Australia & New Zealand Banking Group Ltd v Jones & Ors [1992] QSC 118

( TRANSCRIPT OF PROCEEDINGS State Reporting Bureau, 4th Floor, The Law Courts, George Street, BRJSBANE. 0. 4000 Tel. (07) 227.4360 (Copyright in this transcript is vested in the Crown. Copies thereof must not be made or sold without the written authority of the Director, State Reporting Bureau.) . ~. .---·~- • . -..y REVISED COPI.ES iSSUED ~ Court n~pcrting Bureau • SUPREME COURT OF QUEENSLAND· Date,-:)/ I ~ I 2.._ CHAMBERS ( WHITE, M aster 'i \ No 3941 of 1987 AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED and MARGARET ANNE JONES and MORRIS EVAN JONES and LEWIS DAVID JONES BRISBANE . . DATE 18/ 3/92 JUDGMENT Plaintiff First Defendant Second Defendant Third Defendant 1 -- 1 of 8 -- ( 10 20 30 180392 JUDGMENT MASTER: This is an application by the plaintiff bank to amend its reply and answer to the defendants' defence and counterclaim. The action is set down for trial for six days commencing Monday next on 23 March 1992. The plaintiff sues the defendants as guarantors of the obligations of a company, sungleam 'pty Ltd, which was the vehicle for borrowings by the first defendant from the bank for certain development projects over a period from November 1980 to May 19a4. As at the date of issue of the writ in 1987, the i amount sued for was $281,207.17 with interest accruing at $112.14 per day. The defendants delivered an amended defence and counterclaim on 9 March 1989. In it the defendants allege that at all material times one Kenneth George Rushworth was an area manager of the plaintiff bank, and that in that period the first defendant, either personally or through a company controlled by her, became involved in the purchase and development of real estate on the recommendation and advice 10 30 -40 40 of Rushworth. The vehicle company was unable to service the loans and the plaintiff realised various mortgages held by I it over real property owned by the defendants or interests associated with them. so 50 The losses suffered by the defendants are pleaded to be due to the negligence of the plaintiff inter alia because Rushworth was not competent to give advice about real estate. The defendants seek to set off these losses against the amounts claimed by the plaintiff. They also allege a 60 60 - --Govt. Printer, Qld. 2 -------- -------- 0 0 0 -- 2 of 8 -- ( ( ( 180392 1. JUDGMENT l isale at under value of various properties. That is not presently relevant. The second and third defendants plead that the first 10 defendant induced them to give guarantees because of the advice of Rushworth. The plaintiff requested further and better particulars of certain of the paragraphs in the amended pleadings. Relevantly, the plaintiff requested in paragraph l(d) (v) that the defendants, 20 " ... state the date or dates upon which [or substance and effect of] the advice of the plaintiff by Rushworth was given ... " Paragraphs 2 (a),. 3 (a) and 4 (a) simply ask for particulars of . 1 . advice given by Rush worth. In my opinion, the form of the request for particulars is of no consequence and could not 30 amount to any kind of "admission" of agency as was suggested. Paragraph l(a) of the particulars indicates that the defendants and Rushworth were associated other than simply as bank official and clients of the bank, for it is r stated that: \. I \. 40 "The company, Larissa Pty Ltd, also became involved in the purchase and development of real estate. That is a company in which the defendants held one share each and which was.controlled by the said Kenneth George Rushworth." The particulars of advice given on one occasion were that Rushworth advised the amount of profit in the development 50 "which the first defendant would have to share with Rushworth for his advice and expertise ... " 60 - -Govt. Printer, Qld. 3 10 20 30 40 50 60 -- 3 of 8 -- ( 10 20 30 40 180392 JUDGMENT The plaintiff had delivered a reply and answer to the original defence and counterclaim which was a general denial of the matters pleaded, yet neither delivered nor gave any indication that it intended to deliver an amended reply and answer in response to the amended defence and counterclaim of 8 March 1989, not even after receipt of the particulars which revealed the extended relationship with Rushworth. The plaintiff now seeks to amend its reply and answer. The application was raised on 13 March 1992 and adjourned to 17 March to enable an amendment to be formulated. In the proposed amended pleading the plaintiff admits that Rushworth was its area manager at the relevant time, but denies that if he gave any advice of the kind particularised then he · did · so on t behalf of the plaintiff. Without more there could be no objection, but the pleading goes on to assert positively that if Rushworth gave the advice, it ·was as a friend or personal advisor to the defendants and as a person about to enter into and having entered into a commercial relationship with the defendants. A limitation defence is pleaded with respect to the November 1980 advice, the action having been commenced in 1987 and the counter claim raised in 1988. 10 30 40 "o The · plaintiff. now: allegesL:.-tha"(:· -,any ---ioss --: arising out so of any of the transactions pleaded·and.particularised were due to other intervening causes, for example, over-runs on the cost of construction; increased interest rates and adverse market conditions. Other-proposed amendments do not 60 in essence ·raise new issues. · It s - -Govt. Printer, Qld. 4 60 0 () 0 -- 4 of 8 -- 180392 JUDGMENT plaintiff must have leave to make the amendm~nt sought if those issues to which I have referred are to be raised .. at the trial. The original reply and answer does not, in my view, do anything more than put Rushworth's agency in issue. 10 It does npt support the positive case now raised and would, from a pleading point of view, offend 0 22 r 14. The principles to be applied on ~n application to amend are not in dispute and are conveniently enunciated in the old case 20 of Cropper v. Smith (1884) 26 Ch.D. 700 per Bowen LJ at pp C1 110, 111. c ( I 30 "The object of courts is to decide the rights of the parties and not to punish them for mistakes they make in the conduct of their cases ... I know of no kind of error or mistake which, if notfr,audulent or intended to overreach, the court ought not to correct, if it can be done without injustice to the other party. As soon as it appears that the way in which a party has framed his case will not lead to a decision of the real matter in controversy, it is as much a matter of right t:>n his part to have it corrected, if it canbe done without injustice, as anything else in the case iE a matter of right." 40 That passage was cJ.ted with approval by the High Court in Clough v. Frog (1974) 4 ALR 615 at 617. Mr H Fraser for the defendants submits that leave to amend ought to be refused because otherwise the defendants will 10 20 30 40 so suffer prejudice not .. compensable by an order for costs. The so prejudice is said to be two-fold. Had the proposed amended reply and answer been delivered promptly in 1989 the defendants could have sued Rushworth personally.- However, it seems to :rne that by then itwould appear that only the __ _ _o6"-"o'--f.!a~d~v-=-==i..:::::c~e=--.-::g~~~· v!..:e~n~...:.w:!..::i:..:t~h:.:_.=.r~e'-!::s,?...l:p~e~c~t~-~t~o~t~h=.!e~d~e~v~e:.=l~o~p~mcU:e""-n~t~ouf~t""'h~e_,._,N._..a""'mb'"""""'u,.._c~c_.....a.___-'l 60 - Govt. Printer, Old. 5 -- 5 of 8 -- 10 20 30 40 180392 JUDGMENT !Heads property in February 1984 and following could have I bee.n the subject of suit against Rushworth in 1989. Mr O'Connor swears that he took the view that because - 1. the particulars did not seek particulars of Rushworth's agency,· 2. the plaintiff did not discover documents going to the ambit of Rushworth's employment, and 3. no amended pleading put in issue Rushworth's authority it was unnecessary to join Rushworth as a defendant by counterclaim. Had the proposed amendment been made at the appropriate time the first defendant, he deposes, would have !given instructions to join Rushworth as defendant. I I find it extraordinary that the defendants and their legal advisors thought that the authority of Rushworth to bind the plaintiff was not to be in issue save for formal proof at the trial. The general denial, unfortunate as that pleading practice often is, is permitted by the Queensland Rules 'although rarely elsewhere. The nature of the advice, the ambit of the relationship particularised, must have clear~y highlighted the marginal nature of Rushworth's authority from the plaintiff to act as he did. The defendants must have been conscious of the limitation difficulties frcim·the'time of delivery of the original defence and counterclaim. One 10 20 30 40 so transaction seems· on its face to lie outside of the six -year so period on the defendantsf.pleadirig. An inquiry to the solicitors for the plaintiff prior to making a decision in 1989 not·to join Rushworth in view of the state of the pleadings might have been a course taken on· behalf of the 6o· defendant althou h of course there is 60 - -Govt. Printer, Old. 6 \ \\ ~ \ () II \ () () u -- 6 of 8 -- 180392 JUDGMENT have done so in terms of pleading. I cannot conclude that the failure to amend at an earlier time, namely in 1989, is the reason why the defendants did 10 not join Rushworth. The failure to discover documents going to Rushworth' s employment is another···: ground upon which Mr Fraser founds his submission that it would be unjust to the defendants to permit the amendments. 20 The failure to discover is a. serious-delict by the ( \, plaintiff. Even if Rushworth' s employment with the bank is ( \ 30 not in issue on the. proposed am~ndment up until now it has been. But I-weuld not regard the failure to discover as an.indication to the defendants that it.was not a matter in issue. The other ' ' matter of prejudice is the supposed destru~tion of documents 1 by the bank relating to some of these impugned transactions which took place more than seven years ago. It is unfortunate that the bank has not put in an affidavit f dealing with this issue as was suggested_when it was raised \. 40 last Friday. · From the Bar table Mr J Douglas QC for the bank indicated that transactions and statements have been destroyed but that files are still intact: Passage of time prejudice is 50 also raised by Mr Fraser, but the issues. and evidence are 60 clearly raised in .the particulars given by the defendants, - and I would suppose that detailed statements must have been taken from them in that regard, and I do not·see·this.as an objection to leave being ~iven; - -Govt. Printer, Old. 7 10 20 30 40 50 60 -- 7 of 8 -- ( 10 20 30 40 180392 JUDGMENT As noted above there is no dispute on the principles and each case must ultimately be decided on its own facts, and it seems to me that any prejudice suffered by the ~efendants by allowing the amendment either can.be. cured by :costs or is not,. as a consequence of the conduct of the plaintiff. I should add that no explanation has been offered by the plaintiff for the delay in seeking to deliver an amended reply and answer. I can only say that its conduct of this litigation has been careless and productive of considerable monetary loss. It fs clear then that the trial which is set for hearing on Monday next cannot proceed. It is nowestimated that the trial will take nine days and it was certified for six days. There will be need for further discovery and, as I apprehend it, for some interrogatories from the defendants. Subject to any submissions that might be made, these would be the formal orders that I propose: that the plaintiff have leave to deliver an amended reply and answer in the form tendered; that the plaintiff pay the defendants' costs thrown away as a consequence of the amendments to be taxed; vacate the trial dates; the plaintiff to pay the defendants' costs thrown away as a consequence of the adjournment of the trial.-· I propose to give some directions ord~rs as to 50 further discovery and delivery of intetrogat?ries. MASTER: I think, having considered the submissions, I am not disposed to change the order which I originally made, j that the plaintiff should bear the costs thrown away as a 60 consequence of the trial dates bein--Govt. Printer, Qld. 8 ' 1 10 20 '\ ( I 30 40 50 60 ( -\ _) ( __ ./ ( \ : "--./ 1t · J · r z_ -- 8 of 8 --