Section 58(2)(b)(vii) - other matters - the reasons for the amendment application
140The next other matter which the Court considers relevant in the circumstances of the case is the very important issue summarised by Vickery J as "whether a satisfactory explanation has been given for seeking the amendment at the stage when it is sought". At [55] of the First Amendment Judgment I formulated this consideration slightly more widely: "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". There is no difference of substance between the two formulations.
141The Health District challenged the adequacy, but not the veracity, of the explanations offered by Macquarie as to why its proposed amendments were being sought now and not earlier.
142The reasons for the delay in advancing the excavation costs amendment can be summarised as follows:
(1)Prior to attending conferences with and receiving conclave reports from the quantity surveying and construction cost and town planning experts retained by Macquarie (Messrs Meredith, Nash and Barker) in the period from late May, June or July 2014 (in the contexts of such experts preparing to give concurrent evidence in the proceedings) none of Macquarie's advisers were aware of, or considered, the existence of a possible head of damages for consequential loss in the form of the costs required to be expended to restore the land to its prior state of excavation consequent upon the Health District performing work which has covered over the prior excavation to the land and no forensic decision had been taken not to advance such a claim.
(2)As a result of the conferences and receipt of reports referred to in the preceding sub-paragraph, it became apparent to Macquarie's advisers that there may be a category of costs, not covered by any specific pleading, which Macquarie would incur in preparing the hospital site for the construction of the hospital on re-entry, namely the costs of having to re-perform excavation and other earthworks previously undertaken by Macquarie in the period 1997-1999 as a result of the site being covered in hard stand concrete by the Health District after its re-entry, which re-entry has been declared by the Court of Appeal to have constituted a trespass.
(3)In about mid-late July 2014 Macquarie's counsel asked Mr Meredith, on an informal basis, to provide an informal estimate of the costs likely to be incurred in bringing the hospital site to the same state it was in at about March 2000 and subsequently to prepare a report of such costs.
(4)In about late July 2014 Macquarie's counsel advised their client that in their view there was at least another arguable basis for claiming the excavation costs and prepared an appropriate draft amendment which was included in the proposed amended pleading provided to the Health District's senior counsel on 4 August 2014.
143The Court accepts the foregoing as a proper and adequate explanation of why the excavation costs had not been considered earlier. These proceedings are heavily dependent on expert evidence and the Court accepts that it is entirely possible for experts to raise matters after they have prepared their reports but prior to giving concurrent evidence in court which raise additional issues in the minds of a party's lawyers. There is nothing in the explanation which militates against the excavation costs amendments being allowed.
144Macquarie's explanation for the delay in relation to the mesne profits claim was as follows. On 14 January 2014 the Macquarie served a report from its banking expert Mr Batiste. This was one of the reports which I gave leave to the Macquarie to rely upon at the conclusion of the openings in February 2014. In general terms Mr Batiste's report was to the effect that the hospital development would have been fundable and he proposed what, in his expert opinion, he considered would have been the terms and conditions for a loan that would be imposed by a lender. Those terms and conditions included that any proposal would need to be supported by a valuation. It therefore became apparent to Macquarie's legal advisers that, as part of the hypothetical exercise, a valuation of the hospital would be required. The fact that this necessity arose out of Mr Batiste's report explains why the valuer, Mr Lister, did not begin to play his current role in the proceedings until after the case had been opened in early February 2014 (see also the transcript extract in paragraph [25] above).
145On 28 March 2014 Macquarie's solicitor provided Mr Lister with a letter of instruction. His expert report was received on 6 May 2014 and served on the Health District the next day. Around the same time after receipt of Mr Lister's first report a conference occurred between Mr Lister and Macquarie's counsel which resulted in Macquarie becoming aware for the first time of an expert opinion (being from Mr Lister) that the hospital site had a market rental value in excess of the contract rent, although what that value was had not yet been quantified.
146It was the receipt of Mr Lister's informal, unwritten advice in conference that led to a further letter of instruction being issued to him on 22 May 2014 to quantify the market rental value. That letter of instruction was also immediately provided to the Health District. On 26 May 2014 Mr Dubler SC, on behalf of Macquarie, informed the Court in general terms of the proposed mesne profits amendment (see the transcript extracted in paragraph [25] above). It was Macquarie's solicitor's unchallenged evidence that prior to those mid-May exchanges with Mr Lister, Macquarie was not aware of the availability of any expert evidence that the hospital site had a market rental value in excess of the contract rent.
147Mr Lister originally informed Macquarie's solicitor that he would require four weeks from 22 May 2014 to complete a further expert report. A draft of this report was received on 1 July 2014 but it did not include his assessment of market rent under the hospital lease and its capital value from March 2000. Despite being followed up on numerous occasions by Macquarie's solicitor, his final expert report was not received until 29 August 2014 and was served on that day on the solicitor for the Health District. As it happened, the final valuation, while to some extent dependent upon Mr Lister's work, was for reasons of expertise ultimately undertaken by Messrs Coleman and Lonergan in their report served on 1 September 2014.
148Mr Dubler SC accepted that the Court could find, and it does find, that Macquarie had made a deliberate forensic decision to mount its lost profits case in relation to the hospital site and seek to argue that such a calculation either fell within the concept of mesne profits or was a legally valid alternative basis upon which to assess Macquarie's damages in trespass. However, the Court also accepts that until May 2014, through no fault of its own (see paragraph [130] above), Macquarie did not have an evidentiary basis to assert what might be described as a more traditional mesne profits measure of damages that yielded a result greater than the contract rent. In those circumstances, the Court does not consider Macquarie to have made a forensic decision of the kind which would count against allowing the amendment. The situation, for example, would be different if in pleading and opening the lost profits case Macquarie had had available to it evidence which supported a traditional mesne profits claim greater than the contract rent but less than the lost profits figure and had made a forensic decision to advance the latter rather than the former because the latter was a higher figure.
149Insofar as Macquarie seeks to assert the new methodology in relation to its existing mesne profits claim in relation to the carpark site, the Court is also satisfied that methodology was not known to Macquarie until Mr Lister's input in mid-May 2014.
150Accordingly, the Court accepts that Macquarie's explanation in relation to the lateness of the mesne profits amendment is a proper and adequate one. In those circumstances the delay in Macquarie's bringing of the mesne profits amendment is satisfactorily explained and does not constitute a factor militating against the granting of its amendment application.
151In relation to the compensation provision amendment, the evidence was that this was first thought of in connection with amending Macquarie's reply but it then became apparent that it would also need to be included in Macquarie's claim in chief. Macquarie's solicitor was frank in her explanation, namely that the matters set out in paragraph 2(2) of the proposed amended reply were only first considered in early August 2014 and, to that extent, had been overlooked by Macquarie's legal advisers. Macquarie made clear in its submissions that it did not intend to suggest that Macquarie's advisers were not aware of the existence of the compensation clauses, but that it was the case that they had not considered the possibility of pleading them in reply until recently and no forensic decision with their client had been made previously about such a possible pleading.
152In challenging the adequacy of this explanation, the Health District drew attention to the fact that the compensation clauses of the carpark and hospital leases had been the subject of consideration in a limited manner in the Court of Appeal (Macquarie International Health Clinic Pty Ltd v Sydney South West Area Health Service [2010] NSWCA 268):
Compensation clauses: effect of subsequent events
349. Following delivery of the first judgment in July 2008, Macquarie became aware for the first time that Area Health did not accept and in fact intended to dispute the validity of the compensation clauses (affidavit of P W Moran 22 September 2009 par 15).
350. On 16 September 2009, Macquarie commenced proceedings in the Equity Division (4450/09) seeking a declaration that the compensation clauses are valid, and in the alternative a declaration that Macquarie is entitled to restitution at general law. A document prepared on behalf of Area Health by Mr Burton and his junior Mr Bruckner dated 21 December 2009 for the purposes of those proceedings (Truncated Bundle tab 7) set out contentions of Area Health supporting the invalidity, inapplicability and/or ineffectuality of the compensation clauses in the circumstances of this case.
351. In my opinion, the contention of Area Health, raised for the first time after delivery of the first judgment, that the compensation clauses are invalid, inapplicable and/or inefficacious in the circumstances of this case, is a matter not reasonably foreseeable by Macquarie or the primary judge, which materially affects the question of whether the decision of the primary judge on relief against forfeiture and restitution was correct.
352. In relation to damages for personal injuries, where evidence is sought to be led of events happening after judgment as showing that the award was incorrect, the following approach is supported by the decision of Lord Wilberforce in Mulholland v Mitchell [1971] AC 666. His Lordship stated that the matter was one of discretion and degree, and continued as follows (at 679 - 680):
Negatively, fresh evidence ought not to be admitted when it bears upon matters falling within the field or area of uncertainty, in which the trial judge's estimate has previously been made. Positively, it may be admitted if some basic assumptions, common to both sides, have clearly been falsified by subsequent events, particularly if this has happened by the act of the defendant. Positively, too, it may be expected that courts will allow fresh evidence when to refuse it would affront common sense, or a sense of justice.
353. This approach has been followed by this Court in Radnedge v Government Insurance Office of New South Wales (1987) 9 NSWLR 235 and Doherty v Liverpool District Hospital (1991) 22 NSWLR 284. See also Barder v Caluori [1988] AC 20, Murphy v Stone-Wallwork (Charlton) Limited [1969] 1 WLR 1023, Livesey (formerly Jenkins) v Livesey [1984] UKHL 3; [1985] AC 424, Vernon v Bosley (No 2) [1999] QB 18.
354. In my opinion, if the compensation clauses are invalid or inapplicable or ineffectual, Macquarie would have an arguable case for some relief on the basis of relief against forfeiture/ unjust enrichment/ restitution: cf Clancy v Salienta Pty Limited [2000] NSWCA 248; (2000) 11 BPR 20,425, especially at [202] - [252] per Giles JA, and cases there cited. The invalidity and/or inapplicability and/or ineffectuality of clauses manifestly intended to provide some restitution and to prevent unjust enrichment could itself be a ground for granting this kind of relief.
355. Accordingly, had Macquarie's s 129 case failed, in my opinion it would have been appropriate to set aside the primary judge's decision on relief against forfeiture, and to refer all questions of relief against forfeiture/ unjust enrichment/ restitution to be decided in the fresh proceedings. This course would have had the additional advantage of ensuring that possibly embarrassing questions of issue estoppel did not arise in those proceedings.
153The Equity Division proceedings referred to in paragraph [350] of the Court of Appeal's judgment were apparently discontinued and Macquarie received a partial costs order because the issues raised were not required to be determined. The document referred to in paragraph [350] setting out the Health District's contentions in relation to the compensation clauses was also tendered in evidence before me to explain the factual and legal issues (including an argument that the clauses were void for uncertainty) which the Health District said it would wish to raise if Macquarie was permitted to amend to rely upon the compensation provisions.
154The Health District's challenge to the inclusion of the compensation provisions was, therefore, twofold. First, I understood the Health District's submission to be that Macquarie's explanation was inadequate because the compensation provisions had been within the cognisance of Macquarie's legal advisers. Second, to allow the amendment would open up significant legal and factual issues which would require exploration.
155As to the first of these, the fact that the compensation provisions had generated the litigious activity which they had in 2009 and 2010 does not detract from the validity of the explanation for their omission from the damages inquiry. Because of the way the Court of Appeal decided the case, it was not necessary for the compensation provisions to feature any further. A great deal of litigious water has passed under the bridge in the last four years and, in a case of such complexity, I accept the explanation that the potential role of these particular clauses in the context of the damages inquiry had been overlooked by Macquarie's legal advisers. Where there has been such an oversight on the part of a party's legal advisers, if it can be cured by an amendment which does not cause irremediable prejudice to the other party, then the Court will generally be disposed to permit such an amendment rather than to visit the consequences of their error on the lawyers' client.
156Insofar as the Health District sought to rely on the need to explore new issues of fact and law raised by the compensation provision amendments, I consider these in paragraphs [125] to [126] above and paragraph [159] below.