Dlakic v MLC Limited

[2018] NSWSC 1755

Supreme Court

New South Wales

Medium Neutral Citation:	Dlakic v MLC Limited [2018] NSWSC 1755
Hearing dates:	15 November 2018
Decision date:	15 November 2018
Jurisdiction:	Common Law
Before:	Adamson J
Decision:	See paragraph [23].
Catchwords:	PRACTICE AND PROCEDURE – whether leave ought be granted to amend defence – allegation withdrawn in absence of substantiation – substantiation obtained – allegation sought to be reinstated in amended pleading
Legislation Cited:	Civil Procedure Act 2005 (NSW), Pt 6, ss 56, 58 Legal Profession Uniform Law Application Act 2014 (NSW), Sch 2, cll 2, 4
Category:	Procedural and other rulings
Parties:	Amil Dlakic (Plaintiff) MLC Limited (Defendant)
Representation:	Counsel: Plaintiff in Person HJA Neal (Defendant)   Solicitors: Norton Rose Fulbright Australia (Defendant)
File Number(s):	2016/247422

Judgment – EX TEMPORE

Introduction

1. By notice of motion filed on 13 August 2018, MLC Limited (the defendant) seeks leave to file a further amended defence. Amil Dlakic (the plaintiff) opposes the grant of leave. In order to address the motion it is necessary to set out, in some detail, the progress of the proceedings and the background to the amendment.

Background to the application

2. By statement of claim filed on 14 August 2016, the plaintiff claims benefits under an insurance policy issued to him by the defendant. The original defence, which was filed on 10 January 2017, relevantly alleged, in paragraph 3(c), that the policy was cancelled for non-payment of premiums on or about 22 May 2014. This allegation was based on the defendant’s computer records. Subsequently, in accordance with directions made by the Registrar, the defendant filed an amended defence on 29 November 2017 in which paragraph 3(c) was deleted. The effect of the deletion was to indicate to the Court and the plaintiff that the defendant no longer alleged that the policy was cancelled for non-payment of premiums on or about 22 May 2014. The reason for the deletion was that the defendant was unable to locate the correspondence it had sent to the plaintiff notifying him of the cancellation.

3. The proceedings have come before the Court for directions on several occasions since their commencement. On more than one occasion, the defendant required an extension for the filing of its evidence. Ultimately, on 7 June 2018, the Registrar directed the defendant to serve any further evidence by way of affidavit by 25 June 2018. The Registrar also made the following direction (in a form otherwise known as a guillotine order):

"The defendant is unable to rely on any evidence served after 25 June 2018 without leave of the Court."

4. At the directions hearing before the Registrar on 6 July 2018 the matter was set down for final hearing on 8 April 2019 with an estimate of three weeks. On that day, the defendant read an affidavit sworn on 28 June 2018 by its solicitor, Ganga Narayanan, dealing with the procedural history of the proceedings. In paragraph [51] of that affidavit, Ms Narayanan flagged a proposed amendment to the amended defence to reinstate the earlier pleading that the defendant validly cancelled the policy due to non-payment of the premiums.

5. The defendant has adduced evidence in support of its notice of motion to explain the proposed amendment, the effect of which was as follows. Prior to the filing of the amended defence on 29 November 2017, the defendant decided not to press the allegation that it had cancelled the policy because it had not been able to locate the documents which comprised the required notices which were said to have been sent to the plaintiff. However, after the amended defence was filed, Ms Narayanan received further documents from one of the defendant's senior legal counsel, Philip Robertson (who I take to be an in-house lawyer) which comprised the correspondence by which the plaintiff was notified of the cancellation of his policy. Once those documents were located, the defendant reconsidered its decision to withdraw the allegation that it had a right to cancel the policy on the basis of non-payment of premiums and decided to seek leave to file a further amended defence to reinstate the allegation.

6. Notwithstanding the receipt of the relevant documents in about December 2017, it was a considerable time before the defendant notified either the plaintiff or the Court of the potential amendment. As referred to above, it was first foreshadowed by the affidavit of Ms Narayanan of 28 June 2018. The application was not made until the notice of motion for leave to amend was filed on 13 August 2018.

7. The defendant has explained a significant proportion of the delay. What remains unexplained is the delay from February 2018 (making due allowance for the court vacation from mid-December until the end of January) until 28 June 2018. Mr Neal, who appeared on behalf of the defendant, accepted that there was no satisfactory explanation for that period of time.

8. Mr Neal submitted that, notwithstanding the delay, the interests of justice and the dictates of justice, which are referred to specifically in Part 6 of the Civil Procedure Act2005 (NSW) (the Act) and in particular s 58, favoured the grant of leave to amend.

9. Mr Dlakic, who appears on his own behalf, opposed leave being granted to file a further amended defence. He also opposed leave being granted to the defendant to be permitted to rely on Mr Lee's affidavit. As referred to above, such leave is required by reason of the direction made by Registrar Kenna on 7 June 2018. Mr Dlakic submitted that the defendant and its solicitors have adopted a cavalier attitude to the proceedings and have persistently breached the directions of the court. He cited a recent instance whereby a subpoena was issued to Mr Scarf at the National Australia Bank but the plaintiff was not notified that a subpoena was to be issued. I note that when the defendant's solicitor became aware of the error the plaintiff was notified and the matter stood over in order to ensure that the plaintiff could have access to the subpoenaed documents.

Consideration

10. I am obliged by s 56 of the Act to take account of the fact that the overriding purpose of the Act and of rules of court in their application to civil proceedings is to facilitate the just, quick and cheap resolution of the real issues in the proceedings. I am satisfied that the proposed amendment gives rise to a real issue in the proceedings: namely, whether the defendant was entitled to cancel the insurance policy in favour of the plaintiff by reason of non-payment of premiums.

11. I am satisfied that it would facilitate the just resolution of the real issues in the proceedings to allow the amendment. The questions then remaining are whether it would facilitate the quick and cheap resolution of the real issues in the proceedings.

12. As referred to above, a trial date of 8 April 2019 has been allocated, with an estimate of three weeks. Mr Neal has assured me that the evidence of Bryan Lee (which relevantly annexes the correspondence addressed to the plaintiff regarding the cancellation), if allowed to be adduced, will not cause the trial to go beyond three weeks. Mr Dlakic submitted that it is a matter of inevitability that if Mr Lee's evidence is permitted to be adduced the trial will go beyond three weeks. Mr Dlakic submitted that it would be necessary for the defendant to call additional evidence beyond that of Mr Lee in order to establish the matters it would need to prove the additional matter, and he has postulated that the defendant would at least need to call Brett Scarf. Mr Neal has confirmed that the defendant has no intention of calling Mr Scarf as a witness.

13. Given that the trial date is some time hence, there would be, in my view, ample time for the plaintiff to respond to Mr Lee's evidence without jeopardising the trial date. As to the potential expansion of the trial, given that it seems to me that the defendant relies on business records and correspondence which it says it sent to the plaintiff, it would not appear to me that there is any real basis for the assertion that the trial would go beyond three weeks. Accordingly, I do not consider that the quick and cheap resolution of the real issues would be compromised by granting leave to amend the defence.

14. There are several matters in favour of the grant of the amendment. The case is worth several million dollars. The amendments proposed are substantive and, if made out, could operate as a complete defence to the claim. The additional evidence in support of the amendments, namely Mr Lee's affidavit, has already been served and is relatively confined. The plaintiff has not identified any particular prejudice by reason of the delay. This is to be contrasted with the potential prejudice to the defendant if leave is refused.

15. Whilst there is some force in the plaintiff's submissions about the delay in the matter generally, this is not of itself a reason to refuse the amendment. This Court is concerned with the interests of justice and not to punish parties for defaults, particularly where they have been if not wholly, at least partially, explained.

16. In the present case it appears that the defendant's solicitor's decision, on instructions, to withdraw the allegation in the amended defence was a proper one having regard to the apparent lack of documentation. Clause 2 of Sch 2 to the Legal Profession Uniform Law Application Act2014 (NSW) prohibits solicitors from providing legal services on a defence unless the solicitor reasonably believes on the basis of provable facts and a reasonably arguable view of the law that the defence has reasonable prospects of success. Solicitors are required to certify to that effect in pleadings filed in the Court: cl 4 of Sch 2 of the Legal Profession Uniform Law Application Act. In these circumstances, it was appropriate for the defendant's solicitor to withdraw the allegation. However, it would not be in the interests of justice, when evidence was forthcoming, as in the present case, to refuse the party leave to reinstate an allegation.

17. In these circumstances, I am satisfied that it is in the interests of justice to grant leave to the defendant to file a further amended defence in the form of pages 111 and following of exhibit GVN-1 to the affidavit of Ganga Narayanan sworn 17 August 2018.

18. There is the further question of whether leave should be granted pursuant to the direction made by Registrar Kenna on 7 June 2018. For the reasons I have given above for allowing the amendment, I am satisfied that it is appropriate that leave be granted to the defendant to rely on the affidavit sworn by Bryan Lee on 20 September 2018.

Costs

19. Mr Neal accepted that it would normally be the case that an amending party seeking an indulgence of the Court would be required to pay the other party's costs thrown away by reason of the amendment. However, he submitted that, as Mr Dlakic appears for himself, it could not necessarily be envisaged that there were any such costs thrown away. In the circumstances I consider that that question is for another day and that it is appropriate that I make an order that the defendant pay the plaintiff's costs thrown away by reason of the amendment.

20. Mr Neal sought an order that the plaintiff pay the defendant's costs of the motion filed on 13 August 2018. Mr Neal submitted that the plaintiff ought to have consented to the proposed amendment and thereby obviated the need for the defendant to incur the costs of filing the notice of motion and of adducing substantial evidence as well as the costs of the hearing today.

21. As I understood Mr Dlakic’s submissions, he contended that it was perfectly appropriate for him to oppose the amendment given the defendant's conduct to date.

22. I accept Mr Neal's submissions. It is very important that parties in proceedings take a cooperative approach to amendments to pleadings in circumstances where there is no identifiable prejudice to the opposing party. In the present circumstances, where the trial date is a considerable way off and the substance of the amendment was contained in the original defence filed, I consider it to have been unreasonable for the plaintiff not to have consented to the amendment sought to be made to the defence. I am satisfied that it is appropriate to make an order that the plaintiff pay the defendant's costs of the motion filed on 13 August 2018.

Orders

23. For the reasons given above, I make the following orders:

1. Grant leave to the defendant to file and serve a further amended defence in the form of pages 111 and following of exhibit GVN-1 to the affidavit sworn on 17 August 2018 by Ganga Narayanan within seven days.

2. Grant leave to the defendant to rely at the hearing on the affidavit sworn 20 September 2018 by Bryan Lee.

3. Order the defendant to pay the plaintiff's costs thrown away by reason of the amendment.

4. Order the plaintiff to pay the defendant's costs of the motion filed on 13 August 2018.

5. Direct the plaintiff to file and serve any further evidence in response to the service of Mr Lee's affidavit on or before 24 January 2019.

6. Confirm the hearing date of 8 April 2019.

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Decision last updated: 16 November 2018