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[2010] WASCA 55
Court of Appeal (WA)
2010-03-25
Pullin JA
Original judgment source is linked above.
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
CITATION : SMITH -v- McCUSKER QC [2010] WASCA 55
Jurisdiction : SUPREME COURT OF WESTERN AUSTRALIA
Citation : SMITH -v- McCUSKER QC [No 6] [2009] WASC 381
Practice and procedure - Application to amend statement of claim - Appellants denied opportunity to be heard - Lack of procedural fairness - Futile to remit the application for rehearing - Proposed amendments embarrassing - Unexplained delay
Allesch v Maunz [2000] HCA 40; (2000) 203 CLR 172
Allmark v Mossensons [2006] WASCA 127
Cesan v The Queen [2008] HCA 52; (2008) 236 CLR 358
Coal and Allied Operations Pty Ltd v Australian Industrial Relations Commission [2000] HCA 47; (2000) 203 CLR 194
Commonwealth v Albany Port Authority [2006] WASCA 185
Fox v Percy [2003] HCA 22; (2003) 214 CLR 118
Gallo v Dawson [1990] HCA 30; (1990) 93 ALR 479
Girando v Girando (1997) 18 WAR 450
International Finance Trust Co Ltd v New South Wales Crime Commission [2009] HCA 49; (2009) 261 ALR 220
Nudd v The Queen [2006] HCA 9; (2006) 225 ALR 161
Re Minister for Immigration and Multicultural Affairs; Ex parte Applicant S154/2002 [2003] HCA 60; (2003) 201 ALR 437
Rosenberg v Percival [2001] HCA 18; (2001) 205 CLR 434
Smith v Commissioners of the Rural and Industries Bank of Western Australia [2009] WASC 100
Smith v McCusker QC [2000] WASCA 320
Smith v McCusker QC [2001] WASCA 85
Smith v McCusker QC [No 6] [2009] WASC 381
Stead v State Government Insurance Commission [1986] HCA 54; (1986) 161 CLR 141
Waller v Waller [2009] WASCA 61
Wilson v Metaxas [1989] WAR 285
1 PULLIN JA: The appellant seeks an extension of time and leave to appeal against the order of the primary judge dismissing the appellant's application to amend their statement of claim.
2 The appeal notice identifies the decision appealed against as a decision of the primary judge dated 11 December 2009. No decision, that is no order, was made by the primary judge on 11 December 2009, although there were some reasons of the primary judge dated 11 December 2009. Both parties agreed that par 1 of orders made by the primary judge on 15 December 2009 was the subject of the appeal. This order reads:
The amendments proposed in the document entitled Further Amended Statement of Claim will not be allowed for the reasons that the Chief Justice enunciated during the course of the hearing.
3 On its face the order is in irregular form. It lacked precision. Order 1 refers to the singular ie 'the document'. Paragraph 7 of the orders refers to two documents. It reads:
The plaintiffs pay the defendant's costs of responding to the minutes both in August 2009 and in early December 2009 to be taxed.
4 The likelihood that this would cause uncertainty came to pass. It was necessary to hear submissions about what order 1 meant. When the order was made, there were in fact two minutes before the court. One was dated 26 August 2009 (the August minute) and the other was dated 3 December 2009 (the December minute). In the case of the August minute, the heading appeared 'Further Amended Statement of Claim amended pursuant to the order of His Honour the Chief Justice 26 August 2009'. This was a further irregularity. It was not a statement of claim pursuant to the order of the primary judge; it was a minute of proposed amendments. The December minute was entitled 'Further Amended Statement of Claim amended pursuant to the order of his Honour the Chief Justice 20 October 2009'. That was also incorrect. It was also merely a minute of a proposed further amended statement of claim. The December 2009 minute repeated amendments proposed in the August minute, but added extra paragraphs.
5 The relevant history is as follows. In 1982 the appellants sued the R&I Bank for damages due to alleged negligence and breach of contract by the bank. They alleged that the negligence and breach of contract led them to borrow money from the bank. They contended they could not repay the bank and that they then borrowed money from the Town & Country Building Society to pay out the R&I debt.
6 The appellants obtained legal aid to obtain legal advice from the respondent about the merit of their action against the bank. The respondent advised that there was no merit in the appellants' claim as a result of which, the appellants allege, their application for legal aid was refused. The appellants allege that the advice was given negligently in breach of a general law duty of care and in breach of contract. They allege that these breaches and the lack of legal aid funding disadvantaged them in their ability to pursue their claim against the R&I Bank and caused them loss.
7 A writ issued against the respondent in March 1995. There was an application by the appellants to amend the statement of claim in 1997 in accordance with a minute of proposed substituted statement of claim dated 15 April 1997. The application sought to plead new material facts namely that the respondent was in a position of conflict when he provided his opinion. The conflict was said to arise because the respondent was, at the time, a director of Town & Country Building Society and associated entities, that there was some relationship between the building society and their entities and the R&I Bank and because the respondent was a member of the Board of the Legal Aid Commission. Paragraph 12 of the minute of proposed substituted statement of claim dated 15 April 1997 read in part:
12.1 The first defendant did not disclose, when he accepted the plaintiffs' retainer, that he was already a fiduciary of the plaintiffs and T&C, T&CPBS and T&CNO9TBS in his capacity of Director of T&C, T&CNO9TBS, T&CPBS, and by virtue of the exercise of the power of sale under the terms of the mortgage, following service upon the plaintiffs of a Notice of Demand dated 15th May 1985.
12.2 The first defendant did not disclose to the plaintiffs that he was a director of T&C when the plaintiffs gave vacant possession of the land to T&C in January 1989, about one month before the first defendant provided his opinion.
...
12.4 In the premises the first defendant was in a position of conflict of interests and owed conflicting duties to the plaintiffs, T&C, T&CPBS, T&CNO9TBS, McCusker and Harmer, The R&I, the Treasurers of the state of Western Australia and the Legal Aid Commission.
...
12.4.3 As a result of the first defendant's failure to so disclose the plaintiffs lost the opportunity of deciding in all the circumstances to obtain the opinion from some other Senior Counsel without a conflict of interests and duties.
8 The appellant claimed damages in the prayer for relief.
9 The application for leave to amend by introducing par 12 was dismissed and the appellants appealed against the decision to the Full Court of the Supreme Court. The appellants failed in that appeal to amend in accordance with par 12 of the minute, but were given leave to make some other amendments: Smith v McCusker QC [2000] WASCA 320 and supplementary reasons in Smith v McCusker QC [2001] WASCA 85.
10 In due course a revised statement of claim was settled, taking into account the reasons of the Full Court. There were deficiencies in that statement of claim. Eventually the appellants were granted leave to file a further amended statement of claim in 'May 2007': see Smith v Commissioners of the Rural and Industries Bank of Western Australia [2009] WASC 100 [30] - [38]. The precise form of the statement of claim as it stood when the matter came on for directions before the primary judge on 26 August 2009 was not provided to this court but an examination of the court file in CIV 1230 of 1995 reveals that an order was made by the Chief Justice on 8 March 2007, par 3 of which read:
The plaintiffs file and serve any revised statement of claim by 8 May 2007.
11 A document entitled 'Revised further amended statement of claim' referring to the order of the Chief Justice of 7 March 2007 was filed on 8 May 2007. It would seem to be the 'May 2007' statement of claim referred to above. That appears to have been the form of the statement of claim up until the date of the events the subject of this appeal.
12 On 26 August 2009, the case was listed before the primary judge for directions. On that day, his Honour discussed with the parties a date for trial. There was also discussion about a proposal by the appellants to once again apply to amend their statement of claim on the basis of what Mrs Smith said were new documents and facts undisclosed by the defendant 'that we only found out between November 2008 and three or four weeks ago'. The primary judge informed the appellants that unless the proposed pleading had reasonable prospects he would not allow the amendments. At the end of the hearing the primary judge made orders relating to the forthcoming trial and ordered that:
(a) [B]y 31st August 2009 the plaintiffs file and serve any application for leave to amend their written statement of claim together with an outline of submissions in support of that application.
(b) [I]f such an application to amend is made it will not be a hearing nor will the defendant be required to respond unless and until the Chief Justice has formed the view that the application has reasonably arguable prospects of success and has made such a direction.
13 The primary judge also made an order that the action be listed for trial for four weeks commencing on 19 April 2010.
The application for leave to amend the statement of claim in accordance with the August minute
14 The appellants did not file an application for leave to amend their written statement of claim by 31 August 2009. Instead they filed an application on 2 September 2009 seeking to amend the statement of claim in accordance with the August minute. The August minute largely follows the 8 May 2007 statement of claim, but then added a further 14 pages of proposed material, starting with par 64 and ending with par 99.1.11. Some representative paragraphs are set out below because it will allow comparison to be made with par 12, which was the paragraph which had been disallowed by way of amendment in 1997 and by the Full Court. The numbering of the paragraphs is incorrect, but this is how they appear in the August minute. They read:
15 Some other paragraphs are set out below for reasons which will become apparent later in these reasons. The paragraphs read:
68.1 Westralian International, an Associate merchant Bank of the Rural and Industries Bank, assumed management of the Town and Country Permanent Building Society of Western Australia.
68.2 The Rural And Industries Bank of Western Australia commissioned a report of the systems of T&C and implemented changes and the report and changes were communicated to the Commissioners and documents held on file at the R&I
68.3 Mr Lyn Wilson, former Reserve Bank exchange control department head, of Westralian International, was appointed to the Board of The Town and Country Permanent Building Society of Western Australia and served with the defendant;
68.4 The The [sic] Rural and Industries Bank of Western Australia and Westralian International took up major shareholdings in The Town and Country Permanent Building Society of Western Australia giving the Rural and Industries Bank of Western Australia a major say in T&C affairs and giving Westralian International overall management of T&C.
68.5 Westralian International underwrote issues of secured deposits by T&C and the R&I acted as banker for the issue and received lodgments of deposits and processed redemptions of deposits through its branches state wide;
68.6 The R&I through its branches, received deposits from investors in T&C accounts and forwarded them to T&C, and in this manner, had influence and power over potential customers of T&C.
68.7 The R&I, through its Commissioner which sat on the Board of T&C, received reports and minutes of the directors meetings of T&C and other dealings of T&C and kept them on file in the R&I. At some of these directors meetings the Plaintiffs' own business matters were discussed, including the decision of T&C to rewrite the Plaintiffs' debt to the R&I in 1982, which required the directors' special approval, and the various dealings of the Plaintiffs with T&C leading up to the two mortgagee sales of their farm.
68.8 The Commissioners had money invested in T&C.
68.9 The T&C loans ledger was converted to the R&I computer and T&C used the R&I computer and staff;
68.10 Weekly and monthly reports to directors of T&C were held on file by the R&I;
75.1 there may be and appears to be and to have been at one time facts and information and evidence relevant to their claims against the Commissioners and this claim which it was the contractual duty of the Defendant to disclose;
75.2 the Plaintiffs have never had the use of those facts in formulating either their claim against the Commissioners or this claim;
75.3 some of those facts, information and evidence are now lost and as a result the Plaintiffs may never have a fair trial of their action.
...
PARTICULARS
90.1 All the matters pleaded in this Statement of Claim as flowing from the Opinion;
90.2 Loss of Legal Aid and consequent legal representation;
...
90.12 The burden of years of litigation, including the fact that, whatever we do in litigation we know that he knows it will probably be wrong somehow due to our being unrepresented.
16 The female appellant filed an affidavit sworn 24 August 2009 providing some documents which the appellants contended supported their claims against the respondent. On 9 September 2009, the associate for the primary judge wrote to the female appellant in the following terms:
CIV 1230 of 1995 Smith v McCusker QC
I refer to the Notice of Motion filed on 2 September 2009 in the above matter and to the various documents filed in support of that motion.
The Chief Justice has reviewed those documents for the purpose of assessing whether the defendant should be required to respond to that motion, in accordance with paragraph 6 of the orders which he made on 26 August 2009.
The Chief Justice has asked me to advise you that he has noted, in the course of that review, that the most recent document relied upon in your affidavit sworn 24 August 2009 is a document produced in 1976. The Chief Justice requests that you provide further submissions identifying the evidence upon which you rely for the proposition that there was an association or commercial relationship between the defendant, Mr McCusker QC, and/or Town & Country Permanent Building Society on the one hand, and the R&I Bank on the other, in 1986 when the defendant was retained to provide advice.
17 On 15 October 2009 the associate to the primary judge wrote to the female appellant with a copy to the respondent's solicitors in the following terms:
CIV 1230 of 1995 Smith v McCusker QC
I refer to the plaintiffs' Notice of Motion filed on 2 September 2009 in the above matter and to the various documents filed in support of that motion.
The Chief Justice has reviewed those documents in accordance with paragraph 6 of the orders which his Honour made on 26 August 2009. His Honour is of the view that the plaintiffs' application to amend their writ and statement of claim is sufficiently arguable to justify the defendant being called upon to respond, and as such the defendant should be served with those documents.
18 On 20 October 2009, the matter was again listed before the primary judge for further directions. The transcript of that hearing records the primary judge as stating:
[T]here is an issue arising from Ms Smith's application to amend the statement of claim to assert that in addition to the other breaches of duty there was a breach of duty by Mr McCusker failing to disclose an association which he had with the bank arising from his directorship of Town and Country Building Society.
19 The primary judge said in effect that the proposed amendment was sufficiently arguable to justify the respondent being called upon to respond to it.
Order 4 will be the plaintiffs file and serve any submissions in support of their application for leave to amend their statement of claim and file a minute of any other amendments proposed by 27 November and then the proposal is that we have a hearing. Somebody selected 15 December. Do we need a hearing or can we deal with it on the papers? Do you think we need a hearing, Mr Solomon?
If it is simply the isolated issue your Honour has mentioned, quite possibly not. It might nevertheless be a prudent idea to set aside some time some time in December where we can have a cleanup day of various issues.
MARTIN CJ: Yes, 15 December would be convenient for me. Is that convenient for you, Ms Smith?
SMITH, MS: Yes, your Honour.
MARTIN CJ: Very well. I will list it for 9.30 that day, Ms Smith. Would that be convenient to you?
SMITH, MS: 9.30?
MARTIN CJ: 9.30.
SMITH, MS: Yes, that's fine.
MARTIN CJ: All right. We will deal with any other matters by then.
SMITH, MS: I'm a little bit confused about something, your Honour.
MARTIN CJ: Yes.
SMITH, MS: The plaintiffs' application to amend their statement of claim - didn't you just say that - - -
MARTIN CJ: That is the application that is still under way.
SMITH, MS: Yes.
MARTIN CJ: So we will hear the argument about whether or not - if there is to be any further argument, then we will hear that issue on 15 December.
SMITH, MS: Okay. So what you meant previously was that there wouldn't be a pre-trial trial of the issue.
MARTIN CJ: Yes, what I meant was I am not interested in determining the facts.
SMITH, MS: Yes, all right.
MARTIN CJ: All I am interested in is arguability.
SMITH, MS: Yes, okay.
23 From this it was clear that the appellant's application for leave to amend would be listed and heard at 9.30 am on 15 December 2009. An order was made in those terms.
24 The appellants did not file a minute of 'other amendments' by 27 November 2009 but instead on 4 December 2009, filed the December minute.
25 The December minute is in highly unsatisfactory form. The minute should have set out the 8 May 2007 statement of claim and should then have shown proposed amendments to that statement of claim by either underlining additions or lining through deletions. That process was not followed. However, it does reveal an adoption of much of the original statement of claim but with changes to parts of the statement of claim concerning the recital of the events involving the R&I Bank. The amendments up to par 80.17 in this minute are concerned with pleading a claim as though the action were against the R&I Bank. The minute then sets about pleading out the case against the respondent and repeats, this time in par 117 and 118 (and following), what had been found in pars 64 and 65 (and following) of the August minute. This December minute treats those paragraphs as though they were paragraphs in the existing statement of claim and does not show them as proposed amendments. Nevertheless, the renumbered paragraphs do appear to mirror what was proposed in the new paragraphs proposed in the August minute with some additional paragraphs added.
The primary judge publishes reasons for dismissing the application to amend in accordance with the August minute
26 On 11 December 2009 the primary judge published reasons entitled Smith v McCusker QC [No 6] [2009] WASC 381 in which he referred to the appellants' motion for leave to amend their statement of claim 'in terms of a minute which has been filed'. His Honour dismissed the application to amend. It was evident from reading the reasons that the primary judge had regard only to the August minute.
27 Mrs Smith, the female appellant, advised this court that she received a copy of the reasons a day or two before the hearing on 15 December 2009.
28 At 9.30 am on 15 December 2009 the case came on for hearing before the primary judge. The transcript reveals the female appellant opening by stating:
Well I am a little bit puzzled, your Honour, because the last orders you made were that this morning was a special appointment for the hearing of our application to amend our statement of claim and the next thing I had was a judgment.
29 The primary judge at first said that the matter was to be dealt with on the papers. However upon examining the transcript of 20 October 2009 his Honour acknowledged that he had overlooked the fact that the hearing on 15 December 2009 was to deal with the application to amend the statement of claim. The primary judge then said that he had 'formed a strong view about the issues' when he read the papers but that 'I am happy to revisit that if you would like to put any further argument in support of the proposition'. The female appellant said that the position was 'rather complicated' by the fact that there is now a judgment because 'basically it appears to me that I have a right of appeal from that'. Ms Smith then said that if the matter was to be decided on the papers, she would have put in far more comprehensive submissions and the primary judge asked what those submissions would have gone to. The transcript records the following interchange:
SMITH, MS: This is a bit awkward on my feet.
MARTIN CJ: That's what you thought you were having today. You thought you were having an argument on your feet.
SMITH, MS: Yes, but not with a judgment already in place.
MARTIN CJ: What more could you have said?
30 There was then a short set of submissions which appeared to be addressing one aspect of the primary judge's reasons dated 11 December. After further submissions, the transcript reveals the following exchange:
MARTIN CJ: I remain of the view that I have expressed in the reasons that I have published, Ms Smith.
SMITH, MS: I can't argue with your Honour. I mean, if you are of that view, with respect to the court, it precludes me from arguing further. The only thing that I need to ask you is what are my rights of appeal?
MARTIN CJ: You don't have a right of appeal. You have a right to make an application for leave to appeal because this is an interlocutory decision.
31 The primary judge then turned to the December minute and the transcript reveals the following:
MARTIN CJ: There are other amendments that you have proposed.
SMITH, MS: Yes.
MARTIN CJ: As I say, that's what I thought we were going to be talking about today. Perhaps the best thing - the decision that I have given would, I think, exclude using the new numbering. Everything from paragraph - - -
SOLOMON, MR: I think I can assist you, your Honour.
MARTIN CJ: Yes. (ts 358)
32 It is not necessary then to set out the transcript in full, but what it reveals is that Mr Solomon, counsel for the respondent, made submissions about what he considered was to be found in the December minute. He then produced a document and he said 'we have colour-coded the amendments and put them into six categories that we think they fall into'. Unfortunately the colour-coded document was given back to the respondent's counsel at the conclusion of the hearing. It was not provided to this court during the oral hearing of the appeal. However, the transcript of 15 December 2009 reveal references to some green markings, some blue markings, some orange markings and some yellow markings on the copy of the minute which was handed up. At the hearing of this appeal, the respondent said that he would, after the court reserved its decision, send down a copy of the colour-coded document. Subsequently, a colour-coded document was sent down but it contained only green and blue marked up portions of the December minute. It was not marked up with any yellow or orange markings. Thus the document sent down to the court was not the document which was handed up to the primary judge.
33 Counsel for the respondent at the hearing before the primary judge on 15 December 2009 contended that the proposed amendments fell into two broad categories, those that were 'inadmissible by virtue of your Honour's ruling of Friday and then there are others'. In relation to the others, he said that they were in some instances 'quite substantial in the sense that they expand the claim, but, regrettably, in quite a vague way that is extremely unhelpful, but we are opposed to almost all the amendments for that reason'.
34 The primary judge then asked for confirmation of Mr Solomon's proposition that the amendments had gone further than just 'tidying up and housekeeping'. The primary judge then asked for some examples and some examples were given.
35 Then without calling on or hearing from Ms Smith, the primary judge dismissed the application to amend in accordance with the December minute. This appears from the transcript which reveals the following after Mr Solomon completed his submissions:
MARTIN CJ: So that I just wonder then if I could just say, 'This pleading we don't need to worry about'.
SOLOMON, MR: What does that mean, your Honour?
MARTIN CJ: I will strike it out. I will strike it out and then I will say that I could then set a time by which Ms Smith has to file submissions in support of her claim.
SOLOMON, MR: Do you mean to say that your Honour will disallow these amendments?
MARTIN CJ: I will disallow the amendments entirely because they are much more substantial than I contemplated. I had previously stood over an application to strike out the previous version of the pleading, so I can't see why I would be allowing amendments that, on the face of it, as you say, further complicate and revise, change all the numbering and a substantial revision would mean that you would have to file a completely new defence. It's just all over the place and I can't see why I would allow it at this late stage of the proceedings.
36 The primary judge then turned to the female appellant and said:
Very well. Mrs Smith you have heard me. I just think it's too late for you to completely rewrite the pleading in this way. We've got to have a trial of this case. I think your amendments fall into two categories. Leaving aside the colours - there are three. There's the amendments that I think should be disallowed because they have previously been covered by the decision of the [Full Court] and they are the subject of my decision I published last week. There are two others I think from my reading of the pleading. One is, if you like, the factual enunciation or elaboration of matters that are within the scope of your present claim, the detail about you and your husband's condition.
SMITH, MS: Further detail?
MARTIN CJ: Further detail. To the extent that that it is comprehended within the pleading you lodged in 2007 and the notice that you have given to the bank of the issues you want to run through the witness statements and the evidence that you have filed, then you will be allowed to run those claims at the hearing in April because the bank is on notice of them and they should be prepared.
SMITH, MS: Mr McCusker.
MARTIN CJ: I'm sorry, Mr McCusker is on notice of them and should come prepared to meet them. The other category is matters that go beyond the scope of what you have already put Mr McCusker on notice of. Now, my view is that in the middle of December for a trial starting in late April, the proceedings that have been on foot for 14 years I would not allow you to introduce any significant new matters of that kind because it would be unfair to Mr McCusker and it would prevent the trial starting on the allotted date.
The tortuous history of this case is, in my view, a classic illustration of the type of case in which robust management of the proceedings by the court is necessary so that the broader interests of justice can be served by this trial going ahead on its allotted date, so what I am saying is that to the extent that the amendments you propose are encompassed within the matters of which you have given notice so far, you don't need the amendments. To the extent to which they go beyond those matters, I wouldn't allow them anyway, so I don't think there is any point or purpose served by this additional pleading. Rather, I think the best way forward would be for me to fix a time by which you file - all your evidence is on now. That's right, isn't it? All the evidence upon which you rely has been served? ...
SMITH, MS: I think so ...
MARTIN CJ: If I directed you to file written submission enunciating how you make out your case, then my suggestion is that we use that document viewed in the context of the evidence that you have disclosed as the best enunciation of your case rather than get bogged down with minute analysis of the 2007 pleading.
37 As already mentioned, the reasons of the primary judge published as Smith v McCusker [No 6] make it clear that the primary judge's reasons dealt only with the August minute. However, after hearing submissions from the parties to this appeal about the possible meanings of par 1 of the order dated 15 December 2009 the respondent agreed that it should be construed as a dismissal of the application for leave to amend by adding any of the amendments in either minute. It was not disputed by the appellants that the December minute repeated the amendments proposed in the August minute and then added further proposed amendments. After further debate at the appeal hearing, counsel for the respondent accepted that the reference in the order to 'the reasons that the Chief Justice enunciated during the course of the hearing' should be taken to be a reference to the 11 December 2009 written reasons in Smith v McCusker [No 6] and the primary judge's reasons expressed orally on 15 December 2009.
The reasons of the primary judge in Smith v McCusker [No 6]
38 It is now appropriate to refer to the reasons of the primary judge in Smith v McCusker [No 6]. The primary judge referred to the history of the proceedings in the following terms:
These proceedings have a long and tortuous history. It has been recounted on a number of occasions - see for example Smith v Commissioners of the Rural and Industries Bank of Western Australia [2009] WASC 100. It is unnecessary to recount that history for the purposes of resolving these applications, other than to observe that in recent years I have been endeavouring to case manage these proceedings to a trial. In the course of that management, and in order to get the matter to trial, I have adopted a robust approach in relation to pleading issues and have, for example, adjourned the defendant's application to strike out the plaintiffs' statement of claim to be determined at trial, lest these already protracted proceedings become even further protracted by avoidable interlocutory disputes.
It is also necessary to note that the trial has been listed to commence on 19 April 2010. I have made it clear to all parties on a number of occasions that the interests of justice require the trial to start on that date, given the protracted history of these proceedings, and that case management directions and interlocutory rulings will be made with that objective strongly in mind.
The dispute between the parties with respect to the amendments to the pleadings now proposed by the Smiths are of a different character to those which I have adjourned to be determined at trial. That is because the ambit of the evidence to be adduced at trial would be dramatically affected if the amendments were allowed. It is therefore necessary to rule on this issue well in advance of trial, in order that the parties can prepare accordingly [2] - [4].
39 The primary judge explained that the amendments proposed in the August minute should be disallowed for the following reasons.
In my opinion, there are four separate reasons why the amendments proposed by the Smiths, and the ancillary claims for orders associated with those amendments (including the claims for disclosure and inspection of documents), must be disallowed. They are:
(1) the amendments seek to assert causes of action which the Full Court has previously held to be unarguable - see Smith v McCusker QC [2000] WASCA 320;
(2) the amendments are moved at a late stage of the proceedings, after a lengthy period of unexplained delay;
(3) the amendments, if allowed, would cause substantial prejudice to the defendant, given the time which has elapsed since the occurrence of the events the subject of the amendments, and would very likely lead to a postponement of the trial;
(4) the amendments are vague and confusing. [9]
40 The first reason for refusing the application to amend and the decision of the Full Court in Smith v McCusker QC [2000] was explained in the following terms:
On 15 April 1997, the Smiths filed a document entitled 'Minute of proposed substituted substituted [sic] statement of claim'. In that document, the Smiths pleaded the relationship between the defendant and the law firm McCusker & Harmer, his relationship with the Town and Country Permanent Building Society, the relationship between the Town and Country Permanent Building Society and the Bank and the defendant's membership of the Board of the Legal Aid Commission of Western Australia. The Smiths also pleaded that the defendant was a 'rural financier'.
The 1997 proposed pleading also asserted a duty of disclosure and a breach of that duty of disclosure in connection with the various relationships pleaded. The proposed pleading further asserted that the consequence of the failure of disclosure was that the Smiths lost the opportunity of having a legal adviser whose loyalties were not divided.
Written submissions were filed in support of the pleading proposed in 1997. Those written submissions deal explicitly with the same relationships between the defendant and the various entities to which I have referred which are at the heart of the amendments now proposed.
In Smith v McCusker (Unreported, WASC, Library No 970415, 16 June 1997), the Master rejected the Smiths' application to substitute their statement of claim with the 1997 proposed pleading and dismissed the Smiths' action. The Smiths appealed from that decision. Prior to the hearing of the appeal, a series of questions were settled for the consideration of the Full Court, and the appeal was conducted by reference to those questions.
Some of those questions concerned whether the parts of the proposed 1997 pleading to which I have referred disclosed an arguable cause of action. Templeman J, with whom the other members of the court agreed, concluded that they did not (Smith v McCusker QC [2000] WASCA 320 at [175] - [186]). In the view of the Full Court, the matters alleged would only give rise to an arguable cause of action if it could be established that the defendant in fact acted so as to advance his own interests in preference to those of the Smiths [183]. Such a claim was made in the pleading proposed in 1997. However, in the view of the Full Court because the claim was, in substance, an allegation of fraud, some evidence was necessary to sustain the allegation, and there was no such evidence [184].
Although couched in different terms, the amendments now proposed are substantially the same as those proposed in 1997, save that the current amendments do not assert the fact considered by the Full Court to be critical to their arguability - namely, that the defendant acted so as to advance his own position in preference to that of the Smiths. It follows from the decision of the Full Court, by which both I and the parties to these proceedings are bound, that the proposed amendment fails to disclose an arguable cause of action. It must be rejected for that reason alone.
The matters said to have been 'discovered' by the Smiths in 2008 do not materially alter the character of the assertions made in the proposed amended pleading. They go only to the precise extent of the relationship between the Bank and the Town and Country Permanent Building Society. The extent of that relationship was not material to the decision of the Full Court. The Full Court decision was based upon an assumption that the facts asserted in the pleading proposed in 1997, to the effect that there was a significant commercial relationship between the Bank and the Town and Country Permanent Building Society of which the defendant was a director, were correct. The matters said to have been discovered in 2008 do not therefore alter, in any material way, the substance of the causes of action asserted against the defendant [10] - [16].
41 I should add that the decision of the Full Court in Smith v McCusker QC [2000] has to be read in conjunction with the Full Court's decision in Smith v McCusker QC [2001] in which the Full Court corrected an error in relation to the reasons in their earlier decision.
42 The appeal notice was filed on 25 January 2010. If the appeal was against a final order, the appeal was within time. If the appeal was against an interlocutory decision, then because of r 26(1) of the Supreme Court (Court of Appeal) Rules 2005 (WA) (Court of Appeal rules) the appeal notice had to be filed within 14 days of 15 December 2009. The days between 24 December and 14 January are not to be reckoned in determining the time for appealing (see Rules of the Supreme Court 1973 (WA), O 3). Thus the 14 day period for appealing if the order was interlocutory expired on 20 January 2010. The appeal notice was filed on 25 January 2010, five days out of time.
43 For reasons which appear below, the primary judge's order was an interlocutory order and the appeal notice was therefore filed out of time and the appellant does require an extension of time.
Principles governing application for an extension of time
44 The principles governing an application for an extension of time are well established. The respondent's vested right to retain the judgment, the length of delay, the reasons for delay, whether there is an arguable case, and the extent of prejudice to the respondent are all relevant: Girando v Girando (1997) 18 WAR 450, 454; Gallo v Dawson [1990] HCA 30; (1990) 93 ALR 479, 480.
45 The female appellant explained that she thought she had 21 days in which to appeal and did not know that for an interlocutory appeal the time limit was 14 days. It was not suggested by the respondent that there was any prejudice caused by the five day delay. If there is merit in the appeal then time in which to appeal should be extended.
Principles governing application for leave to appeal
46 Being an interlocutory decision, leave to appeal was required: see s 60(1)(f) Supreme Court Act 1935 (WA). The principles governing an application for leave to appeal are as follows. Leave to appeal against an interlocutory decision will usually only be granted where the decision below was wrong or was attended with sufficient doubt to justify granting leave and where substantial injustice would be done by leaving the decision unreversed: Wilson v Metaxas [1989] WAR 285.
47 The order refusing leave to amend pleadings was an interlocutory decision. An order refusing leave to amend the statement of claim does not finally dispose of the rights of the party in the action: Waller v Waller [2009] WASCA 61. A procedural decision may effectively prevent a party from proceeding with an action but that does not alter the classification of its character or nature: Allmark v Mossensons [2006] WASCA 127 [23].
48 The grounds of appeal are 20 in number but they fall into two categories. They are:
(a) the grounds alleging that there was a miscarriage of justice because of procedural unfairness, in that the primary judge decided the application on the papers on 11 December 2009 before the appellant had the opportunity of making oral submissions, and then denied the appellants procedural fairness in relation to the hearing on 15 December 2009 (grounds 7 and 8); and
(b) other grounds alleging other errors and being grounds 1 - 6 and 9 - 20 which read as follows:
Grounds 7 and 8 - miscarriage of justice by reason of lack of procedural fairness
49 The right of appeal from the primary judge's decision is found in s 58(2) of the Supreme Court Act 1935. Although there is no specification of the grounds on which an appeal may be brought, the purpose of an appeal is to correct errors (Allesch v Maunz [2000] HCA 40; (2000) 203 CLR 172 [23]; Coal and Allied Operations Pty Ltd v Australian Industrial Relations Commission [2000] HCA 47; (2000) 203 CLR 194 [14]) and rectify miscarriages of justice: Fox v Percy [2003] HCA 22; (2003) 214 CLR 118 [24].
50 The concept of miscarriage of justice is as wide as the potential for error and indeed wider. Not all miscarriages of justice involve error. Justice means justice according to law and although a wrong decision is one form of miscarriage, another is the failure of process which departs from the essential requirements of a fair trial: Nudd v The Queen [2006] HCA 9; (2006) 225 ALR 161 [7] (Gleeson CJ); Cesan v The Queen [2008] HCA 52; (2008) 236 CLR 358 [66] (French CJ).
51 The common law tradition is based on a tradition of oral hearings: Rosenberg v Percival [2001] HCA 18; (2001) 205 CLR 434 [41].
52 In International Finance Trust Co Ltd v New South Wales Crime Commission [2009] HCA 49; (2009) 261 ALR 220 [39], French CJ referred to 'the general requirement of procedural fairness that no order adverse to a party's property, liberty, or any other interest should be made without that party first having an opportunity to be heard'. French CJ [55] referred to the legislation in question as requiring a court not only to receive an ex parte application, but to hear and determine it ex parte if the executive so desires which his Honour said was to 'deprive the court of an important characteristic of judicial power'. Heydon J, the fourth member of the court in the majority said:
One of the primary principles on which the judicial process in this country operates is the principle that before any judicial decision is made which has substantive consequences there generally should be a 'hearing'. A hearing takes place before a judge at a time and place of which the moving party has given notice to the defending party. At it both parties have an opportunity to tender evidence relating to, and advance arguments in favour of, the particular orders they ask for. This aspect of the rules of natural justice pervades Australian procedural law. It has several justifications, and their force is so great that exceptions to the hearing rule in judicial proceedings are very narrow [141].
53 It is clear that legislation or rules may provide for decisions to be made on the documents filed without hearing the parties (see for example r 7 of the Court of Appeal rules), although it is common in those instances for provision to be made for a party to request an oral hearing if a decision is made on the papers: see for example r 19 of the Court of Appeal rules. As shown in International Finance Trust, extreme statutory restrictions on the right to a hearing may be invalid. It is not necessary in this case to discuss the extent to which the right to an oral hearing may be modified rather than denied.
The miscarriage in relation to the application to amend pursuant to the August minute
54 In this case the appellants were informed by the primary judge that they would have the opportunity of making oral submissions on 15 December 2009. Written reasons for decision were then published before the appellant could make those submissions. It is evident that the primary judge did not do this deliberately to defeat the appellants' right to be heard. Instead it is clear that the primary judge overlooked the order he had made that the application to amend was to be heard on 15 December 2009 and mistakenly believed that he was to deal with the application on the papers. (I should also note that there are no rules applying in the General Division permitting decisions to be made on the papers without the consent of the parties (save and except where a General Division judge makes an order in an appeal under O 65 r 4)).
55 Although the primary judge was mistaken, there was nevertheless a failure of process, amounting to a miscarriage of justice. The appellants were informed that the hearing of their application would be on 15 December 2009 and they therefore legitimately understood that on that day they would have the opportunity of making oral submissions. The publication of the primary judge's written reasons in Smith v McCusker [No 6] on 11 December 2009 unambiguously indicated to the appellants that the decision had been made and that they would not have the opportunity of making submissions on 15 December 2009. It was clear that Ms Smith believed her only remedy was to appeal.
56 The situation was not remedied by the primary judge asking the appellant to make the submissions that she would have made on 15 December 2009 had there not been a set of published reasons. Counsel for the respondent submitted that there was no miscarriage because the publication of reasons gave the appellants an advantage in the sense that they had the judge's reasoning exposed to them which allowed them then to argue against those reasons. That submission must be rejected. It is clear on reading the transcript that the female appellant was bewildered by the turn of circumstances and had not prepared herself to make submissions once she learned of the written reasons.
The miscarriage in relation to the application to amend pursuant to the December minute
57 In relation to the application to amend in accordance with the December minute, it is clear that the appellants were denied the opportunity to make any submissions at all in support of the application. The primary judge only heard submissions from the respondent before refusing leave to amend.
Grounds of appeal 7 and 8 alleging procedural unfairness are made out
58 For reasons set out under the last two headings, the grounds of appeal alleging procedural unfairness (grounds 7 and 8) are made out. As a result an extension of time in which to appeal should be granted.
Whether such miscarriages require the order of the primary judge to be set aside
59 A departure from the rules of natural justice amounting to a denial of the opportunity to make submissions will not always result in upholding an appeal and the setting aside of the order under review. After hearing the submissions the parties wish to make, the appeal court may be satisfied that those submissions would not produce any different outcome. Otherwise, it would be futile to allow the appeal, set aside the order and direct a rehearing: see Stead v State Government Insurance Commission [1986] HCA 54; (1986) 161 CLR 141. In Re Minister for Immigration and Multicultural Affairs; Ex parte Applicant S154/2002 [2003] HCA 60; (2003) 201 ALR 437 [28] Gummow and Heydon JJ (Gleeson CJ agreeing) said that a rehearing was not necessary if there was no possibility of a different outcome (and see also Kirby J [69]).
60 In Stead's case, submissions were not made because the trial judge stopped counsel from making submission about whether a witness' evidence should be accepted. That created a difficulty because it was not known what influence the submissions may have made upon the trial judge in relation to that witness's evidence. In this case, there is no such difficulty.
61 The question then is whether having heard the appellants' submissions there is any possibility of a different outcome if the matter is remitted for a rehearing. If not, then to allow the appeal would be futile and the appeal should be dismissed.
Is there any possibility of a different outcome on rehearing?
62 The August minute and the December minute and the statement of claim as it stood in 1997, reveal that the appellants, who are not legally trained, attempt to use legal terminology to formulate a statement of claim with an imperfect understanding of the law and with little understanding of the requirements of an acceptable pleading. Both the August minute and the December minute and the 1997 statement of claim are laced with imprecision and lack of particularity, mixed with the use of terms which the appellants have doubtless found by reading cases or text books.
63 It is difficult to understand what the appellants are driving at in par 64 and the following paragraphs in the August minute and in the repeat of those paragraphs in the December minute. For example, in par 64 of the August minute (par 117 of the December minute) the appellants plead that the duties of the respondent are 'contractual, fiduciary and arise in tort and include the duty to exercise skill and care, the duty to act in good faith ... the duty to avoid conflicts of interest and duty'. However, trying to understand what material facts establish such a conflict is impossible on reading either minute. If the appellants set out to prove some relevant conflict of interest and duty or, of duty and duty, it would have to be shown that the respondent, when he gave his opinion, owed some duty to the R&I Bank or had some interest in the bank while at the same time owing a conflicting duty to the appellants. Paragraphs 64 and 65 and the paragraphs which follow it in the August minute and repeated under different numbering in the December minute show how at different points the facts alleged are irrelevant or impermissibly generalised or vague or at points, incomprehensible. In short, the proposed amendments are embarrassing.
64 The allegation of a conflict involving the Legal Aid Commission was set out in par 126.14 which reads:
The Defendant also failed to disclose that he was also the Chairman of the Legal Aid Commission, (LAC) which was funding the Plaintiffs' action against the Commissioners and as a result he owed the LAC duties of disclosure and fidelity as well. He could not possibly perform those duties without breaching many of his other conflicting duties to other persons and entities.
65 The 'other persons and entities' are not identified. On its face, this is vague or meaningless and certainly embarrassing.
66 In my opinion it would be futile to refer the matter back to the primary judge because after a hearing he would be bound to disallow the amendments in the August minute and in the December minute.
67 If the parts of the 1997 proposed amendments (disallowed by the master and the Full Court) and the amendments proposed in the August minute and the December minute are the same in substance, then it would be possible to refuse leave to amend, not because any issue estoppel arises, but because it is an abuse of process: see Commonwealth v Albany Port Authority [2006] WASCA 185 [10], [76]. To the extent that there is a similarity, the application for leave to amend would also have to be refused on that basis. I am not clear that the 1997 proposed amendment and the fresh attempt in pars 64 and following in the August minute and pars 117 and following in the December minute are the same, but the general drift of the proposed amendments is the same.
68 The other factor militating against allowing the amendments was the delay in making the application. The appellants say that they discovered more information and documents in 2008, but this application to amend was made in August 2009. There is a reference to some material being discovered sometime in 2009, but the explanation provided by the appellants is not sufficiently particularised and as a result does not adequately explain the delay in making the application. This affords another reason why at a rehearing the application should be dismissed.
69 For those reasons, there is no possibility that on the rehearing the appellants would be granted leave to amend in terms of the August minute or the December minute. In short, although grounds 7 and 8 have been made out, a rehearing would be futile.
70 The other grounds of appeal are either argumentative (grounds 1, 3, 4, 11, 12, 13, 14, 17, 20), vague (grounds 15 and 16), unparticularised (grounds 9 and 10), raise irrelevant points (grounds 18 and 19) or assert a failure of the primary judge to consider matters which he did consider in
his written reasons (grounds 2, 5 and 6). They have no merit and leave to appeal on those grounds should be refused.
71 I would grant an extension of time in which to appeal but leave to appeal in relation to all grounds should be refused.
72 The result is that the following orders should be made:
(1) An extension of time should be granted in which to appeal.
Allesch
Maunz
(2000) 203 CLR 172
(2008) 236 CLR 358
(1990) 93 ALR 479
(2003) 201 ALR 437
(2001) 205 CLR 434
(1986) 161 CLR 141
(2000) 203 CLR 194
(2003) 214 CLR 118
(1997) 18 WAR 450
(2009) 261 ALR 220
(2006) 225 ALR 161