Tubb v Reissig
[2013] TASSC 76
•13 December 2013
[2013] TASSC 76
COURT: SUPREME COURT OF TASMANIA
CITATION: Tubb v Reissig [2013] TASSC 76
PARTIES: TUBB, Timothy James
v
REISSIG, Christopher Peter
FILE NO: 216/2013
JUDGMENT
APPEALED FROM: Reissig v Tubb [2013] TASMC 25
DELIVERED ON: 13 December 2013
DELIVERED AT: Launceston
HEARING DATE: 12 December 2013
JUDGMENT OF: Estcourt J
CATCHWORDS:
Procedure – Supreme Court procedure – Tasmania – Procedure under rules of court – Amendments – Whether learned magistrate erred in refusing appellant leave to amend defence.
Aust Dig Procedure [276]
REPRESENTATION:
Counsel:
Appellant: J Kitto
Respondent: K Stanton
Solicitors:
Appellant: J Kitto
Respondent: Bishops Barristers and Solicitors
Judgment Number: [2013] TASSC 76
Number of paragraphs: 33
Serial No 76/2013
File No 216/2013
TIMOTHY JAMES TUBB v CHRISTOPHER PETER REISSIG
REASONS FOR JUDGMENT ESTCOURT J
13 December 2013
The appeal
The appellant appeals on eleven grounds against a decision of Magistrate Pearce (as he then was) of 6 March 2013. His Honour entered judgment against the appellant (Timothy James Tubb) in the respondent's (Christopher Peter Reissig) action against him for contribution from the appellant in respect of a debt owed by a company of which the appellant and the respondent were both directors, and in respect of which they were both guarantors to the creditor.
Ground 10 of the notice of appeal asserts that the learned magistrate erred in refusing the appellant leave to amend his defence on the fourth day of a six day trial. I directed that this ground be heard before the hearing of any of the other grounds is embarked upon.
The background to the action before the magistrate
There were two actions by the respondent against the appellant which were heard together by the learned magistrate on 27 and 28 August 2012, 8 October 2012, 15 and 29 November 2012, and 19 December 2012. His Honour set out the background to those two actions at pars[3] - [12] of his reasons for decision as follows:
"3 Prior to 2006 Mr Tubb conducted business as an automotive mechanic through a company Dreem Mechanical Pty Ltd. Mr Reissig operated and still operates a building business through the company Chris Reissig Builders Pty Ltd. Mr Reissig and Mr Tubb, who had known one another for some time and become friends, commenced a business relationship. A solicitor, Melanie Kerrison of Rae and Partners, set up a unit trust called the C & T Unit Trust of which Mr Reissig and Mr Tubb were the trustees. Through the trust they engaged in the construction and sale of residential buildings. In 2006 they decided to buy a hotel together. They looked around for a suitable business and decided upon the Inveresk Tavern at 13-19 Dry Street Invermay in Tasmania. They sought advice from an accountant Mr Ronald Brown.
4 Rae and Partners acted as solicitors in the purchase. Mr Brown advised that a company should be incorporated to purchase the hotel business which consisted of a leasehold, plant and equipment and stock. Skyline Enterprises (Tas) Pty Ltd ('Skyline Enterprises') was incorporated on 9 November 2006. Mr Reissig and Mr Tubb were the directors. The shares were owned by the companies associated with each of them; in Mr Reissig's case Chris Reissig Builders Pty Ltd and in Mr Tubb's case Dreem Mechanical Pty Ltd. Company bank accounts were opened.
5 The purchase price for the business was about $160,000. A deposit of $10,000 was paid from the unit trust with the respective accounts of Mr Reissig and Mr Tubb each being debited by $5,000. To fund the balance and to provide working capital Skyline Enterprises obtained a business loan of $150,000 and an overdraft facility of $100,000 from the ANZ Bank. A letter of offer dated 20 November 2006 was submitted and formed the basis of the agreement with the bank. To further secure the indebtedness to the bank Mr Reissig and Mr Tubb entered into a guarantee and indemnity both in their personal capacity and as trustee for the C & T Unit Trust. Chris Reissig Builders Pty Ltd also entered into a guarantee and indemnity agreement in respect to the liability of Skyline Enterprises.
6 On 13 November 2006 Skyline Enterprises executed an application for a credit account with Australian Liquor Marketers Pty Ltd, a liquor supplier. The application was accepted by ALM which thereafter supplied liquor to the hotel. In part, the application provided:
'The Applicant agrees that if the Applicant is a private company, the directors of the Applicant will be bound as guarantors of the Applicant and shall execute and be bound by ALM's standard Credit Trading Terms.'
The credit trading terms are attached to the application and are also dated 13 November 2006. Both the application and the terms are signed by Mr Tubb and Mr Reissig as directors of Skyline Enterprises and as guarantors. The trading terms relevantly provide for a joint and several guarantee of the liability of Skyline Enterprises to ALM in the following terms:
'30 In consideration of ALM at the request of the Guarantor entering into this Agreement with the Customer the Guarantor covenants and agrees with ALM that:
30.1 The Guarantor guarantees to ALM that he will be with the Customer jointly and severally liable for the due payment of all moneys to be paid under this agreement …
30.4 The liability of the Guarantor under this guarantee and indemnity shall not be affected by the granting of time or any other indulgence to the Customer …
30.9 Where there is more than one person … which together constitute the Guarantor to this Agreement the obligations and liabilities of each and every such person … shall be joint and several.'
7 As between Mr Reissig and Mr Tubb an agreement was reached whereby Mr Tubb would be paid $1000 per week to manage the hotel. Mr Reissig's case, although now disputed by Mr Tubb, is that Mr Reissig's wife Emma was to be paid a wage of $25 per hour to manage and prepare the books of account. Mr Reissig was to, at the same time as continuing to operate his building business, provide some limited services such as preparation of staff rosters and ordering stock, but without remuneration.
8 The hotel commenced operation at the beginning of December 2006. The hotel business did not go well. It suffered substantial losses. Over the course of the next year tension developed between Mr Reissig and Mr Tubb both on a business and personal level. At some point during 2007 Mr Tubb ceased to manage the hotel and another member of staff was appointed to be manager. Mr and Mrs Reissig assumed greater responsibility for the business. The ANZ Bank was paid its debt and re-finance was obtained from the Bank of Queensland. Notwithstanding the falling out between the two men, Mr Reissig and Mr Tubb both remained as directors.
9 There is a dispute about Mr Tubb's level of involvement with the management of the hotel and access to business and company records after 1 July 2007 and the reasons for his reduced role. I will refer to that dispute later in these reasons. Findings about the disputed facts are required to enable determination of the issues in each claim.
10 Eventually the hotel was sold by contract dated 26 May 2009 which was completed on 30 June 2009. The sale price was $250,000 plus stock of $69,039.29. The settlement statement prepared by Rae and Partners records that from the proceeds of sale moneys were paid including $104,344.20 to the Bank of Queensland and $69,039.29 (the stock payment) to ALM. The balance sale proceeds of $128,493.22 were paid into the company bank account with ANZ on 21 July 2009.
11 The sum deposited to the company bank account was used to pay creditors. The payments to creditors included payments to Chris Reissig Builders Pty Ltd and to Mr and Mrs Reissig personally.
12 After the hotel was sold Skyline Enterprises was wound up following appointment of Paul Cook as liquidator. There were insufficient funds to discharge all of the still outstanding liabilities of the company. Two such liabilities, the balance debt to ALM of $51,364.30 and a debt to the ATO of $81,994.48, form the basis of these actions."
This appeal involves only the judgment in claim no 4484/2011 in which action the learned magistrate entered judgment for the respondent against the appellant in the sum of $26,689.94 being a 50% contribution in respect of the Australian Liquor Marketers (ALM) debt of $53,379.88.
The proposed amended defence
On 9 November 2012, after the third day of the trial, the appellant filed an application to amend his defence. The application was to incorporate additional allegations as set out in three paragraphs to the defence, namely pars18, 19 and 20. The learned magistrate heard the application on the fourth day of the trial, 15 November 2012, and he in fact allowed the proposed amendment to par20, but refused the application in respect of pars18 and 19.
Paragraph 20
The appeal against the asserted refusal to allow the amendment proposed by par20 is misconceived and can be disposed of at once.
The proposed par20 was as follows:
"20 In the alternative, the defendant says that he was released from all liability under the alleged Deed of Guarantee by the wholesale liquor group known as 'ALM' on or about the 20th December 2010."
With the consent of counsel for both the appellant and the respondent, the learned magistrate granted leave to amend the defence in accordance with the proposed par20, with some additional words at the end of the paragraph so that it read as follows:
"20 In the alternative, the defendant says that he was released from all liability under the alleged Deed of Guarantee by the wholesale liquor group known as 'ALM' on or about the 20th December 2010 by execution by the defendant's solicitor of a consent memorandum forwarded by ALM in the ALM proceedings that the action be discontinued with no order as to costs and return of the memorandum to ALM."
Not only was the amendment made but the learned magistrate decided the point raised by it at pars[39] - [41] of his reasons for decision, as follows:
"39 Mr Tubb relies, as a defence, on the manner in which the ALM proceedings commenced in Victoria were terminated. The evidence discloses that ALM, through its solicitors and with the consent of Mr Tubb's solicitor, agreed to discontinue its claim against him in February 2011. On 22 May 2011 the Victorian court ordered the claim be 'struck out'. However this does not constitute a defence to Mr Reissig's claim to a contribution. By then he had paid the whole ALM debt. In those circumstances it is hardly surprising that ALM did not proceed against Mr Tubb. It already had its money. The discontinuance and court order did not amount to a determination on the merits. Reference is made by the defendant to what is referred to as an Anshun estoppel, a reference to Port of Melbourne Authority v Anshun Pty Ltd [1981] HCA 45; (1981) 147 CLR 589. A 'cause of action estoppel' or 'res judicata' will prevent a further action or claim when the same claim has already been determined in an earlier proceeding; see Anshun, supra at 597 where Gibbs CJ, Mason and Aickin JJ observed that the 'rule as to res judicata comes into operation whenever a party attempts in a second proceeding to litigate a cause of action which has merged into judgment in a prior proceeding.' See also the judgment of Dixon J in Blair v Curran [1939] HCA 23; (1939) 62 CLR 464 at 532.
40 There has been no such determination here as to give rise to an estoppel, at least one binding Mr Reissig. Were the right of contribution lost as a consequence of the facts relied on by the defendant, it would be an example of the injustice or unfairness arising from a decision by the creditor, ALM in this case, to recover against Mr Reissig and not Mr Tubb.
41 Because reliance was placed on it by the defendant, reference should be made to Walker v Bowry (1924) 35 CLR 48 although the facts are somewhat different. The case does not assist the defendant. Walker and Bowry jointly and severally guaranteed the debt of a company to a bank. The bank sued Mr Walker alone and obtained a judgment for £2,865. Later, after his insolvency, he paid the bank £800 and was released from the judgment. He sought a contribution from Mr Bowry. The court pointed out that the judgment did not affect his right of contribution from co-sureties; see p58. And whilst the release of Mr Walker discharged Mr Bowry from the obligation to pay the whole of the debt to the bank it did not extinguish Mr Walker's right to a contribution but limited to a portion of the amount he actually paid."
Paragraph 18
The proposed par18 was as follows:
"18 In the alternative the defendant says that the claimant and his Wife, Emma Maree Reissig, during the period from the 1st November 2006 until the company went into liquidation on or about 12th August 2010 have fraudulently misappropriated company funds and property for either their own benefit or for the benefit of entities controlled by them, to the company's detriment and therefore the Claimant is not entitled to any contribution from the Defendant towards the Judgment sum."
The learned magistrate refused to allow the amendment proposed by par18 on the basis that it would be unjust after the hearing had commenced to allow a general allegation of fraud over a period of almost four years.
His Honour said:
"So far as the allegation of fraudulent misappropriation in each action is concerned, leave is refused to make the amendment in the terms now proposed for this reason. Pleadings in this court must comply with the Supreme Court rules. The Supreme Court Rule 227 provides that the parties are to plead all of the material facts upon which they rely, either as part of their claim or the defence. The function of the pleadings is referred to in Woodlands v Roberts, a decision Tasmanian Supreme Court 2010, Tasmanian Supreme Court cases 31 at paragraph 25, and by the High Court in Banque Commerciale SA (In Liquidation) v Akhil Holdings [1990] 169 CLR 279.
Pleadings of fraud are serious matters indeed. It is of utmost importance that the allegations of fact which form the basis of the allegation of fraud are pleaded and adequately particularised before the hearing commences. Again some deficiencies in pleading with be cured by amendment in appropriate cases but the amendment in the form currently proposed seeks leave to make a general allegation of fraud over a period of almost four years on the basis that, as I understand it, from submissions that had previously been made in this court, that the defendant wishes to wait and see what the evidence produces and deal with the allegation at that time. That is a recipe for injustice.
There was a prolonged debate in August in this hearing about an allegation of fraud. An amendment in a particular term was proposed and allowed on specific indication given by the court, that that amendment was to be the amendment that was binding on the parties. It then enables the claimant to understand the case that he must meet. It enables the court to determine whatever evidence is relevant to the issues and to limit the evidence accordingly, and to, as I've said, allow a general allegation of fraud without pleading facts or particulars and wide ranging cross examination just to see what the evidence turns up will inevitably, in my view, lead to surprise and injustice.
So the application for those reasons in both actions to make that amendment in those terms is refused."
In my view, it cannot be said that the learned magistrate erroneously exercised his discretion, and I reject the appellant's submissions to the contrary. It is for the appellant to show that his Honour's discretion miscarried: Winter v Somers [2000] TASSC 33 at [7]. Nothing that has been submitted by counsel for the appellant, Mr Kitto, approaches the discharge of the onus the appellant carries on a ground of appeal such as this.
As was explained in Australian Coal and Shale Employees' Federation v The Commonwealth (1953) 94 CLR 621 at 627 by Kitto J, the true principle in an appeal against the exercise of a discretionary judgment is that there is a strong presumption in favour of the correctness of the decision appealed from. The decision should be affirmed unless the court of appeal is satisfied that it is clearly wrong. There must have been an error which consists in acting upon a wrong principle, or giving weight to extraneous or irrelevant matters, or failing to give weight or sufficient weight to relevant considerations, or making a mistake as to the facts.
I am not satisfied that the learned magistrate committed any relevant error, much less that he was clearly wrong in exercising his discretion as he did.
If I am wrong however, and his Honour did err in ruling as he did, any such error cannot be regarded, in my view, as a material or operative error. His Honour had, earlier in the hearing, on 28 August 2012, allowed, subject to the production in writing of the formal terms, an amendment that was, in the circumstances of the case, and given the extremely late stage in the hearing, for all practical purposes, equal to that proposed by par18. It needs to be remembered that by 15 November, not only had the respondent's evidence been taken, but so had that of the company accountant, Mr Brown. Cross-examination of those witnesses by counsel for the appellant, conducted under the umbrella of the 28 August amendment, had been concluded and the witnesses relieved. Only part of the evidence in chief of Mrs Reissig and her cross-examination remained. The fact that Mrs Reissig was the day to day book keeper for the company's business adds little to the equation.
Moreover, the 28 August amendment had, at the time it was allowed, been accepted by counsel for the appellant as fully embracing the fraud that was alleged against the respondent.
Counsel had formulated that amendment as "an additional paragraph 18 in the alternative" as follows:
"The defendant says that the claimant has committed fraud in so far as he has unlawfully applied Skyline Enterprises (Tas) Pty Ltd's monies to his own use and or to the benefit of others."
Counsel provided particulars of the misappropriation at the time that amendment was allowed, both in a written list provided to his opposing counsel, and as articulated orally by him to the learned magistrate. When he was told by his Honour that his client would be held to the particulars of the amendment allowed, counsel had said "I'm okay, your Honour, that's the claim, that's the fraud."
It cannot, in my view, be credibly suggested that the amendment so allowed on 28 August 2012 shut out any evidence relative to the allegation of fraud, particularly when by that time, as already noted, the respondent's evidence had been concluded, and he had been cross-examined at large about the transactions that were suggested as fraudulent, and which might have deprived him in equity of his right to contribution.
Indeed, it was discussion concerning the cross-examination of the respondent by counsel for the appellant that had been unrelated to any pleaded allegation that led to the amendment proposed on 28 August 2012 being formulated by counsel for the appellant.
I note that there was further discussion between the learned magistrate and both counsel in court on 8 November about the terms of the amendment and the fact that it had not been produced in writing, and I note that, at that time, counsel for the respondent was suggesting an amendment along the lines of that formally applied for the following day.
On 8 November it was suggested by his Honour that counsel for the appellant was "changing the goal posts" in the proposed new amendment by pleading a time period for the fraud alleged. However, for my part, I am unable to see that the 28 August amendment was not adequate for the appellant's purposes. I repeat, the 9 November amendment was not sought until all of the respondent's evidence apart from that of Mrs Reissig had been completed.
It is true that the largely non-specific allegation of fraud proposed by the 9 November amendment did seek to extend the time period for the allegation of fraud to cover a period of almost four years, which was some 16 months wider than the 28 August amendment. However, as was pointed out by counsel for the respondent, Mr Stanton, there is no suggestion that the enlarged period contemplated would have led to any additional, relevantly, and I stress, relevantly, arguable allegations of misappropriation over and above those that were in fact dealt with in the evidence and in the learned magistrate's decision. The amendment might have allowed some wider cross-examination of Mrs Reissig, including as to the use of the proceeds of sale of the hotel business, but doubtless valid objection would have been taken if matters were raised with her that had not been put to Mr Reissig and Mr Brown, and of course counsel for the respondent was under no obligation to recall those witnesses.
Finally, the fact that the 28 August amendment was never formalised in writing by the appellant matters not. It had been granted and the learned magistrate actually dealt with the issues raised by the appellant in cross-examination under the broad coverage of the 28 August amendment even though counsel for the appellant ultimately elected, somewhat curtly, not to proceed with it. His Honour said at pars[45] - [54]:
"Defences not pleaded - fraud
45 In the course of the hearing Mr Tubb, through his counsel, cross examined at considerable length about issues in such a manner as to make clear that he was alleging fraudulent behaviour on the part of Mr Reissig and his wife. No such allegation was pleaded. It was put in argument that the issues were relevant because Mr Reissig relied on an equitable remedy and thus must 'come to equity with clean hands'. A person who has been guilty of fraud or sharp practice may be precluded from obtaining a contribution where it may be unjust or unfair to allow it; see Burke v LFOT Pty Ltd, supra, at [17] and Staples v Baker [1999] 1 Qd R 317 at 327-329. However allegations of fact asserting inequitable conduct, especially fraud, must be properly pleaded with adequate particulars. General allegations of fraud are not enough and fraud that is not alleged in the pleadings cannot be proved at the trial. Cross examination was permitted of the claimant's witnesses about facts relevant to this issue because, during the hearing, leave was granted on terms to the defendant to amend his defence. As the hearing progressed however the defendant did not take up the opportunity to amend afforded by the grant of leave.
46 Nevertheless I consider it appropriate to deal in a limited way with the factual assertions put by the defendant to make clear my conclusion that they are without merit.
47 The principal submission made by Mr Tubb's counsel is that Mr and Mrs Reissig fraudulently withdrew funds from the company account. He pointed to a series of withdrawals and transfers made in 2008 and 2009 by Mr and Mrs Reissig to their personal account or to the account of Chris Reissig Builders Pty Ltd. Put another way, the defendant claims that Mr Reissig committed fraud by unlawfully applying money belonging to Skyline Enterprises to his own benefit or to the benefit of Mrs Reissig or Chris Reissig Builders Pty Ltd.
48 Mrs Reissig made summaries of the account transactions which I am satisfied properly reflect the original documents, also in evidence. Her summaries disclose payments between April 2007 and December 2008 from the account of Skyline Enterprises to the account of Chris Reissig Builders Pty Ltd totalling $186,753.55 and between July 2008 and June 2009 payments from the account of Skyline Enterprises Pty Ltd to a joint account of Emma and Chris Reissig totalling $96,500.00.
49 I am satisfied that the transactions are adequately explained by the evidence and do not constitute a fraud as is alleged.
50 Mr Brown, the accountant, gave evidence that from a relatively early stage Skyline Enterprises had difficulty meeting its accounts. He was aware that money was being paid into the Skyline Enterprises account by Mrs Reissig from the account of Chris Reissig Builders Pty Ltd to enable payment of accounts. Such payments were recorded on the internal MYOB accounting system. Mrs Reissig also gave evidence about these transactions and the reason for them. Later, similar transactions were made from her and her husband's joint personal account. Putting aside for a moment the prudence of such payments, the evidence establishes that money was paid into the Skyline account and then repaid as funds became available. Counsel for Mr Tubb focussed on the money paid from the company's account but little attention was paid to the money paid in. I find that the transfers do not amount to fraudulent conduct or, to use the words from the defendant's submissions, 'sharp practice'. Indeed the evidence suggests that more money was transferred in to the Skyline Enterprises account than was transferred out. The conduct is not such as to disentitle Mr Reissig to a contribution.
51 The defendant also made reference to payments from the Skyline Developments account to Mrs Reissig. I am satisfied that such payments are remuneration for her accounting services and that there is nothing improper about them. I accept the evidence of Mr Brown and Mr and Mrs Reissig that it was agreed at the start of the enterprise that Mrs Reissig would be paid at the rate of $25 per hour for her accounting and administrative work. I reject Mr Tubb's evidence that he knew of no such arrangement and did not agree to it. I find it inconceivable that Mr Tubb, at least in the early days of the business, did not become aware that Mrs Reissig was being paid. It was reflected in the accounts and records of the company. It accords with common sense also that there should have been such an arrangement given the level of work involved. Mrs Reissig gave plausible and persuasive evidence that she would not have been prepared to do the work unless paid for it.
52 The defence submission also referred to payments made in 2007 totalling $5,884.89 to an Examiner Newspaper account held in the name Chris Reissig Builders Pty Ltd. I accept the evidence of Mr and Mrs Reissig that the account was for advertising for the Inveresk Tavern billed to the Chris Reissig Builders account because of more favourable terms. This is not conduct that disentitles Mr Reissig to a contribution.
53 Submission was also made about 3 payments respectively made on 21, 22 and 27 July 2009 from the balance proceeds of sale of the hotel in July 2009 to Chris Reissig Builders Pty Ltd totalling $34,489.50. This was put by the defendant as 'sharp practice' that disentitles Mr Reissig on equitable grounds from a contribution. Mr and Mrs Reissig both gave evidence that the payments were for services provided by Mr Reissig's company to the hotel. I have a little more hesitation about these payments. No agreement was produced evidencing an entitlement to payment. However it was not contended that Mr Reissig did not perform a substantial amount of work and time in operating and managing the hotel that he would ordinarily be remunerated for. If he had not done the work then others would have been paid to do it. When Mr Tubb did so he was paid. No issue was taken by the liquidator in respect to these or indeed any other payments made by the company. I do not regard these payments as disentitling Mr Reissig to contribution; even the facts relevant to those payments had been pleaded.
54 It was also submitted that there were sufficient moneys from the balance proceeds of sale to discharge both the ALM and ATO debts in full. I accept that $128,493.22 was paid into the Skyline Enterprises bank account in July 2009 after the hotel was sold. That was enough to cover both debts. However ALM and the ATO were not the only creditors of the company. There was nothing unlawful or unfair in using that money to pay other creditors, including Mrs Reissig and Chris Reissig Builders Pty Ltd, from the balance proceeds, to the exclusion of ALM and the ATO. That is so even if those payments were so allocated leaving only debts in respect to which a contribution may be sought from Mr Tubb. In other words, even if it were the case that the moneys were applied deliberately leaving debts, for example the ALM debt, guaranteed by Mr Tubb with a view to obtaining a contribution, that in my view is no grounds for refusing the claim for contribution. Again, I would point out that the liquidator has apparently taken no issue with the propriety of any of the payments made by the company following completion of the hotel sale and the liquidation."
Paragraph 19
The proposed par19 was as follows:
"In the alternative, if the defendant signed the Deed of Guarantee referred to in paragraph 6 of the Claim, he did so pursuant to the false representation made to him by the Claimant and his Wife, Emma Maree Reissig that the document was only an Application for a line of Credit with the wholesale liquor group known as 'ALM'."
In support of this amendment, counsel for the appellant, submitted to the learned magistrate:
"What was put to Mr Reissig is that Mr Tubb was only shown three pages of this document and that the recording should show that he wasn't shown all of the pages and that it was just an application for credit.
I have no doubt that the recording should talk about that. Mr Reissig had the deed before him for some time. I cross-examined him at length for some time on that document, cross-examined him about the fact that ALM hadn't signed it, it was not sealed. I went through each page to do with the signatures and where they were placed, and why the company box was ticked and things like that. I believe I've put it to him that Mr Tubb was only shown three pages. That's all I can say, that it's not – we have conducted our case on that basis."
The learned magistrate refused the amendment. His Honour said:
"This is the fourth day of evidence for this hearing. Mr Reissig and his accountant have already finished their evidence in chief and cross-examination. The proposed paragraph 19 now seeks to insert an allegation that the deed of guarantee which is the subject of the action was signed by Mr Tubb, because he was induced to do so by, although the paragraph doesn't say that, pursuant to a false representation made by the claimant and his wife, that the document was of a different nature than it appears.
I accept that Mr Reissig was asked some questions about the document, but I do not accept that it is just to allow the amendment in these terms now. It introduces a completely separate allegation in the defence. It gives rise to the possibility of evidence that it would be unjust to seek the claimant to address so far into the hearing of the action. It gives rise to issues about what the representation was, where it was made, what the nature of it was, whether Mr Tubb was in fact induced to sign the document in those terms, none of which has been properly addressed by the evidence, or in advance of the trial.
The pleadings in an action are designed to, before the commencement of a hearing, limit the issues and the evidence which are to be addressed in the action. Now, as I have previously announced, pleadings are not to be used as an instrument of injustice, if by amendment matters can be raised without injustice then there is ordinarily no reason that amendments cannot be made, but to make such an amendment introducing a whole new allegation on the pleadings at such a late stage in my view causes real injustice to the claimant in his action, he's not addressed in his evidence. He's not had the opportunity to consider what other evidence he may call which is relevant to the issue in the trial, and in my view it would be unjust to allow the amendment at this stage."
In my respectful opinion, the learned magistrate was perfectly correct in that analysis of the matters affecting the exercise of his discretion. In my view, in the circumstances that existed, there was no other course properly open to him than to refuse the amendment.
I detect no error in the exercise of the learned magistrate's discretion. The appellant has not discharged the onus he bears of displacing the strong presumption in favour of the correctness of the decision appealed from. I reject the appellant's submissions to the contrary.
In doing so, I note in particular that counsel for the appellant was not able to assert unequivocally that he had put to the respondent that he had shown only three pages of the document to the appellant; much less was he able to say that he had put the asserted false representation to the appellant in cross-examination.
Thus, not only would it have been unjust to allow the amendment at that late stage in the trial for the reasons expressed by the learned magistrate, but even had the amendment been allowed, the appellant would have been in breach of the rule in Browne v Dunn (1894) 6 R (HL) 67 had he sought to give evidence of a false representation that had not been put to the respondent in cross-examination. The appellant would therefore, most probably, in my view, have been precluded from giving any such evidence in the circumstances of the case, notwithstanding the availability to the respondent of the provisions of the Evidence Act 2001, s46.
Disposition
It follows from all that I have said that ground 10 of the notice of appeal is not made out. I will hear counsel as to the disposition of the balance of the appeal.