Perpetual Trustees Victoria Limited v Ann Marie Menzies

Judgment Introduction 1In October 2005 Permanent Trustees Victoria Limited (PTVL) made an advance pursuant to a loan agreement and mortgage which, it understood, had been executed by the defendant Ann Marie Menzies. Ms Menzies denies that she entered into the loan agreement or the mortgage and that she received any funds or, in the circumstances, is liable under the security documents. Challenger Management Pty Limited (Challenger) had entered into certain commercial arrangements with PTVL (at a time when it was known as Interstar Securities (Australia) Pty Limited) by which Challenger arranged for loans such as those claimed to be made to Ms Menzies. On settlement, arranged by Challenger, PTVL paid the loan money to the borrower (here thought to be Ms Menzies), acting on the basis of what was understood by both it and Challenger to be valid and enforceable security documents. BMC Mortgage Corporation Pty Limited (BMC) had entered into a contractual arrangement with Challenger which, essentially, involved its introducing would-be borrowers to Challenger and receiving a commission if Challenger approved the loan (made from PTVL funds). Under the procedure provided for in a manual referenced by the agreement, BMC (called the mortgage originator) passed on to Challenger loan applications and other documents signed by the applicant and, if it approved the loan, Challenger arranged for execution of the security documents and attended to settlement. This occurred in the present case. However, Menzies denied that she made the relevant application for loan and signing any of the security documents on the basis of which Challenger handed over PTVL's money. Moreover, it appears that the Certificate of Title used to register the mortgage was forged. 2PTVL, not accepting Menzies' denials, sued her for possession of the land subject to the registered mortgage, relying on her failure to comply with the obligations in the loan agreement and mortgage. On 4 July 2008 PTVL amended its statement of claim to add Challenger as a second plaintiff and BMC as a second defendant. Against the possibility that Menzies might win her case, PTVL sued BMC for alleged failures to comply with its obligations under the origination agreement which, it contended, caused it to provide funds on invalid security documents. BMC, for its part, asserts that it did all that was required of it and, at all events, alleges (as its alternative case) that, since its agreement was with Challenger and not PTVL, the latter was unable to enforce such obligations as the contract imposed. BMC also alleges that, since the money lost was that of PTVL, BMC has suffered no relevant loss. 3PTVL and Challenger wish to amend their pleadings in connexion with the alternative case. The pleadings 4For present purposes it is necessary only to deal with the pleadings between PTVL, Challenger and BMC. PTVL relied on the origination agreement and the procedures manual alleging that, in a number of respects, all focused on the identification of the borrower, BMC was in breach of its obligations. PTVL also alleged that BMC owed it a duty of care under the general law to act with due care, skill and diligence and failed to do so. PTVL also made a Trade Practices Act 1974 (Cth) claim against BMC alleging that it had made false or misleading representations "to Challenger as agent for PTVL" concerning the verification of "the identity of Menzies as the loan applicant and borrower" and that it "had discharged its [contractual and common law] obligations", PTVL advancing the loan moneys "acting solely in reliance on the representations made [by BMC]". 5Challenger sued for breach of the origination agreement, particularising the failure of BMC to undertake the verification procedures provided in the manual. The loss alleged to have been suffered by Challenger "is the sum lent, together with the interest foregone as contractually mandated and additional expenses in defending the Mortgage and Loan Agreement as an indemnity to PTVL, pursuant to the Trustee Agreement". This trustee agreement, entered into between PTVL and Challenger on or about 3 December 1999, set out the terms and conditions upon which "Challenger would manage a securities backed investment program on behalf of the PTVL Trust". Challenger also claimed against BMC in negligence and for misleading and deceptive conduct under the Trade Practices Act , relying on the same material. It alleged that in respect of both these claims that Challenger had suffered loss and damage pursuant to the indemnity obligations to PTVL created by the trustee agreement. 6On 11 November 2008 BMC filed a defence to the amended statement of claim. In respect of PTVL's claim, it did not admit that it owed a duty of care to PTVL as alleged and denied that any duty of care was breached. It agreed that it made certain written representations to Challenger but denied (perhaps only implicitly) that the representations were made to Challenger as agent for PTVL. It denied that it made representations verifying the identity of Menzies as the loan applicant and borrower. It denied that it was obliged to advise PTVL or its agent, Challenger, that it had failed to undertake adequate identity checks as alleged. BMC also denied that PTVL had suffered loss and damage (as became clear only on later submissions, by virtue of Challenger's duty of indemnification). Issue was also taken with the obligations alleged to arise by virtue of the manual. BMC also denied that Challenger suffered loss and damage (though it did not state the basis of the denial, in particular that PTVL and not Challenger had not advanced any moneys). (Particulars of concurrent wrongdoers were also given but this does not call for any discussion.) 7On 20 December 2010 PTVL and Challenger filed a second further amended statement of claim. So far as PTVL was concerned, alternative relief was claimed of judgment in a money sum plus costs on an indemnity basis and interest. Both PTVL and Challenger sought a declaration that BMC must indemnify either one or both of them against "any loss or damage suffered by them as a result of the conduct of" BMC in breach of the origination agreement, including "consequential financial loss or damage" together with damages at common law, as well as under the Trade Practices Act . Various consequential amendments and other editorial changes were made. PTVL added a claim against BMC for indemnity, alleging that it was an express term of the origination agreement that the indemnities entered into by BMC in favour of Challenger "would enure to the benefit of PTVL". It alleged that, accordingly, the origination agreement and the indemnity "may be enforced by PTVL as promisee against BMC as promisor" and thus "PTVL is entitled to indemnification from BMC for its damages, losses [etc]". Leaving aside the changes to Challenger's claim by virtue of the addition of the allegations concerning moneys due under the loan agreement, Challenger claimed against BMC by virtue of its relationship with PTVL. Challenger relied on what was called a "Master Trust Deed" into which it had entered with PTVL together with various other transactions or arrangements which had the effect of Challenger agreeing to indemnify PTVL as trustee against any losses or expenses that PTVL might incur as a consequence of any breach of "any representation or warranty or undertaking" made to PTVL in connection with, in effect, the value of any mortgage security becoming part of the trust. It is also alleged that Challenger in effect warranted to PTVL that the Menzies mortgage was a valid security and was therefore liable to PTVL in the event that it was not valid. Accordingly, as Challenger suffers loss by being required to indemnify PTVL, it is entitled to be indemnified in its turn by BMC. 8On 14 March 2011 BMC filed its defence to the second further amended statement of claim. Relevantly, it did not admit the allegations as to the legal relations between Challenger and PTVL. So far as the alleged consequential losses are concerned, BMC pleaded that, as the mortgage and loan agreement were in the name of PTVL, any chose in action in favour of PTVL arising from those contracts was owned by PTVL and were not capable of assignment, sale or other transfer from Challenger to PTVL and that, in the premises, Challenger was not required to indemnify PTVL, nor has it suffered any loss as alleged. 9On 5 April 2011 PTVL and Challenger filed an amended reply which, amongst other things, took up BMC's defence to the second further amended statement of claim. It was alleged that PTVL and BMC "[a]dopted a mutual assumption that their relationship was governed by the terms of the [loan origination agreement] and that BMC indemnified PTVL" pursuant to the specific clauses to that effect, that PTVL and BMC "conducted their relationship on the basis of that mutual assumption" and "knew or intended" that the other would act upon that basis. The pleading at first alleged that, in these premises, "departure from the assumption would occasion detriment to the plaintiff" but did not allege any legal consequence that would follow from that detriment. In discussion with Mr Sirtes SC for PTVL and Challenger, it was proposed to add the following words after the allegation of the occasioning of detriment, "in consequence of which BMC is estopped by convention from denying its liability to indemnify the first plaintiff". Submissions 10On 1 April 2011 Mr Curtin SC for BMC filed written submissions as to his client's response to the plaintiff's claim against it. Mr Curtin pointed to the fundamental problem facing PTVL and Challenger, namely their relationship to the lost funds, PTVL having lent the money in respect of which it sues Menzies whilst Challenger (at least directly) does not suffer any loss since the money was not its. As has been pointed out, PTVL seeks to recover its loss from BMC by alleging a breach of a duty of care, misleading or deceptive conduct, or relying on an indemnity clause in the agreement between Challenger and BMC which, PTVL claims, it can enforce against BMC even though it is not a party to the agreement. On the other hand Challenger asserts against BMC that it is liable to indemnify PTVL for its loss by virtue of BMC's breaches of the contract and concomitant duty of care between Challenger and BMC or BMC's misleading or deceptive conduct. 11BMC denies allegations in respect of its conduct but raises additional legal issues concerning the PTVL and Challenger claims against it. It is submitted for BMC that any relevant loss is that of PTVL and not Challenger, that PTVL, not being privy to the contract, is not entitled to the benefit of the indemnity in the agreement between Challenger and BMC and that Challenger is not liable to indemnify PTVL because it has not suffered any loss, the loan funds being PTVL's. 12Mr Sirtes, in dealing with the privity argument, relied firstly on the specific terms of the indemnity clauses. These are - "3.5 Neither Interstar nor the Trustee will be liable for any act or omission by the Originator of [ sic - agreed should be "or"] the Originators Representatives and the Originator indemnifies the Trustee and Interstar and will keep them indemnified in respect of any loss, damage or injury which the Trustee or Interstar may suffer as a result of any such act or omission. [9.2 The warranties and indemnities contained in this agreement: ... (c) are for the benefit of and may be relied upon by the trustee notwithstanding that the trustee is not a party to this agreement. 18.1 The Originator agrees to indemnify and keep indemnified Interstar and the Trustee from and against any damages, losses, outgoings, costs, charges or expenses suffered or incurred by Interstar or the Trustee directly or indirectly in respect of: (a) any breach of the Originator's obligations, warranties, representations and covenants under this agreement or the manual or any error, omission or misrepresentation whether innocent or fraudulent by the Originator or the Originator's representatives ... (e) the provision of any incomplete or inaccurate Applicant Data which the Originator knew or should have known was incomplete or inaccurate; (f) any act or omission of an Originator's Representatives; .... 18.2 Without limiting the provisions of clause 18.1, in the event in any breach of or default under this Agreement by the Originator or the Originator's Representatives, the Originator agrees to indemnify Interstar and/or the Trustee against: (a) all fees ... actions, claims ... losses ... [and so on] ... incurred by Interstar and/or the Trustee in connection with or resulting from this Agreement consequent upon any breach of default under this Agreement by the Originator ...; (b) any loss or damage suffered or incurred by Interstar and/or the Trustee as a result either directly or indirectly of any breach of or default by the Originator under this agreement including, without limitation, any consequential loss or damage including any financial loss or damage suffered by Interstar under any agreement between the trustee and Interstar; and (c) any liability either direct or indirect, tortious, contractual or statutory which may be incurred or suffered by Interstar and/or the Trustee ... where such loss or damage arises directly or indirectly from any breach of or default under this agreement by the Originator or the Originator's Representatives including, without limitation, liability for consequential loss or damage ..." 13Mr Sirtes submitted that the indemnification clauses, in their own imperative terms, entitled PTVL to an indemnity from BMC if BMC were found to have breached its obligations under the origination agreement with Challenger. He cited Mizzi v Reliance Financial Services Pty Limited [2007] NSWSC 37 as demonstrating the way in which the argument was put. In that case, Mrs Mizzi's property was mortgaged to Reliance, which later agreed (in the "January deed") with her relatives (who had benefited from the advances) to release her from any obligation following an effective transfer (in substance substituting other security for Mrs Mizzi's home) by the relatives to Reliance. Some problems ensued relating to the substituted security and payment of further instalments. In due course, Reliance sought to enforce the mortgage against Mrs Mizzi, submitting that, in the events that happened, Reliance was not bound to release Mrs Mizzi pursuant to the January deed and, even if it were so bound, the obligation was not enforceable at the suit of Mrs Mizzi, who was not a party. Brereton J found that it was the plain intent of the parties to the January deed that once there had been an effective transfer of the other property as security, Mrs Mizzi would be released from liability. His Honour found that the pre-condition was satisfied. Although (save for the availability of the new security) the relatives had not performed their obligations under the January deed to pay the specified instalments, this did not of itself affect the obligation to release Mrs Mizzi, having regard to the terms of the deed; in short, the clause providing for the release of Mrs Mizzi's obligations was a separate and independent obligation subject only to the transfer of the relevant property. However, that left the question whether Mrs Mizzi, not being a party to the agreement, and not being privy to the contract, could enforce the obligation. Brereton J considered that the doctrine of privity of contract suggested that she could not, although the application of the doctrine had been questioned and, in Trident General Insurance Co Ltd v McNice Bros Pty Ltd (1988) 165 CLR 107, the High Court finding that a stranger was allowed to sue on an insurance contract, three of the seven members of the Court doing so on the footing that the rules as to privity should be relaxed, at least in the context of an insurance contract. His Honour concluded, "the prevailing view is that the rules as to privity remain the law", citing Winterton Constructions Pty Ltd v Hambros Australia Ltd (1991) 101 ALR 363. His Honour added - "However, there are some recognised exceptions or qualifications, in particular that a party to a contract may be the trustee for a third party of the benefit of a contractual promise to confer a benefit on the third party... Such a trust may attach to the benefit of the whole contract, or only to the whole or part of some particular contractual obligation ... Where there is a trust of the benefit of a contractual promise in favour of a third party depends primarily on the intention of the promisee [here, the relatives] ...; although there may be cases in which the intention of the promisor is also relevant, generally it is the settlor of a trust whose intention is critical, and in this context the settlor is the promisee. There are statements of high authority in this country that courts should not be reluctant to infer a trust in cases where parties make a contract for the benefit of the third party [citing Wilson v Darling Island Stevedoring & Lighterage Co Limited (1956) 95 CLR 43 at 67 (Fulleger J); Trident General Insurance Co Limited v McNiece Bros Pty Ltd (1988) 165 CLR 107 at 146-147 (Deane J)]." 14Brereton J concluded that the crucial relative was the true borrower and primarily obliged as between them to procure the return of Mrs Mizzi's deeds and owed her a legal and equitable obligation to procure her release from the mortgage and the return of her title deed. His Honour concluded, on all the circumstances (though in the absence of evidence from the relatives) that they intended that the benefit of the clause be held by them for Mrs Mizzi, stating that "the most important factor leading to that conclusion is the circumstance that [the crucial relative] had a legal and equitable obligation to procure such a release". In bargaining for it, he was therefore performing a legal obligation that he owed to Mrs Mizzi and, having procured it, he was not at liberty to abandon it or deal with it as if it were for his own benefit so that the "proper inference is that in respect of [the release clause, he] was contracting on behalf of Mrs Mizzi and intended that Mrs Mizzi have an interest in the benefit of [the clause] thus discharging his pre-existing legal and equitable obligation to her to procure her release for the mortgage". 15I have set out in a little detail Brereton J's reasoning to show (as Mr Curtin immediately complained) that circumstances such as these, as they might apply to the relationship between PTVL and Challenger, were not pleaded by either of them; nor was it pleaded, in even general terms, that Challenger held the contractual promise of BMC on trust, except to the extent perhaps that the indemnity was certainly relied on and necessarily by exception to the privity rule. 16(The indemnity provisions were also relied on as an answer to the proportionate liability claim made by BMC but that does not call for present discussion.) 17Mr Sirtes also relied on what he describes as the relaxation of the privity rule to which some of the members of the High Court referred in Trident . He submitted that, in the circumstances, I should find that the doctrine of privity, quite apart from any question of trust, should not prevent PTVL from relying on the indemnity clauses in the origination agreement. He relied on Barroora Pty Ltd v Provincial Insurance Ltd (1992) 26 NSWLR 170 for his principal submission that the exception recognised in Trident was not limited to insurance contracts. In Barroora , the question was whether the holder of a charge over an insured property could at common law enforce the insurance contract against the insurer when the property is destroyed or damaged even though the holder was not a party to the contract. Brownie J held that the holder could enforce the insurance policy upon proof of the insurer's intention to provide coverage to that holder. His Honour discussed Trident at some length with a view to divining the principle for which it stood. Following careful analysis, he concluded that the exception identified in Trident relating to liability insurance should apply also to property insurance. His Honour pointed out that in both the Court of Appeal and the High Court, "the questions argued were not questions peculiar to insurance law, much less questions peculiar to the law of liability insurance, but rather were questions related to the law of contracts generally" (ibid at 177) and concluded, "the whole thrust of the various judgments in both the Court of Appeal and the High Court points to the conclusion that those courts were primarily considering questions of general application, relating to contracts generally, rather than contracts of liability insurance; and the passages which I have quoted from the judgments [referring to insurance] are statements limiting the then recognition of the width of the exception to a rule relating to contracts generally" (ibid 177-178), going on to say - "I see no sensible basis for thinking other than that [the Court of Appeal and the High Court] held that an exception to the old rules, of general application, should be recognised ... [a] finding [that] is therefore binding, but what in my judgment is not binding is the measure of the exception, or the definition of its boundaries; that I think is a matter to be decided in the way in which the common law develops, case by case, and step by cautious step" (See also Co-Operative Bulk Handling Ltd v Jennings Industries Ltd (1996) 17 WAR 257 at 256-266 per Franklyn J and Woodside Petroleum Development Pty Ltd v H & R - E & W Ltd (1997) 18 WAR 539 at 562.) 18Mr Sirtes submitted that I should take that "cautious step". The possibility of such an approach was discussed by Hamilton J in Silver v Dome Resources NL [2007] NSWSC 455 at [111]-[115], but his Honour declined to extend what his Honour described as "the Trident doctrine" beyond contracts of insurance. 19Mr Sirtes pointed out that, on the pleadings as they then stood, Challenger had not brought any claim against BMC as a trustee but brought its own claim under the indemnity whilst PTVL, relying on the indemnity clause without pleading the underlying legal claim, sued in reliance upon it. I then asked him whether it would be a complete answer to Mr Curtin's pleading case in respect of the privity point if Challenger had sued as trustee. After some discussion as to the potential need to amend the statement of claim to raise such a case, the matter was adjourned to 5 April 2011. 20On 5 April 2011 Mr Sirtes sought leave to amend the statement of claim by filing and relying on a third further amended statement of claim and an amended reply. The material amendments were designed to raise what might conveniently be called the trust case, in brief alleging that Challenger held the benefit of the indemnities under the origination agreement as a chose in action against relevant loss on trust for PTVL as beneficiary. Mr Sirtes indicated that the amendment was based solely upon the origination agreement and not upon any evidence. In the amended reply, PTVL sought to add the estoppel case which alleged that PTVL and BMC had adopted a mutual assumption that their relations were governed by the terms of the origination agreement and the indemnification of PTVL pursuant to clause 18, conducted their relationship on the basis of that mutual assumption and knew or intended that the other should act on that basis, concluding "in the premises, departure from the assumption will occasion detriment to the plaintiff". After discussion, Mr Sirtes added to the proposed amendment the words "in consequence of which BMC is estopped by convention from denying its liability to indemnify" PTVL. Mr Sirtes again explained that the amendment was based purely on the origination agreement and no further evidence would be required. The matter was then adjourned to allow Mr Curtin to consider the proposed amendments and give his response. 21On resumption on 13 April 2011 the proposed estoppel case was changed by omitting the words "in consequence of ... indemnify PTVL" and adding a new clause - "As a consequence, BMC is thereby estopped from denying its liability to indemnify PTVL under the indemnity" so that the precise form of the estoppel was no longer pleaded. 22Mr Curtin submitted that I should refuse leave to make the proposed amendments. The fundamental case he made was that (citing Mizzi in particular) the ultimate question as to whether a trust is created is the subjective intention of the promisee, that is to say Challenger. He conceded that the documents upon which PTVL relied were an important part of the evidence but contended that BMC was entitled to call other evidence on the subjective intention of Challenger in order to displace, if it could, the notion of the trust. Accordingly, if I were to allow the amendment, BMC should be permitted to make further enquiries (perhaps by way of discovery or interrogatories) and reopen its case. It might also be necessary to further question certain witnesses called by PTVL. So far as the estoppel argument is concerned, he submitted that the pleading was deficient in that it was necessary to know what the alleged relationship giving rise to the estoppel is said to be. Mr Sirtes, by way of response, pointed to the discussion of the admission of parole evidence in connection with an estoppel by convention by Brereton J in Waterman v Gerling Australia Insurance Company Pty Ltd (2005) 65 NSWLR 300 at [82] in which his Honour held that it was not open to the parties "to contend that they had in fact agreed informally on something other than what was recorded in the document" although his Honour accepted that "[entirely] different considerations apply in respect of post-contractual conduct" in the sense that, after the contract is made, "parties may so conduct themselves as to treat provisions of the contract as no longer relevant or varied in some way or suspended in operation" which might give rise to a promissory estoppel. Mr Sirtes added that, in the circumstances here, no question of subjective intention arises. The intention of the parties is and must be taken to be as expressed in the document itself. Putting the argument another way, it is clear that Challenger and BMC intended that the indemnity clause would be legally efficacious and, if the only way that this could happen was that Challenger held its rights in the contract on trust for PTVL as beneficiary of the right, the clause itself necessarily implied an acknowledgement by BMC of the existence of the trust or, put otherwise, that it was estopped from now saying that the clause lacked efficacy because no trust was explicit. 23Mr Curtin submitted that the existence of the trust depended primarily upon the intention of the promisee and that such an intention is not altogether to be derived from the contract itself. Furthermore, this question of intention is inherently a matter of fact not exclusively to be decided by the contractual terms and accordingly, a matter which is capable of being the subject of evidence without breach of the parole evidence rule. In the course of events, he was not given the opportunity of cross-examining any material witness as to the intention of Challenger to create a trust or, if there were a trust, whether it subsisted. 24In respect of the estoppel argument, Mr Curtin submitted that, as the case presently stood, there was no evidence that PTVL received any representation at all or, in other words, that it ever knew "that this was in the contract between Challenger and BMC" and therefore it was not possible for PTVL to prove it had relied on it. He submitted that, had these amendments been made previously, his client would have issued notices to produce which would have sought production of relevant documents. Furthermore, he submitted that there was no explanation for the delayed amendments, citing Aon Risk Services Australia Ltd v Australian National University (2009) 239 ALR 175. 25Mr Sirtes, in response, pointed out that reliance on the indemnity clause was evident from the very beginning and BMC had never sought particulars of the nature of that reliance although there was only, according to BMC's own arguments, one ground upon which such an argument might be open to PTVL. He submitted, in effect, that it was therefore somewhat disingenuous for BMC now to say that it had not prepared to meet such a case. The estoppel argument, he says, is cognate and raises, if not quite the same issues, similar ones and BMC should not now be permitted to argue that it had not prepared to meet such a case, especially having regard to PTVL's acknowledgement that it does not rely on any additional or different evidence. Mr Sirtes submitted that, in substance, all that had happened was a different legal characterisation of the fundamental factual matrix. He conceded that those advising his client had not appreciated the potential utility of basing its claim against BMC upon estoppel until the stage at which the amendment was sought. I should add that I am satisfied that it was not a deliberate tactical ploy. Mr Curtin candidly conceded that, if the explanation for the delay was, in effect, that it was not thought of until a late stage he did not wish to challenge it but submitted nevertheless that such an explanation did not justify the amendment. Conclusion 26It is not necessary for me to finally decide at this point whether I should take the "cautious step" urged on me by Mr Sirtes, although I candidly admit that I am inclined to follow the line taken by Hamilton J in Silver Dome Resources . I am of the view, however, that the amendments should be permitted. It was apparent from the beginning that PTVL alleged that it was entitled to rely on the origination agreement against BMC and, hence, that privity was an issue in respect of the liability of BMC and, absent an extension of the law as it presently stands, the only grounds upon which this liability could be maintained were the existence of an implied trust and estoppel, the former being perhaps the most likely. I do not accept that BMC had not considered that PTVL would cast its case in this way, though its pleadings did not make specific reference to the chain of reasoning that overcame the privity issue. They are in substance a change in the legal characterisation of the basis of liability - namely the origination agreement - and implicit in PTVL's reliance upon it. 27It is clear beyond argument that the origination agreement manifested a commercial system or structure of which each of the three companies were an integral part. The idea that PTVL might have been unaware in any relevant sense of the indemnity clauses that were expressed to be for its benefit or that BMC did not understand that they were important, likely critical, elements of the arrangement is extremely improbable. As far as the trust is concerned, although it may be that the intention of Challenger to hold the benefit of the chose in action in trust for PTVL is a necessary element of the trust's existence, the origination agreement is not only, as Mr Curtin concedes, highly relevant evidence as to that matter but the possible existence of material capable of reflecting on the obligations (whether explicit or implicit) strikes me as not at all realistically likely. I am therefore sceptical that, as a practical matter, BMC will be prejudiced by the proposed amendments. Nevertheless, against the remote possibility that some counteractive evidence could be obtained, I will give BMC an opportunity to identify lines of enquiry likely to produce useful material and give this matter further consideration. 28Mr Sirtes has, though reluctantly, acknowledged that the need for the amendments he now seeks was not appreciated by the relevant legal advisers at an earlier stage. I accept that the delay was not due to seeking a tactical advantage. Although in a sense, mistake or oversight is not an acceptable explanation, such errors occur from time to time, especially in complex litigation and justice requires that a degree of tolerance be given where this happens. The error is not egregious or truly negligent and should not result in refusing to permit PTVL and Challenger to advance all material matters that affect the viability of their claims especially where I can make appropriate directions that will ensure that BMC will not be unfairly prejudiced by the changes. 29Accordingly, leave is granted to rely on the proposed third amended statement of claim and the amended reply. PTVL and Challenger are to pay the costs thrown away by the amendments. It is clear that BMC will need to make responsive changes to its pleadings and may need to make submissions as to further evidence. The matter is to be set down for directions as soon as practicably possible.