Claimant Allowed to Amend Summons in Commercial Litigation

The court granted the claimant leave to amend its summons and list statement, but prohibited the claimant from adding further evidence without leave of the court. The decision was made in the context of equity and commercial litigation.

Supreme Court New South Wales

Medium Neutral Citation: [COMPANY] atf the [COMPANY] v [NAME] [2024] NSWSC 1050 Hearing dates: 16 August 2024 Decision date: 16 August 2024 Jurisdiction: Equity - Commercial List Before: Stevenson J Decision: Plaintiff granted leave to amend its summons and list statement; plaintiff may not adduce any further evidence without leave of the Court; plaintiff pay defendants' costs thrown away by the amendment and defendants' costs of the motion Catchwords: CIVIL PROCEDURE – pleadings – amendment – where plaintiff proposes amendments to its list statement after the close of evidence and some months after knowing of the matters of its amended claims – where it would not be just to shut out the plaintiff from pursuing those claims Category: Procedural rulings Parties: [COMPANY] as trustee for the [COMPANY] (First Plaintiff/Applicant) [COMPANY] (Second Plaintiff/Applicant) [NAME] (First Defendant/Respondent) [COMPANY] (Second Defendant/Respondent) [COMPANY] (Third Defendant/Respondent) Representation: Counsel: [redacted] A Ogborne (Defendants/Respondents)

Solicitors: [redacted] [NAME] (Defendants/Respondents) File Number(s): 2023/256077

EX TEMPORE

JUDGMENT (REVISED)

1. By contract dated 1 July 2022, the first defendant, [NAME], sold his [NAME] to the plaintiffs, [COMPANY], for $1.8 million. Completion took place on 1 August 2022. 2. [NAME] commenced these proceedings on 11 August 2023. In its List Statement filed on 5 September 2023, it alleged breaches of provisions in the contract that allowed [NAME] to recover from his former clients work in progress that was invoiced at the date of completion. The other allegation [NAME] makes is that [NAME] has sought to recover un-invoiced work in progress from identified clients.

3. The contract also contained a restraint clause. In [NAME]'s current List Statement, only one breach of that clause is alleged, namely, that in relation to an identified client: "On 15 June 2023, [NAME] entered the premises of [that client]. [NAME] told ... the office manager of [that client] that he had sold his business to [NAME]. [NAME] told [that office manager] that [NAME] had sacked him. [However,] [NAME] handed [that office manager] a cheque for $4,400 by way of part repayment for [certain payments]."

1. That is the only allegation the company made in [NAME]'s List Statement concerning the restraint clause. 2. [NAME] served its evidence late on 30 April 2024. That evidence included an affidavit from one of its directors, [NAME], to which I will return. However, also included in that evidence was an affidavit from [NAME]'s solicitor suggesting that [NAME]'s damages would be modest indeed. [NAME] served his corroborating affidavit on or about 25 July 2024.

3. At a directions hearing on 26 July 2024, the Court extended the time for [NAME] to serve its evidence in reply and ordered that any application for leave to serve expert evidence or obtain discovery be made returnable today. It was in that context that [NAME] then was seeking a date for hearing and that, in effect, informed the Court that the matter was otherwise ready for a hearing.

4. Now, by notice of motion filed on 2 August 2024, [NAME] seeks leave to amend its Summons and List Statement to make allegations of breach by [NAME] of the restraint clauses, and also seeks discovery. However, the proposed amendment by [NAME] of its claim was not foreshadowed prior to the filing of the notice of motion. The amendments propose to add a number of incidences where [NAME] is seeking to recover un-invoiced work in progress, but it also adds nine claims of alleged solicitation of clients in breach of the restraint clause. In each case, the form of the allegation is: 1. on a date between about November 2023 and 15 April 2024, [NAME] agreed or offered to give accounting and taxation advice to [the client]; 2. on a date between 13 November 2023 and 15 April 2024, [NAME] caused himself to be registered as the tax agent for [the client] with the Australian Taxation Office; 3. on dates between 13 November 2023 and 15 April 2024 and after, [NAME] acted for [the client] by providing accounting and taxation services.

1. The basis for these allegations against those nine clients appears to be no more than that: 1. on 13 November 2023, [NAME] wrote to the Tax Practitioner's Board saying that he had sold his tax and accounting business but saying: "I now wish to attend tax return preparations for clients again in a much smaller way"; and 2. a search made on 15 April 2024 on the Australian Taxation Office's tax agent portal, which lists those nine clients against [NAME]'s name.

1. In that regard, part of the evidence served for [NAME] on 30 April 2024 was the affidavit of [NAME], to which I have referred, in which he deposed: "On 15 April 2024, I received an email from [NAME] in which she attached an extract of the ATO tax agent portal for [NAME] which showed additional Accounting Clients had [NAME] registered as their tax agents. … This extract may be accessed via the ATO tax portal. In that extract, the names appearing below the column entitled "Name" are the names of some of the Accounting Clients who are now clients of [NAME] as at 15 April 2024. In my experience with engaging clients and registering them as my clients on the ATO portal, the tax agent must take active steps to log into the ATO Portal and add the client on their ATO portal as their client. An accountant needs to be registered as a client's tax agent in order to be able to lodge their tax returns." 1. [NAME] has known of the matters in [8(a)] above, I take it, since at least 30 November 2023, on which date [NAME]'s email was annexed to an affidavit by an officer of [NAME] made in support of an earlier application, and has known of the matter in [8(b)] above since 15 April 2023.

2. However, it has also been open to [NAME] to seek to propound the amendments the subject of its application since then. There is no evidence before me to explain why it is only now that [NAME] seeks to amend, saving that [NAME] has informed me, and I accept, that it has only occurred to those advising [NAME] since the matter was last before the Court that these amendments ought to be sought.

3. It is obviously unsatisfactory that the matter has developed this way. It may well be that, faced with the apparently immodest monetary value of the claim as currently pleaded, the thoughts of those advising [NAME] turned to other possible claims. However that may be, I cannot see how it would be just to shut out [NAME] from seeking to pursue these matters. Therefore, I propose to permit the proposed amendments. There will, however, be conditions. 4. [NAME] informed me that, were leave granted to make the proposed amendments, [NAME] would not seek to adduce further evidence.

Accordingly, as a condition of leave I propose to order that [NAME] may not adduce any further evidence without the leave of the Court, such leave not to be given unless exceptional circumstances are shown. Further, [NAME] will doubtless need to adduce further evidence to meet the amended case, including to place before the Court such evidence as he may be advised to adduce, vis-à-vis the people referred to in the Australian Taxation Office portal extract. He did not deal with these matters in his 25 July 2024 affidavit no doubt, because it was not then an issue. 5. [NAME] accepts that [NAME] must pay [NAME]'s costs thrown away by the amendment. I was inclined to direct that those costs include the further costs that [NAME] will incur in adducing that further evidence and to grant [NAME] leave to apply for a gross sum costs order in relation to those costs, however, on reflection, my conclusion is that those costs, or at least the bulk of them, would likely have been incurred in any event had this amendment been made in a more timely manner and that this question is best left to the trial judge.

6. However, [NAME] must pay the defendants' costs of its notice of motion seeking leave. I propose to make a gross sum costs order in relation to those costs payable forthwith and order that leave to amend be conditional upon those costs being paid within seven days of entry of orders giving effect to these reasons.

7. If the parties cannot confer and agree on a figure for [NAME]'s costs of [NAME]'s motion, the parties should confer and agree on a timetable for short written submissions and any evidence on that question I will decide on the papers.

8. As to the question of discovery, [NAME] has proposed categories of discovery. I propose to direct the parties to prepare a Redfern Schedule in which [NAME] sets out in one column the categories of discovery it seeks and in a second column its argument in favour of disclosure of those categories. [NAME] should then populate a third column with his contention as to why the disclosure should not be given. The Schedule should provide a fourth column for me to populate it with my rulings I will decide then.

9. The parties should now agree on the orders necessary to give effect to these reasons and also for the directions for the future conduct of the matter, including, no doubt, an amended list response by [NAME].

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