Mackamalil Health Pty Ltd v Moore
[2016] QDC 218
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- Unreported Judgment
- Mackamalil Health Pty Ltd v Moore[2016] QDC 218
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Mackamalil Health Pty Ltd v Moore[2016] QDC 218
Mackamalil Health Pty Ltd v Moore[2016] QDC 218
DISTRICT COURT OF QUEENSLAND
CITATION: | Mackamalil Health Pty Ltd v Moore [2016] QDC 218 | ||
PARTIES: | MACKAMALIL HEALTH PTY LTD ACN 158 236 367 (respondent/plaintiff) v ALEXANDRA CHRISTINE MOORE (applicant/defendant) | ||
FILE NO/S: | BD2160/13 | ||
DIVISION: | District Court of Queensland | ||
PROCEEDING: | Civil Application | ||
ORIGINATING COURT: | District Court, Brisbane | ||
DELIVERED ON: | 1 September 2016 | ||
DELIVERED AT: | Brisbane | ||
HEARING DATE: | 30 August 2016 | ||
JUDGE: | Butler SC, DCJ | ||
ORDER: |
| ||
CATCHWORDS: | PROCEDURE – DISTRICT COURT PROCEDURE – QUEENSLAND – PROCEDURE UNDER RULES OF COURT – PLEADING – DEFENCE – Where defendant seeks to amend her Defence – Where leave is required to amend – whether leave should be granted | ||
COUNSEL: | D de Jersey Counsel for applicant/defendant G Sheahan Counsel for respondent/plaintiff | ||
SOLICITORS: | K&L Gates for applicant/defendant Nathan Lawyers for respondent/plaintiff |
- [1]The applicant applies for leave to amend the Amended Defence filed on 3 December 2014. The proposed amendment is in the form of a draft exhibited as BJC-27 to the affidavit of Bridget Camilleri, filed 24 August 2016.
- [2]As a request for a trial date has already been filed, r 380 requires that leave of the court be granted to make any amendment. The application is one of some urgency as the matter is listed for a three day trial commencing on 7 September 2016. The proposed amendments were first brought to the attention of the respondent on 9 August 2016 when the applicant forwarded a copy seeking its consent to the amendments.
Background
- [3]The action is brought by the respondent company which purchased a medical centre from the applicant doctor. The parties entered into a written agreement for the applicant to sell, as a going concern, the business of a general medical practice in Rockhampton for a consideration of $80,000. The plaintiff company alleges that the defendant entered into an agreement in May 2012 to be employed as a medical practitioner at the practice for a period ending 1 May 2015. The defendant denies the terms of the agreement and in particular denies that she agreed to be engaged for a fixed term ending on 1 May 2015. There is a further dispute as to whether the defendant agreed to supervise overseas trained doctors. The defendant ceased to perform any services under the engagement from 14 December 2012. The plaintiff alleges this constituted a breach of their agreement, causing it to terminate the engagement of three overseas doctors and sell the medical centre at a loss. The defendant contests these claims and says that her actions did not cause the sale of the medical centre.
- [4]Proceedings were commenced in the District Court on 18 June 2013. An amended statement of claim was filed on 27 November 2013 and a defence and counterclaim on 13 January 2014. On 2 May 2014 the plaintiff filed a reply, and an amended defence and counterclaim was filed on 3 December 2014 and a further amended statement of claim was filed on 15 September 2015. On 9 May 2016 the parties filed a request for a trial date in the District Court. The plaintiff filed its list of documents on 5 March 2014 and thereafter in correspondence alleged inadequate disclosure by the plaintiff. On 29 July 2016 the defendant sought disclosure in accordance with r 222, and the plaintiff made disclosure under that rule on 5 August 2016. The defendant alleges this disclosed further evidence with respect to the claim for damages and the alleged agreement in respect of overseas medical practitioners.
The issues
- [5]The applicant submits that the amendments being sought fall broadly into three categories. The first category relates to merely typographical corrections. The respondent has no issue with those.
- [6]The second category relates to what the applicant describes as formal amendments. They involve inserting the words “and says it is untrue because” (or similar) immediately after the pleading of a denial. Where a non-admission is pleaded the applicant seeks to insert the words “because despite reasonable enquiry the defendant remains unsure of the sale price”. The third category relates to amendments in respect of damages which the applicant says put causation “explicitly in issue”.
- [7]The respondent takes issue with the second and third categories of amendment being sought. In respect of the second category of amendments the respondent submits that they will have the effect of withdrawing deemed admissions in the defence. The respondent challenges the third category of amendments as also withdrawing deemed admissions but says they are also deficient on the issue of loss and damage.
Applicant’s submissions
- [8]The applicant submits the amendments are necessary for the trial to proceed on the real issues and that the respondent will not suffer prejudice as a result of the proposed amendments. It is submitted that the need for amendment became apparent upon the change of solicitor and the briefing of counsel.
Respondent’s submissions
- [9]The respondent forcefully argued that no affidavit material providing an explanation for the late application to amend is before the court. It was submitted that the applicant has an obligation to place evidence before the court upon which the court could exercise its discretion. In the absence of an explanation the application should be refused. Secondly, the respondent submits that the applicant is seeking to withdraw deemed admissions and in those circumstances should have sought leave pursuant to r 188 of the UCPR. In the absence of such an application it is submitted that the true issue for determination is not properly before the court. Furthermore, the respondent argues that should amendment be made it will suffer prejudice at this late stage prior to trial.
- [10]I will commence by addressing the respondent’s primary objections to amendment.
Deemed admissions
- [11]It is essential to the respondent’s core argument that the amendments will have the effect of withdrawing deemed admissions. The alleged deemed admissions were highlighted in the respondent’s Reply and Amended Reply. The relevant paragraphs appear at 4(b), 6(b), 7(d), 9, 12, 13, 16, 17, 18, 19, 20, 21, 22 and 23 of the Defence. Each of these paragraphs discloses a form of pleading which the respondent submits fails to comply with the requirements of r 166(4) which reads:
“A party’s denial or non-admission of an allegation of fact must be accompanied by a direct explanation for the party’s belief that the allegation is untrue or cannot be admitted.”
- [12]Under r 166(5) if a party’s denial or non-admission does not comply with r 166(4), the party is taken to have admitted the allegation. Under r 188 a party may withdraw an admission only with leave of the court.
- [13]Many of the relevant paragraphs contain a similar form of pleading in denial of an allegation. This can best be illustrated by reference to one example where a denial of paragraph 6 of the Further Amended Statement of Claim was pleaded. Paragraph 6 of the Statement of Claim reads:
“In accordance with clause 19 of the sale contract by letter of engagement prepared by the defendant’s solicitors and presented to the plaintiff on 6 June 2012 signed on behalf of the plaintiff on 9 July 2012 and by the defendant on 26 September 2012 the defendant agreed to the terms of her engagement as a medical practitioner at the IMC (Engagement Agreement).”
- [14]In response to that paragraph the Amended Defence filed on3 December 2014 pleaded as follows:
“As to paragraph 6, the defendant:
- (a)admits that on 26 September 2012 she signed a document headed Engagement Agreement with the plaintiff;
- (b)otherwise denies paragraph 6 and says further that:
- (i)the document she signed was not in accordance with clause 19 of the Sale Contract;
- (ii)the document did not reflect the terms agreed by the parties;
- (iii)believed the document she signed to be another document headed Engagement Agreement (Engagement Agreement 2) and so signed the document she did with the mistaken belief it was Engagement Agreement 2;
- (iv)the Engagement Agreement document signed is not in accordance and did not reflect the terms agreed by the parties in relation to the engagement; and
- (v)the defendant did not agree to have been engaged for a fixed term ending on 1 May 2015.”
- [15]A similar form of pleading, involving denial of an allegation with the added words “and says further that” (or similar), is used in a number of the paragraphs. The respondent contends that this form of pleading does not provide a direct explanation for the defendant’s belief that the allegation is untrue as is required by s 166(4).
- [16]The applicant now seeks to amend paragraph 6 of the Defence by deleting the words “further that” and inserting after “says” the words “it is untrue because”.
- [17]The requirements of r 166(4) were explained in the judgment of Martin J in Pinehurst Nominees Pty Ltd v Coeur De Lyon Investments Pty Ltd [2012] QSC 314 where his Honour observed that in order to accompany a denial the explanation must be clearly connected with the denial. It is not sufficient for the denial to be in one paragraph and the explanation in another paragraph unless there is a clear statement of connection. His Honour went on to say:
“But an allegation in one paragraph of a defence will not, without more, accompany a non-admission even if it concerns the allegation the subject of the non-admission. The explanation must also be ‘direct’ that is, it must unambiguously relate to the allegation and the non-admission. The mischief of ‘evasive denial’ was a blight which this rule seeks to eliminate.”[1]
His Honour adopted the analysis by Daubney J in Cape York Airlines Pty Ltd v QBE Insurance (Aust) Ltd [2009] 1 Qd R 116 at [28]:
“A ‘direct explanation for a party’s belief that an allegation is untrue’ is precisely what it says – a direct explanation for the belief. … But the requirement that a party provide a direct explanation for its belief that an allegation is untrue fulfils two important functions:
- It compels the responding party to expose, at an early stage of the proceeding, its rationale for a joinder of issue on a particular allegation;
- It necessarily compels the respondent party to formulate that rationale. In other words, the party must ask itself, and be able to answer the question, ‘why am I denying this fact?’.
A party’s direct explanation may, depending on the nature of the allegation in question, be straightforward (e.g. ‘this event alleged by the plaintiff did not occur at all’). It may be that the parties believe that the allegation is untrue as founded in a different factual matrix (e.g. ‘this event did not occur in the manner alleged by the plaintiff’). Or it may be that the party believes the allegation to be untrue because the allegation is inconsistent with other matters which the party would propound (e.g. ‘the alleged facts are so inconsistent with other matters that the defendant believes it to be untrue’).”
- [18]Further assistance in relation to what is required of a party in providing an explanation of the party’s belief can be found in the decision of the Court of Appeal in Aimtek Pty Ltd v Flightship Ground Effect Pty Ltd [2014] QCA 294 at [7]. In a case involving non-admissions, their Honours responded to submissions seeking to rely upon the reasons of Fryberg J in ASIC v Managed Investments (No 3) (2012) 88 ACSR 139 as follows:
“In the second cited paragraph Fryberg J held that a party’s pleading that the party ‘… denies paragraph 9 because the allegations are untrue’ did not comply with r 166(4) because the denial was accompanied by an explanation why the party denied the relevant allegations rather than an explanation for the party’s belief that the allegations were untrue.
… Rule 166(4) requires a direct explanation for the party’s belief that the allegation cannot be admitted, but it would be mere pedantry to insist that a pleaded expression of that belief is defective merely because it does not precisely adopt the words used in the rule. Barker v Linklater is inconsistent with any such requirement.”
In the last mentioned case it was held that a respondent’s pleading should not be held to be defective merely because it might have been expressed more elegantly. The judgment in Aimtek went on:
“The essence of the appellant’s argument was that the respondent’s non-admissions were defective because they admit that any statement which related the pleaded explanation for the non-admissions to a belief by the respondent that the allegations could not be admitted. Accepting that it would have been preferable for the pleader to use and more closely adapt the words of the rule, in the context of this pleading the explanation for the non-admission that the respondent remained unsure of the truth or falsity of the allegations after having made reasonable investigations conveyed that the respondent believed that the allegations ‘cannot be admitted’.”
- [19]The applicant does not concede that the form of pleading in the amended defence failed to provide a direct explanation as required by r 166(4). The respondent argues that because the applicant seeks to amend those paragraphs, it in effect is conceding that its original pleadings gave rise to deemed admissions. The applicant responds that it is merely seeking amendment to remove any doubt on the issue, rather than have the matter go to trial with the parties not agreed on what allegations are admitted on the pleadings.
Consideration
- [20]It is important to make a determination on the issue of deemed admissions as that is central to the respondent’s submissions on the amendment application.
- [21]It is correct to observe, as the applicant appears to concede, that the pleadings could have been better drafted. However, in my view the original pleadings are sufficient to comply with the requirement in r 166(4). Each explanation accompanies the denial by appearing in the same paragraph or subparagraph. It is true, as observed by Martin J in Pinehurst Nominees that merely being in the same paragraph is not sufficient, without more. The explanation must also be “direct”. That is, it must expose the rationale of the responding party for joining issue with a particular allegation and force the responding party to address why it is making the denial.
- [22]The drafting in para 6(b) (which I have taken as an example) is, in my view, sufficient to achieve these objectives. Connecting words link the denial to the explanations. They do not merely assert that the allegations are untrue but provide explanations for why the applicant believes them to be untrue. It certainly would have been preferable if the pleading, as the amendment now seeks to achieve, made the link between the denial and the explanations clearer. But, as observed in Aimtek, the pleading should not be held defective merely because it might have been expressed better. It achieves the objectives outlined by Daubney J in Cape York Airlines by exposing the rationale for the denials.
- [23]While I have used paragraph 6 as an example, the same conclusion applies to the other proposed amendments involving denial of allegations. Accordingly, I am satisfied that the relevant paragraphs comply with the requirements of r 166(4) and therefore do not amount to deemed admissions by application of r 166(5).
- [24]Having so concluded, I will approach the application as an exercise of discretion under r 280 of the UCPR. Consideration need not be given to r 188 of the UCPR, as was urged by the respondent.
Lack of explanation
- [25]The respondent argues that the applicant has failed to provide an explanation for why the amendments sought were not made and why they could not have been made earlier than this late stage. It is submitted that in order to properly engage the exercise of the court’s discretion to grant leave to permit amendments after the filing of the request for a trial date, it is necessary that evidence be adduced as to why the application is brought so late.
- [26]The applicant has provided two affidavits on the application. The affidavit of Bridget Jean Camilleri filed on 24 August 2016 merely sets out the history of the proceeding. A further affidavit of Ms Camilleri filed at hearing annexes a letter to the respondent dated 18 July 2016 which advised of a change of the solicitors with day to day carriage of the matter and stated that Mr David de Jersey of counsel had been briefed to appear at the trial. It is submitted on behalf of the applicant that the court can have regard to the recent change in solicitors and appointment of counsel as providing an explanation for why a late decision was made to seek the amendments.
- [27]It is undoubtedly the case that ordinarily affidavit material setting out the reasons why a late application for amendment is sought is to be expected. The respondent relied upon a number of references by all the judges in Rigoto Farms Pty Ltd v Ridolfi [2000] QCA 292 to that effect. Comments to that effect may also be found in Aon Risk Services Australia Limited v Australian National University (2009) HCA 27. While accepting the force of those observations it must also be recognised that this court is engaged in the exercise of a discretion which requires that regard be given to all relevant considerations. I have gained some assistance from the reasons of the Court of Appeal in Monto Coal 2 Pty Ltd & Ors v Sanrus Pty Ltd as trustee of the QC Trust & ors [2014] QCA 267 at [89]-[104]. In that case the Court concluded that:
“The absence of explanation in those circumstances did not result in his Honour being unable to undertake the necessary weighing exercise nor to determine that the application for leave to amend was made bona fide. No error in this respect has therefore been demonstrated.”
The Court of Appeal referred with approval to the judgment of the Federal Court in Cement Australia Pty Ltd v Australian Competition Consumer Commission (2010) 187 FCR 261 at [51]:
“Aon Risk is not a one size fits all case. Whilst various factors are identified in the judgment as relevant to the exercise of discretion, the weight to be given to these factors, individually and in combination, and the outcome of that balancing process, may vary depending upon the facts in the individual case. As the plurality in Aon Risk observed at [75], statements made in cases concerning amendment of pleadings are best understood by reference to the circumstances of those cases, even if they are stated in terms of general application.”
- [28]I accept that the absence of explanation is a relevant factor in the exercise of my discretion. However the absence of that explanation needs to be considered in the context of all the relevant factors on the exercise of discretion.
Relevant legal principles
- [29]In exercising a discretion on application for grant of leave to amend, it is necessary to keep firmly in mind the effect of r 5 of the UCPR. That is, to keep in mind the purpose of facilitating the just and expeditious resolution of the real issues in civil proceedings at a minimum of expense. In Hartnett v Hynes [2009] QSC 225 at [11]-[22] Applegarth J set out a list of relevant principles to be considered when exercising such a discretion. His Honour specifically formulated the principles having regard to r 5 and the decision of the High Court in Aon Risk. Among the matters to be considered is that there is no entitlement to amendment. Merely because the other party can be compensated by cost does not justify the granting of leave. There should be adequate explanation or justification for the application and the existence of an explanation is relevant to the court’s discretion. It must be borne in mind that while parties should have a proper opportunity to plead their case justice does not permit them to raise any arguable case at any point in the proceedings. Justice must be done to all the parties including parties other than the applicant. Regard must be had to any prejudice to the respondents. It will be necessary to consider the history of the litigation and the point relative to trial that has been reached. Amendments to achieve expeditious resolution of the real issues in a proceeding are to be distinguished from amendments raising new claims and new issues. Ultimately it is necessary for all matters relevant to the exercise of the power to be weighed or balanced.
Consideration
- [30]An analysis of the proposed amendments indicates that this is not a case where the amendments will raise new claims or new issues. Those amendments relating to pleaded denials merely clarify the relationship between the denial and its accompanying explanation by substituting for the term “further that” the term “it is untrue because”. For the reasons I have already given I consider that the original pleading was not so deficient as to be non-compliant with the requirements of r 166(4) and that the amendments sought are as to form rather than substance. These amendments will, however, resolve an issue between the parties on the pleadings as to what allegations should be accepted as being admitted or denied, an issue which had the potential to impede the expeditious conduct of the trial.
- [31]Amendment is also sought to paragraphs 21 and 22(e) where non-admissions are made. In paragraph 21 it was originally pleaded, following on from a number of denials, that “the defendant does not admit and cannot admit that sale price pleaded”. The amendment seeks to add “because despite reasonable enquiry the defendant remains unsure of the sale price” to that pleading. The statement that the sale price cannot be admitted is similar to the statement “are unable to attest to the truth or otherwise” of the allegations which was accepted by the court in Barker v Linklater as being capable of complying with r 166. The proposed amendment simply makes the matter already pleaded clearer. In my view no deemed admission arose on the original pleading and the proposed amendment introduces no new issue.
- [32]A similar conclusion may be reached in respect of the proposed amendment to paragraph 22(e). The applicant originally pleaded that she “cannot admit those amounts until further particulars are provided”. The amendment seeks to substitute that they are not admitted “because despite reasonable inquiry the Defendant remains unsure of their truth”. In my view the original pleading provided an adequate explanation for the non-admission although the amendment expresses the applicant’s belief more clearly.
- [33]It is necessary to consider the proposed amendments to paragraph 22 where additional text has been introduced. In paragraph 22(c) the existing pleading provides an explanation for the belief that, in one respect, the allegation of loss is untrue. The words added in the amendment merely articulate more clearly why that is so. No new issue is introduced. The amendment to paragraph 22(d) clarifies that the legal issue of causation is contested. As much was implicit in the original pleading which, in regard to reduction in value of the practice, stated it “was not because of the Defendant”. In argument before me Mr Sheehan accepted that the original pleadings had raised causation as an issue. New subparagraphs (i) and (j) both identify specific alleged expenses in respect of which causation is denied. Both are examples of particularisation of the original pleading that the defendant “did not cause loss or damage to the Plaintiff”. They introduce no new claim or issue but do draw attention to the precise matters in dispute and therefore have the potential to facilitate a just and expeditious resolution of the true issues upon the trial.
- [34]The proposed amendments introducing subparagraphs 22 (f), (g) and (h) identify that the applicant, in denying the allegation of loss and damage, relies on an alleged failure by the respondent to disclose documents relevant to that issue. Disclosure was an issue identified in correspondence between the parties prior to the request for trial date being filed. An email on 14 July 2014 alleged insufficient disclosure and a further letter of 24 December 2015 specifically identified categories of undisclosed documents relevant to the claim for damages.[2] The proposed amendments introduce no new issue, but do particularise an area of dispute in regard to the pleaded denial of the respondent’s claim for loss and damage. That area of dispute had been clearly identified by the applicant in its earlier correspondence.
- [35]Counsel for the respondent submitted that the proposed amendments did not properly transverse the respondent’s allegation of loss and damage. Counsel for the applicant responded that it was not in dispute that the respondent incurred expenses, rather the true issue was whether loss was caused by the actions of the applicant.
- [36]It is necessary that I be satisfied the proposed amendments relate to matters in genuine dispute. It is common ground that between the parties that there is a dispute as to whether or not there are implied admissions. This will affect the way in which each party conducts the trial. In my view it is in the interests of justice that this issue be resolved prior to trial so that the parties are able to enter upon the trial properly understanding the basis upon which the matter is to be litigated. Many of the amendments have the effect of resolving this issue. The remaining amendments do not raise new issues but, in my view, clarify and particularise the defendant’s position.
- [37]Prejudice to the respondent is relevant to my assessment. It is accepted that allowing the amendments will require the respondent to file an amended Reply and respond to the Notice to Admit Facts. A change of strategy for the trial may be necessary. Hopefully the trial will not be delayed. The respondent should not be exposed to prejudice, even with the benefit of a costs order, without good reason when all the relevant considerations are balanced.
- [38]Very limited explanation has been provided for why the amendment is sought at this time, rather than earlier. This is a relevant consideration in the exercise of the discretion. The need for an explanation and the content of any such explanation must vary from case to case. The solicitors for the applicant were given fair notice of the deemed admissions issue from the respondent’s pleadings. A competent solicitor would have taken steps at that stage to address the issue. It is apparent from the limited material before me that the request for amendment has arisen following upon a new solicitor becoming involved in the matter and counsel being briefed. In my opinion, further knowledge about why the original solicitor failed to avert to the issue of the implied admissions would be of little assistance to me in the proper exercise of my discretion in this case. This is not a case where an admission has been made or there has been a failure to deny and, for reasons that are submitted not to be bona fide, there has been a change in position by the party. The primary reason for amendment is apparent and does not relate to any change of position by the applicant on an issue of fact.
- [39]My ruling, contrary to the respondent’s pleadings, that the applicant’s pleadings did not give rise to implied admissions identifies an area of disagreement between the parties requiring attention. This provides a legitimate reason why the applicant’s amendments should be granted in order to provide clarity before the trial begins. As was observed by the plurality in Aon Risk at [82]:
“What needs to be shown for leave to amend to be given, as the cases referred to above illustrate, is that the controversy or issue was in existence prior to the application for amendment being made. It is only then that it is necessary for the court to allow it properly to be raised to enable a determination upon it.”
The amendments here do not raise any issue which was not in existence prior to the application for amendment being made.
- [40]It is accepted that the respondent will or may suffer some prejudice due to the amendments being allowed, at least by way of further steps or preparation prior to trial. A further Amended Claim will need to be filed and the respondent may need to file a Notice to Admit Facts. It is appropriate that orders be made to accommodate those needs.
- [41]Orders
- The Defendant is granted leave to amend its Defence in substantially the form of Annexure BJC-27 to the affidavit of Bridget Jean Camilleri sworn and filed 24 August 2016.
- By 12pm Friday, 2 September 2016, the Plaintiff is to serve any Notice to Admit Facts and any Notice to Admit Documents.
- By 4pm Monday, 5 September 2016, the Defendant is to serve its response (if any) to the Plaintiff’s Notice to Admit Facts and/or any Notice to Admit Documents.
- By 4pm Monday, 5 September 2016, the Plaintiff is to file and serve any Further Amended Reply.
- The Defendant pay the Plaintiff’s costs of and incidental to this application on the standard basis.