Principles concerning the doctrine of relation back
35 Ordinarily, 'an amendment, duly made, takes effect, not from the date the amendment is made, but from the date of the original document which it amends': Baldry v Jackson [1976] 2 NSWLR 415 at 419 (Samuels JA). However, an amendment to introduce a claim that may be barred by the period of limitation at the time the amendment is made is not an ordinary amendment. If it were to be allowed to relate back then it would prejudice the opposing party's ability to raise a limitation point even though the claim was out of time. Such amendments are only treated as taking effect from the date of the original document where the amendment introduces a claim that 'arises out of the same or substantially the same facts' as the claims that have been brought within time: Ethicon Sàrl v Gill [2018] FCAFC 137; (2018) 264 FCR 394 at [47] (Allsop CJ, Murphy and Lee JJ). There is some uncertainty as to the current source of the authority for this limited 'relation back' practice because it was previously to be found in an express rule concerning amendments to 'any document in the proceeding' but is now only to be found in the provision in the Federal Court Rules that is concerned with amendment of the originating application: Voxson Pty Ltd v Telstra Corporation Limited (No 7) [2017] FCA 267 at [16]-[20] (Perram J), noting the limited respect in which those views were found not to be correct in McGraw-Hill Financial, Inc v Clurname Pty Ltd [2017] FCAFC 211 at [23] (Allsop CJ, Jagot and Yates JJ). See also the analysis of the 'relation back doctrine' by Brereton J in Street v Luna Park Sydney Pty Ltd [2006] NSWSC 230 at [45]-[52].
36 All of which leaves open the possibility that Weldon v Neal (1887) 19 QBD 394 applies in the case of an application to amend a statement of claim. The 'rule' established by that case is usually understood to be to the effect that a claimant cannot amend proceedings to set up a fresh claim in respect of causes of action that have become statute barred by the time of the application to amend (even though they would have been brought within time had they been included when the proceedings were commenced). To do so would be to unjustly prejudice the opposite party who would otherwise be able to set up a limitation defence to the claim: Rodgers v Commissioner of Taxation (1998) 88 FCR 61 at 64 (Wilcox, Tamberlin and Emmett JJ).
37 Further, the rule of practice described in Weldon v Neal must now be applied in the context of the express legislative provision concerning such amendments to be found in the Federal Court Act. As to the relation back of amendments, s 52(2B) provides:
The Rules of Court may make provision for:
(a) the amendment of a document in a proceeding; or
(b) leave to amend a document in a proceeding;
even if the effect of the amendment would be to allow a person to seek a remedy in respect of a legal or equitable claim that would have been barred because of the expiry of a period of limitation if the remedy had originally been sought at the time of the amendment.
38 The terms of s 52(2B) appear to contemplate the making of an express rule conferring a power of the kind described in the statutory provision. They seem to reflect a view that the Court could not, at a time when a remedy was barred by expiry of a limitation period, allow an amendment to introduce a new claim as the basis for seeking the remedy unless the amendment was permitted by a provision in the Rules that was expressly authorised by statute. In short, the terms in which s 52(2B) are expressed seem to assume that the Court has no power beyond that conferred expressly by a rule made under the authority conferred by s 52(2B) by which to allow an amendment that will relate back to the date of commencement of proceedings (that is, to take effect as if included in the proceedings at the time that the proceedings were commenced).
39 There is an alternate possibility. It is to the effect that in determining when an action has been commenced for the purposes of a limitation period, the Court treats proceedings that have been commenced as including any cause of action that arises out of the same or substantially the same facts as formed the basis for the proceedings when commenced. It does so as a matter of general law principle (unless modified by statute). Therefore, a later application to make an amendment to advance such a claim can be allowed on the basis that it has been commenced in time. In effect, it was always part of the controversy the subject of the proceedings and therefore could not be said to be out of time if sought to be added to the express claims to be adjudicated. Of course, any such amendment must meet other principles designed to ensure fairness in the conduct of the procedure when it comes to amendment. However, provided the expansion of the case to include a new claim or cause of action does not go beyond the controversy encompassed by the same or substantially the same facts as were the subject of the proceedings when commenced then it is within time. A principle of that kind may well depend upon the terms in which the particular limitation period is expressed. However, it provides an explanation for a source of authority for allowing an amendment to add a new claim that will relate back to the date of commencement if encompassed by the same or substantially the same facts that does not depend upon express legislative authority. As to these matters, see the reasoning of Wigney J in Gloucester Shire Council v Fitch Ratings, Inc (No 2) [2017] FCA 248 at [235] and the summary of the approach at general law in Belgravia Nominees Pty Ltd v Lowe Pty Ltd [2017] WASCA 127; (2017) 51 WAR 341 at [46] (Martin CJ, Murphy and Mitchell JJA); and Agtrack (NT) Pty Ltd t/as Spring Air v Hatfield [2003] VSCA 6; (2003) 7 VR 63 at [40]-[44], [81]-[82] (Ormiston J, Chernov and O'Bryan JJ agreeing), outcome reversed on appeal on different grounds Agtrack (NT) Ptd Ltd t/as Spring Air v Hatfield [2005] HCA 38; (2005) 223 CLR 251.
40 However, in McGraw-Hill Financial, Inc v Clurname Pty Ltd, the Full Court appeared to go even further when it was said that the existence of r 8.21(1)(g) and (2) 'does not mean that the Court's power to permit an amendment [to an originating application] asserted to involve a statute-barred claim is confined to the circumstances in r 8.21(1)(g)(i)'. This appears to be a reference to the Court's power to permit an amendment on the basis that it will relate back to the date the proceedings were commenced even where the amendment goes beyond the same or substantially the same facts as those already the subject of the controversy being adjudicated and without an express rule justifying such a course on the basis of the power conferred by s 52(2B) of the Federal Court Act.
41 However, in Morgan v Banning (1999) 20 WAR 474 at 483 Wheeler J (Ipp and Owen JJ agreeing) articulated two propositions concerning the doctrine of relation back which appear to be inconsistent with the expansive view expressed in McGraw-Hill Financial, Inc v Clurname Pty Ltd, namely:
First, if the writ when issued, although defective, is not a nullity, and its terms are wide enough to encompass the amendments sought to be made to clarify or particularise or 'cure' it, then it seems that no question of limitation arises. Such an action is within time and subsequent steps (even those directed to defects in the original indorsement) are merely steps taken in a validly instituted action with respect to which it is not necessary to consider limitation questions. However, if it is so irregular that, subsequent to the expiry of the limitation period, the defendant is successful in having it wholly set aside, it will then be too late for the plaintiff to bring a further action.
The second proposition which seems to me to follow is that if the defective indorsement appearing on the writ when issued, is not of a type which is capable of encompassing amendments sought to be made after the expiry of the limitation period, so that the amendments truly 'add' an additional and time barred cause of action (rather than particularising, clarifying, or expanding one already instituted) then, whether leave to amend is granted or not, the new action remains time barred. Whatever the rules of court may provide, an action which is in fact instituted out of time is able to be defeated by reliance upon the Limitation Act, which the court has no power to override, whether by a procedural rule of 'relation back' or otherwise.
(emphasis added)
42 In his Honour's concurring judgment, Owen J emphasised that the rules and practices of the court relating to limitation matters must be seen within the statutory context and that there is no inherent jurisdiction or rule of the court that can circumvent statute or the operation of limitation provisions: at 476.
43 The above approach has subsequently been confirmed by the Court of Appeal in Western Australia: see the review of the authorities in Belgravia Nominees Pty Ltd v Lowe Pty Ltd at [29]-[47].
44 Importantly, s 52(2B) was introduced following obiter observations by Toohey J in Wardley Australia Limited v State of Western Australia (1992) 175 CLR 514. The significance of those observations was explained by Cowdroy J in McGrath v HNSW Pty Ltd [2014] FCA 165; (2014) 219 FCR 489 at [35]-[36]:
The decision of Wardley … concerned an application to amend a statement of claim to include a cause of action barred by virtue of s 82(2) of the TPA. The Full Court of the Federal Court had found that the relevant cause of action was not barred by s 82(2). On appeal to the High Court, such finding was upheld per curiam. Toohey J (although not required to do so) also considered the power of the Federal Court to grant leave to amend a statement of claim to introduce a time barred cause of action. The extant rule governing the amendment of documents in the Federal Court was O 13 r 2(1) of the Federal Court Rules 1979 (Cth) ('the 1979 Rules'). Such rule provided:
The Court may, at any stage of any proceeding, on application by any party or of its own motion, order that any document in the proceeding be amended, or that any party have leave to amend any document in the proceeding, in either case in such manner as the Court thinks fit.
Having considered the scope of the jurisdiction exercised by the Federal Court (see 559-561), Toohey J found that O 13 r 2(1) was not sufficiently broad to permit amendments to statements of claim that would add a new and otherwise time barred cause of action. His Honour noted that any incidental or necessary powers invested in the Federal Court by virtue of its jurisdiction could not overcome a clear statutory prohibition such as that contained in s 82(2) of the TPA. His Honour stated at 561-562:
When the Federal Court is faced with an application to amend a statement of claim by introducing allegations that, though they may relate to a time after the relevant limitation period has expired, do no more than expand a cause of action already pleaded, there is no difficulty in treating O.13 r.2 as wide enough to permit such an amendment. But when, as here, the proposed amendment introduces an admittedly new cause of action, the position is quite different. Section 82(2) presents a statutory barrier to any new cause of action; to this barrier, reference to express, implied or incidental powers provides no answer.
45 After Wardley, the Federal Court Act was amended to insert s 59(2B): s 44 of the Law and Justice Legislation Amendment Act 1994 (Cth). The Explanatory Memorandum in respect of the amendment stated (at paras 113-115):
New subsection 59(2B) will enable the Rules of Court to make provision for -
• the amendment of a document in a proceeding; or
• leave to amend a document in a proceeding,
even if the effect of the amendment would be to allow a person to seek a remedy in respect of a claim that is out of time at the time of the amendment.
The proposed amendment is necessary to overcome the operation of the rule in Weldon v Neal (1887) 19 QBD 394. That case held that leave to amend will not be granted to enable a plaintiff to raise a new cause of action if that cause would, if proceedings in relation to it were then started for the first time, be barred by the expiry of a period of limitation. The amendment would not enable Rules to be made to allow a person to amend a claim so as to seek relief which was not available at the time the action was commenced because the action was commenced out of time.
Comments made by the Hon. Justice Toohey of the High Court in Wardley Australia Ltd v Western Australia (1992) 175 CLR 514 have raised some doubts whether the Federal Court currently has the power to make such rules. This amendment will overcome that doubt.
46 Therefore, the precise circumstances in which the Court may allow an amendment to a pleading on the basis that it will relate back to the date of commencement of the proceedings is somewhat uncertain. What is clear is that amendments that seek to introduce a new cause of action at a time that is beyond the expiry of the limitation period must be justified by reference to some source of authority that allows the amendment to relate back to the date of commencement of the proceedings otherwise it will be out of time.
47 Finally, in those cases where r 8.21(1)(g) is relied upon as the basis for an amendment, it has been observed that 'the Court should not be too pedantic in considering the nature of the facts added to the existing pleading' as the question whether 'the added facts are substantially the same as the facts already pleaded will be a question of degree, and will depend on the nature and extent of the existing pleaded case, the facts sought to be added in and the relief already sought': Camilleri v The Trust Company (Nominees) Limited [2015] FCA 1138 at [11] (Middleton J). As to instances where reliance was placed upon r 8.21(1)(g) see Captiv8 Pty Limited (in liq) v Bodger [2018] FCA 1801 at [54] (Gleeson J); Bryant (Liquidator) v L.V. Dohnt & Co Pty Ltd, in the Matter of Gunns Limited (In Liq) (Receivers and Managers Appointed) [2018] FCA 238 at [67]-[71] (Davies J); and Hastie Group Limited (in liq) v Multiplex Constructions Pty Ltd (Formerly Brookfield Multiplex Constructions Pty Ltd) [2020] FCA 1824 at [27] (Middleton J).