Queensland v JL holdings Pty Ltd

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HIGH COURT OF AUSTRALIA
DAWSON, GAUDRON, McHUGH and KIRBY JJ

STATE OF QUEENSLAND SOUTH BANK CORPORATION v JL HOLDINGS PTY LTD F.C. 97/001 Number of pages - 29 Practice and Procedure
14 January 1997

Practice and Procedure Pleadings Application for leave to amend defence Relevance of principles of case management Administration of justice Commercial dispute Prejudice to other party Whether compensable by costs.

Headnote

Hearing

CANBERRA, 2 December 1996
#DATE 14:1:1997 #ADD 14:1:1997


Counsel for the Applicants: R.V. Hanson QC with R.M. Derrington

Solicitor for the Applicants: B.T. Dunphy, Crown Solicitor for the State of Queensland

Counsel for the Respondent: T.A. Gray QC with T. Matthews

Solicitor for the Respondent: Minter Ellison Baker O'Loughlin

Orders

1. Special leave to appeal granted.
2. Appeal allowed.
3. The applicants have leave to amend their defence.
4. The costs of the application for leave to amend and all costs consequential upon the amendment be borne by the applicants.
5. The costs in the Full Court of the Federal Court and in this Court be costs in the cause.
6. All parties have liberty to apply to Kiefel J for any further consequential relief.

Date of Order: 2 December 1996
Reasons for Judgment Delivered: 14 January 1997
On appeal from the Federal Court of Australia

Notice: This copy of the Court s Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports.


Decisions

DAWSON, GAUDRON AND McHUGH JJ.

1. At Kangaroo Point on the south side of the Brisbane River is Crown land, part of which ("the land") is held by the Brisbane City Council ("the Council") as trustee under s 334 of the Land Act 1962 (Qld). The Council called for tenders to develop the land and JL Holdings Pty Ltd ("JLH") became the preferred developer. The Council proposed to grant JLH a 30 year lease to develop the land into an amusement park.

2. By virtue of s 343(1) of the Land Act the Council could not lease the land without the written approval of the Minister of Lands. Sub- section (2) of s 343 provides that such approval is to be sought by way of application to the Minister and, pursuant to sub-section (3), an application must be accompanied by a draft of the proposed lease. JLH claims that on 23 October 1989 it obtained the Minister's written consent to a lease agreed upon between it and the Council, but that when the duly executed lease was submitted for endorsement by the Minister pursuant to s 345 of the Land Act, the Minister wrongly refused to endorse his approval on it. That section relevantly provides: "When a lease under this Division has been duly executed in accordance with the terms and conditions approved by the Minister the original and all other executed copies of such lease shall be forwarded to the Minister for endorsement thereon of his approval of the lease.
...
A lease to which this Division applies which is not endorsed with the Minister's approval shall have no validity or effect in law and in the case of a lease with respect to land granted in trust shall not be capable of registration under 'The Real Property Acts, 1861 to 1960'."

3. JLH sued the present applicants, the State of Queensland and South Bank Corporation, in the Federal Court, seeking damages in the vicinity of $60 million. A number of causes of action were pleaded including breach of copyright, breach of agreement for lease, breach of lease, inducement to breach a lease, civil conspiracy, defamation, negligence, breach of statutory duty, estoppel, contravention of s 45D of the Trade Practices Act 1974 (Cth) and fraud. JLH claims that once the Minister had given written approval to the proposed lease under s 343 of the Land Act, the Minister or (as in this case) the Minister's successor in office is obliged to endorse his consent on the executed lease under s 345. In their defence, the applicants deny this claim.

4. Pursuant to O 13 r 2 of the Federal Court Rules, the applicants by motion sought to amend their defence in a number of respects, including the addition of grounds why the Minister was not required to endorse his approval. Among those grounds was that contained in proposed additions to par 25 of the defence. Those proposed additions read: "... if approval under section 343 of the Land Act had previously been given on the terms of the LAC letter of 26 October 1989 (which is not admitted), then:
(i) the lease documentation referred to in paragraph 26 was not in accordance with that approval:
Particulars
(1) No approval under section 343 was given to the Deed of Variation between the Applicant and the Council dated 26 February 1990;
(2) No approval under section 343 was given to the lease documentation, insofar as it provides for commencement on 1 April 1990 ... and rental payments being deferred until after commencement ...;
(ii) section 345 confers upon the Minister a discretion to endorse the lease documentation, which was not exercised in the Applicant's favour;"
In short, the proposed additions allege that the draft lease submitted for endorsement pursuant to s 345 was different from the executed lease which had been approved pursuant to s 343 because it had been altered by a deed of variation entered into between JLH and the Council.

5. The applicants explained their delay in making application for leave to amend, saying that it was only recently discovered that there was a material discrepancy between the lease originally submitted and the lease submitted for the endorsement of the Minister's approval. That explanation was accepted by the primary judge, Kiefel J, who nevertheless questioned why it had taken so long to uncover the matter and refused leave to amend. However, the principal reason why her Honour refused the application appears from the following passage in her judgment which refers to other amendments which were sought, as well as that in question: "I have, in the context of this case, where there is only a period of about six months from the time that leave was sought to the commencement of the hearing, taken the view that the most relevant consideration is whether the amendments would jeopardise those hearing dates. If that were the case, I would be inclined to disallow the amendments. Such an approach takes account that the loss of the hearing at that time could be said to amount to severe prejudice to the applicant, particularly since the matter, I would think, would be unlikely to be relisted until the following year. It also takes account of a shift in attitude and that in these times a party's 'right' to present their case or their defence is viewed as subject to some limitation."

6. The applicants applied to the Full Court of the Federal Court for leave to appeal against the refusal of the primary judge to grant the application for leave to amend. By a majority (Whitlam and Sundberg JJ; Carr J dissenting) the Full Court granted leave but dismissed the appeal. In granting leave to appeal, the majority conceded the potential injustice involved in denying the respondent the opportunity to ventilate the issue which the proposed amendment was intended to raise. Their Honours referred to the well-known passage in the judgment of Bowen LJ in Cropper v Smith[1] where his Lordship said: "Now, I think it is a well established principle that 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 by deciding otherwise than in accordance with their rights. Speaking for myself, and in conformity with what I have heard laid down by the other division of the Court of Appeal and by myself as a member of it, I know of no kind of error or mistake which, if not fraudulent or intended to overreach, the Court ought not to correct, if it can be done without injustice to the other party. Courts do not exist for the sake of discipline, but for the sake of deciding matters in controversy, and I do not regard such amendment as a matter of favour or of grace."

7. The majority also referred to the decision of this Court in Clough and Rogers v Frog[2] where applications for leave to amend the defences in two actions by adding a new defence had been refused. The actions had been commenced more than five years previously and the applications were made two days before the actions were listed for hearing. The Court in allowing the appeals before it adopted the words above of Bowen LJ in Cropper v Smith and said[3]: "As the defence, if established, would be a complete answer in either action, the amendments sought should have been allowed unless it appeared that injustice would thereby have been occasioned to the respondent, there being nothing to suggest fraud or improper concealment of the defence on the part of the appellants. With the exception of the suggestion of prejudice arising in respect of the loss of the possible claim against the nominal defendant, the matters relied upon by the respondent in opposition to the amendment sought go at the most to delay and irregularity only, matters which are relevant to costs but do not constitute injustice to the respondent in the sense in which that expression is used."

8. The majority in the Full Court dismissed these remarks saying that "times have changed since 1884, and even since 1974". They referred to a passage from the judgment of Toohey and Gaudron JJ in Sali v SPC Ltd[4] where their Honours said: "The contemporary approach to court administration has introduced another element into the equation or, more accurately, has put another consideration onto the scales[5]. The view that the conduct of litigation is not merely a matter for the parties but is also one for the court and the need to avoid disruptions in the court's lists with consequent inconvenience to the court and prejudice to the interests of other litigants waiting to be heard are pressing concerns to which a court may have regard."

The majority concluded: "Unless we are to mouth the repeated cautions about discretionary judgments, case management, efficiency, practice and procedure, and the advantages of the managing judge, only to ignore them when it comes to the crunch, this appeal must be dismissed."

9. It may be said at once that in the passage which we have cited from Sali v SPC Ltd Toohey and Gaudron JJ are not to be taken as sanctioning any departure from the principles established in Cropper v Smith and accepted in Clough and Rogers v Frog. Sali v SPC Ltd was a case concerning the refusal of an adjournment in relation to which the proper principles of case management may have a particular relevance. However, nothing in that case suggests that those principles might be employed, except perhaps in extreme circumstances, to shut a party out from litigating an issue which is fairly arguable. Case management is not an end in itself. It is an important and useful aid for ensuring the prompt and efficient disposal of litigation. But it ought always to be borne in mind, even in changing times, that the ultimate aim of a court is the attainment of justice and no principle of case management can be allowed to supplant that aim.

10. The majority emphasised that the primary judge, Kiefel J, was the trial judge, had been responsible for the management of the present case since 1994 and was in the best position to judge the effect of the proposed amendment. Even so, the application for leave to amend was made before a date was fixed for hearing. The date when fixed was six or so months ahead. It is not apparent that any complex issues of fact are raised by the amendment sought, but even if they are, in a hearing that is estimated to last some four months, they must surely be able to be accommodated. The fact that the new defence which the applicants seek to put in issue may possibly be met on reply by a plea such as that of estoppel or waiver does not suggest any reason for the refusal of the amendment. Moreover, whatever the state of the pleadings, the point which the applicants seek to raise by the amendment may not be avoided on trial if, as seems to be so, it would be apparent from the documents themselves. The purpose of the amendment was, according to the applicants, merely to avoid taking JLH by surprise. But if the amendment sought does raise a new defence and not merely a matter which JLH is required to prove in any event, it constitutes a substantial, if not complete, answer to JLH's claim. If it is arguable, the applicants should be permitted to argue it, provided that any prejudice to JLH might be compensated by costs. No doubt prejudice to JLH may also be averted, as Carr J in dissent in the court below pointed out, by appropriate orders expediting such procedures as the parties might seek to employ as a result of the amendment.

11. The majority in the Full Court considered that costs are not these days considered the "healing medicine" they once were. They referred to the speech of Lord Griffiths in Ketteman v Hansel Properties Ltd[6] and the decision of this Court in The Commonwealth v Verwayen[7]. In Ketteman Lord Griffiths said[8]: "justice cannot always be measured in terms of money and in my view a judge is entitled to weigh in the balance the strain the litigation imposes on litigants, particularly if they are personal litigants rather than business corporations, the anxieties occasioned by facing new issues, the raising of false hopes ...".
In this case, which is of a commercial nature, the litigants are on the one side a developer and on the other side government, and there is nothing which would indicate any personal strain which would justify the conclusion that costs are not an adequate remedy for prejudice caused by the amendment sought to the pleadings.

12. In our view, the matters referred to by the primary judge were insufficient to justify her Honour's refusal of the application by the applicants to amend their defence and nothing has been made to appear before us which would otherwise support that refusal. Justice is the paramount consideration in determining an application such as the one in question. Save in so far as costs may be awarded against the party seeking the amendment, such an application is not the occasion for the punishment of a party for its mistake or for its delay in making the application. Case management, involving as it does the efficiency of the procedures of the court, was in this case a relevant consideration. But it should not have been allowed to prevail over the injustice of shutting the applicants out from raising an arguable defence, thus precluding the determination of an issue between the parties. In taking an opposite view, the primary judge was, in our view, in error in the exercise of her discretion.

13. For these reasons we took the view that we should grant special leave to appeal, allow the appeal and order that the applicants have leave to amend. We made those orders at the conclusion of argument and also ordered that the costs of the application to amend and all costs consequential upon the amendment be borne by the applicants but that the costs in this Court and in the Full Court of the Federal Court be costs in the cause. We reserved liberty to all parties to apply to Kiefel J for any further consequential relief.

KIRBY J.

14. On 2 December 1996, the Court granted special leave to appeal, allowed an appeal and set aside orders of the Full Court of the Federal Court of Australia[9]. It allowed an appeal to that Court from orders made by Kiefel J, the primary Judge. Those orders, made in the course of case management of these proceedings, had rejected an amendment of pleadings to permit a new defence to be raised. The result of this Court's intervention was that the amendment was allowed upon terms as to costs. Such an intervention in the discretionary orders of a trial judge, managing complex litigation, is truly exceptional. Nevertheless, I supported the orders made by the Court. I now state my reasons for doing so.

Factual background to the parties' dispute

15. JL Holdings Pty Ltd ("the respondent") has sued the State of Queensland and South Bank Corporation ("the applicants") in respect of the refusal of a Minister in the Government of Queensland to approve a lease of Crown land. The respondent had won a tender from the Brisbane City Council, as the trustee of the land, to develop the land as an amusement park. Pursuant to the Land Act 1962 (Q) ("the Act")[10] such a lease of Crown land by a trustee required the written approval of the Minister. In accordance with provisions of the Act, a draft of the proposed lease was submitted to the Minister for his advance approval[11]. Such approval was given. However, before the lease was submitted to the Minister for his final approval to be endorsed on it[12], there was a change of government in Queensland. The new Minister refused to endorse his consent. The respondent thereupon sued the applicants in the Federal Court, claiming substantial damages from them.

16. Amongst the respondent's claims was one based upon an interpretation of the Act. It was contended that, after the advance approval by the Minister was given to the draft of the proposed lease, the new Minister was "obliged" to endorse his approval on the lease "duly executed in accordance with the terms and conditions approved by the Minister"[13]. The respondent's pleading did not aver that the lease forwarded to the Minister had been "duly executed in accordance with the terms and conditions approved by the Minister". The present dispute concerns an alleged variance between the draft of the proposed lease, as originally approved, and the executed copy submitted to the Minister for the endorsement of his final approval.

17. The applicants argue that, if an express averment had been made of due execution "in accordance with the terms and conditions approved by the Minister", it could have elicited a traverse. Now the applicants want to rely on the additional legal ground to support the Minister's refusal. The applicants have denied from the outset that the Minister was "obliged", in law, to endorse his consent. They have argued that the Minister retained a discretion at the second stage and that no estoppel could arise to prevent the Minister's reliance upon the Act[14]. Kiefel J refused their application for leave to plead the new defence.

History of the litigation

18. To understand fully the order made by her Honour and the arguments for the respondent, it is necessary to understand some of the history of the litigation.

19. The respondent's statement of claim was filed in January 1994. It contained numerous paragraphs setting out 13 separate causes of action. Following an unsuccessful motion by the applicants seeking to have portions of the statement of claim struck out, they filed their defence in May 1994. A first directions hearing was held in June 1994 before Cooper J. After argument concerning the adequacy of the defence, as filed, the applicants were granted leave to amend it. Cooper J remarked that if matters were to be put in issue, this ought to be done by an express amendment of the pleadings, in order to avoid surprise at the trial. The modern approach to pleading is to require that issues in contest should be identified and, where necessary, particularised so that the parties can prepare to meet them. An amended defence was filed in June 1994.

20. In November 1994 Kiefel J was designated the trial Judge, and thereupon assumed the management of the proceedings. Her Honour has conducted a number of interlocutory hearings. She has given rulings on amendments to the pleadings, on a contested application for access to cabinet documents and on an application for the trial of a preliminary point of law. The last-mentioned ruling[15] rejected the applicants' request to have determined separately questions concerning the general powers of the Minister under the Act to withhold the endorsement of his consent on the lease and whether, in the circumstances, the Minister could be estopped from declining to endorse such consent on the lease. Kiefel J refused to order the separate trial of these issues noting that (even if determined in favour of the applicants) they would not resolve all of the respondent's claims. In dismissing the application, her Honour made it plain that she intended to conduct further directions hearings. She proposed to "allow sufficient time to the parties ... to review their pleadings conscious ... of costs with respect to unnecessary or insubstantial issues"[16]. She directed that there should be "an extensive review"[17] of the pleadings with a view to securing the final pleadings for each party. In July 1995 her Honour made orders for the filing of amended, and by inference final, pleadings.

21. There were further applications and directions hearings in late 1995 culminating in the filing of a further amended defence on 10 November 1995. A reply was filed on 21 December 1995. At a directions hearing in March 1996 Kiefel J foreshadowed the fixing of the trial dates. She stated that the terms of the defence would be reviewed at the next directions hearing. This was fixed for May 1996. On that occasion, counsel for the applicants told her Honour that the only further amendment to the defence concerned a limitation defence to one of the respondent's claims. Her Honour made procedural orders. She directed that the application for leave to amend the defence further should be heard on 4 July 1996. A motion for this purpose sought various other minor amendments which are not in issue. However, for the first time, application was made by the applicants to raise a point never previously relied upon by them. This was the suggested significance of the alleged variance between the form of lease, for which Ministerial approval had been given, and the executed lease from which endorsement of approval had been withheld.

22. An affidavit by the solicitor for the applicants, sworn 9 July 1996, deposed to the fact that the solicitor's attention "was only recently drawn to the issue concerning the discrepancy between the terms of the draft lease and executed lease ... when (it was) brought ... to my attention on or about 23 May 1996". A schedule of differences between the draft lease and the executed lease, tendered during argument, reveals that the variations relied upon comprise such matters as the insertion in the executed lease, in lieu of a blank space, of a date; the insertion of an address for the registered office of the respondent; the inclusion of registered plan numbers of the land; the insertion of the commencement date of the lease; the provision for monthly payments to commence from a given date; and the completion of the execution clause.

23. The case for the applicants in support of the amendment was simple. The scheme of the Act envisaged the exact coincidence between the form of lease as initially approved and the executed document submitted for the endorsement of the Minister's approval. The inclusion of the additional matters in the executed lease had been made following a deed of variation. Not only did the variations reinforce the arguments as to why, at each stage, the Minister, under the Act, enjoyed a discretion to approve, or not to approve, the lease. They also deprived the respondent of an essential pre- condition to the operation of s 345 of the Act upon the ground that the executed lease, as finally presented, was not "in accordance with the terms and conditions approved by the Minister". According to the applicants no estoppel could be relied upon against the express requirements of the Act. In order to have a trial on the merits, they were entitled to have the amendment of their defence so that they could raise their arguments. Upon one view of the pleadings they were not obliged to amend because conformity with the Act was an implicit requirement for securing the Minister's endorsement. But out of deference to the rule of particularity in pleading, and in response to the remarks of the Judges conducting the directions hearings, the applicants had prudently sought the amendment. Given that the trial would not commence for six months and would last a further four months, the amendment could be granted upon appropriate conditions without doing any relevant injustice to the respondent.

24. The respondent opposed the amendment. It sought to demonstrate that the variations between the documents belatedly relied upon, had been known to the applicants in 1990 and 1991. It argued that the raising of a further ground of defence was grossly delayed when viewed in the context of the extensive series of directions hearings just described. The hearing dates for the trial had by now been fixed. These dates might be lost if the amendment were allowed. This was because the amendment would give rise not simply to a legal argument concerning the meaning and application of s 345 of the Act but also to factual issues which could prolong the trial. Such issues might include the respondent's assertion that, by the applicants' conduct, they were estopped from relying upon the point. But the respondent also relied upon a possible claim against its then solicitors who had advised execution of the deed of variation, inferentially upon the footing that the resulting executed lease would still be "in accordance with the terms and conditions approved by the Minister".

25. Kiefel J refused leave to the applicants to amend their defence in this respect[18]. An application for leave to appeal was immediately taken to the Full Court of the Federal Court. By majority (Whitlam and Sundberg JJ; Carr J dissenting) that Court dismissed the appeal. It affirmed Kiefel J's orders[19]. The proceedings in this Court challenged the approach both of the Full Court and of Kiefel J.

Decision of the primary Judge

26. Kiefel J accepted that the amendment sought by the applicants "(touches) on what has always been regarded as a core issue"[20]. Her Honour did not doubt that the suggested "material discrepancy" between the form of lease submitted for approval and that later tendered for the endorsement of approval, had been "only recently discovered"[21]. However, she noted that the failure to "uncover the matter" had not been explained, when it was remembered that the relevant documents had been with the applicants, and their legal advisers, for a long time. Her Honour referred to a previous ruling she had made on 3 November 1995 concerning earlier amendments to the defence. She went on[22]: "It is of some importance now that, it seems to me, it has real potential to require substantial issues of fact to be raised by way of reply. It places this proposed amendment in a different category. I do not have the same level of assurance about the effect of the amendments and the pleadings cannot be permitted to remain open in this way so close to trial. The applicant also points out that it might have joined its then solicitors who are responsible for the leases. Given the existence of professional indemnity insurers, one could say that this may have been a real possibility. In any event for the reasons otherwise given I consider that leave to raise this new allegation ought to be refused."

The reference to the "reasons otherwise given" is a reference to a passage at the beginning of her Honour's opinion where she set out some matters of general approach[23]: "Whether leave to amend is to be granted is not however to be resolved by punishing the respondents. I have, in the context of this case, where there is only a period of about six months from the time that leave was sought to the commencement of the hearing, taken the view that the most relevant consideration is whether the amendments would jeopardise those hearing dates. If that were the case, I would be inclined to disallow the amendments. Such an approach takes account that the loss of the hearing at that time could be said to amount to severe prejudice to the applicant, particularly since the matter, I would think, would be unlikely to be relisted until the following year. It also takes account of a shift in attitude and that in these times a party's 'right' to present their case or their defence is viewed as subject to some limitation."

Decision of the Full Court

27. All Judges of the Full Court agreed that the matter was one appropriate for the grant of leave to appeal[24]. The majority accepted that the applicants would suffer "a substantial injustice" if they were not allowed to raise the new defence[25]. After referring to the long established principle of "generosity in relation to amendments"[26], the majority suggested that times had changed since that generous principle had been accepted in England and even since it was last endorsed by this Court. Their Honours invoked the statement of Lord Griffiths in Ketteman v Hansel Properties Limited[27] to the effect that the "great increase in litigation" and need for "legal business" to be conducted efficiently now required consideration to be given to "the interests of the whole community" with less indulgence towards "the negligent conduct of litigation as was perhaps possible in a more leisured age"[28]. After references to Australian cases in which the Ketteman approach had gained approval, the majority stated that the primary Judge, who had managed the case since 1994, was in a much better position than they were to assess the impact of the amendment on the proposed starting date of the trial, and the effect of the abandonment of that date on the respondent and on the efficiency of the Brisbane Registry of the Court in the disposition of cases. They concluded that the proposed additional defence would have raised new issues of fact with the potential, which Kiefel J had recognised, to interfere with the trial dates. They rejected the applicants' attempt to have them "impose" their own discretionary judgment in the place of that of the primary Judge[29]: "A complaint that inadequate weight has been given to a factor no more justifies interference than does a complaint that excessive weight has been accorded to a matter. Moreover, this ground depends on the (applicants') making out their claim that the proposed amendment would be fatal to the bulk of (the respondent s) claim. Unlike the limitation defence considered in Clough v Frog[30], which the High Court said would, if established, be a 'complete answer', the claim here sought to be raised may be defeated by an estoppel. ...

Unless we are to mouth the repeated cautions about discretionary judgments, case management, efficiency, practice and procedure, and the advantages of the managing judge, only to ignore them when it comes to the crunch, this appeal must be dismissed."

28. In dissent, Carr J agreed that refusal of the amendment would cause serious injustice to the applicants. He invoked the remark of Griffith CJ in Rowe v Australian United Steam Navigation Co Ltd[31]: "(T)he right of every man to a fair hearing before he is condemned lies at the root of the tree of justice."
Carr J referred to the broad language and remedial purpose of the power of amendment expressed in O 13 r 2 of the Federal Court Rules[32]. He insisted that case management was but a means to the end of the attainment of justice. Taking efficiency into account did not oblige a court to give "decisive weight" to that factor[33]. What was decisive remained the assessment of where justice lay in the particular case. This abiding requirement had survived the consideration of efficiency and public interest as, indeed, Lord Griffiths had acknowledged in Ketteman when he said[34]: "Whether an amendment should be granted is a matter for the discretion of the trial judge and he should be guided in the exercise of the discretion by his assessment of where justice lies. Many and diverse factors will bear upon the exercise of this discretion."

29. Carr J accepted the advantages enjoyed by the primary Judge and the deference which was due to her as the judicial officer with the responsibility of managing a large and complex piece of litigation. He recorded, and considered, the many reasons advanced for the respondent in support of the conclusion which the primary Judge had reached. He was prepared to "work on the assumption that further substantial issues of fact" would arise[35]. But even if these required further amendment of the pleadings, further discovery, securing further evidence and issuing new subpoenas, this would not be determinative[36]: "In my view, the situation can be remedied by making orders expediting discovery, production of documents by third parties, amendment of the applicant's pleadings and the like. Orders could also be made for this issue to be dealt with, not in the first week of the trial ... but later at a more convenient part of the hearing or even at the end of the proposed four month hearing. Furthermore, in exercising the discretion afresh, I would have suggested the addition of rigorous conditions ... to the effect that the respondents pay (regardless of the outcome of the case) all the applicant's additional costs..."

Differences of judicial opinion

30. The differences in the opinion in the Full Court of the Federal Court in this case reflect many similar differences amongst appellate judges, when invited to review strongly contested applications to amend pleadings, for adjournment of a hearing or like indulgences. Ketteman[37] is a case in point. Lord Griffiths' approach was supported by Lords Templeman and Goff of Chieveley. But Lords Keith of Kinkel and Brandon of Oakbrook disagreed[38]. There have been similar differences in this Court[39]. Like differences have also occurred in the Full Court of the Federal Court in earlier cases[40]. They have often emerged in decisions of the New South Wales Court of Appeal[41]. They can be found in other State appellate courts[42]. Occasionally, unanimity on such points is achieved, but only with expressions of "reluctance"[43] or "hesitation"[44] on the part of one of the appellate judges.

31. All of these cases depend on their particular facts. The outcomes in all of them are influenced by the restraints imposed by law upon appellate intervention in such matters. In part, because of those restraints, comparatively few interlocutory orders of this kind are challenged. Those which are, tend to be at the controversial end of the spectrum where the challenger, at least, feels that an obvious injustice can be demonstrated. Nonetheless, such judicial differences carry two lessons.

32. The first reinforces the rule of restraint upon appellate interference. Procedural orders frequently involve considerations upon which minds can differ. They concern the evaluation of multiple considerations to which differing weight may readily be attached[45]. As the function of judicial directions to control substantial and complex litigation increases with new techniques of case management, it is appropriate that appellate courts should pay more than lip service to the primacy of the trial judge in such matters[46]. They should do so out of a recognition that the pressures on appellate courts, and the techniques available for their decision-making, will often deprive them of a full appreciation of all the factors which have led the primary judge to his or her conclusion. The facility of special leave permits this Court to limit its work flow. Equivalent facilities are available to very few Australian judges.

33. A second lesson may be derived from the judicial differences. They may reveal differing inclinations to uphold the right of litigants to have their cases tried on the merits, even when doing so involves some additional cost, delay and inconvenience. They may reveal the different weight which particular judges, in busy trial courts and in specialised lists, give to the importance of compliance with rules of procedure and court-ordered timetables. They may disclose different levels of commitment on the part of judges to the principles of case management and differing convictions about the importance of the judicial role in that regard. It is as well to acknowledge such differing inclinations and predilections in order to be alert to them. Otherwise, idiosyncratic personal responses, rather than principles of judicial conduct consistently applied, will govern the outcome of disputes about an application for a procedural indulgence[47]. Every judge brings to the performance of the judicial function his or her own approach. Complete standardisation is unattainable. It is probably inconsistent with the individuality inherent in judicial independence. Some will draw from these truisms reinforcement of the principle of appellate restraint. But others will insist that appellate courts play their proper role in tempering inflexibility at first instance where it deprives a party of justice with no commensurate gain to the justice accorded to others.

The evolving case law on amendment

34. Rules of Court typically afford judges a broad discretion, upon terms, to permit amendments to pleadings at any stage of the proceedings. Order 13 r 2 of the Federal Court Rules is no exception. The classical statement of the approach to be taken to the exercise of such a discretion is found in the opinion of Bowen LJ in Cropper v Smith[48]: "(T)he 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 not fraudulent 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 on his part to have it corrected, if it can be done without injustice, as anything else in the case is a matter of right."
The rule in Cropper was regularly applied in England. In Maxwell v Keun[49], in the context of a contested adjournment, the rule was elaborated for application by appellate courts. They should respect the advantages of the trial judge[50]: "(B)ut, on the other hand, if it appears that the result of the order made below is to defeat the rights of the parties altogether, and to do that which the Court of Appeal is satisfied would be an injustice to one or other of the parties, then the Court has power to review such an order, and it is, to my mind, its duty to do so."

The approach taken in Cropper was unanimously approved and applied by this Court in Clough and Rogers v Frog[51]. The appellate elaboration in Maxwell was endorsed in Bloch v Bloch[52].

35. There matters rested for a time. The introduction of a new emphasis upon listing requirements, efficiency and justice to other litigants, and to the public generally, preceded the Australian cases in which Lord Griffiths' speech in Ketteman was considered. Thus, in Squire v Rogers[53] Deane J, in the Federal Court (also in the context of a disputed adjournment), observed that the effect on court resources and competing claims of other litigants could be taken into account[54]: "(This) may require knowledge of the working of the listing system of the particular court or judge and the importance in the proper working of that system of adherence to dates fixed for hearing."

It was the introduction of systems of case management throughout Australia in the 1980's, coinciding with Lord Griffiths' remarks in Ketteman[55], which undoubtedly stimulated new attention to broader consideration of justice, beyond the claims of the parties. Ketteman was referred to in this Court in The Commonwealth v Verwayen[56]. But it was Sali v SPC Limited[57], another adjournment case, that saw this Court endorse the need to consider the competing claims of other litigants and the public[58]: "In determining whether to grant an adjournment, the judge of a busy court is entitled to consider the effect of an adjournment on court resources and the competing claims by litigants in other cases awaiting hearing in the court as well as the interests of the parties ... What might be perceived as an injustice to a party when considered only in the context of an action between parties may not be so when considered in a context which includes the claims of other litigants and the public interest in achieving the most efficient use of court resources."

36. The majority in Sali cautioned that the older principles, addressed exclusively to justice to the parties, were "formulated when court lists were not as congested as they are today and the concept of case management had not developed into the sophisticated art that it has now become"[59]. The minority similarly acknowledged that the "contemporary approach to court administration has introduced another element into the equation or ... put another consideration onto the scales"[60]. However, the minority affirmed the obligation of the appellate court in discharging its function to consider, even with these added factors, whether the discretion had miscarried. Just as Lord Griffiths had done in Ketteman, many Australian decisions continued to emphasise the need to avoid inflexibility. Case management, and procedural directions, were means to the attainment of justice. They were not ends in themselves. Nor were they to be applied rigidly so as to forbid pleading amendments, adjournments or other indulgences where these were necessary for the attainment of justice[61].

37. For the applicants in these proceedings, the primary Judge and the majority in the Full Court had wrongly permitted adherence to a timetable unduly to dominate the ruling in this application. Especially given the interval between the date of the application for the amendment of the defence and the trial, as well as the other considerations and conditions mentioned by Carr J, inflicting on the applicants the unjust denial of having a hearing on the point they wished to argue comprised the kind of serious error which should have been corrected in the Full Court. For the respondent, on the other hand, no error of principle had been shown warranting intervention. This was a case where support for the requirements of efficient case management was put to the test. Far from disturbing the orders of the primary Judge, it was submitted, this Court, adopting a "modern approach" to judicial administration, should endorse the Judge's ruling. It should confirm, in the context of pleading amendments, the modification to the rule in Clough and Rogers v Frog[62], already accepted, in the case of adjournments, by the Court's decision in Sali[63].

38. What remarks of a general character can be offered for the resolution of the type of conflict which is illustrated by these submissions?

Approach to pleading amendments

39. No rigid pronouncements can be made of the way in which a discretion to permit an amendment of pleadings should be exercised. The Rules of Court affording the power to permit (or refuse) amendment are typically expressed in the widest language. This is to afford a large discretion to the judge to whom the amendment application is made[64]. It would be unwise, and contrary to principle, to fetter such a discretion with rigid rules[65]. Nevertheless, it may be helpful to direct the mind of the decision-maker to some of the considerations which have been found relevant.


40. The basic principle controlling the exercise of a power granted by statute, or under the authority of statute, is that the power must be exercised for the purpose for which it was afforded by the legislature[66]. In the case of Rules of Court, it may be assumed that the power was granted out of the recognition of the traditional role of the judges to do justice according to law[67]. In courts with a large inherent jurisdiction, this is part of the function of judges inherited, historically, from the royal prerogative. In courts created by legislation, it is implied in the very functions of a court and in the office of a judge.

41. Although "some form of case management has always existed"[68], the role of judges in Australia in directing the progress of at least large and complex litigation has increased greatly in recent years. Such functions are now regarded as a necessary and orthodox part of the judicial function[69]. The view has been expressed by experienced Australian judges that, without more effective management of litigation, the system would be likely to collapse[70]. The conviction that accumulating delays occasion serious injustices has led to a greater use of case management as the only effective means by which judges can respond to their ever increasing case loads without benefit of commensurate increases in judicial numbers and resources[71]. The advent of judicial management to replace the passive observance of the "game" by a neutral judicial umpire[72], has produced a context of judicial intervention, case control, electronic filing and other reforms which should not be overlooked in reviewing the exercise of a judicial discretion in a particular case. Not only is a return to the languid days in which Cropper v Smith was decided impossible. Any attempt to do so would now afford justice to one litigant at a potential cost of inflicting serious injustice on many others and on the public. The gradual transformation of judicial functions in the way described is not confined to Australia. It exists in the United States of America[73]. It has also been accepted in England[74]. Some commentators suggest that the change in the judicial role represents the adaptation of the traditional common law concept of the judiciary to interventionist techniques of judging typical of the civil law[75].

42. In some jurisdictions, such changes have been sustained by special Rules of Court made under legislative authority[76]. But even where special Rules have not been provided, alterations to the judicial role have been accommodated within the broad discretions conferred by Rules expressed in unqualified terms. Whilst such Rules may not be limited by particular language, they do imply parameters which must be understood by reference to the conventional requirements of justice[77]. I leave aside constitutional questions which could arise if any law or practice attempted to inhibit the performance of the judicial function or to impose upon that performance rigid or inflexible rules, wholly unconnected with the merits of the particular case. No constitutional question was raised in these proceedings. Obviously in respect of federal courts, and possibly some State courts[78], constitutional considerations establish the outer limits of permissible managerial practices. No one suggested that those limits had been exceeded in this case.

43. Amongst considerations which may tend to favour the extension of an indulgence to a party applying for it are the following: that this is the only way in which the true issues and the real merits, factual and legal, can be litigated and artificiality avoided[79]; that the oversight which occurred is adequately explained[80] as, for example, that it arose out of sudden and unexpected events[81]; that the proposed amendment is of considerable importance to the rights of a party, particularly where it provides a complete answer to a claim[82]; that any fault is that of the party's legal representatives[83]; that the oversight was wholly accidental[84]; that it was simply the product of unavoidable human error[85] or, possibly, the outcome of the application to the case of fresh legal minds who perceived an important new point[86]; that cost orders or the imposition of other conditions could adequately rebalance the competing claims to justice[87]; and that the hearing date is sufficiently in the future to permit a party to meet the amendment, taking into account any consequences for the gathering of fresh evidence, the conduct of discovery or like pre-trial procedures and the loss of assigned hearing dates[88]. Departures from a court ordered timetable, whilst relevant, are not decisive[89]. Such orders are the servants of justice. They are designed to enhance its achievement in a way that an inflexible application of rigid rules could prevent[90]. Efficiency in the despatch of court lists can sometimes be purchased at too high a price, as the biographer of Lord Brougham vividly demonstrated[91].

44. Considerations which tend to argue against the grant of an indulgence include many which are the counterparts of the foregoing. Thus, the failure of a party to offer anything by way of explanation for a late application has been held relevant[92]. So has the blamelessness of the resisting party and the extent to which the applicant is at fault in its breach of clear directions[93]. Courts now take into account the strain which litigation may place upon those involved[94] and the natural desire of most litigants to be freed, as quickly as possible, from the anxiety, distraction and disruption which litigation causes[95]. In my view this is not a consideration limited to litigation by natural persons or involving private citizens. Because justice cannot be measured solely in monetary terms, costs orders are not necessarily an adequate balm to the other party[96]. Thus, the proximity of the hearing is clearly a most important consideration[97]. An opposing party is entitled to have taken into account the consequences of an indulgence, especially where it would cause disarray at the last minute to its preparation of the trial[98]. Similarly, the length of time that the proceedings have been pending before the application is made will often be a relevant consideration. The longer the time, the more reasonable it may be to expect that the parties, or their lawyers, should have earlier appreciated, and raised, the point in issue[99]. If a consequence of the indulgence is truly a necessity to postpone a trial date, this will be a most important consideration[100]. Its importance increases with the congestion of court lists and the difficulty, particularly in the case of a lengthy trial, of securing early replacement dates. The extent to which a new issue would give rise to a substantial and new case in reply is also relevant. So may be the nature of the litigation and whether it has been assigned to a special list designed to cater for the peculiarities and special needs of commercial cases, long trials and the like[101]. Writers on effective case management repeatedly stress the importance of adhering to a "firm, credible ... trial date" as an important element in securing the serious attention to a dispute which may help to promote its resolution[102]. They call attention to the risks of "litigation abuse" by which some litigants seek, at all costs, to avoid firm hearing times[103]. Courts are entitled to react unfavourably to repeated default on the part of a litigant whose conduct has the effect of frustrating a proper timetable fixed for the trial. Justice will not necessarily require that a party should have multiple opportunities to plead and present its case[104]. A court must accord justice to the particular litigant. But it must also maintain its responsible use of scarce public resources[105] and consider, in a general way, the impact which its orders have on other litigants and on the public generally[106].
 
45. Whilst taking all of the considerations relevant to the circumstances of the case into account, the judge must always be careful to retain that flexibility which is the hallmark of justice. New considerations for the exercise of judicial discretion in such cases have been identified in recent years. But the abiding judicial duty remains the same. A judge who ignores the modern imperatives of the efficient conduct of litigation may unconsciously work an injustice on one of the parties, or litigants generally, and on the public. But a judge who applies case management rules too rigidly may ignore the fallible world in which legal disputes arise and in which they must be resolved.

Restraint and intervention in discretionary decisions

46. Taking into account the foregoing considerations, I agree with the other members of the Court that the primary Judge in this case erred in refusing the amendment.

47. The factors most relevant to the favourable exercise of the discretion here were those connected with the nature of the proceedings; the substantial interval before the hearing date; the significant time set aside for the trial; the commercial interests at stake; and the means open to the Judge, by cost orders and the imposition of conditions, to ensure substantial justice to all of the parties. The public itself has an interest in the resolution on the merits of a case such as the present. Upon one view, the matter raised in the proposed defence would arise, in any case, in the proof of the respondent's claim. Upon that view, the additional ground would merely refine a necessary legal issue and present it clearly for decision. Many matters in reply to the applicants' proposed point would appear to be legal, not factual. But even if some factual matters were raised (eg upon a suggested estoppel) their compass would be limited. They could readily be accommodated at a later stage in the extended hearing or by further order. The suggested risk of the total loss of the assigned hearing dates was quite unreal. Depriving a party of the right to have such a relatively straightforward point determined on its merits, with so much time for the other party to meet it, was unnecessarily inflexible.

48. However, repeated injunctions of this Court, and of other courts, insist upon restraint in the disturbance of interlocutory orders, particularly those involving rulings on matters of practice and procedure. It is trite to say that it is not for the appellate court to disturb a decision committed by law to the primary judge simply because, upon re-evaluation, the appellate judges are inclined to reach a different conclusion[107]. Reference has already been made to the numerous explanations of principle and practicality for this rule of restraint[108]. It is a reason why this Court ordinarily requires exceptional circumstances to be shown before granting special leave to appeal from an interlocutory order[109]. Nevertheless, in a proper case, the Court will intervene[110]. Just as the Judges in the Federal Court had their functions to discharge, so does this Court[111].

49. The bases for appellate intervention to set aside a discretionary interlocutory order have been stated many times. They include the demonstration of an error in point of legal principle which is apparent on the face of the reasons or implicit in its result[112]; misapprehension of a fact important to the decision[113]; failure to give weight or sufficient weight, to a relevant fact[114]; or reaching a result which is plainly unreasonable or unjust and which demands appellate intervention[115]. The appellate court must be careful not to convert a conclusion that the order appears to it to be unjust into a conviction that it must therefore be based upon an error of the primary judge in assigning inadequate or excessive weight to particular circumstances of the case[116]. Special restraint will be exercised where the interlocutory order challenged is one concerned with practice or procedure. But even such orders have a capacity to affect substantive rights[117]. The appellate court will be slow to intervene. But if it is convinced that the primary judge's discretion has miscarried and that this has resulted in an injustice, it will be its duty to do so[118].

Conclusion: the discretion miscarried

50. The applicants attempted to show serious errors of principle in the reasoning of the majority of the Full Court and of the primary Judge which would bring this Court within the foregoing principles. They complained that, in the concluding passage of the Full Court's reasons, Whitlam and Sundberg JJ had erected an excessive hurdle for them to overcome by requiring that they should "(make) out their claim that the proposed amendment would be fatal to the bulk of (the respondent's) claim"[119]. As to the reasons of Kiefel J, they accepted that consideration of the risk of the loss of the hearing date was relevant. But they argued that such risk was, in the circumstances, trivial given the six months interval between the initial application for leave to amend and the hearing, as well as the facilities available to her Honour to permit the issue to be resolved, under strict conditions, without displacing the hearing dates.

51. Whilst I agree with the closing comments of Whitlam and Sundberg JJ that respect for the advantages of the primary Judge and for efficiency and justice to others must go beyond pious generalities, the resulting confirmation of the order excluding the applicants from raising an arguable defence was manifestly unreasonable in the circumstances. That order indicated that one or more of the foregoing errors had occurred warranting disturbance by this Court. It required correction upon proper terms. Necessarily, that conclusion is particular to the facts of this case. It is related to the nature of these proceedings, the character of the issue proffered, its consequences and the substantial delay between the application and the conclusion of the trial within the timetable fixed. For my own part, I would not wish to be taken as indicating any lessening of the appreciation by this Court of the importance for justice of the efficient management of litigation in the courts of Australia. Such management is now an essential feature of the administration of justice, the importance of which is likely to increase in the years ahead. But whilst it remains in judicial hands it is a function which must be performed with flexibility and with an undiminished commitment to afford to all who come to the courts a manifestly just trial of their disputes.

Orders

52. In the event that special leave was granted and the appeal upheld, no party disputed that this Court should exercise the discretion which was found to have miscarried below. I therefore joined in the orders of the Court announced by Dawson J on 2 December 1996.