Supreme Court New South Wales Medium Neutral Citation: Ware v Amaral Pastoral Pty Ltd (4) [2012] NSWSC 920 Hearing dates: 30 July to 6 August 2012 Decision date: 06 August 2012 Jurisdiction: Common Law Before: Beech-Jones J Decision: Amendment refused. Cases Cited: - Aon Risk Services Australia Ltd v Australian National University [2009] HCA 27; 239 CLR 175 - Bellingen Shire Council v Colavon Ltd [2012] NSWCA 34 Category: Procedural and other rulings Parties: Peter Michael Ware (Plaintiff/Cross Defendant) Amaral Pastoral Pty Ltd (First Defendant/ Cross Claimant) Gregory Scott Amaral (Second Defendant) Representation: R.J. Weber SC, Ms A. Munro (Plaintiff/Cross Defendant) G. Curtin SC, S. Gardiner (Defendants/ Cross Claimant) Slater & Gordon (Plaintiff/Cross Defendant) Henry Davis York (Defendants/Cross Claimant) File Number(s): 2009/297486 EX TEMPORE Judgment On amendment application (T332) 1This is an application by the defendants to amend their defence in order to plead various matters that they say entitled the first defendant to summarily dismiss the plaintiff. 2The plaintiff was employed by the first defendant as a manager of its farm at Torry Plains, Maude, from January, 2002 until his dismissal in March 2005. The plaintiff's Statement of Claim makes four claims. First, he seeks an amount by way of back pay owing as at the date of his dismissal. Second, he seeks an amount for payment in lieu of notice of his dismissal. Third, he seeks an amount he says he is entitled to for bonus payments arising from the period in which he was employed. Fourth, he brings a claim for the cost of the hire of some machinery which he asserts he contracted with the first defendant to use on its farm. 3The application to amend is to add a defence which seeks to defeat the second of these claims. The total amount claimed by the plaintiff for that claim excluding interest is $21,680.10. This part of the plaintiff's case is pleaded in paragraph 11 of the Further Amended Statement of Claim. It asserts the existence of an implied term of his employment that he would only be dismissed by the provision of reasonable notice or payment in lieu of such reasonable notice. Paragraph 31 pleads that that clause was breached by the failure of the first defendant to make any payment to him in respect of notice following the termination of his employment. The existing defence merely answers those paragraphs by pleading: "Do not admit". It does not allege any breach of the employment contract by the plaintiff which would justify his summary dismissal and the failure to pay him an amount in lieu of reasonable notice. 4The first defendant has filed a cross claim. It seeks recovery of amounts by reason of various alleged failures by the cross defendant (plaintiff) to comply with lawful and reasonable directions said to have been issued to him by the second defendant on behalf of the first defendant. The amounts sought to be recovered are follows. First, it is said that he drew a cheque payable to himself in respect of some fence posting for the sum of $4,620. Second, it is said that he drew a cheque in favour of himself for $13,750 in respect of some equipment hire. Third, it is said that he wrongly reimbursed himself $1,537.45 in respect of some tractor parts. Fourth, it is said that he wrongly caused the first defendant's funds to be used to pay an invoice for some water bores which were in part or in whole for his benefit. Fifth, it is said that, without authority, he caused the first defendant to purchase a seeder machine from him at an inflated price. 5The proposed amendments to the defence are as follows: "46. In further answer to paragraph 31 of the Amended Claim the defendant says the Employment Contract contained an implied term (implied by law) that the plaintiff would exercise proper or reasonable care or skill in the discharge of his duties as farm manager. 47. The plaintiff breached the above term of the Employment Contract. Particulars (a) (if the Anderson Earthmoving invoice dated 7 January 2003 was for work done on Torry Plains) failed to pay any or all of that invoice promptly or at all prior to 12 June 2003; (b) (if the plaintiff did pay $15,000 out of his own funds in payment of the Anderson Earthmoving invoice dated 7 January 2003) failed to disclose to the defendants that he did so in expectation that that payment would be credited against his liability for the costs of drilling the Ware Bore referred to in the Drilltec invoice dated 30 September 2003; (c) opened accounts when he had no authority to do so according to the terms of the Job Description; (d) 'sold' the seeder to the first defendant without authority; (e) failed to pay the balance of the drilling costs of the Ware Bore (per the Drilltec invoice dated 30 September 2003) being $28,545 less $11,353.50 (making a total owing of $17,191.50; (f) invoiced the first defendant invoices 0161 dated 9 April 2004 ($13,750) and 0160 dated 9 April 2004 ($4,620), and paid to himself the total amount of those invoices from the first defendant's funds without providing the goods and services therein (or at all) and without the defendants' knowledge or permission; (g) had failed to pay 37 invoices totalling approximately $96,000 (as at 29 March 2005); (h) had advanced funds to Hockley (per Ware's evidence in cross examination); (i) had purchased a utility vehicle utilising the first defendant's funds for the use of Nathan Wilson; (j) (if his tractors were used on Torry Plains) failed to keep any reasonable or objective records of the hour meter reading on the tractors: (i) at the time they were first taken to Torry Plains; (ii) at any time the tractors left Torry Plains to do work or other matters (which caused the hour clocks to advance) on other properties for persons or companies other than the first defendant; (iii) at any time the tractors returned to Torry Plains from doing work or other matters on other properties for persons or companies other than the first defendant; (iv) at the time each tractor left Torry Plains; (k) failed to convey the records referred to immediately above to the first defendant; (l) failed to orally convey the hour meter readings on the tractors [at each of the occasions referred to in subparagraphs (j)(i) to (iv) above] to the first defendant; (m) failed to comply with instructions from the Department of Land and Water Conservation's Lobidgee Water Operations Officer in or about July 2002; (n) constructed an illegal block bank on Pollen Creek between December 2001 and July 2002; (o) failed to pay State Water invoices promptly 48. The breaches of the Employment Contract, individually or collectively amounted to a repudiation by the plaintiff of the Employment Contract or amounted to circumstances justifying summary dismissal." 6I note three matters concerning these proposed amendments. First, at least in some respects, the subparagraphs to proposed new [47] are not particularised. For example, proposed [47(g)] refers to some 37 invoices and it is common ground that they have not been identified. Further, proposed [47(n)] refers to the construction of an "illegal block bank" on a particular creek. There has been some evidence on this issue. However, as far as I can recall, nothing in the material has clearly identified the basis for the assertion that what was constructed was "illegal". There has not been any identification of a provision of a particular Act that was contravened nor has a basis been specified for asserting that whatever was constructed was not authorised. 7Second, the framework by which the factual allegations in proposed [47] are relevant is specified by the implied term pleaded in proposed [46], namely, that the plaintiff would exercise proper or reasonable care or skill in the discharge of his duties as farm manager. This standard is not found in any other part of the defence, the cross claim or the statement of claim. An allegation phrased in those terms raises a broader inquiry than that which is pleaded in the cross claim even in respect of those factual matters identified in proposed [47] which have a counter-part in the cross claim. 8Third, proposed [48] sets out the legal significance of what are said to be the breaches particularised in proposed [47], namely, that they amount to a repudiation by the plaintiff of the employment contract and were circumstances justifying his summary dismissal. As with proposed [46], this seeks to introduce a new standard into the case. It means that the inquiry is not just into whether the particulars in proposed [47] are made out but whether each such breach, when taken with other such breaches as may be established, in the context of an employment relationship were such as to warrant summary dismissal. Again, that is a potentially broader inquiry than anything raised by the existing pleadings. 9This application is being made on the sixth day of the hearing. On the first day of the hearing, and in the context of considering objections to affidavits, there was discussion as to whether the defence pleaded either an allegation of dishonesty on the part of the plaintiff or any other matter which warranted his termination summarily. Twice on that day senior counsel for the plaintiff made it clear that there was no part of the defence which raised any issue as to whether summary dismissal was justified. At one point senior counsel for the defendants indicated that the pleadings would be considered over the luncheon adjournment. I accept that that followed a concern raised by me and by senior counsel for the plaintiff as to whether there was an express pleading of dishonesty on the part of the plaintiff. Equally, that exchange would have - and no doubt did - brought home to the defendants the absence of any express pleading of a matter said to justify summary dismissal even if it did not involve dishonest or fraudulent conduct. Over the next few days of the hearing, there were references by senior counsel for the defendants to a possible pleading of repudiation by the plaintiff. Nevertheless, the application for an amendment was not foreshadowed until either late on day four or early on day five. As I have stated, it is now being heard on day six. The point in the trial has been reached, where the plaintiff's case has closed. The plaintiff himself was cross examined for just under two days and that is now complete. 10In support of the application to amend, senior counsel for the defendants submitted that the factual matters particularised in proposed [47] have already been addressed by the plaintiff in his affidavit and oral evidence and that of his witnesses. For some of the particulars, I was taken to various parts of the affidavits in order to make good that submission. Senior counsel for the plaintiff accepted that, to an extent at least, aspects of the particulars were addressed. However, he pointed to the different context in which the allegations are now made. He submitted that, to the extent they have been addressed, that either occurred in relation to the defence to a cross claim which involved a different legal standard or they were otherwise treated as what he called "second order issues" namely, something peripheral to the central issues being litigated. To adopt the agricultural flavour of the case, senior counsel politely accepted my analogy that he knew there were lots of rabbits running but they chose which rabbits they would chase and how far they would chase them. Thus the plaintiff submitted that there is a qualitative difference between addressing peripheral issues which appear to go to credit and to litigating issues raised on the pleadings. I accept that submission. 11I have referred earlier to the different legal standards sought to be introduced into the case by proposed [46] and [48] of the proposed amended defences. To my mind they raise significantly new issues. They have been raised at a very late stage. A consideration of what involves a lack of reasonable care or skill on the part of a farm manager which is so serious as to warrant them being sacked immediately without any payment in lieu of notice is a much broader inquiry than that required by the cross claim. 12Of the 15 particulars given for proposed [47], it seems that sub-particulars (d), (e) and (f) are either the same or very close to the matters being litigated in the cross claim. However, for the reasons I have stated, the standard being applied is different. Proposed sub-paragraphs (a), (b) and (j) to (l) are related to issues that are being litigated either on the cross claim or on the plaintiff's claim but that is as close as they get. The balance of the particulars are not raised by any of the existing pleadings. However, the fundamental difficulty I have adverted to remains, namely, that in my view what was being introduced is a totally new standard by which these matters would have to be addressed. 13If these amendments were to be allowed I would at the very least have to give the plaintiff an adjournment so that he can consider what course he will take in light of the new issues raised by the pleadings. He would have to consider, for example, whether to apply to re-open and whether to seek further time to prepare his cross examination of the defendants' witnesses. The fact that the application is now being brought when his evidence and that of his witnesses is complete, including their cross examination, makes it very difficult for me to be satisfied that there would be ultimately no prejudice occasioned to him by allowing the amendments even leaving aside considerations of cost and expense. 14Further, as I have indicated, the amount in issue on this part of the case is just in excess of some $21,000 excluding interest. I am satisfied that to allow these amendments would result in an expansion of the issues on this part of the case such as that the cost and expense of litigating it would become out of all proportion to what was in issue (see Bellingen Shire Council v Colavon Ltd [2012] NSWCA 34 at [28] to [31] per Beazley JA). This is particularly so given the need for procedural fairness to the plaintiff would warrant him at least having some form of adjournment as I have indicated. Given that conclusion, my finding that I could not be satisfied that any prejudice that would be occasioned could in any event be overcome by an order for costs, the likelihood that an adjournment would be required and the late stage of the trial at which the application is made, it is inevitable that I must refuse the application to amend. 15I have not to this point adverted to the explanation for the delay in bringing the application. This was addressed in Aon Risk Services Australia Ltd v Australian National University [2009] HCA 27; 239 CLR 175 at [103] (per Gummow, Hayne, Crennan, Kieffel and Bell JJ): "The fact that an explanation had been offered for the delay in raising the defence was regarded as a relevant consideration in J L Holdings. Generally speaking, where a discretion is sought to be exercised in favour of one party, and to the disadvantage of another, an explanation will be called for. The importance attached by r 21 to the factor of delay will require that, in most cases where it is present, a party should explain it. Not only will they need to show that their application is brought in good faith, but they will also need to bring the circumstances giving rise to the amendment to the court's attention, so that they may be weighed against the effects of any delay and the objectives of the Rules. There can be no doubt that an explanation was required in this case." 16At best for the defendants, the explanation for the late amendment is that it appears to have been an oversight in the preparation of their pleadings. However, that oversight was brought to their attention as of last Monday. The defect, if it can be called that, in their pleadings persisted until this application was brought on last Friday. 17Accordingly, I refuse the application. ********** 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: 14 August 2012