Supreme Court New South Wales Medium Neutral Citation: In the matter of Beverage Freight Services Pty Ltd [2019] NSWSC 1684 Hearing dates: 11 November 2019 Date of orders: 11 November 2019 Decision date: 11 November 2019 Jurisdiction: Equity - Corporations List Before: Black J Decision: Leave granted to the Plaintiffs to file an Amended Statement of Claim in a form consistent with this judgment. Costs of today and of the Plaintiffs' application to amend be reserved. Catchwords: CIVIL PROCEDURE – pleadings – application for leave to file amended statement of claim – where a proposed amendment introduces further claims – where proposed amendment introducing further claims is sought very late – where another proposed amendment adding a reference to an entity is not opposed – whether leave to file amended statement of claim should be granted. Legislation Cited: - Civil Procedure Act 2005 (NSW) ss 56, 57, 58, 64 Cases Cited: - Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175 - Bi v Mourad [2010] NSWCA 17 - Hans Pet Constructions Pty Ltd v Cassar [2009] NSWCA 230 - Macquarie International Health Clinic Pty Ltd v Sydney Local Health District [2013] NSWSC 764 - Re ACN 607 358 887 Pty Ltd [2019] NSWSC 1561 Category: Procedural and other rulings Parties: J and E Vella Pty Ltd (First Plaintiff) Joseph Gregory John Vella (Second Plaintiff) Brian Charles Hobson (First Defendant) Hynadam Pty Ltd (Second Defendant) Brett Soper (Third Defendant) Mechita Pty Ltd (Fourth Defendant) Beverage Freight Services Pty Ltd (Fifth Defendant) Beverage Distribution Australia Pty Ltd (Sixth Defendant) Representation: Counsel: G A Sirtes SC/A F Fernon (Plaintiffs) M Ashhurst SC/M Dolenec (Defendants) Solicitors: Yates Beaggi Lawyers (Plaintiffs) McEvoy Legal (Defendants) File Number(s): 2015/157614 Judgment Nature of the application 1. By Interlocutory Process filed on 30 October 2019 the Plaintiffs, J and E Vella Pty Ltd and others, seek leave to file an Amended Statement of Claim in the form of Annexure A to the Interlocutory Process. 2. That Amended Statement of Claim contains amendments in effectively three areas. The first is to introduce, in several aspects of the Statement of Claim, references to "Schweppes Australia" in parallel to existing references to "Cadbury Schweppes". That amendment was fairly, and appropriately if I may say so, not opposed by Mr Ashhurst who appears with Ms Dolenec for the Defendants. The second amendment was to introduce a new claim for relief, in respect of what was described as the expropriation from the Fifth Defendant of a contract or opportunity to contract with Toll Transport Pty Ltd ("Toll") from about September 2015 for the delivery of Schweppes Australia beverage products. A new paragraph 40A pleads a contract with Toll formed in September 2015, not long after the proceedings were commenced, for the purposes of providing transport supply services in respect of Schweppes Australia Beverages, and further references were introduced to Toll within subsequent paragraphs. The third area of change is the introduction of a loss of opportunity case, although that is an amendment to particulars and does not appear, on its face, to require leave of the Court. 3. Before turning to the affidavit evidence, I should note that there seemed to me to be significant difficulties with the proposed amended pleading. The purpose of the partnership, as pleaded in paragraph 13 of the Statement of Claim, is to make a profit through the business of providing freight services to the Cadbury Schweppes entity. An oral term of the partnership agreement is pleaded that it would be incorporated to conduct a business of supplying freight services to Cadbury Schweppes. Far from supporting the amendment, which seeks to extend the claim to the provision of services to Toll, as a subcontractor, that oral term appears to be inconsistent with the proposed amendment. The provision of services to Toll is, obviously enough, not conducting a business of the provision of freight services to the Cadbury Schweppes entity, even if Toll is contracting, and the Fifth Defendant is subcontracting, for the carriage of Cadbury Schweppes products. 4. There is also no pleading, by way of material facts, or by identification of an analytical structure, of how the entry by the Fifth Defendant into a subcontract with Toll becomes a breach of, or gives rise to claims in respect of, the pleaded partnership, or the other causes of action alleged. When Mr Sirtes, who appeared with Mr Fernon for the Plaintiffs, sought to explain that proposition in submissions, he set out a case which was simply not pleaded, including, inter alia, an unpleaded allegation that the subcontracted business of Beverage Distribution Australia Pty Ltd to Toll was identical, or substantially identical, or perhaps somewhat alike to, the previous business of Beverage Freight Services Pty Ltd. That material fact is not pleaded and, second, the extent of similarity of the relevant businesses is plainly a question of fact which would require further factual inquiry. The affidavit evidence 1. Turning now to the evidence in respect of the application, before returning to the applicable principles, the Plaintiffs rely on the affidavit of Mr Amirbeaggi dated 31 October 2019. That affidavit discloses a long and unfortunate history of delay in the conduct of these proceedings, not limited to the Plaintiffs, but having the consequence that proceedings which were commenced in 2015 have still not reached a hearing, over four years later. That affidavit also, notably, provides no satisfactory explanation of why it is only now, in 2019, the Plaintiffs seek to amend their claim to bring in a case in respect of events which are said to have occurred shortly after the proceedings were commenced, in September 2015, in respect of the subcontract with Toll. There is even less explanation of the fact that no such amendment was sought to be made, at any earlier point, notwithstanding that, as Mr Amirbeaggi fairly recognises, the fact of the arrangements with Toll were plainly disclosed by the Defendants' evidence, filed as long ago as August 2017. 2. The Defendants in turn rely, in opposing the amendment, on the affidavit of Mr Grossman dated 6 November 2019 which refers, inter alia, to the fact that the amendments would require at least further lay evidence to be led, in respect of the arrangements with Toll, and identifies the additional costs which were likely to be incurred in that respect. To that, it seems to me, must be added the fact that the amendments would inevitably require the production of further documents. I can readily draw that inference because, not so long ago, the Plaintiffs served a notice to produce seeking the production of several categories of documents relating to the arrangement with Toll, which was set aside because that matter was not pleaded. The Plaintiffs now contend, possibly for convenience, that the range of documents they require is less than they previously sought. The third area in which the amendment would plainly impact, although Mr Sirtes rightly points out that the Defendants have not yet led expert evidence, is upon the scope and cost of that expert evidence. The introduction of a further issue as to Toll, at this late stage, would expand the scope of and the cost of the expert evidence which is involved. The fourth issue, to which Mr Grossman's affidavit refers, is the risk of deterioration of recollection. While Mr Sirtes points out that Mr Hobson has already led evidence as to matters that occurred some time ago, it remains that a delay of several years in raising an issue would inevitably result in the deterioration of recollection as to that issue, beyond the recollection which would have existed had that issue been raised promptly. Submissions 1. The Plaintiffs point out that the restructure involving the Cadbury Schweppes business, which led to Schweppes Australia's involvement, was of little moment, and that has been fairly recognised by the Defendants in consenting to the amendment introducing reference to Schweppes Australia. The position in respect of Toll, however, is quite different, both because of the identified scope of the partnership and because of the subcontracting arrangement that was established in respect of Toll. The Defendants fairly identify well-established principles in respect of the grant of an amendment, to which I will refer below, and also refer, in oral submissions, to the fact that financial documents had previously been produced by the Defendants, without objection, which covered the period in which the Fifth Defendant contracted with Toll. I will assume, without deciding, the correctness of that proposition. It remains that, on the first occasion on which, as far as the evidence goes, a claim for production of documents was made which specifically identified a claim in respect of Toll, the point was properly taken by the Defendants that that was not part of the Plaintiffs' pleaded case. It seems to me that the Defendants not previously taking that point, in respect of matters which may include issues other than Toll, is neither a matter of criticism, nor a matter which allows the expansion of the case now to matters that were not previously pleaded in it. 2. The Defendants submit, as I have noted above, that the evidence led by the Defendants over two years ago, in multiple affidavits, had disclosed the nature of the relationship with Toll, and that no attempt had then been made to amend the pleading, and that it was not until June 2019 that further documents were sought in respect of the arrangement with Toll, then unpleaded, which led to the successful application to set aside the notice to produce calling for production of those documents. The Defendants point out that, as I also noted above, Mr Amirbeaggi does not provide any real explanation for that delay. The Defendants also point to the prejudice which they contend they would suffer, in now having to deal with a further expanded case, some four years after the case was initiated, when it is at a point that the Court would otherwise allocate a hearing date, as I previously noted, by now having to deal with an expanded case in respect of the claim concerning Toll. The Defendants submit, and I accept, that the prejudice arising from delay is a matter that can be inferred, including the effect of delay on the recollection of witnesses. Applicable principles 1. Turning now to the applicable principles, I am required to exercise my discretion whether to allow any amendment having regard to the provisions of sections 56-58 and 64 of the Civil Procedure Act 2005 (NSW). Section 58 requires the Court to have regard to the dictates of justice when considering an order for the amendment of a document and requires the Court to have regard to the provisions of ss 56 and 57. Section 56 identifies the overriding purpose of the just, quick and cheap resolution of the real issues in dispute in the proceedings and s 57 requires proceedings to be managed having regard, inter alia, to their just determination. Section 64, relevantly, provides that, at any stage of the proceedings, the Court may order that leave be granted to a party to amend any document in the proceedings and that, subject to s 58, all necessary amendments are to be made for the purposes of determining the real questions raised by the proceedings and avoiding the multiplicity of proceedings. 2. I have also had regard to the treatment of the principles in the case law, including Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175, to which the parties refer. The joint judgment there observed, in relation to rules of court that are similar to s 56 of the Civil Procedure Act, that speed and efficiency are seen as essential to a just resolution of the proceedings and, although that should not detract from a proper opportunity being given to the parties to plead their case, it indicates that limits may be placed upon pleading when delays and costs are taken into account. I interpolate that it is not a particularly strict application of those principles to suggest that a significant amendment of the pleadings, some four years into their slow progress towards a hearing, in a manner that will reopen document production and lay evidence, is not the strongest of cases for amendment. The joint judgment also recognised that an order for costs will not always provide sufficient compensation and achieve a just resolution, and it cannot be said that a just resolution requires that a party be permitted to raise an arguable case at any point in the proceedings, on payment of costs. 3. The High Court also there recognised, in the context of a late amendment application, the effect of delay upon the opposing party and the fact that a costs order should not be treated as an automatic solution to problems created by failures to conform with the objectives of case management. The decision also drew attention, lightly, to the fact that justice cannot always be measured in money and that a judge is entitled to weigh the strain the litigation imposes on litigants, several of whom are here natural person defendants. I also have regard to the observations of the Court of Appeal in Bi v Mourad [2010] NSWCA 17 and in Hans Pet Constructions Pty Ltd v Cassar [2009] NSWCA 230 at [36], which emphasised the significance of delay, not only for the parties, but for the interests of justice more generally and other parties with proceedings before the Court. 4. I note that these principles have recently been applied by Kunc J in Macquarie International Health Clinic Pty Ltd v Sydney Local Health District [2013] NSWSC 764 at [48]ff, and again, in Re ACN 607 358 887 Pty Ltd [2019] NSWSC 1561 at [183]ff. In the latter case, his Honour declined an amendment application brought in the course of a hearing, where it was brought too late, without an adequate explanation for delay, and would have prejudiced the defendant by bringing about delay and extra cost and adding further time to an already extended hearing. His Honour there noted that allowing the amendment in those circumstances would have been contrary to the achievement of the overriding objective set out in s 56 of the Civil Procedure Act. Similar issues arise here, although the hearing has not yet commenced. Determination 1. It seems to me inevitable that the Plaintiffs' proposed amendment to introduce claims in respect of the Toll subcontract would bring about the need for further document production, and that the Plaintiffs would ultimately need to seek the wider range of documents that they sought not long ago, rather than the narrower range for which Mr Sirtes has today contended, because it would be necessary to do so in order to properly advance their case. Second, it seems to me that the proposed amendments are here sought far too late, given the lapse of time since the subcontract with Toll was entered into, the time since it was addressed in the Defendants' evidence, the time which this case has already taken to reach this point, and the likely delay that would arise from further document production, further lay evidence, and an expansion of the scope of the Defendants' expert evidence that it would bring about. The delay that would then result would in turn lead to extra cost, including additional costs likely to be associated with a further delayed and extended hearing. 2. These matters also seem to me to emphasise that the Plaintiffs' delay would here cause difficulties which would not have arisen had this amendment been made, for example, promptly in 2015 when the subcontract with Toll was entered into or even, less promptly, in 2017 when it was specifically and clearly identified in the Defendants' evidence. 3. For all these reasons, I am comfortably satisfied that I should not permit the amendment so far as it extends to a claim in respect of Toll. 4. As I have noted above, the amendment in relation to Schweppes Australia was not contested. I will permit the additional particular, in respect of a loss of opportunity case, on the basis that that does not require leave to amend and does not, in fact, expand the pleaded case. Either the additional particular is within the scope of the existing claim of loss and damages, in which case it is permissible, or it is not, and the addition of that particular does not alter that matter one way or the other. 5. I therefore grant leave to the Plaintiffs to file an Amended Statement of Claim in a form that is consistent with the judgment. I initially proposed to grant that order on condition that the Plaintiffs pay the costs thrown away by the amendment. After hearing from Mr Sirtes, I will not order payment of costs thrown away where, in the particular circumstances, the parties appear to have paid little attention to the difference between Cadbury Schweppes and Schweppes Australia and that there is no significant prospect that any costs have been thrown away, other than for those associated with a minor amendment to the Defence to extend it to dealings with that entity. I make the following further orders: 1. Reserve the costs of today and of the Plaintiffs' application to amend. 2. Adjourn the application for leave to bring derivative proceedings to not before 11.30am before me on 29 November 2019. ********** 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: 28 November 2019