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  4. Evolution 70 Little Edward Pty Ltd v Maturu Group Pty Ltd - [2023] QDC 81

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Evolution 70 Little Edward Pty Ltd v Maturu Group Pty Ltd[2023] QDC 81

Evolution 70 Little Edward Pty Ltd v Maturu Group Pty Ltd[2023] QDC 81

DISTRICT COURT OF QUEENSLAND

CITATION:

Evolution 70 Little Edward Pty Ltd v Maturu Group Pty Ltd [2023] QDC 81

PARTIES:

EVOLUTION 70 LITTLE EDWARD PTY LTD

ACN 602 653 896

(Plaintiff)

v

MATURU GROUP PTY LTD ACN 602 562 839

(First Defendant)

AND

SASIDHAR MATURU

(Second Defendant)

FILE NO:

BD No 393/21

DIVISION:

Civil

PROCEEDING:

Claim

ORIGINATING COURT:

Brisbane District Court

DELIVERED ON:

12 May 2023

DELIVERED AT:

Brisbane

HEARING DATE:

24 February 2023

JUDGE:

Porter KC DCJ

ORDER:

  1. Application dismissed.

CATCHWORDS:

PROCEDURE – CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS – TIME, EXTENTION AND ABRIDGMENT – where the plaintiff filed a statement of claim on 18 February 2021 seeking a liquidated sum due following termination of a lease – where the plaintiff filed an amended statement of claim on 14 June 2022 which added new causes of action – where the amended statement of claim sought, for the first time, damages amounting to the difference between the rent that would have been payable under the terminated lease and the amount of rent the plaintiff received from reletting the premises – where the new cause of action was statute barred – where the plaintiff sought leave nunc pro tunc under r 376(4) Uniform Civil Procedure Rules 1999 (Qld) to amend the statement of claim to include the new causes of action – whether leave should be granted under r 376(4) UCPR to file an amended statement of claim 

Legislation

Limitation of Actions Act 1974 (Qld)

Property Law Act 1974 (Qld)

Uniform Civil Procedure Rules 1999 (Qld)

Cases

Australian Golf Management Corporation Pty Limited v Logan City Council [2022] QCA 86

Draney v Barry [2002] 1 Qd R 145

Firstmac Ltd & Ors v Hunt & Hunt (a firm) [2018] QSC 258

Paul v Westpac Banking Corporation [2017] 2 Qd R 96

Thomas v State of Queensland [2001] QCA 336

COUNSEL:

J Hastie for the plaintiff

D K Atkinson KC for the defendants

SOLICITORS:

Mills Oakley for the plaintiff

O'Shea and Partners for the defendants

Summary

  1. [1]
    By claim and statement of claim filed 18 February 2021, the plaintiff (Evolution) claimed the amount of $192,959.92 as a liquidated sum due by the first defendant (Maturu Group) under a written lease entered into on or about 5 December 2014 (the Lease).  The plaintiff alleged that the Lease had been terminated for breach on 17 February 2017 and that Maturu Group had failed to pay $192,959.92 which was due and payable under the Lease up to 17 February 2017.  Those amounts were particularised as amounts of rent, outgoings and legal fees along with reletting expenses incurred (the debt claim). 
  2. [2]
    By an amended statement of claim filed 14 June 2022 (the ASOC), Evolution amended the date of termination by about a year, to 9 February 2016.  It also reduced the claim for liquidated sums due under the Lease to 9 February 2016 to $123,889.40.  It reduced the amounts for rent and outgoings, but the reletting expenses claims were unchanged.  By the ASOC, Evolution also pleaded, for the first time, a claim for damages for breach of the Lease under an express term of the Lease or alternatively at common law (the damages claims); claiming as damages the difference between the sums due under the Lease for the balance of the term and sums received on reletting of parts of the premises to two tenants.  The damages claims alleged damage of $398,171.48.
  3. [3]
    The defendants contend that the damages claims were statute barred at the time of filing of the ASOC.  Evolution does not cavil with that proposition.  However, Evolution contends that leave should be granted nunc pro tunc to advance the claims pursuant to Rule 376(4) UCPR because:
    1. (a)
      The damages claims arise out of the same or substantially the same facts as the claim in the original statement of claim; and
    2. (b)
      Discretionary factors favour granting leave.
  4. [4]
    For the reasons that follow, I find that the damages claims do not arise out of the same or substantially the same facts as the claim advanced in the original statement of claim.  

The claim and statement of claim

  1. [5]
    The original claim and statement of claim were filed on 18 February 2021.  It alleged that:
    1. (a)
      Evolution was the owner of a property in Little Edward Street known as Shop 3; and
    2. (b)
      Maturu Group entered into the Lease for the period 1 December 2014 to 1 December 2024.
  2. [6]
    Evolution alleged the following material terms of the Lease:
    1. (a)
      By the Schedule that:
      1. The Annual Rent of Shop 3 in the first year was $51,000 per annum plus GST ($4,250 per month); and
      2. Mr Maturu was a guarantor of the Lease;
    2. (b)
      By clause 1, that Maturu Group was obliged to pay the annual rent in monthly instalments;
    3. (c)
      By clause 2.1, that in addition to Annual Rent, Maturu Developments must pay Outgoings during each year equal to the “Prescribed Percentage of Outgoings”[1] and by Clause 2.2, that recovery of outgoings would be by the stated mechanism for estimation and reconciliation based on an Accounting Period; and
    4. (d)
      By clause 8 that the tenant must pay the costs of preparation of the Lease plan and “all amounts the Landlord may be required to spend because the Tenant failed to observe a term in this Lease”.
  3. [7]
    The statement of claim set out the default provisions as follows:
  1. 11.
    DEFAULT

Events of default and Right to Re-Enter

  1. (a)
    If:

…

  1. (iv)
    If the Annual Rent, the Percentage Rent, the Prescribed Percentage of Outgoings or any other payments required to be made pursuant to this Lease are in arrears for seven (7) days (whether demanded or not), …

THEN the Landlord may re-enter the Premises and end this Lease.  This will not affect the Landlord’s legal right to pursue the Tenant for any pervious breach of an obligation or agreement contained or implied in this Lease,…

Damages

  1. (c)
    If the Landlord ends this Lease under clause 0 [sic] the Landlord may recover from the Tenant in addition to damages and amounts recoverable apart from this clause:
  1. (i)
    any Rent and Outgoings due at the date of termination;
  1. (i)
    …
  1. (iii)
    any other amount necessary to make up for the Landlord terminating this Lease because the Tenant failed to perform an obligation including the following:

(A)…

(B)…

  1. (C)
    Expenses of reletting including necessary making good, Redecoration or alteration of the Premises;
  1. (D)
    Legal costs…
  1. [8]
    Evolution also pleaded that, relevantly, the Second Defendant, Mr Maturu, guaranteed the Lease by clause 32 as follows:

[T]he Second Defendant, Third Defendant and Fourth Defendant gave guarantees which guaranteed the payment of all moneys by the First Plaintiff (sic) by clause 32 of the Lease which provided (the Guarantee):

“… the Guarantor named… entering into this Lease with the Tenant the Guarantor agrees with the Landlord that:

  1. (a)
    It will be legally responsible together and separately with the Tenant for payment of all Annual Rent and other moneys and for the due performance by the Tenant of this Lease;
  1. (b)
    the Guarantors indemnify the Landlord against all losses, damages, costs and expenses which the Landlord may incur from any breach of this Lease by the Tenant;
  1. (c)
    the Guarantors must pay the landlord interest at the Stipulated Rate from the time of any Annual Rent or other moneys falling due to the date of payment without any need to make prior demand on the Tenant;
  1. (d)
    …
  1. (e)
    The Guarantors are treated as a primary debtor and contractor together and separately with the Tenant;
  1. (f)
    …”
  1. [9]
    By paragraphs 4 and 5, the statement of claim then pleaded the termination of the lease and the claim for an amount due and payable pursuant to the Lease in the following terms:
  1. 4.
    On or about 21 February 2017:
  1. (a)
    the Plaintiff took possession of Shop 3;
  1. (b)
    the Plaintiff terminated the Lease pursuant to clause 11.1.
  1. 5.
    Between 5 December 2014 and 21 February 2017 the First Defendant failed to pay Plaintiff (sic) the amount of $192,959.52 due and payable pursuant to the Lease.

Particulars

The amount of $192,959, is comprised of:

  1. (a)
    $123,472 being the total amount Rent due (sic) and payable by the First Defendant to the Plaintiff from 5 December 2014 to 21 February 2017 set out in a schedule attached to this Statement of Claim and marked “A”;
  1. (b)
    plus $28,148.64 being the total amount of Outgoings due and payable by the First Defendant to the Plaintiff from 5 December 2014 to 21 February 2017 set out in a schedule and attached to this Statement of Claim and marked “B” which are calculated using the following formula:
  1. (i)
    actual annual outgoings / 12 x 0.0752 (being ratio of floor area of Shop 3 to total lettable floor area);
  1. (c)
    plus $951.48 being the total amount of legal fees incurred by the Plaintiff in preparing the Lease;
  1. (d)
    less $5,952.09 being the total payments received by the Plaintiff from the First Defendant for Rent and Outgoings from 5 December 2014 to 21 February 2017;
  1. (e)
    plus $46,339.49, being the total amount of expenses incurred by the Plaintiff of reletting Shop 3.
  1. [10]
    The statement of claim then articulated the claim against Maturu Group as follows:
  1. 6.
    In breach of clauses 1, 2 and 8 of the Lease, the First Defendant has failed to pay the amount $192,959.52 due and owing pursuant to the Lease.
  1. 7.
    By this Statement of Claim, the Plaintiff demands the First Defendant pay the Plaintiff the amount $192,959.52 which is due and payable by the First Defendant.
  1. 8.
    The Plaintiff is entitled to and claims payment of the sum of $192,959.52 from the First Defendant as a debt due and owing under the Lease.
  1. [11]
    There was finally a claim against Mr Maturu for the amount due under the guarantee contained in the Lease.[2]
  2. [12]
    The claim sought the amount of $192,959.52 “due and owing under the Lease” along with interest and costs.

The defence

  1. [13]
    The defendants filed a defence on 23 March 2021.  It is convenient to note the following:
    1. (a)
      The defendants admitted the Lease and the provisions pleaded; and
    2. (b)
      The defendant denied paragraph 4 and alleged (correctly as it turned out) that the Lease was terminated on 9 February 2016 and that Evolution took possession on that day by changing the locks for Shop 3.
  2. [14]
    The gravamen of the defence was contained in paragraph 4 of the defence by which the defendants denied paragraph 5 of the statement of claim.  That paragraph is not easy to follow but it appears to allege that:
    1. (a)
      The Premises was never able to be used for the specified uses under the Lease of a bottle shop or Indian takeaway;
    2. (b)
      Evolution did not pay a contribution to fitout in breach of the Lease; and
    3. (c)
      Maturu Developments never went into possession and pursuant to clause 11(d), it should be taken to have vacated the Premises from the start of the Lease.  Evolution failed to mitigated its loss from the start of the Lease because it did not seek to relet until it terminated the Lease in February 2017.
  3. [15]
    The defendants also alleged that the claims for rent up to 6 years before commencement of the proceedings were statute barred.

The ASOC

  1. [16]
    There was seemingly little progress until an application by Evolution to place the matter on the Commercial List in May 2022.   On 26 May 2022, I placed the matter on the Commercial List and directed the plaintiff serve any amended statement of claim by 15 June 2022.  There was no express discussion of, and Evolution does not rely on that direction as comprising, any grant of leave under r 376(4) UCPR to include any claim which was statute barred.
  2. [17]
    The ASOC was filed on 14 June 2022.
  3. [18]
    The ASOC pleaded additional provisions of the Lease.  Relevant to this application is the fuller pleading in paragraph 3 of clause 11.1(c) as follows (with amendments underlined):

Damages

  1. (c)
    If the Landlord ends this Lease under clause 0 [sic] the Landlord may recover from the Tenant in addition to damage and amounts recoverable apart from this clause:
  1. (i)
    any Rent and Outgoings due at the date of termination;
  1. (ii)
    the amount by which Rent under this Lease exceeds what is, or is likely to be, received from another tenant for the period between the Landlord’s early termination and the expiry date of this Lease; and
  1. (iii)
    any other amount necessary to make up for the Landlord terminating this Lease because the Tenant failed to perform an obligation including the following:
  1. (A)
    costs of maintaining the Premises;
  1. (B)
    costs of recovering possession of the Premises;
  1. (C)
    Expenses of reletting including necessary making good, Redecoration or alteration of the Premises;
  1. (D)
    Legal costs…
  1. [19]
    The ASOC next added allegations relevant to establishing breaches of the Lease as follows:
  1. 3C.
    Between 5 December 2014 and 9 February 2016, the First Defendant made payments under the Lease totalling $5,692.09 (including GST).

Particulars

Date

Amount (including GST)

3 September 2015

$937.42

3 September 2015

$937.42

3 September 2015

$937.42

3 September 2015

$2,879.83

Total

$5,692.09

  1. 3D.
    In breach of clauses 1.1 and 2.1 of the Lease, the First Defendant failed or refused to make payment of the rent and outgoings between March 2015 and January 2016 totalling $59,788.48 (inclusive of GST), as set out in a schedule attached to this Amended Statement of Claim and marked “AA” (Breach).
  1. 3E.
    On or about 22 January 2016, the Plaintiff issued a Form  Notice to Remedy Breach to the First Defendant demanding payment of $59,788.49 (inclusive of GST) for outstanding rent and outgoings (Notice).
  1. 4.
    Due to the First Defendant’s failure to comply with the Notice and remedy the Breach, Oon or about 21 February 2017 9 February 2016 (Termination Date):
  1. (a)
    the Plaintiff took possession of Shop 3; and
  1. (b)
    the Plaintiff terminated the Lease pursuant to clause 11.1 of the Lease.

Particulars

Notice of Termination of Lease dated 9 February 2016

  1. [20]
    It can be seen that the defendants’ allegation that the Lease was terminated on 9 February 2016 was thereby accepted as correct by Evolution.  Evolution necessarily had to amend paragraph 5 given this concession.  Its amended claim for a liquidated sum due under the contract was as follows:
  1. 5.
    Between 5 December 2014 and 21 February 2017 9 February 2016 the First Defendant failed to pay the Plaintiff the amount of $192,959.52 $123,889.40 due and payable pursuant to clauses 1, 2, 8, 11(c)(i) and 11(c)(iii) of the Lease.

Particulars

The amount of $192,959 $123,889.40, is comprised of:

  1. (a)
    $123,472 $67,333.00 being the total amount of Rent due and payable by the First Defendant to the Plaintiff from 5 December 2014 to 21 February 2017  9 February 2016, set out in a schedule attached to this Amended Statement of Claim and marked “A”;
  1. (b)
    plus $28,148.64 $14,957.52 being the total amount of Outgoings due and payable by the First Defendant to the Plaintiff from 5 December 2014 to 21 February 2017 9 February 2016 set out in a schedule and attached to this Amended Statement of Claim and marked “B” which are calculated using the following formula:
  1. (i)
    actual annual outgoings / 12 x 0.0752 (being ratio of floor area of Shop 3 to total lettable floor area);
  1. (c)
    plus $951.48 being the total amount of legal fees incurred by the Plaintiff in preparing the Lease;
  1. (d)
    less $5,952.09 $5,692.09 being the total payments received by the Plaintiff from the First Defendant for Rent and Outgoings from 5 December 2014 to 21 February 2017 9 February 2016;
  1. (e)
    plus $46,339.49, being the total amount of expenses incurred by the Plaintiff of reletting Shop 3.
  1. 5A.
    In the premises of paragraphs 3C to 5 (inclusive) herein, the First Defendant is liable to pay the amount of $123,889.40 payable under the Lease during the period of 5 December 2014 to 9 February 2016 (Debt) to the Plaintiff.
  1. 5B
    As at 14 June 2022, the Plaintiff has not received payment of the Debt.
  1. [21]
    The balance of the ASOC is new.  It begins by alleging each of the agents retained to relet Shop 3 as follows:

Reletting of Shop 3

  1. 5C.
    Between 9 February 2016 and 30 September 2016, the Plaintiff engaged McGees Isles Love Pty. Ltd. ACN 010 508 835 to:
  1. (a)
    act as leasing agents for Shop 3;
  1. (b)
    find a new tenant for Shop 3; and
  1. (c)
    enact advertising campaigns to find a new tenant for Shop 3 as paid for by the Plaintiff.

(together the Reletting Steps)

  1. 5D.
    Between 30 June 2016 and 10 December 2020, the Plaintiff engaged Trident Property Advisory Pty Ltd ACN 074 003 991 (formerly Chesterton International (QLD) Pty Ltd) to undertake the Reletting Steps for Shop 3.
  1. 5E.
    Between 9 June 2017 and 10 December 2020, the Plaintiff engaged JMP Commercial to undertake the Reletting Steps for Shop 3.
  1. 5F.
    Between 5 July 2018 and 10 December 2020, the Plaintiff engaged Blue Commercial (QLD) Pty Ltd ACN 111 351 172 to undertake the Reletting Steps for Shop 3.
  1. 5G.
    Between 31 August 2020 and 10 December 2020, the Plaintiff engaged Colliers International (Brisbane) Pty Limited ACN 072 999 172 to undertake the Reletting Steps for Shop 3.
  1. [22]
    It next alleges entry in a written lease of 44m2 of Shop 3 to a company referred to as Yellowfin from 26 December 2019 to 25 December 2026 and pleads the material terms of the Yellowfin lease including rent ($29,000 pa + GST), annual review rate (4%), term (7 years) and contribution to outgoings.  The Yellowfin lease is alleged to cover 55% of the area of Shop 3.[3]
  2. [23]
    It next alleges entry in a written lease of 36m2 of Shop 3 to a company referred to as Farine from 10 December 2020 to 9 December 2024 and pleads the material terms of the Farine lease including rent ($27,427.50 pa + GST), annual review rate (3%), term (5 years) and contribution to outgoings.
  3. [24]
    The ASOC then pleads the “Loss and damage suffered from 9 February 2016 onwards”. 
  4. [25]
    It pleads compendiously, by paragraph 5L:

In accordance with clause 11(c) of the Lease, the First Defendant is liable to the Plaintiff for the amount of the rent and outgoings payable between the Termination Date to the Expiry Date, less any amount received form reletting Shop 3.

  1. [26]
    There is no clause 11(c) pleaded.  The reference is plainly to 11.1(c).  It is not specified which subparagraph is relied upon.
  2. [27]
    As to rent, by paragraphs 5M to 5O, Evolution pleads the Rent payable under the Lease from Termination on 9 February 2016 to the Expiry Date, along with the rent payable under the two leases for that period.  It pleads by conclusion:
  1. 5P.
    In the premises of paragraphs 5L to 5O (inclusive) herein, the Plaintiff will suffer loss and damage in the amount of $347,740.96 (inclusive of GST) due to the First Defendant’s failure to pay rent under the Lease between the Termination Date and the Expiry Date.

Particulars

Amount of rent payable until (sic) the Lease

between 9 February 2016 and 1 December 2024

$589,348.75

Less rent to be received under the Yellowfin Lease

between 26 December 2019 and 1 December 2024

($137,715.91)

Less rent to be received under the Farine Lease

between 10 December 2019 and 1 December 2024

($103,891.88)

Total

$347,740.96
  1. [28]
    As to outgoings, Evolution pleads the Outgoings liability for Yellowfin and Farine (55% and 45% of Shop 3 respectively), the total Outgoings between the Termination Date of 9 February 2016 and the date that Shop 3 was fully let under the two later leases, and the amount received from Yellowfin and Farine in that period.[4]  It pleads by conclusion:
  1. 5V.
    In the premise of paragraphs 5Q to 5U (inclusive) herein, the Plaintiff will suffer loss and damage in the amount of $50,430.52 (inclusive of GST) due to the First Defendant’s failure to pay outgoings under the Lease between the Termination Date and the date the total lettable are of Shop 3 was relet. 

Particulars

Amount of outgoings payable until (sic) the Lease

between 9 February 2016 and 9 December 2020

$56,868.89

Less amount of outgoings to be received under the Yellowfin

Lease between 26 December 2019 and 30 June 2020

($3,629.23)

Less amount of outgoings to be received under the Farine

Lease between 10 December 2019 and 1 December 2024

($2,809.14)

Total

$50,430.52

  1. [29]
    Evolution then pleads its claim relating to the period after the Termination Date as follows:
  1. 5W.
    In the premises of paragraphs 5L to 5V (inclusive) herein, the First Defendant is liable to pay the Plaintiff damages in the amount of $398,171.48 (Damages) pursuant to clause 11.1(c)(ii) of the Lease.

Particulars

Amount of rent payable between the Termination Date and

the Expiry date under the Lease less outgoings received under

the Yellowfin and the Farine Lease

$347,740.96

Plus amount of outgoings payable between the Termination Date

and the Expiry Date under the Lease less outgoings received under

the Yellowfin Lease and the Farine Lease

$50,430.52

Total

$398,171.48

  1. [30]
    The claim for Outgoings is expressly based, in this paragraph, on clause 11.1(c)(ii) which does not apply to Outgoings.[5]  I also note that the claim for common law damages for loss of bargain does not articulate that the breach was of an essential term.  It might be wondered whether that claim is properly pleaded in the absence of allegations which support the legal conclusion that the covenant to pay rent and outgoings is an essential term or alternatively allegations of repudiation by Maturu Group.[6]  However, that issue was not raised by the defendants on this application.
  2. [31]
    Evolution amended its claim against Mr Maturu as guarantor as follows:[7]
  1. 6.
    Further or alternatively to paragraphs 9, by this Statement of Claim, the Plaintiff demands The Second Defendant, Third Defendant and Fourth Defendant are jointly and severally liable to pay the Plaintiff the Debt and Damages amount of $192,959.52 which are due and payable by the First Defendant to the Plaintiff pursuant to the Guarantee given by each of the Second Defendant, Third Defendant and Fourth Defendant.
  1. 7.
    Each of the Second Defendant, Third Defendant and Fourth Defendant has failed or refused to pay the amount demanded (or any amount) Debt and Damages and that amount is now due and payable to the Plaintiff pursuant to the Guarantee.
  1. [32]
    The claim for relief is articulated as follows:

As against the First Defendant:

  1. 1.
    The amount of $192,959.52 $123,889.40 due and owing under the Lease;

1A.Damages for breach of contract in the amount of $398,171.48;

  1. 2.
    Interest pursuant to s 58 of the Civil Proceedings Act 2011 (Qld);
  1. 3.
    Costs

As against the Second, Third and Fourth Defendants:

  1. 4.
    The amount of $192,959.52 $522,060.88 pursuant to the Guarantee;
  1. 5.
    Interest pursuant to s 58 of the Civil Proceedings Act 2011 (Qld)…
  1. [33]
    Evolution has never obtained leave to amend its claim.

Subsequent pleadings

  1. [34]
    Evolution’s case remains as articulated in the ASOC.  The defendants filed an Amended Defence in response to the ASOC and have subsequently filed Second, Third and Fourth Amended Defences.  The only defence relevant to today is the Fourth Amended Defence (FAD), filed on 13 December 2022.  That is the first defence to take a limitations defence in respect of the damages claim in the ASOC.  The FAD completely repleaded the defendants’ case.  It maintained, however, the limitations defence raised in the original defence.[8] 
  2. [35]
    Most relevant to this application is paragraph [23] FAD which pleaded to paragraph [5L] ASOC as follows:
  1. 23.
    As to paragraph 5L of the ASOC, the defendants deny the allegations and believe them to be untrue because:
  1. (a)
    on the proper construction of clause 11.1(c)(ii), (iii) and (iv) of the Lease:
  1. (i)
    the plaintiff had a contractual right to loss of bargain damages which accrued on and from the date of termination of the Lease (being 9 February 2016);
  1. (ii)
    on 18 February 2021, the plaintiff commenced this proceeding by claim and statement of claim seeking an amount as a debt due and owing under the Lease;
  1. (iii)
    on 14 June 2022, the plaintiff filed an amended statement of claim which sought, for the first time, a claim for loss of bargain damage pursuant to 11.1(c) of the Lease or alternatively at law;
  1. (iv)
    any claim by the plaintiff for loss of bargain damages (either pursuant to clause 11.1(c) or otherwise at law) was required to be brought by 9 February 2022 by reason of section 10 and/or section 25 Limitations of Actions Act 1974; and
  1. (v)
    in the premises of sub-paragraphs (i) to (iv) herein, the entirety of the plaintiff’s claim for damages is statute-barred.
  1. [36]
    The defendants repeated that defence to paragraphs 5P and 5V of the ASOC, which deal with Mr Maturu’s liability under the Guarantee.
  2. [37]
    No reply has been filed by Evolution to the FAD. Rather, it promptly filed the application before the Court seeking leave to file (effectively nunc pro tunc) the ASOC “insofar as it introduces any new cause of action” pursuant to Rule 376(4) UCPR and leave to file an amended claim pursuant to Rule 377 in a form which raises the damages claims.

The issue to be determined

  1. [38]
    The reference to s. 25 Limitations of Actions Act 1974 (Qld) (LAA) in the FAD is otiose.  That provision is concerned with recovering arrears of rent or damages in respect of arrears of rent.  The damages claims do not seek to recover arrears of rent.  They seek to recover loss of the benefit of the promise to pay future rent (and outgoings) under the Lease following termination.  However, s. 10(1)(a) LAA requires an action founded on contract to be brought within 6 years of the date on which the cause of action arose. 
  2. [39]
    The plaintiff conducted the hearing on the basis that the damages claims were statute barred and that leave was required.  In my view, that was a correct position to take.  I can presently see no reason why the limitations defence arising from s. 10(1)(a) LAA is not a good defence to the damages claims.  The only issue which arises is whether leave should be granted under Rule 376(4).   It was implicitly accepted by both parties that the application for leave to amend the claim under Rule 377 would follow the result of the application under Rule 376(4).
  3. [40]
    Rule 376 relevantly provides:

376Amendment after limitation period

  1. (1)
    This rule applies in relation to an application, in a proceeding, for leave to make an amendment mentioned in this rule if a relevant period of limitation, current at the date the proceeding was started, has ended.

…

  1. (4)
    The court may give leave to make an amendment to include a new cause of action only if –
  1. (a)
    the court considers it appropriate; and
  1. (b)
    the new cause of action arises out of the same facts or substantially the same facts as a cause of action for which relief has already been claimed in the proceeding by the party applying for leave to make the amendment.
  1. [41]
    The defendants plead that the damages claims accrued on 9 February 2016 and had to be brought by 9 February 2022.  The proceeding was started on 18 February 2021.  Accordingly, the relevant limitation period for the damages claims was current at the date the proceeding was started and had ended by the filing of the ASOC.  Accordingly, the condition in Rule 376(1) is met.  No party suggested the contrary. 
  2. [42]
    Further, Evolution implicitly accepted that the damages claims were a new causes of action.  That is plainly correct.  The original statement of claim pleaded a claim for liquidated sums which accrued up to the date of termination of the Lease.  The fact that the date of termination was in error by a year does not change the nature of the cause of action advanced.  The causes of action added by the ASOC sought to recover damages, whether pursuant to a contractual provision for damages under clause 11.1(c) or at general law.  Such claims are plainly different causes of action from a claim for accrued liquidated sums. 
  3. [43]
    Accordingly, as argued before me, the application raises two issues:
    1. (a)
      First, do the damages claims arise out of the same or substantially the same facts as the debt claim which was pleaded in the original statement of claim?
    2. (b)
      Second, if so, is it appropriate to give leave to make the amendment to add the damages claims by the ASOC?      

The first issue: same or substantially the same facts

The law

  1. [44]
    The starting point for any analysis of Rule 376(4) is the decision of Thomas JA in Draney v Barry [2002] 1 Qd R 145.  That case involved a detailed consideration of Rule 376(4) and its effect on the previous law.  The proceedings by the appellants against the respondent solicitors arose out of alleged negligence in, broadly, the security for a transaction funded in part by vendor finance.  There were numerous amendments to the extant pleading but the new matters were distilled down to three key new allegations.
  2. [45]
    It is sufficient to refer just to the first, which related to the adequacy of security obtained by the appellants. The point was summarised in this way by Pincus JA:

Mr Fraser informed us that although the original pleading complained (as has been mentioned) of a mistake the respondents made in not registering a bill of sale, the real difficulty was that there was inadequate equity to support a security. No matter how carefully security documents were done, the loss would still have occurred.

  1. [46]
    After concluding that that new case did not arise on the extant pleading, his Honour turned to the question before the Court here:

The next question is whether the cause of action arises out of the same facts or substantially the same facts. This is a question which depends, according to Williams Civil Procedure, Victoria I 36.01.230 (p. 4157), on the degree of overlap. I can see none. The essence of the new case is that communications to which the respondents were party, or inquiries they ought to have made, made or should have made, rendered them aware of the inadequacy of the equity. The question likely to be litigated, if the amendment is allowed, will be the extent to which the respondents, as solicitors, were expected to protect the appellants in relation to the substantial, as opposed to legal, adequacy of the security proffered and whether what they did breached any obligation which they assumed so to protect the appellants. Nothing raised in the existing pleading has to do with either point.

  1. [47]
    Pincus JA went on to analyse the two other key allegations and reached the same conclusion.  Both McMurdo P and Thomas JA agreed in those conclusions.  Thomas JA differed on the approach to the relationship between the relatively new Rule 376(4) and the existing law.  It was in that context that Thomas JA articulated the statement (agreed in by McMurdo P) commonly cited:

Rule 376 provides a structure within which courts may regulate such procedural applications with due regard to the interests of all parties. Sub- rule (4), which is directly relevant in the present context, allows a fairly wide discretion in that the court will not allow such an amendment unless it considers it “appropriate” to do so and also considers that the new cause of action arises at least substantially out of the same facts as the existing cause of action. I do not think that “substantially the same facts” should be read as tantamount to the same facts, and consider that the need to prove some additional facts is not necessarily fatal to a favourable exercise of discretion under r. 376(4). If the necessary additional facts to support the new cause of action arise out of substantially the same story as that which would have to be told to support the original cause of action, the fact that there is a changed focus with elicitation of additional details should not of itself prevent a finding that the new cause of action arises out of substantially the same facts. In short, this particular requirement should not be seen as a straitjacket.

[citations omitted]

  1. [48]
    This passage reflects the essentially evaluative judgment which necessarily attends the application of the legal standard articulated in the rule.  As Sofronoff P observed (Mullins JA and Martin SJA agreeing) in Australian Golf Management Corporation Pty Limited v Logan City Council [2022] QCA 86 (footnotes omitted):
  1. [15]
    A judgment about whether or not the new facts do or do not “arise out of substantially the same facts” is not, strictly speaking, a judgement that involves an exercise of discretion. Whether a pleading satisfies such a test is surely an objective matter. However, experience shows that matters of judgment of that kind are akin to exercises of discretion because such judgments involve decisions about matters of degree.
  1. [49]
    And in Firstmac Ltd & Ors v Hunt & Hunt (a firm) [2018] QSC 258, Bond J observed:
  1. [21]
    Fourth, locating the dividing line between (1) an amendment which introduces a new cause of action; and (2) an amendment which does not, may involve questions of degree and fine judgment which may not be straightforward and can turn on the level of abstraction at which a plaintiff’s case is described.
  1. [22]
    Fifth, in locating the dividing line, the pleading should not be analysed too critically, nor read pedantically, but broadly, resolving ambiguities or doubtful expressions in favour of the pleader, and allowing inferences to be drawn from incomplete facts. Nevertheless, the required analysis should be informed by an appreciation that the policies underlying the limitations statute may be inappropriately undermined by conducting the analysis at too high a level of generality.
  1. [50]
    Although articulated by reference to the same cause of action issue, his Honour later applied these comments to the “substantially the same facts” issue: see [24] of his Honour’s reasons.
  2. [51]
    The last sentence of the above quotation reflects a consistently articulated policy consideration in the application of Rule 376(4).  It was raised by Thomas JA in Draney at [58].  And is also recognised in Fraser JA’s judgment (with which Gotterson JA and Douglas J agreed) in Paul v Westpac Banking Corporation [2017] 2 Qd R 96 [15] where his Honour (recalling perhaps his submissions in Draney) said:

In an appropriate case leave to amend to add a new cause of action which is statute barred may be granted even though it involves reliance upon facts in addition to those out of which a pleaded cause of action arises, provided that those additional facts are substantially the same as facts already pleaded. The question in each case is whether the facts out of which a new cause of action arises are substantially the same as facts relied upon in a cause of action for which relief has already been claimed in the proceeding. As has been mentioned in other cases, this may involve questions of degree and fine judgment, but the answer to that question should be informed by an appreciation that the policies underlying the applicable statute of limitation may be inappropriately undermined if the required analysis is conducted at too high a level of generality. If those underlying policies are not threatened by a proposed amendment, the test in UCPR r 376(4)(b) may be found to be satisfied even though the new claim involves some variation in the facts. This approach is consistent with the careful way in which the rule has generally been applied since it was enacted.

  1. [52]
    Finally, I refer to the decision of the Court of Appeal in Thomas v State of Queensland [2001] QCA 336, where after referring to the passage quoted above in Draney, the Court observed:
  1. [19]
    …Of course “the story” is a shorthand reference to the matters that the plaintiff has to prove. If it had to be proved, for example, that the road should have been differently constructed in the 1940s there would not only be a different case (ie cause of action) there would be a substantial difference in the material facts now requiring to be proved. Quite apart from this, further consideration would have to be given to the question of prejudice. There are therefore limits to which a broad brush approach can provide the necessary answer. There will commonly be three separate questions to consider –
  1. (a)
    Is there a new cause of action?
  1. (b)
    arising out of substantially the same facts?
  1. (c)
    prejudice.
  1. [20]
    With these principles in mind, it seems to us that in allowing the entire amendment to be made the learned trial division judge permitted too much in favour of the plaintiff, and used rather too broad a brush.
  1. [53]
    To my mind, these authorities recognise that the underlying purpose of Rule 376(4) is to permit amendment to add a statute barred cause of action where the defendant was already on notice of the principal allegations of fact relied upon to sustain the statute barred cause of action because the same or substantially the same allegations were already made in a pleading filed within time.  After all, causes of action arise from allegations of fact.  If the defendant is on notice of the substance of the allegations to be relied upon before the expiry of the limitation period, it is hard to see why there is injustice in permitting the cause of action to be litigated.  If the defendant is not on notice, on the other hand, that the limitation statute should fairly carry the day.

Analysis

  1. [54]
    A comparison of the facts alleged in the original statement of claim and the facts pleaded to make good the damages claims shows a fundamental difference: that being that the original statement of claim did not plead any fact relating to events occurring after the alleged Termination Date.  The original statement of claim was concerned only with events giving rise to accrued liquidated claims under the Lease up to the alleged Termination.  That is a qualitative difference in the cause of action originally pleaded and the damages claims added by the ASOC.
  2. [55]
    Reflecting that qualitative difference, the ASOC pleaded for the first time:
    1. (a)
      The clauses of the Lease which give rise to the contractual damages claims (clauses 11.1(c)(ii) and in respect of Outgoings (iii)(A)); and
    2. (b)
      Facts relating to efforts to obtain new tenants for Shop 3;
    3. (c)
      Facts relating to Rent or Outgoings due after the Date of Termination, being amounts which would have been payable under the Lease up to the Expiry Date; and
    4. (d)
      Facts relating to sums recovered from subsequent lessees of Shop 3.
  3. [56]
    The qualitative distinction therefore can be seen to have given rise to a significant quantity of new facts alleged in the ASOC to make good the damages claims.  The above matters added some five pages of new facts to a pleading which was originally only six pages in length.  How does Evolution contend, in those circumstances, that the damages claims arose out of substantially the same facts as those pleaded to sustain the debt claim in the original statement of claim?   
  4. [57]
    Evolution’s contention involves focusing on the material facts which it says technically underpin the damages claims.  Evolution submitted that the damages claims required Evolution principally to plead:
    1. (a)
      The Lease and the relevant terms of the Lease;
    2. (b)
      The facts comprising the breach of the Lease relied upon to terminate the Lease; and
    3. (c)
      The facts relevant to establishing the valid termination of the Lease for those breaches. 
  5. [58]
    Evolution submitted that those facts were pleaded in the original statement of claim.  It submitted that while the matters mentioned in paragraph [55] were not pleaded, the matters that were pleaded were sufficient to make good the proposition that the damages claims arose out of substantially the same facts as the debt claim in the original pleading.
  6. [59]
    Evolution sought to support the focus on the facts identified in paragraph [57] by relying on the characterisation of those matters as the elements necessary to plead the cause of action in damages in each case.  It submitted that the facts alleged in paragraphs 5L to 5X concern “the quantum of the loss suffered…Those allegations were not necessary to establish the cause of action.  An action for breach of contract does not, as should be uncontroversial, require the plaintiff to prove any particular loss”.[9]
  7. [60]
    It added that the allegations about quantification should not have been a surprise for the defendants because the original statement of claim included a claim for reletting costs.
  8. [61]
    I am not persuaded by those submissions for the following reasons.
  9. [62]
    First, it should not be overlooked that the original statement of claim did not plead the facts now relied upon to make out the elements of the damages claims as articulated by Evolution (excluding “mere quantum”):
    1. (a)
      The original statement of claim pleaded that the Lease was terminated on 21 February 2017.  The ASOC pleads it was terminated on 9 February 2016;
    2. (b)
      The original statement of claim pleaded as breaches of the Lease, failures to pay Rent, Outgoings and reletting expenses and the various other amounts pleaded in paragraph 5 up until 21 February 2017, not such failures to the earlier date (and in lesser amounts) to 9 February 2016, as the ASOC now alleges;
    3. (c)
      The original statement of claim did not identify the clauses of the Lease which had been breached (compare ASOC 3D); and
    4. (d)
      The original statement of claim did not expressly plead the breaches which were relied upon as giving rise to a right to terminate.  It might have been inferred from the reference to clause 11.1 that Evolution relied on the breaches alleged in paragraph 5.  However, if so, that is different from the breaches identified in paragraph 3C and 3D ASOC as giving rise to the right to terminate, which were confined to the failure to pay Rent and Outgoings to February 2016 and did not include the other amounts in paragraph 5 (see paragraph 4). 
  10. [63]
    Further, the original statement of claim also did not plead compliance with the mandatory statutory duty to give a Form 7 Notice to Remedy Breach under s. 124 Property Law Act 1974 (Qld) nor the consequences of compliance.  The ASOC does so.  By paragraph 3E ASOC service of a Form 7 is pleaded, relying on the breaches identified in paragraph 3C and 3D (not the breaches alleged in the original statement of claim).  By amendments to paragraph 4, the ASOC pleads failure to comply with the Form 7 and remedy the breaches alleged in 3C and 3D as giving rise to the right to Terminate.  Nothing like that appears in the original statement of claim.  While it might be doubted that it is necessary to advance the damages claims to plead that the conditions in s. 124 Property Law Act were met (because it is probably a condition precedent: see Rule 153 UCPR), it is a fact which could be properly pleaded and was pleaded in the ASOC and relied upon in the formulation of the allegation of entitlement to terminate.
  11. [64]
    In short, even if focus is placed just on the matters identified as central by Evolution in paragraph [57] above, the fact alleged in the ASOC are different from the facts in those respects pleaded in the original statement of claim.  
  12. [65]
    Second, I do not accept that in respect of the contractual damages claim under clause 11.1(c)(ii), the original pleading identified all the material facts required to make out that cause of action.  Clause 11.1(c)(ii) conferred a right to damages measured in the manner set out in that clause.  The measure of contractual damages was established by “the amount by which Rent under this Lease exceeds what is, or is likely to be, received from another tenant for the period between the Landlord’s early termination and the expiry date of this Lease”.  To plead a cause of action for damages under that clause it was necessary to plead facts which identified an amount calculated in accordance with that clause.  Even if facts related to “mere quantum” can be separated from other material facts for the common law claim, that cannot be applied to a claim under the contractual provision.  The facts required to attract the contractual damages are pleaded by paragraphs 5C to 5W of the ASOC.  None of those facts were pleaded in the original statement of claim.  Evolution’s approach of focusing just on the elements of the cause of action excluding “mere quantum” therefore fails for the claim for contractual damages.   
  13. [66]
    Third, I do not in any event accept that Evolution’s approach correctly characterises the cause of action it advances.  Focussing on the general law damages claim, while it can be accepted that a claim for damages for breach of contract could be advanced on proof of the contract and the breach, such a claim is one which gives rise only to nominal damages.  That is not the cause of action that is advanced in the ASOC.   The ASOC advances a cause of action seeking substantial damages for breach of contract.  Properly to plead that cause of action necessarily required Evolution to plead the damage alleged and to plead that the breaches caused that damage.  The original statement of claim contained no facts at all about those matters. 
  14. [67]
    Fourth, the reliance on the reletting costs highlights the error in the Evolution argument.  In both the original statement of claim and in the ASOC, the reletting costs are identical and are pleaded as arising before termination.  To the extent they hint at a story about reletting costs, it is a story about such costs arising before termination.  The damages claims tell an entirely different story about an entitlement to damages arising post termination.
  15. [68]
    Taken together, these factors lead me to conclude that both the contractual and general law damages claims advanced by amendment to the ASOC do not arise out of the same or substantially the same facts as those pleaded to sustain the claim for liquidated sums under the Lease in the original statement of claim.  
  16. [69]
    Having reached that conclusion, it is unnecessary to consider whether it would otherwise be appropriate to give leave.
  17. [70]
    Finally, it is necessary to deal with the argument on the amendment to the claims on the guarantees.  Evolution contends it does not need leave at all in respect of that claim against Mr Maturu.  I am not certain if that argument is maintained by Evolution even if leave to add the damages claims against Maturu Group was refused.  However, if it is, I reject it. 
  18. [71]
    At a high level of generality, the amendment to the original pleading has the effect of just increasing the amount claimed under the guarantee.  However, this is only at a high level of generality.  The ASOC pleads quite clearly (as it had to in my view) that the claim advanced against Mr Maturu was made up of a sum payable by reference to the claim for liquidated sums (the debt claim) and a further sum payable by reference to the damages claims.  The facts which give rise to each liability in the principal debtor would have to be pleaded to make good the distinct bases of the claims against Mr Maturu as guarantor.   Separate causes of action for payment under the Guarantee arose for those separate claims.  That is reinforced by the fact that the Guarantee itself creates separate entitlements to payment by the guarantor for the Debt claim (see clause 32(a)) and the damages claims (see 32(b)).
  19. [72]
    For the above reasons, I dismiss the application.

Footnotes

[1]As defined under clause 6 of the Schedule to the Lease. See [3(g)] of the Statement of Claim.

[2]Statement of Claim [9] – [12].

[3]ASOC [5Q].

[4]ASOC [5Q] – [5U].

[5]Cf ASOC [5L] above.

[6]See W D Duncan and Sharon Christensen, Commercial Leases in Australia (Thomson Reuters, 9th ed, 2020) [130.500]. See also the compendious definition of Breach in paragraph 3D ASOC.

[7]The third and fourth defendants are no longer parties to the proceedings.

[8]See [15] above.

[9]Evolution’s written outline at [38]

Close

Editorial Notes

  • Published Case Name:

    Evolution 70 Little Edward Pty Ltd v Maturu Group Pty Ltd

  • Shortened Case Name:

    Evolution 70 Little Edward Pty Ltd v Maturu Group Pty Ltd

  • MNC:

    [2023] QDC 81

  • Court:

    QDC

  • Judge(s):

    Porter KC DCJ

  • Date:

    12 May 2023

Appeal Status

Please note, appeal data is presently unavailable for this judgment. This judgment may have been the subject of an appeal.

Cases Cited

Case NameFull CitationFrequency
Australian Golf Management Corporation Pty Limited v Logan City Council [2022] QCA 86
2 citations
Jump To
Cite 1 - [2022] QCA 86
Cite 2 - [2022] QCA 86
Draney v Barry[2002] 1 Qd R 145; [1999] QCA 491
2 citations
Jump To
Cite 1 - [2002] 1 Qd R 145
Cite 2 - [2002] 1 Qd R 145
Firstmac Ltd v Hunt & Hunt (a firm) [2018] QSC 258
2 citations
Jump To
Cite 1 - [2018] QSC 258
Cite 2 - [2018] QSC 258
Paul v Westpac Banking Corporation[2017] 2 Qd R 96; [2016] QCA 252
2 citations
Jump To
Cite 1 - [2017] 2 Qd R 96
Cite 2 - [2017] 2 Qd R 96
Thomas v State of Queensland [2001] QCA 336
2 citations
Jump To
Cite 1 - [2001] QCA 336
Cite 2 - [2001] QCA 336

Cases Citing

Case NameFull CitationFrequency
Ryan v Gold Coast Hospital and Health Service [2025] QSC 1812 citations
1

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