SCHIJF -v- MYDOMAINE PTY LTD
[2015] WASC 428
•10 NOVEMBER 2015
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CIVIL
CITATION: SCHIJF -v- MYDOMAINE PTY LTD [2015] WASC 428
CORAM: MITCHELL J
HEARD: 28 OCTOBER 2015
DELIVERED : 28 OCTOBER 2015
PUBLISHED : 10 NOVEMBER 2015
FILE NO/S: CIV 1300 of 2014
BETWEEN: ENNO SCHIJF
Plaintiff
AND
MYDOMAINE PTY LTD
First DefendantSHELLEY CLACK
Second Defendant
Catchwords:
Practice and procedure - Pleadings - Limitation of actions - Whether amendments statute-barred - Application to amend the indorsement on the amended writ of summons
Legislation:
Limitation Act 1938 (WA)
Supreme Court Rules 1971 (WA), O 21 r 5(1), O 21 r 5(5)
Result:
Application allowed
Category: B
Representation:
Counsel:
Plaintiff: Mr T Galic
First Defendant : Mr S D Hubbard
Second Defendant : Mr S D Hubbard
Solicitors:
Plaintiff: TGC Lawyers
First Defendant : DLA Piper
Second Defendant : DLA Piper
Case(s) referred to in judgment(s):
ABB Service Pty Ltd v Hetherington [2001] WASCA 417
Aussie Ideas Pty Ltd v Tunwind Pty Ltd [2006] NSWCA 286
Bell Group Ltd (In Liq) v Westpac Banking Corporation [No 9] [2008] WASC 239; (2009) 39 WAR 1
BHP Iron Ore Pty Ltd v Westraint Resources Pty Ltd [2002] WASCA 18
Dye v Griffin Coal Mining Co Pty Ltd (1998) 19 WAR 431
Glendinning v Cuzens [2009] WASCA 21
Issa v Issa [2015] NSWSC 112
Morgan v Banning (1999) 20 WAR 474
Soia v Bennett [No 2] [2011] WASC 133
Wardley Australia Pty v The State of Western Australia (1992) 175 CLR 514
MITCHELL J:
Summary
On 28 October 2015, I dealt with the plaintiff's application to amend his writ of summons and statement of claim in these proceedings. The proposed application to the indorsement on the writ of summons introduced a reference to a claim for 'damages for breach of fiduciary duty'. The defendant opposed the application on the ground that the amendment involved adding a new cause of action for which the relevant limitation period had expired.
What follows are my reasons for allowing that amendment, edited from the court's record of my oral decision given on 28 October 2015.
Procedural history
Writ of summons
This action was commenced by writ of summons issued on 28 February 2014.
The writ was amended without leave, pursuant to O 21 r (1) of the Rules, on 10 November 2014.
The amended writ was endorsed with a statement that the plaintiff claimed damages for negligence and continuing breach of duty of care by the defendants. The breach was said to relate to the plaintiff's purchase of a lot in a development known as 'Drift Palm Cove' in or about June 2008 and thereafter following an exchange of contracts until settlement of the property. The breach was said to include various 'continuing negligent misrepresentations and/or misstatements made by the Defendants in relation but not limited to' various matters, including the value of the property. The claim was also expressed to be for:
Damages for misleading and deceptive conduct including making representations as to future matters in relation to the Property for the purposes of section 51 of the Trade Practices Act which representations turned out to be false.
The defendants entered an appearance in the action on 21 November 2014.
First strategic conference
The action forms one of a number of actions in which similar claims are made against the defendants by different plaintiffs. All actions were admitted to my CMC list and a strategic conference was held on 26 March 2015.
On 26 March 2015, I made an order that the plaintiffs in all actions file and serve their statements of claim by 4.00 pm on 16 April 2015, and that the strategic conference be adjourned to 22 April 2015.
Statement of claim
On 16 April 2015, the plaintiff in this action filed a statement of claim. The plaintiffs in the other actions did not file statements of claim. The statement of claim filed in the present action was confusing in many respects. However the facts pleaded included the following:
•The first defendant carried on business of:
-seeking development where units were to be marketed by owners or developers;
-arranging with owners or developers for the first defendant to hold seminars for purchasers to consider purchasing units in the development; and
-acting as agents for prospective purchasers in the sale of the property.
•In March to May 2008, the plaintiff attended a seminar in relation to Drift Palm Cove in Queensland and the first defendant made a number of representations about the properties.
•In July and August 2008, the plaintiff purchased Lot 2409 Drift Palm Cove (the Unit) for $570,000.
•From March to August 2008, the first defendant acted as agent for the plaintiff in advising on and negotiating the purchase of the property.
•On 24 May 2008, the second defendant and another person, representing the first defendant, told the plaintiff that it was in his interest to purchase the Unit at the asking price of $570,000.
•The value of the Unit was in fact around $200,000.
•The first and second defendants were negligent in making the representations, which constituted 'misleading and deceptive conduct' under the Trade Practices Act 1974 (Cth).
The pleading also included statements that the first defendant was negligent in making the representation in that:
(a)At all material times it acted as the agent of the plaintiff and undertook to look after his interests;
...
(d)the first defendant had a conflict of interest between giving the plaintiff good advice and promoting its agenda of selling multiple units in Drift and allowed that conflict to influence it to give bad advice to the plaintiff, in particular the first defendant received commission from the owner and not the plaintiff and further that the amount of the commission depended on the size of the purchase price.
Further strategic conference
At the second strategic conference some difficulties with the pleading were discussed, and an order was made for the plaintiff to file an amended statement of claim by 6 May 2015. The requirement for plaintiffs in the other actions to file their pleadings was suspended.
Since that time, the plaintiff's legal representatives have been attempting to formulate a statement of claim in these proceedings, which may be used as a precedent for the similar claims in the other actions.
Amended statement of claim
An amended statement of claim was filed on 19 May 2015. The amended statement of claim contained the following pleading:
26.Further or in the alternative, there existed from May to August 2008 inclusive a fiduciary duty owed by the first defendant to the plaintiffs which was breached by the first defendant in that
(a)during such period the first defendant acted as the plaintiff's agent in relation to the purchase and acquisition by him of Lot 2409, as pleaded above
(b)the first defendant had a conflict of interest in so acting for the plaintiff in that the first defendant was during such period (and at least since March 2008) promoting the selling of multiple units in Drift for the benefit of Indigo and its own benefit in earning commission, the amounts of the commissions being related to the prices of the units sold
(c)the interests of Indigo and its own interests influenced the first defendant to make the false representations and unwise recommendations pleaded above to the plaintiff
(d)in consequence of those representation and unwise recommendations, the plaintiffs purchased and acquired Lot 2409 for $555,000
(e)in consequence of such acquisition the plaintiff suffered loss and damage being the loss of capital of $355,000 referred to in paragraph 18 above, and losses pleaded in paragraph 19, 20, 21 and 22 above, and the plaintiff pleads in the alternative to paragraphs 18 ‑ 22, paragraph 25 above that the losses pleaded in those paragraphs were caused by the first defendant's breach of fiduciary duty.
The reference to the purchase price being $555,000 rather than $570,000 is explained by a pleading that the purchase price was adjusted at settlement on the purchase of the property on 28 August 2008.
Directions hearing in May 2013
At a directions hearing on 20 May 2015 I made an order extending the time for the plaintiff to file an amended statement of claim to 19 May 2015. At that directions hearing, a number of difficulties with the amended statement of claim were discussed with senior counsel for the defendants. The outcome of that discussion was an order that the plaintiff file and serve a further amended statement of claim by 10 June 2015.
Re-amended statement of claim
On 24 June 2015 the plaintiff filed a re-amended statement of claim, purportedly pursuant to my orders of 20 May 2015 (although the time for compliance with the order had expired). Paragraph 26 (quoted above) remained in the pleading.
Directions hearing in July 2015
At a directions hearing on 29 July 2015, the parties advised me that they had conferred about the statement of claim, and that the defendants still had issues with the pleading. I ordered that the plaintiff serve any further re‑amended statement of claim by no later than 12 August 2015, that the defendants make any strike-out application by no later than 26 August 2015. I also ordered that, if no strike out application was made, a defence be filed by 9 September 2015 and a reply be filed by 23 September 2015.
None of the steps required by my orders of 29 July 2015 were taken.
Minutes of amended writ of summons and statement of claim
On 23 September 2015, minutes of a proposed writ of summons and further re‑amended statement of claim were filed. The amendment to the writ involved adding a paragraph to the indorsement which read:
2AFurther or alternatively as against the first defendant damages for breach of fiduciary duty.
On 23 September 2015 the orders made on 29 July 2015 were vacated by consent, the plaintiff was ordered to bring any application to amend his writ of summons by no later than 30 September 2015, and a directions hearing set for 24 September 2015 was ordered to be adjourned. Directions were adjourned to 14 October 2015.
The plaintiff did not file any application to amend until 13 October 2015. On 14 October 2015 I ordered that the application be heard today.
The application
The application is for orders that the plaintiffs have leave to amend the writ with the introduction of a new par 2A, in the terms noted above. Leave is also sought to introduce 'proposed new paragraph 26 to the Amended Statement of Claim'.
The application to amend the Statement of Claim is misconceived in that the paragraph 26 is not new. It is already pleaded in the Amended Statement of Claim. There has been no application to strike out that paragraph. In these circumstances, the only matter calling for my ruling is the application to amend the indorsement on the writ of summons.
Order 21 rule 5 of the Rules
Order 21 r 5(1) of the Rules of the Supreme Court 1971 (WA) (Rules) provides that, subject to certain matters:
the Court may at any stage of the proceedings allow the plaintiff to amend his writ, or any party to amend his pleading, on such terms as to costs or otherwise as may be just and in such manner (if any) as the court may direct.
Order 21 r 5(1) operates subject to the following provisions of that rule.
Order 21 r 5(2) of the Rules provides:
Where an application to the Court for leave to make the amendment mentioned in subrule (3), (4) or (5) is made after any relevant period of limitation current at the date of issue of the writ has expired, the Court may nevertheless grant such leave in the circumstances mentioned in that subrule if it thinks it just to do so.
Order 21 r 5(5) of the Rules provides:
An amendment may be allowed under subrule (2) notwithstanding that the effect of the amendment will be to add or substitute a new cause of action if the new cause of action arises out of the same facts or substantially the same facts as a cause of action in respect of which relief has already been claimed in the action by the party applying for leave to make the amendment.
Limitations period
The only ground on which the defendants oppose the amendment is that leave to amend would introduce a new cause of action which is statute barred.
The limitation periods for equitable causes of action are now prescribed by statute. Section 13(1) of the Limitation Act 2005 (WA) provides that an action on a cause of action cannot be commenced if six years have elapsed since the cause of action accrued. An 'action' is relevantly defined to mean:
any civil proceedings in a court, whether the claim that is the subject of the proceeding or relief sought is under a written law, at common law, in equity or otherwise.
Section 27 of the Limitation Act makes special provision for actions where the relief sought is in equity for which the limitation period would not have been determined by analogy with the common law. Such an action cannot be commenced after the elapse of six years since the cause of action accrued or the elapse of three years since time started running, on equitable principles, for the commencement of the action, whichever is later.
There is room for debate as to whether a court exercising equitable jurisdiction prior to 2005 would have applied the limitation period for contract or tort to an action for breach of fiduciary duty by analogy. The defendants have referred to authorities indicating that the limitation periods would apply by analogy to an action for breach of fiduciary duty.[1] However, in Bell Group Ltd (In Liq) v Westpac Banking Corporation,[2] Owen J found that there was no applicable analogy to the breach of fiduciary duty in that case.
[1] Issa v Issa [2015] NSWSC 112 [41]; Aussie Ideas Pty Ltd v Tunwind Pty Ltd [2006] NSWCA 286 [22] ‑ [24].
[2] Bell Group Ltd (In Liq) v Westpac Banking Corporation [No 9] [2008] WASC 239; (2009) 39 WAR 1, [9267] ‑ [9293].
It is unnecessary to attempt to resolve the question in the present case. Counsel for the plaintiff accepts that the limitation period would be six years under either s 13 or s 27 of the Limitation Act. The defendant contends, and counsel for the plaintiff accepted, that the cause of action would have accrued by 28 August 2008 when the plaintiff purchased the Unit. On that basis, the limitation period would have expired on 28 August 2014. That date was after the issue of the writ in these proceedings, but prior to the recent application to amend the writ.
Therefore, the plaintiff's counsel accepts that the proposed amendment will be made after the expiry of the relevant limitation period. However, counsel for the plaintiff rejects the contention that any new cause of action is pleaded.
Of course, the reference to commencing an action is to the issue in the appropriate court of a writ or other originating application in relation to the action.[3]
[3] Limitation Act, s 12.
Defendant's submissions
The defendants submit that the amendment should be refused unless the factual basis for the relief sufficiently coincides with the facts pleaded in the writ within time.[4] The defendants say that, as the statement of claim was filed after the expiry of the limitation period, the court's enquiry should be limited to the facts contained within the writ.
[4] Citing Soia v Bennett [No 2] [2011] WASC 133 [53](c).
The defendants submit that the writ does not refer to a claim for breach of fiduciary duty or set out the facts that would ground such a claim, but rather seeks relief only for negligence and misleading and deceptive conduct. The defendants say that the plaintiff must show that the defendants owed him a fiduciary duty and breached that duty, and this is not alleged in the writ. They say the writ makes no reference to an agency between the plaintiff and first defendant or the existence of a conflict of interest. They say that a claim of breach of fiduciary duty would involve a number of factual questions which would be irrelevant to a claim in negligence or for misleading and deceptive conduct. It is said, therefore, that the factual basis for the proposed new claim does not sufficiently coincide with the facts pleaded in the writ within time.
Resolution
I do not accept the defendant's submissions that leave to amend should be refused. That is so for a number of reasons.
First, the court has power to allow the amendment even though it introduces a cause of action that is statute barred. The limitation provision bars the remedy not the right, and the remedy is not barred unless the limitation point is pleaded in the defence and has not been waived.[5]
[5] ABB Service Pty Ltd v Hetherington [2001] WASCA 417 [12].
Secondly, allowing the amendment could not prejudice the defendants' right to plead the limitation point in the proceedings. The rules of court cannot, and O 21 r 5(5) of the Rules does not, give the court the power to override or affect the defendants' accrued rights under a statute of limitations. Allowing the amendment will not preclude the defendants from being able to assert a limitation defence at trial.[6]
[6] Morgan v Banning (1999) 20 WAR 474, 483, 486, ABB Service, [9](v) and [18] ‑ [19].
Thirdly, it has been recognised that limitation questions of this kind should not generally be decided in interlocutory proceedings.[7] It will, in this case, be preferable for the issue to be left to trial. Whether a new cause of action arises out of the same facts, or substantially the same facts, in respect of which relief has already been claimed is a matter of impression involving questions of degree.[8] In other than a clear case, those questions are best resolved when the relevant facts are found at trial.[9]
[7] Wardley Australia Pty v The State of Western Australia (1992) 175 CLR 514, 533; ABB Service [11].
[8] Dye v Griffin Coal Mining Co Pty Ltd (1998) 19 WAR 431, 434; ABB Service [20]; Rossen v Airey [2012] WASCA 26 [28] ‑ [29].
[9] Morgan (486).
Fourthly, a 'cause of action' for these purposes is constituted by the facts or combination of facts which give rise to the right to relief. It is not the legal characterisation or label which is applied to those facts, which in pre-Judicature Act times would have been the relevant form of action.[10] Many of the differences to which the defendants point concern the form of action or label that is applied to the facts giving rise to the claimed right to relief. To refer to an action in 'negligence', 'continuing breach of duty of care' or 'misleading and deceptive conduct' merely identifies what might be referred to as a form of action. Those phrases do not define the cause of action. Re‑labelling the facts giving rise to the claim by one or more of those phrases does not involve pleading a new cause of action.
[10] Dye (434); Morgan (484, 487), ABB Service [9](iii); Rossen [30].
In this case it is significant that the amendment to the indorsement does not introduce any new facts. It merely applies the new label of 'breach of fiduciary duty'. If the amendment does not add new facts, it cannot be introducing a new 'cause of action' as that phrase is properly understood.
Fifthly, the defendants' submission that the attention of the court is confined to the facts pleaded in the writ confuses the difference between an indorsement of claim and a statement of claim.[11] An indorsement of claim is not a pleading, and does not need to identify all of the facts that found the cause of action. That the existing writ does not refer to an agency or a conflict of interest (those things being legal characterisations of facts in any event) is not fatal to the proposed amendment. The facts giving rise to the relief sought in the proceedings therefore cannot be defined exclusively by reference to what is set out in an indorsement of claim.
[11] As to which see ABB Service [25] ‑ [27].
This is also indicated by O 21 r 5(5) of the Rules, which refers to the new cause of action 'arising out of the same facts or substantially the same facts in respect of which relief has already been claimed in the action'. This draws attention to the facts and relief claimed in the action at the time of the amendment. It does not confine the court to the initial indorsement or what was claimed before a limitation period may have expired.
The facts giving rise to the claim for relief for breach of fiduciary duty are:
1.the agency arrangement with the plaintiffs;
2.the commission arrangement with the owner;
3.the advice to as to the purchase of the property; and
4.the loss sustained from following that advice.
All those facts have all been pleaded since the first statement of claim was filed in the proceedings. Where the facts giving rise to the claim have already been pleaded, it cannot be concluded either that a new cause of action is being introduced or, if it is, that the new cause of action does not arise out of the same facts or substantially the same facts in respect of which relief has already been claimed in the action.
In Morgan, Wheeler J referred to the court discerning from the indorsement (where possible) what are the underlying facts entitling the plaintiff to relief.[12] In ABB Service, McLure J referred to 'the parameters or framework of the current indorsement'.[13] These references confirm that the court's attention is not confined to the facts set out in the indorsement.
[12] Morgan (487).
[13] ABB Service [27].
In Soia,[14] Commissioner Sleight referred to 'facts pleaded in the writ within time' in his summary of the relevant principles. However, the issue of whether the court was confined to facts set out in the indorsement was not a matter which appears to have been contentious in that case.
[14] Soia [53].
I note that the indorsement does not represent a model of compliance with O 6 r 1(1) of the Rules.[15] However, the defendants have not sought to strike out the indorsement, and if they had done so the deficiency would be an irregularity which could be corrected under O 2 r 1 of the Rules.[16] Order 2 r 2 of the Rules would appear to prevent such an application being made now in relation to the existing indorsement. The defendants have not contended that the amendment would be deficient for any reason other than limitations.
[15] As to which see ABB Service [7] ‑ [10]; Glendinning v Cuzens [2009] WASCA 21 [26] ‑ [30].
[16] Glendinning [27], Morgan (482).
Sixthly, it is no objection under O 21 r 5(5) of the Rules that there are facts that are peculiar to each cause of action, if the overlap is so great that the new cause of action can fairly be said to arise out of substantially the same facts as the old cause of action.[17] In the present case the essence of the pleaded negligence and misleading and deceptive conduct cases is that the first defendant made misrepresentations about the value and other matters concerning the Unit in circumstances where the agency arrangement with the plaintiffs gave rise to a duty of care. The breach of fiduciary duty case as pleaded in par 26 is essentially that the first defendant preferred its own interests in gaining a commission from the Unit owner to its duty as the plaintiff's agent when giving advice to the plaintiff. In both cases it is alleged that the plaintiff relied on the defendants' advice and suffered loss as a consequence of doing so. There is at least a substantial overlap between the facts underlying the claim for breach of fiduciary duty and the facts underlying the claim for relief on the basis of negligent misrepresentation or misleading and deceptive conduct.
[17] Dye (434).
In my view, either:
1.the cause of action based on breach of fiduciary duty is not new because it arises from facts underlying the indorsement; or
2.if there is a new cause of action it arises from the same facts or substantially the same facts as the cause of action in which relief has already been claimed in the proceedings.
It is unnecessary to determine which of these alternatives is the case at this interlocutory stage. In the former case, no issue of limitations arises and the amendment may be allowed under O 21 r 5(1) of the Rules. In the latter case, the amendment may be allowed under O 21 r 5(5) of the Rules.
Conditional leave
Counsel for the defendants submitted that leave to amend should be subject to a condition that the amendment take effect from the date of the amendment, so as to avoid the operation of the relation back rule. Such an approach was adopted by the Master in Morgan. On appeal, that part of his order providing that the amendment took effect from a later date was set aside. Wheeler J observed:[18]
In the end, then, the Master was left with the mere fact of delay, in circumstances where he thought that the indorsement and the proposed amendment did arise out of broadly the same facts, and where he was aware that the respondent had apparently seen a draft writ some 12 months before this writ was served. Given the potentially serious consequences to the appellant of the order that the substituted indorsement take effect from the date of the Master's order, there does not appear to me to have been sufficient material to ground a discretion to make an order of that kind.
[18] Morgan (488).
Counsel for the defendant referred to the observations of Steytler J, with whom Anderson J agreed, in BHP Iron Ore Pty Ltd v Westraint Resources Pty Ltd.[19] Those observations suggested that it might be appropriate for an order that the amendment take effect only from the date that it was made, or a date determined by the trial judge. However, in BHP there was no issue that the amendments did in fact introduce causes of action which were new.[20] The observations may be explained by the fact that, in BHP, the Limitation Act 1938 (WA) could only have applied by analogy. There may have been issues as to the applicability of the observations in Morgan (that the relation back rule did not affect the operation of a statutory limitation period) to a limitation period applied by analogy. Further, in BHP the pleading of breach of fiduciary duty was rejected on other grounds. Steytler J expressed his observations to be comments only, and expressly held that it was unnecessary for him to consider the issue of whether such an order ought to have been made.[21]
[19] BHP Iron Ore Pty Ltd v Westraint Resources Pty Ltd [2002] WASCA 18 [98].
[20] BHP [24].
[21] BHP [96].
To the extent that the circumstances of BHP are not distinguishable, I should apply the decision in Morgan where the resolution of the issue formed part of the ratio of the case.
Discretionary factors
The manner in which the plaintiff has conducted this proceeding is a factor counting against the grant of leave to amend. We are in the position where, approaching 12 months after the defendants entered an appearance, the plaintiff's statement of claim is yet to be in final form. That delay is in large part because the plaintiff has not generally complied with programing directions.
However, there are also a number of discretionary factors that favour the grant of leave to amend. Procedurally, the proceedings are at an early stage. The usual approach in the CMC list is to allow amendments without leave up to seven weeks prior to trial. The defendants are yet to file a defence. The plaintiff's should not be precluded from asserting an argument that the defendants breached a fiduciary duty when the action is not time barred. The defendants remain able to plead and assert a limitation defence at trial.
On balance, the interests of justice favour the grant of leave to amend.
Conclusion
For these reasons I will allow the application to amend the Indorsement on the Amended Writ of Summons to refer to a breach of fiduciary duty.
11
2