Supreme Court New South Wales Medium Neutral Citation: Frontier Assets Pty Limited v Fishburn [2011] NSWSC 1298 Hearing dates: 27 September 2011 Decision date: 02 November 2011 Jurisdiction: Common Law Before: Rothman J Decision: (i) The plaintiff has leave to file a fourth further amended statement of claim in the form relied upon during the course of the motion; (ii) Costs of the motion be costs in the cause; (iii) The plaintiff pay the defendants' costs thrown away by any amendment. Catchwords: PRACTICE AND PROCEDURE - amendments to claim - hearing not yet fixed - no delay occasioned - balance right to plead with case management - amendment allowed Legislation Cited: Civil Liability Act 2002 Cases Cited: Aon Risk Services Australia Ltd v Australian National University [2009] HCA 27; (2009) 239 CLR 175 Hadley v Baxendale (1854) 9 Ex 341 Iannello v Sharpe [2007] NSWCA 61 Mallick v Parish (1916) 16 SR (NSW) 305 Minister for Aboriginal Affairs v Peko-Wallsend Ltd [1986] HCA 40; (1986) 162 CLR 24 Photo Production Ltd v Securicor Transport Ltd [1980] AC 827 at 849-850 Robinson v Harman (1848) 1 Exch 850 at 855; (1848) 154 ER 363 Category: Procedural and other rulings Parties: Frontier Assets Pty Limited (plaintiff) Michael George Fishburn (first defendant) John James Watson (second defendant) Christopher Martin O'Brien (third defendant) Sam Couper (fourth defendant) Stephen Campbell (fifth defendant) Michael Bigelow (sixth defendant) Tod Ritchie (seventh defendant) Representation: Counsel G P George (for the plaintiff) D A Lloyd (for the first to seventh defendants) Solicitors Kalfus Legal (for the plaintiff) File Number(s): 2008/00289361 Judgment 1Frontier Assets Pty Limited (hereinafter "Frontier Assets") moves on notice dated 10 August 2011 to further amend its statement of claim. The defendants oppose the application. 2Resolution of the issue depends fundamentally on the considerations of case management and justice mandated by the Civil Procedure Act 2005 (hereinafter "the Act") and in particular, ss 56, 57, 58 and 64. 3The substantive proceedings involve an allegation of professional negligence against solicitors and counsel. Briefly stated, the professional negligence arises in connection with advice given and action taken concerning a failed real estate sale. Substantive history alleged 4Frontier Assets listed a property for sale and exchanged contracts with a purchaser for $7 million. The contract required a deposit of $700,000 but provided that $350,000 of the deposit (namely, 5 percent of the purchase price) was to be paid on the contract date and the balance of the deposit was payable on the earlier of the completion of the contract or the date of default by the purchaser: as per Iannello v Sharpe [2007] NSWCA 61. 5The exchange of contract was complicated by an earlier option deed exercisable in particular circumstances and by a particular date. The date was subject to extensions. The purchase price nominated in the contract, on the evidence before the Court currently, was more probably than not greater than the value of the property. 6On 10 July 2006, a corporate purchaser was nominated and the purchaser exercised the option to purchase and sent an executed counterpart copy of the contract and a cheque for $330,000 to the solicitors then acting for Frontier Assets. Those solicitors accepted that the option had been exercised. 7The cheque for $330,000 was dishonoured. The obligations of the purchaser were subject to a guarantee. In August 2006, when it became obvious that the prospective purchaser would be unlikely to complete the purchase, advice was sought from counsel as to the enforcement of the guarantee. 8Frontier Assets granted an extension of time to the purchaser to pay the deposit, which extension of time expired on 23 August 2006. One week after the failure of the purchaser to complete on 23 August 2006, namely on 30 August 2006, the solicitors acting for Frontier Assets terminated the contract. The solicitors also wrote to the sole director of the purchaser advising him of the termination of the contract. On the same day, a director of Frontier Assets demanded from the guarantor payment of the balance of the deposit ($680,000) plus costs. Solicitors acting for Frontier Assets had approved the letter to the guarantor. 9None of the purchaser, its director or the guarantor paid the deposit or the remainder of it. Proceedings were commenced by summons in the Supreme Court of Victoria on 20 September 2006. The summons pleaded various causes of action and sought the balance of the deposit payable under the contract, being the sum of $680,000, together with costs and interest. No claim was made for loss of bargain damages (i.e. the loss calculated as the difference between the contract price and the market price: see Hadley v Baxendale (1854) 9 Ex 341 at 354; Mallick v Parish (1916) 16 SR (NSW) 305; Robinson v Harman (1848) 1 Exch 850 at 855; (1848) 154 ER 363 at 365 per Parke B; and Photo Production Ltd v Securicor Transport Ltd [1980] AC 827 at 849-850, per Lord Diplock). 10The difficulties associated with claiming the balance of the deposit were highlighted when solicitors acting for the purchaser served an offer of compromise based upon the rationale in the judgment in Iannello , supra, treating the balance of the deposit as a penalty and unenforceable. 11The failure to claim loss of bargain damages is the central issue involved in the substantive proceedings and is alleged to be a breach of the duty of care by the solicitors who were acting and, to the extent that it relies upon an advice from counsel, by counsel. 12The issue sought to be pleaded in the further amendment with which the Court must now deal is to allege a continuing breach of duty in failing to amend the summons, during the subsistence of the proceedings, to claim damages for the loss of bargain. 13The remainder of the details need not be recited, except to note that the original summons was resolved by consent judgment for the 5 percent deposit plus interest. History of these proceedings 14The progress or otherwise of these proceedings is not a matter of great controversy. The proceedings were initiated by writ in the Supreme Court of Victoria on or about 9 May 2008. Leave was granted to amend the writ and the accompanying statement of claim on 17 June 2008. On 17 June 2008, the proceedings were also transferred to this Court. 15On 11 November 2008, the first to seventh defendants filed a defence to the amended statement of claim and on 12 January 2009, the plaintiff filed a reply. 16On 25 February 2009, Registrar Bradford granted leave to file a further amended statement of claim by 17 March 2009 and the first to seventh defendants were ordered to file a defence to the further amended statement of claim by 31 March 2009. 17The plaintiff filed the further amended statement of claim on 16 March 2009. On 25 November 2009, the first to seventh defendants filed a defence to the further amended statement of claim, pursuant to leave granted by the Court on 23 November 2009. Lists of documents for discovery were exchanged. 18Pursuant to leave granted by the Court, the plaintiff filed a second document, also entitled further amended statement of claim. That document was filed on 8 February 2010 and joined counsel as defendants. The first to sixth defendants filed a defence to that second document on 20 October 2010 and by the seventh defendant on 22 October 2010. 19On 16 November 2010, the plaintiff was granted leave to file a second further amended statement of claim. That document was filed on 18 November 2010. The first to sixth defendants filed a defence to that second further amended statement of claim on 28 February 2011 and the seventh defendant filed a defence on 16 March 2011. 20On 4 April 2011, the plaintiff filed a third further amended statement of claim, pursuant to leave granted by the Court. The first to seventh defendants have not filed a defence to the third further amended statement of claim. 21There have been orders to serve evidence, including expert evidence, with which the parties have complied or substantially complied. 22As already stated, the plaintiff now seeks leave of the Court to file a fourth further amended statement of claim. The Court notes that the third further amended statement of claim related predominantly, if not wholly, to the eighth and ninth defendants (namely, counsel), as distinct from the first to seventh defendants. Only the first to seventh defendants oppose leave being granted for the filing of the fourth further amended statement of claim. 23As a consequence of the foregoing, while preparation for the matter has proceeded, the matter has not been listed for hearing, nor, it seems, is it ready to be listed for hearing. Consideration 24This is another example of the Court being required to deal with the balance between case management, on the one hand, and, on the other hand, allowing a party the ability to present its case in the manner that it best sees fit. As stated, the provisions of the Act and in particular by the provisions of ss 56, 57, 58 and 64 govern these issues. 25In that regard, the Court is mandated (as are the parties) to facilitate the just, quick and cheap resolution of the real issues between the parties. The real issues between the parties are those issues defined by the pleadings and justice, in the foregoing phrase, must be understood to include justice to both parties, including the capacity to have proceedings heard and determined expeditiously. 26Nevertheless, in these proceedings, the grant of leave to file a fourth further amended statement of claim would not be likely to delay the ultimate determination of the proceedings. 27Further, the pleadings, as they exist, allege professional negligence or breach of duty, or both, by failing to advise the plaintiff that there should have been, at the commencement of the proceedings, a claim for damages for loss of bargain. The amendment to pleadings that is sought by this motion would allege a breach of duty or professional negligence, or both, in failing to advise the plaintiff to amend the proceedings. In other words, in any factual sense, the allegation adds little to the proceedings. 28Against that, the defendants submit that it would be necessary to obtain evidence relevant to defences under s 5O of the Civil Liability Act 2002, being evidence of practitioners who are experts in the field as to their conduct and the likelihood of any such application being successful. 29The amendment may involve some additional evidence. Yet, expert evidence dealing with peer practice would be necessary to deal with the pleadings in their present state. The hearing of the proceedings is not yet fixed and it is unlikely the hearing would occur at a time that would prevent or inhibit the compiling or adducing of additional evidence of that kind. 30To the extent that there would be prejudice to the defendants, the Court does not accept that such prejudice outweighs the right of the defendant to plead its case as it is best advised. 31As stated at the outset, the Court, in reaching the foregoing conclusion, has considered the provisions of ss 56, 57, 58 and 64 of the Act. Section 64 must be understood in the context of the purposes set forth in the earlier provisions and is expressly made subject to s 58 of the Act. 32Subject to the issues of case management, the pleadings in proceedings should address the real questions between the parties, avoiding or correcting defect or error and avoiding a multiplicity of proceedings. Section 64(1)(b) of the Act allows the Court to grant leave to a party to amend any document, including pleadings. As already stated, section 64(2), provides that amendments to documents, including pleadings, are subject to s 58 of the Act. 33In turn, s 58 of the Act renders mandatory the consideration of the dictates of justice. As earlier stated, justice must be understood in the context of ss 56 and 57 of the Act to which the Court must have regard. The Court may also have regard to the degree of difficulty or complexity in proceedings, the degree of expedition with which the respective parties have approached the proceedings and the other matters prescribed in s 58(2)(b) of the Act. 34As a consequence of the foregoing, the considerations in ss 56 and 57 of the Act are mandatory and are always relevant to the exercise of discretion and/or the determination of what is just. 35On the other hand, those criteria prescribed in s 58(2)(b) of the Act are to be considered only to the extent that the Court considers them relevant. Some have suggested that, therefore, it is an exercise of discretion as to whether the provisions in s 58(2)(b) of the Act are considered. I disagree with that proposition. To the extent that they are considered relevant they must be taken into account: Minister for Aboriginal Affairs v Peko-Wallsend Ltd [1986] HCA 40; (1986) 162 CLR 24. Nevertheless, it is unnecessary, for present purposes to determine whether such criteria are mandatory. It is sufficient, for present purposes, to note that each of them has been considered in exercising this power. 36The purposes contained in s 57(1) of the Act dictate the manner in which proceedings will be managed and are at the heart of the exercise of the discretion on this motion. 37In some senses the issue that is raised by the amendment is implicit in the pleadings as already filed. If so, the need to amend becomes stronger: Aon Risk Services Australia Ltd v Australian National University [2009] HCA 27; (2009) 239 CLR 175. 38For the foregoing reasons, the Court makes the following orders: (i) The plaintiff has leave to file a fourth further amended statement of claim in the form relied upon during the course of the motion; (ii) Costs of the motion be costs in the cause; (iii) The plaintiff pay the defendants' costs thrown away by any amendment. ********** 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. Decision last updated: 02 November 2011