Woodward v Shellab Pty Ltd (t/as Shellabears) - [2009] WADC 74

JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
IN CHAMBERS

LOCATION: PERTH

CITATION: WOODWARD -v- SHELLAB PTY LTD (t/as SHELLABEARS) & ORS [2009] WADC 74

CORAM: PRINCIPAL REGISTRAR GETHING

HEARD: 6 MAY 2009

DELIVERED : 22 MAY 2009

FILE NO/S: CIV 2568 of 2007

BETWEEN: JOHN LONARD WOODWARD
Plaintiff
AND
SHELLAB PTY LTD (t/as SHELLABEARS) (ACN 063 252 237)
First Defendant
CHRISTOPHER LANGDON SHELLABEAR
Second Defendant
GEORGE WARING
Third Defendant

Catchwords:

Practice and procedure - Leave to amend defence - Consequential amendments - Admissions

Legislation:

Real Estate and Business Agents Act 1978 (WA)

Result:

Plaintiff's application to strike out dismissed
Defendant's application to amend granted

Representation:

Counsel:

Plaintiff:     Ms N Graskoski
First Defendant              :     Mr J Garas
Second Defendant         :     Mr J Garas
Third Defendant            :     No appearance

Solicitors:

Plaintiff:     Wilson & Atkinson
First Defendant              :     Allens Arthur Robinson
Second Defendant         :     Allens Arthur Robinson
Third Defendant            :     Tottle Partners

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

Banque Commerciale S.A., en Liquidation v Akhil Holdings Ltd (1990) 169 CLR 279
Bowes v Chaleyer (1923) 32 CLR 159
Briggs v Curtis Quick & Associates [1999] WASCA 139
Celestino v Celestino [1990] FCA 299
Dare v Pulham (1982) 148 CLR 658
Dovuro Pty Ltd v Wilkins (2003) 215 CLR 317
Essex Securities Pty Ltd v Lunt [2006] WASC 58
Hutton v Meston [2004] WASCA 178
Joyce v Palassis [No 3] [2007] WASC 214
Laws v Australian Broadcasting Tribunal (1990) 170 CLR 70
May v Thomas [2008] WASCA 215
NMFM Property Pty Ltd v Citibank Ltd [2000] FCA 1558
OD Transport (Australia) Pty Ltd (in liq) v OD Transport Pty Ltd [1998] FCA 1653
Petersen v Moloney (1951) 84 CLR 91
Queensland v JL Holdings Pty Ltd (1997) 189 CLR 146
Sangora Holdings Pty Ltd v Dunstan, unreported; FCt SCt of WA; Library No 990172; 13 April 1999
Shine v Williams [2007] WASCA 194
Squire v Squire [1972] Ch 391
The Bell Group Ltd (in liq) v Westpac Banking Corporation [No 9] [2008] WASC 239
Westbank v British Columbia (2000) 191 DLR (4th) 180

PRINCIPAL REGISTRAR GETHING:

The factual background

The pleadings dispute before me for determination takes as its context a dispute between the plaintiff as vendor of Apartment 2, 64 Marine Parade, Cottesloe (the "Property") and the two real estate agents whom he retained to assist him to sell the Property. The two real estate agents, the first defendant and the third defendant, had unsuccessfully attempted to auction the Property on 6 November 2004.
About the same time, the second defendant, a director of the first defendant, entered into some form of arrangement (the precise nature of which is a key issue in dispute) with a Mr and Mrs Ikin. This arrangement was to find them a suitable property in the Cottesloe area. On or about 6 February 2005, Mr and Mrs Ikin entered into a written contract to purchase Apartment 1, 64 Marine Parade, Cottesloe ("Apartment 1"). It was an express term of this contract that it was conditional upon Mr and Mrs Ikin successfully purchasing the Property within 10 days.
Mr and Mrs Ikin subsequently made an offer to purchase the Property. At the same time, the plaintiff had received a competing offer for the purchase of the Property. The two offers were discussed at a series of meetings between the second defendant, third defendant and plaintiff. The plaintiff ultimately accepted a counter‑offer from Mr and Mrs Ikin.
The plaintiff's case centres on the fact that he was never told that Mr and Mrs Ikin had entered into a conditional agreement to purchase Apartment 1. Rather, the plaintiff alleges he was told by the second defendant that if the counter‑offer was not accepted, Mr and Mrs Ikin would purchase an alternate property.

Present applications

On 27 January 2009, by consent, I made orders allowing the plaintiff to amend his statement of claim in terms of a Minute of Proposed Amended Statement of Claim filed with the Court on 22 January 2009 ("the Amended Statement of Claim"). The orders provided that this minute stand as the Amended Statement of Claim in the action, with further filing and service being dispensed with.
A major thrust of the amendments was to add a plea that the first defendant was retained as an agent for Mr and Mrs Ikin, and then to add various breaches of duties owed to the plaintiff as a result of the conflict between this agency agreement and the agency agreement between the first defendant and plaintiff.
At the same time, on 27 January 2009, I made orders giving the defendants leave to amend their defences, with the amended defences to be filed and served within 14 days of the orders. The first and second defendants each filed an amended defence on 26 February 2009, outside the 14 days allowed.
By application dated 8 April 2009, the plaintiff sought orders striking out certain paragraphs of the amended defences filed by the first and second defendants. The essence of the application was that the first and second defendant had each impermissibly withdrawn an earlier plea that Mr and Mrs Ikin had retained the first defendant (and/or the second defendant) as their agent.
By application dated 22 April 2009, the first and second defendants each sought orders permitting them to amend their defences in terms of the pleadings they each filed on 26 February 2009. They also sought orders extending the time within which to file their amended defences from that set out in the orders made on 27 January 2009.
The plaintiff has filed an affidavit of its solicitor, Natalie Graskoski, sworn 8 April 2009, in support of its application. The first and second defendants filed an affidavit of their solicitor, Bryn Francis Dodson, affirmed 22 April 2009, in opposition to the plaintiff's application and in support of their application.

The pleadings as originally filed

In order to determine the present applications, it is necessary to begin the analysis with the original statement of claim filed on 25 February 2008. Paragraph 9 to par 11 of this document are in the following terms:
"9.On or about 6 February 2005 Colin Ikin and Suzanne Ikin ('Mr and Mrs Ikin') entered into a written contract with the vendor of Apartment 1 to purchase Apartment 1 for the sum of $1,530,000 (the 'Apartment 1 Contract').
10.It was an express term of the Apartment 1 Contract that the purchase of Apartment 1 was conditional upon the successful purchase of the Property within 10 days. The Apartment 1 Contract was otherwise an unconditional 'cash' contract.
11.At the time of entering into the Apartment 1 Contract Mr and Mrs Ikin requested the second defendant and the third defendant not to advise the plaintiff of the Apartment 1 Contract prior to any contract for the sale of the Property being entered into between the plaintiff and Mr and Mrs Ikin."
In its defence, filed 6 May 2008, the first defendant expressly pleaded that the second defendant was Mr and Mrs Ikin's agent. Specifically, par 11 provides:
"11.In relation to paragraph 11 of the statement of claim, Shellabears:
(a)admits that at the time Mrs Ikin entered into the Apartment 1 Contract, Mr and Mrs Ikin requested the second defendant (Mr Shellabear) not to advise Mr Woodward of the Apartment 1 Contract prior to any contract for the sale of the Property being entered into between Mr Woodward and Mr and/or Mrs Ikin;
(b)states that Mr and Mrs Ikin requested Mr Shellabear, as their agent in relation to the purchase of Apartment 1, to maintain their confidence; and
(c)states that Mr Shellabear, and Shellabears, were bound by the REBA Code and was bound to keep the terms of the Apartment 1 Contract confidential."
Paragraph 13 of the defence also contained a positive assertion that Shellabears, the first defendant, was the agent of Mr and Mrs Ikin in relation to the Apartment 1 Contract. The second defendant's defence, also filed on 6 May 2008, was in substantially identical terms.
The plaintiff requested particulars of par 11 and par 13 of the defence. The request, and answers, are as follows:
"Request
2.As to subparagraphs 11(a) and 11(b) of the defence state whether Mr and Mrs Ikin's requests to the second defendant were in writing, oral or implied and:
2.1if wholly (sic) partly in writing identify the writing by reference to its date, author and addressee and state where and when it may be inspected;
2.2if wholly or partly oral state:
(a)between that actual persons the conversation took place (sic);
(b)where and when the conversation took place; and
(c)the material substance of the conversation; or
2.3if wholly or partly implied specify every fact, matter, reason, inference and thing relied upon as giving rise to the implication.
Answer
2.The requests pleaded in paragraphs 11(a) and (b) of the defence were oral.
2.1Not applicable.
2.2The request:
(a)was made orally by Mr Ikin, on behalf of Mrs Ikin, to the second defendant on behalf of the first defendant;
(b)was made on several occasions before 6 February 2005 and was repeated on 6 February 2005; and
(c)was to the effect that the Ikins wished the terms of the Apartment 1 Contract to be confidential, particularly the condition that the sale of Apartment 1 was subject to the sale of Apartment 2.
2.3Not applicable.
Request
3.As to paragraph 13 of the defence give full particulars of the agency relationship between the first defendant and Mr and Mrs Ikin including, without limiting the generality of the request:
3.1whether the agency relationship was in writing, oral or implied and:
(a)if wholly or partly in writing identify the writing by reference to its date, authority and addressee and state where and when it may be inspected;
(b)if wholly or partly oral state:
(i)between what actual persons the conversation took place;
(ii)where and when the conversation took place; and
(iii)the material substance of the conversation; or
(c)if wholly or partly implied specify every fact, matter, reason, inference and thing relied upon as giving rise to the implication.
3.2the scope of the agency relationship between the first defendant and Mr and Mrs Ikin;
3.3the duties of the first defendant and second defendant; and
3.4the commission or payment, if any, received by the first defendant or second defendant in relation to the agency relationship.
Answer
3.The first defendant acted as agent for Mr and Mrs Ikin on a limited basis. The agency relationship was partly oral and partly implied.
3.1The agency relationship:
(a)was partly oral in that it consisted of requests from Mr and Mrs Ikin to the second defendant (who acted on behalf of the first defendant) to find suitable properties in the Cottesloe area;
(b)was partly implied in that the requests implicitly authorised the second defendant, acting on behalf of the first defendant, to undertake tasks on behalf of Mr and Mrs Ikin as particularised below.
3.2Mr and Mrs Ikin requested the first defendant to identify suitable properties in the Cottesloe area and to arrange for Mr and Mrs Ikin to inspect those properties.
3.3The duties of the first and second defendants were:
(a)to identify suitable properties for Mr and Mrs Ikin;
(b)to arrange for the inspection of properties by Mr and Mrs Ikin, and in so doing to deal with third parties, including real estate agents, on their behalf;
(c)to assist in, and make arrangements incidental to, the purchase of Apartment 1;
(d)to receive confidential information relation to the purchase of properties by Mr and Mrs Ikin; and
(e)to maintain the confidence of any such information received in the course of the agency relationship.
3.4The vendors of Apartment 1 paid the first defendant, as introducing agent, a commission of $15,300 in respect of the sale of Apartment 1."
In the Amended Statement of Claim, the plaintiff added three new paragraphs as follows (which are quoted without revision marks):
"9.The first defendant was retained as the agent of Colin Ikin and Suzanne Ikin ('Mr and Mrs Ikin') to find suitable properties in the Cottesloe area.
10.The second defendant, on his own behalf and on behalf of the first defendant, had shown Mr and Mrs Ikin several properties including the Property, Apartment 1 and a property in Hamersley Street, Cottesloe ('the Hamersley Street Property').
11.The second defendant was a close friend of Mr and Mrs Ikin."
In its amended defence, the first defendant clarifies the nature of the arrangement between the second defendant and Mr and Mrs Ikin. It does so by adding a new paragraph in the following terms:
"9.In relation to paragraph 9 of the statement of claim, Shellabears:
(a)denies receiving a retainer from Mr and Mrs Ikin, or entering into any agreement under which a retainer would be paid by Mr and Mrs Ikin;
(b)admits that the second defendant (Mr Shellabear), on behalf of Shellabears, was authorised by Mr and Mrs Ikin to undertake certain limited tasks on their behalf,
and say that the tasks and duties undertaken by Mr Shellabear, on behalf of Shellabears, were:
(c)to identify suitable properties for Mr and Mrs Ikin;
(d)to arrange for the inspection of properties by Mr and Mrs Ikin; and
(e)to assist in, and make arrangements incidental to, the purchase of Apartment 1."
The key paragraph challenged in the amended defence is the amended par 14, which was formally par 11 of the defence. With revision marks, it is in the following terms:
"11 14. In relation to paragraph 11 14 of the statement of claim, Shellabears:
(a)admits that at the time Mrs Ikin entered into the Apartment 1 Contract, Mr and Mrs Ikin requested ~~the second defendant (Mr Shellabear)~~ Mr Shellabear not to advise Mr Woodward of the Apartment 1 Contract prior to any contract for the sale of the Property being entered into between Mr Woodward and Mr and/or Mrs Ikin; and
(b)states that Mr and Mrs Ikin requested Mr Shellabear, ~~as their agent in relation to the purchase of Apartment 1~~, to maintain their confidence. ~~; and~~
~~(c)states that Mr Shellabear, and Shellabears, were bound by the REBA Code and was bound to keep the terms of the Apartment 1 Contract confidential.”~~
Again, the amended defence of the second defendant is substantially identical.

Issues for determination

The plaintiff seeks orders that pars 14, 16, 21, 29 and 37 of each amended defence be struck out. It does so on three grounds:
(a)that leave was required, and has not been obtained, to amend the defences in the terms of these paragraphs;
(b)that the impugned paragraphs withdraw an admission, which should not be permitted; and
(c)that, in any event, leave ought not be granted to make the amendments in the terms sought.

Was leave required to amend the defences?

The relevant order made on 27 January 2009 was that:
"The defendants have leave to amend their defences and file an amended defence to the amended statement of claim and serve the same on the plaintiff within 14 days;"
Paragraph 8 of the orders is also relevant:
"8.The plaintiff do pay the defendants' costs thrown away as result of the amendments to be taxed if not agreed;"
The order granting leave to amend is in similar general terms to the order considered by Le Miere J in Joyce v Palassis [No 3] [2007] WASC 214. The order in that case was: "The defendants file and serve amended defences by …" [24]. Le Miere J rejected an argument that the order permitted the defendant to amend its defence as it saw fit. His Honour's conclusion is in the following terms [30]:
"An order giving a defendant leave to amend its defence following upon an amendment to the statement of claim is limited to making amendments consequential upon the amendments to the statement of claim. Such an order does not permit amendments of the defence which relate only to those allegations or contentions contained in the statement of claim that are not affected by amendments to the statement of claim unless the order granting leave to amend the defence expressly states to the contrary. Apart from an amendment under O 21 r 3(1) or r 3(2), a defendant always requires leave to amend his defence. The need for leave is inconsistent with an unqualified ability to amend the defence after leave is given to amend the statement of claim. Further, as Russell LJ observed in Squire v Squire at 398, 'it would be unjust that a defendant should, by the slightest amendment permitted to the statement of claim, be able to avoid the imposition of stringent terms on an independent application for leave to amend the defence, or even a refusal of leave.' "
The rationale set out by Russell LJ in Squire v Squire [1972] Ch 391 applies equally to the present case. In addition to this decision, Le Miere J also relied on the decision of Finkelstein J in OD Transport (Australia) Pty Ltd (in liq) v OD Transport Pty Ltd [1998] FCA 1653, which was to the same effect. The decision of the High Court in Bowes v Chaleyer (1923) 32 CLR 159 at 163 also supports the proposition.
Consistent with these authorities, I am of the view that the orders made on 27 January 2009 only empowered the defendants to make amendments consequential upon the amendments to the statement of claim.
The issue then becomes whether the amendments under consideration were consequential. A key issue here is the meaning of the word "agent". In its ordinary meaning, the term “agent” has a number of meanings, including “person acting on behalf of another” (The Macquarie Dictionary). It is hard to disagree with the comments of the High Court in Petersen v Moloney (1951) 84 CLR 91 at 94 that: "In connection with sales and purchases of property the word ‘agent’ is apt to be used in a misleading way”. The court, comprising Dixon, Fullagar and Kitto JJ, went on to state (at 94):
"The legal conception of agency is expressed in the maxim 'Qui facit per alium facit per se', and an 'agent' is a person who is able, by virtue of authority conferred upon him, to create or affect legal rights and duties as between another person, who is called his principal, and third parties. When a person is employed to find a buyer of property, he is commonly said to be employed as an agent, and the term 'estate agent' is a common description of a class of persons whose business is to find buyers for owners who wish to sell property. But the mere employment of such a person under the designation of agent does not, apart from the general rule that the employer will be responsible for misrepresentations made by him, necessarily create any authority to do anything which will affect the legal position of his employer. He may, of course, be given any express authority which the employer thinks fit to give him, and estoppels may arise, but the law does not imply from the mere fact of employment to find a purchaser a general authority to do on behalf of the employer anything which may be incidental to the effecting of a sale."
To this one can add the definition of "agent" in the Real Estate and Business Agents Act 1978 (WA), namely: "agent means a person who is a real estate agent or a business agent, or both a real estate agent and a business agent".
The amendments in the Amended Statement of Claim placed considerable importance on the alleged retention by the first defendant as "agent" by Mr and Mrs Ikin. In this context, and given the different meanings of the word "agent" set out above, I can understand why the first and second defendants wish to more precisely set out the relationship between the first and second defendant and Mr and Mrs Ikin, and also the relationship of these parties with the vendors of Apartment 1. In my view the amendments to pars 14, 16, 21, 29 and 37 of each amended defence were consequential on the amendments in the Amended Statement of Claim. However, it is a borderline case. It is therefore appropriate for me to consider whether had I not been of this view I would have granted the first and second defendants leave to amend their defences.

Do the amendments seek to withdraw an admission?

In the present case, the plaintiff asserts that the effect of the amendments were to withdraw an admission that the first defendant through the second defendant, was appointed the "agent" of Mr and Mrs Ikin. Three issues arise.
The first is whether the pleading in par 11(b) of the original defences, set out in par 12 above, can constitute an admission that the second defendant was the agent of Mr and Mrs Ikin. The pleading of agency is made in each original defence as a positive assertion by the first and second defendants. The general rule that assertions made in pleadings do not amount to admissions: Laws v Australian Broadcasting Tribunal (1990) 170 CLR 70 at 85, 98. In Laws (supra) Mason CJ and Brennan CJ elaborated this proposition in the following way (at 86):
"The suggestion that pleadings should be treated in the same way as any other form of admission fails, in our view, to take account of the function and object of pleadings, when they are not required to be verified, in outlining the party's case and defining the issues to be tried. Especially is this so in the case of pleading defences. A defendant is entitled to put a plaintiff to proof of his or her cause of action and to raise alternative matters of defence which may possibly answer the plaintiff's claim, without asserting in an absolute sense the truth or correctness of the particular matters pleaded."
Accordingly, the plea of agency in par 11 (b) of the original defences cannot amount to an admission. The first and second defendants support their position by noting that the plaintiff joined issue with the pleas of agency in its rely to the second defendant's defence filed 25 June 2008. A similar conclusion would follow in relation to the particulars provided by the first and second defendants in response to the plaintiff's request for particulars (set out in par 14 above).
The second issue is whether the plea of agency in par 11(b) of the original defences is, in any event, sufficiently clear enough to form an operative admission. In my view, the differing meanings of the term "agent" set out in par 25 and 26 above render the plea in par 11(b) too uncertain to be an operative admission. That admissions to be operative must be identified with "abundant clarity" is seen from the judgment of the Court of Appeal (comprising Buss JA and Murray AJA) in Shine v Williams [2007] WASCA 194. That case concerned an application for judgment on admissions within Rules of the Supreme Court O 30 r 3(1). The Court made the following relevant comments (pars [20]-[21]):
"The purpose, of course, of extracting an admission of fact from a party is that the fact may be proved or taken to be established by proving the admission, without more. The party seeking to prove that fact may thereby be relieved of an evidentiary burden which may indeed, having regard to pragmatic considerations concerned with the availability of witnesses and the like, be unable to be discharged otherwise than by the admission.
It is therefore necessary that the fact or facts admitted be identified with abundant clarity. In Re Registered Trade Mark 'Certina' (1970) 44 ALJR 191 at 193, Barwick CJ, speaking of the rule of the High Court which is expressed in equivalent terms to O 30 r 3, said he was prepared to act upon admissions made which were 'adequate and unambiguous'. The application of the rule on the basis that a party making an admission of fact is held to that admission may, of course, have serious consequences for that party, in particular, because it may lead to an adverse judgment on at least part of the claim, as was sought in this case, or at least to an order which may have the effect of foreclosing the capacity of the party making the admission to advance in the litigation any contrary proposition, again, as was sought here in the alternative."
The third issue is that, even if there was an admission that the relationship between the first defendant (and/or second defendant) and Mr and Mrs Ikin was appropriately characterised as being that of "agency", the admission would be of little utility to the trial process. This is because the question of whether or not a relationship is appropriately characterised as being that of "agency" (leaving aside what this term may mean) is a question of law, or at best a mixed question of fact and law. In this regard, the following comments from Owen JA in The Bell Group Ltd (in liq) v Westpac Banking Corporation [No 9] [2008] WASC 239 at [4528] in relation to an admission that a relationship was "fiduciary" are apposite:
"The question whether the proper characterisation of an obligation is or is not fiduciary is a question of law or, at very least, a mixed question of law and fact. That being so, an admission in the pleadings does not resolve the issue and nor does it absolve the trial judge from the responsibility to ascertain the true state of the law and to apply it in accordance with findings that she or he has made."
There are comments in the decisions in Dovuro Pty Ltd v Wilkins (2003) 215 CLR 317 at [68] – [71] and Shine (supra) (at [27]) to the same effect.
The plaintiff relies on the decision of Lindgren J in NMFM Property Pty Ltd v Citibank Ltd [2000] FCA 1558, at [629] for the proposition that whilst the label "agent" is not decisive of the legal conclusion of an agency relationship, it is open for the Court to given proper weight to the defendant's choice of "agency" as the label of the relationship, although it is not bound by that description. The relevant passage from the decision of Lindgren J is in slightly narrower terms, as follows (par [629]):
"While it is the law, not the parties, that ultimately determines whether their relationship falls within a certain legal category, this does not mean that the parties' express agreement and their use or non-use of agency terminology are irrelevant."
In this case, there is no written agreement between the first and second defendants, and Mrs and Mrs Ikin, in which their relationship is described to be that of "agency". Rather, all there is is lawyers' characterisations after the event.
The other case relied on by the plaintiff on this point was the decision of Sigurdson J in Westbank v British Columbia (2000) 191 DLR (4^th) 180, at [39]. However, that case also concerned the weight to be given to the characterisation adopted by the parties to agreement between them. It is likewise of no assistance on the present issue.
The plaintiff goes further and states that the admission of agency is also found in correspondence between the plaintiff's solicitors and the solicitors for the first defendant and the second defendant, Allens Arthur Robinson ("AAR"). Three items of correspondence are relied on. The first is a letter dated 24 October 2008 from AAR in which there is a reference to "the agency relationship as particularised" and that "our client has no further documents evidencing the nature of the agency relationship".
The second is an email from the plaintiff's solicitors to AAR dated 10 November 2008. The email was in response to a draft set of interrogatories sent by the plaintiff's solicitors to AAR. The relevant portion is as follows:
"We have considered the proposed interrogatories and, in our opinion, all of the interrogatories are objectionable, on the following grounds:
•Interrogatory 1.1 is objectionable because it amounts to 'fishing' in that it relates to a matter (that is, whether or not Shellabears and/or Mr Shellabear was an agent of the Ikins in relation to the purchase of Apartment 1), which has already been admitted on the pleadings.
•Interrogatory 1.2 is objectionable because it improperly asks a question of law not fact. Asking whether or not Shellabears and/or Mr Shellabear acted as agent for the Ikins in relation to the potential purchase of the Hamersley Street property requires the drawing of a legal conclusion, which is not the purpose of interrogatories.
•Likewise, Interrogatory 2 is objectionable because it improperly asks a question of law not fact.
•Interrogatory 3 is objectionable because it is not related to matters in issue between the parties. The date of the Ikins' actual or anticipated departure from Australia is irrelevant since the plaintiff has not pleaded that Mr Shellabear falsely represented that the Ikins were travelling overseas."
The third is in a letter dated 4 December 2008 from AAR, also dealing with the question of interrogatories. The relevant portion is as follows:
"However we maintain our objection to answering interrogatories 1.2 and 2. These interrogatories still seek to interrogate on an admission; they relate to paragraphs 12 and 13 of the defences of the first and second defendants (which pleaded the agency relationship we have particularised, and were otherwise admissions). Accordingly, the attempt to ask further questions based on these paragraphs does not relate to any matter in dispute on the pleadings and amounts to fishing."
Each of these items of correspondence has as its foundation the position taken by the first and second defendants in their original defences and subsequent particulars. Consequently, their status as "admissions" is tainted by the same issues identified in relation to the pleadings in particular. By way of summary, the three defects are:
(a)the plea (and particulars) that the relationship between the first defendant (and/or second defendant) and Mr and Mrs Ikin was that of agency was a positive pleading and not a response, and therefore cannot constitute an admission;
(b)the reference to 'agency' is too vague to constitute an admission that may be relied on for the purposes of the trial; and
(c)the characterisation of a relationship as being that of an 'agency' is a legal question, or at best a mixed fact and law question, and as such, even if it were an admission, it would not be useful for trial purposes.
Given the clear plea of agency by the first and second defendants, and their continuation of this position in the particulars and in correspondence, including its identification as an admission, it is appropriate that I consider whether I would have granted leave to withdraw the plea had I found it to be an admission.
The plaintiff in his submissions relies on the decision of the Full Court of the Federal Court in Celestino v Celestino [1990] FCA 299. In this decision the Court set out a narrow test which must be satisfied before leave will be given to withdraw an admission. This test was rejected by McLure J (as her Honour then was), with whom Templeman and Murray JJ agreed, in Hutton v Meston [2004] WASCA 178, at [21]. Her Honour affirmed that the ultimate object of the amendment power is the attainment of justice, citing Queensland v JL Holdings Pty Ltd (1997) 189 CLR 146, at 154, 167. McClure J commented that, "[a]s the nature and effect of an admission can vary widely it may be unhelpful to formulate a general rule" (par [22]). However, Her Honour did highlight the importance of an admission, stating that "it is a serious matter to make an admission in a pleading, particularly an admission of liability, because from that point onwards the admitted facts cease to be in issue in the action and the parties proceed on that assumption" (par [25]). In making this comment, Her Honour followed the earlier decision of Steytler J (as his Honour then was), with whom Scott J agreed, in Sangora Holdings Pty Ltd v Dunstan, unreported; FCt SCt of WA; Library No 990172; 13 April 1999.
The decisions in Hutton (supra) and Sangora (supra) were followed by Master Newnes (as his Honour then was) in Essex Securities Pty Ltd v Lunt [2006] WASC 58. The learned Master summarised the approach in the following terms (at par [22]-[23]):
"…where a party, who is legally advised and does not suffer any disability, deliberately and without mistake makes an admission, and there is no relevant change of circumstances, prima facie justice and fairness require that the party not be allowed simply to change its mind: SLE Worldwide Australia Pty Ltd v Wyatt Gallagher Bassett Pty Ltd [2005] NSWSC 816 at [56].
Although it is inappropriate to attempt to formulate general rules as to the approach to be taken, or to attempt to state exhaustively the matters to be considered on an application of this nature, in my view it will generally be relevant to consider the circumstances in which the admission was made, the reason that it is sought to be withdrawn, the significance of the admission, the time for which it has stood on the record and any prejudice that is likely to be suffered by the other side that cannot appropriately be compensated by an order for costs. In respect of the last, it must be recognised that in some cases the adverse effects consequent upon such an amendment (including effects created by delay) on the public and private interests involved in the litigation will not be adequately compensated by a costs order. Even simply delay may create adverse consequences that cannot be cured by a costs order: Jackamarra v Krakouer (1998) 195 CLR 516 at [29]."
In the present case, the reason given for the amendments seems to be no more than a re-evaluation of the relationships between the first and second defendants, Mr and Mrs Ikin and the vendors of Apartment 1 (see pars 20-21 of the affidavit of Byrn Dodson). This would be a factor suggesting that leave to make an amendment withdrawing an admission should not be granted.
There are a number of factors suggesting that it would be in the interests of justice that leave to make an amendment withdrawing the plea of "agency" ought to be granted. The first is that the factual substratum has not changed significantly. What has changed is the legal characterisation of that factual substratum. As already noted, a plea of a legal conclusion is of minimal assistance in narrowing the issues. This is particularly so in the present case given the various meanings that could be given to the term "agent".
The second factor is that the plea of agency has only stood on the record for a number of months as the parties have been actively engaged in the process of defining the issues in dispute through the filing of original and amended pleadings.
The third is that to the extent that the plaintiff has relied on the plea of agency, costs can cure the additional work created by this reliance. The additional work could include further amendments to the Amended Statement of Claim. I will leave this issue open to hear from counsel when I consider the issues of consequential programming orders and costs generally.
The fourth is that the plaintiff has not provided any evidence of prejudice, let alone irreparable prejudice, should leave be granted to withdraw the plea of agency. The affidavit of Ms Graskoski is silent on the point. For example, there was no evidence, nor submission, that withdrawal of the plea would prejudice the plaintiff by reason of the expiry of a limitation period in relation to a plea it would have otherwise included in its statement of claim had the fact of agency not been admitted, as was the case in Joyce, (see pars [48]‑[57]). Though even in Joyce (supra) leave to withdraw the admission of agency was granted, albeit conditional on the defendants not taking the relevant limitation point.
The plaintiff submits that he should not be unnecessarily put to proof on the issue of the agency relationship between the first and second defendants and Mr and Ms Ikin. However, as the passage quoted from Owen J in Bell (supra) makes clear, even if there was an "admission" that there was an agency relationship, this would not have obviated the need for the trial Judge to:
(a)identify the relevant factual matrix comprising the triangular relationship between the first and second defendants, Mr and Mrs Ikin and the owners of Apartment 1, including making findings on disputed evidence;
(b)determining what definition of 'agency' was relevant on the pleadings; and
(c)determining whether the factual matrix gave rise to a characterisation of the requisite type of 'agency'.
An admission of 'agency' would thus have limited utility in narrowing the issues in dispute for the purposes of the trial.
In the final analysis, the key issue is what course of action will best serve the interests of the attainment of justice. It seems to me that the interests of justice are best served by allowing the first and second defendants to more specifically plead the factual foundation to the triangular relationship between the them, Mr and Mrs Ikin and the vendor of Apartment 1. In this context, the use of the term 'agency' is more apt to cloud the identification of the legal issues than to assist with their identification.
Accordingly, had I been of the view that the plea of agency, either alone or together with the particulars and subsequent correspondence, constituted an admission, I would have been prepared to grant the first and second defendants leave to withdraw the admission.

Should the defendants have leave to amend?

The conclusion that the first and second defendants ought to have leave to amend their defences is reinforced when one considers the general principles relating to the amendment of pleadings. These principles were conveniently summarised by Newnes AJA, as he then was, in May v Thomas [2008] WASCA 215 at [33] – [34] in the following terms:
"33The relevant principles to be applied on an application to amend a pleading are well-known. In general, a party should be permitted to amend their pleading so that the court may decide all matters in issue between the parties, unless the amendment would cause an injustice to the other party which could not be adequately remedied, for instance by an order for costs: Cropper v Smith (1884) 26 Ch D 700, 710; Shannon v Lee Chun (1912) 15 CLR 257, 260 - 261; Clough v Frog (1974) 4 ALR 615, 618; The State of Queensland v JL Holdings Pty Ltd (1997) 189 CLR 146, 154.
34The party seeking the amendment bears the burden of persuading the court that the amendment will not cause irremediable prejudice to the other party: Hancock Shipping Co Ltd v Kawasaki Heavy Industries Ltd [1992] 1 WLR 1025, 1030; McKenzie v Commonwealth of Australia [2001] VSC 361 [22] - [23]; Burk v Commonwealth of Australia (No 3) [2004] VSC 210. However, the party opposing the amendment ordinarily bears the evidential onus of adducing evidence in relation to the prejudice, at least where the proof of that prejudice lies in the hands of that party; the non-existence of prejudice is difficult to prove, so that in practice in the latter circumstances an evidential burden is borne by the party resisting the amendment: Hancock Shipping Co Ltd (1030). But it is not sufficient for a party to rely on prejudice which results from an unreasonable act or omission on the part of that party: Steward v North Metropolitan Tramways Co (1886) 16 QBD 556, 559 ‑ 560; Wilson v Grimwade [1995] 2 VR 628, 632."
In their application dated 22 April 2009, the first and second defendants seek leave to amend the defence in terms of the amended defences filed 26 February 2009. In its chambers summons to strike out parts of these amended defences, the plaintiff only seeks to strike out par 14, par 16, par 21, par 29 and par 37. Accordingly, it is only necessary for me for present purposes to look at those five paragraphs.
Dealing first with par 14, par 14 takes as its context the new par 9 inserted into the amended defence, which is set out in par 16 above. It seems to me that the effect of par 9 and par 14 of the amended defences is to more precisely set out the nature of the relationship between the first and second defendants and Mr and Mrs Ikin. In the context of the varying meanings of the word 'agent' in the context of the sale and purchase of real estate, in my view, these amendments will be of assistance to the trial Judge in identifying the precise issues in dispute.

The amendments to par 9 and par 14 mean that the pleading more optimally fulfils its function, being to "furnish a statement of the case sufficiently clear to allow the other party a fair opportunity to meet it" [and to] "define the issues for decision in the litigation and thereby enable the relevance and admissibility of evidence to be determined at trial": Dare v Pulham (1982) 148 CLR 658, at 664 (see also: Banque Commerciale S.A., en Liquidation v Akhil Holdings Ltd (1990) 169 CLR 279 at 286). The effect of the amendments is to leave the plaintiff in no doubt as to what the first and second defendants are alleging.
Finally, the amendments to par 14 do not contain any of the deficiencies set out in the Rules of the Supreme Court O 20 r 19(1). They ought to be allowed.
Paragraph 16 of the Amended Defences removes a statement that "Shellabears was the agent of Mr and Mrs Ikin in relation to the Apartment 1 Contract" and inserts five paragraphs setting out the relationship between the first defendant, the third defendant and the vendors of Apartment 1. In my view, this paragraph has a same effect as par 9 and par 14. It more precisely sets out the nature of the relationships between the relevant parties. Likewise, it does not suffer from any of the deficiencies set out in O 20 r 19(1). It ought to be allowed.
Paragraph 21, par 29 and par 37 of the amended defences essentially contain consequential amendments. They also ought to be allowed.
As the plaintiff correctly submits, leave will not be granted to amend a pleading which is inconsistent with existing particulars: Briggs v Curtis Quick & Associates [1999] WASCA 139, at [1], 24], [28]. However, as was pointed out in Briggs (supra), it is open for a party to make a parallel application for leave to amend its particulars. The first and second defendants have accordingly also sought leave to amend their answers to the plaintiff's request for further and better particulars of their defences. The amendments to these particulars are to bring them into consistency with amended defences. For the reasons I have set out in relation to the amended defences, the first and second defendants ought to be allowed to amend their particulars as requested.

Orders for the disposition of the application

It follows from what I have set out above, that the first and second defendants ought to have leave to amend their defences in terms of the amended defences which they have filed, and that the time within which these documents are to be filed be extended so as to cure any procedural defect with the documents being filed on 26 February 2009. They also ought to have leave to amend their particulars.
It also follows that I am not prepared to make the orders requested by the plaintiff striking out any paragraphs of the amended defences.
I will hear counsel as to any consequential case management orders.
In relation to the issue of costs, in the ordinary course, the first and second defendants, being substantially successful, would be entitled to the costs of both applications and the hearing before me. However, the conduct of the first and second defendants suggests that an order in these terms may not be the appropriate order. In particular, as discussed above, the first and second defendants for a time treated the pleading that the relationship between the first and second defendants and Mr and Mrs Ikin was that of agency as, in effect, being an admission. Certainly, in the context of their response to the request to interrogate, the pleading was treated as removing this issue from those in dispute at the trial of the action. It is apparent from the materials before me that the plaintiffs relied on the assertion of an agency relationship in pleading the Amended Statement of Claim. In its context, it is understandable that the plaintiff would feel somewhat aggrieved by the change in position on behalf of the first and second defendants. It is fair to say that a more closely considered analysis of the relationship between the first and second defendants and Mr and Mrs Ikin would have led to the more specific pleading which ultimately found its way into the amended defences being pleaded in the first instance. In that context, there is at least an argument that the costs of each application, and of the hearing, be in the cause.
These comments should be treated as preliminary comments as I have not yet had the benefit of submissions by counsel on the issues. I have included them in these reasons so that the issue of costs can be comprehensibly addressed on the next occasion.