HOLDEN v WYONG SHIRE COUNCIL SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL KIRBY P, MAHONEY and PRIESTLEY JJA 10-1 May 1988, 9 June 1988 [1988] NSWCA 65 PRACTICE & PROCEDURE — pleading — motion to amend statement of claim — application to add claim in negligence against local government authority based on events of 1974 — judge rejects amendment as futile on the ground that the claim is statute barred — on appeal, counsel concedes claim not statute barred — seeks to support judgment which followed below upon the ground that proposed cause of action was "obviously untenable" — seeks order for continuance of first trial before original trial judge held: (1) following abandonment of limitation defence by authority, which was the basis of the judgment at the trial, the discretion to refuse amendment miscarried requiring retrial; (2) claim made not so unarguable as to attract jurisdiction to strike out the amended statement of claim under General Steel Industries Inc v Commissioner for Railways (NSW) & Ors (1964) 112 CLR 125; Mathaman vy Nabalco Pty Ltd (1969) 14 FLR 10 applied; (3) (semble) no power or inappropriate for Court of Appeal to order retrial before a particular judge. Lockyer v Macready & Anor (1965) 66 SR (NSW) 369, 382; Escobar v Spindaleri & Anor (1986) 7 NSWLR 51, 58 distinguished; (4) retrial in the Common Law Division ordered. LIMITATION OF ACTIONS actions statute barred — whether defence a privilege that may be waived — Limitation Act 1969, s14 — action "not maintainable" whether duty in a court to determine that action is "maintainable" where trial judge has held action statute barred but parties agree that defence on the statute is unavailable held: in the circumstances of the case and having regard to the concession made, the Court could act upon the concession of the party which was the beneficiary of the earlier finding of a limitation bar now not pressed — cases of illegality distinguished — Staniland v Kentucky Homes Pty Limited, unreported, CA, 2 December 1987; (1988) NSWJB 17 referred to. JUDGMENTS & ORDERS — Court of Appeal — order of trial judge set aside — whether Court can or should return proceedings to a particular judge in the Common Law Division — considerations of public and private costs of lengthy trial held: without deciding finally the power of the Court of Appeal to do so, such an order would not be appropriate in the present case. Local Government Act 1919, s580. Limitation Act 1969, s14. Supreme Court Act 1970, s51, s75A(10), s51(4). Supreme Court Rules Pt20 r1(2); Pt31 r2. ORDERS 1. The appellant to have leave to amend the notice of appeal to add a new ground namely:- "3. That in refusing an application to amend paragraphs 8, 9 and 10 of the statement of claim, his Honour erred in law by misdirecting himself as to the application of s580 of the Local Government Act 1919 and the Limitation Act 1969, as applying to defeat the utility of the amendment." 2. Appeal allowed. 3. Judgment of Lee J of 24 July 1985, set aside. 4. The appellant (plaintiff) has leave to amend the statement of claim in the terms set out in the notice of motion appearing on pages 9-11 of the appeal book. 2 UNREPORTED JUDGMENTS 5. Proceedings remitted to the Common Law Division for retrial. 6. The costs of the appeal and of the first trial to be costs of the second trial. Kirby P This case has had a most unfortunate history in which the present appeal is but the latest development. Remarkably, it relates to events which occurred as long ago as 1974 and 1977. It comes to this Court on appeal from a judgment which Lee J entered in July 1985. Unfortunately, as a result of these proceedings, the saga of the litigation is not concluded. Claim against the Council In order to explain the issues involved in the appeal, it is necessary to state briefly the nature of the appellant's claim against the respondent. In 1979, the appellant purchased a two storey house in Berkleyvale, near Wyong. Early in 1981, the downstairs floor of the house was flooded after heavy rain. On 8 July 1983, the appellant commenced proceedings against the Wyong Shire Council (the respondent) alleging that it had been negligent in giving approval in 1977 to building works. It had done so pursuant to plans and specifications lodged by the then owners of the house, Mr and Mrs Goodridge. Originally, the appellant joined Mr and Mrs Goodridge in her proceedings, claiming damages from them for allegedly fraudulent misrepresentation However, those proceedings were settled during the course of the trial. Judgment was entered in favour of Mr and Mrs Goodridge. The trial proceeded against the respondent alone. On the third day of the trial, which lasted six days, counsel for the appellant sought to tender certain records of the respondent relating to approvals it had given for the original erection of the house in 1971. The original owner of the house had been a Mr McCully. The respondent's counsel objected to this tender. He likewise objected to the tender of documents relating to the carrying out in 1974 of certain inspections incidental to the approval by the respondent of alterations authorised by it upon the application of Mr McCully. The grounds of the objection in each case was that the evidence was irrelevant to the cause of action as pleaded, confined as this was to negligence allegedly arising out of the events of 1977 Lee J took the sensible course of admitting the evidence tendered by the appellant, reserving until later in the trial a ruling as to its relevance. The appellant continued to press for amendment of her statement of claim to enlarge the al legation of negligence against the respondent to include not only the application made in 1977 but also the earlier application in 1974. As recorded by Lee J, the respondent "took the position that, if the amendment were to be granted, the cause of action would be statute-barred under s580 of the Local Government Act". No other ground for denying the amendment sought by the appellant was recorded by Lee J. In particular, no submission was made to his Honour or recorded by him that the amendment sought, in the terms proffered by the appellant, was "manifestly untenable" or "clearly unarguable", as not disclosing, on its face, a cause of action. Ruling on the limitation defences It was the reliance of the respondent on the limitation defence which led, on the last day of the trial, to Lee J's judgment rejecting the claimant's application to amend her statement of claim. In short, his Honour upheld the respondent's submission. In the course of explaining his reasons, Lee J recorded:- The defendant.. I should mention, has not completed calling all the evidence on which it would intend to rely, if the court held that s580 did not apply. URJ HOLDEN v WYONG SHIRE COUNCIL (Kirby P) 3 Although the transcript of evidence is ambiguous, this statement was confirmed as correct by counsel for the respondent. In his judgment, Lee J held that the application by the appellant to amend her statement of claim to include reliance on the alleged acts and omissions of the respondent in 1974 should be refused. His Honour reached this conclusion for two stated reasons. Principally, he relied on the provisions of s580 of the Local Government Act. Although this section has been repealed by the Notice of Action and Other Privileges Abolition Act 1977, effective from August of that year, such repeal did not, by s3, affect causes of action which had occurred before the Act of 1977. Lee J held that, s580 not having been complied with, the claim of the appellant in respect of the events of 1974 was barred, making an amendment of the statement of claim to permit the appellant to raise such a claim futile. Secondly, his Honour observed that, even if s580 of the Local Government Act had not applied, the proposed cause of action which the appellant had sought to raise would have been out of time under the "usual six year period applicable to tort actions". This was presumably a reference to s14 of the Limitation Act 1969. Having refused to allow the appellant to enlarge her case to rely upon the events of 1974, Lee J peremptorily dismissed the case which remained, in so far as it relied on the events of 1977. In respect of these, his Honour expressed himself quite shortly:- I am wholly at a loss to understand how the approval given to the erection of the window and brick section across which the roller door was, [in 1977] can have any relationship at all to the flooding of the premises, and in the circumstances I am of the opinion that the plaintiff has not made out a case in negligence against the defendant. His Honour thereupon entered judgment in the action in favour of the respondent. It is from that judgment that the appellant appeals. Amendments to the statement of claim The appellant's notice of appeal as originally framed did not, in terms, include a specific challenge to Lee J's refusal to permit amendment to the statement of claim to rely upon the events of 1974. The two grounds of appeal referred to in the notice of appeal were, respectively, that his Honour had erred in holding that the proceedings were barred by s580 of the Local Government Act 1919 and/or by s12 (by which I take it to mean s14) of the Limitation Act 1969. The only such holdings were those relating to the events of 1974, those relating to the events of 1977 having been rejected on an entirely different basis. The appeal originally came before this Court differently constituted (Hope, Mahoney and Priestley JJA) on 14 October 1977. On that occasion, the issue of the limitation defences (if I may so call them) was very much alive. However, the Court made it clear that, in order to determine the limitation questions, it might need to know specifically the precise nature of the cause of action upon which the appellant relied. Only by specification of that cause of action, with particularity, would the Court be able to judge whether an injustice had occurred by reason of Lee J's rejection of the appellant's application to amend. The Court also permitted the appellant to add a ground of appeal challenging the judgment entered by Lee J in respect of the events of 1977. Otherwise, the appeal was stood over to permit the appellant to specify more precisely the alleged cause of action, excluded by Lee J. The original specification, and that rejected by Lee J appears in the appeal book. I will not reproduce it. Relevantly, it recounts that the respondent had in January 1974 approved an application to convert the open area under the elevated 4 UNREPORTED JUDGMENTS portion of the house later owned by the appellant, to a rumpus family room and, as well, the rear of the garage to a tool room. The draft amended statement of claim proceeds that, by this approval in 1974, the respondent:- "wrongfully consented to and permitted the floor level of the downstairs portion to be at a level which was and is lower than the level of the road to the front of the dwelling and the flood level of the contiguous Lake Tuggerah". As a consequence of the 1974 approval, together with the approval in 1977 which is not separated but included in the one claim, it was alleged that the appellant, having purchased the house by transfer from previous owners, had suffered damage by water penetration in 1981 for which the respondent was liable. There was no specific allegation in the amendment proposed to Lee J that the appellant had relied upon approvals or other acts or omissions on the part of the Council, as a consequence of which she had suffered damage. To the extent that such reliance was an ingredient of her claim, it was left to inference in the way the draft amended statement of claim presented to Lee J was expressed. Following the observations of the Court in October 1987 and the adjournment which followed, the appellant prepared a draft further amended statement of claim. This was sent to the solicitors for the respondent within the time fixed by the Court. It includes a claim that the respondent had issued a certificate under s317A of the Local Government Act 1919. This reference was made in an apparent attempt to erect a case based on decisions such as L Shaddock & Associates Pty Limited & Anor v Parramatta City Council (1981) 150 CLR 225. However, when the appeal came on for hearing, it was admitted for the appellant that such a certificate could not be proved. Those parts of the draft further amended statement of claim were abandoned. The new draft acknowledged that the appellant had no knowledge of the events which had occurred prior to her purchase of the house nor of dealings between her predecessors and officers of the respondent. This acknowledgment appears to rule out any allegation of specific reliance upon acts or omissions of the respondent or its employees resulting in her damage. Nevertheless, there appears in para 20 of this draft, for the first time, a specific allegation of a more general reliance:- 20. Additionally or alternatively... at the time when the Plaintiff purchased the residence, she reasonably relied upon the Council having exercised its said powers and discharged its said duties with all due and proper care in respect of all or any building applications made to it by previous owners relating to the lands and the residence. (emphasis added). Whether this allegation of general reliance would be sufficient, if proved, to sustain the appellant's case in negligence against the respondent was not the subject of full argument before this Court. Suffice it to say that the law upon this subject is developing. Indeed it has developed since the matter was before Lee J. It is sufficient to refer in this connection to Sutherland Shire Council vy Heyman & Anor (1984-5) 157 CLR 424, 463; Hawkins v Clayton & Ors, unreported, HCA, 8 April 1988 and Parramatta City Council v Lutz, unreported, CA, 14 March 1988; (1988) NSWJB 23. See also S Quinlan and D Gardiner, "New Developments with Respect to the Duty of Care in Tort" (1988) 62 ALJ 347. As demonstrated during argument, the issues raised by these decisions as they affect the basis and limit of the liability of local authorities in cases such as the present, are not without difficulty. URJ HOLDEN v WYONG SHIRE COUNCIL (Kirby P) 5 Abandonment of limitation defences The immediate question facing this Court was posed on the return of the appeal, by the application of the appellant for leave to amend the grounds of appeal specifically to challenge Lee J's refusal to permit her to rely upon the allegedly negligent conduct of the respondent and its employees in 1974 Upon analysis of his Honour's reasons for rejecting the amendment sought, it is clear that Lee J did not do so upon the basis that the draft amended statement of claim did not disclose a cause of action. Nor did he refuse the application upon other discretionary grounds. The only Consideration relied upon by Lee J for the decision to refuse amendment was the intervention, as his Honour concluded, of two limitation bars, either of which was fatal to the prosecution of the appellant's case based upon the events of 1974. It is now necessary to record an unusual development which occurred in the course of the re listed hearing of the appeal. At the outset, the respondent conceded that it would no longer rely upon either of the limitation defences. It confirmed that it did not seek to uphold Lee J's judgment, or his Honour's refusal to allow the amendment sought, by reference either to s580 of the Local Government Act 1919 or s14 of the Limitation Act 1969. Subject to one consideration which I will mention immediately, the position of the respondent in abandoning the limitation defences is, in my view, determinative of the outcome of the appeal. To the extent that Lee J clearly relied upon the limitation defences in exercising his discretion to refuse the amendment sought by the appellant, and to the extent that the respondent now concedes that its arguments in that regard were erroneous in law, Lee J's discretion will have miscarried. It is then for this Court to exercise its own discretion in respect of the application for amendment made to his Honour, by reference to the relevant criteria. The consideration which I have reserved was raised by the Court during argument. It is not related to the provisions of s580 of the Local Government Act 1919 but to the new terms in which s14 of the Limitation Act 1969 is expressed. Formerly the privilege to raise a defence of the descent of the general limitation bar was enjoyed by the party protected by the bar. The defence could be waived. There was no duty in a court, of its own motion, to raise it. Now, by the terms of sl4 of the Act of 1969, actions after the descent of the bar are "not maintainable". In the light of this change, the court raised the question whether there was any responsibility in the Court itself, notwithstanding the concession of the respondent, to consider whether the appellant's action in respect of the events of 1974 was "not maintainable", as Lee J had held. This question was not fully argued. It would appear clear that the considerations of public policy which require initiatives by a court where illegality is raised by evidence, although not tendered as an issue by the parties, do not exist in cases where a possible limitation bar may have descended. Cf Staniland v Kentucky Homes Pty Limited, unreported, CA, 2 December 1987; (1988) NSWJB 17. I am prepared to approach this appeal upon the basis which the parties invite the Court to accept. Normally, it is for parties to select the issues for determination in a civil trial. Before Lee J, the respondent pressed two limitation defences to resist the appellant's application for leave to amend her statement of claim. Before this Court, those defences were conceded to be unavailable to the respondent and withdrawn. 6 UNREPORTED JUDGMENTS The respondent is advised by senior counsel and by other experienced legal representatives In such circumstances, I do not consider that there is an obligation in the Court to reach its own independent conclusion in a difficult area of the law, unaided by a real contest on the question. I will therefore approach the appeal on the footing that the respondent concedes that its earlier reliance on the limitation defences in respect of the 1974 events was erroneous. I should, however, record that I proceed in this way without having reached any independent conclusion that Lee J was wrong. In the course which the appeal has taken, I consider that I should act upon this concession, made as it plainly is, against the interest of the respondent. Approaching the appeal in that way, it is clear that the respondent necessarily concedes that Lee J's exercise of his discretion in refusing the amendment sought by the appellant miscarried. Clearly, it was influenced by the consideration of the limitation defences now abandoned. It is upon this basis that I therefore consider the appellant's proceedings before this Court. The first of these was a motion to have leave to amend the notice of appeal to include a specific ground of appeal raising the refusal by Lee J to permit the appellant to amend the statement of claim. Interlocutory and final orders It is true that the application which was made to Lee J occurred at a late stage in a trial which was already delayed. It is also true that, if allowed, it might have necessitated further evidence, at least from the respondent and possibly from the appellant too. However, as Lee J recorded, and as the transcript shows, the evidence was not concluded when the application was made. Much evidence had already been admitted, over objection, in relation to the events of 1974. The object of the amendment, which had been foreshadowed on the third day of the trial, was to permit the appellant to express in proper form the legal category into which she sought to classify the facts proved. Amendments to pleadings for such purposes are now more readily given than was formerly the case so that the real issue in contest may be finally resolved. Indeed this is now encouraged by the Rules. See SCR Pt20 r1(2). See Burchett v Kane [1980] 2 NSWLR 266, 278. There is no hint in Lee J's judgment that his Honour would have declined the amendments sought, except for the view which he had reached about the limitation defences. Accordingly, upon the approach stated above, I would conclude that the appellant ought to have had leave to make the amendment sought. There is a real risk of injustice in denying her such leave. Once granted, her claim in respect of the respondent's alleged acts and omissions of 1974 would be an issue to be determined, on its merits, the limitation defences being put aside. A question arose before this Court as to whether the appellant required leave to appeal from Lee J's refusal to allow the amendment sought. It was urged by the respondent that such leave was necessary because the decision challenged was interlocutory in nature. However, in my view such leave is not required. The decision to refuse to permit the amendment of the statement of claim was the basis upon which his Honour limited the appellant's case to the events of 1977. Upon the case so limited, his Honour entered final judgment for the respondent. There is an appeal as of right from that judgment. Such appeal may include, amongst its grounds, grounds relating to various interlocutory orders and rulings made on the way towards the final judgment. These include the decision by Lee J to decline to allow an amendment to the statement of claim. URJ HOLDEN v WYONG SHIRE COUNCIL (Kirby P) 7 It is true that his Honour dealt on the merits with the appellant's claim based on the events of 1977. But he did not, in the course which the trial took, conclude the evidence or deal with the merits of the appellant's claim based upon the events of 1974. The grounds of appeal as originally filed clearly enough relate to the rejection of the application to amend to enlarge the claim to refer to those events. Insofar as there was any doubt that there was an adequate challenge to that ruling, the Court considered it appropriate to permit the appellant to amend the notice of appeal to remove that doubt. No question of leave to appeal, as distinct from leave to amend the notice of appeal, arises. The notice of contention In advance of the final hearing in the Court of Appeal, the respondent filed a notice of contention. By this, it sought to support the judgment which Lee J entered upon a ground different from that given by his Honour. In essence, this was that, on the face of the amended statement of claim proposed by the appellant, there was no arguable cause of action. In particular, it was contended that whether decided by reference to the amended statement of claim rejected by Lee J or the draft further amended statement of claim tendered during the appeal, no cause of action was pleaded which was known to the law. In these circumstances, to permit either amendment would be futile and so no injustice had been done by Lee J in refusing it. Nor would an injustice be done by this Court in refusing, in the circumstances, to disturb the judgment. It was conceded by the respondent that the test to be applied in deciding whether or not to sustain this argument was that stated by the High Court of Australia in General Steel Industries Inc v Commissioner for Railways (NSW) & Ors (1964) 112 CLR 125. I shall approach the argument in that way. In a well known passage, Barwick CJ expressed the criteria thus:- [T]hese cases uniformly adhere to the view that the plaintiff ought not to be denied access to the customary tribunal which deals with actions of the kind he brings, unless his lack of a cause of action... is clearly demonstrated. The test to be applied has been variously expressed; 'so obviously untenable that it cannot possibly succeed'; manifestly groundless'; 'so manifestly faulty that it does not admit of argument'; "discloses a case which the Court is satisfied cannot succeed'; 'under no possibility can there be a good cause of action'; 'be manifest that to allow them' (the pleadings) 'to stand would involve useless expense' Barwick CJ in General Steel adopted the approach appearing in an earlier judgment of Dixon J in Dey v Victorian Railways Commissioners (1948-1949) 78 CLR 62, 91 when the latter said:- "The fact that a transaction is intricate may not disentitle the court to examine a cause of action alleged to grow out of it for the purpose of seeing whether the proceeding amounts to an abuse of process or is vexatious. But once it appears that there is a real question to be determined whether of fact or law and that the rights of the parties depend upon it, then it is not competent for the court to dismiss the action as frivolous and vexatious and an abuse of process." Barwick CJ in General Steel then went on to make an important point:- "I do not think that the exercise of the jurisdiction should be reserved for those cases where argument is unnecessary to evoke the futility of the plaintiff's claim. Argument, perhaps even of an extensive kind, may be necessary to demonstrate that the case of the plaintiff is so clearly untenable that it cannot possibly succeed." 8 UNREPORTED JUDGMENTS These principles are familiar. They are applied frequently in this and other courts. There are a number of answers to the respondent's arguments based on the notice of contention. Although confined for present purposes to an argument of law on the face of the pleadings, the respondent rightly acknowledged that, to the end of the trial, a trial judge retained the discretion to permit repleading of a cause of action so as to express, in any way sustained by the evidence, the cause of action upon which the appellant relied. When Lee J declined to permit the amendment sought by the appellant, the evidence was not yet concluded. The appellant may have sought to tender further evidence, had the amendment been allowed. The respondent had not concluded its case. The appellant had the right to tender evidence in reply to any further evidence called by the respondent. Accordingly, whilst this Court must consider the question in the light of the amended pleadings proffered at the trial (and possibly that foreshadowed now) it must not forget that to the end of the trial and the closure of the evidence, the appellant would have had the right to seek to make further amendments to the expression of her cause of action "for the purpose of determining the real questions raised by... the proceedings". (SCR Pt20, r 1(2)). More importantly, when the respondent sought to support its argument based on the two pleadings presently before the Court, it did so by taking the Court to the judgments of the High Court of Australian in Heyman. The Court was led through the judgments in that case. From them it is difficult to extract a single principle which amounts to a clear holding binding on this Court and establishing the law applicable to the present case at a level of clarity and certainty as to qualify for the epithets collected by Barwick CJ in General Steel. The respondent is entitled even by extensive argument to show that the case of the appellant is "so clearly untenable that it cannot possibly succeed". However, it was eventually conceded, after some little argument, that the pleadings, and both of them, were not such as to attract the peremptory jurisdiction to terminate proceedings before a trial on the merits was had. There is a third and practical reason for this conclusion. It is related to the foregoing. No application of the kind raised in the notice of contention was made to Lee J. This Court does not therefore have the advantage of a considered judgment by his Honour on the point or upon the application of the principles in Heyman and the cases since to all of the facts of the present case. It is clearly preferable for the parties and for the Court in a matter such as the present to have that advantage. Retrial before a particular judge When it became clear in the manner in which the appeal was conducted that the Court was of the opinion that the appeal should be allowed and the judgment below set aside, the respondent urged that the case should be returned to Lee J and not sent for retrial generally. This submission was put on the basis that his Honour had not concluded the trial and should now be permitted to do so Initially such an order was sought by the appellant as one of the alternative orders sought in its notice of appeal. The respondent argued that there were special reasons in the present case for following that course. It referred to the fact that the trial had lasted six days, that Lee J had seen all the witnesses and heard all the evidence, save for any additional evidence that might now be admitted. Great public and private costs could be saved by leaving it to his Honour to conclude the evidence and to apply to it the relevant principles of law, as now elaborated. URJ HOLDEN v WYONG SHIRE COUNCIL (Kirby P) 9 I do not consider that it is possible for this Court to follow the course urged by the respondent. By setting aside the final judgment of Lee J in the proceedings, this Court does not revive the case before his Honour. That case is concluded. It was not "part heard". No decision was made by Lee J on a question which he separated for that purpose (see SCR Pt31 r 2). Accordingly, when the judgment below is set aside, the whole proceedings before Lee J are concluded. If there is to be a retrial, the proceedings must be freshly recommenced. It is not for this Court to control the manner of the retrial in the court or Division below. Nor is it for this Court to select the judge or that court or Division who will conduct the trial. Occasionally, the Court will in special circumstances suggest that a retrial be had before a particular judge upon limited issues. This was done in Lockyer v Macready & Anor (1965) 66 SR (NSW) 369, 382 upon the basis of s145(3) of the District Courts Act 1912. Occasionally, the Court will suggest that when a case is returned for retrial, the court below should be "differently constituted" upon the rehearing. See eg Escobar v Spindaleri & Anor (1986) 7 NSWLR 51, 58. The respondent argued that the Court's inherent power or its power under s75A(1) of the Supreme Court Act 1970 would support an order of the kind it sought. The subsection provides:- "75A(10) The Court may make any finding or assessment, make any direction for entry of judgment, or make any order, which ought to have been made or which the nature of the case requires." The respondent submitted that the discretion conferred by the closing words of the subsection was at least as wide as the provision in s145(3) of the District Courts Act 1912 upon which the Full Court had relied to make its order in Lockyear. Although in the events stated below it is not necessary finally to determine the question, I see a number of difficulties in the respondent's submission. First, the Supreme Court Act, s51(4) makes particular provision for removal or remission of proceedings from the Court of Appeal to a Division. There it confines remission to cases where proceedings are "pending" before the Court of Appeal and then provides only for remission "to a Division". Once the order of the Court disposing of the appeal is pronounced, the proceedings are no longer "pending". They have been concluded. The purpose of the remission provisions in s51(4) appears to be quite different from the purpose sought to be secured here. Secondly, the power in s75A(10) would appear to be confined to making particular orders relevant to the substance of the appeal. It would not appear to support the exceptional control by the Court of Appeal of the internal listing arrangements of the Court or Division to which a matter, after appeal, is returned. Thirdly, so far as the inherent jurisdiction of the Court or the power under s75A(10) does authorise such disturbance of the internal arrangements of the Common Law Division as the respondent urges, there are good reasons of principle why such disturbance should rarely if ever occur. This Court is established by the Supreme Court Act. Its relationship to the Divisions of the Supreme Court or the courts subject to its authority necessitates an appropriate demarcation of their respective responsibilities. Relevantly, this Court disposes of appeals. Once it has concluded its function, it should not ordinarily interfere in the manner in which, or persons by which, Divisions of the Supreme Court or other courts discharge their functions. At the conclusion of argument, the appellant indicated that she agreed that the matter should, if possible, be returned to Lee J. It was recorded that the parties had agreed between themselves that his Honour should accept the tender of the 10 UNREPORTED JUDGMENTS transcript and exhibits of the first trial. This appears to be a sensible arrangement. But whether the retrial will be ordered before Lee J is a matter for the Common Law Division, not for this Court. In a written submission received after judgment was reserved, counsel for the respondent submitted that, alternatively, this Court should order that, upon the new trial, the testimony of each of the witnesses examined before Lee J should be read instead of witnesses being again examined. See pt51 116(5)(c) SCR. Whilst it would obviously be sensible for relevant evidence to be read and not re-prescribed orally, I am not inclined so to control the proceedings on the retrial. The legal issues have changed somewhat. Some of the evidence in the first trial may now be irrelevant. Other parts of it may need elaboration by reference to the new issues posed for consideration by recent authority. Further evidence will clearly be needed which has not been called. I consider that it can be left to the trial judge and the parties to determine the efficient conduct of the new trial, without an order from this Court, as sought. Extent of the permissible repleading. Finally, reference was made during argument to a contention that injustice would be done to the respondent if the appellant were now permitted to proceed on the further amended statement of claim which was produced to this Court. The gist of this complaint was that, by reference to the case originally pleaded, even when supplemented by the amended statement of claim which Lee J rejected in the first trial, the appellant was seeking, although out of time, to rely upon a cause of action which was new and quite different from that previously pleaded. It is unnecessary for me to determine this submission. As there must be a retrial, it will be for the judge conducting the retrial upon the pleadings as amended by the document which Lee J rejected, to determine whether he or she will allow the appellant a still further amendment to reframe the case based upon what has been described as the 1974 events. The appellant foreshadowed that she would be relying upon Pt20 rl(2) SCR to support the application to be permitted to change the expression of the cause of action. She contended that this was not different in substance from that rejected by Lee J It is inappropriate for me to resolve this question. It is properly left to the decision of the trial judge on the retrial. Costs In the events which have occurred, the Court indicated that it had in mind that the costs of the first trial and of the appeal should become costs of the proceedings in the retrial. This is an unusual order in the circumstances but one which is suitable to the way in which this case has developed and may now proceed. Neither party wished to be heard in argument against the making of such order. It is the order which I would propose. Orders The following orders should be made. 1. The appellant to have leave to amend the notice of appeal to add a new ground namely:- "3. That in refusing an application to amend Paragraphs 8, 9 and 10 of the statement of claim, his Honour erred in law by misdirecting himself as to the application of s580 of the Local Government Act 1919 and the Limitation Act 1969, as applying to defeat the utility of the amendment." 2. Appeal allowed. 3. Judgment of Lee J of 24 July 1985, set aside. URJ HOLDEN v WYONG SHIRE COUNCIL (Mahoney JA) 11 4 The appellant (plaintiff) has leave to amend the statement of claim in the terms set out in the notice of motion appearing on pages 9-11 of the appeal book. 5. Proceedings remitted to the Common Law Division for retrial. 6. The costs of the appeal and of the first trial to be costs of the second trial. Mahoney JA This proceeding was before the learned trial judge Mr Justice Lee on a number of days. His Honour gave judgment for the defendant. The plaintiff appealed to this Court. When the appeal came on for hearing the plaintiff sought an adjournment for the purpose of formulating an amendment to her claim. When the appeal was re-listed for hearing, the defendant announced that its position had changed in respect of an important matter. The result of that change is that the proceeding must be returned to the Common Law Division for a re-trial. This result is unfortunate but there is, I believe, no appropriate alternative. As what has occurred before this Court may be relevant in determining the course to be taken upon the re-trial, it is appropriate that it be referred to. On 16 July 1985 the proceeding came before Lee J for hearing. The plaintiff "s claim against the defendant Council was based upon an allegation that it had failed to exercise proper care in the discharge of powers and duties cast upon it by the Jaw. As the result of its default, it was suggested, the house purchased by the plaintiff was subject to flooding and other difficulties. On the third day of the trial, the plaintiff made application to amend her statement of claim. The amendment may have been occasioned by doubts arising from developments which had taken place in t.he law. The learned judge decided that he should not then rule on the application for amendment but should first allow the parties to tender evidence and in particular evidence derived from the records of the defendant. At the end of the evidence, the parties having indicated that they did not desire to call further evidence in the case as it was then constituted, the learned judge dealt with the application to amend. His Honour held that the application should be refused because, even if the amendment were allowed, the plaintiffs claim as so amended would be barred by the law relating to limitation of actions. The objection to the amendment, as it was then made, was based upon submissions as to the effect of the limitation law. The court has been informed that, at that time, it was not submitted that, if the amendment was allowed, it would not, limitation apart, provide a basis in law for the plaintiff's claim. Having refused the amendment, the learned judge dealt with the plaintiff's claim as it was pleaded. He held that claim failed because there was no causal relationship between, as the plaintiff suggested, the defendant's lack of care and the damage suffered by the plaintiff. Judgement was given for the defendant accordingly. The plaintiff appealed to this Court. The form of the notice of appeal, as initially filed, did not in term' raise the problems which are now seen to have arisen. The notice of appeal alleged merely error by the judge in relation to the limitation law. It did not allege error in relation to the matter on which flee J relied, namely, the absence of appropriate causal relationship between the suggested default of the defendant and the plaintiff's damage. On 14 October 1987 the plaintiff's appeal came on before this Court for hearing. The plaintiff then sought leave to amend the notice of appeal to add a ground alleging error by he learned judge in finding the absence of the relevant cause of action. That amendment was made. 12 UNREPORTED JUDGMENTS But, in addition, difficulty was seen to arise in relation to the form of the plaintiff's claim. The plaintiffs submission was that the learned trial judge had erred in refusing to allow the amendment to her statement of claim. It was pointed out that there had been development in this branch of the law and that the question would arise whether the amendment which had been sought at the trial and which, on appeal, it was sought to make would, if made, disclose a cause of action. After consideration of the matter, the plaintiff indicated that she desired further to amend the statement of claim. She could not then formulate the amendment which she desired to make and, on her application, the hearing of the appeal was adjourned to enable her to formulate such amendment as she might desire to make. The hearing of the appeal was then listed for 10 and 11 May 1988. Shortly before 10 May - on the day before, as the court has been informed the defendant indicated a change in its position. It indicated, and, in due course, informed The court that it did not desire to contend that, if the amendment had been allowed, the plaintiffs claim, as amended, would be barred by the limitation law. Counsel for the defendant informed the court that it was the defendant's view that, if and insofar as what was said in Pirelli General Cable Works Ltd v Oscar Faber & Partners [1983] 2 AC 1 was to the. contrary, the observations there made were wrong: cf Sutherland Shire Council v Heyman 157 CLR 424 at 491. The result was that, in considering the Plaintiff's first ground of appeal, viz, that the learned judge had erred in refusing leave to amend the statement of claim, this Court was invited to proceed on the basis that the ground relied upon by the learned judge was not relied upon by the defendant in this appeal. The result of this is, in my opinion, that, in considering that ground of appeal, this Court should act upon the basis that the learned judge, in the exercise of his discretion, acted upon a basis which should be seen as not available to him. This Court has not heard argument upon whether the learned judge's view of the limitation law was correct. What the defendant has done is, as I understand the position taken by it, to concede for the purposes of the proceeding that the plaintiff's claim, as amended, would not have been barred. 1 am conscious that, under the limitation law as it now is, the basic operation of that law is to extinguish a cause of action rather than bar the enforcement of it. But there are circumstances in which the law does not so operate. A defendant is, I think, entitled not to plead the effect of the limitation law: at least, the contrary has not been argued. I think it proper, in the circumstances of this case, to proceed upon the basis that the limitation point is not now open to the defendant. And, in such circumstances, it is proper for thin Court, in considering whether the amendment should have been allowed, to act upon the basis that opposition to the amendment is not now supportable on that ground. The matter should be determined, on appeal, by reference to whether, on that basis, the amendment should have been allowed. On this basis, and subject to the matter to which I shall refer, the amendment should have been allowed. The defendant did not allege any particular prejudice as apt to flow from the amendment which could not be compensated for by costs. However, the defendant has now submitted that the amendment should not be allowed because the plaintiff's claim, as so amended, could not in law succeed. The position in this regard was complicated by the fact that, when the hearing of the appeal recommended, the plaintiff made application to amend the statement of claim by, in effect, substituting for it a new and redrafted statement of claim. The question was then raised whether the new statement or claim, as I URJ HOLDEN v WYONG SHIRE COUNCIL (Mahoney JA) 13 shall describe it, did not set up a claim completely different from that dealt with at the trial and whether, if it did, it was appropriate at this stage in the proceeding to allow such an amendment. However, the new statement of claim was not examined in detail and detailed argument was not directed to it. The plaintiff indicated that, in any event, she desired, as an alternative, that the statement of claim be amended according to the amendment proposed at the trial. It was upon this last matter that, in the main, the argument proceeded. It will be convenient, for the purpose of understanding the arguments that have been presented in respect of the amendment proposed at the trial, to consider the plaintiff's position as it should have been at the trial and then as it is upon the hearing of this appeal. A plaintiff is entitled, within appropriate limits, to frame her case as she sees fit. An application to strike out a pleading will succeed only if it is relevantly objectionable and ordinarily this will involve that it discloses no reasonable cause of action or has a tendency to cause prejudice, embarrassment or delay at the hearings see Pt15 r26: see generally General Steel Industries Inc vy Commissioner for Railways 112 CLR 125; Tringali v Stewardson Stubbs & Collett Ltd 66 SR 335. Where a plaintiff desires to amend her pleading, the court has a discretion. But generally an amendment will be allowed if, subject to matters of prejudice, costs and the like, the amendment is not so obviously futile that it would have been struck out if originally pleaded: see Pt20 r 1; see generally Shannon v Lee Chun 15 CLR 257. Therefore, if the limitation point be put aside, the question which the trial judge would in the present case have been called upon to consider is whether, on these principles, the proposed amendment should have been made. Iam not satisfied that a statement of claim in the form proposed at the trial by the amendment would have been so obviously defective as to be struck out: I do not think that the amendment proposed at the trial would, in the relevant sense, have been futile. Mr Stowe QC, for the defendant, based his argument that the amendment would have been futile upon the contention that, to put the matter compendiously, the plaintiff could not succeed unless she showed "reliance" upon what the Council had done and that she did not, in the statement of claim as so amended, set up such a case. I am not satisfied that the law is so clear as he put it that it would, in the relevant sense, be futile to allow the plaintiff to proceed with a case based as, at the trial, she desired it to be based. There are several matters which are relevant in this regard. First, this branch of the law is, as I have suggested, in a state of development and it is, in my opinion, not relevantly so clear that the factual situation on which, in the end, the plaintiffs case will rest can be established only if she can show the existence of "reliance". Mr Stowe QC, before this Court, put his objection to the amendment which had been proposed at the trial upon the absence of an allegation of such reliance. St is to this that attention can, therefore, be directed. He submitted that the result of the decision of the High Court in Sutherland Shire Council v Heyman 157 CLR 424 is that, to succeed in the anticipated factual situation, the plaintiff must plead and show that, in the sense to which he referred, she relied upon what the defendant had done. I do not think that it is yet clear that this is the nature of the claim on which the plaintiff relies. 14 UNREPORTED JUDGMENTS The law has long recognised that lack of care on the part of a defendant may make him liable for the damages which flow from it. But it may in due course recognise that lack of care - or, at least, that which in hindsight is able to be categorised as such - is an ordinary incident of life in society rather than a special and obviously culpable thing. It may be accepted that not all damage which flows from a lack of care should be punished in damages. And, if and insofar as lack of care is to be punished in damages, it remains, I think, to be settled whether lack of care is to be punished as such by an award of damages or whether there are, in some circumstances, requirements additional to the proof of lack of care for the recovery of such damages. On one view of recent judicial experience, there are three distinct lines of liability, ie, of circumstances in which loss resulting from lack of care will be recoverable. In relation to the damage to person or to property, a single basis of liability may be seen to emerge from Donoghue v Stevenson [1932] AC 562. In relation to claims for, as it has been described, pure economic loss that which the plaintiff aust show, ie, the ingredients of her cause of action, may be different: thus, where the claim for economic loss is by a person whose person or property has not been damaged or by a person whose loss results from negligent advice or statements, the requirements of the cause of action will involve the ingredients referred to in the Caltex case 136 CLR 529 and in L Shaddock & Associates Pty Ltd v Parramatta City Council 150 CLR 225. And, it may be, the cause of action for recovery for damage caused by the exercise, without- due care, of statutory powers and discretions will be seen to be different from these two: see generally Sutherland Shire Council v Heyman and in the United Kingdom the Anns case [1978] AC 728. Whether ultimately the law will develop in this way, and the considerations which may be involved, have been referred to on other occasions: see, eg, the discussion by the members of this Court in Minister Administering the Environmental Planning and Assessment Act 1979 v San Sebastian Pty Limited [1983] 2 NSWLR 268 at, eg, 325 et seq; 61 ALJR 41. Two questions at least may require consideration in the present case: first, whether the plaintiff's loss is to be treated as if it were damage to property within the first kind of case to which I have referred, pure economic loss within the second, or upon a different basis such as that applicable in relation to the exercise of statutory powers and discretions; and, second, what are the ingredients of the cause of action for damage found to be relevant in this case. With deference to those who may see the law at this stage more clearly, I do not think that it can be said that a claim, pleaded in the way in which at the trial the plaintiff sought to have it pleaded, is, in the relevant sense, so obviously objectionable or futile that it should not be allowed to stand. Iam conscious of what was said in the General Steel case. But in the present case, the categorisation of the facts is yet to be made and, giving best attention to the law, there were I think differences between the judges of the High Court in Sutherland Shire Council vy Heyman both as to the categoriation of the claim there in question and as to the significance of reliance upon what the defendant did such as makes it inappropriate to reject a case pleaded as the plaintiff would have pleaded it. One other matter may also be referred to. It is the duty of a plaintiff to frame her pleadings according to the case she desires to make. The form of pleadings will, as is obvious, regulate the course of the case and the evidence which is to be brought. When a plaintiff proposes an amendment, she must draw the amendment in proper terms and as she desires it to be. But, in the end, the URJ HOLDEN v WYONG SHIRE COUNCIL (Mahoney JA) 15 function of pleadings under the judicature system of pleading has differences from their functions under the preceding system: at least, the rigidity of them is not the same. As an experienced trial judge will know, at the end of the evidence, evidence which has properly been adduced under pleadings in one form may be seen to support a claim which is to be formulated differently from the claim in the pleadings. And, subject to matters such as the Suttor v Gundowda Pty Ltd 81 CLR 418 principle and others, pleadings may at the end of the evidence be amended properly to formulate the plaintiffs claim: see generally Banbury v Bank of Montreal [1918] AC 626 at 709-710, per Lord Parker of Waddington; Burchett v Kane [1980] 2 NSWLR 266 at 278. This is a factor which, in my opinion, is to be taken into account in determining whether a proposed amendment to pleadings should be refused on the ground that it is defective. As I have said, the plaintiff must formulate her pleading appropriately but there are distinctions to be made between, for example, defects in pleading which go to the fundamental nature of the claim and those which, though significant, are less fundamental and might, in the end, be rectified according to the evidence which ultimately is properly before the court. Matters such as these go to the exercise of a trial judge's discretion to allow or refuse an amendment during a trial. They are, if this Court is to deal with the matter as the learned judge would have dealt with it had the limitation point not been urged, relevant to the decision in the present case. In my opinion, therefore, notwithstanding the criticisms which may be made of the form of the amendment proposed at the trial, it is proper to uphold the appeal on the ground that the judge's discretion is, in retrospect, to be taken as having been inappropriately exercised. I come now to consider what this Court should do. Two main questions have arisen. First, the plaintiff has sought that, if the learned judge's refusal of amendment at the trial must be put aside, the amendment that should be allowed is either that contained in the new statement of claim or, as an alternative, that proposed at the trial. The plaintiff's preference was for the new statement of claim. Particular considerations arise, or may arise, in relation to the new statement of claim. It may, as I have said, raise what in substance is a basis of claim so different from that litigated to date that, having regard to the passage of time and other matters, it is not proper to allow it to be set up at this stage. There are, in general, considerations to be examined in this regard. These considerations were not pursued in detail before this Court. In my opinion, as, for the reasons to which I have referred, it is proper that the amendment proposed at the trial be allowed, this Court should allow that amendment. The matter should be returned to the trial judge without any expression of opinion as to whether the new statement of claim can or should be allowed as an amendment of the plaintiff's case. If, when the matter is dealt with by the trial judge, the plaintiff desires to seek a further amendment in that or another form, her application may be considered by the judge in the light of the evidence which, as he may then be informed, is proposed to be placed before him. The defendant has, in addition, sought that, if the appeal is upheld and the matter returned for a re-trial, it should be returned for trial by Lee J. The defendant suggests conveniences, in time and cost, apt to flow from this course. It has asked that this Court direct the matter to be heard by the learned judge. 16 UNREPORTED JUDGMENTS Whether this Court has power so to direct is a matter which, in an appropriate case, will require consideration. I express no opinion upon it. The practice of the court is to return a proceeding which is to be re-tried to the Division in question. In my opinion, that is the appropriate course in this case. It should be left to determination then as to whether Lee J can or should undertake the further trial of the matter. It has not been necessary to consider the other ground of appeal. The relation between such lack of care as occurred and the plaintiff's damage will be considered following the re-trial and upon the facts as they have then emerged. In opinion, therefore, the appeal should be upheld. The judgment should be set aside. The plaintiff should have leave to amend the statement of claim in accordance with the amendment proposed at the trial. The proceeding should be returned to the Common Law Division to be dealt with. The costs of the original trial and of the appeal to this Court should abide the result of the trial. The plaintiff should, if entitled, have a certificate under the Suitors' Fund Act. Priestley JA Although the court in this appeal is setting aside a judgment entered by Lee J, that is not because of any finding or opinion formed by this court of any error made by the trial judge. One of the grounds of the appeal was that an application by the plaintiff at the trial for amendment of her statement of claim was refused. The usual practice is to allow amendments, provided the opposing party can be fairly dealt with by orders for adjournments and/or costs or the imposition of any other condition that may be necessary for fairness in the circumstances. A recognised ground for refusing an amendment is that it would be futile if allowed. At the trial before Lee J it was objected that the amendment should not be allowed because the cause of action to be relied on under the amendment would necessarily be out of time and thus futile. Lee J did not rule upon this objection immediately, but took the practical course of allowing all the evidence the plaintiff wished to call on the proposed new cause of action to be given before him, before ruling on the limitation point. After the plaintiff's case in chief on the proposed new cause of action was complete, Lee J gave full reasons for declining to allow the amendment, the basis of his ruling being the limitation position. Soon after the appeal to this court got under way, counsel for the Wyong Shire Council, the defendant before Lee J and the respondent in this court, made it clear that the council did not seek to support Lee J's refusal to permit the amendment of the statement of claim on the basis upon which the trial judge had decided the matter. The only basis on which the council sought to support the refusal to grant the amendment was that the proposed amended statement of claim disclosed no cause of action against the council. This submission however was not put on the basis that the evidence called on behalf of the plaintiff in support of the proposed amended statement of claim did not disclose any cause of action; the submission was specifically put on the much more restricted basis that the proposed amended statement of claim itself did not disclose a cause of action. The way in which courts should deal with such applications has been described in many cases, that most frequently referred to being General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125. A slightly later authority which discusses such cases in very helpful detail is Mathaman v Nabalco Pty Ltd (1969) 14 FLR 10. These authorities show that in a case where a plaintiff seeks an amendment to a statement of claim, which is resisted by reference solely to the form of the amendment, a court will be very reluctant to shut the plaintiff out, unless it is very plain that the proposed cause of action URJ HOLDEN v WYONG SHIRE COUNCIL (Priestley JA) 17 seems doomed to fail. My own reaction to the present case is strongly influenced by the fact that the argument before this court is not whether the proposed new cause of action was sUPPortable (the limitation point being left aside) in light of the evidence called by the plaintiff, but whether the proposed new pleading showed a cause of action. The two questions are distinctly different. In regard to the question this court was asked to rule on, I have considerable doubt whether the pleading was adequate. However, because of the way the point was left to this court, my doubt is about a pleading rather than a judgment point. Had the matter been presented in this way to Lee J, his decision may well have been different. Most obviously, he may have indicated that the pleading was defective and given the plaintiff a further opportunity of putting it in formal order. Although this observation has to me an air of unreality even as I make it, because it involves disregarding the fact that Lee J had all the facts the plaintiff was able to put before him on the proposed amended case in evidence before him at the time of his decision, it nevertheless seems to me to be the approach this court should take, because of the two important differences between the position as it actually was before Lee J and the position we have been asked to base ourselves on in dealing with the appeal: the first, that we are not to take into account the limitation point, and the second that we are to look at the pleading only and not the facts in evidence before Lee J On the foregoing basis I do not think that the plaintiff should have been refused leave to amend in the way that she was. I thus arrive at the apparently paradoxical result that although no error has been shown in Lee J's reasons for entering the judgment that he did, the judgment should be set aside. I agree with the orders proposed by Kirby P. 1. The appellant to have leave to amend the notice of appeal to add a new ground namely:- "3, That in refusing an application to amend Paragraphs 8, 9 and 10 of the statement of claim, his Honour erred in law by misdirecting himself as to the application of s580 of the Local Government Act 1919 and the Limitation Act 1969, as applying to defeat the utility of the amendment." 2. Appeal allowed. Judgment of Lee J of 24 July 1985, set aside. 4. The appellant (plaintiff) has leave to amend the statement of claim in the terms set out in the notice of motion appearing on pages 9-11 of the appeal book. Proceedings remitted to the Common Law Division for retrial. The costs of the appeal and of the first trial to be costs of the second trial. w aun