CATCHWORDS PLEADING - JURISDICTION - Appeal from a refusal by the primary judge to allow an amendment to the Defence and Cross-Claim seeking to incorporate a plea of the time limitation prescribed by s.62(2) of the Trade Practices Act - amendment sought at a late stage in the proceedings - primary judge emphasised prejudice caused by delay in recommencing in the Supreme Court if proposed amendment was ultimately successful - HELD in exercising his discretion the primary judge erred in not taking into account the accrued jurisdiction of the Court to determine all of the matters in dispute between the parties once the jurisdiction of the Court was properly attracted. Trade Practices Act 1974 ss.52, 82(2) and 86. Philip Morris Incorporated v. Adam P, Brown Male Fashions Pty Ltd (1981) 148 C.L.R. 457 at 474 applied; A rown Ma ashions v. Philip Morris ated (1981) 146 C.L.R. 170 applied; al Pr ary Ltd v. Force (1983) 154 C.L.R. 261 applied; Carter and Others v. Eqq and Eqq Pulp Marketing Board (Vict) (1942) 66 C.L.R. 557 applied; Cleugh v. Froaq (1974) 4 A.L.R. 615 referred to; McMahon v. Smith (1986) 69 A.L.R. 527 applied; Dorotea Pty Ltd v. Christos Doufas Nominees Pty Ltd C1986] 2 Qa R 91 referred to; Brisbane velopne Corporat t: dv. Robe mn £1983] 2 Qd R 105 referred to; Cropper v. Smith (1884) 26 Ch. 700 referred to. Queensland G200 of 1966 v. VANCLEVE PTY LTD (as trustee for THE Vv. [ij UST) Northrop, Jackson and Gummow JJ. Brisbane 15th April 1987 IN THE FEDERAL COURT OF AUSTRALIA ) ) QUEENSLAND DISTRICT REGISTRY ) No. G200 of 1986 ) GENERAL DIVISION ) On Appeal from the Federal Court of Australia BETWEEN: DOROTEA PTY LTD Appellant AND: VANCLEVE PTY LTD (as trustee for THE VANCLEVE UNIT TRUST) Respondent CORAM: NORTHROP, JACKSON AND GUMMOW JJ. DATE: 15th April 1987 PLACE: Brisbane MINUTES OF ORDER UPON THE APPELLANT UNDERTAKING TO THE COURT that it will not apply to have the Court exercise its discretion not to hear and determine the claims in the accrued jurisdiction, and undertaking that it will not otherwise challenge the jurisdiction of the Court to hear and determine all matters in issue in these proceedings, THE COURT ORDERS THAT: 1. The appeal be allowed and the appellant be granted leave to amend the amended Defence and Cross-Claim in the manner set out in Exhibit "B" to the affidavit of Warwick Rutledge Chesters filed in the Court on 23rd October 1986. 2. The appellant pay the costs occasioned by such amendment and any costs thrown away by the fact that the pleading of s.82(2) of the Trade Practices Act 1s made now rather than when the Defence was originally delivered. 3. The appellant pay the costs of the proceeding the Primary Judge, but the respondent pay of the appeal. /: / NOTE: Settlement and entry of orders is dealt with in 17 AU Order 36 of the Federal Court Rules. : G 1987 FEDERAL COURT OF AUSTRALIA 7P CIPAL FEUISTRY IN THE FEDERAL COURT OF AUSTRALIA ) ) QUEENSLAND DISTRICT REGISTRY ) No. G200 of 1986 ) GENERAL DIVISION ) On Appeal from the Federal Court of Australia BETWEEN: DOROTEA PTY LTD Appellant AND: VANCLEVE PTY LTD (as trustee for THE VANCLEVE UNIT TRUST) Respondent CORAM: NORTHROP, JACKSON AND GUMMOW JJ. DATE: 15th April 1987 PLACE: Brisbane REASONS FOR JUDGMENT The Court: On 12th September 1984 Vancleve Pty Ltd (the respondent to the appeal but which we shall describe here as "the applicant") instituted proceedings in the Court seeking, on the grounds set out in the Statement of Claim, the following relief:- "(a) A declaration that three contracts entered into between the Applicant and the Respondent (the appellant) dated the llth day of August, 1981 were rescinded or made void by the Applicant on or about the 7th September, 1982; (b) Repayment by the Respondent (the appellant) to the Applicant of deposit monies of EIGHTEEN THOUSAND EIGHT HUNDRED DOLLARS ($18,800.00), 2. NINE THOUSAND EIGHT HUNDRED DOLLARS ($9,800.00) AND FIFTEEN THOUSAND THREE HUNDRED DOLLARS ($15,300.00) respectively; (c) Alternatively, damages pursuant to the provisions of the Trade Practices Act 1974; (d) Further or other relief pursuant to Section 87 of the Trade Practices Act 1974." The amended Statement of Claim filed on 17th October 1984 contains allegations that on llth August 1981 the applicant as purchaser entered into three contracts to purchase lots from Dorotea Pty Ltd ("the appellant") ina building units plan, the building to be named "Boulevard North". It alleges that 1n order to induce the applicant to enter into the agreements, representations were made to it by an officer of the appellant's real estate agent, orally and in writing, as to the features of Boulevard North, and that these representations, which induced the applicant to enter into the contracts, were untrue. It 1s further alleged that the representations were made fraudulently, and were misleading and deceptive or likely to mislead or deceive. The amended Statement of Claim goes on to allege that the applicant rescinded the contracts by the giving of notice of rescission and that the appellant has refused to refund the deposits. The appellant cross-claims for damages for breach of the contracts, claiming losses on resale and other losses. The appellant also has joined as cross-respondents, persons who are said to have guaranteed the performance by the applicant of its obligations under the contracts. 3. As is apparent from the resume which we have given, the jurisdiction of the Court which is invoked by the proceedings is (a) the (exclusive) jurisdiction conferred by s.86 of the Trade Practices Act 1974 1n respect of the claims under Part VI of that Act, and (b) the (concurrent) accrued jurisdiction of the Court in respect of the claims under the general law. At the time when the proceedings were instituted, there was in being Action No. 5160 of 1982 in the Supreme Court of Queensland between the same parties which had been commenced by the applicant as plaintiff on 15th October 1982. Although the pleadings in those proceedings are not before us it is not disputed that, with some differences of expression, the issues arising in those proceedings are now the issues arising in the the accrued jurisdiction. After the institution of the present proceedings the appellant applied to the Court by notice dated 2nd October 1986 seeking orders that the action be struck out or stayed pending the disposal of the Supreme Court proceedings or that those proceedings be stayed pending the applicant giving an undertaking to discontinue those proceedings and pay the appellant's costs. On 19th October 1984 the applicant gave the Court an undertaking to discontinue the proceedings in the Supreme 'Court and to abide by any order which that Court made in relation to costs of those proceedings. The undertaking 4. having been given, Spender J. went on to give directions as to the future conduct of the proceedings, the directions being designed to have the matter ready for trial in February 1985. It may be noted in passing that the proceedings in the Supreme Court were discontinued on 17th'December 1984 and the applicant was ordered to pay the appellant's costs, which it has done. The appellant delivered a Defence and Cross-claim on 17th October 1984 and an amended version of that pleading on 13th October 1985. In neither version was reliance placed on s.82(2) of the Trade Practices Act which provides that:- "(2) An action under sub-section (1) may be commenced at any time within 3 years after the date on which the cause of action accrued." (See also, since 18th Decemper 198€, s.&87(1CA)). By notice dated 23rd October 1986, the appellant sought orders for leave to amend the amended Defence and Cross-claim by adding a paragraph 4A as follows.- "GA, (a) Insofar as the applicants rely upon s.82(1) of the Trade Practices Act, their cause of action thereunder accrued more than three years prior to the date of commencement of this action; (bd) Insofar as the applicants rely upon s.87(1) or 87(1A) of the Trade Practices Act, they are precluded from so doing by the matters referred to in subparagraph (a) hereof." The hearing of the motion took place before Spender J. and on 19th November 1986 was refused. The appellant, having obtained leave to appeal, now appeals from that decision. 5. Various matters have been urged in support of the appeal but it 1s necessary, in our view, to deal only with one, namely the contention that his Honour did not take into account that, whether or not the plea raised by the proposed paragraph 4A was successful, the whole of the matter might yet have proceeded to judgment in this Court rather than in the Supreme Court. We might say that the appellant made it clear before the primary Judge and before us that if the amendment were granted, it would not seek to have the Court exercise its discretion to refuse to proceed with the claims in the accrued jurisdiction, In order to understand what 1s comprehended by the submission, 1t 18 necessary to turn to his Honour's reasons for judgment, which we shall now do. In those reasons his Honour said that were 1t not for:- the circumstance of the Supreme Court proceedings, and the manner in which the matter was dealt with early in its life in the Federal Court, there would be much to be said for the view that the amendment should be allowed, notwithstanding the very late stage at which it 1s brought". The reference to "the manner in which the matter was dealt with early in its life in the Federal Court" appears to be a reference to the giving of the undertaking to discontinue the Supreme Court action to which we have referred. His Honour said that he accepted that the fact that the amendment sought was to raise a plea of the limitation period did not mean that the principles applicable to leave to amend generally were not applicable and proceeded:- 6. "In this particular case, the question of limitation was said not to be adverted to by the respondent at any time up until the recent past. In all probability, this point would not have arisen if the trial had occurred in 1985. Had it been referred to in late 1984 and, indeed, if it had been pleaded when the defence was delivered in November 1984, what the applicant would then have done 1s a matter of some speculation. ° I am satisfied that, by not having had the opportunity to consider what ought properly to be done in the light of that pleading at that time, it has suffered, or may very well have suffered prejudice that cannot be compensated by costs. If the applicant 1s to recommence in the Supreme Court, I am not satisfied that there would not be some delay between now and a time the matters in the Supreme Court are heard. At least five years extra delay to the applicant will have been occasioned if it chooses to re-commence in the Supreme Court. That length of time, 1n my opinion, is pregnant with prejudice, although many of the difficulties are imponderable." What appears to underlie his Honour's reasons is the view that if the terms of s.82(2) had been pleaded when the Defence and Cross-claim was first delivered, the applicant would then have been abie, if 1t chose, to seek the leave of the Court to be released from the undertaking it had given and that the action in the Supreme Court would not have been discontinued in December 1984. The action in the Supreme Court would then have proceeded to trial and should have been disposed of by now. Whilst we accept that if the plea of s.82(2) had been made in the Defence and Cross-Claim filed in 1984 the applicant might have applied for leave to be released from its undertaking we are far from satisfied that such leave would or should have been granted, 7. Upon the institution of the proceedings in the Court, the Court acquired jurisdiction to deal with, and was the only court having jurisdiction to deal with, the whole of the matter being the controversy between the parties (Bargal Proprietary Limited v. Force (1983) 154 C.L.R. 261 at 298). The Court does not lose jurisdiction over the claims in the accrued jurisdiction because the plea of a time limitation may mean that the applicant will fail on the issue which attracted federal jurisdiction (Carter v. Eqg and Eqq Pulp Marketing Board (Vict.) (1942) 66 C.L.R. 557, Philip Morris Incorporated v. Adam P. Brown Male Fashions Pty Ltd (1981) 148 C.L.R. 457 at 474, McMahon v. Smith (1986) 69 A.L.R. 527 at 531-532). Nor does there seem any particular reason why an applicant should be permitted to be released from such an undertaking given to avoid a multiplicity of proceedings merely because when a Defence is served it appears that a plea has been made which, 1f persisted in, may defeat the claim which attracted the Court's jurisdiction. Further we do not think that there is any reason why, 1f the appellant is now permitted to plead s.82(2), new proceedings in the Supreme Court should be commenced. This Court, as we have said, has jurisdiction to determine all issues in the proceedings. We are conscious that the order made by his Honour dealt with a question of practice and procedure but the resolution of the issue is one of importance. It is of importance because, in the manner in which the applicant's case is pleaded, it will be necessary for the applicant to establish that the representations sued on were made 8. fraudulently if it cannot rely on s.52 of the Trade Practices Act. That is so because paragraphs SA and SB of the Defence and Cross-Claim plead as a defence to the claim a term of the contracts whereby the applicant acknowledged that 1t had not relied on any representations by the appellant or its agents in entering into the contract. Such a term, if decisions of the Supreme Court such as Dorotea Pty Ltd v. Christos Doufas Nominees Pty Ltd [£1986] 2 Qd. R. 91 and Brisbane Unit Development Corporation Pty Ltd v. Robertson £19833 2 Qd. R. 105 correctly state the law, 1s effective to bar reliance on innocent misrepresentation under the general law. The term is not effective, of course, to bar reliance on s.52. In our view the primary Judge has erred in not taking into account the fact that the Court has jurisdiction to, and should, continue to deal with the matter, and we regard the case as one where the effect of the order appealed from has been to create injustice in the sense used 1n Adam P. Brown Male Fashions Pty Ltd v. Philip Morris Incorporated (1981) 148 C.L.R. 170 at 177. ='In these circumstances we would allow the appeal and set aside his Honour's decision refusing leave to amend. It is then a matter for the Court to exercise its own discretion on the application. In our view 1t is clear that the case is one where there is no reason why the amendment should not be allowed. As Bowen L.J. said in Cropper v. Smith (1884) 26 Ch. D. 700 at 710 in a passage adopted by McTiernan A.C.d., Menzies, Gibbs and Mason JJ. in Clough v. Frog (1974) 9. 4 A.L.R. 615 at 6198 in relation to an application for leave to amend to add a plea of a limitation statute:- "The principle according to which this power 1s to be exercised was stated by Bowen LJ in Cropper v. Smith...: ".,. the object of courts is to decide the rights of the parties, and not to punish them for mistakes they make in the conduct of their cases .... I know of no kind of error or mistake which, 1f not fraudulent or intended to overreach, the court ought not to correct, if it can be done without injustice to the other party .... as soon as it appears that the way in which a party has framed his case will not lead to a decision of the real matter in controversy, it is as much a matter of right on his part to have it corrected, 1f it can be done without injustice, as anything else in the case is a matter of right." It 1s equally clear, however, that there should be some terms imposed on the grant of leave to amend. One such term, of course, should be that the appellant pay in any event any costs occasioned by the amendment and any costs thrown away by the fact that a time limitation 1s pleaded now rather than when the first Defence and Cross-Claim was delivered. Since it is likely that the applicant would be out of time to institute fresh proceedings in the Supreme Court after llth August this year, a further requirement should be the giving of an undertaking that the appellant will not apply to the Court to seek to have the Court exercise its discretion not to hear the claims in the accrued jurisdiction, and will not otherwise seek to challenge the Court's jurisdiction. In our opinion the appeal should be allowed, the order of the primary judge set aside and in lieu thereof it be ordered that upon the appellant undertaking to the Court that it will not apply to have the Court exercise its discretion not to proceed to hear and determine the claims in the accrued 10. jurisdiction, and undertaking that 1t will not otherwise challenge the jurisdiction of the Court to hear and determine all matters in issue in these proceedings, the appellant be granted leave to amend the amended Defence and Cross-Claim in the manner set out in Exhibit "B" to the affidavit of Warwick Rutledge Chesters filed in the Court on 23rd October 1986. We would also order that the appellant pay the costs occasioned by such amendment and any costs thrown away by the fact that the pleading of the time limitation of the Trade Practices Act is made now rather than when the Defence was originally delivered. The appellant should pay the costs of the proceedings before the primary Judge, but the respondent should pay the costs of the appeal. I certify this and the 9 preceding pages are a true copy of the Reasons for Judgment herein of the Court. Associate: Mare ante . Date: 15th April 1987. Counsel for the Appellant: Mr E. Lennan Q.C. with Mr C. Newton Solicitors for the Appellant: McDonald Balanda and Chesters Counsel for the Respondent: Mr J. Griffin Q.C. with Mr J. Sheahan Solicitors for the Respondent: Hawthorn Cuppaidge and Badgery Date of hearing: 13th April 1987