David Richard Hawes v Trevor Laurence Dean

[2012] NSWSC 535

Supreme Court

New South Wales

Medium Neutral Citation:	David Richard Hawes -v- Trevor Laurence Dean [2012] NSWSC 535
Hearing dates:	7 February 2012
Decision date:	07 February 2012
Jurisdiction:	Equity Division - Corporations List
Before:	Hammerschlag J
Decision:	Hearing adjourned. Cross-defendants to pay the cross-claimants' costs thrown away on the indemnity basis, payable forthwith
Catchwords:	PRACTICE AND PROCEDURE - cross-defendants (plaintiffs) seek leave to amend on the morning of the hearing because their legal advisors failed to plead a defence to the cross-claim, of which they were aware - amendment would necessitate an adjournment - matter finely balanced - proceedings adjourned with indemnity costs order
Legislation Cited:	Corporations Act 2001 (Cth)
Category:	Procedural and other rulings
Parties:	David Richard Hawes - First Plaintiff Hawes Investments Pty Limited ACN 070 877 188 - Second Plaintiff Trevor Laurence Dean - First Defendant T & B Dean Investments Pty Limited ACN 070 907 809 - Second Defendant Hawden Property Group Pty Limited ACN 003 528 345 - Third Defendant Hawden Constructions Pty Limited ACN 098 020 814 - Fourth Defendant Gallway Pty Limited ACN 063 430 937 - Fifth Defendant
Representation:	Counsel: G.M. McGrath - First and Second Plaintiffs J.E. Lazarus - First, Second and Fifth Defendants Solicitors: Staunton & Thompson - First and Second Plaintiffs JT Law - First, Second and Fifth Defendants
File Number(s):	2009/290891

Judgment

1. HIS HONOUR: On 16 August 2011 the hearing of these proceedings was fixed to commence on 7 February 2012 with an estimate of three days. The proceedings were commenced in the Corporations List because the first defendant sought leave under s 227(1) of the Corporations Act 2001 (Cth) ("the Act") to bring proceedings on behalf of two corporate entities in which he and the first plaintiff are associated. The proceedings also involve an application for the winding-up of two entities in which they both are interested and in which they are deadlocked. However, the winding-up is of formal significance in that it is being opposed only because cross-claims those entities assert are being prosecuted. Once they are determined, winding-up, it seems, is almost inevitable.

1. One of the entities, Hawden Property Group Pty Ltd ("HPG"), brings a cross-claim against an entity styled Warr Pty Ltd ("Warr"), associated with the first plaintiff. It claims payment alleged to be due under an instrument described as the Warrawee deed, in respect of an alleged indebtedness described in the deed as the net HPG loan, in the amount of $857,869.15 as at 31 October 2005. It is pleaded that certain other cross-defendants have indemnified the cross-claimant against any loss in respect of the net HPG loan ("the Warr cross-claim").

1. The Warr cross-claim is pleaded in paras 22 to 30 of the Further Amended Statement of Cross-Claim, which was filed on 23 November 2011.

1. This morning counsel for the plaintiffs opened the principal case which is for rectification of a Settlement Deed executed by certain of the parties on or about 17 November 2005. Thereafter, counsel for the defendants opened on the cross-claims.

1. In answer to the Warr cross-claim, the cross-defendants pleaded as follows in para 3 of their defence to the Further Amended Statement of Cross-Claim, which they filed on 18 January 2012:

The cross-defendants deny paragraph 23 of the statement of cross-claim, save that it is an inaccurate paraphrase of clause 1 of schedule 6 of the Warrawee deed, rely on the provisions of the Warrawee deed and say that the obligation owed by Warr was a limited recourse obligation and not unconditional indebtedness

1. As one might have expected, the cross-claimants' solicitors sought further particulars of this averment in a letter dated 13 September 2010 in which they asked:

In relation to paragraph 23 of your clients' defence, please specify all facts, matters and circumstances upon which it is said that the obligation owed by Warr is a limited recourse obligation and not unconditional indebtedness.

1. An entirely unsatisfactory response was forthcoming in a letter from the cross-defendants' solicitors on 21 September 2010. They responded:

The cross-defendants rely on the provisions of the Warrawee Deed

1. In these circumstances the cross-claimants were undoubtedly justified in considering that the only issues which were being litigated were ones which related to the provisions of the Warrawee Deed (and presumably ones of construction).

1. However, after the cross-claimants had opened, the cross-defendants sought to amend by pleading that the indebtedness of Warr was entirely discharged by agreement by the parties on 28 March 2007. They provided as particulars the following:

Minutes of meeting of directors of Hawden Property Group Limited on 28 March 2007 signed by Mr Trevor Lawrence Dean;

Journal entries made by Rhodes Docherty accountants identified in emails to David Richard Hawes dated 9 August 2010; and

Accounts of Hawden Property Group Pty Limited for the year ended 30 June 2007 adopted by the directors of Hawden Property Group Pty Limited and signed by Mr Dean.

1. Initially, an entirely unsatisfactory explanation for why this had not been pleaded earlier was offered from the bar table. It concerned the timetable which had been ordered for the service of pleadings. I was, however, subsequently informed by counsel for the cross-defendants that the reason for the lateness was that the cross-defendants' legal advisers, whilst they were aware, or should have been aware, that such a defence was available, simply had not pleaded it. I accept this, albeit that no affidavit evidence establishing it was provided (despite an invitation from the Court). It was not put on behalf of the cross-claimants that I should not accept it.

1. For their part, in opposition to the amendment, the cross-claimants relied on an affidavit of their solicitor, Mr Tomaras, sworn 6 February 2012. Counsel for the cross-claimants put, and I accept, that if the amendment is allowed, further enquiry, as identified in the affidavit will be necessitated and that the proceedings must be adjourned. This is undoubtedly so, not least of all because evidence by the same persons may well span and be relevant to more than one of the various claims and cross-claims.

1. The matter is finely balanced and it would have been open to the Court to exercise its discretion to refuse the amendment. However, given the substantial amount involved in the claim the subject of the amendment and that I propose to make the costs orders described below, I have concluded that justice dictates that the leave to amend should be given and that the hearing should be vacated and set down later in the year.

1. I give leave to the cross-defendants to amend their defence to the cross-claim so as to plead the defence referred to above. They are to pay the cross-claimants' costs thrown away by the adjournment on the indemnity basis, which costs will be payable forthwith.

1. Subsequent to pronouncing these orders the parties agreed that the costs thrown away should be provisionally assessed in the amount of $25,000.

1. The Court ordered that the amount be paid within seven days.

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Decision last updated: 22 May 2012