Tassal Ltd v Russfal Pty Ltd
[2006] TASSC 33
•16 May 2006
[2006] TASSC 33
CITATION: Tassal Ltd v Russfal Pty Ltd [2006] TASSC 33
PARTIES: TASSAL LTD (ABN 64 009 548 770)
(RECEIVERS & MANAGERS APPOINTED)
AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED (ACN 005 357 522)
v
RUSSFAL PTY LTD (ABN 45 009 555 980)
DOEDENS, Richard John
RAADAS SALMON PTY LTD (ABN 39 083 124 565)
RUSSELL FALLS PTY LTD (ABN 13 009 495 470)
RAADAS HOLDINGS PTY LTD (ABN 41 083 124 510)
RAADAS PTY LTD (ABN 86 079 001 871)
TITLE OF COURT: SUPREME COURT OF TASMANIA
JURISDICTION: ORIGINAL
FILE NO/S: 183/2003
DELIVERED ON: 16 May 2006
DELIVERED AT: Launceston
HEARING DATES: 24 April 2006
JUDGMENT OF: Crawford J
CATCHWORDS:
Procedure – Supreme Court procedure – Tasmania – Practice under rules of court – Judgments and orders – Power to review an order not entered – Order made allowing leave to amend statement of claim despite defendants' claim to limitation defence – Subsequent application for order that amendments take effect from date of order.
Smith v New South Wales Bar Association (1992) 176 CLR 256, applied.
Aust Dig Procedure [279]
REPRESENTATION:
Counsel:
Plaintiffs/Applicants: S H Parmenter
Defendants/Respondents: S S W Couper QC and D A Bessell
Solicitors:
Plaintiffs/Applicants: Mallesons Stephen Jaques
Defendants/Respondents: Page Seager
Judgment Number: [2006] TASSC 33
Number of paragraphs: 18
Serial No 33/2006
File No 183/2003
TASSAL LTD (ABN 64 009 548 770)
(RECEIVERS & MANAGERS APPOINTED) and
AUSTRALIA AND NEW ZEALAND
BANKING GROUP LIMITED (ACN 005 357 522)
v RUSSFAL PTY LTD (ABN 45 009 555 980),
RICHARD JOHN DOEDENS,
RAADAS SALMON PTY LTD (ABN 39 083 124 565),
RUSSELL FALLS PTY LTD (ABN 13 009 495 470),
RAADAS HOLDINGS PTY LTD (ABN 41 083 124 510)
and RAADAS PTY LTD (ABN 86 079 001 871)
REASONS FOR JUDGMENT CRAWFORD J
16 May 2006
The plaintiffs sued the first five defendants on 16 April 2003. A statement of claim was included in the writ. Subsequently, the sixth defendant was added. The statement of claim was amended on 1 March 2004. In October 2004, the plaintiffs changed their solicitors and different counsel were briefed to appear for them in the action. On 18 October 2004, the defendants' solicitors wrote to the plaintiffs' new solicitors, claiming that there were a number of deficiencies in substance in form in the amended statement of claim. They invited the plaintiffs' solicitors to produce a further amended statement of claim.
The plaintiffs determined to make further amendments to the statement of claim. On 1 February 2005 it was ordered by consent that they file and serve any application for leave to file and serve a further amended statement of claim within seven days. On 8 February, such an application was filed and served. The proposed further amended statement of claim ("the proposed pleading") contained 220 paragraphs that were intended to replace 89 paragraphs of the existing pleading. Some of the old claims were repeated and some were expressed in far more detail. The defendants maintained that there were also a considerable number of new claims in the proposed pleading and they opposed them in particular.
On 23 September 2005, following a hearing of the application, I made the following orders:
"1Leave is granted to the plaintiffs to amend the statement of claim into the form of exhibit 'DMG-2' to the affidavit of Domenic Mathew Gatto sworn on 8 February 2005 and filed herein with the exception of pars36 – 38, 56 – 58, 75 – 77, 92 – 94, 103 – 105, 152 – 154 and 186 – 191.
2That within 28 days the first plaintiff file and deliver to the defendants' solicitors particulars of the facts relied upon in support of its case that the breaches of cl 5.1(k) of the sale agreement alleged in pars37, 57, 76, 93, 104, 153 and 190 caused the damages claimed in pars38, 58, 77, 94, 105, 154 and 191 respectively.
3That the further hearing of the application so far as it concerns whether the first plaintiff should be given leave to amend by including pars36 – 38, 56 – 58, 75 – 77, 92 – 94, 103 – 105, 152 – 154 and 189 – 191 is adjourned to a date to be fixed upon the application of a party after 28 days from the date of this order or after the delivery of the particulars required by the previous order, whichever is the earlier.
4That within 14 days the plaintiffs amend the statement of claim so as to plead the terms of warranty 4.3(d) it is alleged in par99 was breached and warranties 12.1(b) and 12.3 it is alleged in par148 were breached."
On 24 April 2006, the application came on for hearing again. Only two issues were raised by the parties as unresolved. One concerned the appropriate order for costs that should be made and I ordered that the question be adjourned sine die until I resolved the other issue, which was raised by the defendants. They submitted that I should order that the amendments made pursuant to the leave granted on 23 September 2005, should date from that date. In the alternative, they submitted that the question concerning the date from which the amendments take effect should be reserved for determination by the judge who tries the action.
The plaintiffs' claims are for damages based on alleged breaches of a number of warranties and other contractual terms in a sale agreement dated 4 February 2003 ("the sale agreement") by which the first defendant agreed to sell its business to the first plaintiff. Opposition by the defendants to the proposed pleading was based on a number of grounds. I dealt with them in my earlier reasons for judgment. See Tassal Ltd v Russfal Pty Ltd [2005] TASSC 92. One of the arguments arose out of a time limitation provision in cl 16.5(d) of the sale agreement, which provided that despite any other provision of the agreement "the Buyer may not bring an action for breach of the Warranties, unless such claim is notified within 12 months of the Completion Date". By virtue of cl 27.1, the requirement for notification was for notification in writing. The 12-month period referred to ended on 14 February 2004. With regard to a number of the proposed amendments to the statement of claim, the defendants argued that what was sought to be claimed was being raised for the first time and was prohibited by cl 16.5(d) because notice of the claims was not given within the 12-month period.
Early in my reasons for judgment at par5, I observed that in support of much of the defendants' opposition to the amendments, a number of documents were tendered in evidence, but no reliance was placed on the testimony of witnesses. I further observed that a problem arising out of such a method of opposition can be that documents only speak for what they say and there may be other documents available, as well as oral testimony, that assist to prove or disprove a particular fact. I pointed out in particular, that the defendants presented no evidence that the documents they tendered were the only items of evidence available that might be cogent and relevant to a particular issue. What I said in those regards, had particular relevance when later in my reasons I dealt with the issues arising out of the time limitation provisions of cl 16.5(d). I disposed of those issues in pars21 and 22 of my reasons in the following terms:
"21Clause 16.5(d) of the sale agreement provided that despite any other provision of the agreement "the Buyer may not bring an action for breach of the Warranties unless such claim is notified within 12 months of the Completion Date". By definition cl 27.1 "notice means written notice and notify means notification in writing". It follows that the notice required by cl 16.5(d) must be written. The 12 month period ended on 14 February 2004. The action was commenced on 16 April 2003. The defendants tendered in evidence four written notices of claim from the first plaintiff. One dated 27 February 2003 was addressed to the second defendant. Two dated 5 March 2003 were addressed to the first defendant and the second defendant respectively and one dated 26 March 2003 was addressed to the first defendant. There was no evidence that no other written notices of claim were delivered. Counsel for the first plaintiff pointed out that there may well be other written notices and that it is possible that there was oral notice and for some reason the first defendant is estopped from relying on the defence of lack of notice within cl 16.5(d).
22In 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.
The relevant submissions that were made to me by counsel at the hearing that led to those reasons were along the following lines. Counsel for the plaintiffs briefly addressed first. He mentioned that there was an issue between the parties arising out of the 12-month limitation provision in the sale agreement and said that it would be his argument that it would be a matter for the defendants to plead by way of defence. He added that he would elaborate after he had heard the arguments of counsel for the defendants.
Many of the proposed amendments were in contention and with respect to most of them, counsel for the defendants raised a number of reasons why they should not be allowed. When he first dealt with the limitation provision of cl 16.5(d), he was dealing with a proposed amendment that was categorised as "the profitability claim". He said that he apprehended that there was no debate that the profitability claim was not notified within 12 months and he submitted that accession to the suggestion by the plaintiffs' counsel that the amendment should be allowed and the limitation provision could be pleaded as a defence, so that the issue could go to trial, would amount to an abuse of the Court's process because given the facts, it was plain that the claim would fail.
Counsel for the defendants returned to cl 16.5(d) when dealing with proposed amendments that would make a claim arising out of representations concerning fish numbers. He submitted that it was a new claim and that a consequence was that under cl 16.5(d) it was barred. Repeating the effect of what he had submitted earlier, he submitted that the suggestion by counsel for the plaintiffs that the issue should be dealt with by the defendants pleading cl 16.5(d) in their defence would amount to "the triumph of procedure over substance, it's a pointless exercise". He maintained that it was not suggested that notice of the claim had been given, and commented that "there either is a notice or there is not, therefore the limitation defence has effect, the claim must fail". In response to a question from me as to whether there was evidence that no notice of the claim had been given as required by cl 16.5(d), counsel for the defendants said that there were three notices in evidence which were given and the claim concerning fish numbers was not there. I asked whether there was evidence that the notices in evidence were the only notices to have been given (there was in fact no such evidence) and counsel for the defendants accepted that the affidavit did not say so, but he added that "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".
The defendants' counsel next raised the cl 16.5(d) bar with respect to the "profitability representations claim" which he said was a new claim. He submitted: "If one comes back to the 12-month limitation clause, there is no notification of this claim. It's simply barred. ... There's no point allowing this claim if it will inevitably be met with a successful claim that it's defeated by a contractual limitation clause." When dealing later with an amendment making a "missing assets claim", counsel for the defendants submitted that it was "untenable at a number of levels", one of them being that "there's no notice of it" and therefore, "cl 16.5(d) takes effect".
When regard is had to all of what was submitted by the defendants' counsel, it is apparent that the submissions were made upon the basis that there was no question that the claims in question were barred by the limitation provision of cl 16.5(d) because timely notice of them had not been given. It is also apparent that by the time counsel for the defendants had completed his submission, both counsel had made their submissions upon the basis that if the amendments to the statement of claim were allowed, the defendants would nevertheless be able to plead the limitation defence. To that point, and particularly so having regard to the submissions of the defendants' counsel that to allow the amendments would be pointless because inevitably they would be defeated by the contractual limitation, both counsel appear to have overlooked what seems to be generally accepted as a rule that unless it is otherwise ordered, an amendment to a pleading takes effect from the date of the original pleading, in which case, if leave was given to the plaintiffs to amend, the defendants would not have been able to rely on the provisions of cl 16.5.(d) as a defence.
However, by the time counsel for the plaintiffs came to make submissions by way of reply, which were later supported by supplementary written submissions, he had realised that point. He made express reference to it and submitted that "the relation back period, if leave to amend is given, means that the amendment takes effect from the date of the institution of the proceeding", with a consequence that there would be utility in allowing the amendments. He submitted that in such a circumstance, any limitation defence would be "instantly defeated". Counsel for the plaintiffs also pointed to the 2003 amendment to the Supreme Court Rules 2000 which inserted subr(2A) into r427, so as to provide that "the Court or judge, despite the expiry of any relevant limitation period after the day on which proceedings commenced, may grant leave" [to amend] "under subr(1) if it is satisfied that any other party to the proceedings would not, as a result of granting leave, be prejudiced in the conduct of his or her claim or defence in a way that could not be fairly met by an adjournment, an award of costs or otherwise". He submitted that the rule encompasses contractual limitation periods and not only statutory limitation periods (relying on PSL Industries Ltd v Simplot Australia Pty Ltd (2003) 7 VR 106 at 111). He further submitted that as a consequence of subr(2A), the rule in Weldon v Neal (1887) 19 QBD 394 had been abrogated and that all that was left for the defendants to argue was that they would be prejudiced in some way if the amendments were allowed. Counsel for the plaintiffs made the point that the defendants had made no assertion of prejudice, nor was there any evidence of prejudice. He further submitted that it was not a relevant type of prejudice that allowance of an amendment will or may deprive a party of a success which that party would achieve if the amendment was not to be allowed (relying on Etna v Arif [1999] 2 VR 353 at 368 approving Ketteman v Hansel Properties Ltd [1987] 1 AC 189 at 203) and that the prejudice referred to in subr(2A) does not include the prejudice of being deprived from an otherwise available limitation defence (relying on four unreported Victorian cases, Pyramid Building Society (In liquidation) v Farrow (Beach J, 30 April 1993 at 4 – 5; Murphy v Burns Philp Trustee Co Ltd (In liquidation) (Smith J, 7 May 1993 at 29 – 30; Re W M Train & Co (Beach J, 24 January 1995, BC 9507164 at 3); and Wintle v Conaust (Vic) Pty Ltd [2001] VSC 315 at par16).
In relation to the question whether any of the proposed claims were barred by cl 16.5(d), counsel for the plaintiffs submitted that there was no evidence that they were (the only evidence being of some written notices of claim and not the lack of them), and that there was a substantial overlap in subject matter between existing and new claims and that notifications in respect of the existing claims were sufficient to satisfy the clause with respect to the new claims, and he stated that the plaintiffs intended to rely on the doctrines of waiver and estoppel in their reply to the defence if the limitation bar was pleaded in the defence. In relation to that last point, no basis for waiver or estoppel was raised by evidence.
In response to the submissions in reply of counsel for the plaintiffs, counsel for the defendants drew my attention to Agtrack (NT) Pty Ltd v Hatfield (2003) 7 VR 63 at 80, 84, 86, 88, 89 and 91 – 92 and Howlett v Hurburgh [2004] TASSC 79 at pars 7 – 8 as authorities for the proposition that r427(2A) was intended only to have a procedural effect designed to ensure the proper and fair consideration of applications to amend pleadings by way of a broader discretion than the rigid rules in Weldon v Neal previously allowed, but the subrule was not intended to permit what are plainly new claims that are clearly barred by time. Counsel for the defendants concluded by submitting that "the position is, your Honour, that these are claims made after the contractual limitation period has passed, they are new claims, there is necessarily prejudice if they're permitted to be run because they're otherwise barred and no good reason has been shown to depart from the general principle that that would not be permitted."
Contrary to the initial submission for the plaintiffs at the recent hearing, the orders I made on 29 September 2005 were not entered or perfected. See Supreme Court Rules 2000, r183. If they had been entered under that rule they would be beyond recall (Bailey v Marinoff (1971) 125 CLR 529; Smith v New South Wales Bar Association (1992) 176 CLR 256 at 265) and I would not have had power to review or alter them. The power to review an order that has not been entered was considered by Brennan, Dawson, Toohey and Gaudron JJ in Smith at 265, and their Honours accepted as a general statement that the power to review will not ordinarily be exercised to permit a general reopening, the statement having general application to both the question whether leave to reopen should be granted and, if it is, the nature of the review involved.
I 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.
When, 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.
For the above reasons I refuse to make an additional order concerning the date upon which the amendments should be deemed to have taken effect. I note that there are appeal avenues open to the defendants with regard to the orders that were made on 23 September 2005.
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