Shum Yip Properties v Chatswood Investment and Development

[2002] NSWSC 247

CITATION:	Shum Yip Properties v Chatswood Investment & Development [2002] NSWSC 247
CURRENT JURISDICTION:	Equity
FILE NUMBER(S):	SC 4959/99
HEARING DATE(S):	22 March 2002
JUDGMENT DATE:	22 March 2002
PARTIES :	Shum Yip Properties Development Ltd (P) Chatswood Investment and Development Co Pty Ltd (D1) Rosanna Wong (aka Rosanna Ngan) (D2) Rolle Pty Ltd (D3)
JUDGMENT OF:	Austin J

COUNSEL :	R Kaye (P) M G Scheib (D)
SOLICITORS:	Lazarus Smith Lawyers (P) Crichton-Browne Crossley (D)
CATCHWORDS:	PRACTICE & PROCEDURE - leave to amend - application to amend defence to add limitation defence after final hearing and reasons for judgment handed down - relevant considerations
CASES CITED:	Classic Gourmet Sausages v Leader Commercial Properties Pty Limited (2000) 97 FCR 313 Commonwealth Bank of Australia v Mehta (1991) 23 NSWLR 84 Cropper v Smith (1884) 26 ChD 700 Hawkins v Clayton (1998) 164 CLR 539 Ketteman & Ors v Hansel Properties Ltd [1987] 1 AC 189 Queensland v J L Holdings Pty Limited (1997) 189 CLR 146 Sali v SPC Ltd (1993) 67 ALJR 8
DECISION:	Leave granted

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

AUSTIN J

FRIDAY 22 MARCH 2002

4959/99 SHUM YIP PROPERTIES DEVELOPMENT LTD V CHATSWOOD INVESTMENT AND DEVELOPMENT CO PTY LTD & ORS

JUDGMENT (ex tempore; revised 27 March 2002)

1 HIS HONOUR: On 12 February 2002 I published my reasons for judgment after a hearing of the present proceeding which occupied some time in the months of February, May, July and August 2001. I stood the matter over to 27 February 2002 for the purpose of making orders and dealing with costs so that the parties would have the time to read and consider my reasons for judgment, which ran for some 91 pages.

2 On 27 February 2002 I made some orders giving effect to my reasons for judgment, including orders for the winding up of the first defendant and the appointment of a liquidator. However, I left some matters outstanding, partly because the third defendant's counsel informed me that he proposed, by notice of motion, to seek leave to file an amended defence raising, for the first time, a statute of limitation defence. I made directions for the filing and service of the Notice of Motion and evidence in support of it, and for the filing of submissions by the parties on the limitation point, and with respect of costs, and for orders disposing of the remainder of the proceedings, and I stood the matter over for further hearing today.

3 At today's hearing there has been time only to deal with the Notice of Motion raising the limitation point. Some other issues with respect to costs and orders will need to be stood over to be dealt with on another occasion. Since I have just granted leave, for reasons I am about to give, for the amended defence to be filed by the third defendant, the further hearing of the matter will deal with the limitation question and also questions of costs and orders.

4 Essentially, the relief sought in the proceeding was an order based on the oppression and just and equitable grounds in the Corporations Act for the winding up of the first defendant as the primary relief; orders against the second defendant with respect to breach of her fiduciary duty and duties as a director of the first defendant, including compensation orders, and orders against the third defendant for knowing participation in those breaches of duty; and orders for relief with respect to a joint venture agreement either on the ground that the second or third defendant was a party to it or on the ground that they were involved in breach of the agreement or a fiduciary duty arising out of the joint venture relationship.

5 I found, as I have said, that the oppression ground was made out and that orders should be made for the winding up of the company, and those orders have been made. I also found that there were breaches of duty by the second defendant and that orders should be made, including compensation orders against her. As regards the joint venture agreement, there was some uncertainty reflected in the pleadings, and in the submissions in the case, as to the true identity of the plaintiff's co-venturer. In paragraphs 24 and following I reached the conclusion, which I described as controversial, that the co-venturer was the third defendant. At paragraph 237, having rejected a contention that the joint venture agreement had been varied, I found that the third defendant was in breach of the agreement by failing to make its full contribution, although I held that the contribution that the third defendant had made must be taken to include three sums, which the plaintiffs had unsuccessfully challenged. I said that, in my view, the plaintiff was entitled to relief by way of damages in respect of that breach of the agreement.

6 At paragraph 255 I indicated my intention to make orders with respect to damages recoverable by the plaintiff for the third defendant's breach of the joint venture agreement. At paragraph 256 I observed that the drafting of orders would be a matter of intricacy and I, therefore, stood the matter over directing the plaintiff to bring in short minutes.

7 The limitation point, which the third defendant now wishes to raise, relates only to my finding of breach by it of the joint venture agreement leading to liability in damages.

8 The third defendant's application for leave is made pursuant to Pt 20 r 1 of the Supreme Court Rules. The application seeks leave to file an amended defence which does no more than plead that the action for breach of the joint venture agreement is time barred pursuant to s 14(1)(a) of the Limitation Act (NSW). Section 14(1)(a) provides, so far as is relevant, that an action on a cause of action founded in contract is not maintainable if brought after the expiration of a limitation period of six years running from the date on which the cause of action first accrues to the plaintiff.

9 It appears to me, and the third defendant's submission to this effect was not contested by the plaintiff, that the cause of action for breach of the joint venture agreement accrued no later than 16 June 1992. The terms of the joint venture agreement were set out in paragraph 22 of my reasons for judgment. The breach relied upon the failure by the third defendant to make the contributions required by the agreement. The agreement required that the second of two instalments of contribution be remitted prior to 16 June 1992.

10 The plaintiff referred me to some observations by Deane J in Hawkins v Clayton (1998) 164 CLR 539 at 590 to the effect that the reference in s 14(1) to the cause of action first accruing should be construed as excluding any period during which the wrongful act effectively the bringing of proceedings. But counsel did not suggest that this was a case of that kind. Rather, Hawkins v Clayton & Ors was cited to indicate the purpose or legislative intent underlying s 14(1), matters which I shall take into account, but which do not affect the point at which the cause of action accrues.

11 Both parties accept that leave to amend can be granted under Pt 20 r 1 at any stage of the proceeding: Classic Gourmet Sausages v Leader Commercial Properties Pty Limited (2000) 97 FCR 313 at pars 81 - 84. The dispute between the parties relates not to the Court's power to grant leave, but to the manner in which the Court's discretion should be exercised.

12 In my opinion, observations by Bowen LJ in Cropper v Smith (1884) 26 ChD 700 at 710-11 remain relevant in a case such as the present. His Lordship referred to the effect of the Judicature Act on pleadings and consequently, upon the Court's attitude to amendment. He said:

“Now, I think it is a well established principle that the object of Courts is to decide the rights of the parties, and not to punish them for mistakes they make in the conduct of their cases by deciding otherwise than in accordance with their rights. Speaking for myself, and in conformity with what I have heard laid down by the other division of the Court of Appeal and by myself as a member of it, I know of no kind of error or mistake which, if not fraudulent or intended to overreach, the Court ought not to correct, if it can be done without injustice to the other party. Courts do not exist for the sake of discipline, but for the sake of deciding matters in controversy, and I do not regard such amendment as a matter of favour or of grace.”

At page 711 his Lordship said:
“The question seems to me to be this. Can you by the imposition of any terms place the other side in as good a position for the purpose of having the question of right determined as they were in at the time the mistake of judgment was committed? It does not seem to me material to consider whether the mistake of judgment was accidental or not, if not intended to overreach. There is no rule that only slips or accidental errors are to be corrected. [His Lordship referred to the English rule equivalent to Pt 20 r 1]. I have found in my experience that there is one panacea which heals every sore in litigation, and that is costs. I have very seldom, if ever, been unfortunate enough to come across an instance, where a person has made a mistake in his pleadings which has put the other side to such a disadvantage as that it cannot be cured by the application of that healing medicine. Here I fail even to see with the Respondents wants costs to remedy any grievance, because they have been put to none. The case has been fought exactly in the same way as it would have been fought if Mr Hancock had delivered particulars of objection and therefore it seems to me that he ought to be allowed to amend.”

13 That was a case where particulars of objection in a patent case had not been delivered. The case is relevant to the present circumstances only as a statement of general principle.

14 Lord Justice Bowen's remarks received some support in the High Court of Australia in Queensland v J L Holdings Pty Limited (1997) 189 CLR 146. In that case application was made after several interlocutory hearings for leave to amend the defence to add a defence which the judge regarded as likely to result in the vacation of the hearing dates which had been fixed for the trial months in advance. The trial judge refused leave to add the defence, and his decision was upheld by the Full Court of the Federal Court of Australia. However, the High Court reversed the Full Court's decision, holding that although case management principles are appropriate to be taken into account by the Court in exercising its discretion on an application for leave to amend, those principles ought not to be used to prevent a party from litigating an issue which is fairly arguable. Prejudice to other parties through the granting of leave to raise an arguable defence should ordinarily be dealt with by a costs order.

15 Dawson, Gaudron and McHugh JJ (at 152 and 153) quoted, with approval, part of the extract from the judgment of Bowen LJ in Cropper v Smith, which I have set out. They then referred to a passage in the judgment of Toohey and Gaudron JJ in Sali v SPC Ltd (1993) 67 ALJR 841 at 849 to the effect that the contemporary approach to Court administration had introduced another consideration onto the scales, and that in modern times the conduct of litigation is not merely a matter for the parties. It is also a matter in which the Court must take into account the need to avoid disruption to its lists and consequent inconvenience and prejudice to other litigants.

16 Dawson, Gaudron and McHugh JJ conceded (at 153) that in this respect times had changed since 1884 when Cropper v Smith was decided. However, they said (at 154):

“It may be said at once that in the passage which we have cited from Sali v SPC Ltd Toohey and Gaudron JJ are not to be taken as sanctioning any departure from the principles established in Cropper v Smith ... Case management is not an end in itself. It is an important and useful aid for ensuring the prompt and efficient disposal of litigation. But it ought always be borne in mind, even in changing times, that the ultimate aim of a court is the attainment of justice and no principle of case management can be allowed to supplant that aim.”

At 155, their Honours said:
“Justice is the paramount consideration in determining an application such as the one in question. Save in so far as costs may be awarded against the parties seeking the amendment, such an application is not the occasion for the punishment of a party for its mistake or for its delay in making the application. Case management, involving as it does the efficiency of the procedures of the court, was in this case a relevant consideration. But it should not have been allowed to prevail over the injustice of shutting the applicants out from raising an arguable defence, thus precluding the determination of an issue between the parties.”

17 In my opinion the principles of those two cases are the general principles by reference to which any application for amendment must be assessed.

18 Counsel for the plaintiffs submitted that there was, in effect, an exception to those principles where the application to amend is an application to add a limitation defence, at any rate, when the application is made very late. He referred to Ketteman & Ors v Hansel Properties Ltd [1987] 1 AC 189 and, in particular, to the observations made by Lord Griffiths at 219. In that case an application for leave to amend to raise a limitation defence was made in the course of final submissions. His Lordship said:

“I have never in my experience at the Bar or on the Bench heard of an application to amend to plead a limitation defence during the course of the final speeches. Such an application would, in my view, inevitably have been rejected as far too late. A defence of limitation permits a defendant to raise a procedural bar which prevents the plaintiff from pursuing the action against him. It has nothing to do the merits of the claim which may all lie with the plaintiff; but as a matter of public policy Parliament has provided that a defendant should have the opportunity to avoid meeting a stale claim. The choice lies with the defendant and if he wishes to avail himself of the statutory defence it must be pleaded. A defendant does not invariably wish to rely on a defence of limitation and may prefer to contest the issue on the merits. If, therefore, no plea of limitation is raised in the defence the plaintiff is entitled to assume that the defendant does not wish to rely upon a time bar but prefers the court to adjudicate on the issues raised in the dispute between the parties. If both parties on this assumption prepare their cases to contest the factual and legal issues arising in the dispute and they are litigated to the point of judgment, the issues will by this time have been fully investigated and a plea of limitation no longer serves its purpose as a procedural bar.

If a defendant decides not to plead a limitation defence and to fight the case on the merits he should not be permitted fall back upon a plea of limitation as a second line of defence at the end of the trial when it is apparent that he is likely to lose on the merits. Equally, in my view, if a defence of limitation is not pleaded, because the defendant's lawyers have overlooked the defence the defendant should ordinarily expect to bear the consequences of that carelessness and look to his lawyers for compensation if he is so minded.”

19 Counsel also notes that under Pt 15 r 13(2) of the Supreme Court Rules a limitation defence is required to be pleaded specifically.

20 In Commonwealth Bank of Australia v Mehta (1991) 23 NSWLR 84 the Bank applied for leave to amend to raise a limitation defence to a claim under the Trade Practices Act. It appears that the claim under the Trade Practices Act was only one of the grounds for relief advanced by the plaintiff and the limitation defence was confined to the trade practices ground, where the limitation period under s 82 is three years. At 106-107, Waddell AJA referred to the reasoning of the judge at first instance who had refused the application for leave. It appears that the judge based his reasoning on two specific grounds. The first was that to allow the amendment would occasion prejudice to the plaintiffs which would not be compensated by an order for costs, evidently because the hearing might well have been conducted differently if the defence had been raised in a more timely fashion. Secondly, the judge took into account the subsidiary role of the claim under the Trade Practices Act in the conduct of that case.

21 After referring to Ketteman's case and, in particular, the observations of Lord Griffiths, Waddell AJA concluded (at 107) that while there may be circumstances in which such an amendment should be allowed, generally speaking, the considerations referred to by Lord Griffiths would support refusal of the leave to amend. He held that the Bank was unable to point to any respect in which the exercise of the trial judge's discretion had miscarried.

22 Several points should be made about the application of these two cases to the present case. First, as I shall explain, in the present case the application is made on the basis that the defence was not raised earlier due simply to inadvertence, perhaps encouraged by the way the matter was pleaded and argued by the plaintiff, rather than any deliberate decision by the third defendant to run the case on the merits and not raise the limitation point. Secondly, it cannot be said that in the present case the claim for damages for breach of the joint venture agreement was a subsidiary claim in the same way that the trade practices claim was subsidiary in the Mehta case. Thirdly, and perhaps most importantly, the Ketteman case and the Mehta case preceded the statement of the general principles of the law as to amendment by the High Court in the J L Holdings case.

23 In my opinion, there is no basis for any categorical distinction between the principles applicable to an amendment to raise a limitation defence belatedly, and the principles applicable to any other belated amendment. There are differences in application produced by the nature of the amendment. For example, it may be relevant for the Court to take into account, in the exercise of its discretion, that the amendment would raise a defence which is a technical defence in the circumstances of the case. The same could be said, for example, where leave is sought to amend to add a defence based on the statute of frauds.

24 In some circumstances, a limitation defence does have the air of pure technicality. However, in the present case, I do not regard the limitation defence as purely technical. Lord Griffiths referred, in the Ketteman case, to the public policy underlying the limitation legislation arising out of the injustice of requiring a defendant to meet a stale claim.

25 In the present case the events of 1992, happening partly in Hong Kong and partly in Sydney, are shrouded in mystery. One of the potential witnesses, whose evidence might have been crucial, has not been located. Evidence of others has been given in Mandarin, with translations which may not have always reflected the nuances of Australian language and law. It is not merely a technical matter to allow a defendant to raise a defence based upon the fact that the claim has been made so long after events of that kind.

26 I turn from the legal principles applicable to such a case to consider the strength of the case that the defendant might have if leave is granted. It is inappropriate for me to make anything like a final determination on this issue at the present time. However, given the special circumstances of this case, in which I have already delivered what I hope will be my principal judgment purporting to make comprehensive findings of fact, it is appropriate, in the exercise of my discretion, to refer to those findings and make a preliminary assessment of the kind of case that might arise if leave is granted.

27 I have said that the cause of action accrued in June 1992. The proceeding commenced on 8 December 1999, well outside the six year limitation period prescribed by s 14(1)(a). The only answer to the limitation defence suggested in submissions today is that the plaintiff may wish to raise s 55 and the equitable considerations underlying it (adverted to by Deane J in Hawkins v Clayton). The only part of s 55 that the plaintiff has sought to invoke was s 55(1)(b). So far as relevant, that subsection provides that where a cause of action is fraudulently concealed, the time which lapses after a limitation period fixed by the Act for the cause of action commences to run and before the date on which a person having the cause of action first discovers, or may with reasonable diligence have discovered, the fraud or concealment, does not count in the reckoning of the limitation period.

28 That raises four issues: first, whether a cause of action has been concealed; second, whether the concealment is fraudulent; third, whether and when the person having the cause of action has first discovered the fraud or concealment; and fourth, whether and when with reasonable diligence that person would have discovered the fraud or concealment.

29 A difficulty for the plaintiff in the present case is that Mr Lin was managing director of Shum Yip and director of CIDC for a substantial period up to 1996 and 1997 respectively, as I pointed out in my reasons for judgment. If the plaintiff bears the onus of proving the ingredients of s 55(1)(b), the absence of any evidence from Mr Lin, who had authority as the plaintiff's managing director for some time after the cause of action accrued, could be fatal. There was no evidence at the hearing enabling me to conclude that the second and third defendants had concealed the terms of the joint venture agreement, and the amount of the third defendant's contribution under it, from Mr Lin.

30 Another difficulty remains, even if the position of Mr Lin is put to one side. There is evidence that the plaintiff was aware of the terms of the joint venture agreement from at least 1997. Ms Tuen gave evidence that she had seen it and had, indeed, a copy of it. There is evidence that in September 1998 a demand was made by Mr Tian for information at a meeting in Sydney, including information relating to the contributions of the Wong interests to the joint venture. What is not clear is whether any demand for information was made by the plaintiff, before the expiration of the limitation period, for information with respect to contributions. At paragraph 82 of my reasons for judgment, I referred to a meeting between Ms Tuen and Ms Wong in Sydney in May 1998 where Ms Tuen asked Ms Wong for "information about the finance of the company", inter alia. At paragraph 196, I found that the facts had shown that the plaintiff was seeking information breaking down global figures for income and expenses in the financial statements and that Ms Wong must have been aware of what Shum Yip wanted, even if the articulation of its demands had been imprecise.

31 It may be that there is some further evidence, or some construction of the evidence that the plaintiff can successfully advocate, to demonstrate there was a demand for information about financial contributions and hence a concealment at a time before September 1998, but so far as the evidence at the hearing goes, there appears to be nothing other than that to which I have referred. That material appears to be insufficient.

32 Under s 55(2) the extension of the limitation period has effect whether the limitation period for the cause of action would, but for the section, expire before or after the date mentioned in that subsection. But it is at least doubtful whether that principle will assist the plaintiff to overcome the paucity of evidence at the hearing.

33 Apart from difficulties about the question of concealment, it will be necessary before s 55 applies for the Court to be satisfied on the question of fraudulent concealment, and the questions of the time of first discovery or the time when with reasonable diligence first discovery would have occurred.

34 It follows, on the state of the evidence before me now, that it seems likely that if I grant leave for the third defendant to amend its defence, the amendment will be successful. I say that not to make any finding pre-judging the fate of the amended defence, but rather because it is a relevant consideration for me to take into account now in the exercise of my discretion as to the granting of leave.

35 The limitation defence relates to a matter of quite central significance in this case. Though the quantum of damages has not been assessed, it appears to be clear that if damages are recoverable by the plaintiff for breach of the joint venture agreement, the quantum of those damages will substantially exceed the quantum of the compensation recoverable against the second defendant for breach of her fiduciary duty.

36 I turn to the next consideration, namely the reasons advanced by the third defendant for not pleading the limitation defence earlier. In the statement of claim as originally filed, paragraph 14 pleaded oppression and gave amongst the particulars in sub-paragraph (k) failure to procure an injection of capital and loan funds to the benefit of the first defendant in accordance with the joint venture agreement. Paragraph 22 pleaded that the second defendant had breached the joint venture agreement by failing to make the payments required by the agreement. Paragraph 23 pleaded that if the joint venture agreement was between the plaintiff and the company referred to as NIPL, the second and third defendants had induced NIPL to breach the agreement. In paragraph 24, after dealing with the oppression and breach of fiduciary duty grounds, the prayers for relief sought a declaration that the second defendant was in breach of the joint venture agreement or a declaration that the joint venture agreement had been terminated, or damages, or (in the alternative) equitable damages.

37 The pleading of the cause of action for a breach of contract can be seen to have been sketchy to a degree. That is partly explained by the fact that there was considerable and understandable doubt as to the identity of the co-venturer with the plaintiff, as I have explained. But it is noticeable that nowhere in the statement of claim is there an assertion that, by virtue of the failure of the party responsible to make contributions under the joint venture agreement to make them, the plaintiff suffered loss and damage.

38 In my view, though that deficiency in the pleading in the statement of claim is regrettable, it does not provide an excuse for the defendants to overlook the limitation point. Reading the Statement of Claim as a whole, it is clear that the intention of the pleader was to allege that a party in the defendants' camp, referred to in submissions as "the Wong interests", was in fact the co-venturer with the plaintiff who had failed to make the contributions required by the joint venture agreement and that the remedy that should flow from that breach was damages.

39 I was taken by the parties to the further history of the pleadings and submissions. In my opinion, that sheds only a little further light on the issues I have to decide. I note that in the Amended Statement of Claim, filed on 15 May 2001, well after the hearing had commenced, paragraph 5 asserted that the parties to the joint venture agreement were the plaintiff and either the second or the third defendant. The assertion that the third defendant may be a party to the joint venture agreement was made for the first time in that pleading. And in the Amended Defence to that Statement of Claim, the defendants denied the allegation in paragraph 5, making it clear they were aware that the third defendant was alleged to be, in the alternative, a party to the agreement.

40 In the plaintiff's Outline of Facts and Law, filed before the commencement of the hearing, it asserted, at paragraph 10, that there were significant deficiencies in the books and records of the first defendant to such an extent that it was impossible to determine, from the books and records provided, whether the shareholders of the first defendant had actually contributed any of the capital or loan funds required. And there was a specific assertion that the second or third defendant breached the joint venture agreement by failing to make the agreed payments.

41 That, in my view, confirms that the defendants were effectively on notice, at that time, of a claim for damages for breach of agreement, which might potentially be a claim against the third defendant. Indeed, the defendants’ Outline of Contentions of Fact and Law, provided on 23 August 2000, says, in paragraph 8, that declarations had been sought with respect to the joint venture agreement which did not appear to lead to any consequential relief except perhaps a claim for damages.

42 In the final submissions of the plaintiff, at paragraphs 56 and 57, there was an analysis of the loss suffered by the plaintiff through failure of the relevant defendant to make contributions under the joint venture agreement, and in paragraph 87 of the submission the plaintiff said that although it was not presently in a position to determine the amount of any such damages (a matter which would require further and more extensive records of CIDC), an account may be the most appropriate order or, alternatively, the matter could be left to the liquidator.

43 In their final submissions, which were exchanged with the plaintiffs rather than following upon them, the defendants contended that the amended pleading contained no allegation against the third defendant of breach of the joint venture agreement (paragraph 112) and (at paragraph 210) that a claim had been made for damages, but that it was "a matter of speculation" to whether that claim related to the third defendant.

44 It seems to me that while there was no specific, pleaded claim for damages for breach of the joint venture agreement against the third defendant, there was, as I have said, sufficient in the pleadings alone, and certainly in the pleadings when read with the submissions, to make it clear that whatever entity within the Wong interests was found to be the contracting party that entity would be subject to a claim for damages for breach of the joint venture agreement by failure to make contributions. And as it happened, consistently with allegations in the Amended Statement of Claim, I found that the third defendant was the joint venture party. That analysis leads me to conclude that the failure to plead the limitation point at any time prior to the delivery of my reasons for judgment was simply a matter of inadvertent mistake not contributed to by any conduct on the party of the plaintiff.

45 The question, therefore, is whether I should exercise my discretion in favour of a party who has simply inadvertently failed to raise what seems to be a strong defence. The fact that the mistake was inadvertent, and not otherwise justified, points against the exercise of discretion, but the significance of the omission suggests that it is appropriate for the Court to allow the matter to be raised at this very late stage if there is no appreciable prejudice to the plaintiff.

46 I therefore turn finally to the question of prejudice. At the present time, there has been no assessment of damages for breach of the joint venture agreement. The plaintiff has provided me with a report by an accountant, upon which it had intended to rely on this question, though the report is not presently in evidence. However, during submissions today, the plaintiff said that the question of assessment of damages was really just a matter of calculation, provided the Court made a choice between two methods of calculation, one of which had been favoured by the accountant. The claim is essentially only a claim for interest. One approach looks to the amount of the contributions of the joint venture parties, works out the extent of the under-contribution by the third defendant, and then calculates the interest consequences to the company of that under-contribution (in terms of having to take up a larger loan facility than would have been required if the contribution had been made), and then finally apportions those consequences to the joint venturers according to their proportionate shareholdings. The alternative approach, preferred by the accountant, is to assess damages on the assumption that the plaintiff had made a lower contribution than it in fact made, proportionally to the under-contribution by the third defendant, and then to allow the plaintiff recovery of the interest it could otherwise have earned on its over-contribution.

47 It seems to me that the choice between these methods of assessment does not require expert evidence, though it may be a matter upon which expert evidence could be adduced if a party wished to do so. The calculation of interest, once the correct method has been identified, could conveniently be provided within the framework of an accountant's report or simply by counsel for the plaintiff handing up calculations which the defendants could challenge as a matter of arithmetic. Therefore, while damages have not been assessed, it does not seem to me likely that any substantial hearing will be needed in order to complete that process.

48 As to the conduct of the hearing, counsel for the plaintiff submitted that there was a real prospect that he would have conducted the trial differently had a timely limitation defence been raised, to which he would have replied in terms of s 55. He said this was so in three ways. First, greater attention would have been paid, with greater precision, to precisely what information had been requested by the plaintiff of the defendants during the period from December 1997 to June 1998. Secondly, greater attention would have been paid to what the Wong interests had done, particularly in that time, that might have amounted to concealing those contributions. Thirdly, more effort would have been given to establishing the precise timeframe in respect of the concealment of information.

49 Doing my best to assess the matter, but with the benefit of having presided over a lengthy hearing, my view is that, while accepting that counsel may have laid more emphasis on some of the matters raised at the hearing had the limitation point been in issue, that emphasis would almost exclusively been in submissions rather than in adducing primary evidence. A great deal of time at the hearing was devoted to demonstrating, principally with a view to succeeding on the oppression ground, that the defendants, and Ms Wong in particular, had received demands for information to which she had not responded adequately. The precision of demands for information was very much at issue at the hearing, and I doubt that the introduction of the limitation point would have made this any more so. The actions of the Wong interests in concealing contributions were also issues of central significance in the oppression claim, and while possibly some more attention might have been given to the timeframe if the limitation point was in issue, there was, nevertheless, fairly careful attention paid by both sides to the times at which various demands and responses or failures to respond had occurred.

50 On balance, therefore, it does not seem to me that the prejudice to the plaintiff through conducting its case at the hearing differently from the way it would have done if the limitation period were raised, is anywhere near significant enough to justify my denying the third defendant the opportunity to run the limitation point at this late time. I regard the prejudice arising in that way as slight.

51 There is another kind of prejudice that needs to be considered. By virtue of my granting leave, it is necessary for the plaintiff now to decide what evidence it will adduce to answer the limitation point. It almost certainly will be necessary for the plaintiff to take instructions from clients resident overseas. It may be necessary for individuals resident overseas to come to Australia and perhaps even give evidence here. It is far from clear to me, particularly in view of the observations I have made about the prospects of raising s 55(1)(b), that any oral or affidavit evidence on the plaintiff's side will have any material significance. But even if it were necessary for the plaintiff to call witnesses from abroad, it would still seem to me that the prejudice involved in the plaintiff doing so is substantially outweighed by the injustice that would be caused to the third defendant if I had refused to grant leave. If the limitation point is run by the third defendant and lost, the prejudice in terms of adducing further evidence can adequately be dealt with by an order for costs.

52 Both parties made submissions with respect to paragraph 219 of my reasons for judgment. In that paragraph I was dealing with the contribution alleged to have been made by the Wong interests in the sum of $680,000, which I referred to as the Heywood transaction. I pointed out, at paragraph 214, that there were many grounds for suspicion about this alleged payment. I found, at paragraph 217, that but for two matters, considerations of that kind would be sufficient to warrant the conclusion that the Heywood transaction was a sham. I then referred to the two qualifications. One related to the effect of an audit by Cassim Calligeros Simos performed in 1994, as to which I rejected the defendants' submission that there was no basis for looking behind the audit process. The other was the contention, which I found to be an obstacle for the plaintiffs, that Mr Lin had, on the plaintiff's behalf as managing director, accepted and adopted financial statements reflecting the audit report of Cassim Calligeros Simos, which had also been made available to Mr Lin. I said that his conduct had the effect of estopping the plaintiff from departing from the opinion that the financial statements for the 1994 year were relevantly accurate.

53 I am not in a position to determine now whether that estoppel extends to prevent the plaintiff denying that it had notice of the under-contribution of its co-venturer in 1994. To reach a conclusion on that point, I would have to reconsider the audit working papers, which are Exhibit D 11, as well as the financial statements themselves. My provisional view is that the estoppel would not extend so far as the third defendant wishes to take it, but no doubt it will be a matter for submission when the limitation point is further considered.

Conclusion

54 I have found this application rather difficult because of the fairly extreme circumstances in which it arises. Counsel for the plaintiff submitted that there is no case in which a limitation defence has been permitted to be raised after the Court has delivered reasons for judgment finding a breach of contract to which the limitation point would have been a defence.

55 The farthest the cases cited to me go is to show that an arguable case for amendment can be made if the limitation point is raised in final submissions. Even there, however, the attempts to secure leave to raise the limitation point have generally been unsuccessful in the reported cases. It seems to me, however, that the position must now be assessed in light of the fundamental principles articulated in the J L Holdings case.

56 I have said the case is a difficult one because of the extreme circumstances in which it arises. When, however, one moves beyond that consideration to look at the substantive merits of the application for leave, going to the exercise of discretion, the case becomes decidedly easier.

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Last Modified: 04/16/2002