BMW Australia Finance Ltd v Trigas

[2022] NSWDC 279

District Court

New South Wales

Medium Neutral Citation:

BMW Australia Finance Ltd v Trigas [2022] NSWDC 279

Hearing dates:

30 June 2022

Date of orders:

22 July 2022

Decision date:

22 July 2022

Jurisdiction:

Civil

Before:

Russell SC DCJ

Decision:

Orders on the Motion filed on 11 March 2022

(1)   The Notice of Motion filed on 11 March 2022 was dismissed at the hearing on 30 June 2022.

(2)   Order the defendant to pay the costs of Mr Shade of the Notice of Motion filed on 11 March 2022.

(3)   Decline to make a lump sum costs order.

Orders on the Notice of Motion filed on 4 April 2022

(1)   Set aside the Notice to Produce dated 28 March 2022 served by the defendant upon the plaintiff.

(2)   Appoint 26 August 2022 as the return date for a Notice to Produce to be served by the defendant upon the plaintiff, in terms similar to the Notice to Produce dated 28 March 2022.

(3)   Order that the costs of the Notice of Motion filed on 4 April 2022 be costs in the cause.

Orders on the Notice of Motion filed on 16 June 2022

(1)   Grant leave to the defendant to amend the Defence in a form similar to Annexure B to the Notice of Motion filed on 16 June 2022 subject to the discussion in this judgment of matters requiring amendment or clarification in the new pleading.

(2)   Grant leave to the defendant to file a Cross Claim in a form similar to Annexure A to the Notice of Motion filed on 16 June 2022, subject to the discussion in this judgment of matters requiring amendment or clarification in the new pleading.

(3)   Order the defendant to pay the costs of the plaintiff and of Mr Shade of the Notice of Motion filed on 16 June 2022.

Catchwords:

CIVIL PROCEDURE – application to set aside notice to produce – no valid date for production – whether notice to produce is too wide - a notice to produce is not too wide if it calls for documents relating to a particular document

CIVIL PROCEDURE – application by for leave to file cross claim – whether conduct particularised was conduct which was misleading or deceptive - incomplete particulars in pleadings – heads of damage - delay in bringing forward proposed cross claim

CIVIL PROCEDURE – application for leave to amend defence – whether fraud is pleaded in proposed amended defence - a party alleging agency must plead the origins, nature and scope of the authority of the agent – whether pleadings relating to the insurance representations bound to fail – whether proposed amended defence is an embarrassing pleading – court may give directions concerning mode of amendment

COSTS – lump sum costs order

Legislation Cited:

Australian Consumer Law, ss 18, 236, 237, 243

Civil Procedure Act 2005 (NSW), s 64

Uniform Civil Procedure Rules 2005 (NSW), rr 14.14, 14.28, 19.5, 19.6, 34.1

Cases Cited:

AJG Pty Ltd v Mobile Communications Systems Pty Ltd [2015] VSCA 231

Bitannia Pty Ltd v Parkline Constructions Pty Ltd (2006) 67 NSWLR 9

Willcocks v Croft [2021] NSWSC 1610

Williams v Toyota Motor Corporation Australia Ltd [2022] FCA 344

Category:

Procedural rulings

Parties:

BMW Australia Finance Ltd (Plaintiff)
Arthur Trigas (Defendant/Proposed Cross Claimant)
Peter Shade (Proposed Cross Defendant)

Representation:

Counsel:
M Gunning (Plaintiff)
R Perla (Defendant)
S Gray (Proposed Cross Defendant)

Solicitors:
Mills Oakley (Plaintiff)
Weinberger Lawyers (Defendant)
Clyde & Co (Proposed Cross Defendant)

File Number(s):

2018/71917

Judgment

Introduction

1. This judgment concerns three Notices of Motion filed in proceedings which commenced in 2018. The plaintiff BMW Australia Finance Ltd (BMW) provides finance for the acquisition of motor vehicles. The defendant Mr Arthur Trigas was interested in purchasing two Mercedes motor vehicles, the first being a Mercedes Benz G63 AMG motor wagon (the G63) and the second being a Mercedes Benz SLS C197 AMG coupe (the Gullwing).

2. BMW sues Mr Trigas in relation to two finance contracts said to relate to the G63 and the Gullwing.

3. By an Amended Statement of Claim filed on 6 October 2021 BMW seeks orders in relation to possession of the Gullwing and damages of $190,648.45 plus interest of $92,046. In the alternative, BMW seeks damages of $175,799.23 plus interest of $104,055.56, in relation to finance which BMW says relates to the G63.

Background

4. Mr Trigas’ version of events is best understood by reference to par 3 of the affidavit of his solicitor Mr Weinberger dated 11 March 2022 (DX 1). Paragraph 3 is as follows:

“3   In his evidence, the defendant deposes to the fact that:

a.   he was introduced to Peter Shade (Shade), an employee or contractor to Trivett Classic (Trivett) who sold luxury cars;

b.   Shade represented that he had the G63 for sale at a cost of $180,000;

c.   he agreed to purchase the G63;

d.   Shade procured finance on behalf of the defendant from the plaintiff without the authority of the defendant;

e.   he did not receive the G63;

f.   between November 2015 and April 2016:

i.   money was deposited into his ANZ Access Advantage Cheque account (Account No: 401909469) (ANZ Account) by persons or entities unknown to the defendant but known to Shade in order to cover the repayments for the G63; and

ii.   payments were debited from the ANZ Account by the plaintiff in respect of the First Agreement (the First Agreement Repayments);

g.   Shade was aware that the plaintiff was debiting the First Agreement Repayments and that the G63 had not been delivered to the defendant;

h.   Shade represented to the defendant that he had the Gullwing for sale at a cost of $180,000;

i.   Shade procured an approval for finance for the purchase of the Gullwing from the plaintiff on behalf of the defendant (the Second Application);

j.   Shade represented to the defendant that the First Agreement had been cancelled by the plaintiff;

k.   Shade lodged the Second Application:

i.   without the authority of the defendant;

ii.   in circumstances where he did not have or could not procure the Gullwing to sell to the defendant;

iii.   in circumstances where any funds advanced pursuant to the Second Application would be used to payout the First Agreement; and

iv.   in circumstances where the defendant had communicated that he did not want to proceed with:

1.   the purchase of the Gullwing; and

2.   the Second Application;

I.   Shade induced the plaintiff to advance $177,529.83 on behalf of the defendant to itself to payout the First Agreement;

m.   the plaintiff approved the Second Application (the Second Agreement);

n.   the plaintiff discharged the balance of the funds advanced under the First Agreement by the funds advanced under the Second Agreement;

o.   on 20 April 2016, the defendant declined to obtain insurance over the Gullwing from Allianz Insurance through the plaintiff;

p.   in order to approve any application for finance, the plaintiff required the applicant to obtain comprehensive motor vehicle insurance over the vehicle that was being financed with any policy to note the interests of the plaintiff;

q.   the defendant did not obtain comprehensive motor vehicle insurance over the Gullwing at any time;

r.   after 21 April 2016, Shade:

i.   arranged for comprehensive motor vehicle insurance policy from MB Insurance over the Gullwing (the Policy);

ii.   was aware that the Policy was obtained without the defendant's knowledge or authority;

iii.   arranged for the Policy to comply with the plaintiff's requirements;

iv.   arranged for the Policy to be provided to the plaintiff in order to secure finance under the Second Application; and

v.   procured finance from the plaintiff pursuant to the Second Application in circumstances where:

1.   the defendant did not authorise the lodgement of the Second Application with the plaintiff; and

2.   Maddie Harrod (an employee of Trivett) did not witness the defendant's signature on any document;

s.   if Shade did not actually do the things set out in the preceding sub-paragraph, he was or ought to have been aware that they were done;

t.   Shade was aware that:

i.   the premium for the Policy would not be paid; and

ii.   that the Policy would lapse soon after the Second Application was approved by the plaintiff.

u.   Shade did not deliver the Gullwing to the defendant or was aware, or ought to have been aware that it was not delivered to the defendant;

v.   the defendant has never had ownership, possession, custody or control of the Gullwing; and

w.   the Gullwing has never been registered to the defendant.”

5. Mr Trigas filed a Defence to the Amended Statement of Claim on 26 November 2021. Mr Weinberger summarises the Defence in par 5 of DX 1 as follows:

“5   The defendant pleads, inter alia, that:

a.   at all material times Trivett Automotive Pty Ltd, Peter Shade and Kerry Allen were agents of the plaintiff (collectively referred to as the Agents);

b.   the Agents were not authorised to submit the First Agreement to the plaintiff for the plaintiff's approval;

c.   the defendant was induced into signing a number of documents including the Second Agreement by the Agents;

d.   the defendant executed the Second Agreement under the influence of a mistake induced by the Agents or the plaintiff of which the plaintiff knew or ought to have known;

e.   the defendant's signature was not witnessed by Maddie Harrod;

f.   the defendant did not take possession of any vehicle the subject of the Second Agreement;

g.   the conduct including the execution of the Second Agreement occurred in trade and commerce;

h.   the conduct of the Agents, or the plaintiff, or both was misleading and deceptive;

i.   the conduct of the Agents was performed in their capacity as agents for the plaintiff;

j. the Agents, or the plaintiff, or both contravened s 18 of the Australian Consumer Law (the ACL);

k. the defendant is accordingly entitled to relief pursuant to ss 237 and 243 of the ACL, including an order that the Second Agreement is void or alternatively, an order that the plaintiff not enforce the Second Agreement;

I.   further or in in (sic) the alternative, the defendant withdrew his offer before the plaintiff accepted it with the result that the Second Agreement is not enforceable as it never came into effect;

m.   further or in in the alternative, no consideration passed from the plaintiff to the defendant;

n.   the defendant did not obtain insurance for the Gullwing;

o.   the defendant did not authorise any person to obtain insurance on his behalf for the Gullwing; and

p. if the Second Agreement did come into existence (which is otherwise denied), then the defendant says that it was unjust at the time it was made within the meaning of s 9 of the Contracts Review Act, 1980 and the Court should make an order pursuant to s 7 of the Contracts Review Act, 1980, including an order that the Second Agreement be declared void or not be enforced.”

First Notice of Motion: Filed 11 March 2022

6. The first Notice of Motion was filed on 11 March 2022 by Mr Trigas. That Notice of Motion sought leave to file a Cross Claim against Mr Shade. Mr Trigas no longer wished to pursue that Notice of Motion or that form of the proposed Cross Claim. The third Notice of Motion (discussed below) sought leave to bring a Cross Claim against Mr Shade, in a more extensive pleading than that associated with the first Notice of Motion.

7. At the hearing on 30 June 2022 I made an order dismissing the defendant’s Notice of Motion filed on 11 March 2022. The parties argued the costs of the first Notice of Motion.

Costs of the First Notice of Motion

8. Counsel for Mr Shade sought an order for costs of that Notice of Motion, on the basis that the defendant had not succeeded, having abandoned the application. He also sought a lump sum costs order, and the opportunity to put further evidence before the court as to the quantum of such order.

9. Counsel for Mr Trigas opposed both applications. He submitted that there had been no “event” for costs to follow, and proposed that costs of the first Notice of Motion should be Mr Shade’s costs in the cause. He opposed the lump sum costs order.

10. If one party brings another person to court, seeking to join them to the action pursuant to a cross claim, but later changes their mind, I see no reason why a costs order should not be made against them. I have already made an order dismissing the first Notice of Motion, so there is an “event” and in my view costs should follow that event. In my view the appropriate order is for the defendant to pay the costs of Mr Shade of the Notice of Motion filed on 11 March 2022.

11. I decline to make a lump sum costs order. These proceedings have been bedevilled by delay, multiple interlocutory applications and significant legal costs. I see no reason to put the parties to further expense at this stage. I did ask counsel for Mr Shade for a non-binding indication of the size of the lump sum sought. The answer was $40,000. Without knowing the legal work generated to defend the first Notice of Motion, I cannot express any view about such a figure. I can infer that any further hearing of an application for an order for that figure would be hotly contested by Mr Trigas, generating more legal costs for Mr Trigas and Mr Shade, and delaying the proceedings for BMW. I decline the application for a lump sum costs order.

Second Notice of Motion: Filed 4 April 2022

12. The second Notice of Motion was filed by BMW on 4 April 2022. It sought an order setting aside a Notice to Produce dated 28 March 2022 and served by Mr Trigas upon BMW. BMW also sought costs. Counsel for BMW indicated during oral submissions that BMW no longer sought the orders set out in par 2 and par 3a of the Notice of Motion.

13. The Notice to Produce which is the subject of the plaintiff’s Notice of Motion filed on 4 April 2022 is Exhibit NA-19 to the affidavit of Mr Angelakis, solicitor, dated 4 April 2022 (PX 2).

14. The Notice to Produce requires production of the following:

“2.   All documents relating to the Loan Contract and Goods Mortgage Agreement dated 25 November 2015 (the First Agreement) including but not limited to emails, file notes, letters, policies of insurance, application forms, tax invoices and approvals of the First Agreement.

3.   All documents relating to the Loan Contract and Goods Mortgage Agreement dated 20 April 2016 (the Second Agreement) including but not limited to emails, file notes, letters, policies of insurance, application forms, tax invoices and approvals of the Second Agreement.

4.   All documents relating to any communications with:

(a)   Trivett Automotive Pty Ltd (deregistered);

(b)   Peter Shade;

(c)   Kerry Allen; or

(d)   Maddie Harrod

in respect of the First Agreement and the Second Agreement.

5.   All documents relating to any communications with:

(a)   MB Insurance;

(b)   Insurance Advisernet Australia Pty Ltd; or

(c)   John Durant

in respect of the “First Agreement, the Second Agreement, a 2015 Mercedes Benz G63 AMG Wagon motor vehicle (Engine No. 15798450073556, Vin No. WDB4632722X236486) or a 2010 Mercedes-Benz SLS C197 AMG Coupe motor vehicle (Engine No. 15998060001541, VIN No. WDD1973772A001494).

6.   All documents relating to the ‘investigation’ referred to at paragraph 47 of the affidavit of Michael Later affirmed 2 September 2021.

7   All documents recording the plaintiff’s policies or processes in place as at 20 April 2016 relevant to review, acceptance or approval of insurance policies for the purposes of Loan Contract and Goods Mortgage Agreements.”

15. Rule 34.1 Uniform Civil Procedure Rules 2005 (NSW) (UCPR) deals with Notices to Produce. Subrule 1 says:

“A party may, by notice served on another party, require the other party to produce to the court, or to any examiner:

(a)   at any hearing in the proceedings or before any such examiner, or

(a1)   at any time fixed by the court for the return of subpoenas, or

(b)   by leave of the court, at some other specified time, any specified document or thing.”

16. The first basis for setting aside the Notice to Produce is set out in par 3 of a letter dated 30 March 2022 from the solicitors for BMW to the solicitors for Mr Trigas (PX 2, p 46). That letter points out that the Notice to Produce requires production to the court on 14 April 2022, however that was not a date for hearing in the proceedings, or a time fixed by the court for the return of subpoenas.

17. That submission is undoubtedly correct. This technical defect in the Notice to Produce was pointed out by that letter dated 30 March 2022. Mr Trigas has not sought since that time to issue a fresh Notice to Produce returnable on a date obtained from the court in accordance with r 34.1(1) UCPR. For this reason the Notice to Produce dated 28 March 2022 served by the defendant must be set aside.

18. BMW submitted (PX 2, p 46, par 5) that the principles in relation to a Notice to Produce are equivalent to those applicable to a subpoena to produce. Those principles are well known. The document sought must be of apparent relevance to the issues in the proceedings. A Notice to Produce cannot be used as a substitute for discovery and only permits the production of a specified document for a legitimate forensic purpose.

19. The letter from the solicitors for BMW to the solicitors for Mr Trigas dated 30 March 2022 criticised the drafting of the Notice to Produce because it sought documents “relating to” the loan contracts or “relating to” any communications or “relating to” an investigation. BMW submitted that the form of the paragraphs in the Notice to Produce required the plaintiff to “to apply an evaluative judgment as to whether a document records or relates to the classes of document referred to in each paragraph” (PX 2, p 47, par 6).

20. In oral submissions, counsel for BMW submitted that Mr Trigas should get his pleadings in order before proper consideration can be given to the Notice to Produce. Counsel submitted that otherwise, the Notice to Produce was just a fishing expedition.

21. Counsel for Mr Trigas submitted that regard should be had to the proposed Amended Defence with a view to evaluating the wording used in the Notice to Produce. While this is a theoretical exercise, in the light of the point regarding non-compliance with the appropriate date for production, referred to above, I propose to deal with the broader submissions made for BMW in relation to the wording of the Notice to Produce. I do so in the hope that this may assist the parties in future in relation to production of documents.

22. On the basis that leave will be granted to file an Amended Defence, largely in the form put forward by Mr Trigas, but with some improvements, it seems to me that the numbered paragraphs of the Notice to Produce do constitute appropriate calls for production of documents.

23. A subpoena, and thus a Notice to Produce, is not too wide if it calls for documents relating to a particular document, in this case the First Agreement and the Second Agreement as initially referred to in the affidavit of Mr Weinberger dated 11 March 2022. BMW must surely have a file in relation to each of those agreements, containing its documentation which led, for its part, to the granting of finance. Against the background of the allegation to be pleaded in the new Amended Defence, there is no speculation or guesswork involved in identifying the documents relating to the First Agreement and the Second Agreement. Nor is there any evaluative exercise in searching for communications with Trivett, Mr Shade, Ms Allen or Ms Harrod in respect of the First Agreement or the Second Agreement. The same can be said in relation to communications with MB Insurance, Insurance Advisernet Australia Pty Ltd or Mr Durant in relation to the First Agreement, the Second Agreement, the G63 or the Gullwing.

24. Nor is there any evaluative exercise required to obtain the documents referred to in pars 6 and 7 of the Notice to Produce.

25. I propose to set aside the present Notice to Produce. However, I will appoint a date for return of subpoenas, and any further Notice to Produce can be made returnable for that date, pursuant to r 34.1(1)(a1) UCPR. I do so in the hope of achieving a practical outcome in relation to the Notice to Produce, and in moving this litigation along.

Costs of the Second Notice of Motion

26. BMW has succeeded on the Notice of Motion on a technical ground. In my view Mr Trigas should have realised the force of the proposition concerning the return date of the Notice to Produce, withdrawn it and issued another Notice to Produce. However, the argument as to the substance of the Notice to Produce, which occupied most of the time for submissions on the hearing of the motions, has been lost by BMW. I am of the view that the present wording of the Notice to Produce is appropriate, and, if the Notice to Produce was issued in a proper form, would have to be complied with by BMW.

27. In those circumstances, I will make an order that the costs of the second Notice of Motion be costs in the cause.

Third Notice of Motion: Filed 16 June 2022

28. The third Notice of Motion was filed on 16 June 2022 by Mr Trigas. He sought leave to file and serve a Cross Claim against Mr Shade, in the form of the pleading annexed to the Notice of Motion. He also sought leave to file and serve an Amended Defence to the Amended Statement of Claim. A draft pleading was annexed to the Notice of Motion. Mr Trigas also sought the costs of this Notice of Motion.

Proposed Amended Defence

29. The proposed Amended Defence is Annexure “B” to the Notice of Motion filed on 16 June 2022. Paragraph 2 of the proposed pleading responds to par 1A of the Amended Statement of Claim. The additions to par 2 run from the foot of p 1 to p 5 of the proposed pleading. They set out allegations concerning representations made by Mr Shade and described as:

1. The G63 Representation.

2. The Binding Sale Representation.

3. The First Agreement Representation.

4. The Implied First Agreement Representation.

5. The Repayments Representation.

30. New par 2(f) of the proposed pleading alleges that at all material times Trivett Automotive Pty Ltd (Trivett), Mr Shade and a Ms Allen were agents of BMW. The particulars provided under par 2f do not plead the origins, nature or scope of authority of the agents, as is required: Willcocks v Croft [2021] NSWSC 1610 at [253]-[260]; AJG Pty Ltd v Mobile Communications Systems Pty Ltd [2015] VSCA 231 at [34].

31. The particulars refer to various documents and to events including the inspection of the G63 and the commission paid to Trivett and Mr Shade.

32. Mr Trigas was not privy to the arrangements, if any, between BMW and Mr Shade, Trivett and Ms Allen. Mr Trigas would seek to construct a case on agency by inference from the documents and events particularised under par 2f of the proposed pleading.

33. While it is understandable that at this stage Mr Trigas may not be able to fully particularise the origins, nature and scope of the agency, if leave is granted to amend his Defence in the form proposed, he will have to provide the best particulars he can of the origin, nature and scope of the agency. Mr Trigas says, in part, that he cannot do that at this stage because he requires a response to the Notice to Produce, which BMW seeks to set aside in the second Notice of Motion which is the subject of this judgment. After eventual production of documents by BMW, Mr Trigas should be able to provide better particulars of the origin, scope and nature of the pleaded agency.

34. Paragraph 6 of the original form of the Defence denied par 2 of the Amended Statement of Claim. The proposed pleading adds, to that bare denial, allegations pleaded in pars 6-9 concerning additional representations said to have been made by Mr Shade, describe as:

1. The Gullwing Representation.

2. The Insurance Representation.

3. The Implied Insurance Representation.

35. Part of the explanation for the proposed expansion of the Defence arises from insurance documents obtained by Mr Trigas on subpoena a relatively short time ago.

36. New par 6g of the proposed pleading alleges that the representations pleaded in pars 2 and 6 were made in trade and commerce.

37. New par 6h of the proposed pleading says that the making of these representations by the agents, or BMW, or both, was misleading and deceptive or likely to mislead or deceive. Particulars of the allegation of misleading and deceptive conduct are set out in new par 6h of the proposed pleading, which runs from p 10 to p 12.

38. New par 6h.d. pleads that Mr Trigas relied upon the pleaded representations, which constituted misleading and deceptive conduct.

39. Paragraph 6i of the proposed pleading (which has not been amended or expanded from the original version) pleads that the conduct of the Agents was performed in their capacity as agents for BMW. Paragraph 6j (again, something which was in the original Defence) pleads that the agents, or BMW, or both contravened s 18 of the Australian Consumer Law (ACL).

40. Paragraph 6k of the proposed pleading (which is in its original form) pleads that Mr Trigas is accordingly entitled to relief pursuant to ss 237 and 243 of the ACL, including an order that the Second Agreement is void, or an order that BMW cannot enforce the Second Agreement.

Proposed Cross Claim

41. The proposed Cross Claim against Mr Shade is Annexure “A” to the defendant’s Notice of Motion filed on 16 June 2022. The proposed pleading seeks:

1. Damages.

2. An order for Mr Shade to indemnify Mr Trigas for any liability that Mr Trigas has to BMW.

3. An order for damages against Mr Shade under s 236 of the ACL.

4. An order that Mr Shade pay damages directly to BMW under the ACL.

5. Costs of Mr Trigas in defending the action brought by BMW.

6. Costs of the Cross Claim.

7. Interest.

42. Paragraph 3 of the proposed Cross Claim summarises the allegations made by BMW against Mr Trigas in the Amended Statement of Claim. Paragraph 6 of the proposed Cross Claim pleads that Mr Shade was an employee of Trivett or a contractor to Trivett.

43. The proposed Cross Claim then pleads representations in similar terms to those asserted against Mr Shade in the proposed Amended Defence.

44. From p 7 onwards a new cause of action is pleaded, being the tort of deceit. Paragraph 26 alleges that Mr Shade made certain representations with knowledge that they were false. In the alternative it is pleaded that he was reckless or careless as to whether the representations were false or not. Mr Trigas pleads that he suffered damage caused by his reliance upon the representations.

45. Paragraphs 33-64 of the proposed Cross Claim plead the Gullwing Representation, the Insurance Representation and the Implied Insurance Representation in terms similar to those in the proposed Amended Defence.

46. Paragraphs 65A-69 plead the tort of deceit in relation to those representations.

47. Paragraph 70 pleads that in the alternative to the pleading in deceit regarding the representations, those representations constituted conduct of Mr Shade which was misleading or deceptive within the meaning of the ACL. Particulars of how those representations were misleading or deceptive are set out under par 70A.

48. Paragraph 71 pleads that the representations and the conduct of Mr Shade were made in trade and commerce. Paragraph 72 pleads and particularises the reliance placed by Mr Trigas on the representations and the conduct of Mr Shade. Paragraph 74 pleads that Mr Trigas has suffered loss and damage as a result of the misleading and deceptive conduct of Mr Shade. Paragraph 75 sets out the relief sought, which has been summarised above.

Principles in Relation to Amendment of the Defence

49. Counsel for BMW set out his summary of the applicable principles in pars 13-17 of his written submissions (MFI 2). Counsel’s summary was follows:

1. The court may, at any stage of the proceedings, on application by any party or of its own motion, order that any document in the proceedings be amended, or that any party have leave to amend any document in the proceedings: s 64 of the Civil Procedure Act 2005 (NSW).

2. The court may refuse an amendment if the amendment is so futile that it would be struck out if it appeared in an original pleading.

3. A pleading can be struck out if it has a tendency to cause prejudice, embarrassment or delay: r 14.28 of the UCPR.

4. A pleading may tend to cause prejudice, embarrassment or delay if it contains allegations which are vague or imprecise, so that the other party does not know in advance the case it has to meet or it cannot plead specifically to such allegations.

5. A pleading may be embarrassing if it expresses facts in a way that leaves difficulty or doubt about identifying and piecing together what is referred to.

6. Allegations of fraud and agency must be expressly and specifically pleaded by way of material facts so that the opposite party is not taken by surprise: r 14.14 UCPR.

7. It is not the function of particulars to take the place of the necessary averments in a pleading, or to fill in the gaps where material facts are omitted, to try and make good a bad pleading.

50. I accept the submission set out above as a correct statement of the principles to be applied in relation to the proposed amendment of the Defence.

Is Fraud Pleaded in the Amended Defence?

51. Counsel for BMW points out (MFI 2, par 19) that r 14.14 UCPR requires the defendant to plead specifically any matter that may take the plaintiff by surprise, and that this includes a pleading of fraud.

52. Counsel submitted (MFI 2, par 21):

“In some limited respects, it appears that fraud is alleged in the Proposed FAD [Further Amended Defence]. However, this is by no means clear because the fraud is not alleged explicitly. If that is the case, then the proposed FAD does not meet the fundamental requirement that fraud must be pleaded specifically and particularised.”

53. The word fraud does not appear in the proposed Amended Defence. Further, there is no pleading of the tort of deceit against BMW. Rather, the pleading is that Mr Shade and others made misleading or deceptive representations to Mr Trigas, and that when they made those representations, they were agents for BMW.

54. The proposed Amended Defence cannot be read, in my view, as an allegation of fraud against BMW.

55. Counsel for Mr Trigas pointed out in written submissions (MFI 1, par 8) that misleading and deceptive conduct can be pleaded as a defence: Bitannia Pty Ltd v Parkline Constructions Pty Ltd (2006) 67 NSWLR 9 at [7]-[9] and at [78]-[95].

56. Counsel for the plaintiff drew attention (MFI 1, par 11) to the decision of the Federal Court in Williams v Toyota Motor Corporation Australia Ltd [2022] FCA 344 at [226]. Omitting references, Justice Lee said:

“It is trite to observe that the question of whether conduct is misleading or deceptive, or is likely to be so, is an objective question of fact that the Court must determine for itself. …It is not necessary to prove that the conduct in question in fact misled or deceived anyone, nor is it necessary to prove an intention to mislead.”          

(Emphasis added)

57. Fraud is not alleged in the proposed Amended Defence. The proposed pleading therefore does not fall foul of r 14.14 UCPR, at least in relation to fraud.

58. Counsel for BMW drew attention to the pleading of the very same representations in the proposed Cross Claim, where an allegation was made that Mr Shade made the representations knowing they were false. Further, the representations made by Mr Shade were said to establish the tort of deceit. Counsel submitted (MFI 2, par 29):

“The plaintiff respectfully submits that the defendant should not be permitted to plead that the very same representations were fraudulent on the one hand, and then only misleading or deceptive (such that they may be innocent representations) on the other. It is the same conduct that is relied upon in the proposed FAD and the proposed CC [Cross Claim].”

59. I reject this submission. The proposed Amended Defence makes it plain that there is no allegation against BMW that it had any intention to deceive Mr Trigas. Rather, the pleading against BMW is specifically confined to a breach of the ACL, being misleading or deceptive conduct, where the pleader does not have to allege or prove that there was an intention to mislead. On the other hand, the pleader of the Cross Claim is perfectly entitled to make an allegation that, to the knowledge of Mr Shade, the statements made by him were false. Even if that allegation is made out against the proposed cross defendant, it does not mean that the plaintiff BMW will be saddled with such a finding.

Pleading in Relation to Agency

60. As previously recited, the authorities say that a party alleging agency must plead the origins, nature and scope of the authority of the agent. The proposed pleading does not do this. I have already made comment as to why that is so, at this stage.

61. I regard it as essential for Mr Trigas to plead, as soon as possible, particulars of the origins, nature and scope of authority of the Agency.

Pleading in Relation to Insurance

62. Counsel for BMW submitted that the allegations in the proposed pleading relating to insurance over the Gullwing were “confusing and difficult to decipher” (MFI 2, par 36). Counsel submitted that the plaintiff was being left to speculate as to whether, had the insurance representations not been made, BMW would never have advanced funds and the Second Agreement would not have come into binding effect (MFI 2, par 37).

63. This is a complaint that the proposed pleading does not set out the consequences of the making of the insurance representations and the reliance upon them.

64. However, par 6ao of the proposed Amended Defence (p 8 of that document) pleads that in breach of the insurance representations, Mr Shade lodged the Second Agreement documents with BMW, without the authority of Mr Trigas and in circumstances where Mr Shade could not sell the Gullwing to Mr Trigas. The allegation concerning the two insurance representations is tied up with the defendant’s allegations that the Second Agreement was lodged with BMW without the authority of Mr Trigas, and in circumstances where Mr Shade did not have the Gullwing to sell to Mr Trigas. In other words, there would have been no finance provided by BMW in relation to the proposed Gullwing purchase.

65. I reject the submission that the plaintiff is left to speculate as to the consequences of the insurance representations.

66. A second submission in relation to these representations is that they depend upon Mr Shade providing to BMW documents known by him to be false to induce BMW to advance funds. It is submitted that on this scenario, Mr Shade would be practising a fraud on his alleged principal and that such conduct could not be attributed to the plaintiff (MFI 2, par 39). The consequence, it was submitted, is that the case relying on the insurance representations is therefore bound to fail.

67. That may or may not be so as a matter of law. It would depend upon facts to be established at the trial. At this stage it is not possible to say that the insurance allegations would lead to Mr Trigas failing on that part of his case. That may well be the end result, but the argument is not so clear that leave should be refused in relation to the Insurance Representations. Further, the strength of those representations cannot be fully assessed until Mr Trigas clarifies his case upon the origins, nature and scope of the Agency of Mr Shade. These matters will be most relevant to an allegation that Mr Shade was practising a fraud on BMW, and that BMW therefore cannot be liable for anything done by Mr Shade in relation to insurance.

Is the Proposed Defence an Embarrassing Pleading under Rule 14.28 UCPR?

68. Counsel for BMW submitted (MFI 2):

“41.   First, as a matter of form, the Proposed FAD is largely incomprehensible. Paragraph 2 has 26 subparagraphs. Paragraph 6 has 39 subparagraphs, not including the subparagraphs beyond the first level.

42.   Second, due to the formatting, it is impossible to decipher which subparagraph or particulars belong to a specific paragraph. There is widespread repetition in particulars of matters pleaded previously in the document, and matters within the particulars which ought to be pleaded as material facts (see examples in paragraphs 6(h) and (hd)).”

69. The proposed Amended Defence is indeed hard to decipher, but not impossible to decipher. The convoluted numbering of paragraphs and subparagraphs has come about because the pleader has attempted to fit the extensive amendments into the numbered paragraphs in the previous version of the Defence. For example, paragraph 2 of the original Defence was a simple non-admission of par 1A of the Amended Statement of Claim, but the new paragraph 2 adds nearly four pages of additional pleading relating to some of the representations.

70. The form of the proposed amended pleadings has come about because of the first part of r 19.5(4) UCPR which says:

“An amended document must retain the existing paragraph numbering, with any additional paragraphs that are inserted after an existing paragraph bearing the number of that paragraph together with the letters ‘A’, ‘B’ and so on, as in these rules.”

71. The pleader could have taken up the requirement in the second half of this subrule, so that instead of using subparagraphs, the additional matters could have been pleaded as additional paragraphs. For example, proposed paragraph 2a could have been pleaded as paragraph 2A and so on. To do so would not make the pleading any shorter, but it would make it more comprehensible.

72. Rule 19.6 UCPR provides that if the court grants leave for the amendment of a document, the court may give such directions as it thinks fit concerning the mode of amendment.

73. Another criticism of the proposed pleading made by counsel for BMW is that it is difficult to see how the “Implied First Agreement Representation” can be implied from the facts contained in the particulars (MFI 2, par 43). This may be so, but it must be recognised that the Implied First Agreement Representation is pleaded in the alternative to the First Agreement Representation in par 2g of the proposed Amended Defence. Any difficulty in implying a representation is a problem for the defendant rather than the plaintiff.

74. Counsel for BMW also submits that there are allegations of knowledge which are not particularised, referring to par 6(ao)(V) (MFI 2, par 44). Counsel also submits that allegations of knowledge are contained in particulars rather than pleaded as material facts, giving reference to par 6(h). While this point is well made, appropriate particulars could be provided in any ultimate version of the Amended Defence, or by way of supply of further particulars. In my view it would be preferable if they were pleaded in the Amended Defence.

75. Counsel for BMW also criticises some of the phrasing in the proposed Amended Defence (MFI 2, pars 45-46). Those are relatively minor matters, which could be corrected or made clearer in any ultimate version of the Amended Defence. It may well be that these criticisms of the proposed pleading lead to a version which is not only clearer, but slightly simpler than the present version.

Conclusion in Relation to Proposed Amended Defence

76. I will grant leave to amend the Defence, but not precisely in the same form as Annexure B to the Notice of Motion filed on 16 June 2022. In my view the new version of the pleading should have each individual allegation pleaded in a numbered paragraph, where the additional paragraphs use paragraph numbers including “A” and “B” as suggested in r 19.5(4) UCPR. Further, the proposed pleading can be re-drafted to take account of matters discussed above in this judgment. Apart from the re-numbering of allegations as paragraphs rather than subparagraphs, the substance of the Amended Defence will probably not differ greatly from Annexure B to the Notice of Motion filed on 16 June 2022.

Consideration of Proposed Cross Claim

77. Counsel for Mr Shade raised several matters in opposing leave being granted to file the Cross Claim.

78. Paragraph 70 of the proposed Cross Claim pleads, in the alternative to the claims in deceit, that Mr Shade made eight pleaded representations. Paragraph 70A pleads that the making of those representations and the conduct of Mr Shade as particularised, was misleading or deceptive or likely to mislead or deceive. Counsel submitted that the actual conduct which was particularised was not conduct which was misleading or deceptive. For example, in relation to the G63 Representation, the first particular was that Mr Shade did not have the G63 available to be sold to Mr Trigas for $180,000. While this may have been a misleading or deceptive representation under the ACL, counsel submitted that not having the G63 available to be sold was not of itself misleading or deceptive, as it was the true position as alleged by Mr Trigas.

77. With respect, I think that this is an overreading of the pleading in par 70A. What par 70A says is that, in the light of the true position (being, for example, that Mr Shade did not have the G63 available to be sold) making a representation that he did have it available to be sold was misleading or deceptive. Such a reading, which I believe accords with common sense, applies to the entirety of the particulars supplied under par 70A.

78. The next criticism made by counsel for Mr Shade was that par 70b pleaded that Mr Shade made the Binding Sale Representation, but there were no particulars provided under par 70A of how this representation was misleading or deceptive. That is so, and it appears to be a clear oversight by the pleader. On revisiting the proposed Amended Defence, those particulars are also missing from that pleading. That lacuna in the proposed Cross Claim and the proposed Amended Defence will have to be cured.

79. The next criticism raised by counsel for Mr Shade concerns par 32 of the proposed Cross Claim. Particular (b) of damage asserts that part of the damage was “the difference between the value of the G63 and the liability Trigas has to the plaintiff under the First Agreement”. Counsel submitted that this head of damage is premised on Mr Trigas actually buying the G63 in the first place, and this did not happen. In my view particular (b) is covering a head of damage which is theoretical rather than real. However, I do note that BMW, in the alternative, seeks relief in relation to the First Agreement in its Amended Statement of Claim. It was therefore prudent for particular (b) to be included in the proposed Cross Claim.

80. The same criticism was raised in relation to particulars (b) and (c) provided under par 74 of the proposed Cross Claim. Counsel submitted that these allegations were inconsistent with the primary allegation that Mr Trigas never intended to buy either car and never did buy either car. Once again, I am of the view that those heads of damage have only been particularised for completeness, depending on the outcome of the claim brought by BMW against Mr Trigas. Whether or not Mr Trigas did intend to buy the G63 or the Gullwing are matters for determination in the plaintiff’s claim.

81. Counsel for Mr Shade also raised the issue of delay on the part of Mr Trigas in bringing forward the proposed Cross Claim. However, counsel acknowledged that there was no actual prejudice that he could point to. Mr Shade has retained a solicitor and counsel. He is clearly available to give instructions and there is no suggestion that there are documents which could have assisted his case which can no longer be found. While it is unsatisfactory that the Cross Claim has been brought forward against Mr Shade many years after the proceedings were commenced, I do not think that this is a discretionary reason for refusing leave to bring the Cross Claim.

82. I propose to grant leave to file the Cross Claim, subject to matters dealt with above.

Costs of the Third Notice of Motion

85. I propose to make orders that Mr Trigas have leave to amend his Defence and to file a Cross Claim, although neither document will be in the precise form annexed to the third Notice of Motion. In relation to the Amended Defence, counsel for Mr Trigas submitted that until the insurance documents were made available, the pleading could not properly set out allegations in relation to the two insurance representations. Accepting that that is so, there is no explanation why the other six representations were not properly pleaded long ago. In relation to the proposed Cross Claim, no explanation has been provided as to why it is being brought so late. The involvement of Mr Shade was known to Mr Trigas from day one. There was no suggestion that any recent discovery of documents, apart from the insurance documents, meant that a cross claim could not have been brought earlier in time.

86. Mr Trigas has come to court seeking an indulgence in relation to amending his Defence and filing a Cross Claim well out of time. In my view the appropriate order is that the defendant should pay the cost of the plaintiff and of Mr Shade of the Notice of Motion filed on 16 June 2022.

Orders

Orders on the Notice of Motion filed on 11 March 2022

87. My orders are:

1. The Notice of Motion filed on 11 March 2022 was dismissed at the hearing on 30 June 2022.

2. Order the defendant to pay the costs of Mr Shade of the Notice of Motion filed on 11 March 2022.

3. Decline to make a lump sum costs order.

Orders on the Notice of Motion filed on 4 April 2022

88. My orders are:

1. Set aside the Notice to Produce dated 28 March 2022 served by the defendant upon the plaintiff.

2. Appoint 26 August 2022 as the return date for a Notice to Produce to be served by the defendant upon the plaintiff, in terms similar to the Notice to Produce dated 28 March 2022.

3. Order that the costs of the Notice of Motion filed on 4 April 2022 be costs in the cause.

Orders on the Notice of Motion filed on 16 June 2022

89. My orders are:

1. Grant leave to the defendant to amend the Defence in a form similar to Annexure B to the Notice of Motion filed on 16 June 2022 subject to the discussion in this judgment of matters requiring amendment or clarification in the new pleading.

2. Grant leave to the defendant to file a Cross Claim in a form similar to Annexure A to the Notice of Motion filed on 16 June 2022, subject to the discussion in this judgment of matters requiring amendment or clarification in the new pleading.

3. Order the defendant to pay the costs of the plaintiff and of Mr Shade of the Notice of Motion filed on 16 June 2022.

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Decision last updated: 22 July 2022