Application to amend to claim relief from forfeiture in equity
175 In their first written submissions, DNPW argued that the Court need only consider the question of relief from forfeiture if the Court rejected DNPW's submission that s 444F was the equivalent of relief from forfeiture or were of the opinion that relief should either not be granted under s 444F(4) or should only be granted on terms that an order was also made giving relief from forfeiture.
176 Indeed, the Points of Claim did not include a claim for relief from forfeiture in equity and at trial the claim for statutory relief was abandoned. At trial BCC did not consent to the applicants pursuing a claim for equitable relief. Indeed, it opposed the applicants departing from their pleaded case.
177 Although the applicants had successfully opposed an application by BCC to amend its Points of Defence, the applicants sought to amend the Points of Claim. I ordered the applicants to provide the Court and BCC with a copy of any Proposed Amended Points of Claim and written submissions in support of any application to amend.
178 In the Proposed Amended Points of Claim the applicants pleaded that BCC had given notice of intention to terminate the Lease on 12 June 2008 (the first notice of termination) and again on 5 February 2009 (the second notice of termination). The second notice of termination was not pleaded in the Points of Claim.
179 In the Proposed Amended Points of Claim the applicants relied upon the effect of clause 13.2(b) which is set out at [21] of these reasons.
180 The applicants' Proposed Amended Points of Claim contain a claim for relief sought in "the inherent power of the Court". Paragraph 24 reads:
24. In the alternative the second applicant seeks relief from forfeiture pursuant to the inherent power of the Court.
24.1. Both the Notice of Termination and the Second Notice of Termination were a valid notice under clause 13.2(b) of the Lease, with effect from the dates upon which they were respectively served on the second applicant.
24.2. By operation of clause 13.2(b) of the Lease, each Notice 'absolutely determined' the Lease.
24.3. Each Notice constituted a sufficient act of forfeiture or threat of forfeiture (for the purposes of the doctrines of equity) notwithstanding that the respondent has not re-entered the demised premises or unequivocally demanded that the second applicant deliver up possession of the demised premises to the respondent.
24.4. The Court in its discretion should relieve against the consequences of each Notice.
24.5. The applicants rely on the matters set out at paragraph 20 herein.
181 The application to amend the Points of Claim was opposed by BCC.
182 The applicants contended that BCC was always aware that the applicants were seeking relief against forfeiture. They said that BCC's Points of Defence contained a pleading in answer to the claim for relief against forfeiture in equity. The pleading in paragraph 27.5, which is set out in [7] of these reasons, relates only to the claim for statutory relief against forfeiture under s 138 of the NT Property Act. Notwithstanding the first sentence in paragraph 27.5, the use of the words "In any event" in the second sentence shows that the plea in paragraph 27.5 addresses the claimed statutory relief against forfeiture. I reject this submission.
183 Next they contended that the Court was informed at a directions hearing on 11 December 2008 that the applicants sought relief against forfeiture in equity.
184 There was a reference at that directions hearing to the applicants seeking relief from forfeiture in equity but it would not be right to say that counsel at that time indicated that relief was being sought , only that the applicants would consider their position in relation to a claim for relief against forfeiture in equity because of the difficulties in establishing a claim for statutory relief. The exchange with counsel on that occasion could not have put BCC on notice that the applicants were making a claim for equitable relief. Indeed, in the exchange counsel implicitly acknowledge the absence of a claim for equitable relief.
185 The applicants contended that in their first written submissions in abandoning the claim for statutory relief they made it clear that they claimed relief "solely on the inherent or equitable power of the Court". That is so. However, the applicants wrote that their primary submission was that relief under s 444F(4) is the practical equivalent of relief against forfeiture and that if that submission were accepted the Court need not rule upon the alternative application for relief against forfeiture. As well, of course, the written submissions did not address the absence of any claim for relief against forfeiture in equity in the Points of Claim.
186 Next they contended that the respondent's submissions served on the morning of the hearing addressed both directly and comprehensively the equitable principles of relief against forfeiture. The respondents did address both relief under s 138 of the NT Property Act and relief against forfeiture in equity but, in doing so, said that no grounds for equitable intervention had been asserted or could be established.
187 The applicants further contended that the issue was addressed by counsel for the respondents in his submissions at the first hearing. That is so but the respondent's counsel made it clear that BCC relied upon the failure of the applicants to plead a case for equitable relief against forfeiture as a ground for dismissing any application for relief of that kind. In written submissions filed after the first hearing, BCC made it quite clear that it opposed any relief of that kind because the applicants had not pleaded any case for relief against forfeiture in equity. BCC also contended in those written submissions that no grounds had been raised by the applicants upon which equity might intervene to relieve against forfeiture.
188 BCC announced that the submissions it made were, as it said, premised on the Court permitting the applicants to depart from their pleaded case.
189 The applicants contended that O 13 r 2(1) of the Federal Court Rules empowers the Court to allow a party to amend a pleading "at any stage of any proceeding" and that leave might be given even after the close of evidence provided there is no irremedial prejudice to the other side. The applicants contended that the proposed amendment would not inflict any prejudice on BCC because the claim for relief arises out of substantially the same facts as those relevant to relief under s 444F.
190 In the alternative, the applicants contended that the Court has an obligation to ensure that all matters in controversy between the parties are completely and finally determined and all multiplicity of proceedings concerning those matters is avoided: s 22 of the Federal Court of Australia Act 1976 (Cth).
191 It was contended that O 13 r 2(2) of the Federal Court Rules requires the Court to allow amendments which are to be made for the purpose of determining the real questions raised or otherwise, depending on the proceeding or of avoiding multiplicity of proceedings.
192 Lastly, it was put that courts ought to decide the rights of parties and not punish them for mistakes in the conduct of their case, and an amendment should be refused only where bad faith is demonstrated or where the consequential injury or prejudice to the other parties is incapable of remedy.
193 BCC opposed the application on four separate grounds. First, it contended that the applicants had failed to give any explanation for their failure to plead the case in the Points of Claim notwithstanding its repeated warnings. Secondly, the claim which is sought to be advanced merely concerns an alternative claim. Thirdly, the claim which is sought to be pleaded in its terms is untenable because it does not contain the material facts sufficient to warrant a finding that would give rise to relief in forfeiture in equity. Fourthly, BCC will be prejudiced by the amendment because the evidence has been closed and the parties have made tactical decisions based upon the material facts which were pleaded. It was contended that had the case been pleaded in the terms of the Proposed Amended Points of Claim the course of the case may well have been different.
194 As early as 10 November 2008 when Registrar Christie made the orders to which reference has been made, BCC said in support of its submission that pleadings should be ordered:
It would be regrettable ... if, despite a wealth of affidavit material, the true grounds upon which it is asserted that there should be relief from forfeiture only emerge at a final hearing of this matter.
195 BCC also in its written submissions, as I have said, argued that no relief could be made because no ground had been asserted or established. Moreover, again as I have said, BCC's counsel at the first hearing argued that a plea for equitable relief against forfeiture was not contained in the Points of Claim. BCC relied upon Gaudron J's remarks in The Commonwealth v Verwayen (1990) 170 CLR 394 at 482:
When a party to litigation deliberately chooses not to take a point or fails to take a point when it comes to notice, the Courts may adopt a more stringent attitude, treating the point as being irrevocably abandoned. Usually the party that has failed to take this point is said to have waived it.
196 The applicants have given no explanation for their failure to give any explanation for the absence of this plea in the Points of Claim delivered on 24 November 2008 or any explanation as to why this application was not made when BCC made it clear that it opposed the applicants relying upon this ground in the absence of any pleading. The applicants are seeking an indulgence from the Court. It behoves the applicants to inform the Court why the applicants did not include a claim for equitable relief in the Points of Claim. A deliberate omission would be a factor going to the exercise of the Court's discretion. It might be inferred that the applicants did not plead the relief now sought to be added because the applicants were of the opinion, as they have submitted, that if an order were made under s 444F that order would have the practical effect of an order for relief from forfeiture.
197 It is unsatisfactory that no explanation has been given but, if I were of the opinion that it was in the interests of justice that I allow the amendment for the purpose of ruling upon the applicants' claim for relief against forfeiture in equity, the absence of an explanation would not mean that the amendment should not be allowed.
198 I do not think, with respect, there is any merit in the second ground raised by BCC in opposition to the application to amend. The fact that this is an alternative claim to that relied on under s 444F would not be by itself a ground for refusing the application.
199 As I have said both at the trial and during the argument in relation to this application to amend, senior counsel for the applicants, Mr McNamara QC, submitted that this application was only made in case I were of the opinion that the applicants' case under s 444F should fail.
200 I put to him that it was my tentative view that the applicants should succeed in relation to the claim under s 444F for the reasons which I have given. He said if that were the case then I should allow the amendment but not rule upon whether or not an order for relief from forfeiture in equity ought to be made.
201 The applicants seemed thereby to be maintaining the primary submission which they made, which was that an order under s 444F would obviate the need to consider whether relief against forfeiture in equity should be ordered.
202 Mr McNamara contended that I should allow the amendment in case on appeal the Full Court disagreed with my opinion, in which case the matter could be remitted to me for a consideration of the alternative claim which is now sought to be advanced.
203 I do not think, with respect, that the course proposed could be adopted. If the amendment were allowed, it would seem to me that I should consider whether an order should be made relieving against forfeiture in case the Full Court disagreed with my opinion in relation to the relief available under s 444F of the Corporations Act. Although the amendment could not be disallowed simply because it is, as BCC suggests, merely an alternative claim, the applicants' proposal suggests an absence of prejudice to the applicants in the event that the amendment were refused.
204 The third and fourth grounds have, with respect, more substance. Apart from paragraphs 24.1, 24.2 and 24.3 which give sufficient material facts to suggest that forfeiture in equity has occurred, the plea which is sought to be made does not contain any material facts which would support the making of an order for relief against forfeiture. The plea merely claims the right to relief because of the forfeiture without identifying the facts and circumstances upon which the applicants rely for the order, unless it could be said that the reference to paragraph 20 in paragraph 24.5 was, of itself, sufficient material facts to warrant the making of an order.
205 Paragraph 20 provides:
The termination of the lease and recover of the property by the respondent would have a material adverse effect on achieving the purposes of the DOCA in that the obligation on NT Pubco to perform its obligations would not arise and accordingly the DOCA would terminate and the company would go into liquidation.
206 The only ground relied upon for the order would seem to be that contained in paragraph 20, which does not seem to me to be relevant in determining whether the applicants would be entitled to relief against forfeiture in equity. Moreover, the plea in paragraph 24.4 is unsupported by any material facts.
207 Paragraph 24 does not give BCC fair notice of the applicants' claim in that it does not identify the facts and circumstances upon which the applicants rely for the purpose of the relief sought in equity. Nor does it identify the facts and circumstances which would bear upon the exercise of the Court's discretion to make such an order.
208 I therefore accept the respondent's third argument that the proposed plea in paragraph 24 does not contain the material facts upon which the relief is sought.
209 An amendment will not be allowed where the plea would be futile. The plea would be futile if it were allowed in circumstances where it would be liable to be struck out because it failed to provide sufficient particulars. If this plea had been contained in the Points of Claim, the applicants would have had to give particulars of the plea if those particulars had been sought by BCC. If the applicants could or would not give particulars, the plea would be struck out.
210 In my opinion, it would not be appropriate to allow an amendment so late in the day which does not in any event comply with the pleading rules.
211 BCC contended that it would suffer prejudice because it might have conducted its case differently at trial if the plea had been raised prior to trial.
212 Counsel for BCC contended that he may have conducted BCC's case differently if this plea had been contained in the Points of Claim before trial. The day before the trial BCC served the second notice of termination in which it claimed to be entitled to possession of the property. The second notice of termination is now relied upon by the applicants for its claim that there has been a forfeiture for which relief should be granted. Counsel said it was a tactical decision taken in the context of an argument under s 444F in the light of the decision in Re Java 452 Pty Ltd (Administrator Appointed) (No 2) (1992) 32 ACSR 507 where forfeiture of the lease was held to be significant in a consideration of an application under the Corporations Act.
213 It was submitted that if there had been a further plea that the applicants be granted relief from forfeiture in equity, BCC might not have given the second notice of termination because it might have argued that the first notice of termination did not amount to a forfeiture. It might have argued, absent the second notice of termination, that the application for equitable relief was premature. That argument is no longer available.
214 Next BCC argued that it was precluded from cross-examining Mr Strazdins regarding additional breaches of the Lease and the wilful nature of those breaches. I have already referred to the cross-examination of Mr Strazdins and why I thought that aspect of the cross-examination was irrelevant in a consideration of s 444F. However, BCC contends, and I think rightly, that if it established there had been further wilful breaches of the Lease which were continuing, that might be a matter which would be taken into account in a consideration of the exercise of the Court's discretion in relation to a claim in equity.
215 It was further argued that, if the plea had been included in the Points of Claim, the respondent would have been entitled to discovery of the management agreement, which was entered into by the administrators under which the business of the licensed premises had been conducted since the DOCA was entered into. The respondent might have been able to argue that the management agreement evidenced a sub-letting, licence or a parting with possession in breach of clauses 11.1 and 11.2 of the Lease. If that management agreement evidences further ongoing breaches of the Lease, that might be a relevant consideration in an application for equitable relief. BCC has lost the opportunity to explore those issues.
216 Mr Livesey contended that if he asserted that BCC may have conducted its case differently, the Court ought to accept that assertion and accept that BCC has been prejudiced by the late plea. I do not think that the Court is bound to accept counsel's assertion that the party which counsel represents is prejudiced. In the end, it is for the Court to determine whether the party has been prejudiced and the Court is not bound to simply accept an assertion made by counsel that prejudice exists.
217 That is not to say that the Court would not have regard to an assertion of prejudice made by senior counsel, as was the case on this application. But in the end result, I think it is for the Court to determine whether there has been prejudice of the kind asserted.
218 I have concluded that if this application were allowed BCC would suffer prejudice because of the way in which it has conducted its case.
219 I accept that the respondent made a tactical decision in giving the notice which it did of 5 February 2009 in which it claimed possession of the leased premises. By doing so, it probably put the applicants in a position where they were able to argue that forfeiture had occurred. It certainly put the applicants in a more favourable position in that regard.
220 I also accept the contention that BCC has not been able to advance a case that there have been further wilful breaches of the Lease, which might be a reason why in the exercise of the Court's discretion the Court would refuse to make an order for relief from forfeiture in equity. BCC was precluded from cross-examining Mr Strazdins in respect of those further breaches because they were thought not to be relevant in relation to a claim for relief under s 444F.
221 The prejudice which BCC has suffered in relation to the giving of the second notice of termination cannot be remedied. The notice has been given and that is that. The second item of prejudice, namely BCC's failure to obtain discovery of the management agreement and BCC being precluded from cross-examining Mr Strazdins in relation to further wilful breaches, could be remedied by ordering the discovery of that document and by re-opening the trial to allow the relevant cross-examination to take place. The prejudice could therefore be partly remedied.
222 Whilst ordering discovery and re-opening the trial would obviate the prejudice suffered by BCC in relation to that second claim, it would do so at some cost to BCC. I think it would be unfair to BCC to submit it to a further trial on this alternative claim.
223 It would not be unfair to the applicants to disallow the amendment because that would not preclude the applicants from litigating that issue in conjunction with a claim for statutory relief under s 138 of the NT Property Act. Because an order under s 444F of the Corporations Act has the practical effect that the applicants assert, the applicants would only need to agitate a claim for relief against forfeiture in equity in the event that the applicants committed some further breach of the Lease. At that stage the orders made under s 444F would be discharged by the further breach. The applicants could then seek relief in respect of the breaches, the subject of this proceeding and any further breach.
224 In my opinion, having regard to all of the circumstances of the case, it would be appropriate to dismiss the applicants' application to amend the Points of Claim to include paragraph 24 as proposed and the reference in the proposed Points of Claim to the second notice of termination.