Court of Appeal (WA)|2017-07-07|Before: Martin CJ

BELGRAVIA NOMINEES PTY LTD -v- LOWE PTY LTD [2017] WASCA 127 (7 July 2017)

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA

CITATION : BELGRAVIA NOMINEES PTY LTD -v- LOWE PTY LTD [2017] WASCA 127

Jurisdiction : SUPREME COURT OF WESTERN AUSTRALIA

Citation : BELGRAVIA NOMINEES PTY LTD -v- LOWE PTY LTD [No 3] [2015] WASC 442

Practice and procedure - Leave to amend indorsement of claim - New cause of action statute-barred by limitation legislation - Application to extend limitation period foreshadowed and not futile - Leave to be granted and limitation questions to be resolved at trial

ABB Service Pty Ltd v Hetherington [2001] WASCA 417

Belgravia Nominees Pty Ltd v Lowe [2015] WASCA 143

Belgravia Nominees Pty Ltd v Lowe Pty Ltd [No 3] [2015] WASC 442

Belgravia Nominees Pty Ltd v Lowe Pty Ltd [No 4] [2016] WASC 74

Do Carmo v Ford Excavations Pty Ltd [1984] HCA 17; (1984) 154 CLR 234

Dye v Griffin Coal Mining Co Pty Ltd [1998] WASCA 184; (1998) 19 WAR 431

Morgan v Banning (1999) 20 WAR 474

Rayney v State of Western Australia [No 3] [2010] WASC 83

Rossen v Airey [2012] WASCA 26

Stone James v Pioneer Concrete (WA) Pty Ltd [1984] WASC 460; [1985] WAR 233

Wardley Australia Ltd v State of Western Australia [1992] HCA 55; (1992) 175 CLR 514

Weldon v Neal (1887) 19 QBD 394

1 Belgravia Nominees Pty Ltd (the plaintiff)[1] applies for leave to appeal from a decision of the judge at first instance refusing, in part, its application to amend the writ in the proceedings below. The appeal raises issues of general application with respect to the amendment of writs. Further, the plaintiff has established that the judge was wrong to refuse leave and that there is a risk of substantial injustice if that error is not corrected. Accordingly, for the reasons which follow, leave to appeal should be granted, the appeal allowed and the application to amend the writ allowed.

2 The writ was issued on 18 October 2013. The defendants to the writ as issued were Lowe Pty Ltd and Mr Colin Reginald Heath. Pursuant to an order made by the Court of Appeal on 16 July 2015,[2] the writ was amended on 19 August 2015 to add Penhurst Nominees Pty Ltd as a third defendant.

3 The original indorsement of writ was in the following terms:

The plaintiffs' claims arise from a written agreement made 26 August 1999 pursuant to which the first defendant has received payment without a valid appointment as agent under s 60 of the Real Estate and Business Agents Act 1970, or has failed to provide the services for which the payments have been received or has received payment for services provided by third parties for which they received payment.
Further the second defendant acting on behalf of the plaintiffs including an account signatory made payments to the first defendant purportedly pursuant to the written agreement and in breach of his duty to the plaintiffs when the second defendant was interested in the payments as a director and shareholder of the first defendant and the first defendant was not entitled to the payments for the reasons at 1 above.

4 On 16 September 2015 the plaintiffs amended their statement of claim. By paragraph 11 of the amended pleading, the plaintiffs assert that Lowe received payments totalling $4,340,280.10 as a result of payments made by Belgravia and Penhurst from funds held in a bank account in the name of Belgravia and Penhurst as a result of actions taken by Mr Colin Heath or at his direction. Particulars of the payments allegedly made are provided in that paragraph. Nineteen payments allegedly made between April 2006 and January 2012 are particularised, totalling $4,340,280.10. For reasons which will be explained, it was significant to the approach taken by the judge at first instance that the first six of those payments, totalling $1,946,863.55, were made between April 2006 and March 2007, and were all therefore made more than six years prior to the issue of the writ.

5 It was also significant to the approach taken by the judge at first instance that a number of other payments[3] were made during a period commencing six years prior to the issue of the writ, and ending six years prior to the application to amend the writ.

6 In response to a foreshadowed application to strike out the amended statement of claim on grounds which included an assertion that it went beyond the terms of the indorsement on the writ, the plaintiffs applied to amend that indorsement. The amendment introduced three additional paragraphs in the description of the claim, and seven additional paragraphs into the prayer for relief. The three additional paragraphs in the description of the claim were all qualified by the assertion that they were only 'to the extent that they are not otherwise within the indorsement' on the writ, and identified the following claims:

a claim for repayment of moneys mistakenly paid to Lowe;
a claim for repayment of those moneys by way of restitution;
a claim in respect of Mr Heath's breaches of his duties, both fiduciary and statutory, as a director of Belgravia;
a claim in respect of Lowe's knowing receipt of moneys received as a result of Mr Heath's breaches of his duties to Belgravia; and
a claim for rescission of the agreement between Belgravia and Lowe on the basis it was entered into by reason of Mr Heath's breach of his duties to Belgravia.

7 After relating the circumstances to which we have referred, the judge at first instance described what he considered to be the essential questions raised by the application for leave to reamend the writ in the following terms:[4]

(a) first, whether the amendments proposed would introduce causes of action which are barred by the Limitation Act 1935 (WA) or the Limitation Act 2005 (WA) and are, therefore, impermissible in accordance with the rule in Weldon v Neal (1887) 19 QBD 394; and,

(b) secondly, if the amendments are statute barred whether they are of a kind that fall within the provisions of O 21 r 5(2) and r 5 of the Rules of the Supreme Court 1971 (WA) (RSC). Those sub-rules read:

(2) Where an application to the Court for leave to make the amendment mentioned in sub-rule (3), (4) or (5) is made after any relevant period of limitation current at the date of issue of the writ has expired, the Court may nevertheless grant such leave in the circumstances mentioned in that sub-rule if it thinks it just to do so.

(5) An amendment may be allowed under sub-rule (2) notwithstanding that the effect of the amendment will be to add or substitute a new cause of action if the new cause of action arises out of the same facts or substantially the same facts as a cause of action in respect of which relief has already been claimed in the action by the party applying for leave to make the amendment.

8 The judge then[5] set out a series of legal propositions which he extracted from previous decisions in the area which cannot be faulted, with the exception of the following assertion:[6]

The discretion to allow the introduction of a new cause of action after the statutory limitation period has expired is limited to the circumstances in O 21 r 5(5). There is no general discretion under O 21 r 5(1) to permit amendment despite the expiry of the relevant limitation period: Dye (439) (Owen J).

For reasons explained below, this proposition is contrary to the decision in Morgan v Banning.[7]

9 After analysing the amended statement of claim, the judge addressed the question of whether the claim for repayment of moneys paid by way of mistake added a new cause of action. He answered that question affirmatively.[8] That conclusion has not been challenged in this appeal with the result that its correctness has not been the subject of argument. In those circumstances it would not be appropriate to express a concluded view on the question, but nor should these reasons be construed as endorsing the correctness of that proposition.

10 Order 6 r 1 of the Rules of the Supreme Court 1971 (WA) requires that an indorsement be a 'concise statement of the nature of the claim made, and of the relief or remedy required'. As the judge acknowledged,[9] it is well established that an indorsement is not a pleading, and O 6 r 1 does not require a plaintiff to plead a cause of action in the sense in which that phrase is used in O 21 r 5. Further, indorsements should not be read narrowly, but generously.[10] What must be identified in an indorsement is the critical events which give rise to the relief claimed, without, of course, descending to the factual particularity appropriate to a statement of claim. The ambit of the action commenced by the writ is determined by reference to the facts asserted, and not by reference to any legal labels or categories which may or may not have been used in the indorsement.[11]

11 In our respectful view, it could be argued that the critical facts giving rise to the relevant cause of action were the payments to which reference is made in the original indorsement, with the result that the subsequent inclusion of a restitutionary claim based on 'mistake', in the legal sense, was essentially the application of a legal label to the critical facts already included within the indorsement. However, as we have noted, this point was not argued, and in light of the conclusion we have otherwise reached in relation to this appeal, it is not necessary for this court to decide the point.

12 The judge went on to address the question posed by O 21 r 5(5) - namely, whether the new cause of action arose out of the same facts or substantially the same facts as the causes of action in respect of which relief had already been claimed, and also answered that question in the affirmative.[12] That conclusion is challenged by a notice of contention filed by the respondents, which we will address in due course.

13 The judge then addressed the question posed by O 21 r 5(2) - namely, whether a limitation period current at the date of issue of the writ had expired at the time of the application to amend. The trial judge concluded that the limitation period had expired in respect of any claim arising from payments made more than six years prior to the issue of the writ on 18 October 2013. As we have noted, the payments allegedly made prior to 18 October 2007 are six in number, totalling $1,946,863.55. The trial judge noted that the amended indorsement proposed did not particularise the payments made, but aggregated all payments made, with the result that the proposed amendment included some causes of action permitted pursuant to O 21 r 5(5) and some which were not. He considered the correct course was to disallow the amendment but to permit the plaintiffs to bring in a further minute limiting the claims to those which he concluded were permitted by O 21 r 5(5) - that is, in respect of all payments made after 18 October 2007 (being the date six years prior to the issue of the writ) and before 29 September 2009 (being the date six years prior to the application to amend the writ) plus payments made after 29 September 2009 (being payments made within six years of the application to amend, and therefore within the relevant limitation period).[13]

14 The judge then addressed the proposed claim in unjust enrichment. He considered the amendment to be defective in form because it did not allege any relevant vitiating fact. That is another conclusion which has not been challenged in this appeal, and upon which it is neither necessary nor appropriate to express a view. The judge also noted that the paragraph suffered the same defect as the paragraph he had addressed - namely, that it failed to differentiate between payments made more than six years before the date upon which the writ was issued, and payments made subsequent to that time.[14]

15 The judge then addressed the third paragraph proposed for inclusion in the indorsement, and expressed the view that the precise nature of the claim sought to be advanced by that paragraph was obscure.[15] However, to the extent that the paragraph embraced claims for breach of fiduciary and statutory duties, he concluded that it fell within the scope of the original indorsement and therefore no limitation issue arose.[16]

16 Insofar as the indorsement embraced claims for knowing receipt and rescission, the judge concluded that it could not be concluded definitively that those claims would be defeated by a limitation defence, and for that reason the amendment should be allowed.[17]

17 In summarising the arguments put by the respondents on the latter point, the judge at first instance referred to the fact that there was no application before the court to extend any limitation period pursuant to the power contained in s 38 of the Limitation Act 2005 (WA). However, the judge does not refer in his reasons to the fact that he had been advised by the plaintiffs that, if and when any limitation defence was pleaded to the amended statement of claim, an application would be made for an extension of time pursuant to that section. It will be necessary to return to that fact later in these reasons, as it is relevant to the disposition of the appeal.

18 After the judge published his reasons, the plaintiffs applied to reopen their application on the ground that they had not been heard on the question of whether the first six payments upon which their claim was based were made after any limitation period current at the time of issue of the writ had expired. The judge allowed the plaintiffs to reopen and they submitted that the judge should have taken the same approach with respect to those payments as was taken in relation to the knowing receipt claims and the rescission claim - that is, to leave the limitation issue to be pleaded by the defendants and determined at trial. In support of that submission, the plaintiffs again drew attention to their foreshadowed application pursuant to s 38 of the Limitation Act, in the event that a limitation defence was pleaded.

19 The judge rejected that submission on the ground that, in effect, it amounted to a contention that O 21 r 5(2) and r 5(5) should be read subject to an implied qualification - namely, 'unless an application for an extension of time within which to commence an action may be made pursuant to s 38 of the Limitation Act 2005'.[18]

20 The judge reiterated the proposition to which we have drawn attention in his earlier reasons to the effect that:[19]

There is no general discretion under O 21 r 5 to permit amendment despite the expiry of the relevant limitation period. The plaintiffs' application for leave to amend must thus be brought within O 21 r 5(2) and (5).

21 The judge considered that the limitation issue was clear in relation to the payments made more than six years prior to the issue of the writ and did not consider that O 21 r 5 should be read as constrained by the possibility of an application pursuant to s 38 of the Limitation Act. In that context, he emphasised the portion of s 38 which provides for the grant of leave to commence an action and expressed the view that:[20]

Neither s 38 nor s 43 addresses the issue of extending the limitation period to facilitate amending the originating process in an existing action. Having regard to the words of the Act, there is no sound basis for construing s 38 as applying to an application to amend the originating process in an existing action by adding an otherwise statute barred cause of action.

22 The net result of the plaintiffs' application to reopen the issue was that the judge affirmed his earlier decision and the plaintiffs were permitted to amend the indorsement in terms which claimed repayment of moneys paid over the period between 20 October 2007 and 29 January 2012, on the basis that they were paid by mistake, and which therefore excluded the payments totalling $1,946,863.55 to which we have referred. The plaintiffs were also permitted to include a provision in the indorsement advancing a claim in respect of all payments made, irrespective of the time at which they were made, on the basis of breaches of fiduciary and statutory duty, and knowing receipt of the funds.[21]

23 There is a single ground of appeal. It asserts that the judge:

Erred in law in determining that he had no power to grant leave to amend under O 21 r 5 of the Rules of the Supreme Court with respect to causes of action which had accrued outside the limitation periods applicable by virtue of the Limitation Act 2005 (WA) at the time of the issue of the writ, notwithstanding the appellants' intended reliance on the court's power to grant leave with respect to those causes of action under s 38 of the Limitation Act 2005.

24 The defendants contend that the decision of the judge should be upheld:

On the ground that the new paragraph 1A in the indorsement raises new causes of action not arising out of the same facts or substantially the same facts as a cause of action in the original indorsement and therefore not within O 21 r 5(5) of the Rules of the Supreme Court.

Amending writ or pleading with leave

(1) Subject to -

(a) Order 18 rules 6, 7 and 8; and

(b) Order 20 rule 19(2) to (5); and

(c) the following provisions of this rule,

the Court may at any stage of the proceedings allow the plaintiff to amend his writ, or any party to amend his pleading, on such terms as to costs or otherwise as may be just and in such manner (if any) as the court may direct.

(2) Where an application to the Court for leave to make the amendment mentioned in subrule (3), (4) or (5) is made after any relevant period of limitation current at the date of issue of the writ has expired, the Court may nevertheless grant such leave in the circumstances mentioned in that subrule if it thinks it just to do so.

(3) An amendment to correct the name of a party may be allowed under subrule (2) notwithstanding that it is alleged that the effect of the amendment will be to substitute a new party if the Court is satisfied that the mistake sought to be corrected was a genuine mistake and was not misleading or such as to cause any reasonable doubt as to the identity of the party intending to sue or, as the case may be, intended to be sued.

(4) An amendment to alter the capacity in which a party sues (whether as plaintiff or as defendant by counterclaim) may be allowed under subrule (2) if the capacity in which, if the amendment is made, the party will sue is one in which at the date of issue of the writ or the making of the counterclaim, as the case may be, he might have sued.

(5) An amendment may be allowed under subrule (2) notwithstanding that the effect of the amendment will be to add or substitute a new cause of action if the new cause of action arises out of the same facts or substantially the same facts as a cause of action in respect of which relief has already been claimed in the action by the party applying for leave to make the amendment.

26 Subrule (1) of the rule confers a general power on the court to permit a writ to be amended at any stage of the proceedings.

27 Subrule (2), and the specific instances in which that power may be exercised and for which provision is made in subrules (3), (4) and (5), are all concerned with the circumstance in which an application for leave is made after any relevant period of limitation current at the date of the issue of the writ has expired between the issue of the writ and the application to amend. It is clear that all four paragraphs of the rule presuppose the operation of the doctrine of 'relation back', which assumed that any amendment allowed in the exercise of the general power conferred by subrule (1) would take effect as if included on the original writ. That is the doctrine which underpins the rule in Weldon v Neal,[22] which is based on the avoidance of prejudice to defendants as a result of being deprived of a limitation defence because any amendment allowed will be taken to relate back to the date of the issue of the writ. As will be seen, authoritative decisions of this court have had the effect that the doctrine of relation back no longer applies in Western Australia, if it ever did, with the result that the rule in Weldon v Neal has no continuing application and subrules (2) - (5) of O 21 r 5 have little or no continuing utility.

28 In order to make that proposition good, it is necessary to review the relevant cases.

29 In Dye v Griffin Coal Mining Co Pty Ltd[23] the plaintiff issued a writ with an indorsement claiming damages for personal injuries suffered as a result of negligence, breach of statutory duty and breach of contract on or about 12 October 1990. In 1997 the plaintiff applied to amend his statement of claim to include allegations of injuries sustained during the period between January 1990 and 12 October 1990. By the time that application was made, the limitation period for commencing an action based on a tort or torts said to have been committed between January 1990 and 12 October 1990 had expired. The plaintiff appealed to the Full Court from the decision of the District Court judge refusing the amendment.

30 Owen J, with whom the other members of the court[24] agreed, observed that a '"cause of action" is the fact or combination of facts which gives rise to a right to sue'.[25] He also observed that 'questions such as whether a claim is "new" or whether it arises substantially from the same facts are largely and often questions of degree', often resolved as 'matter[s] of impression'.[26] In his view, the allegations of negligence relating to the earlier period involved the addition of a fresh cause of action which did not arise from the same or substantially the same facts as those alleged in the original writ in the statement of claim.

31 Owen J then addressed a submission that O 21 r 5(1) conferred a general discretion upon the court to permit the addition of a new cause of action outside the relevant limitation period. In that context he referred to the rule in Weldon v Neal, and the divergent lines of authority dealing with the operation of that rule in England and Australia. In that context, Owen J observed:[27]

In light of the authorities, and as a matter of construction, I think the effect of the rules is that the rule in Weldon v Neal continues in force in truncated form, being qualified only to the extent that O 21 r 5 allows some amendments out of time for certain limited purposes. Relevantly, when confronted with a proposed amendment that seeks to add a cause of action that is otherwise statute barred, the court has a discretion to allow the amendment under O 21 r 5(5) if the conditions set out in that rule are satisfied. The general discretion in O 21 r 5(1) is limited to that extent. It seems to me, therefore, that once the trial judge had decided that the amendments did not come within O 21 r 5(5), that was an end to the matter. His Honour was correct in deciding that O 21 r 5(1) does not confer on the court a general and further discretion to permit amendment despite the expiry of the relevant limitation period.

32 The proper construction and effect of O 21 r 5 were again considered, less than a year later, by the Full Court differently constituted in Morgan v Banning.[28] Ipp J agreed with Wheeler J, who observed that the appeal related to an order made by the Master striking out the indorsement on the writ and allowing leave to amend in the terms sought, but on the basis that the amendment was only to take effect from the date of the Master's order[29] (thereby purportedly excluding any retrospective operation of the amendment as from the date of the writ through the doctrine of 'relation back').

33 Wheeler J observed that it is generally undesirable to attempt to determine questions of limitation other than in the context of a substantive trial.[30] Her Honour observed that the 'relation back' rule rested on a surprisingly slender foundation and explained the reasons for that view.[31]

34 Her Honour then directed her attention to limitation legislation generally, and noted that such legislation operated by reference to the time at which proceedings were commenced in the court. Her Honour considered that two consequences flowed from that fundamental fact. First, if the indorsement on the writ when issued was wide enough to encompass any amendments later sought to be made to clarify or particularise the claim, no question of limitation arises. The second proposition was expressed by her Honour in these terms:[32]

If the defective indorsement appearing on the writ when issued, is not of a type which is capable of encompassing amendments sought to be made after the expiry of the limitation period, so that the amendments truly 'add' an additional and time-barred cause of action (rather than particularising, clarifying, or expanding one already instituted) then, whether leave to amend is granted or not, the new action remains time-barred. Whatever the rules of court may provide, an action which is in fact instituted out of time is able to be defeated by reliance upon the Limitation Act, which the court has no power to override, whether by a procedural rule or 'relation back' or otherwise.

35 Her Honour drew support for this view from observations made by Toohey J, with whom Deane J agreed, in Wardley, where he observed that if an amendment sought to introduce an admittedly new cause of action, the court had no power to ignore any statutory limitation period governing the bringing of that cause of action.[33]

36 The views expressed by her Honour deny the operation of any 'relation back' of an amendment and thereby undermine the justification for the rule in Weldon v Neal and render subrules (2) - (5) of O 21 r 5 largely otiose. That is because the allowance of an amendment will have no effect upon a limitation defence, which will be either good or bad depending upon when the 'action' was commenced in the court. It was therefore necessary for her Honour to explain Weldon v Neal, and the cases which consider the application of the so-called rule and the rules of court developed in that context. In her view, each was to be explained by the ambiguity of the expression 'cause of action', in the context of the abolition of the rigid forms of action by the Judicature Act 1873 (UK). Her Honour considered that O 21 r 5(5) was directed to curing an unduly rigid and narrow interpretation of Weldon v Neal by encouraging a broader view on the question of whether an amendment fell within the terms of the indorsement on the original writ. In that context her Honour expressed the view that in a clear case in which the amendment would add a new cause of action which was barred by statute, the amendment should be refused. However, in cases in which it was not clear, the amendment should be allowed and the limitation issue determined at trial.[34]

37 Wheeler J then observed that the views which she had expressed might be thought to be inconsistent with the passage in the reasons of Owen J in Dye which we have set out above. Her Honour expressed the view that much of what she had said was consistent with the reasoning in Dye, and that she did not understand Owen J to be asserting that O 21 r 5(5) permitted the addition of a new cause of action outside the relevant limitation period. Her Honour considered that, read as a whole, the decision in Dye supported the conclusions which she had reached.[35]

38 Applying these principles to the case before the court, Wheeler J concluded that as the Master found that the indorsement on the original writ was wide enough to cover the matters sought to be raised by the amendment, no question of 'defeating' the Limitation Act arose. There was therefore no point or purpose to be served by ordering that the amendments take effect only from the date of his order, and the appeal should be allowed.[36]

39 Significantly, Owen J agreed with the reasons published by Wheeler J.[37] Like Wheeler J, he observed that limitation legislation operated by reference to the commencement of an action, which was usually done by the issue of a writ. In that context he agreed with Wheeler J's observation that limitation provisions were generally concerned with the date of issue of the writ rather than with any subsequent proceedings. He also agreed with Wheeler J that neither the practice of the court nor its rules could circumvent the limitation legislation. He also agreed with Wheeler J that the general role performed by O 21 r 5(5) was to avoid an overly technical and rigid investigation as to the degree of coincidence which must be found to exist between the facts necessary to establish the cause of action as originally advanced and those contained in the proposed amendments.[38] Significantly, Owen J also expressly agreed with Wheeler J's analysis of the authorities, including Dye.[39]

40 Owen J also agreed with Wheeler J that once the Master had found that the original indorsement was sufficient to encompass the causes of action formulated in the substituted indorsement and the statement of claim, no question of a limitation issue arose from the allowance of the amendment, and accordingly there was no basis for ordering that the amendment only take effect from the date of the order.[40]

41 The issue was again considered by the Full Court in ABB Service Pty Ltd v Hetherington.[41] The reasons of the court were given by McLure J, with whom Wheeler J agreed. Unsurprisingly, those reasons were consistent with the decision in Morgan v Banning. McLure J observed:[42]

The High Court in Wardley Australia Ltd v Western Australia [1992] HCA 55; (1992) 175 CLR 514 made it plain (at 533) that limitation questions of this kind should not generally be decided in interlocutory proceedings in advance of the hearing of the action.

It follows the Court must have the power to approve amendments to a writ or a pleading in such a case, notwithstanding it may be statute-barred. This is consistent with principle. When a statutory limitation bars the remedy rather [than] the right, the remedy is not barred unless pleaded in the defence (Ronex Properties Ltd v John Laing Constructions Ltd [1983] QB 398 at 405) and can be waived (Commonwealth v Verwayen (1990) 170 CLR 394.) Further, the grant of leave to amend in these circumstances cannot affect a defendant's rights pursuant to a statutory period of limitation.

The second issue is whether O 21 r 5(2) and (5) applies in this case. It will only do so if the relevant limitation period had not expired at the commencement of the action, but had expired by the time of making an application to amend to add a new cause of action.

...

It appears to have been assumed for some time that the relation back doctrine as it applies to amendments to a writ and pleadings had the capacity to prejudice a defendant's rights under a statute of limitations in a situation where an action was commenced within the relevant limitation period and an application to amend was made after the expiry of the limitation period. The assumption explains the characterisation of the rule in Weldon v Neal [1887] 19 QBD 394 as a 'rule of practice'.

However, it is clear in Morgan v Banning (supra) that the rules of court cannot and O 21 r 5(5) does not give the Court the power to override or affect a defendant's accrued rights under a statute of limitations.

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 matters in the relevant pleading and those in the proposed amendment: Morgan v Banning per Owen J at 477.

Whether a new cause of action arises out of the same facts, or substantially the same facts, as the cause of action in respect of which relief has already been claimed is a matter of impression involving questions of degree: Dye v Griffin Coal Mining Co per Owen J at 434.

42 In the circumstances before the court, because the proposed amendments clearly fell within the parameters or framework of the current indorsement, no limitation issue arose.[43]

43 So, consistently with Morgan v Banning, ABB v Hetherington stands for the proposition that if an application to amend does not add a new cause of action in the sense described in the cases, no limitation issue arises, and the general power conferred by O 21 r 5(1) can be exercised. On the other hand, if the amendment does add a new cause of action after the time specified for the commencement of that action in a limitation provision, no doctrine of relation back or rule of court can preclude the defendant relying upon a limitation defence, which should ordinarily be determined at trial.

44 In Rossen v Airey[44] the plaintiff issued a writ generally endorsed alleging that the defendant had published material defamatory of the plaintiff to 'Community Newspapers' which had been republished by that entity. After the expiry of the 12-month limitation period applicable to defamation proceedings against registered newspapers, the plaintiff applied to amend the writ to substitute 'the Post Newspaper' for 'Community Newspapers' in the indorsement of claim. The application was dismissed on the ground that the amendment would introduce a new cause of action which was barred by statute. An appeal from that decision was also dismissed, for reasons given by Newnes JA, with whom the other members of the court[45] agreed.

45 Although the reasons of Newnes JA are directed, in part, to the application of O 21 r 5(5), he cited Morgan v Banning in support of the proposition that the purpose of that rule was to avoid an overly technical and rigid investigation as to the degree of coincidence which must be found to sustain the amendment.[46] After referring at other points to Morgan v Banning and Dye, Newnes JA concluded that the amendment would introduce a new cause of action, by alleging a different tort to that alleged on the original indorsement, at a time when that cause of action was clearly statute-barred.[47] Viewed in that context, there is nothing in the reasons in Rossen, or its outcome, which is inconsistent with the principles established in Morgan v Banning and which were adopted in ABB v Hetherington. Dye and Rossen can both be seen as cases in which a broader principle was engaged - namely, the principle that it would be a futile and inefficient use of the limited resources of the parties and the court to allow a party to advance a claim which has no reasonable prospect of success.

46 As the views expressed by Owen J in Dye have been qualified and explained by the subsequent decision of Morgan, which has been applied in two subsequent decisions of this court, the following principles can now be taken to be established:

(a) limitation legislation, and the defences provided by limitation legislation, operate by reference to the commencement of proceedings in relation to a cause of action, and not by reference to subsequent steps in the course of proceedings, unless that subsequent step is seen as the 'commencement' of a proceeding by the addition of a new cause of action;

(b) if an amendment does not involve the addition of a new cause of action, no question of limitation arises;

(c) in assessing, as a matter of impression and degree, whether an amendment involves the addition of a new cause of action, the court will not undertake an overly technical and rigid investigation, and will construe an indorsement generously, rather than narrowly;

(d) if the amendment does involve the addition of a new cause of action after the time for commencement of proceedings in respect of that cause of action has expired, no doctrine of 'relation back' or rule of court can prevent a defendant from invoking and relying upon a limitation defence;

(e) a statutory limitation bars the remedy rather than right, must be pleaded to be invoked, and can be waived;

(f) however, in a case in which a defendant indicates an intention to plead a limitation defence to a cause of action barred by statute at the time it is proposed to be added by amendment, the court will disallow the amendment if there is no doubt that such a defence would defeat the claim.

47 Generally speaking, however, limitation issues are best decided at trial, with the consequence that an amendment will only be disallowed on the basis of such a defence in the clearest case. Examples of the type of case in which the availability of a limitation defence will be sufficiently clear and uncontroversial as to justify disallowance of an amendment which would inevitably be defeated by such a defence are provided by the circumstances in Dye and Rossen. However, in all but cases of that character, the appropriate course is to allow the amendment (assuming there is no other valid objection to it), enabling the defendant to plead any limitation defence which can then be determined at trial.

48 The question which resolves this appeal is whether this is such a clear case, where the amendment sought should be disallowed on the basis that it is futile because there is a limitation defence that would inevitably succeed. That is why the foreshadowed application by the plaintiffs pursuant to s 38 of the Limitation Act is significant.

49 Sections 38 and 43 of the Limitation Act provide:

Court may extend time to commence actions in cases of fraud or improper conduct

(1) A plaintiff may apply to a court for leave to commence an action on a cause of action even though the limitation period provided for under this Act has expired.

(2) On an application a court may extend the time in which the action can be commenced up to 3 years from when the action ought reasonably to have been commenced if the court is satisfied that the failure to commence the action was attributable to fraudulent or other improper conduct of the defendant or a person for whom the defendant is vicariously liable.

(3) Nothing in section 39, 41 or 42 prevents a court from extending, under this section, the time in which a plaintiff can commence an action.

(4) This section does not apply to an action relating to the publication of defamatory matter.

...

(1) Subject to subsection (2), an extension application is to be made by summons in the jurisdiction in which -

(a) the existing action, if any, has been brought; or

(b) the proposed action would be brought if the application were successful,

(2) An extension application in respect of an arbitration for a difference or matter under an arbitration provision is to be made by summons to the Supreme Court.

(3) The plaintiff is to serve a copy of the summons on each person against whom the action that is the subject of the extension application is brought or proposed to be brought.

(4) Despite subsection (1), the Supreme Court may give leave to bring an action in any court which seems to it to be the appropriate court.

(5) An extension application can be sought or determined at any time before or after the issue, or close of, pleadings.

50 It is necessary to first address the judge's conclusion that neither of these provisions can be used to facilitate the amendment of process in an existing action. If that view is correct, and s 38 can only be used to obtain leave prior to the commencement of relevant proceedings, an application under the section will be of no practical utility to the plaintiffs. That is because a court can only extend time for a period up to three years from the time when the action ought reasonably to have been commenced. As senior counsel for the plaintiffs conceded,[48] it is difficult to conceive any possible basis upon which the plaintiffs might persuade the court that the time at which the action ought reasonably to have been commenced was any later than the time at which it was in fact commenced - namely, on 18 October 2013. It follows that the period of three years from that date has already expired, and any application for leave to commence fresh proceedings within a period extended by the maximum period available under s 38 would be pointless.

51 However, with respect, the judge's conclusion on this issue overlooks the clear terms of s 43, which expressly authorise the making of an application for an extension of time by summons in any jurisdiction in which an existing action has been brought, and which also authorises the making or determination of an extension application at any time before or after the issue or close of pleadings, implicitly therefore in the course of pending proceedings. So, in the present case, it is still open to the plaintiffs to bring an application in accordance with s 43 of the Limitation Act. If and when such an application is made, it will be for the court to determine the time at which the action the subject of the application ought reasonably to have been commenced, and thereby identify the period of three years after that time in respect of which an order may be made. If the filing of the amended statement of claim and the application to amend the indorsement brought in September 2015 are taken to be the commencement of proceedings in respect of new causes of action added to the proceedings by either or both of those documents, there remains a real possibility that the plaintiffs might obtain an order extending the time for commencement of such proceedings until some date after September 2015.

52 The second reason given by the judge for dismissing the plaintiffs' reliance upon the application foreshadowed under s 38 of the Limitation Act was his conclusion that O 21 r 5 should not be construed as being subject to or conditioned by the possibility of such an application. However, with respect, that conclusion is contrary to the principles established by the cases to which we have referred. In accordance with those principles, following the demise of any doctrine of 'relation back', the only continuing significance of subrules (2) - (5) of O 21 r 5 is to reinforce the proposition that the court should not take an overly rigid or technical approach to the assessment, as a matter of impression and degree, of whether an amendment adds a new cause of action.

53 The position adopted by the judge, apparently in reliance upon Dye, was that leave could only be granted if the case fell within subrules (2) - (5) of O 21 r 5, notwithstanding the general terms of O 25 r 5(1). Because he concluded (correctly) that there was no limitation period 'current' at the time of the issue of writ in respect of payments made more than six years before that date, subrules (2) - (5) did not apply, and he therefore had no power to amend the writ in relation to those payments. The flaw in this process of reasoning is that when s 38 and s 43 of the Limitation Act are taken into account, it does not necessarily follow from the fact that there was no limitation period 'current' at the time of the issue of the writ, that a limitation defence will inevitably succeed.

54 In accordance with the principles to which we have referred, the first question which the judge had to address was whether the proposed amendments added a new cause of action. If the answer to that question, addressed in the manner we have already described, is in the negative, then no limitation issues arise. If the answer to that question is in the affirmative, the judge had then to ask whether this was one of those cases in which it was so clear that a foreshadowed limitation defence would succeed that the amendment should be disallowed on the ground that it would be futile.

55 In this case the judge answered the first question affirmatively in relation to the amendment the subject of this appeal. Although there might be scope to challenge that conclusion, that is not the course the plaintiffs have taken. The outcome of this appeal therefore turns on the second question, which is the question of whether it is so clear that the limitation defence foreshadowed by the defendants will succeed that leave to amend should have been refused. Because of the possibility that the plaintiffs might succeed in an application made pursuant to s 38 of the Limitation Act and obtain an order which would overcome any pleaded limitation defence, in the circumstances of this case the judge should have concluded that this was not one of those cases in which a foreshadowed limitation defence would necessarily succeed, and allowed the amendment. With respect to the judge, this is not a question of construing O 21 r 5 as being constrained by words that are not there. Rather, it is a question of applying the rule by reference to the principles established by the cases to which we have referred.

56 It follows that the ground of appeal has been made out.

57 It is necessary to return to the question of whether leave to appeal should be granted. There are two reasons why leave should be granted in this case. First, notwithstanding the decisions to which we have referred, it appears that the provisions of O 21 r 5 are continuing to cause confusion, and it is desirable for the operation of those provisions to be clarified by a decision of this court. The second reason leave should be granted is that the appellants have succeeded in establishing error which could potentially result in substantial injustice if the error is not corrected. That injustice arises from the fact that it is now too late for the plaintiffs to apply under s 38 of the Limitation Act for leave to commence fresh proceedings. If it is decided at trial that the amendments introduced in September 2015 did in fact constitute the commencement of proceedings in relation to new causes of action not encompassed within the proceedings commenced in 2013, the only way the plaintiffs will be able to pursue those causes of action is if they are successful in an application brought pursuant to s 38 and s 43 of the Limitation Act in these proceedings.

58 The judge has reserved the question of the date from which the amendments are to be taken to have effect, which will leave it open to him to determine that they should take effect from the date upon which the applications for amendment were made, consistently with the observations made above with respect to the primacy of limitation legislation, and the inability of a court to defeat the application of that legislation by rules or practices. Assuming the judge takes that approach, the possibility of an order pursuant to s 38 of the Limitation Act extending the time for commencement of proceedings in respect of any 'new' causes of action remains real.

59 It remains to deal with the notice of contention which asserts that the decision of the judge at first instance should be upheld on the basis that he erroneously concluded that the amendments arose out of the same facts or substantially the same facts as a cause of action covered by the original indorsement, and therefore came within O 21 r 5(5). It is difficult to see how this notice could have any effect in any circumstance, because the judge excluded the amendment relating to the payments made more than six years before the writ was issued because O 21 r 5(5) did not apply to those payments, not because it did. The only payments to which the contention could apply are the payments which the judge found did fall within O 21 r 5(5), namely, those made later than six years before the issue of the writ, but earlier than six years before the application to amend. A challenge to the judge's decision with respect to those payments is not a contention that his decision should be upheld on other grounds, but is, in effect, an appeal from that aspect of his decision.

60 In any event, it is apparent from the reasons we have already given that the only continuing significance of O 21 r 5(5) is to discourage the taking of an overly rigid or technical approach to the question of whether an amendment adds a new cause of action. Because, in this case, even if the amendments did add new causes of action, it was not possible to say with certainty that a limitation defence foreshadowed by the defendants would inevitably succeed. It was and remains unnecessary to address the question posed by O 21 r 5(5) and leave to amend should have been allowed.

61 For these reasons, leave to appeal should be granted, the appeal allowed, and orders made granting the plaintiff leave to amend the indorsement on the writ in accordance with the reasons of this court, such amendment to take effect from a date to be fixed by the judge at first instance. The notice of contention should be dismissed.

[1] Joondel Developments Pty Ltd, the other plaintiff in the proceedings below, did not participate in this appeal. Reference in these reasons to the plaintiffs, plural, includes Joondel.

[2] Belgravia Nominees Pty Ltd v Lowe [2015] WASCA 143.

[3] For reasons which will appear, it is unnecessary to particularise or compute the total of these payments.

[4] Belgravia Nominees Pty Ltd v Lowe Pty Ltd [No 3] [2015] WASC 442 (Reasons) [6] - clearly the reference to r 5 of the Rules should be read as a reference to O 21 r 5(5).

[7] Morgan v Banning (1999) 20 WAR 474.

[10] Stone James v Pioneer Concrete (WA) Pty Ltd [1984] WASC 460; [1985] WAR 233, 239 (Burt CJ); Rayney v State of Western Australia [No 3] [2010] WASC 83 [36] (Martin CJ).

[18] Belgravia Nominees Pty Ltd v Lowe Pty Ltd [No 4] [2016] WASC 74 [21].

[21] Amended minute of reamended writ dated 10 March 2016.

[22] Weldon v Neal (1887) 19 QBD 394.

[23] Dye v Griffin Coal Mining Co Pty Ltd [1998] WASCA 184; (1998) 19 WAR 431.

[25] Dye (434), relying on Do Carmo v Ford Excavations Pty Ltd [1984] HCA 17; (1984) 154 CLR 234, 245 (Wilson J).

[28] Although Owen J was a member of both courts.

[30] Consistently with High Court authority - see Wardley Australia Ltd v State of Western Australia [1992] HCA 55; (1992) 175 CLR 514.

[31] Morgan v Banning (480 - 482).

[35] Morgan v Banning (486 - 487).

[38] Morgan v Banning (466 - 467).

[40] Morgan v Banning (477 - 478).

[41] ABB Service Pty Ltd v Hetherington [2001] WASCA 417.

[42] ABB v Hetherington [11] - [13], [18] - [21].

[44] Rossen v Airey [2012] WASCA 26.

Real Estate and Business Agents Act 1970

ABB Service Pty Ltd v Hetherington

At a glance

Court

Decision date

Before

Catchwords

Source

Catchwords

Judgment (126 paragraphs)

BELGRAVIA NOMINEES PTY LTD -v- LOWE PTY LTD [2017] WASCA 127 (7 July 2017)

Parties

Legislation Cited (1)

Cases Cited (5)