HP Mercantile Pty Ltd v Clements

Judgment 1By a Notice of Motion dated 24 February 2014 the Defendant, Mr Clements, brings two applications, the first in relation to an amendment of his Defence in the proceedings and the second in relation to an application for a direction that the Plaintiff, HP Mercantile Pty Ltd ("HP Mercantile"), call a particular person, Mr Purcell, as a witness in its case. I will deal with those two applications in turn. 2By the first aspect of the Notice of Motion, Mr Clements seeks leave to file a Fourth Further Amended Defence in the form exhibited to his affidavit dated 25 February 2014 with leave to the Plaintiff to file any amended reply. That application is made in circumstances that the hearing in the proceedings is due to commence on 11 March and continue for several days over the subsequent weeks, and that there has been a very lengthy delay, by both parties, in bringing the proceedings to hearing and that the hearing date has previously been vacated. 3Mr Clements sent his proposed Fourth Further Amended Defence to HP Mercantile's solicitors by letter dated 24 February and those solicitors did not take much time to indicate, by letter of the next day, that one aspect of the amendments was accepted, as narrowing the issues in dispute, but several other paragraphs of the proposed amendments were objected to. Mr Clements then filed his application for leave to amend. The affidavit in support of the amendment is not illuminating, in two respects. First it states that the purpose of the amendments "are to more accurately reflect my defence, in light of the evidence [and] as a result, to reduce the issues in dispute". The generality of that statement provides little justification for particular amendments, although I accept that there has been some narrowing and, as will emerge, significant widening by the proposed amendments. The affidavit is also unilluminating in respect of the delay in seeking the amendment. While I accept that the issues are complex, there has nonetheless been a very long period for them to be addressed, and numerous previous amendments in which Mr Clements has had the opportunity to refine the case he wishes to put. 4Counsel have since exchanged summaries of submissions prior to the argument today, by which the paragraphs to which objection was taken were narrowed and the grounds of objection were clarified. Helpfully, and it is a matter of credit to both parties, the grounds of objection were further narrowed by agreement between them prior to the argument today. 5HP Mercantile points to the general prejudice which it claims to suffer in dealing with an amendment when a trial date is imminent and contends that Mr Clements has failed to provide "any adequate" (or, on one view, any) explanation for the delay in the circumstances which I have noted. I would prefer to approach the matter, as the parties did in their substantive submissions, by reference to the particular amendments and their consequences, rather than by reference to a general proposition of that kind. 6The applicable principles are well established and it is not necessary to set them out at length. I am required to exercise my discretion whether to allow the amendment having regard to the provisions of ss 56-58 and 64 of the Civil Procedure Act 2005 (NSW). Section 58 requires the Court to have regard to the dictates of justice when concerning an order for the amendment of a document and requires the Court also to have regard to the provisions of ss 56 and 57. Section 56 identifies the overriding purpose of the just, quick and cheap resolution of the real issues in dispute in the proceedings and s 57 requires proceedings to be managed having regard, inter alia, to the just determination of the proceedings. 7These provisions point to, and I am conscious of, the requirement that in justice parties have a fair opportunity to put the case they wish to put; however, they also point to the need to take into account the wider public interest in the administration of justice, as to which delay is a significant matter. Section 64(2) in turn provides that, subject to s 58, all necessary amendments should be made for the purpose of determining the real issues raised by the proceedings. 8I should also have regard to the High Court's decision in AON Risk Services Australia Limited v Australian National University [2009] HCA 27; (2009) 239 CLR 175, where the High Court, in the context of an amendment application, emphasised the significance of delay for the opposing party and the fact that a costs order should not be treated as an automatic solution to problems created by failures to conform to the objectives of case management. That decision also pointed to the fact that a judge was entitled to have regard to the strain that litigation imposed on litigants, but recognised that such strain is of lesser significance for business corporations or commercial entities than for personal litigants. In this case, HP Mercantile is a commercial entity, involved in litigation for commercial gain, and I would regard such strain as of lesser significance. The principles identified by the Court in AON above are, of course, also to be applied having regard to the statutory context established by the Civil Procedure Act and the matters which I have noted above. 9In the present case, HP Mercantile submits that it will suffer prejudice in dealing with particular issues. It does not lead specific evidence, either from its principal or from its solicitors, of that prejudice, but there are some matters which seem to me to be self-evident, given the history of the proceedings and what is known as to the scope of the issues in them and the volume of the documents in them. I also have regard to the fact that, to some extent, to make further enquiries to scope the extent of searches that HP Mercantile would need to undertake, HP Mercantile would in fact have had to undertake those searches, subjecting itself to the very prejudice of which it complains. 10Turning to the specific objections raised, HP Mercantile contends that paragraph 3AA of the proposed Fourth Further Amended Defence raises a new factual issue as to whether certain costs and expenses were incurred, which HP Mercantile contends it is unable to meet at trial. That matter overlaps with an issue to which I will refer in respect of the other aspect of the motion. HP Mercantile draws attention to the decision of Australian Competition and Consumer Commission v Cabcharge Australia Ltd (No 2) [2010) FCA 837 where Finkelstein J drew attention to the difference between a non-admission and a denial, noting that, on the one hand, speaking generally, "there is no difference in effect between denying and not admitting an allegation" (at [7]), but also pointing to a suggested custom that a party who does not admit an allegation which is within his or her knowledge will not tender evidence to contradict any evidence led by a plaintiff. That observation is, of course, in its terms limited to the position where a plaintiff does not admit a matter which is within his or her knowledge, and the scope for such a non-admission is now limited in New South Wales by the enquiries a party would need to make before not admitting a matter. In this case, it does not seem to me that it could be suggested that the particular matter is within Mr Clements' personal knowledge. 11It does not seem to me that the proposed amendment can fairly be characterised as raising a new issue. Mr Clements previously did not admit the allegation as to the expenses incurred and proof of the alleged expenditures had always been necessary to HP Mercantile's case. To the extent that they are sought to be proved by documents, the question of the admissibility of those documents and the weight to be given to them had always arisen. The dispute has perhaps been sharpened by, but does not arise from, the proposed amendment. I would allow the proposed amendment in respect of paragraph 3AA, noting that it is not the withdrawal of an admission, because the paragraph had never been admitted. 12Objection is taken to proposed paragraph 34(b)(i) on the basis that it raises a new factual issue which HP Mercantile would be unable to meet at trial, namely, the capacity of participants in the relevant project (and I note that the issue does not seem to be unique to Mr Clements) to carry on a "farm business" (as defined in the Loan Agreement) without granting a particular charge or lien. This issue arises in circumstances that the grant of that charge or lien, by the manager of the project, is said to have caused the particular loan to convert from non-recourse to recourse status. HP Mercantile contends that this issue would require investigation of the terms of the appointment of third parties and the basis on which they would have accepted appointment as manager, including whether they might have accepted certain arrangements other than the grant of a security or charge. 13Mr Clements responds that the Plaintiff's case is documentary only and that there is no evidence of specific prejudice. HP Mercantile in turn accepts that its case to date is documentary, but it cannot be assumed that its response to this issue would have the same character. It seems to me that this issue can be resolved on a narrower basis. The documents in this case are, in any view, extremely voluminous, with the documents having been produced on subpoena by key entities exceeding 150 boxes of documents. It seems to me that I can infer, without specific evidence, that there would be a need to review the documents to address this allegation. Even if, as Mr Newlinds hypothesises on behalf of Mr Clements, there might be a folder in those 150 boxes which deals with the issue, that does not address the difficulty of the need to search to find the folder, and then further to search for the documents which might be there which are not contained within the folder. It seems to me that the prejudice of imposing such a search upon HP Mercantile at this late point is self-evident, particularly when there is no real explanation from Mr Clements as to why the point would not have been raised earlier. 14Mr Newlinds contends that the point will still be in issue, so far as HP Mercantile will need to establish its case, that the relevant conversion from a non-recourse loan to a loan as to which recourse was available against Mr Clements took place. If that is the case, then that is less reason rather than more reason to permit the amendment. For these reasons, I will not grant leave in respect of the proposed amendment in respect of paragraph 34(b)(i). 15Objection is also pressed in respect to proposed amendments to paragraphs 34X(e)-(f), 52A(e)-(f) and 52G(g)-(h) which are said to raise a new issue as to the construction of netting and certain facilities. Paragraph 34X(e)-(f) pleads alleged representations as to those matters; paragraph 52A(e)-(f) plead their falsity by the absence of construction of the netting or facilities; and paragraph 52I relies on a reversal of onus under s 51A of the Trade Practices Act 1974 (Cth). I note that the reliance on a reversal of onus may be essential, because a statement which had an element of futurity to it would not have been falsified merely by showing that it had not come to pass. It seems to me that this issue plainly raises factual issues, which are exacerbated where a reversal of onus is relied upon, so as to shift the onus to HP Mercantile to justify the relevant representations, which it could not do without identifying further documents to support them or calling witnesses to support them. In this circumstance, the detriment of HP Mercantile being forced to address this matter at this late stage is again substantial, and I would not grant leave for the amendment. 16Finally, an amendment is sought to be made in respect of paragraphs 83AA and 83BA which seek to plead that a non-disclosure of the matter pleaded in paragraph 52A(d), as to which the amendment is not now opposed, breached a fiduciary duty which is in turn pleaded in paragraph 83A. The alleged breach is the consequence of an already pleaded fact, as now amended; it overlaps with Mr Clements' representational case, and there is no suggestion that any disclosure has been pleaded in response to that representational case. I can see no prejudice to HP Mercantile in respect of the relevant amendment, which does not seem to me to raise issues other than those which are already raised, directly or by implication, in the representational case. There may be a legal question whether a non-disclosure is capable of amounting to a breach of fiduciary duty, but that point was not taken before me and the issue in any event is not closed beyond argument: Iacullo v Iacullo [2013] NSWSC 1517 at [106]. I will therefore grant leave for the amendment in respect of paragraphs 83AA and 83BA. 17I therefore make the following directions in respect of this aspect of the motion: