New South Wales District Court CITATION: Lee v Micha International Pty Limited [2009] NSWDC 91 HEARING DATE(S): 2 April 2009 EX TEMPORE JUDGMENT DATE : 2 April 2009 JURISDICTION: Civil JUDGMENT OF: Goldring DCJ DECISION: Plaintiff's application for leave to amend statement of claim allowed in part and refused in part. CATCHWORDS: COURTS - District Court - Equitable jurisdiction - what constitutes LEGISLATION CITED: District Court Act 1973 Civil Procedure Act 2005 CASES CITED: Commonwealth Bank of Australia v Hadfield (2001) 53 NSWLR 614 TEXTS CITED: R P Meagher, W M C Gummow & J R F Lehane, Equity Doctrines and Remedies, 3rd ed (1992) Sydney, Butterworths E I Sykes & S Walker, The Law of Securities, 5th ed (1993) Sydney, Law Book Co Ltd PARTIES: Jong Seol Lee (Plaintiff) Micha International Pty Limited (Defendant) FILE NUMBER(S): 4185 of 2008 COUNSEL: M Sneddon (Plaintiff/Applicant) J R Young (Defendant/Respondent) SOLICITORS: Watson & Watson Solicitors (Plaintiff/Applicant) Sean Kim Bilias & Associates (Defendant/Respondent) JUDGMENT Application to amend statement of claim 1 HIS HONOUR: This is an application by the plaintiff for leave to amend the statement of claim. Originally the statement of claim says this in para 2: "On or 16 December 2005 the Plaintiff (as vendor) entered into a written Agreement with the Defendant (as purchaser) for the sale/purchase of a business known as 'Windsor Convenience Store'. PARTICULARS Contract for the Sale of Business 2000 Edition, dated 16 December 2006." 2 That document is in evidence before me on the application. Paragraph 4: "The terms of the contract inter alia required the Plaintiff to pay to the Defendant the following amounts: (i) $300,000 being the price for sale of the business; and (ii) $ 60,000 being the price for the sale of stock. Total $360,000." 3 The amendment seeks the addition of paras 4A and 4B: "4A. Further or in the alternative by or about 16 December 2005 it was agreed that the purchase price for the said business was $360,000. Particulars: (a) Paragraph 5 of the affidavit of Kuong Suk Lim, sworn 15 February 2008, be para 9 of the affidavit of Kuong Suk Lim, sworn 3 December 2008. 4B. Further or in the alternative in the events as they happen should the court conclude that the written agreement does not conclude correctly or reflect the agreement reached between the parties, the plaintiff is entitled to rectification of same." 4 Paragraph 9, which is the claiming provision, seeks to add subpara 2: "Further or in the alternative rectification of the written agreement, dated 16 December 2005, so as that the purchase price read '$360,000' as agreed between the parties." 5 The application is opposed on two grounds. First, that if the plaintiff seeks to rely on an agreement other than the written agreement to which I have referred, no particulars have been given, and the Rules of Court require that particulars should be given. That is very clear from r15.1. Again there is no evidence before me of this, but it appears that the plaintiff and the defendant reached some form of agreement before 16 December as to a number of matters including the price. The plaintiff says that what was written in the written agreement was incorrect and did not reflect the agreement of the parties, hence the application for rectification. 6 However, there is an alternative matter that I take to be pleaded by the proposed amended statement of claim, and that is a separate agreement other than the written agreement. I may be wrong on that, but if I am not it does not seem, in my view, to affect the course of the proceedings. 7 The claim for rectification is an equitable claim. Section 134 of the District Court Act gives to this Court jurisdiction in equity proceedings. I am not going to read the whole of the section, but I am going to read some provisions of it: "(1) The Court shall have the same jurisdiction as the Supreme Court, and may exercise all the powers and authority of the Supreme Court, in proceedings for: (b) the specific performance, rectification, delivery up or cancellation of any agreement for: (i) the sale or purchase of any property at a price not exceeding $20,000." I omit the remainder of that subsection, which is not relevant: "(h) any equitable claim or demand for recovery of money or damages, whether liquidated or unliquidated (not being a claim or demand of a kind to which any other paragraph of this subsection applies), in an amount not exceeding the Court's jurisdictional limit." 8 The jurisdictional limit of the Court is currently $750,000. 9 Mr Sneddon, for the plaintiff applicant, argues that the proposed amendment is one over which the court does have jurisdiction pursuant to s134(1)(h). He relies on the Court of Appeal, particularly Beazley JA, with whom the President agreed, in Commonwealth Bank of Australia v Hadfield (2001) 53 NSWLR 614. That was a case in which the bank sought an order of prohibition in respect of an order made by a judge of this Court, who had given leave to the plaintiff to reopen proceedings and amend his pleadings. 10 The proceedings in the District Court were proceedings in relation to a mortgage. The bank exercised its power of sale, and the plaintiff alleged that the bank had acted unlawfully, by refusing to allow him to remove personal property from the land, when it exercised its power of sale. 11 The point was taken that such a claim was beyond the jurisdiction of the Court. Beazley JA considered very carefully the provisions of s 134 that I have just read out. I must say that the facts of this case are significantly different from the facts that were before the Court of Appeal in Commonwealth Bank v Hadfield. In that case, what the effect of the amendments would have been was to allow an accounting for profit. As Beazley JA said at para 62: "The question which has to be determined therefore is whether a proceeding for an account is encompassed by the phrase 'equitable claim for damages'. It is clearly an equitable claim. Is it a claim for 'damages'?" 12 Her Honour then goes on to consider cases, particularly a case where it was found that a mortgagee had exercised a power of sale recklessly, and she went on to say at para 65: "In my opinion s 134(1)(h) covers the claim made here - it is an 'equitable claim' for recovery of money." 13 As was explained in Meagher, Gummow & Lehane, and in Sykes and Walker, and in the extracts quoted earlier, an action for an account is a claim to recover the surplus proceeds of sale to which the mortgagor claims to be entitled. There is nothing in the express words of the provision, or within the context of the provisions, conferring equitable jurisdiction of the Court to exclude the claim, nor is there any reason to limit the words "equitable claim or demand for recovery of any money" to a claim "involving money in the form of debt", as was said in the Second Reading Speech. 14 That, I think, is clear, but I think what Beazley JA said, and also what Bryson JA said in that case, do reflect clearly on the purpose of interpretation of s 134. However, in my view, in this case, the claim for rectification is a claim for rectification of an agreement for the sale or purchase of any property, because it is an agreement for the sale of a business. Although that is not the sale of land, the goodwill and other aspects of a business are intangible property. 15 The price is clearly above $20,000 and, in my view, this is a matter that is specifically excluded from the jurisdiction of the Court, and therefore so far as the proposed amendment seeks to add a claim for rectification of the contract, I cannot allow that, because, clearly, it is beyond the jurisdiction of the Court in my view. 16 Insofar as the amendment seeks to put forward a claim based on a contract other than the written contract, that seems to me to be the only construction I can put on the words of the proposed amended pleading. It seems to me that if that is the case, it is a matter which should be put before the Court. However, if I were to allow that amendment, I would certainly allow the defendant if it wished, on terms as to costs, to have the proceedings adjourned so that it could meet that claim. 17 I make those comments in the light of the admitted fact that the proposed amendment was only served on the defendant yesterday. It purports to be based on what appear to be admissions by Ms Lim made in her affidavit of 3 December. Why it has taken nearly four months for the proposed amendment to be made I do not know, but in fairness to the parties and because of s 58 of the Civil Procedure Act, I propose to allow the amendment, insofar as it allows the plaintiff to proceed on the basis that there is an alternative contract, but I indicate that, if the defendant wishes to have the proceedings adjourned, I would be very sympathetic to such an application. 18 Insofar as the application relates to the addition of a claim for rectification, the application is refused. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.