Burr v Merrick

1. [1]

   HIS HONOUR: The plaintiffs, Darren Burr and Punam Burr, are the owners of a property known as XX Carinya Road, Picnic Point. Somewhat extraordinarily, having regard to the nature of their claim, there is no mention in the current or proposed pleadings of the date when they purchased it. However, be that as it may, the plaintiffs allege that when they did so, they relied upon a pre-purchase building inspection report concerning the property prepared and provided to them pursuant to the terms of a contract with the defendants or one of them in July 2017. It appears to be common ground that the house was afflicted with significant defects. It would also appear to be common ground that the report was inadequate in that it failed to disclose them, although there is a dispute over the extent of its inadequacy.

2. [2]

   The plaintiffs claim damages.

3. [3]

   By their notice of motion filed on 21 August 2025, the plaintiffs now seek leave under s 64(1)(b) and s 65 of the Civil Procedure Act 2005 to amend their statement of claim in order to rely upon what is described as a further amended statement of claim. In the events that have occurred, the only proposed amendments objected to now are paragraphs 42A-42C and 42E. They are as follows:

4. [4]

   The first defendant, Mr Merrick, was the principal of Wollongong Building Inspections Pty Ltd, which is presently deregistered. The second defendant, Mr Penman, is the principal of the third defendant Jim’s Group Pty Ltd. The fourth defendant is the insurer of Wollongong Building Inspections Pty Ltd.

5. [5]

   The proposed amendments substantially concern Mr Penman and Jim’s Group. Mr Merrick and the fourth defendant do not oppose the proposed amendments.

Plaintiffs’ submissions

1. [6]

   The plaintiffs originally submitted that the proposed amendments to paragraphs 30-32 are generally cosmetic, save that they seek to introduce a claim against Jim’s Group in the alternative to the existing claim against Mr Penman in order to cure a potential mistake as to the identity of the counter-contracting party to the plaintiffs. They maintained that it is obvious that they intended to sue the party with whom they entered into the rectification agreement. In this regard the case is said to be on “all fours” with the decision in Strata Plan 87060 v Loulach Developments Pty Ltd [2020] NSWSC 550 at [22]-[37]. These paragraphs are no longer in issue.

2. [7]

   The plaintiffs submit now that paragraphs 42A-42C and 42E seek to introduce a new claim which arises from the same common or substantially the same facts as those giving rise to a cause of action presently contained in the current amended statement of claim filed on 19 July 2022. They submit that, as such, leave should be granted pursuant to s 65(2)(c) of the Civil Procedure Act.

3. [8]

   The plaintiffs contend that it is difficult to see how the proposed amendments can genuinely be opposed or give rise to any prejudice to Mr Penman or Jim’s Group.

Second and third defendants’ submissions

1. [9]

   The second and third defendants oppose the grant of leave for three interrelated reasons.

2. [10]

   First, the form of the proposed pleading of the new cause of action is deficient and liable to cause embarrassment, particularly when it is advanced at such a late stage of the proceedings.

3. [11]

   Whilst the new claims appear superficially straightforward, that is a function of the highly generalised and imprecise manner in which they are pleaded. That superficial appearance masks the substantial new factual and legal issues that are raised by the new claims, none of which is properly or clearly articulated.

4. [12]

   A party seeking to advance claims alleging that an opposing party has contravened statutory prohibitions based on misleading or deceptive conduct must articulate any such claims clearly and precisely: Miller & Associates Insurance Broking Pty Ltd v BMW Australia Finance Ltd (2010) 241 CLR 357; [2010] HCA 31 at [5]-[7]; Cornerstone Investment Aust Pty Ltd (In Liquidation) v Tom Seymour [2022] NSWSC 281 at [5]. Amongst other things, that arises from the basic requirement that pleadings afford procedural fairness by enabling a party a proper opportunity of meeting the case against it: Banque Commerciale SA (En Liqn) v Akhil Holdings Ltd (1990) 169 CLR 279 at 286; [1990] HCA 11. The plaintiffs’ proposed form of pleading fails properly to discharge these requirements in a number of respects. The extent of those deficiencies is sufficient to deny leave to bring these amendments on conventional principles. Moreover, for reasons addressed in the following section, they have the further effect of rendering it difficult, if not impossible, for the plaintiffs to satisfy the Court that the new cause of action arises out of “substantially the same” facts as those already pleaded.

5. [13]

   These new claims rely upon a pleaded representation said to have been conveyed by a video contained on the “Jim’s Group” website that was previously pleaded as giving rise to the pleaded contractual guarantee. The proposed amendments then contend that that representation was variously made in trade or commerce, as to a future matter and without reasonable grounds.

6. [14]

   It appears from subsequent correspondence in which these concerns were raised, and by the proposed pleading, that the plaintiffs now solely contend the representation was one with respect to a future matter within the meaning of s 4 of the Australian Consumer Law. It also appears that the plaintiffs solely rely, in seeking to establish that there was no reasonable grounds for the making of the representation, upon the evidentiary presumptions created by sub-s 4(2) of the Law, and do not seek to advance any positive factual position as to their allegation that the representation lacked reasonable grounds. Their position in that regard nonetheless remains highly opaque. The second and third defendants should not be left to guess at those matters. The plaintiffs should be required clearly and precisely to explain the manner in which they intend to advance this claim, including whether and to what extent they advance any positive factual position as to the alleged lack of reasonable grounds for the making of the representation beyond bare reliance on the evidentiary presumption created by sub-s 4(2).

7. [15]

   The proposed pleading also advances no positive allegation of any contravention of s 18 of the Law said to arise from the representation. Again, the second and third defendants should not be left to guess at the precise cause of action to be advanced against them, including the precise statutory provision they are alleged to have contravened.

8. [16]

   The proposed pleading then pleads that “[b]ecause of the [representation]” the plaintiffs (1), requested and obtained a pre-purchase building inspection report from the first defendant and (2), proceeded to purchase the property in question. The words “[b]ecause of” obscure rather than clarify the case to be advanced at trial, a matter compounded by the rolled-up nature of the two sub-paragraphs that follow that chapeau. It appears from the late evidence served in support of the claim that the plaintiffs contend that they engaged the first defendant in direct and actual reliance upon the representation: if that is the case to be advanced at trial, it should be clearly pleaded in those terms; if not, the plaintiffs should clarify the alleged causal connection between the representation and the request for the building inspection report they seek to advance. It is then entirely unclear how the plaintiffs contend that they continued to purchase the subject property “[b]ecause of” the representation, and they should be required precisely to plead the causation case they intend to advance. The second and third defendants should not be left to guess what it is.

9. [17]

   The second and third defendants insist that these complaints about the form of the pleading are not mere nitpicking. These proceedings have been on foot for more than 3½ years, and a significant body of evidence has already been served. The proceedings would, save for this application, have been listed for final hearing. The plaintiffs should be in a position, and should be required, to indicate precisely the new case they intend to advance. Their inability or unwillingness to do so weighs against the grant of leave to amend.

10. [18]

    Secondly, the plaintiffs appear to accept that, by these amendments, they seek to raise new causes of action which would otherwise be statute-barred and that a grant of leave pursuant to s 65(2)(c) of the Civil Procedure Act is required. The applicable principles in that regard are well-settled and were addressed in detail by Leeming JA in Commonwealth of Australia v Winston (2024) 116 NSWLR 111; [2024] NSWCA 277 at [135]-[146]. Amongst other things, whether a new and otherwise time-barred cause of action advanced by way of an amendment attracts the operation of s 65(2)(c) is a matter of degree, to be approached by reference to the substance of the proposed amendments and the underlying concern of prejudice to a defendant in permitting a plaintiff belatedly to bring a new cause of action that is otherwise statute-barred.

11. [19]

    The plaintiffs contend in terms that leave should be granted pursuant to s 65(2)(c) on the basis that the new claims arise from the same or substantially the same facts as those giving rise to an existing cause of action. Paragraphs 42A to 42C plainly introduce at least some new facts, including the alleged lack of reasonable grounds for the making of the representation and the new (albeit highly opaque) allegations of causation or reliance advanced by the plaintiffs. The application of s 65(2)(c) therefore is one of degree, being whether those new facts are such that the new claims no longer rise out of “substantially” the same facts. The lack of clarity or precision as to the how the plaintiffs seek to formulate these new claims renders that judgment highly difficult, if not impossible, on the face of the pleading alone. It similarly renders it difficult for the second and third defendants to respond sensibly to the bare assertion that the same or substantially the same facts are in play.

12. [20]

    Alternatively, if I were otherwise satisfied that it is appropriate to grant leave pursuant to s 65(2)(c) to file the proposed amendments in a form including paragraphs 42A, 42B, 42C and 42E, the second and third defendants submit that I should not in effect foreclose any substantive limitation defence at this stage on the basis of an unsatisfactory pleading, but should instead preserve the parties’ respective positions by deferring those matters to the final hearing consistently with the High Court’s guidance in Wardley Australia Ltd v State of Western Australia (1992) 175 CLR 514; [1992] HCA 55. To that end, the second and third defendants submitted that I should adopt the orthodox approach of expressly reserving to the trial judge the question as to the date on which the proposed amendments should take effect: see Ingot Capital Investments Pty Ltd v Macquarie Equity Capital Markets Ltd (No 3) [2005] NSWSC 255 at [33]; Commonwealth Bank of Australia v ZYX Learning Centres Ltd [2014] NSWSC 1676; (2014) 103 ACSR 476 at [253].

13. [21]

    Thirdly, the second and third defendants submit that leave ought otherwise be refused in the exercise of my discretion given the late stage at which these amendments are proposed, the fact they will necessitate further evidence and discovery (and the attendant delay) and the consequential prejudice to them.

14. [22]

    In addition to the difficulties as to form, there are strong discretionary reasons to refuse the grant of leave to amend at this late stage.

15. [23]

    By seeking to amend to add entirely new causes of action against the second and third defendants some 3½ years into the proceeding, the plaintiffs require a considerable indulgence. They consequently bear the onus of explaining the delay in bringing forth these amendments, including amongst other things the need to negative any available inference that they have done so to gain a forensic advantage: Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175; [2009] HCA 27 at [103]-[110].

16. [24]

    The plaintiffs’ submissions do not engage with this fundamental and well-known requirement, despite it having been squarely raised in prior correspondence. The only explanation proffered in the supporting affidavit is that the amendments were identified in late July 2025, despite counsel at that time having been briefed since November 2020. That is not an explanation, much less one that is sufficiently clear or candid to negative the inferences that might otherwise be available.

17. [25]

    Moreover, permitting the amendments will occasion real and substantive prejudice to the second and third defendants for which an order for costs thrown away is an insufficient cure.

18. [26]

    The second and third defendants perceive that the plaintiffs invoke an evidentiary presumption contained in s 4(2) of the Australian Consumer Law that the representation lacked reasonable grounds. Assuming that to be correct, the second and third defendants would, if leave were granted, be faced with a need to meet an evidentiary onus of establishing the reasonable grounds for making it in about 2017. That will necessitate the expenditure of further time and cost, in circumstances where they have already gone to the trouble of preparing their evidence in response to the current claims. It will lead to yet further delay in obtaining a final hearing, in circumstances where the matter is otherwise ready to proceed.

19. [27]

    The second and third defendants are unable to point to specific prejudice in the nature of formerly available evidence on these matters that they are positively aware has been lost in the past 3½ years. However, they maintain that there is obvious prejudice to them in being placed in a position to meet a new case, with an evidentiary onus advanced against them. They rely in that regard upon the general presumption of prejudice where there is a long delay since the events in question given the degrading effect of time on the quality of available evidence: see Brisbane South Regional Health Authority v Taylor (1996) 186 CLR 541 at 551; [1996] HCA 25 per McHugh J. Those considerations loom all the larger where the potential effect of allowing the amendments would be to permit the plaintiffs to advance claims that would otherwise be statute-barred: see Impiombato v BHP Group Ltd [2025] FCAFC 9; (2025) 173 ACSR 28 at [375]-[376].

20. [28]

    The second and third defendants have self-evidently made forensic decisions as to the conduct of the proceedings since 2022 in meeting the case advanced against them over that time. That would now need to be substantially revisited if the amendments are permitted.

Consideration

1. [29]

   The plaintiffs allege, in broad terms, that they engaged the first defendant to carry out a building inspection and prepare a building inspection report in respect of a property that they had contracted to purchase and that they relied on his report in “proceeding to purchase” the property. They allege further that the building inspection report negligently or, alternatively, in contravention of s 18 of the Australian Consumer Law, failed to identify various defects in the property. The plaintiffs allege that in either case they have suffered loss and damage as a result of their reliance on the report.

2. [30]

   The third defendant was a franchisor, known as “Jim’s Group”, of the first defendant, and the second defendant is the principal of the third defendant. The plaintiffs now wish to claim:

   1. (1)

      that the second defendant had by an email dated 18 October 2018 formed a contract with the plaintiffs to undertake works to rectify defects to the property either as agreed or as determined by an independent expert, that the second defendant failed to perform that contract, and that the plaintiffs are entitled to damages for breach of that alleged contract; and

   2. (2)

      that the third defendant gave a contractual guarantee by way of a publication on the “Jim’s Group” website to rectify any work with which a customer was unsatisfied, that the third defendant has failed to perform that contractual guarantee, and that the plaintiffs are entitled to damages for breach of that alleged contractual guarantee.

3. [31]

   Those claims are legally and factually contested by the second and third defendants.

4. [32]

   Sections 64 and 65 of the Civil Procedure Act are relevantly in the following terms:

5. [33]

   It goes without saying that I have considered the parties’ detailed and helpful written and oral submissions. I have also read the affidavits of Darren Burr affirmed on 21 April 2023, 10 July 2024, 16 December 2024 and 7 August 2025, Andrew Shaw sworn on 17 July 2023, Banjo Stanton affirmed on 21 August and 19 September 2025 and James Archer affirmed on 12 September 2025. None of the parties referred me in any detail to this evidence, although some general references appear in counsels’ submissions. There was no cross-examination of any of the deponents.

6. [34]

   It seems to me that what I might call “the guarantee issue” has been a feature of the parties’ attention from the outset. Mr Burr’s reference to the video interview with Mr Penman occurs as early as his first affidavit. It is of course no part of my current task to characterise what significance or importance, if any, may ultimately be ascribed or attributed to that material. It is sufficient to note only that it has been in play in these proceedings from as early as the date of the first affidavit on which the plaintiffs rely.

7. [35]

   Even though the latest iteration of the plaintiffs’ pleading is late by any measure, it could not have been lost on the defendants, or the second and third defendants in particular, that the plaintiffs were running a case alleging that they entered into the contract of sale to purchase their house and relied upon the building inspection report concerning its structural and related status before doing so. Even though they have delayed until now to characterise any part of their claim as one relying upon an allegation of misleading and deceptive conduct, it is not in my view a particularly big leap now to plead the matters referred to in proposed paragraphs 42A-42C and 42E. Even accepting that there may be some infelicity in the pleading of those paragraphs, the second and third defendants could be in no doubt what the plaintiffs are asserting.

8. [36]

   It could not also be correct to contend in response, as the second and third defendants do, that the proposed amendments do not arise out of the same or substantially similar facts as those that underpin the original claims. There is arguably an obvious and haunting connection or relationship between the type of things allegedly said by Mr Penman in the video to which Mr Burr refers in his affidavit and the creation of the kind of confident expectation with which the plaintiffs presumably entered the contract to purchase their house, when armed with the building inspection report they had commissioned, having heard what Mr Penman is alleged to have said.

9. [37]

   Furthermore, the evidence concerning the possibility that the second and third defendants will or may suffer prejudice by reason of delay is less than convincing in my opinion. None of the Jim’s Group staff to whom Mr Archer refers in his affidavit as possible witnesses is said to be dead or definitely unavailable to assist with any response to the proposed amendments. The second and third defendants do not describe or specify the “further evidence” that they contend will be required to meet the amendments if they are allowed, nor have they indicated whether there are any actual, as opposed to purely hypothetical, difficulties that they anticipate might exist in obtaining it.

10. [38]

    I do not suggest that the approach taken by the second and third defendants is nitpicking, to adopt the colourful description used by their counsel in his submissions. However, I am of the view that a realistic and practical approach needs to be taken to the plaintiffs’ application and the response to it. In the event that some well documented prejudice can be identified, or the plaintiffs are unwilling or unable to satisfy any reasonable request for particulars of their proposed amendments that the second and third defendants might make, no doubt the matter could be raised in the course of the further management of the case or when the matter goes to trial. It is important in this case, as in all cases, that the real issues in dispute are identified and contested.

Orders

1. [39]

   I consider that the following orders should be made:

   1. (1)

      Grant leave to the plaintiffs to file by 14 November 2025 a further amended statement of claim in the form attached to the plaintiffs' submissions filed on 7 October 2025.

   2. (2)

      Order that the costs of the application to amend be the plaintiffs' costs in the proceedings.

   3. (3)

      The defendants to file defences to the further amended statement of claim by 21 November 2025.