Agricultural and Rural Finance Pty Ltd v Atkinson
[2014] NSWSC 948
•18 July 2014
Supreme Court
New South Wales
Medium Neutral Citation: Agricultural and Rural Finance Pty Ltd v Atkinson [2014] NSWSC 948 Hearing dates: 15 July 2014 Decision date: 18 July 2014 Jurisdiction: Equity Division Before: Ball J Decision: See paragraphs 49 to 51 of this judgment.
Catchwords: PROCEDURE - civil - judgments and orders - effect of appellate judgments - whether court should determine scope of remitter as separate question in advance of further hearing - amendments - whether in the interests of justice that leave be granted to further amend particulars of defence Legislation Cited: Civil Procedure Act 2005 (NSW), ss 56-58
Contracts Review Act 1980 (NSW)
Evidence Act 1995 (NSW), s 135
Supreme Court Rules 1970 (NSW), Pt 31, r 2
Uniform Civil Procedure Rules 2005 (NSW), rr 28.2, 51.53Cases Cited: Agricultural and Rural Finance Pty Ltd v Gardiner [2008] HCA 57; (2008) 238 CLR 570
Agricultural and Rural Finance Pty Ltd v Atkinson [2010] NSWSC 311
Agricultural and Rural Finance Pty Ltd v Atkinson [2010] NSWSC 425
Agricultural and Rural Finance Pty Ltd v Atkinson [2010] NSWSC 635
Idoport Pty Ltd v National Australia Bank Ltd [2000] NSWSC 1215
Singler v Ferguson [2010] NSWCA 325
Wardle v Agricultural and Rural Finance Pty Ltd [2012] NSWCA 107
Wardle v Agricultural and Rural Finance Pty Ltd (No 2) [2012] NSWCA 388
Wardle v Agricultural and Rural Finance Pty Ltd (No 3) [2013] NSWCA 207; (2013) 303 ALR 298Category: Procedural and other rulings Parties: Agricultural and Rural Finance Pty Ltd (Plaintiff)
Geoffrey Nevell Fredericksen (35th Defendant)
Nicholas Charles Rowe (75th Defendant)
Maria Francesca Russo (78th and 189th Defendant)
David James Wardle (95th Defendant)
Jennifer Dianne Wallace (124th Defendant)
Franco Giannuzzi (149th Defendant)
Gavin Winston Long (172nd Defendant)Representation: Counsel:
CJ Bevan (Plaintiff)
Ms A Tsekouras (35th, 75th, 78th, 95th, 124th, 149th, 172nd and 189th Defendants)
Solicitors:
Evangelos Patakas & Associates (Plaintiff)
Abadee Dresdner & Freeman Pty Ltd (35th, 75th, 78th, 95th, 124th, 149th, 172nd and 189th Defendants)
File Number(s): 2003/92819 Publication restriction: Nil
Judgment
By orders made by the Court of Appeal on 30 April 2012 and 30 November 2012, these proceedings were remitted to this Division for further hearing. By a notice of motion filed on 30 June 2014 by the plaintiff, Agricultural and Rural Finance Pty Ltd (ARF), ARF seeks an order that the Court determine separately, and in advance of the further hearing (which has been set down to commence on 18 August 2014), the precise scope of that hearing. ARF also seeks orders concerning that scope, alternative orders in the event that the Court determines that the scope of the hearing is broader than the one for which it contends and directions concerning the preparation of the case for the hearing. The 95th defendant, Mr Wardle, has also filed a motion seeking leave to amend his defence. This judgment concerns those two motions.
The motion for separate determination
Background
The defendants in these proceedings were investors in two primary production projects concerned with the growing of tea trees known as the Port Macquarie Tea Tree Plantation Project No 1 and the Port Macquarie Tea Tree Plantation Project No 2, which were established by a company known as Oceania Agriculture Ltd (OAL). For the purpose of investing in the projects, the defendants borrowed money from ARF pursuant to standard form loan agreements (the Loan Agreements) and entered into standard form indemnity agreements (the Indemnity Agreements) with OAL by which OAL agreed to indemnify the investor against the investor's liability to repay principal and interest to ARF.
Clause 2 of the Indemnity Agreement relevantly provided:
The Indemnity referred to in Clause 1 shall be effective and enforceable if:
(a) the Borrower has punctually paid the interest payable pursuant to Clauses 3.2 and 3.3(a) of the Loan Agreement; and
(b) the Borrower has punctually paid the reductions of the Principal Sum set forth in Clause 4.1 of the Loan Agreement; and
...
Clause 7 of the Loan Agreements provided:
The Lender acknowledges and agrees that the Borrower shall have no liability to repay any part of the Principal Sum outstanding or any interest thereon if the indemnity granted under the Indemnity Agreement as defined in the Project Deed is effective and enforceable in accordance with Clause 2 of the Indemnity Agreement in respect of that Principal Sum.
The projects failed, and, in these proceedings, ARF sought to recover the amounts that it lent to each of the defendants.
The Court adopted a procedure by which the proceedings against one of the borrowers, Mr Gardiner, would be treated as a test case (the Gardiner Test Case); and many of the other defendants, including those who now remain in the proceedings, agreed to be bound by the results of the Gardiner Test Case.
Ultimately, ARF was successful against Mr Gardiner in the High Court in respect of three of the four loans it had advanced to Mr Gardiner: see Agricultural and Rural Finance Pty Ltd v Gardiner [2008] HCA 57; (2008) 238 CLR 570. Those three loans were ones in respect of which it was held that Mr Gardiner had not "punctually paid" all of the interest payments and reductions of the principal sum required under the relevant Loan Agreements.
Following the High Court appeal, a number of cases remained to be determined. The outcome of those cases depended on whether it could be said that the relevant investors had punctually paid amounts payable by them. A number of those investors also sought to raise other defences. Broadly speaking, those defences fell within two categories. First, there were defences alleging that the relevant Loan Agreements were unfair contracts within the meaning of the Contracts Review Act 1980 (NSW) (the CRA) and that relief should be given under that Act in respect of them. Secondly, Mr Wardle and the 149th defendant, Mr Giannuzzi (Mr Wardle's accountant), raised a defence that ARF was estopped from asserting that amounts owing by him were not punctually paid.
The remaining issues were heard by Einstein J. At the commencement of the hearing, ARF filed a motion seeking to strike out certain paragraphs of the defences and cross-claims, which raised the defence under the CRA and the estoppel defence raised by Mr Wardle and Mr Giannuzzi, on the basis that those defences were inconsistent with the agreement of the relevant defendants to be bound by the results of the Gardiner Test Case. Einstein J held that the estoppel defence and part of the defence based on the CRA should be struck out on that basis: Agricultural and Rural Finance Pty Ltd v Atkinson [2010] NSWSC 311. In a later judgment, Einstein J also rejected certain evidence said to be relevant to what remained of the defence based on the CRA: Agricultural and Rural Finance Pty Ltd v Atkinson [2010] NSWSC 425. He then proceeded to hear the remaining substantive issues in the case.
In a judgment delivered on 17 June 2010 (Agricultural and Rural Finance Pty Ltd v Atkinson [2010] NSWSC 635), Einstein J rejected what remained of the defence based on the CRA. He also held that none of the remaining defendants had paid amounts owing by them punctually, and, as a result, they were not relieved of the liability to repay their respective loans by cl 7 of their Loan Agreements. In reaching that conclusion, he held that the Gardiner Test Case had determined that the borrowers bore the onus of proof that they had paid punctually and that the remaining defendants could not depart from that determination. He also rejected an argument said to be based on a rule (referred to as the "postal rule") that payment was made when the payments were posted to ARF. Lastly, his Honour made findings on when the payments in question were received, which were based largely on the records of ARF and his acceptance of evidence given by Ms Edwards concerning those records.
The remaining defendants appealed. The Court of Appeal delivered its judgment on 26 April 2012: see Wardle v Agricultural and Rural Finance Pty Ltd [2012] NSWCA 107. The leading judgment was given by Campbell JA (with whom Barrett JA and Sackville AJA agreed), who relevantly summarised his conclusions at [17] in the following terms:
The issues that arise in this judgment, and the conclusions I have come to concerning them, are:
1. Whether the judge was correct in the construction he placed on the separate trial order and undertakings pursuant to which the Gardiner Test Case was conducted, and in particular the extent to which matters decided in the Gardiner Test Case bound the Appellants. I have concluded that the judge incorrectly construed the order and undertakings, by attributing to the Gardiner Test Case more extensive consequences than were justified.
2. Whether the judge was in error in striking out defences whereby borrowers contended that they had paid punctually if they had put a cheque into the post by the date on which the debt fell due. I conclude that although the judge's reasons for striking out these defences should not be accepted, his conclusion was correct. I conclude that there is no general rule of law whereby, if the parties to a transaction contemplate that the post might be used for communication between them, a document is treated as being notionally in the hands of the recipient as soon as it is posted. I conclude that the payments that the Appellants were obliged to make to ARF were not made at the time an appellant posted a cheque to ARF for the purpose of making that payment.
3. ...
4. Whether, when ARF sues a borrower for debt, the borrower bears the onus of proving that a payment has been made punctually, or ARF bears the onus of proving that the payment was not made punctually. I conclude that the borrower bears the onus. In consequence I conclude that the judge's findings that certain payments were not made punctually have not been vitiated by the judge adopting an incorrect onus of proof.
5. ....
6. Whether the judge was in error in striking out a defence that alleged that ARF had waived strict compliance with provisions of the Loan Agreement requiring payment to be made punctually, or was estopped from denying that payment had been made punctually. I conclude that he was in error in striking out the estoppel defences, but that no separate purpose is served by the waiver defence and it should remain struck out.
7. Whether the judge was in error in striking out part of the defence under the Contracts Review Act. That part of the defence contended that the contracts on which ARF sued were unjust because the prospectus, pursuant to which investors made investments in the prescribed interest schemes, did not disclose a material fact. The undisclosed fact was that when an investor borrowed money from ARF and paid it to OAL, OAL did not keep it for the purpose of operating the scheme but rather lent it back to ARF, which then lent it to another borrower, a process that went on repeatedly. I have concluded that the judge was in error in striking out this defence.
8. Whether the judge was in error in evidentiary rulings that were dependent in part on relevance to the Contracts Review Act defence. I have concluded that those rulings should be set aside.
9. ....
The Court made the following orders, which were formally made on 30 April 2012:
(1) Appeal allowed.
(2) Set aside the judgments in the court below against each Appellant.
(3) Enter judgment for Mr Holmes, with costs of the hearing at first instance.
(4) Grant leave to Mr Wardle and Mr Gianuzzi to replead paras [28]-[31] of the Further Amended Defence by inserting into those paragraphs the particulars that had previously been in [27] of the Further Amended Defence, modified to make clear that Mr Lloyd is alleged to have been acting on behalf of both ARF and OAL.
(5) Cross-appeal dismissed with costs.
(6) Remit to the Equity Division for further hearing ARF's claim against each of the Appellants other than Mr Holmes.
(7) Reserve further consideration of what other orders should be made to give effect to these reasons for judgment.
...
The parties could not agree on the terms of the further orders that should be made. Consequently, following written submissions, the Court of Appeal delivered a second judgment on 30 November 2012 dealing with that question: Wardle v Agricultural and Rural Finance Pty Ltd (No 2) [2012] NSWCA 388. The orders made at that time were extensive. It is not necessary to set them out in full. However, the orders included the following:
In the appeal (2011/236264)
(3) The orders made by Einstein J on 29 April 2010 be set aside insofar as -
(i) they struck out the following parts of the pleadings:
(a) Brakatselos' Defence, sub-para 29(ba) (i)-(ix) and (xviii)(aa);
(b) Federicksen's Defence, sub-para 27(ba) (i)-(ix) and (xviii)(aa);
(c) Rowe's Defence, sub-para 26(ba) (i)-(ix) and (xviii)(aa);
(d) Russo's Defence, sub-para 27(ba) (i)-(ix) and (xviii)(aa);
(e) Wardle's Defence, paras 27-32 and sub-para 33(ba) (i)-(ix) and (xviii)(aa);
(f) Wallace's Defence, sub-para 27(ba) (i)-(ix) and (xviii)(aa);
(g) Giannuzzi's Defence, paras 24, 25, 28-33 and sub-para 34(ba) (i)-(ix) and (xviii)(aa);
(h) Long's Defence, sub-para 34(ba) (i)-(ix) and (xviii)(aa); and
(ii) they made the costs order in clause 3 of those orders
...
(5) The order made at first instance on 9 June 2011, dismissing the Appellants' cross-claims, be set aside.
...
(8) Subject to orders as to costs already made, reserve to the judge who decides the remitted hearing the question of how the costs of the first trial should be borne.
A further judgment was delivered by the Court of Appeal on 11 July 2013 (Wardle v Agricultural and Rural Finance Pty Ltd (No 3) [2013] NSWCA 207; (2013) 303 ALR 298) which corrected minor errors in the orders made on 30 November 2012.
ARF contends that, as a result of the orders made by the Court of Appeal, the only substantive issues that remain to be determined on the remitter are the defences based on the CRA and, in the case of Mr Wardle and Mr Giannuzzi, the estoppel defence. On the other hand, the defendants contend that the Court of Appeal set aside the orders made by Einstein J. As a result, they say they are free to raise any issue that falls within the scope of the original pleadings that has not been determined by the Court of Appeal. In particular, they contend that they are free to re-litigate the issue whether they paid punctually and specifically the question when payment was received by ARF. They accept that, in doing so, they are bound by the conclusions reached by the Court of Appeal. So, for example, they are bound by the Court of Appeal's conclusion concerning the postal rule and the onus of proof. However, they contend that the Court of Appeal made no finding concerning the timing of receipt, that Einstein J's orders that depended on that finding have been set aside and that therefore they are free to reargue that question.
Should the issue be determined as a separate question?
The first question is whether the issue of the scope of the hearing should be determined in advance of the hearing. In my opinion, it should.
The principles to be applied by the court in determining whether to order a separate question were set out by Einstein J in Idoport Pty Ltd v National Australia Bank Ltd [2000] NSWSC 1215 at [7]:
(1) The power of the Court to order the separate determination of an issue is a discretionary power which must be exercised judicially, but cannot otherwise be fettered: Dunstan v Simmie & Co Pty Ltd [1978] VR 699 at 670 per Young CJ and Jenkinson J.
(2) In exercising the power under Pt31, r2, the Court is now enjoined to give effect to the overriding purpose of the Supreme Court Rules; namely to facilitate the just, quick and cheap resolution of the real issues in the proceedings and cannot be stated in a more confined way: Pt1, r3 (1), r3(2) Supreme Court Rules.
(3) The Court begins with the proposition that it is ordinarily appropriate that all issues in a proceeding should be disposed of at the one time: Tallglen v Pay TV Holdings Pty Ltd (1996) 22 ACSR 130 at 141 per Giles CJ in Comm D, Hadid v Australis Media Ltd (unreported, Supreme Court of NSW, 29 March 1996 per Rolfe J). Accordingly, it is for the party who wishes to have a question separately determined to show that it is desirable for that to occur.
(4) Without being exhaustive, the separate determination of an issue may prove to be an appropriate procedure in at least the following sets of circumstances:
(a) where the resolution of that separate issue will have the effect of resolving the entirety of the litigious controversies or of substantially narrowing the field of litigious controversy: CBS Productions Pty Ltd v O'Neil [1985] 1 NSWLR 601 at 606 per Kirby P, Dunstan v Simmie & Co Pty Ltd (supra, at 671 per Young CJ and Jenkinson J);
(b) where the resolution of that separate issue carries with it a strong prospect that the parties will thereafter be able to resolve their dispute themselves and thus avoid further litigation: Tallglen v Pay TV Holdings (supra, at 141 - 142 per Giles CJ in Comm D);
(c) where there is a clear demarcation between that issue and all other issues in the case, including issues going to the credit of witnesses: CBS Productions Pty Ltd v O'Neil (supra, at 606 per Kirby P), Tallglen v Pay TV Pty Ltd (supra, at 142 per Giles CJ in Comm D), Rajski v Carson (1988) 15 NSWLR 84 at 88 per Kirby P and Hope JA.
(5) Conversely, the separate determination of an issue will rarely be an appropriate procedure where:
(a) there are intertwined issues of fact or law between the separated question and the other questions such that the determination of the separate question will not have any substantial effect upon the width of the field of litigious controversy or the prospect of the settlement of the balance of the litigation: Law Society of NSW v Bruce (unreported, Supreme Court of NSW, 23 April 1996, per Rolfe J), Parramatta Stadium Trust v Civil and Civic Pty Ltd (unreported, Supreme Court of NSW, 27 August 1996, per Hunter J).
(b) where there is a commonality of witnesses and issues of credit as between the separate issue and other issues in the case which will or may necessitate a ruling on the credit of one or more of the common witness, thus possibly precluding that same judicial officer from again dealing with the matters going to the credit of the common witness in accordance with the decision of the Court of Appeal in Australian National Industries Ltd v Spedley Securities Ltd(in liq) (1992) 26 NSWLR 441: Story of Sydney Pty Ltd v Ling (unreported, Supreme Court of NSW 15 November 1994, per Rolfe J), Century Medical v THLD [2000] NSWSC 5; (unreported, Supreme Court of NSW, 3 February 2000, per Rolfe J).
(c) there is a possibility that the resolution of the separate issue will not finally determine the issue but will merely result in an appeal from that decision in relation to that separate issue, creating a multiplicity of proceedings, interruption to the court and undesirable fragmentation of the proceedings: Story of Sydney Pty Ltd v Ling (supra), Century Medical v THLD (supra).
(6) the experience of courts suggests that the separation of proceedings often does not result in the quicker and cheaper resolution of proceedings as anticipated, but often has the reverse effect, merely causing added delay and expense to the resolution of the litigation. Thus, before an issue is to be separately determined, it must be possible to clearly see that it will facilitate the quicker and cheaper resolution of the proceedings: Tallglen v Pay TV Pty Ltd (supra, at 142 per Giles CJ in Comm D), Parramatta Stadium Trust v Civil and Civic Pty Ltd (supra), Century Medical v THLD (supra).
These principles were stated by reference to Pt 31, r 2 of the Supreme Court Rules 1970 (NSW). However, that rule is not materially different from Uniform Civil Procedure Rules 2005 (NSW) (UCPR) r 28.2, which replaces it. Applying these principles, in my opinion, it is appropriate to make an order that the precise scope of the hearing be determined separately to any other questions arising in the proceedings. I say that for several reasons.
First, the separate question concerns the scope of the hearing. It does not depend on any facts in issue in the proceedings. Rather, it depends on the correct construction of the orders made by the Court of Appeal.
Second, by its nature, the issue will have to be determined separately. The Court will need to determine what the issues in the case are in determining, for example, the admissibility of evidence. The defendants do not contend otherwise, although they submit that it would be appropriate to determine the scope of the hearing at its commencement rather than now.
Third, the issue is a clearly defined one. The parties agree that the real question is whether it is open to the defendants to contend that ARF received payments by the due date notwithstanding the findings of Einstein J. As I have said, the answer to that question does not depend on any factual findings that are relevant to the substantive issues in the case.
Fourth, determining the issue now will permit preparation of the case to proceed in an orderly fashion. The parties accept that the hearing will be substantially longer if the defendants' contention is correct. If the determination is not made now, both parties will need to prepare the case, and the Court will need to set aside time for the hearing, on the basis that the defendants' contention is correct. That preparation will be wasted, and the hearing of other cases may be unnecessarily deferred, if the true position is that the defendants are not entitled to re-agitate the question of when the payments were received by ARF.
How should the separate question be answered?
The order for which ARF contends in relation to the separate question is the following:
An order pursuant to UCP rule 28.2 that, on the further hearing on remitter of ARF's claims against the defendants who are respondents to this motion, those defendants are, on the proper interpretation of the order for remitter of the Court of Appeal dated 26 April 2012, limited to raising as defences to ARF's Summons, first, the reinstated estoppel defences of Messrs Wardle and Giannuzzi as pleaded in pars 27-31 of their Further Amended Defences and as referred to in par 303 of the Court of Appeal's reasons of 26 April 2012 (the CA's reasons), secondly, the reinstated defences under the Contracts Review Act pleaded in subpar 33(ba) of the Further Amended Defences and as referred to in pars 310 and 340 of the CA's reasons, and thirdly, the defensive Cross-Claims of those defendants limited to issues arising in respect of the prayers for relief made under the Contracts Review Act as pleaded in subpar 33(ba) of the Cross-Claims and referred to in pars 310 and 340 of the CA's reasons.
I have concluded that an order to that effect should be made.
The defendants' contention to the contrary depends on two propositions. The first is that the Court of Appeal did not make any determination concerning the question of when the payments were made. The second is that, properly construed, the orders made by the Court of Appeal setting aside the judgment of Einstein J must be understood as an order setting aside all of the conclusions that his Honour reached. I do not accept either of those propositions.
As to the first, the parties accept that order 6 of the orders made on 30 April 2012 must be read as including the words "consistently with the Court's reasons for judgment". The defendants' first proposition depends on the contention that the Court of Appeal made no determination concerning the question whether the payments were made punctually. However, I do not think that that is correct. One ground of appeal concerned the findings made by Einstein J in relation to when certain payments were made. For example, para 17 of the Notice of Appeal filed by Mr Wardle identified the following ground of appeal:
The Trial Judge erred in his finding that the cross-appellant's cheque dated 28 June 1999, which was deposited to the first respondent's bank account on 2 July 1999, was not received by the first respondent until after 30 June 1999 (Judgment 17 June 2010 paras 223-32)
Campbell JA dealt with the issue raised by that ground of appeal under the heading "Set Aside Findings of Lack Of Punctual Payment Even If No "Postal Rule" Defence?" at [241] to [255] of the judgment delivered on 26 April 2012. Campbell JA records the issue in these terms (at [241]):
Mr Epstein submits that even if the judge was right in striking out the "postal rule" defences, his findings in the Principal Judgment that the relevant defendants other than Mr Holmes had not paid punctually should be set aside. The judge approached the question of whether the payments were made on time by enquiring whether each Appellant had established that his or her payments were made on time. Mr Epstein submits that the judge should have approached the matter by enquiring whether ARF had established that the payments in question were not made on time.
After discussion, his Honour reached the following conclusion (at [255]):
For these reasons, the primary judge made no error in deciding the Principal Judgment on the basis that each Appellant bore the onus of proving that he or she had made the payments in question punctually.
It is true that Campbell JA did not specifically deal with the factual finding made by Einstein J. However, that factual finding was not challenged except on the onus of proof and postal rule grounds. That is made clear by the following paragraphs from the judgment delivered on 30 November 2012:
[17] Another issue considered in the Principal Judgment was whether the Appellants had paid all instalments punctually. The judge considered that question on the basis of his earlier rejection, in the Strike Out Judgment, of the contention of the Appellants that the date of payment should be decided in accordance with the so-called "postal rule". The judge held that none of the Appellants had paid all instalments punctually.
[18] There were two challenges to that finding on the appeal. The first, applicable to all the Appellants, was that the findings were vitiated by the judge applying an incorrect onus of proof. That challenged failed. The second related only to whether Mr Holmes had failed to pay punctually. That challenge succeeded, by virtue of facts that were peculiar to Mr Holmes.
Having disposed of those two grounds, Campbell JA must be understood as having disposed of the ground of appeal in para 17 of the Wardle Notice of Appeal (among others) and, in doing so, as having rejected any challenge to the finding of Einstein J that there had not been punctual payment. It would be inconsistent with that conclusion for the court in the remitted hearing to determine that the payments were made punctually.
As to the defendants' second proposition, it is necessary to consider the orders in context. It is clear that the Court of Appeal cannot order a new trial unless it appears to the Court that there has been a substantial miscarriage of justice: see UCPR r 51.53. It may order a new trial on any question: UCPR r 51.53. Against that background, an order that involves a further hearing should not readily be interpreted as involving a hearing on issues that are severable and are not infected by any error. To approach the interpretation of the order in some other way would be inconsistent with the principle that lies behind UCPR r 51.53 - namely, the finality of litigation and the desirability of avoiding the hardship and costs of a new trial: see, eg, Singler v Ferguson [2010] NSWCA 325 at [110] per Young JA (in dissent, but not on this point). The order in this case was an order for a further hearing. The need for a further hearing arose from two matters. First, the Court of Appeal concluded and Mr Wardle and Mr Giannuzzi were entitled to a hearing on their estoppel defence. On that question, Campbell JA said (at [303]):
Mr Wardle and Mr Giannuzzi should have been permitted to have a trial on their estoppel defences. For that reason, the judgments against them should be set aside, and a new trial ordered. Rather than restore paras [27]-[31] of the Further Amended Defence, the estoppel defences should be repleaded, with the extent of the repleading permitted by this court being confined to inserting the particulars now contained in para [27] into paras [28]-[31], and permitting those particulars to be modified to make clear that Mr Lloyd is alleged to be acting on behalf of both ARF and OAL. Such an order will not preclude a judge in the Commercial List from allowing a further amendment, if a case for a further amendment is made out.
Second, the Court of Appeal concluded that the defendants should have a new trial on their defence based on the CRA. On that question, Campbell JA said (at [340]):
Thus, the orders striking out para (ba) of the Contracts Review Act defences, insofar as para (ba) depends upon the round robin allegations, should be set aside. The orders striking out corresponding allegations in the various cross claims should likewise be set aside. That will in turn mean that the verdict entered against all the Appellants who sought to rely upon such a Contracts Review Act defence should be set aside. A new trial will be needed concerning the question of liability of all those Appellants.
It was not suggested in the judgment that there should be a new trial for any other reason. In those circumstances, the order that there should be a further hearing should be interpreted as an order that there should be a further hearing in relation to the matters on which the Court considered that it would be necessary to have a new trial.
That conclusion is reinforced by the pains the Court of Appeal went to in the judgment delivered on 30 November 2012 to identify with precision those orders made by Einstein J on 29 April 2010 that should be set aside. If the Court of Appeal had intended that there should be a retrial on all issues, there would have been no point in making the orders the Court of Appeal did. Moreover, the Court of Appeal made extensive costs orders. It is difficult to make sense of those costs orders if the Court of Appeal contemplated that there would be a rehearing on the question of punctual payment, with the possible result that the defendants would succeed on that issue. It might have been thought that, in those circumstances, it would be more appropriate for the question of costs to await the outcome of the rehearing of the question whether the defendants had paid punctually.
Mr Wardle's amendment application
The estoppel defence raised by Mr Wardle is a defence that ARF was estopped from asserting that it was entitled to demand strict compliance with the obligation to pay punctually in order for Mr Wardle to obtain the benefit of the indemnity because it was represented to Mr Giannuzzi that strict compliance was not necessary.
At the time the strike out application was heard by Einstein J, Mr Wardle's defence gave the following particulars of that representation:
(i) On 30 October 1998, the Defendant's accountant, Mr Gianuzzi spoke to Mr Steven Lloyd of OAL, in relation to the Defendant's principal repayment for Loan Agreement TT 125 and told him that the payment would be late. Mr Lloyd said that it would be "ok". The representation was not retracted or qualified by ARF and OAL at any material time after it was made.
(ii) On 29 September 1999, Mr Gianuzzi spoke to Mr Lloyd, in relation to the Defendant's principal repayment for Loan Agreement TT 308 and told him that the payment would be late. Mr Lloyd said that it would be "ok". The representation was not retracted or qualified by ARF and OAL at any material time after it was made.
Einstein J struck out the defence (and a waiver defence based on the same facts) on the basis that it had been determined in the Gardiner Test Case that Mr Lloyd was not the agent of ARF.
The Court of Appeal overturned that finding on the basis that the Gardiner Test Case had only determined the question whether Mr Lloyd had authority to make representations in an investment seminar on behalf of ARF. It did not determine whether Mr Lloyd had authority to make the representations on which Mr Wardle relied.
On 24 April 2014, Mr Wardle filed an amended defence. The relevant particulars to the amended defence are in the following terms:
(i) On 30 October 1998, the Defendant's accountant, Mr Gianuzzi spoke to Mr Steven Lloyd acting on behalf of both ARF and OAL, in relation to the Defendant's principal repayment for Loan Agreement TT 125 and told him that the payment would be late. Mr Lloyd said that it would be "ok". The representation was not retracted or qualified by ARF and OAL at any material time after it was made.
(ii) On 29 September 1999, Mr Gianuzzi spoke to Mr Lloyd, acting on behalf of ARF and OAL in relation to the Defendant's principal repayment for Loan Agreement TT 308 and told him that the payment would be late. Mr Lloyd said that it would be "ok". The representation was not retracted or qualified by ARF and OAL at any material time after it was made.
It is obvious that these amendments were made in accordance with order 4 of the orders made by the Court of Appeal on 30 April 2012.
Mr Wardle now seeks to amend those particulars by changing the name "Mr Stephen Lloyd" in particular (ii) to "Mr Rob Henry".
This amendment is said to be justified by evidence given by Mr Giannuzzi in an affidavit sworn by him on 19 March 2010. In para 40 of that affidavit, Mr Giannuzzi gives the following evidence of a conversation he had on or about 29 September 1999 (the day before repayment of part of the principal was due):
I rang to speak to Steve Lloyd and I spoke to a male person at ARF, who may have been Rob Henry. I said that David's payment may be up to a week late and the person I spoke to replied in words to the effect -
"That will be no problem."
It appears that that evidence was overlooked at the time that Mr Wardle propounded the defence which Einstein J struck out.
The amendment is also said to be supported by letters dated 2 June 1999 and 7 July 1999 that Mr Wardle received from Ms Edwards saying that "[s]hould you have any queries please contact myself or Rob Henry...".
The question of amendment is governed by ss 56-58 of the Civil Procedure Act 2005 (NSW). Section 58(1) provides as follows:
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, and
...
(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.
Section 58(2) provides that, for the purpose of determining what are the dictates of justice in a particular case, the court must have regard to the provisions of ss 56 and 57 and may have regard to other matters set out in s 58(2). Section 56 relevantly provides:
(1) The overriding purpose of this Act and of rules of court, in their application to civil proceedings, is to facilitate the just, quick and cheap resolution of the real issues in the proceedings.
(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.
Section 57 provides:
(1) For the purpose of furthering the overriding purpose referred to in section 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).
In my opinion, it would not be in the interests of justice to permit the amendment. I say that for two reasons.
First, up until now, the case has been conducted on the basis that Mr Giannuzzi spoke to Mr Lloyd on 29 September 1999. It was on that basis that ARF sought to strike out the estoppel defence. That application succeeded before Einstein J and failed before the Court of Appeal. Those findings had costs consequences for ARF. Mr Wardle accepts that, if the amendment were allowed, he would have to pay the costs thrown away by the amendment, and he accepted that those costs may include a proportion of the costs incurred by ARF in relation to the strike out application. However, in determining what costs order should be made, it would be necessary for the Court to form a view on what would have happened if the amendment had been made before the strike out application was heard. In my opinion, the Court should not engage in speculation of that type. Up until now, the case has been conducted on a particular basis. ARF has made tactical decisions on that basis. The Court of Appeal remitted the matter back to this Division to determine a particular question - namely, whether Mr Lloyd was acting as an agent for ARF in making the representations he is alleged to have made. In my opinion, it is now too late for Mr Wardle to seek to conduct the case on some different basis.
Secondly, I do not accept that there would be any utility in permitting the amendment. In my opinion, the evidence in para 40 of Mr Giannuzzi's affidavit would be excluded under s 135 of the Evidence Act 1995 (NSW) on the basis that the evidence might be unfairly prejudicial to ARF or cause or result in undue waste of time.
The evidence is of a conversation that occurred approximately 11 years before the evidence was given. Mr Giannuzzi does not say that he spoke to Mr Henry. Rather, he says that he rang to speak to Mr Lloyd. He gives no evidence of how he ended up speaking to someone else, and he gives no explanation of the basis of his belief that it may have been Mr Henry. Without knowing these matters, and assuming for the moment that the evidence is accepted, in my opinion, it is doubtful that any weight can be placed on the evidence. If that is right, its admission is likely to result in an undue waste of time because it is likely that ARF would want to deal with it by cross-examining Mr Giannuzzi and calling its own evidence. On the other hand, if weight is likely to be placed on the evidence, it seems to me that ARF is unfairly prejudiced by it because ARF has no means of knowing what investigations it should undertake with a view to establishing that Mr Giannuzzi's belief is mistaken or should carry little weight.
Orders and costs
I make the following orders in relation to ARF's motion filed on 30 June 2014:
(1) Order pursuant to UCPR r 28.2 that the question as to the precise scope of the further hearing of this matter on remitter from the Court of Appeal as ordered by that Court on 30 April 2012 ([2012] NSWCA 107 order 6) (the further hearing), on the proper interpretation of that order, be determined separately to any other questions arising in the proceedings, and before the further hearing of the Summons and Cross-Claims listed on 18 August 2014.
(2) Order pursuant to UCPR r 28.3 that, on the further hearing on remitter of ARF's claims against the defendants who are respondents to the motion, those defendants are, on the proper interpretation of the order for remitter of the Court of Appeal dated 30 April 2012, limited to raising as defences to ARF's Summons, first, the reinstated estoppel defences of Messrs Wardle and Giannuzzi as pleaded in paras 27-31 of their Further Amended Defences and as referred to in para 303 of the Court of Appeal's reasons of 26 April 2012 (the CA's reasons), secondly, the reinstated defences under the CRA pleaded in subpara 33(ba) of the Further Amended Defences and as referred to in paras 310 and 340 of the CA's reasons, and thirdly, the defensive Cross-Claims of those defendants limited to issues arising in respect of the prayers for relief made under the CRA as pleaded in subpara 33(ba) of the Cross-Claims and referred to in paras 310 and 340 of the CA's reasons.
I will deal with the balance of the issues raised by the motion and hear the parties in relation to costs of the motion at a time convenient to the parties and the Court.
I dismiss the 95th defendant's motion filed on 2 July 2014 with costs.
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Decision last updated: 18 July 2014
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