Skinner v BAMBALOS - [2010] WADC 119

JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
IN CHAMBERS

LOCATION: PERTH

CITATION: SKINNER -v- BAMBALOS & ANOR [2010] WADC 119

CORAM: PRINCIPAL REGISTRAR GETHING

HEARD: 28 JULY 2010

DELIVERED : Delivered Extemporaneously on 28 JULY 2010 typed from tape and edited by the Principal Registrar

FILE NO/S: CIV 2378 of 2007

BETWEEN: DAVID PAUL SKINNER
Plaintiff
AND
STEVEN BAMBALOS
First named Defendant
ALLAN RAYMOND PAGES-OLIVER
Second named Defendant

Catchwords:

Pleadings - Late application to amend

Legislation:

Nil

Result:

Application dismissed

Representation:

Counsel:

Plaintiff:     Ms P E Cahill SC
First named Defendant     :     Mr G A Rabe
Second named Defendant     :     Mr G A Rabe

Solicitors:

Plaintiff:     Arns & Associates
First named Defendant     :     Norton Rose Australia
Second named Defendant     :     Norton Rose Australia

Case(s) referred to in judgment(s):

Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175
Fletcher (as Trustee for the Brian Fletcher Family Trust) St George Bank Limited [2010] WASC 75
Hooker Corporation Ltd v Commonwealth of Australia (1986) 65 ACTR 32
Traeger v Harris [2010] WADC 101

PRINCIPAL REGISTRAR GETHING: The application before me for determination is an application by the defendants filed on 21 July for leave to amend the defence and the counterclaim.
The application takes as its context the plaintiff's action against the defendants in relation to what is, in essence, a partnership dispute. There are issues relating to representations made as to the basis on which an amount of $60,000 was contributed to the partnership. There are then issues as to the basis on which an account should be taken subsequent to its dissolution.
The application also takes as its context the fact that the action is listed for a trial for seven days commencing on 30 August 2010.
The application was accompanied by a minute of proposed further substituted defence and counterclaim. The defendants by oral application have made an application to effectively discontinue the counterclaim. I will leave that to the end of these reasons.
The authorities, as least as I understand them, in relation to late pleadings amendments, require me to do two things. The first is to work out whether or not the amendments would be allowed on the normal rules of pleadings. The second is to work out, if the answer to that is yes, whether in the exercise of discretion that I should allow the amendment.

Pleadings objections

Turning to the first issue, the starting point when considering an application for leave to amend is that the court will not grant a party leave to make an amendment which could be struck out as defective on any of the grounds set out in Rules of the Supreme Court1971 O 20, r 19(1)(b) to r 19(1)(d). Hooker Corporation Ltd v Commonwealth of Australia (1986) 65 ACTR 32 at 38. In relation to the law generally on pleadings disputes, I have set that out in some detail in an earlier decision, Traeger v Harris [2010] WADC 101, and I rely on that statement of the authorities at [18] and following as the broad context for the determination of the present application.
The defendants have filed a Minute of Proposed Further Substituted Defence dated 21 July 2010 ("Minute"). For present purposes it is only necessary for me to deal with two categories of the alleged defects. They are that the Minute contains withdrawals of admissions and that the Minute contains pleadings which are insufficiently particularised.
In relation to the former, at par 2 of the Minute the defendants seek to withdraw an admission at par 2 of the statement of claim in relation to the formation of the relevant partnerships. In par 11 of the Minute the defendants seek to withdraw an admission relating to the circumstances of the dissolution of the partnership.
The law in relation to the withdrawal of admissions requires me to consider the explanation as to why the party seeks to withdraw the admissions. In support of this application the defendants filed an affidavit of their solicitor Ms Callanan, dated 21 July 2010. The circumstances of the amendments are basically that on the evening of Thursday, 17 June 2010, counsel then retained for the trial advised that he was no longer able to appear as counsel. Alternate counsel was briefed. The defendants retained and took advice from alternate counsel. Ms Callanan deposes that (par 5(d)):
"… as a result of considering that advice I am instructed by the defendants to apply for leave to amend the defence and counterclaim in accordance with the Minute."
That is the only explanation as to why the amendments have been made and, in particular, why the admissions have been withdrawn. As I understand the authorities, the onus is on the defendants, as the party seeking to withdraw the admissions, to establish why it is in the interests of justice that it be allowed to do so. In this case, and on the material available to me, I am not persuaded that it is in the interests of justice to grant leave to withdraw the admissions.
In relation to particulars, in the recent case of Fletcher (as Trustee for the Brian Fletcher Family Trust) St George Bank Limited [2010] WASC 75 the Chief Justice stated (at [30]):
"… it is incumbent upon the party moving the amendment to provide all necessary and appropriate particulars within the amendment proposed."
This comment was made in the context of an application for leave to amend at a late stage in the action.
In the present case, the Minute is defective in relation to particulars in at least three respects. The first is in relation to par 9(a)(ii). That paragraph provides:
"… the quality of the plaintiff's work in the business was poor and resulted in numerous complaints from customers of the Third Partnership who had previously provided their a custom to the First and Second partnerships."
It seems to me that there would at least need to be particulars of these complaints in order for the plaintiff to know the case he has to meet.
The second is in relation to a plea on p 6 of the Minute in relation to proposed par 12(e). This goes to the basis on which the plaintiff and the defendants reached an oral agreement in or about September 2006. The plaintiff submitted that there should be particulars of when, where, how and with whom the agreement was entered into. Counsel for the plaintiff contrasted the level of particularity in this pleading with the level of particularity in the current version of the defence and counterclaim which sets out the oral agreement by virtue of offers and acceptances, and in considerably more particularity. It seems to me that, if the amendment was allowed, the plaintiff would need further and better particulars at par 12(e) in order to understand the case he has to meet.
The third example is in relation to par 15(d). That paragraph contains a plea that the:
"… plaintiff has prevented a final settlement of accounts from taking place by withholding financial documents from the defendants and thereby preventing such a settlement of accounts to be undertaken. "
It seems to me that there would at least need to be particulars of the various allegations contained within that plea.
On the basis of the comments by the Chief Justice in Fletcher (supra), given that the pleading has been inadequately particularised at this late stage, on the issue of whether it complies with the rules of pleadings I am not prepared to allow it to be amended.

Discretion

It is appropriate that I also deal with the issue of discretion as that will frame any attempt by the defendants to fine tune the pleadings in relation to a possible further application. The law in relation to discretion takes as its commencement point O 21 r 5, which provides:
"… 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 and as may be just and in such manner (if any) as the Court may direct."
The general discretionary framework for the amendment of a pleading is perhaps superseded in the case of a late pleading by a slightly more sophisticated and all-encompassing regime. The overarching issue in the exercise of discretion to grant leave to amend is balancing the competing risk of injustice in the context of maintaining public confidence in the legal system as a whole.
Four factors emerge from the decided cases:
(a)the reasons for delay in making the application;
(b)the prejudice to the defendant if leave is not granted;
(c)the prejudice to the plaintiff if leave is granted; and
(d)the impact on the public interest if leave is granted.
For present purposes it is necessary for me to only refer to three authorities: Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175, Fletcher and my decision in Traeger v Harris (supra) at [57] and following where I consider the authorities in detail.
I turn first with the reasons for delay. As I have indicated, the reasons for delay are basically a change of counsel. This is not a case where there is an external catalyst for the making of the amendment such as a document coming to light at a late stage.
In Aon, the court placed weight on the fact of whether or not the defendant had an earlier opportunity to amend the pleading to raise the issues that are currently being raised. I note that the entirety of the defence and counterclaim was substituted in August 2009. There is nothing on the materials before me to suggest that the defendants did not have the opportunity to amend the pleading at an earlier stage. There is no denial of justice to the defendants by declining them the opportunity to amend at this stage because they have had ample opportunity to amend in the past.
Dealing then with the prejudice to the defendants if leave is not granted, the tenor of submissions from counsel for the defendants was that the key issues in dispute remain in the current version of the pleadings. The key issues include whether or not a representation was made as to what would happen to an amount of $60,000 paid into the partnership by the plaintiff, the terms of the dissolution of the partnership and whether or not any account ought to be ordered and if so, in what terms.
If that submission is correct then the injustice to the defendants in not allowing them leave to amend at this stage is marginal. They are still able to run the case which they have been satisfied with up to the present time. This is not a case where the defendant seeks to fine tune the pleadings on the basis of witness statements or pre‑trial disclosure. What is happening in this case is the defendants are fundamentally rewriting their case, at least in terms of form.
The third factor is the prejudice to the plaintiff if leave is granted. The prejudice to the plaintiff if leave is granted seems to me is that there is a serious risk that the trial dates set down for August may be prejudiced. I will return to that in the question of the impact on the public interest as a whole.
The other prejudice to the plaintiff is that by orders made on 16 March the parties were ordered to file witness statements for evidence‑in‑chief of each party other than the three members of the partnership. The plaintiff complied with the order. The defendant was due to file its witness statements initially on 18 May and then by consent order extending that to 11 June.
It seems to me that there is an inherent prejudice to a party who has gone into an exchange of witness statements on the basis that the pleadings were locked to find out that part‑way through the defendants, after having received the plaintiff's witness statements, seek to change the basis of the pleadings.
The final factor is the impact on the public interest if leave is not granted. A critical factor in the present case is that on 30 March 2010 the then counsel for the defendants certified that he had reviewed the pleadings and was satisfied that they adequately defined all the issues of fact and law that the defendants contend will need to be determined at trial. That certificate is filed pursuant to the District Court Rules 2005, r 43(3a). Rule 48A of the District Court Rules sets out that in relation to an amendment of pleadings the party seeking amendment is to file an affidavit setting out the facts that have arisen since the certificate was tendered under r 43(3a) and that ground the argument that the amendment is necessary. The affidavit, as I have said, indicates no more than the fact that there has been a change in counsel. It would seem from a public interest perspective that it would be a highly undesirable development for the court to adopt the view that a mere change in counsel is sufficient reason to allow a party to go back on a r 43(3a) certificate.
The other relevant portion of the District Court Rules is r 48B which states that, unless justice otherwise requires, the court will not grant an application filed after the action is listed for trial if to do so would necessitate the adjourning of the trial. That factor reflects the discretionary considerations set out in the Aon case.
In my view, there is a serious risk that, if this amendment is allowed, in particular in this form, the trial dates will be prejudiced.
There is a significant proportionality issue here in relation to costs. The amounts in issue are not large. The amounts relate to the dissolution of a partnership for the provision of automotive electrical services. The scope can be ascertained, at least in part, from the fact that the amount paid by the plaintiff to enter that partnership was $60,000. It would seem to me that allowing a wholesale change in the case at this stage, with the consequent risk of adjourning the trial, runs a very grave risk that the costs will balloon out of all proportion to the amounts in issue.
A further issue in relation to the amendment and the consequent risk of adjournment of trial, is that the plaintiff will need to go back and adjust its witness statements that have been filed. I accept the argument from Mr Rabe that they may not need to be radically altered, but the point remains that someone will have to go through and adjust those witness statements.
The defendant still has to put on its witness statements. It is in breach of the timetable imposed by the Court for doing so. The reasons for this breach of the timetable are not apparent on the face of the materials before me. The plaintiff will need the opportunity to put on responsive witness statements, which again puts the matter reasonably close to trial.
It seems to me that in the context of the District Court Rules, which have been put in place by the judges of this Court, the public interest requires that the r 43(3a) certificates be given serious weight. In this case there is nothing in the material before me suggesting that it is in the interests of justice that the defendants be allowed to resile from the position set out on their behalf by their counsel in March of this year in the r 43(3a) certificate.
There is no denial of justice in a sense of a lack of prior opportunity to make these amendments. There is no denial of justice in relation to the fact that the defendants will not be able to put their case at trial. They will be able to put their case. It may not be in the form that their current counsel thinks is optimal, but they will still be able to put their case. For those reasons the defendants' application for leave to amend is dismissed.
As to the question of leave to discontinue the counterclaim, I will hear from counsel on that application.