123 259 932 Pty Ltd v Cessnock City Council [2021] NSWSC 1291

Supreme Court New South Wales

Medium Neutral Citation: 123 259 932 Pty Ltd v Cessnock City Council [2021] NSWSC 1291 Hearing dates: 5 October 2021 Decision date: 05 October 2021 Jurisdiction: Common Law Before: Adamson J Decision: The plaintiff's application to amend the statement of claim is refused. Catchwords: CIVIL PROCEDURE — Commencement of proceedings — Statement of claim — Application to amend statement of claim — Proceedings commenced in 2017 and application foreshadowed the week before commencement of hearing in 2021 — Potential prejudice to defendant if amendment allowed — Consideration of the just, quick and cheap resolution of proceedings and matters in Part 6 of the Civil Procedure Act 2005 (NSW) — The amendment would be a substantial amendment and put the defendant in a position where it is deprived of adequate time to consider the forensic consequences of the amendment — Amendment refused Legislation Cited: Civil Procedure Act 2005 (NSW), s 56 Cases Cited: Commonwealth v Amann Aviation Pty Ltd (1991) 174 CLR 64; [1991] HCA 54 Hadley v Baxendale (1854) 9 Exch 341; [1854] 154 ER 145 Category: Procedural rulings Parties: 123 259 932 Pty Ltd (Plaintiff) Cessnock City Council (Defendant) Representation: Counsel: D Williams SC / B Kaplan (Plaintiff) D Cook SC / G Ng (Defendant)

Solicitors: Dentons Australia Pty Ltd (Plaintiff) Holding Redlich (Defendant) File Number(s): 2017/295180

Judgment (ex tempore) 1. These proceedings were commenced on 29 September 2017 when the plaintiff, 123 259 932 Pty Ltd, filed its statement of claim. On 7 February 2021, the matter was set down for hearing for five days commencing 5 October 2021. In the period from the commencement of the proceedings until the date it was set down there were numerous directions hearings before the Registrar. 2. The plaintiff, by email sent to the defendant's solicitors at 6.48pm on Thursday, 30 September 2021, foreshadowed, for the first time, an amendment to its statement of claim, which seeks to add paragraphs 23A and 23B: "23A Further, and in the alternative, to the matters pleaded in paragraph 15 above, by reason of the matters pleaded in paragraphs 18-19 and 23 above, the Council repudiated its obligations under the Agreement. 23B By its correspondence to the Council dated 1 September 2015 and its conduct referred to therein, the plaintiff accepted the Council's repudiatory conduct and/or breaches of the Agreement, and terminated the Agreement." 1. In substance, the proposed amendment alleges that the defendant, Cessnock City Council, by reason of various matters pleaded elsewhere in the pleadings, repudiated its obligations under the agreement to lease with the plaintiff and that the plaintiff, by email sent on 1 September 2015, accepted the defendant's repudiation and terminated the agreement. 2. In response to that letter, the defendant's solicitors wrote at 11.11am the following morning, being Friday, 1 October 2021, being the last working day before the October long weekend, and sought particulars of the additional matters pleaded in order to allow, as they put it, "proper assessment of the proposed amendment." 3. In relation to paragraph 23B they sought particulars about the meaning of the word "and" and enquired whether the plaintiff's case would be that the sending of the correspondence, together with conduct referred to in that correspondence, constituted acceptance or whether it contended that either the sending of the correspondence or the conduct constituted the acceptance. 4. A response to that letter was not forthcoming until Monday, 4 October 2021 at 9.44pm, Monday being a public holiday. The response given by the plaintiff's solicitors was that the agreement for lease was terminated by the plaintiff by its insistence on a financial settlement and abandonment of its project. It was also alleged that the plaintiff insisted on a financial settlement in the email of 1 September 2015 and that the abandonment of the project occurred on the same date. 5. Mr Williams SC, who appears with Mr Kaplan on behalf of the plaintiff, contended that the effect of the amendment was merely to put a different complexion on the facts and to contend for a different legal consequence from those underlying facts. Mr Williams submitted that the amendment would add an alternative case to the plaintiff's primary case. He confirmed that he did not seek to adduce any further evidence on behalf of the plaintiff in support of the amendment and that, as I have said, the amendment would, as it were, constitute a platform for him to put arguments relating to the legal consequences of the correspondence and the conduct between the parties, which had already been the subject of extensive evidence. 6. Mr Cook SC, who appears with Mr Ng on behalf of the defendant, submitted that the proposed amendment was a very substantial one because it sought to attribute legal significance to what occurred in September 2015 and to the defendant's conduct at around that time. He submitted that the pleading was embarrassing because it purported to rely on matters which were out of sequence chronologically. Further, he submitted that the email sent by James Johnston on 1 September 2015 to Bronwyn Rumbel of the Council could not on its face bear the construction for which the plaintiff contended. 7. Leaving aside these matters, Mr Cook also submitted that if the amendment were allowed, his client would suffer very substantial prejudice, which would be irremediable unless an adjournment were granted. He submitted that an adjournment would be inappropriate, having regard to the circumstances, which included the lateness of the amendment application. 8. Mr Cook submitted that, had the original pleading contained allegations or had the additional allegations been added at an earlier time, there would be a host of matters which the plaintiff might have raised in response. 9. He said that the defendant might have relied on an election by the plaintiff to proceed with the contract between the period 30 September 2011 until 1 September 2015. Further, he said that there had been, in that period of four years, several meetings between the plaintiff and the defendant at which the plaintiff had insisted that the contract remained on foot. He submitted that it would have been open to the defendant, given adequate notice of the further allegations, to plead, in addition to an election to affirm, an estoppel, the effect of which would be that it was not open to the plaintiff to withdraw from the representation that negotiations between the parties were continuing, with a view to achieving a resolution. Further, he suggested that it may have been open to the plaintiff to allege a waiver of the right to terminate for breach on that ground, having regard to the events which occurred in the ensuing four years. 10. Mr Cook informed me that, had any of these matters been sought to be raised on behalf of the defendant, it would have been necessary for an evidentiary foundation to be made for them. He submitted that, whilst there was evidence before the Court as to what had occurred during those four years, it had not been adduced with an eye to those potential allegations. Accordingly, he submitted that, although the email of 1 September 2015 was annexed to Ms Rumbel's affidavit, which had been served by the defendant, there were other matters which would need to be the subject of evidence. He argued that careful consideration would need to be given to which matters in that period would need to be the subject of further evidence. Mr Cook indicated that in the time available he and his instructing solicitors had not been able to have regard to those matters or perform any detailed analysis of the effect of the amendment if granted, not only what the defendant could plead in response, but also on what evidence the defendant would wish to adduce to counter the plaintiff's allegation. 11. Mr Cook also raised the additional issue that as at 1 September 2015 Mr Johnston was not a director of the plaintiff company, which had not had directors since 2012. 12. Mr Cook submitted that the defendant would also be prejudiced by the late notice when it came to an assessment of damages in accordance with the rules in Hadley v Baxendale (1854) 9 Exch 341; [1854] 154 ER 145 or in in accordance with Commonwealth v Amann Aviation Pty Ltd (1991) 174 CLR 64; [1991] HCA 54, where reliance damages are appropriate, having regard to the difficulty, if not impossibility, of determining damages by reference to the rules in Hadley v Baxendale. 13. He submitted that the defendant has given careful consideration to meeting what is a complex case of damages by reference to the contrast between the position the plaintiff is in as a result of the alleged breach and the position the plaintiff would have been in but for the alleged breach. He submitted that if the amendment were allowed, there would be an entirely different algorithm, which would need to be adopted by the defendant to work out how to meet a different calculation of damages based on a wholly different counterfactual. 14. In response, Mr Williams submitted that the prejudice was more apparent than real and that Mr Cook's reaction was "theatrical". As Mr Williams put it, "all we are doing is giving legal complexion to the very same facts." 15. It is important that regard be paid to the just, quick and cheap resolution of proceedings. This requires amendments to pleadings to be made in a timely way to enable the other party to respond in order to preserve hearing dates. Were I to accede to the amendment application, there would be an inevitable denial of procedural fairness to the defendant if no adjournment was granted. 16. It has not been suggested by either party that an adjournment ought be granted. Nor has any application for adjournment been made. I understand this to be because of the parties' mutual understanding of the difficulties of adjournments being granted at such a stage of the hearing. 17. In determining the application, I am obliged to give effect to the overriding purpose: to facilitate the just, quick and cheap resolution of the real issues in the proceeding: Civil Procedure Act 2005 (NSW) (the Act), s 56. In deciding whether to grant the amendments, I need to consider the various matters referred to in Part 6 of the Act which are well known to the parties and which I will not list, having regard to the pressures of time. 18. The matters I need to take into account include the degree of injustice that would be suffered by the respective parties as a consequence of any order or direction; the use that any party may have made of the opportunity that has been available to take a particular forensic step; the degree of expedition which the parties have approached the proceedings; and the degree of difficulty or complexity to which the issues in the proceedings give rise. I am persuaded by Mr Cook that the amendment is a substantial amendment. I consider that in light of the fact that this is the first day of the proceedings, the defendant ought not be put into a position where it has been deprived of adequate time to consider the forensic consequences of the amendment. 19. I accept Mr Cook's representation that the amendment would require the defendant to adduce additional evidence and also to give consideration to the various matters that could be raised in pleading against the new allegations. In all of these circumstances, I am not satisfied that it is in the interests of justice to allow the amendment. Accordingly, the plaintiff's application to amend the statement of claim is refused.