Practice and procedure - Application to amend statement of claim, particulars and reply - Whether amendments embarrassing - Lack of explanation for change in pleadings - Whether amendments should be allowed to enable a just resolution of the dispute - Turns on its own facts

ABB Service Pty Ltd v Hetherington [2001] WASCA 417

Aon Risk Services Australia Ltd v Australian National University [2009] HCA 27; (2009) 239 CLR 175

Barclay Mowlem Construction Ltd v Dampier Port Authority [2006] WASC 281

Morgan v Banning (1999) 20 WAR 474

Papadoulis v Pappas & Associates (a firm) [2009] WADC 22

Soia v Bennett [2011] WASC 59

1 COMMISSIONER SLEIGHT: The trial in this matter is listed to commence on 20 May 2011 and thereafter is listed for three weeks. Proceedings in this matter were commenced by the plaintiffs on 10 February 2003.

2 The plaintiffs by chamber summons dated 4 May 2011, made applications for:

(a) Leave to amend the statement of claim in terms of a minute of proposed amended statement of claim dated 14 April 2011 (this was subsequently replaced with a minute dated 2 May 2011).

(b) Leave to amend the reply in terms of a minute of the proposed amended reply dated 14 April 2011.

(c) The defendant to provide further and better discovery on oath of documents which are listed in schedule 1 of the chamber summons.

3 The applications by the plaintiffs are opposed by the defendant.

4 The defendant made an application by chamber summons dated the 20 April 2011 seeking an order for parts of the plaintiffs' reply dated the 29 March 2011 be struck out.

5 The applications came before me on 4 May 2011. The plaintiffs' existing reply pleading, the proposed amended statement of claim and the proposed amended reply, contained particulars of alleged representations made by the defendant which were inconsistent with par 3 of the statement of claim and, by way of particulars, made a reference to paragraphs of the witness statements of the plaintiff, Mr Soia dated 18 February 2011 and 23 March 2011. The paragraphs of the witness statements pleaded by way of particulars contained material other than that relied upon for the pleadings. I concluded that the form of the pleadings was embarrassing. On this basis I struck out the reply and dismissed the plaintiffs' applications for leave to amend the statement of claim and the reply. However, leave was given for the plaintiffs to file a further minute of proposed amendments to the statement of claim and a minute of proposed amendments to the reply.

6 The plaintiffs have now filed the following minutes of proposed amendments and seek leave to amend in accordance with these minutes.

1. Further proposed amended statement of claim dated 6 May 2011.
2. Further proposed amended reply dated 6 May 2011.
3. Amended particulars of Paragraph 3 of the statement of claim dated 6 May 2011.

7 The starting point in considering these applications is to consider briefly the history of the proceedings.

(i) The statement of claim was filed on 21 March 2003.

(iii) The plaintiffs filed further and better particulars of the statement of claim on 29 August 2005.

(iv) An amended defence was filed pursuant to an order of Corboy J on 1 March 2011. These amendments were after the matter had already been entered for trial.

8 The amendments to the statement of claim and reply proposed by the plaintiffs and the reply document itself must be examined in the context of the nature of the plaintiffs' claim on the current pleadings and the effect of the amendments to the defence allowed by Corboy J on 1 March 2011. I propose to give a broad description of the issues arising on the pleadings. This description is to be read with the more detailed discussion of the pleadings that is contained in the decision of Corby J in Soia v Bennett [2011] WASC 59.

9 The plaintiffs' claim can be summarised as follows:

1. Between March 1999 and 19 June 1999, the defendant orally proposed a joint venture to Mr Soia to create a tuition business to be operated on the internet. This business was to be on the basis that the second plaintiff ceased its existing business, that Mr Soia concentrated solely on the development of the new business, and that the defendant would fund the development of the new business, including management fees to be payable to Mr Soia. This representation I will call the 'funding representation' and is contained in par 3 of the statement of claim.
2. On 30 June 1999, at a directors' meeting of Internet Tuition College Pty Ltd, a budget was adopted by the directors, Mr Soia and Mr Bennett. Internet Tuition College Pty Ltd was a company formed to conduct the new business. I refer to the company in this decision as ITC. It is pleaded that this adoption of the budget gives rise to a representation that Mr Bennett would fund the business in accordance with the budget and that the first plaintiff, Mr Soia, would be paid management fees in accordance with this budget. This alleged representation I will describe as 'the representation as to the extent of the funding'. It is pleaded in par 5 of the statement of claim.
3. A third representation is pleaded that in July 1999, the defendant provided to Mr Soia a document called 'corporate structure' which, inter alia, provided for Mr Soia to be remunerated by payment of $250,000 in the first year. I will describe this representation as 'the management fee representation'. It is pleaded in par 6 of the statement of claim.

10 The statement of claim goes on to plead in broad terms that the plaintiffs relied on these three representations by closing down their existing business operations and Mr Soia devoting his time, energy and expertise to the development of the new business. The plaintiffs allege that Mr Bennett failed to honour his representations and ceased to provide funding to the business. The plaintiffs allege that the defendant's representations constituted misleading or deceptive conduct in trade or commerce and seek damages under the Fair Trading Act 1987 (WA). Alternatively, the plaintiffs seek damages for breach of contract.

11 The original defence document had simply denied each of the three representations. The first amendment made to the defence pursuant to the order of Corboy J relates to 'the representation as to the extent of the funding'. The amended defence pleads in the alternative that if such a representation was found to have been made, by necessary implication the representation was conditional on ITC generating income of a magnitude and over the periods provided for in a cash flow document forming part of the budget (par 5.5 of the amended defence).

12 The amended defence pleaded by amendment that funding ceased because ITC did not earn any income (par 15.4).

13 The amended defence further pleaded that if a funding agreement existed, it was made between the defendant and ITC (and not with the first plaintiff). Further, such a funding agreement was conditional on ITC generating income as per the cash flow document and sufficient to cover ITC's costs; and was conditional on the first plaintiff and the defendant cooperating at a reasonable level in the running of the business of ITC. The defendant pleads these conditions were not fulfilled and therefore the defendant was not obliged to provide the funding claimed (par 24).

14 Finally, the defendant pleaded by amendment to the defence that the claims under the Fair Trading Act were statute-barred by reason of s 79 of the Act (par 27).

(1) That the plaintiffs deny implication pleaded in par 5.5 of the amended defence concerning 'the representation as to the extent of the funding' and say:

(a) there was never any stipulation or condition that ITC would generate income prior to the defendant fulfilling his funding obligations (par 1(a));

(b) to enable ITC to generate income the defendant was required to provide funding for the development of the business to allow the business to get off the ground and be self-funding (par 1(b));

(c) the conduct of the defendant was inconsistent with the necessary implication pleaded in the amended defence in that:

(i) the defendant agreed to pay the costs of running the business for the first two years as per the adopted budget;

(ii) the defendant produced documents that specified the need for substantial up-front funding prior to the business being able to produce income itself, including a Pixel report dated 14 June 1999 and the budget;

(iii) the defendant caused to produce further documents after 30 June 1999 which indicated the need for substantial funding prior to the business producing an income, including the Key Sinclair Technical Budgets dated 24 July 1999 and 4 October 1999 and approved the production of the budget document provided to Arrow Data Holding Ltd during August 2000 (par 1(c)(i)-(iii));

(d) the defendant is estopped from asserting the implied implication pleaded in the amended defence as the plaintiffs had relied to their detriment upon representations the joint venture would be funded by the defendant to the extent disclosed in the budget for the first two years (par 1(d));

(e) The plaintiffs plead the defendant waived reliance on the implications pleaded in par 5.5 of the amended defence in response to the 'the representation as to the extent of the funding' by his conduct in failing to qualify the representations when he knew the plaintiffs acted on the basis of the representations being unqualified and making payments pursuant to the representations (par 1(e));

(2)(3) and (4) The plaintiffs plead responses in pars 2, 3 and 4 (except as to subpars (e) and (f) of the reply) that are uncontroversial and need not be detailed in this decision.

(4)(e) The plaintiffs plead in par 4(e) to par 24.3 and par 24.6 of the amended defence, which pleaded that ITC did not generate any income and therefore failed to fulfil a condition of the funding agreement, that it would generate its own income and therefore entitled the defendant to cease funding ITC's costs and terminate the funding agreement. Par 4(e) pleads that the defendant was not entitled to cease funding and the defendant by his conduct in not providing funding caused the business to fail to provide the income necessary to cover its expenses.

Paragraph 4(e) then contains a long list of particulars which are meant to be particulars of matters the plaintiffs will rely upon to show that income was needed to cover ITC expenses.

(4)(f) The plaintiffs plead in subpar 4(f) that the defendant is estopped from relying on the terms and conditions of the funding agreement pleaded in par 24 of the amended defence.

16 In my opinion, although the pleadings contained in the reply are somewhat clumsy, they are sufficiently responsive to the amendments to the defence and put into issue that Mr Bennett was not entitled to rely upon an alleged implied qualification to cease to fund ITC. Accordingly, I will allow the amended reply to stand as the pleading subject to a number of minor matters. The use of the word 'including' in par 1(c)(ii)and (iii) of the reply is to be changed to the word 'being'. This was raised with Mr Alstergren, counsel appearing for Mr Soia, and Mr Alstergren agreed that such an amendment should be made. There are also some typographical errors to be corrected.

17 I will now deal with the proposed amendments to the statement of claim which also includes amended further and better particulars to par 3 of the statement of claim.

18 Of significance is the observation by Corboy J, that the current statement of claim does not allege that Mr Bennett said anything at a directors' meeting on 30 June 1999 that constituted part of 'the representation as to the extent of the funding' pleaded in par 5, apart from his agreement to the adoption and implementation of the budget. It would seem that this observation has been the catalyst for the plaintiffs to review its statement of claim and seek leave to amend par 3 and par 5 of the existing statement of claim.

19 The existing par 3 of the statement of claim pleads as follows:

Between March 1999 and the 19th June 1999 the defendant orally represented to the first plaintiff (representing himself and his company, the second plaintiff) that

(a) the second plaintiff's resources were under utilised in providing tuition to a limited number of students in Perth;

(b) if the first plaintiff entered into a joint venture with him (in which each would have a 50% interest) for the establishment of a tuition business on the internet ('the business'), the business would provide tuition to thousands or millions of students and the financial and professional rewards for the first plaintiff and the defendant would be enormous;

(c) if the first plaintiff joined him (the defendant) in the venture, the second plaintiff would have to cease carrying on his business as the first plaintiff would have to concentrate solely on the development of the tuition business on the internet;

(d) the defendant would fund the development of the business which funding would include provision of management fees for the first plaintiff.

20 Paragraph 5 of the existing statement of claim pleads as follows:

(a) At a meeting of directors of ITC held on the 30th of June 1999, the defendant provided a budget for ITC which included -

(i) expenditure for each of the next twelve (12) financial years commencing on 1 July, expenditure for 1999/2000 ('the first year') and 2000/20001 ('the second year') being respectively $1,765,765 and $1,986,080 (and increasing each year thereafter);

(ii) management fees for the first plaintiff of $200,000 for the first year and $300,000 for the second year, $400,000 for the third year and $650,000 for each of the next nine years.

(b) The first plaintiff and the defendant orally agreed that such budget was adopted and would be implemented.

(c) The defendant thereby represented expressly or impliedly that he would fund development of the business in accordance with the budget and the first plaintiff would be paid management fees in accordance with the budget.

21 Paragraph 3 and par 5 of the current statement of claim must be read with further and better particulars filed by the plaintiffs on 19 August 2005.

(i) Meetings were held between the defendant and the first plaintiff on or about the 23rd of February 1999, the 25th of February 1999, the 2nd of March 1999, the 4th of March 1999, the 5th of March 1999, the 26th of March 1999, and the 30th of March 1999 at the offices of Messrs Bennett & Co, Barristers and Solicitors situated at 28 The Esplanade Perth.

(ii) Representations to the effect pleaded in paragraph 3 were made by the defendant to the first plaintiff diverse occasions during the said meetings. In particular the defendant orally represented to the first plaintiff that if the first plaintiff entered into a 50-50 joint venture partnership with the defendant to establish the business, the defendant would fund its development and - - -that the establishment of the business would first target an Australian wide market and quickly expand its operations into the United States of America, the United Kingdom, New Zealand and Canada and that the financial rewards for the parties, that is the defendant and the first plaintiff would be enormous. The extent of the anticipated financial rewards were specified at pages 3 and 4 of a written agreement made between the shareholders of Internet Tuition College Pty Ltd ('ITC') ('Shareholders Agreement') which sets out terms for the payment of dividends when the net profit of ITC exceeds $100 million per annum.

23 In relation to par 5 of the statement of claim, the following further and better particulars were requested and given.

1. In respect of the allegation in 5(b), give the substance of the material conversation constituting the alleged or oral agreement.

Answer

The purpose of the directors meeting held on 30 June 1999 was for the ITC directors to agree on an expenditure budget for the business. The Defendant provided the First Plaintiff with a copy of the proposed budget during the meeting. The Defendant informed the First Plaintiff that he and Bestall had prepared the financial analysis and budget for the meeting. The Defendant tabled the budget for discussion at the meeting. The Defendant said to the First Plaintiff words to the effect that the budget was in accordance with his proposal to proceed with the joint venture and then asked of the First Plaintiff whether he accepted and was in agreement with the budget estimates and amounts which were proposed to be paid to the First Plaintiff by way of management fees, to which the First Plaintiff replied words to the effect that he accepted and agreed the same and that the business could proceed on that basis.

1. In respect of paragraph 5(c), in so far as the representation is said to be express, state whether the same is in written or oral and further;

(a) if and in so far as the alleged representation is in writing, identify each material document constituting the same and say in whose possession it now is and when and where is may be inspected by the Defendant's solicitors;

Answer

In so far as the representation is in writing, it is contained in the aforesaid budget document, copies of which are in the possession of the First Plaintiff and should also be in the possession of the Defendant. The agreement is also to be found in the various drafts of the shareholders and Promoters Agreements produced by the parties, the final version of which was later signed by the parties on or about 29 October 1999. The First Plaintiff has a copy of the said document in his possession and the Defendant should also have a copy in his possession. Further, the essential terms of the agreement are acknowledged in the Defendants correspondence to the First Plaintiff, dated 28 August 2000 as referred to in the Plaintiffs answer to request number three (3) above.

(b) if and so far as the alleged representations are oral, give the substance of each material conversation constituting the same.

Answer

In so far as the alleged representation was oral, it was constituted by a conversation between the First Plaintiff and the Defendant at the said Directors Meeting held on 30 June 1999, the material particulars of which are as set out in the answer to question 6 above.

1. In respect of paragraph 5(c), in so far as the representation is said to be implied, state by reason of what acts, facts, matters things and circumstances it is to be so implied.

Answer

It went without saying that the Defendant would fund the development of the business in accordance with the budget and that the First Plaintiff would be paid management fees in accordance with the budget because the parties agreed to adopt the budget and implement the same. The Plaintiff himself did not ever agree to provide funding for the business. The ITC budget estimates were provided by the Defendant on the basis that he himself would provide the necessary funding for the business to operate.

24 The plaintiffs seek to amend par 3 of the statement of claim by changing the range of dates as pleaded in par 3, during which it is said oral representations were made, to on or about 23 February 1999 to 30 June 1999.

25 Further, the proposed amended particulars to par 3 abandon reliance on anything said on the 25 February 1999, 2 March 1999, 4 March 1999 and 26 March 1999 being dates of oral representations pleaded in the further and better particulars dated 29 August 2005. No explanation is given why these dates have been abandoned. Further, the plaintiffs now seek to rely on additional dates 4, 17, 25, and 31 May 1999 and 14, 18, 21 and 30 June 1999.

26 Further, the plaintiffs now provide particulars of what was allegedly said by the defendant Mr Bennett on each of the dates stated to collectively provide the representation pleaded rather than a collective particular as provided in the further and better particulars dated 29 August 2005. I do not propose for the purpose of this decision to repeat the proposed particulars. In my opinion they are again somewhat clumsily pleaded and go into evidence rather than being confined to pleading material facts. However, the proposed amended pleading and particulars do not change the substance of par 3 which is that Mr Bennett made 'the funding representation'.

27 Dr Schoombee, counsel for the defendant, submitted that the proposed amendments to par 3, were embarrassing as they contradicted par 4. Paragraph 4 pleads that that Mr Soia, in reliance upon 'the funding representation', concurred in the incorporation of ITC with Mr Soia and Mr Bennett being directors and their respective personal companies being 50/50 shareholders. It was agreed by the parties that this was put into effect on or about 19 June 1999 and, accordingly, any representation after that date could not be relied upon. Mr Alstergren for the plaintiffs conceded this issue and sought an amendment to par 3 of the proposed amended statement of claim to reduce the pleaded period to between 23 February 1999 and 19 June 1999. The plaintiffs entirely abandon relying on anything said after 19 June 1999 as constituting 'the funding representation' in par 3.

28 The next proposed amendment to the statement of claim is to par 5. The first significant change to par 5 is the word 'thereby' is deleted from par 5(c). The word 'thereby' has significance because it makes it clear on the existing pleading 'the representation as to the extent of the funding' was constituted by Mr Bennett agreeing to the terms of the budget. Therefore, on the existing pleading the representation was based upon an implied representation. This was observed by Corboy J in Soia v Bennett. The observation is plainly correct.

29 By the proposed amendment the plaintiffs now seek to allege that 'the representation as to the extent of the funding' arises by an express or an implied representation. Particulars are provided to the alleged express or implied representation contained in the proposed amendments. Insofar as it is alleged the representation was partly oral, the plaintiffs rely upon what was allegedly said by Mr Bennett at the meeting on 30 June 1999. The substance of this oral representation is pleaded as follows:

I will fund the company and I will pay you management fees so you will be free to concentrate on producing the best education system in the world. If you look at the budget you will see the expenditure will be $1,769,765 in the first year. To get the project off the ground is going to cost real money.

30 Insofar as it is alleged the representation was in writing, the plaintiffs rely upon the content of the budget document.

31 Insofar as it is alleged the representations was implied, the plaintiffs plead it went without saying that the defendant would fund the development of the business in accordance with the budget. The ITC budget estimates were provided by the defendant on the basis that he would provide the necessary funding for the business to operate.

32 The effect of the proposed amendments is not to change the substance of 'the representation as to the extent of the funding'. The amendment changes the source of the representation from simply an implication arising from the adoption of the budget and supplementing it with what was allegedly said by Mr Bennett at the meeting on the 30 June 1999.

33 The plaintiffs also propose amendments to pars 19 and 20 of the statement of claim which plead a contract that the defendant would provide funding for the development of the business in accordance with the budget and Mr Soia would be paid management fees in accordance with the budget. The effect of the amendment is the plaintiffs also seek to rely on the alleged oral representations made by Mr Bennett on the 30 June 1999 as a basis for alleging a contract was entered into and the terms of the contract. This amendment makes paragraphs relating to the funding contract consistent with the proposed amendments to par 5 as to the alleged oral representations made by Mr Bennett constituting the 'the representation as to the extent of the funding'.

34 In an affidavit sworn by the plaintiffs' solicitor, Mr T Galic sworn on 19 April 2011, Mr Galic deposes that until Corboy J made comments to the effect that the plaintiffs had not pleaded any oral representation by the defendant at the 30 June 1999 meeting, the plaintiffs and counsel were under the impression that an oral representation on 30 June 1999 had been pleaded. No evidence has been provided as to what the plaintiffs' instructions were previously about a meeting on 30 June 1999 in terms of representations made by Mr Bennett prior to the preparation of the witness statement of Mr Soia.

35 Mr Bennett in an affidavit sworn on 19 April 2011, in par 5, stated as follows in relation to the further particulars now sought to be pleaded in pars 3 and 5 of the statement of claim:

To seek to deal with such matters, would necessitate my now going back at least 12 years in recollection in time to seek to recall what was said and not said, in the surrounding circumstances, concerning such documents and any related conversation. Had I known this was somehow part of the plaintiff's case, these matters could have been considered far nearer to the time they alleged occurred and then recorded.

36 The affidavit of Ms Onofaro, solicitor for Mr Bennett, sworn on 3 May 2011, details what I will describe as procrastination on the part of plaintiffs' solicitors in filing an application for leave to make the proposed amendments. According to this affidavit, Mr Galic indicated some time before 21 March 2011 the plaintiffs intended to amend the statement of claim but only to correct a typographical error. On 21 March 2011 Mr Galic sent an email to the defendant's solicitors attaching a proposed statement of claim. The proposed statement of claim is not in terms of the proposed amendments now before me. An exchange of correspondence occurred between the plaintiffs' solicitors and the defendant's solicitors concerning the indicated proposed amendments. At a directions hearing on 29 March 2011, Mr Galic, appearing on behalf of the plaintiffs, indicated that an application was about to be filed seeking leave to amend the pleadings. When the matter came back before me on 15 April 2011, an application had not been filed and orders were made requiring any application to be filed by 4.00 pm on 18 April 2011. The application was not filed until 19 April 2011.

37 The legal principles on an application seeking leave to amend were referred to in Corboy J's decision in Soia v Bennett [52] - [54] and [58] - [62].

38 The principles enunciated in Aon Risk Services Australia Ltd v Australian National University [2009] HCA 27; (2009) 239 CLR 175 can be summarised as stating that the guiding principle is to obtain a just resolution of the dispute taking into account the recognition contained in modern case management principles of the need for litigation to be conducted in accordance with positive case flow management objectives. Aon's case was an appeal from the Supreme Court of the ACT. The rules of that court contained O 21 which in broad terms contain similar objectives to that contained in O 1 r 4B of the Rules of the Supreme Court 1971 (WA).

39 It is worth revisiting some of the passages of Aon's case from the decision of the plurality:

The need for amendment will often arise because of some error or mistake having been made in the drafting of the existing pleading or in a judgment about what is to be pleaded in it. But it is not the existence of such a mistake that founds the grant of leave under rules such as r 501(a), although it may be relevant to show that the application is bona fide. What needs to be shown for leave to amend to be given, as the cases referred to above illustrate, is that the controversy or issue was in existence prior to the application for amendment being made. It is only then that it is necessary for the court to allow it properly to be raised to enable a determination upon it. (footnotes omitted)

41 At [83] after referring to a number of authorities:

A consideration of these cases does not suggest that an unduly narrow approach should be taken to what are the real issues in controversy, although they are not, or are not sufficiently, expressed in the pleading.

Rule 21(2)(b) indicates that the rules concerning civil litigation no longer are to be considered as directed only to the resolution of the dispute between the parties to a proceeding. The achievement of a just but timely and cost-effective resolution of a dispute has an effect upon the court and upon other litigants. In Sali v SPC Ltd Toohey and Gaudron JJ explained that case management reflected: '[t]he view that the conduct of litigation is not merely a matter for the parties but is also one for the court and the need to avoid disruptions in the court's lists with consequent inconvenience to the court and prejudice to the interests of other litigants waiting to be heard ...'

Of course, a just resolution of proceedings remains the paramount purpose of r 21; but what is a 'just resolution' is to be understood in light of the purposes and objectives stated. Speed and efficiency, in the sense of minimum delay and expense, are seen as essential to a just resolution of proceedings. This should not detract from a proper opportunity being given to the parties to plead their case, but it suggests that limits may be placed upon re-pleading, when delay and cost are taken into account. The Rule's reference to the need to minimise costs implies that an order for costs may not always provide sufficient compensation and therefore achieve a just resolution. It cannot therefore be said that a just resolution requires that a party be permitted to raise any arguable case at any point in the proceedings, on payment of costs.

The objectives stated in r 21 do not require that every application for amendment should be refused because it involves the waste of some costs and some degree of delay, as it inevitably will. Factors such as the nature and importance of the amendment to the party applying cannot be overlooked. Whilst r 21 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. Rule 21 makes it plain that the extent and the effect of delay and costs are to be regarded as important considerations in the exercise of the court's discretion. Invariably the exercise of that discretion will require an explanation to be given where there is delay in applying for amendment.

44 It is also important to take into account the modern function of pleadings which involves a less technical approach than previously existed and acknowledges that the primary function of pleadings is to disclose to the opposition the case that it has to answer: Barclay Mowlem Construction Ltd v Dampier Port Authority [2006] WASC 281.

45 In my view, it is clear on pars 3 and 5 of the current statement of claim that the plaintiffs' claim is that there was an oral undertaking by Mr Bennett that he would fund the joint venture proposal and that, in reliance upon the undertaking, the first plaintiff and his company, the second plaintiff, abandoned existing operations and devoted themselves to the joint venture.

46 In my view, the proposed amendments to pars 3, 5 19 and 20 do not change the real nature of the dispute between the parties. The plaintiffs are still relying upon the three representations which I have identified earlier, being:

1. the funding representation;
2. the representation as to the extent of the funding; and
3. the management funding.

47 Certainly the factual basis for the representations has changed to some degree as a result of the amendments, in particular by relying upon representations as contained in the particulars to par 3 of the statement of claim and also relying on alleged representations made on 30 June 1999.

48 I do not accept that Mr Bennett has been materially prejudiced in terms of his recollection as a result of these later changes. The meeting of 30 June 1999 was always an important meeting, based upon the initial claim and accordingly he was sufficiently alerted by the original statement of claim that he would need to recollect what took place at this meeting.

49 Further, as I have indicated above, the fundamental alleged representations have not changed, and accordingly Mr Bennett was alerted to the fact that recollections concerning what might have been said at any time in relation to these representations became relevant.

50 Even if the amendments proposed are not allowed, the plaintiffs would be entitled to lead evidence of the alleged oral representations of Mr Bennett on various dates, including 30 June 1999, as evidence of behaviour consistent with what the plaintiffs allege was the intention of the parties in forming the funding contract. Further, once the defendant pleaded, by par 5.5 of the amended defence, that 'by necessary implication', the representation as to funding was conditional on ITC generating enough income of the magnitude over the time provided in the cash flow document, in my opinion, the plaintiffs were entitled to rely upon representations of Mr Bennett on 30 June 1999 that indicated that such an implication was not consistent with the intention of the parties.

51 In my opinion, the proposed amendments to the statement of claim, subject to amendment to par 3 as indicated earlier in this decision, would allow the full dispute to be aired. The defendant has not contended that, by allowing the amendments, the defendant will not be in a position to proceed to trial and that the trial will need to be adjourned. Accordingly, the main mischief that Aon's case was directed at, that is, amendments which lead to an adjournment of the trial, are not applicable.

52 The defendant submits that by virtue of the proposed amendments to pars 5, 19 and 20, a new cause of action is pleaded which is statute-barred if it is a claim under the Fair Trading Act or statute-barred under s 38 of the Limitation Act 1935 (WA) insofar as the claim is contractual.

53 The relevant principles concerning an application to amend which raises issues of time limitations are set out in my decision in the District Court in Papadoulis v Pappas & Associates (a firm) [2009] WADC 22 [27] relying on the authorities Morgan v Banning (1999) 20 WAR 474 and ABB Service Pty Ltd v Hetherington [2001] WASCA 417. In that decision I stated as follows (deleting the references to authorities)

The following relevant general principles emerge from these two above authorities:

1. The limitation provisions concern questions of whether the statutory limitation period had expired at the time of the issue of the writ rather than any subsequent proceeding
2. A 'cause of action' is simply a factual situation, the existence of which entitles one party to obtain from the court a remedy against another party
3. Given the above definition of 'cause of action', an amendment which seeks grounds of relief which would be statute barred if subject to fresh proceedings, may be allowed by way of amendment to a writ issued within the statutory limitation period, if the facts pleaded in the writ substantially coincide with the facts upon which the amended relief is sought. --this coincides with the principal purpose of statutory limitation periods that a defendant knows with finality what fact or facts are said to give rise to the action against him, rather than what label may be conveniently applied to these facts.
4. Accordingly, an amendment seeking an additional basis for relief may be allowed if the factual basis for the relief sufficiently coincides with the facts pleaded in the writ within time. If, however, the amendment seeks to raise a new basis for relief on a different set of facts, then no amendment is permitted.
5. The purpose of O 21 r 5(5) is to avoid an overly technical and rigid investigation as to the degree of coincidence between the facts pleaded in the writ and those in any proposed amendment It is no objection to a proposed amendment that some of the facts out of which the new cause of action arises are peculiar to it and that some of the facts out of which the old cause of action arises are peculiar to it. It is enough if the overlap is so great that the new cause of action can be said to arise out of substantially the same facts as the old cause of action.
6. An amendment allowed does not preclude the other party from pleading in its defence and arguing at trial that the relief sought by the amendment raises a new cause of action and is statute barred. This recognises that the idea of 'relation back' of an amendment cannot be used to defeat a limitations argument.
7. The exercise of the court of the power to amend under O 21 r 5 is discretionary. When considering whether to exercise a discretion to allow an amendment under O 21 r 5(5) the court can take into account:

(i) that to disallow the amendment will prevent the plaintiff from bringing the issue to court at all;

(ii) the question of justice to the plaintiff, delay, reasons for delay, prejudice to the defendant or other persons, and possible abuse of process.

54 I conclude that, as the core representations relied upon by the plaintiffs have not changed, there is enough overlap so that if a new cause of action arises, it does so arise out of substantially the same facts as the existing pleaded cause of action. Accordingly, I conclude that the statutory limitation periods ought not prevent the plaintiffs from making the proposed amendments.

55 In summary, I would allow the plaintiffs leave to amend as follows:

1. Leave is granted to amend their reply as per the minute dated 6 May 2011, save as to substituting the word 'including' in pars 1(c)(ii) and (iii), with the word 'being' and two typographical errors as contained in pars 3(b) and 4(e), as acknowledged by the parties in their submissions.
2. Leave to amend the statement of claim as per the minute dated 6 May 2011, save that the time period pleaded in par 3 will be as from 23 February 1999 to 19 June 1999.
3. Particulars of par 3 will be as per the minute dated 6 May 2011, except that subpars (xi) and (xii) are to be deleted.

56 I will hear counsel for the defendant as to what consequential orders might follow. The representative for the plaintiffs is not in attendance due to prior commitments.