Disability Services Australia Limited v Gollop & SafeAs Australian Pty Limited

Consideration

Whether a single grant of leave is required for DSA to pursue its appeal, or whether such leave is doubly required, there is no question that the leave of this Court is necessary for any appeal to be brought. As an intended appeal against an interlocutory order of the Local Court sitting in its General Division, s.40(2) of the Local Court Act 2007 makes that plain.
DSA requires the leave of the Court to proceed with its appeal on two fronts: firstly, the statutory restriction imposed by s.40(2) relevant to interlocutory appeals; and, secondly, the statutory restriction imposed by s.40(1) upon grounds advancing questions of mixed fact and law (which the plaintiff accepts applies to at least some of its grounds). The twofold statutory restrictions must weigh heavily against a grant of leave.
The statutory requirement for leave is one which enforces a constraint upon the rights of the parties to appeal against decisions of courts at first instance. It is a constraint intended to limit both the costs and the time taken to adjudicate disputed matters, and to achieve finality.
Particularly when the appeal is one against a decision of the Local Court, the issue of cost takes on considerable significance. The Local Court is a court of limited jurisdiction, with a monetary jurisdictional limit in its General Division of $100,000. Without restricting the right of the parties in such matters to appeal against decisions with which they are dissatisfied, the potential legal costs and the cost to the public purse in making available the resources of the courts could rapidly reach disproportionate levels. One can readily foresee a situation where the legal costs of court action, even excluding the costs to the community, could be substantially greater than the quantum of the dispute between the parties. With an original claim for $65,000 (with interest and costs) such would quickly be the case in the present matter.
In Coulter v R [1988] HCA 3; 164 CLR 350 Deane and Gaudron JJ noted that statutory restriction on the right of appeal, "… represents a constraint upon the overall cost of litigation by protecting parties, particularly respondents, from the costs of a full hearing of appeals […] (at 359)."
Where a party requires leave, with that background of statutory constraint, it has been repeatedly stated that something more than a contention that the judge at first instance was arguably in error is required: Carolan v AMF Bowling Pty Ltd [1995] NSWCA 69. Referring to what was stated in Carolan, Campbell JA in Jaycar Pty Ltd v Lombardo [2011] NSWCA 284 noted at [46] that, "… ordinarily it is appropriate to grant leave to appeal only concerning matters that involve issues of principle, questions of general public importance or an injustice which is reasonably clear, in the sense of going beyond what [is] merely arguable (Young and Meagher JJA agreeing)."
Of course, these considerations do not detract from the applicability of s.56 of the Act, which refers not just to cost and timeliness but to the achievement of justice; nor from s.58, which requires a court to act in accordance with the dictates of justice, and having regard to the degree of injustice that would be occasioned to a party as a consequence of an order of the court: Be Financial Pty Ltd as Trustee for Be Financial Operations Trust v Das [2012] NSWCA 164.
The question is whether asserted error in the decision of the learned Magistrate as to the construction and applicability of s.65 (2)(b) of the Act and the exercise of his discretion in favour of Mr. Gollop is one of sufficient significance that leave to appeal should be granted.
Section 65(2)(b) of the Act is a remedial provision of broad application intended to permit amendment where necessary to correct mistakes in the identification of a party in the suit, in circumstances where, owing to the operation of the Limitation Act 1969, fresh action brought with the correct parties nominated would be barred. That section needs to be considered in conjunction with s.64. "s. 64 (1) At any stage of proceedings, the court may order: (a) that any document in the proceedings be amended, or (b) that leave be granted to a party to amend any document in the proceedings. (2) Subject to section 58, all necessary amendments are to be made for the purpose of determining the real questions raised by or otherwise depending on the proceedings, correcting any defect or error in the proceedings and avoiding multiplicity of proceedings. (3) An order under this section may be made even if the amendment would have the effect of adding or substituting a cause of action that has arisen after the commencement of the proceedings but, in that case, the date of commencement of the proceedings, in relation to that cause of action, is, subject to section 65, taken to be the date on which the amendment is made. (4) If there has been a mistake in the name of a party, this section applies to the person intended to be made a party as if he or she were a party. (5) This section does not apply to the amendment of a judgment, order or certificate. s. 65 (1) This section applies to any proceedings commenced before the expiration of any relevant limitation period for the commencement of the proceedings. (2) At any time after the expiration of the relevant limitation period, the plaintiff in any such proceedings may, with the leave of the court under section 64 (1)(b), amend the originating process so as: (a) to enable the plaintiff to maintain the proceedings in a capacity in which he or she has, since the proceedings were commenced, become entitled to bring and maintain the proceedings, or (b) to correct a mistake in the name of a party to the proceedings, whether or not the effect of the amendment is to substitute a new party, being a mistake that, in the court's opinion, is neither misleading nor such as to cause reasonable doubt as to the identity of the person intended to be made a party, or (c) to add or substitute a new cause of action, together with a claim for relief on the new cause of action, being a new cause of action that, in the court's opinion, arises from the same (or substantially the same) facts as those giving rise to an existing cause of action and claim for relief set out in the originating process. (3) Unless the court otherwise orders, an amendment made under this section is taken to have had effect as from the date on which the proceedings were commenced. (4) This section does not limit the powers of the court under section 64. (5) This section has effect despite anything to the contrary in the Limitation Act 1969. (6) In this section, "originating process", in relation to any proceedings, includes any pleading subsequently filed in the proceedings."
The issue of whether or not the relevant limitation period had expired as at 27 June 2014 so as to enliven the operation of s.65 was conceded by the plaintiff for the purposes of proceedings before this Court, with the same concession having been made in the Court below.
The meaning and operation of s.65 have been considered in a number of decisions, including Bridge Shipping Pty Limited v Grand Shipping SA (1991) 173 CLR 231; Sibroll Pty Ltd (in liquidation) v Mitch Properties Pty Ltd [2007] NSWSC 579; (2007) 212 FLR 1; Greenwood v Papademetri [2007] NSWCA 221, and Mitry v Business Australia Capital Finance Pty Ltd (in liquidation) [2010] NSWCA 360.
Consideration of a similar provision referring to mistake in the name of a party was given in Evans Constructions Co Limited v Charrington & Co Limited [1983] QB 810. In that case, Charrington had been wrongly named as the defendant to proceedings in the mistaken belief that it was the plaintiff's landlord. Donaldson LJ said, at 821, "…it is, in my judgment, important to bear in mind that there is a real distinction between suing A in the mistaken belief that A is the party who is responsible for the matter complained of and seeking to sue B, but mistakenly describing or naming him as A and thereby ending up suing A instead of B. The rule is designed to correct the latter and not the former category of mistake. Which category is involved in any particular case depends upon the intentions of the person making the mistake and they have to be determined on the evidence in the light of all the surrounding circumstances."
That decision was followed in Lloyd Steel Co v (Aust) Pty Limited and Anor v Jade Shipping SA and Anor (1985) 1 NSWLR 212 which, in its turn, was applied and followed in Bridge Shipping. See also East West Airlines Limited v Turner [2010] NSWCA 53, where an amendment to the name of a party to the proceedings allowed at first instance was confirmed on appeal, the decision of the trial judge on that point, there being described as a question of fact.
In my view, and applying Bridge Shipping and East West Airlines, the question of whether a mistake of the type contemplated by s.65(2)(b) has been made is one of fact, which must be determined on the evidence in the particular case. It is acknowledged that the line drawn between the correction of a misnomer or misdescription and the substitution of a different party is not always an easy one to draw. [2] Here, his Honour had to assess the competing claims and arguments of the parties, and draw that line.
Mr. Gollop contended, on the one hand, that he had nominated himself as plaintiff because he and his company were synonymous for all practical purposes, and the company was not at the time of filing a legal entity in any event. He submitted that this was a mistake within the meaning of s.65(2)(b). DSA, on the other hand, asserted that this was no mere misnomer, but was an error as to the entity in which the right of action was vested rather than one of mistake as to the name of the person entitled to sue. It submitted to his Honour that the mistake should be viewed as an error falling within the same category as that in Siproll, where a company liquidator erroneously commenced proceedings in the company's name rather than that of the liquidator.
Whilst Siproll is informative, his Honour appears to have concluded that it was not determinative of the case before him. He proceeded on the basis that the facts in Siproll could be distinguished from the facts of the case before him because in Siproll the entitlement of a company in liquidation to bring action in circumstances where a liquidator had been appointed was regulated by the Corporations Act 2001. That approach is neither novel nor unique: Mitry, [48] - [50].
The decision at first instance rested on a conclusion of fact that Mr. Gollop's mistake was more than a mistake of law alone, and thus the operation of s.65(2)(b) was not precluded. As was observed in Mitry (at [48]) the fact that a mistake of that nature was made does not mean that there was not also a mistake in the name of the plaintiff. Section 65(2)(b) "does not require that the 'mistake in the name of a party' be the sole mistake that has been made".
It was clear in the present matter that his Honour concluded on the evidence before him that Mr. Gollop had made a mistake in naming the entity or individual with a cause of action against DSA by reference to his own name. The Local Court concluded that his mistake was one of nomenclature, rather than one as to the description of the party who was entitled to bring the claim. In the same sense as in Mitry, the Court concluded that Mr. Gollop purported to bring the action in exercising the rights of the company, which was defunct; his failure was in not bringing the action in the name of the company.
It was, in my view, open to his Honour to reach that conclusion on the evidence before him. Whilst the contrary position was capable of being advanced, that simply highlights the difficulty of drawing the line in some cases between misidentification, and mistake of law as to the appropriate party. That DSA had an arguable case on the application of s.65(2)(b) is not of itself sufficient to warrant a grant of leave.
As was required of him, the Magistrate at first instance also considered the question of whether the mistake was misleading, or such as to cause reasonable doubt as to the person intended to be made a party.
It was not seriously contended in these proceedings that there was any real possibility that DSA could have been misled by Mr. Gollop's mistake. Indeed, it was DSA which immediately noted the mistake in the nomination of the plaintiff, and sought to take advantage of it by simply denying that it had ever entered into an agreement with Mr. Gollop. Despite the wrongness of the name of the plaintiff, the description of the entity properly having that role was always clear, and his Honour so concluded. That conclusion was also open to him.
Grounds 1 and 2 could not be made out.
Ground 3 of the plaintiff's proposed appeal raised an alternative proposition that, even if there had been a mistake amenable to correction pursuant to ss.64 and 65 of the Act, the Magistrate erred in granting leave to amend the originating process. It is argued that his Honour's discretion in that regard, properly exercised, should have resulted in leave being refused.
The argument advanced by DSA in support of that contention is that, Mr. Gollop having been so dilatory in seeking to correct the error, substantial prejudice was occasioned to DSA, and leave to amend should not have been granted. The prejudice occasioned to DSA was identified as the fact that, because leave was granted to Mr. Gollop to amend the originating process, it had to answer the claim in the Local Court, an outcome which would have been quite the opposite if leave had been refused.
Counsel for the plaintiff relied upon Aon Risk Services Australia Ltd v Australian National University [2009] HCA 27; 239 CLR 175 as authority for the proposition that an order for costs, and even indemnity costs, could not be regarded as a sufficient remedy for any prejudice that may have flowed to DSA from the tardiness of Mr. Gollop in seeking to correct the name of the plaintiff in the originating process. Whilst Counsel expressed the principle enunciated in Aon Risk in terms that allowed for no shade to its meaning, as one which meant that costs could never be seen as a sufficient answer to amendment and consequential delay, I do not read Aon Risk in such a starkly dichotomous way. As stated in Aon Risk at [98] and [99]: "[98] Of course, a just resolution of proceedings remains the paramount purpose of r 21; but what is a "just resolution" is to be understood in light of the purposes and objectives stated. Speed and efficiency, in the sense of minimum delay and expense, are seen as essential to a just resolution of proceedings. This should not detract from a proper opportunity being given to the parties to plead their case, but it suggests that limits may be placed upon re-pleading, when delay and cost are taken into account. The Rule's reference to the need to minimise costs implies that an order for costs may not always provide sufficient compensation and therefore achieve a just resolution. It cannot therefore be said that a just resolution requires that a party be permitted to raise any arguable case at any point in the proceedings, on payment of costs. [99] In the past it has more readily been assumed that an order for the costs occasioned by the amendment would overcome injustice to the amending party's opponent. In Cropper v Smith Bowen LJ described an order for costs as a panacea that heals all. Such a view may largely explain the decision of this court in Shannon v Lee Chun, which upheld a decision allowing the plaintiff to raise a new case at the second trial, but which imposed a condition as to costs. The modern view is that even an order for indemnity costs may not always undo the prejudice a party suffers by late amendment. In the present case it is difficult to see that such an order could be sufficient compensation, given that Aon would be required to again defend litigation which was, effectively, to be commenced afresh."
The point being made in Aon Risk as I understand it was, that in an age when the pressures on the courts are many and heavy, the resolution of the dispute between the parties is no longer to be the only consideration in achieving justice. The need to avoid disruption to a court's lists and the consequent waste of public resources and prejudice to other litigants waiting to gain access to the court must also be taken into account. An order for costs to one party or another is clearly incapable of addressing and remedying the broader considerations of delay in the courts as a whole.
As Aon Risk made clear, there is no right to amendment, simply subject to the payment of costs. A wider range of factors than was previously the case must now be considered when determining whether to grant leave to a party to amend pleadings, including delay and wasted costs and the effects of those features on not just the parties, but also upon the court and other litigants.
(It is notable that Aon Risk involved an application for an adjournment by the ANU to make substantial amendments to its pleading, resulting in the waste of four weeks of court time set aside for the trial, and the loss of the very substantial costs incurred by Aon Risk in its preparation for the trial. There is no comparison to the potential loss and delay in the present matter.)
What the High Court in Aon Risk did not say, as the plaintiff appeared to contend at one point in address to this Court, is that the dictates of justice between the parties are to be ignored wherever the conduct of one party leads to delay and increased costs. Even in such circumstances, justice between the parties has not been rendered wholly irrelevant, but remains an important consideration.
Whilst the form of expression used by the learned Magistrate when considering these aspects of the matter, and the decision in Aon Risk, may have muddied the meaning somewhat, it is clear that his Honour took into account and weighed all of the relevant considerations, including that of delay and prejudice to DSA and of costs to the administration of justice more generally. He was also required to, and did, consider, the provisions of ss.56 and 58 of the Act, and what was necessary to determine and litigate the real issues between the parties, and achieve a just outcome.
I have concluded that it was open to the learned Magistrate to exercise his discretion to grant leave in favour of Mr. Gollop. The exercise of a discretion is reviewable only where some error has been made in the exercise of the discretion. As stated in House v R [1936] HCA; 55 CLR 499 at [504]: "If the judge acts upon a wrong principle, if he allows extraneous or irrelevant matters to guide or affect him, if he mistakes the facts, if he does not take into account some material consideration, then his determination should be reviewed and the appellate court may exercise its own discretion in substitution for his if it has the materials for doing so. It may not appear how the primary judge has reached the result embodied in his order, but, if upon the facts it is unreasonable or plainly unjust, the appellate court may infer that in some way there has been a failure properly to exercise the discretion which the law reposes in the court of first instance. In such a case, although the nature of the error may not be discoverable, the exercise of the discretion is reviewed on the ground that a substantial wrong has in fact occurred."
I am unable to conclude that a substantial wrong has occurred.
As the learned Magistrate noted, there having been a mistake made by Mr. Gollop as to the plaintiff nominated, and there being no possibility that the mistake was one which was misleading or such as to cause doubt as to the intended litigant, to refuse him leave to make the amendment would shut him out from the jurisdiction of the court altogether, and deny him the opportunity to have his claim heard and determined on its merits.
Whilst action to correct the mistake was slow in being taken by Mr. Gollop, there was an adequate explanation provided in the evidentiary material before the Local Court for both the delay in bringing the claim, and the delay in seeking to correct it. The evidence, which DSA did not seek to test in the Local Court or to challenge before this Court, explained the delay by reference to Mr. Gollop's extremely difficult personal circumstances, his impecunity and - at least inferentially - the legal advice he had received prior to filing his original claim. The delay had not been due to any deliberate manipulation of the court's process, or to an attempt to secure some unfair advantage over DSA.
From DSA's perspective, his Honour concluded that, whilst there had been prejudice to DSA in the delay, on the particular circumstances of the case, an order for costs in its favour was a sufficient compensation. The defence filed by DSA had, other than the narrow technical defence of denying that a contract with Mr. Gollop existed, denied the allegation of defective work. The latter is, presumably, a sufficient answer to the claim against it without more. It is plain from the material filed in the defence in the Local Court that DSA was in a position to adduce evidence and argue its case as a denial that its work was substandard, or that it had rendered the safety devices upon which it had worked unsaleable. The change to the name of the plaintiff allowed by the Local Court could have made no difference at all to the defence, other than by making its technical defence unavailable to it.
It was still open to DSA to conduct its defence to the claim and have that defence considered by the court. In that sense, there could be no prejudice to DSA in granting leave to amend, other than costs thrown away.
His Honour concluded that an order in DSA's favour for the costs of preparing the matter for hearing, and of the day of hearing, was sufficient redress. There is no challenge from the plaintiff to the costs order.

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Judgment (8 paragraphs)

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Cases Cited (14)

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