The High Court warns against last-ditch amendments in litigation

Earlier this month, the High Court in Aon Risk Services Australia Ltd v ANU [2009] HCA 27 held that a party may not be permitted to amend its case at a late stage in litigation if that would unduly compromise the administration of justice in the case. This decision represents a significant shift away from the previously understood position.

The prior state of the law pursuant to JL Holdings

Previously the legal authorities were understood to almost always, in a practical sense, require a court to permit a party to amend its case (ie its pleadings), even after the commencement of trial. Even if this amendment resulted in significant delays (eg the vacation of an imminent hearing) and additional costs for the other party, the amendment would almost always be allowed although the party seeking the amendment would likely be ordered to pay that other party’s costs.

This position was derived from the common reading of the High Court’s previous decision in Queensland v JL Holdings (1997) 189 CLR 146.

The facts in Aon

ANU owned a number of properties which were destroyed during the 2003 Canberra bushfires. Following a dispute over the extent of its insurance coverage, ANU commenced proceedings in the ACT Supreme Court against its insurers for indemnity for losses caused by the fires. In the same proceedings, ANU also sued its insurance broker, Aon. Significantly, ANU made only very limited claims against Aon.

Three days into the four week trial, ANU settled with the insurers and applied for an adjournment of the trial so that it could amend its claim against Aon. The amendments proposed would radically change the nature of ANU’s case against Aon. Evidence given by ANU’s solicitor to the court gave no real reason for ANU’s amendment, and indicated that ANU had deliberately decided not to give such reasons.

Aon opposed the amendments. However the ACT Supreme Court, feeling that it was bound by JL Holdings, granted the adjournment and ordered ANU to pay Aon’s costs. Aon appealed.

The High Court’s decision in Aon

The High Court allowed Aon’s appeal, and dismissed ANU’s application to amend its case against Aon. It ruled that, when deciding whether or not to permit an amendment, the court should essentially weigh up all relevant factors.

The High Court found that in the circumstances of the case the substantial delay and wasted costs that would flow from the amendment outweighed the counterveiling considerations that were in favour of allowing ANU to make the amendments. It would appear that the High Court took into account the apparent lack of candour shown by ANU in justifying its application for amendment.

Arguably the High Court did not expressly overrule JL Holdings. Rather, it seemed to disapprove of the continued “blanket” application of certain statements made in JL Holdings when determining amendment applications. Also, it was noted that the facts which gave rise to the decision in JL Holdings were fundamentally different to the facts in Aon.

Corrs acted for Aon.

Implication

Aon is a warning to litigants that there are limits to their ability to amend their pleadings. Naturally it is still possible to amend a case at a late stage of litigation, but it is clear that the bar for this is set at much higher level than was previously thought.

The principles behind the High Court’s ruling are analogous to those apparent in a decision of the NSW Supreme Court that we discussed in May this year.