Mad Dogs Pty Ltd (in liq) v Gilligan's Backpackers Hotel & Resort Pty Ltd
[2015] QSC 140
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- Mad Dogs Pty Ltd (in liq) v Gilligan's Backpackers Hotel & Resort Pty Ltd[2015] QSC 140
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Mad Dogs Pty Ltd (in liq) v Gilligan's Backpackers Hotel & Resort Pty Ltd[2015] QSC 140
Mad Dogs Pty Ltd (in liq) v Gilligan's Backpackers Hotel & Resort Pty Ltd[2015] QSC 140
SUPREME COURT OF QUEENSLAND
CITATION: | Mad Dogs Pty Ltd (in liq) v Gilligan’s Backpackers Hotel & Resort Pty Ltd & Anor [2015] QSC 140 |
PARTIES: | Mad Dogs Pty Ltd (in liquidation) (Plaintiff Applicant) v Gilligan’s Backpackers Hotel & Resort Pty Ltd (First Respondent) v Christian John Ainsworth (Second Respondent) |
FILE NO/S: | SC No 29 of 2009 |
DIVISION: | Trial |
PROCEEDING: | Application |
ORIGINATING COURT: | Supreme Court at Cairns |
DELIVERED ON: | 22 April 2015 |
DELIVERED AT: | Cairns |
HEARING DATE: | 20 March 2015 |
JUDGE: | Henry J |
ORDERS: |
|
CATCHWORDS: | PROCEDURE – SUPREME COURT PROCEDURE – QUEENSLAND – PROCEDURE UNDER UNIFORM CIVIL PROCEDURE RULES AND PREDECESSORS – PLEADING – DEFENCE AND COUNTERCLAIM – where the plaintiff applicant seeks an order that paragraph 32 of the second amended defence of the defendants be struck out pursuant to r 171 of the Uniform Civil Procedure Rules 1999 on the basis it discloses no reasonable defence, tends to prejudice or delay the fair trial of the proceeding and/or is an abuse of process of the court – where the defendants say that the new causes of action do not arise out of the same facts as the causes of action for which relief was previously claimed by the plaintiff – whether paragraph 32 complied with r 149 – whether the defendants should be given leave to replead under r 376 of the rules Wardley Australia Limited v Western Australia (1992) 175 CLR 514, cited Civil Proceedings Act 2011 (Qld) s 16(4) Limitation of Actions Act 1974 (Qld) s Uniform Civil Procedure Rules 1999 (Qld) r 149, r 150(1)(c), r 171, r 376, r 379, r 387 |
COUNSEL: | CJ Ryall for the Plaintiff Applicant DJ Campbell QC for the Respondents |
SOLICITORS: | O'Reilly Stevens Lawyers for the Applicant Creevey Russell Lawyers for the Respondents |
- HIS HONOUR: The plaintiff applicant seeks an order that paragraph 32 of the second amended defence of the defendants be struck out pursuant to rule 171 on the basis it discloses no reasonable defence, tends to prejudice or delay the fair trial of the proceeding and/or is an abuse of process of the court.
- Paragraph 32 pleads:
To the extent that amendments pleaded by the plaintiff in paragraphs 5, 6A, 7, 8B, 8C, 9, 9A of the fifth amended statement of claim give rise to a new cause or causes of action (“the new causes of action”), the defendants say that the new causes of action do not arise out of the same facts, or substantially the same facts, as the causes of action for which relief was previously claimed in the proceeding by the plaintiff.
- The new causes of action are raised for the first time outside the time period set by the Limitation of Actions Act 1974 (Qld) for commencing such action or actions, and accordingly, they are statute barred due to effluxion of time.
- The amendments referred to in paragraph 32 (“the plaintiff’s amendments”) were made subsequent to, but not consequent upon, my decision in another application in this case ([2014] QSC 165) handed down on 25 July 2014. At issue now is the pleading in paragraph 32 of the seconded amended defence that the plaintiff’s amendments give rise to a new cause or causes of action which are statute barred due to effluxion of time.
- The plaintiff’s amendments were initially challenged by the defendants via a different path than its pleading. That was by an application seeking orders, in respect of the amendments, that they be disallowed under rule 379 or struck out under rule 171 because they “were not in compliance with rule 376”. Rule 376 is a permissive provision of the Rules which allows the court to give leave to make an amendment to include a new cause of action after the end of a relevant limitation period.
- The aforementioned application of the defendants, which was filed on 25 August 2014, was dismissed by consent on 11 December 2014 without being heard on the merits.
- The argument advanced in support of the plaintiff’s application now before me effectively involved two limbs:
(1)that in the historical circumstances of the litigation of this particular case, the defendants are legally precluded from pleading the limitation defence; and
(2)if not so precluded, the limitation pleading as it stands, is not sufficiently particular.
- Dealing with the latter limb first, the purported effect of paragraph 32 of the second amended defence is to plead a defence under the Limitation of Actions Act 1974 (Qld). That is a matter which rule 150(1)(c) requires must be specifically pleaded.
- Paragraph 32 expressly pleads the nature of the defence, vis that it is a “defence under the Limitation of Actions Act 1974”. That much is plain from paragraph (b) of paragraph 32.
- Rule 150(1)(c) has therefore been complied with in a superficial sense. However, paragraph 32 does little else to prevent surprise at trial. It merely identifies paragraphs which are said, to some undefined “extent”, to give rise to a new cause or causes of action which is or are raised out of time. Merely identifying the paragraphs does not amount to a pleading, as required by rule 149(2), of the material facts in support of the conclusion of law that the unspecified new cause or causes of action are out of time. Further, contrary to rule 149(1)(c), the pleading does nothing to enlighten the plaintiff or the court as to just what the one or more out of time causes of action raised in the offending paragraphs are said to be.
- I record, for completeness, that paragraph (a) of paragraph 32 does not remedy these shortcomings. Moreover, it appears to be surplusage. Whether a new cause of action arises out of substantially the same facts grounding causes of action already pleaded in time may be relevant in the context of a potential grant of leave under rule 376, to which I will shortly come, but it will not be to the point in determining at trial whether or not a cause of action is out of time.
- The second limb of the plaintiff’s argument is, for the reasons I have briefly exposed, well founded. Proper compliance with rule 149 effectively required particulars to have been included in paragraph 32 of what the allegedly out of time cause or causes of action are said to be. That defect must be remedied.
- As to the first limb of the plaintiff applicant’s argument, the premise underlying it is that if the plaintiff’s amendments did include a new cause of action out of time, then unless the amendments were disallowed or struck out, their continued existence precludes the raising of a limitation defence. That cannot be correct.
- The Limitation of Actions Act precludes the bringing of certain categories of causes of action after certain periods. Despite it, s 16 of the Civil Proceedings Act permits the court to “order an amendment to be made” or “grant leave to a party to make an amendment” even though it will include a cause of action after the end of a relevant period of limitation.
- Section 16 (4) provides s 16 applies despite the Limitation of Actions Act. Thus, where a court orders or grants leave to make an amendment including an out of time cause of action, the statutory bar on that action under the Limitation of Actions Act can be avoided. The key qualification, though, is that the amendment will only have that curative quality if made pursuant to an order or with leave. Prima facie, such an amendment appearing in the pleading without the sanction of order or leave will be vulnerable to being legitimately met with a defence under the Limitation of Actions Act.
- The plaintiff’s amendments appear without such sanction, and thus, on the face of it, the defendants remain entitled to plead a limitation defence. The Uniform Civil Procedure Rules do not alter that apparently orthodox position. Section 16(3) of the Civil Proceedings Act provides the rules of the court may “limit” the circumstances in which the amendments which s 16 refers to may be made. It does not, however, provide that the rules may extend or enlarge the circumstances in which such amendments may be made. Thus, the need for an order or for leave to amend remains fundamental to avoiding the consequences of the Limitation of Actions Act in respect of a cause of action raised out of time by the amendment.
- The Rules are, as would be expected, consistent with that statutory position. Rule 376 limits the relevant circumstances by providing, at subsection (4):
“The court may give leave to make an amendment to include a new cause of action only if the court considers it appropriate; 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.”
- While the language of rule 376(4) merely limits the circumstances under which leave may be given, it is permissive in form. That it permits a court to give leave to a plaintiff does not, however, mean it places any obligation on a defendant, let alone an obligation to make application to disallow or strike out a pleaded amendment for which leave under rule 376 has not been given.
- It is a matter for a defendant whether a defendant makes such interlocutory application or simply awaits trial, concluding that the latter stage is the preferable stage to litigate such an issue, for reasons identified by the High Court in Wardley Australia Limited v Western Australia (1992) 175 CLR 514.
- Similarly, whether a plaintiff seeks leave or runs the gauntlet of a limitation defence at trial is a matter for the plaintiff. Doubtless a plaintiff’s decision-making in this regard will be influenced by its confidence as to whether or not an amendment has the effect of pleading a new cause of action and, if so, whether it is barred by effluxion of time.
- This analysis also exposes why the consent dismissal of the application to disallow or strike out the plaintiff’s amendments can have no more than neutral consequences. The outcome of that application did not involve the permissive act of the court giving the plaintiff leave to make the amendments.
- It remains the case that the plaintiff has not secured an order or leave under rule 376, with the consequence that the plaintiff cannot avoid the potential application of the Limitation of Actions Act pursuant to s 16(4) of the Civil Proceedings Act. Whether it can avoid it conventionally by reason of the state of evidence at trial remains a matter for trial. At this point, I neither intimate nor hold any view at all as to whether or not the plaintiff’s amendments do plead a new cause of action.
- It is necessary, finally, to say something of rule 387, upon which the plaintiff also relied. It provides:
387 When amendment takes effect
- If a document is being amended under this part, the amendment takes effect on and from the date of the document being amended.
- However, an amendment including or substituting a cause of action arising after the proceeding started takes effect on and from the date of the order giving leave.
- Despite subrule (2), if an amendment mentioned in subrule (2) is made, then, for a limitation period, the proceeding as amended is taken to have started when the original proceeding started, unless the court orders otherwise.
- The plaintiff’s argument, based on this section, was that if the plaintiff’s amendments did, in truth, include a new cause of action, then having been made under the same part of the Rules in which 387 appears, rule 387(3) would have the effect, for a limitation period, of backdating the amendments to when the original proceeding started. This overlooks that the amendment referred to in rule 387(3), that is an amendment mentioned in 387(2), is one which includes or substitutes a cause of action “arising after the proceeding started”.
- The plaintiff’s amendments here relate to events in 2007 before the proceeding started on 23 January 2009. They cannot sensibly be said to ground a cause of action arising after the proceeding started. That fact alone dispenses with rule 387’s utility here. This makes it unnecessary to articulate a concluded view in this application on the admittedly dubious proposition that rule 387 could allow a plaintiff to gain the benefit of s 16 of the Civil Proceedings Act to avoid the Limitation of Actions Act without meeting s 16’s fundamental requirement that an order or leave be given by the court.
- I reject that limb of the plaintiff’s argument in support of its application which sought to strike out paragraph 32 of the seconded amended defence on the basis the defendants are, in this case, precluded from pleading a limitation of action defence. I have, however, concluded there is substance to the other limb of the plaintiff’s argument, that is, that paragraph 32 should have included particulars of what the allegedly out of time cause or causes of action are said to be.
- The most obvious means of giving effect to that conclusion is to strike out paragraph 32, pursuant to rule 171, giving leave to replead it. However, I am conscious the trial is listed to commence next week. I anticipate the defence’s remedying of the present defect and any response of the plaintiff to it could be dealt with readily, particularly given the parties will, by now, be well seized of the issues in the case.
- In substance, it involves proper articulation of a legal conclusion and its foundation in a litigation which is so well advanced that further factual investigation is unlikely to be necessary. Nonetheless, there may be logistical considerations connected with the trial’s looming commencement which bear on the preferable form of orders to be given consistent with my conclusion and the desire for the timely disposition of the trial. Accordingly, I will hear the parties as to the proper form of orders and also as to costs.
…
- My orders are:
- Paragraph 32 of the second amended defence be struck out with leave to file and serve an amended pleading thereof by 4 pm on 23 April 2015.
- The plaintiff file and serve any further amended reply by 4 pm on 24 April 2015;
- Costs reserved.