Macquarie International Health Clinic Pty Ltd v Sydney Local Health District; Sydney Local Health District v Macquarie Health Corporation Ltd

Supreme Court of NSW|2013-05-28|Before: Kunc J, Mr P, Nicholas J, Windeyer J

Introduction 1This is an application by the plaintiff ("Macquarie") to amend its pleadings in circumstances where the proceedings have been already dealt with both at first instance and by the Court of Appeal. By an order of the Court of Appeal the matter has returned to a judge of this Division to conduct an inquiry into damages on the basis specified by that Court.

Summary 2Macquarie sued the defendant ("the Health District") in relation to agreements between them, including certain leases. Macquarie was to develop a private hospital and car park on the land of the Royal Prince Alfred Hospital at Camperdown. The car park was built; the private hospital was not. 3A lengthy trial was conducted before Nicholas J on the basis of the Fifth Further Amended Statement of Claim ("the Fifth Claim"). Macquarie lost (Macquarie International Health Clinic Pty Ltd v Sydney South West Area Health Service [2008] NSWSC 738 ("the primary judgment")). 4The Court of Appeal took a different view and allowed one aspect of Macquarie's appeal (Macquarie International Health Clinic Pty Ltd v Sydney South West Area Health Service [2010] NSWCA 268). That Court ordered that an inquiry as to damages take place before a judge of this Division. The inquiry is as to the amount of damages (if any) to which Macquarie might be entitled in trespass (Macquarie International Health Clinic Pty Ltd v Sydney South West Area Health Service [2010] NSWCA 348). 5The inquiry has been listed before me for three weeks commencing on 14 October 2013. By notice of motion filed on 28 May 2013, Macquarie applied for leave to amend the Fifth Claim to include an allegation of breach of Macquarie's right to quiet enjoyment under the leases. That application is refused.

The facts 6To determine the present application, it is necessary to set out the history of these proceedings in some detail. 7On 17 March 2000 the Health District served on Macquarie notices of termination under the various agreements between them. It re-entered the relevant sites and locked Macquarie out of the car park. 8On 28 March 2000 Windeyer J dismissed Macquarie's application for an interlocutory order for the return of the car park site to its possession. 9On 10 April 2000 Macquarie filed its statement of claim, which included these allegations (particulars omitted): Trespass 3. As at 17 March 2000 the Plaintiff was in lawful, peaceful and undisturbed exclusive possession, to which it was and is entitled, of the land described in Folio Identifier 11/809663 and 12/809663 ("the Land") on which there is constructed, inter alia, a car park pursuant to the following instruments between it and the Defendant ... 4. On 17 March 2000 the Defendant unlawfully and wrongfully entered upon the land and the car park and dispossessed the Plaintiff of its possession and continues to dispossess the Plaintiff therefrom. 5. On 17 March 2000 the Defendant unlawfully and wrongfully excluded the Plaintiff from the Land and continues to do so. 6. The Defendant's conduct amounted to an unlawful trespass, and the trespass is continuing. 7. By the conduct of the Defendant the Plaintiff has suffered loss and damage and continues to suffer loss and damage. 10The relief claimed in the statement of claim included: 1. An order for possession of all that land contained in Folio Identifier 11/809663 and 12/809663 ... 5. An order requiring the Defendant to return possession of the car park to the Plaintiff ... 8. An order requiring the Defendant to account to the Plaintiff for all monies received and expended by it as a result of its operation of the car park from 17 March 2000. 9. Damages, including damages pursuant to s 68 of the Fair Trading Act 1987 (NSW) and exemplary damages. 11The Health District sought particulars of the damage alleged in paragraph 7 of the statement of claim. By letter of 17 May 2000 these particulars were provided: Our client has suffered loss and damage by reason of being dispossessed from the land and continues to suffer loss and damage in the amount of approximately $2,000 per week which was the total of the receipts from paying patrons of the car park. That continuing damage and loss would increase if our client was given an opportunity to challenge the development consent and the car park was open for further patrons. 12It is common ground that the claim for possession and damages for trespass was introduced in the statement of claim filed on 10 April 2000 and was not subsequently amended. While that may be so, the statement of claim did undergo further iterations. 13On 1 July 2003 an amended statement of claim was filed. 14On 22 November 2005 a further amended statement of claim was filed. 15On 6 February 2006 Nicholas J commenced hearing the proceedings, which occupied 86 hearing days from 6 February 2006 until 28 May 2008. 16On 4 May 2006 a second further amended statement of claim was filed. This added claims for loss of bargain expectation damages if the order for possession was refused. 17On 30 August 2006 a third further amended statement of claim was filed. This gave further particulars of loss of bargain expectation damages claiming loss of profits on the private hospital and the lost terminal value of the leasehold. 18On 2 March 2007 the fourth further amended statement of claim was filed, which included further particularisation of the alleged loss of profits in the expectation damages claim. 19On 26 March 2007 addresses commenced before Nicholas J. 20On 2 May 2007 the Fifth Claim was filed. 21On 6 July 2007 addresses concluded. 22The hearing before Nicholas J was a hearing on all of the issues raised on the pleadings and presented for determination by the parties, including damages. His Honour indicated that full submissions should be made to him on damages. 23In its final written submissions at the hearing before Nicholas J, Macquarie was quite precise about the relief it sought. In relation to the car park the relevant section is headed "Primary relief sought - notices set aside and an order for possession" (12 Black 6020 - references are to the appeal books). That part of its submissions continues (12 Black 6021): Ancillary relief sought - damages for unlawful possession 107. In addition, Macquarie also seeks damages with respect to the period of time that it has been denied, by reason of the issuing of invalid default and termination notices and unlawful possession of the car park, the opportunity of deriving revenue from the operation of the car park. 108. These damages were quantified by Macquarie's valuer, Mr Ellis of Landmark White, as follows ... 110. As no competing report was served in response to Mr Ellis' report, the parties should be able to agree on the figure, or at least the method of calculating, damages for loss of profits in the period from termination up to judgment. 24Macquarie then summarised its claims for relief (12 Black 6039-6040): Section 8: Summary of Macquarie's claims for relief Section 8.1: In respect of the Car Park Lease 64. Macquarie seeks orders as follows: (1) An order setting aside the Notices of Default dated 13 September 1999 and the Notices of Termination dated 17 March 2000 in respect of the Car Park Lease and Sub-Lease. (2) An order severing the Car Park Lease and the Car Park Sub-Lease from the Hospital Lease and restoring possession to Macquarie. (3) An order for damages or compensation in an amount consistent with the evidence of Mr Ellis less the amount spent by Area Health as set out in its Cross Claim. 65. Macquarie seeks the above relief pursuant to its claims for breach of the duty of utmost good faith, s 129 of the Conveyancing Act, the matters raised in its submissions in respect of the car park and by way of relief against forfeiture. Section 8.2: In respect of the Hospital Lease 66. Macquarie seeks orders as follows: (1) An order setting aside the Notices of Default dated 13 September 1999 and Notices of Termination dated 17 March 2000 in respect of the Hospital Lease. (2) An order restoring possession to Macquarie. 67. Macquarie seeks the above orders pursuant to its claims for breach of the duty of good faith, s 129 of the Conveyancing Act and its claim to be entitled to a change of use. 68. Macquarie's claim for damages beyond that identified above has only ever been pleaded as being a claim that will be pursued if, and only if, its claims for possession are declined. In the event that the Court declines Macquarie's claims for possession in respect of either the Car Park [or] the Hospital Lease, but upholds a finding that Area Health has breached the duty of good faith under the Hospital Lease, then the Court ought defer ruling (and, Macquarie submits, hearing final submissions) on Macquarie's claims as to damages until after the sale and compensation process that are required to take place under the Leases. 69. It is not possible for the Court to rule on the claim for damages until that has occurred. This is because any such claim for damages must take into account the proceeds received by Macquarie under the sale process. Macquarie also submits that it would not be productive for the parties to present final submissions on that issue at this stage in light of the fact that no ruling can be issued by the Court in any event. The parties may resolve the issue by that time - the experts already being very close to agreement on the quantum of damages. 25On 23 July 2008 Nicholas J delivered the primary judgment. Several paragraphs from the introductory section are relevant to the present application: 1. These proceedings concern the claim by [Macquarie] against [the Health District] for the recovery of possession of sites at the rear of Royal Prince Alfred Hospital (RPAH) buildings on the western side of Missenden Road, Camperdown. On 17 March 2000 [the Health District] purported to terminate agreements under which Macquarie occupied the sites and had undertaken to build thereon a private hospital and a car park. 2. The proceedings include [the Health District's] cross-claim against Macquarie for the recovery of loss and damage incurred in completing certain work which it alleged should have been carried out by Macquarie in compliance with conditions of consent to the car park development. ... 9. By its fifth amended statement of claim, Macquarie seeks an order for possession of lots 11 and 12. It also seeks declarations that the default notices and termination notices were invalid, and should be set aside, on grounds that Macquarie was not in default as alleged; the notices were invalid under s 129 Conveyancing Act 1919 (the Act); and the notices were issued contrary to express terms in the construction deed, hospital lease and car park lease which required the parties to act in the utmost good faith in the performance of their duties, and in their respective dealings with each other. 10. Macquarie also seeks declaratory relief under the hospital lease that it became entitled to change the permitted use of lot 12 for a hospital. It also seeks orders for possession of lots 11 and 12, and damages for the period in which it was excluded from the car park. Alternatively, if the notices are not set aside, Macquarie seeks relief against forfeiture ... 13. Some statistics: The hearing proceeded, with interruptions, for 86 days from 6 February 2006 until 28 May 2008. Twenty nine witnesses gave evidence. Eighty six affidavits were read. The documentary evidence consisted of 49 exhibits, which included a 12 volume tender bundle containing in excess of 5000 pages. The transcript of evidence and submissions contained 5591 pages. The parties provided extensive written submissions in chief and in reply which covered in detail a wide range of issues and sub-issues. Oral submissions were heard, with interruptions, over 19 days between 26 March 2007 and 25 May 2007. 14. The factual and legal issues were many and complex, and presented the Court with a difficult task ... I consider it to be neither necessary nor appropriate nor realistic in these reasons to deal with all of the issues and arguments raised by the parties. No utility would be served in repeating evidence and submissions on issues which were peripheral or would not affect the outcome. ... I have confined these reasons to those issues which were found to be crucial for the determination of Macquarie's claim. 26At the end of the primary judgment, which is 671 paragraphs long, Nicholas J dismissed the Fifth Claim. 27Over seven days between 1 August 2008 and 20 April 2009 Nicholas J heard the Health District's cross-claim against Macquarie. On 7 July 2009 judgment was delivered on the cross-claim with the conclusion that Macquarie was liable to pay damages to the Health District. 28Macquarie appealed from the whole of Nicholas J's decisions and the Health District cross-appealed from specific parts of both decisions. The appeal was heard over nine days in June 2010. The Court of Appeal delivered its decision on 14 October 2010. Insofar as Macquarie's appeal is concerned, the Court of Appeal determined that Macquarie was entitled to an order for possession of lots 11 and 12, and also, at its election, to an inquiry as to damages or an account from the Health District of car parking fees. 29Macquarie was directed to bring in short minutes of order, agreed as far as possible. Not all matters could be agreed and the Court dealt with the disputed matters on the papers, delivering judgment on 13 December 2010. An important feature of this decision was the Court of Appeal's determination that any inquiry as to damages should be held before a judge other than Nicholas J, although in doing so the Court made it clear that result reflected no criticism of the learned trial judge. The Court of Appeal's orders, which were subsequently entered, included: 4. (11) A declaration that by virtue of s 129 of the Conveyancing Act 1919 (NSW) [the Health District] was precluded from taking possession of the hospital and car park sites on 17 March 2000 and [the Health District's] eviction of [Macquarie] was a trespass against [Macquarie]. (12) A declaration that the Car Park Lease, Hospital Lease, Sub-Lease and Construction Deed continue to operate and bind both [Macquarie] and [the Health District]. (13) Order that there be an enquiry before a Judge or Associate Judge other than Nicholas J as to the amount of damages which are payable by [the Health District] to [Macquarie] or an account of moneys received by [the Health District] (which account would include both revenue received and reasonable expenses incurred and rental from 1 December 1999), at [Macquarie's] election, in respect of being kept out of possession of the car park site and the hospital site between 17 March 2000 and the date of being restored to possession. 30Save for the question of who should hear any inquiry, the terms of orders 4.(11) and (13) were common ground between the parties. 31On 10 June 2011 the High Court refused a special leave application by the Health District. 32On 1 August 2011 the matter returned to the Court of Appeal because issues had arisen between the parties as to the effect of Order 4.(13) concerning the inquiry. After dealing with the question of the election which Macquarie was to make, Hodgson JA turned to consider what evidence could be before the judge hearing any inquiry as to damages. His Honour concluded (Macquarie International Health Clinic Pty Limited v Sydney Local Health Network [2011] NSWCA 231): 14. I think it will be a matter for the judge hearing the inquiry to determine what procedure would be just, quick and cheap. 15. In my opinion, it would be a reasonable approach to determine that the inquiry be on the basis of the evidence before the primary judge and evidence of events occurring since the trial, with other evidence of events occurring up to the end of the trial being permitted only if substantial grounds are made out for permitting such evidence. 33Macquarie ultimately elected for an inquiry as to damages and the matter returned to this Division for that purpose. It was initially case managed by the Chief Judge in Equity, who in July 2012 directed the parties to file points of claim and a response. 34By its points of claim (amended points of claim have since been filed, but the amendments are not presently relevant) Macquarie seeks damages for being kept out of the car park and for being kept out of the private hospital site. In relation to the car park, Macquarie says it is entitled to damages represented by its loss of profit on the operation of the car park, or the lost opportunity to earn profits on the operation of the car park. Macquarie estimates the value of this claim to be approximately $28.5 million plus interest. The claim for damages for lost profits from the operation of the private hospital, or the lost opportunity to earn profits on the operation of the private hospital by reason of being kept out of the private hospital site is estimated to be approximately $176.7 million plus interest. Further, in relation to the private hospital site claim, Macquarie makes a claim in the alternative for reliance losses of approximately $24.5 million plus interest. 35In its points of response the Health District raises numerous factual and legal defences, putting in issue many of the assumptions and hypotheticals which Macquarie has pleaded as facts which will have to be found before Macquarie can make out its claim. However, in the present application the most relevant of the Health District's defences is its general answer (in the nature of a demurrer) that Macquarie "is not entitled to any damages as claimed because what is claimed is in substance by way of damages for lost opportunity to earn profits, which is not a claim for damages for trespass known to law". 36On 11 October 2012 the Chief Judge fixed the inquiry as to damages for hearing for 10 days commencing on 17 June 2013. 37On 14 March 2013 the Health District's solicitors wrote to Macquarie's solicitors: We refer to the Defendant's Points of Response. Although we consider it encompassed in the denial of entitlement to make the claim, we confirm expressly that para 7 of the Defendant's Points of Response includes a denial to entitlement to make the claim for "reliance losses" in para 17 of the Plaintiff's Points of Claim on the basis that a claim for reliance losses is not a claim for damages for trespass known to law. As the Defendant [scil. the Plaintiff] has not filed a Points of Response, we are proceeding on the basis that the Plaintiff simply joins issue and says that the Plaintiff's claim is for damages in trespass for loss of opportunity and (in the alternative) reliance loss which is a claim known to law. Please advise if you consider this is not a correct statement of the Plaintiff's claim by 5.00 pm on Friday 15 March 2013. 38The genesis of the present application is the response to that letter. On 17 April 2013 Macquarie's solicitors replied: 6. Your letter of 14 March 2013: We confirm the correctness of the assumption set out in your letter of 14 March 2013, namely, that the plaintiff's case is that reliance losses are a claim known to law for trespass and that the plaintiff's claim for reliance losses is in the alternative to its primary case for loss of opportunity. As well as suing in trespass the plaintiff sues also for breach of the covenant of quiet enjoyment, and reliance losses are clearly available as a head of damage for such breach. 39On the evidence before me, the last sentence just quoted is the first time in the 13 year history of this hard fought and complex litigation that Macquarie gave notice that it was also relying upon alleged breach by the Health District of the covenants of quiet enjoyment in the relevant leases. 40The Health District's solicitors responded with alacrity on 19 April 2013: 6. Your answer to our letter of 14 March 2013 (reminder 12 April 2013): Please advise the basis on which the plaintiff says it can maintain a claim for breach of the covenant of quiet enjoyment on any basis, since this has never been pleaded in any of the seven formal iterations of the plaintiff's statement of claim (or in any of the informal attempts at particularisation during the course of the hearing before Nicholas J) and is not the subject of any adjudication in favour of the plaintiff at trial or on appeal, where trespass was the only pleaded claim for alleged wrongful dispossession. We assume from your answer that you claim that damages for breach of covenant of quiet enjoyment encompasses both loss of opportunity and reliance loss. Please confirm the correctness (or otherwise) of that assumption and, if confirmed, state the basis you allege, as a claim known to law, for the claim of loss of opportunity or reliance loss as forms of damage known to law for breach of such a covenant. This should be done in time for us to consider before any re-listing. 41Macquarie's solicitors have never responded to this request. 42Under the case management of the Chief Judge, pre-trial preparation of evidence for the inquiry had been continuing, including while the correspondence to which I have been referring passed between the parties. As is not surprising in a difficult case such as this, there had been delays in that process. Furthermore, the estimate of two weeks for the length of the hearing had come to appear optimistic. 43On 26 April 2013 the Chief Judge vacated the hearing fixed to commence on 17 June 2013. Her Honour fixed the hearing of the inquiry as to damages before me for three weeks commencing on 14 October 2013. 44The matter came before me for the first time on 22 May 2013. On that occasion Macquarie indicated that it wished to amend the Fifth Claim to plead breach of the covenants of quiet enjoyment in the relevant leases. Macquarie provided a copy of the proposed sixth further amended statement of claim which is the subject of this application. 45At the same case management conference before me, it became obvious that, even without Macquarie's proposed amendment, three weeks would be insufficient for the hearing of evidence and the making of submissions on the inquiry. I therefore indicated to the parties that the three weeks already fixed for the hearing would be devoted entirely to the taking of the evidence. After allowing a period of time for the exchange of written submissions I fixed an additional week commencing on 2 December 2013 for submissions. 46Again, taking no account of the effect of Macquarie's proposed amendment, the parties presently expect that between them they will call 14 lay witnesses and 11 experts (two of whom are appointed jointly by the parties). 47On 28 May 2013 I heard this application. By its notice of motion of that date Macquarie seeks leave to amend the Fifth Claim to become: TRESPASS AND BREACH OF THE COVENANT OF QUIET ENJOYMENT ... 6. The Defendant's conduct amounted to: (a) an unlawful trespass, which is continuing; and (b) a breach of the covenant of quiet enjoyment under the Car Park Lease, the Hospital Lease and the Sub-lease. PARTICULARS The covenant is implied as a matter of law and/or was express by clause 12.1 of the Car Park Lease, clause 13.1 of the Hospital Lease and clause 3.2 of the Sub-Lease.

The applicable legal principles 48The parties, correctly, agreed that I had power to permit Macquarie's amendment under s 64 of the Civil Procedure Act 2005 (NSW) ("the CP Act"), which provides: (1) At any stage of proceedings, the court may order: (a) that any document in the proceedings be amended, or (b) that leave be granted to a party to amend any document in the proceedings. (2) Subject to section 58, all necessary amendments are to be made for the purpose of determining the real questions raised by or otherwise depending on the proceedings, correcting any defect or error in the proceedings and avoiding multiplicity of proceedings. ... 49Section 58 of the CP Act provides: (1) In deciding: (a) whether to make any order or direction for the management of proceedings, including: (i) any order for the amendment of a document, and ... (b) the terms in which any such order or direction is to be made, the court must seek to act in accordance with the dictates of justice. (2) For the purpose of determining what are the dictates of justice in a particular case, the court: (a) must have regard to the provisions of sections 56 and 57, and (b) may have regard to the following matters to the extent to which it considers them relevant: (i) the degree of difficulty or complexity to which the issues in the proceedings give rise, ... (v) the use that any party has made, or could have made, of any opportunity that has been available to the party in the course of the proceedings, whether under rules of court, the practice of the court or any direction of a procedural nature given in the proceedings, (vi) the degree of injustice that would be suffered by the respective parties as a consequence of any order or direction, (vii) such other matters as the court considers relevant in the circumstances of the case. 50Pausing there, I therefore proceed on the basis that the prima facie mandatory requirement for all necessary amendments to be made under s 64(2) is to be exercised subject to the requirements of s 58. In doing so it is mandatory for the Court to have regard to the provisions of ss 56 and 57 of the CP Act and permissible for the Court to have regard to the matters listed in s 58(2)(b). I have reproduced above those permissive matters listed in s 58(2)(b) which I consider to be relevant to the present application and which I have in fact taken into account. 51Section 56 requires the Court, in an application of this kind, to give effect to the overriding purpose of the CP Act, which is to facilitate the just, quick and cheap resolution of the real issues in the proceedings. 52Section 57(1) of the CP Act requires the overriding purpose to be effected having regard to the following objects: (a)the just determination of the proceedings, (b)the efficient disposal of the business of the court, (c)the efficient use of available judicial and administrative resources, (d)the timely disposal of the proceedings, and all other proceedings in the court, at a cost affordable by the respective parties. 53The enactment of the CP Act has meant that the case law developed before that legislation relating to matters such as amendment of pleadings is no longer directly relevant. Nevertheless, that case law can provide a useful guide, particularly as to discretionary considerations of the kind which fall within s 58(2)(b)(vii) of the CP Act. 54In the course of argument before me there was discussion as to the applicability, by analogy, of cases dealing with, for example, applications for leave to reopen proceedings following the delivery of judgment (e.g., Smith v NSW Bar Association (1992) 176 CLR 256 at 266-267) or where, on appeal, matters not raised below are sought to be relied upon for the first time (e.g., Suttor v Gundowda Pty Ltd (1950) 81 CLR 418 at 438). However, while cases of that kind may point to discretionary considerations which could be relevant to the present case, I do not propose to seek to apply such cases by analogy. I respectfully agree with the observation of the Court of Appeal in Walker Corporation Pty Ltd v Sydney Harbour Foreshore Authority [2009] NSWCA 178 ("Walker Corporation") (upholding a decision of Biscoe J in the Land and Environment Court refusing a party leave to amend its points of claim after the matter had been remitted to his Honour from the Court of Appeal) where at [92] Basten JA (with whom Beazley and Young JJA agreed) said: ... The danger of relying upon analogy is that it will distract attention from the specific circumstances of the particular case. Appropriate guidelines promote uniformity of approach and are desirable; guidelines adopted by analogy may be helpful in some situations, but not in others. 55In determining this application I have applied the provisions of the CP Act to which I have referred. Nevertheless, drawing upon considerations which have been identified as relevant in cases of the kind cited in paragraph 54 above, I have identified the following matters which (with one exception) I consider to be relevant in the circumstances of this case pursuant to s 58(2)(b)(vii) of the CP Act: (a) the principle of finality of litigation, particularly after the entry of judgment and, a fortiori, after appeal; (b) (not relevant to this application) whether the application is based on fresh evidence either not reasonably obtainable before the hearing or relating to events after the hearing; (c) the reasons for the amendment application and why the subject matter of the application had not been pleaded earlier, including whether a forensic decision had been made not to do so; and (d) whether the defendant would have taken a different forensic course (including raising different legal issues, calling additional evidence and pursuing other lines of cross examination) had the proposed new issue been pleaded before the matter had been heard.

Macquarie's submissions 56Macquarie's submissions may be summarised as follows. 57Macquarie submitted, albeit unsupported by affidavit, that the amendment was sought because the Health District had alleged that loss of bargain damages were unknown to the law of trespass. Macquarie's legal advisers had not appreciated that such a point could or would be taken. 58Macquarie's previous amendment applications should not count against it. Each was made for its own unique reasons and none of them involved attention being directed to the claim in trespass and for consequential damages. 59The proposed amendment raised no new material facts. Causes of action identified in the pleading were helpful signposts, but judgment could be given on any cause of action established by the facts alleged. 60Although there had been no express pleading that the leases contained a covenant of quiet enjoyment, it could "hardly be controversial" such a covenant applied both by express provision and implication. 61No new evidence or factual findings would be required. Macquarie would not seek to adduce any additional evidence solely directed to the case introduced by the amendment. The amendment constituted a different legal characterisation of the unlawful conduct in which the Health District had already been found to have engaged. Macquarie's counsel submitted that the amendment was "not adding to the burden of [the Health District] other than an extra page or two of submissions in the law". 62The proposed amendment falls within the scope of the damages inquiry. The Court of Appeal's order for the inquiry did not refer to trespass per se and should not be read as being so limited or confined. 63The amendment occasioned no prejudice to the Health District. In particular, no investigation of Macquarie's alleged breaches of the leases that had not been raised before Nicholas J would be necessary because there was clear case law that Macquarie's entitlement to quiet enjoyment persisted even if it was in breach. The Health District's evidence as to what it would have done had the amendment been pleaded before trial should be treated with "healthy scepticism".

The Health District's submissions 64The Health District's submissions may be summarised as follows. 65The number and comprehensiveness of Macquarie's earlier amendments demonstrate that considerable thought had been given by Macquarie and its legal advisers at various times about how Macquarie wished to put its case. While the facts do not justify an inference that a tactical decision was taken earlier not to advance a case based on breach of quiet enjoyment, there had been earlier opportunities to amend Macquarie's case and tactical choices had obviously been made about other matters. Notwithstanding these opportunities, Macquarie's case had consistently remained one for damages in trespass. No adequate explanation for the late amendment had been proffered, whether by affidavit or otherwise. 66Any implied covenants as to quiet enjoyment in the leases must have given way to the express ones which apply "while the tenant complies with its obligations under the lease". The existing case law relied upon by Macquarie did not extend to breaches of essential obligations which had denied the Health District the substantial benefit of its bargain. The Court of Appeal had found that a case for repudiation by Macquarie was open but on the claim as litigated did not need to determine it. The Health District wished to advance a case that Macquarie's repudiation (if it be such) would be an answer to the damages proposed to be claimed for the alleged breach of the covenants of quiet enjoyment. 67The Health District, in an affidavit sworn by its solicitor, said that it would have taken a number of steps had the allegation of breach of quiet enjoyment been pleaded before the trial. These included: (a) Submitting that the breach of quiet enjoyment clauses could not apply because Macquarie as tenant had not complied with its obligations under the relevant lease or sub-lease. Evidence would have been led about those alleged breaches, including Macquarie's breaches of its obligation of utmost good faith to the Health District, being breaches additional to those which had been relied upon in the proceedings to date. (b) The Health District would have asked Nicholas J and the Court of Appeal to make findings on breaches by Macquarie and whether it had repudiated or renounced its obligations under the relevant transaction documents, on the evidence before those courts and on further evidence that the Health District would have led. The Health District listed a number of alleged breaches by Macquarie which had not been litigated which it would have wished to have raised in answer to an allegation of breach of the covenant of quiet enjoyment. (c) The Health District would have obtained an expert report on damages for the breaches now sought to be alleged in the amendment, insofar as that damage differed from the damages claim which Macquarie had already brought. This would have involved an investigation of whether no damages had been suffered by reason of the absence of a lawful occupation certificate for the car park and that Macquarie had no intention to build the hospital. (d) The Health District would have sought findings from the trial judge in relation to all of these additional breaches and, if unsuccessful, would have considered whether or not to appeal findings in relation to those breaches. (e) The facts and circumstances surrounding the additional alleged breaches would have been the subject of cross-examination of Macquarie's witnesses (principally Dr Wenkart but perhaps others) and additional disclosure would have been sought. 68In the course of oral argument, the Health District submitted that if the amendment were to be allowed, taking into account the new matters it would wish to investigate and argue, an additional several days' of court time would be required over that already set aside for the hearing, as well as more time for submissions. 69Macquarie had failed to articulate, despite being requested to do so (see paragraph 40 above), why there was a basis in law for damages for lost opportunity or reliance loss flowing from breach of a covenant of quiet enjoyment when there was no loss of a bargain. 70Finally, the subject matter of the amendment was statute barred. There was insufficient commonality of fact to engage ss 65(2)(c) and (3) of the CP Act, which would have cured any limitation issue by deeming the amendment to take effect from the date on which the proceedings had commenced.

The determinative circumstances 71The statutory regime for allowing amendments which I have outlined above must be applied by reference to the particular circumstances of this case. I have resolved this application against Macquarie by reason of the cumulative effect of the following five matters when considered in accordance with that statutory regime. As will become apparent, these matters assume importance at various points in the process which the CP Act requires the Court to follow.

Not a necessary amendment 72First, the mandatory aspect of s 64(2) of the CP Act is not engaged because the proposed amendment is not "necessary ... for the purpose of determining the real questions raised by or otherwise depending on the proceedings, correcting any defect or error in the proceedings and avoiding multiplicity of proceedings". In this case the application is not put on the basis of correcting any defect or error or avoiding multiplicity of proceedings. Attention must therefore be directed to "the real questions raised by or otherwise depending on the proceedings". 73Without foreclosing the circumstances to which s 64(2) might apply, in most cases (especially where new evidence in not relied upon) its applicability will usually be more limited when an amendment application is made after the entry of judgment either at first instance or on appeal. This is because, in the ordinary course, it is to be expected that the real questions between the parties should have emerged and been determined through the trial or appellate process which has led to judgment being entered. 74The present application is brought after entry of judgment on appeal. The only decision which bears any factual similarity which either the parties or I have found is Walker Corporation. For my purposes the utility of that decision goes no further than being an example of the application of the kinds of discretionary considerations which I am applying in this case. Its outcome does not bind me; its learning on the limitations of analogy (cited in paragraph 54 above) does. 75I have been unable to find any authority (and none has been cited to me) where a new cause of action has been sought to be added after judgment on appeal, whether or not in reliance on new evidence. Absent an application based on new evidence the only appellate example referred to in Ritchie's Uniform Civil Procedure NSW is Classic Gourmet Sausages Pty Ltd v Leda Commercial Properties Pty Ltd [2000] FCA 389; (2000) 97 FCR 313, where an amendment was allowed on appeal to add the correct corporate plaintiff. However, the circumstances of that case (where the parties had always conducted themselves as though the relevant corporate plaintiff had been a party) bear no comparison to this application. 76For present purposes the "real question raised by or otherwise depending on" these proceedings was what (if any) liability the Health District had to Macquarie by reason of the Health District's conduct in purporting to terminate the agreements between them. That has been answered by the Court of Appeal and the proposed amendment is not necessary to achieve a purpose which has already been fulfilled. 77That this is so is demonstrated by the fact that all that remains is the conduct of the inquiry as to damages. The rights of the parties have now been determined by the Court of Appeal. As the Court of Appeal observed in Milltec Australia Pty Ltd v Burnes [2006] NSWCA 13 per Handley JA (Hodgson JA and M.W. Campbell AJA agreeing) at [13] (emphasis added): ... the claim was for damages for a common law tort and the onus on a plaintiff who does not prove his damages, but seeks an inquiry for this purpose, is to establish his cause of action at the trial. A plaintiff is not entitled to an inquiry to discover whether or not he has a cause of action. The rights of the parties must be determined at the trial and any accounts or inquiries which are then ordered "follow merely consequentially": McGoroy v Alderdale Estate Co Ltd [1918] AC 503, 511 and generally Spencer Bower Turner & Handley "Res judicata" 1996 PP76-8.

Ample opportunity for amendment 78The second notable circumstance is the length and scope of these proceedings. They have already exceeded the length of the Trojan War by three years. As will be apparent from the procedural history set out above, the proceedings at first instance and on appeal have occupied many weeks of hearing time with every possible issue being raised. 79Over the history of the proceedings Macquarie amended its pleadings several times. At all times it has been represented by competent solicitors and senior and junior counsel. I accept the Health District's submission that while an inference cannot be drawn that a tactical decision was made on some earlier occasion not to advance the case based on breach of the covenant of quiet enjoyment, Macquarie has obviously reconsidered its case on several occasions and has never thought to divert from or expand its fundamental case in trespass. The fact that it has not done so before now is an important matter weighing against its application.

Macquarie's explanation does not assist 80Third, Macquarie's explanation for the proposed amendment - that it is a response to the unforeseen and unforeseeable demurrer pleaded by the Health District - does not advance its case. This is because the Health District's defence is itself a response to Macquarie's attempt to broaden its damages claim for the purposes of the inquiry beyond what it had argued at both first instance and on appeal. 81As is especially apparent from its final submissions before Nicholas J (set out in paragraph 24 above), it had only ever sought its past losses in relation to the car park. The claim which it now seeks to agitate in relation to both the car park and the private hospital for loss of profit, loss of opportunity to make a profit and reliance losses were not part of its case prior to the inquiry being ordered. The Health District has done no more than respond to the expanded damages case which Macquarie wishes to run as part of the inquiry. In those circumstances, Macquarie's claim of surprise does not assist its application.

The amendment is outside the inquiry 82Fourth, I do not accept Macquarie's submission that its proposed amendment falls within the scope of the damages inquiry. Order 13 made by the Court of Appeal on 13 December 2012 (set out in paragraph 29 above), in referring to "being kept out of possession" and "being restored to possession", clearly confines the subject matter of the inquiry to damages for trespass. If there is any ambiguity, then the content of Order 13 must be determined by reference to the declaration in Order 11, which refers to trespass. That declaration itself accurately reflects the pleadings and the way the case was argued both at first instance and on appeal, which nowhere and at no time sought to rely upon breach of any covenant of quiet enjoyment. Damages for the tort of trespass are by no means necessarily identical to contractual damages for breach of the covenant of quiet enjoyment.

The Health District would have taken a different course 83Fifth, while Macquarie's submissions that the proposed amendment raises no new material facts, requires no new evidence and simply constitutes a different legal characterisation of unlawful conduct already found to have been engaged in by the Health District may be true from Macquarie's point of view, I do not accept that is the end of the matter for at least two reasons. 84First, the procedural history of this case demonstrates that every point has been taken and no quarter has been given. In those circumstances, I have no difficulty in accepting the Health District's evidence and consequential submission that had the subject matter of the proposed amendment been raised before Nicholas J, the Health District would have taken the steps set out in paragraph 67 above. I reject Macquarie's submission that the Health District's evidence on this point should be treated with scepticism, healthy or otherwise. The Health District's evidence is inherently plausible and reasonable. It is not fanciful or far-fetched and is on its face seriously advanced by an officer of the Court. 85Second, Macquarie's answer to the Health District's evidence about what it would have done is not to attack the bona fides of that evidence. Rather, Macquarie submits that it is all unnecessary once the law in this area is properly understood. Macquarie relied upon the statement of Hill J (with whom Gallop and Gyles JJ agreed) in Hawkesbury Nominees Pty Ltd v Battik Pty Limited [2000] FCA 185 ("Battik") at [50] that: ... it is incorrect as a matter of law to say that the obligation to give quiet enjoyment is dependent upon payment of rent and outgoings so that non-payment relieves the landlord thereafter from the obligation, even where the obligation is expressed to be subject to the lessee complying with the provisions of the lease. Reference may be made to Dawson v Dyer (1833) 5 B&Ad 584 110 ER 906, Edge v Boileau [1885] 16 QBD 117 at 119, Halsbury, Laws of England (4th ed) at 245-3305, Taylor v Webb [1937] 2 KB 283, per DuParcq J at 292 and Dowse v Wynard Holdings Limited [1962] NSWR 252 at 263. The two covenants are independent covenants. 86In its terms, that appears to be a correct statement of the law. Nevertheless, I do not understand Battik or any of the other cases referred to by Hill J, also called in aid by Macquarie, as being such a clear and definitive answer to the matters which the Health District says it would have raised that I should not take the Health District's evidence as to what it would have done into account. 87It is not appropriate for me on an application of this kind to form any definitive view as to the correct legal answer (and I have not done so) in relation to the propositions which the Health District wishes to advance. Those propositions were summarised by the Health District's counsel as being, first, that there was either repudiation or breaches of obligations by Macquarie such that Macquarie was disqualified from seeking damages for breach of covenant of quiet enjoyment as a matter of liability and, second, such repudiation or breach would also have a serious impact on the quantum of any damages. 88For present purposes it is enough that I am satisfied that the authorities to which Macquarie has referred do not make the matters which the Health District says it would have advanced unarguable. The question of repudiation by Macquarie remains open for determination. The nature and scope of the breaches by Macquarie which the Health District wishes to allege, especially in the context of a development of the kind contemplated by the parties, means that the cases upon which Macquarie relies are arguably distinguishable. 89I should also record that in the course of argument I raised with Macquarie's counsel whether the prejudice alleged by the Health District could be ameliorated if Macquarie admitted the additional breaches which the Health District sought to rely upon. Counsel sought instructions and informed me that no such admission would be made, even as a condition of leave to amend, and that any additional alleged breaches would be strenuously contested. 90Finally, on this aspect of the matter I give some, but not determinative, weight to the fact that Macquarie has not explained, either in correspondence or in the course of argument before me, precisely how it says there is a basis in law for damages for lost opportunity or reliance loss flowing from breach of a covenant of quiet enjoyment when there was no loss of bargain.

Application of the CP Act 91I now turn to apply the provisions of the CP Act to the facts and circumstances of this case as I have found them. As I have already recorded, the parties accepted that I had power under s 64 of the CP Act to allow the amendments sought by Macquarie. As I have concluded that those amendments do not fall within the subject of the inquiry as to damages ordered by the Court of Appeal, in practical terms allowing the amendment would be to permit Macquarie to reopen on the new issue of liability for breach of the covenants of quiet enjoyment and then to determine any damages consequential upon any established breach of those covenants at the same time as inquiring into the damages for trespass. In an appropriate case that could be done. This is not such a case.

Section 64(2) of the CP Act 92For the reasons set out in paragraphs 72 to 77 above I do not consider Macquarie's proposed amendments to be "necessary" in the sense referred to in s 64(2) of the CP Act. That is not to say that Macquarie's application fails at that point. The Court must go on to consider the application against the background of s 58. However, the consequence of my conclusion is that Macquarie's application does not have the advantage of the presumption that it must be allowed subject to any countervailing considerations flowing from s 58.

Section 58 of the CP Act 93I therefore next consider the matters that arise under s 58. Even if I am wrong in the conclusion that I have just expressed and the amendment is "necessary" for the purposes of s 64(2), I would still have reached the conclusion that the amendment ought not be allowed by reference to s 58. 94Section 58 requires the Court to act in accordance with the dictates of justice. In doing so it must have regard to the provisions of s 56 and s 57.

Section 56 of the CP Act 95Insofar as s 56 is concerned, I do not think allowing the application will facilitate the just, quick and cheap resolution of the real issues in the proceedings. "Just, quick and cheap" is an inter-related rather than simply cumulative notion (an example of hendiadys, albeit with three words) and must take into account the position of both parties to the litigation. As I have set out in paragraphs 72 to 77 above, the real issues in the proceedings have been resolved, save for the determination of the quantum of damages in accordance with the inquiry. 96To allow the amendment will lengthen the time of the hearing and the expense to be incurred by all parties. Insofar as justice is concerned, Macquarie has had ample opportunity to articulate its case both at first instance and in the Court of Appeal. Any injustice to it by not now being allowed to advance a case based on breach of the covenants of quiet enjoyment is considerably outweighed by the injustice to the Health District of not having had the opportunity to advance the matters that it says it would have advanced if the amendment had been pleaded before Nicholas J. Experience also teaches that there is a real prejudice to a party in the position of the Health District if it now had to pursue the matters it would otherwise have done before, given that would have to happen outside the context of a trial which, absent special order, should be the occasion on which the parties engage on all issues.

Section 57 of the CP Act 97The Court must also take into account the objects set out in s 57 of the CP Act (see paragraph 52 above). For the reasons I have just advanced in paragraphs 95 and 96 above, I do not consider that any of those objects would be advanced by permitting the amendment. The injustice to the Health District which I have identified is inimical to the just determination of the proceedings. 98The additional time required for the agitation of a new area of liability, including time for the Health District to deal with all the matters which it says it would wish to raise in answer, will obviously not assist the efficient disposal of the business of the Court. This is true both for the efficient disposal of these proceedings insofar as they remain to be dealt with as an inquiry into damages, as well as consuming time that could be devoted to the hearing of other cases for litigants who have not already claimed so much of the Court's time and attention as Macquarie. 99These same considerations demonstrate that allowing the amendment would not be consistent with the objects set out in ss 57(c) and (d) of the CP Act.

Section 58(2)(b) of the CP Act 100Next, the discretionary matters set out in s 58(2)(b) (see paragraph 49 above) must now be take into account. 101I have allowed for the degree of difficulty or complexity to which the issues in the proceedings give rise. There is no doubt that the issues in this case were and remain difficult and complex. However, given the skilled representation of both parties and the degree to which every point has already been taken, I do not consider the fact that the proceedings thus far have been difficult or complex to be a point in favour of Macquarie's application. This is not a case where Macquarie can credibly submit that something was overlooked due to the complexity of the matter. 102As for the matters comprehended by s 58(2)(b)(v), I have dealt with the impact upon my considerations of the several opportunities which Macquarie has taken to amend its claim in paragraphs 78 to 79 above. It has both had and taken advantage of multiple opportunities to make its litigious bed. Given the stage the proceedings have reached, it should now be required to lie in it, unless there is no real prejudice to the Health District and the other matters I am required to take into account do not militate otherwise. There is such prejudice and the other factors I have set out point against the amendment. 103As to the degree of injustice that will be suffered by the respective parties, being the matter identified in s 58(2)(b)(vi), I repeat what I have said in paragraphs 83 to 90 and 96 above.

Other relevant matters 104Finally, having regard to s 58(2)(b)(vii), I turn to the matters which I have set out in paragraph 55 above. 105At the stage the proceedings have now reached, the principle of finality of litigation is a very substantial obstacle in the way of Macquarie's application. Given the view I have taken of the length of the proceedings to date, Macquarie's ample opportunities for amendment and the injustice to the Health District (see paragraphs 78 to 79, 83 to 90 and 96 above) the principle of finality in litigation fortifies me in the conclusion that Macquarie's application should not be allowed. 106No question of fresh evidence arises in the present application. I have included it in paragraph 55 above solely for the purposes of completeness. 107Insofar as the reasons for the amendment application are concerned, I repeat what I have set out in paragraphs 80 to 81 above. 108In relation to the impact upon the Health District and the course it would have taken had the subject matter of the amendment been pleaded at or before the hearing before Nicholas J, I repeat what I have said in paragraphs 83 to 90 above. 109Finally, I note for completeness that because of the views to which I have otherwise come, I have not had to decide the Health District's limitation argument (see paragraph 70 above). I would in any event have declined to do so because the complexity of the facts in this case mean that determination can only properly be made at trial: Wardley Australia Ltd v Western Australia (1992) 175 CLR 514 at 533.

ORDERS The Orders of the Court are:

The plaintiff's notice of motion filed on 28 May 2013 is dismissed.
The plaintiff is to pay the defendant's costs of and incidental to that motion.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 13 June 2013

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