Aesthetics Architecture Pty Limited v John Camilleri & Ors

[2007] NSWSC 1129

CITATION:	Aesthetics Architecture Pty Limited v John Camilleri & Ors [2007] NSWSC 1129
HEARING DATE(S):	27/09/2007
JUDGMENT DATE :	15 October 2007
JUDGMENT OF:	Hoeben J at 1
DECISION:	The second defendant is given leave to file an Amended Defence in the form attached to its Notice of Motion filed on 24 April 2007; Each party is to pay his or its own costs of this application.
CATCHWORDS:	Practice and procedure - application to amend defence to raise limitation of liability - whether conditions should be imposed - whether plaintiff will be prejudiced by such an amendment - whether and to what extent the plaintiff would have conducted the litigation differently had the defence been raised earlier.
LEGISLATION CITED:	Civil Procedure Act 2005 Professional Standards Act 1994
CASES CITED:	Ketteman v Hansel Properties Limited (1987) 1 AC 189 The State of Queensland and Anor v J L Holdings Pty Limited (1996-97) 189 CLR 146
PARTIES:	Aesthetics Architecture Pty Limited - Plaintiff John Camilleri trading as JCB Partners Chatswood - First Defendant Christian Borkowski - Second Defendant
FILE NUMBER(S):	SC 12700/2004
COUNSEL:	Mr C Birch SC/Ms S Walsh - Plaintiff No appearance - First Defendant RA Cavanagh - Second Defendant
SOLICITORS:	Maurice Blackburn Cashman Lawyers - Plaintiff No appearance - First Defendant Lander & Rogers - Second Defendant

IN THE SUPREME COURT
OF NEW SOUTH WALES
COMMON LAW DIVISION

HOEBEN J

Monday 15 October 2007

12700/2004 - AESTHETICS ARCHITECTURE PTY LIMITED v JOHN CAMILLERI trading as JCB PARTNERS CHATSWOOD & Ors

JUDGMENT

1 HIS HONOUR:

Nature of proceedings
The second defendant moves by motion dated 24 April 2007 for an order that he have leave to file and serve an Amended Defence. He also seeks an order that the plaintiff pay his costs of the motion.

2 The plaintiff consents to all of the amendments except paragraphs 37(c), 38(a) and 43(a) of the proposed Amended Defence. Those paragraphs are pleaded in identical terms and assert a limitation of liability defence as follows:

“37 In respect of paragraph 29B of the Further Amended Statement of Claim, the second defendant:
…
(c) says that if he is liable to the plaintiff, which is denied, that liability is limited to $500,000, inclusive of the plaintiff’s costs, pursuant to the operation of the Accountants Scheme, approved under the Professional Standards Act 1999 (NSW).”

3 The plaintiff submits that leave should only be given to the second defendant to amend his Defence to rely upon that limitation of liability defence conditionally. The condition which the plaintiff seeks is that the second defendant be prevented from having the benefit of the defence in respect of any costs ordered in favour of the plaintiff which have been incurred prior to the date of filing the Amended Defence. In other words insofar as costs are concerned, the Amended Defence would not take effect until the date on which it was filed.

4 The second defendant does not agree to that condition.

5 In the proceedings before me, the second defendant relied upon an affidavit of Jonathan Hunt, sworn 24 April 2007, and the plaintiff relied upon affidavits by Jason Geisker, sworn 23 May 2007 and of Juliana Tang, affirmed 23 May 2007. Mr Geisker was cross-examined on his affidavit by counsel for the second defendant.

Factual background

6 The plaintiff alleges that the first and second defendants operated an accountancy practice in Chatswood as partners. He says that on or about 29 August 2001 Tony Camilleri, as a director of the plaintiff, obtained advice from the first defendant, John Camilleri, regarding a loan of $400,000 to another entity, said to be a client of the defendants, Sun Cu Pty Limited.

7 The director of Sun Cu Pty Limited, John Bradshaw, subsequently died. The debt was not repaid. The plaintiff has brought proceedings against the defendants relying upon negligence, breaches of the Trade Practices Act (Commonwealth) and the Fair Trading Act.

8 The plaintiff says that it is entitled to damages from the defendants as a result of the defendants’ actions in, inter alia, advising the plaintiff to enter into a loan agreement with Sun Cu Pty Limited on 30 August 2001 and advising the plaintiff not to register a second mortgage at the commencement of the loan. The plaintiff refers to this as the “negligent advice claim”.

9 The plaintiff also seeks damages from the defendants for, inter alia, failing to do all things reasonably necessary to obtain and register second mortgages and a first mortgage, being mortgages that were promised to be granted and registered in favour of the plaintiff in consideration for the advance made to Sun Cu Pty Limited in accordance with the Sun Cu loan. The plaintiff refers to this as the “inaction claim”.

10 On the basis that the claim involves the repayment of the principal sum plus interest, the plaintiff asserts that its damages are in excess of $1.4 million plus legal costs. On a basis which is not explained and which is not particularised in the Further Amended Statement of Claim, an amount of $3,612,489 is claimed. It is not clear to me how that figure is calculated or where it comes from.

11 The plaintiff was informed of the position of Sun Cu Pty Limited on 9 July 2002. The present proceedings were commenced by the plaintiff on 20 August 2004. At that time the plaintiff’s solicitors were Charlton Shearman Read (CSR). The Statement of Claim was served on the two defendants between 6 and 9 September 2004.

12 On 13 October 2004 Messrs Lander and Rogers (L & R) filed an appearance on behalf of both defendants. By letter dated 12 October 2004 L & R advised CSR that they did not act for the first defendant. The first defendant has not actively participated in the proceedings since that time.

13 Over the next twelve months considerable correspondence passed between L & R and CSR, including a comprehensive request for particulars of the Statement of Claim by L & R. CSR issued subpoenas for the production of documents. CSR replied to the letter requesting particulars of the Statement of Claim on 18 April 2005.

14 On 1 July 2005 CSR merged with Maurice Blackburn Cashman (MBC) who then became the solicitors on the record for the plaintiff. Other solicitors from MBC conducted the matter on behalf of the plaintiff until 26 April 2006 when Mr Geisker took over the day-to-day conduct of the matter.

15 The second defendant filed his Defence on 16 September 2005. Directions were made by the Court on 13 December 2005 which included orders for discovery and inspection of documents. In 2006 subpoenas were issued by both sides. On 17 January 2006 L & R advised MBC that the second defendant consented to the filing and service of a proposed Amended Statement of Claim. That document was filed on 17 February 2006 and served on 1 March 2006. On 17 March 2006 a Defence to that Amended Statement of Claim was filed.

16 Further directions were given by the Court on 16 May 2006. Those orders related to discovery and inspection of documents and the service of evidence. The second defendant’s Verified List of Documents was served on 30 June 2006. Inspection of the second defendant’s documents took place on 20 July 2006.

17 During the inspection of documents on 20 July 2006 Mr Geisker learned that the second defendant had become a bankrupt on 20 September 1996. This required further amendment to the Statement of Claim. It also led to more subpoenas being issued on behalf of the plaintiff.

18 Directions were given by the Court on 22 August 2006 which included orders for the filing and service of the Further Amended Statement of Claim and the filing and service of an Amended Defence. The Court gave directions relating to discovery by the plaintiff and as to the provision of particulars.

19 On 8 September 2006 MBC served the plaintiff’s Unverified List of Documents on L & R. The Further Amended Statement of Claim was filed and served on 31 October 2006. On 2 November 2006 L & R filed and served the second defendant’s Defence to the Further Amended Statement of Claim.

20 On 8 November 2006 Mr Geisker again attended the offices of L & R to inspect documents. On 14 November 2006 senior counsel, Mr Birch SC, was briefed on behalf of the plaintiff. By letter dated 15 November 2006 MBC sought further and better particulars of the second defendant’s Defence to the Further Amended Statement of Claim. On 20 November 2006 MBC provided replies to the second defendant’s request for further and better particulars of the Further Amended Statement of Claim.

21 On 28 November 2006 directions were given by the Court requiring the second defendant to provide particulars of his defence and providing a further return date for subpoenas.

22 It was in November 2006 that Mr Geisker first considered the possibility that limitations under the Professional Standards Act 1994 might apply to the claim (T.14.20). As a result, investigations were carried out and conferences with counsel took place. Insurance policy documents were requested from L & R but not provided. There is no evidence as to what the results of these investigations and consultations were.

23 By facsimile dated 20 December 2006 L & R provided further and better particulars of the second defendant’s Defence. In December 2006 and January 2007 consent orders were made for the production of documents and correspondence took place as to the production and inspection of documents.

24 On 2 February 2007 MBC received a letter from L & R enclosing a proposed Amended Defence in the form which is the subject of this application. Thereafter correspondence occurred between the parties in the course of which the plaintiff refused to give its unconditional consent to the filing of the Amended Defence.

25 No explanation was provided to the Court as to why the limitation of liability point was not raised by the second defendant earlier than 2 February 2007. I infer from this silence that the second defendant, through its legal advisers, overlooked the possibility of raising such a defence until that date.

26 In his affidavit Mr Geisker asserts that a number of factual and legal complications have arisen in relation to the proceedings since their commencement in 2004 (para 77). He asserts that the value of the claim is now well in excess of $1.4 million (para 78). Because of these complexities junior counsel was involved at an early point in time and senior counsel was briefed in November 2006 (para 93). He says that substantial costs have already been incurred which now exceed $270,000 (paras 96-97).

27 Mr Geisker says (para 105) that had he been aware of the limitation of liability defence, the plaintiff’s solicitors would have conducted the proceedings on a significantly different basis. In particular the expenditure incurred would have been limited, the budget would have been substantially scaled back, he would have refrained from briefing senior counsel and would have limited the role of junior counsel in the preparation of the matter.

28 In view of the way in which Mr Geisker was cross-examined it should be noted that $18,954.80 was incurred by way of legal costs and disbursements by the plaintiff up to June 2005 and that thereafter costs were incurred on a monthly basis as follows:

June 2005	$ 14,798.42
July 2005	$ Nil
August 2005	$ 601.75
September 2005	$ 812.50
October 2005	$ 93.75
November 2005	$ Nil
December 2005	$ 1,937.60
January 2006	$ 343.75
February 2006	$ 1,243.75
March 2006	$ 2,156.25
April 2006	$ 4,237.50
May 2006	$ 2,212.50
June 2006	$ 1,650.00
July 2006	$ 14,550.00
August 2006	$ 14,917.50
September 2006	$ 9,062.50
October 2006	$ 6,235.00
November 2006	$ 26,547.50
December 2006	$ 32,775.00
January 2007	$ 31,683.60
February 2007	$ 24,413.30
March 2007	$ 34,376.40
April 2007	$ 7,791.90
May 2007	$ 20,965.40
Total	$253,405.87


Amendment of Defence

29 So far as I can see, the requirements of the Professional Standards Act 1994 have been met so as to enable the limitation of liability defence to be pleaded. Accordingly it cannot be suggested that the amendment is so obviously futile that it should not be allowed. On the contrary, the vigour with which this application has been contested strongly suggests that the plaintiff’s legal advisers believe that the limitation of liability defence has substance.

30 The application is brought under s 64 of the Civil Procedure Act 2005 (the Act). This section provides:

“64(1) At any stage of proceedings, the court may order:

(a) that any document in the proceedings be amended, or

(b) that leave be granted to a party to amend any document in the proceedings.
(2) Subject to s 58, all necessary amendments are to be made for the purpose of determining the real questions raised by or otherwise depending on the proceedings, correcting any defect or error in the proceedings and avoiding multiplicity of proceedings. …”

31 Section 58 provides:

“58(1) In deciding:
(a) whether to make any order or direction for the management of proceedings, including:
(i) any order for the amendment of a document,
…
(b) the terms in which any such order or direction is to be made,
the Court must seek to act in accordance with the dictates of justice.
(2) For the purpose of determining what are the dictates of justice in a particular case, the Court:
(a) Must have regard to the provisions of ss 56 and 57, and
(b) May have regard to the following matters to the extent to which it considers them relevant:
(i) The degree of difficulty or complexity to which the issues in the proceedings give rise,
(ii) The degree of expedition with which the respective parties have approached the proceedings, including the degree to which they have been timely in their interlocutory activities,
(iii) The degree to which any lack of expedition in approaching the proceedings has arisen from circumstances beyond the control of the respective parties,
(iv) the degree to which the respective parties have fulfilled their duties under s 56(3),
(v) the use that any party has made, or could have made, of any opportunity that has been available to the party in the course of the proceedings, whether under rules of court, the practice of the court or any direction of a procedural nature given in the proceedings,
(vi) the degree of injustice that would be suffered by the respective parties as a consequence of any order or direction,
(vii) such other matters as the court considers relevant in the circumstances of the case.”

32 Sections 56 and 57 provide:

“56(1) The overriding purpose of this Act and the rules of court, in their application to civil proceedings, is to facilitate the just, quick and cheap resolution of the real issues in the proceeding.
(2) The court must seek to give effect to the overriding purpose when it exercises any power given to it by this Act or by rules of court and when it interprets any provision of this Act or of any such rule.
(3) A party to civil proceedings is under a duty to assist a court to further the overriding purpose and, to that effect, to participate in the processes of the court and to comply with directions and orders of the court.
(4) A solicitor or barrister must not, by his or her conduct, cause his or her client to be put in breach of the duty identified in subsection (3).
(5) The court may take into account any failure to comply with subsection (3) or (4) in exercising a discretion with respect to costs.
57(1) For the purpose of furthering the overriding purpose referred to in s 56(1), proceedings in any court are to be managed having regard to the following objects:
(a) The just determination of the proceedings,
(b) the efficient disposal of the business of the court,
(c) the efficient use of available judicial and administrative resources,
(d) the timely disposal of the proceedings, and all other proceedings in the court, at a cost affordable by the respective parties.
(2) This act and any rules of court are to be so construed and applied, and the practice and procedure of the courts are to be so regulated, as best to ensure the attainment of the objects referred to in subsection (1).”

33 The leading case on the amendment of pleadings remains The State of Queensland and Anor v J L Holdings Pty Limited (1996-97) 189 CLR 146. There the majority said at 154-155:

“But if the amendment sought does raise a new defence and not merely a matter which JLH is required to prove in any event, it constitutes a substantial, if not complete, answer to JLH’s claim. If it is arguable the applicants should be permitted to argue it, provided that any prejudice to JLH might be compensated by costs … Justice is the paramount consideration in determining an application such as the one in question. Save insofar as costs may be awarded against the parties seeking the amendment, such an application is not the occasion for the punishment of a party for its mistake or for its delay in making the application. Case management, involving as it does the efficiency of the procedures of the court, was in this case a relevant consideration. But it should not have been allowed to prevail over the injustice of shutting the applicants out from raising an arguable defence, thus precluding the determination of an issue between the parties …”

34 It follows that the second defendant should be granted leave to amend its Defence in the form which it has foreshadowed. The proposed limitation of liability defence raises an arguable matter with significant implications for the outcome of the proceedings. The only question is what, if any, conditions should be imposed on the second defendant in granting this leave.

Submissions

35 A preliminary issue debated by the parties was whether the court has power to impose the type of condition sought by the plaintiff. The second defendant submitted that it did not because to do so would derogate from the substance of the amended defence (which is expressed to be inclusive of costs) and would involve a variation of the terms of the scheme prescribed by the Professional Standards Act in a way not envisaged or permitted by that Act.

36 The plaintiff submitted that the court has wide powers under s 58(1)(b) to impose terms on the granting of any leave to amend. The court also has wide powers to impose costs under s 98. The plaintiff submitted that these sections provide a sufficient source of power to enable the court to impose the sort of condition which it sought.

37 Although the question is not without doubt, I am of the opinion that the power under s 58 is sufficiently broad that it would support the imposition of a condition relating to the payment of costs even though the terms of the Defence sought to cover the field insofar as costs were concerned. This is because the Defence would not take effect until the condition was imposed, ie granting of leave to rely upon the Defence would be contingent upon the condition being met.

38 That analysis, of course, only goes to the power to impose a condition relating to the payment of costs. It says nothing about whether such a condition should be imposed.

39 The plaintiff submitted that the second defendant’s delay in raising the limitation of liability defence was in the order of two and a half years and in the circumstances of the case was gross and unexplained. It involved to a high degree lack of expedition as referred to in s 58(2)(b)(iii). It was submitted that the amendment arose after the close of pleadings when discovery was substantially completed and numerous documents had been produced on subpoena. It was submitted that the matter sought to be raised in the Amended Defence was a matter that was or should have been known to the second defendant from the outset of the proceedings.

40 The plaintiff submitted that for the reasons specified by Mr Geisker in his affidavit, the plaintiff would be significantly prejudiced if the amendment was allowed. The nature of that prejudice was identified as the incurring of costs which would not have been incurred had the defence been raised at the commencement of the proceedings or at some point in time earlier than 2 February 2007.

41 The plaintiff submitted that had the proposed defence been raised at an earlier point in time it would probably not have pursued the “inaction claim”. As a result it would not have required the evidence to support that claim, would not have briefed senior counsel to advise and appear, would have significantly limited the scope and issue of subpoena for production of documents and would have significantly limited the scope of discovery.

42 The plaintiff submitted that this prejudice also operated in relation to the future conduct of the matter. If the second defendant was granted unconditional leave to file the Amended Defence, the plaintiff’s ability to pursue the litigation in the future would be adversely affected. Because substantial costs had already been incurred, any future costs would significantly erode the maximum amount which the plaintiff could recover if it was successful in the litigation. It would also adversely affect the plaintiff’s ability to rely upon any offer of compromise.

43 The plaintiff submitted that the only way in which this prejudice could be redressed was if the costs already incurred by the plaintiff were segregated from those covered by the defence.

Consideration

44 As indicated, it seems clear that the reason for the second defendant’s delay in raising a limitation of liability defence was because his legal advisers overlooked it. No other explanation has been offered. It seems to be the only reasonable inference open. Should that failure be characterised as “gross delay” as submitted by the plaintiff?

45 I do not regard the availability of a limitation of liability defence under the Professional Standards Act 1994 in proceedings against an accountant as so notorious that a failure by a solicitor to raise it after receiving a Statement of Claim should be regarded as a significant professional failure on the part of the solicitor. Defences under that Act have not, as yet, been considered by this court either at first instance or on appeal. I could find only two brief references to the Act in decisions of the Court since the Act was proclaimed. One of those references was by way of a footnote.

46 It seems to me that both the plaintiff and the defendant share some responsibility for the failure to raise the possibility of such a defence until 2 February 2007. It is clear from annexure “G” to the affidavit of Jonathan Hunt that correspondence to the plaintiff on the defendants’ letterhead had the following notation - “Liability is limited by the Accountants Scheme pursuant to the NSW Professional Standards Act 1994”. The significance of that notation appears to have escaped both the plaintiff’s legal advisers and those of the second defendant. Similarly if it should have been known to L & R that such a defence was available, it should have been equally known to CSR and MBC that in suing a firm of accountants such a defence could be raised. Given the importance of such a defence, it would have been prudent for the plaintiff’s legal advisers to have made some inquiries as to whether such a defence was available before allowing the plaintiff to incur substantial legal costs.

47 I do not think it is entirely accurate to submit that the second defendant sought to raise the defence late in the proceedings after pleadings had been closed, discovery was substantially completed and numerous documents had been produced on subpoena. The pleadings had been re-opened by the plaintiff on two occasions before the defence was raised. Discovery had not been completed and there were continuing disputes as to what documents were properly discoverable. Despite a number of orders of the court no evidence or statements had been served by either side. This is not one of those situations where a significant amendment was sought just before a hearing or after the close of evidence (Ketteman v Hansel Properties Limited (1987) AC 189.)

48 It is also apparent from the affidavit of Mr Geisker that the proceedings were not pursued with any particular expedition after their commencement. CSR did not provide particulars of the Statement of Claim until 18 April 2005 and L & R did not file the second defendant’s Defence until 16 September 2005. The plaintiff had not finalised its claim until its Amended Statement of Claim was filed on 17 February 2006. Although a Further Amended Statement of Claim was filed on 31 October 2006 I accept that the amendments in that document were necessitated when the plaintiff’s legal advisers learned that the second defendant had been bankrupted in 1996. Nevertheless, it is apparent from the schedule of legal costs provided by Mr Geisker that the matter was not pursued with any urgency until July 2006 when for the first time substantial legal costs were incurred on behalf of the plaintiff.

49 It should have been obvious to L & R from about that time, ie July/August 2006 that the plaintiff was starting to pursue the claim vigorously and that it was necessary for the defence of the matter to be closely examined. It is from about this time that one would have expected L & R to be closely reviewing potential defences and evidence available to the second defendant. It is from about this time that the plaintiff’s submissions as to delay on the part of the second defendant in raising the Amended Defence have some force. The relevant delay is, however, 6-7 months not 2 ½ years as submitted.

50 Mr Geisker was cross-examined on his affidavit, particularly as to his assertion that had he been aware that a limitation of liability defence might be raised he would have conducted the litigation in a different way. His answers under cross-examination were not particularly clear. It was difficult to identify what costs would not have been incurred had the defence been raised earlier. It was also difficult to determine precisely what he would have done had such a defence been raised earlier than it was. In that regard he seemed to be saying that had the defence been raised earlier, he would have fully investigated it and provided advice to his client or if he could not fully investigate it, he would have explained the potential risk to his client and sought instructions. More detail was not provided.

51 Mr Geisker agreed that he became aware in November 2006 of the possibility that such a defence could be raised. This does not seem to have had any effect on the level at which legal costs continued to be incurred in that the costs in the months of November and December 2006 and January 2007 averaged $30,000 per month. Similarly, even after he became aware on 2 February 2007 of the second defendant’s intention to raise the defence, costs thereafter continued to be incurred at a high rate. Accordingly, it is difficult to conclude that earlier knowledge of an intention to raise a limitation of liability defence would have had any effect on the incurring of costs by the plaintiff.

52 Mr Geisker agreed that costs would have had to have been incurred as to liability in any event. He also agreed that he had a duty not to incur costs other than those which were reasonably necessary to ensure success in the proceedings. He agreed that costs such as those associated with some discovery and some subpoenas would have had to have been incurred regardless of whether notice of the Amended Defence was given or not. It was his evidence that had he received earlier notice of such a defence it was the “inaction claim” which would not have been pursued or would not have been pursued as extensively.

53 The best explanation of the “inaction claim” was given by senior counsel for the plaintiff at T.21. That explanation seems to me to raise not only issues of quantum, but also issues of liability. The generality of the description does not persuade me that the pursuit of that claim would have involved substantially more investigation, production of documents and discovery than the “negligent advice” claim. Both claims depended upon establishing negligent advice and a failure to provide adequate security for the loan. I accept that some additional costs would have been incurred in preparing the “inaction claim” but on the evidence before me I am not persuaded that those costs were substantial. Most, it seems to me, would have had to be incurred in order to pursue the “negligent advice” in any event.

54 There is another matter which I also take into account. When the second defendant filed his Defence to the Further Amended Statement of Claim on 14 November 2006 he could have raised the limitation of liability defence as of right and would not have required the leave of the court to do so. No conditions could or would have been imposed. It is an odd circumstance that because he failed to raise the defence on that occasion, but did so three months later, his right to rely upon it should be made conditional upon the imposition of potentially punitive terms as to costs.

55 I do not accept the plaintiff’s submission that its future conduct of the matter will be significantly circumscribed if unconditional leave is granted to the second defendant to rely upon the Amended Defence. This would always be a problem for any plaintiff when such a defence “inclusive of costs” was available to a defendant. The incurring of legal costs would always be a problem for a plaintiff in such circumstances regardless of when the defence was raised.

Conclusion

56 As senior counsel for the plaintiff appreciated the second defendant is entitled to file the Amended Defence. I am not persuaded that to allow the second defendant to do so unconditionally would significantly prejudice the plaintiff.

57 It seems to me that both sides should share some responsibility for the delay in raising and considering the limitation of liability defence. Given the way in which the matter progressed the best that could be said on behalf of the plaintiff is that from the time when the tempo of the matter increased in July/August 2006 the second defendant should have been more assiduously examining his position. The delay on the part of the second defendant in that regard in raising such a defence thereafter, should not be regarded as gross although it is a matter which needs to be taken into account.

58 In relation to the proposition that the second defendant’s delay in raising the defence has caused financial loss to the plaintiff, the evidence as to the additional costs incurred thereby was vague and lacked any specificity. It is not sufficient to refer generally to the costs related to the “inaction claim” without identifying at least by example the sort of costs to which reference was being made.

59 That submission was further undermined by the fact that high levels of costs continued to be incurred from November 2006 onwards, ie after the plaintiff’s legal advisers first realised that such a defence might be raised. High levels of costs also continued to be incurred after 2 February 2007 when the plaintiff’s legal advisers were on notice that the second defendant intended to raise the limitation of liability defence.

60 I propose to grant leave to the second defendant to amend its defence in accordance with the Amended Defence attached to the Notice of Motion. I do not make that amendment subject to any conditions.

61 That leaves outstanding the question of the costs of this motion. Under the Act the rule is that costs should follow the event. In this case there are reasons why I do not propose to follow that approach.

62 The second defendant has approached the court seeking an indulgence. There has been some delay on his part in raising this defence. It should have been raised in July or August 2006 and certainly by 14 November 2006 when the Defence to the Further Amended Statement of Claim was filed. Nevertheless, the second defendant has succeeded in his application. That being so, it seems to me that the most appropriate order is that each party should pay his or its own costs of this application.

63 The orders which I make are as follows:

(1) The second defendant is given leave to file an Amended Defence in the form attached to its Notice of Motion filed on 24 April 2007.

(2) Each party is to pay his or its own costs of this application.

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