CATCHWORDS PRACTICE and PROCEDURE - leave to amend defence to cross-claim - amendment foreshadowed - whether other party can meet matters raised - whether other party will suffer prejudice Gentry Brothers Pty Ltd v Wilson Brown & Associates Pty Ltd & Ors No QG93 of 1992 Kiefel J Brisbane 21 February 1995 IN THE FEDERAL COURT OF AUSTRALIA QUEENSLAND DISTRICT REGISTRY GENERAL DIVISION No. QG93 of 1992 BY ORIGINAL ACTION BETWEEN: GENTRY BROTHERS PTY. LTD. Applicant AND: WILSON BROWN & ASSOCIATES PTY. LTD. First Respondent AND: BRUCE JAMES BROWN Second Respondent AND: ANSCAPE PTY. LTD. Third Respondent AND: BRIAN JOHN CLARKE Fourth Respondent AND BY FIRST CROSS CLAIM BETWEEN: ANSCAPE PTY. LTD. First Cross Claimant AND: BRIAN JOHN CLARKE Second Cross Claimant AND: GENTRY BROTHERS PTY. LTD. First Cross Respondent AND: JAMES GENTRY Second Cross Respondent AND: CIARAN GENTRY Third Cross Respondent AND: WILSON BROWN & ASSOCIATES PTY. LTD. Fourth Cross Respondent AND: BRUCE JAMES BROWN Fifth Cross Respondent AND BY SECOND CROSS CLAIM BETWEEN: WILSON BROWN & ASSOCIATES PTY. LTD. First Second Cross Claimant AND: BRUCE JAMES BROWN Second Cross Claimant AND: GENTRY BROTHERS PTY. LTD. First Second Cross Respondent AND: JAMES GENTRY Second Second Cross Respondent AND: CIARAN GENTRY Third Second Cross Respondent JUDGE MAKING ORDER: Kiefel J. DATE OF ORDER: 21 February 1995 WHERE MADE: Brisbane MINUTES OF ORDERS THE COURT GRANTS LEAVE: 1. To the first and second respondents to further amend the defence to the amended first cross-claim in terms of Exhibit 68. THE COURT ORDERS THAT: 2. The third and fourth respondents' costs of and incidental to the application to amend the defence to the first cross-claim, including costs associated with argument on 16 and 17 February 1995, be paid by the first and second respondents to be taxed. NOTE: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA QUEENSLAND DISTRICT REGISTRY GENERAL DIVISION No. QG93 of 1992 BY ORIGINAL ACTION BETWEEN: GENTRY BROTHERS PTY. LTD. Applicant AND: WILSON BROWN & ASSOCIATES PTY. LTD. First Respondent AND: BRUCE JAMES BROWN Second Respondent AND: ANSCAPE PTY. LTD. Third Respondent AND: BRIAN JOHN CLARKE Fourth Respondent AND BY FIRST CROSS CLAIM BETWEEN: ANSCAPE PTY. LTD. First Cross Claimant AND: BRIAN JOHN CLARKE Second Cross Claimant AND: GENTRY BROTHERS PTY. LTD. First Cross Respondent AND: JAMES GENTRY Second Cross Respondent AND: CIARAN GENTRY Third Cross Respondent AND: WILSON BROWN & ASSOCIATES PTY. LTD. Fourth Cross Respondent AND: BRUCE JAMES BROWN Fifth Cross Respondent AND BY SECOND CROSS CLAIM BETWEEN: WILSON BROWN & ASSOCIATES PTY. LTD. First Second Cross Claimant AND: BRUCE JAMES BROWN Second Second Cross Claimant AND: GENTRY BROTHERS PTY. LTD. First Second Cross Respondent AND: JAMES GENTRY Second Second Cross Respondent AND: CIARAN GENTRY Third Second Cross Respondent CORAM: Kiefel J. DATE: 21 February 1995 PLACE: Brisbane REASONS FOR JUDGMENT I have before me now an application for leave to amend the first and second respondents' defence to the claim brought against them by the third and fourth respondents. This amendment was foreshadowed, from recollection, last Thursday, and was the subject of discussion on Friday. An essential feature of it is that the Carrara property, owned at the relevant time by the fourth respondent, was exchanged pursuant to the transaction with the applicant for Rosewood Island, and that any loss suffered by the third or fourth respondent would be calculated by reference to the value of the property and not the stated contract sum of $1.3 million. These matters have been the subject of considerable discussion during the conduct of this case. The question of the true value of the Carrara property was always an issue in the case as between the applicant and the third and fourth respondent, it being the applicant's case from an early time that there had been a misrepresentation as to its true value by the third and/or fourth respondent. As a result, valuations were prepared by the parties as to that property, and an exchange of valuations was the subject of a direction in early 1993. An affidavit by the solicitor for the first and second respondents also discloses that there has in fact been a recent exchange of reports between the respondents. It seems that a number of valuations of the Carrara property were in fact obtained by the third and fourth respondents. It seems clear that the third and fourth respondents, have their own valuation evidence as to the value of the Carrara property. Further, Mr Lee of counsel, who appears for the third and fourth respondents, said that those respondents were prepared to meet the issue as to the value of the property raised by the applicant, Gentry Brothers, when the case first commenced last Monday. The applicant did not, however, appear at the commencement of the hearing and the issue thus raised with respect to the Carrara property by the applicant has not been pursued in evidence. But it seems to me that the central question in relation to leave to amend is whether or not the third and fourth respondents can meet by way of evidence the matters raised. In this respect, the only further evidence that would need to be adduced is that with respect to the value of the Carrara property. I am unable to understand why it is now said that the third and fourth respondents are unable to meet the issue as to damages raised. My enquiries of Counsel did not elicit any real basis. I do not see that there is any prejudice to the third and fourth respondents in permitting this issue to be raised, and in permitting the calling of evidence as to the value of the Carrara property. It seems to me, on the material before me, that what may have occurred is that the third and fourth respondents were prepared to accept the valuations they had then received as accurate, but that they expected any issue as to value to have disappeared with the applicant. That misconceives, I consider, what may well be the proper measure of the third and fourth respondents' damages to which the Court must have regard. Indeed this was a matter raised by me earlier, at a point when an enquiry was made as to who, as between the third and fourth respondent, had truly suffered a loss, although it is clearly preferable that an allegation that the damages of a particular party ought to be measured by reference to different facts should be specifically pleaded. But as I have said, with respect to that question, it does not appear to me that the third and fourth respondents suffer any prejudice with respect to the evidence necessary to be called as a result. I propose to allow the amendment sought. It remains for argument at the conclusion of the trial as to whether the loss suffered, if any, by the third or fourth respondents is taken to be measured by the property conveyed, the Carrara property, or whether regard ought to be had to the amount appearing on the face of the contract of $1.3 million. The question of the true measure of damages is, however, I consider a very important one, and that has partly influenced my view that the matter ought to be properly clarified on the pleadings. I should indicate that if Mr Lee for the third and fourth respondents can satisfy me at any point, and by reference to evidence, that there is any real prejudice in the conduct of his case in meeting the allegations thus raised, I will be prepared to consider an application for an adjournment. But the trial has advanced to a point where a proper use of time allocated would be to conclude the evidence of other witnesses. As I have said, however, I will hear an application for an adjournment or for further hearing with respect to any additional evidence if Mr Lee is able to explain to me why it is now necessary. I should also make it plain, since for some reason the third and fourth respondents continue to appear confused about this, that on the third and fourth respondents' case for damages, there remains the question as to who in fact suffered loss; that is, as between Anscape and Mr Clarke. There will be leave to amend the defence to the amended first cross-claim in terms of the pleading which has been handed to me and which I will make an exhibit in the proceedings. I certify that this and the preceding five pages are a true copy of the reasons for judgment herein of the Honourable Justice Kiefel. Associate Date: 21 February 1995 Counsel for the first and second respondents: Mr D.G. Ryan Solicitors for the first and second respondents: Thynne & Macartney Counsel for the third and fourth respondents: Mr J.W. Lee Solicitors for the third and fourth respondents: Ffrench Wright & Dennett Date of Hearing: 16, 17, 21 February 1995 Place of Hearing: Brisbane Date of Judgment: 21 February 1995