Technology Leasing Limited v Stephen and Robyn Eyre Pty Ltd t/as Hot Shots Express and Ors

Defendants' arguments 16In support of their application, the defendants indicated that their proposed amendments fell into the following categories: (1)Those relating to a secret commission; (2)Those relevant to 'recommended retail price'; (3)Those relevant to the 'rate of return'; (4)More broadly, the addition of particulars to the 'Contracts Review' defences; (5)Pleadings that flow from the (already pleaded) allegation that the plaintiff did not supervise Network Techs; (6)An amendment to paragraph 14 of the defences - a deletion of three words and the addition of another. 17The defendants argued that they should be allowed to amend as:

• In the circumstances, the plaintiff would not suffer any prejudice
• If there were prejudice (which is rejected), it could be cured by allowing the plaintiff to put on evidence before the 22 August 2011 trial date
• There is an excuse for the amendment application coming when it does
• The excuse is referable to the plaintiff's conduct, namely the service of John Harrison's affidavit dated 31 May 2011 a couple of days before the hearing.
• The proposed pleadings merely reflect the way the matters have been litigated at trial
• The plaintiff acquiesced to the course at trial that elicited the evidence relevant to the pleadings 18The defendants' counsel conceded during the hearing of the amendment application that they had received the documents relating to the 'rate of return' prior to the service of Mr Harrison's affidavit.

Plaintiff's arguments 19The plaintiff strenuously opposed the amendment application on the following basis:

• Categories (a) to (e) seek to introduce a new basis and foundation for the claim that the contracts are unconscionable and should be set aside pursuant to section 51AB of the Trade Practices Act or the personal guarantees pursuant to the Contract Review Act.
• Category (f) dramatically alters the way in which the Defendants seek to link the rental of the equipment from TLL to the telephony services of Network Techs and the plaintiff would suffer significant prejudice if the amendments were allowed. It would have run the case differently if this matter had been pleaded earlier (eg. It would have led different evidence, cross-examined witnesses differently and may have called additional witnesses.)
• The defendants have not explained the reason for the late amendment and have not provided any affidavit is support of their application. Importantly, they have not provided any evidence as to the steps their solicitors took to review the discovered documents and the evidence and why they did not utilise interlocutory steps such as notices of motion or notices to produce prior to the hearing commencing.
• Using the Eyre proceedings as an example, the defendants had previously been provided with copies of the documents that were attached to Mr Harrison's affidavit of 31 May 2011.
• If the amendments were allowed then the plaintiff might need to amend its pleadings, serve additional evidence and possibly call expert evidence. Witnesses would have to be recalled and it is likely that the two days that have been allocated for the remainder of the hearing would be insufficient. This would be inconsistent with the "just, quick and cheap" resolution of the proceedings.
• The 21 st Century proceedings are likely to have been resolved if they had proceeded to hearing in May. The plaintiff would not have consented to the vacation of the hearing date if it had realised that the proceedings might not be resolved for some months.

The law 20Rules 21.1 to 21.7 of the Uniform Civil Procedure Rules deal with discovery of documents. UCPR 21.3 requires the party who is giving discovery to provide a list of documents, the details of which are prescribed by the rule. UCPR 21.4 requires the list of documents to be accompanied by a supporting affidavit and a solicitor's certificate of advice. The rule prescribes the matters that must be included in both documents. 21Division 1 of Part 6 of the Civil Procedure Act 2005 contains sections dealing with the guiding principles of case management. Section 64 deals with the amendment of documents generally. 22Case management has been the focus of much attention in recent years. 23NSW gave statutory underpinning to case management principles when it enacted Part 6 of the Civil Procedure Act . Since that time, there have been a number of significant decisions by the High Court and the Court of Appeal that guide courts when dealing with applications such as those that are currently before me. These include Aon v Risk Services Australia Limited v Australian National University [2009] HCA 27, Hans Pet Constructions Pty Ltd v Cassar [2009] NSWCA 230, Halpin v Lumley General Insurance Ltd [2009] NSWCA 372 and Richards v Cornford (No 3) [2010] NSWCA 134. 24The plaintiff's counsel provided me with useful extracts from these cases but for brevity's sake I have not reproduced these in this judgment.

Discussion 25As a preliminary matter, counsel agreed with my suggestion that I would treat all proceedings in the same way, even though the evidence was complete in some proceedings and not in others. The basis for my suggestion was that it would be unfair to distinguish between proceedings given that they had all be set down for hearing at the same time. 26I do not accept the defendants' submission that the plaintiff would not be prejudiced by the amendments or that any prejudice could be cured by allowing the plaintiff to put on more evidence prior to the next hearing date. 27There is no doubt that if I were to allow the defendants' application then it would have a dramatic effect on the conduct of this litigation. The plaintiff will need to reconsider its position in relation to its pleadings and will need to adduce further evidence to address the new issues in the proceedings. Witnesses will need to be recalled and it is likely that extra hearing days will be required. The additional costs and delays will be significant. It will also have an impact on availability of judicial and administrative resources for other proceedings. 28This clearly is the type of prejudice that the High Court and the Court of Appeal have indicated has to be avoided. It is inconsistent with the concept of a "just, quick and cheap resolution of the real issues in dispute". 29The defendants also failed to tender affidavits explaining and justifying their actions to date. This approach is not to be recommended, particularly when a party is seeking an indulgence in circumstances such as these. 30Had there not been problems with discovery, I would have refused the defendants' application relying on:

• Part 6 of the Civil Procedure Act
• The cases referred to earlier in my decision
• The defendants' failure to make this application earlier in the proceedings
• The clear prejudice to the plaintiff
• The flow on effect on the availability of judicial and administrative resources for other proceedings. 31I turn now to the issue of discovery 32Discovery is not utilised very often in the Local Court, as the cost of discovery can be disproportionate to the importance and complexity of the real issues in dispute. 33In this case, the Court ordered discovery at the request of the parties so the legal representatives must have been aware what that would mean for their clients and themselves, namely, a significant amount of work would be required to identify and produce documents in accordance with the order and the rules. 34During the hearing of the amendment application, the plaintiff tendered:
• A copy of its affidavit verifying discovery
• A copy of the email sent by its solicitors on 30 March 2011 enclosing the informally discovered documents
• A copy of extracts from the computer file directory showing a sample of the documents contained in the CD provided with the affidavit verifying discovery. 35Whilst the plaintiff provided the defendants with an affidavit verifying discovery and a number of documents, it has not done so in accordance with UCPR 21.3 and 21.4. 36The plaintiff failed to provide a list of documents and it appears that it has also failed to provide the solicitor's certificate of advice. The lack of a solicitor's certificate of advice was not raised during the hearing of the amendment application. This is an important issue so I intend giving parties the opportunity to address me on this issue before I make any orders, as it may be that the copy of the affidavit verifying discovery that was provided to me had been copied incorrectly. 37Although Mr Harrison's affidavit of 31 May 2011 contained only a few documents, and these documents appeared to be the same as the documents that were provided on the CD, there were subtle differences between some of the documents. For example, the application for finance annexed to the affidavit of 31 May 2011 contained more information that the version of the document on the CD. In the absence of further evidence, it is impossible for me to assess the significance of these differences. 38It is arguable that if the discovery process had been more thorough then the documents would have been identified earlier. If it transpires that a solicitor's certificate of advice was never prepared, then I would have even greater concerns about the thoroughness of the discovery process. 39It may be that the plaintiff has actually served all of the documents that fall within the scope of the order for discovery. Even if this is the case, by failing to provide a list of documents, the defendants have been deprived of the opportunity to see whether there are any documents to which a claim for privilege attaches and whether the claim should be challenged. 40The defendants certainly had the opportunity to seek interlocutory relief earlier in the proceedings. They could have filed a notice of motion seeking an order to require the plaintiff to properly comply with the order for discovery. 41Given the proximity of service of Mr Harrison's affidavit and the hearing date, it is not surprising that the defendants did not apply to amend their pleadings prior to the hearing. I do not yet have the transcript of the hearing but if my memory serves me correct, the issue of amendment of the pleadings was raised early on in the hearing. The issue was deferred in the interest of ensuring that court time was used effectively during the hearing. 42When deciding whether to allow an amendment, s 64 of the Civil Procedure Act requires me to have regard to s 58 of the Act. 43Section 58 of the Civil Procedure Act requires the court to seek to act in accordance with the dictates of justice when making orders for the management of proceedings including for the amendment of a document. When determining what are the interests of justice, a court must have regard to ss 56 and 57 of the Act and may have regard to a range of matters listed in subsection (2)(b). For brevity's sake, I will not list all of the matter however some are clearly relevant in these applications. For example, these are clearly complex proceedings and in my view, given the real problems with discovery, there is the potential for the defendants to suffer a real injustice if they are not allowed to amend their pleadings. 44Even though the defendants should have taken steps earlier to seek an order to compel the plaintiffs to comply with the order for discovery, I do not consider that this failure entitles the plaintiff to avoid facing the consequences of its earlier actions. 45Despite the defendants' concession that they had previously been provided with the documents that underpin the proposed amendments falling into category (c), I am of the view that the problems caused by the incomplete discovery are such that the defendants should not be precluded from making these particular amendments. 46Even though the effect of allowing the defendants to amend their pleadings will increase the costs for the plaintiffs and might lead to some delay in the proceedings, I am of the view that Part 6 of the Civil Procedure Act and the decisions of the High Court and Court of Appeal do not require me to refuse an amendment if do so would cause an injustice. I note that I would have formed this view even if it becomes apparent that the plaintiff's solicitor did prepare the certificate of advice required for discovery. 47For the above reasons, I give leave for the defendants/cross-claimants to amend their pleadings. I will hear from the parties before I make further orders for the conduct of the proceedings. Magistrate J Atkinson 8 July 2011 DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 15 July 2011