Barrington Tops Developments Pty Ltd v Low [2008] NSWSC 410 | Case summary

5999/06 BARRINGTON TOPS DEVELOPMENTS PTY LTD v STEPHEN THOMAS LOW JUDGMENT (on application to amend further amended defence to cross claim - see T51) 1 HIS HONOUR: This is an application by the plaintiff to amend further its amended defence to cross claim in these proceedings. The proceedings are in effect being tried on the defendant's cross claim. They relate to a contract for the sale of land by the defendant to the plaintiff ("the contract") for the purpose of the plaintiff carrying out a subdivision of land including the land the subject of the contract. 2 One of the major issues in the proceedings is whether or not an implied obligation or term of the contract was in a form contended for by the defendant or in a form contended for by the plaintiff. The provision of the contract in the form contended for by the plaintiff is: "That the plaintiff would act reasonably and use its reasonable endeavours to have an appropriate subdivision approved and registered and to sell the three most easterly lots in such a subdivision within two years of the completion of the contract." 3 If the provision of the contract is found to be in that form, an issue will arise as to whether the plaintiff did act reasonably and use its reasonable endeavours in the regard alleged. No such issue will arise if the provision of the contract is found to be as alleged by the defendant and the proceedings will be able to be determined finally without the determination of such an issue. 4 The problem that the plaintiff seeks to solve by the present amendment application arises from the form of paragraph 31 of the defence as it stands. That paragraph is as follows: "31 Paragraph 44 is denied. The Cross Defendant says it acted reasonably and in fulfilment of any implied or express terms in the Contract in entering into a Contract with George Marner Colvin Smith on 18 June 2004 for the sale to him of lots 5, 6 and 7 in an unregistered plan (copy of which was attached to the Contract) for the sum of $440,000, such plan was in fact the proposed subdivision referred to in DA54/03 and the said lots 5, 6 and 7 were the lots 5, 6 and 7 in the proposed subdivision referred to in DA54/03 ." 5 The problem arises from different understandings of the ambit of this paragraph by the defendant on the one hand and the plaintiff on the other. The defendant says that he took the paragraph to mean that the entry into the contract with Smith was the only fact or circumstance to be relied on by the plaintiff as constituting its acting reasonably and in fulfilment of any implied or express terms in the contract. The plaintiff says that it understood that it was clearly implied from paragraph 31 that it was entitled to lead evidence of the facts and circumstances leading up to its entry into the contract with Smith, obviously at a price for the lots that was less than contemplated by the parties at the time of the contract between them. 6 I understand the representatives of each side taking the views that they respectively took of the ambit of paragraph 31. However, the difference has caused a major problem in the trial, in that the defendant has come here unprepared to deal with the factual matters leading up to the Smith contract, which are now set out in some 15 subparagraphs of the paragraph 31A now proposed to be inserted in the pleading by way of amendment. 7 Mr P T Russell, of counsel for the defendant, tells me that, if the amendment is allowed, he will be quite unable to deal with these allegations in the trial this week and will be obliged to seek an adjournment. In opposing the amendment, the defendant relies on the lateness of the application and the disruption which will be caused to the trial if the application is allowed. In addition to that, on the application the defendant has laid before me facts surrounding an amendment made in 2007 to the defence to cross claim that brought it into its present form, together with correspondence surrounding that amendment. 8 The defendant says that that amendment was made as a result of an application by the plaintiff to strike out the original defence to cross claim. The defendant says that an opportunity was then afforded to the plaintiff to make its case completely clear, as it will now be made completely clear by inserting the material now proposed to be inserted and that the failure by the plaintiff to take that opportunity is to be added to the other reasons against the application being granted. 9 The defendant does not lead any evidence as to prejudice that it will suffer other than the prejudice actually arising from the matters noted earlier, namely, the necessity for an adjournment and the consequential disruption of the trial. It has not been submitted that this prejudice cannot be met by an order as to costs. 10 The principles relating to how applications for amendment of pleadings should be dealt with are to be found in the decision of the High Court in State of Queensland v J L Holdings Pty Ltd (1997) 189 CLR 146. And see also the decision of the Court of Appeal in Pringle v Everingham (2000) 46 MVR 58; [2006] NSWCA 195 and my decision in ASIC v Sydney Investment House Equities Pty Ltd [2007] NSWSC 1456. 11 I find it understandable that counsel for the defendant took the ambit of paragraph 31 of the amended defence as being limited in the way set out above and preparing his case accordingly, without adversion to the factual matters now clearly set out in the proposed paragraph 31A. There was adversion to these matters in the affidavits served by the plaintiff, but the issues in cases are not defined by the evidence, even written evidence served ahead of time, and the opposing party is entitled to have them clearly defined in the pleadings. In this case the ambiguity was continued in the statement of issues prepared by the defendant for the Court for the purposes of the trial and agreed to by the plaintiff (with amendments not germane to the present question). 12 It flows from J L Holdings that cases should be decided upon the real issues between the parties unless there is some good reason why orders to produce this effect should not be made. It flows from Pringle v Everingham that a party should not be prejudiced by a course mistakenly taken by its legal representatives. The present situation is created by an ambiguity arising from the form of the amended defence that was filed on the plaintiff's behalf. 13 In considering whether or not I should grant the amendment at this late stage, I take into account steps that may be taken to diminish the prejudice caused by the amendment. The first is that the plaintiff (as it concedes) will have to undergo an order for the costs of the application for amendment and for costs thrown away by the amendment. In addition, it has occurred to me that the question as to whether or not there was a breach of the subject contract on the plaintiff's part, assuming that there is found to be a provision in the contract in the terms propounded by the plaintiff, is a question that could be tried without serious inconvenience separately from and after the other issues in the proceedings. This would have the beneficial effect that, if the relevant provision of the contract is found to be as contended for by the defendant, the whole of the proceedings could be disposed of after the present trial without the need for a second trial to decide the question of breach of the alternative term. On this basis, the present trial can continue to completion and the second trial need never take place if the defendant's version of the relevant provision is accepted. 14 Bearing all these things in mind, the decision that I have come to is that I should exercise my discretion in favour of allowing the amendment. I should at the same time order that the question I have adverted to be tried separately from and after the other questions in the case. 15 The most convenient way of continuing to conduct the present trial is that, as the affidavits which have already been served are read, I should treat as relevant and admit material in those affidavits that is relevant to the deferred question that will now be squarely raised by the new paragraph 31A. Objections may still be taken to that evidence on grounds other than the ground of relevance. This course will have the advantage that, if any such evidence is rejected as a matter of form, it may be able to be put in better form before any subsequent trial. However, I shall proceed on the basis that both parties will be at liberty at the subsequent trial to lead such further evidence as they may be advised on the deferred question, including evidence by way of cross examination of each other's witnesses. It will not be necessary at this trial to cross examine witnesses on that subject matter.

Barrington Tops Developments Pty Ltd v Low

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