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Practice and procedure - Application to strike out statement of claim - Application out of time - Application to strike out defence - Application to amend defence - Turns on own facts

Application for extension of time to apply to strike out statement of claim refused

Australian Energy Ltd v Lennard Oil NL [1986] 2 Qd R 216

Gardiner v Ray [1999] WASC 140

Grundy v Lewis (1995) 62 FCR 567

Hospital Products Ltd v United States Surgical Corporation [1984] HCA 64; (1984) 156 CLR 41

LG Thorne v Thomas Borthwick (1955) SR (NSW) 81

Port Sudan Cott & Co v Govindaswamy Chettiar & Sons [1977] 2 Lloyds Rep 5

Robinson v Adshed (No 2) (1995) 12 WAR 577

Sangora Holdings Pty Ltd v Dunstan, unreported; SCt of WA; Library No 990172; 13 April 1999

Schipp v Cameron, Harrison & Ors [1998] NSWSC 997

Secured Income Real Estate (Australia) Ltd v St Martins Investments Pty Ltd [1979] HCA 51; (1979) 144 CLR 596

State of New South Wales v Banabelle Electrical Pty Ltd [2002] NSWSC 178; (2002) 54 NSWLR 503

United Dominions Corporation Ltd v Brian Pty Ltd [1985] HCA 49; (1985) 157 CLR 1

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

1 MASTER SANDERSON: This is the defendants' application to strike out the plaintiff's entire statement of claim or, in the alternative, certain paragraphs thereof. The defendants also seek leave to amend their defence in terms of a minute of proposed amended defence filed 29 November 2002. The plaintiff opposes this application and has applied to strike out the present defence. (Although the chamber summons did not seek leave to amend the defence as an alternative to the strike-out application, clearly if the whole or substantial part of the statement of claim was struck out with leave to replead, there would be no point in filing any defence until the statement of claim was amended). Although the defendants' chamber summons did not seek an extension of time to bring the strike-out application, the application was made well out of time and leave was required. It is convenient to consider first whether, in the circumstances, leave to apply to strike out the statement of claim ought be granted.

2 It is not entirely clear from the court record, nor does it emerge from the evidence, as to when the writ of summons endorsed with the statement of claim was served on the defendants. However, both defendants entered an appearance on 6 August 2002. Both defendants filed their defence on 4 September 2002. At a case management conference on 13 September 1992 Registrar C Boyle made orders allowing the defendants to file and serve any amended defence and counterclaim by 11 October 2002. The orders reserved to the plaintiff the right to apply to strike out the defence and counterclaim. Orders were made allowing for limited discovery. On 28 October 2002 the plaintiff filed an affidavit sworn by him verifying a list of documents. On 29 November 2002 the defendants brought their application to strike out the statement of claim. The O 59 r 9 certificate filed by the defendants indicates that the defendants' solicitors first raised with the plaintiff's solicitors complaints with respect to the statement of claim on 31 October 2002. That was almost two months after the defence had been filed.

3 In support of the application for an extension of time, the defendants filed an affidavit of Michael Charles Hotchkin ("Mr Hotchkin") sworn 8 April 2003. Mr Hotchkin says that he is a partner of the firm of solicitors representing the defendants. In a frank and candid way he says that the defence of the first and second defendants was drawn by an experienced solicitor now no longer employed by his firm. When Mr Hotchkin took over conduct of the file he spent some time considering the statement of claim and the defence that had been filed. He reached the conclusion that not only was the defence defective, but that there were difficulties with the statement of claim. He says that once he reached that conclusion he immediately contacted the plaintiff's solicitors and invited them to amend their pleading. When the plaintiff's solicitors did not avail themselves of that opportunity, the strike-out application was brought. In the circumstances, where the failure to comply with the time set by O 20 r 19(3)(a) was not the responsibility of the defendants but rather their solicitors, an extension of time ought be granted.

4 In my view this is not a proper case to grant such an extension of time. The reason why there is a time limit on strike-out applications is to ensure that a party does not proceed with an action only to be met with an attack on the pleadings when the action is well advanced. If there is a difficulty with a pleading, it should be identified early and steps taken, after negotiation, to bring the matter before the Court. Undoubtedly there will be cases where the pleading is complex and requires careful attention, or instructions cannot be obtained from a client, resulting in minimal delays which, when explained, would justify a grant of leave. There may also be cases when although the delay is substantial, the strike-out application is of such importance to the ultimate resolution of the dispute between the parties that to refuse leave would not be in the interests of justice. There may be many other situations which would justify a grant of leave. But in my view there is nothing in the evidence in this case which would justify leave being granted. Two things are of importance. First, the delay is substantial and the case has moved on, driven, it must be said, by a plaintiff who appears anxious to have his claim resolved. Secondly, the statement of claim is not in a form which is either incoherent or in such a form which makes pleading to it impossible. Indeed, the defendants have not only filed a defence, they now seek leave to amend that defence to respond directly to the statement of claim. That strongly suggest whatever problems there may be with the statement of claim, those problems are not so substantial as to entirely compromise the defendants' position.

5 In the circumstances then, I would refuse the defendants leave to bring this application out of time.

6 Having reached that conclusion it is, strictly speaking, not necessary for me to consider the defendants' objections to the statement of claim. However, given the careful and thorough argument of both counsel, I will deal with the defendants' objections to the statement of claim, if for no other reason, to clear the air as to the state of the pleadings.

7 Before dealing with the statement of claim it is necessary to say something about the facts of the case. At all material times the plaintiff was the owner of a rural property at Yallingup in the south-west of Western Australia. The first defendant is a corporation and the second defendant is a director of that corporation. Between 1993 and March 1996 the plaintiff negotiated with the defendants with a view to entering into a contract for the development of the plaintiff's land. What was intended was that the property would be divided into approximately 70 strata lots which would be developed on permaculture principles. In other words, the development would be ecologically friendly and self-sustainable and the lots would be sold to persons who subscribed to the "green" objectives of the proposal. The plaintiff says that on 14 March 1996 he entered into a partly written and partly oral contract with the first defendant for the development of the land. By par 8 and 9 of the statement of claim, the plaintiff pleads the terms of the contract, these terms being express, oral and implied. By par 10 it is pleaded that as an alternative to some of the terms of the contract there was a collateral oral contract. This was one aspect of the pleading which was attacked by the defendants and I will return to it in due course. By par 11 the plaintiff pleads that as a consequence of the contractual relationship between the parties, and as a consequence of certain precontractual representations, the first defendant owed fiduciary duties to the plaintiff. This, too, was the subject of attack by the defendants and I will return to this plea in due course.

8 What then follows in the pleading is what might be described as allegations by the plaintiff that the first defendant breached the terms of its contract with the plaintiff, or alternatively, breached its fiduciary duty to the plaintiff. Some of these breaches are more significant than others. For instance, by par 34 it is pleaded that the first defendant "does not have, nor has it ever had, the expertise to design and implement a survey-strata plan in accordance with the purpose and aim of the Contract". By par 37 it is pleaded that contrary to the terms of the contract, the first defendant has failed to account to the plaintiff for amounts charged by the first defendant and in relation to other matters. The plaintiff says that the breaches of contract by the first defendant amount to repudiation of the contract between the parties. Further, the plaintiff says that as a consequence of the breaches of contract by the first defendant, the plaintiff has suffered loss and damage.

9 By par 51 of the statement of claim the plaintiff pleads that between 1996 and 2000 the plaintiff entered into a series of agreements with third party investors for the purpose of raising finance to fund the construction of infrastructure. The plaintiff pleads that it was not in his best interests to enter into these "Third Party Agreements" (as they are defined in the pleading) and that the plaintiff entered into them as a consequence of a breach by the first defendant of its fiduciary duties to the plaintiff. There are further claims which plead a breach of duty of care and a claim under the Trade Practices Act. While these are separate and distinct claims, they rely very much on earlier pleaded facts.

10 It must be said that this is a difficult case. Both counsel acknowledged as much. The plaintiff and the first defendant entered into an agreement after many years of discussions and without the benefit of legal advice. No doubt at one time all parties had clearly in mind what they hoped to achieve through development of the property and were united in their aims. Over the years this consensus fell apart. When lawyers were consulted they were faced with a prospect of taking a complex jumble of facts and fitting those facts within a legal framework. It is inevitable that such a situation will lead to complex pleadings. That fact must be borne in mind when examining both the statement of claim and the defence.

11 The defendants' first complaint relates to par 5 of the statement of claim. That paragraph through subpar 5(a) to (f) pleads certain representations. The defendants say that it is not pleaded whether these representations are oral and which are in writing. In response, the plaintiff says that insofar as it does not emerge from the pleading which representations were oral and which were in writing - and the plaintiff refers to the particulars to par 5 - any complaint can be covered by a request for particulars. That is clearly correct. It may have been preferable if the plaintiff had indicated in the pleading itself which of the representations were oral and which were written, rather than leave it to the defendants to work this out by reference to particular documents. Nonetheless, the complaint is hardly significant and can be cured by a request for particulars.

12 Of rather more concern to the defendants is the question of which the oral representations are contractual in nature. By par 6 it is pleaded that the oral representations formed part of the contract: see par 6A. That plea cannot be literally correct. For instance, par 5(d) pleads that there was a representation to the effect that "the majority of the Proposed Lots would sell quickly". It is difficult to see that such a representation could be contractual in nature. The plaintiff's answer to this complaint is that by par 8 the express terms of the contract are pleaded. It is said that any confusion which may arise can be resolved by referring just to par 8 of the statement of claim.

13 I would accept that there is something of a problem in the way that par 6 is pleaded. However, it does seem to me that there is a clear and direct plea as to the terms of the contract to be found in par 8 and it is to that paragraph that the defendants should direct their attention. Any confusion occasioned by the wording of par 6 can then be eliminated. Although I do think that the wording of par 6 is too broad and consequently somewhat confusing, it is not a matter of such significance that requires the paragraph to be struck out.

14 The defendants object to par 7 and 19 of the statement of claim. Paragraph 7 of the statement of claim begins with the words "The objective purpose and aim of the Contract was as follows: ...". The defendants say that the objective purpose and aim of the contract are irrelevant. It is the terms of the contract and the alleged breach of those terms which gives rise to the cause of action. On that basis it is said par 7 ought be omitted. In answer to that submission, the plaintiff says that it should be entitled to refer to matters which led to the formation of the contract to explain its terms. Reference was made to Codelfa Construction Pty Ltd v State Rail Authority of NSW [1982] HCA 24; (1982) 149 CLR 337. It is the case that a party can lead evidence of surrounding circumstances in aid of the construction of a contract: see Codelfa Construction (supra) per Mason J at 348 and 352. However, whether a pleading in terms of par 7 is necessary to alert the defendants to the possibility that evidence of surrounding circumstances may be relevant, is open to question. I very much doubt that par 7 is a proper plea.

15 Paragraph 19(a) appears to refer back to par 7. Quite where par 19(a) goes is uncertain. It is a plea of reliance and it may tie in with the pleading of breach of duty and breach of the provisions of the Trade Practices Act. However, that is by no means clear. In my view, par 19(a) suffers from the same defects as par 7.

16 By par 9 of the statement of claim the plaintiff pleads certain terms which, it is said, are to be implied into the contract. The defendants complain that there is no pleaded basis for the implication of the terms. Further, it is said that a number of the terms the plaintiff seeks to imply in the contract are inconsistent with the pleaded express terms of the contract. Reference was made to subpar (e). It was further said that the plea in subpar (g) was vague and could not possibly meet the requisite test set out in BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266 at 282 - 283.

17 The plaintiff says that the defendants' contentions are matters of argument to be determined at trial and not at a strike-out application. In the context of this case I agree with the plaintiff's submissions. As I have indicated above, the contractual position between these parties is complex. Once all of the evidence has been heard the Judge will be in a position to determine the express terms of the contract, written or oral, and what terms are to be implied into the contract, if any. The pleading in its present form, whatever its defects, has alerted the defendants to the terms that the plaintiff says are to be implied. In my view the pleading is in all respects sufficient.

18 Paragraph 10 pleads the collateral contract. The collateral contract is pleaded as an alternative to the plea of the express terms found in par 8(a) to (g). It seems that the plea in relation to these subparagraphs is that the terms were oral. The defendant says that a collateral contract cannot be formed unless it is pleaded that the collateral term or promise was made with the intention of inducing the other party to enter into the collateral contract. It is said that this has not been pleaded. The plaintiff responds by submitting that it is only required to plead that there was an oral promise made which was the consideration for the other party entering into the written agreement.

19 I have doubts about the way in which par 10 is pleaded. At the very least it is a rolled-up plea. Nonetheless, the complex contractual position is once again at issue. What the plaintiff has done is alert the defendants to his alternative case. That being so, in the circumstances I am satisfied that the plea in par 10 is in the circumstances sufficient.

20 By par 11 the plaintiff pleads that by reason of the matters pleaded in par 6, 7 and 8, a fiduciary relationship was established between the plaintiff and the first defendant. Paragraph 6 pleads the fact of the contract between the plaintiff and the first defendant. Paragraph 7 pleads the "objective purpose and aim of the Contract". Paragraph 8 pleads the express terms of the contract. It is difficult to see how any of the matters pleaded in those three paragraphs could give rise to a fiduciary relationship between the plaintiff and the first defendant. In response to the defendants' complaints the plaintiff says that the relationship properly considered is one which gives rise to a relationship of "trust and confidence" and accordingly is a fiduciary relationship. The circumstances in which a fiduciary duty might arise were considered by Brennan CJ in The Wik Peoples v The State of Queensland & Ors (1996) 187 CLR 1. His Honour said (at 95 - 96):

"It is necessary to identify some action or function the doing or performance of which attracts the supposed fiduciary duty to be observed. The doing of the action or the performance of the function must be capable of effecting the interests of the beneficiary and the fiduciary must have so acted that it is reasonable for the beneficiary to believe and expect that the fiduciary will act in the interests of the beneficiary, (or, in the case of a partnership or joint venture, in the common interest of the beneficiary and fiduciary) to the exclusion of the interest of any other person or the separate interest of the beneficiary."

21 It is difficult to see how that test is satisfied by reference to par 6, 7 and 8 of the statement of claim. At the very least, the plaintiff should have referred to particular subparagraphs of the three paragraphs which are said to give rise to the fiduciary duty. Nonetheless the defendants are aware that it is said by the plaintiffs that there is a fiduciary relationship between the parties and that this relationship emerged, based upon their contractual arrangement. To that extent the defendants know the case they have to meet. Insofar as the defendants are left in any doubt as to what is put against them, a request for particulars, although not an ideal way to solve a problem such as the defendants have identified may, in this case, assist their understanding of the case they have to meet.

22 In relation to par 28, the defendants say that the plea that the lots created under the strata plan are "not attractive to a broad range of prospective purchasers" is too vague. The plaintiff responds by saying that the defendants' difficulty can be cured by request for particulars. I agree. With that qualification par 28 is a proper plea.

23 Complaint is then made of par 33 of the statement of claim. Paragraphs 30 through to 33 deal with a proposal put to parties who had already purchased lots in the subdivision pursuant to which further lots would be created. It is said that unanimous approval was required for this motion under the provisions of the Strata Titles Act. The plaintiff says that in opposing this motion and campaigning against it, the defendants breached the terms of their contract and breached their fiduciary duties. The defendants say that there is no plea which indicates what fiduciary duty the defendants have breached. Further, and more fundamentally, it is said that mere campaigning against a motion could not, in any circumstances, amount to a breach of fiduciary duty.

24 The first objection raised by the defendants can be covered by a request for particulars. Once again, this may not be an ideal solution but it will at least allow the defendants to identify which of the pleaded fiduciary duties it is said that they have breached. The more fundamental question is whether or not the pleaded actions of the defendants, assuming that they are established, could ever amount to a breach of fiduciary duty. However, given that this is a strike-out application and remembering that the fiduciary duties owed by the defendants to the plaintiff are dependent upon the nature of the relationship between the parties, that relationship being established by the evidence, I would not be minded to strike out par 33. Nonetheless, the plaintiff's advisers need to give careful consideration as to whether or not this aspect of the claim is to be pursued.

25 The defendants raise a similar objection to par 39. It is said that the plea fails to specify which fiduciary duties have been breached by the pleaded conduct. Once again, if there is any difficulty with this plea it can be cured by a request for particulars. (There was a further objection taken to par 39. In the written submissions counsel for the plaintiff indicated that an amendment would be made to par 39(a). As a consequence this objection falls away.)

26 Objection is taken to par 40. It is said that the plea the first defendant "commenced selling the lots" with no prior material facts pleaded as to what the first defendant is alleged to have done in commencing selling lots is embarrassing. In my view the paragraph is unobjectionable. Once again any difficulty can be cured by a request for particulars.

27 Similar comments apply to the objections raised to par 45. Paragraph 45 alleges that the plaintiff suffered loss as a result of the alleged breach pleaded in par 40. It is said there are no particulars provided to support such loss and it is not clear how the loss could have been caused by the alleged breach. Insofar as there is any substance in this complaint it can be cured by a request for particulars.

28 Objection was taken to par 50. In written submissions, counsel for the plaintiff sought to resolve the problem identified by adding a new par 50A. With the addition of that paragraph the objections to par 50 fall away.

29 With respect to par 53, the defendants say that there are no material facts pleaded to justify the allegation that the first defendant "acted for and on behalf of the Third Party Investors". Once again, this complaint can be cured by a request for particulars. By par 56 the plaintiff pleads that the first defendant did not advise the plaintiff to seek independent advice in relation to the third party agreements, nor did it advise whether it was in the plaintiff's best interests to enter into such agreements. About this paragraph the defendants made two complaints. First, they say that it is not clear which of the fiduciary duties pleaded in par 11 is breached. The plaintiff says that the duty breached is self evident. I am satisfied that the plea in its present form allows the defendants to understand the case they have to meet. The defendants further complain that there is a lack of material facts pleaded which could establish that it was not in the plaintiff's interest to enter into the third party agreements. That complaint is, I think, cured by par 58. If more is needed, resort can be had by the defendants to a request for particulars.

30 Complaint is made as to par 58 of the statement of claim. The submissions made on behalf of the defendants in relation to this paragraph go rather more to the merits of the claim than to strictly a pleading question. It may well be that in terms of logical connection there is a difficulty with par 58. But it is not strictly speaking a pleading problem. Reading par 58 it is clear what the plaintiff says. Whether or not anything will flow if the plaintiff is able to establish the matters outlined in par 58 is a different question. In my view the paragraph can stand.

31 Complaint was made of matters raised in par 65 through to 72 on the basis that the claim pleaded may be statute-barred. Given this was a strike-out application, counsel for the defendants quite properly did not proceed with this objection.

32 Finally, objection was taken to par 71. This paragraph deals with loss and damage occasioned by the alleged breach of s 52 of the Trade Practices Act. Any difficulties with this paragraph can be cured by a request for particulars.

33 On balance then, even if I had granted leave to bring this application, I would not have been minded to strike out any significant parts of the plaintiff's statement of claim. That is not to say that I regard the statement of claim as flawless. It clearly has deficiencies and would no doubt benefit from reconsideration by counsel. Furthermore, there are gaps in the statement of claim but by and large, these gaps can be plugged by particulars. The statement of claim does allow the defendants to understand the case they have to meet. To that extent it is a proper and adequate pleading.

34 Having concluded that the statement of claim should stand, the question then is whether or not the defendants should be allowed to amend their defence in terms of the minute. The plaintiff objects to leave being granted. The bulk of the plaintiff's objections relate to amendments which, it is said, amount to a withdrawal of admissions. It is said that there is no explanation as to why the admissions are to be withdrawn and in the circumstances, amendment should not be permitted. This dispute can be highlighted by reference to par 5 of the defence.

35 As I have indicated above, par 5 pleads a series of representations allegedly made by the defendants to the plaintiff during the course of negotiations. Paragraph 5(a) pleads a representation to the effect that the first defendant would design and prepare an appropriate survey strata plan for the land. In response to that plea, par 5.1 of the defence said that in relation to par 5 of the statement of claim, the defendants:

"Admit paragraph 5(a) of the statement of claim save that the alleged definition of 'the Permaculture Principles' is not inclusive of all relevant principles and was not defined in the Agreement. Its application was agreed to be in accordance with the Second Defendant's Discretion."

36 In the amended defence the defendants seek to delete entirely what was previously par 5.1. The new par 5.1 says the defendants:

"Deny the First Defendant represented that the defendants would design and prepare any plans, and say that the Plaintiff agreed with the Defendants that a team would be put together including, among others, David Caddy of The Planning Group, to perform such services."

37 It may be that on a very careful comparison of the two paragraphs, that there is a withdrawal of an admission. However, it is somewhat difficult to see just what fact is admitted and how the plaintiff will now be prejudiced by having to prove all matters referred to in par 5(a). As I have said, and repeated above, this was an arrangement between two parties which evolved over a long period of time. The nature of the discussions and the agreement that emerged as a consequence of those discussions is the prime question in the litigation. In my view, what is sought to be pleaded in the amended defence is not so dissimilar to what is contained in the original defence as to prejudice the plaintiff's position. It is far better that the plaintiff be in possession of a carefully considered defence which sets out with clarity the defendants' position than to have the matter proceed on an artificial basis meaning the evidence given by the defendants will inevitably be inconsistent with their pleaded case. Accordingly I would allow the amendment to par 5.1 of the defence. The same comments apply to the objections taken to par 6.1, 7.5, 8.17, 8.22, 8.25, 12, 29 and 45 of the amended defence. I would allow the amendments to all these paragraphs.

38 Objection is taken to par 7.1 of the defence. This paragraph is not amended by the proposed amendments and I would not now allow any objection to the earlier pleading. Leaving that consideration to one side, I am not satisfied that the objection taken is of any substance.

39 The plaintiff objects to the amendments proposed to par 8.1 and 8.2 of the defence. It is said that it is not clear whether the defendants are denying the whole or only part of the allegations pleaded in par 8(a) of the statement of claim. With respect, the amendments seem to make that clear. In my view the amended par 8.1 clearly sets out the defendants' position in relation to par 8(a) of the statement of claim. In my view it is a proper plea.

40 The plaintiff objects to the new par 8.7. This paragraph addresses par 8(f) of the statement of claim. It does not appear as though the defence addresses that subparagraph. Paragraph 8.7 of the amended defence pleads that in January 1997 the plaintiff and the first defendant reached an agreement which was partly oral and partly in writing to the effect that the cost of all goods and services provided to the joint venture (and that is the way the defendants characterise the relationship between the plaintiff and the defendants in par 8.16 of the amended defence) by the defendants and others, would be capitalised. This agreement is defined as "the Capitalisation Variation". The plaintiff complains that this plea is vague and embarrassing for a number of reasons. It is said that material facts are not pleaded upon which the alleged agreement is based, there is no consideration pleaded, it is not clear how the capitalisation relates to the agreement pleaded by the plaintiff.

41 In my view there is some merit in all of the plaintiff's complaints. However, it still seems to me that in this complex contractual situation there is little point to be served in requiring more precision in the pleading. Essentially the plea in its present form makes clear to the plaintiff the case that is put by the defendants. That is sufficient. In my view par 8.7 should stand.

42 Objection is taken to par 8.13. The primary objection to that paragraph by the plaintiff is that it incorporates par 8.7. Having ruled par 8.7 can stand, the objection falls away. Specific objection is taken to par 8.13(b). The plaintiff says that the reference to the plaintiff's conduct in the subparagraph is irrelevant. Strictly speaking, that is so. Nonetheless, the inclusion of the words is not so offensive as to require they be struck out. Paragraph 8.13 can stand.

43 Objection is taken to par 8.16. By this paragraph the defendants plead that the agreement between the plaintiff and the defendants was a joint venture agreement. Without going through the specifics of the plaintiff's objections, it is enough if I repeat again that the contractual position between the parties is central to the dispute. Paragraph 8.16 is the defendants' formulation of that contractual position. It is clear from a reading of the paragraph what the defendants say is the position. Although there may be merit in some of the complaints made by the plaintiff, none of them either individually or taken together, would justify refusing leave to plead in terms of par 8.16. The paragraph can stand.

44 By par 8.19 the defendants plead what they refer to as "the Success Fee Variation". The plaintiff alleges the plea lacks a factual basis for the alleged agreement, does not plead any consideration and that particular (b) cannot properly be a particular of the pleaded agreement. Consistent with the liberal approach that I have taken in relation to the contractual position between the parties, I am prepared to allow the plea to stand. I would accept that there is some merit in the plaintiff's argument but I am not satisfied that it is sufficient to refuse leave to replead in terms of par 8.19.

45 A number of other relatively minor complaints are made about the amended defence. Insofar as I have not dealt specifically with each and every one of these points, I have taken them into account in considering whether or not to grant leave. In all the circumstances I am satisfied that it is proper and appropriate to grant the defendants leave to amend their defence in terms of the minute of amended defence.

46 That then leaves the defendants' counterclaim. When the defence was filed, no counterclaim was included. On 20 November 2002, without leave, the defendants filed a separate document entitled "counterclaim". They now seek leave to rely upon that document. The plaintiff objects both to the filing of a separate counterclaim and to its terms. The first of these objections can be disposed of quickly. Strictly speaking, the counterclaim should have been filed with the defence. The defendant was not entitled to file a separate counterclaim unless the amendment was made under O 20 r 3(1) or leave was obtained under O 21 r 5(1). The defendants did not adopt either of these courses of action. Properly considered then, what the defendants are now seeking is leave to amend their defence in terms of the minute of proposed amended defence of 29 November 2002, such amendment to incorporate the counterclaim filed on 20 November 2002. Essentially that is the way the matter was approached at the hearing. The remaining question then is whether or not the counterclaim is in a proper form.

47 By par 81(d) of the counterclaim the defendants say that the parties entered into a contract which is defined by the defendants as "the Agreement". It is said that the parties entered into the Agreement on 14 March 1996. This is the same date referred to by the plaintiff in par 6 of the statement of claim. In that paragraph the plaintiff defines the contract as "the Contract". The parties agree then that they entered into some agreement which was legally binding. The real question is what the terms of that Agreement might be. The plaintiff's complaints relate to par 82(g), (h) and (k). I am satisfied that these subparagraphs are in a proper form and should stand. The plaintiff also says that par 82 is inconsistent with par 8.16 of the amended defence. The defendants say that is not so. It does appear that there is some tension between par 8.16 of the amended defence and par 82 of the counterclaim. In par 8.16 the defendants adopt the definition of the plaintiff and refer to "the Contract". For instance, par 8.16(d) deals with the proceeds of sale of any part of the land. Paragraph 82(e)(i) appears to deal with the same matter but does so in a slightly different way.

48 Without going through the rest of the objections taken by the plaintiff to the form of the counterclaim, it is sufficient if I say that in broad terms I am satisfied that the counterclaim is properly pleaded. It would be appropriate if the defendants now integrated the amended defence and the counterclaim to produce a coherent whole. Once that is done, if the plaintiff has any remaining objections, those objections can be dealt with at a later date.

49 I will hear the parties as to the precise form of orders and as to costs.