DJZ Constructions Pty Ltd v Paul Pritchard trading as Pritchard Law Group [2009] NSWSC 215 | Case summary

JUDGMENT 1 HER HONOUR: On 13 March 2009, I gave leave to the parties to amend both the defence and the statement of claim (see DJZ Constructions Pty Ltd v Paul Pritchard trading as Pritchard Law Group [2009] NSWSC 151.) A further issue then arose between the parties, namely, the date on which the amendments made to the further amended statement of claim are to take effect. 2 The plaintiff took the view that the provisions of s 65 of the Civil Procedure Act 2005 applied, with the result that in accordance with s 65(3), the amendments would take effect from the date on which the proceedings were commenced. The defendant's position was that s 65 did not apply to the amendments; that while there was a discretion under s 64 to allow the amendments to take effect from the date on which the proceedings were commenced, that was not a discretion which would be exercised in this case; and if s 65 did apply, then the Court would make an order that the amendments would not take effect from the date on which the proceedings were commenced, in the circumstances in which the amendments came forward. 3 Sections 64 and 65 of the Civil Procedure Act provide: 64 Amendment of documents generally (cf SCR Part 20, rules 1 and 4; DCR Part 17, rules 1 and 4) (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. 65 Amendment of originating process after expiry of limitation period (cf SCR Part 20, rule 4; DCR Part 17, rule 4) (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. 4 There was no question between the parties as to the law. In Greater Lithgow City Council v Wolfenden [2007] NSWCA 180, the Court of Appeal approved the approach taken in a number of earlier authorities to the question of whether there was a general discretion under s 64 to grant leave to amend a claim to add a statute barred cause of action. There it was concluded: 13 It is necessary to say something about the history of the rules of Court which in substance have been incorporated in those sections of the Civil Procedure Act . The matter first came before this court in McGee v Yeomans [1977] 1 NSWLR 273. The plaintiff had brought an action in the Supreme Court of New South Wales against the administrator of the estate of a deceased driver appointed by the Supreme Court of Victoria. The proceedings were improperly constituted as the appointment of an administrator or an executor by a foreign court is not recognised in New South Wales. By the time the plaintiff understood the difficulty of his position a claim against the same defendant in his capacity as an executor de son tort in New South Wales was statute barred. 14 The primary judge applied the rule in Weldon v Neal (1887) 19 QBD 394 and refused leave to amend. 15 This court reversed that decision and held that SCR Pt 20 r.1 and r.4 displaced the rule in Weldon v Neal and that r.1 conferred a general power which enabled the Court to grant leave to add a statute barred cause of action outside the cases covered by r.4. The principal judgment was that of Glass JA who said at p 280: "By providing in r. 4(3)-(5) that an amendment may be authorized which allows the substitution of a new party, the suing by the plaintiff in a new capacity and the substitution of a new cause of action, the rule was, in those circumstances, totally destroyed. I am unable to accept that it continued, nonetheless, to operate in circumstances outside their terms with undiminished vigour. When it is further provided that the abrogation of the settled rule of practice in certain defined situations shall not in any way abridge the width of the general power to amend, there is in my view an implication that other amendments might in the exercise of discretion be properly allowed in situations not expressly dealt with by the rule, notwithstanding that they introduce causes of action then barred by the expiry of a period of limitation. I am driven to the conclusion that the Supreme Court Rules , upon their proper construction, displace the settled rule of practice laid down in Weldon v Neal (1887) 19 QBD 394 and all the finespun distinctions which it engendered. In its place there has been substituted a general discretion to allow an amendment, notwithstanding that it raises a barred cause of action, whenever justice so requires. The exercise of the discretion is unfettered by any rules of practice. It is not possible by judicial decision to establish in advance categories of amendments which it would be just or unjust to allow." 16 Moffitt P agreed (at 274) with the Judgment of Glass JA. Mahoney JA decided the case on narrower grounds taking the view that it fell within the provisions of r.4. 17 This Court reaffirmed that view of the operation of Pt 20 rr.1 and 4 in Proctor v Jetway Aviation Pty Limited [1984] 1 NSWLR 166 at 171, 180-1, and 183 and said in clear terms that McGee v Yeomans was a binding decision of this Court that sustained the wider power of amendment under rule 1 in cases where a plaintiff sought to add a statute barred cause of action. This Court maintained that view in Fernance v Nominal Defendant (1989) 17 NSWLR 710, 719 in the judgment of Gleeson CJ and in Bebonis v Angelos (2002) 56 NSWLR 127, at 138-9. 18 Parliament, by using substantially the same language in ss 64 and 65 of the Civil Procedure Act, and in particular in the provisions of s 65(4), must be taken to have endorsed this line of authority. In my view the Court should apply the settled construction of the former rules to those sections. 5 It was common ground that the question of whether the amendment to the statement of claim should be permitted to take effect from the date on which the proceedings were commenced, whether that question arises under s 64, or s 65(3), must be decided on the basis of what justice requires in the particular circumstances. 6 For the defendant it was argued that there were three possible courses available to the Court in determining that question, namely either to grant or refuse leave, or in a third alternative pressed for the defendant, to defer the decision until the hearing of the merits of the claim. (See Ingot v Macquarie (No 3) [2005] NSWSC 255 at [33].) That third approach was opposed by the plaintiff. 7 The third possible approach, that of deferral, is a course which I am not attracted to in the circumstances here before the Court. It would, in my view, unnecessarily add to the costs of these proceedings, inconsistently with the overriding purpose of the Civil Procedure Act, namely, the just, quick and cheap resolution of the real issues in the proceedings. 8 In this case, I take the view that the application falls within the provisions of s 65 of the Civil Procedure Act. The amendments in the second further amended statement of claim go to two matters. The first, the allegation that in advising and acting for the plaintiff in connection with a deed of 1 February 2001 as the plaintiff's solicitor, the defendant owed the plaintiff a duty of care, which the defendant breached by his negligence. The second amendment goes to a deed dated 7 August 2003. 9 The first claim is statute barred, but the second is not. It was common ground that the parties' contest thus goes to the first amendment. 10 The plaintiff has already been given leave to make the amendments in the February judgment. That was the condition upon which the defendant was given leave to amend its defence to refer to the February 2001 deed. That leave was available to be given in accordance with s 65(1)(c), that is, to add a new cause of action in relation to the 1 February 2001 deed, together with a claim for relief on that new cause of action, because the claim made in relation to that deed arose from the same (or substantially the same) facts as those giving rise to the existing cause of action and claim for relief. 11 That conclusion flowed from a consideration of the pleadings on which the proceedings were advancing when the February judgment was given, namely the further amended statement of claim. 12 There it was claimed that the defendant had been negligent in connection with the sale of the Chris Burke & Co business, which the defendant was advising the plaintiff about. The further amended statement of claim alleged in clause 19 that the 1 February 2001 deed varied the obligations arising under a 1 July 1999 deed. In clause 20 of the further amended statement of claim, it was claimed that the defendant advised and acted for the plaintiff in connection with the 1 February 2001 deed. It was further alleged that the plaintiff later gave notice of default under the 1 July 1999 deed. On 3 August 2001 proceedings were commenced in the Supreme Court to seek to enforce the 1 July 1999 deed; the defendant acted as solicitor for the plaintiff in those proceedings. In November 2003 an agreement for sale of the business was entered, which included a release given to the purchaser, in relation to the Supreme Court proceedings. It was claimed that the defendant was negligent in the advice given as to the terms of that release. (Those terms were found by the Court of Appeal to have also released other parties to the Supreme Court proceedings.) 13 The second further amended statement of claim adds the claim that the defendant was also negligent in the advice given in relation to the 1 February 2001 deed. The amendment followed from the fact that the defendant relies on the February 2001 deed to defend the complaint made in relation to the terms of the sale agreement. This defence flows from an observation made by the Court of Appeal in its judgment in James & Ors v Surf Road Nominees Pty Ltd & Ors [2004] NSWCA 475 (also relied on in the further amended statement of claim at paragraph 29). That defence is essentially that if negligence is established in relation to the sale agreement, then no damages will be found, because the terms of the February 2001 deed had the same effect, namely of releasing the other parties to the Supreme Court proceedings. 14 It follows, in my view, that the new claim, that relating to the February 2001 deed, arises from substantially the same facts as those giving rise to the existing cause of action and claim for relief set out in the further amended statement of claim. 15 The question thus is whether the usual rule in s 65(3), namely, that an amendment made under the section is taken to have had effect as from the date on which the proceedings were commenced, should be displaced. 16 That question must be approached in accordance with the requirements of ss 56, 57 and 58 of the Civil Procedure Act 2005, which require that the discretion be exercised 'in accordance with the dictates of justice' and that the overriding purpose of the Act and of the Rules, namely, the just, quick and cheap resolution of the real issues in the proceedings be facilitated. Regard must also be had to the approach of the Court of Appeal in Dennis v Australian Broadcasting Corporation [2008] NSWCA 37 at [28] - [29]. 17 In this case I am well satisfied that the dictates of justice require that the ordinary approach, namely that the amendment take effect from the date of commencement of the proceedings should apply. Were it necessary to give leave to achieve that outcome, if the discretion to be exercised was that arising under s 64, I am also satisfied that such leave would have to be given as matter of justice between these parties. 18 Undoubtedly, the fact that a claim is statute barred is a matter to be considered when exercising a discretion under either s 64 or s 65. The scheme of s 65 is, however, to permit such amendments to take effect from the outset of the proceedings, if they arise from the same factual basis as the proceedings are otherwise concerned with. It is plainly the Parliament's view that such an approach is generally entirely consistent with the dictates of justice, although there will be cases where that general rule will have to be departed from. I can see no basis for departure from that approach in this case. 19 In my view that conclusion flows inevitably from the conclusions reached in the February judgment. There I concluded that: 21 I am satisfied that in order to ensure that justice is done between the parties in this situation, that leave to amend the defence must be granted, but on the basis that the plaintiff must also be given leave to amend the statement of claim, to rely on the deeds of February 2001 and August 2003 which have been raised in the amended defence. So much was conceded for the defendant. Any other course would permit the curious and unsatisfactory outcome that a claim of negligence could be defended on the basis that there had been earlier negligence, about which no complaint could be made by the plaintiff. …

DJZ Constructions Pty Ltd v Paul Pritchard trading as Pritchard Law Group

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Judgment (15 paragraphs)

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