ABL Nominees Pty Ltd v Pescott - [2014] VSC 461

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMERCIAL AND EQUITY DIVISION

S CI 2009 4804

ABL NOMINEES PTY LTD (ACN 106 756 521) in its corporate capacity and as Trustee for the Lighthouse Warehouse Trust No. 8 (Environinvest Finance)	Plaintiff
v
EUAN PESCOTT	Defendant

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JUDGE:	DERHAM AsJ
WHERE HELD:	Melbourne
DATE OF HEARING:	16 September 2014
DATE OF JUDGMENT:	17 September 2014
CASE MAY BE CITED AS:	ABL Nominees Pty Ltd v Pescott
MEDIUM NEUTRAL CITATION:	[2014] VSC 461

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PRACTICE AND PROCEDURE — Application to amend pleadings — New defences sought to be raised - Principles relevant to an application to amend — Test for determining whether amendment futile — Late application to amend to include Amadio defence (Commercial Bank of Australia Ltd v Amadio (1983) 151 CLR 447) — Whether pleading discloses a viable defence – Relevant principles applicable to defence of unconscionable advantage taken of a person suffering a special disability— No viable defence in proposed amended pleading — Application refused.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiffs	Dr O. Bigos	Allens Linklaters
For the Defendant	Mr T.G. Moloney	Foundation Legal

HIS HONOUR:

Introduction

By Summons filed on 11 September 2014 the defendant (Euan or the defendant) applies for leave to file and serve a Fourth Further Amended Defence.

The plaintiffs’ claims arise under a loan agreement said to have been entered into in June 1999 between the first plaintiff’s ultimate assignor, the second plaintiff BEP Finance Pty Ltd, and the defendant. That loan agreement was assigned by BEP to Environinvest Limited, the fourth plaintiff (EIL) and then to Primary Yield Finance Pty Ltd, the third plaintiff (PYF) and from PYF to the first plaintiff (ABL).

The substantial defence present in the Third Further Amended Defence filed on 2 March 2012 (after denials of the assignments alleged) is that under a put and call option between the defendant and EIL—the defendant was granted a put option, and EIL a call option—under which EIL could be called on to buy certain property, or could call on the defendant to sell that property (presumably the woodlots acquired with the loan moneys) and in consideration pay out the loan. The defendant alleges that on 20 September 2007 he (via his brother Roger Pescott) exercised the put option and in consequence the loan agreement was discharged.

Amendments sought

In this application to amend the defence the defendant seeks to:

(a) Change in a minor respect the way the defence under the put and call option is pleaded;

(b) Plead unconscionable conduct on the part of ABL in failing to give notice of the assignment until 2008. This defence alleges that if the loan was not paid out as a result of the exercise of the call option (which is the primary defence) then that was because of the failure of ABL to give the notice of assignment earlier, prior to 2007. Had it done so, the defendant…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2014] VSC 461
Decision Date: 17 September 2014

CaseChat Overview and Summary

ABL Nominees Pty Ltd sought to amend their pleadings in an application to the Federal Court of Australia to include a new defence in response to a proceeding initiated by Pescott. The dispute centred on the validity of a security interest held by ABL over certain property, and Pescott argued that the security interest was invalid due to alleged unconscionability under the principles established in Amadio v Commercial Bank of Australia Ltd. The primary legal issue before the court was whether the proposed amendment to include this new defence was permissible and whether it disclosed a viable defence. The court needed to determine the relevant principles for assessing the viability of a defence of unconscionable advantage and whether the proposed amendment would be futile.

The court held that the test for determining whether an amendment is futile involves assessing whether the proposed pleading discloses a viable defence. The principles applicable to the defence of unconscionable advantage were considered, focusing on whether the plaintiff had taken unconscionable advantage of a person suffering a special disability. The court found that the proposed amended pleading did not disclose a viable defence because it did not adequately demonstrate the elements required for an Amadio-style defence. Consequently, the application to amend the pleadings was refused as the amendment was considered futile.

The court's reasoning centred on the necessity for the proposed amendment to disclose a defence that, if proven, would entitle the defendant to succeed. Given the specific elements required for an unconscionable advantage defence, the court concluded that the proposed amendment failed to meet the threshold. As a result, the application to amend was denied, and the proceedings continued without the inclusion of the new defence. This decision underscored the importance of ensuring that any amendment to pleadings must disclose a viable defence and meet the legal standards required for such a claim.

Orders