WOOMERA CO LTD AND ANOTHER v. PROVIDENT CENTRE DEVELOPMENT LTD

BETWEEN

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JUDGMENT

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1. The plaintiffs' claim in this action has been concluded but is the subject matter of a pending appeal. Pursuant to an order of the Court of Appeal made in an interlocutory appeal against the granting of leave to amend at the trial, the Counterclaim was stood over for determination on its own. The hearing of the Counterclaim has been fixed for 8 days commencing from the 27th of this month.

2. The defendant now seeks to further amend its Counterclaim by a summons filed on the 14th January 1985 and supported by Mr. Morris' affidavit of the 31st January 1985. On close analysis, the controversies evoked by the statements in Mr. Morris' affidavit, deposed to in good faith no doubt, are no longer matters of real dissent between the parties to the Counterclaim.

3. The proposed amendments are designed to introduce a claim for common law damages in the midst of a housekeeping operation of peripheral significance. I need not refer specifically to the proposed amendments except to say that what was truly resisted is the defendant's attempt to claim common law damages either independently of or in conjunction with Clause 16 of the Agreements for Sale and Purchase.

4. There proceedings involve the plaintiffs' claim for the return of deposits on account of alleged repudiatory breaches of these agreements for 200 flats by the defendant and the defendant's Counterclaim on the plaintiffs' alleged failure to complete the sale.

5. From counsel's notes of submissions made by leading counsel for the defendant both at the trial and to the Court of Appeal, admittedly the defendant had, long before the commencement of the hearing, been aware of a possible claim for common law damages; the defendant had decided ''to cut down" its claim to bring it within Clause 16 of these said Agreements for Sale and Purchase; it was "not proceeding" with the common law damages claim which was described as the alternative "second tier"; it was making "a choice between claiming 200 flats and limiting to 54 flats"; Clause 16 was even acknowledged to be in the nature of an "exemption clause in reverse against the vendor" thus "watering down" or "abrogating" "the common law right" in damages. When these statements were made by leading counsel for the defendant, both junior counsel and Mr. Morris were in court. Delivery of judgment which contains a reference to the defendant's exclusive Clause 16 damages claim was received by leading counsel of the defendant attended by Mr. Morris. In effect, the defendant categorically abandoned the common law claim in damages by not proceeding with it. There was no question that counsel and solicitor were not ad idem.

6. The plaintiffs resisted the defendant's present application to further amend on the following grounds: First, it was contended by Mr. Ferris that the proposed amendments seeking to restore the common law damages claim was a futile exercise. Secondly, counsel submitted that once abandoned, the common law claim in damages could not be revived. Lastly, it was urged that if the court did have jurisdiction to entertain an application such as the defendant's for resurrecting an abandoned claim, judicial discretion ought to be exercised in favour of the plaintiffs. I will deal with these matters in the same order as they were put.

7. It was submitted or behalf of the plaintiffs that the common law claim sought to be restored by the proposed amendments must fail. Clause 16 provided, so ran counsel's argument, a comprehensive code to the exclusion of the common law claim for damages. It was, so argued Mr. Ferris, a multi-faceted clause which was devised to oversee every aspect arising from the purchasers default, save for the remedy of specific performance and its consequential damages or damages in lieu, but counsel hastened to add that the equitable remedy of specific performance was founded on the premise that the Agreements for Sale and Purchase were still on foot and sought to be enforced whilst Clause 16 was intended to and did serve as an exhaustive provision in the case of breach. It was further submitted on behalf of the plaintiffs that Clause 16 was, in essence, contradictory to and inconsistent with such common law remedy, particularly in view of the consequences flowing from the service of the prescribed notices, the artificial time limit for the permitted resale, the nature and quantum of the loss and the time for payment of the ascertained balance due. I was invited to take note of two Law Society Circulars as part of the matrix for the interpretation of Clause 16. These Law Society Circulars explain the evolution of Clause 16 which was made mandatory for a contract of sale such as these now under consideration.

8. It was also pressed upon me that construction of Clause 16 was a short point which could and should be disposed of on the defendant's present summons. It is a short, I agree, but for the reasons I am about to give nevertheless a difficult point.

9. For proper construction of Clause 16, the entire contract must be looked at. I was not taken through the remainder of these virtually identical Agreements for Sale and Purchase if only for reinforcing counsel's bare assertion that the rest was irrelevant. Mr. Ching, counsel now representing the defendant, is, I believe, right in his submission that no matrix need be resorted to as an aid of construction unless the provision is obscure, in which case within a well-defined limit set by Lord Wilberforce in their Lordships' House in Prenn v. Simmonds, ⁽¹⁾ extrinsic evidence may be admissible with reference to "the factual background known to the parties at or before the date of the contract, including evidence of the 'genesis' and objectively the 'aim' of the transaction". As it is often said, the court must place itself, in these circumstances, in thought in the same "factual matrix" as that in which the parties found themselves. Mr. Ferris referred to the two Law Society Circulars for part of the matrix. In my view, Clause 16 cannot be a trouble-free provision.

10. I have re-read the whole of the Agreement for Sale and Purchase. Clause 16 has been conceded as rot having the effect of expunging the remedy of specific performance and Mr. Ferris has offered his explanation for such non-exclusion, but Clause 16 would seem to deal exclusively with defaults, some of which may arguably not amount to repudiation, for example, the deposit and payment of three months' service charge as provided for in Clause 5(b) and (c). The questions which would immediately leap to mind are whether there is some distinction between a or any Clause 16 default and repudiation and if indeed there is, whether Clause 16 would override the common law claim for damages flowing from a repudiatory breach.

11. Returning to the crucial question as to whether Clause 16, as an express provision, evinces an intention to uproot the common law claim for damages: Much was sought to be made of the absence in Clause 16 of such words of reservation as "without prejudice to any other right or remedy available to him".⁽²⁾ But what would the consequence be, if the defendant as vendor declined to take advantage of clause 16 by serving one or the other of the notices? Would it be left wholly without remedy even in the case of such of the Claus 16 defaults as would amount also to repudiation? There could be, as Mr. Ching submitted, compelling reasons why the vendor would not wish to proceed under Clause 16 and thereby saddle himself with the necessity of a forced disposition within a mere period of six months.

12. In my view, it is a short but difficult point of construction which, I believe, has not been hithereto ventilated. In addition, it is a matter of great public importance as can be seen by the two Law Society Circulars which made Clause 16 a mandatory provision for all agreements for sale and purchase of this nature. A determination of the meaning of this clause would affect a large section of the community. Moreover, coming back to the present Counterclaim, any interpretation would involve a very substantial claim in excess of $20 million. Clause 16 damages are in respect of 54 flats amounting to some $33 million, and common law damages sought to be reintroduced by the proposed amendments for an alleged loss in respect to 200 flats would amount, in total, to $74 million. These considerations alone cry out for fuller arguments. I unhesitatingly share Mr. Ching's anxiety that construction of a clause such as Clause 16 in these Agreements for Sale and Purchase should be accorded a place of more prominence than what can now be offered by this summons to amend. For all these reasons, I cannot, as at present advised, stigmatize the proposed relevant amendments as being useless, which are incontestably bad and must fail.

13. I turn next to the second limb of Mr. Ferris' opposition, viz. an abandoned claim is not revivable and, if it is, in what way should judicial discretion be exercised.

14. Counsel for the defendant relied on Hollis v. Burton,⁽³⁾ where one of the partners in a solicitors' firm, who was not himself the sole trustee of the settlement, admitted in ignorance and consequently by mistake that funds of the beneficiary had been paid into the banking account of the legal firm. The admission was made both in his defence and in his answer to interrogatories. It was shown conclusively that in fact no such payment was made into the banking account of the firm. His defence was allowed to be amended for the purpose of withdrawing such an admission.

15. H. Clark (Doncaster) Limited v. Wilkinson⁽⁴⁾ was another authority cited by Mr. Ching, counsel for the defendant. In that case, the owner of two properties withdrew instructions to sell one by the auctioneers, but both properties were nevertheless put up for auction and knocked down to a bidder. Without instructions, the owner's solicitor signed the contract of sale. The owner sought to argue that the signed document did not amount to a sufficient memorandum in writing. When judgment was applied for against the vendor/owner, his counsel made on admission that his client's solicitor at the auction had authority to sign the contract of sale. The District Registrar, nevertheless, was inclined to give leave to defend on the original defence as pleaded, but when the plaintiffs intimated that they would appeal from such a decision, the District Registrar adjourned the summons to a judge. The learned judge refused leave to amend the defence as pleaded, holding that the vendor/owner was bound by the admission of his counsel before the District Registrar and granted the plaintiffs a declaration that the contract of sale ought to be specifically performed. On appeal, it was held that the vendor/owner "was not bound by the admission of its counsel, since the purchaser had not acted to the detriment on the faith of that admission". At page 703B, Lord Denning M.R. had this to say.

"An admission made by counsel in the course of proceedings can be withdrawn unless the circumstances are such as to give rise to an estoppel."

16. Danckwerts L. J. came to the same conclusion, and at page 704C, he referred to the admission as an ''admission or the abandonment of the point". At p.704G, in arriving at the same conclusion, Salmon L.J. observed:

"It is not even suggested that the statement made by counsel before the registrar; which may have been made under a misapprehension as to the state of the law, was acted on by the respondents. Clearly, if a man was appearing in person and made an admission during the course of any interlocutory proceedings or during the course of the trial and that statement was not acted upon by the other side to its detriment, there is no rule of law that prevents him from with-drawing it. I do not see how a man can be any worse off in this respect because, instead of making the admission himself, the admission is made on his behalf by counsel."

17. Mr. Ferris invited the court to hold these decisions as being distinguishable. But for the concessions made to the averments, so counsel analysed, the opponent would in each case have had to discharge the burden of proof; consequently the opponent would not, in effect, be put at a disadvantage by the restoration of the initial onus through a permitted withdrawal of the admissions. It was pressed upon me that here we were faced with a conscious and deliberate election to claim under Clause 16 alone and not to pursue a common law claim and that, as Mr. Ferris argued, the defendant had irrevocably abandoned all claim at common law for damages.

18. In my view, there seems to be little difference between an admission of an averment and an abandonment of an alleged claim : In the former a withdrawal would revert to the accuser the burden of proof and in the latter a restoration would merely bring back to the accused the risk of having to defend. If a distinction must be drawn, it would seem more unwelcome to be again called upon to resume yet an additional burden of proof.

19. On behalf of the plaintiffs, my attention was directed to Cargill v. Bower, ⁽⁵⁾ where the plaintiff filed a writ with an endorsement claiming a cancellation of an allotment of shares to himself on the ground of the defendants' alleged fraudulent misrepresentations. One of the defendants was a limited company, the shares of which had been so allotted. After the issuance of the writ, a winding-up petition was presented against the defendant limited company, and the plaintiff as a contributory on the record appeared to support the petition and was awarded costs in that capacity. When a statement of claim was delivered, the plaintiff did not seek a cancellation of the allotment. It was held that the plaintiff could not claim, on the pleadings as they then stood, a rescission on the alleged fraudulent misrepresentations and leave to amend his statement of claim was refused. However, the ratio decidendi is apparent even from the headnote that in fact leave was refused "on the ground that by his conduct the plaintiff had elected to claim the rescission of the contract, not in the action, but in the winding-up". At page 509, Fry J. had this to say:

"It is not necessary for me to say whether the plaintiff has finally elected to approbate the contract, but I think he has by his conduct at any rate expressed an intention and desire to assert his claim to rescission of the contract only in the winding-up proceedings. I, therefore, refused to give leave to amend." (The underlying is mine).

20. Mr. Ferris relied also on Harries v. Ashford, ⁽⁶⁾ a fatal accident action. In the writ, damages were claimed by the administratrices under the Fatal Accidents Act, 1846 - 1908, and under the Law Reform (Miscellaneous Provisions) Act, 1934, and the widow under the Acts of 1846 - 1908. However, Letters of Administration were not granted until two days after the issuance of the writ. The action was therefore an obvious nullity. In the statement of claim of this void action, only a claim was made under the Acts of 1846 - 1908 by the administratrices. After the statutory period had expired for the widow to claim in her own name, leave to amend so as to restore the widow's claim under the Acts of 1846 - 1908 in the statement of claim was refused although that had originally been included in the writ but thereafter dropped from the then existing statement of claim. It is reasonably clear that the English Court of Appeal was faced with an attempt to revive a claim after the statutory limitation period and a long delay. Asquith L.J. seemed to hold the view that the court could not entertain the application since the litigant had abandoned or was deemed to have abandoned his claim.

21. Harries v. Ashford was criticized in Clemence v. Daniels, an unreported case, and a reference of it can be found in Current Law Year Book. ⁽⁷⁾ The passage is brief, and I propose to repeat it in extenso:

"In Clemence v. Daniels (July 10, 1956) C. issued a writ on November 5, 1954, claiming specific performance of an oral contract made in March, 1953, for the sale of certain land at a certain price, alternatively of a contract contained in documents in April, 1954, for the sale of the same land at the same price. In his statement of claim delivered on November 16, 1954, C. claimed specific performance of the contract of April, 1954, only, and in April, 1956, he sought to amend it by including a claim in the alternative for specific performance of the contract of March, 1953. Danckwerts J. gave leave to amend, holding that the dicta of Asquith L.J. in Harries v. Ashford (1950) 1 C.L.C. 7817, to the effect that the court had no power to grant leave to amend a statement of claim by including therein a claim appearing in the writ, were obiter, and were not supported by the authorities referred to in that case."

22. Mr. Ferris also sought to derive support from Perestrello E. Companhia Limitada v. United Paint Co. Ltd. ⁽⁸⁾ and Cellular Clothing Co., Ltd. v. G. White & Co., Ltd. ⁽⁹⁾ Perestrello was a claim for damages arising out of an alleged breach of an agreement for the manufacture and distribution of a certain liquid stone known as "Unistuc". The plaintiff sought special damages representing wasted expenditure. There was no claim for loss of profits which was inconsistent with the pleaded claim for fruitless expenditure. Leave to amend was refused to add a claim for loss of profits. The refusal was based on various grounds, viz. delay, the awareness of the loss of profits claim long before action, the necessity for extra discovery of documents of a different nature, a transformation of the basis of the claim leading to protracted proceedings and causing difficulty in the defendant's assessment of the quantum for making a payment into court, and the unavailability of or difficulty in locating witnesses with special knowledge in Portugal. At p. 578H, Lord Donovan, in delivering the judgment of the English Court of Appeal, inserted a gentle reminder that none of above matters was to be treated as "decisive in itself".

23. Cellular Clothing Company case is a case of passing-off. The writ alleged both infringement of trade mark and passing-off. The plaintiffs were content to rely on passing-off alone in the ensuing interlocutory injunction application and their statement of claim. The action was founded on two allegations, each a trap order. Six months after the commencement of the action, unopposed, the plaintiff obtained leave to amend their statement of claim by making yet a third allegation in further support of the passing-off. The plaintiffs purported to effect an amendment to the prayer of their statement of claim, without leave, by raising a claim of infringement based on the added third factual allegation. The defendants pleaded to both, but leave to introduce the infringement claim which had been arbitrarily inserted into the prayer was not sought until the trial, when it was refused. At p.12 line 49, Harman J. recognized that it was largely a matter of discretion. The learned judge was much influenced by the facts that the original allegations of only two trap orders were less than overwhelming, that these two trap orders were maintained to be "the best particulars", that the injunction application proceeded exclusively on the basis of these two trap orders as "the best particulars", that the plaintiffs were confining themselves to passing-off in the interim injunction, and most of all that the third factual allegation added unopposed was prior in time to the two trap orders. At p.12 line 37 the learned judge passed his critical comment as follows:

"It is very extraordinary that, having given what they called the best particulars they can in October, the plaintiffs produce in February further particulars which either were or should have been, if they were true, within their knowledge the whole time. I should have thought that the amendment ought not to have been allowed. (Emphasis is mine).

24. Harman J. concluded that though the amendment was not objected to, he ought nevertheless to refuse leave to add a prayer to claim infringement, which, if allowed, would in effect enable the plaintiffs to rely on and take advantage of an obviously suspicious allegation. Cellular Clothing Company was decided on its special facts and is a far cry from the situation which confronts me to-day.

25. That it is essentially a matter of discretion cannot be doubted. In my judgment, it is open to this court to entertain the defendant's application for re-introducing its common law claim despite an abandonment.

26. The central issue in Cargill v. Bower was duplicity created by an election to pursue a claim in a separate proceeding. Harries v. Ashford as criticized in the unreported Clemence v. Daniels was, in essence, a discretion case against a background of a belated attempt to revive an abandoned claim which had become statute-barred. Perestrello and Cellular were judicial discretion decisions made on wide-ranging considerations, including prejudices such as unavailability of witnesses and a dubious factual allegation raised virtually as an afterthought. It is therefore encumbent upon me to make an all-embracing survey of the situation. Beneath all this lies the cardinal rule that leave to amend on terms is rarely refused if there is no material prejudice.

27. On behalf of the plaintiffs, I was reminded to have regard to all the material considerations in the exercise of my discretion. Mr. Ferris highlighted the following: that by these amendments the defendant sought to raise and rely on a wholly transformed new case, both in law and on fact, that the common law claim had long been known to the defendant, that the defendant made a conscious and deliberate election for Clause 16 damages, that this belated application was not made with expedition, that the proposed material amendments represented yet a further shifting of front and that the plaintiffs had lost an opportunity of appropriately reacting to the defendant's application for its last amendment to the Counterclaim which was met on the basis of finality.

28. There has been a long delay since the institution of these proceedings in December 1982 and the commencement of the trial in March 1984. Even the summons for this application was not filed until some 7 weeks after the plaintiffs were finally informed in November last of the defendant's intention to restore the common law claim. The defendant has already caused to be amended its pleading three times. However, the hearing of the Counterclaim has not begun. Discovery can only be of sales documents of the same categories, and investigation by the plaintiffs, though more extensive, would not differ much in nature. Construction of Clause 16, though complex, is nevertheless a short point, and proceedings cannot be unduly protracted, though hearing of the Counterclaim must suffer a further delay. Similar witnesses arc expected to be called either in support of 54 resales or 200 resales of flats in these same blocks. There is no complaint of unavailability of witnesses, experts or otherwise, or other material prejudices. The plaintiffs have raised no estoppel. Not being forewarned of the reintroduction of the common law claim for damages, the plaintiffs may have lost an opportunity to score a technical advantage over their opponent. On the bench, I, for one, share no great joy in technical victories. The other suggested prejudices seem remote and insignificant. In sharp contrast with the simple points of law or fact abandoned or admitted in the authorities cited, any decision on Clause 16 must have been an exceed-ingly difficult one to make even for the most vigilant and the most informed.

29. Taking a bird's-eye view of the whole circumstances, I would accede to the application of the defendant.

30. The rest of the proposed amendments being cosmatic, I would therefore give leave to amend, dispense with reservice and, subject to what counsel have to say, order that cost of, incidental to and thrown away by this application be costs for the plaintiffs.

31. I am also prepared to vacate the hearing date of the Counterclaim and to give directions.

(1)    [1971] 1 W.L.R. 1381 at p.1385 H.

(2)   Form 2:A:1 "Agreement for Sale by an absolute owner", p.409, Vol.18 The Encyclopedia of Forms & Precedents, 4th ed.

(3)    [1892] 3 Ch. D. 226

(4)    [1965] 1 Ch. 694

(5)    [1878] 10 Ch. 502

(6)    [1950] 1 A.E.R. 427

(7)    [1956] C. L. Y. para. 6925

(8)    [1969] 1 W.L.R. 570

(9)    (1952) 70 R.P.C. 9