Wyzenbeek v Australasian Marine Imports Pty Ltd

The context of the application 7 The matters now in contention ought to be given some context. 8 In general terms, the substance of the applicants' case, as it appears in the second further amended statement of claim (referred to as the "SFASC"), is that that they were induced to purchase a 75 foot motor yacht for a purchase price of $3.95m as a result of certain representations which were allegedly made by the respondents. Some of the representations were alleged to be in writing and some were alleged to have been made orally. It is said that the representations which, in very general terms, went to the ability of the vessel to be used in the open seas for trans-ocean crossings, were false or misleading. The applicants seek to recover damages which they claim that they have suffered as a result of the making of the representations and their subsequent acquisition of the vessel. The respondents are, it is alleged, an admixture of corporate entities and individuals whom, it is alleged, operated a business selling motor vessels at the Gold Coast in Queensland. On behalf of the respondents it is denied that they were all involved in the sale of the motor vessel in question. It is also denied that the representations were made or were acted upon. 9 It is necessary to observe that, to a fair degree, the SFASC in this matter fails to articulate the case in a manner which is to be expected in commercial courts which operate under regimes which require parties to act in a such way that the true issues in dispute are expeditiously and efficiently resolved (See ss 37M and 37N of the Federal Court of Australia Act 1976 (Cth)). This is particularly so in three major respects which have given rise to the issues which have now emerged. (a) First, the pleadings do not wholly reflect the detail of the case on which the applicants actually rely. Many of the alleged misrepresentations which appear in the witness statements and on which the applicants now seek to found their case, are absent from the particulars in the SFASC. (b) Second, the pleading is internally ambiguous and unclear. Its major weakness in relation to the representation case is that, whilst the material facts pleaded allege the making of the representations by a number of the respondents including Ryan Leigh-Smith (Ryan L-S) and Dean Leigh-Smith (Dean L-S), the particulars provided inconsistently appear to refer to only Dean L-S. Given that the particulars were included in the original version of the pleading, it would seem clear that by the manner in which it was drawn, it did not intend to exclude a case founded upon the representations against Ryan L-S and others of the respondents. (c) Third, the facts relied upon to establish causation in relation to the misrepresentation claim are poorly pleaded. Had that been done to a standard expected in the commercial courts it might have been easier to identify the relevance of the proposed evidence to the matters in issue. (d) The claim pleaded against the fifth respondent, Mr Gay, is, as these reasons show, so inadequate that it ought to be struck out. 10 However, despite the above deficiencies having been apparent to the respondents for some time or, at least, they ought to have been, the respondents have done nothing to resolve the difficulties and ambiguities up until this point in time. The retort of the respondents is, in effect, to say that it is not up to them to identify deficiencies in the applicants' case and that, in an adversarial process, they are entitled at the start of a two week trial to take certain points which, if successful, will have the effect of limiting the scope of the case. Properly understood, the submission is that it was not for the respondents to identify any perceived lack of veracity in the pleading and that it is for the applicants to pursue their case as they see fit with the consequence being that, at trial, the respondents are entitled to take objection to any matter which does not fall within the scope of the articulated claim. Whilst there may be some substance to that as far as the parties are concerned, it does have the consequence that, when matters such as this are raised, it is more than likely to have the effect that an amendment will be sought which will inevitably lead to an application for an adjournment. In relation to this, the respondents resort to reliance upon AON Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175 (AON) as being an insurmountable impediment to the applicants amending their pleadings at a late stage. However, it is not immediately self-evident that AON was ever intended to be used as a spring-loaded trap in a litigious strategy which involves one party proceeding to trial unaware that the other intends to take issue with the adequacy of the pleading once the trial has commenced.

A short history of the matter 11 The relevant allegations in the SFASC are to the general effect that representations were made that the Endurance Range of Hampton Yachts and, in particular, the Endurance 750 Skylounge, were oceangoing vessels and also were of a high standard. Necessarily, such representations go together in that in order for recreational vessels to have oceangoing capacity they need to be of a very high standard in terms of design, build and equipment. Some of the alleged representations were that the Endurance 750 Skylounge vessel is safe and comfortable for crossing oceans, would be suitable to fulfil the applicants' requirements (which was to engage in ocean crossings) and is suitable for extended passage in open ocean service. The applicants allege that they relied upon those representations and purchased an Endurance 750 Skylounge vessel which is now named "Cadeau". The applicants allege that the representations to the effect that the vessel had ocean-going capacity (along with other attributes which rendered it so) were misleading and false. They claim to have suffered loss and damage as a result of entering into the transaction. They further raise additional claims under the implied warranties in the ACL in respect of which they claim that they are entitled to relief. The respondents deny the claims as made. 12 This matter was called on for hearing on 3 October 2017. It had been extensively case managed by Rares J and subsequently transferred to my docket for its hearing. There have been numerous case management hearings and orders made, and one expects that the purpose of those was to ensure that the real issues in the litigation are determined at trial. Amongst other things those orders included the delivery of outlines of evidence. The applicants' outlines were delivered in April this year. Their major outline was in relation to the evidence of Mr Wyzenbeek. The respondents have been in possession of that statement for over 5 months. The respondents including Mr Ryan L-S and Mr Dean L-S have, likewise, filed outlines of evidence. Those outlines respond to all of the evidence in the applicants' outlines and, in particular, in the outline of Mr Wyzenbeek. That observation is relevant because the respondents now assert that some of the representations referred to in Mr Wyzenbeek's outline of evidence (and which have been responded to in the witness statements of Ryan L-S and Dean L-S) are not all articulated in the statement of claim and should not be part of the applicants' case. 13 It is apparent from the face of Mr Wyzenbeek's witness statement that the occasions on which he asserts the relevant representations were made are more numerous than the occasions which are particularised in the pleading. That is, they refer to representations allegedly made by, inter alia, Ryan L-S. In the pleading it is alleged that representations were made by Ryan L-S although no particulars are provided. There are also statements in the witness statements indicating that Dean L-S made representations on occasions which are additional to those alleged in the SFASC. This is acknowledged by the applicants. However, to some extent, but far from exclusively, the assertions in Mr Wyzenbeek's witness statement tend to support the various broad allegations which have existed in the various iterations of the statement of claim relating to representations as to the seagoing capabilities of the yacht which he purchased. 14 The alleged misrepresentations are pleaded in paragraphs 13, 14 and 15 of the SFASC. In each of those paragraphs the material facts pleaded allege that the first respondent (AMI), the second respondent (GCCM), the third respondent, Dean L-S and the fourth respondent, Ryan L-S made the relevant representations. However, the allegations become obscure and ambiguous as the particulars given in respect of those paragraphs appear to assert that only Dean L-S engaged in the conduct or made the various written or oral representations. No particulars are provided about the representations alleged to be made by Ryan L-S or, indeed, how AMI or GCCM made the representations. 15 It is difficult to know what to make of these allegations, especially in relation to the claims against Ryan L-S. The initial impression is that the particulars of the claims against him have been omitted by inadvertence. The broad allegation that he made the representations was asserted at the same time that the limited particulars were given. That would suggest that the applicants did not intend to eschew reliance on any representations by Ryan L-S. Rather, it would suggest that the allegations against him were broad and un-particularised. This led to the existence of certain patent ambiguities in the pleading. Relevantly for present purposes, no request for particulars was made by the respondents in relation to this matter with the result that the pleading stayed in the way it was drawn until trial. 16 The respondents filed their witness statements in about June 2017, including one in respect of the evidence of Ryan L-S. That witness statement contains 371 paragraphs, traversing over 40 pages and dealt extensively with the elements of Mr Wyzenbeek's witness statement which related to Ryan L-S. In particular, it responds to the allegations in Wyzenbeek's witness statement concerning representations by Ryan L-S allegedly. 17 It is difficult to understand how it was that, in the preparation of the applicants' witness statements, the legal representatives did not notice that the evidence which they were preparing relating to the making of representations did not correspond to the particulars in the SFASC. One might have thought that the main points of reference for the preparation of a witness statement are the allegations which are articulated in the pleadings. It is axiomatic that witness statements are to contain "relevant" evidence and that material which is not relevant to any live issue should not be included. That being so, it ought to have been clear to those preparing the applicants' statements that the identity of which respondents made representations and the occasions on which they were made as detailed in the statements, were different to that which had been alleged in the particulars of paragraphs 13 to 15. It is deposed that the lack of correspondence between the relevant issues and the witness statements was not noticed by anyone. That explanation can be accepted. It is supported by the fact that the applicants made no attempt to amend the SFASC and nor did they indicate their intention to do so. If the lack of congruence had been noticed it does not seem probable that the applicants' solicitors would not have alerted the respondents that an application would be made in due course to amend the pleading. It might also be the case that those preparing the witness statements had reference to the broad allegations in paragraphs 13 to 15 of the SFASC rather than focusing upon the particulars which, in any event, seem incongruous. 18 By the same token it is also difficult to comprehend how the legal representatives for the respondents did not notice at an earlier time that the evidence in Mr Wyzenbeek's witness statement transcended the boundaries of the particulars alleged. The preparation of their witness statements ought to have put them on notice that the case which was sought to be agitated at trial extended to matters which were not identified within the particulars as then pleaded. That said, it might also have been the case that the respondents paid attention to the broad allegations of material facts in the SFASC rather than to the limited and apparently incongruous particulars. Nevertheless no query was made by the respondents of the fact that the assertions made in Mr Wyzenbeek's witness statement went further than the particulars provided in the SFASC. That is a good reason for accepting the evidence of the respondents' legal representatives that they did not notice, until shortly before trial, that the evidence in the witness statements went beyond the pleaded particulars. That conclusion is fortified by the fact that the respondents delivered responsive witness statements which answered the additional allegations made by Mr Wyzenbeek. However, by doing so, the respondents represented that they were prepared to contest these wider allegations. In this respect, it can be assumed that by the time of trial the respondents had prepared to meet a case based upon the representations which were identified in Mr Wyzenbeek's witness statement rather than a more limited one based upon the particulars of the representations as pleaded. 19 On 28 September 2017, being in the latter part of the week prior to the hearing of the trial, Silberstein & Associates, the solicitors for the applicants, wrote to the solicitors for the respondents identifying that the applicants intended to add particulars to paragraphs 13 and 15 of the SFASC. This was, apparently, prompted by a notice from the respondents that they would be objecting to parts of the applicants' evidence on the basis that it transcended the particulars provided. The applicants' letter of 8 September 2017 identified 18 additional "particulars" which, it was said, were to be relied upon. The particulars were identified by reference to the numbered paragraphs in Mr Wyzenbeek's statement, documents referred to therein or specific conversations mentioned in that statement. There was, however, no indication as to which specific representations the various "particulars" were directed. No new draft pleading was proffered to the respondents as being the pleading on which the applicants intended to proceed. The proposed further particulars contained in the letter of 28 September 2017 purported to expand the occasions on which the applicants alleged that representations asserted in the statement of claim were made and the identity of the persons who made them. 20 As has been indicated above, after the applicants' opening had been completed, the first to fifth respondents took objection to substantial portions of the witness statement of Mr Wyzenbeek on the ground that the additional allegations of the making of representations were irrelevant because they were not particularised in the statement of claim. After some debate the applicants were directed to prepare a draft of a proposed amended statement of claim incorporating their proposed amended particulars. They were also directed to file an interlocutory application and serve any supporting affidavit evidence on the respondents. The application for leave to amend not only encompassed the recasting of the particulars of the alleged misrepresentation as to the ocean-going abilities of the vessel in question, it also involved the abandonment of a variety of causes of action (such as breach of certain warranty claims and claims that the goods were not merchantable or of an acceptable quality) as well as the abandonment of any reliance on other certain representations. Naturally enough, the application is not opposed to the extent to which the applicants seek to narrow their case. By the proposed amended statement of claim, the applicants also seek to make other amendments which, they assert, do little more than clarify existing causes of action. 21 The manner in which the application for amendment initially arose was most unsatisfactory. It was effectively an instanta application made after objection was taken to parts of the witness statements. Such applications, which are no doubt of significance for the further conduct of the trial, should be approached in the usual manner, that is, by filing an application with supporting affidavits which are served on the respondents in sufficient time for them to respond. The fact that the application arises at the commencement of a trial or during it does not alter the fact that a respondent to such an application is entitled to be told precisely what amendments are to be made and to be provided with the evidentiary material on which any application is founded. Unsworn statements from the Bar Table as to the existence or otherwise of prejudice or in relation to any other matter are not satisfactory. As Mr Sirtes SC submitted, in the most forceful of terms, the applicants carry the onus of satisfying the Court that they are entitled to make the amendment. 22 The necessary, but unfortunate, consequence of the making of the application was that the trial had to be adjourned to allow the applicants to make a formal application on material and for the respondents to be afforded an opportunity to put material before the Court. As that occurred, the number of complaints about the applicants' pleading expanded. After a full day's hearing about the veracity of many parts of the pleadings, which included the tendering of additional evidence and books of authorities, the trial had to be adjourned, sini die, pending the delivery of this judgment. This is a most unfortunate state of affairs.

Principles to apply on an application to amend 23 The principles which apply to an application under r 16.53 of the Federal Court Rules 2011 (Cth) were recently articulated by Charlesworth J in Australian Building and Construction Commissioner v McDermott [2017] FCA 504 and I gratefully adopt her Honour's exposition of them. Neither of the parties submitted that any other principles were applicable. Her Honour stated: 21 The Court has the discretion to allow an amendment to a pleading: r 16.53 of the Federal Court Rules 2011. The power to allow an amendment is to be interpreted and exercised in a manner that best promotes the overarching purpose of the Court's civil practice and procedure provisions: s 37M of the Federal Court of Australia Act 1976 (Cth) (FCA Act). 22 In Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175, the High Court (Gummow, Hayne, Crennan, Kiefel and Bell JJ) held at [111] that an application 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 [Queensland v JL Holdings Pty Ltd (1997) 189 CLR 146] which suggest only a limited application for case management do not rest on upon a principle which has been carefully worked out in a significant succession of cases. On the contrary, the statements are not consonant with this Court's earlier recognition of the effects of delay, not only upon the parties to the proceedings in question, but upon the court and other litigants. Such statements should not be applied in the future. (footnote omitted) 23 In Cement Australia Pty Ltd v Australian Competition and Consumer Commission (2010) 187 FCR 261, the Full Court (Keane CJ, Gilmour and Logan JJ) said (at [51]): Aon Risk is not a one size fits all case. Whilst various factors are identified in the judgment as relevant to the exercise of discretion, the weight to be given to these factors, individually and in combination, and the outcome of that balancing process, may vary depending on the facts in the individual case. As the plurality in Aon Risk observed at [75], statements made in cases concerning amendment of pleadings are best understood by reference to the circumstances of those cases, even if they are stated in terms of general application. 24 The same philosophy underlying the decision in Aon Risk Services can now be discerned in s 37M of the FCA Act: Cement Australia at [43]. To similar effect, the Full Court on appeal in Tamaya Resources Limited (in liq) v Deloitte Touche Tohmatsu (A Firm) [2016] FCAFC 2; (2016) 332 ALR 199 at [125] approved this summary of relevant factors given by Gleeson J at first instance (Tamaya Resources Limited (in liq) v Deloitte Touche Tohmatsu (A Firm), in the matter of Tamaya Resources Limited (in liq) [2015] FCA 1098 at [127], citations removed): (1) The nature and importance of the amendment to the party applying for it; (2) The extent of the delay and the costs associated with the amendment; (3) The prejudice that might be assumed to follow from the amendment, and that which is shown; (4) The explanation for any delay in applying for that leave; (5) The parties' choices to date in the litigation and the consequences of those choices; (6) The detriment to other litigants in the Court; and (7) Potential loss of public confidence in the legal system which can arise where a court is seen to accede to applications made without adequate explanation or justification. 25 Given the wide variety of circumstances in which the discretion not to amend may fall to be exercised, I have discerned little assistance from a comparison of the results reached in the decided cases in differing circumstances. The authorities do not, and could not, set down a uniform approach to the exercise of the power or otherwise require that a particular conclusion be reached on this application. The discretion is to be exercised judicially, having regard to all of the relevant circumstances. 24 The comments of Charlesworth J in that concluding paragraph are important and must be kept steadily in mind. Invariably, the factual underpinning of the various decisions concerning applications to amend will involve the peculiar circumstances of the case at hand which will often be nuanced by reference to the manner in which the particular matter has developed. It must always be kept in mind that the discretion to allow an amendment is to be exercised in the particular circumstances of the case. 25 In that respect, there are a number of particular or peculiar circumstances in this case which are worth mentioning: (a) The contested amendments are not new allegations so much as particulars of existing broad allegations. (b) The statement of claim, in all of its iterations, has been ambiguous and obviously inconsistent, yet no attempt was made by the respondents to have the case against them clarified. (c) The respondents were given the evidence on which the applicants intended to rely some five months prior to the commencement of the hearing and they responded to that evidence in full. This is not a case where the respondents have been unaware of the nature of the case which the applicants intended to advance at trial even though it was not clearly articulated in the pleading. (d) As best can be ascertained, the parties prepared for trial on the basis of the evidence in the witness statement of Mr Wyzenbeek. It was apparently, not until quite recently that the absence of particulars concerning the representations made by Mr Ryan L-S was noticed by any party.

The nature and importance of the proposed amendments 26 In order to understand the importance of the amendments in relation to the proposed addition of particulars of the alleged representations, it is necessary to set out the nature of the misleading conduct case which is presently articulated in the statement of claim. 27 Presently, the representations which are sued upon are articulated in paragraphs 13, 14 and 15 of the statement of claim. There is no need to set them all out in terms. It suffices to note that paragraph 13(b) alleged the making of specific representations about the ocean-going capabilities of the Hampton Yacht model "Endurance 750 Skylounge" in the following manner: Commencing in or about October 2009, AMI and/or GCCM and/or DLS and/or RLS represented to the Applicants that The Hampton Yacht model "Endurance 750 Skylounge": (a) is a transatlantic vessel capable of "round the world" cruising; (b) is safe and comfortable for crossing oceans; (c) would be a suitable vessel to fill the applicants' requirements; and (d) is suitable for extended passage making in open ocean service. 28 Paragraph 14 of the statement of claim makes reference to representations concerning the rating of the vessel and its stability attributes. Paragraph 15 alleges that the respondents represented that the Endurance range of Hampton Yachts were "suitable for extended passage making in open ocean service". 29 Paragraph 13 is pleaded in extremely wide terms. Most notably, the representations are said to have been made in the period commencing from "in or about October 2009". No end to the period in which the representation was made is specified although it would presumably be around the occasion in 2010 when the applicants entered into the agreement to acquire the vessel. The nature of this allegation is difficult to comprehend. On the one hand it seems to assert some form of continuous conduct in respect of which a representation was made or representations were made. It is more likely that what was intended to be alleged was that there was a series of representations of a similar nature made during the relevant period. In effect this is an egregiously wide, overarching allegation of the making of the representation(s) by each of the identified persons or entities. The respondents did not challenge the extraordinary width of the pleading in this respect, nor did they challenge the fact that it impermissibly contained a number of "rolled up" allegations. They were content to proceed to trial as it stood. Had an application been made to strike out paragraph 13 it is difficult to think that such an application would not have been successful to some extent. At the least, the applicants would have been required to separate out the claims against each respondent. Equally, if an application had been made for particulars of each of the rolled up allegations it is difficult to think that such an application would not have had good chances of success. It is unfortunate that no such application was made and that the applicants were permitted to proceed upon the basis of the case as pleaded. 30 The scope of the representations now alleged in the proposed further amended statement of claim are as follows: Commencing in or about October 2009, each of or any one or more of AMI, GCCM, DLS (being Dean Leigh-Smith) and RLS (being Ryan Leigh-Smith) represented to the Applicants that: a. the vessel the applicants were offered was or would be suitable for trans-ocean crossing; b. the vessel the applicants were offered was or would be suitable for extended passage making in open ocean service. 31 The occasions on which the representations were made and the manner in which they were made, being either in writing or orally, are set out in extensive new particulars. Those particulars make reference to the witness statement of Mr Wyzenbeek and the tender bundle where the relevant evidentiary foundation is located. 32 As can be seen from a comparison of the existing representations and the proposed new representations, the scope of what is said to have induced the applicants to purchase the vessel has not been widened. What has been expanded is the number of occasions on which the representations were made. Indeed, the nature of the representations said to have induced the purchase of the vessel has been narrowed. Substantially, the proposed amended particulars seek to include reliance upon representations made by Ryan L-S in the period from around early 2010. The "new" particulars are within the scope of the representations which are already alleged in the SFASC to have been made by each of the respondents, including Ryan L-S. 33 The applicants referred to a number of authorities for the purpose of submitting that the relevance of pleadings has diminished with the advent of case management and that steps such as the delivery of witness statements ahead of trial militate against any strict reading of pleadings (see Thomson v STX Pan Ocean Co Ltd [2012] FCAFC 15 at [13], [15]; Barclay Mowlem Construction Limited v Dampier Port Authority [2006] 33 WAR 82; Bright v Femcare (2000) 175 ALR 50). None of these authorities greatly assist the applicants. Whilst it may be true that obscurities within the scope of a pleaded case may carry less weight than they used to given that case management practices will more fully inform each party of the case they have to meet, that says nothing about whether a party might rely upon case management procedures to widen the scope of a pleaded case. The approach suggested by the applicants, being to the effect that the exchanged witness statements will act as a substitute for the pleaded case, should be approached with much caution. A party is entitled to know with a fair degree of precision, the case that is alleged against them. They are entitled to scrutinise whether the material facts alleged sufficiently support any cause of action or claim and they are entitled to take pre-emptory action to dismiss any case which does not have a legitimate foundation (see Betfair Pty Ltd v Racing New South Wales (2010) FCR 356, at 373-374, [49]-[50]). A party should not be required to wait till the end of their opponent's closing address to be appraised of the real case that they have to meet. If that were so it is likely that defences which are available to a respondent will not be recognised within sufficient time in which to raise them. Any reliance on witness statements to complete or fill out the nature of the case (as opposed to identifying the evidence on which an identified case will be mounted) will have the necessary consequence that the principles in ss 37M and 37N will be circumvented. Appropriate case management and the early identification of the real issues in dispute are advanced by a greater, not lesser, emphasis upon accurate and precise pleadings. A requirement that the parties, at an early point in proceedings, clearly articulate all relevant aspects of the case which they wish to agitate will advance its expeditious resolution. When the real claim or defence to be advanced is articulated with clarity at an early stage, the parties are able to consider their position and are better placed to determine the risk of the litigation and, if possible, resolve it before trial. It will also have the effect that any issues as to the veracity of a claim or a defence will crystallise early in the proceedings and that will avoid the recognition of them at or shortly before trial with the consequence imperilling the continued hearing of the matter. None of this will be unfamiliar to those who regularly practice in the commercial courts. 34 That is not to say that the provision of witness statements in the course of case management might not be useful for elaborating upon a pleaded case. Where witness statements have been exchanged there can be little sympathy for any party who, having been appraised of the evidence on which their opponent relies, only complains at trial in relation to any disconformity between the statements and the pleaded case. 35 Here, given the width of the pleaded facts and the delivery of the applicants' witness statements, all that the Court is being asked to do is to permit the inclusion of additional particulars of existing representations where those particulars have been long since telegraphed to the respondents who expected that the cause of action as pleaded and identified in the witness statements would be advanced at trial against Ryan L-S. 36 To the extent that the pleaded particulars in this case might control the evidence to be adduced, there is little doubt about the importance of the additional particulars to the applicant. If the proposed amendments are not allowed, it would appear that no evidence might be adduced against Ryan L-S and the scope of the representations alleged against the other respondents would be substantially reduced. It would also appear to be the case that the applicants' case against all respondents would be strengthened by the addition of the particulars as they would be coherent with the existing particulars. Mr Giles SC has submitted that without the amendments the representation claims against, inter alia, Ryan L-S would fail. That is quite possibly so. The seriousness of that consequence must be weighed against the fact that none of the amendments would take the respondents by surprise given that they have been aware of the case to be advanced for a number of months. 37 On any application such as the present, one issue will be whether there is any substance in the proposed amendment. A court will not readily allow an amendment at this stage of the proceedings which did not appear to have chances of success. Here the applicants have demonstrated some merit to the case founded upon the proposed new particulars. In opening the case Mr Giles SC took the Court to certain documents in the tender bundle upon which the applicants will no doubt rely upon as being admissions by the respondents as to the manner in which vessels of the type sold to the applicants were marketed. In this respect the following is relevant: (a) After substantial water leakage was identified in the vessel "Cadeau" and after AMI and GCCM had spent substantial amounts on repairs, Mr Dean L-S sent an email to Mr Chen of Hampton Yachts (which was the manufacturer of the vessel), stating: In short, the existing PORTLIGHTS are not working … I expect that Hampton will "FIX THE PROBLEM", your inference that "Norbert is using the vessel in extreme circumstances" is not the case. We sell every Endurance as being capable of 'trans ocean crossings'. You market the boats on the Hampton website as a 'US Coast Guard Offshore Rating 1 vessel' & they are obviously falling short in this case. I'd ask that Hampton stands by the product & uses the appropriate equipment. (Emphasis in original). The statement "We sell every Endurance as being capable of 'trans ocean crossings'" is entirely consistent with the representation case which has been alleged in the SFASC and is the focal point of the representation case pleaded and particularised in the proposed statement of claim. (b) The response from Hampton Yachts was to the effect that the vessels are not suited to trans-ocean crossings and, if they were, they would have to be built to entirely different specifications. Mr Chen wrote: We want to clarify that we never advertise the Endurance to be Capable of 'Trans Ocean Crossing'. In order to be … Trans Ocean Crossing vessel, the vessel need to be Class Certified to R1 or RO. This is a total difference design criteria and construction method. We want to emphasise that we advertise the Endurance to be a Long Range Cruiser, and we should not mislead the customer. To the extent to which this email may be admissible in the action to establish that the Endurance vessel is not an ocean-going vessel, it is consistent with the applicants' case that the representations as to the ocean-going capacity of Cadeau were misleading and false. The apparent failure of the respondents to respond to the indication from Hampton Yachts that their vessels were not built for ocean-going activities suggests that the respondents accepted that which was told to them by the manufacturer. 38 The effect of these emails (on one view) might be significant in the circumstances of this case although it should be observed that they have not yet been the subject of explanation or tested in evidence. It may be that, in time, their apparent initial impact can be explained away. For present purposes it suffices to observe that they may provide significant support for the applicants' case that representations were usually made by the first to fourth respondents or some of them that vessels such as the "Cadeau" were suitable for ocean-going travel. They also support the allegation that such representations were misleading. At least for present purposes the emails demonstrate that the newly asserted particulars have some substantial substance to them. 39 The fact that the proposed amended particulars have some apparent substance to them weighs in favour of permitting the making of the amendments.

The extent of the delay and costs associated with the proposed amendments 40 Mr Silberstein, the solicitor for the applicants, has explained the delay in the making of the application for leave to amend the particulars of the statement of claim. In brief, until shortly before the date set for the commencement of trial, the applicants' solicitor did not appreciate either that the evidence which had been filed went beyond the scope of the particulars or that the respondents were contesting that the evidence might be relied upon. As Mr Giles SC on behalf of the applicants submitted, that is not surprising as the respondents answered all of the "additional" matters in their witness statements. It was not unreasonable for Mr Silberstein to rely upon the fact that the respondents did not take objection in their responsive witness statements to the additional material. That is not to cast any onus upon the respondents, it is merely to identify the reason why the applicants took no action in relation to amending the particulars until after the matter was raised by the respondents. 41 In this context it is appropriate to acknowledge the evidence of Mr McKenzie, the solicitor for the first to fifth respondents. He deposes that, at the time that he received the applicants' witness outlines, he did not notice that the evidence proposed exceeded the pleaded case. He does not state when he became aware of the disconformity although it would appear that occurred at some time in late August or early September 2017. 42 It should be accepted that neither the solicitors for the applicants nor the solicitors for the first to fifth respondents were cognisant that the evidence which had been prepared for the hearing of the action extended to matters beyond the scope of the pleaded particulars. In that respect, I do not detect any attempt to ambush or to take the other party by surprise. It appears that late in the preparation for trial it became apparent that the evidence in the witness statements included matters which were not pleaded. It was then that the matter was raised. 43 In any event, in this case the matters on which the applicants wish to now rely were not hidden from the respondents. They were advanced in the witness statements and the respondents have responded to them. It would seem that, at least until about early September, the respondents were preparing for trial on the basis that the matters alleged in Mr Wyzenbeek's witness statement formed the basis of the applicants' case. That is relevant to the issue of the existence of any delay in making the application for leave to amend, as the effective joining of issue on these additional matters camouflaged their irregularity from the applicants' solicitor. 44 For the following reasons there is not likely to be much, if any, delay if the amendments are allowed to proceed: (a) Despite the respondents' submissions to the contrary, the newly alleged representations are, in effect, substantially or wholly the same as the existing representations. The expert evidence of both parties as to the ocean-going capacity of the Cadeau which has already been obtained will be relevant to the new representations. No further expert reports will be required. (b) The persons who allegedly made the alleged representations have already provided witness statements in response. They have considered the allegations and the material relied upon in support of them. They have provided a written response. No delay to the trial would arise as a result of the respondents having to deal with the new particulars. That said, the extensive argument advanced by both parties on this and other issues caused the trial to be abandoned and the matter is now set down for hearing next year at the earliest available time. It has been the dispute over whether the amendments should be allowed, not the amendments themselves, which has caused the delay. (c) It cannot be said that any of the newly alleged representations take the respondents by surprise. They have been aware of them for over five months. (d) It also does not appear that there is any additional cost to be expended in meeting the newly alleged representations or particulars. 45 Such considerations weigh in favour of allowing the amendments.

The prejudice that might be assumed to follow from the amendment, and that which is shown 46 Given that the new particulars are within the scope of the existing allegations and that the respondents' lay witnesses have already provided a written response in relation to the new particulars, it is difficult to see that any real prejudice will arise from allowing the amendments. 47 Mr McKenzie has deposed that, in his deliberations, he did not forensically compare the outline of evidence with the applicants' pleading. I assume that he considered the potential liability of the respondents based upon the witness statements which were exchanged and that was a reasonable approach to adopt. That said, in his affidavit, he seems to suggest that his consideration as to his clients' prospects of success in the action and on the cross-claim which they had mounted was founded upon the terms of the pleading. He identifies that he considered the pleading and that he noticed that the particulars were limited to oral or written representations emanating from Dean L-S. Although Mr McKenzie does not expressly acknowledge it, as a careful and prudent solicitor perusing the statement of claim he would have become aware that whilst material facts were pleaded against Mr Ryan L-S which amounted to a valid cause of action for misleading or deceptive conduct, there were no particulars of the alleged misrepresentations. One might have thought that the conclusion which he drew was that particulars of that cause of action were yet to be provided. At the very least, the material facts alleged in the statement of claim identified a good cause of action and it can be expected that trial preparation proceeded on that basis. One can expect that this would have been considered in any advice given to his clients. 48 In his affidavit, Mr McKenzie seems to assert that the respondents settled a cross-claim against their insurance broker (Gold Coast City Marina Pty Ltd v Commercial and General Insurance Brokers Pty Ltd matter number QUD 644 of 2017) on the faith of the strength of the applicants' claim as it appeared in the statement of claim. This is advanced as the foundation of prejudice which the respondents will allegedly suffer if the amendments are allowed. However, on the material available it is difficult to identify that the nature of the pleaded representations in the proceedings by the applicants had any real bearing on the settlement of that action: (a) First, the email of Mr McKenzie to his clients on 6 September 2017, in which a recommendation is made to resolve those other proceedings, does not make any reference to the prospects of successfully defending the action brought by the applicants or that any such assessment had occurred on the basis that no claim had been advanced against Ryan L-S. (b) Second, the impetus for settling the action against the brokers (which apparently had not been agitated strenuously) was the apparent advice from an expert to the effect that it is not likely that a policy would exist which would have covered the liability being asserted by the applicants. For that reason it would have been difficult to show that the respondents had suffered loss as a result of the broker's alleged negligence. (c) Third, to the extent to which the prospects of successfully defending the applicants' claim was a factor in the settling of the proceedings with the brokers, it was seemingly based upon the reliance on the expert reports which had been received. If it were relevant to his clients' consideration of whether to settle the proceedings against the broker that the claim as agitated in the pleading was limited to some oral and written representations made by Dean L-S which Mr McKenzie considered was weak, one might have expected to see a clear statement to that effect in the email to the clients. There was no such statement or anything like it. Whilst such a conclusion may have been a factor which motivated Mr McKenzie to give advice to his clients about settling the action against the brokers, given that it is not mentioned in his letter of advice it is not likely that the respondents relied upon it to a great extent in determining to settle those proceedings. (d) Fourth, the matters enumerated in Mr McKenzie's email to his clients (which does not include the consideration of the scope of the alleged representations) are more likely to have been the matters which motivated the respondents to settle the action against the broker. 49 Additionally, the terms on which the proceedings with the broker were settled are not in evidence, it may be that those proceedings can be resurrected if the pleading is amended. It is not possible to conclude that any prejudice will have arisen from the settling of those actions in the absence of the terms of settlement. 50 There is no sufficient evidence that the respondents will suffer any significant prejudice from having to confront a case founded upon the applicants' witness statements of which they have had possession for over five months before the commencement of the trial and which accord with the general case as pleaded. That is a significant factor in the exercise of the discretion to allow some of the proposed amendments.

The explanation for any delay in applying for that leave 51 It is understandable that in the few weeks prior to the hearing no application to amend was made. A significant amount of work is required to have a matter ready for trial and much is undertaken in the weeks leading up to trial. However, the delay by the applicants in making an application to amend in that period after the statement from Mr Wyzenbeek was produced is problematic. 52 The explanation for the omission to apply for leave to make the amendments has been identified above. In effect, it was oversight by the solicitor for the applicants in not appreciating that an application should be made. That oversight and consequent delay was exacerbated by the oversight of the respondents' solicitor who also did not notice that the applicants' witness statements transcended the particularised case, as did the fact that the respondents filed witness statements answered all of the allegations raised. Whilst this observation does not necessarily suggest the imposition of any onus on the respondent to conduct the applicants' case for them, it merely identifies that the actions of the respondents in answering all of the new allegations, as opposed to identifying that they were not part of the pleaded case, inadvertently buttressed the assumption of the applicants' solicitor that no question arose as to the nature of the case to be advanced by the applicants. If some objection was to be taken to the reliance on the additional representations one would have thought that the objection would have been made clear and that no response would have been made in the respondents' witness statements to the additional allegations. 53 Mr Silberstein deposes that the extended scope of the case to be advanced was not realised by him until the respondents recently advised that they objected to various parts of Mr Wyzenbeek's statement and gave reasons for that stance. This apparently galvanised the applicants into action and to write the letter of 28 September 2017. 54 It is also relevant that within the month immediately prior to trial the parties have engaged in a mediation of the matter. Although what occurred at that mediation is not known, it is difficult to think that the applicants' legal representatives could have prepared for it and participated in it without considering the applicants' pleading and witness statements. In the absence of evidence to the contrary, it would seem that the parties attempted to mediate the case advanced in the witness statements. 55 Given the above, it is apparent that the delay by the applicants in seeking to amend the particulars was not so much the product of a deliberate strategy, but rather an oversight as to the need to bring the particulars into line with the evidence on which they intended to rely.

The parties' choices to date in the litigation and the consequences of those choices 56 Despite the applicants not taking action to amend their particulars, there was an equal absence of action from the respondents when they received the statement of Mr Wyzenbeek. 57 The difficulty in this case is that none of the parties prepared their witness statements by reference to the issues which arose in the pleadings. I did not understand any of the parties to suggest that it would not be prudent to prepare witness statements in that manner. There are many advantages of doing so. Firstly, it is efficient because it focuses attention on the live issues in the action. They are the only issues in respect of which evidence is required. Secondly, it avoids wasted costs. Clients' funds ought not to be expended on generating evidence on irrelevant issues. Third, if reference is not made to the issues which have crystallised on the pleadings the parties are likely to extend the scope of the evidence needlessly and issues will be created which do not align with the pleadings. The parties are likely to progress to trial on that false basis with the consequence that at or near to trial the error will be noticed and applications will be made to amend. That is, apparently, what occurred in the present case. 58 What follows from the above is that inadvertence was the origin of the present difficulty and inadvertence was the cause of its continuation. The choices by the parties to not adopt the issues arising from the pleadings as the framework for the witness statements apparently caused them to prepare for trial on the basis of all of the representations which Mr Wyzenbeek identified in his witness statement and on which he claimed that he relied. 59 Mr Sirtes SC, on behalf of the first to fifth respondents, submitted that the proceedings are adversarial such that it is for the applicants to bring their pleaded case to court and prove the same. He variously made submissions to the effect that the respondents were not obliged to take pre-emptive action in relation to the applicants' pleading, that they were entitled to "keep their powder dry" until trial, that a strike out application would merely lead to an application for an amendment, and a respondent should not be forced to effectively improve the case against themselves. These submissions were advanced in relation to the omission of the respondents to advise the applicants of the inconsistency between the pleaded case and the allegations in the statement of claim or to take some form of action in relation to it. That submission requires some analysis in the light of ss 37N and 37M of the Federal Court of Australia Act 1976 (Cth). 60 Even before the reforms to the Federal Court Australia Act in 2010, this Court accepted that certain hitherto accepted practices of adversarial litigation had the untenable effect that matters were not determined on the real issues in dispute, and that the Court's resources and parties' funds were unnecessarily wasted. In an often cited passage in White v Overland [2001] FCA 1333, Allsop J (as the Chief Justice then was) identified that the just resolution of disputes ought not involve procedural machinations designed to entrap the other party. His Honour observed at [4]: However, by way of general principle I would simply like to make perfectly plain my view that in the efficient and proper conduct of civil litigation, even civil litigation hard fought between parties, it should always be recognised that in the propounding of issues for trial the parties should take steps to ensure that all relevant parties to the dispute are cognisant of what the issues are. Any practice of quietly leaving footprints in correspondence or directions hearings to be uncovered some time later in an attempt to reveal that a matter was always in issue should be discouraged firmly. Even if something has been said, where it is evident, or indeed suspected, that the other side is proceeding on the basis of a misconception or has not appreciated something, as a general rule, efficiency, common sense and an appreciation of the costs and resources (both public and private) likely to be wasted by confusion in litigation will mandate that a party through his or her representative ensure that the other is not proceeding on a misconception or that the other does appreciate something that has been said. Litigation is not a game. It is a costly and stressful, though necessary, evil. To paraphrase Roscoe Pound from "The Causes of Popular Dissatisfaction with the Administration of Justice" (1906) 29 ABA Rep 395, 404-406, the "sporting theory of justice" and any behavioural manifestation of it should be seen as a survival, or better, a relic, of the days when a lawsuit was a fight between two clans: cf Jackamara v Krakouer (1998) 195 CLR 516 at 526-527 per Gummow and Hayne JJ. Representatives do not owe duties to the other side's client. They owe duties to their own client. But no one's interests are advanced by litigation proceeding on assumptions which are seen or suspected to be false. This is very much the case when an issue, if it is to be propounded, might endanger the instructions of those acting for the other side. In saying this I need make no reference to the well-known responsibility of the Crown and emanations of the Crown to act at all times as model litigants beyond referring to what was said by the Full Court of this Court in Scott v Handley [1999] FCA 404 at [43] ff. I would expect no less than that which I have indicated of bitterly competitive commercial parties in the hardest fought of cases. In the long run, the only consequence of keeping issues hidden or not clearly identifying them is to disrupt the business of the court leading to the waste of valuable public resources and to lead to the incurring of unnecessary costs by the parties, costs which ultimately have to be borne by someone. 61 These comments have been cited with approval and approbation on numerous occasions, see for instance Nowlan v Marson Transport Pty Ltd (2001) 53 NSWLR 116 at [28]; Baulderstone Hornibrook Engineering Pty Ltd v Gordian Runoff Ltd [2008] NSWCA 243 at [160]. They were referenced by Johnson J in McGuirk v The University of New South Wales [2009] NSWSC 1424 at [26] where his Honour emphasised that the duty of the parties to assist the Court in the overriding objective to facilitate the just, quick and cheap resolution of the real issues in dispute, gives rise to need for "clarity, precision and openness in the conduct of litigation". This is particularly so in circumstances where a failure to do so might take the other party by surprise; Baulderstone Hornibrook Engineering Pty Ltd v Gordian Runoff Limited [2008] NSWCA 243 at [161]. For many years, trial by ambush which has the effect of disadvantaging an opposing party has had no part to play in litigation (Nowlan v Marson Transport Pty Ltd (2001) 53 NSWLR 116 at [26], [28]). 62 More recently, in the New South Wales Court of Appeal in Benn v State of New South Wales [2016] NSWCA 314 at [62] Gleeson JA (with whom Meagher JA and Johnson J agreed) identified that it was part of the duty of all parties to litigation to ensure that other parties are cognisant of the issues which are sought to be raised in the litigation. His Honour noted that this was not a "new phenomenon" but reflected what has been referred to for some years as the "cards on the table" approach to litigation (see Boyes v Collins (2000) 23 WAR 123; White v Overland [2001] FCA 1333 at [4] and Baulderstone Hornibrook Engineering Pty Ltd v Gordian Runoff Ltd [2008] NSWCA 243 at [160]-[162]) 63 In this Court similar statements have been made by Rares J in TJ (on behalf of Yindjibarndi People) v Western Australia (No 2) [2015] FCA 1358 where his Honour explained that in modern litigation, it is the obligation of all parties to ensure that hearings are approached such that the real issues in dispute might be determined: [8] In my opinion, the procedural rules that apply both under Pt VB of the Federal Court of Australia Act 1976 (Cth) and under the common law require the parties to bring forward their cases frankly, prior to the final hearing. The purpose of case management and the docket system adopted by this court is to enable both the parties and the court to be informed, from the outset, of the case each party intends to advance and to identify the real issues in dispute. This is so that directions can be crafted to enable the efficient management of the litigation, with a view to focusing on and allowing those issues to be tried, and, at the same time, eliminating irrelevant matters quickly and efficiently: White v Overland [2001] FCA 1333 at [3]-[4] per Allsop J (applied by Heydon JA in Nowlan v Marson Transport Pty Ltd (2001) 53 NSWLR 116 at 128-129 [28]-[32], Mason P and Young CJ in Eq agreeing); Visible Results Properties Inc v Sushi Train (Australia) Pty Ltd [2005] FCA 1159 at [29] per Allsop J; Snowy Mountains Organic Dairy Products Pty Ltd v Wholefoods Pty Ltd [2006] FCA 1361 at [15] per myself; Baulderstone Hornibrook Engineering Pty Ltd v Gordian Runoff Ltd [2008] NSWCA 243 at [160]-[162] per Allsop P, with whom Beazley and Campbell JJA agreed. [9] In Maniotis v JH Lever & Co Pty Ltd [2006] FCAFC 7 at [72], Finn, Emmett and Bennett JJ said: In the efficient and proper conduct of civil litigation, even civil litigation hard fought between parties, it should always be recognised that, in the propounding of issues for trial, the parties should take steps to ensure that all relevant parties to the dispute are cognisant of what the issues are. Quietly leaving footprints in correspondence or directions hearings to be uncovered some time later in an attempt to reveal that a matter was always in issue is a practice that must be firmly discouraged. Where it is evident, or indeed suspected, that the other side is proceeding on the basis of a misconception or has not appreciated something, common sense will, as a general rule, mandate that a party ensure that the other is not proceeding on a misconception or that the other does appreciate something that has been said. No one's interests are advanced by litigation proceeding on assumptions which are seen or suspected to be false. The only consequence of keeping issues hidden or not clearly identifying them is to disrupt the business of the court leading to the waste of valuable public resources and to lead to the incurring of unnecessary costs by the parties, costs which ultimately have to be borne by someone: see White v Overland [2001] FCA 1333 at [4]. (italic emphasis in original; bold emphasis added) 64 Whilst the above comments might be taken as referring to the substantive issues in dispute between parties, on principle they are not so limited. They apply, perhaps with even greater force, to matters of practice and procedure. Where, for instance, a party is of the opinion that a claim in a pleading cannot be sustained at trial, it can only be productive of wasted time and costs for that issue to be held back and only raised at the trial of the matter. Trials, which are expensive to prepare and run, are for the resolution of the substantive disputes between the parties. They do not exist for the purposes of playing out procedural stratagems which might prevent the real issues which exist between the parties from being ventilated. The respondents' claims to be entitled to "keep their powder dry" or to not take steps which might alert the applicants to deficiencies in their pleading must be rejected. 65 Whilst lawyers are obliged to advance their own client's interests, they are to do so within the confines of the obligations imposed by the Federal Court of Australia Act 1976 (Cth). Sections 37N and 37M of that Act impose on the parties and their lawyers the duty to facilitate the just resolution of disputes according to law and as quickly, inexpensively and efficiently as possible. It is now beyond doubt that if arguments about the adequacy of pleadings which can be advanced well before a trial, are saved up till trial in the hope of obtaining a forensic advantage, there is a real risk that their resolution will necessitate the adjournment of the trial with the concomitant waste of court time and resources. It can probably not be doubted that the perceived effect of the High Court's decision in AON Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175 has, unintentionally, made the strategy of not advancing pleading points and the like prior to trial somewhat more advantageous. On one view of the decision in AON, a party's failure to ensure that their case is adequately pleaded prior to trial has an almost terminal consequence. On that view, which has a degree of prevalence amongst some of the profession, any amendment sought to be made close to or at trial which might necessitate an adjournment of the hearing has almost no chance of success. However, there is nothing in AON which suggests that it is intended to be used in such a manner. The decision of the plurality identified that the procedural context of that matter was one where "case management principles" dominated and where the rules of Court were intended to minimise delay and expense even though there were no explicit obligations imposed on the parties such as those which emanate from ss 37M and 37N of the Federal Court of Australia Act 1976 (Cth). Where such obligations do exist, there is no warrant for a party to keep to themselves until trial complaints about the adequacy of the opposite side's pleading. Fulfilment of the obligations cast by ss 37M and 37N require all parties to take whatever steps are necessary to ensure that the substantive issues between the parties are determined at trial and that involves ensuring that they make clear the case which they intend to advance, including any issue as to the adequacy of their opponent's pleading. To the same extent that a party is not entitled to "leave footprints in the sand" as to the existence of any substantive claim or defence, neither may they conceal any procedural attack on the other party's pleaded case. 66 In the circumstances of the present case, if the issues now in question were appreciated by the respondents well ahead of the hearing and nothing was done about it, there would have been non-compliance with the requirements of s 37M. Happily that did not occur. The solicitors for the respondents have deposed that they did not notice that the allegations in Mr Wyzenbeek's witness statement went beyond the scope of the pleading until shortly before trial when they were considering its admissibility. That explanation is coherent with the fact that the respondents produced a complete response to all of the allegations in the witness statement. It seems that it was possible to answer all of the allegations without difficulty. 67 Although the delay in the raising of this issue surrounding the discrepancy between the particulars and the witness statements was not the result of any conscious decision by any party, all sides chose to press on with the litigation without questioning the sufficiency of the pleading to sustain the substantive evidence which had been delivered. This is particularly true of the respondents who prepared witness statements and, whom presumably, prepared for trial on the basis of the pleaded material facts in the statement of claim and the evidence contained in the applicants' witness statements. 68 These circumstances weigh heavily in favour of allowing the making of amendments which will bring the pleaded claims into line with the action which both parties seemed to have anticipated was to be pursued.

The detriment to other litigants in the Court 69 Whilst there is always the potential for the creation of detriment to other litigants if matters have to be adjourned to a later date, this criterion is, sometimes, given greater weight than it deserves. Here, the amendments as they are to be made will reduce rather than increase the number of issues to be considered at trial. The ultimate length of the trial will be shortened. Moreover, although there may be personal costs to the litigants in this matter, no significant amount of judicial time was wasted as a result of the making of the application or by the adjournment of the trial.

Potential loss of public confidence in the legal system 70 In this case the amendments sought to be made cause no prejudice and are likely to shorten the case. There is no potential for there to be any loss of confidence in the court system which has adapted to meet the needs of the litigants all of whom may not have appreciated, until a very late stage, the lack of conformity between the pleaded particulars and the witness statements.

Conclusion on leave to amend paragraphs 13, 14 and 15 71 In the light of the above it is appropriate to give the applicants leave to make the amendments to the pleading which both, remove a number of representations on which there was previous reliance, and include particulars of the existing allegations relating to the ocean-going capabilities of the Endurance range of motor vessels of which the Cadeau was one. The amendments are significant to the applicants' case in that they go to the heart of the action and they are particulars of allegations which have existed in the pleading since the action began. It is apparent that until shortly before the hearing, all of the parties perceived that the representations which are the subject of the new particulars were an essential part of the applicants' case. Until this late point in time the respondents must have been preparing to meet a case founded upon the evidence in Mr Wyzenbeek's affidavit which is reflected in the proposed amended particulars. That being so, they have not been able to point to any substantial prejudice were the amendments to be allowed. Although the application to amend was not made until trial, that is understandable when the respondents had apparently joined issue with the case as asserted in the applicants' witness statements. The applicants have adequately explained any delay. To the extent to which the respondents chose not to question the fact that the witness statement of Mr Wyzenbeek exceeded the extant particulars (which was a relatively short period of time) they can have no cause for complaint. The time has come where litigants must realise that trials are for the resolution of the substantive issues and the obligation of litigants before the Court and their legal representatives extend to acting in a manner which ensures that this is achieved as expeditiously as possible. It should be observed that this last point is not determinative of the discretion in this case.

Other amendments 72 The above discussion concerns the application of the principles identified by Charlesworth J in Australian Building and Construction Commissioner v McDermott (supra) to the major amendments which were sought. That discussion is also applicable, in part, to other proposed amendments which the applicants seek to make to the pleading and which are discussed in the following paragraphs.

The misleading or deceptive conduct claim/"no transaction" case asserted by the applicants 73 The second matter which has been raised by the respondents concerns the nature of the applicants' cause of action for misleading conduct and their damages claim. Mr Giles SC opened that the applicants' case was based upon s 52 of the TPA and that the damages claim was founded upon a "no transaction" case. That is, it is said that the applicants relied upon the various representations in determining to purchase "Cadeau" and had the representations not been made, they would not have entered into the transaction. The respondents complain that no cause of action based upon s 52 (or s 18 of the ACL) has been pleaded and, further that, if there is such a case, it is not pleaded as a "no transaction" case. By the proposed amended statement of claim the applicants seek to make some relatively minor amendments which they say will "clarify" the claims which have been made in the SFASC.

The extant TPA / ACL claims and proposed amendments thereto 74 In relation to the question of whether a cause of action under s 52 of the TPA (or under s 18 of the ACL or, indeed under the Fair Trading Act 1989 (Qld)) is pleaded, it is observed there is no mention of any such statutory provisions in the Originating Application or in the SFASC as is required by r 16.02(1)(e) of the Federal Court Rules 2011 (Cth). That omission, of itself, does not render the pleading invalid. That said, the rule exists for the salutary purpose of ensuring that the party receiving the pleading knows exactly what, if any, statutory provision is being relied upon. Compliance with that rule advances the openness with which litigation ought to be conducted. Whilst the applicants submit that the text of the statutory provision might be recited in the pleading rather than the particular section be mentioned (Henderson v McSharer [2013] FCA 414 at [23] - [26]) neither were identified in the present case. What the rule requires is that there is a clear identification of any statutory provision on which the party pleading intends to rely. It is difficult to see how that can be achieved without an express mention of the statute in question and the specific provision. 75 Despite the above, it is not in doubt that all of the material facts necessary to raise a claim under s 52 of the TPA are pleaded. That includes allegations that the corporate respondents carried on trade or commerce, that the representations made were, inter alia, misleading, that they caused the applicants to enter into the transaction and that loss was suffered as a result. The respondents submit that, at best, the SFASC only pleads a claim under s 53 of the TPA (false or misleading statements in relation to the supply of goods or services) because the conclusory statement in paragraph 58 refers to the representations as being "false and/or misleading" which is similar to the expression used in s 53. Whilst it is true that a claim under that section appears to be raised, as pleaded the allegations are sufficiently broad to capture within them a claim under s 52 or s 18 of the ACL. That being so, any amendments made in this respect are, in truth, by way of clarification. 76 The applicants submit that, in this case, a claim under the TPA against the respondents was fairly raised. There is force in that submission and, it appears, the respondents have viewed the pleading in that manner. In a letter of 28 June 2016 the solicitors for the respondents identified that claims were being made in the statement of claim against the respondents for misleading conduct under the TPA although that acknowledgement does not expressly identify s 52 of that Act. It is also the case that the first to fifth respondents defended the action in a manner which was consistent with an apprehension on their part that the pleading raised allegations of misleading conduct under the TPA. The applicants also rely upon evidence in Mr Silberstein's affidavit to the effect that during the course of the interlocutory steps there have been a number of instances where the applicants' claim has been referred to as one for damages for misleading or deceptive conduct under the TPA and no party took umbrage at that suggestion. Indeed, other parties to the litigation so regarded the action in that manner. It also appears that during the course of an interlocutory application, Rares J identified the action as being one for misleading or deceptive conduct under the TPA or the ACL and no disagreement was expressed with that proposition. 77 Although the respondents submitted otherwise, it seems that all parties have engaged in this litigation on the basis that one of the central claims made by the applicants was for misleading or deceptive conduct under the TPA (or the ACL). In the circumstances, it was apparent to the respondents that such a claim was being advanced. That being so, the amendments which flesh out the TPA / ACL claims do not disadvantage the respondents in any way. The claims already existed in the SFASC and the proposed amendments clarify rather than alter the pleaded actions. The proposed amendments in this respect should be seen as merely "tidying up" the existing pleading; Pascoe v Boensch [2009] FCA 1240 at [79]. 78 The next related issue concerns the amendments sought to be made in paragraphs 6(d) and 7(c) where the applicants expressly rely upon the extended operation of the TPA pursuant to s 6(3) of that Act in relation to certain representations which are alleged to have been made by Dean L-S and Ryan L-S in their personal capacity. In particular, the applicants now seek to expressly mention that Ryan L-S and Dean L-S were within that extended operation of the TPA when they made representations via the internet (using email) or telephone. 79 A claim against Dean L-S and Ryan L-S for misleading conduct under the TPA (ACL) already exists in the SFASC. Those claims were made against them directly rather than as an accessory to conduct of a corporation. Pursuant to the TPA that could only be founded upon its extended operation such as conduct occurring by use of the telecommunication network. That was particularised to some extent in relation to Dean L-S where it was alleged that he engaged in the conduct by sending emails. The claim against Ryan L-S was broad and no particulars were sought. The proposed new particulars in relation to him fall within the scope of the claim already pleaded and the details have long since been revealed to the respondents by the content of Mr Wyzenbeek's witness statement. 80 The addition of the references to the extended operation of the TPA is mere clarification of a claim which already exists. The application of the principles in Australian Building and Construction Commissioner v McDermott (supra) as discussed above apply equally to these proposed amendments and they ought to be allowed.

The no transaction case 81 The respondents also assert that the claim under the Trade Practices Act cannot be sustained given the manner in which causation and loss are pleaded. During his opening, Mr Giles SC identified that the applicants were alleging damages for misleading or deceptive conduct on the basis of a "no transaction" case. In that respect, the applicants have opened the evidence of Mr Lack who has purported to value the Cadeau as at 22 June 2017 at $2.461 million. Mr Giles SC submits that this has some indirect relevance to the value of the vessel as at the date on which it was acquired and that will be relevant to the assessment of damages on the basis of a "no transaction" case. The respondents, by Mr Sirtes SC, assert that no sufficient plea is made to raise a claim that the applicants suffered loss and damage on the basis that they would not have entered into the transaction to acquire the vessel had the representation not been made. For this reason the respondents have objected to the evidence of Mr Lack going to the value of the vessel. 82 At the outset it should be noted that the pleading of damages in the SFASC includes an assertion that there was a diminution in the value of the vessel. The evidence of Mr Lack seems to go directly to that issue and that is probably sufficient to allow his evidence to be adduced. Whether or not that will advance a "no transaction" case is a matter which requires further submissions at a later time. 83 In the existing pleading and, indeed, in the proposed new pleading, the counterfactual element of the causation plea is not expressed with great clarity in that there is no direct statement to the effect that had the misleading conduct not occurred, the applicants would not have purchased the vessel. It is true that at paragraphs 16 and 55 of the existing pleading the applicants assert that they relied upon the representations in agreeing to purchase the vessel and, it might be said, that "carries with it" the implicit assertion that had the representation not been made they would not have done so. There is some merit in that assertion and it is also not suggested that the applicants would have entered into any "different transaction". By the exclusion of that latter possibility, a commercial lawyer should probably have reached the conclusion that, despite the poor pleading of the causative link between the misleading conduct and loss, a "no transaction" case was being advanced. 84 The applicants further plead that "as a result of" the various representations they have suffered loss and damage which are particularised as being the costs of repairing the defects, the costs of and incidental to repairing and rectifying the vessel, the costs of rendering the vessel closer to fitness for the purpose for which it was purchased, diminution in the value of the vessel and loss of use. It should be recognised that attempts to plead causation in TPA / ACL claims by the use of phrases such as "as a result of", "by reason of" or "because of" have long been deprecated. Those pieces of legislation require that the party alleging the breach plead the necessary material facts to establish the causal relationship between the misleading or deceptive conduct and the loss. In Bond Corp Pty Ltd v Thiess Contractors Pty Ltd (1987) 14 FCR 215 at 222 French J said that "facts and circumstances should be set out leading to a reasonable inference that the conduct and the damage stood to each other in the relation of cause and effect." This observation has been referred to on numerous occasions (Barns v Forty Two International Pty Ltd (2014) 316 ALR 408; Graham & Linda Huddy Nominees Pty Ltd v Byrne [2016] QSC 221; Hastie Group Ltd (In Liq) v Bourne; Hastie Group Ltd (In Liq) v Moore [2017] NSWSC 709 at [217]; Willmott Forests Ltd (recs and mgrs apptd) (in liq) v Armstrong Dubois Pty Ltd [2016] VSC 61). In Southern Cross Mine Management Pty Ltd v Ensham Resources Pty Ltd [2004] QSC 457, Chesterman J said at [15]: In any cause of action in respect of which causation is an essential element it is necessary to plead the material facts which are said to give rise to the causal connection. In particular it is necessary to plead the facts which lead to a reasonable inference that the acts complained of (here the relevant non-disclosure) and the alleged later event (here the making of the dragline agreement) stand to each other in the relation of cause and effect. Douglas J put it this way in LBS Holdings Pty Ltd v The Body Corporate for Condor Community Title Scheme 13200 & Ors [2004] QSC 229 (at para [3]): … The principle relied on is that facts must be set out which lead to a reasonable inference that the acts complained of and the loss claimed stand to each other in the relation of cause and effect and that the plaintiff must plead the necessary facts showing that causal link … His Honour referred to Dow Hager Lawrance v Lord Norreys & Ors (1890) 15 App Cas 210at 221 and Bond Corporation Pty Ltd v Thiess Contractors Pty Ltd & Ors (1987) 14 FCR 215 at 221-222. In the first of those cases Lord Watson had said: There must be a probable, if not necessary, connection between the fraud averred and the injurious consequences which the plaintiff attributes to it; and if that connection is not sufficiently apparent from the particulars stated, it cannot be supplied by general averments. Facts and circumstances must in that case be set forth, and in every genuine claim are capable of being stated, leading to a reasonable inference that the fraud and injuries complained of stood to each other in the relation of cause and effect. 85 Here the pleading barely suffices to establish the matters required of the above authorities. The conclusory statement in paragraph 60 that "as a result of" the alleged representations the applicants suffered loss and damage is, of itself, insufficient. However, other allegations to the effect that the applicants relied on the representations when purchasing the vessel, and, implicitly, that its true value was less than its sale value probably save the pleading in this respect. 86 The applicants' identification in the pleading of the loss and damage arising from the misleading conduct as being identical to that sustained by reason of a breach of the implied warranty of fitness for purpose is also the foundation of some confusion. The losses alleged in paragraph 57 appear to consist mostly of expectation losses which are available in an action based on the latter cause of action. The exception may be the reference to "diminution in the value of the vessel". Mr Giles SC for the applicants asserts that within that reference would fall losses which might be derived more directly from a no transaction case. In the proposed amended statement of claim the pleading is clarified to identify that what is being sought under this head of damages is, "Diminution in the value of the Vessel in other words the difference between the cost of the Vessel and its present value". That formulation accords with the measure of damages for claims under the TPA / ACL for misleading or deceptive conduct which was given the approbation of the High Court in HTW Valuers Pty Ltd v Astonland Pty Ltd (2004) 217 CLR 640 at 666 [63] and referred to as the "price minus benefits left in the plaintiff's hands" approach. It is also true to say, as the applicants submit, that the costs and outlays which have been incurred in relation to the vessel are, to some extent, within the scope of losses which are recoverable under the TPA / ACL claim (see Henville v Walker (2001) 206 CLR 459 at 488-489, [94]). 87 It is difficult to accept the respondents' submission that they were not aware that the applicants were alleging a "no transaction" case in relation to the misleading or deceptive conduct claim. At an interlocutory hearing on 21 February 2017, the applicants, by their counsel, identified on two occasions that the dispute concerned misleading or deceptive conduct and that losses were to be sought on the basis of a "no transaction" case. No question was raised by the respondents as to the veracity of those statements and such matters were raised prior to the witness statements being delivered. This seems to have been the assumption on which the respondents presumed that the matter would progress as, on 6 September 2017, Mr McKenzie of Gadens sent to the respondents an email concerning the forthcoming hearing. Although the focus of that email concerned settling the related proceedings against insurance brokers, in it Mr McKenzie expressly identified that the applicants' claim in the action was a "no transaction or financial loss claim". That was an accurate statement of the nature of the case alleged in the pleading despite its deficiencies and it shows that the respondents have always been aware of the nature of the loss claimed by the applicants. 88 In the circumstances, the claim based on s 52 of the TPA or s 18 of the ACL was adequately pleaded and, in relation to that claim, the allegations made sufficiently identified that they sought to recover their losses on a "no transaction" basis. Despite the submissions to the contrary, that this is how the respondents perceived the case and, one would expect, it was the basis on which they prepared for trial. The amendments proposed in relation to the question of damages are for the purposes of clarification and do not change the nature of the case as originally advanced or as it was understood by the respondents. The amendments in relation to the damages plea are allowed as well.

The additional claim under the Fair Trading Act 1989 (Qld) 89 Relying on the same facts which are asserted in support of the misrepresentation claim under the TPA or the ACL, the applicants also seek to amend the SFASC to rely upon s 38 of the Fair Trading Act 1989 (Qld). The applicants claim that the elements of an action under this section were already contained in the pleading and no further allegations of fact are asserted in the proposed amended statement of claim in support of it. The applicants, however, identify that they seek to rely upon that provision for the purposes of obtaining relief under that section, if necessary, against the individual respondents. 90 The respondents assert that this Court has no jurisdiction to entertain an action founded upon the Fair Trading Act 1989 (Qld) despite it rising out of the same facts and circumstances as the claims under the TPA and ACL. That argument is founded upon an assertion that this Court is reliant upon s 79 of the Judiciary Act 1903 (Cth) for the application of State laws which are relevant to the determination of the "matter" before the Court. In this respect, the respondents rely upon what was said by the High Court in the recent decision of Rizeq v Western Australia (2017) 344 ALR 421. The respondents assert that s 79 will permit the application of laws of the State where a Federal Court is sitting, but does not extend to permitting the application of the laws of another State in such a matter. They submit that as the Federal Court sitting in New South Wales, it cannot apply the laws of Queensland to the extent to which they might be applicable. In answer to this the applicants assert that s 79 is irrelevant, as the power of the Federal Court to apply the Fair Trading Act 1989 (Qld) arises by reason of the accrued jurisdiction of the Court. 91 Whatever be the correctness of the outcome of these arguments, the answer is not so clear that it ought to be determined on an interlocutory argument raised in the course of a trial. Mr Sirtes SC referred me to the observations of Wigney J in Gloucester Shire Council v Fitch Ratings Inc (No 2) [2017] FCA 248 at [85] where his Honour said of the principles to apply on an application for leave to amend where a question arises as to the veracity of a proposed amendment: Leave to amend should be granted unless the proposed amendment is futile, such that the issue sought to be raised by the amendment has no reasonable prospects of success, or would be liable to be struck out as not raising a reasonable cause of action, or where the amendment would cause substantial prejudice or injustice to the opposing party in a way that cannot be compensated by the award of costs: Research in Motion Ltd v Samsung Electronics Australia Pty Ltd (2009) 176 FCR 66 at 69-70 [21]-[22]; Ron Medich Properties Pty Ltd v Bentley-Smythe Pty Ltd [2010] FCA 494 at [8]; Caason at 327 [21]. 92 That statement of principle is unquestionably correct. Here, the question of whether or not this Court has jurisdiction to hear the FTA claim is a complex one which requires a detailed analysis of the High Court's decision in Rizeq and the competing arguments in relation to it. At the very least, the applicants' argument that the FTA is within the accrued jurisdiction of this Court is not without merit. If the argument advanced by the respondents is correct, it will be equally correct at the end of the trial and, given that the facts relating to the Fair Trading Act 1989 (Qld) claim will be explored in the TPA / ACL claims, the respondents will not be put to added expense if the point is argued in full at the end of the trial. There is no prejudice suffered by the respondents as a result of the Fair Trading Act 1989 (Qld) claim becoming part of the pleading at this juncture. For that reason, it is appropriate to give leave to amend the SFASC to include the relief sought under the Fair Trading Act 1989 (Qld).

The claim that Mr Gay was knowingly concerned in the contraventions of the TPA 93 In paragraph 56 of the SFASC an allegation is made that the fifth respondent, Mr Gay, was knowingly concerned in the making of the misleading representations which were in breach of the TPA or the ACL. By the proposed amendments the applicants claim that all that they are attempting to do is to tidy up some "infelicities" in the existing pleading. 94 The respondents oppose the proposed amendments on two bases. First, it is said that they will alter the case against Mr Gay by significantly widening the scope of the representations in respect of which it is said that he was "knowingly concerned". Second it is said that, in any event, the pleading ought to be struck out because it fails to plead a reasonable cause of action. 95 As to the first matter, whilst the manner in which the amendments are intended to operate is opaque, when properly understood there is no widening of the representations in respect of which it is said that Mr Gay was knowingly concerned. Indeed, it would appear that the amendments reduce the number of representations in issue. 96 In relation to the second matter, there is substantial weight in the submissions of the respondents that the pleading in paragraph 56 does not plead a reasonable cause of action against Mr Gay based on him being "knowingly concerned" in the alleged breaches of the TPA and ACL. An essential requirement of any plea of this nature is that the person against whom the claim is made knew of the matters which make up the essential elements constituting the contravention in question. Such allegations are necessary to establish that the person intentionally participated in that contravention. Where accessorial liability is alleged in relation to misleading or deceptive conduct, the party alleging the same must assert that at least the respondent knew of the making of the representation, that it was made in trade or commerce and that it was misleading or deceptive (see Yorke v Lucas (1985) 158 CLR 661 at 667). In Australian Competition and Consumer Commission v Online Dealz Pty Ltd [2016] FCA 732 Markovic J identified the now well accepted positon which flows from Yorke v Lucas. Her Honour said: [163] It is necessary to show an intentional participation in and actual knowledge of the essential elements of the contravention. However, it is not necessary to show that the person appreciated that the conduct constituted a contravention. In Rural Press Limited v Australian Competition and Consumer Commission (2003) 216 CLR 53 at [48] a majority of the High Court confirmed that the trial judge had rightly held that it was necessary to find that the relevant individuals participated in, or assented to, the companies' contraventions with "actual knowledge of the essential elements constituting the contraventions" and that in order to "know the essential facts, and thus satisfy s 75B(1) of the Act and like provisions, it is not necessary to know that those facts are capable of characterisation in the language of the statute". [164] In Australian Competition & Consumer Commission v IMB Group Pty Ltd [2003] FCAFC 17 a Full Court of this Court held at [133] that for a person to be involved in a contravention pursuant to s 75B(1)(c) of the Trade Practices Act, the person must be an "intentional participant in the contravention, the necessary intent being based upon knowledge of the essential elements of the contravention" relying on Yorke v Lucas. The Court went on to say that while it was not necessary to establish that the individual respondents had "knowledge that there was such a contravention … of the Act, it is necessary to demonstrate that each individual respondent had knowledge of each of the essential elements of the contravention". … 97 Here, paragraph 56 is devoid of any allegation that Mr Gay had knowledge of any assertion that he was aware of any representation which was relied upon by the applicants in entering into the agreement to acquire Cadeau. There is no suggestion that he knew that any representation made was false. Indeed, there is not even an attempt to allege a form of wilful blindness. The paragraph was, apparently, drawn without any consideration of the requirements mentioned in Yorke v Lucas as to the necessary allegations of intention. 98 Somewhat confusingly, the particulars to paragraph 56 in the proposed statement of claim refer to, inter alia, paragraph 15 of the pleading which has been abandoned and to matters or events which occurred well after the Cadeau was acquired. The relevance of these latter matters is not apparent. They certainly cannot be relevant to the alleged contraventions of the TPA or ACL which are said to have caused the applicants to acquire the vessel. 99 The pleaded claim against Mr Gay is hopeless and nothing that was submitted by Mr Giles SC gave rise to any prospect that some form of surgery might save it. It is an act of kindness to terminate its existence. 100 Aside from the futile attempts by the applicants to preserve this cause of action during the course of the interlocutory hearing, the most troubling aspect of this matter is that no action had been taken by the respondents over an extended period to strike out this part of the pleading. The claim, on its face, is hopeless and it always has been. In the old vernacular, it was demurrable. That would have been apparent to any reasonably competent commercial litigator and, it follows, the omission of the respondents to take any step to strike it out, which would have relieved Mr Gay of his participation in the proceedings, must necessarily have been a deliberate forensic decision. That decision seems to have been to allow a hopeless claim to be agitated against Mr Gay over an extended period to await the commencement of the hearing before any complaint is made in respect of it. As has been indicated above, trials are for the determination of the substantive issues between the parties and not for engaging in disputes about the veracity of pleadings. The fact that the respondents made no complaint about the lack of veracity in relation to the claim against Mr Gay until the commencement of trial is a very weighty factor in favour of not striking it out. However, as it is so completely devoid of some of the essential material facts on which such a claim can be founded it is not appropriate that it remain part of the action. I certify that the preceding one hundred (100) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Derrington.

SCHEDULE OF PARTIES NSD 911 of 2015 Respondents Fourth Respondent: RYAN ANTHONY LEIGH-SMITH Fifth Respondent: PATRICK VINCENT GAY Sixth Respondent: CHUBB INSURANCE AUSTRALIA LTD Seventh Respondent: THE UNDERWRITERS OF LLOYDS SYNDICATE 5000 TRV