Practice and procedure - Application for leave to amend statement of claim - Operation of O 21 r 5(5) - "new cause of action" - "arising out of substantially the same facts" - Principles to be applied

1 MASTER SANDERSON: This is the plaintiffs' application for leave to amend its statement of claim in terms of a minute of further amended statement of claim dated 15 October 1999. This matter has had a considerable interlocutory history. On 22 December 1996 Acting Master Chapman struck out certain paragraphs of the plaintiffs' statement of claim (Arcadia Holdings Pty Ltd v Brown, unreported; SCt of WA; Library No 960025; 22 January 1996). From this decision the plaintiffs appealed. The Full Court (Murray, Owen and Parker JJ) dismissed the appeal (Arcadia Holdings Pty Ltd v Brown, unreported; FCt SCt of WA; Library No 970438; 9 September 1997). Although confirming the order of the learned Acting Master striking out the statement of claim, the Full Court acknowledged that the plaintiff could seek leave to replead. This application is the plaintiffs' application to replead in the form of the amended minute.

2 As the facts of this case have been set out in some detail in various interlocutory judgments and are again set out at length in the decision of the Full Court. I do not propose to detail the facts at all. It will suffice if I say that the learned Master struck out the central feature of the plaintiffs' claim against the second and third defendants. So far as the second defendant is concerned, the learned Master was of the view that failure to announce a Cabinet decision could not amount to a representation and therefore the claim against the second defendant as pleaded could not lie. In relation to the third defendants, it was argued that statements made by them could not give rise to implied representations as pleaded and therefore the claim against them could not lie. There is a significant difference between the claims as pleaded against the second defendant and the third defendants. It is convenient to take each in turn.

3 The crux of the plaintiffs' claim against the second defendant, as it appears in the minute of further amended statement of claim, is to be found at par 21, par 22 and par 23. Because of the importance of these paragraphs I will quote them in full:

"21. At no time prior to December 1991 did the Second Defendant make any public announcement, or inform the Plaintiffs, of the matters pleaded in paragraphs 11(a), (b) and (d).

22. The Second Defendant, on behalf of the Federal Government, having announced:

(b) on 13 April 1988 an amendment to the Button Car Plan which involved the accelerated reduction of tariffs on all imported passenger motor vehicles from 45 per cent to 35 per cent in 1992.

in March 1991, in an Industry Statement, 'Building a Competitive Australia', publicly stated that under the Federal Government's motor vehicle industry policy, which would replace the Button Car Plan, there would be a further reduction in tariffs on all imported passenger motor vehicles from 35 per cent to 15 per cent in the year 2000.

23. By the March 1991 Industry Statement pleaded in paragraph 22, and the matters pleaded in paragraph 14, 20 and 21 the Second Defendant represented to the Plaintiffs that:

(a) the Federal Government's sole purpose in introducing and securing the passage of the MVSA was to ensure that all those who supplied vehicles to the Australian market complied with ADR;

(b) the Federal Government was not opposed to the importation into Australia of high volumes of second hand motor vehicles as long as there was compliance with the MVSA;

(c) the Federal Government's policy was to reduce tariffs on all imported motor vehicles until the year 2001."

4 The difference between this version of the statement of claim and the version of the statement of claim which was struck out is par 22. In the earlier version, par 21, the alleged silence of the second defendant, was said to give rise to the representations pleaded in par 23. The learned Acting Master and the Full Court found that silence could not give rise to these representations. The question for determination now is whether what is pleaded in par 22 gives rise to representations as pleaded in par 23(a) and (b). During the course of submissions it was conceded by counsel for the plaintiffs that what is pleaded in par 22 could give rise to the representation pleaded in par 23(c). That is clearly the case and the concession was properly made.

5 In my view, the addition of par 22 does not cure the problems identified in the earlier statement of claim. Paragraph 22 refers to the industry statement of March 1991. It is not pleaded that there was anything at all in that statement about the purpose in the Government introducing and securing the passage of MVSA. Really, what is being pleaded is that the silence in the industry statement with respect to the passage of MVSA amounts to a representation. In other words, the amended pleading seeks to establish a representation by silence. The same is true with respect to par 23(b). There was nothing in the industry statement on this question (or it is not pleaded that there was) and this is said to be a representation. It can only be a representation by silence and, consistent with the decision of the Full Court, it cannot stand.

6 So far as the third defendants are concerned, the objection to the amendment is taken on quite different grounds. The proposed par 30 and par 31 of the statement of claim are in the following form:

"30. At a meeting on 23 November 1989 between Frank Corrigan, on behalf of the First Plaintiff, Robert Moore of R Moore Engines Pty Ltd trading as Moore's Car World, Ralph Alexander Reid, on behalf of himself and as representative of the Second Plaintiff, and the Third Defendants, the Third Defendants expressly represented orally that:

(a) the Federal Government would make no concessions and allow no departures from the requirements of the MVSA

(b) the Federal Government would not impose any impediment to the development of an importation business under the full volume scheme other than the requirements of the ADR;

(c) the Federal Government would not introduce any other barrier to stop second hand vehicles being imported into Australia provided the ADR were complied with;

(d) there were no matters that could affect the continuation of an importation business under the full volume scheme other than the requirements of the MVSA.

31. By reason of the matters pleaded in paragraph 30 above, the Third Defendants impliedly represented that:

(a) the Federal Government's sole purpose in introducing the MVSA was to ensure that all those who supplied vehicles to the Australian market complied with the requirements of the ADR;

(b) the Third Defendants had informed the Plaintiffs of all relevant Federal Government policies thereby enabling the Plaintiffs to make a commercial decision as to whether to develop an importation business under the full volume scheme."

7 These two paragraphs equate with par 29 and par 30 in the earlier pleading. Both these paragraphs were struck out by the learned Acting Master and his decision was confirmed on appeal. The new par 31 reflects the earlier par 30. However par 29 in the earlier statement of claim was in the following terms:

"29. At a meeting on 23 November 1989 between Frank Corrigan, on behalf of the first plaintiff, Robert Moore of R Moore Engines Pty Ltd trading as Moore's Car World, Ralph Alexander Reid, on behalf of himself and as representative of the second plaintiff, and the third defendants, the third defendants expressly represented orally that:

(a) the Federal Government's intention in introducing the MVSA was to ensure that all those who supplied vehicles to the Australian market complied with the requirements of the ADR; and

(b) the development of an importation business under the full volume scheme was essentially a commercial decision."

8 The difference between the two pleadings has to do with the representations orally made at the meeting which took place in November 1989. None of the representations pleaded in the present par 30 are comparable with what was previously contained in par 29. It is not now contended that the implied representations pleaded in par 31 cannot arise as a consequence of what is pleaded in par 30. That was the argument in relation to the earlier proceeding. It is submitted on behalf of the third defendants that what is sought to be pleaded against them now is a new cause of action and the amendment should not be allowed because it is apparent that the cause of action is statute barred.

9 The plaintiff seeks leave to make the amendment under O 21 r 5(2) and (5). These rules are in the following terms:

"(2) Where an application to the Court for leave to make the amendment mentioned in paragraph (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 paragraph if it thinks just to do so.

(5) An amendment may be allowed under paragraph (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."

10 Referring to r 5(5) it is apparent that the new cause of action (if it is a new cause of action which is pleaded) does not arise out of the same facts as originally pleaded. The representations to be found in the present par 30 are properly pleaded as material facts. They differ from the material facts pleaded in the earlier par 29. The question then is, first whether the new cause of action is pleaded and if it is whether it arises out of substantially the same facts as the cause of action in respect of which relief has already been claimed.

11 The operation of r 5(5) was considered by the Full Court in Dye v Griffin Coal Mining Co Pty Ltd (1998) 19 WAR 431. The facts of the case were as follows. The plaintiff had applied to amend his statement of claim. The difference between the original statement of claim and the proposed amendments can be summarised by quoting from the judgment of Owen J (at 434):

"It is very difficult to interpret the statement of claim in its original form as anything other than an allegation of an injury arising from a single journey in the vehicle. The essence of the claim in the amendments is a whole series of repeated events over a series of roads in a period of some nine or 10 months. There is a real difference between the two versions. The first alleges an incident or a series of incidents of jolting on the one day ... which caused or accumulated to a cause of injury. The second refers to a series of incidents which occurred over a period of nine to 10 months and which accumulated to a cause of injury. So far as concerns the second version, each incident in the series is a separate act of negligence occurring on each of various days."

12 His Honour then went on to consider circumstances when amendments raise a new cause of action. His Honour said (at 434):

"I agree with the comment of the trial judge 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. This is essentially a matter of impression ... . It is no objection that some of the facts out of which the new cause of action arises are peculiar to it and that some of the facts out of which the old cause of action arises are peculiar to it. It is enough if the overlap is so great that the new cause of action can fairly be said to arise out of substantially the same facts as the old cause of action."

13 In Bill Discount Services Pty Ltd (In Liq) v Dill-Macky, unreported; FCt SCt of WA; Library No 6700; 7 May 1987 Burt CJ (at 3) described a fresh cause of action in the sense of a "new claim on a new basis". See also Stone James v Pioneer Concrete (WA) Pty Ltd [1985] WAR 233 per Burt CJ at 241 - 242.

14 The Full Court had occasion to further reconsider O 21 r 5(5) in Morgan v Banning, unreported; FCt SCt of WA; Library No 990199; 21 April 1999. Delivering the reasons of the court, Wheeler J undertook an analysis of the so-called rule in Weldon v Neal [1887] 19 QBD 394 focusing, in particular, on what was meant by "a new cause of action". Her Honour concluded at 16 - 17:

"The position now as I understand it is that the rule in Weldon v Neal applies to a cause of action which is truly new, and may not be abrogated without statutory authority. At least in a clear case, the court should refuse to allow the addition of a new cause of action in that sense. There may of course be circumstances where it is not clear how the amendments relate to the original cause of action and in such a case it may be preferable that the issue be left for trial, just as the issue may be left for trial where it is not clear from the pleadings whether an action is time barred. If there is no new cause of action in that sense, but is rather a re-labelling, addition, modification or clarification of an existing cause of action raised in the endorsement, O 21 r 5(5) is applicable. When the discretion is exercised in that case, it is of course to be remembered that the effect of a refusal to permit amendment may be that a plaintiff will be unable to bring an issue before the court at all, and questions of justice to the plaintiff, delay, reasons for delay, prejudice to the defendant or other persons, possible abuse of process, among others, will be relevant."

15 At first pass it does seem difficult to reconcile what was said by her Honour in Banning with what was said by Owen J in Dye v Griffin Coal Mining Co Pty Ltd. Her Honour recognised this prospect and said (at 17 - 18):

"Much of what I have said earlier is consistent with the reasoning in Dye. In particular, the definition of 'cause of action' in the broad sense in that case, and the understanding of the scope of O 21 r 5(5) as permitting the re-categorisation of facts rather than the addition of a different claim arising from different facts, I understand to be identical to the conclusions which I have reached.

I do not think, when the reasons are read as a whole, that Owen J was asserting that O 21 r 5(5) permitted the addition of a new cause of action, properly understood, in the absence of statutory authority. Rather, it is my view that his Honour was simply adopting the words of O 21 itself which, in the first part of r 5(5), appears to use the expression 'cause of action' in a narrower sense than is now commonly the case and as meaning essentially a 'form of action'. Read as a whole it is my view that Dye supports the conclusions which I have reached."

16 In the circumstances, then, it is necessary to consider the difference between what was originally pleaded and what the plaintiff now seeks to plead. First, the claim by the plaintiffs against the second defendants is based in negligence. It is pleaded that the third defendants were under a duty to the plaintiffs to exercise reasonable care and skill in making representations during the course of the November 1989 meeting. This has not changed from the previous statement of claim. Secondly, the date of the meeting and the persons who attended the meeting remain the same. Thirdly, the implications to be drawn from representations at the meeting have not changed.

17 What has changed is the plea as to what representations were actually made at the meeting. Can this properly be categorised as a relabelling, addition, modification or clarification of an existing cause of action? Or is it a new claim on a new basis? As Owen J pointed out in Dye, it is very much a question of degree. On balance, I am satisfied that if this is a new cause of action (and I am by no means satisfied that it is), it arises substantially out of the same facts as a cause of action in respect of which relief was claimed in the earlier version of the statement of claim. It is therefore open to me to permit the amendment under O 21 r 5(5).

18 In Morgan v Banning Wheeler J pointed out that if the rule permits an amendment to the statement of claim it is still a matter of discretion as to whether or not the amendment should be permitted. Her Honour referred to such discretionary considerations as the delay in seeking the amendment, the prejudice to the parties if the amendment is permitted or refused and the reasons for the delay. This action was commenced in 1994 and it has had something of a chequered history. In January 1997 I made certain orders allowing for inspection of documents held by the defendant. This decision was the subject of an appeal which was heard on 28 April 1997 and a decision was handed down on 16 May 1997. The appeal was successful and access to the defendants' documents was denied the plaintiffs. The plaintiffs sought special leave to appeal from this decision and although the application for special leave was lodged on 9 June 1997 it was not determined by the High Court until 22 October 1998. Leave was refused. The decision of the Full Court in relation to the pleading question was handed down in September 1997. There were some settlement negotiations between the parties commencing in October 1998 and running through to May 1999. On 15 July 1999 a notice of intention to proceed was lodged and the present draft of the statement of claim was filed in October 1999. It is now more than two years since the decision of the Full Court in relation to the pleading and no final version of the statement of claim is in existence.

19 In the course of his submissions, counsel for the defendants pointed to the fact that so far as the third defendants are concerned the claim against them is based upon what took place in a meeting in 1989. Counsel submitted that even without evidence it is possible to conclude that the flux of time has had an adverse effect on the recollections of the third defendants and they have been prejudiced by the delay. No evidence of any specific prejudice, such as the death of a witness or the loss of documents, has been provided.

20 Although this action has proceeded at an alarmingly slow rate and despite the fact that there has been considerable delay on the part of the plaintiffs in moving to amend their statement of claim I am not satisfied that, in the exercise of my discretion, I should now refuse to allow the amendments with respect to the third defendants. The plaintiffs are not in a position where there has been any contumelious disregard of orders of the court. At least some of the delay has been occasioned by a bona fide attempt to negotiate a settlement. While I accept that the recollections of the third defendants would be adversely affected by the length of the delay, the crucial issue in the case is the meeting of November 1989. It is not as though the amendments to the statement of claim raise other meetings at other dates and times which the third defendants must now attempt to recollect. The focus on the one particular meeting in the pleadings seems to me to lessen the impact of the passage of time.

21 In the circumstances, then, I am prepared to allow the amendments so far as they concern the third defendants. However, I am not prepared to allow the amendments in their present form so far as they concern the second defendants and therefore it seems to me the proper course is to refuse leave in terms of the minute while providing the plaintiffs with the opportunity to submit a further minute.

22 I will hear the parties as to the precise form of orders.