In Aon Risk Services Australia Limited v Australian National University [2009] HCA 27 (Aon v ANU), the High Court has unanimously upheld the importance of the objective of the ‘just, quick and cheap resolution of the real issues between the parties’ (as these objectives are variously enshrined in Court Rules) in determining applications for leave to amend pleadings.

In reaching this decision, the High Court has expressly overturned the previous decision in Queensland v JL Holdings (1997) 189 CLR 146 (JL Holdings). The decision is likely to have significant practical ramifications for the conduct of litigation in the future.

Amendment applications under JL Holdings

JL Holdings was authority for the proposition that ‘justice’ was the paramount consideration in determining an application for leave to amend pleadings. Although case management principles (such as efficiency and avoiding delay) were a relevant consideration, the High Court held that they could not:

…prevail over the injustice of shutting the applicants out from raising an arguable defence, thus precluding the determination of an issue between the parties. As a consequence of this decision, the accepted position was that an application to amend would in most cases be granted, so long as:

  1. the proposed amendment raised an arguable issue, and
  2. any prejudice suffered by the other party or parties could be adequately compensated by an order for costs.

The decision in Aon v ANU

In Aon v ANU, the High Court unanimously held that the discretionary power of the Court to permit a party to amend pleadings is subject to, and intended to be guided by, the objectives of case management. In this case, these objectives were expressed in rule 21 of the Court Procedure Rules (ACT) as the ‘just resolution of the real issues in civil proceedings with minimum expense and delay’.

In reaching this conclusion, the High Court held that the various Court Rules must be applied having regard to the objectives of the timely disposal of proceedings at an affordable cost, where these objectives are stated. In this context, the ‘just resolution’ of proceedings remains the paramount consideration, but this phrase is to be understood as encompassing the minimisation of expense and delay. In particular, the High Court stated:

Speed and efficiency, in the sense of minimum delay and expense, are seen as essential to a just resolution of the proceedings. This should not detract from a proper opportunity being given to the parties to plead their case, but it suggests that limits may be placed upon re-pleading, when delay and cost are taken into account. The Rule’s reference to the need to minimise costs implies that an order for costs may not always provide sufficient compensation and therefore achieve a just resolution. It cannot therefore be said that a just resolution requires that a party be permitted to raise any arguable case at any point in the proceedings, on payment of costs…The modern view is that even an order for indemnity costs may not always undo the prejudice a party suffers by late amendment.

In addition to considering the interests of the parties to the proceedings, the High Court also held that a court should have regard to:

  • the public interest in the proper and efficient use of public resources
  • the effect that undue delay can have on public confidence in the judicial system, and
  • the interests of other litigants (not the parties to the proceedings).

The implications of Aon v ANU

While the decision in Aon v ANU concerned the ACT’s Court Procedure Rules, the reasoning of the High Court is likely to have general application. Many Australian courts have rules similar to that considered in Aon v ANU. For instance, the Civil Procedure Act 2005 (NSW) provides that the overriding purpose of the rules of court is to ‘facilitate the just, quick and cheap resolution of the real issues in the proceedings.’ Similarly, a Bill has recently been introduced into Federal Parliament which, if passed, will introduce into the Federal Court Act 1976 (Cth) an overriding obligation on the Federal Court, legal practitioners and parties to litigation to ‘facilitate the just resolution of disputes according to law and as quickly, inexpensively and efficiently as possible’.

In light of Aon v ANU, it is likely that these objectives of the efficient and inexpensive resolution of the real issues between the parties to litigation will take on a greater importance in the conduct of litigation, given the acceptance and support of these principles by the High Court. The decision in Aon v ANU is likely to lead to trial judges taking a more proactive approach to case management, and exercising their discretion to refuse applications to amend pleadings where such applications have not been brought in a timely manner. The decision will also have relevance beyond applications to amend pleadings, for instance in relation to adjournment applications.

A party seeking leave to amend pleadings, or an adjournment, is likely to bear a heavier burden than in the past, as it may no longer be sufficient to rely simply on a costs order being adequate compensation. Further, it will be more difficult to resist discretionary decisions by trial judges to refuse such applications. Accordingly, it will be important for parties to make such applications at the earliest opportunity and, where there has been delay, provide a reasonable explanation of the reasons for that delay.