Yap v Flinders Reproductive Medicine Pty Ltd (ACN 076 904 035)
[2014] SADC 82
•16 May 2014
DISTRICT COURT OF SOUTH AUSTRALIA
(Civil)
YAP v FLINDERS REPRODUCTIVE MEDICINE PTY LTD (ACN 076 904 035)
[2014] SADC 82
Ruling of Her Honour Judge McIntyre
16 May 2014
PROCEDURE - COURTS AND JUDGES GENERALLY - COURTS - RULES OF COURT
Application by plaintiff to amend Statement of Claim issued two days before trial due to commence. Consideration of relevant principles. Application granted.
Indemnity costs awarded to defendant for a fixed period from the filing of the previous Statement of Claim to date.
District Court Rules R3, R 113, 114, R131(5); District Court Act 1991 s42(1), referred to.
Lovell v Lovell (1950) 81 CLR 513 at 532; Forlyle v Tiver [2007] SASC 464 at 29; Colgate Palmolive Co Pty Ltd v Cussons Pty Ltd (1993) 46 FCR 225; Sunburst Properties Pty Ltd v Agwart Pty Ltd (No 2) [2005] SASC 293; Alstom Power Ltd v Yokogawa Australia Pty Ltd (No 2) [2006] 244 LSJS 65; Macks v Tucker (No 3) [2007] SASC , considered.
YAP v FLINDERS REPRODUCTIVE MEDICINE PTY LTD (ACN 076 904 035)
[2014] SADC 82The application
This contract dispute was listed for trial before me on 14 May 2014 with 3 days set aside. The plaintiff filed an interlocutory application on the afternoon of Monday 12 May 2014 seeking that the application be specially returnable to the trial Judge either at or before the commencement of the trial. The principal relief sought was:
That the plaintiff have permission to file and serve within 24 hours a third statement of claim in accordance with the proposed third statement of claim attached to the affidavit of Kevin Francis Gilchrist filed contemporaneously herewith.
In addition further disclosure was sought together with consequential orders.
The application was opposed by the defendant. I heard argument on the topic on 14 May 2014. This is my ruling.
Whilst the plaintiff did not seek an adjournment of the trial it was an inevitable consequence of the circumstances of the making of the application even if the application to amend was dismissed. In brief the circumstances were a combination of the late application, changes in the plaintiff’s position as to the content of the amendment on four occasions, the disruption to the defendant’s preparation for trial, the length of the argument on the application and the probability that the three day listing was inadequate in the light of these matters. Accordingly, I adjourned the trial.
Background
This matter arises out of contractual arrangements between the plaintiff and the defendant. The plaintiff is a qualified medical practitioner. The defendant is a not for profit corporate entity carrying on the business of a fertility clinic. The contractual arrangements commenced on 1 February 2012 and concluded on or about 14 August 2012.
Notice of the plaintiff’s claim and the basis of that claim was given to the defendant by way of a letter to its solicitors date 11 September 2012. The defendant’s solicitors responded by letter dated 5 October 2012. This letter took issue with various aspects of the claim. The plaintiff issued proceedings in this Court on 10 January 2013 seeking damages consistent with the basis set out in the letter dated 11 September 2012. The defendant filed a defence on 21 February 2013.
Litigation plans were required. Practice direction 3.3A.5 relevantly provides that
The Court expects each party to give close attention to the preparation of its Litigation Plan. The course of the action to trial may be determined by reference to the respective Plans. Parties should assume that departures from the timetable fixed by the Court after consideration of the Litigation Plans will not readily be permitted.
The plaintiff filed a litigation plan on 26 April 2013 indicating that pleadings were closed and that the only interlocutory step required to prepare for trial was a notice to admit facts. The defendant filed a litigation plan on13 May 2013 indicating that the pleadings were closed but that it intended to apply to strike out or obtain further particulars of paragraphs 3 – 8 of the statement of claim on the basis that it was contended that the legal and factual basis upon with the plaintiff alleged an entitlement to damages was not sufficiently clear.
On 14 May 2013 a settlement conference was held. No settlement was reached and accordingly Master Norman formally closed the settlement conference. The Master made the following further orders of relevance for present purposes:
The defendant has sought further particulars of the statement of claim and plaintiff is to respond by 28.5.13. Defendant is to notify the plaintiff within a further 7 days if it is satisfied with the response, and in that event the plaintiff is to amend his claim within a further 7 days.
If the defendant is dissatisfied with the response it is to issue any application within 14 days of receiving the plaintiff’s response and an argument date should be sought.
Notwithstanding that the matter is not ready I fix a listing conference. Plaintiff is to file a certificate of readiness which may be qualified at or before the listing conference and a trial book within 14 days of close of pleadings.
A listing conference was held on 27 June 2013. The trial was listed for three days commencing on 14 May 2014. A certificate of readiness was ordered to be filed within 7 days and a trial book was ordered to be filed at the close of pleadings in accordance with the order of Master Norman. No certificate of readiness has ever been filed.
It appears from the affidavit of William Spargo sworn on 12 May 2014 that the issue of further and better particulars was not progressed in accordance with Master Norman’s orders. The plaintiff did not comply with the order to respond by 28 May 2013. A partial response was received on 14 June 2013. Correspondence passed between the solicitors in relation to the prospect of the plaintiff amending his claim to include the further particular and to address what the defendant contended were deficiencies in the pleadings. A draft copy of a second statement of claim was sent by the plaintiff’s solicitors on 15 November 2013. The defendant maintained that there were still problems with the pleadings but said that it would not oppose the plaintiff making an application to amend the statement of claim. [1] A non-contentious application was filed by the plaintiff to that effect on 26 February 2014. Orders were made the same day giving the plaintiff leave to file and serve a second statement of claim. The defendant had leave to file and serve a second defence within 14 days of service of the second statement of claim and the plaintiff was to file an amended trial book within 7 days of the close of proceedings. The trial date was confirmed.
[1] Spargo Affidavit 12/5/14 paragraphs 16-23
The second statement of claim was filed on 3 March 2014 and the second defence on 29 April 2014. The trial book was filed on 13 May 2014.
The argument
Both counsel filed an outline of submissions and supplemented these by oral submissions. In summary the defendant opposed the plaintiff’s application on the basis that there was no proper explanation for the late application to “fundamentally recast his case and to add numerous entirely new factual and legal issues”.[2] As I have indicated above, it was apparent that the trial needed to be adjourned in any event, however the defendant maintained its opposition to the amendments on procedural grounds and on the merits. The defendant further advanced an argument in respect of costs.
[2] Defendant’s outline of submissions paragraph 2.
The plaintiff pressed the amendment albeit in a different form to that annexed to the affidavit of Mr Gilchrist sworn in support of the application. The plaintiff conceded that the defendant was entitled to costs but disputed the extent of the orders sought by the defendant. It was agreed by both counsel that the question of further disclosure ought to be adjourned pending the outcome of the application for amendment. Accordingly these reasons deal solely with the amendment, costs and consequential orders.
Discussion – Application to Amend
The objects of the District Court Rules include the establishment of orderly procedures for the just resolution of civil disputes, the avoidance of all unnecessary delay in dispute resolution, the promotion of efficiency in dispute resolution consistent with the paramount claims of justice and the minimisation of the cost of civil litigation.[3]
[3] DCR3
The plaintiff’s written submissions contain the following propositions:
7. Further, the within action is an action proceeding on the basis of litigation plans. It was listed for trial before the matter was ready for trial, and in circumstances where amendments to the pleadings were contemplated, as specifically noted in the order of Master Norman made on 14 May 2013. In those circumstances, Rule 131 (5) and (6), prohibiting the making of interlocutory applications once matters have been listed for trial, do not apply. Master Norman ordered as such on 14 May 2013.
8. Moreover, the parties have not signed a Certificate of Readiness.
9. While this is of course not an answer to the lateness of the application, it is submitted that the regime prescribed by the Rules in relation to litigation plans, and the front listing of matters for trial, is of some relevance in relation to applications to amend that are made after the matter has been listed for trial. It is an inevitable incidence of listing matters for trial before they are ready that some matters may not be ready for trial at the commencement of the trial.
These submissions contain a serious misapprehension of the Rules and the plaintiff’s obligations.
The orders of Master Norman on 14 May 2013, some twelve months before the matter was listed for trial, set forth a timetable in which any amendments to the pleadings ought to have been made. They were not complied with. No reason has been advanced for this failure. The plaintiff was ordered to file a Certificate of Readiness on two occasions; 14 May 2013 and 27 June 2013. Again the plaintiff did not comply. The plaintiff can hardly rely upon the lack of a Certificate of Readiness in those circumstances.
The submission that applications to amend may be made after a matter has been listed for trial under the litigation plan regime is self evident. However, I do not accept the further submission that in the circumstances of this case it was inevitable that this matter would not be ready for trial. The plaintiff had 12 months from the date of Mater Norman’s orders to finalise his statement of claim. To seek leave to file a further amended statement of claim less than two days before the trial, absent any changed circumstances, is plainly not “inevitable”.
These submissions further overlook a number of obligations imposed upon the parties by the Rules. The parties are obliged to assist in the orderly progress of proceedings by, inter alia, complying with Court directions as to the conduct of proceedings, ensuring that the pleadings properly reflect the case that is to be presented at trial and ensuring that the trial can proceed as far as practicable without interruption from the time appointed for its commencement.[4] The plaintiff has the primary responsibility for ensuring the orderly progress of litigation.[5]
[4] DCR 113
[5] DCR 114
I have already referred to Practice Direction 3.3A in relation to litigation plans. The topic of litigation plans is also dealt with under Rule 120 which amongst other things provides that it is the responsibility of the parties to ensure that the action is ready for trial at the trial date. If an action will not be ready for trial, a party becoming aware of that fact is, as soon as practicable, to seek orders from the Court.
In the circumstances of this case I do not consider that the plaintiff has complied with either the letter or the spirit of the Rules.
The Rules are consistent with the principles set out by the High Court in Aon Risk Services Australia Ltd v Australian National University.[6] The High Court held that such rules were directed not only at the resolution of the dispute between the parties but also to enable the court to do justice to all litigants and those other people in the system. The High Court made it plain that there was a balancing act to be undertaken in each case where a party seeks to amend pleadings and stated that:
Factors such as the nature and importance of the amendment to the party applying cannot be overlooked. Whilst r21 assumes some ill effects will flow from the fact of a delay that will not prevent the parties dealing with its particular effects in their case in more detail. It is the extent of the delay and the costs associated with it, together with the prejudice which might reasonably be assumed to follow and that which is shown, which are to be weighed against the grant of permission to a party to alter its case. Much may depend upon the point the litigation has reached relative to a trial when the application to amend is made. There may be cases where it may properly be concluded that a party has had sufficient opportunity to plead their case and that it is too late for a further amendment, having regard to the other party and other litigants awaiting trial dates.
[6] (2009) 239 CLR 175
AON was considered by the Full Court of the Supreme Court of South Australia in Channel Seven Adelaide Pty Ltd v Manock[7]. His Honour Justice Bleby identified the following factors as matters that need to be taken into account in determining whether a late application for permission to amend should be granted:
[7] [2010] SASFC 59
Those matters include:
(1) Whether there has been undue delay in making the application;
(2) The extent to which there will be wasted public resources in granting the amendment;
(3) Whether there will be inefficiency occasioned by the need to revisit interlocutory processes;
(4) Whether a trial date would need to be vacated or a trial adjourned;
(5) Whether there is any satisfactory reason for the delay in applying;
(6) Whether the point to be raised by the amendment would be raised in any event at the trial;
(7) The likelihood of strain and uncertainty being imposed on the litigants;
(8) Whether any further delay would undermine confidence in the administration of civil justice;
(9) Any other prejudice likely to be suffered by the other party;
(10) The additional costs likely to be incurred. (citations omitted) [8]
[8] At paragraph 46
Both parties accept that these cases are the leading authorities on the topic of the amendment and that I ought to apply the principles to this case albeit the plaintiff says that both are distinguishable.
Has there been undue delay in making the application and what is the reason for the delay?
The affidavit of Kevin Francis Gilchrist sworn on 12 May 2014 that accompanied the application sets out the reason for the delay as follows:
4. Mr Munt was first briefed in late March 2014 and, having considered the Brief, proposed in around mid April 2014 that certain amendments be made to the Second Statement of Claim. I was absent on annual leave from Monday 21st April until Tuesday 6th May 2014. I obtained instructions from the Plaintiff in relation to the proposed amendments on Wednesday 7 May 2014. I have had, at all times, the principal conduct of this Action on behalf of Plaintiff. Anital Filleti, an Associate solicitor employed by Gilchrist Connell, had the conduct of the file in my absence while I was on leave, but was new to the file and insufficiently familiar with the matter and the Plaintiff to take instructions in relation to, and advance the proposed amendments in my absence. I am also informed by Mr Munt and verily believe that he was on leave over the period 18 April to 25 April 2014. The proposed amendments were progressed, on the basis of the instructions obtained from the Plaintiff on 7 May 2014, over 8 and 9 May 2014. Kelly & Co were then provided with a copy of the proposed Third Statement of Claim (substantially in accordance with that comprising “KFG1” by email at 6.05 pm on 9 May 2014.
The affidavit goes on to say:
5. I say that the amendments in clause 22 to 40 of the proposed Third Statement of Claim do not, at least for the most part, arise out of any new facts, but merely reflect the application of the law to facts that were, at least for the most part, already within the knowledge of the parties, either from the Second Statement of Claim or documents that had been disclosed by one or both of the parties.
A further affidavit of Mr Gilchrist sworn on 13 May 2014 does not refer to the delay or reasons for the delay but says that:
…the proposed amendments do not introduce any significant factual matters but rather plead alternative legal characterisations.[9]
[9] Paragraph 3
Submissions made by counsel for the plaintiff suggested that the delay was not a lengthy one and that the explanation outlined in Mr Gilchrist’s affidavit of 12 May 2014 concerning leave should be accepted as a satisfactory explanation for the delay.
This is not however a case where some new material or information has come to the attention of the plaintiff’s solicitors or where there has been a change in circumstances. The amendment is sought on the basis of counsel’s advice on what Mr Gilchrist says are substantially the same facts and documents as the previous two iterations of the statement of claim. In other words it is a forensic decision to amend the pleadings rather than any new circumstance. The basis of the forensic decision is not made clear.
The length of the delay needs to be viewed in context of the history of the matter. Given the issues raised by the defendant concerning the issue of pleadings throughout it is surprising that counsel was not briefed to address that topic at an earlier stage. Counsel was instead briefed shortly after the filing of the second statement of claim and about 6 weeks before trial.
The issue of late briefing of counsel was raised in argument. The plaintiff’s response in the written submissions and supplemented orally was a concession that counsel could have been briefed earlier but “the pleadings were still in progress as late as 29 April 2014”.[10] The point being made that the defendant did not file the second defence until that date. I do not however understand the filing of the defence to the second statement of claim to be in any way causative of the plaintiff’s decision to apply to further amend his statement of claim. Accordingly I fail to see the relevance of that submission.
[10] Plaintiff’s summary of argument paragraph 10
Leaving aside the issue of late briefing of counsel, counsel having advised in mid-April 2014 that further amendments were required it is extraordinary that no action was taken to, at the least, advise the defendant or the court of this. This may have alleviated the prejudice to the defendant to some extent but, to the contrary, the plaintiff was giving every indication that the matter would proceed to trial on the 14 May 2014.[11]
[11] See for example Annexures WS9, WS10 & WS11 to the affidavit of Mr Spargo sworn 12/5/14
In the circumstances it is my view that there has been undue delay in making the application. I further do not consider that there is a satisfactory reason for the delay.
Wasted public resources and the adjournment of the trial
As I have indicated above, the circumstances of the making of the application necessitated the adjournment of the trial in any event. The plaintiff now says that in view of this, the wasted public resources and the question of vacating the trial date are irrelevant to the question of whether to allow the amendment. This argument has superficial appeal but the wasting of public resources and the adjournment were the inevitable consequence of the plaintiff’s conduct and so can hardly be counted in his favour. Further, granting the application will inevitably result in the expenditure of further public resources.
Inefficiency and revisiting of interlocutory processes
Plainly there will be inefficiency occasioned by the need to revisit interlocutory processes. The plaintiff suggests that this will not be significant. I do not agree. I have carefully considered the proposed pleading and have compared it to the existing pleading. The amendments proposed are substantial. I have no doubt that they would require the defendant to reconsider its position, its defence, the evidence it relies upon and the question of further disclosure of documents. The further disclosure sought by the plaintiff at paragraph 3.4 of the Interlocutory application for example relates to a new claim for what is described as “Breach of Right of First Refusal”.[12] On the face of it, this requires considerable additional investigation of the work allocations of the defendant over a three month period. The potential for interlocutory processes to be invoked is obvious.
[12] Paragraphs 27 – 31 Proposed third statement of claim (4th iteration)
Points raised by the amendment
Whilst some of the factual material may well have been raised at the trial in any event the points raised by the amendments would not. The amendments are too substantial and too numerous for this to be the case.
Confidence in the administration of civil justice.
Any delay has the propensity to undermine confidence in the administration of civil justice. It is said that the delay in this case is not an extraordinary delay. The plaintiff, whilst agreeing that they were the leading authorities, sought to distinguish Aon as follows:
5.Aon is distinguishable in that it was held by the High Court in that case that the defendant would be required to again defend litigation which was effectively to be commenced afresh after a very lengthy period of delays. ………
6.While it is indeed regrettable that the trial is to be adjourned in the present case, the present case was commenced in January 2013. [13]
[13] Plaintiff’s outline of argument paragraphs 5 & 6
I accept that the length of the litigation in this case is not as substantial as in Aon. However I do not accept the implicit assumption that 15 months from issue of proceedings to the date of trial constitutes a speedy resolution and that an additional delay of many months duration are acceptable. Our civil litigation system is often criticised for the cost and time involved. Many potential litigants are dissuaded from seeking redress by those factors. The court is continually striving to improve the efficiency and cost effectiveness of its processes. The advent of litigation plans is one such effort. In the context of this action, arising out of an employment arrangement involving limited quantum, a private litigant and a not for profit organisation, the time frame was not rapid.
It is my view that the costs associated with the amendments sought and the length of time it will inevitably take to deal with those amendments would be rightly subject to criticism and could well undermine confidence in the system of civil justice.
Prejudice, Strain & Uncertainty
The plaintiff contends that Manock is distinguishable because there was found to be prejudice in that case. It is contended that the amendments do not occasion prejudice to the defendant that cannot be compensated by normal costs orders “given that it is accepted that the trial is to be adjourned.”[14] I do not accept that submission.
[14] Plaintiff’s outline of arguments paragraphs 5 & 12
The affidavit of Mr Spargo of 12 May 2014 outlines the question of prejudice to the defendant.[15] These can be summarised as legal fees, time spent by employees of the defendant in preparing for the litigation, the significant further work that would be necessitated by the amendment; the negative effect upon the business; the difficulty that witnesses will now have in recalling the events that they will be questioned about; the strain and uncertainty being imposed on the defendant’s employees. These are all substantial matters not all of which can be compensated by normal costs orders nor do they arise solely because of the adjournment. For example, additional work by the defendant’s employees to address any amendments will not be compensated by a costs order. The strain and uncertainty of those employees will likewise not be compensated by costs and the additional inevitable delay in dealing with an amended claim would no doubt add to that strain and uncertainty. In saying this I note that the defendant is a commercial organisation albeit a not for profit organisation and accordingly this issue may not weigh as heavily as it might do in the circumstances of a personal litigant.[16]
[15] Paragraphs 39 - 42
[16] Manock – para 42
Conclusion
This is a very difficult matter. The plaintiff comes to the court seeking an indulgence with limited explanation why this situation has occurred and in circumstances where there has been minimal compliance with the rules or court orders. The defendant understood that the matter was to proceed to trial on the basis of the pleadings filed by the plaintiff in March 2014 and was only notified of the proposed application at 6.05 pm on the Friday prior to trial. On that occasion it was served with a document purporting to represent the proposed amendments. When the interlocutory application was ultimately filed on Monday afternoon it attached a different proposed amended statement of claim. Two further iterations of that document appeared on Tuesday. Accordingly, even in the making of the application for amendment the plaintiff has not acted expeditiously or with a view to minimising the cost and inconvenience to the defendant or the court.
On the other hand, whilst I am reluctant to allow the plaintiff to profit from the fact that his actions made it necessary for the trial to be adjourned it is nevertheless a fact that the trial has been adjourned. That being the case there will be delay in re-listing. The prejudice to the defendant has therefore in the main already occurred. Further I am told, albeit I am in no position to assess this with any degree of certainty, that these amendments are necessary in the interests of justice to the plaintiff. I am reluctant to deprive the plaintiff of the opportunity to properly present his claim. Justice of course cuts both ways. I am acutely aware of the invidious position of the defendant who does not have the primary conduct of these proceedings and who moreover appears to have done much to bring the question of pleadings to the attention of the plaintiff’s solicitors. But for this application the defendant would have been in a position to proceed with the trial.
In all of the circumstances, despite my views about the misconduct of the plaintiff, I have decided to grant the application and allow the plaintiff to amend his statement of claim in line with the document handed to the court on 14 May 2014. I will make further orders for the disposal of this matter that have as their aim the expeditious relisting of the matter for trial.
Costs applications
The plaintiff concedes that the defendant is entitled to costs thrown away in relation to the adjournment of the trial, the amendments and the costs of the interlocutory application. It is contended that these should be on a party/party basis.
The defendant seeks costs on an indemnity basis and for a fixed period from the filing of the second statement of claim until the disposal of the interlocutory application. It is argued that the time frame will avoid further prejudice to the defendant occasioned by a minute examination of the specific items of work and that indemnity costs are appropriate in the circumstances of the case.
The starting point for consideration of this issue is s.42 (1) of the District Court Act 1991 which vests a wide unfettered discretion to award costs. The discretion must be exercised judicially.[17]
[17] Lovell v Lovell (1950) 81 CLR 513 at 532
Orders for indemnity costs are made on the basis that the party will be fully reimbursed for costs incurred in the conduct of the litigation except to the extent that the party paying the costs shows them to have been unreasonably incurred. Orders for solicitor/client costs are made on the basis that the party will be fully reimbursed for costs reasonably incurred by the party in the conduct of the litigation.[18]
[18] DCR 6 R 264(5)
The defendant says that the indemnity costs are appropriate because of the misconduct of the plaintiff. Misconduct in this context means misconduct relating to the litigation.[19] The lateness of the application, the lack of real explanation for the delay, the obvious prejudice to the defendant arising out of the plaintiff’s conduct are contended to be “special and unusual features” which weigh in favour of an order for costs on an indemnity basis.[20] It is further contended that indemnity costs are an appropriate vehicle for the Court to express its disapproval of the unreasonable conduct of the plaintiff.[21]
[19] Forlyle v Tiver [2007] SASC 464 at para 29
[20] Colgate Palmolive Co Pty Ltd v Cussons Pty Ltd (1993) 46 FCR 225
[21] Sunburst Properties Pty Ltd v Agwart Pty Ltd (No 2) [2005] SASC 293
I have carefully considered the submissions and it is my view that it is appropriate to order costs on an indemnity basis. I further consider that it is appropriate to avoid additional prejudice to the defendant and to simplify the calculation of those costs by awarding indemnity costs for the period from the filing of the second statement of claim on 3 March 2014 to date.
Finally I must deal with the application by the defendant that an order awarding the costs be made payable forthwith. I have noted the case law to which I was referred.[22] I consider it is appropriate to order that these costs be payable forthwith on the basis that it will limit prejudice to the defendant arising from the amendment and the adjournment. The plaintiff has engaged in “a degree of unreasonable conduct”[23] in respect of the litigation, the determination of the interlocutory application is a discrete aspect of the action and it is likely to be sometime before these proceedings are finalised. I note the effect that the issue of legal costs is having upon the defendant as outlined in Mr Spargo’s affidavit sworn on 12 May 2014. I do not consider that it is reasonable to require the defendant to be denied the benefit of the costs order until the resolution of the action. I will therefore order that these costs be payable forthwith.
[22] Alstom Power Ld v Yokogawa Australia Pty Ltd (No 2) [2006] 244 LSJS 65; and Macks v Tucker (No 3) [2007] SASC Bleby, J
[23] Macks, see note 21 above at paragraph 18
Orders
I will hear the parties as to the form of the orders I propose to make.
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