Lanai Unit Holdings Pty Ltd v Mallesons Stephen Jaques

Like the decision of McQueen v Mount Isa Mines [2017] QCA 259, reported in last week’s edition, this case considers the concept of a “new cause of action” under r 376(4) of the UCPR. Jackson J considered a number of issues regarding the application of that provision, which will be of particular interest to commercial practitioners. 

Jackson J

6 November 2017

This matter concerned an application for leave to further amend a statement of claim in a professional negligence action. [1]. Rule 376(4) of the Uniform Civil Procedure Rules 1999 limits the circumstances in which amendments “to include a new cause of action” can be made. [4]. In particular, r 376(4)(b) provides that the court may give leave to make the amendment only if:

“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.”

The present case gave rise to three key issues concerning the application of that provision:

1. can the rule apply if there is an unresolved dispute about whether a relevant limitation period was current at the date the proceeding was started?
2. how is the rule to be applied if facts have been previously struck out on the basis that the relief claimed was not maintainable? 
3. is there a new cause of action when the plaintiff adds an alternative counterfactual scenario and pleads a new loss for which damages are claimed? [63].

As for the first issue, the defendant submitted that the alternative loss scenario pleaded raised a new cause of action and that the question of when the plaintiff first suffered loss or damage based on this scenario could not be finally determined on the application. [70]. Accordingly, the defendant submitted that “no order [could] be made under r 376(4) because the question of whether the relevant period of limitation was current at the date the proceeding was started [could not] be decided” and further that whether to allow the amendment should be decided under r 375. [71].

Jackson J rejected this submission, stating that the question could be resolved by proceeding as if r 376 of the UCPR applied. [72]. Even if the amendments were allowed, the defendant would be able plead in the defence that the proceeding was brought out of time. [72]. His Honour stressed, however, that this method of proceeding would not be appropriate in all cases – in particular:

“If it is clear that the period has expired before the proceeding was started, r 376 does not apply, and it would not be appropriate to allow an amendment to add a limitation barred cause of action, over a defendant’s opposition, under r 375.” [73].

The second issue arose because claims based on breaches of the Trade Practices Act 1974 (Cth) had previously been struck out. Notwithstanding this, the plaintiff sought to amend the statement of claim to include corresponding causes of action in negligence. The defendant argued that a struck out cause of action was not a cause of action “for which relief has already been claimed in the proceeding” within the meaning of r 376(4)(b). [84]. Jackson J rejected this submission, noting that the past tense of “has already been claimed” is capable of extending to a cause of action for which relief was claimed at any prior time in the proceeding. [85]. Of course, his Honour said that this does not mean that “the court might not decide that to permit a long deleted cause of action to be resurrected is not ‘appropriate’ under r 367(4)(a)”. [86].

As for the third issue, importantly, “both parties proceeded on the footing that [pleading an alternative counterfactual scenario and new loss] may raise a new cause of action”. [96]. However, his Honour still asked whether it should be accepted that “there is a new cause of action where the added allegations are of a different past counterfactual or hypothetical scenario, based on a different allegation of causation and a different loss of a valuable commercial opportunity?” [97]. In the result, however, because the parties did not debate the question, his Honour proceeded upon the basis that it did raise a new cause of action. [100]. His Honour held that the new cause of action arose out substantially the same facts and that it was appropriate to grant leave. [108].

Accordingly, his Honour made orders granting the plaintiff leave to amend the statement of claim.

J English