Bannon v Nauru Phosphate Royalties Trust (No 4)
[2018] VSC 237
•14 May 2018
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
EMPLOYMENT AND INDUSTRIAL LIST
S CI 2015 03354
| PAUL BANNON | Plaintiff |
| v | |
| NAURU PHOSPHATE ROYALTIES TRUST | Defendant |
| NAURU PHOSPHATE ROYALTIES TRUST | Plaintiff by Counterclaim |
| v | |
| PAUL BANNON | Defendant by Counterclaim |
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JUDGE: | McDONALD J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 26 April 2018, written submissions dated 7 May 2018 |
DATE OF RULING: | 14 May 2018 |
CASE MAY BE CITED AS: | Bannon v Nauru Phosphate Royalties Trust (No 4) |
MEDIUM NEUTRAL CITATION: | [2018] VSC 237 |
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PRACTICE AND PROCEDURE – Objection to admissibility of expert evidence – Application to amend defence and counterclaim – Expert evidence of probative value – Objections to evidence going to weight of evidence rather than admissibility – Application for leave to amend pleadings granted – Expert evidence admissible – Civil Procedure Act 2010 ss 9(1)(d), 10(3), 16, 20, 23, 56.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr T J North QC with Mr M G Rinaldi | Lander & Rogers |
| For the Defendant | Mr R A Millar | HMB Employment Lawyers |
HIS HONOUR:
The plaintiff objects to proposed amendments to the defendant’s defence and counterclaim. He also objects to the admissibility of a report and supplementary report prepared by an accountant, Mr Thomas Fitzgerald. For the reasons set out below, I grant leave to the defendant to amend its defence and counterclaim. I have also concluded that the report and supplementary report of Mr Fitzgerald is admissible. The weight which will ultimately be given to that report is a matter to be determined following Mr Fitzgerald’s evidence.
Background
Mr Bannon was employed by the defendant (‘NPRT’) from 3 October 1994 until 30 June 2014. He claims $3,925,151.22 damages for breach of contract.[1] The principal component of his damages claim is for a sum of $3,111,000, being unpaid director/secretarial fees.[2] He claims he was entitled to receive these fees pursuant to an express term of a contract of employment which he signed on 24 August 2007.
[1]Plaintiff, ‘Plaintiff’s opening on loss and damage and preliminary matters’, 16 April 2018, 1 [1].
[2]At paragraph 16 of the statement of claim dated 29 June 2015, the plaintiff claims $3,422,100 in respect of director/secretarial fees. However, that amount included a GST component, abandoned at trial.
On 21 September 2016, Ierodiaconou AsJ granted NPRT leave to file and serve an amended defence and counterclaim. That leave was granted following a contested hearing on 12 and 16 August 2016. Judgment was delivered on 21 September 2016.[3]
[3]Bannon v Nauru Phosphate Royalties Trust (No 2) [2016] VSC 558.
As amended, the counterclaim alleges that Mr Bannon received $2,388,871.95 by way of unauthorised loans and unauthorised payments during the course of his employment. Paragraphs [42], [42A] and [42B] allege:
Unauthorised loans
42.The defendant:
(a)refers and repeats paragraphs 28A and 28B above; and
(b)says that if the plaintiff is entitled in law to retain the loans then, in the premises in (a), the defendant has suffered and will suffer loss and damage.
Particulars
So far as it is presently able to say, the defendant will suffer loss and
damagesdamage to the amount of the $286,010.95.
Unauthorised payments
42ADuring his employment by the defendant, unauthorised payments were made to the plaintiff, or on the plaintiff’s behalf, of not less than $2,102,861.
Particulars
The accounts of the defendant include payments from the defendant’s funds noted as “Paul Bannon” for the following sums, being in addition to the plaintiff’s agreed remuneration:
2002/2003 $39,893
2003/2004 $2,716
2004/2005 $42,352
2005/2006 $73,850
2006/2007 $66,546
2007/2008 $328,600
2008/2009 $232,695
2009/2010 $174,463
2010/2011 $245,010
2011/2012 $168,390
2012/2013 $284,858
2013/2014 $448,487Total $2,102,861
42BThe payments referred to in paragraph 42A were paid without a lawful basis, and further were in breach of the Fiduciary Obligations and the Integrity Terms, by reason of which the defendant has suffered loss and damage of not less than $2,102,861.
The trial commenced on 16 April 2018. To date, the trial has run for eight days. Counsel for the plaintiff and defendant made opening submissions spanning the first two days of hearing. During the course of opening submissions, Mr North QC, who appears with Mr Rinaldi for the plaintiff, submitted that Mr Bannon should not give evidence-in-chief regarding the alleged unauthorised loans and payments. He submitted that the allegations relied upon the evidence of Mr Fitzgerald which would be objected to in its entirety. I accepted this submission insofar as it related to the allegations of unauthorised payments, but not in respect of the allegations of unauthorised loans. I ruled that:
(a)Mr Bannon’s evidence-in-chief need not address the allegations of unauthorised payments;
(b)Following the completion of the defendant’s evidence, Mr Bannon is to have the right to lead evidence by way of rebuttal in respect of the allegations of unauthorised payments and Mr Millar will have the opportunity to cross-examine him in respect of such evidence.
Mr Bannon has given evidence and has been subject to lengthy cross-examination regarding loans which he allegedly advanced to himself during the course of his employment and which remained unpaid when his employment was terminated on 30 June 2014. During the course of his evidence, Mr Bannon agreed that he owes NPRT approximately $20,000 in respect of funds which were advanced to him and recorded in his loan account and which remain unpaid.[4]
[4]Transcript of Proceedings (20 April 2018) 530.01–530.21.
During re-examination of Mr Bannon, Mr North tendered Exhibit A: Reconciliation of Reimbursable Expenditure of Paul William Bannon for the period 8 July 2013 to 30 June 2014. Tab 1 of Exhibit A is a ‘reimbursable expenditure summary’ prepared by Mr Bannon. In the summary, Mr Bannon contends that:
(i) during the financial year concluding 30 June 2014 he received advances of $421,678.15 from NPRT; and
(ii) he incurred reimbursable expenditure on behalf of NPRT of $267,088.09.
The difference between the amount which Mr Bannon contends he received by way of advances and the amount of his reimbursable expenditure is $154,590.06. However, Mr Bannon’s summary also records that from this amount, a further $118,750.57 should be deducted. It appears that this amount is comprised of salary, motor vehicle acquisition allowance and superannuation which Mr Bannon contends he is entitled to as a consequence of a $60,000 salary increase agreed to by NPRT in May 2013, but which in fact was not paid to him prior to the termination of his employment. Mr Bannon’s entitlement to this salary increase is disputed by NPRT. Mr Bannon contends that the amount of $154,590.06 is to be further reduced by $16,033.96 referable to miscellaneous expenditure. This leaves a balance owing by him to NPRT of $19,805.53.
Exhibit A was tendered in re-examination. It is a comprehensive document which has 18 annexures, most consisting of multiple pages. The fact that Exhibit A was tendered in re-examination precluded Mr Millar from having an opportunity to cross-examine Mr Bannon regarding its contents. I directed that Mr Millar be permitted to make an application to re-call Mr Bannon for further cross-examination regarding the contents of Exhibit A.[5]
[5]Ibid 582.23–582.26.
I raised with Mr North why he had not tendered Exhibit A during examination-in-chief, given Mr Bannon’s evidence that the contents of Exhibit A expunged NPRT’s unauthorised loan claim, save for $19,805.53. Mr North responded:
It may have been my error, Your Honour, but my understanding was that this matter was – and I might have been in my own mind thinking it was a matter to be dealt with by Mr Fitzgerald. When the matter arose in cross-examination, my friend raised the issue of where these documents came from; it’s at that stage I recollected that I had received in my part of the brief this document and it had in fact been an issue that I had flagged for Mr Fitzgerald, rather than this witness.[6]
[6]Ibid 581.29–582.7.
Mr Bannon is yet to be cross-examined regarding the contents of Exhibit A. Nevertheless, it appears there is some overlap between the unauthorised loan allegations and the unauthorised payment allegations. In this regard, I note that Exhibit A records that Mr Bannon received payments during the financial year ending 30 June 2014 totalling $421,678.15, an amount well in excess of the balance of his loan account ($286,010.95) when his employment was terminated on 30 June 2014.
During the course of opening submissions on 16 April 2018, Mr North pointed out that Mr Fitzgerald’s report did not contain any material which supported the allegation in [42A] that unauthorised payments of not less than $2,102,861 had been made to Mr Bannon prior to the termination of his employment. On the second day of hearing, Mr Millar acknowledged that NPRT would seek leave to amend [42A] to bring the quantum of the alleged unauthorised payments into line with the contents of Mr Fitzgerald’s report.
In his report of 8 February 2018, Mr Fitzgerald has identified overpayments to Mr Bannon by way of EFT and cheque payments totalling $906,561 and overpayments of cash of $104,160. At face value, these amounts are significantly less than the $2,102,861 particularised in paragraph [42A].
Mr Millar filed a proposed amended defence and counterclaim on the morning of the third day of the trial. It was agreed that the application for leave to amend would be deferred and heard together with the plaintiff’s objection to the admissibility of Mr Fitzgerald’s report. This took place on the eighth day of the hearing.
In support of both his opposition to NPRT’s application for leave to amend, and his objection to the admissibility of Mr Fitzgerald’s report, the plaintiff relies upon a significant volume of documents. Many of these documents were produced by Mr Fitzgerald in answer to a subpoena served upon him by the plaintiff. The extensive submissions advanced by the plaintiff necessitated an adjournment of the trial. First, considerations of procedural fairness required an adjournment to provide the defendant with an opportunity to reply to the plaintiff’s submissions. Second, the volume of material relied upon meant that the Court was not in a position to give ex tempore reasons in respect of the contested applications.
Having heard the plaintiff’s application on 26 April 2018, the proceeding was adjourned until 4 June 2018. Directions were made for the filing of submissions by the defendant, with the plaintiff having a right of reply.
On the afternoon of 3 May 2018, the defendant’s solicitors provided a supplementary report prepared by Mr Fitzgerald. On 4 May 2018, Mr Fitzgerald filed an affidavit in which he deposed to the circumstances in which his supplementary report had been prepared. He deposed:
On or about 26 April 2018, I was asked some questions by the Defendant’s Counsel about whether items described as “Payments – Cash” in the Statements for the Plaintiff’s Westpac Mastercard could correlate to EFTs made from the Plaintiff’s Classic Plus Account.
It appeared to me that there could be some correlation because some of the amounts were identical and I decided it was necessary to undertake a further review of the transactions occurring in 2011 to 2014. From this review, I identified a number of transactions that had been described in the Statements for the Plaintiff’s Westpac Mastercard as “Payments – Cash” but were in effect EFTs from the Plaintiff’s Classic Plus Account.
I was not instructed to produce a supplementary report, but I did feel it was my obligation to produce a further report correcting the misstatements I made in my report dated 8 February 2018. Now produced and shown to me marked “TF2” is a copy of that supplementary report.[7]
[7]Affidavit of Thomas Gregory Fitzgerald sworn 4 May 2018, [8]–[10].
The effect of Mr Fitzgerald’s supplementary report is to significantly reduce the quantum of the alleged unauthorised payments to Mr Bannon. The quantum of the alleged unauthorised payments has been reduced from $1,142,478 to $405,011. This reduction is reflected in a further proposed amended defence and counterclaim provided by the defendant on 7 May 2018. As to the alleged unauthorised loans recorded in Mr Bannon’s loan account at the time of the termination of his employment, Mr Fitzgerald has reduced the quantum of the balance outstanding by $50,800 to $243,048.
Mr Fitzgerald’s report is of probative value
It is appropriate to consider at the outset the probative value of Mr Fitzgerald’s report. As noted above, the two principal limbs of the defendant’s counterclaim are comprised of the unauthorised loan allegation and the unauthorised payment allegation. Further, as has emerged during the course of the trial, particularly by reference to the contents of Exhibit A, there may be some overlap between these two allegations.
Mr Fitzgerald’s report records his opinion in respect of both of these allegations. As to the unauthorised loan allegations, Mr Fitzgerald’s report responds directly to the contents of Exhibit A. As I understand the evidence which has been given thus far, Mr Bannon contends that Exhibit A demonstrates that his loan account, as at 30 June 2014, is expunged by expenses totalling $267,088.09 which he incurred on behalf of NPRT. As to Mr Bannon’s claim in respect of the reimbursable expenditure of $267,088.09 recorded in Exhibit A, Mr Fitzgerald states:
In regard to the Reimbursable Expense claims, I have identified expenditure that has been claimed by Mr Bannon and cross-checked the payments relating to those claims to the entries in his Altitude Platinum Credit Card. Accordingly, I am satisfied that he has incurred those expenses. However, I have offset those expenses against the cash deposits made to the credit card (Refer Section 7, Table 7.2). Accordingly, I consider that this claim is duplicated and therefore not a valid claim at the time of his termination.[8]
[8]Report of TG Fitzgerald, 8 February 2018, 18 [4].
Prima facie, if Mr Fitzgerald’s evidence is accepted, it would appear to have the result of increasing by $267,088.09 the amount of $19,805.53 which Mr Bannon has acknowledged he owes NPRT. Needless to say, I have formed no conclusion one way or the other as to whether Mr Bannon has in fact been reimbursed for the amount of $267,088.09. Nevertheless, Mr Fitzgerald’s evidence in respect of the unauthorised loan allegations is of significant probative value.[9]
[9]See ASIC v Rich (2005) 218 ALR 764, 799 [163].
As to the unauthorised payments, in his supplementary report, Mr Fitzgerald has identified deposits totalling $746,726.09 which appear to be sourced from EFT transfers from Mr Bannon’s Classic Plus account, or cheques from NPRT. It appears that Mr Fitzgerald accepts that this amount is to be set off against the total amount of $939,427.39 deposited in Mr Bannon’s account during the period 2011 to 2014. This leaves a balance of $192,701.30.
Mr Fitzgerald has identified reimbursable expenditure totalling $745,051. When this amount is set off against the sum of $192,701, the balance is ($552,350). When this amount is further set off against the total payments to Mr Bannon of $957,361 (as set out in the revised Executive Summary table), the amount outstanding is $405,011.
The methodology deployed by Mr Fitzgerald in preparing his report is yet to be tested in cross-examination. Nevertheless, I consider Mr Fitzgerald’s report is of probative value in respect of the defendant’s contention that during the course of Mr Bannon’s employment, he received unauthorised payments totalling $405,011.
Does Mr Fitzgerald qualify as an expert witness?
The plaintiff submits that Mr Fitzgerald ‘does not qualify as a true expert witness’.[10] Section 79(1) of the Evidence Act2008 provides:
If a person has specialised knowledge based on the person’s training, study or experience, the opinion rule does not apply to evidence of an opinion of that person that is wholly or substantially based on that knowledge.
[10]Plaintiff, ‘Plaintiff’s submissions on defendant’s application for leave to further amend its amended defence and counterclaim’, 26 April 2018, 4 [18].
Mr Millar submits that Mr Fitzgerald’s report satisfies the criteria for admissibility under s 79 identified by the High Court in Dasreef Pty Ltd v Hawchar:
To be admissible under s 79(1) the evidence that is tendered must satisfy two criteria. The first is that the witness who gives the evidence “has specialised knowledge based on the person’s training, study or experience”; the second is that the opinion expressed in evidence by the witness “is wholly or substantially based on that knowledge”. [11]
As to the first matter, Mr Millar submits that Mr Fitzgerald’s report contains a summary of his background and skills. He submits that as an accountant of 44 years’ standing, Mr Fitzgerald has lengthy experience in forensic accounting matters, and is well placed to provide his report. As to the second matter, Mr Millar submits that the evidence of Mr Fitzgerald involves the tracing through of many transactions across voluminous records to arrive at the analysis presented to the Court, and is substantially based upon that knowledge.[12] I accept these submissions.
[11](2011) 243 CLR 588, 602 [32].
[12]Defendant, ‘Defendant’s submissions on amended counterclaim and adducing expert evidence’, 7 May 2018, 6 [24].
Mr Fitzgerald’s report reflects a substantial body of work tracing and explaining the flow of money in and out of a number of bank accounts controlled by NPRT, and bank and credit card accounts controlled by Mr Bannon and his wife. I agree with the conclusion of Bromwich J in Hart v Commissioner of Taxation (No 2) that:
… tracing and explaining flows of money is, in my opinion, plainly part and parcel of both the expertise and application of expertise of a forensic accountant. [13]
[13][2016] FCA 897 [32].
In addition to challenging Mr Fitzgerald’s standing as an expert witness, Mr North advanced numerous arguments in support of his submission that Mr Fitzgerald’s report is inadmissible:
(i)He was not provided with instructions as to matters of fact by any employee or officer on behalf of the Defendant having relevant knowledge that would provide a basis for any opinion he might express, including not having any instructions as to processes and procedures for transactions engaged in by the Defendant or their authorisation;
(ii)He was not asked to provide an opinion requiring relevant expertise on any particular matter, but was rather asked to review documents and provide comments, being inadmissible lay evidence as to matters the subject of documents and not within his personal knowledge;
(iii)He was asked in the Letter of Instruction to review and comment on an “unauthorised payment of backpay”;
(iv)He does not have, or claim to have, any expertise on what is “unauthorised” or “without a lawful basis” (see paragraphs 42B and 42D of Amended Defence and Counterclaim);
(v)He has been given instructions as to how to prepare his report which were pejorative and not impartial and has worked on it in consultation with a range of other persons including the Defendant’s solicitors, counsel, Mr Andrew Jacobson and Mr David Aingimea;
(vi)He has had regard to other accountants’ reports and derived assistance from other work carried out by other accountants or bookkeepers (Mr David Ferrier of Definitive Outcomes and Ms Nicola Porter of Constructed Bookkeeping);
(vii)He relied on Ms Porter (who is not being called as a witness) for his understanding of the Defendant’s MYOB accounts. He was not informed that the MYOB records provided for his review were only incomplete and deficient and had to seek assistance from Ms Porter in relation to “details of deficiencies in the MYOB records”. The Plaintiff made numerous attempts to obtain discovery of proper MYOB records from the Defendant. She responded that “[to comment on deficiencies within the records, I would first need to analyse the business and their processes, then review transaction postings and analyse reconciliation and trial balance reports”;
(viii)He does not comply with the requirements of Order 44 and the Expert Witness Code of Conduct, in that he has:
•Become an advocate for the party who retained him and has not remained impartial;
•Not properly explained or acknowledged areas in which he is dealing with matters falling outside his expertise;
•Not properly explained or acknowledged parts of his report that involve the acceptance of another person’s opinion or his reliance on that person’s expertise or specified their qualifications;
•Not adequately specified where he has been unable to provide a concluded opinion because of insufficient data or to modify his opinion based on the insufficiency of data;
•Not exercised his independent judgment to assist the Court impartially on matters relevant to his area of expertise;
(ix)Mr Fitzgerald did not provide all documents relied on or to which he regard in preparing his report. These were only provided pursuant to subpoena and following requests for complete material by the Plaintiff’s solicitors dated 28 March 2018 and 11 April 2018. He has still maintained a claim of legal professional privilege despite his report having been filed and served, and privilege thereby being waived. The Defendant’s new solicitors were asked by letter from the Plaintiff’s solicitors dated 13 April 2016 to identify the items over which legal privilege is claimed and are yet to provide a response…[14].
[14]Plaintiff, ‘Plaintiff’s submissions on defendant’s application for leave to further amend its amended defence and counterclaim’, 26 April 2018, 4 [18(i)–(ix)] (footnotes omitted).
The matters set out above do not, either individually or collectively, render Mr Fitzgerald’s report inadmissible. Rather, the matters go to the weight to be attributed to the report. The plaintiff will have the opportunity, when cross-examining Mr Fitzgerald, to put all of the matters set out above to him.
The plaintiff submits that Mr Fitzgerald has not only failed to comply with Order 44, but has also failed to comply with obligations under ss 16, 20 and 23 of the Civil Procedure Act 2010 (‘CPA’), as informed by s 10(3), which extends the overarching obligations to expert witnesses. An allegation of breach of the CPA is a serious matter. I am not prepared to make a finding of breach as alleged without Mr Fitzgerald being given an opportunity to respond to the alleged breaches by way of evidence.
The plaintiff submits that Mr Fitzgerald’s report is inadmissible because he has not acted impartially, but has assumed the role of an advocate in the defendant’s cause. The plaintiff will have an opportunity to put this contention to Mr Fitzgerald in cross-examination. If the Court accepts that Mr Fitzgerald has not acted independently in the preparation of his report, this will be a factor which will impact upon the weight, if any, to be attributed to the report.
To similar effect, the plaintiff contends that Mr Fitzgerald has not had access to source documents (such as payment vouchers and reimbursement claims) which are critical to the assessment of whether Mr Bannon owes money to NPRT. If the Court accepts this contention it will be a matter which weighs on the weight to be attributed to Mr Fitzgerald’s report.
The plaintiff submits that NPRT has failed to discharge its discovery obligations. He points to evidence that all of the records of the Melbourne office of NPRT were shipped back to Nauru in about mid-2015. The writ was served on 3 September 2015. The plaintiff annexes to his reply submissions a list of key correspondence relating to discovery. This correspondence spans the period 1 February 2017 to 19 June 2017.
The Court has wide-ranging powers under s 56 of the CPA to impose sanctions upon a party in default of discovery obligations. The plaintiff could have made an application prior to the proceeding being fixed for trial. He did not do so. Rather, on 16 March 2018 Lander & Rogers filed a Notice of Trial, which included a statement ‘discovery has been obtained and inspection had and it is not proposed to seek further discovery or further inspection of documents’.
It is difficult to reconcile this statement with the submissions now advanced by the plaintiff regarding deficiencies in the defendant’s discovery. Nevertheless, the plaintiff will be permitted to advance submissions prior to the completion of the trial as to the inadequacy of the defendant’s discovery and any sanction which should be imposed upon it by reason of such inadequacy.
The plaintiff is entitled to challenge the independence of Mr Fitzgerald in the preparation of his report. Nevertheless, a question will arise as to the extent to which the methodology utilised by Mr Fitzgerald in preparing the report provides an opportunity for subjective personal opinion. The accuracy of the financial records which underpin the report would appear to be a matter to be determined objectively. To the extent that the plaintiff wishes to challenge the accuracy of the records, it will have the opportunity to do so. For instance, the plaintiff contends that the MYOB records provided to Mr Fitzgerald for the purpose of preparing his report were ‘incomplete and deficient’.[15] The plaintiff will have an opportunity to cross-examine Mr Fitzgerald regarding this matter, together with any other alleged deficiencies in the methodology and documentation underpinning the report.
[15]Ibid, 5 [18(vii)].
It is apparent, on the face of Mr Fitzgerald’s report, that a considerable amount of work has been undertaken in the preparation of the report. Hundreds of bank and credit card entries have been examined for the purposes of identifying payments made to Mr Bannon and payments made by him. The collating of the bank and credit card entries in the report represents a timely and cost-effective means of placing evidence before the Court which is relevant to issues in dispute. Absent the evidence being admitted by way of Mr Fitzgerald’s report, the alternative would potentially involve a very lengthy process of tendering individual documents. Considerations of the efficient use of judicial resources weigh in favour of the admissibility of the report: s 9(1)(d) of the CPA.
The application for leave to amend
The defendant’s proposed amendments fall into three categories:
(i) deletion of claims not pressed;
(ii) amendment of the set-off defence to include the full counterclaim; and
(iii) amendments to bring the quantum of the counterclaim into line with Mr Fitzgerald’s report as amended.
The plaintiff submits that, except insofar as proposed amendments delete the pleas in paragraphs [15(b)(i) and (ii)], [28C], [28D] and [43], the application for leave to amend should be refused. However, the plaintiff goes further, submitting that numerous paragraphs in the defence and counterclaim which are not the subject of any application for leave to amend should be struck out. No such application was properly before the Court. For this reason alone, the plaintiff’s application to strike out numerous paragraphs in the defence and counterclaim should be rejected. In any event, for the reasons set out below, the strike out application is without merit.
The premise of the application is the plaintiff’s contention ‘now is the time for the Court to deal with the question of the sustainability of the remaining paragraphs of the [amended defence and counterclaim]…’. I reject this submission. It is not correct, as the plaintiff contends, that all of the lay evidence relevant to the pleadings is in. The plaintiff is yet to be cross examined regarding Exhibit A. In any event, I do not accept that it is an appropriate use of judicial resources to embark on the task of ruling on the sustainability of allegations prior to the conclusion of the trial.
The defendant seeks leave to amend [15(b)(iii)] to amend the definition of ‘fees’. The amendment is unremarkable. A consequential amendment is sought to [15(b)(v)]. In response, the plaintiff submits that [15(b)(iii), (iv) and (v)] should be struck out on the grounds that the claims are ‘unsustainable’. Whether the claims are, or are not, sustainable is a matter to be determined after the completion of the trial. The same observation is apposite in respect of the plaintiff’s application to strike out [15(c)], which pleads that the plaintiff’s claim for fees is unconscionable and barred in equity, or alternatively, that the defendant is entitled to set-off against that claim.
Paragraph [28A] pleads that during the plaintiff’s employment, he authorised loans and other payments from NPRT to himself. The proposed amendment is to the particulars to bring the quantum thereof into line with the contents of Mr Fitzgerald’s report. Specifically, the amended particulars now plead that the balance of the loan account as at 30 June 2014 was $243,048. Previously, the amount pleaded was $286,010.95.
The plaintiff contends that the amendment to [28A] should not be allowed and that the pleading should be struck out. I have set out earlier in this ruling my conclusion that the report of Mr Fitzgerald contains probative evidence regarding the unauthorised loan allegation. It is appropriate that the particulars be amended to be consistent with Mr Fitzgerald’s report. Insofar as the effect of the proposed amendment is to reduce the amount claimed by the defendant, this is consistent with the defendant’s overarching obligation under s 23 of the CPA to narrow the issues in dispute.
The plaintiff also contends that paragraph [28B] should be struck out. Paragraph [28B] pleads that Mr Bannon is liable to NPRT in the amount of $77,500, being the quantum of a loan which he authorised to be made to one of NPRT’s employees, Ms Romys Eobob. The plaintiff contends that the allegation in [28B] ‘is not capable of being sustained’ because of the forgiveness of the debt of Ms Eobob by the chairman of the trust in June 2014. Whether the claim in [28B] is made out is to be a matter which should be determined after the conclusion of the trial.
The proposed amendment to [28C] pleads:
The defendant further says in answer to the whole of the plaintiff’s claim that it has suffered the loss and damage alleged in the Counterclaim below at paragraphs 42A, 42B, 42C and 42D.
The proposed amendment is unobjectionable.
The defendant seeks leave to amend the particulars to [42] to bring the quantum of the loss and damage alleged into line with Mr Fitzgerald’s report. This amendment will be allowed for the same reasons the amendment to [28A] has been allowed.
Paragraph [42A] pleads the defendant’s unauthorised payments allegation. The proposed amendments bring the quantum claimed and particularised into line with Mr Fitzgerald’s report, as amended. The primary basis for the plaintiff’s objection to the proposed amendment is his contention that Mr Fitzgerald’s report is inadmissible. I have rejected this contention. The report is admissible. The weight to be attributed to the report is a matter to be determined after Mr Fitzgerald has given evidence.
Paragraph [42B] has been amended in consequence of the amendment to [42A]. It inserts the sum of $405,011 in lieu of the previously claimed $2,102,861. The amendment is consistent with the defendant’s overarching obligation under s 23 of the CPA to narrow the issues in dispute.
Paragraph [42C] has been amended to plead an unauthorised back payment of superannuation contributions totalling $24,396. Whether this payment was unauthorised is an issue in dispute which will be determined at the conclusion of the trial. The defendant is granted leave to make this amendment and a consequential amendment to [42D].
Conclusion
The defendant is granted leave to amend its defence and counterclaim in the form of the document filed on 7 May 2018. The report of Mr Thomas Fitzgerald, including the supplementary report received by the Court on 3 May 2018, will be admitted into evidence.
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