Tony Sadler Pty Ltd v Sadler

[1994] HCATrans 83

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
              Perth         No P29 of 1994

B e t w e e n -

TONY SADLER PTY LTD

First Applicant

and

ANTHONY SADLER and FAYE SADLER

Second Applicants

and

McLEOD NOMINEES PTY LTD and
  PHILLIP GERALD McLEOD

Respondents

Application for special leave
  to appeal

MASON CJ
DEANE J
GAUDRON J

TRANSCRIPT OF PROCEEDINGS

AT PERTH ON TUESDAY, 25 OCTOBER 1994, AT 3.57 PM

Copyright in the High Court of Australia

MR M.J. HAWKINS:   If it please the Court, I appear for the applicant.  (instructed by Preuss Mohen)

MR G.A. RABE:   I appear for the respondents.  (instructed by McAlwey Hyland & Watts)

MR HAWKINS:   Your Honours, the points of general importance that the applicant says are raised by this application sufficient to grant special leave are whether the parties’ interests should be subordinated to some abstract genuflection to an ideal of the efficient dispatch of court business.  Your Honours would be well aware of the principles applicable to applications for summary judgment.  Indeed, recently Your Honours delivered the decision in Webster v Lampard where it was said that great care should be exercised to ensure that under the guise of achieving expeditious finality, the plaintiff is not improperly deprived of his or her opportunity for trial of his or her case.

It is the applicants’ submission that similar principles apply to an application for leave to amend.  This was an application for leave to amend a defence to include a plea that the Full Court described as raising a strong, arguable defence.  But the Full Court dismissed the appeal for a number of reasons, principally, for the principles of case management.  If I can take Your Honours to the application book as an example of some of these principles, His Honour, Mr Justice Seaman, at page 21, line 20 said that:

The grant or refusal of leave to amend is a matter of discretion (Baume v The Commonwealth (1906) 4 CLR 97) but in my view it is clear that the exercise of that discretion must now take into account the principles and objects stated on O1 rr4A and 4B and reflected by O29 -

GAUDRON J:   As a statement of principle, you cannot object to that, can you?

MR HAWKINS:   No.  It is the application or interpretation of rules 4A and 4B.  If it assists Your Honour, I have a book of extracts, the first of which is Order 1 rules 4A and 4B.  Rule 4A is reproduced at the first page at the foot of the page.  Rule 4B is at the top of the second page.  As Your Honours will see, the rules now raise the principles of case management.  Central to the applicants’ submission is that the court has, as it were, gone overboard in applying the principles of case management, as evidenced by the decision in this case where the court has focused on utilisation of court resources in an efficient manner, and in the applicants’ submission, not in an effective manner.  The court, with respect, appears to have lost sight of the role of the court in society by providing the means whereby parties can resolve their differences so that there is finality between the parties of all issues and controversy.

His Honour Mr Justice Seaman canvassed what he described as the traditional view, but at page 26, lines 13 and following, said:

However the old authorities may be viewed, there is, in my view, no assistance to be gained from considering them because of the very different terms of the Rules of this Court.

And again, at pages 25 and 26 His Honour referred to the principles that exercised the discretion to grant or refuse an application for an adjournment and he applied those principles.  In my submission, that was an erroneous approach because - - -

GAUDRON J:   They are analogous to some extent, when you have got a date for trial, are they not?

MR HAWKINS:   Yes, they are, if it will result in the court abandoning the trial dates, but with respect to the Full Court, they are not analogous when there is no trial date set and there is not going to be a loss of court sitting time.  That is the first point.

The second point is that the efficiency and the effectiveness of the courts cannot be measured solely by the time spent sitting in court.  As Your Honours would only be too painfully aware, there is time needed for preparation, there is time needed to give reserved decisions.  If the measurement of the effectiveness is the number of judge days in court then there will not be the proper time devoted or available, without undue stress, to preparation or to the giving of reserved decisions. 

This case is an example of the workload that the court can put itself under in which it took six and a half months for the court to give a reserved decision.  In my submission, that bears out the argument that it is not effective to concentrate on having a judge in court all the time.  Even if a court sitting day is lost, then that can be a bonus to the overall effect of resolution of the court’s business because the judge can then attend to other matters.  Finally, at page 28, line 17, His Honour said:

In my view what is essential to the fair and just determination of the issues must be judged with the goal of the elimination of unreasonable delay and in particular to the matters enumerated in r4B(1).

As to that, Your Honours, the submission is that before this particular Full Court decision in Western Australia, the authorities were well settled and had stood for 110 years.  They were authorities that Your Honours had canvassed in Verwayen with some modification as to what prejudice was as a result of, or in recognition of the decision in Ketteman.

In Verwayen, if I can just refer Your Honours to two short passages, His Honour the Chief Justice, at page 416 at the foot of the page, referred to Murray v Munro and Ketteman v Hansel Properties Ltd and said that:

The question then is whether an order for costs is a sufficient recompense for the respondent in respect of the detriment suffered by him.  An order for costs has traditionally been regarded as a sufficient adjustment to meet prejudice in terms of expense and inconvenience occasioned by the pleading of new defences -

His Honour Justice Toohey, at page 464 at about one‑third of the way down the page, said:

Leave to amend is ordinarily given, even at a late stage, so long as this can be done “without injustice to the other party”, to use the words of Bowen L J in Cropper v Smith.....Nevertheless, it is appropriate to refuse leave to amend, if to grant leave may bring about an injustice to the other party which cannot be compensated by an adjournment or by an order for costs.  This is not something that can always be determined by reference to the merits of the matter sought to be raised by the proposed amendment.....There may be cases, and a plea of limitations is a good example, where the amendment proposed has every prospect of success but comes at such a late stage that, if it be granted and the point raised succeeds, an award of costs in favour of the other party is no adequate compensation.  It may be, for instance, that it is then too late for the plaintiff to bring action against anyone else.....It should not be lightly assumed that the “healing medicine” (the words are those of Bowen L J in Cropper v Smith) of costs is always a sufficient cure for the disadvantage to the other side.

With respect, the applicants agree with that as a statement of general principle.

MASON CJ:   But is not your problem this, that by and large, this was a matter to be determined by the exercise of the judicial discretion?  One might disagree with the result of the exercise of that discretion but essentially, this is a matter of practice and procedure and you are seeking special leave to appeal from which is, in effect, an interlocutory decision.  This Court only grants special leave to appeal in matters of that kind in exceptional circumstances.

MR HAWKINS:   Yes, Your Honour, and it is my submission that these are exceptional circumstances.

MASON CJ:   But what are the exceptional circumstances?

MR HAWKINS:   Your Honour, if this decision is allowed to stand, there is an extremely radical shift in attitude to amendments to place the abstract concept of public interest.

DEANE J:   But a shift to approach to amendments in quite exceptional cases, one would hope, and I am looking at the paragraph on page 28 commencing at line 19.

MR HAWKINS:   Your Honour, the amendments in November of 1990 and in September of 1991 were made as a result of the plaintiff amending its case.  If I can give evidence from the bar table, the current application for amendment is brought about because of a change of counsel and that change took place in 1993.

His Honour Mr Justice Seaman referred to an application for leave to amend to be given on 23 February 1993, within 21 days.  But, the amendment was not made until 21 June 1993.  That looks bad on the face of it but, with respect, is an error of fact.  What happened was that the minute of the proposed amended defence was filed within the three weeks, the court did not hear the application until June, and then the amendment was allowed.  I concede that it would hae been better for all concerned if the current paragraph had been sought to be pleaded then, but it was overlooked.

The reasons why we say this is an exceptional case, although it is an appeal from a discretionary decision, is that we say that the court below has acted upon a wrong principle in placing public interest over the private interests of the parties; that the court, accordingly, has given weight to extraneous or irrelevant matters, because it cannot be said that there was any waste of court time in the sense of an abandonment of hearing days, remembering of course, that in Kettemen, the application for leave to amend was made after 10 days of hearing had taken place.  In one of the other decisions that is reproduced in that book, Mehta, the application was made when the trial judge had delivered his draft reasons for decision.  In both those cases there would have been days and days thrown away. This particular application before you would not result in any days being thrown away, save with time spent considering the application.

There was the mistake as to facts, and I have touched on one which was the three week period.  The other was the call‑over in July for a hearing in August.  That was one where the parties were given six days notice of the application.  The circumstances are set out in paragraph 13 of Mr Levitan’s affidavit which is reproduced at page 51 of the application book. 

As Your Honours will see, leave to amend was given in the 25 June 1993 and amendments were filed.  The plaintiffs did not file their reply until 23 July 1993 which was three days after the court gave oral notice of the inclusion in the call‑over for the August sittings

Further and better discovery was requested by the Defendant on 30th June 1993, but it was not given until the 22nd September 1993 when 74 more documents were discovered.

Interrogatories took from 9 August until 19 October 1993.  The plaintiffs filed some answers and were ordered to file others.  So, at the time that the application for leave to amend was made on 15 October, the plaintiff was still attending to interlocutory matters.

Finally, in my submission, in terms of interfering or overturning the exercise of a discretion, it is unjust to exclude a defendant from the opportunity, belated though it may be, of raising what the Full Court recognised at page 20 as a strong, arguable defence.  It is not a defence which, in these proceedings, will involve a canvassing of a great deal of fact.  All it is, is the argument that because the lease was not registered - the lease agreement being over Torrens System Land for a period of 10 years - there was no lease at law, and on the interpretation of the lease agreement and guarantee, the guarantee was thus not operative.

The plaintiff has asserted that it will be prejudiced.  The plaintiff has said that it may wish to bring an action against the vendor and that the vendor may raise a limitation defence, but the plaintiff has never put before the court the offer and acceptance. The court has appeared to proceed on the assumption that the mere spectre of prejudice, without evidence of prejudice, on the part of the plaintiff is something that should override the prejudice or the injustice to the applicant defendant. 

At page 27 at the top of the page His Honour Mr Justice Seaman said:

In my view the prejudice to the applicant of the refusal to leave to make a belated amendment does not predominate over the prejudice to the public interest and to the opponent.

He said that in the course of giving reasons for the decision in Grljusich where the application for leave to amend was made three days before the hearing date and at a time when a hearing date would have had to have been vacated.

In my submission, the Full Court misdirected itself in taking into account those factors that influence the decision to allow an adjournment, and as a consequence, an injustice has been done.  If it please the Court.

MASON CJ:   Thank you, Mr Hawkins.

DEANE J:   Mr Hawkins, can I ask you this?  We have not got the pleadings before us, have we?  What is the amendment?  Was there silence in the defence which constituted an admission or was there an express admission which it is now sought to delete, or what was it?

MR HAWKINS:   There was a plea in paragraph 1 of the statement of claim that there was a lease and it is summarised at page 16.  The pleading itself is not reproduced.  There was the pleading that the predecessor in title let the premises for a term of 10 years, or the date of practical completion from a commencement date at a base rental.  The making of that agreement was admitted in the defence.  The proposed amendment is at pages 18 and 19 - at the foot of page 18 at line 25.

There is still the admission that the agreement was signed but there is the denial of that effect of that agreement at law.

DEANE J:   The question I was asking you arises from line 15 on page 17.  That is:

the applicant’s defence and counterclaim admitted para 1 of the statement of claim -

What does that mean, that there was an express admission?

MR HAWKINS:   Yes, Your Honour, it was not an admission by silence.  It was an express admission that the agreement, which was described in the paragraph 1 as a lease, was entered into between the parties.  Unfortunately, and I apologise for that paragraph not being reproduced, the agreement - - - 

DEANE J:   No, you have answered my question.

MR HAWKINS:   Yes, but the agreement in paragraph 1 of the statement of claim was referred to as a lease.

DEANE J:   Yes, thank you.

MASON CJ:   The Court need not trouble you, Mr Rabe.

This is an application for special leave to appeal in relation to an interlocutory discretionary decision on a question of practice and procedure involving the application of a rule of court.  It is only in exceptional circumstances that this Court would grant special leave in such a case.  After careful consideration, the Court has come to the conclusion that on balance no such circumstances are made out here.  The application for special leave to appeal is therefore refused.

MR RABE:   I seek an order for costs, Your Honour.

MASON CJ:   You do not oppose an order for costs, Mr Hawkins?

MR HAWKINS:   No, Your Honour.

MASON CJ:   The application is refused with costs.

AT 4.19 PM THE MATTER WAS ADJOURNED SINE DIE