Plaintiffs v Defendant

1 The plaintiffs seek leave pursuant to r 36.01(1) of the Supreme Court (General Civil Procedure) Rules 2015 (Vic) (Rules) to file and serve a proposed further amended statement of claim (Proposed Claim). The proposed amendments include a deceit claim against the defendant.

2 The defendant opposes the application but its opposition is qualified. It said that it would consent to the granting of leave to file the Proposed Claim if:

(a) the pleading of the deceit claim in paragraphs 140 and 141 is removed;

(b) an order is made that the date on which the remaining amendments are to take effect is reserved for determination at trial; and

(c) paragraph D of the prayer for relief is deleted.[1]

(a) leave should be granted to the plaintiffs to file and serve a further amended statement of claim substantially in the form of the Proposed Claim, but omitting paragraph D of the prayer for relief;

(b) the leave granted in respect of the deceit claim amendments in paragraphs 140 and 141 of the Proposed Claim should be made subject to further order; and

(c) the date upon which the deceit claim amendments in paragraphs 140 and 141 of the Proposed Claim are to take effect should be determined at trial.

4 This proceeding was commenced by generally indorsed writ on 30 June 2016, with the statement of claim filed on 14 August 2017, and the existing amended statement of claim (ASOC) filed on 27 October 2017. The proceeding has had an extended and somewhat complex procedural history, as is in part apparent from my rulings on three earlier applications in Pentridge Village Pty Ltd (in liq) v Capital Finance (Pentridge Village No 1).[2]

5 The claims in the proceeding relate to financing and other dealings between the plaintiffs and the defendant (Capital Finance) in connection with a property development project in Coburg, Victoria that commenced many years ago. From May 2002, the first plaintiff (Pentridge Village) was a participant in, custodian for, and manager of a joint venture, the business of which was to purchase, develop, manage, lease and sell land upon which the former Coburg prison complex was located (Project). The second plaintiff (West Homes) was subsequently engaged by Pentridge Village to undertake the construction of buildings and other works on the land.[3]

6 The plaintiffs allege that Capital Finance was the provider of banking services to Pentridge Village in respect of the Project, including the provision of credit, and from August 2005 until February 2010, its financial adviser through its then agent and employee, Mr Mallon, who is the main person with whom the plaintiffs dealt at the time.[4]

7 By their ASOC the plaintiffs seek damages from Capital Finance, including damages pursuant to s 12GF of the Australian Securities and Investments Commission Act 2001 (Cth) (ASIC Act), s 1041I of the Corporations Act 2001 (Cth) (Act) and ss 82 and/or 87 of the Trade Practices Act 1974 (Cth) (TP Act), in respect of alleged contraventions of statutory prohibitions on misleading or deceptive conduct and unconscionable conduct regarding the renewal of an existing facility agreement between Pentridge Village and Capital Finance, and the financing of the Project. An equitable estoppel claim is also pleaded in connection with the renewal of the relevant facility agreement.

8 Capital Finance denies liability on the grounds set out in its defence to the ASOC.

9 Further details of the background are set out in Pentridge Village No 1, to which I refer but will not set out here.[5]

10 The plaintiffs relied on an affidavit sworn on 13 November 2019 by David Colovic, the solicitor for Pentridge Village, an affidavit sworn on 14 November 2019 by Howard Bear, the solicitor for West Homes, and an affidavit of a director of West Homes, Leigh Chiavaroli, sworn on 1 May 2020.

11 The defendant relied on a short affidavit of its solicitor, Janet Whiting, sworn on 24 March 2020. This affidavit addressed only the fact that the plaintiffs had not yet given notice that they had entered into a litigation funding agreement.[6]

12 The plaintiffs relied upon written submissions filed on 13 November 2019, 13 December 2019, and 1 May 2020. The defendants relied upon written submissions filed on 20 November 2019 and 16 April 2020. Each of the parties supplemented their written submissions orally at hearings held on 25 March and 20 May 2020.

(a) determining the real question in controversy between the parties to any proceeding; or

(b) correcting any defect or error in any proceeding; or

(c) avoiding multiplicity of proceedings -

the Court may, at any stage order that any document[7] in the proceeding be amended or that any party have leave to amend any document in the proceeding.

14 The general principles relating to the grant or refusal of leave to amend pleadings are well known. They were succinctly referred to by Elliott J in Cargill Australia Limited v Viterra Malt Pty Ltd (No 18)[8] as follows:[9]

The principles relating to the granting or refusal of leave to amend pleadings are well established.[10] Rule 36.01(1)(a) of the Supreme Court (General Civil Procedure) Rules 2015 (Vic) empowers the court to grant leave to any party to amend any document for the purpose of "determining the real question in controversy between the parties to any proceeding". Leave may be granted at any stage of the proceeding.

In deciding whether to grant leave to a party to amend its pleadings, the court must consider whether the proposed amendments facilitate the identification of the real issues in dispute and the just resolution of the proceeding.[11]

The power to grant leave to a party to amend its pleading to raise an arguable issue is a discretionary power. There is no right or entitlement for a party to amend its pleading subject to the payment of costs referable to the amendment.[12] The nature and importance of the proposed amendments must be considered.[13] This factor must be weighed against case management considerations such as cost, delay and the potential for unfair prejudice to other parties to the proceeding, the court and other litigants that might arise if the proposed amendments are allowed.[14]

Further, in exercising the power to grant leave, the court may give any direction or impose any term or condition it thinks fit.[15]

15 A helpful summary was also set out in ABL Nominees Pty Ltd v MacKenzie (No 2):[16]

The power to amend in r 36.01 (1) of the Supreme Court (General Civil Procedure) Rules 2005 (Rules) authorises the court to order that a party have leave to amend any pleading for the purpose of determining the real question in controversy between the parties to any proceeding, correcting any defect or error or avoiding multiplicity of proceedings.

It is common ground that an amendment which is futile because it is obviously bad in law will not be allowed: Commonwealth v Verwayen.[17] Similarly, if a proposed pleading would be liable to be struck out if it had been contained in an original pleading, either because the pleading is bad in law or is defective as a pleading, then leave to file the proposed pleading will not be allowed: Horton v Jones (No.2);[18] Gimson v Victorian WorkCover Authority.[19] The court, on this type of application, will not engage in an examination of the merits of the case foreshadowed by the proposed amendment, but where that amendment introduces a patently hopeless issue for determination then its inclusion will be futile and that will be a significant, and probably decisive, matter in the exercise of the court's discretion.[20]

As J Forrest J observed in Matthews v SPI Electricity Pty Ltd (Ruling No 6),[21] having regard to the terms of the Civil Procedure Act 2010 (CPA), the test is best expressed in the words of s 63 of that Act: if the amendment has no real prospect of success at trial then that would be a highly relevant factor in the exercise of the discretion to refuse the application.[22]

In Namberry Craft Pty Ltd v Watson,[23] Vickery J summarised the relevant factors to be considered, as a result of the decision in AON Risk Services Australia v Australian National University,[24] as follows:

[T]here are to be limits placed upon re-pleading. The High Court in AON Risk Services Australia referred to a range of other considerations which need to be weighed in the balance in the exercise of the discretion to grant an amendment to a pleading. The High Court made reference to the following factors:

(a) Whether there will be substantial delay caused by the amendment;

(b) The extent of wasted costs that will be incurred;

(c) Whether there is an irreparable element of unfair prejudice caused by the amendment, arising, for example, by inconvenience and stress caused to individuals or inordinate pressures placed upon corporations, which cannot be adequately compensated for, whatever costs may be awarded;

(d) Concerns of case management arising from the stage in the proceeding when the amendment is sought, including the fact that the time of the court is a publicly funded resource, and whether the grant of the amendment will result in inefficiencies arising from the vacation or adjournment of trials;

(e) Whether the grant of the amendment will lessen public confidence in the judicial system; and

(f) Whether a satisfactory explanation has been given for seeking the amendment at the stage when it is sought.[25]

This list of factors is not exhaustive. It is made against the background of the earlier decision of the High Court in Queensland v JL Holdings Pty Ltd,[26] and the authorities that preceded it, including the famous case of Cropper v Smith,[27] where the liberal approach to the amendment of pleadings finds its lead in the dissenting judgment of Bowen LJ.

On the other hand, pleadings are not an end in themselves. They are a means of ensuring that real issues of controversy are raised for determination in a way that is procedurally fair, both to a plaintiff and a defendant. This allows claims and defences to be clearly articulated, granting parties an opportunity to present their case properly prepared, on clear notice of allegations and defences raised in the proceedings. On this basis, the authorities clearly establish that, absent extraordinary circumstances, leave to amend will be granted.[28]

16 In Ultra Thoroughbred Racing Pty Ltd t/as Baree Stud v Those Certain Underwriters at Lloyd's (Ultra Thoroughbred),[29] J Forrest J observed that, following the High Court's decision in Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175 (Aon), courts must consider: the wider public interest and the efficient use of limited court resources when deciding whether to grant applications to amend pleadings; that parties will not be permitted to raise any arguable case in any stage of proceedings subject only to payment of costs; and that amendments that produce delay impact on the entire court system and affect parties desirous of utilising that particular court system. As his Honour noted, in Aon, the High Court said as follows:[30]

An application for leave to amend a pleading should not be approached on the basis that a party is entitled to raise an arguable claim, subject to payment of costs by way of compensation. There is no such entitlement. All matters relevant to the exercise of the power to permit amendment should be weighed. The fact of substantial delay and wasted costs, the concerns of case management, will assume importance on an application for leave to amend. Statements in JL Holdings which suggest only a limited application for case management do not rest upon a principle which has been carefully worked out in a significant succession of cases...

A party has the right to bring proceedings. Parties have choices as to what claims are to be made and how they are to be framed. But limits will be placed upon their ability to effect changes to their pleadings, particularly if litigation is advanced. That is why, in seeking the just resolution of the dispute, reference is made to the parties having a sufficient opportunity to identify the issues they seek to agitate.

In the past it has been left largely to the parties to prepare for trial and to seek the court's assistance as required. Those times are long gone. The allocation of power, between litigants and the courts arises from tradition and from principle and policy. It is recognised by the courts that the resolution of disputes serves the public as a whole, not merely the parties to the proceedings.

17 In Northern Health v Kuipers (Northern Health),[31] Kyrou and McLeish JJA referred to the above extract, the reasons of J Forrest J in Ultra Thoroughbred, and echoed the observations of the High Court regarding the just resolution of proceedings being a paramount consideration:[32]

It has been said by this Court that Aon may have 'reinvigorated the procedural paradigm' insofar as time, costs and limited judicial resources are relevant consideration in the determination of whether to allow certain interlocutory processes.[33] However, as J Forrest J observed in Ultra, 'the primary question still remains: what do the interests of justice dictate?'; Aon reminds courts that 'the prism through which these interests are viewed is wider than just that of the moving party'.[34]

18 The court must have regard to the relevant provisions of the Civil Procedure Act 2010 (Vic) (CP Act) when addressing case management matters, including applications for leave to amend. This was emphasised by Kyrou and McLeish JJA in Northern Health, where the CP Act was described as '... pivotal to the resolution of disputes about case management issues in civil proceedings to which the Act applies ...', and it was stressed that '... it is important that ... trial judges engage with the Act's provisions in balancing the competing interests of the parties and those of the administration of justice more generally.'[35]

19 Their Honours were also swift to recognise that procedural rulings must often be made promptly with succinct reasons, noting that engaging with the provisions of the CP Act '... does not mean that trial judges must set out each applicable provision of the Act and state reasons in relation to it ... [but that] it must be apparent from the reasons for the ruling - either expressly or inferentially - that the judge took into account the applicable provisions.'[36]

Section 34 of the Limitation of Actions Act 1958 (Vic), r 36.01(6) of the Rules and the abrogation of the rule in Weldon v Neal

20 The nature and extent of prejudice that may be suffered by a party, and the extent to which it can or cannot be addressed, are typically key factors to be considered when addressing amendment applications. Claimed prejudice in this case includes the expiry of the limitation period in respect of the deceit claim against the defendant, and the inability of the defendant to bring a contribution claim against Mr Mallon because of the expiry of the time period referred to in s 24(4) of the Wrongs Act 1958 (Vic) (Wrongs Act).

21 An amendment properly made takes effect from the date of the original document which it amends and not from the date when the amendment is made. Thus, a new cause of action introduced by an amendment to a statement of claim will operate as if originally included in the claim, and the defendant can thus be deprived of a limitation defence that might have been available to the defendant had the plaintiffs been required to raise the cause of action in a fresh proceeding.[37]

22 In substance the rule in Weldon v Neal[38] stated that no amendment should be permitted if the effect would be to allow a plaintiff to rely on a cause of action which was statute-barred at the time of the amendment application. There were more subtle nuances in its application,[39] although these need not be explored further for present purposes.

23 In Agtrack (NT) Pty Ltd v Hatfield (Agtrack),[40] Ormiston JA undertook an extensive discussion of the rule in Weldon v Neal and its abrogation through the introduction of s 34 of the Limitation of Actions Act 1958 (Vic) (LA Act) and r 36.01(6) of the Rules,[41] which was more recently referred to in Brirek Industries Pty Ltd v McKenzie Group Consulting (Vic) Pty Ltd (No 1) (Brirek No 1)[42] and Brirek Industries Pty Ltd v McKenzie Group Consulting (Vic) Pty Ltd (No 2) (Brirek No 2),[43] to which I refer but will not set out.

24 Section 34 of the LA Act is entitled 'Abrogation of rule in Weldon v. Neal (1887) 19 Q.B.D. 394'. Section 34(1) provides as follows:

If a court would, but for the expiry of any relevant period of limitation after the day a proceeding in the court has commenced, allow a party to amend a document in the proceeding, the court must allow the amendment to be made if it is satisfied that no other party to the proceeding would by reason of the amendment be prejudiced in the conduct of that party's claim or defence in a way that could not be met by an adjournment, an award of costs or otherwise.

25 Rule 36.01 (1)(6) of the Rules is in similar but not identical terms:

Notwithstanding the expiry of any relevant limitation period after the day a proceeding is commenced, the Court may make an order under paragraph (1) where it is satisfied that any other party to the proceeding would not by reason of the order be prejudiced in the conduct of that party's claim or defence in a way that could not be fairly met by an adjournment, an award of costs or otherwise.

26 As the Court of Appeal observed in Brirek (No 1), '... Both r 36.01(6) and [s 34(1) of] the Limitation of Actions Act make it clear that the fact that an amendment will introduce a statute-barred claim between existing parties is not, in itself, a ground for refusing leave to make an amendment ...'.[44]

27 In Willmott Forests Ltd (Receivers & Managers appointed) (In Liq) v Armstrong Dubois Pty Ltd (Willmott Forests),[45] the principles regarding r 36.01(6) of the Rules and s 34(1) of the LA Act were conveniently summarised as follows:

In relation to the operation of r 36.01(6) and s 34, the following propositions have been established:

(a) the rule and section are remedial and should be given a beneficial interpretation - the widest interpretation which its language will permit;[46]

(b) although r 36.01(6) does not refer to the addition or substitution of a cause of action outside the limitation period, the power of the Court to allow an amendment which adds or substitutes a cause of action after expiry of the relevant limitation period is made clear by the reference in r 36.01(8) to r 14.03(2);

(c) both s 34 and r 36.01(6) apply to a limitation period arising under a statute of any kind,[47] or under a contract;[48]

(d) together r 36.01(6) and s 34 direct the court in exercising its discretion to allow a party to amend a document in a proceeding to disregard the expiry of any limitation period provided it is satisfied that any other party to the proceeding would not be reason of the amendment be prejudiced in the conduct of that party's claim or defence in a way that could not be fairly met by an adjournment, an award of costs or otherwise;

(e) prejudice to the opposing party by reason of the amendment proposed is prejudice in the conduct of the other party's claim or defence, that is, in the handling or management of the claim or defence, for instance, arising from the death or disappearance of a vital witness;[49] or prejudice in the exercise of rights against other parties who might be liable to contribute;[50]

(f) an amendment which merely deprives the other party of a limitation defence does not give rise to such prejudice;[51]

(g) although neither the rule nor the section identify upon whom the burden of satisfaction is cast, the fact that the Court must be satisfied that if the amendment sought were allowed no other party would thereby be prejudiced in any relevant sense, the burden effectively rests with the plaintiff.[52]

28 In Wintle v Conaust (Vic) Pty Ltd (Wintle),[53] Hedigan J held that prejudice in the conduct of a party's defence included prejudice in the exercise of rights against other parties who might be liable to contribute, or even the risk of the loss of those rights.[54] His Honour also observed that r 36.01(6) 'does not talk in terms of burdens', but concluded that he had to reach a state of positive satisfaction of mind that the first defendant (and for that matter any other defendant or third party) would not by reason of the order be prejudiced in the conduct of its claim or defence in the proceeding.

29 It is well accepted that, speaking generally,[55] the application of the limitation of actions legislation to the facts of a particular case is a matter for determination at trial rather than in the course of interlocutory proceedings,[56] and so much was properly accepted by the parties given the facts of the present case. Consequently, questions of amendment and the applicability or operation of s 34 of the LA Act and r 36.01(6) of the Rules frequently fall for consideration prior to the determination of limitation of actions defences.[57] Typically speaking that does not present material difficulties and courts often proceed appropriately on the basis of assumed or pending positions regarding the expiry of limitation periods when addressing questions of claimed prejudice in the context of s 34 of the LA Act and r 36.01(6) of the Rules.[58] The decisions in Pyramid Building Society v Farrow,[59] NLC Holdings Pty Ltd (in liq) v Victoria,[60] and Hodgson v Amcor Ltd,[61] are examples of this approach, and there are others. It may also be observed that, as a matter of construction, neither s 34 of the LA Act nor r 36.01(6) of the Rules requires the question of whether a limitation period has expired to be determined as a threshold matter before the statutory provision or the rule can be engaged and applied. The language adopted in each of the provisions allows for their application and engagement on the basis of assumed or pending positions in relation to the expiry of limitation periods in a given case. This is unsurprising given that at the time the provisions were introduced, as remains the case, it was most common for limitation period expiry issues to be determined at trial. This construction is consistent with the recognition that the provisions are remedial and should be given a beneficial interpretation.[62]

30 As mentioned, the parties filed multiple written submissions that were supplemented orally at the hearings held on 24 March and 20 May 2020. It is convenient first to refer to the submissions of the defendant in opposition to the grant of leave to amend, and then turn to the plaintiffs' submissions.

31 The defendant acknowledged that the Proposed Claim relied mainly on the same facts and matters as were pleaded in the earlier ASOC,[63] and did not contend that the proposed amendments were objectionable because the pleading was deficient.

32 With respect to the proposed amendments other than the deceit claim, in substance, the defendant submitted that:

(a) There were some additional matters of fact relied on which may ultimately be relevant to when the causes of action accrued and the extent to which the defendant can rely on limitation defences.

(b) It was accepted that the availability or otherwise of limitation defences is rarely determined at an interlocutory stage and should be left for determination at trial.

(c) The potential prejudice that the defendant might suffer with respect to the loss of limitation defences could only be appreciated at trial.

(d) The defendant's potential prejudice could be addressed by directing that the date at which the amendments take effect be reserved for determination at trial.

33 The defendant's position regarding the deceit claim was more strident. Although it recognised that '... the deceit claim is based on a broad substratum of events as pleaded in the previous ASOC, now with some amendments and some additional matters identified ...',[64] it submitted that '... its characterisation of a claim in deceit makes it a very serious allegation and the court should be especially cautious when considering the exercise of its discretion.'[65]

(a) It would suffer prejudice in two ways. First, it may lose the ability to rely on a limitation defence in respect of the deceit claim because the amendment will date back to the commencement of the proceeding or at least the date of the original statement of claim. Second, it will be statute-barred by s 24(4) of the Wrongs Act from bringing a contribution claim against Mr Mallon in respect of the deceit claim.

(b) The inability to bring a contribution claim is a serious prejudice that has been recognised as a basis for refusing the grant of leave to amend.[66]

(c) By reason of the operation of s 24AM of the Wrongs Act, the proportionate liability regime in Part IVAA of the Wrongs Act does not apply to claims against a defendant in respect of whom a finding of fraud is made and this would necessarily be the case in respect of a claim in deceit.

(d) Consistent with the decision in Wintle,[67] and having regard to the operation of s 34 of the LA Act and r 36.01(6) of the Rules, the plaintiffs in practice carry the burden of satisfying the court that no prejudice in the relevant sense would be suffered by the defendant.

(e) Whilst directing that the time at which the amendments take effect is to be determined at trial could address the first kind of prejudice regarding limitation of actions between the plaintiffs and the defendant, it could not address the prejudice of being time barred from bringing a contribution claim against Mr Mallon.

(f) There was general prejudice by reason of the delay.

No sufficient explanation for the delay was given, with the circumstances being said to be comparable to those considered in Idameneo (No 123) Pty Ltd v Thomas Martin Suszko (Idameneo).[68] It was further submitted that '... The claim is made on the basis of a combination of the representations and other factual allegations used to found the pleadings of misleading or deceptive conduct ...'[69] and therefore the factual and legal foundation for the proposed amendments must have been understood by the plaintiffs and their advisors for some time.

(g) The plaintiffs had not yet been able to obtain funding for the litigation and there was material uncertainty as to whether the plaintiffs could meet an adverse costs order, and the circumstances were similar to those considered by Brooking JA in Howarth v Adey.[70]

35 During the hearing on 25 March 2020 it became apparent that the defendant needed and desired to give further consideration to its submission regarding s 24AM of the Wrongs Act, and the applicability or otherwise of the proportionate liability regime to a deceit claim. The plaintiffs also needed and desired to give this aspect further consideration given that the primary prejudice relied upon by the defendant was the claimed loss of a right to claim contribution against Mr Mallon. Consequently, the parties were each given additional time to file further written submissions on the topic, which were addressed at the hearing on 20 May 2020.

36 The defendant's position was that Part IVAA of the Wrongs Act does not apply to deceit claims and, further and in any event, if it does then the defendant would be prejudiced because s 24AM of the Wrongs Act would operate to deny it the benefit of apportionment.

37 The defendant stated that it had not found any case on point that considers whether the proportionate liability regime applies to deceit or other similar claims.[71] With respect to what were said to be divergent lines of authority regarding the meaning of 'apportionable claim' and the proper approach to the construction of s 24AF(a) of the Wrongs Act,[72] it was submitted that what the defendant described as the 'legal approach' adopted by Macfarlan JA in Perpetual Trustee Co Ltd v CTC Group Pty Ltd (No 2)[73] should be preferred to what the defendant described as the 'factual approach' that was said to have evolved from the observations of Middleton J in Dartberg Pty Ltd v Wealthcare Financial Planning Pty Ltd (Dartberg).[74]

(a) Applying the 'legal approach', a deceit claim was not an apportionable claim within the meaning of Part IVAA of the Wrongs Act.

(b) It was not necessary to address the conflicting lines of authority point because '... it is impossible to envisage any circumstance at trial in which factual findings will be made in relation to the deceit claim from which it emerges that the alleged loss arises from a failure to take care as opposed to intentional and dishonest acts of the defendant. Thus even on the 'factual approach', the deceit claim cannot on any view be said (actually or potentially) to arise from a failure to take reasonable care ...'.[75] Further, and in any event, the factual approach could also be applied at this stage and it would reveal that the deceit claim cannot be said to arise from a failure to take reasonable care and therefore cannot be an apportionable claim.

(c) If leave to amend is granted in respect of the deceit claim the defendant will have no option but 'to consider seeking to join Mr Mallon to the proceeding' and pleading an apportionment defence and contribution claim in the alternative, to preserve its position in case it emerges from findings at trial that the deceit claim arose from a failure to take reasonable care.[76] In that case it was submitted that further consequential prejudice would be:

(i) Mr Mallon potentially raising discretionary considerations, or legal issues regarding limitation or apportionment, that may succeed if raised resisting joinder;

(ii) the plaintiffs potentially resisting the joinder of Mr Mallon on the basis that Mr Mallon being a party might then result in the defendant's liability to the plaintiffs in deceit being reduced; and

(iii) expense and costs risks associated with the requirement to join Mr Mallon if pleading apportionment or claiming contribution under the Wrongs Act.[77]

39 The plaintiffs emphasised that no complaint was made or objection taken by the defendant on the basis that the proposed pleading was deficient. They submitted that the granting of leave to amend was in the interests of justice because it furthers the just, efficient and timely resolution and determination of the proceeding. They levelled criticism at the defendant's opposition to the application and the associated costs, and pointed to, among other things: the factual substratum not being new; the nature of the claims not changing in any materially relevant way;[78] the many amendments directed towards restructuring the claim so as to simplify aspects, provide additional particulars, and further clarify various allegations in the existing ASOC; and the attempt to make the document easier to follow, read and digest.

40 With respect to the matters raised by the defendant, they accepted that the loss of a right to claim contribution may constitute relevant prejudice for the purpose of s 34 of the LA Act, r 36.01(6),[79] and more generally, but, in substance, submitted that:

(a) None of the matters raised warranted the refusal of leave to amend in the present circumstances.

(b) The substance of the allegations concerning Mr Mallon's conduct have largely been present in every form of the statement of claim since 2017.

(c) Since the abolition of the rule in Weldon v Neal the possibility of the defendant being precluded from relying on a limitations defence against the plaintiffs is not relevant prejudice for the purposes of s 34 of the LA Act or r 36.01(6) of the Rules.

(d) The defendant's asserted right to claim contribution from Mr Mallon was 'new', and the defendant's conduct to date in seeking only apportionment against Mr Mallon '... may found an inference that a claim to contribution against Mallon is less than vital to the manner by which [the defendant] responds to the plaintiffs' allegations.'[80]

(e) Assuming that a contribution claim will be made by the defendant against Mr Mallon, the question was whether the defendant is prevented from doing so by s 24 (4) of the Wrongs Act, and the answer to that question is no - or if there be doubt, the question only arises after the limitation period can be determined, which is a question that must be determined at trial.

(f) Relevantly, and noting that more than 12 months had passed since the issue of the writ in this proceeding, under s 24(4) of the LA Act the time period within which the defendant could bring a contribution claim against Mr Mallon is the period within which the plaintiffs' deceit claim against the defendant might have been commenced.

(g) The period in which the deceit claim could be brought against the defendant had not yet expired. As it is a claim in tort there would ordinarily be a six-year limitation period, but that period has been postponed by the operation of s 27(a) of the LA Act because the action is based upon the fraud of the defendant or its agent, and the period did not begin to run until the plaintiffs discovered the fraud or could with reasonable diligence have discovered it.

(h) The aspect that was 'new' in the Proposed Claim was the reference to the defendant's internal document dated 27 October 2009 that set out an internal decision directly in contrast to the alleged representations made by Mr Mallon. The alleged effect of that document was said to render the representations not only false but made with knowledge of the falsity, and this was not known to the plaintiffs until the defendant first referred to the document in its defence filed on 19 March 2018.[81] Accordingly, time did not commence to run for the plaintiffs in respect of the deceit claim against the defendant until 19 March 2018 at the earliest.

(i) Although there may be competing arguments between the plaintiffs and the defendant as to when time commenced to run which involve complicated factual matters, these issues cannot be determined until trial, and there is at least reasonable basis for concluding that the claim is not obviously time-barred.[82]

(j) Section 34 of the LA Act and r 36.01(6) of the Rules presupposes that the expiry of the limitation period has already been determined to have occurred, which had not yet happened in this case.

(k) There was no evidence that the defendant will in fact make a contribution claim against Mr Mallon.

(l) In any event, the claimed prejudice in relation to the contribution claim limitation period can be addressed by making an order that the date upon which the deceit claim amendments take effect be determined at trial, thereby enabling the limitation issues and any questions of prejudice said to follow to be considered and determined at that same time. Orders could then be made with respect to the date on which the amendment is to take effect and, consequently, there would be no 'gap' in respect of the limitation period as between the plaintiffs and defendant on the one hand, and the limitation period as between the defendant and Mr Mallon on the other, that could relevantly prejudice the defendant.

(m) Any issues with respect to costs can and should be dealt with in other ways, including through the well-accepted procedures associated with security for costs. In addition, reliance was placed on the statements in Mr Chiavaroli's affidavit sworn on 1 May 2020 regarding ongoing communications with potential funders that are said will continue following the resolution of this application, and his financial position.

(n) If leave is granted in respect of the deceit claim (and other) amendments, the court can be satisfied that the defendant will not be prejudiced in the conduct of its defence in a way that cannot be met by an adjournment, an award of costs or otherwise.

(o) It was accepted that paragraph D in the prayer for relief of the Proposed Claim is otiose and ought to be excluded.

41 With respect to the question of whether the proportionate liability regime in Part IVAA of the Wrongs Act applies to a deceit claim, the plaintiffs were a little equivocal or circumspect. They, too, had been unable to uncover a case on point, and they accepted that there was a level of divergence of authority between what was described as the 'legal' and 'factual' approaches to the proper construction and application of s 24AF of the Wrongs Act and its equivalents in other jurisdictions.

42 Unlike the defendant, the plaintiffs contended that the 'factual approach' was the correct approach and was well supported by authority, including decisions in this court. They levelled criticism at the defendant for not drawing to the court's attention the New South Wales Court of Appeal's decision in Landpower Australia Proprietary Limited v Penske Power Systems Proprietary Limited (Landpower),[83] which they submitted also supported the adoption of the 'factual approach'.

43 The plaintiffs also drew attention to the pleaded allegation of recklessness in connection with the deceit claim and contended that, because a claim in deceit can be made out where the defendant was 'reckless or careless',[84] this supported the contention that 'it would appear' that a claim in deceit may be an apportionable claim because it may be found to arise from a failure to take reasonable care, as required by s 24AF(1)(a). It was submitted that ultimately determining this aspect will involve a factual enquiry that can only take place at trial. It was also submitted that even if the legal approach was to be applied, the same result would follow.

44 I say the plaintiffs were a little equivocal or circumspect because they submitted that the question of whether the proportionate liability regime could apply to a claim in deceit remained open and should not be decided on this application. It was submitted that the issue was hypothetical in nature because Part IVAA of the Wrongs Act had not yet been pleaded or relied on by a party in this proceeding. The plaintiffs contended that this issue should not be determined in the 'abstract', and that they should not be required to take a position on the point in this application because they may wish to proceed differently at trial depending upon the steps taken by the defendant in relation to Mr Mallon.

45 Finally, it was submitted that s 24AM of the Wrongs Act provided no assistance to the defendant's position because the section only engages if there is an apportionable claim, which means that Part IVAA expressly contemplates that apportionable claims can include claims involving fraud.

46 Having regard to the amendments sought to be made, the submissions of the parties, the evidence, the principles and observations earlier referred to, the claimed prejudice and other circumstances in question, and the relevant considerations under the CP Act, I have concluded that:

(a) leave should be granted to the plaintiffs to file and serve a further amended statement of claim substantially in the form of the Proposed Claim, but omitting paragraph D of the prayer for relief;

(b) the leave granted in respect of the deceit claim amendments in paragraphs 140 and 141 of the Proposed Claim should be made subject to further order; and

(c) an additional order should be made directing that the time at which the deceit claim amendments in paragraphs 140 and 141 of the Proposed Claim are to take effect from should be determined at trial.

47 I elaborate as to why below, after first making some brief general observations regarding the nature and extent of the proposed amendments.

48 Although the amendments in the Proposed Claim appear on their face to be quite extensive and material, a detailed comparison with the terms of the existing ASOC reveals that they are not as extensive or material as they may first appear.[85] Putting to one side for the moment the deceit claim in paragraphs 140 and 141 of the Proposed Claim,[86] a holistic review of the proposed amendments shows, among other things that: generally speaking the claims made are substantially the same as, or relevantly similar to, those previously made and they rest upon essentially the same alleged facts and factual foundation as raised in the ASOC;[87] the revisions required to be made regarding parties, assignment, and other matters as a result of my rulings in Pentridge No 1 have been made; the allegations concerning the alleged positive representations and misleading conduct by silence have been restructured and simplified in various respects; various additional particulars have been included; causation and reliance has been dealt with more precisely; misleading conduct claims based on the TP Act have been removed; narrative has been removed and commendable attempts have been made to re-order the pleading so as to make it more logically structured and easier to read and digest; and other matters have sought to be further clarified or exposed, including the estoppel and statutory unconscionable conduct claims.

49 It is to be remembered in this regard that claims in respect of misleading and deceptive conduct, unconscionable conduct, and equitable estoppel are made in the existing ASOC - which was filed in October 2017 - and are based on substantially the same factual foundation as the reformulated claims in the Proposed Claim.

50 Although the deceit claim is a new cause of action, and it is common ground that the allegations of knowledge of the falsity of, and reckless indifference towards, the relevant representations are new,[88] a comparison of the existing ASOC with the deceit claim amendments in paragraphs 140 and 141 shows that this deceit claim is also based upon essentially the same alleged factual framework that is raised in the existing ASOC.

51 Not only are the above matters apparent from a careful review of the ASOC and the Proposed Claim, they were essentially but properly acknowledged by the defendant in various parts of its written submissions. For example, in the context of the defendant's complaint regarding what is said to be an inadequate explanation for the late pleading of the claim in deceit, the defendant stated that there was nothing to suggest that the cause of action was based on new information only recently available, or an unexpected development. Further, the defendant stated that '... Indeed the claim is made on the basis of a combination of the representations and other factual allegations used to found the pleadings of misleading or deceptive conduct. Thus, the factual and legal foundation for the proposed amendments must have been well understood by the plaintiff[s] and their advisors for some time ...'.[89] The point was also reinforced during oral submissions, including when senior counsel for the defendant observed that, although the deceit claim was new and a serious claim to make, it was '... based on substantially the same facts ... [and] mainly the same facts have been pleaded'.[90]

52 It is also to be noted that, as the plaintiffs emphasised in their submissions, the knowledge of falsity and reckless indifference allegations rest materially upon the content of an internal document of the defendant dated 27 October 2009. That document was expressly referred to in the defendant's defence of 19 March 2018,[91] which is the earliest the plaintiffs contend they became aware, or could reasonably have become aware, of the alleged fraud.[92]

53 I turn to the substantive matters raised in the parties' respective submissions. I address first the proposed amendments other than the deceit claim amendments in paragraphs 140 and 141 of the Proposed Claim (collectively, Restructure Amendments), and then the deceit claim amendments.

54 As earlier mentioned, the defendant's stated position was that it would consent to (or not oppose) leave being granted in respect of the Restructure Amendments if an order was made that the date on which they are to take effect is reserved for determination at trial.[93]

55 The question of pleading deficiencies may be put to one side because the defendant did not rely on any in support of its qualified opposition to the Restructure Amendments.[94] I also refer to my earlier observations regarding the nature and extent of the proposed amendments, noting in particular the substantially common underlying factual foundation in the existing ASOC and the Proposed Claim. As was at least implicitly but properly recognised by the defendant, these features militate in favour of the plaintiffs' application.

56 Insofar as the defendant pressed a submission that leave to include the Restructure Amendments should be refused or qualified by a timing order because the defendant would or may suffer prejudice by being deprived of limitation defences against the plaintiffs as a result of the amendments dating back to the date of the original document or the commencement of the proceeding, I do not accept that submission. This matter can be dealt with crisply.

57 The rule in Weldon v Neal was abrogated long ago and s 34 of the LA Act and r 36.01(6) of the Rules make plain, as the Court of Appeal emphasised in Brirek (No 1),[95] that the fact that an amendment will or may introduce a statute-barred claim between existing parties is not, of itself, a ground for refusing leave to make an amendment. It is not relevant prejudice for the purpose of s 34 of the LA Act or r 36.01(6) of the Rules. For the same reason, the actual or potential loss of a limitation defence as between the defendant and the plaintiffs by reason of the relation back date of the amendments provides no sound basis, of itself, for making an order directing that the date that relevant amendments are to take effect from should be set at some different date, or left for determination at trial.[96] That would cut across the abrogation of the rule in Weldon v Neal in s 34 of the LA Act and r 36.01(6) of the Rules.

58 No issue with respect to contribution is raised by the defendant in respect of the Restructure Amendments and therefore this can also be put to one side. That no issue was raised is explained in part by the defendant's existing pleaded apportionment defences against Mr Mallon in respect of the claims made by the plaintiffs against the defendant under the Act, the ASIC Act and the TP Act.[97]

59 With respect to the claimed general prejudice by reason of delay, insofar as this was pressed in connection with the Restructure Amendments, it has little force in the present circumstances. First, the defendant's stated position contemplated the grant of leave to amend in respect of the Restructure Amendments, albeit subject to a timing order. Second, the relevant factual framework and foundation is substantially the same as that which is currently in play in the proceedings and already needs to be addressed by the parties and witnesses. Third, except with respect to costs, no evidence was sought to be adduced by the defendant at either of the hearings in relation to prejudice of any particular kind that is said will be suffered by reason of the introduction of the Restructure Amendments at this stage in the proceeding. I add that this is not a criticism. It is unsurprising given the extensive overlap and common underlying factual foundation between the existing ASOC and the Proposed Claim.

60 Further, and keeping in mind the nature and extent of the amendments in question, allowing the amendments will facilitate the determination of the real questions in controversy between the parties and contribute to the just, efficient, timely and cost-effective resolution of the real issues in dispute. Although the proceeding has had an extended and challenged procedural history, it is a considerable distance from being ready to be set down for trial, and many procedural and timetabling steps have not yet occurred, including for example, the preparation and filing of witness statements and witness outlines, expert reports, lists of issues, or court books and so on.

61 It also cannot be said that the Restructure Amendments introduce delayed disproportionate complexity to the proceeding or the amounts in dispute. Although it is neither possible nor appropriate to make any observations regarding the merits or otherwise of the claims at this stage, the amounts claimed are very substantial and it is apparent that the proceeding in its current form involves significant factual and other complexity in respect of events that occurred many years ago. Having regard to the material before the court it appears that the Restructure Amendments will not add materially, if at all, to the existing complexity and scale of the proceeding.

62 To the extent that it was submitted that allowing the Restructure Amendments will involve the incurring of additional costs and costs risk of a kind that should weigh materially against the granting of leave to amend, I do not accept that submission in the circumstances. Although it is of course inevitable that some additional costs will be incurred in connection with the amendments, that is far from unusual and is expressly addressed by the Rules in relation to costs, including r 63.17 of the Rules. It is also relevant that the proceeding is a considerable distance from trial, and that the underlying alleged factual framework remains essentially the same. I refer also to my earlier remarks regarding proportionality and note, further, that the defendant's stated position contemplated leave being granted in respect of the Restructure Amendments in any event, albeit subject to a timing order.

63 To this I add that the defendant has foreshadowed the making of a security for costs application, which is a course that remains open to it and one which is not unusual in proceedings involving corporate plaintiffs in liquidation, as is the case with Pentridge Village. There is also scope for the court to order where appropriate that costs thrown away by reason of amendment be paid by the party seeking to amend.

64 Although it is correct that the court may take into account cost and costs risk in the way observed by Brooking JA in Howarth v Adey,[98] such matters fall to be considered and weighed in the balance in the light of particular facts and circumstances under consideration and the amendments sought to be made, as has here occurred. To the extent the defendant submitted that the making of the Restructure Amendments involved circumstances comparable to the circumstances considered by Brooking JA in Howarth v Adey,[99] I do not accept that submission.

65 It is sufficient to observe that the facts in that case were materially different in many ways, including because it involved a trial judge refusing an amendment during the course of a trial that was considered to have been material and would have resulted in the trial being aborted. I also note that, notwithstanding the reservations expressed by Brooking JA, like Winneke P and Callaway JA, his Honour ultimately concluded that the trial judge ought to have granted leave to amend notwithstanding the significantly more extreme circumstances than those involved with the proposed amendments in the present case. In this context it may be noted that Mr Chiavaroli's unchallenged evidence is that discussions with potential funders will be ongoing but that he has been informed by a potential funder that no funding will be provided until the status of the proposed amended statement of claim is resolved. He also stated that he intends to pursue funding when the outcome of this application is known. Further, there is some evidence of the second plaintiff's financial capacity (through Mr Chiavaroli) to deal with costs, which is supported to a limited extent by amounts paid in connection with other proceedings in connection with the Project, including in respect of security for costs. In addition, and given the sums involved, even if there were to be limited success by the plaintiffs or one of them in their respective damages claims it appears likely that funds would be available to address costs thrown away or other costs.

66 When all things are considered, such risks and uncertainties as there may be in relation to costs do not tip the balance in favour of the defendant or mean that any relevant prejudice of that kind may not be able to be met by costs or otherwise - which is the case with respect to both the Restructure Amendments and the deceit claim amendments discussed below.

67 Further, even if the Restructure Amendments were not permitted, given the scale and complexity of the litigation as it is, the defendant would be facing costs risks and issues associated with the proceeding as it is. In any event, the court has a broad power and discretion in relation to costs and the defendant is not shut out from ultimately making such submissions as it wishes in relation to the costs of the proceeding.

68 With respect to the claimed inadequate explanation, in the circumstances this is not of material weight and I refer in this regard to the observations made further below when considering this issue in the context of the deceit claim amendments.

69 In all of the circumstances, and mindful of the High Court's and Court of Appeal's observations regarding the importance of facilitating a just resolution of proceedings and considering what the interests of justice dictate,[100] it is in my view clear that the Restructure Amendments ought to be allowed, and that no order should be made deferring until trial the question of when they should take effect.

70 I turn to the deceit claim amendments in paragraphs 140 and 141 of the Proposed Claim.

Deceit claim amendments in paragraphs 140 and 141 of the Proposed Claim

71 Again, insofar as the defendant pressed its contention that leave to include the deceit amendments should be refused because the defendant would or may suffer prejudice by being deprived of a limitation defence against the plaintiffs as a result of the amendments dating back to the date of the original document or the commencement of the proceeding, I do not accept that submission. I refer in this regard to the observations made in paragraphs 56 and 57 above, which apply equally to the deceit amendments. As others have observed, the actual or potential loss of a limitations defence as between plaintiff and defendant by reason of the relation back of the date of effect of amendments to a statement of claim is not relevant prejudice - even if such prejudice is assumed to or may come to pass.

72 That brings me to the defendant's claim that it will suffer prejudice because the relation back date of the amendments will or may mean that the plaintiffs will be able to claim damages for deceit from the defendant but the defendant will be statute-barred from claiming contribution from Mr Mallon as a concurrent wrongdoer.

73 One of the reasons it was said that this prejudice cannot be made out is because the defendant has not established that it will or would have made a contribution claim against Mr Mallon in respect of the deceit claim, and reference was made to the absence of evidence on the topic. The plaintiffs also appeared to submit that an adverse inference can be drawn against the defendant in relation to the likelihood of a contribution claim being made against Mr Mallon because the defendant had only raised apportionment defences to date rather than make contribution claims.

74 No such adverse inference can or should be drawn. As is apparent from the terms of its defence, the defendant considers that the relevant apportionment provisions under the Act, the ASIC Act and the TP Act are engaged and it is upon these that it seeks to rely in relation to the existing statutory claims made against it. The deceit claim is new and has not yet been made in the proceeding. It follows that the defendant has not yet had the occasion to seek to claim contribution - or apportionment if it is an apportionable claim - against Mr Mallon or others in respect of it.

75 The position regarding that which the defendant might have done with respect to contribution if the deceit claim had been brought earlier, and that which it intends to do if leave to amend is granted, was somewhat opaque. During the first hearing I raised the absence of evidence on the topic with the defendant's senior counsel and was informed that she was instructed that if leave to amend was granted the defendant '... would make a contribution claim against Mr Mallon ...'.[101] No suggestion was raised by either party that any form of agreement or other arrangement exists between the defendant and Mr Mallon that would preclude such a course and I proceed on that basis.

76 No additional evidence was filed by the defendant in advance of or at the hearing on 20 May 2020 on the topic. In addition, the defendant's written submissions dated 16 April 2020 appeared to retreat from the definite position put to the court during oral submissions on 25 March 2020, although no reference was made to the change of position in the subsequent written submissions. I refer in this regard to paragraph 29 (b) of the written submissions where it was stated that if leave to amend was granted the defendant '... will have no option but to consider seeking to join Mr Mallon to the proceeding and plead an apportionment defence and contribution claim in the alternative to preserve its position ...'.[102]

77 For present purposes I propose to sidestep this issue and proceed on an assumption, to the benefit of the defendant, that it would have or may have made a contribution claim against Mr Mallon if the deceit claim had been brought earlier, and that it will or may do so if leave to amend is granted in respect of the deceit claim amendments. This is consistent with that which senior counsel for the defendant informed the court regarding her instructions at the hearing on 20 May 2020. Given the ultimate conclusion I have reached regarding the granting of leave to amend, it is not necessary to return to this topic.

78 Consistent with the judgment of Hedigan J in Wintle,[103] the plaintiffs accepted that relevant prejudice for the purpose of s 34 of the LA Act, r 36.0(1)(6) of the Rules, and more generally, can include prejudice in the exercise of rights against other parties who may be liable to contribute. This is also consistent with the observations in Willmott Forests and other cases,[104] and I proceed on that basis for the purpose of this application. Taking this approach is not to ignore the question raised by Osborne JA in J Z Lee Interiors,[105] but this is not the occasion to further explore it given the position of the parties, the outcome of the application, and the fact that I do not consider it open to conclude that Hedigan J and those that have followed him were clearly wrong. On the contrary, and with respect, it appears to me to be the correct view, although that is not something that is necessary to address further on this application.

79 It was common ground that by reason of the operation of s 24AJ of the Wrongs Act, contribution or indemnity cannot be obtained from a concurrent wrongdoer by a defendant against whom judgment is given in relation to an 'apportionable claim'. However, the defendant submitted that the deceit claim was not an apportionable claim within the meaning of ss 24AE and 24AF of the Wrongs Act because (relevantly) it was not a claim for damages 'arising from a failure to take reasonable care'.

80 The defendant therefore submitted that, putting time limits to one side, the deceit claim is a claim in respect of which it could claim contribution from Mr Mallon as a concurrent wrongdoer.

81 As will become apparent, it is not necessary for me to decide on this application whether the deceit claim is or may be an apportionable claim, although I briefly address some aspects of the parties' submissions on this topic a little later in these reasons. For present purposes, however, I proceed on the assumption that the defendant is correct and that the deceit claim is not an apportionable claim under Part IVAA of the Wrongs Act.

82 It was common ground that in the circumstances of the present case, and by reason of the operation of s 24(4) of the Wrongs Act, the period within which a contribution claim could be brought by the defendant against Mr Mallon is the longer of the period within which the plaintiffs could bring the deceit claim against the defendant, or 12 months after the issue of the writ in this proceeding. This latter period expired some time ago.

83 The parties also agreed that the court cannot determine on this application when the limitation period as between the plaintiff and defendant expires or expired, or the extent to which, if any, the commencement of this limitation period is or might be postponed pursuant to s 27(a) of the LA Act by reason of the deceit claim being based upon the fraud of the defendant or its agent. The parties were correct to proceed on this basis and these are issues that must properly be left for determination at trial.

84 In effect, the defendant submitted that if the deceit amendments are allowed to be made and they date back to the date of the original statement of claim or the commencement of the proceeding, the defendant could find itself in a position where the plaintiffs are able to proceed against the defendant for deceit, but the defendant would be statute-barred from claiming contribution against Mr Mallon in respect of that deceit claim.

85 As a matter of logic this can be seen to be conceptually possible. For example, if the limitation period as between the plaintiff and the defendant is found to have expired after the date of the filing of the original statement of claim; before leave to amend is given and the amended claim is filed and served; and before a contribution claim is made against Mr Mallon, then if the deceit amendments date back to the date of the original statement of claim the plaintiffs' deceit claim will not be statute-barred as against the defendant but the defendant's contribution claim will be time-barred as against Mr Mallon.[106]

86 Although the plaintiffs submitted that no issue will arise because the commencement of the limitation period against the defendant was postponed until March 2018 or a later date by reason of the defendant's fraud, the parties correctly recognised that these matters will not be determined in advance of trial. Consequently, the defendant submitted that the extent of its prejudice cannot be known until determinations are made at trial. This risk to the defendant of effectively falling between two stools means, so it was said, that the court cannot be satisfied under s 34 of the LA Act and r 36.01(6) of the Rules that the defendant will not by reason of the amendment suffer prejudice in the conduct of its defence in a way that could not be met by an adjournment, an award of costs or otherwise.

87 On the other hand, the plaintiffs submitted that any possible prejudice to the defendant of this kind can be addressed by making an order directing that the time at which the deceit amendments in paragraphs 140 and 141 of the Proposed Claim are to take effect be determined at trial.

88 There is force in this submission of the plaintiffs and I accept it.

89 If an order to the effect suggested is made then the time at which the deceit amendments are to take effect can be addressed and determined in the light of the determination of the limitation issues as between the plaintiffs and defendant, and any potential prejudice that may result from a 'mismatch' of limitation periods by reason of the relation back date of the amendments can then be considered and addressed.

90 That being so, I am satisfied that the contribution time limitation prejudice that is claimed will or may be suffered by the defendant can be met by '... An adjournment, an award of costs or otherwise ...'.[107] The 'otherwise' is the making of the amendment timing order.

91 It may also be noted that the plaintiffs submitted that there will be 'no gap' to cause the defendant concern and emphasised, correctly, that, despite invitation from the plaintiffs and the court, senior counsel for the defendant had not been able to identify any relevant 'gap'. At the hearing on 20 May 2020, senior counsel for the defendant frankly but properly acknowledged that this remained the position.

92 There was no dispute between the parties that the court has the power to make a direction of the kind contemplated in relation to the time at which the amendments are to take effect, and in my view the parties were correct to approach the matter on that basis.

93 The 'or otherwise' language of s 34 of the LA Act and r 36.01(6) of the Rules contemplates and permits the making of other orders so as to address relevant prejudice. Further, an order of this kind may also be made, as it is here, in seeking to give effect to the overarching purpose of the CP Act. It is also an order falling within the terms of s 47 of the CP Act made for the purpose of ensuring that the proceeding is managed and conducted in accordance with the overarching purpose.

94 In my view it is also permitted by r 1.14(b) of the Rules, which allows the court to give any direction or impose any term or condition it thinks fit when exercising any power under the Rules. Although not raised by the parties in this context, I make these observations conscious of the decision in Nesnah Nominees Pty Ltd v Blackwell (Nesnah Nominees).[108] In part, that case involved a question as to whether there was any residual discretion open to the court to enable it to make a direction preserving a limitation of actions defence as between plaintiff and defendant. In substance Eames J concluded, among other things, that r 1.14(b) of the Rules would not permit such an order to be made as it would be cutting across the statutory mandate which s 34 of the LA Act and r 36.01(6) of the Rules seeks to achieve. His Honour also concluded that even if there was such a power, he would decline to exercise it in the circumstances.

95 Given the facts of the present case it is not necessary to consider further Eames J's conclusions in relation to r 1.14(b) as applied to the different facts in the case before his Honour. The order in this case is not sought in order to preserve the limitation defence between the plaintiff and defendant, as was the position in Nesnah Nominees, but is made in order to address claimed prejudice of a different kind.

96 In any event, the case of Nesnah Nominees was decided many years before the introduction of the CP Act and its wide-ranging powers.[109]

97 There is also an additional mechanism that can be adopted to address the claimed contribution timing prejudice raised by the defendant. That is to make the grant of leave in respect of the deceit claim amendments subject to further order. That will provide a further mechanism that can be considered when the limitation periods are determined and the defendant's claimed prejudice can be seen in that light.

98 With respect to the defendant's submissions in relation to costs prejudice, they are of little overall force. The deceit amendments arise from substantially the same facts. They will not add materially to that which is already involved in the proceeding between the plaintiffs and the defendant given the extensive factual and legal territory that is to be covered in the proceeding in any event. In addition, the defendant will have the opportunity in due course to make such submissions as it wishes in relation to the relevant costs following the determination of the issues at trial, noting of course the wide powers and discretion that the court has in relation to costs. I refer also to the comments made above regarding costs when addressing the Restructure Amendments.

99 That allowing the deceit amendments to proceed may result in the defendant needing to consider whether or not to make an apportionment or contribution claim against Mr Mallon does not provide a sound or principled basis for not granting leave to amend, whether considered alone or together with one or more of the other relevant circumstances. Whether or not Mr Mallon is sought to be joined, and how he or other parties will or may react, if it occurs, is not known at this stage - as is commonly the position. In any event, the orders proposed in relation to the grant of leave, and the court's wide powers with respect to costs that remain to be exercised, are sufficient to address the issues raised by the defendant.

100 Although it is true that the plaintiffs' explanation for the delay in bringing the deceit claim and other amendments forward is, at best, limited, when weighed in the balance with the other considerations and the circumstances of this case, including the overarching purpose, it does not weigh at all heavily against the granting of leave to amend. It is apparent that the deceit claim is in large part founded upon a document of the defendant's referred to in its defence, which it is true the plaintiffs could have explored earlier. However, there have been material procedural and substantive issues and steps that have been occupying the parties for considerable periods of time. It is also the case that, viewed fairly, the additional claim does not materially add to the scale and complexity of the proceeding, noting again that the proceeding is far from being ready for trial. Although the defendant is correct that there was scope for further explanation, in the end this is perhaps one of the few cases where such a consideration is of limited concern given the history, the claims made, and the course of correspondence in relation to the proposed amendments. In this regard it is apparent from the communications exhibited that the explanation aspect of the defendant's objection has been far from central to its concerns.[110]

101 For completeness, I add that I do not accept that the circumstances in this case are comparable to those arising in Idameneo. It is sufficient to observe that a review of that decision reveals that the circumstances are not relevantly similar or germane but were materially different. For example, in that case: it was 3 weeks before trial; the trial would have had to be adjourned; costs thrown away would have been significant; considerable additional evidence, including that from non-parties, would have been required; additional expert reports would have followed; additional discovery and non-party discovery would have been needed; and it also appeared that the nature of the case was being materially and substantially altered. Indeed, a review of this decision again highlights the importance of considering each case in the light of its own facts, as has been done here.

102 In closing I return to the parties' submissions as to whether the deceit claim is an apportionable claim. As mentioned, given the conclusions reached and the position of the parties it is not necessary or desirable to seek to determine this issue on this application. However, it is convenient and appropriate to make the following three observations regarding matters raised by the parties in this context.

103 First, to the extent that the defendant pressed its submission that fraud claims cannot be the subject of Part IVAA of the Wrongs Act because of the operation of s 24AM of that Act, I do not accept that submission. Section 24AM falls within Part IVAA of the Wrongs Act, which only applies to apportionable claims of the kind addressed in ss 24AF and 24AG. Section 24AM of the Wrongs Act only engages in relation to a defendant to an apportionable claim. The section makes a defendant found liable for damages in respect of an apportionable claim, and against whom a finding of fraud has been made, jointly and severally liable for the damages awarded against any other defendant in the proceeding.

104 Put another way, the existence of a fraud finding against a defendant in respect of an apportionable claim removes the insulating effect provided by (at least) s 24AI of the Wrongs Act in respect of a defendant's liability for that apportionable claim.

105 Further, because s 24AM of the Wrongs Act relates only to a defendant found liable in respect of an apportionable claim and expressly contemplates circumstances where a finding of fraud is made against that defendant, it appears that the section itself contemplates that apportionable claims to which Part IVAA applies may include claims involving fraud. In turn, this is a relevant matter that will fall to be considered when considering the proper construction and application of s 24AF of the Wrongs Act and what may or may not be an apportionable claim in a given set of circumstances.

106 Second, there is no persuasive force in the defendant's recent alternative submission that if the deceit claim is an apportionable claim then the defendant will or may suffer relevant prejudice because s 24AM of the Wrongs Act may be engaged so as to make the defendant jointly and severally liable to the plaintiffs. If the deceit claim was successful and that consequence followed it would be a consequence of the application of s 24AM and Part IVAA of the Wrongs Act. It is not prejudice relevantly caused by reason of the granting of leave to allow the deceit claim amendments.

107 Third, I shall leave for another day any detailed consideration of the apparent divergence of opinion between what has been described in this case as the 'factual approach' and 'legal approach' to the proper construction and operation of s 24AF of the Wrongs Act and its equivalents or analogues in other jurisdictions. That said, and although the convenient labels adopted by the parties are apt to mislead, as others in this and other courts have expressly and implicitly observed, the so-called 'factual approach' does appear to have much to commend it, not the least of which is the terms of the relevant statutory provisions. It has also been applied in this court on a number of occasions, including most recently by Forbes J in Trani v Trani (No 2).[111] In addition, and as the defendant acknowledged at the hearing on 20 May 2020, it also appears to gain support from the New South Wales Court of Appeal in its decision in Landpower.[112]

(a) leave should be granted to the plaintiffs to file and serve a further amended statement of claim substantially in the form of the Proposed Claim, but omitting paragraph D of the prayer for relief;

(b) the leave granted in respect of the deceit claim amendments in paragraphs 140 and 141 of the Proposed Claim should be made subject to further order; and

(c) the date upon which the deceit claim amendments in paragraphs 140 and 141 of the Proposed Claim are to take effect should be determined at trial.

109 Orders will be made to the above effect and I will hear from the parties regarding consequential orders, timetabling, and costs.

[1] This aspect was not controversial and the plaintiffs accepted that it followed from the proposed deletion in the Proposed Claim of claims made pursuant to the Trade Practices Act 1974 (Cth).

[2] [2018] VSC 633.

[3] Pentridge Village is said to have been in receivership since July 2014 and in liquidation since August 2014, and West Homes is alleged to have been in receivership since July 2014.

[4] In the Proposed Claim the allegation that Mr Mallon was a financial adviser is deleted.

[5] At [13]-[19] and the 'Background Schedule' at [311]-[361].

[6] By order made 22 February 2020 the plaintiffs were required to notify the defendant of the date that any litigation funding agreement is entered into within seven days of the execution of any such agreement.

[7] The inclusive definition of 'document' in rule 36.01(2) includes a pleading.

[8] [2018] VSC 772.

[9] At [31]-[34], footnotes included as in original.

[10] The relevant principles have been set out previously in Cargill Australia Ltd v Viterra Malt Pty Ltd (No 10) [2018] VSC 439, [16]-[18]. They are repeated here for convenience.

[11] AON Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175, 204-205 [69] (Gummow, Hayne, Crennan, Kiefel and Bell JJ). See also ABL Nominees Pty Ltd v Mackenzie (No 2) [2014] VSCA 529, [17] (Derham AsJ).

[12] AON Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175, 212 [96], 213 [98]-[99], 217 [111].

[14] Ibid, 213 [98]-[99], 214-215 [102], 217 [111]; Civil Procedure Act 2010 (Vic), s 7.

[15] Supreme Court Rules, r 1.14(1)(b).

[16] [2014] VSC 529 [17]-[22], footnotes included as in original (Derham AsJ).

[18] [1939] NSWStRp 35; (1939) 39 SR NSW 305, 310.

[19] [1995] VicRp 14; (1995) 1 VR 209, 215.

[20] Matthews v SPI Electricity Pty Ltd (Ruling No 6) [2012] VSC 70, [33].

[21] [2012] VSC 70, [34].

[22] As to the test see Lysaght Building Solutions Pty Ltd v Blanalko Pty Ltd [2013] VSCA 158 [29] per Warren CJ and Nettle JA (Neave JA agreeing).

[23] [2011] VSC 136.

[25] Ibid [38]. Equuscorp Pty Ltd and Sintoff Pty Ltd v Acehand Pty Ltd & Ors [2010] VSC 89, [19].

[26] [1997] HCA 1; (1997) 189 CLR 146.

[27] (1884) 26 Ch D 700.

[28] ACN 074 971 109 v The National Mutual Life Association of Australasia Ltd [2010] VSC 186, [28].

[29] [2011] VSC 370.

[30] [2011] VSC 370, [7], citing Aon (2009) 239 CLR 175, 217, [111]-[113].

[31] [2015] VSCA 172, footnotes included as in the original. See also the recent references to Aon and Northern Health by the Court of Appeal in Billington v Sussan Corporation Australia Pty Ltd [2020] VSCA 12, [25]-[26] (Beach, Kaye JJA and Croucher AJA) (Billington).

[33] Trevor Roller Shutter Service Pty Ltd v Crowe [2011] VSCA 16, [42].

[34] Ultra Thoroughbred [2011] VSC 370, [9].

[35] Northern Health, [22]. Considerations of this kind were further referred to in Mandie v Memart Nominees Pty Ltd [2016] VSCA 4 [36]-[48] (Kyrou, Ferguson and McLeish JJA), and more recently reinforced in Billington at [25] (Beach, Kaye JJA and Croucher AJA).

[37] See, for example, Willmott Forests Ltd (Receivers & Managers appointed) (In Liq) v Armstrong Dubois Pty Ltd [2016] VSC 61 at [31] and the cases there cited (Derham AsJ).

[38] (1887) 19 QBD 394.

[39] As Ormiston JA observed in Agtrack (NT) Pty Ltd v Hatfield at [28]-[35].

[40] [2003] VSCA 6; (2003) 7 VR 63.

[41] See Agtrack at [27]-[53] (Chernov JA and O'Bryan AJA agreeing).

[42] [2014] VSCA 165.

[43] [2015] VSCA 185; (2015) 48 VR 558, [193]-[203] (Redlich, Whelan, and Santamaria JJA).

[45] [2016] VSC 61, [34]. Footnotes as in original except where otherwise indicated.

[46] Bridge Shipping Pty Ltd v Grant Shipping SA [1991] HCA 45; (1991) 173 CLR 231 at 260-261 per McHugh J when considering r 36.01(4) (Brennan and Deane JJ agreeing). The history of the rule suggests the same approach is to be taken in the construction of r 36.01 as a whole.

[47] Agtrack [2003] VSCA 6; (2003) 7 VR 63; PSL Industries Ltd v Simplot Aust Pty Ltd (2003) 7 VR 106; [2003] VSCA 7. I add that other considerations may arise where the limitation is imposed by Commonwealth legislation or legislation in other States or Territories. See, for example, the discussion in the appeal to the High Court in Agtrack (NT) Pty Ltd v Hatfield [2005] HCA 38; (2005) 223 CLR 251, [55]-[60] (Gleeson CJ, McHugh, Gummow, Hayne and Heydon JJ). These matters need not be further explored for present purposes.

[48] Lloyd Steel Co (Aust) Pty Ltd v Jade Shipping SA (1985) 1 NSWLR 212; Dyno Wesfarmers Ltd v Knuckey [2003] NSWCA 375 at [36].

[49] Duncan Davis (Sales) Pty Ltd v Davis [2008] VSC 127 at [36].

[50] Wintle v Conaust (Vic) Pty Ltd (2001) VSC 315 at [16].

[51] Pyramid Building Society (in liq) v Farrow (VSC, Beach J, No 2057/92, 30 April 1993, unreported); Murphy v BPTC Ltd (in liq) (VSC, Smith J, No 12377/91, 7 May 1993, unreported); Re WM Train & Co Pty Ltd (VSC, Beach J, No 8341/94, 24 January 1995, unreported); Wintle v Conaust (Vic) Pty Ltd [2001] VSC 315; Williams, Civil Procedure Victoria, paragraph 36.01.230.

[52] Wintle v Conaust (Vic) Pty Ltd [2001] VSC 315.

[53] [2001] VSC 315.

[54] Ibid [16] and [18]. But see the Court of Appeal's consideration in Smith and Donamis Consultants (Vic) Pty Ltd v J Z Lee Interiors Pty Ltd [2017] VSCA 65 (J Z Lee Interiors), where Osborn JA (Tate JA agreeing) questioned whether the prejudice in that case regarding the ability to claim contribution was really prejudice 'in the conduct of that party's ... defence' (at [46]). After referring to Wintle, Osborn JA concluded that it was not the occasion to re-examine the issue.

[56] See, for example, Wardley Australia Ltd v State of Western Australia [1992] HCA 55; (1992) 175 CLR 514, [31]; [1992] HCA 5 as applied by Hamill J Commonwealth Bank of Australia and Another v ZYX Learning CENTRES Ltd and Others [2014] NSWSC 1676, [247]; and Allsop CJ, Jagot and Yates JJ in McGraw-Hill Financial Inc v Clurname Pty Ltd and Another [2017] FCAFC 211; (2017) 123 ACSR 467, [6], [25]-[26].

[57] See, for example, Lanai Unit Holdings Pty Ltd v Mallesons Stephen Jaques (No 2) [2017] QSC 251; [2018] 3 Qd R 28 (Jackson J) (Queensland Supreme Court); Hodgson v Amcor Ltd [2010] VSC 204 (Emerton J); NLC Holdings Pty Ltd (in liq) v Victoria [2009] VSC 603 (Croft J); and Pyramid Building Society v Farrow (VSC, unreported, Beach J, 30 April 1993).

[58] Or equivalent limitation provisions or analogues in other jurisdictions.

[59] (VSC, unreported, Beach J, 30 April 1993).

[60] [2009] VSC 603 (Croft J).

[61] [2010] VSC 204 (Emerton J).

[62] See Willmott Forests and paragraph 27 above.

[63] First written submissions filed by the defendant on 20 November 2019 (First written submissions), [2]. See also [10], [23], [28].

[64] First written submissions, [23].

[66] Relying on Wintle, [16] and Willmott Forests.

[67] [2001] VSC 315.

[68] [2015] SASC 29.

[69] First written submissions, [28].

[70] [1996] VICSC 4; [1996] 2 VR 535, [551]-[552]. This case was raised in an email from the defendant's solicitors to the court, dated 16 April 2020.

[71] This is not to ignore the decision of the County Court in Peachbulk Pty Ltd v RT Edgar Pty Ltd [2011] VCC 1370 [355] (Judge Ginnane, as his Honour then was).

[72] And its equivalent provisions in other States.

[73] [2013] NSWCA 58, [22]-[23]. See also Cassegrain v Cassegrain [2016] NSWCA 71 (Basten JA, Sackville and Emmett AJJA); Rahme v Benjamin & Koury Pty Ltd [2019] NSWCA 211 (Bathurst CJ, Macfarlan and McCallum JJA); cf. Landpower Australia Pty Ltd v Penske Power Systems Pty Ltd (2019) 99 NSWLR 780 (Bell P, Macfarlan and Payne JJA).

[74] [2007] FCA 1216; (2007) 164 FCR 450. See also Reinhold v New South Wales Lotteries Corporation (No 2) [2008] NSWSC 187; (2008) 82 NSWLR 762 (Barrett J); Main Road Property Group Pty Ltd & Ors v Pelligra & Sons Pty Ltd and Ors [2010] VSC 5 (Croft J); Godfrey Spowers (Victoria) Pty Ltd v Lincolne Scott Australia Pty Ltd and Others [2008] VSCA 208; (2008) 21 VR 84 (Nettle, Ashley and Neave JJA); Trani v Trani (No 2) [2019] VSC 723; and Landpower Australia Pty Ltd v Penske Power Systems Pty Ltd (2019) 99 NSWLR 780 (Bell P, Macfarlan and Payne JJA).

[75] Second written submissions filed by the defendant on 16 April 2020 (Second written submissions), [28], noting also the observations of Ashley JA in Godfrey Spowers (Victoria) Pty Ltd v Lincolne Scott Australia Pty Ltd [2008] VSCA 208; (2008) 21 VR 84, footnote 27.

[76] Second written submissions, [29](b).

[77] It was noted that Mr Mallon did not need to be joined in respect of the apportionment claims currently relied on in the defence in respect of the claims under the Act and the TP Act.

[79] See, for example, transcript 25 March 2020, 42:17-43:20. See also 34:10-14.

[80] Second written submissions filed by the plaintiffs on 13 December 2019, [10].

[81] Ibid, [9]. At [27] and as retained in its amended defence filed on 25 May 2018 at [27].

[82] Reference was made to McGraw-Hill Financial, Inc v Clurname Pty Ltd [2017] FCAFC 211; (2017) 123 ACSR 467 at 25, and Commonwealth Bank of Australia v ZYX Learning Centres Limited [2014] NSWSC 1676; (2014) 103 ACSR 476 at 249-253.

[83] (2019) 99 NSWLR 780. Emphasis was placed upon Macfarlan JA's agreement with the reasons of Bell P, which were said to reflect the 'factual approach' and support of Dartberg.

[84] Emphasis in original. Third written submissions filed by the plaintiffs on 1 May 2020, [7.5] citing McGill v McGill [2006] HCA 51; (2006) 226 CLR 551 at [114].

[85] Although a somewhat challenging and time consuming exercise, this detailed review task is best undertaken by reference to the lengthy version of the Proposed Claim recording changes in mark-up that comprised Exhibit 'DC 2' to the affidavit of Mr Colovic sworn 13 November 2019, rather than the essentially 'clean' version attached to the plaintiffs' summons.

[86] Including the allegations of knowledge of, and reckless indifference towards, the falsity of the 'Renewal Representations' and the 'Confirmation Representations'.

[87] Which is not to overlook the differences or additional factual matters raised.

[88] See paragraphs 140 and 141 of the Proposed Claim.

[89] First written submissions at [28]. See also other similar or related statements at [2], [10], [23].

[91] At [27], but noting that in the defence the document is said to have been dated 26 October 2009.

[93] Although the defendant did wander a little from this position on occasion during oral submissions.

[95] [2014] VSCA 165, [201]. See also Willmott Forests [2016] VSC 61, [34(f)] and the cases there cited.

[96] Assuming the court has the power to make such a direction, which is discussed further later in these reasons. See also Nesnah Nominees Pty Ltd v Blackwell [1998] VSC 130, [27]-[43] (Eames J).

[97] Noting that the existing claims under the TP Act have been deleted in the Proposed Claim.

[98] [1996] VICSC 4; (1996) 2 VR 535, 548-552.

[100] Through the recalibrated lens as reflected in Aon.

[101] Transcript 25 March 2020, 62:26-63:11.

[102] Second written submissions [29b.].

[103] [2001] VSC 315.

[104] See, for example, Pyramid Building Society (in liq) v Farrow (VSC, unreported, Beach J, 30 April 1993); Murphy v BPTC Ltd (in liq) (VSC, unreported, Smith J, 7 May 1993); and Re WM Train & Co Pty Ltd. (VSC, unreported, Beach J, 24 January 1995).

[106] Noting also that the period ending 12 months after the issue of the writ in this proceeding ended some years ago.

[108] [1998] VSC 130 (Eames J).

[109] See also the observations made in passing by Ormiston JA in Agtrack at footnote [75] raising the question of whether Eames J was correct in relation to the question of power under r 1.14(b).

[110] Which is not to diminish its importance more generally having regard to the matters raised in Aon and related cases, and to the terms of the CP Act.

[111] [2019] VSC 723. See also, as examples, Godfrey Spowers (Victoria) Pty Ltd v Lincolne Scott Australia Pty Ltd and Others [2008] VSCA 208; (2008) 21 VR 84 (Nettle, Ashley and Neave JJA); Main Road Property Group Pty Ltd & Ors v Pelligra & Sons Pty Ltd and Ors [2010] VSC 5 (Croft J); Tarik Solak v Bank of Western Aust Ltd [2009] VSC 82 (Pagone J). It may be noted however that there has not in any of these decisions been a detailed discussion of the apparent tension between the two approaches and the authorities relating to the same.

[112] (2019) 99 NSWLR 780 (Macfarlan JA, with Bell P and Payne JA agreeing). See also paragraph 42 above.