FEDERAL COURT OF AUSTRALIA

Tada Constructions Corporation Pty Ltd v JP Dixon Real Estate Pty Ltd (No 2) [2011] FCA 791

THE COURT ORDERS THAT:

1.    The trial date fixed for 25 July 2011 is vacated.

2.    Orders 7, 8, 9, 11, 13, 14 and 16 made on 2 March 2011 are vacated.

3.    The applicant, on or before 4:00pm on 8 July 2011, file and serve a second further amended statement of claim substantially in the form attached to exhibit MJO-23.

4.    The respondents, on or before 4:00pm on 22 July 2011, file and serve a defence to the second further amended statement of claim.

5.    The applicant, on or before 4:00pm on 2 August 2011, file and serve any reply.

6.    The respondents file and serve any expert report(s) upon which they intend to rely by 4:00pm on 12 August 2011.

7.    The respondents file and serve outlines of evidence by 4:00pm on 26 August 2011.

8.    By 4:00pm on 2 September 2011, the applicant file and serve a chronology of the relevant facts and events.

9.    By 4:00pm on 9 September 2011, the parties must file and exchange written notice of facts and contentions.

10.    By 4:00pm on 9 September 2011, the parties file and serve any objections to the admissibility of evidence in so far as is practicable.

11.    The proceeding be referred to mediation by a Registrar of the Federal Court, such mediation to be completed by 5 October 2011. [This order was amended by order of 13 July 2011]

12.    The applicant pay the respondents’ costs of their notice of motion filed on 4 July 2011.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. The text of entered orders can be located using Federal Law Search on the Court’s website.

REASONS FOR JUDGMENT

INTRODUCTION AND BACKGROUND

1    On 7 July 2011, I made orders (amended slightly by an order of 13 July 2011) as follows:

1.    The trial date fixed for 25 July 2011 is vacated.

2.    Orders 7, 8, 9, 11, 13, 14 and 16 made on 2 March 2011 are vacated.

3.    The applicant, on or before 4:00pm on 8 July 2011, file and serve a second further amended statement of claim substantially in the form attached to exhibit MJO-23.

4.    The respondents, on or before 4:00pm on 22 July 2011, file and serve a defence to the second further amended statement of claim.

5.    The applicant, on or before 4:00pm on 2 August 2011, file and serve any reply.

6.    The respondents file and serve any expert report(s) upon which they intend to rely by 4:00pm on 12 August 2011.

7.    The respondents file and serve outlines of evidence by 4:00pm on 26 August 2011.

8.    By 4:00pm on 2 September 2011, the applicant file and serve a chronology of the relevant facts and events.

9.    By 4:00pm on 9 September 2011, the parties must file and exchange written notice of facts and contentions.

10.    By 4:00pm on 9 September 2011, the parties file and serve any objections to the admissibility of evidence in so far as is practicable.

11.    The proceeding be referred to mediation by a Registrar of the Federal Court, such mediation to be completed on the next available date after 5 October 2011.

12.    The applicant pay the respondents’ costs of their notice of motion filed on 4 July 2011.

2    My reasons for making those orders are set out below.

3    By a notice of motion dated 4 July 2011, the respondents, JP Dixon Real Estate Pty Ltd (“JP Dixon”) and Jonathan Dixon (collectively, “Dixon”) sought:

1.    An order striking out the Applicant’s Further Amended Statement of Claim dated 22 June 2011.

2.    An order that the Applicant file and serve:

(a)    a Further Amended Application;

(b)    a Second Further Amended Statement of Claim including repleading paragraphs 9 and 12 of the Applicant’s Further Amended Statement of Claim and providing full particulars thereof and addressing the matters raised in the Respondents’ letters to the Applicant dated 24 June 2011 and 1 July 2011.

3.    An order vacating the trial date.

4.    Directions for the filing of a defence and expert material upon which the Respondents will seek to rely.

5.    Costs.

6.    Such further or other orders as the Court considers appropriate.    

4    The application was supported by the affidavits of Michael O’Brien of the solicitors for the respondents sworn on 4 July 2011 and 6 July 2011 and by written submissions dated 5 July 2011.

5    The application was opposed by the applicant, Tada Constructions Pty Ltd (“Tada”), which relied on written submissions dated 5 July 2011.

6    Mr O’Brien deposed to the respondents’ earlier application by notice of motion dated 25 May 2011 to, inter alia, strike out Tada’s amended statement of claim filed on 18 March 2011 (“ASOC”), or alternatively, for an order that Tada provide further and better particulars of loss and damage.

7    After hearing from the parties on that earlier notice of motion, on 20 June 2011, for reasons published on 22 June 2011 (“June reasons”), I ordered that:

1.    The applicant, on or before 4.00pm on 22 June 2011, provide further and better particulars to paragraphs 12 and 16 of the amended statement of claim dated 25 February 2011.

2.    Alternatively to order 1, the applicant, by 4.00pm on 22 June 2011, file and serve a further amended statement of claim, including re-pleadings of paragraphs 12, 16 and 19 of the amended statement of claim dated 25 February 2011, providing full particulars thereof.

3.    Order 16 made on 2 March 2011 be varied by adding the preface “In so far as is practicable”.

4.    The applicant pay the costs of the respondents’ notice of motion dated 25 May 2011 and any costs thrown away by reason of the amendment.

8    The June reasons relevantly stated at [74] and [75]:

… I considered… that Dixon’s complaints about the lack of clarity of the pleading and inadequacy of the particulars of loss and damage were well founded and, together with the principal query, had been reiterated from an early stage without a sufficient response.

There was no satisfactory explanation for why Tada had hitherto failed to proffer the fundamental clarification.

9    The respondents, while seeking further and better particulars of loss and damage, also stated at the June hearing that if it were clarified that the alleged loss and damage was confined to the difference between Tada entering the licence deed and trading under its own banner (as opposed to that of another real estate agency), they would be able to prepare evidence without vacation of the trial date (which, by an order made by consent on 2 March 2011, was fixed for 25 July 2011 on a five day estimate).

10    At the June hearing, as stated in the June reasons:

Senior counsel for Tada made clear that, at trial, Tada would maintain that in the event that Tada failed on its contract and rectification claims, it would allege that the loss and damage arising from the alleged misleading and deceptive conduct was that Mr Daly would not have started up the business pursuant to the licence deed (without exclusivity in the Market) but would have started up a business under his own name or similar, and would have been better off. Senior Counsel submitted that the Blashki report indicated that in such a case, the business would be poised to make a certain level of profit. The gist of Tada’s alleged loss was having to build a business twice, which the report addressed.

(emphasis added)

11    Pursuant to the orders made on 20 June 2011, Tada filed and served a further amended statement of claim (“FASOC”) on 22 June 2011.

Further Amended statement of claim

12    In the FASOC, Tada alternatively alleged:

(a)    misleading and deceptive representations in reliance on which, and induced by, Tada entered a licence deed which it would not otherwise have done; and

(b)    breach of certain terms of the licence deed.

13    The misleading and deceptive conduct claim and the breach of contract claim were (broadly speaking at least) mutually exclusive, because if the contractual terms were as Tada alleged, then the representations would not be misleading and deceptive.

14    Under the misleading and deceptive conduct claim, the FASOC alleged that Dixon represented that JP Dixon would grant an exclusive licence to Tada to carry on business in the Portsea/Sorrento/Peninsula area (“the Market”); that other Dixon entities would not (during the term of the licence) compete with Tada in the Market, and if they were engaged to list properties they would hand them to Tada to sell; that JP Dixon would not establish another office in the Market nor compete with Tada; and nor would Mr Dixon allow other entities he controlled or of which he was a director to compete. Tada, in turn, would be required to pay Dixon 10% of its gross commission on sales and 5% of its gross commission on rentals.

15    The particulars subjoined to the allegation that the representations were misleading and deceptive were not the subject of leave to replead and remained obscure and inapposite. They included that Mr Dixon was a director of the respondents, that JP Dixon listed or referred properties to Tada to be sold, that Tada referred a Toorak property to JP Dixon, that Tada paid 20% of its gross commission on sales listed by JP Dixon or the Brighton office, and further, that Tada paid 10% of all gross sales commission and 5% of all gross rental commission.

16    The FASOC introduced an allegation that, but for the making of the representations, Tada would not have entered the licence deed and, instead, would have carried on a real estate business under the Troy Daly banner or similar, as follows:

11A    But for the making of the Representations and Further Representations and Tada’s reliance thereon, Tada would not have entered into the Licence Deed.

11B    If Tada had not entered into the Licence Deed, Tada would have operated and carried on a real estate business under the banner “Troy Daly” or similar name.

17    Paragraph 12 of the FASOC alleged:

12    By reason of the matters outlined above Tada and Daly have suffered loss and damage.

PARTICULARS

A)    Since approximately August 2007 Tada has pursued the development and growth of goodwill in the Market in the name “JP Dixon” rather than pursuing the development and growth of goodwill in the name “Troy Daly” or similar name.

B)    Tada would not have incurred the obligation set out in 5.3(a) and (c) of the Licence Deed.

C)    Tada has become bound to and has paid to JP Dixon commission in the sum of $232,937.90 which it otherwise would not have paid.

D)    The Licence Deed has a period of 20 years from 22 August 2007. Payments made by Tada in 2010 pursuant to clause 5.3(a) and (c) of the Licence Deed total $98,542. The anticipated total to be paid by Tada pursuant to clause 5.3(a) and (c) of the Licence Deed for each remaining year of the Licence Deed is approximately $100,000. The commission payable for the duration of the Licence Deed is $100,000. The commission payable for the duration of the Licence Deed is $100,000 x 17 years = $1.7 million (Tada will rely upon the evidence of Mr Daly as to the anticipated revenue of the Business.

E)    Tada’s loss is the commission paid plus the commission payable for the term of the Licence Deed.

18    Particular (A) under paragraph 12 of the FASOC was the Delphic existing “goodwill” particular.

19    Particular (B) was new.

20    Particular (C) was an existing particular.

21    Particular (D) was new. As extracted above, it alleged that the licence deed has a period of 20 years from 22 August 2007 and payments by Tada in 2010 pursuant to the licence deed totalled $98,542. It alleged that the anticipated total of the amounts to be paid for each remaining year of the 20 year term of the licence deed from 22 August 2007 (that is, 17 years), estimated at an annual average of $100,000, was $1.7 million. Particular (D) added that “Tada will rely on the evidence of Mr Daly as to the anticipated revenue of the Business”. No basis for the calculation of the sum of $98,542 was set out.

22    Tada did not, by its application or the FASOC, seek to terminate the licence deed, (although its senior counsel at the hearing of this application stated that the court might ultimately consider it appropriate to make an order to that effect under s 87 of the Trade Practices Act 1974 (Cth) (“TPA”)).

23    Despite Tada’s senior counsel’s statement at the June hearing (referred to at paragraph 10 above), the FASOC, while retaining the goodwill particular, did not plead that Tada would have been better off had it operated on its own account without the JP Dixon banner and, perforce, did not set out the basis for such an assertion. In the factual context of the FASOC, and senior counsel’s statement at the June hearing, this required explanation. Tada’s claim for loss and damage in the FASOC appeared implicitly to allege that the JP Dixon banner was of no value. The relationship of the particulars subjoined to paragraph 12 inter se, and to senior counsel’s statement at the June hearing, given the retention of goodwill particular, together with the implications of the Blashki report, remained unclear. Paragraph 12 of the FASOC thus failed clearly to expose how Tada put its loss and damage case.

24    Particular (D) indicated that Tada sought to keep on foot the licence deed under which it will incur, for a further 17 years, damages which were essentially a set off of commissions it would unjustifiably have to pay; and sought to capitalise that loss, while continuing to operate under the JP Dixon banner.

25    The FASOC also alleged a number of terms of the licence deed, including that Tada must pay the commission alleged; that JP Dixon must pay Tada a total of gross commission earned by the Brighton office on sales of properties listed by Tada in Brighton or sold in Brighton; and that JP Dixon would not start up another office in the Market and would not compete with Tada in the Market, but would refer any properties in the Market to Tada. It also alleged an implied term to the effect that Tada would operate and carry on the business exclusively in the Market.

26    Paragraph 15(a) of the FASOC alleged breaches, being that JP Dixon denies Tada’s entitlement to commission for JP Dixon’s (or the Brighton or Toorak offices’) sales and listings in the Market. It was unclear how such conduct would breach any of the terms alleged in paragraph 13 of the FASOC, as it did not correspond to paragraph 13(c), which related to sales by JP Dixon in Brighton, referred by Tada.

27    Paragraph 16 of the FASOC alleged the first two particulars of loss and damage by reason of JP Dixon’s breach of contract as follows:

(a)    gross commission on sales that should have been referred to Tada by JP Dixon up to May 2010 (less the commission Tada must pay) totalling $110,973.50 (paragraph 16(i)); and

(b)    gross commission from sales that would have been listed or referred to Tada by JP Dixon or the Brighton office for the duration of the licence deed over the 17 years remaining of the term, assessed by extrapolating the net commission from sales of properties referred to in paragraph 9(d)(iv) (paragraph 16(ii)).

28    The reference to paragraph 9(d)(iv) was apparently a typographical error, and should instead have been a reference to paragraph 9(iii) (which referred to six properties that JP Dixon referred to Tada to sell). It was unclear why that circumstance particularised the misleading conduct alleged. The commission was estimated to total $280,278 over two years, giving a yearly average of $140,139, to be multiplied by 17. The particular stated Mr Daly would give evidence at trial of properties listed or sold in the market by JP Dixon, Dixon and the Brighton office, and not referred to Tada. No basis for calculating the estimated commission was set out.

29    Particular 16(iii) alleged that since approximately August 2007, Tada had pursued the development of goodwill under the JP Dixon name, rather than that of Troy Daly or similar. Again, that replicated the existing goodwill particular.

30    The FASOC thus sought damages for breach of contract, being the value of the referrals to it of all the anticipated sales located by JP Dixon or associated entities in the Market. It did not seek to terminate the licence deed.

31    The FASOC deleted the existing claim for rectification.

32    On receipt of the FASOC, the respondents’ solicitor expressed his concern, inter alia, that the FASOC went beyond the leave to amend given on 20 June 2011, still contained confusing or obscure features and, most significantly, failed adequately to particularise loss and damage.

33    The respondents required particulars permitting a comparison between Tada’s financial position under the licence deed and the financial position trading under its own name, complained that the particulars left open the ambiguity of the value of goodwill, and observed that none of those matters was predicated on terminating the licence deed, so that the Blashki report was not to the point.

34    Tada’s solicitor undertook to provide further and better particulars and did so on 29 June 2011 in the form of a proposed further amended statement of claim (“PFASOC”), for which he sought the respondents’ urgent consent.

Proposed further amended statement of claim

35    The PFASOC contained some significant improvements. The allegations of misleading conduct were clarified. The PFASOC alleged that six properties particularised under paragraph 9 (which were different from those previously particularised thereunder in the FASOC) were properties sold by JP Dixon in the Market. Under paragraph 12, Particular (A) (the development of goodwill particular) was deleted. The other particulars subjoined to paragraph 12 remained almost identical save for Particular (D), where the $98,542 figure was changed to $102,863.81, now calculated according to a schedule to the PFASOC, which set out in detail Tada’s gross commission (from January 2010 to December 2010) and stated its total sales and rental commission payable.

36    In paragraph 16, the PFASOC now alleged both breach and anticipatory breach of the licence deed. The particulars were as follows:

(a)    loss of the commission that Tada should have received on the sales in paragraph 9 which Dixon should have referred to it, but did not, amounting to approximately $125,973.50 (paragraph 16(i)); and

(b)    loss of the gross commission from sales of properties that would have been listed to it under the licence deed over the 17 remaining years of the licence deed, based on an average yearly value of $141,289, now calculated as set out in an attached schedule B (paragraph 16(ii)). Schedule B listed eight properties, most of which were sold by Tada from a listing or introduction by Dixon, and many of which were previously particularised in paragraph 9(iii) of the FASOC.

37    The respondents’ solicitors did not consent to the PFASOC, although it addressed some of the respondents’ complaints. As the respondents stated in their written submissions:

On 29 June 2011, the Applicant sent the Respondents its proposed 'Second Further Amended Statement of Claim' ('Proposed Amended Pleading'), which was provided under a covering letter requesting that the Respondents consent to same by 4 PM on the following day. On 30 June 2011, the Respondents sent a letter to the Applicant commenting on the Proposed Amended Pleading. In the letter concerns were raised about the lack of further and better particulars, including the failure to identify how the Applicant would have been ‘better off’ by not entering into the Licence Deed.

38    By a letter dated 1 July 2011, Tada’s solicitors stated, inter alia, that:

At trial Tada will seek to prove that, but for your clients' contraventions of the TPA, Tada would be in the position it is in now but free of any obligation to pay commission to your client.

39    The respondents’ solicitors, by a letter on 1 July 2011, sought that Tada confirm that it alleged that, but for entry into the licence deed, it would have been in the same financial position save for the obligation to pay commission. The letter stated that if confirmation were received and appropriate additions were made to the pleading, the respondents would consent to the filing and serving of the PFASOC.

40    Tada’s solicitors declined to make the clarification sought by the respondents. The respondents stated that in that case they would hold Tada to the FASOC as filed.

discussion

41    By his affidavit sworn on 6 July 2011, Mr O’Brien deposed to the history of the matter and stated:

4.    In terms of the background of the matter, I refer to my affidavit sworn on 25 May 2011. In that affidavit, at paragraph 12, I refer to the Applicant having filed and served an Amended Application and Amended Statement of Claim on 25 February 2011. Since March of this year, the Respondents have been seeking further and better particulars of the Applicant's claim. In this regard I refer to my letter to the Applicant of 18 March 2011, as referred to in paragraph 14 of my 25 May 2011 affidavit.

5.    Since early in the proceeding, it has been the Respondents' intention to put on expert evidence to respond to the Applicant's claim for loss and damage. In particular, it has been my intention, once the Applicant has properly articulated its claim for loss and damage, to obtain a report from an expert in the real estate industry on whether the claim for loss and damage by the Applicant is sustainable. I have withheld engaging an expert to provide such a report until the Applicant has properly set out its claim for loss and damage, in order that the expert engaged is focused only on relevant issues and prepares a report accordingly. Notwithstanding this, in early May of this year I and lawyers assisting me in this matter prepared draft briefing documents, and conducted some enquiries, with a view to engaging an expert. Those enquiries did not involve contacting potential experts in the real estate industry, but they did involve identifying some potential experts who might be contacted in due course.

6.    It has been my practice to brief experts with a copy of the relevant pleadings, including the final version of the statement of claim and defence and, where relevant, further and better particulars. That is a practice that I propose to adopt when engaging an expert to prepare a report for the Respondents in this proceeding. However, I have had significant difficulty understanding the Applicant's claim for loss and damage, which has been borne out by my letters to the Applicant since March of this year.

7.    On 20 June 2011, the Applicant was ordered to provide further and better particulars of its loss and damage, or an amended pleading setting out full particulars of loss and damage, by 22 June 2011. When these orders were made I was expecting that the Applicant would fully particularise its claim for loss and damage in order that I would be in a position to engage an expert to provide a report in relation to the Applicant's claim for loss and damage. However, the Further Amended Statement of Claim did not, in my view, comply with the Court's orders. I therefore sought clarification of the Applicant's position. In this regard, I refer to my two affidavits of 4 July 2011, which set out relevant correspondence between the parties. It was only in the Applicant's facsimile to me of 1 July 2011 (exhibit MJO-25 to my Second Affidavit of 4 July 2011) that I understood the Applicant to be saying that it would be in the same financial position, but for the alleged misrepresentations, and its reliance upon them, in entering into the Licence Deed - but without any obligation to pay commission to be [sic] Respondents. Until that point, I had expected that the Applicant would be providing calculations in support of the financial position it alleges it would have been in had it not entered into the Licence Deed.

42    Mr O’Brien further stated that he now required time to plead to the FASOC and then would need to commission and receive a responsive expert report, which cut across preparation for trial in accordance with the orders.

43    Before me, senior counsel for Tada made clear that Tada no longer based its claimed loss and damage on goodwill and simply claimed the payments which it had made and would have to make under the licence deed (which it would not otherwise have been obliged to make).

44    Senior counsel for Tada submitted that it sought relief by way of damages under ss 82 and 87 of the TPA and was required to do no more at this stage to articulate that there was loss of damage. It had pleaded such loss and damage in accordance with Murphy & Anor v Overton Investments Pty Ltd (2004) 216 CLR 388 (“Murphy v Overton”), which established that loss or damage under Part IV of the TPA could be constituted by the assumption of outgoings under a lease which were larger than the representee had been led to believe, although there was no difference between the price paid under the agreement and the value of the property as at the date of the agreement, and no evidence that the representees were not receiving value for the outgoings they were obliged to pay. The High Court in Murphy v Overton observed that the representees did not contend that they suffered loss by entering the relevant lease rather than taking some other accommodation and the amount of the loss claimed was not to be “determined… only by comparing the financial position” on both those scenarios (at 413).

45    Tada submitted that as the claim based on goodwill was abandoned in the PFASOC, which was forwarded to the respondents on 29 June 2011, the respondents should have comprehended that no comparison or particulars relevant thereto were required in relation to Tada’s alleged loss or damage. Further, as the PFASOC only confined or narrowed Tada’s case, the respondents should have immediately consented to it, and could reasonably be required promptly to plead to it and to prepare expert evidence by the scheduled trial date.

46    Senior counsel for Tada submitted that, consistently with the decisions in Sali v SPC Ltd & Anor (1993) 67 ALJR 515 (“Sali v SPC”), Andrews v Australia and New Zealand Banking Group Ltd [2011] FCA 388 (“Andrews”) and ss 37M and 37I of the Federal Court of Australia Act 1976 (Cth) (“Federal Court Act”), the trial date must not be vacated given that the proceeding probably could not be refixed within a short time, and there was no sufficient admissible evidence that maintaining the existing trial date entailed any prejudice to the respondents. Senior counsel contended that, accordingly, the trial should proceed as scheduled to achieve justice to Tada, although that course might produce a sense of injustice in the respondents.

47    I rejected that submission. The principles governing the grant of an adjournment do not require a party to be held, in the interests of achieving a quick resolution of the dispute, to a trial date on which they would be inadequately prepared properly to present their case, due to inadequate pleading or other deficiencies on the part of an opponent. Further, no particular form of explanation is required.

48    In Cement Australia Pty Ltd v Australian Competition and Consumer Commission (2010) 187 FCR 261, the Full Federal Court dismissed an appeal from the decision of a trial judge to grant the applicant leave to amend its pleading when it was taken by surprise after the respondents’ opening at trial, although the need to amend was primarily the applicant’s fault and resulted in the adjournment of the trial.

49    The Full Court discussed in detail the High Court’s decision in Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175 (“Aon”), observing that the philosophy identified as informing the rule particularly at issue in Aon was also evident in ss 37M and 37N of the Federal Court Act. Their Honours observed at 275:

The trial judge found that there was an error of judgment by the ACCC of the type contemplated by the High Court in Aon Risk… In so finding, his Honour acted upon the acknowledgment by counsel for the ACCC that they had not previously identified the problem… The Cement Australia parties submit that his Honour erred in this regard.

50    The Full Court noted that in the case before it, the applicant had made an error of judgment, and although there was no sworn evidence providing an explanation, the Full Court considered that in the circumstances, the limited explanation by counsel responsible for the pleading sufficed, and was capable of acceptance by the primary judge. It was a very different position from that in Aon, where the claim introduced by the amendment had not previously been raised as a result of a deliberate tactical decision (at 276). Their Honours also observed at 277 that the High Court in Aon was “more concerned that there be an explanation… than the form in which the explanation was proffered”.

51    The Full Court stated at 275-276:

Aon Risk is not a one size fits all case. While 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.

52    The Full Court at 278-279 rejected the submission that the primary judge had failed to give proper consideration to:

the effect upon the administration of justice of a six-week trial that had been set down for approximately 18 months being adjourned, which encompassed the Cement Australia parties having both to revisit interlocutory steps, their evidence, cross-examination and other steps for trial as well as the potential waste of court resources and the strain that the litigation imposes upon the litigants, particularly in the context of the present proceedings involving individuals.

53    Their Honours noted that the trial judge may have been conscious of, and, on the basis of Sali v SPC Ltd was entitled to factor into his judgment, the state of the listings, the question of likely delay and the effect on other litigants whose cases were awaiting trial (at 279).

54    Their Honours stated at 279:

The trial judge did not mention all of these matters in his reasons. However, ultimately, against his assumed knowledge of the listings of the court it may be inferred that his Honour considered that any delay would not be undue. Accordingly it follows implicitly in his Honour’s reasoning that while there will always be inevitable irreparable prejudice which follows delay, it would not in this case likely be undue prejudice. The exercise of discretion involves, necessarily, a balancing exercise.

Importantly, to adapt the joint judgment in Aon Risk 239 CLR 175 at [102] to reflect the relevant statutory provision in the present case, the objectives in s 37M of the Federal Court Act do not require that every application for amendment should be refused because it involves the waste of some costs and some degree of delay, as it inevitably will. Factors such as the nature and importance of the amendment to the party applying cannot be overlooked.

There is nothing in Aon Risk or ss 37M and 37N of the Federal Court Act which would suggest that the consideration that it is desirable that the case be decided on its merits, so as to preserve public confidence in the administration of justice, is a consideration irrelevant to the exercise of his discretion.

It should be borne in mind that the extent to which the granting of an amendment which will lead to an adjournment of a trial may have the adverse effect upon the orderly administration of justice envisaged by the High Court in Aon Risk is a question in relation to which a trial judge of the Federal Court enjoyed a peculiar advantage.

55    In Andrews, Gordon J, in the context of an application for the trial of a separate question and to strike out a paragraph of the respondents’ fast track response in a representative action, observed that recognition of case management principles had modified the traditional restraint on strike out applications, albeit as the High Court stated, “case management principles should not supplant the objective of doing justice between the parties according to law”.

56    In that context, her Honour stated at [27]:

The High Court in AON then went further — their Honours acknowledged that it may be necessary in an appropriate case to make a decision which may produce a sense of injustice, for the sake of doing justice to the opponent or to other litigants: AON at [94]. Such an approach is consistent with the direction in s 37M(3) of the FCA that the Rules must be interpreted and applied, and any power conferred must be exercised or carried out, in a way that best promotes the overarching purpose — the just resolution of disputes according to law and as quickly, inexpensively and efficiently as possible: see s 37M of the FCA and AON at [97]–[98].

57    In the present case, the respondents’ complaints in relation to the FASOC filed on 22 June 2011 were, in my opinion, well founded. Not only were the amendments more extensive than the order permitted, but the particulars of calculation of loss and damage were wanting and retained, without any elucidation, the confusing goodwill allegation, which was potentially inconsistent with the claim underpinning the following particulars.

58    Further, as stated in the June reasons, the pleading of the ASOC was unsatisfactory in crucial respects, fully justifying the respondents’ complaints that its obscurities, confusing features (including the relationship of the loss and damage pleaded to the expert evidence served) and the omission of fundamental particulars did not permit them to prepare answering expert evidence. The respondents’ complaints remained unaddressed for a prolonged period without any satisfactory explanation.

59    In my opinion, the eleventh hour deletion of the goodwill particular from the PFASOC, which Tada (even had it obtained the respondents’ consent) required leave to serve, did not, in the context of the long-standing confusion generated by the three previous statements of claim, amplified by inconsistent or ambiguous statements in hearings and in correspondence, make clear how Tada put its case on loss and damage.

60    The cases on which Tada relied to oppose vacation of the trial date involved very different facts from those of this case, which entailed last minute repleading by the party resisting the vacation of trial date. The FASOC’s deficiencies, in my opinion, fully justified the striking out of at least paragraphs 12 and 16. Tada required leave to file and serve the PFASOC, which, save for the respondents’ concession that it could plead to it, may not have been granted, given the shifts in, and obscurity of, Tada’s loss and damage claim throughout four successive iterations. The need to vacate the trial date was, in my view, adequately explained and necessary in order to afford the respondents an adequate opportunity to prepare for trial, and to permit the case to be decided on its merits. While, as in almost every instance where a trial date is vacated, delay will be entailed, it was occasioned by the deficient or recast pleadings, associated delay and inadequate explanations of Tada. Accordingly, I ordered Tada to pay the respondents’ costs.

Associate:

Dated:    7 July 2011