Anandavalli Ganesh and Ganesh Radhakrishnan v National Australia Bank Limited (ABN 004 044 937)
[2020] VSCA 39
•5 March 2020
SUPREME COURT OF VICTORIA
COURT OF APPEAL
S EAPCI 2019 0111
| ANANDAVALLI GANESH and GANESH RADHAKRISHNAN | Applicants |
| v | |
| NATIONAL AUSTRALIA BANK LIMITED (ABN 004 044 937) | Respondent |
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| JUDGE: | McLEISH JA |
| WHERE HELD: | MELBOURNE |
| DATE OF HEARING: | 21 February 2020 |
| DATE OF JUDGMENT: | 5 March 2020 |
| MEDIUM NEUTRAL CITATION: | [2020] VSCA 39 |
| JUDGMENT APPEALED FROM: | [2019] VSC 642 (Riordan J) |
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PRACTICE AND PROCEDURE – Application for leave to appeal order discontinuing proceeding – Whether counterclaim at time of discontinuance – Whether trial judge’s discretion miscarried – Leave to appeal granted on reformulated ground.
PRACTICE AND PROCEDURE – Application for leave to appeal – Trial judge made no order as to costs following discontinuance – Applicant self-represented – Whether self-represented litigant entitled to recover disbursements – Leave to appeal granted.
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APPEARANCES: | Counsel | Solicitors |
| For the Second Applicant | In person | |
| For the Respondent | Mr A Segal | Dentons Australia |
McLEISH JA:
The applicants, Mr and Mrs Ganesh, seek leave to appeal a decision granting the respondent, National Australia Bank, leave to discontinue a proceeding which it brought against them.[1] They claim that, while they had no objection to the bank discontinuing its claims against them, the effect of the judge’s order was to bring to an end a counterclaim they had advanced.
[1]National Australia Bank Ltd v Ganesh [2019] VSC 642 (‘Reasons’).
For the reasons that follow, leave to appeal will be granted on the following grounds:
(a) The trial judge erred by mistaking the fact that the defendants had made a counterclaim, and ordering on that basis that the proceeding, and not just the plaintiff’s claims in the proceeding, be discontinued.
(b) The trial judge erred in ordering, on the basis that the defendants were self-represented and had not contested the point, that there be no order as to costs.
Background
In 2009, the bank lent Mrs and Mrs Ganesh a total of $1,425,000 under six credit facilities, variously secured by three properties:[2]
[2]See Ganesh v National Australia Bank Ltd [2018] VSCA 224, [5] (Hargrave JA).
(c) 24 Plumpton Avenue, Oak Park, which was then the family home owned by Mr and Mrs Ganesh;
(d) 29 Glen Drive, Rye, which was owned by Mrs Ganesh; and
(e) 20 Marcia Avenue, Rye, which is owned by Gsquare Group Pty Ltd, a company of which Mr and Mrs Ganesh are directors.
The first four credit facilities were secured by the Plumpton Avenue property. Mr and Mrs Ganesh sold that property following a default on those facilities and the net proceeds of that sale discharged all but one of the facilities, the ‘second facility’. Another credit facility, the ‘sixth facility’, was secured by the Glen Drive property.[3]
[3]National Australia Bank Ltd v Ganesh [2016] VSC 738, [8].
The remaining facility, the ‘fifth facility’, has been the primary subject of the dispute between the bank and Mr and Mrs Ganesh. The contentious feature of that facility is that it extended the bank’s security relative to another facility which it replaced, the ‘previous facility’. The ‘previous facility’ was secured only by the Marcia Avenue property and a guarantee from Gsquare. The ‘fifth facility’ was secured, not only by that property and guarantee, but by the existing mortgages over the Plumpton Avenue and Glen Drive properties.
The proceeding
This proceeding has a long and painful procedural history and it is necessary to set it out in some detail.
In 2015, the bank commenced the proceeding against Mr and Mrs Ganesh, and Gsquare, following defaults under various facilities. The bank sought judgment for outstanding amounts due under the ‘second facility’, ‘fifth facility’ and ‘sixth facility’, as well as possession of the Glen Drive and Marcia Avenue properties.
In 2016, an application by the bank for summary judgment was granted in respect of the bank’s claims relating to the ‘second facility’ and ‘sixth facility’, but was refused in respect of its claims relating to the ‘fifth facility’.[4] As a result, the bank was granted summary judgment for possession of the Glen Drive property, but not the Marcia Avenue property.
[4]Ibid [57]–[59].
In 2017, an appeal brought by Mr and Mrs Ganesh against the summary judgment was dismissed by a judge in the trial division. In addition to ordering that the appeal be dismissed, the judge ordered the bank to file and serve an amended statement of claim limited to claims relating to the ‘fifth facility’, and referred the proceeding for further case management. Later, Mr and Mrs Ganesh sought, and were refused, an extension of time to file an application for leave to appeal to this Court against those orders.[5]
[5]Ganesh v National Australia Bank Ltd [2018] VSCA 224.
The bank filed its amended statement of claim on 10 April 2017. On 25 October 2017, an associate judge ordered Mr and Mrs Ganesh to file and serve their defence and any counterclaim by 4 December 2017, and ordered the bank to file and serve any reply and defence to any counterclaim by 22 January 2018.
On 19 January 2018, Mr and Mrs Ganesh filed a document entitled ‘Defendants’ Response to Amended Statement of Claim’. On the bank’s application, the associate judge made orders striking out that document in its entirety on 22 March 2018. The orders gave Mr and Mrs Ganesh leave to file and serve a proposed amended defence by 12 April 2018. In those orders, the associate judge directed that:
(f) the proposed amended defence confine itself to issues of liability in respect of the ‘fifth facility’;
(g) any proposed counterclaim against the bank be made in a separate document to be filed and served with the proposed amended defence; and
(h) any proposed counterclaim confine itself to the ‘fifth facility’, identify the person against whom a counterclaim is made, state the relief or remedy sought, and state the facts upon which the counterclaim is sought to be made.
On 16 April 2018, Mr and Mrs Ganesh filed a document described as ‘Proposed Defence to Amended Statement of Claim dated 10 April 2017’. Following a directions hearing, the associate judge made orders striking out certain paragraphs of that document on 18 April 2018. The orders provided that, subject to the Court striking out the paragraphs, the ‘Proposed Defence to Amended Statement of Claim dated 10 April 2017’ would ‘stand as the defence’ in the proceeding. Relevantly, paragraph 3 of the orders provided that:
The defendant[s] shall by 27 April 2018 file and serve a document called ‘Relief or Remedy Sought by Way of Counterclaim’ in which they shall state, by reason of their allegations in their defence, what relief or remedy they seek on a counterclaim.[6]
[6]Emphasis added.
It is necessary briefly to note certain aspects of Mr and Mrs Ganesh’s ‘defence’ document, as it stood after the strike-out order. In addition to disputing the validity and enforceability of the ‘fifth facility’ and its various securities, Mr and Mrs Ganesh also positively alleged wrongdoing on the part of the bank in relation to the ‘fifth facility’. The alleged wrongdoing included, for example, contraventions of various provisions of the National Credit Code and the National Consumer Credit Protection Act 2009 (Cth), and misleading or deceptive conduct in contravention of s 18 of the Australian Consumer Law.
Mr and Mrs Ganesh allege that, by reason of that wrongdoing, they have suffered loss and damage. One form of loss and damage is said to result from their entry into additional credit facilities with other lenders and secured by other properties, unaware that the ‘fifth facility’ was more extensively secured than the ‘previous facility’. Those additional credit facilities were defaulted upon, the properties which secured those facilities were ‘lost’, and there remain ‘outstanding creditor claims’ against Mr and Mrs Ganesh in respect of those facilities. Mr and Mrs Ganesh say that if the bank had properly disclosed to them (and to credit reporting agencies and other credit providers) the extent to which the ‘fifth facility’ was secured, then those additional credit facilities would not have been sought or approved, and the losses arising from the defaults on those facilities would have been avoided.[7]
[7]See Proposed Defence to Amended Statement of Claim dated 10 April 2017 [100]–[105], [116].
On 1 May 2018, Mr and Mrs Ganesh filed a lengthy document entitled ‘Relief and Remedy Sought by Way of Counterclaim’. Following a further directions hearing on 26 June 2018, the associate judge made orders striking out that document in its entirety. Among other things, it pleaded extensive facts, including matters previously struck out, rather than just identifying the relief or remedies sought. The orders provided Mr and Mrs Ganesh an opportunity to file a further version of the document, as follows:
8.By 20 August 2018, the defendants shall file and serve another document called ‘Relief and Remedy sought by way of Counterclaim — Version 2’ in which they shall state what relief or remedy they seek on a counterclaim by reason of the allegations in their defence.
9.For the purposes of paragraph 8 the document to be filed may not seek relief or remedy concerning the first, second, third, fourth and sixth facilities which have already been the subject of the Court’s determination and affirmed on appeal, and likewise by reason of the Court’s determinations the counterclaim may not seek relief concerning securities under those facilities.
In a statement of reasons accompanying the orders, the associate judge explained that:
[I]n order to understand and accommodate any desire for [Mr and Mrs Ganesh] to file a counterclaim, I … ordered on 18 April 2018 that they were to file a standalone document to be called ‘Relief or Remedy sought by way of Counterclaim’. That is, I relieved them of the need to plead or repeat facts in the counterclaim but required them to simply state the relief or remedy sought. I stipulated that the relief or remedy should be based upon the allegations in their defence.
This brings me to the present problem. The document ‘Relief and Remedy sought by way of Counterclaim’ was filed on 1 May 2018. Rather than confining itself to relief or remedy, it purported to introduce an array of allegations and reintroduce facts and matters concerning the facilities which the Court has already found were valid and enforceable. Moreover, their document one way or another reintroduced allegations which the Court in the past has found were scandalous and outlandish, and which have been struck out. The dispute was going backwards. One possibility was to go laboriously through this prolix document and strike out piecemeal the offending parts. That creates confusion or difficulties of comprehension especially at trial. Instead, I made these orders [to] give them a chance to redo the document, and redo it with a reminder that it is to be confined to the surviving allegations in their defence; confined to the fifth facility and the security under it; and confined to stating the relief or remedy sought.[8]
[8]Emphasis added.
On 21 August 2018, Mr and Mrs Ganesh filed a document entitled ‘Relief and Remedy Sought by Way of Counterclaim — Version 2’. Following a further directions hearing on 24 August 2018, the associate judge again made orders striking out that document in its entirety.[9] As the associate judge explained in those orders, this was because the document filed by Mr and Mrs Ganesh was ‘in substance no different to the [v]ersion previously struck out’. The orders provided Mr and Mrs Ganesh with leave to file and serve a further version of the document, entitled ‘Relief and Remedy Sought by Way of Counterclaim — Version 3’ by 14 September 2018, and required that document to confine itself to ‘stating concisely the relief or remedy’ Mr and Mrs Ganesh would seek, if the Court were to determine that the ‘fifth facility’ is unlawful or unenforceable. In ‘Other Matters’, the associate judge presciently recorded that:
The plaintiff suggests striking out and proceeding to trial according to the allegations in the defence. But the defendants adamantly raise the sword as well as the shield. This Court is unwilling to simply leave a state of disorder and awful problems for the trial Court, which has to know what the defendants seek by way of a counterclaim.
[9]These orders were made on 24 August 2018 and corrected pursuant to the ‘slip rule’ on 27 August 2018.
On 2 October 2018, there was a further directions hearing. Mr and Mrs Ganesh had not filed a ‘Relief and Remedy Sought by Way of Counterclaim — Version 3’. They did not appear at the directions hearing.
At that directions hearing, counsel for the bank submitted that the matter should proceed to trial notwithstanding that Mr and Mrs Ganesh had not filed a ‘Relief and Remedy Sought by Way of Counterclaim — Version 3’. The trial judge, it was said, could deal with the case without that document as the substance of any counterclaim was contained in the extant defence. Counsel for the bank characterised Mr and Mrs Ganesh’s defence as ‘a defence and counterclaim in that it [is] shield and sword’ because, in addition to defending the bank’s claims, it makes claims against the bank for misleading or deceptive conduct and for damages.[10] Counsel said that the fact that Mr and Mrs Ganesh had not filed a document specifying the relief sought in respect of their claims was not an obstacle because were the trial judge to ‘take the view that [Mr and Mrs Ganesh] are entitled to some form of relief’ on the basis of the allegations contained in the defence, the trial judge could fashion appropriate relief, and the bank would not be caught by surprise.[11]
[10]Transcript of Proceedings, National Australia Bank Ltd v Ganesh (Supreme Court of Victoria, S CI 2015 04098, Mukhtar AsJ, 2 October 2018) 8.15.
[11]Ibid 8.16–8.20.
The associate judge appeared to accept this submission, stating:[12]
Accordingly, they are proceeding to trial on the basis of their defence dated 12 April, filed 16 April, parts of which were struck out on 18 April. To observe that within that defence there’s a claim for loss and damage, and whilst it is unorthodox, possibly unsatisfactory, what must prevail is advancing the matter to trial and the court fashioning relief by way of counter claim depending on its findings on allegations made in the defence.[13]
[12]Ibid 10.04–10.12.
[13]Emphasis added.
Counsel for the bank explained that the bank had chosen, rather than make the defendants ‘go back’ and do it again, to treat Mr and Mrs Ganesh’s defence as the defence and counterclaim. Accordingly, the bank’s reply to defence and counterclaim stood as its reply.[14] The associate judge then queried whether he should order that ‘as things stand there is no counterclaim’, before deciding that such a statement would not amount to an order and it was preferable to ‘leave it as some reasons’.[15]
[14]Transcript of Proceedings, National Australia Bank Ltd v Ganesh (Supreme Court of Victoria, S CI 2015 04098, Mukhtar AsJ, 2 October 2018) 11.11–11.15, 11.27–12.09.
[15]Ibid 12.10–12.16.
The associate judge made orders adjourning the directions hearing until 8 October 2018, at which time the Court would ‘make orders referring the proceeding to the Commercial Court for the making of trial directions’ unless Mr and Mrs Ganesh could ‘show good reason why the matter should not now proceed to trial’. The associate judge set out under ‘Other Matters’:
The Court has experienced great difficulty in getting the defendants to prepare a satisfactory defence and counterclaim to enable an orderly trial. Those difficulties necessitated the Court ordering the defendants to file a separate counterclaim, that is, separate to the defence. The Court struck out two versions of their counterclaim in April and August this year and gave them an opportunity to file a third version by 14 September. They have not done so.
There is sufficient in the defence to not cause embarrassment in the fair and orderly conduct of a trial. The problem has been the composition of the counterclaim, which is based on claiming loss and damage according to the same allegations as comprise the defence. More extensions of time to give the defendants more opportunity to improve their counterclaim will lead to more disputes and delay. As litigants in person, it is unlikely that more coercive Court orders will produce a more meaningful counterclaim. It is one of those cases where things will have to be fashioned at trial. The plaintiff is content with adapting to that state of affairs, as against the prospect of further delay.[16]
[16]Emphasis added.
The orders relevantly provided that:
The defendants’ defence to this claim shall proceed according to the ‘Defence to Amended Statement of claim dated 10 April 2017’ which was filed on 16 April 2018 and parts of which were struck out according to the Court’s orders dated 18 April 2018, and to which the plaintiff has filed a reply dated 22 June 2018.[17]
[17]Emphasis added.
Neither the orders nor what appeared under ‘Other Matters’ contained a statement that ‘as things stand, there is no counterclaim’. The Court did, however, describe ‘two versions of [the] counterclaim’ as having been ‘struck out’.
On 8 October 2018, Mr and Mrs Ganesh again did not appear, and the associate judge made orders referring the proceeding:
to the Principal Judge of the Commercial Court, or the responsible officer in the Commercial Court Registry, for allocation to a trial Judge of the Commercial Court for pre-trial directions and the hearing and determination of the proceeding.
On 28 October 2018, Mr and Mrs Ganesh filed a notice of appeal against the order referring the proceeding to trial. Their fundamental complaint was that the proceeding referred was confined to issues in relation to the ‘fifth facility’, whereas they wished to allege against the bank breaches of the terms of the other facilities: the ‘first’, ‘second’, ‘third’, ‘fourth’ and ‘sixth’ facilities, as well as the ‘previous facility’.
On 2 November 2018, there was a directions hearing before the trial judge. The trial judge made orders adjourning the hearing of the defendants’ notice of appeal to 1 February 2019. Those orders also required Mr and Mrs Ganesh, in the interim, to file and serve a statement:
(a)listing each alleged breach of contract by the plaintiff on which the defendants rely; and
(b)with respect to each breach, the financial consequences that flow from the alleged breach.
On 1 February 2019, there was a further directions hearing. The trial judge made orders listing the matter for trial and requiring the filing and serving of witness outlines. The following direction was made as to the issues to be tried:
Pursuant to the Court’s obligation to give effect to the overarching purpose under s 8 of the Civil Procedure Act 2010, the Court has made the following trial directions and identified to the parties that the issues to be tried (‘the Trial Issues’) are as follows:
(a) Is the fifth agreement (as it is referred to in the Defence to the Amended Statement of Claim dated 10 April 2017) invalid or otherwise unenforceable by reason of the plaintiff’s wrongful conduct in the incorporation of a term extending the security under the fifth agreement to the mortgages over the Plumpton Avenue Property and the Glen Drive Property (as defined in the Amended Statement of Claim filed 10 April 2017)?
(b) If the plaintiff did engage in the wrongful conduct, referred to in subparagraph (a), did the defendants suffer any damage, and if so what damage, as a result of such wrongful conduct?
It is not clear from the orders what was done on this day in respect of the notice of appeal. One interpretation (in the absence of the relevant transcripts) is that the trial judge sought to abbreviate the appeal process by directing the filing of the ‘breach’ and ‘financial consequences’ documents, and resolved the substance of the appeal by the manner in which the issues to be tried were defined.
The bank duly filed and served its witness outlines, and discovery proceeded. Mr and Mrs Ganesh did not file outlines. Eventually, on 7 August 2019, the bank made an application for leave to discontinue the proceeding, which was heard by the trial judge on 19 August 2019. Mr and Mrs Ganesh did not object to the bank discontinuing its claims, but sought to maintain the claims they said they had made, as well as those which the associate judge had prevented them from making, as part of the ongoing proceeding.
The bank’s application was granted. Orders were made that the proceeding be discontinued and that there be no order as to costs.
Judge’s reasons
The trial judge considered it appropriate that leave to discontinue the proceeding be granted, given that, by the time of the hearing of the bank’s application:[18]
[18]Reasons [17].
(i) the bank had written off the debt due under the ‘fifth facility’, the subject matter of its remaining claims;
(j) the bank had discharged the mortgage over the Marcia Avenue property, the remaining mortgage at issue in the proceeding, and had returned the certificate of title to Mr and Mrs Ganesh;
(k) Mr and Mrs Ganesh, at the hearing, did not object to leave to discontinue being granted.
The judge noted that, notwithstanding that they did not object to leave being granted, Mr and Mrs Ganesh continued to contend that they were entitled to relief against the bank for alleged wrongful conduct on the part of the bank in relation to the ‘fifth facility’. However, the judge considered that those claims were ‘not part of any current proceeding’ before the Court, as both iterations of Mr and Mrs Ganesh’s ‘counterclaim’ had been struck out by the associate judge.[19]
[19]Reasons [19].
Next, the judge considered the question of costs. He accepted the bank’s submission that because Mr and Mrs Ganesh were self-represented litigants there
should be no order as to costs,[20] and recorded that Mr and Mrs Ganesh did not contest that there should be no order as to costs.
[20]Reasons [20], citing Cachia v Hanes (1994) 179 CLR 403, 410–1 (Mason CJ, Brennan, Deane, Dawson and McHugh JJ).
Proposed grounds of appeal
Mr and Mrs Ganesh rely on the following six proposed grounds of appeal:
1.Leave to appeal should be granted because the applicants have a right to counterclaim even if the respondent discontinues the proceedings.
2. The Court has a duty to ensure that the ‘real issues’ of the applicants are addressed in this proceeding.
3. To enable relief due to them, the applicants require the court to recognise and make orders on the following issues:
a. Breach of the written terms in the mortgages and credit contracts by the respondent from 23 April 2010.
b. Respondent cannot claim the applicants are in default of the mortgages and credit contracts.
4. Apart from relief under Ground 3, the applicants’ counterclaim will also include inter alia:
a. Recovery of payments made under mistake of law.
b. Misleading and deceptive/fraudulent conduct of the respondent.
5. The applicants are entitled to costs other than the legal fees.
6. The appellate [Court] has the jurisdiction to examine the facts and also recognise that the respondent is in breach of their overarching obligations.
As may be seen, the first to fourth grounds relate to the order discontinuing the proceeding, the fifth ground relates to the order in respect of costs, and the sixth ground raises allegations in respect of the bank’s compliance with the ‘overarching obligations’.
Mrs Ganesh’s status in this application
Some days before the hearing of this application for leave to appeal, an affidavit was filed by the bank deposing that a sequestration order had been made against Mrs Ganesh, and that Mrs Ganesh’s trustees in bankruptcy had elected to discontinue the application on her behalf. The day before the hearing of the application, the Court received correspondence from Mr Ganesh requesting that the hearing be adjourned so that issues relating to Mrs Ganesh’s bankruptcy could be resolved. The Court, in correspondence to the parties that same day, advised that the hearing would proceed and that any application for an adjournment could be made at the hearing.
At the proceeding, Mr and Mrs Ganesh applied to adjourn the hearing to a date not before 25 May 2020 so that proceedings in another court in relation to Mrs Ganesh’s bankruptcy could first be finalised. That application was refused, on the basis that:
(l) Mrs Ganesh’s bankruptcy only prevented Mrs Ganesh from taking steps in this proceeding. It did not prevent Mr Ganesh from appearing at the hearing and making full submissions; and
(m) any later changes to Mrs Ganesh’s status, as a result of a proceeding in another court, could be addressed at that time in this proceeding.
The parties’ submissions
First, second, third and fourth grounds
Mr and Mrs Ganesh’s submissions in respect of the first, second, third and fourth grounds express, in different ways, a fundamental objection: that the judge erred in ordering that the proceeding be discontinued because that deprived them of the opportunity to make claims they wish to make against the bank by way of a counterclaim in the proceeding. In oral submissions, Mr Ganesh clarified that an essential part of this submission was that he and Mrs Ganesh had, at the time of the discontinuance, a counterclaim in the proceeding in substance, if not form, and that the proceeding should not have been discontinued in those circumstances.
In oral submissions, counsel for the bank quite properly accepted that, if it was shown that, at the time of the discontinuance, Mr and Mrs Ganesh had a substantive counterclaim in the proceedings, then the trial judge’s discretion granting leave to discontinue would be undermined.[21] But the bank submitted that there was no counterclaim in the proceeding at the time. This was said to be because:
[21]House v The King (1936) 55 CLR 499, 505 (Dixon, Evatt and McTiernan JJ).
(n) the associate judge repeatedly sought, and Mr and Mrs Ganesh never provided, a separate document specifying the relief and remedy sought by them in respect of their claims against the bank;
(o) the claims Mr and Mrs Ganesh made against the bank appeared only in their defence, and the allegations of loss and damage in respect of those claims were therefore in the nature of a set-off;
(p) the associate judge had ordered that the defendants’ defence was to proceed according to the their ‘Defence to Amended Statement of Claim dated 10 April 2017’ and had made no such order with respect to any counterclaim;
(q) the trial issues identified by the trial judge did not extend to any counterclaim; and
(r) alternatively, the claims Mr and Mrs Ganesh made against the bank in the defence were not articulated with the level of detail and precision necessary for them to constitute a counterclaim.
The bank also submitted that the discontinuance did not deprive Mr and Mrs Ganesh of the opportunity to make the claims they seek to make against the bank, as the discontinuance of the proceeding would not prevent them from commencing another proceeding to bring those claims. Furthermore, it was submitted that continuing the proceeding, in the circumstances, would present serious difficulties, because such claims as Mr and Mrs Ganesh may have are not adequately articulated in the extant pleadings, the bank cannot know and meet the case against it, and the court cannot ascertain the issues for determination.
Fifth ground
In respect of the fifth ground, which relates to the order in respect of costs, Mr and Mrs Ganesh submitted that the judge erred in making no order for costs on the basis that they were self-represented litigants. In doing so, they contended, the judge overlooked authorities which recognise that self-represented litigants may be entitled to recover disbursements, including out-of-pocket expenses incurred by them in relation to the proceedings.[22] They also submitted that they had made a written submission before the trial judge to the effect that costs should be reserved.
[22]Mr and Mrs Ganesh referred, for example, to Arnoldus-Lewis v Murphy [2008] NSWSC 1103 and Wollongong Council v Smith [1999] NSWSC 473.
In respect of this ground, the bank submitted that the judge’s order as to costs was consistent with the general rule that a self-represented litigant may not recover the costs of his or her time spent in litigation,[23] and contended that Mr and Mrs Ganesh did not contest the order as to costs at the relevant hearing.
Sixth ground
[23]Bell Lawyers Pty Ltd v Pentelow (2019) 93 ALJR 1007.
The sixth ground does not appear to directly relate to the orders in respect of which leave to appeal is sought. Rather, in their written submissions in respect of this ground, Mr and Mrs Ganesh make various allegations about the bank’s conduct of the proceeding and its compliance with its overarching obligations as a civil litigant.
In respect of the sixth ground, the bank submitted that any allegation that the bank had contravened its overarching obligations by its conduct in the proceeding was entirely without foundation.
Consideration
The primary question before the Court is whether the proposed appeal has prospects of success that are real, in the sense of not being fanciful.[24] It is convenient to start with proposed grounds 1–4.
[24]Kennedy v Shire of Campaspe [2015] VSCA 47, [12]–[13] (Whelan and Ferguson JJA) (‘Kennedy’).
The Supreme Court (General Civil Procedure) Rules 2015 provide that a counterclaim may be prosecuted notwithstanding that judgment is given for the plaintiff in the original proceeding or that the original proceeding is stayed, discontinued or dismissed.[25] Subject to the availability of specific powers under statute or rules of court, it might seem axiomatic that a defendant cannot introduce a counterclaim after the proceeding has been discontinued.[26] However, it is not necessary to decide for the purposes of this application whether a counterclaim could formally be instituted notwithstanding the trial judge’s order. The proposed appeal turns on the question whether the trial judge’s discretion miscarried because he mistook the fact that there was, in substance, a counterclaim on foot.
[25]Rule 10.08.
[26]The Salybia [1910] P 25, 27 (Bigham P); Dorrough v Bank of Melbourne Ltd [1996] FCA 816; cf Allianz Australia Insurance Ltd v Bluescope Steel Ltd [2012] NSWCA 240, [43]–[44] (Beazley JA, Macfarlan JA agreeing at [62]), [80] (Barrett JA); Accom Finance Pty Ltd v Kowalczuk [2006] NSWSC 730, [7]–[9] (Brereton J).
In my opinion, while it is not especially clear on the materials before the Court exactly what transpired in the interlocutory stages of this proceeding, it is reasonably arguable that the parties before the associate judge were proceeding on the basis that Mr and Mrs Ganesh were pursuing a counterclaim, albeit that no prayer for relief had yet been formulated. The transcript of the hearing on 2 October 2018 certainly gives that impression. In what were evidently difficult circumstances, the associate judge referred the matter for trial on 8 October 2018 on the basis that ‘things will have to be fashioned at trial’. Arguably, that meant that the facts relevant to any counterclaim would be the subject of the trial and the scope of any relief could be addressed later.
It is not clear what the trial judge was told about the hearing on 2 October 2018. Significantly, he did not have the transcript of that hearing, albeit that he did refer to the associate judge’s observations in ‘Other Matters’ made on 8 October 2018.
As counsel for the bank submitted, it is possible to interpret the ‘defence’ document as advancing only claims of set-off.[27] But that is by no means the only view of the document. Again, although the bank did not suggest it, it is possible that matters were overtaken by the filing of the ‘breach’ and ‘financial consequences’ documents and the trial judge’s articulation of the trial issues. But the trial issues themselves do not use the language of defence or counterclaim. No explicit order was made resolving the position and the conclusion remains open that substantive issues had been raised and pleaded by way of counterclaim, and were being treated as such, when the matter was before the associate judge and thereafter. In the end, the correct understanding of the state of the proceeding would be a matter for any appeal and need not be determined on the present application. All that matters for present purposes is that it is reasonably arguable that, when he made the order for discontinuing the proceeding, the judge overlooked the fact that there was a counterclaim on foot, and thereby ‘mistook the facts’ within the meaning of House v The King.[28]
[27]See para 40(b) above.
[28](1936) 55 CLR 499, 505 (Dixon, Evatt and McTiernan JJ).
Notwithstanding that Mr Ganesh has an arguable case in this respect, leave may still be refused if to do so would occasion no substantial injustice.[29] In that regard, I have considered the bank’s submissions regarding the state of the pleading and its contention that Mr and Mrs Ganesh (or her trustees in bankruptcy) are not prevented from bringing any claims they wish in a fresh proceeding. There is also, perhaps, the prospect that a counterclaim could be launched in the present proceeding notwithstanding the orders of the trial judge.[30] Those matters tend to suggest that the matter is merely one of practice and procedure and no substantial injustice would be done if leave were to be refused.
[29]Kennedy [2015] VSCA 47, [14] (Whelan and Ferguson JJA); PCCEF Pty Ltd v Geelong Football Club Ltd [No 2] [2019] VSCA 148, [40] (Whelan, McLeish and Emerton JJA).
[30]See n 26 above.
On the other hand, the matter has progressed over several years to its present stage. If an appeal succeeds, the proceeding would be able to continue without discarding that progress. If the orders of the trial judge stand, then Mr and Mrs Ganesh (or her trustees) would be required to undertake the process afresh, with the attendant risk that, in the meantime, limitation periods may expire. On balance, it would be unduly onerous to refuse leave despite there being an arguable case, and to expose Mr and Mrs Ganesh, or her trustees, to that burden. Refusing leave on this basis would not be conducive to the fair and efficient resolution of the issues in dispute. This takes the case beyond mere matters of procedure.
There will therefore be a grant of leave in respect of the subject matter of proposed grounds 1–4. For the sake of clarity, I have reduced that matter to a single ground of appeal, as set out at the start of these reasons.
I should make it clear, also, that it is no part of my reasoning that the pleadings in the ‘defence’ document are adequate for any counterclaim to go to trial. It is not necessary to address that issue, which might more suitably be the subject of an interlocutory application if the appeal succeeds. Similarly, it has not been necessary to make any assessment of the prospects of the applicants being granted leave to advance claims not currently in their ‘defence’ document. Despite the submissions of Mr and Mrs Ganesh as to the alleged strength of those claims and their wish to pursue them, they were not, on any view, raised on the pleadings at the time of the trial judge’s decision. This again is potentially a matter for application in the proceeding if the appeal succeeds.
Turning to proposed ground 5, in my opinion this ground also has a real prospect of success. In short, it is arguable that the fact that Mr and Mrs Ganesh could not recover costs in respect of their own time is not a reason for denying them any order for costs but instead goes only to the taxation of those costs. Mr and Mrs Ganesh submitted that they had incurred court fees and other out-of-pocket expenses. They also contested the trial judge’s statement that they had not contested that there should be no order as to costs,[31] by reference to a written submission which was said to have been before the trial judge. In my opinion, it is arguable that the judge erred in declining to make any costs order on the basis that Mr and Mrs Ganesh were self-represented.[32] I will grant leave in respect of this ground, again formulated as I have set out earlier.
[31]Reasons [18].
[32]Ibid [20].
There is no merit in proposed ground 6. While the application for leave to appeal seeks a direction that the applicants make an application regarding the bank’s alleged breach of its overarching obligations, to be heard by the Court, no such application was before the trial judge and the matter is not suitable for determination on appeal.
Conclusion
Leave to appeal is granted in the terms set out at the start of these reasons. Since Mrs Ganesh’s trustees in bankruptcy have discontinued the proceeding in her name, the appeal will proceed with Mr Ganesh as the moving appellant. Mrs Ganesh remains a party, albeit that her application stands discontinued. There is no need to make orders expressly preserving her right to seek to prosecute the appeal if she succeeds in challenging her bankruptcy in other proceedings.
The parties will need to give careful consideration to what might follow if the appeal were to succeed on the substantive ground. Since the case involves an exercise of discretion, if that discretion were successfully challenged one possibility would be to set aside the decision and remit the matter for rehearing so that the discretion could be exercised afresh. Another possibility might be that an order should be made by this Court on the question whether the proceeding should be discontinued in whole, in part, or at all.
Because these matters have not been addressed by the parties, and because leave to appeal has been granted on confined grounds, it may be desirable for the parties to file substituted written cases. I will hear the parties on that question, and as to costs.
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