Supreme Court of WA|2008-10-10|Before: Newnes J

HUGHES -v- ST BARBARA MINES LTD [No 3] [2008] WASC 220 (10 October 2008)

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA

CITATION : HUGHES -v- ST BARBARA MINES LTD [No 3] [2008] WASC 220

BETWEEN : BRYAN KEVIN HUGHES (as Trustee of the KINGSTREAM STEEL CREDITORS TRUST)

Practice and procedure - Application to amend statement of claim - Amendment to writ to add cause of action previously omitted from the writ - Whether statutebarred - Relevant limitation period - Whether a new cause of action under O 21 r 5(5) - Exercise of discretion - Whether amendment causes irremediable prejudice to defendants - Relevant principles - Turns on own facts

Rules of the Supreme Court 1971 (WA), O 21 r 5(5)

Leave to amend, subject to reservation to trial judge of date upon which amendments take effect

First Defendant : Mr C R C Newlinds SC & Mr I R Pike

Second Defendant : Mr C R C Newlinds SC & Mr I R Pike

1 NEWNES J: This is an application by the plaintiff to amend the statement of claim in the action and, to the extent it may be necessary, the writ of summons. The application was heard on 1 and 2 September 2008. On 8 September 2008, I received further written submissions on behalf of the plaintiff and, on 12 September 2008, further written submissions on behalf of the defendants.

2 It is appropriate, before turning to the proposed amendments, to set out briefly the background to the dispute.

3 On 27 April 1993, exploration licence 20/209 (EL 20/209) was granted to the second defendant (a wholly owned subsidiary of the first defendant) under the Mining Act 1978 (WA) (the Act). It related to land in an area known as 'Jack Hills'. As originally granted, EL 20/209 covered an area of land comprising 17 'blocks' within the meaning of s 56 of the Act.

4 In 1996, eight of the blocks became subject to compulsory surrender by effluxion of time, pursuant to s 65(1) of the Act. On 1 October 1996, the second defendant lodged applications (the Applications) for mining leases 51/641 (ML 51/641), 20/343 (ML 20/343) and 20/344 (ML 20/344) in respect of those eight blocks. The purpose of the Applications was to avoid losing the eight blocks by applying to convert the areas concerned to mining leases.

5 At that time the first defendant held (relevantly) exploration licence 20/176 (EL 20/176) and temporary reserve 3902H (TR 3902H).

6 On 25 March 1997, Kingstream Steel Ltd (now known as Midwest Corporation Ltd) and the first defendant entered into a deed (the option deed) by which, for an option fee of $1 million, the first defendant granted to Kingstream an option for a period of 12 months to purchase TR 3902H, EL 20/176 and EL 20/209 (together defined in the deed as the 'Tenements'), to which the first defendant said it held the title. The purchase price payable on exercise of the option was the sum of $3,200,000 to be paid by the issue to the first defendant of shares to that value in Kingstream.

7 The surrender provisions of s 65 of the Act came into effect in respect of EL 20/176 and TR 3902H in December 1997. The first defendant applied to convert into mining leases the parts of EL 20/176 and TR 3902H liable to be surrendered.

8 On 20 January 1998, Kingstream and the first defendant executed a supplemental deed. The effect of the supplemental deed, so far as relevant, was to amend the definition of the tenements which were the subject of the option deed. Under the amended definition of the 'Tenements', those tenements were expressed to include not only TR 3902H, EL 20/176 and EL 20/209 but also

all other mining or exploration licences, leases or other interests acquired or applied for by either party pursuant to the Mining Act in addition to or in substitution for all or part of TR 3902H, EL 20/167 [sic] and EL 20/209 or any of them over or in respect of all or part of the area included within the outer perimeter of TR 3902H, EL 20/167 [sic] and EL 20/209 as at 26 March 1997. (emphasis supplied)

9 Kingstream exercised the option by written notice of 8 February 1999.

10 On or about 19 September 2001, the second defendant withdrew the Applications, in respect of which there had at that stage been no grant of mining leases under the Act. Subsequently third parties applied for an exploration licence over the area covered by the Applications and ultimately an exploration licence over the area was granted to Murchison Metals Ltd. In 2005, Murchison Metals was granted a mining lease over the area.

11 The essential dispute between the parties is whether the Applications were the subject of the contract which came into existence upon the exercise of the option by Kingstream. The defendants say that they were not. The amended definition of the 'Tenements' in the supplemental deed expressly refers to mining leases applied for in respect of areas that were included within the outer perimeter of (relevantly) EL 20/209 as at 26 March 1997. The area the subject of the Applications was not included within the outer perimeter of EL 20/209 as at 26 March 1997 as the area had been surrendered on 10 October 1996, pursuant to s 65 of the Act, and had at that time become the subject of the Applications.

12 The plaintiff, on the other hand, says, among other things, that the plaintiff and first defendant always intended that the Applications would be included in the option agreement and that if the option agreement does not have that effect it should be rectified. The plaintiff claims damages for the loss of the benefit of the Applications.

13 The proceedings have been brought by the plaintiff as the assignee of any cause of action that Kingstream may have against the defendants.

14 In the current version of the statement of claim, the plaintiff advances several claims. First, it alleges that the omission of the Applications from the subject-matter of the option means that the option deed did not reflect the common continuing intention of Kingstream and the first defendant. The plaintiff seeks rectification of the option deed (as amended by the supplemental deed) by the deletion of the passage 'as at 26 March 1997' at the end of the definition of the 'Tenements'. The definition of the Tenements under the option deed would then apply to the whole of the area of EL 20/209 as originally granted to the second defendant in 1993, including the area that became the subject of the Applications in October 1996.

15 The plaintiff also pleads that the withdrawal of the Applications in 2001 by the second defendant constituted a breach by the first defendant of implied terms of the option deed to the effect that the first defendant would do, and cause the second defendant to do, all things necessary to maintain the Applications and to enable Kingstream to have the benefit of them (or of mining leases granted pursuant to them). The plaintiff further pleads that the first defendant was in breach of a duty it owed to the plaintiff to exercise reasonable care to ensure the Applications were maintained and not withdrawn prior to being determined by the Minister. A claim in negligence is also pleaded against the second defendant.

16 The substantive effect of the proposed amendment to the writ is to add a cause of action in contract, a cause of action to similar effect having been contained in the writ when it was originally issued but having been deleted by an amendment made in 2004. The proposed amendments to the statement of claim are to plead a cause of action in contract in accordance with the proposed amendment to the writ, to add a further plea as to the construction of the option deed, to plead certain estoppels, and to plead a claim for rectification based on unilateral mistake.

17 It is necessary for the purposes of the current application to describe some of the procedural history of the action. That involves going back to the very beginning.

18 The writ of summons was issued on 2 July 2002. The writ contained a general indorsement making claims against the first defendant for breach of contract, breach of fiduciary duty, for money had and received by way of the consideration paid by Kingstream in respect of the Applications, and for an order for restitution of that consideration on the basis of unjust enrichment.

19 The claim in contract against the first defendant is of particular significance to the present application. That claim was as follows:

1.1 Damages for breach of contract entered into between the plaintiff and the first defendant for the purpose of, inter alia, mining tenements known as ML51/641, ML20/343 and 20/344 ('the Mining Leases') pursuant to the plaintiffs exercise of an option under the terms of an Option Agreement made between the plaintiff and the first defendant on or about 29 January 1999.

20 The indorsement also included claims against the second defendant for breach of trust and breach of fiduciary duty.

21 A statement of claim was filed on 1 August 2002. In the statement of claim, the plaintiff pleaded the execution of the option deed on or about 27 March 1997 and the execution, on or about 20 January 1998, of the supplemental deed varying the option deed. The plaintiff went on to plead that, on or about 29 January 1999, the option deed was further varied by a written agreement between the plaintiff and the first defendant constituted by a letter dated 29 January 1999 (the Clayton Utz letter) from the first defendant's solicitors, Clayton Utz, to the plaintiff's solicitors, Solomon Brothers.

22 It is necessary, because of the significance the letter has assumed in relation to this application, to digress to some extent to set out the relevant parts of the letter, a copy of which was tendered for the purposes of this application. It was (so far as relevant) in the following terms:

We refer to your facsimile of 18 January 1999 and subsequent telephone conversations between Mr Solomon and the writer [Mr Dundo].

We are instructed to confirm that in the event that your client exercises its option in respect of the Weld Range tenements, that option will be effective in respect of the following mining and/or exploration leases, licences, reserves or applications, namely:

TR 3902H;

Exploration licence 20/176;

Mining Lease 20/402;

Mining Lease 20/403;

Exploration licence 20/209;

Mining Lease23/343;

Mining Lease 20/344; and

Mining Lease 51/641,

and the provisions of the Deeds dated 26 March 1997 and 20 January 1998 shall apply to those tenements as if those tenements were specifically listed in the Deeds.

23 The plaintiff pleaded that the option deed, the supplemental deed and the Clayton Utz letter together constituted an agreement by which the first defendant granted the plaintiff an option to purchase the tenements set out in the Clayton Utz letter, including (among others) EL 20/209 and the Applications.

24 The plaintiff also alleged that in withdrawing, or causing or allowing the second defendant to withdraw, the Applications, the first defendant breached express or implied terms of the option deed which (in substance) required it to do all things necessary to give effect to the option deed, to deal with the plaintiff in good faith, and to cause the second defendant to maintain the Applications and transfer them (or any mining leases granted pursuant to them) to the plaintiff.

25 The plaintiff further pleaded that the withdrawal of the Applications was a breach of a fiduciary duty owed by the first defendant to the plaintiff. The plaintiff also pleaded that the consideration paid for the Applications had failed and the first defendant had been enriched by that payment.

26 The statement of claim promptly came under attack from the defendants. On 13 August 2003, some two weeks after it was served, the defendants' solicitors wrote to the plaintiff's solicitors complaining that the statement of claim was defective because there was no consideration pleaded for the contract based on the Clayton Utz letter. They also said they did not understand how a letter between solicitors could, without more, constitute an agreement between the solicitors' respective clients.

27 There appears to have been no substantive response to that complaint and follow up letters were written by the defendants' solicitors in September and October 2002, apparently to no avail.

28 At a status conference on 7 October 2002, Registrar Powell ordered that any amended statement of claim be filed and served on or before 18 November 2002. No amended statement of claim was filed by that date and, on 9 December 2002, Registrar Powell made a 'springing order' requiring the filing and service of an amended statement of claim by 13 February 2003. That led to the filing and service of an amended writ and statement of claim in early February 2003.

The amended writ and statement of claim in February 2003

29 In February 2003, the plaintiff amended the indorsement on the writ to add a claim for rectification of the option deed (by the deletion of 'as at 26 March 1997' in the amended definition of the 'Tenements' as amended by the supplemental deed). The amended indorsement also added claims against the first defendant for negligence and for breach of a warranty that the first defendant was empowered to transfer the Tenements to the plaintiff. The previous claims for breach of fiduciary duty and restitution were omitted.

30 A substituted statement of claim was filed in February 2003. It is notable that although the substituted statement of claim did not plead a claim in contract based on the Clayton Utz letter, such a claim remained in the amended writ. In the statement of claim, the Clayton Utz letter was relied upon only as a particular of the plea for rectification.

31 It was alleged in the substituted statement of claim that, in late 1996, Mr Zuks for Kingstream and Messrs Roberts and Tomich for the first defendant verbally agreed that the first defendant would grant to the plaintiff an option to purchase TR 3902H and EL 20/176, being tenements relating to a site known as 'Weld Range', and all of the first defendant's interests in 'Jack Hill'. The plaintiff pleaded that at the time the interests relating to 'Jack Hill' consisted of EL 20/209 which, unbeknown to the plaintiff, was held by the second defendant.

32 The plaintiff pleaded that the option deed, executed on 27 March 1997, was intended to embody the verbal agreement. It was drawn up and executed by the parties under a common mistake that the Applications were included in the definition of the 'Tenements' contained in it. Particulars were given of the matters relied upon to establish the common mistake. They consisted of an error in the amended definition of the 'Tenements' in the option deed, matters set out on a map attached to the option deed, and the Clayton Utz letter.

33 The plaintiff further alleged that the supplemental deed, too, was drawn up and executed under a common mistake that the Applications were included in the original definition of the 'Tenements' in the option deed and in the amended definition in the supplemental deed. In the particulars of the plea the plaintiff relied, in addition to the contents of the deeds, upon the Clayton Utz letter to establish the common mistake. The plaintiff sought rectification of the definition of the 'Tenements' in the supplemental deed by the omission of the passage 'as at 26 March 1997'.

34 The plaintiff also pleaded claims for breach of express or implied contractual terms to maintain the Applications, breach of a warranty that the first defendant was empowered to transfer the tenements to the plaintiff, and negligence.

35 An amended substituted statement of claim was filed in July 2003. It was there pleaded that the option agreement was partly written and partly oral. The oral part was said to consist of two alleged telephone conversations. The first was in December 2006 between Messrs Zuks and Tomich in which it was agreed that the first defendant would grant the plaintiff an option to purchase TR 3902H and EL 20/176, being 'Weld Range' and all mining interests relating to 'Jack Hills'. The second telephone conversation occurred between December 1996 and January 1997 in which it was agreed that if the plaintiff exercised the option, the first defendant would transfer to the plaintiff the areas to which the Applications related. The written part of the agreement was said to consist of the option deed.

36 It is pleaded that the option deed was subsequently varied by the supplemental deed which purported to clarify the definition of the 'Tenements' in the option deed. The supplemental deed was drawn up and executed by the parties under a common mistake that the Applications were included in the amended definition of the 'Tenements' contained in the supplemental deed. Particulars of the matters relied upon to establish the alleged common mistake were given. Four matters were relied upon:

a telephone conversation in December 1996 or January 1997 between Mr Zuks on behalf of Kingstream and Mr Tomich on behalf of the first defendant in which it was agreed that if the plaintiff exercised the option it would include the Applications;
a conversation in December 1997 or January 1998 between Mr Zuks on behalf of Kingstream and Mr Atkins on behalf of the first defendant to the same effect;
the delivery by the first defendant, on or about 8 February 1999, to Kingstream executed transfers of the agreed tenements, including the Applications; and
the Clayton Utz letter.

37 The plaintiff sought rectification of the option deed by the omission of the passage 'as at 26 March 1997' at the end of the definition of the 'Tenements', as amended by the supplemental deed.

38 The statement of claim also contained claims against the first defendant for breach of contract in withdrawing, or causing or allowing the second defendant to withdraw, the Applications, for breach of a warranty that the first defendant was empowered to transfer the tenements to the plaintiff, and for negligence in failing to maintain and progress the Applications.

39 It is evident then that, again, the plaintiff did not plead any claim that the Clayton Utz letter had contractual effect; it was relied upon only as evidence of the common mistake which was the basis of the claim for rectification.

40 The writ was further amended in terms of a minute of proposed amended writ of summons dated 22 December 2004. The indorsement, as so amended, contained claims against the first defendant for rectification, for damages for breach of the option deed in failing to cause the Applications to be maintained and failing to ensure they were not withdrawn, and for damages for negligence.

41 Significantly for present purposes, the amended writ omitted the claim in par 1.1 of the original writ and did not include any other claim in contract which relied upon the Clayton Utz letter as having contractual effect. The only claim in contract was for breach of the option deed in failing to cause the Applications to be maintained and failing to ensure they were not withdrawn.

The amended statement of claim in March 2005

42 The statement of claim was amended in March 2005 in terms of a minute of proposed further substituted statement of claim dated December 2004.

43 In the further substituted statement of claim, the agreement between the parties in relation to the option was said to be constituted by the option deed as amended by the supplemental deed. It was alleged that at all material times on or before the date of execution of the supplemental deed, it was the common continuing intention of Kingstream and the first defendant that if Kingstream exercised the option, then the rights and interests the subject of the option deed would include the Applications. The plaintiff claimed rectification of the option deed to give effect to that common intention.

44 The statement of claim included particulars of the matters relied upon in support of the alleged common intention. So far as presently relevant, they were alleged to be (in substance):

a telephone conversation in December 1996 between Mr Zuks for Kingstream and Mr Tomich for the first defendant in December 2006 in which it was agreed that the first defendant would grant Kingstream an option to purchase all mining interests relating to a site known as 'Jack Hills' (EL 20/209, it is said, being such an interest);
a telephone conversation in December 1996 or January 1997 between Mr Zuks on behalf of Kingstream and Mr Tomich on behalf of the first defendant in which it was agreed that if the plaintiff exercised the option it would include the Applications;
a meeting on 12 January 1999 between Messrs Zuks and Solomon for Kingstream and Messrs Atkins and Dundo for the first defendant at which it was orally agreed that if the plaintiff exercised the option it would include the Applications;
a facsimile dated 18 January 1999 from Mr Solomon for Kingstream to Mr Dundo for the first defendant attaching a draft deed in which it was recited that at the time of execution of the deeds the first defendant had overlooked that EL 20/209 and the Applications were in the name of the second defendant;
a telephone conversation on 29 January 1999 in which Mr Dundo for the first defendant told Mr Solomon for Kingstream, in effect, that if the plaintiff exercised the option it would include the Applications;
two facsimiles dated 29 January 1999 from Mr Dundo to Mr Solomon in which Mr Dundo referred to the facsimile of 18 January 1999 and their telephone conversation of 29 January 1999 and confirmed his instructions from the first defendant that if the plaintiff exercised the option it would include the Applications. I should mention that (relevantly) the second facsimile of 29 January 1999 merely corrected a typographical error in the first facsimile, the Clayton Utz letter.

45 The statement of claim also again pleaded claims against the first defendant for breach of the option deed in failing to cause the Applications to be maintained and failing to ensure they were not withdrawn, and in negligence.

46 On 4 December 2007, the plaintiff filed what was described as an amended writ of summons. It was said to be amended pursuant to an order that had been made on 26 September 2007. Relevantly, par 2 of the indorsement was said to be amended as follows:

1.2 Damages for breach of a contract entered into between the plaintiff Kingstream and the first defendant for the purchase of, inter alia, mining tenements known as ML51/641, ML20/343 and ML20/344 ('the Mining Leases') pursuant to the plaintiff Kingstreams exercise of an option arising under pursuant to the terms of an Option Agreement made between the plaintiff Kingstream and the first defendant on or about 209 January 19989.

47 The validity of that amendment was in issue on the hearing of this application. I will come to that in due course. It appears, however, that the draftsperson of the amendments had overlooked the amendments that had been made to the writ in 2004 and had referred only to the original (and superseded) indorsement on the original writ. The amendments therefore do not relate to the indorsement on the writ as it stood following the 2004 amendments.

The proposed amendments to the writ and statement of claim

48 The plaintiff seeks, by this application, to amend the December 2007 writ, if that was a valid amendment, and, if it was not, then to amend the December 2004 writ, to incorporate, in substance, a cause of action for breach of contract. The plaintiff says it is to the same effect as the cause of action in par 1.1 of the original indorsement. The relevant terms of the proposed amended writ are as follows:

Damages for breach of a contract between Kingstream and the defendants arising from an offer made to Kingstream by the defendants by their solicitors' letter dated 29 January 1999 to Kingstream's solicitor, and the acceptance of that offer by Kingstream by notice in writing of exercise of the option under the Option Deed as amended dated 8 February 1999, by reason of the first defendant failing to:

3.1 cause or procure the second defendant to do all acts and things necessary or desirable to maintain the Applications until the Applications were considered and determined by the Minister under the Act;

3.2 further or alternatively, cause or procure the second defendant to do all acts and things necessary or desirable to enable Kingstream to have the benefit of the Applications;

3.3 further or alternatively, failing to cause or procure the second defendant to use all reasonable endeavours to obtain a grant under the Act of each of the mining leases the subject of the Applications; and

3.4 further or alternatively, failing to ensure that the second defendant did not withdraw the Applications prior to the Applications being considered and determined by the Minister under the Act.

49 The plaintiff also seeks to make substantial amendments to the statement of claim to add a number of claims against the first defendant. The amendments are lengthy and I will deal with each of them separately. Before doing so, it is convenient to deal with the evidence which was led on the application in support of the defendants' contention that if the amendment to the writ and statement of claim to plead the contract claim based on the Clayton Utz letter were permitted, it would cause the defendants irremediable prejudice.

50 In support of that contention the defendants relied upon an affidavit of Mr Ross Kennedy, the company secretary of the first defendant, sworn on 24 July 2008. Mr Kennedy has been the company secretary of the first defendant since October 2004. Mr Kennedy has the principal responsibility for the management of the case on behalf of the defendants. In his affidavit, Mr Kennedy expresses the opinion that if the amendments are allowed the defendants will be significantly prejudiced. Mr Kennedy says, in effect, that because the relevant limitation period has now expired, the first defendant has lost the opportunity to consider, and, if appropriate, take proceedings against Clayton Utz for negligence in respect of the Clayton Utz letter. The possible claim is put on the basis that Clayton Utz should have advised the defendants that the information as to the tenements the subject of the option, supplied by an employee of the first defendant to be included in the Clayton Utz letter, was inconsistent with the option agreement, and/or that the first defendant was under no contractual obligation to transfer the Applications to the plaintiff upon the exercise of the option. The first defendant conceded that it cannot now say what its prospects of success in such an action might have been, but says that that is because the plaintiff allowed so much time to pass before seeking to make the proposed amendments that it is now impossible effectively to investigate such a claim.

51 Mr Kennedy says that the first defendant's solicitor spoke to Mr Dundo in early 2008 about the Clayton Utz letter and alleged conversations of 29 January 1999 and provided Mr Dundo with access to the relevant files. The first defendant's solicitor subsequently told Mr Kennedy that Mr Dundo has no recollection of the conversations. He also told Mr Kennedy that while Mr Dundo's recollection was vague, he (Mr Dundo) believed the Clayton Utz letter was written as a draft without the tenement details and then sent to a Ms Oats (an employee of the first defendant) to provide those details, which she did. Mr Dundo has no recollection of what, if any, conversations he had with Ms Oats about those details.

52 There is attached to Mr Kennedy's affidavit a signed statement of Ms Oats, dated 24 July 2008, in which Ms Oats says she was the tenement manager for the first defendant between 1997 and June 1999. Ms Oats is no longer employed by the first defendant and is living in New Zealand. It appears she was located by a private enquiry agent engaged by the first defendant. Ms Oats says that if Clayton Utz had requested the first defendant to provide the tenement details in the Clayton Utz letter, it is highly likely that they would have been provided by her. Ms Oats says she has no recollection of the Clayton Utz letter or the circumstances surrounding its creation. She says she had not been asked to turn her mind to the issue until 23 July 2008.

53 Mr Kennedy says he did not instruct the first defendant's solicitors to seek Mr Dundo's recollections in relation to his dealings with Ms Oats, or to obtain the recollections of Ms Oats or of the former managing director of the first defendant, Mr Atkins (whom Mr Kennedy understood had been involved in giving Mr Dundo instructions in relation to the transaction), at an earlier time because previously the issue did not appear to be particularly important. Mr Kennedy says that, based on advice from the first defendant's solicitors, he formed the view that the Clayton Utz letter was of no assistance to the plaintiff in the rectification claim because it significantly post-dated the supplemental deed and that all of the other contemporaneous documents are either inconsistent with the rectification case or neutral.

54 I should interpose that in cross-examination Mr Kennedy did, however, say that a statement had been obtained from Mr Dundo in 2005 or 2006 in relation to all matters then relevant to the case.

55 In his evidence, Mr Kennedy said he understood that Mr Atkins was the managing director of the first defendant and was one of two senior officers of the first defendant involved in the transaction with the plaintiff. He could not say what Mr Atkins's precise role was in relation to the transaction. Mr Kennedy said that Mr Atkins left the first defendant's employment on 25 June 1999. On 20 October 2000, the first defendant and others were sued by Westgold Resources NL and the first defendant joined Mr Atkins as a party to those proceedings. The proceedings against Mr Atkins were ultimately discontinued in about February or March 2007, but there was then what Mr Kennedy describes as 'an acrimonious dispute' between the first defendant and Mr Atkins. I understand that the dispute concerned, at least in part, the costs of the third party proceedings.

56 Mr Kennedy said that he spoke to Mr Atkins by telephone on 14 July 2008. Mr Atkins said he would only consider co-operating with the first defendant in this matter if he was paid $200,000 for his costs and distress of the proceedings against him in the Westgold litigation. Mr Kennedy says he considers this sum far in excess of any amount to which Mr Atkins is entitled by way of costs and that the demand is improper. He says it is highly unlikely Mr Atkins will assist the first defendant in this action. Mr Kennedy says, however, that the prospects of obtaining Mr Atkins's co-operation would have been significantly higher in 2004 than it is now.

57 In his affidavit, Mr Kennedy acknowledges that what legal advice the first defendant would have received in relation to a possible claim against Clayton Utz would have depended on what Mr Atkins and Ms Oats said. But the delay by the plaintiff in seeking to advance the contract claim has meant that the chance to consider that claim has been lost.

58 Mr Kennedy was cross-examined at some length by senior counsel for the plaintiff. In the course of the cross-examination, Mr Kennedy said that in May 2005 he had sought legal advice on whether the Clayton Utz letter might be effective as a supplemental agreement and had been advised by the first defendant's solicitor that a claim that the Clayton Utz letter was part of the contract had initially been made by the plaintiff but had been dropped in the amended statement of claim of 13 February 2003. The solicitor said the reason it was dropped was that there was no consideration for it. Mr Kennedy was told that the Clayton Utz letter was now only a particular of the claim for rectification.

59 Mr Kennedy said that in 2006, shortly after the plaintiff's claim had been quantified by the plaintiff at some $14 million, he asked the first defendant's solicitors if there was any basis for joining Clayton Utz in the action but was advised that any action would be statute-barred. Mr Kennedy said he thought it prudent to make such an enquiry. He said it was the increase in the size of the claim, from a previous apparent maximum amount of some $250,000 up to $14 million, which led him to seek advice on a possible claim against Clayton Utz.

60 In cross-examination, Mr Kennedy maintained that he believed Mr Atkins would have been more willing to co-operate with the first defendant in 2004 than he was now because the settlement of the Westgold proceedings in 2007 had exacerbated the relationship, but he conceded it was unlikely that Mr Atkins would have co-operated in 2004.

61 The first proposed amendment is contained in par 17A of the minute. It is there pleaded that on the proper construction of the amended definition of the Tenements in the supplemental deed, the Applications were applications for mining leases made in substitution for part of the area included within the outer perimeter of EL 20/209 as at 26 March 1997. Although as at 26 March 1997 the Applications did not comprise part of EL 20/209, they were nevertheless within the outer perimeter of EL 20/209 because they covered an area located within the outer perimeter of EL 20/209 as originally granted. The plea is in the alternative to the plea for rectification.

62 It was submitted on behalf of the plaintiff that such a construction was at least arguable, having regard not only to the text of the supplemental deed but also the surrounding circumstances known to the parties, and the purpose and object of the transaction. It was argued that when the parties referred to the outer perimeter of EL 20/209 in the option deed, they intended to refer to the whole of EL 20/209 before the surrender of the areas which became the Applications in October 1996. The purpose and object of the transaction was to grant to the plaintiff an option over that whole area.

63 The defendants contended that the construction was entirely without merit. The Applications came into existence on or about 1 October 1996. The definition of the Tenements in the option deed (as amended by the supplemental deed) included all mining and exploration licences 'acquired or applied for by either party pursuant to the Mining Act in addition to or substitution for all or any part of ... EL 20/209 or any of them over or in respect of all or any part of the area included within the outer perimeter of ... EL 20/209 as at 26 March 1997'. The Applications were not within the outer perimeter of EL 20/209 as at 26 March 1997. They had dropped out of EL 20/209 altogether in October 2006.

64 It was conceded, however, by senior counsel for the defendants that the question was purely one of construction and there was no reason why it could not be left to trial.

65 I consider that the point should be left for determination at trial. No purpose would be served by deciding it at an interlocutory level. There would be no apparent saving in time or cost of any significance if the point were determined ahead of the trial and there is possible disadvantage by way of the exercise of appeal rights in doing so.

66 I have earlier set out the proposed amendment to the indorsement on the writ. Paragraph 17B of the minute contains the proposed amendment to the statement of claim to reflect the proposed amendment to the writ.

67 Paragraph 17B of the minute (so far as relevant) is as follows:

(i) by the conduct pleaded in paragraph 16(ix) and (x) above, the first defendant, both for itself and as agent for the second defendant, offered that if Kingstream exercised the Option, the defendants would be contractually bound by the amended Option Deed to transfer to Kingstream mining lease 20/343, mining lease 20/344, mining lease 51/641 (the Mining Leases) as and when each mining lease was granted, and EL20/209, and to otherwise comply with the terms of that deed;

(ii) on exercise by Kingstream of the Option by the notice in writing dated 8 February 1999 ... Kingstream accepted the defendants' offer;

(iii) by reason of the acceptance pleaded in subparagraph (b)(ii) the defendants became contractually bound to sell and to transfer to Kingstream, any Mining Lease granted to either defendant in respect of the Applications.

68 It is necessary, in order to make that plea intelligible, to set out the matters pleaded in pars 16(ix) and 16(x), which are as follows:

(ix) On 29 January 1999 Dundo on behalf of the first and second defendants informed Solomon on behalf of Kingstream by telephone, relevantly, that there would be 'no problem with the Zygot tenements' by which Dundo intended to convey to Solomon and Solomon understood from Dundo that if Kingstream exercised the option then the rights and interests the subject of the contract referred to in clause 4 of the Option Deed as amended would include the Applications.

(x) By two facsimiles dated 29 January 1999 from Dundo on behalf of the first and second defendants to Solomon on behalf of Kingstream, Dundo referred to the facsimile dated 18 January 1999 referred to in particular (viii) above and the telephone conversation referred to in particular (ix) above and, relevantly, confirmed his instructions that, in the event Kingstream exercised the option, the exercise of the option would be effective in respect of certain specified mining and/or exploration leases, licences, reserves or applications, including, relevantly, the Applications.

69 It is evident from the plea in par 16(x) that the plaintiff relies upon not only the Clayton Utz letter, but also to a second facsimile from Clayton Utz to the first defendant's solicitor on the same day, 29 January 1999. I referred to that second facsimile at [44]. In it, the first defendant's solicitors said (relevantly):

We confirm that Mining Lease 23/343 in our earlier facsimile today should have read Mining Lease 20/343 and all the tenements listed in that facsimile (as amended by this facsimile) are subject to the option.

70 They also advised that the first defendant would extend the exercise date of the option to 8 February 1999.

71 The defendants submitted, first, that the proposed amendment was statute-barred and, secondly, in any event as a matter of discretion it should not be allowed. Senior counsel for the defendants argued that by these proposed amendments to the writ and statement of claim the plaintiff was seeking to reintroduce a cause of action that had previously been abandoned, and was seeking to do so after the relevant limitation period had expired. The essence of the amendment was to plead that the Clayton Utz letter had contractual force, a plea that had been abandoned on the filing of the amended writ in December 2004. That writ omitted any claim in contract based upon an assertion that the Clayton Utz letter had contractual force.

72 It was submitted that no distinction could be made between the proposed amendment (effectively that the Clayton Utz letter is a stand-alone contract) and the original plea in 2002 that the contract was constituted by the option deed, the supplemental deed and the Clayton Utz letter. Both forms of pleading have as their essential element that the Clayton Utz letter has contractual force. In fact, the Clayton Utz letter makes no sense as a contract in and of itself and could only have contractual effect when read in conjunction with the option deed and the supplemental deed.

73 It was submitted that O 21 r 5 has no application because the proposed plea is not a 'new' cause of action within the meaning of that rule. It had previously been pleaded and had been abandoned. In any event, it would not be a proper exercise of the discretion under that rule to allow an amendment to reintroduce an abandoned cause of action at a time when it was statute-barred.

74 It was further submitted that if these amendments were permitted, they would cause irremediable prejudice to the defendants who have lost the opportunity to investigate the possibility of a claim against Clayton Utz for professional negligence and, if appropriate, prosecuting such a claim. There had been a potential such claim based on an allegation that Clayton Utz had failed to advise the defendants that the information provided to them by Ms Oats as to the tenements which were the subject of the option (as set out in the Clayton Utz letter) was inconsistent with the contractual arrangements and/or to advise that there was no contractual obligation to transfer the Applications to the plaintiff on the exercise of the option. But any cause of action against Clayton Utz would have accrued from the date of exercise of the option (8 February 1999) and therefore has been the subject of an unanswerable limitation defence since February 2005.

75 Senior counsel for the defendants argued that while it is not now possible to analyse the potential strengths or weaknesses of a claim against Clayton Utz, that should not be held against the defendants. It has come about as a result of the significant time that elapsed between the relevant events and the application to make these amendments. That has had an obvious effect in respect of both relevant memories and the intervening falling out between the first defendant and Mr Atkins. However, on the evidence available, it is almost certain there was some communication between Mr Dundo and Ms Oats concerning the tenements included in the Clayton Utz letter, but neither of them can now remember the communications, some 10 years after the event. Mr Atkins is not now prepared to assist the defendants on any reasonable terms. Accordingly, it is now impossible to ascertain whether or not Clayton Utz discharged its duty to point out the disconformity between the tenement details apparently provided by Ms Oats for inclusion in the Clayton Utz letter and the contractual documents, and, if not, what effect such advice would have had.

76 It was conceded on behalf of the defendants that the Clayton Utz letter formed part of a pleaded claim in contract in the period August 2002 to February 2003 and that it appears that the circumstances in which the Clayton Utz letter came to be written were not investigated by the defendants at that stage. The first defendant cannot say why they were not, the first defendant now having different ownership and management, and different legal representation. But senior counsel for the defendants argued that it was significant that the litigation was then at an early stage and the maximum amount involved was in the order of $250,000, compared to the claim which, in the proposed amendments, is said to be in the order of $2.6 billion.

77 The defendants argued that it was not necessary for the defendants to show that it was more probable than not that they would have contemplated a claim against Clayton Utz. What was critical was Mr Kennedy's evidence that the defendants may have done so if the claim had been advanced earlier. And a contention by the plaintiff that before the expiry of the limitation period the first defendant's solicitors should have advised Mr Kennedy that the statement of claim could be amended or that the court could find a contract on the existing pleading, should be rejected. There was no evidence that a solicitor acting responsibly would have given such advice.

78 It was further submitted that as a matter of discretion the amendment should be refused. There was no acceptable explanation for bringing the amendments so late. It is not sufficient that, having over the previous years engaged several different senior counsel, the plaintiff has recently engaged fresh senior counsel who has taken a different view of the case.

79 In relation to the limitation point, senior counsel for the plaintiff argued that the amendment to the writ sought to reintroduce a plea of the same nature as that in par 1.1 of the original writ; that is, a plea in contract relying on the Clayton Utz letter. The filing of the original writ containing par 1.1 caused time to cease to run in respect of such a claim. In that connection, senior counsel for the plaintiff referred to various dicta to the effect that where a plaintiff has commenced an action by a writ of summons sufficiently indorsed with a claim, time will cease to run in respect of that claim during the currency of the action in respect of any defendant to it.

80 The plaintiff accepted that where an action was discontinued, the limitation period would apply afresh in respect of any other claim brought on the same cause of action, but argued that that had no bearing on a case such as the present case where amendments were simply made to the writ in a continuing action. While each new action must comply with the requirements of the Limitation Act 1935 (WA), the issue of a writ stops time running in respect of any cause of action included in that writ even though the cause of action may later be omitted from, and then subsequently reinserted in, the writ.

81 As the writ, when issued, had been indorsed with a claim based on the Clayton Utz letter having contractual effect, an amendment to reintroduce such a claim in the action is not subject to any limitation period.

82 It was further submitted on behalf of the plaintiff that, in any event, the proposed plea fell within O 21 r 5(5) as it asserted the legal effect of conduct already pleaded; namely, conduct pleaded in respect of the rectification claim. Senior counsel for the plaintiff argued that the Clayton Utz letter had always been pleaded as part of either a contract or a rectification claim since the action was first commenced. In the original statement of claim it was pleaded as part of a contract; in the second statement of claim of February 2003 it was referred to as part of a claim for rectification of the option deed on the basis of common mistake; in the amended statement of claim of July 2003 it was referred to as a particular of the facts relied upon for rectification of the supplemental deed on the basis of common mistake; in the amended statement of claim of December 2004 it was relied upon as part of the rectification claim; and in the current statement of claim that remains the case. Throughout the history of the matter, the Clayton Utz letter has been a critical element of the plaintiff's case either in contract or rectification. The pleading of the Clayton Utz letter as having contractual effect in the proposed amendment is simply a new legal theory applied to facts already pleaded.

83 It was also submitted that it was not correct to say that O 21 r 5(5) has no application because the plaintiff was seeking to reintroduce a plea that had previously been abandoned. It is still a new plea for the purpose of that rule. In any event, while the plea in contract in the proposed amendment was of the same general nature as the original cause of action, it was different. The contract originally pleaded was a contract constituted by the option deed, supplemental deed and the Clayton Utz letter. The contract as now sought to be pleaded is one whose terms are confined to the contents of the Clayton Utz letter (as corrected by the second facsimile), albeit operating against the background of the deeds.

84 It was submitted on behalf of the plaintiff that there was no evidence of irremediable prejudice. First, the defendants had not lost the opportunity to investigate a possible claim against Clayton Utz. A claim that the Clayton Utz letter had contractual effect had been in issue in the action from August 2002 to February 2003. The defendants have not explained why the circumstances were not investigated earlier when a claim in contract was originally made; indeed, there is no evidence that they were not investigated and rejected. It appears that a deliberate decision was made not to carry out reasonable investigations. But whether or not the defendants did investigate a possible claim is irrelevant. They had the opportunity to do so.

85 Secondly, the evidence of Mr Atkins was essential to any claim against Clayton Utz. Without knowing what instructions Mr Atkins gave to Mr Dundo, or whether or not Mr Atkins believed there was an obligation on the first defendant to transfer the Applications on the exercise of the option, a claim could not responsibly have been brought against Clayton Utz. There is no credible basis for the assertion by the defendants that Mr Atkins might have been more co-operative at an earlier time. Mr Atkins has not been prepared to speak to the defendants since he was joined in the Westgold litigation in 2000, except on terms they were not prepared to accept. Although Mr Kennedy claimed the likelihood of co-operation would have been higher in 2004, there was no reasonable basis for that assertion and even Mr Kennedy conceded that Mr Atkins's co-operation in 2004 was 'unlikely'.

86 Thirdly, there was no basis for a contention that had the contract claim been made earlier, the possibility of a claim against Clayton Utz would have been investigated. Mr Kennedy had received legal advice in May 2005 that a contract claim would fail for want of consideration. He gave evidence that while the maximum amount of the claim was $250,000 he was not prepared to invest time and money in enquiries into a claim against Clayton Utz. What caused him to make such enquiries was the increase in the quantum of the claim to $14 million.

87 Fourthly, the first defendant's solicitors should have advised Mr Kennedy that even on the current pleadings the court could find a contract. If the opportunity to investigate a claim against Clayton Utz was lost, it was because that advice was not given.

88 I earlier mentioned that there was an issue as to whether the current writ was the writ as amended in 2004 or the writ as amended in 2007. In my view, the writ was not validly amended in terms of the 'amended writ' of December 2007. A plaintiff may amend the writ in an action once without leave, so long as (among other things) the amendment is not to add or substitute a new cause of action. Otherwise leave is required to amend the writ: O 21 r 1. Reference was made in the course of argument to the order of the court, made on 26 September 2007, permitting any party to amend their pleadings without leave not later than seven weeks before the trial. In my view, however, that order did not authorise the amendments subsequently sought to be effected to the writ.

89 There is, of course, a clear and well known distinction between a writ and a pleading, one which is expressly recognised in O 21, dealing with amendments. The writ serves, among other things, to specify for the purposes of the Limitation Act the causes of action on which the plaintiff brings the proceeding and to mark out the permissible ambit of the statement of claim. It is, therefore, one thing for an order to permit the amendment of a pleading without leave in circumstances where leave would otherwise be required; it is quite another to allow the amendment of a writ without leave in such circumstances. A reference in an order of the court to leave to amend a pleading would not ordinarily be intended to include the amendment of the writ. There is nothing to suggest that in this instance the word 'pleadings' in the order bore anything other than its usual meaning. In my view, the reference in the order of 26 September 2007 to the amendment of pleadings did not include an amendment to the writ.

90 It is, I think, clear that the current form of the indorsement on the writ is as it was amended in December 2004; that is, omitting any reference to a claim in contract relying on the Clayton Utz letter. The effect of the amendment now proposed would be to reintroduce a claim of that nature. The proposed amendments to the statement of claim in par 17B of the minute proceed upon the basis of the proposed amendment to the writ being made.

91 As I have mentioned, the plaintiff says that no question of the limitation period arises. The original writ stopped time running in respect of such a cause of action and, in respect of these proceedings, time does not start running again simply because the cause of action is later deleted from the writ.

92 I was not referred to any cases as authority for that proposition or where circumstances analogous to the present had been considered; that is, where a writ has been amended to omit a cause of action and later, outside the time period stipulated as the relevant limitation period, the plaintiff had sought to amend the writ again to include the same cause of action.

93 It is established that, under the rules of this court, where the writ in an action contains a cause of action which is not pleaded in the statement of claim, the omission of the cause of action from the statement of claim does not mean that the cause of action is deemed to be abandoned: Jeffrey v Witherow [2006] WASCA 4; (2006) 31 WAR 236. It follows that in such circumstances the cause of action remains extant and time does not continue to run in respect of it. If the statement of claim is subsequently amended to include such a cause of action, there can be no issue of the limitation period having expired. As Wheeler J (as her Honour then was) pointed out in Morgan v Banning (1999) 20 WAR 474, 483, if a writ when issued bears an endorsement in terms sufficiently wide to encompass the amendments sought to be made to the statement of claim, no question of limitation arises.

94 The proposition advanced by the plaintiff in this case goes, of course, further than that. The plaintiff contends, in effect, that once an action has been commenced in respect of a cause of action, time ceases to run on that cause of action for the purposes of the Limitation Act for the duration of the action, even if the indorsement on the writ is subsequently amended to remove the cause of action. In such circumstances it is therefore open to the plaintiff (subject to issues of judicial discretion) to reintroduce the cause of action at any time during the currency of the action, as time has ceased to run in respect of it for the duration of the action.

95 I do not accept that submission. The Limitation Act provides that an action must be commenced within the relevant time stipulated in that Act. Because the Limitation Act is concerned with the date upon which an action is commenced, an important function of the indorsement of claim on a writ is to identify the causes of action in respect of which the action is brought. The metes and bounds within which a plaintiff must frame the statement of claim are set by the indorsement on the writ: O 20 r 2(2).

96 It was not in issue on this application (and I do not think it could have been) that if a plaintiff discontinued an action and later sought to commence a fresh action for the same cause of action, the relevant limitation period in respect of the second action would run from the time at which the cause of action had accrued. It would not cease at the time of, or be suspended for the duration of, the first action.

97 In my view, no proper distinction can be drawn between the omission of a cause of action by an amendment to the indorsement on the writ, and the discontinuance of the action in whole or part, pursuant to O 23 r 2. Once the indorsement on the writ has been amended to omit a cause of action, proceedings have ceased to be brought on that cause of action and no claim can be made in respect of it in the statement of claim. The defendant is entitled to proceed thereafter on the basis that they will not be called upon to answer it. In my view, if the writ were subsequently amended to include it once more in the writ, a new action in respect of that cause of action would thereupon be commenced for the purposes of the Limitation Act. In respect of that action, time would run from the date the cause of action had accrued to the date the amendment took effect.

98 If the plaintiff's contention were correct, it would mean that once a cause of action was included in a writ, even if only fleetingly, it would thereafter exist, if not in the writ then in a state of suspended animation, able to be animated again at any time so long as the action remained on foot. It would also seem to apply not only to the causes of action contained in the writ as originally issued, but any cause of action which, within the relevant limitation period, was at any time (however so briefly) contained in the writ.

99 In my view, the plaintiff's contention that time had ceased to run in respect of a claim based on the same cause of action as par 1.1 of the original indorsement must fail.

100 It is necessary, then, to turn to the second limb of the argument, namely whether the plaintiff should have leave, pursuant to O 21 r 5(5), to amend the writ to add the proposed cause of action in contract.

An amendment may be allowed [after the relevant limitation period has expired] notwithstanding that the effect of the amendment will be to add or substitute a new cause of action if the new cause of action arises out of the same facts or substantially the same facts as a cause of action in respect of which relief has already been claimed in the action by the party applying for leave to make the amendment.

102 The plaintiff says that the proposed cause of action arises out of the same or substantially the same facts as the extant rectification claim and therefore O 21 r 5(5) permits it to be made. Moreover, it is not simply the resuscitation of an abandoned claim, being different in nature to the original claim, but even if it was, it is still a 'new claim' for the purposes of O 21 r 5(5).

103 The defendants, on the other hand, contended that the amendment is not a 'new' cause of action within the meaning of O 21 r 5(5) because it was previously included in the writ; that is, it is not (as it must be) new to the action. It was submitted that there is no difference in substance between the cause of action in par 1.1 of the original indorsement and that in the proposed amendment to the writ. The amendment did not, therefore, raise a 'new' cause of action; it recycled an old cause of action and accordingly O 21 r 5(5) had no application.

104 The question of what constitutes a 'new' cause of action within the meaning of O 21 r 5(5) was considered by the Full Court in Dallas Development Corporation Pty Ltd v Western Australian Land Authority (Unreported, WASCA, Library No 980245, 7 May 1998). There, the indorsement on the writ included a claim for negligent misstatement but the statement of claim which was subsequently served did not. The Full Court found that the plaintiff had thereby abandoned the claim (cf Jeffrey v Witherow). It held that the reference in O 21 r 5(5) to the addition of a 'new' cause of action was a reference to the addition of something new to the particular document - in that case the statement of claim. If the cause of action was new to the statement of claim, it will come within the rule although it is not new to the indorsement on the writ. While the claim for negligent misstatement had always been indorsed on the writ, it had not previously been included in the statement of claim and was therefore a new claim for the purposes of the amendment of the statement of claim.

105 Senior counsel for the defendants did not seek to rely on that case, accepting that it was inconsistent with latter authority which held that the writ sets the perimeters of the plaintiff's case and that claims can come and go in the statement of claim. He referred to Tristram v Hyundai Automotive Distributors Australia Pty Ltd [2005] WASCA 168 and ABB Service Pty Ltd (formerly known as ABB Engineering Construction Pty Ltd) v Hetherington [2001] WASCA 235. The defendants' contention was that O 21 r 5(5) refers to a cause of action that is new to the case, not new to the particular document that is the subject of the application.

106 In any event, in my view Dallas Development is not authority for the proposition that where a cause of action has been made in a writ and then omitted by amendment, a subsequent amendment to reintroduce that cause of action falls outside the rule. No such issue arose in that case.

107 There does not seem to me to be any warrant for construing the terms of the rule so as to exclude an amendment of the nature now sought by the plaintiff. Order 21 r 5(5) is concerned with the circumstances in which a cause of action may be added to a writ or pleading by amendment after any relevant limitation period has expired. The focus of the rule is on the expiry of the limitation period. The effect of the rule is to limit such amendments to those where the cause of action to be added or substituted arises out of the same, or substantially the same, facts as an existing cause of action. The rule is not otherwise concerned with the nature of the amendment, and in particular, whether such a claim had previously been made in the writ.

108 In my view, O 21 r 5(5) is not restricted to circumstances where the cause of action sought to be added to the writ has not previously been included in the writ. A 'new' cause of action is one that is not contained in the writ at the time the amendment is sought to be made. It is not to the point that it was once contained in the writ. In my view, therefore, the proposed amendment (to the extent it is to the same effect as par 1.1 of the original indorsement) is a 'new' cause of action for the purposes of O 21 r 5(5).

109 The fact that a cause of action has previously been deliberately abandoned is, however, a matter going to the exercise of the court's discretion under O 21 r 5(5). But I might observe that I do not consider that in such a case the court starts from the premise that ordinarily such an amendment should not be allowed. In my view, there is nothing which would justify the discretion being fettered in that way. In all cases, the question is whether it is in the interests of justice that a party be permitted to reinstate a cause of action that it has earlier abandoned, and that must depend upon the particular circumstances of the case.

110 In view of my conclusion on this point, it is unnecessary to consider whether, as contended by the plaintiff, the proposed amendment is a different contract to that originally pleaded so that, on that basis, it is a 'new' cause of action.

111 The remaining question in respect of the application of O 21 r 5(5) is whether the cause of action in these proposed amendments arise out of the same, or substantially the same, facts as an existing cause of action. Order 21 r 5(5) applies where the amendment adds, not a new cause of action arising from quite different facts, but is 'rather a re-labelling, addition, modification or clarification of an existing cause of action raised in the indorsement': Morgan v Banning (486). Whether or not the cause of action in question can be said to arise out of the same, or substantially the same, facts as an existing cause of action is essentially a matter of impression based on the degree of overlap: Dye v Griffin Coal Mining Co Pty Ltd (1998) 19 WAR 431.

112 I did not understand it to be contested by the defendants that the proposed amendment arises out of substantially the same facts as an existing claim; the defendants simply argued that it was not a 'new' cause of action. However, to the extent it may be in controversy, in my view it is a matter to be left to the trial, which is listed to commence on 1 December 2008.

113 In Morgan v Banning, Wheeler J suggested that where it is not clear whether or not the cause of action in question arises out of the same, or substantially the same, facts as an existing cause of action, it may be preferable that the issue be left for trial, just as the issue may be left for trial where it is not clear from the pleadings whether an action is time barred. See also Tristram v Hyundai Automotive Distributors [42].

114 In the circumstances, I consider that, if the amendment is otherwise to be allowed, the proper course (if this particular issue is in fact live) would be to allow it on the basis that the question of the date from which it takes effect is reserved to the trial judge.

115 Finally, I turn to the submission on behalf of the defendants that as a matter of discretion the amendment should not be allowed.

116 It is accepted that, in general, a party should be permitted to amend their pleading so that the court may decide all issues between the parties, unless the amendment would cause prejudice to the other party which could not adequately be remedied, for instance by an award of costs: Cropper v Smith (1884) 26 Ch D 700, 710; Shannon v Lee Chun [1912] HCA 52; (1912) 15 CLR 257, 260 - 261; Clough v Frog (1974) 4 ALR 615, 618; The State of Queensland v JL Holdings Pty Ltd [1997] HCA 1; (1997) 189 CLR 146, 154.

117 The party seeking the amendment bears the burden of persuading the court that the amendment will not cause irremediable prejudice to the other party: Hancock Shipping Co Ltd v Kawasaki Heavy Industries Ltd [1992] 1 WLR 1025, 1030; McKenzie v Commonwealth of Australia [2001] VSC 361 [22] - [23]; Burk v Commonwealth of Australia (No 3) [2004] VSC 210; Wintle v Conaust (Vic) Pty Ltd [2001] VSC 315 [18] - [19]. However, the party opposing the amendment ordinarily bears the evidential onus of adducing evidence in relation to the prejudice, at least where the proof of that prejudice lies in the hands of that party; the non-existence of prejudice is difficult to prove, so that in practice the evidential burden is borne by the party resisting the amendment: Hancock Shipping Co Ltd (1030). But it is not sufficient for a party to rely on prejudice which results from an unreasonable act or omission on the part of that party: Steward v North Metropolitan Tramways Co (1886) 16 QBD 556, 559 - 560; Wilson v Grimwade [1995] VicRp 80; [1995] 2 VR 628, 632.

118 It is the case, as the defendants submitted, that a defendant will suffer relevant prejudice where, if the amendment were to be allowed, the defendant may have a cross-claim against a third party which is statute-barred at the time the amendment is sought. In this case, the defendants say that the plaintiff's abandonment of the contract claim in 2003, and the delay in seeking leave to amend to raise it, has caused the defendants irremediable prejudice in that they have lost the opportunity of investigating the possibility of a claim for negligence against Clayton Utz and, if appropriate, prosecuting such a claim. Any such cause of action against Clayton Utz accrued, at the latest, at the date of the exercise of the option and the relevant limitation period therefore expired in February 2005. Clayton Utz now has a complete defence that any such claim is statute-barred.

119 I am not satisfied that the defendants will suffer such prejudice as would warrant the refusal of leave to make the amendments to the writ and statement of claim. As I have mentioned, a cause of action to the same substantive effect as that now sought to be added by the plaintiff was contained in the writ from the time it was issued in July 2002 until the writ was amended in 2004, and was pleaded in the statement of claim from August 2002 to February 2003. That is, the plaintiff relied upon the Clayton Utz letter as having contractual effect.

120 There is no doubt that in that period the defendants had both the opportunity and a reason to investigate the prospects of a claim against Clayton Utz. As the defendants denied that the Applications had ever been the subject of the option agreement, the prospect that a claim may lie against Clayton Utz arising out of the Clayton Utz letter could hardly have escaped the notice of the defendants or their solicitors. The fact that the defendants contended that the plaintiff's claim in contract, as pleaded, was defective did not alter the fact that the claim was made and was not given up for some months.

121 There was, however, no evidence that at that time any enquiries were made into a possible claim against Clayton Utz. There is apparently no record of any such enquiries. Mr Kennedy was appointed as company secretary only in October 2004 and could not say what had occurred in that respect prior to his appointment. No one else gave evidence on behalf of the defendants, and in particular no one who was involved in the matter prior to that time, although there was nothing to indicate that there were no such witnesses available to give evidence. However, it appears from Ms Oats's statement that no enquiry was made of her until 2008. Similarly, it appears that although a statement of Mr Dundo's evidence in relation to the action was taken in 2005 or 2006, no enquiries were made of him specifically in relation to the Clayton Utz letter until 2008. It seems clear that no enquiry was made of Mr Atkins until 2008.

122 I am satisfied that, while the defendants could at that time have made enquiries into a possible claim against Clayton Utz, either because of difficulties they perceived would be involved or simply a disinclination to do so, the defendants were not concerned to initiate such enquiries. In other words, that consideration of a claim against Clayton Utz was not pursued at that stage because the defendants chose not to do so. That is perhaps not surprising, given that the defendants did not then regard the claim as a large one, that there was litigation on foot between the first defendant and Mr Atkins, and that Ms Oats had apparently left the first defendant's employment in June 1999, some three years earlier. In that connection, I should say that I do not consider there is any reason to believe that at any stage over the course of this action Mr Atkins would have been significantly more inclined to assist the defendants than he is now. I do not accept that Mr Atkins's willingness to assist the first defendant has changed significantly.

123 I consider that the defendants' attitude in relation to a possible claim against Clayton Utz did not change until the amount of the plaintiff's claim suddenly escalated markedly in 2006. Mr Kennedy gave evidence that he familiarised himself with the action when he became company secretary of the first defendant in October 2004. He sought legal advice in May 2005 from the first defendant's lawyers on whether the Clayton Utz letter could be regarded as a supplemental agreement. He said he was advised that a claim in contract based on the Clayton Utz letter had initially been made by the plaintiff and then dropped, and that there was no consideration for such a contract. It was clear from his evidence that Mr Kennedy understood the latter to mean that such a claim was not maintainable.

124 It was not until 2006 that Mr Kennedy sought, for the first time, advice on a possible claim against Clayton Utz. Mr Kennedy said he sought the advice because the amount of the plaintiff's claim had suddenly increased from an estimated maximum of $250,000 to some $14 million.

125 I do not accept Mr Kennedy's evidence that if, prior to that increase in the claim, the plaintiff had sought to plead a cause of action of the nature now proposed, he might have considered a claim against Clayton Utz. I am satisfied that that was not in fact the case. I consider that Mr Kennedy's evidence tended to be coloured by his anxiety to ensure that the defendants' position on the application was maintained. I did not find his evidence that he might have considered a claim against Clayton Utz had the plaintiff raised the contract claim within the limitation period to be persuasive.

126 That that was not the case is, I think, consistent with Mr Kennedy's evidence that until the increase in the quantum of the claim in 2006 the first defendant's 'corporate thinking' was that the claim was 'relatively insignificant, immaterial'. He said that even if he had been advised differently in 2005 in respect of the Clayton Utz letter 'it's not certain that I would have invested time and energy and thought in widening my enquiries about this matter. In 2006 it was'. Mr Kennedy said that the quantification of the claim at some $14 million 'significantly changed the way in which the [first defendant] saw the whole matter.'

127 It was, in my view, clear from Mr Kennedy's evidence that what caused the defendants to take up consideration of a possible claim against Clayton Utz was the sudden and dramatic increase in the amount of the claim in 2006. I am satisfied that had the plaintiff sought to revive a contract claim based on the Clayton Utz letter before that time, it would not have caused the defendants to investigate or consider a claim against Clayton Utz. I do not therefore consider that the effect of the late amendments is that the defendants have been deprived of the opportunity to consider making a claim against Clayton Utz.

128 There remains, then, the defendants' contention that there has been unacceptable and insufficiently explained delay on the plaintiff's part in seeking to make the amendments.

129 It is clear that there has been very considerable delay on the plaintiff's part. It is plainly unsatisfactory that amendments of this nature should be sought so late in the proceedings, with no better explanation available than that senior counsel new to the case has taken a different view to his predecessors on the appropriate causes of action. But I am not satisfied that there would be any irremediable prejudice to the defendants if these amendments were permitted, on the basis (if it is in issue) that the date from which the amendments take effect be reserved to the trial judge. Any prejudice can adequately be cured by costs. There would, however, be obvious prejudice to the plaintiff if it were precluded from putting its full case at trial.

130 I would therefore allow these amendments to the writ and the statement of claim on the basis that the question of the date from which the amendments take effect is reserved to the trial judge.

131 The next amendment is that proposed in par 17C of the minute. There it is pleaded, in effect, that if the facsimile of 29 January 1999 and Kingstream's exercise of the option of 8 February 1999 did not together give rise to a contract, then the defendants are estopped from denying that the contract brought into existence by Kingstream's exercise of the option included the Applications.

132 The estoppel is put as an equitable estoppel or alternatively a conventional estoppel. The plaintiff pleads, in substance, that by the Clayton Utz letter and the other facsimile of 29 January 1999, the defendants represented to Kingstream that if Kingstream exercised the option, that exercise would be effective in respect of the Applications. In reliance upon the representation, Kingstream exercised the option. By that conduct, each of Kingstream and the defendants adopted a common assumption that upon exercise of the option, the defendants would be contractually bound to transfer to Kingstream any mining leases granted to the defendants in relation to the Applications.

133 The plaintiff pleads, in the alternative, that after Kingstream exercised the option, each of the parties adopted as the conventional basis for their dealings with the other the fact that the defendants were so contractually bound.

134 The plaintiff says that in reliance upon the common assumption, or alternatively the conventional basis, Kingstream paid the purchase price under the option, the defendants delivered transfers under the Act executed by the second defendant, an announcement was made to the Australian Stock Exchange that Kingstream had acquired the tenements (including ML 20/343, ML 20/344 and ML 51/641), and Kingstream wrote to the first defendant on 22 April 1999 referring to the exercise of the option and noting that transfers in relation to ML 20/343, ML 20/344 and ML 51/641 could not be effected until the mining leases were granted and requesting the first defendant to do all things necessary to maintain the Applications in good standing until the Applications were determined.

135 It is pleaded that the defendants' denial of any contractual obligation to transfer the Applications to Kingstream is an unconscientious departure from the assumption and/or a departure from the conventional basis upon which the parties acted. The plaintiff says that the defendants are estopped from denying that withdrawal of the Applications was not in breach of their contractual obligations.

136 The amendment is opposed by the defendants who say that it seeks to advance claims which are statute-barred. The relevant limitation period for the bringing of these causes of action expired, at the latest, in September 2007. That is because either the effect of the estoppels is to allege that a contract was entered into in late January/February 1999 which was breached in September 2001, or insofar as the estoppel alleges an equitable cause of action, that cause of action is analogous to a breach of contract and equity follows the law in respect of limitation periods. The detriment which is said to arise by reason of the estoppels is said to have been the withdrawal of the Applications by the defendants in September 2001. The causes of action are therefore out of time.

137 The defendants submitted that O 21 r 5 does not assist the plaintiff. The estoppel claims do not arise out of the same, or substantially the same, facts as an existing cause of action. There are a significant number of new facts which have not previously been pleaded; first on the issue of reliance, secondly in respect of the allegation that the parties adopted a common assumption or a conventional basis in their dealings with each other, and thirdly on the issue of detriment. They give rise to an investigation of the conduct engaged in by the parties after the exercise of the option in February 1999. They involve facts which were not previously relevant to a cause of action pleaded.

138 In addition, the estoppels have, as their focus, the letter of 29 January 1999, giving rise to the same prejudice as referred to previously.

139 Senior counsel for the plaintiff argued that there was no limitation issue in respect of the proposed amendments. A conventional estoppel does not create a cause of action, but is a rule of evidence. While it is arguable that an equitable estoppel does create a cause of action, the position is by no means clear. In any event, if it does, the question of what is the relevant limitation period cannot be decided on an interlocutory application of this nature.

140 It was submitted, in the alternative, that the proposed equitable claim falls within O 21 r 5(5) as it arises out of the same, or substantially the same, facts as an existing cause of action. The gist of it is the assertion that the defendants are estopped from denying that withdrawal of the Applications was not in breach of contractual obligations, which obligations are already pleaded.

141 It was also submitted that there was no substance in the defendants' complaint that there were significant new facts which had not previously been pleaded. Most of the acts constituting reliance have already been pleaded. The only new element is a plea of Kingstream's announcements in its annual reports for 1999 and 2000.

142 The fact that a new legal label has been applied to substantially the same conduct as pleaded in respect of other causes of action does not mean that O 21 r 5(5) does not apply. Moreover, the conduct of the parties after the exercise of the option in February 1999 is relevant to the rectification claim and the proposed amendment does not in that respect involve anything new. Similarly, the issue of detriment simply involves the loss of the opportunity to exploit the Applications and the mining leases once granted. This again is simply the change of a label.

143 For the reasons I gave in relation to par 17B of the minute, I do not accept that there would be prejudice to the defendants of a nature that would justify the refusal of leave to amend. I also do not consider that the limitation issue should be determined at an interlocutory stage. An interlocutory application will rarely be a satisfactory process for determining whether equity should apply a statutory limitation period by analogy: Young v Waterways Authority of New South Wales [2002] NSWSC 612 [27]; In De Braekt v Powell [2007] WASCA 55; (2007) 33 WAR 389 [30]. It is not, in my view, a satisfactory process in this case. Whether or not the cause of action arises out of the same, or substantially the same, facts as an existing cause of action is a matter for trial. I would allow the amendment on the basis that the question of the date from which it takes effect is reserved to the trial judge.

The plea of a contractual obligation to maintain the Applications

144 The next amendment is contained in par 17D of the minute. It is pleaded that cl 9 of the option deed provided that the first and/or second defendants would do all things necessary to give full effect to the contract created by the exercise of the option. It is alleged that upon the proper construction of cl 9, upon the exercise of the option the first and/or second defendants were contractually bound to maintain and prosecute the Applications so as to cause mining leases to be granted, to transfer those mining leases to Kingstream when they were granted, and not to withdraw the Applications so as to prevent mining leases being granted in respect of the areas covered by the Applications. It is alleged the withdrawal of the Applications was a breach of cl 9.

145 It was submitted on behalf of the defendants that such a contention was hopeless as on no reading of cl 9 of the option deed did it provide for the matters alleged. Moreover, the second defendant was not a party to the deed.

146 The plaintiff says that the effect is to cover the same ground as the implied terms already alleged in the statement of claim and is based on the construction of the deed in an unrectified form.

147 This is an issue of construction which can, and should, await the trial of the action.

The plea of rectification for unilateral mistake

148 A further plea of rectification is contained in par 17E of the minute. There is there pleaded, in substance, a claim for rectification based upon unilateral mistake. The plaintiff alleges that by reason of the agreement made between Mr Zuks and Mr Tomich in the telephone conversation which took place in December 1996 or January 1997, the defendants knew Kingstream was entering into the option deed and supplemental deed in the belief that if it exercised the option, the first defendant would be contractually bound to transfer to it any mining leases issued in respect of the Applications, but that the first defendant knew that belief to be incorrect. The defendants therefore knew that Kingstream mistakenly believed that each of the option deed and the supplemental deed, upon their proper construction, imposed a contractual obligation on the first defendant to transfer any mining leases issued in respect of the Applications if Kingstream exercised the option.

149 The plaintiff alleges that neither before execution of the option deed nor the supplemental deed did the first defendant inform Kingstream that Kingstream's belief was incorrect or mistaken. The plaintiff says that the defendants were aware Kingstream was operating under a mistake and took unconscientious advantage of it.

the alleged agreement made between Mr Zuks and Mr Tomich in the telephone conversation in December 1996 or January 1997;
a telephone conversation between Mr Solomon for Kingstream and a Mr Gardiner of the first defendant on 17 December 1997 (confirmed by a facsimile from Mr Solomon to Mr Gardiner of 19 December 1997) in which Mr Gardiner said that the first defendant had secured the portions of the two exploration licences it had to surrender by applying for mining leases over those areas and these would become part of the tenements the subject of the option - thereby representing that the first defendant would treat any areas of EL 20/209 so secured as subject to the supplemental deed;
the alleged failure of Mr Gardiner to tell Mr Solomon either that the Applications had been made before the date of the option deed or that they would not be included in the tenements the subject of the option.

151 It is alleged that, having regard to those matters, if at the time the supplemental deed was executed the first defendant did not intend that the contract brought into existence upon exercise of the option would include the Applications, then the first defendant's conduct was unconscionable and the plaintiff is entitled to rectification.

152 The defendants opposed the application on the ground that such a claim for rectification was statute-barred, being brought more than six years after the cause of action allegedly arose. Senior counsel for the defendants argued that the plaintiff is not assisted by O 21 r 5(5) because the new rectification claim does not arise out of the same, or substantially the same, facts as an existing cause of action. It is based, not upon a common continuing intention, but upon the defendants:

being aware that the Applications were not to be transferred to Kingstream;
being aware that Kingstream was acting under the mistaken belief that they were to be transferred; and
acting unconscionably by failing to inform Kingstream that that belief was wrong or mistaken.

153 Those were wholly new facts which had not previously been pleaded.

154 It was submitted on behalf of the plaintiff that the only factual element that was new was that the state of mind of the defendants has changed from a common intention with Kingstream to knowledge of Kingstream's mistaken state of mind. Based on the existing pleadings, the state of mind of the relevant officers of the first defendant should have been gathered from investigations made a long time ago. The failure to inform Kingstream of its mistaken belief is an omission and not a positive new fact. The claim of unconscionability is a question of legal characterisation, not fact. The basket of facts is very much the same.

155 Once again, for the same reasons as I gave earlier, I would allow the amendment on the basis that the question of the date from which it takes effect is reserved to the trial judge.

156 The next proposed amended plea is in par 17F of the minute. It is there pleaded that if the conduct alleged in par 17E did not give rise to a right to rectification, then by reason of that conduct Kingstream and each of the defendants adopted the common assumption that:

the expression 'EL 20/209' in the definition of the 'Tenements' in the option deed and supplemental deed included the Applications and any mining leases which were issued in respect of the Applications;
if Kingstream exercised the option, the first defendant would become contractually bound to transfer any mining leases issued in respect of the Applications.

157 Alternatively, prior to entering into the option deed and the supplemental deed, each of the parties adopted as the conventional basis for their dealings with the other, the fact that the defendants were or would become contractually bound to transfer any mining leases issued in respect of the Applications.

158 It is pleaded that based upon that common assumption, and/or by adoption of the conventional basis, Kingstream entered into the option deed and the supplemental deed, paid the $1 million option fee and assumed the obligations provided for in the option deed (as varied by the supplemental deed). It is pleaded that the defendants are thereby estopped from denying that the expression 'EL 20/209' included the Applications and any mining leases issued in respect of them.

159 The amendment was opposed by the defendants who contended that the plea was indistinguishable from the new estoppel plea set out in par 17C of the minute. The defendants said that for the reasons advanced in opposition to the amendment in par 17C the amendment should be refused, albeit senior counsel for the defendants accepted that a common assumption estoppel was not a cause of action, but said the plea did not arise out of the same, or substantially the same, facts as an existing claim.

160 The plaintiff relied upon the same grounds as it had advanced in relation to the plea in par 17C of the minute.

161 I would take the same course as I have stated in relation to the plea in par 17C.

162 The final amendment relates to par 33 of the statement of claim. By the minute, the plaintiff seeks to amend par (ii) of the particulars of par 33 of the statement of claim. Paragraph 33 pleads that by reason of the various breaches alleged in the statement of claim, the plaintiff has suffered loss and damage. The various elements of the alleged loss and damage are set out in the particulars, including particular (ii). The proposed amendment to particular (ii) is as follows (the proposed amendment is underlined):

The value of the lost opportunity of acquiring the mining leases the subject of the Applications including the opportunity to obtain and retain the mining leases and to profit by their exploitation in connection with the development by Midwest of its Weld Range direct shipping ore project.

163 The defendants opposed the amendment, contending that it would represent a fundamental shift in the way in which the plaintiff puts its case on damages. Previously, the plaintiff's loss was said to be assessed by reference to the market value of the tenements in an open market on a range of dates, the principal of those being either the date of the breach in 2001 or some later date. It was never contended the Applications had 'special value' to Kingstream which significantly increased the value of the claim. But this is what it now seeks to do. Moreover, a claim based on 'special value' depends on facts which are not pleaded or contained in the proposed amendments. At this late stage, the plaintiff should not be permitted fundamentally to change course.

164 The plaintiff submitted that the amendment was simply an elaboration of an aspect of damages already pleaded. The plaintiff contends that by reason of the breaches alleged, Kingstream lost the chance of obtaining mining leases over areas which are now held and operated by Murchison Metals and which have provided the foundation for that company's market capitalisation and current business. Kingstream's case is that by the defendants' breaches, Kingstream lost the chance of obtaining the iron ore mines which Murchison Metals now has. It is a plea which is fairly within the compass of the existing plea.

165 In my view, the proposed amendment should be allowed. Although it is unsatisfactory that amendments of this nature are sought so late in the proceedings, in the absence of any prejudice to the defendants I do not consider that the circumstances warrant the refusal of leave to make the amendment. There is no evidence of any prejudice, nor is any prejudice apparent, at least any prejudice that could not be remedied by an appropriate order as to costs.

Application for leave to adduce further expert evidence

166 There was also an application by the plaintiff to adduce further expert evidence and, in particular, a report of Mr Cole of N H Cole & Associates Pty Ltd, dated 27 June 2008. In the report, Mr Cole values the loss of the Applications at some $2.6 billion, based on the history of the area they covered since it has been held by Murchison Metals. The effect of that evidence, if admitted, would be to put the amount in issue in the action in an altogether different league to anything previously contemplated.

167 The plaintiff submitted that Mr Cole's evidence was relevant and there was no discretionary reason why leave should not be granted to adduce it. As the trial has been scheduled to commence in December 2008, there was adequate time for the defendants to meet the valuation evidence contained in Mr Cole's report. The defendants have already engaged relevant experts in connection with this action and have served expert reports. In addition, their experts are familiar with the current prospects and value of the tenements from other work in which those experts have been engaged.

168 The defendants submitted that the evidence now sought to be adduced represented a fundamental shift in the plaintiff's case on damages, at an extremely late stage and in circumstances where no explanation has been offered. The court had previously ordered that the plaintiff serve all expert reports on which it intended to rely by 11 September 2006. The report in question was served, without explanation, on 27 June 2008. Leave to rely upon it at this late stage of the proceedings should be refused.

169 There was no evidence that the defendants would not be in a position adequately to respond to Mr Cole's new report. It was undoubtedly served well outside the time prescribed for the exchange of expert evidence. Late service of expert evidence is not to be encouraged, but in the absence of any evidence of prejudice to the defendants, I consider that it is in the interests of justice to grant the plaintiff leave to rely on it.

170 I would allow the amendment to the writ and to pars 17A, 17B, 17C, 17D, 17E and 17F on the basis that the question of the date from which the amendments take effect is reserved to the trial judge. I would allow the amendment to par 33 of the statement of claim. I would also extend the time within which the plaintiff is required to serve the expert evidence of Mr Cole to the date upon which it was served on the defendants.

171 I will hear the parties on the form of the orders, and on the costs of the application and any costs thrown away by the defendants.

HUGHES -v- ST BARBARA MINES LTD [No 3] [2008] WASC 220 (10 October 2008)

At a glance

Court

Decision date

Before

Catchwords

Source

Catchwords

Judgment (200 paragraphs)

HUGHES -v- ST BARBARA MINES LTD [No 3] [2008] WASC 220 (10 October 2008)

The amended writ and statement of claim in February 2003

The amended statement of claim in March 2005

Cases Cited (7)