Draney v Barry [1999] QCA 491 [2002] 1 Qd R 145

SUPREME COURT OF QUEENSLAND CITATION: Draney v Barry & Ors [1999] QCA 491 PARTIES: PETER WILLIAM DRANEY and BEVERLEY JUNE DRANEY (plaintiffs/appellants) v DECLAN JAMES BARRY and IAN ROBERT FOOTE trading as KREIS BARRY AND FOOTE (defendants/respondents) FILE NO/S: Appeal No 11361 of 1998 SC No 603 of 1993 DIVISION: Court of Appeal PROCEEDING: Appeal ORIGINATING COURT: Supreme Court at Brisbane DELIVERED ON: 30 November 1999 DELIVERED AT: Brisbane HEARING DATE: 2 September 1999 JUDGES: McMurdo P, Pincus JA, Thomas JA (diss in part) ORDER: Appeal allowed so as to permit amendments raising the complaint covered by paras 5E, 5F and 5G of the proposed new pleading and by that part of para 5E(h) which refers to the option to purchase, and further to permit amendment of other parts of the proposed pleading supporting the claim that the option document did not properly reflect the intention of the parties to it. Matter adjourned to allow parties to agree upon a formal order giving effect to the Court’s intention and to annex an amended statement of claim, failing which this Court will make a further order. No order made with respect to costs of the appeal. CATCHWORDS: PROCEDURE – SUPREME COURT PROCEDURE – QUEENSLAND – PRACTICE UNDER RULES OF COURT – AMENDMENT – action for damages for negligence against a firm of solicitors – application to amend pleading – amendment adding new causes of action otherwise time-barred – when allowed - rule in Weldon v Neal – "very peculiar circumstances" test – application of O 32, r 1 Supreme Court Rules – application of r 5, r 375 and r 376 Uniform Civil Procedure Rules – effect of s 81 Supreme -- 1 of 17 -- 2 Court of Queensland Act 1991 providing general discretion to amend pleadings to include a new cause of action – whether refusal to allow amendments to pleading a correct exercise of discretion Adam v Shiavon [1985] 1 QdR 1, applied Lynch v Keddell (No 2) [1990] 1 QdR 10, applied McGee v Yeomans [1977] 1 NSWLR 273, applied Renowden v McMullin (1970) 123 CLR 584, distinguished Weldon v Neal (1887) 19 QBD 394, distinguished Yrttiaho v Public Curator (Queensland) (1971) 125 CLR 228, considered Supreme Court of Queensland Act 1991, s 81 Supreme Court Rules, O 32, r 1 Uniform Civil Procedure Rules, r 5, r 375, r 376 COUNSEL: Mr H B Fraser QC with him Mr C L Francis for the appellants Mr G A Thompson SC for the respondents SOLICITORS: Trilby Misso and Company for the appellants Minter Ellison for the respondents [1] McMURDO P: I have read the reasons for judgment of Pincus JA and Thomas JA in which the relevant facts and issues are stated. [2] I agree with Pincus JA, for the reasons given by him, that when applications do not come within UCP r 376(4)(b) the court nevertheless has a general discretion under s 81 of the Supreme Court of Queensland Act 1991 to add a cause of action out of time. In exercising that discretion the court would be cognisant of UCP r 376(4); the fact that the exercise of the discretion would effectively evade the provisions of the Limitation of Actions Act 1974 and that the legislature intended the UCP Rules to provide "a consistent framework for all the courts". 1 Good reasons would therefore be required to justify the exercise of the discretion in favour of such an amendment. [3] I agree generally with Pincus JA's analysis of the operation of O 32 of the Supreme Court Rules and of the UCP Rules which have replaced that order, but for the following matters. [4] I agree with Thomas JA's observations that the words "substantially the same facts" under O 32 r 1(5) and UCP r 376(4)(b) do not necessarily make the need to prove some additional facts fatal to the favourable exercise of discretion. 1 Second Reading Speech, Civil Justice Reform Bill, Hansard, 4 March 1998, 136; there is no equivalent to s 81 of the Supreme Court of Queensland Act 1991 in the District Court Act 1967 or the Magistrates Court Act 1921. -- 2 of 17 -- 3 [5] The learned primary judge in this case took that approach, which was, in my view, open, and exercised his discretion to refuse the application to amend the statement of claim under SCR O 32 r 1(5). The issue is whether that exercise of discretion was wrongly exercised. [6] In respect of the refusal to allow amendments to the statement of claim as to both the worth of the security and the 1989 complaint, for the reasons given by Pincus JA and Thomas JA, I agree that the learned primary judge correctly exercised his discretion. [7] In respect of the amendments sought to be made to the statement of claim as to the option, I find no reason to depart from the primary judge's assumption that the facts arose out of substantially the same facts relied upon to establish the pleaded cause of action. In exercising his discretion under SCR O 32 r 1(5), the learned primary judge did not pay sufficient regard to the facts, set out in the reasons of Pincus JA, which establish that the circumstances surrounding the additional facts now sought to be pleaded were generally raised in a pleading prepared in 1989 in a separate but related action and reasonably detailed written instructions were taken about those from the respondent Mr Foote. This, combined with Mr Foote's statement of 20 March 1990 paras 40 and 42, supports an exercise of discretion granting the amendment and outweighs and counteracts the concern that because of the great passage of time since these events occurred the respondents may be unfairly prejudiced by these late amendments. Although the question was finely balanced, I am finally satisfied the learned primary judge gave insufficient weight to these facts. The amendments in respect of the option should be allowed and the primary judge erred in refusing them. [8] I agree with the substantive order proposed by Pincus JA. As the appellant has been only partially successful in this appeal and as the application is one which is very tardy and seeks an indulgence of the court, I agree with the order proposed by Pincus JA as to costs here and below. [9] PINCUS JA: This is an interlocutory appeal in an action for damages for negligence against a firm of solicitors. The writ was issued in April 1993 complaining of the conduct of the respondent solicitors "in or about 1987". The statement of claim disclosed that the events in question occurred in 1987 and 1989. In November 1998 there was heard before Byrne J an application to make substantial amendments to the statement of claim; his Honour refused to allow them - hence this appeal. It is argued for the appellants that the amendments proposed could be regarded as particulars of what had previously been alleged, that it should be inferred that the respondents would suffer no great disadvantage by the length of time which has passed - 10 to 12 years - between the occurrence of the events in question and the present time, and that any new cause of action embodied in the proposed amendments would not be statute-barred. [10] The existing statement of claim says that on or about 9 February 1987 the appellants entered into contracts for sale of property, which were varied on 10 March 1987 in such a way as to entitle the appellants to a bill of sale over certain property and a right to "enter into possession by way of lease" of land which I shall call Lot 3. The pleading alleged the grant of the bill of sale and of an option to purchase Lot 3 "to be exercisable immediately upon the date when the said Bill of -- 3 of 17 -- 4 Sale . . . had been wholly satisfied, or on the 1st day of April, 1989 whichever date was the earlier". Then it was said that it was agreed that the appellants would exercise the option upon payment of a certain sum pursuant to the bill of sale not later than 1 April 1989, but that sum was not paid; in consequence, the appellants attempted to exercise their rights under the bill of sale, but found that the property subject to it had been encumbered in favour of another party. Paragraph 10(ii) said in effect that following the failure of the party liable to pay the sum secured by the bill of sale - " . . . and as a result of [the appellants] being unable to enter into possession and ownership of the assets secured by the said Bill of Sale as a result of such assets becoming the property of the said third party, the [appellants] were unable to take up the option to purchase [Lot 3]". On the face of it, the allegation I have quoted seemed, as Mr Thompson SC submitted for the respondents, to convey that it was lack of money which disabled the appellants from exercising the option over Lot 3. [11] The original statement of claim went on to say that, as a result of the matters I have mentioned, the appellants suffered loss. Paragraph 12 alleged that the defendants should have but did not register the bill of sale under the Companies Code, thereby losing priority; again, the implication seemed to be that the loss of priority produced the result that the appellants could not exercise their rights under the security and obtain the sum secured. By para 14 of the pleading, it was said in effect that the appellants' loss consisted principally in loss of the money secured by the bill of sale and loss consequent upon inability to exercise the option to purchase Lot 3. [12] In addition to the specific allegations which I have attempted to analyse, the pleading contained general allegations of negligence against the respondents. Mr H Fraser QC argued for the appellants that the presence of these general allegations had a beneficial effect, in the present situation, on the appellants' application for amendment; that point is discussed below [13] The essence of the existing pleading is that the solicitors did not register a security in the way they should have done and that this caused loss of the money secured and loss consequent upon inability to exercise the option relating to Lot 3. The new proposed pleading puts forward a more complicated case. [14] Before attempting to summarise the nature of that case, it seems desirable to deal with the question: what is the test to be applied, when an application to amend is made, the cause of action the applicant wishes to add being time-barred? The respondents argued that the appellants had abandoned any claims beyond those pleaded in the initial statement of claim and relied upon Renowden v McMullin (1970) 123 CLR 584. In that case it was held that a statement of claim should not be amended to raise a cause of action which, although covered by the endorsement on the writ, had been abandoned in the initial statement of claim, in circumstances such that the new cause of action would be statute-barred if a writ were issued on it. Mr Fraser argued that the doctrine adopted in Renowden v McMullin has no application in the present case, because the amendments were within the endorsement on the writ and there was no abandonment of them by the original statement of claim. -- 4 of 17 -- 5 [15] Prior to the liberalising amendment of O 32 r 1 in 1965, the rule applicable to attempts to introduce new causes of action by amendment, where the cause of action would if made the subject of a new writ be statute-barred, was that laid down in Weldon v Neal (1887) 19 QBD 394 at 395 in which Lord Esher said: "Under very peculiar circumstances the Court might perhaps have power to allow such an amendment, but certainly as a general rule it will not do so". Accepting the authority of Weldon v Neal, the High Court in Renowden v McMullin engaged in some discussion of it which was based on the assumption that the question was not whether a new writ would have been out of time, but rather whether the causes of action sought to be added were statute-barred because not covered by the endorsement on the original writ; these tests may give contrary results, in particular cases. [16] There is a question whether these authorities and, most importantly, the "very peculiar circumstances" test approved by the High Court in Renowden v McMullin have survived the amendments made in 1965 to O 32 r 1. The relevant provisions are: "(1) The Court or a Judge may, in any cause or matter, at any stage of the proceedings, allow or direct either party to alter or amend the writ of summons, or any endorsement thereon, or any pleadings or other proceedings, in such manner and on such terms as may be just. (2) Where an application to the Court or a Judge for leave to make the amendment mentioned in subrule (3), (4) or (5) is made after any relevant period of limitation current at the date of the issue of the writ has expired, the Court or a Judge may nevertheless grant such leave in the circumstances mentioned in that subrule if the Court or Judge thinks it just to do so. . . . (5) An amendment may be allowed under subrule (2) notwithstanding that the effect of the amendment will be to add or substitute a new cause of action if the new cause of action arises out of the same facts or substantially the same facts as a cause of action in respect of which relief has already been claimed in the action by the party applying for leave to make the amendment". [17] The central provision is r 1(2) which empowers the court to grant leave after the limitation period has expired "if the Court or Judge thinks it just to do so". It was said in Adam v Shiavon [1985] 1 QdR 1, that the Supreme Court might under O 32 r 1 allow amendments so as to add causes of action out of time and that the discretion should not be fettered by rigid rules (7). In Lynch v Keddell (No 2) [1990] 1 QdR 10, the question at issue was addition of a party out of time, but remarks were made disapproving the view expressed in Adam v Shiavon (16). [18] There are three distinct problems. The first is whether it was the intention of the amendments to O 32 r 1 to which I have referred to preserve the strict rule in Weldon v Neal, that amendments to add a cause of action out of time should only be allowed in "very peculiar circumstances". To that question the answer is plainly no; a rule which gives the court power to take a step if it "thinks it just to do so" cannot sensibly stand with a rule that the step can be taken only in "very peculiar circumstances". The second question is whether the power to allow an amendment -- 5 of 17 -- 6 under subr (2), where the effect would be to add or substitute a new cause of action, can be exercised even if the test set out in subr (5) is not satisfied. The answer to that question is in my view no; otherwise subr (5) would have to be read as if, instead of the word "if", the subrule read "whether or not". The third question is whether in deciding whether or not a new cause of action is being substituted, for the purposes of subr (5), the doctrine of Renowden v McMullin is relevant. Suppose that, as in Renowden v McMullin, the writ raises two causes of action, contract and breach of statutory duty, but the statement of claim initially delivered is based on breach of contract only. Is an attempt to add to the pleading, by amendment, a claim for breach of statutory duty to be treated as an amendment adding a new cause of action? Renowden v McMullin is not an authority on the meaning of "new cause of action" in the rule, because it was not decided under the rule. The proper course is to examine the pleading sought to be amended, without reference to the writ, to determine whether the cause of action to be added is a new one, in the sense that it was not previously pleaded. [19] In hearing this appeal, the Court has to exercise a discretion as to whether to apply the Uniform Civil Procedure Rules: see r 765(1), (2) and (4). If under subr (4) the Court decides that it is "in the interests of justice" to do so, it may proceed by way of rehearing and apply the new rules; here the relevant rules are nos 5, 375 and 376. So far as the present case is concerned, r 376(1) and (4) have an effect which is in no significant way different from the corresponding parts of O 32 r 1. However, r 376(5) says "[t]his rule does not limit the court's powers under rule 375" and a general power of amendment is given by r 375. [20] It is my view that r 376(5) means that it is possible to give leave to amend to add a new cause of action, out of time, in cases not falling within r 376(4); that is, the relevant power to amend is not exhaustively set out in r 376(4). But it is unclear whether exercise of the general power to amend, in such cases, is taken to be restricted by the rule in Weldon v Neal. On the one hand, one could say that to apply Weldon v Neal would be inconsistent with the spirit of r 5, which encourages "the just and expeditious resolution of the real issues" and discourages technicality. On the other hand, if there is an untrammelled discretion to allow amendments to add new causes of action out of time, the limitations in r 376(4) would seem to have no effect. A rather similar problem was discussed by the New South Wales Court of Appeal in McGee v Yeomans [1977] 1 NSWLR 273, the decision which was followed in Adam v Shiavon (above). The New South Wales rules in issue in McGee were in relevant respects indistinguishable, in my view, from rules 375 and 376. The result, according to McGee v Yeomans, was the destruction of the rule laid down in Weldon v Neal "and all the finespun distinctions which it engendered" (280). [21] The New South Wales decision was discussed in a number of Queensland cases culminating in Lynch v Keddell (above), but what was said there was obiter; Lynch v Keddell was concerned with an application to add a new party. Where a rule gives what is on the face of it an unrestricted discretion, it would not usually be right to treat it as applicable only in special circumstances. The strength of that consideration is enhanced by the insertion, in 1998, of s 81 into the Supreme Court of Queensland Act 1991. It gives the Supreme Court power to amend pleadings to include or substitute a new cause of action or add a new party; it does not include any provision restricting the scope of that power. -- 6 of 17 -- 7 [22] This provision, s 81, becomes relevant because of the consideration previously mentioned, that the Court has a discretion to treat the appeal as one by way of rehearing. Section 81 is on the face of it an independent source of power to allow an amendment so as to add a cause of action out of time - and, of course, to take other steps mentioned in the section. It is not easy to reconcile the terms of s 81, which came into force on 1 July 1999 (1999 SL 70), with the apparently more restrictive provision for amendment in r 376. [23] I also note that Yrttiaho v Public Curator (Queensland) (1971) 125 CLR 228 supports the conclusion that s 81 should be applied to pending proceedings. It is my opinion that when applications do not pass the test set out in r 376(4)(b) the court has a general discretion under s 81 of the Supreme Court of Queensland Act 1991 to add a cause of action out of time. In exercising that discretion, the court should have regard to the fact that the effect of adding a new cause of action out of time is equivalent to an evasion of the provisions of the Limitation of Actions Act 1974, so some adequate ground will be required, in order to justify such an amendment. Since the discretion given by s 81 is not, however, the subject of any express limitation, it appears to me that the court must always have a discretion to add a cause of action out of time where the interests of justice demand that. Proposed amendments [24] In part, the proposed amendments consist simply in a fuller explanation of the transactions which took place between the parties. These are innocuous, but as I understand the matter, the only point of altering this part of the pleading is to give a foundation for the adding of what are argued to be new causes of action. [25] Under the proposed new pleading, it would be alleged that transactions which are briefly summarised as follows took place: (i) In February 1987 there were contracts made under which the appellants sold land and a business to Boldex Pty Ltd, a company of which Peter and Mary Eton were directors. (ii) At the same time, there was made a contract under which Peter Eton sold what is called the "Oceanview" land to the appellants. (iii) The contracts contemplated that after settlement there would be a balance due, secured by a bill of encumbrance to be granted by Boldex Pty Ltd. (iv) On 10 March 1987 the contracts were varied so as to delete Lot 3 from the Oceanview contract and make it subject to a lease and option agreement; consequently, more monies than originally contemplated would be due to the appellants, being secured in part by a bill of mortgage and in part by a floating charge. (v) The bill of mortgage was granted, but not the floating charge, which was replaced by a bill of sale. [26] The new proposed pleading would make numerous complaints about the conduct of the respondents in relation to these transactions, but those which are central, according to the argument of Mr Fraser, are three in number. In what follows, I shall explain each of the three and express an opinion as to whether adding it would be justified under the new or the old rules. -- 7 of 17 -- 8 Worthwhileness of security [27] 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. [28] A number of parts of the new pleading relate to this cause of action, in particular paras 11A(f) and 12(q). There is nothing about it in the existing pleading. It was argued by Mr Fraser that the point is embraced within para 12(j) and para 13 of the original pleading; indeed, he argued that all the new allegations are within the scope of those parts of the existing pleading. [29] Paragraph 12 begins: "The Plaintiffs' loss was caused as a result of the negligence of the Defendants, particulars whereof are as follows:-". There followed particulars (a) to (i) and also the general allegation: "(j) Failing to take all due care and attention in providing legal advice and services on the Plaintiffs' behalf". The expression "[t]he Plaintiffs' loss" in para 12 is a reference back to the loss referred to in para 11: "As a result of the matters aforesaid, the Plaintiff has suffered severe financial loss". The "matters aforesaid" have already been discussed and they amount to this, that the bill of sale was unenforceable for want of proper registration and in consequence another security took priority, as a result of which the appellants were unable to take up what was described as an option to purchase. [30] Unfortunately for the appellants, the characterisation of the allegation in para 12(j) which I have quoted as a particular of "Plaintiffs' loss" leads one back to the earlier part of the pleading and limits its scope. Nothing in the earlier part of the pleading ascribes any loss to a failure to advise about adequacy of equity, nor to either of the other two aspects of the new pleading, to be discussed below. [31] Nor does the general allegation in para 13 of the existing pleading assist the appellants. It says in essence that it was a term of the contract between the appellants and the respondents that it was the duty of the respondents to take proper care in carrying out their instructions. But it does not allege any breach of that term and so is mere surplusage. [32] Apart from these rather technical answers to the appellants' argument based on paras 12(j) and 13 of the existing pleading, there is the broader consideration that one cannot evade the plain intention of O 32 r 1(5), or its counterpart r 376(4), by inserting in a pleading a vague allegation raising no identifiable cause of action. Such an allegation would be liable to be struck out as not setting out the material facts: Rubenstein v Truth and Sportsman Ltd [1960] VR 473. But the fact that para 12(j) was not struck out does not oblige the Court to ignore its vacuous character, when considering whether an amendment will if allowed add or substitute a "new cause of action". That view appears, in my opinion, the proper one to take under both the new and the old Rules, but especially under the former, which require that the rules be applied so as to avoid undue technicality and to facilitate their purpose: r 5(2). The spirit of the UCP Rules would not be respected if the question whether -- 8 of 17 -- 9 what are in substance new causes of action should be allowed to be added out of time is made to depend upon the presence or absence in the existing pleading of an allegation of misconduct which is so vague as to be devoid of any ascertainable meaning. [33] It follows, in my opinion, that the effect of the amendment is such as is mentioned in O 32 r 1(5) and in r 376(4)(b), i.e. it adds a "new cause of action" in so far as it alleges a failure on the part of the respondents connected with the inadequacy of equity available in the security proffered. [34] 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 ΑCivil 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 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. [35] It follows that the application cannot succeed with respect to this part of the amendment, unless under the broader discretion given by s 81. As to the exercise of that discretion, Mr Fraser draws attention to the fact that the documents relating to dealings between the appellants and respondents are still in existence. He also says that there are statements made by the respondent Foote, for the purposes of an action brought in 1989 by the appellants against Boldex Pty Ltd and the Etons, which might be of assistance to the respondents in reconstructing relevant events. It is true that there is reference in that material to Foote being informed by Eton of difficulties the latter was having in obtaining finance, but there is nothing to indicate what passed between Foote and the appellants on that subject. Mr Fraser also argued that there was no affidavit from either of the respondents to assist the Court in assessing their state of knowledge of these events, which took place in 1987. The absence of that material, in my opinion, goes against the respondents; it would tend to make one more ready to reach a conclusion that they, and in particular Foote, might have or be able to gain a good recollection of the events of 1987, in so far as they concern the adequacy of equity to provide security to the appellants. But since no issue has ever been raised about that subject, until these amendments were advised in May 1998, it is likely that the long delay would have produced significant disadvantage to the respondents; one could feel no assurance that, despite that delay, the questions sought to be raised could be adequately and fairly tried. I notice in this connection the affidavit filed on behalf of the respondents to the effect that the appellants' instructions to the respondents were "almost entirely oral"; that statement stands unchallenged. [36] It follows, in my opinion, that the primary judge was right to refuse the amendment relating to the inadequate equity, because it was a new cause of action which did not arise out of the same facts or substantially the same facts as the cause of action originally pleaded. Further, the amendment should not be allowed under s 81, for the reasons just given, and because there are no additional circumstances justifying -- 9 of 17 -- 10 that course. So far from the circumstances especially favouring allowance of the amendment, they point towards the conclusion that to do so would be unjust to the respondents, imposing on them the burden of defending a claim which must necessarily depend in significant part on recollection of conversations which occurred in 1987. Option [37] The proposed new pleading says there was an option to purchase Lot 3, as I have mentioned above, and that the true intention of the parties was that Lot 3, valued at $170,000, would be transferred to the appellants on or before 1 April 1989 contemporaneously with the release of Boldex's obligations pursuant to the bill of sale (which I have also mentioned), "without the need for payment of any further moneys by [the appellants] to Eton". [38] There were two option documents, both of which are in the record. The first was drawn by Eton. It granted the appellants the option to purchase Lot 3 for $170,000, for a period of two years. Its last sentence said: "Should Peter Eton be notified by Boldex Pty Ltd and the Draneys that the money of $170,000 under the business contract is to be ready to be paid then the Draneys shall immediately purchase the abovementioned block simultaneously with the payment of the abovenamed sum and the release of mortgage debenture". That sentence appears quite unclear. The original document was replaced by one drawn by Foote, reading in part as follows: "2. The said option shall be exercisable immediately upon the date when a certain mortgage debenture securing the sum of ONE HUNDRED AND SEVENTY THOUSAND DOLLARS ($170,000.00) and given by BOLDEX PTY LTD to the Grantee has been wholly satisfied or on the 1st April, 1989, whichever date is the earlier and in the event the option is so exercised the option fee of TEN DOLLARS ($10.00) referred to in clause 1 hereof shall form part of the deposit referred to in the Contract of Sale". [39] According to a statement taken from Foote which is in the record, what happened was that the first option document was produced by Eton to the appellant Draney, who phoned Foote and asked him to come and read it and other documents Eton had produced. The statement said that Draney understood the effect of Eton's proposal was, among other things, that Lot 3 would be transferred upon payment of a balance purchase monies due to the appellants. It seems clear that the reference in the statement to a balance purchase monies is to the sum referred to in cl 2 which I have quoted - i.e. $170,000. The effect of cl 2 is that when the $170,000 is paid the option may be exercised. That sum was never paid. The alternative date of exercise was 1 April 1989; but the new pleading says, as did the old, that Boldex did not pay the sum due by it. [40] The new pleading alleges in effect that the true intention was that Lot 3 would be transferred to the appellants without the need of any payment, on release of Boldex's obligations under the security: 5E(f). If that was the true intention, then plainly it was not carried into effect by cl 2 (prepared by Foote) which I have quoted. -- 10 of 17 -- 11 [41] The strength of the appellants' case on this aspect is that the action brought in 1989 to which I have referred raised the identical question, that of the true intention of the parties with respect to the option. Paraphrasing para 18 of the statement of claim delivered in the 1989 action, it alleged that the parties intended that Lot 3 would be transferred to the appellants in exchange for the release of the security given by Boldex. As originally drawn, that pleading joined Westpac Banking Corporation, which was the competing security-holder. But the claim against it was dropped and the case became one against Boldex and Peter and Mary Eton. The statement of claim made the allegation as to intention which I have mentioned and complained (para 35) of Peter Eton's failure to accept the release of Boldex's obligations in exchange for the title to Lot 3. [42] For reasons akin to those given in discussing cause of action number 1, I have come to the view that this is a new cause of action, so far as these respondents are concerned, and it does not arise out of the same facts or substantially the same facts as those underlying the cause of action previously pleaded. As to the latter point, proof of the cause of action previously pleaded would not have involved any investigation of the communications between the parties concerning the true intention with which the option was given. Paragraph 6(I) simply pleaded, in effect, cl 2 which I have quoted and para 6(ii) pleaded that the appellants and Boldex agreed that the appellants would exercise the option upon payment by Boldex of the amount it owed the appellants. None of this involves the point now sought to be raised. It follows, in my opinion, that the primary judge was right to refuse leave to amend under O 32 r 1. [43] The question remains whether this Court should give leave to amend under s 81. The argument for doing so consists largely in the fact that the point which is the essence of this part of the claim was specifically raised in a pleading prepared in 1989 for which, it is plain, detailed written instructions were taken from the respondent Foote. Those instructions still exist. [44] The peculiarity, then, of this application is that the issue of the true intention of the option, which is the heart of it, is one of which the respondents had notice years before the writ in this action was delivered. Their position in resisting the appellants' claim about the option appears to be better than it would have been had the matter been raised for the first time in the original statement of claim delivered in this action in April 1994. [45] It is true that about four years passed, from the time of delivery of the original statement of claim in this action, before the appellants advised the respondents that they wished to raise the question of the intention of the option, again. Nevertheless, it appears to me that instructions having been taken in detail on the point for the 1989 action is good ground for saying that circumstances exist to warrant granting the amendment sought. Another factor suggesting that it would be just to allow the amendment is that the respondent Foote gave a statement dated 20 March 1990, paras 40 and 42 of which read as follows: "40. In the month of March, 1989 Mr & Mrs Draney exercised their option on the remaining parcel of land at Dayboro. The Bill of Sale was to be released in exchange for the property at Dayboro, however my clients were subsequently -- 11 of 17 -- 12 notified that this was not to be the case and that they were required to finance the land for the full price of $170,000". "42. Settlement of this parcel of land was effected on the 3rd April, 1989. At settlement the vendor, Eton, declined to accept a release of the Bill of Sale in satisfaction of the purchase price of the land and insisted on a bank cheque in the sum of $170,000 to be exchanged for the Certificate of Title". Paragraph 40 accords with the case the appellants seek to make out. An addendum to that statement was prepared, apparently by the respondent Foote, which made various changes to it; paragraphs 40 and 42 were left in the form I have quoted. [46] This Court should not treat exercise of its power to entertain an interlocutory appeal as one by way of rehearing as a matter of course. In the present case, however, I have reached the opinion that it would wear the appearance of injustice, in the circumstances I have outlined, to prevent the appellants from litigating the question whether the option document was defectively prepared, insofar as it did not accord with what was said to be the parties' true intention. Although it is regrettable that so much time has passed since the relevant conversations took place, the claim appears to be one which has substance and the essential point in it was the subject of detailed instructions from the respondents long before this present action was instituted. [47] I would therefore propose that the appeal be allowed so as to permit amendments raising the complaint covered by paras 5E, F and G of the proposed new pleading and by that part of para 5E(h) which refers to the option to purchase, and further to permit amendments of other parts of the proposed pleading supporting the claim that the option document did not properly reflect the intention of the parties to it. To make the Court's order quite precise, I would invite the parties to agree upon a formal order giving effect to the Court's intention and annex an amended statement of claim. 1989 complaint [48] The third point sought to be raised by the proposed amendments is that in 1989 the respondents gave some wrong advice. It is said (para 12(s)) that the respondents failed to consider and advise the appellants of the prospects of their compelling Eton to accept the exercise of the option to purchase without the need to pay the sum of $170,000. [49] So far as the evidence shows, this is a question upon which the respondents would have had no occasion to reflect until notified last year of the proposed amendments. The record contains instructions to counsel dated 17 April 1989 asking for advice about matters connected with the option, but those instructions were drawn after it had been exercised and the money paid. It does not appear to me, with respect, that there is any good reason to doubt that this proposed amendment fails the test set out in O 32 r 1(5). Further, no circumstances can be pointed to which would justify allowing an amendment requiring an examination in detail of communications between solicitors and clients in 1989, when there was no reason to focus on that subject until last year. It would not in my opinion be fair or just to allow this amendment. -- 12 of 17 -- 13 Conclusion [50] I would allow the appeal with respect to the second cause of action to the extent indicated above and adjourn the matter to enable the parties to present an agreed form of order, failing which this Court would make a further order. Since in my opinion the orders made below were correct, as the law then stood, I would not alter the order for costs there made. In my opinion no order should be made with respect to the costs of the appeal. [51] THOMAS JA: This is an appeal against a decision in the Trial Division refusing leave to the plaintiffs to amend their statement of claim in an action claiming damages for professional negligence against a firm of solicitors. [52] The relevant facts and issues have been stated in the reasons of Pincus JA which I have had the advantage of reading. My additional comments will be directed firstly to the legal tests applicable to such an application; and secondly to the question whether the discretion to amend was erroneously exercised. Discretion to amend – new cause of action after expiry of period of limitation [53] I agree with what Pincus JA has written with respect to Order 32 Rules 1(1), 1(2) and 1(5), and Uniform Civil Procedure Rule 376 subject to the following. [54] I do not consider that the power given to the court by s 81 of the Supreme Court of Queensland Act 1991 should be exercised on principles different from those contained in the Rules of Court. Those rules are of course now contained essentially in Uniform Civil Procedure Rules 375 and 376. Rule 375 states the general power of amendment. Rule 376 then provides: "(1) This rule applies if, in a proceeding, an application for leave to make an amendment is made after the end of a relevant period of limitation current at the date the proceeding was started. (2) The court may give leave to make an amendment correcting the name of a party, even if it is alleged that the effect of the amendment will be to substitute a new party, if- (a) the court considers it appropriate; and (b) the court is satisfied that the mistake sought to be corrected- (i) was a genuine mistake; and (ii) was not misleading or such as to cause any reasonable doubt as to the identity of the person intending to sue or intended to be sued. (3) The court may give leave to make an amendment changing the capacity in which a party sues (whether as plaintiff or as defendant by counterclaim) if- (a) the court considers it appropriate; and (b) the capacity in which, if the amendment is made, the party will sue is one in which, at the date the proceeding was started by the party, the party might have sued. -- 13 of 17 -- 14 (4) The court may give leave to make an amendment, even if the effect of the amendment is to include a new cause of action, if- (a) the court considers it appropriate; and (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. (5) This rule does not limit the court's powers under rule 375". [55] Section 81 of the Supreme Court of Queensland Act 1991 (as amended by Act No 20 of 1998) provides as follows: "(1) This section applies to an amendment of a claim, anything written on a claim, pleadings, an application or another document in a proceeding. (2) The court may order an amendment to be made, or grant leave to a party to make an amendment, even though- (a) the amendment will include or substitute a cause of action or add a new party; or (b) the cause of action included or substituted arose after the proceeding was started; or (c) a relevant period of limitation, current when the proceeding was started, has ended. (3) This section applies despite the Limitation of Actions Act 1974". [56] If there was ever any doubt about judicial power to allow amendments which would permit proceedings to be brought by amendment after a period of limitation had expired, this section has removed it. However the question with which I am concerned is not one of power; it is with the principles upon which the power should be exercised. Two questions arise, firstly, should we regard the enactment of s 81 as interrupting the flow of Weldon v Neal2 and other cases which held that the discretion should be exercised in a very restricted way? In my opinion the answer is "yes"3. I respectfully agree with Pincus JA's reasoning on this question. Secondly, does this section create a source of power over and above that which is stated in Rule 376? The answer again is "yes", but I cannot envisage any situation where a court would act upon any different principles under s 81 than those upon which it is required to act by Rule 376. I do not say that it is actually impossible that a separate stream of authority could arise, but while there is a rule of court that effectively covers the field I do not think there is any reason for a second stream. However in Queensland rules of court are made with only limited judicial input, and if the relevant rule could be seen as a negation of the broad judicial power that is recognised by s 81, it might be necessary for a court to act under the latter section. But currently such a possibility is purely hypothetical. Rule 376 in my view now sets out the principles upon which such applications are to be considered. [57] 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 2 (1887) 19 QBD 394, 395. 3 Compare McGee v Yeomans [1977] 1 NSWLR 273. -- 14 of 17 -- 15 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 Rule 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 facts4. In short, this particular requirement should not be seen as a straitjacket. [58] Subparagraph 5 presents a problem. It is either a rule inserted merely out of an abundance of caution to ensure that Rule 375 is not read down, or it is a positive widening of Rule 376, recognising a general power of amendment notwithstanding an applicant's failure to satisfy the specific requirements of sub-rules 2, 3 or 4 of Rule 376. With some hesitation I am inclined to the latter view which accords with that of Pincus JA. In the end, although the special tests of Weldon v Neal and cases in the same line have not survived, the courts must continue to be conscious that the effect of such applications is to deprive a respondent of the right to defeat such a claim by pleading the statute of limitations. A respondent would have such a right if the applicant was forced to commence a fresh action instead of being given the benefit of amending the present one. By its very nature, such an application requires an indulgence for the applicant with a corresponding detriment for the respondent, and it is hardly surprising that courts in the past have associated such applications with the need for "special circumstances". However I do not think it necessary or desirable to spoil this fresh charter by the re-imposition of such phrases. The discretion will no doubt be exercised according to the circumstances of particular cases upon the relevant criteria in Rule 376, with the court fully conscious of the nature of the application, of its relative effect on the parties, and of any factor (including prejudice) that may make the order "appropriate" or inappropriate. Was the discretion correctly exercised? [59] The trial division judge's rejection of the amendment was not based upon any narrow construction of Order 32 Rule 1 which applied at the time the decision was made. Indeed, having observed that minds might fairly differ on the question whether the new causes of action arose out of substantially the same facts as the cause of action already pleaded, his Honour indicated that he did not propose to base his rejection upon any failure to satisfy the requirements of Order 32 Rule 1(5). The ultimate test posed by his Honour, having canvassed the extent of departure involved in the new allegations, the extent to which it might be inferred that relevant information had been obtained by the respondent when investigating the original claims, the existence of records and documents and the likely prejudice from delay, was whether it would be just to allow the amendments. [60] Somewhat prophetically his Honour's approach is consistent with that which Pincus JA and I have now suggested as appropriate for such applications under the 4 Allonnor Pty Ltd v Doran Appeal [1998] QCA 372; No 5210 of 1998, 17 November 1998. -- 15 of 17 -- 16 Uniform Civil Procedure Rules. Having regard to the immediate force of the Uniform Civil Procedure Rules, and to Rule 765(4) concerning their possible use during appeals, it should not be held that his Honour made any legal error by imposing the tests which he stated. The real question in this appeal is whether his Honour's discretion miscarried. [61] Mr H Fraser QC for the appellants presented persuasive submissions, particularly in relation to the alleged lack of prejudice that would be caused to the respondents through permitting the proposed amendments concerning the respondents' advice (or lack of it) and actions in relation to an option to purchase Lot 3. I need not repeat the circumstances that are adequately presented in Pincus JA's reasons. The strongest basis for the submission that there would be minimal prejudice to the respondent is in the contents of paragraphs 40 and 42 of a statement prepared by Mr Foote on 20 March 1990. That statement was prepared for the purposes of the action that his clients (the appellants) were then bringing against the vendor Mr Eton. The question of the true intention of the parties to the option which was raised in that litigation is different from the main questions that now arise on this aspect of the present litigation. Now the primary facts concern what instructions the appellants gave to the solicitors in this respect before the solicitors drew the relevant documents. As promising as paragraphs 40 and 42 of Mr Foote's statement appear to be for the appellants, those paragraphs are essentially a statement of his client's instructions to him as at 20 March 1990, concerning events between them and Mr Eton more than a year previously. The question whether those instructions had adequately been conveyed to their solicitor at the time he drew the original documents simply did not arise. [62] Paragraphs 5E and 5F of the amendment that is now desired to be made suggest various instructions by the appellants and acts and omissions by the solicitors which suggest progressive instructions on different occasions. Certainly the pleading is no more specific than that both the various instructions and advices that are mentioned in paragraphs 5E and 5F were given "prior to settlement of the transaction". [63] Although, as the learned trial judge noted, Mr Eton himself had not retained any documents concerning his dealings with the respondents in 1987 to 1989, Mr Fraser QC for the appellants has satisfied me that the documents that came to light during discovery in the action against Mr Eton have been retained and are still available. He has also satisfied me that Mr Foote turned his mind to important issues that are clearly connected with issues that might arise in the present litigation, particularly when Mr Foote prepared his statement in relation to the Eton action in March 1990. He also rightly adverted to the circumstance that Mr Foote filed no material to rebut the appellants' material establishing these matters. However, as already noted the present issues involving Mr Foote have a different focus. So far as other material witnesses are concerned, Mr Eton's statement however would seem to be undetailed and somewhat casual and it was shown that his recollection of his dealings with the appellants and with Mr Foote are now "very clouded". Among many other issues that may be determinative of the result of the proposed new claim is the likely response from Mr Eton had he been presented with contracts in the form which the appellants now say they should have been drawn. The learned trial judge's concern, and perhaps his principal concern, was the substantial risk of an unfair trial in respect of the allegations in paragraph 5E. -- 16 of 17 -- 17 [64] Many of the vital issues raised by the amendment are not of a nature that are confined by documents, and it seems likely that the claim, if it went ahead, would in the end depend upon the acceptance or rejection of oral evidence. It is also the case that the appellants' financial affairs in and around 1987 would need to be investigated whereas the previous statement of claim required an investigation in or about 1989. [65] In addition to the above, underlying the whole application is the extensive delay that has occurred in making both the original and the new allegations and in bringing them to trial. It may well be doubtful whether the parties can have a fair trial even of the original claim at this stage. Notwithstanding this the appellants have the right to have such a trial. However I do not think that it is appropriate for the court now to extend the issues upon which the eventual litigation should be determined. In my view all three subjects of amendment were rightly refused. I would dismiss the appeal with costs to be assessed. -- 17 of 17 --