LK Smith Holdings Pty Ltd & Ors v FJA Holdings Pty Ltd & Anor [2025] QSC 182

PROCEDURE - CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS - TIME, EXTENSION AND ABRIDGMENT - where the plaintiffs commenced proceedings against the defendants in 2021 - where the plaintiffs' claim relates to the sale of an agricultural equipment manufacturing business owned and operated by the third plaintiff - where the course of the litigation has been slow and disrupted by intermittent periods of inactivity - where the parties participated in a mediation on 27 February 2023 - where the plaintiffs filed an amended statement of claim on 26 February 2025 - whether the filing of the amended statement of claim was an effectual step in the proceeding - whether the mediation constituted a step in the proceeding pursuant to the Uniform Civil Procedure Rules 1999 (Qld)

PROCEDURE - CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS - TIME, EXTENSION AND ABRIDGMENT - where the plaintiffs did not request or obtain leave to file the amended statement of claim - whether the plaintiffs require leave to file the amended statement of claim - whether the amended statement of claim contains a new cause of action which had expired at the time of the amendments - whether the new claim arises from the same or substantially the same facts as the originally pleaded case - whether leave to amend the statement of claim ought to be granted

Civil Proceedings Act 2011 (Qld), s 16, s 42

Supreme Court Rules 2000 (Tas), r 56

Uniform Civil Procedure Rules 1999 (Qld), r 375, r 376, r 387, r 389

Artahs Pty Ltd v Gall Standfield & Smith (a firm) [2012] QCA 272; [2013] 2 Qd R 202, followed

Black & Black v De Waard & De Waard & anor [2021] QDC 138, cited

Bradley v Bradley [2023] QSC 69, considered

Brighton Marine Place and Pier Ltd v Woodhouse [1893] UKLawRpCh 64; [1893] 2 Ch 486, 488-489, cited

Citicorp Australia Ltd v Metropolitan Public Abattoir Board [1980] 1 Qd R 592, considered

Coad v Dimmick [2013] TASSC 48; (2013) 22 Tas R 351, considered

Deathridge v McNaught [2019] QDC 165, considered

Firstmac Ltd & Ors v Hunt & Hunt (A Firm) [2018] QSC 258, considered

Haller v Ayre [2005] QCA 224; [2005] 2 Qd R 410, considered

I H Dempster Nominees Pty Ltd v Chemgoods Pty Ltd [1993] 2 Qd R 377, cited

Kanyilmaz v Nominal Defendant (Queensland) [2000] QSC 180, cited

Kreyzig v QBE Insurance (Aust) Ltd [2018] QDC 70, considered

Merker v Merker [2021] QSC 285, cited

Microbio Resources Inc v Betatene Ltd [1992] FCA 503

Ogilvie I Adams [1981] VicRp 92; [1981] VR 1041, cited

Porzuczek v Toowoomba District Health Services [2007] QSC 177, considered

Rabvue Pty Ltd v Malcolm Douglas Consultants Pty Ltd [2010] QDC 150, considered

Rae & Partners Pty v Shaw [2020] TASFC 14, cited

Re Burns v Korff (1982) 8 QL 201, considered

Seeto Kui (Holdings) Ltd v Chow [2015] QSC 193, considered

Smiley v Watson [2001] QCA 269; [2002] 1 Qd R 560, considered

Spincer v Watts [1889] UKLawRpKQB 103; (1889) 23 QBD 350, considered

Stockley Furlong (A Firm) v Hyde [2023] QCA 203, considered

Vickers, Sons & Maxim Ltd v Coventry Ordnance Works Ltd [1908] WN 12, cited

Way & Anor v Primo Rossi Pty Ltd & Anor [2018] QCA 203, cited

Wright v Ansett Transport Industries Limited [1990] 1 Qd R 297, considered

• [1] These proceedings were commenced in December 2021 with the plaintiffs' various claims against the defendants emanating from the funding arrangements and sale of an agricultural equipment manufacturing business owned and operated by the third plaintiff. The course of the litigation has been slow and disrupted by intermittent periods of inactivity, mainly on the plaintiffs' part.
• [2] On 26 February 2025, the plaintiffs filed an amended statement of claim. That "step" prompted a flurry of applications from both sides.
• [3] The defendants first seek an order that the filing of the amended pleading was an ineffectual step in the proceeding as the plaintiffs failed to comply with the requirements of r 389(2) of the Uniform Civil Procedure Rules 1999 (Qld); and that the proceeding be dismissed for want of prosecution. Alternatively, the defendants seek an order that the amendments to the statement of claim be disallowed because the plaintiffs failed to obtain leave as required by r 376 of the UCPR.
• [4] The plaintiffs have cross-applied for declarations that the filing of the amended statement of claim is an effectual step and that this pleading is an effectual document; or in the alternative, an order for leave nunc pro tunc to file that amended statement of claim, if leave is found to be necessary.
• [5] The resolution of these applications and the consequential orders and declarations to be made are dependent on three issues:

(a) First, whether the amended statement of claim was filed within two years from the time the last step was taken in the proceeding. This issue turns on whether a mediation of the proceeding was a "step in the proceeding";

(b) Second, whether the plaintiffs need leave to file their amended statement of claim. This issue turns on whether the pleading contains a new cause of action which had expired at the time of the amendments; and if so, whether the new claim arises from the same facts or substantially the same facts as the originally pleaded case; and

(c) Third, if leave to file the amended statement of claim is necessary, whether it ought to be granted and if so, the appropriate form of the order. This issue turns on whether leave is appropriate in the circumstances of this case taking into account matters of delay and prejudice.

• [6] The answers to these questions are informed by a general understanding of the plaintiffs' case and of the procedural history surrounding the initiation and progression of the proceeding to date.

• [7] It is relatively uncontroversial that as part of the sale of the business to the second defendant, it was agreed that the second defendant would borrow the purchase monies from the first defendant with the first defendant sourcing funds through the first and third plaintiffs. Lindon Smith, the second plaintiff, is the sole director, secretary and shareholder of the first and third plaintiffs. He was, until various dates in 2019, a director of the first and second defendant along with Mr Geraint Hudson - who remains a director to this date. Mr Hudson's wife, Skye Hudson, is also involved in the dispute as the holder of 40 ordinary class shares in the first defendant as trustee for the Hudson Family Trust. Part of the plaintiffs' case is that the first plaintiff remains the holder of 50% of the issued share capital in the first defendant and that the second plaintiff remains a director of the first and second defendant.
• [8] The form, nature and terms of the provision of the finance as between the plaintiffs and the defendants is hotly contested. On this issue, the defendants complain that the plaintiffs' case has completely shifted from one about a partly oral and partly written loan agreement for consent journal entries that reflect the loan between "six gentlemen" in November and December 2015[1] to one of an oral agreement between "two men" in March and June 2016, with the loan being made by way of capital contributions under a written shareholder agreement, and the adoption of that agreement acting as a style of estoppel by convention.[2]
• [9] The facts underpinning the plaintiffs' case date back to November 2015 although the proceeding was not commenced until 16 December 2021. Part of the initial delay in formal proceedings commencing, at least in part, appears to have been due to the parties engaging in an informal exchange of correspondence and documents from at least late 2019. What emerges from this material is that the proceedings were not commenced "out of the blue". Rather, there were ongoing issues about the sale of the business including over directors' salaries and share value, and with the first plaintiff contending it was owed about $1.3 million for the loans. The idea of an early formal mediation to resolve the issues was flagged with Mr and Mrs Hudson by the plaintiffs' solicitors as early as 16 December 2019 in the following way:

"Now, with a view to seeing those claims satisfied as soon as possible in the new year, are you prepared to participate in good faith, in a mediation? If you are, then I will put to you the names of three senior barristers (probably QCs, given the subject matter of the various controversies), and you can select one of them as mediator. While a mediation won't necessarily result in a resolution to this matter, my client would certainly prefer to engage in that process, in the hope litigation (with all the expenses and distraction it brings), can, after all, be avoided. Indeed, litigation will almost certainly require you to mediate. That being the case, it would be a shame if a resolution was ultimately reached at a mediation in the course of litigation, if the same resolution could have been reached by mediation without litigation.

Please note that the proposal for mediation assumes that you will both engage legal representation in the meantime (so that you have the benefit of frank legal advice prior to and at the mediation)."

• [10] Mr and Mrs Hudson responded to this letter on 10 January 2020 advising that they expected to be able to provide a meaningful response by the end of the month. There was no further communication between the parties between that date and the filing of the claim and statement of claim on 16 December 2021.
• [11] At the time the proceedings were served on the defendants on 20 December 2021, the plaintiffs' solicitors again flagged the idea of a mediation with the defendants. On 22 December 2021, the plaintiffs allowed an extension of time for filing the defence.
• [12] On 14 February 2022, the defendants, having obtained legal representation, filed a notice of intention to defend and defence. The defence was served on the plaintiffs at this time, but the notice of intention to defend was not served on them until

• [13] On 15 February 2022, the defendants made a request for further and better particulars of the statement of claim. About a week later, the solicitors for the defendants advised the plaintiffs' solicitors that the defendants were open to mediation but only after their request was answered and pleadings were finalised.
• [14] Between 21 February 2022 and 24 May 2022, that request was followed up by the defendants' solicitors. On 13 and 15 June 2022, the plaintiffs provided a response to the request by way of emails, letters, and two sets of particulars. The letter of 13 June 2022 advised that Mr Smith wished to inspect the books and financial records of the defendants. On 1 July 2022, the defendants provided their list of documents and agreed to allow Mr Smith the opportunity to inspect their books and records either at the defendants' accountant's office or their solicitors' offices.
• [15] On 7 July 2022, the solicitors for the defendant again advised that the defendants did not want to mediate prematurely and certainly not until further particulars of the statement of claim were provided.
• [16] On 19 September 2022, the solicitors for the plaintiffs refuted the notion that there was an outstanding request for particulars and again pressed the idea of mediation with the solicitors for the defendants. Between 1 November 2022 and 18 November 2022, the solicitors for both sides continued to exchange emails about advancing the proceeding and the prospect of a mediation. This included, from the defendants' solicitor's perspective, the idea that "we could skip reply and try to mediate this year."[4]
• [17] On 22 November 2022, an amended defence and counterclaim was filed and served by the defendants.
• [18] On 8 December 2022, the defendants' solicitors advised the plaintiffs' solicitors that the defendants were content to proceed to mediation. Shortly after this, it was agreed that the defendants did not require the plaintiffs to file and serve an amended reply and answer to the amended defence and counterclaim until after the mediation.
• [19] Between 8 December 2022 and 23 February 2023, the parties (through their solicitors) arranged for a mediation to be held on 27 February 2023. A mediator was appointed, and the costs of the mediation, including the mediator's fees, were agreed to be shared equally between the parties.

"(a) the Mediation shall be treated as if it arose in consequence of a court order and, or alternatively, an agreement between the Parties under s.42 of the Civil Proceedings Act 2011 (Qld), to mediate the dispute; and

(b) each of ss.52 and 53 of the Civil Proceedings Act 2011 (Qld) shall apply in relation to the Mediation."

• [21] The mediation was conducted over about five hours but was unsuccessful. A mediator's certificate was subsequently filed by the mediator.
• [22] On 8 November 2023, the solicitors for the plaintiffs sent a letter to the defendants' solicitors inviting the defendants to reconvene the mediation or to engage in a fresh mediation. The reasons for the re-agitation of this course were articulated by the plaintiffs' solicitor in the following way:[7]

"Since the mediation, our clients have engaged in a lengthy and comprehensive review of documents concerning the affairs of your clients available to our clients, both in our clients' possession, custody and control, and obtained from third parties. Our clients have (even without yet having engaged in disclosure) identified a core number of documents...Electronic copies of those core documents are provided with this letter. We address each of those core documents in turn further below.

In the circumstances, there seems to our clients to be two options open to progress a resolution of this dispute:

1. Our clients can proceed to amend their Statement of Claim to plead additional causes of action - including pleas of estoppel by deed, by representation and by conduct, each of which our clients assert is open on the evidence - and then press this matter forward through disclosure and other interlocutory steps to trial (by way of Court ordered directions, if necessary).
2. Alternatively, the parties can return to mediation and sensibly and maturely seek to resolve this dispute, thereby avoiding protracted litigation and substantial future legal costs.

Our clients would prefer to pursue option numbered two above. In that respect, having regard to the matters stated further below and the enclosed bundle of documents, our clients respectfully request that your clients...join them in returning to mediation to seek to negotiate a sensible resolution to this dispute at this relatively early stage of the litigation.

Our clients are open to either reconvening a mediation with [the mediator], or agreeing to engage a new mediator and starting afresh" (emphasis added).

• [23] The offer to further mediate was declined by the defendants on 30 November 2023.
• [24] For various reasons, including obstacles in the personal and business life of the solicitor acting for the plaintiffs, the proceeding did not advance any further until the amended statement of claim settled by counsel was filed and served on the defendants on 26 February 2025.
• [25] It is this "step" by the plaintiffs that underpins the first question for this Court's determination and the divergence of submissions on behalf of the parties. On one hand, the defendants submit that the filing of the amended pleading by the plaintiffs was ineffectual because it was not filed within two years from the last step that was taken in the proceeding as required by r 389(2) of the UCPR. On the other hand, the plaintiffs submit that the mediation on 27 February 2023 was a "step" in the proceeding, such that leave under UCPR 389(2) was not necessary.

• [26] The starting point is r 389 of the UPCR, which relevantly states:

(1) If no step has been taken in a proceeding for 1 year from the time the last step was taken, a party who wants to proceed must, before taking any step in the proceeding, give a month's notice to every other party of the party's intention to proceed.

(2) If no step has been taken in a proceeding for 2 years from the time the last step was taken, a new step may not be taken without the order of the court, which may be made either with or without notice.

(3) For this rule, an application in which no order has been made is not taken to be a step" (emphasis added).

• [27] There is no issue that there had not been a step in the proceeding for one year at the time the amended pleading was filed, and that notice under r 389(1) was given by the plaintiffs on 19 November 2024. This notice is not a step in the proceeding.[8]
• [28] The expression "step" is not defined in the UCPR.
• [29] The dilemma about whether a particular action constitutes a "step" in a proceeding has been the focus of considerable judicial consideration over the years, both in Queensland and other jurisdictions. In Seeto Kui (Holdings) Ltd v Chow [2015] QSC 193 (Seeto), Martin J (as His Honour then was) considered whether the respondent's payment of four default judgments obtained against her in Papua New Guinea was a step in the proceeding. In concluding that the payment was not a step in the Queensland proceeding, Martin J analysed several relevant decisions from which the following principles can be discerned:

(a) The question of whether a step has been taken in a proceeding depends on the "pertinent" circumstances of the case;[9]

(b) The expression "step in the proceeding" should not be applied unduly narrowly, though many things undertaken by the parties in the course of litigation will not necessarily amount to a "step";[10]

(c) The ordinary meaning of "step" in this context, and as defined by the Macquarie Dictionary, is "a move or proceeding, as towards some end or in the general course of action: the first step towards peace"[11] (emphasis in original);

(d) A "step" is an act taken to advance the proceeding or with the view to progressing or continuing the litigation to a conclusion, although it does not need to be a step required by the UCPR;[12]

(e) Any action taken with a view to continuing litigation against whom the proceeding is taken may be a step in the proceeding, but not if it has the effect of putting an end to the action;[13] and

(f) Acts done only in preparation of a party's case do not qualify as a step in a proceeding.[14]

• [30] Relevantly, acts which have been found not to be a step in the proceeding include:

(a) the payment of money into court or the acceptance of money paid into court with the intention of bringing the litigation to an end;[15]

(b) the inspection of copies of documents produced earlier by the solicitor in the solicitor's office;[16]

(c) an application to transfer an action from one court to another;[17]

(d) taking potential witness statements, or obtaining documents pursuant to notices of non-party disclosure;[18]

(e) the provision of an unsigned certificate of readiness for trial;[19]

(f) a request by one party to the other to have settlement discussions;[20] and

(g) correspondence proposing mediation "when no such mediation occurred."[21]

• [31] In Citicorp Australia Ltd v Metropolitan Public Abattoir Board [1980] 1 Qd R 592, the inspection of documents was held not be a step in the proceeding as it did not "have the characteristic of carrying the cause of action forward".[22] In reaching this view, McPherson SPJ observed:[23]

"I am...unable to accept that acts done in the recesses of a solicitor's office partake of the character of a proceeding simply because they may, from the standpoint of the party for whom that solicitor is acting, be supposed to carry the action forward."

• [32] Acts which have been found to be a step in the proceeding, or identified as potentially having such character, include:

(a) an application to court for an extension of time to deliver a defence;[24]

(b) the amendment of a statement of claim;[25]

(c) the provision of a supplementary affidavit of documents;[26]

(d) the delivery of a medical report;[27]

(e) the provision of copies of disclosed documents after a notice requiring their production;[28] and

(f) the filing and serving of a reply.[29]

• [33] It is also relevant to note that by r 389(3) of the UCPR, an application on which an order is made is implied to be a step in the proceeding.[30]
• [34] The issue of whether a mediation or a settlement conference is a step in a proceeding has been the subject of divergent views.

Cases considering whether mediation is a step in a proceeding

• [35] In Coad v Dimmick [2013] TASSC 48; (2013) 22 Tas R 351 (Coad), Porter J considered the issue of whether a settlement conference listed by the court (via a consent order) was a step in the proceeding under the Tasmanian equivalent of r 389(2) of the UCPR. Relevantly, r 56(1) of the Supreme Court Rules 2000 (Tas) provides that:

"If a step, other than an application on which no order has been made, has not been taken in a proceeding for 6 years since the last step was taken, a party may not take any further step in the proceeding without the order of the Court or a judge" (emphasis added).

• [36] In that case, His Honour agreed with the view of Peter Lyons J in Artahs Pty Ltd v Gall Standfield & Smith (A Firm) [2012] QCA 272; [2013] 2 Qd R 202 that the action need not be one that is strictly required by the rules.[31] Rather, it is sufficient for the step to be provided for in, or contemplated by, the rules.[32] Porter J's view was that mediation ordered by a court can carry an action forward.[33] His Honour rejected the appellant's argument that mediation is designed to bring the proceeding to an end, and therefore cannot carry it forward, in the following terms:[34]

"...the finalisation or termination of an action is only one of the purposes of mediation, albeit a significant one. In my view, the fact that mediation might see the finalisation of the action, does not make it incapable of amounting to a step taken in a proceeding."

• [37] Ultimately, Porter J found that the settlement conference was a step in the proceeding on the following bases:

(a) A court ordered mediation is part of the court's procedures and becomes part of a particular proceeding;[35]

(b) In modern litigation, mediation is an appropriate step if not to settle the proceedings, to at least assist the parties to confine the issues;[36]

(c) It was assumed by Moynihan J and the parties in Porzuczek v Toowoomba District Health Services [2007] QSC 177 that a mediation amounted to a step in the proceeding;[37] and

(d) While mediations may fail to resolve the action, they can give the parties a better understanding of their strengths and weaknesses, allow differences to be resolved (even if this cannot be formally ascertained),[38] and, at the least, show "that the action is 'alive'".[39]

• [38] In reaching his view in Coad, Porter J observed that "the activity must be one which is at least capable of carrying the action forward and one which is done with that intention"[40] (emphasis added). I accept these observations as being consistent with both:

(a) the Court of Appeal's reasoning in Artahs and the principles I have set out above. Following the analogy of the action being "the first step towards peace" or a "move" towards a conclusion, the fact that such a conclusion is not reached does not necessarily change the character of the act as a step in the proceeding for the purpose of r 389(2) of the UCPR; and

(b) the authorities (as identified by Porter J in Coad) which suggest that a step in the proceeding includes an action taken with a view to continuing litigation or carrying the action forward. It includes things that are designed to further prosecute the action or continue the action towards judgment.[41]

• [39] In Kreyzig v QBE Insurance (Aust) Ltd [2018] QDC 70, the Court held that a settlement conference did not have the character of a step in the proceeding, reasoning that there is no mandatory requirement for holding such a conference or mediation to be ready for trial.[42] The Court observed that the settlement conference in question:[43]

"...did not progress the action towards finalisation. This is in contrast, for example, with actions which could thereupon have been taken under r 467 to prepare and sign a request for trial date ... Other contrasting examples of 'steps' include an amendment to a pleading; provision of a supplementary affidavit of documents; delivery of a medical report; and provision of copies of disclosed documents. Those steps moved the litigation process forward; the conference process here unsuccessfully sought an alternative resolution without advancing the litigation. The analysis of what amounts to a step is also, in my view, informed by the terms of r 389(3) which indicates the necessity of an actual, rather than merely anticipated, progression" (emphasis added).

• [40] This reasoning, in my respectful view, is inconsistent with that in Artahs in two ways. First, the focus on there being no mandatory component to the settlement conference overlooks that a step does not necessarily need to be one required by the UCPR.[44] Second, there is no requirement to show that there was any actual advancement of the proceeding arising out of the action. Rather, what is required is for the action to have been taken with a view to advancing the proceeding.[45]
• [41] Conversely, the Court in Deathridge v McNaught [2019] QDC 165 held that the parties' attendance at a settlement conference (which was ordered to occur by the Magistrates Court) was a step in the proceeding even though the conference was unsuccessful.[46] In my respectful view, the focus in that case on the mandatory nature of the settlement conference was appropriate and in line with Artahs. That is because, whilst a step need not be required by the UCPR, if the action is something that must occur before the matter can progress, that is strongly indicative that the action is a step taken to advance the proceeding.

• [42] The defendants submit that a mediation is not a step in the proceeding on three grounds:

(a) First, mediation is not a step that advances a proceeding to a conclusion, rather, it is an alternative dispute resolution process that parties may undertake to attempt to resolve and thereby end the proceeding;

(b) Second, the outcomes from mediation are too various and uncertain for it to be considered a step that advances the proceeding to a conclusion; and

(c) Third, mediation is an optional step that is not required by the rules and need not be undertaken before a proceeding can go to trial. Mediation is not a precondition to the issuing of a request for trial dates or setting trial directions or dates.

• [43] The defendants sought to distinguish the decision of Coad on the basis that unlike the Supreme Court Rules 2001 (Tas), the UCPR does not provide for a mandatory settlement process - that is, a court-ordered mediation is not part of the court's procedures and therefore it cannot be said to become part of a particular proceeding. I accept that distinction exists between the two jurisdictions, but I do not accept that this diminishes the force of the thorough analysis of the various cases by Porter J, including, most critically, His Honour's adoption of the principles articulated in Artahs.[47] Ultimately, whether a mediation in a given case is a step in the proceeding will turn on the facts.
• [44] It is convenient to deal with the defendants' third argument first. It is underpinned by the notion that a mediation is a voluntary process, and that to be a step in the proceeding, the act must be something required by the rules. This was a notion that was expressly rejected by the Court of Appeal in Artahs. The mandatory character of an action is not part of the test for whether it is a "step" that advances a proceeding towards a conclusion.
• [45] Turning to the first ground, part of which overlaps with the second ground. In my view, this argument is premised on the conflation of two competing notions: that a mediation does not advance a proceeding because the outcomes are unknown; and that a mediation, as part of an alternative dispute resolution process, is an action to resolve and thereby end the proceeding. In terms of the latter, the defendants appear to reason by analogy from Martin J's decision in Seeto that where an action taken by a party concludes a proceeding (such as payment), it is not a step that advances the proceeding to a conclusion and so is not a step for the purposes of r 389(2).[48] But there is an important distinction between a payment concluding a proceeding and a mediation as potentially a step that advances the proceeding to a conclusion.
• [46] The defendants' first ground is the crux of the real issue for determination. That is, whether the mediation in this case was an act to advance, move, progress or continue the litigation towards a conclusion. In the context of the present case, I am satisfied that the conduct of the mediation accomplished all of these things for the following reasons.

Does the amended statement of claim raise a new cause of action?

• [53] The defendants submit that the amendments to the statement of claim ought to be disallowed because they raise new time-barred causes of action for which leave of the court is required, but no leave was sought or obtained by the plaintiffs. The plaintiffs dispute this proposition on the basis that none of the amendments include a new cause of action in respect of which a relevant period of limitation, current at the date the proceeding was started, has now ended.
• [54] In the alternative, the plaintiffs have cross-applied for leave to make the amendments impugned by the defendants. The defendants oppose leave being granted but contend that if leave is granted, then the amendments ought to take effect from 27 February 2025 - the date the amended pleading was filed.
• [55] The resolution of these cascading arguments invokes a consideration of s 16 of the Civil Proceedings Act and a number of provisions of the UCPR.

• [56] Section 16 of the Civil Proceedings Act provides:

(1) This section applies to an amendment of a claim, anything written on a claim, pleadings, an application or another document in a proceeding.

(2) The court may order an amendment to be made, or grant leave to a party to make an amendment, even though -

(a) the amendment will include or substitute a cause of action or add a new party; or

(b) the cause of action included or substituted arose after the proceeding was started; or

(c) a relevant period of limitation, current when the proceeding was started, has ended.

(3) Despite subsection (2), the rules of court may limit the circumstances in which amendments may be made.

(a) applies despite the Limitation of Actions Act 1974; and

• [57] The relevant provisions of the UCPR are as follows:

(1) At any stage of a proceeding, the court may allow or direct a party to amend a claim, anything written on a claim, a pleading, an application or any other document in a proceeding in the way and on the conditions the court considers appropriate.

(1) This rule applies in relation to an application, in a proceeding, for leave to make an amendment mentioned in this rule if a relevant period of limitation, current at the date the proceeding was started, has ended.

(4) The court may give leave to make an amendment to include a new cause of action only if -

(b) the new cause of action arises out of the same facts or substantially the same facts as a cause of action for which relief has already been claimed in the proceeding by the party applying for leave to make the amendment.

(1) If a party makes an amendment without leave before the filing of the request for trial date, another party may, within 8 days after service on the party of the amendment, apply to the court to disallow all or part of the amendment.

(2) On the application, the court may make an order it considers appropriate.

(1) If a document is being amended under this part, the amendment takes effect on and from the date of the document being amended.

(2) However, an amendment including or substituting a cause of action arising after the proceeding started takes effect on and from the date of the order giving leave.

(3) Despite subrule (2), if an amendment mentioned in subrule (2) is made, then, for a limitation period, the proceeding as amended is taken to have started when the original proceeding started, unless the court orders otherwise" (emphasis added).

• [58] What emerges from these rules is that:[55]

"Pleadings may be amended, including by amendments which introduce new causes of action. But where an amendment is proposed in a context where a relevant period of limitation, current at the date the proceeding was started, has ended, it is necessary first to work out whether the amendment introduces a new cause of action. If it does, then the Court may give leave only if the two considerations mentioned in UCPR r 376(4) are established."

• [59] The starting point is to therefore ascertain whether the amended statement of claim introduces a new cause of action and if it does, whether the amendments should be regarded as arising out of the same facts or substantially the same facts. There can be a fine balance or "dividing line" between when an amendment introduces a new cause of action and when it does not.[56] The same can be said of whether any new cause of action arises out of the same facts or substantially the same facts as an existing cause of action.
• [60] The relevant legal principles and the practical steps required to navigate these lines were scrutinised and summarised in Firstmac Ltd & Ors v Hunt & Hunt (a firm) [2018] QSC 258, in which Bond J (as His Honour then was) relevantly observed that:

(a) A cause of action is the multitude of facts which are material to be proved for the plaintiff to succeed;[57]

(b) Not every amendment which seeks to add to or change that combination of facts should be regarded as an amendment which raises a new cause of action;[58]

(c) The adequacy of the initial pleading will always be relevant;[59]

(d) If an amendment simply adds a detail or responds to a requested particular, then the amendment does not introduce a new cause of action.[60] But an alteration which, for example, completely changes the approach to an assessment of damages might do so;[61]

(e) The balancing act is a delicate one and requires a broad, uncritical approach to the analysis of the pleading and resolving ambiguous language in favour of the pleader.[62] At the same time, the court must consciously recognise the importance of not undermining the important policy considerations that lie beneath relevant limitation provisions;[63] and

(f) Factors such as delay and prejudice must not be overlooked in the exercise of the reposed discretion as it arises.[64]

Analysis of the "before" and "after" of the plaintiffs' case

• [61] The plaintiffs' claims as to the "debts due and owing" from the loan arrangements between the parties is that the first defendant owes:

(b) alternatively, the third plaintiff the sum of $200,000; and

• [62] The plaintiffs' initial pleaded case and particularised iteration of the material facts were as follows:

(a) There was a written agreement on 31 December 2015 (the Business Sale Contract) between the third plaintiff as vendor and the second defendant as purchaser for the sale of a business known as TTQ to a new entity (the second defendant) for $2,566,000;

(b) There was an agreement between the first and second defendants (made orally and in writing through emails between Mr Smith, Mr Hudson, Mr Fritz, Mr Silver, Mr Kumar, Mr Noller and Mr Beckett in November and December 2015) that the first defendant would lend the second defendant sufficient funds to finance the acquisition of the business under the Business Sale Contract. There was no agreement as to the term of or the interest payable on the loan but the loan is recorded in the books of the defendants;

(c) There was an agreement in late 2015, but before 31 December 2015, which was made orally and by email between the same group of people as above. The agreement was that each of the three investor groups would lend the funds described as shareholders' loans to the first defendant on an unsecured basis to finance the acquisition of the business, with the loans recorded in the books of the defendants. The three investor groups were the first plaintiff, Ms Hudson as trustee for the Hudson Family Trust, and Toowoomba Investments Australia Pty Ltd (TIA) - all being shareholders in the first defendant;

(d) Funds were lent by TIA and Ms Hudson as trustee as agreed, and the first defendant on-lent $1,366,000 to the second defendant with those funds being paid to the third plaintiff as part of the agreed purchase price;

(e) The first plaintiffs' part of the loan as agreed ($1,000,000) was made by way of journal entry with the consent and agreement of the defendants given through email and conversations (the First Plaintiff's loan). The second defendant's payment of the $1,000,000 to the third plaintiff as a further part of the purchase price was made by way of journal entry;

(f) The balance of $200,000 of the purchase price (the Contract Debt) was unpaid;

(g) With the agreement of all three investor groups (made through the same group of people as above orally and by email on unparticularised dates) the Contract Debt was assigned by the third plaintiff to the first plaintiff which aggregated the First Plaintiff's Loan to make it $1,200,000;

• [63] The amended statement of claim now pleads the material facts underpinning the plaintiffs' claims as follows:

(a) Pursuant to a written shareholder agreement dated 23 December 2015, TIA and Ms Hudson as trustee of the Hudson Family Trust made working capital contributions to the first defendant in the amounts of $500,000 and $1,000,000 respectively;

(b) The first defendant, for the second defendant, paid $1,366,000 to the third plaintiff as part of the purchase price under the Business Sale Contract;

(c) By reason of the payment of $1,366,000 instead of $2,566,000 by the second defendant, the second defendant is indebted to the third plaintiff in the amount of $1,200,000;

(d) The first plaintiff did not make any working capital contribution under the shareholder agreement;

(e) There was an oral agreement between the parties as a result of various telephone conversations between Mr Smith and Mr Hudson between 1 March 2016 and 30 June 2016 about the enforcement of the various amounts owed;

(f) There was an assumption of facts in furtherance of the agreement;

(g) Each of the plaintiffs and defendants adopted a convention;

(h) The defendants and plaintiffs accepted the assumed facts and the convention by causing the recording of certain transactions;

(i) The plaintiffs relied upon the assumed facts and the convention;

(j) The First Plaintiff's Loan arises from assumed facts and convention;

(k) The First Plaintiff's Loan increased to $1,203,995.25 through a newly pleaded oral agreement between Mr Hudson and Mr Smith on or about

30 June 2017;

(l) The defendants are estopped from denying the First Plaintiff's Loan because of a detriment to the plaintiff and because it would be unconscionable; and

(m) In the alternative, the second defendant owes the amount of $1,200,000 under the Business Sale Contract.

• [64] The defendants seek that all of the amendments be disallowed given their connection to the newly pleaded cause of action, except for those new pleadings related to the Contract Debt at paragraphs 19C, 19D, 20 and 20A.[65]

• [65] The plaintiffs concede that new facts have been pleaded in the amended statement of claim and that, in many respects, the pleading has been recast. The plaintiffs deny, however, that a new cause of action has been included, essentially because the loan sued upon is the same loan arising out of the same circumstances.

1. The plaintiffs also submit that the repleading of the facts and circumstances giving rise to the First Plaintiff's Loan (as facts assumed and a convention adopted) permit a plea of estoppel by convention to be advanced. The plaintiffs refer to the considerable judicial and academic discussion about "estoppel by convention"[66] and submit that this pleading is not an independent cause of action.[67]
2. I accept that ordinarily, estoppel by convention is a shield, not a sword, and it is not a cause of action in itself.[68] The difficulty is that the plaintiffs accept this on the one hand, but then submit on the limitation issue that equitable remedies do not give rise to an applicable period of limitation_._[69]

• [68] It is unnecessary for the purposes of this application to resolve this tension in the plaintiffs' submission. I am satisfied that a new cause of action has been included by the plaintiffs, and that there is an applicable limitation period, for the following reasons.
• [69] First, the newly articulated claim does more than just add a few details. It entirely recasts the plaintiffs' case. The agreement for the shareholder loans alleged to fund the business purchase has been changed from an agreement made orally and by email in November and December 2015 to a written shareholder agreement which required working capital contributions. Further, the allegation as to the First Plaintiff's Loan has changed from one arising from journal entries with consent and agreement, to one arising from the newly pleaded agreement and an assumption of facts and the convention. The amended statement of claim entirely changes the premise upon which the monies are said to be due and owing as a debt.
• [70] Second, the amended pleading relies on a series of new material facts which date back to 2016 and 2017. Two new sets of conversations have been pleaded which are not substantially the same as those previously pleaded. A new set of conduct, as well as a certain state of mind and knowledge, is now attributed to the parties.
• [71] Third, on 8 November 2023, the plaintiffs flagged their intention to amend their statement of claim to plead additional causes of action.
• [72] Finally, the newly alleged agreement dates back to March to June 2016, with the alleged indebtedness arising no later than 30 June 2016. That debt is said to be due on demand, and the limitation period for a claim for such a debt is six years.[70] The cause of action relying upon the newly alleged agreement is potentially out of time as it was only raised for the first time as part of the amended statement of claim, filed 26 February 2025.

Does the amended statement of claim arise from the same facts or substantially the same facts as the originally pleaded case?

• [73] The defendants submit that the newly pleaded material facts in respect of the First Plaintiff's Loan are not the same or substantially similar as the plaintiffs' original case. In the defendants' submission, the amendments ought to be disallowed because:

(a) the original case was about a consent and agreement to the recording of the First Plaintiff's Loan in journal entries, reached between a group of people as particularised; and

(b) the new case alleges an agreement about a series of different matters related to enforcement of payment obligations allegedly reached between two men only.

• [74] I accept that there has been a significant recasting of the new material facts in the amended statement of claim. But the expression "substantially the same facts" in r 376(4) does not make the need to prove some additional facts "fatal to a favourable exercise of discretion under r 376(4)".[71] For the reasons that follow, I am satisfied that the new cause of action can be said to "arise out of substantially the same story as that which would have to be told to support the original cause of action".[72]
• [75] First, in essence, the loan sued upon is the same loan, arising out of the terms of the Business Sale Contract and the Shareholders Agreement.
• [76] Second, the plaintiffs continue to plead a liability arising under the same loan, at the same time and in the same amount, and that there was a failure, refusal or neglect to pay that loan by the first defendant to the first plaintiff which gives rise to the present indebtedness.
• [77] Third, leaving aside the quantum of amounts already claimed, no new relief is sought in the prayer for relief.

• [78] In deciding whether to exercise the court's discretion to grant leave, the defendants submit that it would be appropriate to disallow the amendments because of the significant delay in raising this new case and matters of general prejudice to them. In particular, the defendants point to:

(a) the unfairness of the plaintiffs being permitted to raise new conversations, conduct, knowledge and states of mind, and the resulting need for examination and cross-examination of witnesses about events that took place 10 years ago and about which memories would be expected to have faded;

(b) the prejudice arising from costs thrown away by the defendants if the amendments are allowed. For example, a substantial portion of the defence and counterclaim will need to be re-drafted, with attendant ramifications for disclosure and all of the usual steps required to be undertaken to defend a proceeding; and

(c) the potential loss of documents.

• [79] The newly pleaded events date back to the period of March to June 2016 and were not raised in the pleaded case of December 2021. It follows that issues of delay and prejudice are relevant to the exercise of this Court's discretion to allow the plaintiffs leave to amend their statement of claim.
• [80] The relevant delay is in making the amendments which I have found plead a new cause of action. The unchallenged explanation for the delay is said to have been the solicitor for the plaintiffs' fault, not his clients'. Even accepting this evidence at its highest, there remain unexplained delays.
• [81] Overall, I am satisfied on balance that leave ought to be granted because:

(a) The critical conversations now relied upon by the plaintiffs occurred between two individuals (Mr Smith and Mr Hudson) who have been involved in this case from the outset - indeed, it seems that they were both at the mediation;

(b) All or most of the remaining potential witnesses are contactable;

(c) Part of the case appears to be underpinned by documentary evidence such as emails and accounting records which are already in existence;

(d) Some of the amendments to the plaintiffs' case appear to have arisen from the defence and counterclaim filed by the defendants;

(e) Aspects of the unfairness and prejudice can be dealt with by the defendants at trial in cross-examining the plaintiffs' witnesses, including, for example, about the change in their case;

(f) The issue of the costs thrown away can be compensated to a large degree by an award of costs in the defendants' favour; and

(g) The weight of the consequences of delay in raising this new claim and prejudice ought to be carried by the plaintiffs. Some of this prejudice can be adequately addressed by granting leave and ordering that the amendments take effect from

27 February 2025, pursuant to r 387 of the UCPR. This will allow the defendant to plead any limitation defences, and leaves the issue about whether or not the cause of action has expired to trial.

• [82] It follows from these reasons that I am satisfied that:

(a) the amended statement of claim was filed within two years from the time the last step was taken in the proceeding and was therefore an effective step in the proceeding;

(b) the plaintiffs require leave to file their amended statement of claim; and

(c) leave to file the amended statement of claim is granted, with an order that the amendment take effect from 27 February 2025.

• [83] I will hear the parties as to the form of orders that follow from these findings, dealing with the various applications filed and as to costs.
• [84] I will also hear from the parties about whether or not the proceeding should be placed on the Commercial List and if so, whether it should remain in the Toowoomba Supreme Court where the trial will be conducted (but managed from Brisbane) or, whether it is more appropriate for the matter to be transferred to the Brisbane Supreme Court to be heard and managed there.

[3] Affidavit of Adrian Hallewell affirmed 9 May 2025 at ASH-1 pp 137-8.

[8] Way & Anor v Primo Rossi Pty Ltd & Anor [2018] QCA 203 at [9] (Brown J, as Her Honour then was).

[9] Artahs Pty Ltd v Gall Standfield & Smith (A Firm) [2012] QCA 272; [2013] 2 Qd R 202 at [3] (Margaret McMurdo P), cited in Seeto Kui (Holdings) Ltd v Chow [2015] QSC 193 at [8] (Martin J).

[10] Artahs Pty Ltd v Gall Standfield & Smith (A Firm) [2012] QCA 272; [2013] 2 Qd R 202 at [45] (Peter Lyons J), cited in Seeto Kui (Holdings) Ltd v Chow [2015] QSC 193 at [9] (Martin J).

[11] Artahs Pty Ltd v Gall Standfield & Smith (A Firm) [2012] QCA 272; [2013] 2 Qd R 202 at [3] (Margaret McMurdo P), cited in Seeto Kui (Holdings) Ltd v Chow [2015] QSC 193 at [8] (Martin J).

[12] Artahs Pty Ltd v Gall Standfield & Smith (A Firm) [2012] QCA 272; [2013] 2 Qd R 202 at [3]- [4] (Margaret McMurdo P, Fraser JA agreeing), [48]-[49] (Peter Lyons J), cited in Seeto Kui (Holdings) Ltd v Chow [2015] QSC 193 at [8]- [9].

[13] Spincer v Watts [1889] UKLawRpKQB 103; (1889) 23 QBD 350 at 353 (Lopes LJ), cited in Seeto Kui (Holdings) Ltd v Chow [2015] QSC 193 at [11] (Martin J); Coad v Dimmick [2013] TASSC 48; (2013) 22 Tas R 351 at [32] (Porter J).

[14] Coad v Dimmick [2013] TASSC 48; (2013) 22 Tas R 351 at [33] (Porter J), cited in Seeto Kui (Holdings) Ltd v Chow [2015] QSC 193 at [10] (Martin J).

[15] Spincer v Watts [1889] UKLawRpKQB 103; (1889) 23 QBD 350 at 353 (Lopes LJ), cited with approval in Artahs Pty Ltd v Gall Standfield & Smith (A Firm) [2012] QCA 272; [2013] 2 Qd R 202 at [46] (Peter Lyons J).

[16] Citicorp Australia Limited v Metropolitan Public Abattoir Board [1992] 1 Qd R 592 at 594-5 (McPherson SPJ, Ryan and Dowsett JJ agreeing), cited with approval in Artahs Pty Ltd v Gall Standfield & Smith (A Firm) [2012] QCA 272; [2013] 2 Qd R 202 at [47] (Peter Lyons J).

[17] Smiley v Watson [2001] QCA 269; [2002] 1 Qd R 560 at [17]- [18] (Williams JA, Davies and McPherson JJA agreeing), citing I H Dempster Nominees Pty Ltd v Chemgoods Pty Ltd [1993] 2 Qd R 377 at 378 (Ryan J).

[18] Smiley v Watson [2001] QCA 269; [2002] 1 Qd R 560 at [12] (Williams JA, Davies and McPherson JJA agreeing).

[19] Wright v Ansett Transport Industries Limited [1990] 1 Qd R 297 at 299 (Dowsett J).

[20] Black & Black v De Waard & De Waard & Anor [2021] QDC 138 at [22]- [27] (Horneman-Wren SC DCJ).

[21] Bradley v Bradley [2023] QSC 69 at [23] (Brown J, as Her Honour then was), citing Rabvue Pty Ltd v Malcolm Douglas Consultants Pty Ltd [2010] QDC 150, a decision of Andrews SC DCJ in which counsel for the defendants conceded that mediation was a step in the proceeding: at [25].

[22] At 594 (McPherson SPJ, Ryan and Dowsett JJ agreeing).

[23] Citicorp Australia Limited v Metropolitan Public Abattoir Board [1992] 1 Qd R 592 at 594.

[24] Brighton Marine Place and Pier Ltd v Woodhouse [1893] UKLawRpCh 64; [1893] 2 Ch 486 at 488-9 (North J), cited with approval in Artahs Pty Ltd v Gall Standfield & Smith (A Firm) [2012] QCA 272; [2013] 2 Qd R 202 at [46] (Peter Lyons J).

[25] Vickers, Sons & Maxim Ltd v Coventry Ordnance Works Ltd [1908] WN 12 (Warrington J); cited with approval in Artahs Pty Ltd v Gall Standfield & Smith (A Firm) [2012] QCA 272; [2013] 2 Qd R 202 at [47]- [48] (Peter Lyons J).

[26] Kanyilmaz v Nominal Defendant (Queensland) [2000] QSC 180 at 3 (Muir J), cited with approval in Artahs Pty Ltd v Gall Standfield & Smith (A Firm) [2012] QCA 272; [2013] 2 Qd R 202 at [47] (Peter Lyons J).

[27] Porzuczek v Toowoomba District Health Services [2007] QSC 177 at [16] (Moynihan J), cited with approval in Artahs Pty Ltd v Gall Standfield & Smith (A Firm) [2012] QCA 272; [2013] 2 Qd R 202 at [47] (Peter Lyons J).

[28] Wright v Ansett Transport Industries Limited [1990] 1 Qd R 297 at 298-9 (Dowsett J), cited with approval in Artahs Pty Ltd v Gall Standfield & Smith (A Firm) [2012] QCA 272; [2013] 2 Qd R 202 at [47] (Peter Lyons J).

[29] See the obiter observations of Peter Lyons J in Artahs Pty Ltd v Gall Standfield & Smith (A Firm) [2012] QCA 272; [2013] 2 Qd R 202 at [48].

[31] Coad v Dimmick [2013] TASSC 48; (2013) 22 Tas R 351 at [28] (Porter J).

[36] Ibid at [44]-[46], quoting Microbio Resources Inc v Betatene Ltd [1992] FCA 503 at [10] (Olney J).

[37] Coad v Dimmick [2013] TASSC 48; (2013) 22 Tas R 351 at [47]- [48], citing Porzuczek v Toowoomba District Health Services [2007] QSC 177 at [13].

[38] Coad v Dimmick [2013] TASSC 48; (2013) 22 Tas R 351 at [31], citing Alternative Dispute Resolution Act 2001 (Tas) s 10(4).

[39] Coad v Dimmick [2013] TASSC 48; (2013) 22 Tas R 351 at [16], citing Burns v Korff (1982) 8 QL 201 at 208 (Master Lee).

[40] Coad v Dimmick [2013] TASSC 48; (2013) 22 Tas R 351at [34], cited and emphasised in Seeko Kui (Holdings) Ltd v Chow [2015] QSC 193 at [10] (Martin J).

[41] Coad v Dimmick [2013] TASSC 48; (2013) 22 Tas R 351 at [32], citing Spincer v Watts [1889] UKLawRpKQB 103; (1889) 23 QBD 350 at 353 (Lindley and Lopes LJJ); Leach v International Portion Foods Pty Ltd [1984] 2 Qd R 152 at 154 (Master Lee); Rideout v Glaxo Group Ltd [1996] 1 Qd R 200 at 206-207 (Derrington J); Argo Pty Ltd v Attorney-General (No 3) [2004] TASSC 51; (2004) 13 Tas R 69 at [27] (Underwood J).

[43] Kreyzig v QBE Insurance (Aust) Ltd [2018] QDC 70 at [24].

[44] See, eg, Artahs Pty Ltd v Gall Standfield & Smith (A Firm) [2012] QCA 272; [2013] 2 Qd R 202 at [3], [4] (Margaret McMurdo P), [48] (Peter Lyons J).

[47] See, eg, Coad v Dimmick [2013] TASSC 48; (2013) 22 Tas R 351 at [28].

[48] Seeto Kui (Holdings) Ltd v Chow [2015] QSC 193 at [15].

[49] See Uniform Civil Procedure Rules 1999 (Qld) ch 9, pt 4.

[50] See Civil Proceedings Act 2011 (Qld) pt 6.

[51] See Supreme Court of Queensland, Amended Practice Direction No 9 of 2023, Caseflow Management - Civil Jurisdiction at [18(g)], [20(a)].

[52] See Supreme Court of Queensland, Practice Direction No 11 of 2012, Supervised Case List at [20].

[53] See Supreme Court of Queensland Form 48, 'Request for Trial Date' at [F].

[54] Coad v Dimmick [2013] TASSC 48; (2013) 22 Tas R 351 at [31].

[55] Firstmac Ltd & Ors v Hunt & Hunt (a firm) [2018] QSC 258 at [15] (Bond J, as His Honour then was).

[64] Ibid at [26], citing the principles in Aon Risk Services Australia Ltd v Australian National University [2009] HCA 27; (2009) 239 CLR 175.

[65] In relation to the alternative claim by the third plaintiff, the plaintiffs submit that whilst the amount of the claim has increased, the claim was previously pleaded elsewhere in the statement of claim (at paragraphs 25 to 26) and it remains a claim for the Contract Debt.

1. [66] See, eg, Rae & Partners Pty v Shaw [2020] TASFC 14; Felicity Maher, 'Doing the Same Work? Estoppel by Convention and Failure of Basis' [2023] UWALawRw 14; (2023) 50(2) University of Western Australia Law Review 64.

[67] The plaintiffs further submit - and I accept - that r 376(4) of the UCPR does not apply if what is sought to be added by amendment is not an independent "cause of action": see Stockley Furlong (A Firm) v Hyde [2023] QCA 203 at [7] (Flanagan JA, Mullins P and Henry J agreeing).

1. [68] See Felicity Maher, 'Doing the Same Work? Estoppel by Convention and Failure of Basis' [2023] UWALawRw 14; (2023) 50(2) University of Western Australia Law Review 64 at 79-80, cited with approval in Bottoni v Young [2024] WASC 186 at [84]- [85] (Lundberg J).

[69] With reference to Merker v Merker [2021] QSC 285 at [21] (Dalton J). I note that this decision was overturned in Merker v Merker [2022] QCA 277, but on the issue of whether there was a joint venture constructive trust.

[70] See Ogilvie v Adams [1981] VicRp 92; [1981] VR 1041 at 1048 (Fullager J); Haller v Ayre [2005] QCA 224; [2005] 2 Qd R 410 at [19]

[71] Firstmac Ltd v Hunt and Hunt (A Firm) [2018] QSC 258 at [23] (Bond J), quoting Draney v Barry [2002] 1 Qd R 145 at [57] (Thomas JA, McMurdo P agreeing).

[72] Firstmac Ltd v Hunt and Hunt (A Firm) [2018] QSC 258 at [23] (Bond J), quoting Draney v Barry [2002] 1 Qd R 145 at [57] (Thomas JA, McMurdo P agreeing).