Gold Peg International P/L v Kovan Engineering

Current statement of claim 10 Relevantly, the applicant pleads in a second further amended statement of claim, an agreement made in 1992 between the applicant and the first respondents. Particulars are sought to be added to extend the conversations constituting the agreement from conversations "in or about 1992" to conversations "in the period from about 1989 until early 1992" (paragraph 11 of the statement of claim). 11 In relation to the same agreement, it is also sought to add an alternative particular that the parties' agreement was signified by Mr Miller, a principal of the respondent, by silent acceptance. In this regard the applicant relies on Empirnall Holdings Pty Ltd v McMahon Paull Partners Pty Ltd (1988) 14 NSWLR 523. (Paragraph 11 of the statement of claim.) 12 Thirdly, it is sought to include two terms of the agreement already pleaded as terms to be implied as a matter of law: BP Refinery (Westernport) Pty Ltd v Hastings Shire Council (1977) 180 CLR 266; Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337. (Paragraph 11 of the statement of claim.) 13 The respondents, also in reliance on Queensland v JL Holdings, submit that the attainment of justice must be the paramount consideration when dealing with late amendments. The respondents rely on cases in which late amendments were refused, which include Burnham v The City of Mordialloc (1956) VLR 239 at [241]; Gordon v MacGregor (1909) 8 CLR 316 at [321]; and Patrick v Capital Finance Pty Ltd [2003] FCA 206 ("Patrick"). The cases are distinguishable if only because amendments were sought after the close of evidence. See also The Commonwealth v Verwayen (1990) 170 CLR 394 at 456. The respondents sought to emphasize that the attainment of justice merely involves both parties being given a reasonable opportunity to place before the court the issues they wish to litigate: Cohen v McWilliam (1995) 38 NSWLR 476 at 502. In this context they relied on a passage in the judgment of Tamberlin J. in Patrick at [10]: "The conduct of a lengthy complex commercial proceeding, such as the present may, as the case is prepared and progresses, involve fine assessments as to what documentary or oral evidence ought to be adduced and as to whether or not to cross‑examine a witness. If it is thought desirable to cross‑examine then decisions need to be made and instructions obtained and to the nature and extent of the cross‑examination. In the effective presentation of a case these matters are decided by the specific issues raised in the pleadings. If there are substantial variations in the issues raised then the way in which the case is conducted may be significantly different. Often, but not always, at the close of proceedings, to permit significant amendments that raise issues which, practicably, cannot be effectively addressed, may cause substantial injustice to the other parties. This principle is of particular significance in the present case where the application to amend is sought at the close of evidence in circumstances where extensive amendments were permitted prior to and after the commencement of the hearing." 14 Where late amendments have been refused the grounds appear to me not so much that the amendments are late, or even very late, but rather that as a result of the lateness, consequential prejudice to the other party is incapable of remedy: see for example, National Australia Bank Limited v Nobile and Another (1991) 100 ALR 227; following Cropper v Smith (1884) 26 Ch D 700. 15 The respondents relied on the fact that the applicant in this case has had many opportunities already to plead and present its case in respect of the agreement in question as follows: "5 July 2002 In its statement of claim dated 15 July 2002, Gold Peg alleged that it entered into an agreement with Kovan, which was partly evidenced in writing, partly oral, and partly to be implied. Insofar as the agreement was oral, it was alleged to be constituted by conversations in June 1998, 19 April 2001, 29 November 2001, 11 December 2001, 18 January 2002 and 10 April 2002. Insofar as the agreement was implied it was alleged to be implied from the course of dealing between the applicant and the first respondent, but also to give business efficacy to such dealings. 8 November 2002 On 8 November 2002, Gold Peg filed and served an amended statement of claim, in which it alleged that the Agreement was partly oral, and partly to be implied. Insofar as the agreement was oral, it was alleged to be constituted by a conversation in or about 1991. Insofar as the agreement was implied it was alleged to be implied from the course of dealing between the applicant and the first respondent, but also to give business efficacy to such dealings. 24 January 2003 On 24 January 2003, Gold Peg's solicitors sent the respondents' solicitors a draft further amended statement of claim, in which Gold Peg alleged that the Agreement was entirely oral, and was constituted by a conversation occurring in March 1992. 6 June 2003 On 6 June 2003, Gold Peg filed and served a second further amended statement of claim, in which Gold Peg alleged that the Agreement was constituted not by one conversation in March 1992, but by various conversations in 1992. The term referred to in paragraph 11(e) was alleged to be implied to give business efficacy to the matters the subject of the oral agreement." 16 In the context of this chronology it needs to be noted that Mr Miller swore his affidavit on 15 April 2003 and he swore that he assented to certain terms of the agreement pleaded, on behalf of the first respondent, by gesture while remaining silent (paragraph 11 of the statement of claim). Amendments proposed for paragraphs 15 and 22 require no further elaboration. 17 The respondents complained that if the amendment were allowed, to extend the time during which conversations which constitute the agreement occurred, the respondents could suffer a prejudice not compensable by way of costs or an adjournment. This is because Mr Smith and Mr Miller have already been cross‑examined on the basis of the case as pleaded and that the proposed amendment would oblige the respondents' counsel to virtually cross‑examine on the previous cross‑examination. Perhaps even more importantly it was submitted that in the course of the case, strategic decisions have been made by the respondents which cannot easily be reversed for the purposes of continuing this proceeding. For example, Mr Smith has given evidence already in respect of conversations from 1989 and prior to 1992 to which no objection has been taken. Senior counsel for the respondents contends that he would have reacted differently to this evidence had the particulars now sought to be advanced governed the case the respondents had to meet: Dare v Pulham (1982) 148 CLR 658 at 664. In this context, he emphasised that the respondents' case in respect of this aspect of the proceeding is one which will turn, to a significant extent, on the issue of Mr Smith's credit in respect of conversations which occurred twelve years ago (on the current state of the pleadings) or going back fifteen years (on the proposed amended particulars). While this submission was directed most of all to the amendment of particulars specified in paragraph 10 above, it was also directed to the other proposed amendments to paragraph 11 of the statement of claim. Thus is it put that the trial ought to be aborted if the amendment is allowed: Howarth v Adey [1996] 2 VR 535. It is fair to describe this as the respondents' most significant objection to the proposed amendments because in relation to the period during which the conversation occurred, the respondents identify a prejudice to them which is not compensable by costs or adjournment. All the other proposed amendments, including the balance of amendments to paragraph 11, are compensable by an order for costs, directions for particulars or other interlocutory steps, as required and any necessary adjournment. 18 It was noted by the respondents that there was no evidence of any particular excuse being proffered by the applicant for the late amendment which it was urged militated against the grant of leave: Queensland v J L Holdings at [17] per Kirby J; Amatek v Botman (1995) 13 ACLC 1729 at 1732. 19 The applicant, in reply, distinguished Patrick's case as a long and complex case where an amendment was sought after all the evidence had closed, alleging new facts to support new causes of action being new allegations of fraud. Furthermore, the applicant urges that there is nothing in the proposed amendments in this proceeding which cannot be dealt with by way of further cross‑examination and accordingly leave to make them should be granted on condition that witnesses will be recalled as necessary. 20 Weighing, as carefully as I am able to, the competing factors in relation to exercising the discretion to grant leave to amend, in accordance with the established principles in Queensland v J L Holdings, I accept the respondents' argument that the applicant has had many opportunities to plead its case in relation to the specific particulars of conversations constituting the agreement. Further late change in those particulars has the capacity to cause prejudice to the respondents which cannot be assuaged by costs or an adjournment, having regard to strategic decisions taken during the course of the hearing to date. An aborted hearing would be a drastic step which would occasion serious prejudice to the applicant. It seems to me justice can be attained on this application without taking such a drastic course. In any event, the applicant has pleaded that conversations constituting terms of the agreement occurred "in or about 1992" and the evidence falls to be assessed under that particular. 21 As to the balance of the amendments in relation to paragraph 11 of the statement of claim, I accept the applicant's submissions and regard the proposed amendments as governed by established principles to which I have already referred. The points sought to be raised are arguable and their inclusion will not occasion any prejudice to the respondents which cannot be assuaged by costs and any necessary directions and/or adjournment. 22 In relation to amendments covering an additional particular of breach of the agreement to be added to paragraph 15 of the statement of claim, I accept the applicant's arguments in support of the grant of leave. I will however, permit the respondents to seek any particulars in respect of any of the amendments for which leave is granted. In relation to paragraph 22 of the statement of claim the proposed further particulars of infringement which have the effect of narrowing the matters in dispute, will be allowed, in accordance once again with established principles. Any prejudice to the respondents can be assuaged by the conditions of the grant of leave.

The proposed amended defence and cross‑claim 23 The applicant has opposed the grant of leave in respect of the amended defence and cross‑claim, primarily on the basis that a new issue has been raised which has the capacity to require considerable additional evidence at this late stage of the proceeding. Furthermore, refusal of leave would not preclude the respondents from pursuing this aspect of the proposed cross‑claim at a later date. 24 The particular paragraph attracting this submission is paragraph 3 which claimed that the applicant/cross‑respondent threatens and intends to infringe copyright subsisting in the "Kovan Drawings", which designation I have already described. Some indications were given during the course of argument that the parties could give consideration to having any question of the cross‑respondent's manufacture of cookers in accordance with the "Kovan Drawings" heard at a later occasion rather than in the present proceeding. Having regard to the fact that findings in the present proceeding may result in there being no necessity to further pursue that aspect of the cross‑claim that seems a practical course. While there was no formal consent registered in respect of that proposal I note it as relevant to the exercise of my discretion in favour of the respondents because this distinguishes the position from a case such as Patrick's case where a new case is sought to be dealt with as part of the proceeding. The amendments proposed will be allowed by applying the principles to which reference has been made, on the basis that prejudice to the applicant can be obviated by separate hearing of allegations of any actual (as distinct from threatened) infringement of the "Kovan Drawings" and postponement of any interlocutory steps in respect of such a hearing. 25 In accordance with these reasons leave will be granted to the applicant to amend the statement of claim in accordance with its proposed statement of claim except for the addition of the words "in the period from about 1989 until early 1992" to the particulars to paragraph 11. To the extent that it is sought to further cross‑examine any witness as a result of the permitted amendments, the leave would be conditional on the recall of witnesses for those purposes. To the extent that the applicant has already agreed to further particularise the proposed amended particulars of infringement, the grant of leave is conditional on the provision of those further particulars. 26 To the extent that either party requires time in order to undertake further interlocutory steps as a result of the amendments in respect of which leave is granted, the leave will be conditional on adjournment of the further hearing as reasonably required. I direct the parties to bring in proposed minutes of order in accordance with these reasons for judgment, such minutes to cover all directions as necessary, including a direction for a further case management conference. At that time I will give the parties the opportunity to make submissions on costs. I certify that the preceding twenty‑six (26) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Crennan.

Associate: Dated: 8 December 2004 Counsel for the Applicant: Colin Golvan SC Dr Staniforth Ricketson

Counsel for the Respondent: David Collins SC Andrew McClelland

Solicitor for the Respondent: Brian Ward & Partners