Aon Risk Services Australia Ltd v Australian National University

• Jurisdiction: Australia Federal only
• Judge: French CJ,Gummow,Hayne,Crennan,Kiefel,Bell JJ,Heydon J
• Judgment Date: 05 August 2009
• Neutral Citation: 2009-0805 HCA A,[2009] HCA 27
• Court: High Court
• Docket Number: C1/2009
• Date: 05 August 2009

[2009] HCA 27

HIGH COURT OF AUSTRALIA

French CJ, Gummow, Hayne, Heydon, Crennan, Kiefel and Bell JJ

C1/2009

Aon Risk Services Australia Limited

Appellant

and

Australian National University

Respondent

Representation

J T Gleeson SC with N J Owens for the appellant (instructed by Corrs Chambers Westgarth)

B W Walker SC with J Oakley for the respondent (instructed by Sparke Helmore)

Court Procedures Rules 2006 (ACT), rr 21, 501, 502.

Aon Risk Services Australia Limited v Australian National University

Practice and procedure — Pleadings — Amendment — Where application for leave to amend statement of claim made on third day of four week trial — Whether application should have been granted.

Practice and procedure — Pleadings — Amendment — Where Court Procedures Rules 2006 (ACT) (‘Rules’), r 502 provided that court may give leave to amend pleadings ‘in the way it considers appropriate’ — Where r 21 provided objectives of Rules to facilitate just resolution of real issues in proceedings and timely disposal of proceedings at affordable cost — Relevance of case management principles to application to amend — Capacity of costs to overcome prejudice to opposing party — Whether party should be permitted to amend to raise arguable issue subject to payment of costs — Whether Queensland v J L Holdings Pty Ltd(1997) 189 CLR 146; [1997] HCA 1 should be overruled — Relevance of stage of proceedings at which amendment sought — Relevance of explanation for delay in seeking amendment — Relevance of extent of proposed amendment.

Practice and procedure — Pleadings — Amendment — Where r 501(a) of Rules provided that all necessary amendments must be made for purpose of deciding ‘real issues in the proceeding’ — Whether court retains discretion to grant amendment in these circumstances — Whether amendment necessary to raise arguable issues.

Practice and procedure — Pleadings — Amendment — Where r 501(c) of Rules provided that all necessary amendments must be made for purpose of ‘avoiding multiple proceedings’ — Whether amendment necessary where potential further proceedings — Relevance of possibility that further proceedings would be barred on abuse of process or estoppel grounds.

Evidence — Legal professional privilege — Whether inference may be drawn from absence of explanation for delay where explanation rested on legal advice.

Words and phrases — ‘all necessary amendments’, ‘avoiding multiple proceedings’, ‘just resolution’, ‘real issues in the proceeding’.

ORDER

Appeal allowed with costs.

Set aside orders 2 and 3 of the orders of the Court of Appeal of the Supreme Court of the Australian Capital Territory dated 25 August 2008 and, in lieu thereof, order that:

• a) The appeal be allowed.

• b) The orders of Gray J made on 12 October 2007 be set aside, and in lieu thereof there be an order that the plaintiff's application for leave to amend the further amended statement of claim be dismissed with costs.

French CJ

Introduction

1 In November 2006, at the commencement of a four week trial of an action against its insurers and its insurance broker Aon Risk Services Australia Ltd (‘Aon’), the Australian National University (‘ANU’) settled with the insurers and consent orders were made to give effect to the settlements. ANU then applied for an adjournment of the trial to make substantial amendments to its statement of claim against Aon. The circumstances are set out in detail in the joint judgment 1. The adjournment was granted, the application for amendment was heard two weeks later, and for reasons which do not appear from the record, the primary judge did not give judgment until 12 October 2007 2.

2 The reasons for judgment of the primary judge involved the following steps:

His Honour rejected a contention by Aon that ANU was seeking a judgment against it inconsistent with the consent orders made in respect of the insurers 8. He held that there was no abuse of process 9. His Honour ordered ANU to pay Aon's costs, but refused to make an order for indemnity costs.

• • The decision of this Court in Queensland v J L Holdings3 (‘ J L Holdings’) stood as authority for the proposition that ‘justice is the paramount consideration’ in determining the application to amend 4.

• • ANU's new case was not totally inconsistent with the case as pleaded originally. The original pleading was widely expressed and not confined to a claim that Aon had failed to act in accordance with its instructions 5.

• • Although the explanations for delay given by counsel and the solicitor for ANU were not entirely satisfactory, it was important that the allegations raised real triable issues between ANU and Aon 6.

• • On an overall consideration of the matters put by ANU and by Aon, leave should be granted 7.

3 The primary judge's decision was appealed to the Court of Appeal of the Supreme Court of the Australian Capital Territory. On 25 August 2008, that Court allowed the appeal only in so far as it agreed unanimously that the costs of and thrown away by the amendments should have been awarded on an indemnity basis 10. By majority (Higgins CJ and Penfold J), the Court dismissed the challenge to the order granting leave to amend. Lander J dissented. The reasoning of the majority, delivered in separate judgments, some aspects of which were consistent with the dissenting judgment of Lander J, may be summarised as follows:

Special leave to appeal to this Court against the decision of the Court of Appeal was granted on 13 February 2009 15.

• • The Supreme Court of the Australian Capital Territory was bound to follow the majority opinion in J L Holdings, decided in relation to Rules of Court similar to the Court Procedures Rules 2006 (ACT) (the ‘ACT Rules’) 11.

• • Case management considerations, including the availability of court resources, were not irrelevant, but the paramount consideration was ‘justice as between the parties’ 12.

• • The decision to amend was unreasonably delayed and the delay lacked a satisfactory explanation. But it was not thereby to be inferred that ANU believed a more frank explanation would have led to a refusal of the application to amend 13.

• • There were no case management considerations that would require leave to be refused, and any additional work required of Aon could be compensated adequately by an appropriate order for costs 14.

4 Save for the dissenting judgment of Lander J in the Court of Appeal, the history of these proceedings reveals an unduly permissive approach at both trial and appellate level to an application which was made late in the day, was inadequately explained, necessitated the vacation or adjournment of the dates set down for trial, and raised new claims not previously agitated apparently because of a deliberate tactical decision not to do so. In such circumstances, the party making the application bears a heavy burden to show why, under a proper reading of the applicable Rules of Court, leave should be granted.

5 In the proper exercise of the primary judge's discretion, the applications for adjournment and amendment were not to be considered solely by reference to whether any prejudice to Aon could be compensated by costs. Both the primary judge and the Court of Appeal should have taken into account that, whatever costs are ordered, there is an irreparable element of unfair prejudice in unnecessarily delaying proceedings. Moreover, the time of the court is a publicly funded resource. Inefficiencies in the use of that resource, arising from the vacation or adjournment of trials, are to be taken into account. So too is the need to maintain public confidence in the judicial system. Given its nature, the circumstances in which it was sought, and the lack of a satisfactory explanation for seeking it, the amendment to ANU's statement of claim should not have been allowed. The discretion of the primary judge miscarried.

6 It appears that a factor in the decision of the primary judge and of the Court of Appeal was the decision of this Court in J L Holdings. That case arose out of an entirely different factual setting. However, to the extent that statements about the exercise of the discretion to amend pleadings in that case suggest that case management considerations and questions of proper use of court resources are to be discounted or given little weight, it should not be regarded as authoritative. For the reasons set out more fully below, I would allow the appeal. I agree with the orders proposed in the joint judgment 16.

The applicable rules

7 The relevant provisions of the ACT Rules are rr 21, 501 and 502. These are all to be found in Ch 2, entitled ‘ Civil proceedings generally’. Part 2.1 of Ch 2 contains introductory provisions. It includes r 21, entitled ‘ Purpose of Ch 2 etc’, which provides:

• ‘(1) The purpose of this chapter, and the other provisions of these rules in their application to civil proceedings, is to facilitate the just resolution of the real issues in civil proceedings with minimum delay and expense.

• (2) Accordingly, these rules are to be applied by the courts in civil proceedings with the objective of achieving–

  • (a) the just resolution of the real issues in the proceedings; and

  • (b) the timely disposal of the proceedings, and all other proceedings in the court, at a cost affordable by the respective parties.

• (3) The parties to a civil proceeding must help the court to achieve the objectives.

• (4) The court may impose appropriate sanctions if a party does not comply with these rules or an order of the court.’

A note under the title indicates that the rule was based upon 17 s 1.1 of the Civil Procedure Rules 1998 (UK), r 5 of the Uniform Civil Procedure Rules 1999 (Q) and s 60 of the Civil Procedure Act 2005 (NSW).

8 Part 2.7 of Ch 2 is entitled ‘ Amendment’. It applies in relation to documents (other than affidavits) that...