Russfal Pty Ltd v Tassal Ltd
[2007] TASSC 80
•30 October 2007
[2007] TASSC 80
CITATION: Russfal Pty Ltd v Tassal Ltd [2007] TASSC 80
PARTIES: RUSSFAL PTY LTD (ABN 39 083 124 565)
DOEDENS, Richard John
RAADAS SALMON PTY LTD (ABN 39 983 124 565)
RUSSELL FALLS PTY LTD (ABN 13 009 495 470)
RAADAS HOLDINGS PTY LTD (ABN 41 083 124 510)
RAADAS PTY LTD (ABN 86 079 001 761)
v
TASSAL LTD (ABN 64 009 770)
RECEIVERS & MANAGERS APPOINTED
AUSTRALIA & NEW ZEALAND BANKING GROUP LTD
(ACN 005 357 522)
TITLE OF COURT: SUPREME COURT OF TASMANIA (FULL COURT)
JURISDICTION: APPELLATE
FILE NO/S: FCA 37/2006
DELIVERED ON: 30 October 2007
DELIVERED AT: Hobart
HEARING DATE: 20 August 2007
JUDGMENT OF: Underwood CJ, Evans and Blow JJ
CATCHWORDS:
Procedure – Judgments and orders – Amending, varying and setting aside – General rules – "Relation-back doctrine" for amendments – Attempt to re-argue after reasons for decision given – Interest in finality of litigation – Outweighing case to reopen proceedings after judgment pronounced.
Smith v New South Wales Bar Association (1992) 176 CLR 256, Wentworth v Woollahra Municipal Council (1982) 149 CLR 672, De L v Director-General, New South Wales Department of Community Services (1997) 190 CLR 207, University of Wollongong v Metwally (No 2) (1985), applied.
Aust Dig Procedure [483]
REPRESENTATION:
Counsel:
Appellant: S Couper QC and B Thomas
Respondent: J Peters SC and S Parmenter
Solicitors:
Appellant: Page Seager
Respondent: Mallesons Stephen Jaques
Judgment Number: [2007] TASSC 80
Number of paragraphs: 41
Serial No 80/2007
File No FCA 37/2006
RUSSFAL PTY LTD (ABN 39 083 124 565) RICHARD JOHN DOEDENS
RAADAS SALMON PTY LTD (ABN 39 983 124 565)
RUSSELL FALLS PTY LTD (ABN 13 009 495 470)
RAADAS HOLDINGS PTY LTD (ABN 41 083 124 510)
RAADAS PTY LTD (ABN 86 079 001 761)
v TASSAL LTD (ABN 64 009 770) RECEIVERS & MANAGERS APPOINTED AUSTRALIA & NEW ZEALAND BANKING GROUP LTD (ACN 005 357 522)
REASONS FOR JUDGMENT UNDERWOOD CJ
EVANS J
BLOW J
30 October 2007
Order of the Court
Appeal dismissed
Serial No 80/2007
File No FCA 37/2006
RUSSFAL PTY LTD (ABN 39 083 124 565) RICHARD JOHN DOEDENS
RAADAS SALMON PTY LTD (ABN 39 983 124 565)
RUSSELL FALLS PTY LTD (ABN 13 009 495 470)
RAADAS HOLDINGS PTY LTD (ABN 41 083 124 510)
RAADAS PTY LTD (ABN 86 079 001 761)
v TASSAL LTD (ABN 64 009 770) RECEIVERS & MANAGERS APPOINTED AUSTRALIA & NEW ZEALAND BANKING GROUP LTD (ACN 005 357 522)
REASONS FOR JUDGMENT UNDERWOOD CJ
30 October 2007
The primary issue on this appeal is whether the learned judge at first instance erred when he refused to entertain further argument on behalf of the appellants ("the defendants") with respect to issues that his Honour had determined almost eight months earlier.
Circumstances leading up to the appeal
On 16 April 2003, the respondents ("the plaintiffs") commenced proceedings against five of the defendants. The dispute related to the sale of a fish farming and processing business. The sixth defendant was later joined in the proceedings. On 8 February 2005, the plaintiffs made an application to amend the statement of claim. The defendants opposed the making of the orders sought. The litigation is complex and concerns claims for many millions of dollars. The original statement of claim comprised a mere 89 paragraphs. The plaintiffs' application was for an order giving leave to replace it with a statement of claim of 220 paragraphs.
For the purposes of this appeal, it is only necessary to note one of the arguments raised on behalf of the defendants. It concerns cl 16.5(d) of the business sale and purchase agreement which provides:
"[The plaintiffs] may not bring an action for breach of the Warranties unless such claim is notified within 12 months of the Completion Date".
It is common ground that the completion date was 14 February 2003. Accordingly, cl 16.5(d) provided that no action for damages for breach of warranty could be brought unless notice of the claim was made on or before 14 February 2004.
With respect to the proposed amendments that sought to raise claims for breaches of warranty, not pleaded in the original statement of claim, counsel for the defendants submitted to the learned judge at first instance that no notice of these claims had been given by 14 February 2004 and consequently in that respect the application to amend should not be granted, as such claims were doomed to failure.
However, for reasons published on 23 September 2005, the learned judge at first instance permitted the making of claims for damages for breach of warranties by granting leave to amend the statement of claim. With respect to the requirement to give notice of intention to make a claim for damages for breach of warranty on or before 14 February 2004, the learned judge noted that the defendants tendered into evidence four written notices of claim, one dated 27 February 2003, two dated 5 March 2003, and one dated 26 March 2003. Although not expressly stated in the reasons for judgment, the clear inference is that none of these notices gave notice of intention to make a claim that was set out in the proposed amendments to the statement of claim.
At the hearing a submission was made to the learned primary judge by counsel for the plaintiffs that there may have been other notices given and/or there may have been oral notice given in circumstances that would estop the defendants from relying on the limitation clause in the contract. The submission was that there was simply no evidence about whether notice had been given, one way or the other. In his reasons for judgment the learned judge held that there was no evidence that these four notices of claim were the only notices of claim that had been delivered. This being the state of the evidence, his Honour dealt with the submission made by counsel for the defendants that amendments to permit the making of claims for damages for breach of warranty should not be made because they were doomed to failure for want of notice, by saying at par22 of his reasons for judgment dated 23 September 2005:
"In the absence of cogent evidence that particular claims would be barred by the clause because they were not preceded with the required notice, I hold that leave to amend should not be refused on that basis."
There has been no appeal against the judgment handed down on 23 September 2005 giving leave to amend the statement of claim to make (inter alia) claims for damages for breaches of warranties.
The matter did not rest there. There remained the question of costs of the application to amend the statement of claim. That issue was raised before the learned primary judge on 24 April 2006. At that time the order giving leave to amend the statement of claim had not been perfected. Counsel for the defendants not only raised the issue of costs. He raised par22 of his Honour's reasons for judgment and submitted that unless an order was made that the amendments took effect from the date of the application to amend, or alternatively, from a date to be determined by the trial judge, the defendants would be shut out from adducing evidence that no notice had been given within the time prescribed by the agreement for sale. Although not articulated by counsel, I apprehend that the bases for this contention were:
· Absent any order to the contrary, an amendment to a pleading has effect from the date of the pleading it amends. See Webster v Roberts [1989] Tas R 37; Stilbo Pty Ltd v MCC Pty Ltd (in liq) (2002) 11 Tas R 63; Sneade v Wotherton Barytes and Lead Mining Co Ltd [1904] 1 KB 295; Baldry v Jackson [1976] 2 NSWLR 415 at 419; Proctor v Jetway Aviation Pty Ltd [1984] 1 NSWLR 166 at 182. It is a rule of practice that the amendment takes effect as if it had always been in the relevant pleading. This rule is known as the "relation-back doctrine".
· The writ, which was issued on 16 April 2003, was accompanied by the statement of claim. An appearance was entered the following day.
· By virtue of the "relation-back doctrine" an order giving leave to amend the statement of claim to include claims for damages for breach of warranty would mean that those claims were included in the statement of claim delivered on 16 April 2003.
· Delivery of the writ and amended statement of claim constituted written notice of (inter alia) claims for damages for breach of warranty.
· If an order were made, either by the learned primary judge or by the trial judge that the amendments permitting the making of claims for damages for beach of warranty only took effect from a date after 14 February 2004, the limitation clause in the agreement would operate as a bar to the success of those claims.
However, the learned judge at first instance declined to revisit the orders made on 23 September 2005, and this appeal is brought from that refusal. In his reasons for refusing to revisit the orders that he had made, his Honour correctly noted that at the original hearing, counsel for the defendants repeatedly stated with respect to the proposed warranty claims, that an amendment permitting them to be made should not be allowed because notice had not been given and therefore such claims were doomed to failure. It is clear that when making those submissions counsel for the defendants did not have in mind the "relation-back doctrine". The learned judge at first instance asked counsel for the defendants where was the evidence that no notice to make a warranty claim had been given. Although there was evidence of notices that had been given, there was no evidence that they were the only notices that had been given, and there was no direct evidence that no notice of intention to make a warranty claim had been given. Counsel for the defendant accepted those propositions, saying:
"If that's not common ground, and I'd say we'd work on the assumption that it was probably the common ground, if it's not we'll have to deal with it.".
At that stage of the original hearing, it would appear that counsel for the plaintiffs had also overlooked the "relation-back doctrine", but by the time he replied to submissions on behalf of the defendants, counsel for the plaintiffs was clearly aware of the "relation-back doctrine". He expressly relied upon it to answer claims made on behalf of the defendants that the proposed warranty claims were doomed to failure because no notice had been given.
With respect to his refusal to revisit his order made on 23 September 2005, the primary judge said that he regarded the defendants' arguments as an attempt to re-open their case. He reasoned that from start to finish, the contention with respect to the proposed warranty claims, advanced on behalf of the defendants at the original hearing, had been that no notice of them had been given within the time prescribed and therefore they should not be allowed, as to do so would be an exercise in futility. His Honour repeated the finding that he made on 23 September 2005 that the evidence did not permit him to conclude that no notice of a claim for damages for breach of warranty had been made. On 23 September 2005 he reasoned that because it was not open to find that no notice had been given, he should not refuse the amendments upon that basis and therefore the application to amend should not be refused on that account. No challenge to that reasoning has been mounted. In his reasons given on 16 May 2006 for refusing to revisit the order made on 23 September 2005, his Honour said, at par16, that it was never part of the defendants' case at the original hearing that they merely wished to raise the argument that notice had not been given, and therefore if the application was successful, the order should specify that the amendments take effect from a date after 14 February 2004 so that the defendants could raise that argument. The defendants' contention at the original hearing depended upon the fact that no notice had been given and that fact was not established. His Honour reasoned that an argument that the date the amendment takes effect should either be the date of the application to amend (9 February 2006) or a date fixed by the trial judge, was, in effect, an attempt by the defendants to re-open their case upon the factual issue determined against them, viz, no notice of an intention to make a claim had been made within the time prescribed by the agreement.
It seems that from the time counsel became aware of the "relation-back doctrine" submissions proceeded upon the basis that if the application was granted and no order made specifying that the amendments take effect from some date after 14 February 2004, the condition precedent set out in cl 16.5(d) was satisfied because of the operation of the "relation-back doctrine". For my part I am far from satisfied that is the case. Clause 16.5(d) calls for proof of a fact, viz, that notification of a claim for breach of warranty was given prior to 14 February 2004. I would need persuasion that a rule of practice provided such proof. With respect to the nature of the "relation-back doctrine", Ormiston J said in Agtrack (NT) Pty Ltd v Hatfield (2003) 7 VR 63 at 85 - 86)
"To my way of thinking it means no more than this: amendment involves making an alteration to an existing document and that document will have come into existence at some time in the past; whoever amends such a document is not normally creating an entirely different document, but is merely effecting a change or changes to that which is already in existence, which itself has a known date upon which it came into effect. One could 'substitute' a new document of the relevant kind and that might connote the creation of a document taking effect only at a later date. In fact, as a matter of practice, where some special problem has arisen, occasionally judges have directed that certain amendments to pleadings only take effect as at the date of the making of the amendment, but that ordinarily comes about by a specific order." [Footnotes omitted]
Accordingly, the "relation-back doctrine" may defeat the operation of a limitation statute that prevents the bringing of an action after a specified period of time. No such statute is involved in this case. Relevantly, this case concerns the proper meaning of a contractual condition precedent and the issue of whether a fact has, or has not, been proved. However, at no stage of this litigation was this issue raised. All the litigation concerning the application to amend has proceeded upon the basis initially, that neither counsel was aware of the relation back doctrine, and subsequently, including on appeal in this Court, upon the basis that application of that doctrine would satisfy the condition precedent prescribed by cl 16.5(d). This review of an exercise of a judicial discretion to refuse a party leave to re-open its case should proceed upon the same basis.
Revisiting the order of 23 September 2005
The joint judgment in Smith v New South Wales Bar Association (1992) 176 CLR 256 is authority for the proposition that "it has long been the common law that a court may review, correct or alter its judgment at any time until its order has been perfected" (265). The joint judgment describes the power to re-open a hearing as discretionary and considerations of public interest in finality and the right of appeal militate against exercising the power. In McAdam v Robertson (1999) 73 SASR 360, Doyle CJ said of the power to re-open a hearing, at 367:
"The power is to be exercised with great caution. The reasons for that are obvious. There is a strong public interest in the finality of litigation. Once a stage in the process of litigation has been completed, ordinarily it should not be revisited. Our system of adversary litigation, with the obligation that it imposes upon the parties to present their whole case and to present their best case, would begin to collapse if courts too readily entertained applications to reopen decisions given after a full hearing. The power can be exercised if some important principle of law has been overlooked, or if there is an apparent misapprehension as to a significant fact, but this is to be distinguished from enabling a party to attempt to persuade a court that it should change its view of a matter that it has considered and decided."
In Autodesk Inc v Dyason(No2) (1993) 176 CLR 300, Mason CJ held that although it is true that only rarely will the court permit a re-opening after judgment has been given, there is no restriction on the nature of circumstances where this will be done, and the power may be exercised where a judgment has miscarried for any reason. Brennan J (as he then was) expressed the same view at 308, but said at 309, that in the case at hand the court should not re-open a matter that had been fully heard and argued because of a submission by the unsuccessful party that, on further argument, the Court would be satisfied that it had reached the wrong conclusion in law. An indication of the approach that should be taken to re-open a case appears from the following passage taken from the joint judgment in Wentworth v Woollahra Municipal Council (1982) 149 CLR 672 at 684:
"… the circumstances in which this Court will reopen a judgment which it has pronounced are extremely rare. The public interest in maintaining the finality of litigation necessarily means that the power to reopen to enable a rehearing must be exercised with great caution. Generally speaking, it will not be exercised unless the applicant can show that by accident without fault on his part he has not been heard."
In State Rail Authority of New South Wales v Codelfa Construction Pty Ltd (1982) 150 CLR 29, Mason J (as he then was) and Wilson J said at 38 that the power to re-open proceedings after judgment has been handed down, but not perfected, is one "to be exercised with great caution". Their Honours said, also at 38, that apart from cases of mistake or misprision, "it will be a case of weighing what would otherwise be irremediable injustice against the public interest in maintaining the finality of litigation". Their Honours went on to say that the circumstances justifying a rehearing must be "quite exceptional". This principle was affirmed by the judgment of Toohey, Gaudron, McHugh, Gummow and Kirby JJ in De L v Director-General, New South Wales Department of Community Services (1997) 190 CLR 207 with this statement at 215:
"The power of this Court to reopen its judgments or orders is not in doubt. The Court may do so if it is convinced that, in its earlier consideration of the point, it has proceeded 'on a misapprehension as to the facts or the law' (Autodesk Inc v Dyason [No 2] (1993) 176 CLR 300 at 302), where 'there is some matter calling for review' (Smith v NSW Bar Association (1992) 176 CLR 256 at 265) or where 'the interests of justice so require' Autodesk Inc v Dyason [No 2] (1993) 176 CLR 300 at 322. It has been said repeatedly that a heavy burden is cast upon the applicant for reopening to show that such an exceptional course is required 'without fault on his part' (Wentworth v Woollahra Municipal Council (1982) 149 CLR 672 at 684; cf State Rail Authority of NSW v Codelfa Construction Pty Ltd (1982) 150 CLR 29 at 38, 45-46; Nintendo Co Ltd v Centronics Systems Pty Ltd (1994) 181 CLR 134 at 168, ie without the attribution of neglect or default to the party seeking reopening Autodesk Inc v Dyason [No 2] (1993) 176 CLR 300 at 303. By such expressions of the power to reopen final orders, courts seek to recognise competing objectives of the law. On the one hand, there is the principle of finality of litigation which reinforces the respect that should be shown to orders, final on their face, addressed to the world at large and upon which conduct may be ordered reliant upon their binding authority. On the other hand, courts recognise that accidents and oversights can sometimes occur which, unrepaired, will occasion an injustice. In the case of a final court of appeal, such as this Court, that injustice may be irremediable, unless the Court itself, acting promptly, is persuaded to reopen its orders so as to afford relief in the exceptional circumstances of the case (Autodesk Inc v Dyason [No 2] (1993) 176 CLR 300 at 302; Wentworth v Rogers [No 9] (1987) 8 NSWLR 388 at 394-395; Logwon Pty Ltd v Warringah Shire Council (1993) 33 NSWLR 13 at 28-29.)"
In that case relevant factors in the exercise of the discretion included the omission of the Director-General and the Attorney-General to refer to a significant regulation in the Family Law Act 1975 that was relied upon by the appellant, that failure was due to oversight, the order made appeared to be contrary to the regulation, the proper interpretation of the regulation by the final court of appeal was important and had general application, and the appellant would not be prejudiced by the re-opening. With respect to the exercise of the power to re-open concluded litigation, the High Court made this general observation in University of Wollongong v Metwally (No 2) (1985) 59 ALJR 481 at 483:
"It is elementary that a party is bound by the conduct of his case. Except in the most exceptional circumstances, it would be contrary to all principle to allow a party, after a case had been decided against him, to raise a new argument which, whether deliberately or by inadvertence, he failed to put during the hearing when he had an opportunity to do so."
The learned primary judge's refusal on 16 May 2006 to make any further order falls to be reviewed in accordance with those statements of principle.
The grounds of appeal
The defendants rely upon the following grounds of appeal:
"1The learned primary judge erred in finding that, by seeking an order which would permit the appellants an opportunity to establish at trial their contractual time limit had expired without relevant notice being given, thereby defeating a number of the respondents' proposed amended claims, the appellants were seeking to re-open their case.
2The learned primary judge erred in deciding that the appellants' conduct of their opposition to the respondents' application for leave to further amend should preclude them from raising relevant issues of fact at trial.
3Alternatively, the learned primary judge erred in finding that in the circumstances the re-opening of the appellant's [sic] case should not be permitted.
4The learned primary judge erred in refusing to order that the further amendments to the Statement of Claim would take effect from the date of the grant of leave to further amend in circumstances where:
(a) an order permitting the further amendments to relate back to the date of issue of the writ would cause prejudice to the appellants;
(b) the learned primary judge did not determine that he was satisfied that the appellants would not as a result of granting leave be prejudiced in the conduct of their defence in a way that could not be fairly met by an adjournment, an award of costs or otherwise;
(c) the learned primary judge gave no reasons which could form a basis for the existence of such satisfaction."
Ground 3 is a general statement and amounts to no more than an assertion that error occurred. Grounds 1 and 2 proceed on a misconstruction of what the learned primary judge said in his reasons for judgment on 16 May 2006, pars16 and 17:
"16I regard what the defendants are now seeking to do as a reopening of their case. Their primary argument, that was made throughout their counsel's submissions until the end of the hearing of the application for leave to amend, was that insofar as the proposed amendments contained claims that were not in the existing statement of claim, notice of them had not been given within the 12-month limitation period prescribed by cl 16.5(d) and, for that reason, leave to amend should be refused. Their evidence failed to prove that. It was never their case that they merely wished to raise that argument and for that reason the effective date of the amendments, if leave was to be given, should be the date of the order or should be determined by a later court. When considering the evidence and the submissions that were advanced on behalf of the parties, I quickly concluded that the main argument for the defendants, that leave to amend should not be granted because time had expired without notice being given, plainly failed because the defendants had not established that basic fact. What they are now seeking is another opportunity to present evidence to establish that the time limit had expired without relevant notice being given. It amounts to a request to reopen their case.
17When, in pars21 and 22 of my reasons, I determined the point against the defendants I was aware that the effect of my orders was likely to prevent the defendants from succeeding with a limitation defence. A middle ground was not part of their case and it did not occur to me that I should consider making orders that would permit it and allow another attempt to prove the same facts. They had failed to prove the factual basis of their opposition to the amendments and I determined that their opposition necessarily failed as a result."
Senior counsel for the appellants submitted that in those two paragraphs the learned primary judge was referring to the adducing of evidence at trial. It is quite clear that at the original hearing, counsel for the defendants submitted that the amendments should not be made because no notice of claim had been given as provided by cl 16.5(d) of the agreement. It is equally clear that the learned primary judge questioned that submission, suggesting that that might not be the state of the evidence upon the application to amend. To that, counsel responded to the effect that he believed that it was common ground, but if it was not (and that appears to have been the case) "we'll have to deal with it." It was not dealt with and so the learned judge was quite correct to dismiss the opposition to an order giving leave to amend upon the basis that no notice had been given because there was no evidence to that effect. At the original hearing counsel for the defendants made no submission to the effect that if the application was to be allowed to permit the making of claims for damages for breach of warranty, the order should provide that the amendment only takes effect from a date after 14 February 2005, otherwise the defendants would be prejudiced by the operation of the "relation-back doctrine" proving that notice of the claims for breach of warranty was made within the period prescribed by cl 16.5(d). The application to re-open the hearing was to make just that submission. Had it succeeded the evidence could have been adduced at trial that no notice had been given prior to 14 February 2005. The learned judge was referring to that in his reasons for judgment, pars16 and 17 set out above. This is clear from the next paragraph in his Honour's reasons for judgment:
"When, in pars21 and 22 of my reasons [delivered on 23 September 2005], I determined the point against the defendants I was aware that the effect of my orders was likely to prevent the defendants from succeeding with a limitation defence. A middle ground was not part of their case and it did not occur to me that I should consider making orders that would permit it and allow another attempt to prove the same facts. They had failed to prove the factual basis of their opposition to the amendments and I determined that their opposition necessarily failed as a result."
His Honour's reference in par16 of his reasons for judgment of 16 May 2006, to another attempt to prove the same facts on is a reference to an attempt to prove that no notice was given by reliance on the "relation-back doctrine", not, as was argued on this appeal, an attempt to adduce more evidence at trial. In effect, his Honour is saying that counsel did not make any case for dating the amendments from some time after 14 February 2004. Opposition was based upon a fact that was not established and accordingly, that alleged fact would not affect the exercise of the discretion to allow or disallow the proposed amendments to the statement of claim.
In support of ground 4, counsel for the defendants submitted that the learned primary judge fell into error because he failed to determine whether the defendants would have been prejudiced by an order giving leave to make the proposed amendments upon the assumption that no notification of these claims had, in fact, been given. As I understand it, another way of putting this submission would be that the learned primary judge fell into error because he failed to consider an argument that was never put to him. It was never put to him that if the defendants are wrong about, or unable to establish, the alleged fact that no notice has been given, the amendments should not be allowed in any event because of prejudice other than that suffered by reason of lack of notice. Further, even if the learned judge fell into error by not considering whether the proposed amendments should be disallowed upon the basis of prejudice other than lack of notification, this would not be an error vitiating the decision of 16 May 2006 refusing leave to re-open the case. Such an error might be a ground for challenging the decision of 23 September 2005 granting leave to make the amendments; something that the learned judge noted at the end of par16 of his earlier reasons and set out above. But no such appeal was lodged.
The learned primary judge's view that the defendants were attempting to re-open their case was absolutely correct in the sense that they were attempting to put an argument that was not, but could have been, put the first time, in an attempt to show that the decision handed down on 23 September was wrong. This was not a case of a party who had not been given a chance to be heard on a point. This was not a case of misapprehension of the law or the facts. The conduct of the defendants' case upon the application for leave to amend the statement of claim was quite straightforward namely, that no notification of the proposed claims had been given within the prescribed time, and therefore the order should not be made because the claims are doomed to failure. The case was not conducted upon the basis that lack of notice will be circumvented if the order is made without condition as to date of operation and therefore if an order is to be made it should not take effect until after the 14 February 2005. If the learned primary judge erred in failing to so consider the case in his reasons for judgment on 23 September 2005 that is appealable error. But on behalf of the defendants it was submitted that that claimed error by the learned primary judge was good reason to permit the argument to be re-opened and that the failure to do so was an error.
I do not accept that his Honour's refusal to permit a re-opening for that purpose constituted an error in the exercise of his discretion. I accept that submissions with respect to a failure to consider prejudice upon the basis that notice had not in fact been given was relevant to the question whether counsel should be given leave to re-visit the application, but certainly not determinative of it. It was just one factor in the exercise of the discretion.
No specific error can be detected in his Honour's reasons of 16 May 2006 refusing to make any further order upon the application determined on 23 September 2005. With respect to general error, the following passage taken from the judgment of the High Court in Mace v Murray (1955) 92 CLR 370 at 378 is settled law and apposite:
"The order of the learned primary judge was made in the exercise of a discretionary judgment; and it has been repeatedly laid down by this Court, following decisions of the highest authority in England, that in such a case a court of appeal is not justified in interfering with the decision appealed from unless it reaches a clear conclusion that by reason of some error, whether of fact or of law, the primary judge not only has taken a view different from that which the judges of the court of appeal would have taken if they had been in his place, but has failed properly to exercise the discretion committed to him: House v The King (1936) 55 CLR 499, at pp 504, 505; Lovell v Lovell (1950) 81 CLR 513, at pp 518-520, 526, 528, 532-534; Pearlow v Pearlow (1953) 90 CLR 70, at pp 76, 77; Paterson v Paterson (1953) 89 CLR 212, at pp218-224."
In the case of appeals from discretionary judgments there is a strong presumption in favour of the correctness of the judgment from which the appeal is brought. See Australian Coal and Shale Employees Federation v Commonwealth (1953) 94 CLR 621. In this case that presumption applies to a decision that the authorities say is one that should have been made unless there are exceptional circumstances. No such circumstances have been demonstrated. I would dismiss the appeal.
File No FCA 37/2006
RUSSFAL PTY LTD (ABN 39 083 124 565) RICHARD JOHN DOEDENS
RAADAS SALMON PTY LTD (ABN 39 983 124 565)
RUSSELL FALLS PTY LTD (ABN 13 009 495 470)
RAADAS HOLDINGS PTY LTD (ABN 41 083 124 510)
RAADAS PTY LTD (ABN 86 079 001 761)
v TASSAL LTD (ABN 64 009 770) RECEIVERS & MANAGERS APPOINTED AUSTRALIA & NEW ZEALAND BANKING GROUP LTD (ACN 005 357 522)
REASONS FOR JUDGMENT EVANS J
30 October 2007
I agree with the reasons for judgment prepared by Underwood CJ and would likewise dismiss the appeal.
File No FCA 37/2006
RUSSFAL PTY LTD (ABN 39 083 124 565) RICHARD JOHN DOEDENS
RAADAS SALMON PTY LTD (ABN 39 983 124 565)
RUSSELL FALLS PTY LTD (ABN 13 009 495 470)
RAADAS HOLDINGS PTY LTD (ABN 41 083 124 510)
RAADAS PTY LTD (ABN 86 079 001 761)
v TASSAL LTD (ABN 64 009 770) RECEIVERS & MANAGERS APPOINTED AUSTRALIA & NEW ZEALAND BANKING GROUP LTD (ACN 005 357 522)
REASONS FOR JUDGMENT FULL COURT
BLOW J
30 October 2007
I have read the reasons for judgment of the learned Chief Justice in draft form. I agree with his reasons and his conclusion. I wish to add some comments as to two aspects of this appeal – the pleadings, and the possible insignificance of the appeal.
The pleadings
The submissions of counsel before the learned primary judge and on the appeal proceeded upon the premise that cl 16.5(d) of the sale agreement created a contractual limitation period, ie, stipulated a time limit for the bringing of an action. The clause reads as follows:
"Despite any other provision of this document:
…
(d) the Buyer may not bring an action for breach of the Warranties unless such claims are notified within 12 months of the Completion Date."
The clause does not say that the buyer may not bring an action for breaches of warranties more than 12 months after the completion date. Read literally, the clause fixes a 12-month time limit for the notification of claims for breaches of warranties, not for the bringing of an action. Senior counsel for the appellants, Mr Couper SC, told this Court that the primary contention of the appellants was not that the clause created a contractual limitation period, but that the clause created a condition precedent to the existence of a cause of action for a breach of a warranty. However, he also said that the clause might not be construed that way; that it might be construed as creating a contractual 12-month limitation period; that that was the only other way that the clause could be characterised; and that his clients should not be shut out from arguing that the clause imposed a limitation period that had expired. The appeal proceeded on the basis that the interpretation and effect of the clause were matters for determination on the trial of the action, not on the appeal.
The solicitors for the appellants provided a supplementary appeal book containing an amended statement of claim dated 1 March 2004 and the further amended statement of claim that was the subject of the interlocutory application of 8 February 2005. No other pleadings were provided to us. Counsel did not refer to any other pleadings. An examination of the file relating to the action reveals that, following the institution of this appeal but before it was heard, the defendants filed a defence in which cl 16.5(d) was pleaded and relied on. It was not pleaded that the clause created a contractual limitation period. The paragraphs concerning the clause read as follows:
"16 Clause 16.5(d) of the Agreement provides:
'Despite any other provision of this document:
…
(d)the buyer may not bring an action for breach of the Warranties unless such claim is notified within 12 months of the Completion Date.'
17Claims in respect of the breaches of Warranty alleged in paragraphs 29, 31, 34, 68, 70, 73, 99 and 101 of the Statement of Claim were not notified within twelve months of the completion date.
18 In the premises, such claims are extinguished."
On 3 August 2006, the solicitors for the plaintiffs filed an amended reply, par12(f) of which read as follows:
"(f)Further or alternatively, all claims made in the statement of claim, including those referred to in paragraph 17 of the defence, are taken to have been made at the latest on or shortly after 16 April 2003, when the original statement of claim was filed and served, by reason of the operation of rule 427 of the Supreme Court Rules and the Reasons for Judgment delivered and Orders made by the Honourable Justice Crawford on 23 September 2005 and 16 May 2006, and were therefore notified in accordance with clause 16.5(d) of the Agreement.
PARTICULARS
The plaintiffs refer to paragraphs 21 and 22 of the Reasons for Judgment delivered on 23 September 2005, to the entirety of the Reasons for Judgment delivered on 16 May 2006, but in particular paragraphs 11, 12, 17 and 18, and to the Order made on 16 May 2006. Copies are in the possession of the solicitors for the plaintiffs and may be inspected by appointment."
That pleading has subsequently been amended, but par12(f) remains unchanged. It is pleaded in earlier sub-paragraphs that the claims made in pars29, 31 and 34 of the statement of claim were notified in a notice dated 27 February 2003, in certain paragraphs of the original statement of claim dated 16 April 2003, and in particulars dated 30 July 2003. There are no such pleas in relation to the claims made in pars68, 70, 73, 99 and 101 of the statement of claim.
Possible insignificance of the order sought
It therefore seems to me that the primary purpose of this appeal must be to avoid a situation in which, following a trial of the action, the trial judge reasons as follows:
·The evidence establishes that no actual notification was given during the relevant 12 month period of certain claims for breaches of warranties.
·An order was made by the learned primary judge on 23 September 2005 permitting the statement of claim to be amended to include claims for those breaches of warranties.
·Pursuant to that order, an amended statement of claim was filed and served, and it included claims for breaches of those warranties.
·The common law rule known as the "relation-back doctrine" applies in this case, so that the amendment to the pleading takes effect as from the date of the original pleading.
·Therefore, once the amended statement of claim was filed pursuant to the order of the learned primary judge, it became a fact that claims for the breaches of the relevant warranties were notified at the time of the service or delivery of the original statement of claim.
The hearing of the appeal proceeded on the basis that any question as to the correctness or validity of such reasoning was to be determined on the trial of the action, not on this appeal. However I think it is appropriate for this Court to take into account the fact that this line of reasoning has a number of weaknesses. First of all, it is by no means certain that the relation-back doctrine would be held to operate not just for the purposes of pleadings and related procedures, but so as to retrospectively satisfy a contractual condition precedent. The notification of a claim for the purposes of cl 16.5(d) is something that, at least ordinarily, would occur independently of any court proceedings. The reported cases as to the relation-back doctrine are generally concerned with the status of amendments for procedural purposes, as distinct from the deeming of events to have occurred for contractual purposes: Stilbo Pty Ltd v MCC Pty Ltd (2002) 11 Tas R 63; Webster Ltd v Roberts [1989] Tas R 37; Sneade v Wotherton Barytes & Lead Mining Co Ltd [1904] 1 KB 295; Baldry v Jackson [1976] 2 NSWLR 415 at 419. However it was suggested in Warner v Sampson [1959] 1 QB 297, by Hodson LJ at 322 and Ormerod LJ at 326, that if a denial in a pleading of the existence of a lease resulted in the automatic forfeiture of that lease, the amendment of the pleading so as to remove that denial would preclude the landlord from relying on the fact that there had been such a denial.
Further, it will be necessary at the trial for the words "unless such claim is notified" in cl 16.5(d) to be construed by reference to the intentions of the parties to the contract. I am inclined to think that the plaintiffs would be on strong ground in arguing that those words refer to a notification before the institution of an action, or independently of the institution of an action, as distinct from the making of a claim by the service of a writ or a statement of claim. The cases of Rhymney Railway Co v Rhymney Iron Co Ltd (1890) 25 QBD 146 and Genvrain v Beck (1925) 41 TLR 629 might be regarded as supporting such a view. They both concerned a statutory provision for the recovery of interest on debts "when demand of payment shall have been made in writing, so as such demand shall give notice to the debtor that interest will be claimed …". It was held that a demand in a writ was not a demand giving notice that interest would be claimed. Even if a claim actually made in a writ or statement of claim was held to constitute a notification for the purpose of the clause, it would by no means follow that the parties to the agreement intended that the condition precedent would be satisfied if a new claim were added by amendment after the expiry of the 12-month period, and deemed to relate back to the date of the institution of the action for the purposes of the law of procedure.
I think it can also be fairly said that it is unlikely that the clause in question would be interpreted as limiting the time for the bringing of an action, rather than imposing a condition precedent to the bringing of an action. Ordinarily the intended meaning of a clause in a contract is determined by reference to the ordinary meaning of the words used by the parties. I think it would be necessary to depart from that principle in order to construe the clause as imposing a limitation period, and I do not know of any reason why a court should depart from that principle when interpreting this clause.
The result of all this is that I believe it is quite unlikely that the order now sought by the appellants – an order that the amendments have effect from some date after the expiry of the 12-month period – will make any difference to the outcome of this litigation. That is a factor that weighs against the revisiting of the orders made on 23 September 2005.
Conclusion
I think the only appropriate course is for this appeal to be dismissed.
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