Sharples v Minister for Local Government

KEY ISSUES: Practice and Procedure :- application for leave to amend points of claim - principles - application made on fifth day of hearing when evidence virtually closed and after relevant witnesses had been cross-examined - prejudice to respondents.

LEGISLATION CITED: Civil Procedure Act 2005, ss 56, 57, 58, 59, 64 Local Government Act 1993, s 508A

Ingot Capital Investments Pty Ltd v Macquarie Equity Capital Markets Ltd [2004] NSWSC 1219 CASES CITED: State of New South Wales v Mulcahy [2006] NSWCA 303 State of Queensland v J L Holdings Pty Ltd [1997] HCA 1, (1997) 189 CLR 146

APPLICANT: Mr T Robertson SC SOLICITORS Woolf Associates

FIRST AND SECOND RESPONDENTS: LEGAL REPRESENTATIVES: Mr M Izzo SOLICITORS Crown Solicitor's Office (NSW)

THIRD RESPONDENT: Mr C Leggat SC and Mr M Seymour SOLICITORS Marsdens Law Group

JUDGMENT: THE LAND AND ENVIRONMENT COURT OF NEW SOUTH WALES

TERRY SHARPLES v MINISTER FOR LOCAL GOVERNMENT AND ORS

EX TEMPORE JUDGMENT 1 HIS HONOUR: This a contested oral motion by the applicant for leave to amend his Further Amended Points of Claim. The proposed amendments are indicated in draft Second Further Amended Points of Claim (which are with the papers), as amended orally during argument. The proceedings concern a challenge to the validity of two determinations made in 2006 and 2007 by the Minister for Local Government to increase Tweed Shire Council's rates under s 508A of the Local Government Act 1993. The respondents are the Minister for Local Government, the Department of Local Government and the council. Principles in relation to amendments 2 There is High Court authority that only in extreme circumstances should case management principles shut a party out from litigating an issue which is fairly arguable: State of Queensland v J L Holdings Pty Ltd [1997] HCA 1, (1997) 189 CLR 146 at 154. However, that case was not decided on legislation such as now controls the power of amendment of documents in civil proceedings in New South Wales: Civil Procedure Act 2005 ss 64 and 56-59. The Court of Appeal has held that when regard is paid to those provisions, there are significant alterations in (a) the approach to amendments which the judgment in State of Queensland v J L Holdings treated as appropriate, and (b) the relative importance of the way in which an action is conducted at earlier stages and of a party's wish to put forward a new matter as one of the real questions raised by or otherwise depending on the proceedings: State of New South Wales v Mulcahy [2006] NSWCA 303 at [25] - [29]. 3 Section 64(2) of the Civil Procedure Act directs that, subject to s 58, "all necessary amendments are to be made for the purpose of determining the real questions raised by or otherwise depending on the proceedings...". Section 58 provides that in deciding whether to make any order or direction for the management of proceedings, including an order for the amendment of a document, and the terms in which any such order or direction is to be made, the court must seek to act in accordance with the dictates of justice. Section 58(2) provides that for the purpose of determining what are the dictates of justice in a particular case, the court must have regard to the provisions of ss 56 and 57, and may have regard to a range of other specified matters. Those other matters include the degree of injustice that will be suffered by the respective parties as a consequence of any such order or direction, and such other matters as the court considers relevant to the circumstances of the case.

4 Section 56 is the key provision governing civil litigation in this State. It provides that the overriding purpose of the Act and the rules of the court, in their application to civil proceedings, is to facilitate the just, quick and cheap resolution of the real issues in the proceedings. It provides that the court must seek to give effect to the overriding purpose when it exercises any power given to it by the Act or by rules of court. Finally, s 57 provides that for the purpose of furthering the overriding purpose referred to in s 56(1), proceedings in any court are to be managed having regard to the following objects: (a) the just determination of the proceedings; (b) the efficient disposal of the business of the court; (c) the efficient use of available judicial and administrative resources; and (d) the timely disposal of the proceedings, and all other proceedings in the court, at a cost affordable by the respective parties.

5 Significant prejudice to an opposing party is likely to defeat an application to amend for proper purposes: State of Queensland v J L Holdings; Ingot Capital Investments Pty Ltd v Macquarie Equity Capital Markets Ltd [2004] NSWSC 1219 at [49] - [65].

The proposed amendments 6 The motion for leave to amend was made today, the fifth day of the hearing. The proceedings were fixed for hearing for two days commencing last Monday. They have gone far beyond the originally estimated hearing time of two days. The evidence has just concluded. A further two days are required for closing submissions. The proceedings will now have to be adjourned for some weeks for that purpose. 7 The key proposed amendment is a new par 21A, which (as amended orally) is in the following terms: Further or alternatively to paragraph 21 above, the Paper Survey was an ineffective mechanism for obtaining evidence of community support for the Plan.

(a) The Paper Survey was a self-completion survey and was therefore not representative of the community as a whole (b) Question 5 contained 2 or 3 statements and it was unclear which part of the question the respondents might have responded to (c) The words "necessary important projects" are loaded and would or would be likely to encourage a positive response (d) The Representation was misleading and inaccurate, as pleaded above 8 The proposed amendments then incorporate par 21A into the first and second grounds of challenge to the 2006 determination. The first ground is that the council's paper survey of ratepayers in the council's 7 Year Plan miscarried. It is pleaded that the Minister could not validly make any determination of the council's 2006 Application to increase rates in the absence of an accurate assessment of community attitudes to the proposed rate increase, and that the paper survey was the sole or primary basis upon which the council sought to demonstrate to the Minister that there was community support. The present pleading is to the effect that the paper survey miscarried because there was a misleading and inaccurate representation in it. The proposed amendment would couple that allegation with a new allegation that the paper survey was an ineffective mechanism for obtaining evidence of community support. 9 The second ground is that the 2006 Application breached s 508A(3) of the Local Government Act, which provides that the Minister's determination may be made only on the application of the council made in accordance with any guidelines issued by the Director General of the Department of Local Government under the Act. Those guidelines required evidence of community support for the proposal and how the community was consulted. The second ground is presently pleaded on the basis of the said alleged misleading and inaccurate representation, incorrect recording of the results of the paper survey, and the creation of a misleading impression concerning support for a telephone survey. The proposed amendment would add that the paper survey was an ineffective mechanism for obtaining evidence of community support.

10 It appears that it is not intended to relate the allegation in the proposed new par 21A to any of the other pleaded grounds of challenge to the two determinations.

Submissions 11 The applicant submits that the respondents were put on notice that the applicant relied on the matters the subject of the proposed amendments by the applicant's written outline of opening submissions, which was served last Friday afternoon, the last weekday before the hearing commenced. That document was served after the respondents had served their written outlines of opening submissions earlier that day. Paragraphs 55 to 58 of the applicant's written opening stated: "55. An alternate basis for that conclusion is the view expressed by Mr Sergeant, the Council's marketing and social research expert, who opines that the Paper Survey was an ineffective mechanism to obtain an accurate assessment of community views. His evidence is that because the survey was completed only by those motivated to respond, the results are not representative: 'The Council has used one method for undertaking a survey (ie self-completion) that is designed to convey full information and provide a mechanism for objection, but this method is not well adapted to achieving accurate results for representativeness.' 56. Mr Elliott is similarly critical of question 5 of the Paper Survey.

57. Mr Sergeant also criticises the telephone survey conducted by Market Facts in the following terms: 'The Council has also used a second method (telephone sampling) that provided only limited information to recipients but to a more representative sample.' 58. If those conclusions be correct, then it would appear that the entire survey process was fundamentally flawed, and the Council (and therefore the Minister) could not rely upon any results generated by either of the surveys in order to draw conclusions about the level of community support for the proposed increases, and that the community was, in reality, never consulted at all." 12 The Minister and the Department submit that (a) the amendments expand the factual matters in dispute between the parties, raising a matter which has not been fully explored in the evidence, namely, whether there was a better way of doing the survey; (b) although they do not complain of particular prejudice to them, there is the spectre of the potential need to call further evidence; (c) the new matter is not relevant and may go to inadmissible merit review: in effect, the applicant is cavilling with the way that the council went about its survey. I would say immediately that I would not reject the amendment on the ground of relevance: any contention to that effect should await final submissions.

13 The council adopts the submissions of the Minister and the Department. The council also objects to the amendments by reference to each particular of the proposed par 21A, as follows.

14 As for par 21A(a), its genesis is something that was said by Mr Sergeant in his report served on 21 October 2008. The council says that it has been taken out of context. In any event, the council submits that (a) if the amendment were allowed Mr Sergeant would have to be recalled; and (b) if it had known that the amendment would be sought, it probably would not have called Mr Sergeant or, alternatively, probably would not have read the paragraph containing the said statement, and probably would have called other expert evidence. The applicant submits that it is inherently unlikely that the council would have done what it now says it would have done, particularly in relation to not calling Mr Sergeant or not reading the relevant part of his evidence; and that if the latter course had been followed, then it would have been a simple matter for the applicant to have cross-examined the omitted material back in. There is force in the applicant's submissions concerning Mr Sergeant. Otherwise, however, I think there is force in the matters which the council has identified as being in the nature of prejudice. 15 As for par 21A(b), the council submits that it is prejudiced because it is impossible now to argue that the survey was objectively clear when it undertook cross-examination to different effect. The council says that it is likely that its cross-examination of the applicant's marketing expert Mr Elliott would have been very different in that it is likely that Mr Elliott's coding of survey results would have been accepted instead of being challenged in part on the basis that reasonable minds could differ as to classification of individual survey results. The applicant submits that (a) this should not be accepted given the pleadings in which the council denied the accuracy of the survey results alleged by the applicant which were based on Mr Elliott's analysis; (b) even if the council may have accepted Mr Elliott's coding, that does not necessarily mean that it would have been put to Mr Elliott that the survey results were capable of producing an objectively fair outcome; (c) the respondents have been on notice of this matter since service of the applicant's written outline last Friday; and (d) s 21A(b) is an objective matter which simply arises out of the nature of the survey. 16 As for par 21A(c), the applicant says that it simply raises an objective matter. The council, however, says that it would wish to call evidence from the company Market Facts (Qld) Pty Limited, its independent research company which conducted the telephone survey, as to why it worded the particular question in the way that is now complained of, and as to its opinion (or the opinion of its representative) as to its likely effect. Conclusion 17 The proposed amendments raise a new issue of whether the paper survey was an ineffective mechanism for obtaining evidence of community support for the council's plan to increase rates. It invites disputation and evidence as to whether there was a better way of going about it. I accept that if the amendments were to be allowed, there would be prejudice to the respondents arising out of the lateness in seeking the amendment. If leave to amend had been sought in a timely way, it is likely that the council would have conducted its case differently by calling other or additional evidence and conducting its cross-examination differently. I am, however, doubtful, as I have earlier indicated, that the council would have gone so far as not to call Mr Sergeant. The marketing survey expert witnesses, Mr Elliott for the applicant and Mr Sergeant for the council, gave concurrent evidence in relation to the surveys and were cross-examined earlier this week before the application to amend was made. If the amendments were to be allowed, the respondents would have to be afforded the opportunity to call further evidence and have Mr Sergeant and Mr Elliott recalled for further questioning. To allow the amendments would disrupt and extend the further hearing of the case and adversely affect its timely disposal. I also consider that there has been insufficient explanation for the delay in moving for leave to amend until the fifth day of the hearing. 18 For these reasons, I am not persuaded that I should accede to the motion for leave to amend which, accordingly, I dismiss.

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