Karuah Local Aboriginal Land Council v Mymurra Pty Ltd

LEGISLATION CITED : Civil Procedure Act 2005, s 56

CASES CITED : Dennis v Australian Broadcasting Corporation [2008] NSWCA 37 Queensland v J L Holdings Pty Ltd (1997) 189 CLR 146

Karuah Local Aboriginal Land Council (P) PARTIES : Mymurra Pty Ltd (D1) R P Hawks Nest Pty Ltd (D2)

COUNSEL : D A Smallbone and J Cohen (P) M J Watts (D)

SOLICITORS : Bilbie Dan (P) Grogan & Webb (D)

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

5361/04 - KARUAH LOCAL ABORIGINAL LAND COUNCIL v MYMURRA PTY LTD (NO 2) JUDGMENT 1 HIS HONOUR: My previous reasons also dealing with pleadings was published on 7 April 2008 ([2008] NSWSC 308). I will not repeat the background facts that I there related. 2 To summarise, in my earlier judgment I said:

(1) The defendants opposed the amendments which were in dispute because they were late and there was no reason for their lateness.

(2) (Para 16 of the judgment). I considered that there was a reason for the late amendments and that was that Mr Smallbone had just come into the case and that previous lawyers had not thought of the ways of putting the case that had occurred to Mr Smallbone.

(3) Despite my general agreement to allow amendments, I would not allow all the amendments which the plaintiff sought to make. 3 The matter was then stood over so that the plaintiff could put in the last final extra version of the amendments which it sought to make to the statement of claim. 4 The matter next came before me on 7 May 2008. On that occasion, a new draft of the amended statement of claim was handed up and marked MI 1001. Later that day, amended pages 21 and 33 were handed up adjusting certain parts of that document. The most material of these is that prayer B now reads: "In the alternative to paragraph A, a declaration that upon the true construction of the Agreement, and the Aboriginal Land Rights Act 1983 (NSW) and in the any events which have happened, the Contract has been was terminated by frustration between 12 and 16 May 2003". The alterations are apparent from the words which I have underlined or crossed out. In particular, after the word "Contract" the words "did not come into effect or alternatively has or" were inserted. At the end of prayer C in the alternative to an order that the relevant deed of agreement be rescinded, the words "or set aside" were added. 5 The defendants say paragraph 16 of the previous judgment was in error. It is clearly the case that Mr Smallbone had been involved in litigation of a similar nature on behalf of the plaintiff since 18 July 2005 and in the present case since 2006. Secondly, it was put that because of this I should re-examine my attitude to the submissions made under s 56 of the Civil Procedure Act 2005. Further it was noted that MI 1001 contained a large number of new paragraphs, being paragraphs 22A through to 22E, 25B, 25EA, 25EC, 25JA to 25JG, 25N, 25P to 25R, 25T, 25V, 25X, 25ZB to 25ZC, 25ZG to 25ZH and 25ZL. Furthermore, the plaintiff had fundamentally changed the relief it sought. No longer was there a suggestion that there had been frustration, but rather what was sought was a declaration based on termination. 6 Mr Watts of counsel appeared for the defendants and his arguments were finally summarised in his written submissions of 19 May 2008. These were:

(1) that there was no evidence to explain the considerable delay in bringing forward the amendments which brought about a considerable change to the plaintiff's case;

(2) the amendments should not be permitted because the plaintiff is in breach of its duty to the court as prescribed by s 56(3) of the Civil Procedure Act 2005; and

(3) the pleadings concerned issues which are not the real issues in the proceedings.

The defendants also had something to say about the utility of the amendments generally. 7 Section 56 of the Civil Procedure Act 2005 certainly does alter the way in which courts approach this sort of problem. 8 Section 56(1) makes it clear that the overriding purpose of the Act and the rules of court is to facilitate the just, quick and cheap resolution of the real issues in the proceedings. Subsection (2) puts a duty on the courts to give effect to the overriding purpose. Subsection (3) imposes a duty on a party to civil proceedings to assist the court to further the overriding purpose. Subsection (4) imposes duty on a barrister and solicitor not by his or her conduct to cause the client to be in breach of the duty in subsection (3) and subsection (5) says the court may take account of any failure to comply with the section in exercising its discretion with respect to costs. 9 For years, courts have had to consider the authority of Queensland v J L Holdings Pty Ltd (1997) 189 CLR 146 which suggests that unless there is sufficient prejudice to other parties which could not be compensated by costs, amendments should be allowed even at a late stage. However, in Dennis v Australian Broadcasting Corporation [2008] NSWCA 37 at [28]-[29] Spigelman CJ with whom Basten and Campbell JJA agreed, said: "The respondent invoked the authority of Queensland v J L Holdings Pty Ltd in support of its ability to amend, even for the fifth time. Case management practices in all Australian courts have changed significantly in the decade since that judgment. Although it remains binding authority with respect to the applicable common law principles, the circumstances of the case were significantly different from those in the present case and do not dictate its outcome. In any event, such principles can be, and have been, modified by statute both directly and via the statutory authority for Rules of Court. In this State J L Holdings must now be understood as operating subject to the statutory duty imposed upon the courts by s 56(2) of the Civil Procedure Act 2005, which requires the Court in mandatory terms - 'must seek' - to give effect to the overriding purpose - to 'facilitate the just, quick and cheap resolution of the real issues in the proceedings' - when exercising any power under the Act or Rules. That duty constitutes a significant qualification of the power to grant leave to amend a pleading under s 64 of the Civil Procedure Act ." 10 The Court of Appeal in that case declined to interfere with a judge's refusal to allow a fifth further amended statement of claim to be further amended in defamation proceedings. 11 I believe that I was acting under a misapprehension as to when Mr Smallbone became involved in the case when I made my assessment of the submissions previously made under s 56 of the Civil Procedure Act. It is most strange in all the circumstances of this case, that there has not been any concession on this matter. It may well be that Mr Smallbone did not sufficiently direct his mind to the problem until recently, but it could not be the case that he only came into the case relatively recently. 12 However, when reassessing the submissions, and even bearing in mind what the Court of Appeal said in Dennis' case, one must bear in mind that even though there is an overriding purpose that proceedings be dealt with justly, quickly and cheaply, this does not completely trump the principles which have been laid down for many years that unless there has been unacceptable prejudice to other parties, all amendments which can be met should be allowed. 13 In my earlier judgment, I made it clear that apart from those which I grouped as sections (g) and (h), the amendments should be allowed and I cannot even now see how they cause any real problems to the defendants. The groups (g) and (h) sought to add paragraphs then 25C to 25L alleging breach of equitable duty by officers of the plaintiff and alleging that the first defendant took advantage of the plaintiff's special disability (paragraphs 25M to 25P). 14 These paragraphs have now been substantially augmented and are now paragraphs 25C through to 25ZJ. The paragraphs contain a large number of very questionable propositions. A basal proposition is that the first defendant ought to have known that the transaction was suspect and inequitable because the plaintiff's co-ordinator, Mr Michael Rodgers, had been in receipt of payment from the first defendant. 15 As Mr Watts points out in paragraph 35 of his submissions, the pleading is just not sufficient in its present form to enable that sort of allegation to lead anywhere. In particular, there is no pleading of material facts as to any improper purpose attaching to any alleged payments, when the payments were made, whether Mr Rodgers was or was not an officer of the plaintiff and whether there is a relevant connection between the alleged payment and Mr Rodgers' alleged failure to communicate. 16 It seems to me that in the light of there being no explanation as to the reason for the late amendments, the prolix and convoluted nature of the proposed amendments, the problem that the plaintiff has with respect to paragraph 16 of my previous judgment and s 56 of the Civil Procedure Act, and that this is far from the first attempt at amendment, I should not allow the amendments proposed in paragraphs 25C to 25ZJ in MI 1001 as amended. 17 I do allow the other amendments as indicated in my previous judgment, even though they are now slightly tidied up and I believe that I should also allow the prayers to be amended in accordance with the finally restated paragraphs A, B and C as there is usually no problem with asking the plaintiff to state the orders that it seeks at the final hearing as the court can always make the appropriate orders in any event. 18 However, it seems to me that because prayer B has now been amended, paragraph 27 of document MI 1001 should be deleted. 19 I consider that on this application, the plaintiff has largely been unsuccessful, and accordingly the plaintiff should pay the defendants' costs of and occasioned by the amendments and also in particular the costs of 7 May 2008 and of today. 20 I now must set another date for further pre-trial and I will suggest 29 July 2008 at 9.30am unless counsel the week before inform my Associate that some other day should be chosen.

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