WIN Television NSW Pty Ltd v Frank G Mclnerney and others (trading as the law firm "Maguire and Mclnerney")

[2013] NSWSC 1327

Supreme Court

New South Wales

Medium Neutral Citation:	WIN Television NSW Pty Ltd V Frank G Mclnerney and others (trading as the law firm "Maguire & Mclnerney") [2013] NSWSC 1327
Hearing dates:	29 August 2013
Decision date:	13 September 2013
Jurisdiction:	Equity Division
Before:	Slattery J
Decision:	Grant leave to amend the plaintiff's Amended Statement of Claim in accordance with annexure A to the plaintiff's Notice of Motion filed on 29 August 2013.
Catchwords:	PROCEDURE - miscellaneous procedural matters - amendment to pleadings - plaintiff gives notice of further amendments to the Amended Statement of Claim six weeks before trial - argument concerning amendment takes place six weeks before trial - proceedings relate to events that occurred in 1988 - amendments relate to events that occurred in 1995 and 1998 - whether amendments should be allowed - whether the defendant would suffer prejudice through the making of the amendments - whether plaintiff has explained the lateness of the amendments - whether the plaintiff would be prejudiced were the amendments not to be allowed.
Legislation Cited:	Civil Procedure Act Civil Procedure Act s 56, s 57, s 58, s 64, s 65 Fair Trading Act 1987 s 42 Limitation Act 1969 s 14, s 55
Cases Cited:	Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175 Brisbane South Regional Health Authority v Taylor (1996) 186 CLR 541 DJZ Constructions Pty Ltd v Pritchard t/as Pritchard Law Group (No 2) [2009] NSWSC 215 Downing v WIN Television (NSW) Pty Ltd and Others (No 2) [2011] NSWSC 563 Downing v WIN Television (NSW) Pty Ltd and Others (No 4) [2011] NSWSC 1257 Downing v WIN Television (NSW) Pty Ltd and Others [2010] NSWSC 1132 Karl Suleman Enterprizes Pty Ltd (in liquidation) v Pham and Others [2013] NSWCA 93 Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589; [1981] HCA 45
Category:	Interlocutory applications
Parties:	Plaintiff: WIN Television NSW Pty Ltd Defendants: Frank G McInerney, John E Driscoll, Mark A McDonald And Michael E Davies (trading as the law firm partnership known as 'Maguire & McInerney')
Representation:	Counsel: Plaintiff: TGR Parker SC Defendants: S Donaldson SC, M Newton Solicitors: Plaintiff: Thomsons Lawyers Defendants: HWL Ebsworth Lawyers
File Number(s):	2009/288754

Judgment

1. The plaintiff in these proceedings WIN Television NSW Pty Ltd ("WIN") applies to amend its Amended Statement of Claim. The application to amend was filed on 29 August 2013. The matter is listed for trial before me for five days commencing on Monday 23 September 2013. The defendants resist the application for amendment. This judgment decides that the application should be allowed. The issues raised by the amendment require a greater understanding of the matters in issue in the proceedings.

WIN, the Downing family and Maguire & Mclnerney - 1988 to 2010

1. From about 1969 until November 2005, WIN, a commercial television broadcaster located in Wollongong, retained Maguire & Mclnerney as solicitors to provide legal advice in relation to WIN's various business activities.

1. In late February 1988 WIN instructed Maguire & Mclnerney to document an agreement that WIN had entered into with Mr Robert Reginald Downing (Mr Downing Senior) whereby WIN was permitted to construct and operate a transmission tower and related structures on Mr Downing Senior's property in Goulburn, for a period of 25 years, with an option for a further 25 years, for a fee of $1 per year. Maguire & Mclnerney solicitors drafted a licence agreement which WIN and Mr Downing Senior executed on 18 January 1989.

1. The original retainer of Maguire & Mclnerney for documenting the licence agreement was made between Mr Peter Gough on behalf of WIN and Mr Frank Mclnerney on behalf of Maguire & Mclnerney. Both Mr Gough and Mr Frank Mclnerney are to be witnesses in the proceedings. The original retainer is said to be partly oral and partly written.

1. But over 20 years later this licence agreement became subject of litigation in the Equity division of this Court. Mr Downing Senior died in 1994. The property remained under the control of his executors until 1998, when it was transferred to Mr Downing Junior, who became its registered proprietor. From the time Mr Downing Junior took over the family property, in December 1998, he and his solicitors corresponded with WIN claiming that WIN's telecommunication infrastructure erected under the licence agreement was in place without approval and constituted a trespass upon his land. WIN claimed the right to occupy the site under the 1989 licence agreement. The parties could not resolve their differences and in early 2007 commenced proceedings, which Ball J determined in 2010: Downing v WIN Television (NSW) Pty Ltd and Others [2010] NSWSC 1132. It is not necessary to describe the full complexity of the proceedings before Ball J, but his Honour determined: (1) the licence agreement was not an agreement for lease; (2) the licence agreement does not permit WIN to sublicence the licensed space to third parties; (3) WIN did not gain a right to exclusive possession of the area covered by the licence by any subsequent conduct between Mr Downing Senior and WIN in 1993; and (4) after Mr Downing Junior gave notice to WIN to take its transmission facilities off the family property in 1999 and WIN failed to comply, from June 1999 it became a trespasser liable to pay Mr Downing Junior mesne profits for its occupation. Ball J assessed those mesne profits: Downing v WIN Television (NSW) Pty Ltd and Others(No 2) [2011] NSWSC 563.

1. Then Ball J awarded costs of the proceedings against WIN: Downing v WIN Television (NSW) Pty Ltd and Others(No 4) [2011] NSWSC 1257.

WIN's existing pleading - the Amended Statement of Claim

1. WIN's existing pleading is an Amended Statement of Claim filed on 3 May 2012, to which Maguire & Mclnerney filed a Further Amended Defence on 21 February this year. And WIN in turn filed a Reply on 13 March this year. The scope of the existing pleadings is of some importance to determination of this application.

1. The plaintiff's existing pleading, the Amended Statement of Claim, pleads the original retainer in February/March 1988, being the retainer to document the licence agreement and advise about the most appropriate legal structure to protect WIN's interest arising out of the commercial agreement that founded the licence agreement (paragraphs 7B to 7D). The Amended Statement of Claim pleads the performance of the March 1988 retainer by the drafting and negotiation of the licence agreement, leading to its execution by WIN and Mr Downing Senior on 18 January 1989 (paragraphs 7E to 7L). Under the heading "Advice from Maguire & Mclnerney regarding the licence agreement " the Amended Statement of Claim further pleads events after 29 January 1999 in which WIN sought advice concerning the licence agreement. Then it pleads that on various occasions in 2000, 2001 and 2002 Maguire & Mclnerney variously provided incomplete advice, failed properly to brief counsel to advise, and refused or neglected to advise WIN about the following matters: (1) that WIN's entitlements under its agreement with Mr Downing Senior were not properly documented in the licence agreement; (2) that it was arguable that WIN's entitlement to occupy the site might have been defeated upon the registration of Mr Downing Junior as the proprietor of the property; and (3) that it was arguable that WIN's entitlements under the agreement founding the licence agreement were not adequately protected by the execution of the licence agreement (paragraphs 7M to 7T).

1. Then, importantly, WIN pleads a case of Maguire & Mclnerney's non-disclosure to WIN. It pleads that Maguire & Mclnerney continued to refuse or neglect to advise WIN between January 2001 and November 2005: that Maguire & Mclnerney may be liable to WIN arising from Maguire & Mclnerney's preparation of the licence agreement; that Maguire & Mclnerney could not continue to act for WIN; and that WIN should retain independent solicitors to advise it further. The pleading continues that Maguire & Mclnerney continued to act for WIN until the firm's retainer was terminated in November 2005 (paragraphs 7U and 7V).

1. The Amended Statement of Claim pleads that these events amounted to a breach of Maguire & Mclnerney's duty of care to WIN arising out of the retainer (paragraphs 7W and 8) and a breach of Maguire & Mclnerney's associated fiduciary duty (paragraph 7X, 7Y and 22). WIN claims damages for breach of Maguire & Mclnerney's duty of care and for the alleged breach of its fiduciary duty (paragraphs 23 to 28).

1. The Amended Statement of Claim also pleads a claim in misleading and deceptive conduct under Fair Trading Act 1987 s 42. WIN pleads Maguire & Mclnerney's alleged representations in 1988 and 1989 about their proposed performance of the retainer to draft the licence agreement (paragraph 29) and pleads a continuing representation that Maguire & Mclnerney did not have any liability to WIN arising from its preparation of the licence agreement and the lack of any conflict of interest between Maguire & Mclnerney and WIN (paragraph 37). The alleged misleading and deceptive conduct is also said to result in contravention of Fair Trading Act 1987 s 42, thereby causing WIN to suffer loss and damage.

The Further Amended Statement of Claim - contents and context

1. Maguire & Mclnerney object to two groups of proposed amendments in the proposed Further Amended Statement of Claim. The first group of amendments pleads new claims or causes of action founded upon events in 1994 and 1995. This material added to the pleadings arises out of a sub-licence between WIN and the NSW Government ("Government Sub-licence") whereby the Government was to share the use of WIN's television transmission facilities on Mr Downing Senior's land (proposed Further Amended Statement of Claim paragraph 7LA). Pursuant to this arrangement Maguire & Mclnerney did prepare for execution an agreement between WIN and the Minister for Public Works and Services, which agreement was executed on 22 November 1995 (proposed Further Amended Statement of Claim paragraph 7LB).

1. WIN pleads that the Government Sub-licence contained an express representation by WIN that it had obtained Mr Downing Senior's consent to enter into the Government Sub-licence but Maguire & Mclnerney did not ensure that Mr Downing Senior's consent was obtained with the result that WIN's rights under its licence agreement with Mr Downing Senior, which Ball J found did not permit sub-licences, became defeasible.

1. The second proposed group of amendments which are the subject of objection in the Further Amended Statement of Claim allege that: Maguire & Mclnerney failed to advise WIN to obtain independent advice on the arguable entitlements that WIN had to compensation from Maguire & Mclnerney (proposed Further Amended Statement of Claim paragraph 22(e)); and if there is a statutory bar, that Maguire & Mclnerney failed to advise that WIN had lost its entitlement as a consequence of the defendants' breaches of duty of care and fiduciary duties (proposed Further Amended Statement of Claim paragraph 28).

1. In my view this second group allegations does not require amendment to the pleadings. I do not regard them as a significant expansion of existing issues. The same allegations are maintainable, in my view, on the basis of the existing Amended Statement of Claim especially paragraph 7U. The existing pleading clearly maintains allegations of non-disclosure between at least January 2001 and November 2005: of WIN's potential cause of action against Maguire & Mclnerney; of the fact that Maguire & Mclnerney could not continue to act for WIN; and, that WIN should retain independent solicitors. A claim that WIN is entitled to compensation from Maguire & Mclnerney and that such a claim might become statute barred as a result of that non-disclosure is hardly new. The Reply also seeks postponement of the bar due to Maguire & Mclnerney's non-disclosure. All the proposed pleading is doing in this respect is making existing issues clearer.

1. That leaves the proposed allegations about the Government Sub-licence. The timeline for these proposed amendments commences on 7 August 2013 when WIN's lawyers wrote to Maguire & Mclnerney's lawyers in these proceedings proposing these amendments. 7 August was six weeks before the proceedings were due to start. Six weeks before trial should ordinarily be an adequate period of pre-trial notice of most amendments, when both parties are acting cooperatively. Response was sought by 15 August 2013. Eventually after some toing and froing in correspondence, Maguire & Mclnerney's legal representatives communicated their objection to the proposed pleading on 21 August 2013, two weeks after the issue had been raised. This two weeks wasted valuable time. The motion for amendment was then filed before me in the directions hearing on 29 August 2013. WIN was directed to file all its evidence that would be required on the amended pleading by 5 September, which it did.

1. WIN's supplementary evidence is limited. It consists of a further Affidavit of Peter Gough WIN's principal witness of the events from the late 1980s. He gives more detail about conversation in 1994 and 1995 with Mr Frank Mclnerney, the principal witness for Maguire & Mclnerney. He adds the Government Sub-licence, and some further correspondence between WIN and Maguire & Mclnerney - three letters between March 1994 and August 1995. Some further questions are to be put to WIN's expert witness on the issue of solicitor's negligence, Ms Diane Skapinker

1. Maguire & Mclnerney filed evidence in response on the motion. That evidence was that any files held by Maguire & Mclnerney in relation to the Government Sub-licence have been destroyed, because it is the practice of Maguire & Mclnerney not to keep files for longer than nine years after completion.

Consideration

1. The applicable legal principles in relation to the exercise of the Court's discretion on an amendment such as this are not in doubt. They do not need to be elaborated. The Court is particularly guided by the relevant statutory command of Civil Procedure Act 2005 ss 56, 57, 58 and 64 and the statements of principle in Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175 and Karl Suleman Enterprizes Pty Ltd (in liquidation) v Pham and Others [2013] NSWCA 93.

1. The parties put in issue the usual considerations on an amendment such as this. Those considerations lead in my view to the following conclusions.

1. Prejudice to Maguire & Mclnerney does not weigh heavily against granting the amendment. Maguire & Mclnerney contend that what has been forgotten can rarely be shown if these further old allegations are added and that therefore their prejudice from the proposed amendment would be irremediable: Brisbane South Regional Health Authority v Taylor (1996) 186 CLR 541; at 552-553 per McHugh J. Such presumptive prejudice was recognised in Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175 at [102]. But although Mr Downing Senior died in 1995 and Maguire & Mclnerney's files have been destroyed, Mr Frank Mclnerney who received the firm's 1993-1994 instructions from Mr Gough for WIN a witness in the proceedings. This means an account of the new issue can be given by Maguire & Mclnerney, although it may be imperfect. No doubt such absences of recollection that Mr Frank Mclnerney has, can be taken into account in assessing his evidence.

1. Moreover, the issue of the Government Sub-licence in 1995 is a matter which would normally arise as part of the course of events to be examined between 1989 and 2006 on the existing pleadings. I do not accept that it is an entirely new area of factual enquiry. Mr Mclnerney is already seeking to give evidence from recollection of even older events.

1. Another area of prejudice to which Maguire & Mclnerney points is that WIN may need to vacate the trial due to commence on 23 September as a result of allowing the amendments on the Further Amended Statement of Claim. That prejudice can easily be cured. The Court will not permit the trial to be vacated by reason of these amendments. And Maguire & Mclnerney's position can be further protected by it having the right to apply for such further directions as it requires to avoid any prejudice to it from the conduct of the trial based on the Further Amended Statement of Claim commencing on that date. For example, WIN seeks to put supplementary questions to the expert witness Ms Skapinger. If these cannot be dealt with in the time set aside for the trial, a short supplementary hearing of the expert evidence may be necessary.

1. Maguire & Mclnerney contend there is no explanation for the delay in bringing forward this amendment. Ordinarily the Court should be supplied with a justification for the delay so the explanation can be taken into account in the balancing exercise necessary when exercising the discretion: Karl Suleman Enterprizes Pty Ltd (in liquidation) v Pham and Others [2013] NSWCA 93 at [22]. But this contention is less powerful than it might seem in this case for several reasons. First, Maguire & Mclnerney say the Government Sub-licence claim could have been introduced when these proceedings were first commenced. That is true. But there is no evidence that the file in relation to the Government Sub-licence existed then. So delay from the amendment does not seem to have occasioned additional prejudice beyond the delay of the commencement of the proceedings in general, which the evidence suggests may not be WIN's fault This case is an unusual one in this respect.

1. Secondly, the delay will not be allowed to cause a vacation of the hearing. In that sense the need for an explanation is reduced. And I regard WIN's giving of six weeks notice of the amendment before hearing as reasonable. The correspondence indicates that Maguire & Mclnerney's lawyer's response to the amendment proposal was leisurely. And notice of this amendment was given prior to Maguire & Mclnerney serving its evidence.

1. Thirdly, I also weigh in the balance the prejudice to the plaintiff that may arise if these amendments are not permitted. WIN will not be able to argue a potential claim. The contentions and evidence suggest that it is at least arguable that the defendants' continuing non-disclosure of a potential cause of action against them is an explanation for WIN's own delay and an additional cause of its losses. I am conscious of the unfairness that may be occasioned to WIN, in not allowing an amendment in circumstances where there is a claim against Maguire & Mclnerney for non-disclosure of the cause of action against them. It would be unjust to WIN to eliminate a claim that has arguably been delayed because of Maguire & Mclnerney's own non-disclosure.

1. Moreover, if the amendment is declined WIN will be able to argue in future proceedings that Maguire & Mclnerney's alleged negligence in respect of the Government Sub-licence could not be tried in these proceedings, and it may not perhaps be therefore prevented by Anshun estoppels from conducting the claim in later proceedings, were it to choose to bring later proceedings: Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589; [1981] HCA 45. Of course those proceedings would be met by a defence under Limitation Act 1969 s 14. But that in turn would no doubt be answered by a reply under Limitation Act 1969 s 55. The proposal for this amendment indicates that WIN desires to litigate this issue. It would be highly inefficient and contrary to Civil Procedure Act s 56 dictates for the Court to contemplate a situation in which there would be two trials between these two parties. This is another reason for allowing the amendment.

1. In the Court's assessment the disruption by this amendment does not at this stage, look as though it will be major. As a result of the Court's directions WIN has filed all its evidence relating to the amendment by 5 September 2013. The defendants now have that evidence. It is not substantial in scope. This is another factor which causes the Court to conclude that these amendments will be manageable during the trial.

1. The parties are at issue about whether the amendments in the Further Amended Statement of Claim should date from today or from the commencement of these proceedings: Civil Procedure Act ss 64 and 65 and DJZ Constructions Pty Ltd v Pritchard t/as Pritchard Law Group (No 2) [2009] NSWSC 215 at [16]. But I do not have to decide that question now. I will reserve it for the trial. It can probably be dealt with as part of the final submissions.

Conclusions and orders

1. In the result therefore the Court will make the following orders:

(1)   Grant leave to the plaintiff to file its Further Amended Statement of Claim in the form attached to its Motion of 29 August 2013.

(2)   Grant liberty to the defendants to apply at any time during the hearing of these proceedings for such directions as the defendants see fit to alleviate any procedural prejudice to the defendants that may arise due to the filing of the Further Amended Statement of Claim.

(3)   Direct the parties to confer with a view to the defendants filing any supplementary evidence they are advised to file in response to the Further Amended Statement of Claim and with a view of managing the expert evidence in the proceedings to accommodate the Further Amended Statement of Claim.

(4)   Order the plaintiff to pay the defendants costs thrown away by the filing of the Further Amended Statement of Claim.

(5)   Otherwise costs of the plaintiff's motion of 29 August 2013 will be the parties costs in the proceedings.

(6)   Reserve for further consideration the question of whether the amendments effected by the Further Amended Statement of Claim should date from today or from the commencement of these proceedings.

(7)   Liberty to apply.

Decision last updated: 13 September 2013