IN THE HIGH COURT OF FIJI
AT SUVA
CIVIL JURISDICTION

Civil Action No. HBC 106 of 2008

BETWEEN:

VINOD PATEL AND COMPANY a limited liability company having its registered office at Ratu Dovi Road, Centerpoint, Laucala Beach Estate, Nasinu.
PLAINTIFF

AND:

GLENN RICH of P O Box 121, Westpark Village, Auckland, New Zealand, Company Director.
DEFENDANT

BEFORE: Master Deepthi Amaratunga

COUNSEL: Mrs. S. Devan of Neel Shivam Lawyers for the Plaintiff 
 Mr. Prasad V. of Howards Lawyers for the Defendant 

Date of Hearing: 7th March, 2011 
Date of Ruling: 12th January, 2012

RULING

A.	INTRODUCTION

1.	The Plaintiff filled this action against the Defendant for the alleged debt due to Cabella Pacific Construction (Fiji) Ltd, where the Defendant was a director and has also allegedly signed a personal guarantee for the mortgage with the principle debtor. The Defendant has filled a statement of Defence in 2008, but now it seeks to amend the statement of defence and the action has proceeded to the stage of pre-trial conference, without it being finalized and submitted to the court. The proposed amendment is a complete overhaul of the earlier statement of defence and it also contained a counterclaim.

2.	The Plaintiff objects to the proposed amendment and state that the proposed amendment would cause inordinate delay in the action and would also incur additional cost and also state that the said amendments lack merits. The Defendant has stated reasons for the delay in the proposed amendment and has also consented to pay a cost to the Plaintiff for the delay.

B.	LAW AND ANALYSIS

3.	This is the Defendants application to amend his Statement of Defence pursuant to Order 25 rule 5 of the High Court Rules 1988.The law relating to grant of leave to amend pleadings is set out under Order 20 rule 5 off the Supreme Court Practice 1999.

Order 20 Rule 5 of the High Court Rules which provides:

"5-(1) Subject to Order 15, Rule 6, 8 and 9 and the following provisions of this rule, the Court may at any stage of the proceedings allow the Plaintiff to amend his writ, or any party to amend his pleading, on such terms as to costs or otherwise as may be just and in such manner (if any) as it may direct."
(emphasis is added)

4.	It should be noted the court is granted a discretion to allow any amendment at any time of proceedings, but this discretion has to be exercised in accordance with the accepted norms and principles of law. The Plaintiff is objecting to the said amendment and the affidavit in opposition filed by Diven Lal Sharma state that inter alia 

a.	There are no merits in a claim for right to set off.

b.	There will be prejudice to the Plaintiff if the said amendment is allowed.

c.	The Plaintiff had been put to unnecessary legal costs to recover a debt which is lawfully and justly due and the matter so far has been inordinately delayed by the Defendant.

d.	The Plaintiff has incurred $4,350 legal fees and will incur further legal fees if amendments are allowed at such a late stage.

5.	The Plaintiff in the affidavit in opposition state that earlier enquiry or request by the Defendant for the disclosure of pertinent documents would have vitiated the need for the application for amendment and also state that Defendants have not provided any evidence of any prior requests being made for the disclosure of 'pertinent documents' for purpose of filing their defence and state that the justification for amendment at such late stage of the proceedings untenable.

6.	It should be noted that there is a delay, in this application for amendment and the amendment is substantial and the Defendant seems to have jettisoned almost all of the admissions including the fact of the mortgage between the Plaintiff and the principle debtor which he admitted earlier.

7.	The Reasons for amendment is laid down in paragraph 3 of the Defendant's affidavit in support and it states as follows

'3.That upon further perusing through the various documents in Court possession in relation to the Ca'Bella Pacific Construction (Fiji) Ltd, and seeking further advice from my solicitors, it has now become apparent that the statement of Defence filled needs to be substantially amended.

In paragraph 4 Defendant further states

'4. That I did not have these documents in my possession at the time when the statement of Defence was initially filed as a number of documents belonging to Ca'Bella Pacific Construction (Fiji) Ltd were uplifted by Yakuve Island Resort Limit and were not returned or made available until recently when discovery was made in another matter pending before this Court being Ca'Bella Pacific Construction (Fiji) Ltd and Anor v Yakuve Island Resorts Limited, Suva High Court Civil Action No HBC 41 of 2005.'

8.	The main reason according to the above two paragraphs are non availability of the relevant documents at the time of drafting the statement of defence and subsequently certain facts being discovered in a related action between the plaintiff and the principle debtor, where the same documentary evidence is produced. If the relevant documents were not in possession, that could have easily overcome by making a request to the Plaintiff directly and or making a formal request to court for specific discovery seeking appropriate order from the court. It is well established principle that the object of the amendment after the closing of the pleading Court 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…(per Bowen L.J. in Cropper v. Smith (1883) 26 Ch. D. 700, pp. 710 – 711, with which observations A.L. Smith L.J., expressed "emphatic agreement" in Shoe Machinery Co. v. Cultam (1896) 1 Ch. 108. P. 112)

9.	Under Order 20/ 8/6 of the Supreme Court Practice of 1999 under the heading 'General principles for grant of leave to amend' at page 379 it is stated that:

"General principles for grant of leave to amend (rr5, 7 and 8)-It is a guiding principle of cardinal importance on the question of amendment that, generally speaking, all such amendments ought to be made "for the purpose of determining the real question in controversy between the parties to any proceedings or of correcting any defects or errors in any proceedings." (see per Jenkins L. J. in R. L. Baker Ltd v Medway Building & Supplies Ltd [1958] 1 W.L.R. 1216; [1958] 3 All E.R. 540, p.546)." (Emphasis added)

It is well established principle that the object of the amendment after the closing of the pleading Court 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…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 grace… it seems to me that 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 rights 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" (per Bowen L.J. in Cropper v. Smith (1883) 26 Ch. D. 700, pp. 710 – 711, with which observations A.L. Smith L.J., expressed "emphatic agreement" in Shoe Machinery Co. v. Cultam (1896) 1 Ch. 108. P. 112)."

A dictum of Peter Gibson L. J. (see below) in Cobbold v Greenwithc LBC August 9, 1999, unrep.,CA, has been relied upon in many cases, both at first instance and on appeal(e.g. Sumtomo Corp v Credit Lyonnais Rouse Ltd [2003] EWHC 833, (comm), April 8, 2003 unrep,(Cook J.); Law Debenture Trust Corporation (Channel Islands)Ltd, The v Lexingotn insurance Co [2001] EWCA Civ 1595, October 31, 2003, unrep., CA; Daniels v Thompson [2004] EWCA Civ 307, March 18, 2004, unrep., CA). ………

In allowing the appeal Peter Gibson L.J. said (with Sedley L.J. concurring):

"The overriding objective (of the CPR) is that the court should deal with cases justly. That includes so far as in practicable, ensuring that each case is dealt with not only expeditiously but also fairly. Amendments in general out to be allowed so that the real dispute between the parties can be adjudicated upon provided that any prejudice to the other party caused by the amendment can be compensated for in costs, and the public interest in the administration of justice is not significantly harmed."

[Page 487, Civil Procedure (White Book) Volume 1 (2011)17.3.5 General principles for grant of permission to amend]

10.	It should be noted what is paramount in the exercise of the discretion of the court in determining an application for amendment is whether the amendment will lead to a decision of the real matter in controversy and if so to allow the pleading to be corrected with necessary amendment, even though it results a dely.

11.	Under Order 20/ 8/6 of the Supreme Court Practice of 1999 under the heading 'General principles for grant of leave to amend' at page 379 further stated as follows

"In Tildesley v. Harper (1876) 10 Ch. D. 393, pp 396, 397, Bramwell L.J. said:

"My practice has always been to give leave to amend unless I have been satisfied that the party applying was acting mala fide, or that, by this blunder, he had done some injury to his opponent which could not be compensated for by costs or otherwise." "However negligent or careless may have been the first omission, and however late the proposed amendment, the amendment should be allowed it can be made without injustice to the other side. There is no injustice if the other side can be compensated by costs" (per Brett M.R. Clarapede v. Commercial Union Association (1883) 32 WR 262, p263; Weldon v. Neal (1887)19 QBD 394 p.396. Australian Steam Navigation Co. v. Smith (1889) 14 App. Cas. 318 p 320; Hunt v. Rice & Sons (1937) 53 TLR 931, C.A and see the remarks of Lindley L.J. Indigo Co. v. Ogilvy (1891) 2 Ch. 39; and of Pollock B. Steward v. North Metropolitan Tramways Co.(1886) 16 QBD.178, p.180, and per Esher M.R. p.558, C.A.). An amendment ought to be allowed if thereby "the real substantial question can be raised between the parties," and multiplicity of legal proceedings avoided (Kurtz v. Spence (1888) 36 Ch, D. 774; The Alert (1895) 72 L.T. 124).

On the other hand it should be remembered that there is a clear difference between allowing amendments to clarify the issues in dispute and those that provide a distinct defence or claim to be raised for the first time (see, per Lord Griffiths in Kettma v Hansel Properties Ltd [1987] A.C 189 at 220).

Leave to amend will be given to enable the defendant to raise a defence arising from a change in the law since the commencement of the proceedings affecting the rights of the parties or the relief or remedy claimed by the plaintiff, even though this might lead to additional delay and expense and much longer trial, e.g. that the plaintiffs have acted in contravention of Art. 85 (alleging undue restriction of competition) and Article 86 (alleging abuse of dominant market position) of the treaty establishing the European Economic Community (the "Treaty of Rome") which became part of the law of the United Kingdom by the European Community Act 1972, so as to become disentitled to their claim for an injunction (Application des Gaz SA v Falks Veritas Ltd [1974]Ch. 381;[1974]3 All E.R. 51 CA)…

Where a proposed amendment is found upon material obtained on discovery from the defendant and the plaintiff also intends to use if for some purpose ulterior to the pursuit of the action (e.g. to provide such information to third parties so that they could bring an action), the plaintiff should not be allowed to amend a statement of claim endorse on the writ and so it the public domain but instead the amendment should be made as a statement of claim separate from the writ and thus not available for public inspection (MialanoAssicuranzionaSpA v Walbrook Insurance Co Ltd [1994] 1 W.L.R 977 see too Omar v Omar [1995] 1 W.L.R. 1428, use of documents disclosed in relation to Mareva relief permitted to amend claim and at trial.

The Court is entitled to have regard to the merits of the case in an application to amend if the merits are readily apparent and are so apparent without prolonged investigation into the merits of the case (King's Quality Ltd v A.J. Paints Ltd [1997] 3 All E.R. 267)." (Emphasis added)

12.	The Plaintiff do not allege mala fide against the Defendant. In the affidavit in opposition it state that the proposed amendment lacks merits. On the materials that are available to me at this moment it is not possible to analyse the merits of the action. Though the Defendant denies the execution of the mortgage in the proposed statement of defence as opposed to the one it submitted in 2008, it should be noted that the legality of the said instrument was never admitted by the Defendant.

13.	The White Book further goes on to state under Order 20/8/10 at p 382 state under the heading "Before the trial or hearing" state as follows

"Before the trial or hearing(rr5,7 and 8)- Leave is readily granted, on payment of the costs occasioned, unless the opponent will be placed in a worse position than he would have been if the amended pleading had been served in the first instance (Steward v North metropolitan Tramways Co (1885) 16 Q.B. D 178) or some injury caused to him for which he cannot be compensated by payment of costs B (See "Costs no remedy", para20/8/20)……….

Under the same heading "Before the trial or hearing" it further state at p 382

"There will be difficulty however, where there is ground for believing that the application is not made in good faith. Thus, it either party seeks to amend his pleading, by introducing for the first time allegations of fraud, or misrepresentation or other such serious allegation, the Court will ask why this new case was not presented originally; and may require to be satisfied as to the truth and substantially of the proposed amendment (Lawrance v. Norreys (1890) 39 Ch. D. 213; see judgment of Stirling J. p.221, and of Bowen L.J. p. 235). 

So in a libel action, if the defendant seeks at a late stage to amend his defence by adding a plea of justification, his application will be closely inquired into and it will be allowed where he has shown due diligence in making his inquiries and investigations, but it may well be refused if he has been guilty of delay or has not made proper inquiries earlier (Associated Leisure Ltd v Associated newspapers Ltd [1970] 2 Q.B 450 [1970] 2 All E.R. 754, CA)

14.	It is clear, that even before trial, the position regarding the amendment is not always favourable for the party seeking amendment, and there is a discretion with court that has to be exercised with due regard to the established principles on amendment. Where there is a delay, even though it is before the commencement of the trial, the amendment should not be granted as of a right, but the discretion of the court has to be exercised judiciously. In the Associated Leisure Ltd v Associated newspapers Ltd [1970] 2 Q.B 450 [1970] 2 All E.R. 754, CA it was held that though the trial has not started, if the party applying for amendment is guilty of delay and has not made proper inquiries the amendment can be refused in that case the defence of justification was pleaded lately in the proposed amendment, but Lord Denning MR allowed the amendment in appeal. The Plaintiff on one hand states that its documents were lost as they were uplifted by a third party, and this has not been denied by the Plaintiff, at the same time the Plaintiff has states that they discovered certain facts that made the proposed amendment necessary in a related action, he also states that he obtained legal advice and was informed that he is entitled for the defence of the principle debtor and seeks to include them in his statement of defence. The last reason may be as a result of negligence, but that again cannot be a reason for rejection.

15.	The affidavit in support of this summons further states that amendments are crucial for the determination of all the issues in this action so as to avoid multiplicity of actions and also states that it will not prejudice the Plaintiff as cost is a remedial measure for any delay and also state that Defendant is prepared to pay costs.

16.	The delay is a concern to the Plaintiff, and has also requested a cost of $5,500 if the amendment is allowed. The Plaintiff has stated that it had already incurred a cost of $4,350 for litigation. The amendment is substantial and it is virtually jettisoning its earlier statement of defence entirely and introducing a new statement of defence denying an earlier admitted fact of signing a mortgage though its validity in law was already denied by the Plaintiff in its statement of defence that was filled on 4th August, 2008. It is clear that though the Defendant state that this admission was a typographical error, the legality of the mortgage instrument was an issue that was denied by the Defendant, even in the statement of defence of 2008 and now the Defendant wants to deny even the signing of the mortgage. The proposed statement of defence is comprehensive and also contains a counter claim as opposes to the brief statement of defence filed in 2008. 

17.	In Peter Sujendra Sundar and Anor –v– Chandrika Prasad Civil Appeal No; ABU 0022/97, the court of appeal at page 9 of the judgment aptly summarized the rationale and test for the permission to grant or refuse an amendment as follows:-

"…………Generally, it is in the best interest of the administration of justice that the pleadings in an action should state fully and accurately the factual basis of each party's case. For that reason amendment of pleadings which will have that effect are usually allowed, unless the other party will be seriously prejudiced thereby (G.L.Baker Ltd. V. Medway Building and Supplies Ltd [1985] 1 WLR 1231 (C.A.)). The test to be applied is whether the amendment is necessary in order to determine the real controversy between the parties and does not result in injustice to other parties; if the test is met, leave to amend may be given even at a very late stage of the trial (Elders Pastoral Ltd v. Marr (1987) 2 PRNZ 383 (C.A.))." (emphasis added)

18.	The Defendant submits that on being sued by the creditor for payment of the debt guaranteed, a guarantor may rely on any right of set-off or counterclaim which the principal debtor could set up against the creditor in reduction of the guaranteed debt in order to reduce the claim against him under the guarantee. However, if on its true construction the guarantee requires the guarantor to pay a particular amount due irrespective of the accounting position between the principal debtor and the creditor, then the guarantor will not be entitled to rely on the principal debtor's rights of set-off or counterclaim – Coca-Cola Corporation v Finsat International Ltd [1998] Q.B.43 . It is a legal defence and the Defendant should not be deprived of his defence, since I am unable to disallow such an amendment on examination of the merits of the defence on documents at this moment.

19.	In the proposed Statement of Defence, the Defendant relies upon the affidavit of Nigel Ainley. In the affidavit, Nigel has expressly noted that the principal debtor, namely Ca'Bella Pacific Construction (Fiji) Limited has a legitimate defence to the claim. The Defendant states that goods or part thereof supplied were of poor quality or unfit for the purposes. There is annexed to the affidavit of Nigel a copy of the report from an independent party, namely Rwalinson. This might impact upon the quantum of claim if the defendant were to become liable. The Plaintiff in the affidavit in opposition state that items in the Rawlinson report have not been submitted by them, but I am unable to verify the truth of that purely on the documents before me and this has to be encountered in the trial, and I cannot conclude on the documents supplied by the Plaintiff that the said defence is without a merit.

20.	In White Book (2011) at page 488 it states under heading Need to show some prospect of success as follows

'Need to show some prospect of success

An application for permission to amend a defence will be refused if it is clear that the proposed amendment has no prospect of success (Oil & Minerals Development Corp v Sajjad December 3, 2001 unrep., QBD; Groveholt Ltd v Hughes [2010] EWCA Civ Group Inc v T & N Ltd December 19, 2001, unrep, QBD).

Given the purpose of the statement of truth verifying an amendment a party will not be permitted to raise by amendment an allegation which is unsupported by any evidence and is therefore pure speculation or invention (Clarke v Marlborough Fine Art (London) Ltd [2002] EWHC 11)

21.	The Defendant in the affidavit in support substantiate his position and I am unable to verify the truth or evidential value at this stage on the materials supplied to me. Considering the reasons given for the amendment, I think that Defendants could have easily obtained the relevant documents earlier, than waiting till they being discovered in a connected action.

22.	There are not materials before me to conclude that delay and negligence amounts to mala fide. The Plaintiff does not state the proposed amendments were done in mala fide and on the material before me I do not think so. In the circumstances though the proposed amendment will delay the action it is equally important to allow the Defendant's contention and I will allow the proposed statement of defence in the absence of clear mala fide on the part of the Defendant. There is no prejudice alleged in the affidavit in opposition to this summons, other than delay.

C.	COSTS

23.	The plaintiff should be allowed costs of this action as there is a delay in this application and it could have been avoided if due diligence and proper inquiries were made at appropriate time by the Defendant. I have discussed this in issue earlier in this ruling. What is the reasonable cost under the circumstances, has to be decided in application of the relevant law. 

'As a general rule, where a plaintiff makes a late amendment, as here, which substantially alters the case the defendant has to meet and without which the action will fail, the defendant is entitled to the costs of the action down to the date of the amendment (per Stuart-Smith L.J. in Beoco Ltd v Alfa Laval Co Ltd [1995] Q.B. 137).
 
24.	The Plaintiff is encountered with a complete overhaul of the defences and also included a counterclaim in the amended statement of defence. The Plaintiff state that it had incurred a cost of $4,350 as the cost and this has not been refuted by the Defendant. It can be safely deduced that with the present amended statement of defence the Plaintiff will incur more cost as it contain number of defences for the first time and it is comprehensive and also contains a counter claim. All of which needs more time and deliberation by the Plaintiff, at the pretrial stage as well as in the trial, increasing the cost of the Plaintiff in this litigation substantially.

25.	In calculating the cost, one has to consider the nature of the action and the stage of the proceedings and the nature of the amendment. It is very clear the amendment is substantial and this will require the Plaintiff to file even a reply to the counter claim that was a new addition. The action is at the pretrial stage and Plaintiff will incur additional expenses considering the nature of the issues that were raised for the first time. The Plaintiff has stated that it has incurred more than $4,350 as legal cost. Considering the nature of the amendment the Plaintiff will either be incurring a similar or more cost as the proposed amendment is extensive and contains new issues including a counter claim. 

As a general rule, where a plaintiff makes a late amendment, as here, which substantially alters the case the defendant has to meet and without which the action will fail, the defendant is entitled to the costs of the action down to the date of the amendment (per Stuart-Smith L.J. in Beoco Ltd v Alfa Laval Co Ltd [1995] Q.B. 137). The Plaintiff claims that it incurred a cost of $4,350, and considering all the circumstances I will assess a cost summarily at $2,500.

D.	CONCLUSION

The proposed amendment is substantial and it is a complete overhaul of the statement of defence filled in 2008. The main object of the Plaintiff is that the said defence would delay the action, this can be compensated by the award of cost. The Defendant's proposed amendments cannot be considered as done in mala fide, without a prospect of success. The affidavit in support substantiates its contention and it can be tested only in the trial. The proposed amendment filled with the summons for amendment is allowed with a costs of and cause by assessed at $2,500.

E.	FINAL ORDERS

a.	The Defendant's summons for the amendment of the statement of defence is allowed.

b.	The Defendant is ordered to pay a cost of $2,500 to the plaintiff within 14 days.

c.	The Defendant is ordered to file and serve the statement of defence within 14 days.

d.	Thereafter, the matter is to take normal cause.

Dated at Suva this 12th day of January, 2012

Mr. Deepthi Amaratunga
Master of the High Court
Suva