Monto Coal 2 Pty Ltd & Ors v Sanrus Pty Ltd as trustee of the QC Trust & Ors [2014] QCA 267
[2014] QCA 267
Court of Appeal (Qld)|2014-10-17|Before: Margaret McMurdo P and Morrison JA and Flanagan, J, Separate reasons for judgment of each member of the Court, each concurring, as to the order made
PROCEDURE UNDER UNIFORM CIVIL PROCEDURE RULES AND PREDECESSORS
– AMENDMENT
– where the respondents and the first appellant entered into a joint
Source
Original judgment source is linked above.
Catchwords
PROCEDURE – SUPREME COURT PROCEDURE – QUEENSLAND –PROCEDURE UNDER UNIFORM CIVIL PROCEDURE RULES AND PREDECESSORS– AMENDMENT– where the respondents and the first appellant entered into a jointventure agreement for the carrying outof a coal mining project – wherethe joint venture was suspended by the first appellant – where therespondents initiatedproceedings on 1 October 2007 alleging that the firstappellant’s suspension was a breach of contract and in consequence therespondents lost the opportunity to sell coal and thereby suffered loss –where the appellants defended the claim on the basisthat, inter alia,the project was not economically viable – where the respondents deniedthat the project was not economically viable in theirreply – whereamendments were made to the pleadings in 2010 – where the proceedings wereadded to the supervised caselist in early 2011 – where the supervisingjudge made a number of orders in early 2011 for the appellants to provide
particulars
as to the allegation the project was not economically viable and for
the respondents to file an amended reply and provide particulars
as to the
project’s economic viability – where the respondents failed to
provide particulars as to the project’s
economic viability from 2006
onwards – where the proceedings were delayed during 2012 due to settlement
negotiations –
where further amendments were made to the pleadings in 2011
by the respondents and in early 2013 by the appellants – where
the
respondents were ordered on a number of occasions to provide an amended reply
and particulars of the project’s economic
viability in early 2013 –
where the respondents served an amended reply in late 2013 without the
allegation that the project
was economically viable and stated that therefore no
particulars were required – where the appellants wrote to the respondents
alleging that the statement of claim failed to plead a causal nexus between
breach and damage – where the appellants applied
to the supervising judge
for paragraphs of the statement of claim to be struck out – where the
respondents sought to file a
proposed further amended statement of claim
that pleaded that the project would have been profitable – where the
appellants
opposed leave being granted for the proposed further amended
statement of claim – where the supervising judge granted leave
to the
respondents to file the proposed further amended statement of claim –
where the matter had not been set down for trial
– where disclosure had
not yet been finalised – whether the respondents’ proposed
amendments and the appellants’
objection were made pursuant to r 378 and r
379 of the Uniform Civil Procedure Rules 1999 (Qld) (“UCPR”)
– whether the placing of a matter on the supervised case list ousts r 378
of the UCPR – whether
the principles in Aon Risk Services Australia Ltd
v Australian National University apply to amendments made pursuant to
r 378 and r 379 of the UCPR, namely prior to the matter being set down
for trial – whether
leave ought to have been granted to the respondents to
amend their statement of claim
Uniform Civil Procedure Rules 1999 (Qld), r 5, r 378, r 379
Adam P Brown Male Fashions Pty Ltd v Philip Morris Inc (1981) 148
CLR 170
[1981] HCA 39, cited
Aon Risk Services Australia Ltd v Australian
National University (2009) 239 CLR 175
[2009] HCA 27, applied
Brocx v
Hughes (2010) 41 WAR 84
[2010] WASCA 57, considered
Cement Australia
Pty Ltd v Australian Competition and Consumer Commission (2010) 187 FCR 261
[2010] FCAFC 101, applied
Edwards v State of Queensland [2012]
QSC 248, cited
Groves v Groves [2011] QSC 411, applied
Hartnett
v Hynes [2009] QSC 225, applied
House v The King (1936) 55 CLR
499
[1936] HCA 40, followed
Mokrzecki v Popham [2013] QSC 123,
cited
Re Jokai Tea Holdings Ltd [1992] 1 WLR 1196,
considered
Rigato Farms Pty Ltd v Ridolfi [2001] 2 Qd R 455
[2000] QCA
292, followed
Takemoto v Moody’s Investors Service Pty Limited
(No 2) [2010] FCA 622, considered
The Beach Retreat
Pty Ltd v Mooloolaba Marina Ltd [2008] QCA
224, distinguished
Judgment (469 paragraphs)
[1]
PROCEDURE - SUPREME COURT PROCEDURE - QUEENSLAND - PROCEDURE UNDER UNIFORM CIVIL PROCEDURE RULES AND PREDECESSORS - AMENDMENT - where the respondents and the first appellant entered into a joint venture agreement for the carrying out of a coal mining project - where the joint venture was suspended by the first appellant - where the respondents initiated proceedings on 1 October 2007 alleging that the first appellant's suspension was a breach of contract and in consequence the respondents lost the opportunity to sell coal and thereby suffered loss - where the appellants defended the claim on the basis that, inter alia, the project was not economically viable - where the respondents denied that the project was not economically viable in their reply - where amendments were made to the pleadings in 2010 - where the proceedings were added to the supervised case list in early 2011 - where the supervising judge made a number of orders in early 2011 for the appellants to provide particulars as to the allegation the project was not economically viable and for the respondents to file an amended reply and provide particulars as to the project's economic viability - where the respondents failed to provide particulars as to the project's economic viability from 2006 onwards - where the proceedings were delayed during 2012 due to settlement negotiations - where further amendments were made to the pleadings in 2011 by the respondents and in early 2013 by the appellants - where the respondents were ordered on a number of occasions to provide an amended reply and particulars of the project's economic viability in early 2013 - where the respondents served an amended reply in late 2013 without the allegation that the project was economically viable and stated that therefore no particulars were required - where the appellants wrote to the respondents alleging that the statement of claim failed to plead a causal nexus between breach and damage - where the appellants applied to the supervising judge for paragraphs of the statement of claim to be struck out - where the respondents sought to file a proposed further amended statement of claim that pleaded that the project would have been profitable - where the appellants opposed leave being granted for the proposed further amended statement of claim - where the supervising judge granted leave to the respondents to file the proposed further amended statement of claim - where the matter had not been set down for trial - where disclosure had not yet been finalised - whether the respondents' proposed amendments and the appellants' objection were made pursuant to r 378 and r 379 of the Uniform Civil Procedure Rules1999 (Qld) ("UCPR") - whether the placing of a matter on the supervised case list ousts r 378 of the UCPR - whether the principles in Aon Risk Services Australia Ltd v Australian National University apply to amendments made pursuant to r 378 and r 379 of the UCPR, namely prior to the matter being set down for trial - whether leave ought to have been granted to the respondents to amend their statement of claim
Rigato Farms Pty Ltd v Ridolfi [2001] 2 Qd R 455; [2000] QCA 292, followed
[14]
Takemoto v Moody's Investors Service Pty Limited (No 2)[2010] FCA 622, considered
[15]
The Beach Retreat Pty Ltd v Mooloolaba Marina Ltd[2008] QCA 224, distinguished
[16]
A C Archibald QC, with D Kelly QC, for the appellants
[17]
W Sofronoff QC, with J Chapple, for the respondents
[18]
[1] MARGARET McMURDO P: I agree with Flanagan J's reasons for dismissing this appeal with costs.
[19]
[2] MORRISON JA: I have read the reasons of Flanagan J and agree with those reasons and the order his Honour proposes.
[20]
[3] FLANAGAN J: Introduction: This is an appeal from interlocutory orders made by Boddice J on 28 February 2014.[1] The effect of those orders was that the appellants' application dated 25 October 2013 seeking, inter alia, a striking out of certain paragraphs of the respondents' amended consolidated statement of claim was dismissed and the respondents were granted leave to file and serve a further amended pleading. On 21 March 2014 his Honour ordered that each parties' costs in the application be their costs in the cause.
[21]
[4] The appeal concerns how the relevant principles identified by the High Court in Aon Risk Services Australia Ltd v Australian National University[2] ("Aon") apply at a different point in commercial litigation;[3] here the parties are yet to complete disclosure and the matter has not been set down for trial.
[22]
[5] The proceedings concern a greenfield coal mining project which was being considered for development on rural land near Monto in Central Queensland.
[23]
[6] In 1996, a company called Burnett Coal Pty Ltd ("Burnett") (a company associated with the respondents) obtained a new exploration permit over part of this land. On 17 October 2001, Burnett entered into a heads of agreement with Macarthur Coal Limited ("Macarthur") and one of its subsidiaries, Monto Coal Pty Ltd ("Monto Coal").
[24]
[7] Pursuant to the heads of agreement Burnett agreed to sell to Macarthur and Monto Coal 51 per cent interest in the legal and beneficial ownership in the relevant mining tenements, mining information and certain records.[4] The sale was subject to conditions precedent including, inter alia:[5]
[25]
"(iii) the Purchaser completing a reasonably detailed Feasibility Study satisfactorily demonstrating to the Purchaser the economic viability of conducting Mining Operations in Stage 1;
[26]
(iv) the Purchaser being satisfied that the indicators regarding the viability of Mining Operations in Stage 2 remain financially attractive."
[27]
[8] Under clause 4 of the heads of agreement, on the completion of the purchase the parties agreed to form a joint venture by entering into a joint venture agreement. On 16 May 2002, a written joint venture agreement was executed between the respondents and Monto Coal 2 Pty Ltd ("Monto Coal 2"), a subsidiary of Macarthur.
[28]
[9] The purpose of the joint venture is the carrying out of the "Monto Coal Project".[6] This is a defined term which means "the undertaking of the Exploration Work, the Pre-Development Acquisition and Planning Work, the Mine Development and the Mining Operations in relation to the Tenements."[7]
[29]
[10] The agreement contemplated two stages of a Mining Operations. Stage 1 is defined to mean "Mining Operations producing between 1,000,000 and 1,500,000 tonnes of saleable coal per annum." Stage 2 is defined to mean "the Mine Development and Mining Operations beyond Stage 1 with the expectations of production being 10,000,000 tonnes or more of saleable coal per annum."[8] Clause 5 of the joint venture agreement deals with the Stage 1 Development and is relevant to understanding the nature of the dispute between the parties. Clause 5.1 states:
[30]
"The Participants must use all reasonable efforts to obtain the grant of the Mining Lease and to, having regard to all relevant factors relating to the Monto Coal Project and the economic viability of the Monto Coal Project, develop Stage 1 within 3 years of the Commencement Date. For the avoidance of doubt, Monto Coal 2 agrees not to have any regard to the profitability of any other ventures entered or to be entered into by its holding company, Macarthur Coal, or any of its Related Corporations."[9]
[31]
[11] By clause 5.2 Monto Coal 2 was solely liable for the cost of the Mine Development for Stage 1 and the cost of the Stage 2 Feasibility Study to a minimum aggregate amount of $5,700,000. By clause 6, the parties agreed to undertake the Stage 2 Feasibility Study during the Stage 1 Mine Development. The "Stage 2 Feasibility Study" was a defined term which means "a bankable feasibility study to determine whether or not to undertake Stage 2 ... ."[10]
[32]
[12] The agreement, by clause 7, established a Management Committee which is responsible for the management and control of the joint venture.[11] Clause 7.2 provides:
[33]
"Without limiting the generality of clause 7.1, the Management Committee is authorised at any Meeting to make all decisions on the varying or vetoing any decision, nature and extent of and the management of the Joint Venture including commitment or other action of the Manager and otherwise directing the Manager on the management and conduct of the Joint Venture and the Monto Coal Project."
"The Management Committee has full and complete power and authority, and the Participants hereby empower and direct the Management Committee, to give all approvals and to make all decisions and determinations required or permitted to be given or made by the Participants pursuant to this Agreement with respect to the Monto Coal Project and the Joint Venture Assets, including the power:
[36]
(a) to adopt (with or without amendment) or modify each proposed Annual Programme and Budget;
[37]
(b) to cease, curtail, suspend or resume the Monto Coal Project or any part of it; and
[38]
(c) to supervise the activities of the Manager under the Management Agreement,
[39]
PROVIDED THAT the Management Committee, in exercising any power or authority, must comply with all voting and other requirements set out in this Agreement relating to the Management Committee and its decision making process."
[40]
[14] The Management Committee is comprised of one representative of each participant with more than 5 per cent interest in the joint venture. Monto Coal was appointed manager of the joint venture under a separate Management Agreement.[13]
[41]
[15] On 4 July 2003 at a Management Committee Meeting of the Monto Coal Joint Venture, Monto Coal 2 proposed a motion to suspend all work on the Monto Coal Project.[14] Monto Coal 2 voted in favour of the motion. On the appellants case the respondents abstained from voting.[15]
[42]
[16] The suspension motion has never been subsequently revoked. At the time of the suspension the development of Stage 1 had not been achieved and the Stage 2 feasibility study had not been undertaken. The appellants' case is that the suspension decision was made, because it was common ground between the parties that the Monto Coal Project was not then economically viable. This suspension decision gave rise to the present dispute which Boddice J described in his Reasons as follows:[16]
[43]
"A dispute between the joint venture partners arose in 2003. The dispute related to differing views as to the economic viability of the project. Ultimately, the project was suspended by the Defendants. The Defendants assert the Plaintiffs' position as to the economic viability of the project changed from 2003 to 2006. They contend the Plaintiffs accepted the project was not economically viable but later asserted the project could be shown to be economically viable."
[44]
[17] The respondents initiated proceedings by filing a claim and statement of claim on 1 October 2007. The claim sought damages of not less than $68,970,000 for breach of contract. Paragraph 14 of the statement of claim alleged that the decision of the Management Committee to suspend the project was beyond power and was otherwise not a decision authorised by clause 7.22 of the joint venture agreement.[17] Paragraph 18 of the statement of claim pleaded that Monto Coal 2, in voting to suspend all work on the Monto Coal Project, and in subsequently maintaining that suspension:[18]
[45]
"(a) preferred the interests of itself and Macarthur Coal to the best interests of the joint venture;
[46]
(b) had regard to interests extraneous to the joint venture;
[47]
(c) did not act in the best interests of the joint venture;
[48]
(d) did not act in good faith towards the other participants."
[49]
[18] It was therefore alleged that Monto Coal 2 breached its obligations under the joint venture agreement in the following respects:[19]
[50]
" (a) its obligation to use all reasonable efforts to develop Stage 1 of the Monto Coal Project within 3 years of the commencement date, namely by 16 May 2005;
[51]
(b) its obligation to undertake the Stage 2 Feasibility Study during the construction of Stage 1 of the Monto Coal Project;
[52]
(c) its obligation to exercise its vote in the Management Committee in the best interests of the Joint Venture;
[53]
(d) Its obligation to act in good faith towards the other participants."
[54]
[19] Paragraph 20 of the statement of claim pleaded that by reason of Monto Coal 2's breach of the joint venture agreement:[20]
[55]
" (a) the development of Stage 1 has not been achieved;
[56]
(b) the Stage 2 feasibility study had not been undertaken;
[57]
(c) the participants have lost the opportunity to sell coal in the current favourable economic conditions;
[58]
[20] This loss was particularised. A cause of action was also pleaded against Monto Coal for damages for breach of the Management Agreement in failing to use reasonable efforts to obtain a mining lease.
[59]
[21] On 29 October 2007 the appellants' filed a defence. As to the suspension decision, the defence pleaded the decision was authorised by clause 7.22 of the joint venture agreement.[21] If the decision was not authorised by clause 7.22 the appellants pleaded that, as at the date of the decision and at all material times since the date of the decision, the Monto Coal Project was not economically viable.[22] The defence further alleged that the respondents had acknowledged to the appellants that the project was not economically viable.[23]
[60]
[22] The respondents' loss claim was denied primarily on the basis that the Monto Coal Project was not economically feasible. Accordingly, even if the decision to suspend had not been made the Monto Coal Project would have returned a loss.
[61]
[23] In their reply dated 11 March 2008,[24] as to the validity of the decision to suspend, the respondents denied that the Monto Coal Project was not economically viable. The basis of this denial was limited to certain facts including the fact that prior to entering into the joint venture agreement Monto Coal 2 had adopted the Stage 1 Feasibility Study and the Stage 2 Pre-Feasibility Study, contemplated by the heads of agreement.[25]
[62]
[24] The then solicitors for the respondents in a letter dated 25 July 2008 acknowledged that:
[63]
"At the heart of the dispute between the parties is the question of whether, at the date of the Suspension Decision, the Monto Coal Project was economically viable. The issue arose firstly by your clients' Defence. There is a further issue that the Monto Coal Project has remained economically unviable at all times until the filing and service of the Defence.
[64]
Our clients have put these allegations in issue in their Reply. We fully accept that our clients should provide such particulars as will apprise your clients of the nature of the case they have to meet at the trial; and we are conscious of the requirements of UCPR 150(1)(b), 155 and 158.
[65]
However, it must also be borne in mind that the defendants bear the onus of proving that the Monto Coal Project was not economically viable at the times mentioned."[26]
[66]
[25] On 26 October 2010 an amended statement of claim was filed. This pleading contained additional alleged breaches of the joint venture agreement (paragraph 17) and substantially increased the claim for loss from 68 million dollars to over 1 billion dollars.[27]
[67]
[26] On 23 November 2010 the respondents also filed a claim seeking damages for over one billion dollars from Macarthur Coal for allegedly procuring and inducing Monto Coal 2's breach of contract.[28]
[68]
[27] On 23 December 2010 the appellants delivered a new round of defences.[29] It may be accepted, as submitted by the appellants, that both defences continued to plead denials of both liability and causation of loss on the explicit basis that the Monto Coal Project was never economically viable.[30]
[69]
[28] By early 2011 both proceedings commenced to be supervised by Boddice J.
[70]
[29] A joint report dated 17 February 2011 as to the status of each proceeding was required by the Court.[31]
[71]
[30] The appellants' position as to the issue of economic viability is expressed in this joint report as follows:
[72]
"The defendants allege that the obligation to develop Stage 1 is not unqualified, but rather the obligation is subject to the Monto Coal Project being economically viable. It is the defendants' case that the Monto Coal Project is not, and has not been economically viable."
[73]
[31] The respondents' position was identified as follows:
[74]
"The plaintiffs contend that the defendants' particulars (of the allegation that the 'Monto Coal Project' has never been economically viable) are of relative short compass.
[75]
The plaintiffs have - despite bearing no onus of proof on the issue - served an expert's report, analysing the plaintiffs' loss.
[76]
The defendants have not served any expert's report.
[77]
The plaintiffs' report uses the model that (so the plaintiffs understand) was used in the Stage 1 Feasibility Study prepared by the defendants' consultant (viz. Minserve Group Pty Ltd) prior to the entry into the Joint Venture Agreement, and analyses the financial performance of the mining operations that the parties would have experienced - with the benefit of the prevailing historical data that has become available in the years since the agreement was executed.
[78]
The plaintiffs respectfully contend that the exercise which the defendants have suggested is largely pointless, since:-
[79]
To embark on the exercise the defendants have suggested would unnecessarily complicate the pleadings, and would amount to giving evidence as particulars
The plaintiffs do not make any positive case concerning the viability of the Project - it is the Defendants who bear the onus of proof of the case they have pleaded."
[80]
[32] On 9 March 2011 the plaintiffs were ordered to file and serve an amended reply in proceeding 8609 of 2007 and a reply in proceeding 12704 of 2010 by 22 April 2011.[32] The appellants submit that the order of 9 March 2011 in relation to the replies was not complied with by the respondents.[33] The respondents however submit that the order of 9 March 2011 was superseded by orders made by Boddice J on 13 April 2011 and 10 May 2011. The order of 10 May 2011 effectively extended time for compliance for both parties in respect of earlier orders and reset the timetable for all pleadings.[34]
[81]
[33] On 13 April 2011 the following exchange occurred between Boddice J and Mr Sofronoff QC who appeared for the plaintiffs/respondents:[35]
[82]
"Mr Sofronoff: ... We have alleged that it's viable. We'll need to particularise that so they understand why that's so.
[83]
His Honour: Because you've made a positive allegation, effectively, so you have to particularise.
[84]
Mr Sofronoff: Whether we do it implicitly or expressly, it's there. And anyway, it's the issue - it's an issue in the case, so we'll have to raise it.
[85]
Now that raises another matter. At some point we're going to have to join issue upon the test for viability. That is to say, often the test for viability in joint venture contracts is that the parties need not proceed, and there will be no penalty for failing to proceed, if an internal rate of return of 15 per cent is not reached."
[86]
[34] Boddice J in his Reasons identified the consequences of the orders made on 13 April 2011:[36]
[87]
"In 2011, as a consequence of case management reviews, orders were made for further particularisation of the allegations relevant to the economic viability of the project. As part of this process, on 13 April 2011, orders were made requiring the Defendants file and serve further and better particulars of the allegation the project was not economically viable. Such particulars were to be provided, in respect of each individual year, in a staged process. The Plaintiffs were also ordered to provide particulars of their allegation the project remained economically viable. Those particulars were to be provided on a similar staged basis.
[88]
The time for compliance with those orders was extended on a number of occasions thereafter, with the consent of the parties. These requests for extensions of time related to compliance with the respective orders by the Plaintiffs and by the Defendants. It appears to be accepted by both parties that preparation of the particulars was a complex and lengthy task."
[89]
[35] On 1 September 2011 the respondents filed and served a document titled "Plaintiffs' response to the defendants' particulars concerning economic viability". The appellants had concerns about those particulars. On 17 October 2011 the appellants' solicitors outlined those concerns and sought the identification of the particulars which underpinned the respondents' positive allegation of economic viability.[37]
[90]
[36] In the parties' joint report to the Court dated 21 October 2011 the respondents stated that:[38]
[91]
"The plaintiffs will respond to the defendants' concerns set out in the letter of 17 October, 2011 in the following ways:-
[92]
first, they will respond to the outstanding 2007 particulars when they are received;
secondly, when the plaintiffs file and serve their amended Reply, they will:-
consolidate the particulars that have already been provided;
amend to make it clear that they do advance a positive case that the Monto Coal Project was economically viable at all material times (as distinct from the reasons for the denial that currently subsist in the Reply); and
provide proper particulars of that allegation, as they proposed to prove their case;
thirdly, they will otherwise respond in detail to the letter of 17 October, 2011 when they file and serve their Amended Statement of Claim on 28 October, 2011."
[93]
[37] On 28 October 2011 the respondents filed and served an amended consolidated statement of claim.
[94]
[38] Most of what occurred in 2011 may be characterised as both parties attempting to either comply with consent orders or other orders made by Boddice J in respect of the delivery and response to particulars of economic viability. In this respect, Mr Archibald QC who appeared with Mr D Kelly QC for the appellants conceded that in the year 2011 there was "slippage" by both sides in complying with the supervisory orders made by Boddice J.[39]
[95]
[39] In oral submissions Mr Archibald, having dealt with the history of the litigation in 2011, was content to move to 2013. The respondents suggested that for the period May 2012 to February 2013 settlement negotiations provided some explanation for the respondents' non-compliance with certain orders, in particular the order to file and serve their reply. The evidence in this respect is found in the affidavit of Terence John McBride.[40]
[96]
"During the first half of 2012 extensive work was done by the Plaintiffs in the prosecution of this matter and in particular the preparation of detailed witness statements and an amended reply.
I am instructed that in May 2012 the parties commenced a series of protracted discussions with a view to seeing whether the litigation could be resolved. Those discussions continued through until January 2013.
In February 2013 I was advised by the Plaintiffs that the discussions had come to an end and that the matter was to be pursued."
[97]
[40] This evidence is unsatisfactory. There is no evidence to suggest that either the court or the appellants had consented to the matter being placed in abeyance during this period.[41] Boddice J accepted that during 2012 there was a lengthy period during which the parties placed the matter in abeyance whilst settlement discussions were undertaken.[42]
[98]
[41] The appellants' amended outline of argument suggests that his Honour's assumption in this respect was erroneous.[43] Mr Archibald did not seek to address this alleged error nor did he seek to make any great moment of the delays in 2012. One may readily understand such an approach given that no objection was taken to the relevant paragraphs of Mr McBride's affidavit which I have quoted above, nor was there any particular agitation by the appellants in 2012 with respect to the litigation, nor was Mr McBride cross-examined.
[99]
[42] On 7 March 2013 the respondents were ordered to file and serve an amended reply by 8 July 2013.[44] The plaintiffs failed to comply with this order. The explanation as to why this order was not complied with is contained in paragraph 9 of Mr McBride's affidavit sworn 15 July 2013.[45] One of the explanations was that the amended defence of the appellants to the amended consolidated statement of claim which was filed and delivered on 7 May 2013 had increased from 72 pages to 125 pages. A further explanation was that Mr McBride's firm had not received the complete file from the previous solicitors until 3 June 2013. In the same affidavit Mr McBride explained that the respondents had engaged Williams Hall Chadwick to assist in the preparation of the particulars in respect of economic viability for the years 2006, 2007, 2008, 2009 and 2010. The respondents had previously provided their response to the appellants' particulars for 2003, 2004, and 2005.[46] According to Mr McBride, Williams Hall Chadwick required three to four weeks to prepare the response to the appellants' particulars.[47]
[100]
[43] At the court review on 7 March 2013 Boddice J observed:[48]
[101]
"... Could I just indicate to the parties I am a little concerned about how long this matter is taking. It's a 2007 matter. I know it is very complex, but it just does seem to be dragging out. So I am prepared to make those orders by consent, but I expect the parties to really be in a position that all of these matters should have been sorted out by no later than the end of this year, so that we can be looking at setting the matters down sometime in next year."
[102]
[44] A further court review was conducted on 15 July 2013. At that review the following exchange occurred between his Honour and Mr McKenna QC who was appearing for the appellants:[49]
[103]
"Mr McKenna: ... But one thing I'm very concerned about is that we'll come back in two months time, and there'll be yet another reason for not doing what your Honour has asked them to do. So our position, really, is we're very anxious that this be the last extension to get the pleadings sorted out, so that next time we come back before your Honour, we do have pleadings that actually disclose the issues of the trial that's going to be fought over. Not alighting [sic] the issues, but actually engaging the issues, and then we can talk meaningfully about the disclosure that - further disclosure that needs to be done, the expert reports and the like, and get the matter on for hearing next year, as your Honour wished to occur.
[104]
His Honour: There much [sic] reach a point, Mr McKenna, where your client would have to consider whether to bring an application, because of the constant non-compliance with court orders.
[105]
Mr McKenna: We really think this is - this is - this next extension will be - will be when that will occur. And I guess we're hoping for some encouragement from your Honour in that approach. Because we don't - we don't - we're trying to work with the court.
[106]
His Honour: Well, I would consider that the - as things currently stand, despite whatever explanations may be given, it's not being run in accordance with the rules. And the rules are there - in terms of a power - to strike out for a non-compliance - and it seems to me it's persistent non-compliance now. So I would have thought that if there's a non-compliance with the next order, then the appropriate course would be to list any application you chose to bring as soon as possible."
[107]
[45] On 15 July 2013 Boddice J ordered the respondents to file and serve:[50]
[108]
(a) an amended reply by 4.00 pm on 16 September 2013; and
[109]
(b) the respondents' further and better particulars for the 2006, 2007, 2008, 2009 and 2010 years by 4.00 pm on 16 September 2013.
[110]
[46] These orders were not complied with by 16 September 2013. The reason for this is contained in a letter dated 16 September 2013 from the solicitors for the respondents to the solicitors to the applicant:[51]
[111]
"Our clients' Senior Counsel is currently engaged in a trial in Sydney and is not in a position to finalise the reply today. As such, we will not be in a position to deliver the reply this afternoon.
[112]
We expect to receive the pleading tomorrow and will deliver it as soon as possible."
[113]
[47] On 23 September 2013 the solicitors for the respondents served the amended reply. A copy of this reply had been provided to the solicitors for the appellant on 21 September 2013.[52] The respondents' response to the appellants' further and better particulars of 2003 (amended), 2006, 2007, 2008, 2009, 2010 was also delivered on 23 September 2013. The respondents did not however provide particulars as to their positive case that the Monto Coal Project remained economically viable.
[114]
[48] In the covering letter by which these documents were delivered the solicitors for the respondents stated:[53]
[115]
"Order 2 of the orders made on 13 April 2011 ordered the plaintiffs to provide further particulars relied on to support the allegation in their Reply that the Monto Coal Project remained economically viable. In the Reply enclosed with this letter, that allegation is no longer made. Consequently, the plaintiffs will not be providing particulars the subject of that order. We will inform the Court of this at the next directions hearing. The particulars provided do, however, satisfy the remaining part of that order, namely identifying the respects in which the plaintiffs dispute the matters relied on by the defendants in support of their allegation that the project was economically unviable."
[116]
[49] By letter 8 October 2013 the solicitors for the appellants identified this change of position as follows:[54]
[117]
"We understand from your clients' decision not to provide the Court ordered particulars that:
[118]
First, a positive allegation about economic viability at any material time no longer forms any part of your clients' case on any issue.
[119]
Secondly, your clients will not at trial seek to advance any positive allegation about economic viability at any material time."
[120]
[50] Confirmation of the understanding of the solicitors for the appellants was sought. Such confirmation was not forthcoming with the solicitors for the respondents replying by letter dated 11 October 2013:[55]
[121]
"The two propositions in your letter which you have requested a response to are ambiguous and expressed in broad terms which are not reflective of the matters in issue in the pleadings. We do not see that any response to them could sensibly advance the case. We would prefer to confine our case to that which is reflected in the actual pleadings and thereby avoid unnecessary argument about the actual issues in dispute.
[122]
Paragraph 2 of the Order dated 13 April 2011, required our client to provide particulars of the positive allegation in the Reply that the Monto Coal Project remained economically viable. That allegation is no longer made in the Reply, therefore our client is not required to provide the particulars pursuant to the Order."
[123]
[51] At no stage had the respondents pleaded in any versions of their statement of claim a positive case that the Monto Coal Project was economically viable. It was the appellants who raised that issue in the first version of their defence both in relation to the decision to suspend the Monto Coal Project and causation of the respondents' claim for damages. The respondents pleaded a positive case that the Monto Coal Project was economically viable only in response to the suspension decision. As to the allegation made by the appellants that the suspension decision was not causative of any loss because the Monto Coal Project was never economically viable the respondents in their original reply generally joined issue on the defence.[56]
[124]
[52] It would appear that prior to the application (the subject of this appeal) being made on 25 October 2013, that the parties had not clearly joined issue on the question of causation. This may be gleaned from an examination of the amended consolidated statement of claim filed 28 October 2011,[57] the amended defence filed 7 May 2013[58] and the amended reply filed 23 September 2013.[59] In paragraph 23(c) of the amended consolidated statement of claim the respondents pleaded that they lost the opportunity to sell coal and to earn royalties under the Monto Coal Royalty Deed by reason of Monto Coal's breach of the joint venture agreement.[60] A similar plea is made in paragraph 32(c) of the amended consolidated statement of claim in respect to Macarthur Coal's alleged conduct.[61] What is pleaded in response in the amended defence is that even if the alleged breaches had been committed, the Monto Coal Project would in any event have returned a loss because the Monto Coal Project was not at any material times economically viable.[62] The reply filed 23 September 2013 simply denies those allegations in the amended defence on the basis of what is pleaded in the reply and amended consolidated statement of claim.[63]
[125]
[53] The matter came on for review before Boddice J on 14 October 2013. On this occasion the respondents were represented by Mr O'Donnell QC. He informed the court as follows:[64]
[126]
"In your Honour's last order on the 15th of July, you directed the plaintiffs to deliver their amended reply by 16th September. That's been done but it was a week late. You also directed the plaintiffs to file and serve further and better particulars in compliance with an earlier order. And that early order went into two things: one was the defendant's - sorry - the plaintiffs had previously made a positive assertion in their reply that the project was economically viable and they had to give particulars of that and the defendants served in their defence the project was not economically viable and gave particulars of that ...
[127]
So we have delivered particulars contesting the defendant's [sic] assertion of not economically viable. We have not included in our new amended reply that the project was economically viable and therefore we have not given particulars of that ...
[128]
So we say that that discharges the previous orders."
[129]
[54] On 14 October 2013 his Honour made certain orders which included requiring the appellants to write to the respondents setting out their concerns. In a letter dated 17 October 2013, the appellants for the first time identified a difficulty in the respondents' statement of claim in respect to causation:[65]
[130]
"As to causation and damage, your clients' case has always been governed by very clear, mandatory pleading rules enshrined by rules 150(1)(b), 155 and 158 UCPR. We note that these are the very pleading rules to which reference was made in your clients' solicitors' correspondence dated 25 July 2008. Your clients' case has also been governed by settled common law principles which require material facts to be pleaded which establish a causal nexus between breach and loss and damage.
[131]
The Amended Consolidated Statement of Claim does not plead any material facts (not involving the premise of economic viability of the Monto Coal Project) which establish a causal nexus between breach and the amount of loss and damage claimed. On that basis, paragraphs 23(c), 23(e) and 32(c) of the Amended Consolidated Statement of Claim and paragraph 1 of the Prayer for Relief are liable to be struck out pursuant to rules 171(a), (b), (d) or (e) UCPR."
[132]
[55] The application filed 25 October 2013 was made pursuant to rules 5, 163, 171, 280, 366, 370, 371, 374 and 684 of the Uniform Civil Procedure Rules 1999 (Qld) ("UCPR") and pursuant to the inherent jurisdiction of the court. Each of these rules confers a discretionary power upon the court. The appellants identified the source of the court's power to determine the application as follows:[66]
[133]
"The source of the court's power to determine this matter derived from a number of rules of the UCPR. The application was explicitly advanced under r 5(4) (sanctions for non-compliance with rules or orders), r 163 (sanctions for non-compliance with orders for particulars), r 171 (sanctions for improper pleadings), r 280 (sanctions for non-compliance with rules or orders), r 366 (the power to give directions), r 370 (sanctions for failure to comply with directions), r 371 (sanctions for failure to comply with the rules), and r 374 (sanctions for failure to comply with orders). The oral cross-application by the Respondent, for leave to amend its pleadings and particulars, was implicitly made under r 375 (power to allow amendments to pleadings and other documents)."
[134]
[56] Both parties filed extensive written submissions. The appellants' written submissions made specific reference to rule 5 and the principles identified in Aon.[67]
[135]
[57] When the application came on for hearing before his Honour on 14 November 2013 it became clear that the respondents had failed to plead a causal link between the alleged breaches and the loss of opportunity.[68] In particular, there was no pleaded causal link to the losses claimed in relation to Stage 2. His Honour therefore ordered that the plaintiffs provide any further proposed amendments to the amended consolidated statement of claim by 4pm on 27 November 2013 and otherwise adjourned the hearing to 29 November 2013.[69] This course was taken over objection by Mr McKenna QC who submitted that any leave to re-plead should be limited to a basis consistent with the case management direction sought by the appellants which stated:[70]
[136]
"A direction that the plaintiffs are prohibited from raising in the proceedings a positive case or a positive allegation to the effect that the Monto Coal Project or Stage 1 or Stage 2 of the Project were economically viable at any material time."
[137]
[58] Shortly prior to the adjourned hearing on 29 November 2013 the respondents delivered a draft amended statement of claim.
[138]
[59] The primary amendment that was made was to paragraph 23(c). Paragraph 23(c) pleaded that the respondents had lost the opportunity to earn a profit from the sale of coal from Stage 2 and to earn royalties under the Monto Coal Royalty Deed. The relevant particulars given were:[71]
[139]
"(a) Stage 1 would have been completed and would have been profitable;
[140]
(b) The Stage 2 Feasibility Study (as that term is defined in clause 1 of the Joint Venture Agreement) would have been prepared by about May 2005;
[141]
(c) Coal produced from Stage 1 would have obtained market acceptance and would have been sold at a profit during Stage 1;
[142]
(d) The Stage 2 Feasibility Study would have demonstrated that Mine Development of Stage 2 would have been profitable."
[143]
[60] The appellants filed further written submissions for the hearing conducted on 29 November 2013. The appellants' submitted that leave to amend paragraph 23 as proposed should not be granted:[72]
[144]
"This is simply another crude attempt by the Plaintiffs to advance a case which can only be properly founded upon a properly particularised allegation of economic viability - but without providing a valid pleading or particulars."
[145]
[61] His Honour ordered that the respondents provide further and better particulars of the facts, matters and circumstances relied upon to support the allegation in paragraph 23(c) particular (d) of the proposed amended consolidated statement of claim by 4.00 pm, 14 February 2014.[73] These particulars were supplied.[74] His Honour referred to these further and better particulars in paragraphs 15 and 16 of his Reasons.[75]
[146]
[62] On 28 February 2014 Boddice J dismissed the appellants' application and gave the respondents leave to amend the statement of claim in the manner proposed.[76]
[147]
[63] There was, on appeal, some dispute between the parties as to the nature of the application being determined by his Honour and therefore whether the principles in Aon applied.
[148]
[64] The respondents, in their written outline of argument, submitted that as there was no relevant application for relief by the respondents the decision in Aon was "beside the point".[77] The respondents did not require leave to amend their statement of claim, it was submitted, because of the operation of rule 378 of the UCPR which provides:
[149]
"Before the filing of the request for trial date, a party may, as often as necessary, make an amendment for which leave from the court is not required under these rules."
[150]
[65] The appellants however submitted that leave to amend was required. First, this was a case that for almost seven years had been subject to case management on the Commercial List and then from early 2011 by Boddice J on the Supervised Case List. The appellants submitted that the correct view is that once a case is being managed on these lists, a party's entitlement to amend is rendered subject to the court's control so that rule 378 no longer applies.[78] For this proposition the appellants relied on the decision of this Court in The Beach Retreat Pty Ltd v Mooloolaba Marina Ltd[79] ("The Beach Retreat") where Keane JA (as his Honour then was) stated:[80]
[151]
"I should also say that, although it is not necessary to come to a firm view for the purposes of this case, it seems to me that there is something to be said for the view that where a case has been placed on the Supervised Case List, then pursuant to r 367 of the UCPR and Practice Direction No 6 of 2000, cl 11, cl 12 and cl 19, a party's entitlement to amend its pleadings is rendered subject to the court's control so that the general provision in r 378 no longer applies. Clause 19 of the Practice Direction expressly requires that once a matter on the Supervised Case List has been allocated a trial date, the Supervised List Manager must be notified forthwith by a party becoming aware of 'any proposal to amend a pleading'. That proposal can then be dealt with by the court. Until it is dealt with, it remains a proposal. Under r 367(1) of the UCPR, a court may make directions about the conduct of proceedings inconsistent with another provision of the UCPR including r 378. That this is so is hardly surprising. The case management regime established by Practice Direction No 6 of 2000 is elaborate and comprehensive. It plainly contemplates that a matter within the regime of the Supervised Case List is set down for trial, not in the general course contemplated by r 378 of the UCPR, but on the basis of the assurances to the parties that the matter is ready for trial and, in particular, that no further amendments to the pleadings will be sought."
[152]
[66] As to whether the decision in The Beach Retreat is authority for the proposition that r 378 is ousted by virtue of a matter being placed on the supervised case list, the following should be noted:
[153]
1. Of importance to the observations of Keane JA was clause 19 of Practice Direction No 6 of 2000 which provided:
[154]
"Once a matter on the Supervised List has been placed on the callover list or allocated a trial date, the Supervised List Manager MUST be notified forthwith a legal representative of any party becoming aware of ...any proposal to amend a pleading".
[155]
2. Practice Direction No 6 of 2000 was repealed by Practice Direction No 11 of 2012. The more recent practice direction does not contain a clause similar to clause 19 of Practice Direction No 6 of 2000. It does however contain clause 32 which states:
[156]
"Before a request for trial date is filed on the Supervised Case List, each party is to inform the Supervising Judge at a review that:-
[157]
(b) it has given recent consideration to the question whether its pleadings properly reflect the case to be presented at the trial;
[158]
(c) it has given recent consideration to the question whether it maintains any challenge to the pleadings or particulars of any other party;
[159]
(d) it has recently reviewed the pleadings to identify the issues in respect of which it proposes to adduce evidence, and has considered whether it is in a position to do so ...".
[160]
Clause 32 appears to suggest that a matter will not be allocated trial dates, either through the filing of a request for trial date or through the allocation of trial dates by the supervising judge, until the parties have advised the supervising judge that pleadings have been closed. That has not happened here.
[161]
3. In The Beach Retreat the parties had been allocated trial dates, not by virtue of the filing of a request for trial date, but directed allocation by the supervising judge. Insofar as Keane JA was suggesting rule 378 may be ousted, I consider his Honour was doing so in the context of trial dates being allocated by the supervising judge. That is, the allocation of trial dates is to be treated the same as the filing of a request for trial date. Any potential ouster of rule 378 therefore arises by virtue of being allocated trial dates, not merely by being placed on the supervised case list.
[162]
4. Not only had the parties been allocated trial dates by the supervising judge, the proposed amendments in The Beach Retreat were delivered 20 days from the commencement of the trial.
[163]
[67] The factual differences between this matter and The Beach Retreat are significant. Further, although it is not necessary to decide, any potential ousting of r 378 had not and would not come to fruition until trial dates had been allocated by the Supervising Case List judge.
[164]
[68] The appellants also relied on rule 379 of the UCPR. That rule provides:
[165]
(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."
[166]
[69] At the commencement of the hearing on 29 November 2013 the court asked the appellants as to their attitude to the proposed amendments and the appellants objected to those amendments.[81]
[167]
[70] Accordingly, the appellants submitted that rule 379 was engaged and the court's discretion to allow the amendment fell to be exercised in accordance with r 375.[82] It is clear that his Honour dealt with the application as one for leave to amend the statement of claim.[83]
[168]
[71] Rule 379 requires a party to apply to the court within eight days of service of an amendment to disallow all or part of any amendment made under r 378. Whilst no express stand-alone application was made by the appellants to disallow the proposed amendments to the respondents' amended consolidated statement of claim, the appellants objected to the proposed amendments at the scheduled review two days following delivery:[84]
[169]
"His Honour: Thank you. Now, Mr McKenna, you've had an opportunity to consider the amended document?
[170]
[72] I accept the appellants' submission that rule 379 was engaged. Any failure to strictly comply with r 379 by the appellants is an irregularity and was able to be corrected by his Honour pursuant to rules 367 and/or 371 of the UCPR.
[171]
[73] Contrary to the respondents' submission that Aon is of no relevance in the context of rule 378, the principles in Aon, because of the operation of rule 5 of the UCPR, must be accepted to be of general application. Those principles apply to amendments prior to the filing of a request for trial date or the allocation of trial dates by the supervising judge, whether or not rule 379 is invoked. Applegarth J gave careful consideration to this issue and the operation of rule 378 in Hartnett v Hynes [2009] QSC 225 where, after citing Aon, his Honour stated:[85]
[172]
"The right to amend pursuant to UCPR 378 is qualified by a party's obligations under UCPR 5 and the Court's own obligation to facilitate the just and expeditious resolution of the real issues in proceedings at a minimum of expense.
[173]
In appropriate circumstances the Court may disallow amendments authorised by UCPR 378 as a sanction for a breach of a party's implied undertaking to proceed in an expeditious way, to uphold the objectives of the rules and to achieve justice.
[174]
Aon Risk Services Ltd v [Australian] National University ("Aon") concerned amendments to a pleading for which leave was required and which were sought during a trial. However, the High Court's statements of principle and its consideration of a rule in similar terms to UCPR 5 provide guidance in determining an application to disallow amendments made without leave, particularly in cases involving unexplained delay in making amendments.
[175]
... UCPR 5 and the principles stated in Aon do not support the proposition that a party has a right to amend as many times as it likes before a request for trial date, without explanation or justification."
[176]
[74] In Hartnett v Hynes,[86] Applegarth J outlined, by express reference to Aon, 12 principles with respect to amendments for which leave is required. Justice Boddice in Groves v Groves[87] stated that the principles identified by Applegarth J apply "whether or not leave to amend is required as amendments made without leave can be disallowed." The principles in Aon are therefore of general application in the circumstances of the present appeal, namely an amendment pursuant to r 378 and an objection pursuant to r 379. The statements to this effect by Applegarth and Boddice JJ should be accepted as correct. The 12 principles identified by Applegarth J are, of course, only a guide in the sense that the application of those principles will vary from case to case. Each case will depend on its own circumstances.
[177]
[75] Further, Boddice J, as the supervising judge, was seized of the inherent jurisdiction of the court to control its own processes.[88] The need for the respondents to amend the statement of claim in respect to causation arose in the context of the hearing of the appellants' application filed 25 October 2013. The orders made by Boddice J on 14 November 2013 contemplated the delivery of a "proposed" amended statement of claim. It was clearly contemplated that such proposed amendments were subject to the supervisory jurisdiction of the court and required leave to amend. As observed by Applegarth J in Hartnett v Hynes:[89]
[178]
"The entitlement of a party to amend pursuant to UCPR 378 and the power of the Court to disallow an amendment made under that rule are subject to the overriding purpose of the rules which is to facilitate the 'just and expeditious resolution of the real issues in civil proceedings at a minimum of expense' and the requirement that the rules be applied with the objective of avoiding undue delay, expense and technicality and facilitating the purpose of the rules. Each party impliedly undertakes to the Court and to the other parties to proceed in an expeditious way and the Court may impose appropriate sanctions if a party is in breach of the implied undertaking." (footnotes omitted)
[179]
[76] Mr Sofronoff in oral submissions accepted that the application may be treated as an application for leave to amend as his Honour was "seized of the supervision of the case"[90] and could have made the appropriate order inherently.
[180]
[77] His Honour therefore sought to apply the principles identified in Aon in determining whether to allow the respondents' amendments. As the respondents have not filed any notice of contention it is appropriate that this appeal should proceed on the basis that his Honour was exercising a discretion whether to grant leave to amend and whether in applying the identified principles in Aon his Honour erred.
[181]
[78] This is an appeal from an exercise of discretion. The appellants must therefore establish appealable error as identified in House v The King:[91]
[182]
"The manner in which an appeal against an exercise of discretion should be determined is governed by established principles. It is not enough that the judges composing the appellate court consider that, if they had been in the position of the primary judge, they would have taken a different course. It must appear that some error has been made in exercising the discretion. If the judge acts upon a wrong principle, if he allows extraneous or irrelevant matters to guide or affect him, if he mistakes the facts, if he does not take into account some material consideration, then his determination should be reviewed and the appellate court may exercise its own discretion in substitution for his if it has the materials for doing so."
[183]
[79] The appellants submit that upon analysis of his Honour's Reasons, it is apparent that the result in the present case was reached by an erroneous application of principle and a failure to have due regard to the relevant factors the court was required to consider.[92]
[184]
[80] The respondents emphasised however that the appeal is not just from an exercise of discretion but is an appeal from an interlocutory exercise of discretion in a matter relating to practice and procedure. Accordingly, it was submitted that the appellants have an onus to show error which is much heavier than in other appeals, even those also concerned with exercises of discretion.[93] In reviewing decisions pertaining to practice and procedure appellate courts exercise particular caution.[94] As observed by de Jersey CJ in Rigato Farms Pty Ltd v Ridolfi:[95]
[185]
"... appeal courts should be especially circumspect about interfering with decisions on matters of practice and procedure. As put by the High Court (Adam P. Brown Male Fashions Pty Ltd v. Philip Morris Inc.[1981] HCA 39; (1981) 148 C.L.R. 170, 177) 'particular caution' must be exercised_._ The constraints confirmed in House v. The King are real constraints, to be respected not perfunctorily discarded, and they are especially powerful, in limiting an appellate court, in a case of this character."
[186]
[81] Mr Archibald submitted that his Honour committed 10 errors. Most of these errors, as Mr Archibald observed, overlap and feed one into the other. It is however convenient for the purpose of disposing of this appeal to consider those errors separately.
[187]
First error - the failing to give effect to rule 5 UCPR
[188]
[82] The first error is that his Honour, in exercising the discretion to grant the respondents leave to amend, failed to address or give effect to rule 5 of the UCPR.[96]Rule 5 provides:
[189]
"5 Philosophy - overriding obligations of parties and court
[190]
(1) The purpose of these rules is to facilitate the just and expeditious resolution of the real issues in civil proceedings at a minimum of expense.
(2) Accordingly, these rules are to be applied by the courts with the objective of avoiding undue delay, expense and technicality and facilitating the purpose of these rules.
(3) In a proceeding in a court, a party impliedly undertakes to the court and to the other parties to proceed in an expeditious way.
(4) The court may impose appropriate sanctions if a party does not comply with these rules or an order of the court.
[191]
The court may dismiss a proceeding or impose a sanction as to costs, if, in breach of the implied undertaking, a plaintiff fails to proceed as required by these rules or an order of the court."
[192]
[83] Mr Archibald submitted that rather than address the objectives of rule 5, which constrained the exercise of discretion, his Honour regarded the discretion as "untrammelled".[97] He referred to paragraphs 89, 92, 97 and 105 of Aon:
[193]
"[89] A power is given to the court by r 502(1) to permit the amendment of pleadings 'in the way it considers appropriate'. Rule 21(2) specifies, in paras (a) and (b), the objectives to be sought by the exercise of the power conferred by r 502(1). In this setting, some care is called for in describing the grant or refusal of an application to amend in such a way as to suggest a very wide discretion in the decision whether to permit amendment. The observations by Gleeson CJ, Gaudron and Hayne JJ in Coal and Allied Operations Pty Ltd v Australian Industrial Relations Commission are apposite:
[194]
'Discretion' is a notion that 'signifies a number of different legal concepts'. In general terms, it refers to a decision-making process in which 'no one [consideration] and no combination of [considerations] is necessarily determinative of the result'. Rather, the decision-maker is allowed some latitude as to the choice of the decision to be made.'
[195]
Their Honours went on to point out that the latitude as to choice may be considerable or it may be narrow. Given the terms of r 21, it could not be said that the latitude as to the choice of decision, as to whether to grant or refuse leave to amend, was at large. The objectives in r 21(2) are to be sought in the exercise of the power given by r 502(1).
[196]
[92] The purposes stated in r 21 reflect principles of case management by the courts. Such management is now an accepted aspect of the system of civil justice administered by courts in Australia. It was recognised some time ago, by courts here and elsewhere in the common law world, that a different approach was required to tackle the problems of delay and cost in the litigation process. In its report in 2000, Managing Justice: A review of the federal civil justice system, the Australian Law Reform Commission noted that: 'Over the last ten years Australian courts have become more active in monitoring and managing the conduct and progress of cases before them, from the time a matter is lodged to finalisation'.
[197]
[97] The objectives of case management are now expressly stated in r 21 of the Court Procedures Rules. It cannot be overlooked that later rules, such as r 21, are likely to have been written with the decision in JL Holdings in mind. The purposes stated in r 21 cannot be ignored. The Court Procedures Rules make plain that the Rules are to be applied having regard to the stated objectives of the timely disposal of the proceedings at an affordable cost. There can be no doubt about the importance of those matters in litigation in the courts of the Australian Capital Territory.
[198]
[105] The primary judge was in error in failing to recognise the extent of the new claims and the effect that amendment would have upon Aon. His Honour was in error in failing to recognise the extent to which the objectives of r 21 would not be met if the amendments were allowed. The known ill-effects of a delayed determination, which informed the purposes and objectives of the Rule, were present. Rule 502(1) read with r 21 did not provide an unfettered discretion to grant leave to amend. The objectives of r 21 were to be pursued in the exercise of the power conferred by r 502(1). The fact that ANU's new claims were arguable was not itself sufficient to permit amendment and could not prevail over the objectives of r 21. A 'just' resolution of the proceedings between ANU and Aon required those objectives to be taken into account." (footnotes omitted)
[199]
[84] The submission that his Honour, in exercising his discretion, failed to have regard to rule 5 should be rejected. First, the submission is not supported by an examination of the Reasons. His Honour's Reasons at [18] specifically identified the primary submission of the appellants which on any ordinary and natural reading must be understood as a reference to the objectives of r 5:[98]
[200]
"The Defendants submit principles of case management, together with public policy considerations, require the Plaintiffs be held to their decision to abandon any positive reliance on economic viability. To do otherwise would be to make a mockery of the obligations placed on litigants. Further, as no explanation has been provided for the change in position, an amendment ought not to be allowed having regard to the principles enunciated in Aon Risk Services Australia Ltd v Australian National University." (footnote omitted)
[201]
[85] His Honour in his Reasons at [23] made reference to the relevant factors which were identified by the High Court in Aon, including the stage of the litigation and the effects of the proposed amendments on the timely determination of the proceedings. Reading the Reasons as a whole it is clear that his Honour was seeking to apply those factors in exercising his discretion.
[202]
[86] Second, his Honour had been supervising these proceedings since early 2011. As a Supervised Case List Judge, his Honour was required to supervise these proceedings, from 18 May 2012 onwards, by reference to Practice Direction No 11 of 2012 (which deals with the Supervised Case List). By paragraph 6(a) of that Practice Direction, all parties to a case on the Supervised Case List are expressly referred to rule 5 of the UCPR.
[203]
[87] Third, the extensive written submissions filed in respect of the application filed 25 October 2013 made specific reference to rule 5.
[204]
[88] Finally, it was his Honour, in the exchange with Mr McKenna QC on 16 September 2013 referred to in paragraph 41 above, who suggested that there must reach a point where the appellants would have to consider whether to bring an application because of the respondents' "constant non-compliance with court orders." This observation by his Honour reflects that he was clearly conscious of the operation of the objectives of rule 5 in respect to the proceedings.
[205]
Second error - the need for the respondents to provide an explanation
[206]
[89] The second error is that the respondents did not provide any, or any sufficient, explanation for their requiring leave to amend.
[207]
[90] The appellants submitted that the need for an explanation arises for two reasons. First, it is necessary for this disclosure by the respondents to occur to allow the court to undertake the necessary weighing exercise which is required to properly exercise the discretion. A party seeking an indulgence cannot place themselves in a better position by simply declining to offer an explanation.[99] Secondly, such an explanation is necessary to show that the application is brought in good faith and not merely for a forensic stratagem.[100]
[208]
[91] Apart from [103] of Aon which was quoted by his Honour, the appellants also relied on the last sentence of Aon [102]:
[209]
"Invariably the exercise of that discretion will require an explanation to be given where there is delay in applying for amendment."
[210]
As well as Aon [114], in particular the last sentence:
[211]
"Critically, the matters relevant to a just resolution of ANU's claim required ANU to provide some explanation for its delay in seeking the amendment if the discretion under r 502(1) was to be exercised in its favour and to the disadvantage of Aon. None was provided."
[212]
[92] The difficulty with the present appeal is identifying exactly what conduct of the respondents required an explanation. In the appellants' written outline it was suggested that the explanation which was required concerned the whole course of conduct which had resulted in undue delay in delivering a proper pleading of economic viability.[101] This cannot be the case when one has reference to the history of the proceedings outlined above. For most of 2011 the proceedings were conducted in accordance with consent orders. Mr Archibald in oral submissions did not raise any particular concerns in relation to delay arising from the conduct of the parties in 2012. Subject to the supervisory jurisdiction of the court, the withdrawal of the positive allegation in the reply that the project was economically viable did not expressly require leave under the UCPR. The first time any complaint was made in respect of the respondents' pleading of causation was in the appellants' letter of 17 October 2013.[102] The appellants' complaint having been made in relation to the respondents' pleading of causation, his Honour permitted the delivery of a proposed amended statement of claim addressing this concern and subsequently ordered further and better particulars of paragraph 23(c)(d) of the statement of claim.[103] An examination of the amendment to the statement of claim and the particulars supplied in respect of paragraph 23(c)(d) of the statement of claim reveals that this is not the same plea of the Monto Coal Project being economically viable which was withdrawn. The particulars of paragraph 23(c)(d) of the statement of claim dated 13 February 2014 are in short compass. As his Honour observed:[104]
[213]
"Whilst aspects will require elucidation at trial, the proposed particulars inform the Defendants of the case to be met at trial. The Plaintiffs' counsel readily concedes those particulars are based on an expert report commissioned by the Plaintiffs. It is contended delivery of that report will provide the necessary further elucidation."
[214]
[93] There is no appeal from this aspect of his Honour's judgment. What then is the conduct of the respondents that requires explanation?
[215]
[94] Mr Archibald initially submitted that the explanation that was required was for the making of the application to amend the statement of claim. This was because the amendment to the statement of claim constituted, on Mr Archibald's submission, a reinstatement of the positive allegation of economic viability that had been withdrawn from the reply. Mr Archibald relied in this respect on the statement of his Honour at paragraph [27] of the Reasons:[105]
[216]
"By contrast, the present application involves reinstating a positive allegation which had only been abandoned some two months prior, in circumstances where the proceeding is still at a pleading stage."
[217]
[95] The respondents, having withdrawn the positive allegation of economic viability from the reply, have never sought to reinstate that allegation in respect of liability. Implicit in the appellants' submission is that in the absence of explanation his Honour could not have been satisfied that the application for leave to amend the statement of claim was bona fide, the inference being that the positive allegation of economic viability in the reply was simply withdrawn to avoid the consequences of non-compliance with orders for the delivery of particulars.
[218]
[96] These inferences do not arise in the circumstances of the present appeal.
[219]
[97] It is not at all clear that the amendment to the statement of claim involved the reinstating of a positive allegation of economic viability which had been recently abandoned. As submitted by the respondents:[106]
[220]
"Of course, the two concepts are not the same. 'Viability at the time' depends upon a prediction made at a point in time upon knowledge then available. Loss by reason of a breach of contract depends upon proving what would actually have happened having regard to real events after breach.
[221]
In short, the Plaintiffs' claim, from the first day, has always involved an allegation that they suffered loss by reason of the failure of the Defendants to develop what would have been, as events have proved, a profitable mine. No particulars have even been asked of those losses and no complaint about the pleading in that respect has even been made (until now)."
[222]
[98] There was no evidence before his Honour that the positive allegation of economic viability in the reply had been abandoned so as to circumvent compliance with previous orders of the court as to the supply of particulars. To the contrary, the transcript, recording the withdrawal of that allegation from the reply, evidences a conscious decision by senior counsel then acting for the respondents. The respondents have in any event now particularised what his Honour referred to as the "reinstatement" of the previously abandoned plea. No complaint is made in relation to those particulars. The application for leave to amend the statement of claim and the subsequent provision of particulars in relation to the issue of causation may therefore be viewed quite separately from any history of non-compliance by the respondents of orders to file and serve an amended reply and supply particulars of the reply.
[223]
[99] The appellants submitted that his Honour erred in seeking to distinguish the approach in Aon on the ground that Aon was concerned with an amendment sought to be made at trial.[107] Mr Archibald expanded on this in oral submissions:[108]
[224]
"His Honour really treated, in our respectful submission, the question of explanation as much diminished, almost to the vanishing point, because of the absence of imminence of trial, and therefore, although (sic) no explanation was not really mattering in the circumstances."
[225]
[100] Whilst it may be accepted that the principles identified in Aon are of general application, the application of those principles will vary from case to case. As stated by Keane CJ, Gilmour and Logan JJ in Cement Australia Pty Ltd v Australian Competition and Consumer Commission:[109]
[226]
"Aon Risk is not a one size fits all case. Whilst various factors are identified in the judgment as relevant to the exercise of discretion, the weight to be given to these factors, individually and in combination, and the outcome of that balancing process, may vary depending on the facts in the individual case. As the plurality in Aon Risk observed at [75], statements made in cases concerning amendment of pleadings are best understood by reference to the circumstances of those cases, even if they are stated in terms of general application."
[227]
[101] In the present appeal, the claim for damages in the respondents' original statement of claim and all subsequent versions of the statement of claim has remained relatively unchanged. Any complaint in relation to the pleading of causation was not raised until 17 October 2013. This was not a case, such as Aon, where a new cause of action was sought to be pleaded. The need for an explanation and the content of any such explanation must vary from case to case. As observed by Gummow, Hayne, Heydon, Crennan, Kiefel and Bell JJ at Aon [82]:[110]
[228]
"The need for amendment will often arise because of some error or mistake having been made in the drafting of the existing pleading or in a judgment about what is to be pleaded in it. But it is not the existence of such a mistake that founds the grant of leave under rules such as r 501(a), although it may be relevant to show that the application is bona fide. What needs to be shown for leave to amend to be given, as the cases referred to above illustrate, is that the controversy or issue was in existence prior to the application for amendment being made. It is only then that it is necessary for the court to allow it properly to be raised to enable a determination upon it."
[229]
[102] The primary paragraph in Aon upon which the appellants relied was [103]. The plurality referred to the fact that an explanation was regarded as a relevant consideration in J L Holdings.[111] The court identified that "[g]enerally speaking, where a discretion is sought to be exercised in favour of one party, and to the disadvantage of another, an explanation will be called for."[112] This explanation arises because of the factor of delay. In Aon that delay was clear in that ANU on the third day of a four week trial, having settled with the insurers, sought an adjournment of the trial of its claim against Aon and foreshadowed an application for leave to amend that claim to allege a substantially different case.[113]
[230]
[103] As already observed, in the present appeal it is not immediately clear which period of delay requires explanation. It was always incumbent upon the respondents to properly plead their cause of action including their claim for damages. There was however no complaint made in relation to how causation was pleaded until 17 October 2013. Thereafter the respondents sought leave to amend and subsequently provided particulars. Even if one was to view (as his Honour did) this as a reinstatement of the positive allegation of economic viability there was not a delay of such an extent as to require explanation. As Flick J identified in Takemoto v Moody's Investors Service Pty Ltd (No 2):[114]
[231]
"The absence of any such explanation, however, remains but one consideration to be taken into account."
[232]
[104] Boddice J identified the failure to provide an explanation as a relevant factor in determining whether to give the respondents leave to deliver the pleading. The delay was however of short duration and in respect to proceedings which were still at a pleading stage. The amendments sought were to the respondents' claim for damages for breach of contract. This claim had remained substantially the same throughout the proceedings. The immediate explanation for the amendments to the statement of claim was the concerns raised by the appellants in respect to causation in their solicitors' letter of 17 October 2013. The absence of explanation in those circumstances did not result in his Honour being unable to undertake the necessary weighing exercise nor to determine that the application for leave to amend was made bona fide. No error in this respect has therefore been demonstrated.
[233]
Third error - treating the making of a costs order as a panacea for the amendment
[234]
[105] The appellants' submitted that applying the principles in Aon, Boddice J should have recognised that undue delay necessarily caused injustice to the appellants - "injustice of a kind which could not be allayed by a mere order for costs, and which should have been regarded as an important consideration in the exercise of the court's discretion."[115]
[235]
[106] The appellants relied on paragraphs [99] and [100] of Aon:[116]
[236]
"In the past it has more readily been assumed that an order for the costs occasioned by the amendment would overcome injustice to the amending party's opponent. In Cropper v Smith Bowen LJ described an order for costs as a panacea that heals all. Such a view may largely explain the decision of this Court in Shannon v Lee Chun, which upheld a decision allowing the plaintiff to raise a new case at the second trial, but which imposed a condition as to costs. The modern view is that even an order for indemnity costs may not always undo the prejudice a party suffers by late amendment. In the present case it is difficult to see that such an order could be sufficient compensation, given that Aon would be required to again defend litigation which was, effectively, to be commenced afresh.
[237]
The views expressed by Lord Griffiths in Ketteman v Hansel Properties Ltd, that justice cannot always be measured in money and that a judge is entitled to weigh in the balance the strain the litigation imposes upon litigants, are also now generally accepted. In Bomanite Pty Ltd v Slatex Corporation Aust Pty Ltd, French J said of Bowen LJ's statements in Cropper v Smith:
[238]
'...That may well have been so at one time, but it is no longer true today ... Non-compensable inconvenience and stress on individuals are significant elements of modern litigation. Costs recoverable even on an indemnity basis will not compensate for time lost and duplication incurred where litigation is delayed or corrective orders necessary'." (footnotes omitted)
[239]
[107] The particular paragraphs of the Reasons said to give rise to this error are paragraphs 31 and 35.[117]
[240]
"Case management regimes are important, having regard to the significant demands on court time and the need for courts to weigh the interests of all litigants in the allocation of court resources. However, case management principles are not a means of punishment. A litigant is not to be denied the opportunity to advance a substantial claim on the basis of case management principles, if the interests of justice and the interests of other litigants, including, most particularly, that of the opposing party in the particular litigation, can be justly and adequately protected by the making of directions and appropriate costs orders.
[241]
Balancing all of the relevant factors, and notwithstanding the absence of an explanation by the Plaintiffs for the change in position, I am satisfied it is appropriate the Plaintiffs be given leave to deliver the pleading. Any prejudice to the Defendants can be adequately and justly met by the imposition of costs orders in favour of the Defendants, together with further directions as to the completion of other interlocutory steps and the delivery of expert reports."
[242]
[108] Mr Archibald submitted that his Honour had treated any potential costs order "as a panacea that heals all"[118] in circumstances where the prejudice occasioned to the appellants by the amendment could not be sufficiently compensated by any order for costs.
[243]
[109] Mr Archibald suggested that his Honour had not made any order that the appellants have their costs thrown away by the amendment.[119] Such an order was not necessary because of the operation of r 386 of the UCPR which provides that the costs thrown away as a result of an amendment made under r 378 must be paid by the party making the amendment unless the court orders otherwise. The respondents were therefore automatically liable for these costs.
[244]
[110] The only costs order made by his Honour was in respect of the appellants' application filed 25 October 2013. The appellants had not succeeded on that application. The costs order made by his Honour in respect to that application was that each party's costs of the application be that party's costs in the proceeding.[120]
[245]
[111] In considering whether his Honour erred as submitted it is necessary to identify the prejudice that the appellants alleged they would suffer if leave to amend was granted. Mr Kimmins, solicitor for the appellants, stated:[121]
[246]
"Furthermore, if the plaintiffs are now allowed to amend their case to raise a positive allegation of economic viability this will lengthen the trial and increase costs. As mentioned in paragraph 159 of my first affidavit, on my analysis of the issues I had identified approximately 16 expert witnesses that the defendants would need to call at trial on the issue of economic viability. Further, many of the defendants' witnesses of fact will give evidence concerning the project's economic viability. Assuming that the plaintiffs take a similar approach and call experts in relation to the individual inputs as well as an expert with financial expertise, this will significantly lengthen the trial and increase costs. In addition, it will delay the matter coming on for trial. A case not involving the plaintiffs raising a positive allegation of economic viability could potentially be ready for trial in 2014. However, taking into account the delay involved in relation to the plaintiffs providing proper particulars of a positive allegation of economic viability, the subsequent exchange of expert reports, experts conferring and general trial preparation including preparing for a trial involving contested expert evidence would mean that the proceedings would not be ready for trial until 2015 at the earliest."
[247]
[112] His Honour specifically addressed the appellants' submission that no accommodation, by way of the making of directions and appropriate cost orders, could be made as the respondents' conduct of the litigation had caused it actual prejudice.[122] His Honour identified the matters raised in respect of prejudice as relevant. He did not however consider them of such a nature as to justify depriving a litigant of the opportunity to advance a substantial claim in proceedings which were then on foot.[123] His Honour sought to balance a number of competing considerations.[124] Having regard to his Honour's Reasons, the submission that he treated any potential costs order "as a panacea that heals all" should be rejected.
[248]
Fourth error - approaching the matter as though the plaintiffs had something akin to a right to amend
[249]
[113] This error was said to arise from a consideration of his Honour's reasoning in paragraphs 31 and 35 which is quoted above. Mr Archibald submitted that his Honour, in observing that a litigant is not to be denied the opportunity to advance a substantial claim on the basis of case management principles, was, in effect, treating the respondents' application for leave to amend as equivalent to a right to amend.[125]
[250]
[114] This submission should be rejected. His Honour sought to balance a number of considerations including case management principles, the interests of justice, the interest of other litigants (including the appellants) and the absence of an explanation. All these matters were relevant to the exercise of the discretion and "a just resolution" of the respondents' claim. As is clear from the statement in Aon at [114][126] in determining what was a "just resolution" of the respondents' claim, serious consideration of all these matters was required.
[251]
[115] An important consideration was that if leave to amend was not granted or if the appellants' application to strike out the damages plea was not dismissed, the respondents' claim for damages would have been reduced to one of nominal damages only.[127]
[252]
[116] Further, the effect of the grant of leave to amend in the present case was very different to that considered in Aon. In Aon leave to amend meant that the trial was lost and the litigation substantially recommenced. There would be an impact upon other litigants seeking a resolution of their cases.[128] Here, as his Honour noted, the proceeding was a long way from being ready for trial[129] and certainly the matter had not been set down for trial.
[253]
[117] Mr Archibald was asked to identify any authority where leave to amend had been refused in circumstances where trial dates were not within the contemplation of the parties.[130] The court was referred to the decision of Flick J in Takemoto v Moody's Investors Service Pty Ltd (No 2)[131] to which reference has already been made.
[254]
[118] In that case the matter had not been set down for trial. There had been a number of applications by the applicant to amend the statement of claim and applications by the respondent to have various paragraphs of the statement of claim struck out. The causes of action pleaded when the first statement of claim was filed were breaches of s 52 or (in the alternative) s 53B of the Trade Practices Act 1974 (Cth) and breach of contract. The trade practices claim was struck out. Subsequently the applicant sought to reinstate the trade practices action.
[255]
[119] Flick J observed, referring to Aon, that an explanation for the change of position should have been forthcoming.[132] Leave to amend was refused however not upon any application of the principles identified in Aon but because the claim was fundamentally flawed:[133]
[256]
"But the need for an explanation can be left to one side. The claim sought to be advanced remains so fundamentally flawed that no leave should be granted to plead the case in the manner proposed."
[257]
[120] As previously stated the principles identified in Aon are of general application. They apply to applications for leave to amend whether or not the matter has been set down for trial. They also apply whether or not leave to amend is required as amendment made without leave can be disallowed.[134] In applying these principles to the present case and undertaking the balancing process required, his Honour did not treat the grant of leave to amend as an automatic right.
[258]
Fifth error - treating the application as more meritorious because it involved a substantial claim
[259]
[121] In paragraph 30 of the Reasons his Honour referred to the fact that the proposed pleading was based on an expert report and that if that report was to be accepted at trial the respondents stood to be awarded a "considerable sum". In paragraph 31 of the Reasons his Honour referred to the respondents' claim as a "substantial claim".
[260]
[122] Mr Archibald submitted by reference to Aon at [105],[135] that the mere fact that a claim was "arguable" was not of itself sufficient to permit amendment. In any event there was no material before his Honour to support the observation that the respondents' claim, if amendment was permitted, was "substantial".
[261]
[123] These submissions should be rejected. Care should be exercised in selecting particular passages from Aon. It is too easy to consider a passage out of context without proper reference to the circumstances of that case and the course of litigation.[136] In paragraph [105] of Aon the plurality stated:[137]
[262]
"The fact that ANU's new claims were arguable was not itself sufficient to permit amendment and could not prevail over the objectives of r 21. A 'just' resolution of the proceedings between ANU and Aon required those objectives to be taken into account."
[263]
[124] Simply because his Honour had reference to the respondents' claim for damages being for a "considerable sum" or being a "substantial claim" does not mean his Honour in granting leave to amend, failed to have regard to the objectives of r 5 of the UCPR. Nor does the mere reference to these matters suggest that undue weight was given to these considerations. His Honour was not dealing with an amendment to add new causes of action on the eve of trial. The amendment was to the respondents' allegation of loss, which had remained relatively unchanged throughout the proceedings.[138] The amendment and the particulars supplied sought to answer a specific concern in respect to causation raised by the appellants' solicitors in a letter dated 17 October 2013. The "missing link" in the causation chain was described as follows:[139]
[264]
"... that losses were suffered because Stage 1 would have been completed and would have been profitable, a Feasibility Study for Stage 2 would have reported that Stage 2 would have been profitable and would have recommended that it be undertaken, that Stage 2 would have been completed and it would have been profitable."
[265]
The amendment sought was one to an existing cause of action and claim for loss.
[266]
[125] As to the suggestion that there was no foundation for his Honour to consider the claim "substantial" or to be for a "considerable sum", the very nature of the claim for loss and its subject matter, namely loss of profit from the sale of coal from Stage 1 and Stage 2 of the Monto Coal Project, was sufficient foundation. Further, this claim for loss was supported by an expert report.
[267]
Sixth error - his Honour did not examine the history of litigation
[268]
[126] This alleged error may be dealt with briefly. His Honour identified that the relevant factors to any determination as to whether leave should be granted include the stage of the litigation, in particular, how advanced it was towards trial, the history of the litigation and the effects of the proposed amendments on the timely determination of the proceedings.[140] A brief history of the litigation was outlined in paragraphs [3]-[16] of the Reasons.
[269]
[127] As has been previously noted his Honour was the Supervised Case List judge for this matter. The significance of a judge having a familiarity with the relevant proceeding was considered by the Full Court of the Federal Court in Cement Australia Pty Ltd v Australian Competition and Consumer Commission:[141]
[270]
"It should be borne in mind that the extent to which the granting of an amendment which will lead to an adjournment of a trial may have the adverse effect upon the orderly administration of justice envisaged by the High Court in Aon Risk is a question in relation to which a trial judge of the Federal Court enjoyed a peculiar advantage. In the Federal Court, individual matters are allocated to the dockets of particular judges. The docket judge is charged with responsibility for the efficient management and determination of the cases within his or her docket. The extent to which an adjournment consequential upon an amendment of a pleading may adversely affect the due administration of justice in terms of a judge's docket is an issue which that judge is peculiarly well-placed to determine. This Court should be slow to attempt to 'second guess' the primary judge. In the present case, it is, in our respectful opinion, not open to this Court to regard it as an error on the part of the trial judge that he failed to act on the footing that other litigants and the Court would be disrupted to an unacceptable degree by the necessity for an adjournment, or that there would be undue delay before the trial of the adjourned proceedings."
[271]
[128] Mr Sofronoff in oral submissions relied on the above quoted passage and submitted that it applies with equal force to the circumstances of this case. Mr Sofronoff further submitted that his Honour could hardly have failed to take the history of the matter into account because it formed a great part of the submissions for the appellants below and his Honour in any event as the Supervised Case List judge had knowledge of the matter.[142] Mr Sofronoff's submission in this respect should be accepted.
[272]
Seventh error - failure to take into account the respondents' history of non-compliance with orders
[273]
[129] The appellants submitted that the respondents were in repeated breach of recurring court orders to deliver an amended reply and particulars of economic viability:[143]
[274]
"This course of conduct extended over a very long period - from 22 April 2011 (when the first breach occurred) to 23 September 2013 (when any positive allegation of economic viability was abandoned). This course of conduct had the result of stultifying this action at the pleading stage - preventing the case from moving on to the task of disclosure and the delivery of expert reports."
[275]
[130] The alleged error is that his Honour did not give any recognition in the Reasons to this aspect of the case. Mr Archibald submitted that this conduct of non-compliance weighed against a grant of leave to amend but was not decisive.[144] The history of non-compliance with court orders was, he suggested, conduct which had a tendency to disentitle the respondents from being granted leave to amend.[145]
[276]
[131] In support of this submission Mr Archibald referred to the decision of the Western Australian Court of Appeal in Brocx v Hughes where Newnes JA (with whom Pullin and Buss JJA agreed):[146]
[277]
"Where a party demonstrates a disregard for the orders or procedures of the court and as a result their claim is dismissed, their right again to invoke the jurisdiction in respect of that same claim cannot be unlimited if the public interest in the efficient use of court resources and the rights of other litigants are to be given due recognition. It cannot be the case that so long as the limitation period has not expired a party can ignore the rules and orders of the court, secure in the knowledge that if the worst happens and the action is struck out they can simply start again. It would bring the administration of justice into disrepute, and be 'productive of serious and unjustified trouble and harassment' to the defendant, if a party whose action had been dismissed by reason of their contumacious conduct could simply institute and proceed with a fresh action and, until the limitation period ran out, could continue to repeat that if and when the same fate befell them. To the extent that statements in the older cases, including Birkett v James and Tolley v Morris, may be understood to suggest that such a party is entitled as of right to prosecute a fresh action, I would not follow them. The High Court pointed out in Batistatos: (at [65]):
[278]
The 'right' of the plaintiff with a common law claim to institute an action is not at large. It is subject to the operation of the whole of the applicable procedural and substantive law administered by the court, whose processes are enlivened in the particular circumstances. This includes the principles respecting abuse of process."
[279]
[132] This passage needs to be understood in the circumstances of that case. As Newnes JA observed in the following paragraph:[147]
[280]
"Each case must, of course, depend upon its own circumstances."
[281]
[133] The appeal was from an order of a Master dismissing the appellant's action as an abuse of process. The action was in all material respects identical to an earlier action which had been dismissed for failure to comply with a "springing" order.[148]
[282]
[134] Newnes JA referred to the judgment of Browne-Wilkinson VC in Re Jokai Tea Holdings Ltd[149] in the following passage:[150]
[283]
"In Re Jokai Tea Holdings Ltd[1992] 1 WLR 1196, the defendant failed to comply with an 'unless' order requiring it to file further and better particulars of its defence by a specified time. The day before the time limit expired, the defendant filed an application to amend its defence to abandon all of the paragraphs in respect of which particulars had been sought. The primary judge held that the plaintiff was entitled to judgment by reason of the defendant's failure to comply with the order. An appeal by the defendant was allowed. In the course of his judgment, Browne-Wilkinson VC expressed the view that a litigant who fails to comply with a peremptory order of the court will not normally be permitted to continue to litigate either that or any other action based on the same claim or defence. He continued (at 1202 - 1203):
[284]
Disobedience to a peremptory order is 'generally' to be treated as contumelious conduct: see Tolley v Morris[1979] 1 WLR 592, 603 per Lord Diplock. Where there has been such contumelious disobedience not only the plaintiff's original action but also any subsequent action brought by him based on the same cause of action will be struck out: see Janov v Morris[1981] 1 WLR 1389. The basis of the principle is that orders of the court must be obeyed and that a litigant who deliberately and without proper excuse disobeys such an order is not allowed to proceed. The rationale of such penalty being that it is contumelious to flout the order of the court, if a party can explain convincingly that outside circumstances account for the failure to obey the peremptory order and that there was no deliberate flouting of the court's order, his conduct is not contumelious and therefore the consequences of contumely do not flow.
[285]
In Janov v Morris a plaintiff whose first action had been struck out for failure to comply with an 'unless' order brought a second action based on the same cause of action. The basis of the decision was that the failure to comply with the peremptory order was contumacious: Janov v Morris[1981] 1 WLR 1389, 1395H per Watkins LJ. It is clear that the court, in reaching the conclusion that the conduct was contumacious, placed much reliance on the fact that no explanation or excuse had been given by the plaintiff for his disobedience to the order.
[286]
In my judgment, in cases in which the court has to decide what are the consequences of a failure to comply with an unless order, the relevant question is whether such failure is intentional and contumelious. The court should not be astute to find excuses for such failure since obedience to orders of the court is the foundation on which its authority is founded. But, if a party can clearly demonstrate that there was no intention to ignore or flout the order and that the failure to obey was due to extraneous circumstances, such failure to obey is not to be treated as contumelious and therefore does not disentitle the litigant to rights which he would otherwise have enjoyed.
[287]
Browne-Wilkinson VC concluded that the defendant's explanation that it was amending its defence to omit the relevant pleas showed that it was not defying or ignoring the court order and that it was impossible to characterise its conduct as contumelious (or as Sir John Megaw, agreeing, suggested, 'contumacious')."
"But, in my view, where an action has been dismissed by reason of the failure of a party to comply with a springing order in circumstances where that party's conduct was contumacious, a second action by that party to enforce the same claim will generally be an abuse of process. I do not, however, consider that the fact an action was dismissed for failure to comply with a springing order establishes, of itself, that the conduct of the party in default was contumacious. I do not understand the cases to which I have referred to suggest otherwise. In each case, the court found that the conduct was contumacious in the absence of an explanation which showed that it was not. (I think that for all practical purposes 'contumelious' and 'contumacious' have generally been used interchangeably in the cases as denoting a wilful and obstinate resistance or disobedience to authority.) As Heydon JA (as his Honour then was) pointed out in Micallef v ICI Australia Operations Pty Ltd[2001] NSWCA 274 at [54]: 'A satisfactory explanation on affidavit might negate an inference that the plaintiff's defaults were not [sic] intentional or contumelious. But the absence of any explanation permits that inference to be drawn'."
[290]
[136] Boddice J was not faced with conduct that could be described as either "contumelious" or "contumacious". Unlike the circumstances in Brocx, the respondents were not in breach of any springing orders.[152] The respondents did eventually provide (on 23 September 2013) a response to the appellants' particulars concerning economic viability for each relevant year. An amended reply was also filed on 23 September 2013, albeit seven days late.
[291]
[137] The primary reason why the respondents did not provide particulars as to their positive case that the Monto Coal Project was economically viable was because that allegation was withdrawn. As Mr O'Donnell QC asserted on 14 October 2013 in the review before his Honour, the withdrawal of the allegation discharged the previous orders.[153] This was the situation identified by Browne-Wilkinson VC in Re Jokai Tea Holdings, namely that where a plea was withdrawn this showed that a party was not defying or ignoring court orders.
[292]
[138] It follows that when the application for leave to amend was being considered by Boddice J, the respondents were not in breach of any existing orders for the delivery of further and better particulars. Further it cannot be said that as Supervising Case List judge, his Honour was not fully aware of the history of non-compliance. It was his Honour who, in an exchange with senior counsel for the appellants on 15 July 2013, queried whether an application should be brought by the appellants because of "the constant non-compliance with court orders" (referred to in paragraph 42 above).[154]
[293]
[139] The appellants' submissions in this respect should therefore be rejected.
[294]
[140] The issue of prejudice has already been touched upon in respect of the alleged third error. His Honour dealt with the submission that the respondents' conduct of the litigation had caused the appellants actual prejudice in paragraphs [32] and [33] of the Reasons.[155] Mr Archibald submitted that his Honour, in paragraph [33] of the Reasons, referred to matters that had no real factual foundation, to impermissibly diminish the prejudice identified by the appellants.[156] Mr Sofronoff however submitted that any actual prejudice to the appellants was limited to the change of position from September 2013 to February 2014. The witnesses referred to in Mr Kimmins' affidavit were witnesses that were in the contemplation of the appellants to be called in September 2013. The only effect that the change of position had was that those witnesses may not have been in the contemplation of the appellants to be called for the period between September 2013 and February 2014.
[295]
[141] The matters identified by his Honour at paragraph [33] of the Reasons were clearly open on the material. His Honour, for example, observed that the advancing age of some witnesses was not of such a magnitude that there would be significant prejudice. There was no medical evidence before his Honour to suggest that any of the witnesses were unable to give evidence because of advancing age or that their recollection of events would otherwise be affected. It may also be accepted that simply because a witness is no longer in the employ of the appellants that would have any impact upon the ability of that witness to give cogent and reliable evidence at trial. If anything, that fact may assist in the witness being regarded as more independent.
[296]
[142] Mr Archibald properly conceded that these considerations were minor in the balancing process but still needed to be weighed.[157] An analysis of his Honour's Reasons shows that the alleged prejudice to the appellants was identified and weighed. There is nothing in this alleged error.
[297]
Ninth error - failure to take account of the interests of other parties
[298]
[143] His Honour noted the importance of case management principles to the interests of all litigants.[158] He concluded that these interests could be protected by "the making of directions and appropriate orders."[159]
[299]
"This conclusion is difficult to follow. Having been afforded a reasonable opportunity to access the court system to advance its case - but having misused this opportunity through undue delay - the Respondents' conduct has already damaged the interests of other litigants. In the present case, their interest could only be protected by expediting the hearing of the case as presently formulated - not allowing further court resources to be directed to the pursuit of an expanded case."
[300]
[145] Mr Archibald in support of this submission referred to Aon at [102]:[161]
[301]
"Much may depend upon the point the litigation has reached relative to a trial when the application to amend is made. There may be cases where it may properly be concluded that a party has had sufficient opportunity to plead their case and that it is too late for a further amendment, having regard to the other party and other litigants awaiting trial dates."
"The resources of the court are limited and the demands upon them are great. In light of the objects set out in O 1 r 4B, the public interest in the efficient use of those resources and the right of other litigants to have their disputes resolved in an efficient and timely way are properly matters to be taken into account in determining whether proceedings instituted in circumstances such as the present are an abuse of the process of the court. Parties have the right to invoke the jurisdiction and the powers of the court in order to seek a resolution of their dispute and must be afforded a sufficient opportunity to resolve their dispute by that process. But that opportunity is not unlimited."
[304]
[147] These passages make it clear that, in assessing the interest of other litigants, much will depend upon the point the litigation has reached relative to a trial when the application to amend is made. His Honour was dealing with an application for leave to amend in circumstances where disclosure was not complete, the appellants had not delivered any expert reports and the matter had not been set down for trial. His Honour viewed the proposed amendment as a reinstatement of an allegation of economic viability that had only recently been withdrawn (23 September 2013). In such circumstances the interest of other litigants was not a significant consideration in respect of the amendment application. No error has been revealed.
[305]
Tenth error - failure to balance all relevant factors
[306]
[148] In Aon at [111][163] the plurality stated that all matters relevant to the exercise of the power should be weighed. Mr Archibald submitted that this weighing or balancing process was not undertaken because his Honour failed to address a number of relevant matters, essentially the matters identified in errors one to nine above.
[307]
[149] For the reasons discussed in relation to those errors this submission should also be rejected.
[308]
[150] No error has been identified that would warrant this Court interfering with his Honour's exercise of discretion.
[309]
[1] The judgment and orders were delivered on 28 February 2014. The written reasons mistakenly state they were delivered on 27 February 2014.
[310]
[3] Appellants' amended outline of argument filed 3 July 2014, [4].
[311]
[4] Heads of agreement dated 17 October 2001, definitions of "Relevant Interest" and "Mining Property", AR Vol 5, 1751-1761.
[312]
[5] Heads of agreement dated 17 October 2001, clauses 3.1(a)(iii)(iv), AR Vol 5, 1754.
[313]
[6] Joint venture agreement dated 16 May 2002, clause 2.1, AR Vol 2, 506.
[314]
[7] Joint venture agreement dated 16 May 2002, clause 1, AR Vol 2, 504.
[315]
[8] Joint venture agreement dated 16 May 2002, clause 1, AR Vol 2, 505.
[316]
[9] Joint venture agreement dated 16 May 2002, clause 5.1, AR Vol 2, 508-509.
[317]
[10] Joint venture agreement dated 16 May 2002, clause 1, AR Vol 2, 505.
[318]
[11] Joint venture agreement dated 16 May 2002, clause 7.1, AR Vol 2, 509.
[319]
[12] Joint venture agreement dated 16 May 2002, clause 7.22, AR Vol 2, 512.
[320]
[13] Management agreement dated 16 May 2002, AR Vol 2, 527-544.
[321]
[14] Amended consolidated statement of claim filed 28 October 2011, [17](a),(b), AR Vol 6, 2082; amended defence of the defendants to the amended consolidated statement of claim filed 7 May 2013, [130](b), AR Vol 6, 2266.
[322]
[15] Amended defence of the defendants to the amended consolidated statement of claim filed 7 May 2013, [130](c), AR Vol 6, 2266.
[17] Statement of claim filed 1 October 2007, [14], AR Vol 5, 1839.
[325]
[18] Statement of claim filed 1 October 2007, [18], AR Vol 5, 1841.
[326]
[19] Statement of claim filed 1 October 2007, [19], AR Vol 5, 1841-1842.
[327]
[20] Statement of claim filed 1 October 2007, [20], AR Vol 5, 1842.
[328]
[21] Defence filed 29 October 2007, [10](a), AR Vol 5, 1856.
[329]
[22] Defence filed 29 October 2007, [10](b)(i), AR Vol 5, 1856.
[330]
[23] Defence filed 29 October 2007, [11](b), AR Vol 5, 1858.
[331]
[24] Reply dated 11 March 2008, par 1(b), AR Vol 5, 1880.
[332]
[25] Reply dated 11 March 2008, [1](e)(i), AR Vol 5, 1881.
[333]
[26] Letter Russell and Company to Corrs Chambers Westgarth dated 25 July 2008, AR Vol 2, 591-592.
[334]
[27] Amended statement of claim filed 26 October 2010, AR Vol 5, 1890-1913.
[335]
[28] Claim and statement of claim filed 23 November 2010 (BS 12704/10), AR Vol 5, 1914-1935.
[336]
[29] Amended defence filed 23 December 2010, AR Vol 5, 1936-1961.
[337]
[30] Appellants' amended outline of argument filed 3 July 2014, [84].
[338]
[31] Affidavit of Michael John Kimmins sworn 25 October 2013, [53], AR Vol 2, 411 and exhibit MJK-23, AR Vol 2, 767-772.
[339]
[32] Exhibit MJK-24 to the affidavit of Michael John Kimmins sworn 25 October 2013, AR Vol 2, 773-775.
[340]
[33] Appellants' amended outline of argument filed 3 July 2014, [86].
[341]
[34] Exhibit MJK-33 to the affidavit of Michael John Kimmins sworn 25 October 2013, AR Vol 3, 875-876; respondents' outline of argument filed 19 May 2014, schedule to respondents' challenges to appellants' outline of argument, 17.
[342]
[35] Affidavit of Michael John Kimmins sworn 25 October 2013, [74](c), AR Vol 2, 420.
[43] Appellants' amended outline of argument filed 3 July 2014, [102].
[351]
[44] Exhibit MJK-50 to the affidavit of Michael John Kimmins sworn 25 October 2013, AR Vol 3, 989-990.
[352]
[45] Affidavit of Terence John McBride sworn 15 July 2013, [9], AR Vol 4, 1509-1510.
[353]
[46] Affidavit of Michael John Kimmins sworn 25 October 2013, [86], AR Vol 2, 424; plaintiffs' response to the defendants' particulars concerning economic viability dated 1 September 2011, AR Vol 6, 2012-2031.
[354]
[47] Affidavit of Terence John McBride sworn 15 July 2013, [12], AR Vol 4, 1510.
[355]
[48] Exhibit MJK-50A to the affidavit of Michael John Kimmins sworn 25 October 2013, AR Vol 3, 992.
[356]
[49] Exhibit MJK-54 to the affidavit of Michael John Kimmins sworn 25 October 2013, AR Vol 3, 1029-1030.
[357]
[50] Exhibit MJK-55 to the affidavit of Michael John Kimmins sworn 25 October 2013, AR Vol 3, 1033-1034.
[358]
[51] Exhibit MJK-55 to the affidavit of Michael John Kimmins sworn 25 October 2013, AR Vol 3, 1035.
[359]
[52] Exhibit MJK-61 to the affidavit of Michael John Kimmins sworn 25 October 2013, AR Vol 3, 1043.
[360]
[53] Exhibit MJK-64 to the affidavit of Michael John Kimmins sworn 25 October 2013, AR Vol 3, 1046.
[361]
[54] Exhibit MJK-65 to the affidavit of Michael John Kimmins sworn 25 October 2013, AR Vol 3, 1047.
[362]
[55] Exhibit MJK-66 to the affidavit of Michael John Kimmins sworn 25 October 2013, AR Vol 3, 1048.
[363]
[56] Reply filed 11 March 2008, [3], AR Vol 5, 1886.
[364]
[57] Amended consolidated statement of claim filed 28 October 2011, AR Vol 6, 2066-2121.
[365]
[58] Amended defence of the defendants to the amended consolidated statement of claim filed 7 May 2013, AR Vol 6, 2194-2318.
[366]
[59] Reply to the amended defence filed 23 September 2013, AR Vol 7, 2319-2501.
[367]
[60] Amended consolidated statement of claim filed 28 October 2011, [23](c), AR Vol 6, 2102.
[368]
[61] Amended consolidated statement of claim filed 28 October 2011, [32](c), AR Vol 6, 2119.
[369]
[62] Amended defence of the defendants to the amended consolidated statement of claim filed 7 May 2013, [163](b), [189](c), AR Vol 6, 2309, 2318.
[370]
[63] Reply to the amended defence filed 23 September 2013, [163], [189], AR Vol 7, 2498, 2500.
[371]
[64] Exhibit MJK-67 to the affidavit of Michael John Kimmins sworn 25 October 2013, AR Vol 3, 1050.
[372]
[65] Exhibit MJK-68 to the affidavit of Michael John Kimmins sworn 25 October 2013, AR Vol 3, 1059.
[373]
[66] Appellants' amended outline of argument filed 3 July 2014, [134].
[374]
[67] Defendants' written submissions, [69]-[73], AR Vol 7, 2535.
[375]
[68] Transcript of proceedings,14 November 2013, 1-24, lines 5-40, AR Vol 1, 24.
[376]
[69] Transcript of proceedings,14 November 2013, 1-32, lines 42-45, AR Vol 1, 32.
[377]
[70] Appellants application filed 25 October 2013, [4], AR Vol 7, 2519.
[378]
[71] Proposed amended consolidated statement of claim dated 27 November 2013, [23](c), AR Vol 7, 2609.
[379]
[72] Defendants' further written submissions dated 29 November 2013, [25], AR Vol 7, 2637.
[380]
[73] Order of Boddice J dated 29 November 2013, AR Vol 7, 2648-2649.
[381]
[74] Further and better particulars of paragraph 23(c)(d) of the proposed amended consolidated statement of claim dated 13 February 2014, AR Vol 7, 2650.
[135]Aon Risk Services Australia Limited v Australian National University (2009) 239 CLR 175, 215 [105].
[442]
[136]Aon Risk Services Australia Limited v Australian National University (2009) 239 CLR 175, 206 [75].
[443]
[137]Aon Risk Services Australia Limited v Australian National University (2009) 239 CLR 175, 215 [105].
[444]
[138] Respondents' outline of argument filed 19 May 2014, [27]-[28].
[445]
[139] Respondents' outline of argument filed 19 May 2014, [29] and further and better particulars of paragraph 23(c)(d) of the proposed amended consolidated statement of claim dated 13 February 2014, AR Vol 7, 2650-2664.