintiff makes and what claims the Partnership makes. Again, that is a deficiency that ought to be rectified.
In summary terms then, in relation to the first limb, which is the application of the rules of pleading, the proposed amendments contain certain deficiencies which could be cured by a combination of particulars and re‑pleading. The question is whether I ought to exercise my discretion and allow an opportunity for that to occur.
Discretion – principles
The leading case in relation to discretion is the decision of the High Court in Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175. At [212], the majority stated:
A party has the right to bring proceedings. Parties have choices as to what claims are to be made and how they are to be framed. But limits will be placed upon their ability to effect changes to their pleadings, particularly if litigation is advanced. That is why, in seeking the just resolution of the dispute, reference is made to the parties having a sufficient opportunity to identify the issues that they seek to agitate.
The overarching issue in the exercise of the discretion to grant leave to amend is to balance the competing risks of injustice in the context of maintaining public confidence in the legal system as a whole. Four factors emerge from the decided cases:
(a)the reasons for the delay in making the application;
(b)the prejudice to the plaintiff if leave is not granted;
(c)the prejudice to the defendant if leave is granted; and
(d)the impact on the public interest if leave is granted.
In addition to the decision in Aon, that analysis is supported by the decisions in Queensland v JL Holdings (1997) 189 CLR 146, Wiltrading (WA) Pty Ltd v Lumley General Insurance Ltd (2005) 30 WAR 290, and Christmas Island Resort Pty Ltd v Geraldton Building Co Pty Ltd (No 5) (1997) 18 WAR 334 at 345.
Delay
The issue of delay is set out in Mr Chin's affidavit. In summary terms, the delay was caused by the fact that it was only upon current trial counsel reviewing the pleadings following the vacation of the trial dates that the second plaintiff became aware that they may have a cause of action. Mr Chin deposes that in or about November 2008 he discussed with the plaintiff the difficulties associated with claiming the Partnership's losses. He further deposes that at that time he was concerned that the Partnership, as opposed to the plaintiff, might not have a cause of action.
The question of delay becomes more problematic to the plaintiff when it is appreciated that the plaintiff filed a certificate on 19 July 2010 containing a certification from the then trial counsel (who is different from the current trial counsel) that:
Pursuant to Rule 43(3a) of the District Court Rules I certify that I have reviewed the pleadings and am satisfied that they adequately define all the issues of fact or law that the plaintiff contends will need to be determined at trial.
It is relevant at this point to note that the District Court Rules 2005 r 48A provides that where an application to amend a pleading is filed after a case is listed for trial, the application must be accompanied by an affidavit of the party making the application or the lawyer representing the party. The affidavit is to set out the facts that have arisen since the certificate was tendered under rule 43(3a) and that ground the party's or the lawyer's argument that the amendment is necessary.
From a technical perspective Mr Chin's affidavit complies with r 48A(4). The argument that the opportunity to amend only arose because subsequent trial counsel formed a different view on the law is a weak argument and does not provide any compelling reason to allow the adjournment.
Prejudice to the plaintiff
The prejudice to the plaintiff is that the Partnership, in order to make a claim for the losses incurred, if it is not able to aerate the issue in the present action, would have to commence a fresh action. Given that the representations occurred in or about October 2005, and the relevant limitation period under the Trade Practices Act at least is six years, there is no limitation bar to the second plaintiffs commencing that action.
The difficulty that will arise is that the parallel action would necessarily cover much of the same ground as the present action. In particular, it is significant that both the first plaintiff and Stephen Rogers, one of the members of the Partnership, attended the 9 September meeting. It is evident from the amendments made to the statement of claim, and their limited nature, that the claim brought by the Partnership is based on exactly the same representations that the plaintiff relies on. If the second plaintiffs were to commence a separate action, then it would be very much parallel to the current action.
If the actions were to proceed to trial separately, then there would be significant res judicata and/or issue estoppel issues between findings made in the trial in the present action and findings made in the trial of any parallel action. Indeed, the existence of those overlaps may well persuade a court to stay the trial of the current action until it is able to be heard concurrently with the parallel proceedings.
The other prejudice to the second plaintiffs, if they are not allowed to bring their claim, is that there is a risk that they will not be able to claim some of the damages as a court will determine that the damages are damages suffered not by the first plaintiff but by the Partnership.
Prejudice to the defendants
The principal prejudice to the defendants is the delay in the matter proceeding to trial. Counsel for the defendants advised that from his perspective the matter is ready to be listed for trial. The difficulty with that submission is that, for the reasons I have already outlined, there is likely to be a greater delay to trial if a parallel action is commenced in relation to the claims of the second plaintiffs.
Counsel for the plaintiff argued that there is a minimal factual increase in the areas of dispute as a result of the amendments and thus that any prejudice to the defendant by an enlargement of the claim is minimal. This is demonstrated in two primary areas. The first is that the representations relied on are the same, including the fact that one of the other members of the second plaintiff was at the key meeting. The second is that the ambit of damages is not increased. On that basis the plaintiff submits that there will be minimal prejudice to the defendant as a result of the enlargement of the issues of the case.
The other prejudice to the defendant is the additional costs incurred in responding to the amendments. These costs are most accurately described as costs that are incurred as a result of the defendant not being able to prepare its defence in one hit, with the delays causing inevitable duplication of work. That is a cost that can be adequately compensated for by a costs order.
Interests of justice
Looming large in relation to the interests of justice is the question of proportionality. The principle of proportionality is conveniently summarised in the District Court Circular to Practitioners CIV 2008/2, dealing with the Commercial List, in the following terms:
That principle may generally be expressed in terms of requiring the court to deal with cases, so far as practicable, in ways which are proportionate:
(a)to the importance of the issues involved;
(b)to the value of the subject matter involved;
(c)to the complexity of the issues; and
(d)to the financial position of each party;
Consistently with the overriding obligation of the court to deal justly with its cases.
That statement of proportionality is largely consistent with comments of the Chief Justice in Youlden Enterprises Pty Ltd v Heath Solutions (WA) Pty Ltd (2006) 33 WAR 1, 2, Kenneth Martin J, in Staley v Pivot Group Pty Ltd [2009] WASC 204 [5]; and Templeman J Macmahon Contractors Pty Ltd v Woodside Energy Ltd [2008] WASC 271 [11] ‑ [26].
On one level of analysis, to allow a plaintiff at this late stage to make an amendment to bring in other parties on a claim that, on its best, appears to be around $300,000, runs a grave risk of a lack of proportionality. The proceedings have already been on foot since 2007. The proceedings have generated numerous case management appearances.
The other argument, however, is that the principle of proportionality is best served by allowing the entirety of the dispute to proceed to trial in the current action. If the amendment were not allowed and the second plaintiffs had to commence a parallel action, then that is likely to cause more costs than by allowing the amendments and having the trial proceed as a whole.
Balancing the risks of injustice, it seems to me that they are best served by allowing the amendments, subject to the plaintiff providing a further minute of amended writ of summons and substituted statement of claim within seven days dealing with the issues that I have identified.
I will hear from counsel in relation to consequent orders.
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