Farrell v Gray

[2010] NSWSC 784

CITATION:	Farrell v Gray [2010] NSWSC 784
HEARING DATE(S):	16 June 2020
JUDGMENT DATE :	16 July 2010
JUDGMENT OF:	Smart AJ
DECISION:	In addition to orders made on 30 November 2009 and 16 June 2010: 1. Dismiss that part of Statement of Claim seeking relief under s 37A of the Conveyancing Act 1919 2. No order as to costs of either party of the s 37A part of the proceedings 3. Dismiss the application of 3 May 2010 of the plaintiff (seeking to amend Statement of Claim after delivery of substantive judgment) 4. Order the plaintiff to pay one-third of the costs of the defendants of the applicaiton of 3 May 2010, such costs to be set off against those payable by the defendants to the plaintiff 5. Order the first defendant to pay the costs of the contempt motion against him. Leave to first defendant to move to discharge costs order within 14 days and to argue the question of costs.
CATCHWORDS:	Proposed amendments of Statement of Claim after delivery of judgment, problems as to relief sought being raised during hearing - too late to allow further amendments - principle of finality prevailing - registered mortgages entered into without notice of plaintiff's rights - operation of s 37A of Conveyancing Act 1919 - imposition of terms including costs orders not sufficient to compensate for prejudice to defendants
LEGISLATION CITED:	Civil Procedure Act 2005 Conveyancing Act 1919 Crimes (Sentencing Procedure) Act 1999 Legal Practice Act 1996 (No 35) (Vic)
CATEGORY:	Principal judgment
CASES CITED:	AON Risk Services Australia Ltd v Australian National University [2009] HCA 27; 258 ALR 14 De L v Director General, NSW Department of Community Service (No 2) (1997) 190 CLR 207 Equuscorp Pty Ltd v Wilmoth Field Warne [2007] VSCA 280 Kavia Holdings Pty Ltd v Bevillesta Pty Ltd (No 2) [2006] NSWSC 1160 Ketteman v Hansel Properties Ltd [1987] AC 189
PARTIES:	Gavin Edward Farrell (Plaintiff) Andrew Richard Hewell Gray (First Defendant) Melanie Maree Gray (Second Defendant)
FILE NUMBER(S):	SC 2004/185552
COUNSEL:	N Obrart (Plaintiff)
SOLICITORS:	Kenny Spring (Plaintiff) Stuart Cork (Defendants) (3 February - 16 June 2010)

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

Smart AJ

Friday 16 July 2010

2004/185552

Gavin Edward Farrell v Andrew Richard Hewell Gray and
Melanie Maree Gray (née Eldridge)

JUDGMENT

1 This judgment should be read with my judgments of 26 September 2008, 13 November 2009, 30 November 2009 and 16 June 2010.

2 By motion of 3 May 2010 the plaintiff sought to further amend his Statement of Claim after the substantive judgment had been delivered on 30 November 2009. The document was headed “Third Amended Statement of Claim”.

3 On 26 September 2008 I determined that Mr Gray was indebted to Mr Farrell in the sum of $62,754.00, being the balance due consequent upon a partnership between them and its dissolution. The questions of interest and costs remained. On 30 November 2009 (paragraph 39 of the judgment) I allowed compensation at the rate of 9% per annum from 1 May 2005 to the date of that judgment amounting to $24,891.94. This resulted in entering a judgment for the plaintiff for $87,465.94. An order was made that Mr Gray pay the costs of Mr Farrell of the partnership proceedings (excluding those covered by previous order) as from 11 October 2004 and those subsequent to 4 February 2008 on an indemnity basis.

4 An Amended Statement of Claim, filed 4 October 2004, sought partnership relief and an order that the transfer of Mr Gray’s undivided one-half share interest in the fee simple in a Bathurst property to be set aside pursuant to s 37A of the Conveyancing Act. On 30 November 2009 I declined to grant the plaintiff any relief in respect of his claim under s 37A. Orders 4 and 5 of 30 November 2009 (pp 28 – 29) read:

“4. Adjudge that Andrew Richard Hewell Gray is guilty of civil contempt of Court in that he failed to comply with the order of the Court made on 10 February 2006 by not filing and serving on the plaintiff by 10 April 2006:


(i) A detailed account verified by Affidavit of all of the dealings and transactions of the partnership the subject of these proceedings and of the partners and each of them in relation thereto from commencement of the partnership on 20 May 2001 up to and including August 2003. Such account shall specify in respect of each payment or receipt the date and amount thereof, to whom the account was paid and the purpose or account for or to which the amount was paid or received.

(ii) A detailed statement of what is claimed to be:

(ii.i) The assets and liabilities of the said partnership as at August 2003; and

(ii.ii) The respective interests of the partners therein having regard to the said liabilities and to all other relevant matters and specifying each item clearly and in respect of each item specifying its nature and its value or amount.

5. Dismiss the motion of 26 September 2008 seeking to adjudge Melanie Maree Gray guilty of contempt. No order as to the costs of such motion.”

5 The hearing of the motion for contempt against Mr Gray was adjourned to 3 February 2010 to deal with the question of the penalty to be imposed on Mr Gray and the costs of the contempt motion against him.

6 On 3 February 2010 counsel for the plaintiff foreshadowed that he wished to amend his Statement of Claim. Directions were given accordingly. The proceedings were adjourned to 7 April 2010 to deal with the question of sentencing and the application to amend the Statement of Claim. The matter did not proceed on 7 April 2010 for two reasons. Mr Gray made a mistake as to the date to which the hearing had been adjourned and the plaintiff, because of illness, had been unable to give instructions as to the filing of his motion.

7 The two matters were listed for hearing on 27 May 2010. That date was changed so that they were listed for hearing on 16 June 2010. On that day Mr Gray was ordered to serve 250 hours community service. On 16 June 2010 counsel for the plaintiff proceeded with his motion of 3 May 2010. Mr Gray’s solicitor addressed on his behalf. The solicitor also appeared on Mrs Gray’s behalf. He had not fully considered her position and sought the opportunity to make written submissions. I directed:

“a) that the proceedings be adjourned to enable Mrs Gray to make written submissions why the amendments sought by the plaintiff’s Motion of 3 May 2010 should not be made (allowed) and that the matter thereafter proceed on written submissions;
b) any written submissions to be made by Mrs Gray be delivered by her on or before 25 June 2010 to the solicitors for the plaintiff with a copy to my Associate;
c) any written submissions to be made by the plaintiff in response to be delivered to the solicitors for Mrs Gray on or before 2 July 2010 with a copy to my Associate;
d) any written submissions to be made by Mrs Gray in reply be delivered by her to the solicitors for the plaintiff by 9 July 2010 with a copy to my Associate;
e) written submissions may be delivered by fax;
f) costs of today of the motion of 3 May 2010 be reserved. (Note that the hearing of the motion started about 10.30 am after I had dealt with the sentencing for contempt about 10 am).

It is anticipated that judgment will be delivered after receipt of the written submissions on whether the amendments sought will be allowed and, if necessary, a further hearing date appointed.”

8 I have now received written submissions from the solicitor for the defendants and counsel for the plaintiff.

9 In support of the motion of 3 May 2010 the plaintiff relied upon the affidavit of AV Edwards of 29 April 2010. That seeks to explain the delay that occurred after 3 February 2010. I accept the explanation proffered and come to the substance of the motion.

10 The plaintiff sought this further relief in his proposed Third Amended Statement of Claim:

“8. A Declaration that the Second Defendant is liable to the Plaintiff for the half of the value of the Property without taking into account the mortgages of the Property on 22 December 2005 and 8 December 2007.
9. In the alternative, a Declaration that the second Defendant is liable to the Plaintiff for half of the amounts for which the Property was mortgaged on 22 December 2005 and 8 December 2007 being half of $163000.00 being $815000.00 plus half of the value of the Property or such other amount as this Honourable Court deems fit.
10. In the alternative, a Declaration that the Second Defendant is liable to the Plaintiff in respect of half of the value of the Property.
11. A Declaration that the Plaintiff has an equitable charge of the Property to secure payment to him of the amount referred to in order 8 or 9 or 10 above.
12. An order that the Second Defendant execute an unregistered mortgage in favour of the Plaintiff to secure the Plaintiff’s interest in the Property.
13. Costs jointly and severally against the First and Second Defendants.”

11 The plaintiff added the following allegations to his proposed Third Amended Statement of Claim:

“16. At all material times from May 2003 the Plaintiff was a creditor of the First Defendant pursuant to the Partnership.

17. The Transfer was effected by the First Defendant with the intent to defraud the Plaintiff as a creditor of the First Defendant pursuant to the Partnership

18. At all material times the Second Defendant had notice of the First Defendant’s intent to defraud the Plaintiff.
Particulars
The Second Defendant was at all material times the First Defendant’s wife.
The Second Defendant at all material times cohabited with the First Defendant.
The Second Defendant at all material times was aware of the Partnership.
The Transfer to the Second Defendant was not for valuable consideration.


19. As at 17 October 2003 the Property was mortgaged to Australia and New Zealand Banking Group Ltd for the sum of $102000.00 (‘Mortgage’).

20. On 22 December 2005 the Second Defendant refinanced the Property and further mortgaged the Property to the sum of $220 000.00 to Perpetual Trustee Company Ltd (‘First Further Mortgage’) adding an additional $118000.00 to the Mortgage (‘First additional Mortgage amount’).

21. On 8 March 2007 the Second Defendant refinanced the Property and further mortgaged the Property to the sum of $265,000.00 (‘Second Further Mortgage’) adding an additional $45,000.00 to the mortgage amount (‘Second Additional Mortgage Amount’).

22. The First Further Mortgage and Second Further Mortgage constituted alienations of property within the meaning of s 37A Conveyancing Act 1919.

23. The First Further Mortgage was effected with the intent to defraud the Plaintiff as a creditor of the First Defendant and/or the Second Defendant.
Particulars
The First Further Mortgage was effected during the course of these proceedings to which the Second Defendant was a party at all material times.

24. The Second Further Mortgage was effected with the intent to defraud the Plaintiff as a creditor of the First Defendant and/or Second Defendant.
Particulars
The Second Further Mortgage was effected during the course of these proceedings to which the Second Defendant was a party at all material times.


25. In the premises the Transfer and the First and Second Further Mortgages are voidable at the instance of this Honourable Court.

26. In the premises this Honourable Court would grant remedies sufficient to avoid the Transfer and the First and Second Further Mortgages to the extent that they have the capacity to frustrate the Plaintiff’s entitlement to damages interest and costs in these proceedings and to avoid the frustration of the Orders of this Honourable Court.”

12 Section 56 of the Civil Procedure Act states that the overriding purpose of that Act and of rules of Court is to facilitate the just, quick and cheap resolution of the real issues. Section 61 provides that at any stage of proceedings the court may order that leave to granted to a party to amend any document in the proceedings. See also s 64(2) and s 58.

13 Counsel for the plaintiff relied on AON Risk Services Australia Ltd v Australian National University [2009] HCA 27; 258 ALR 14. In AON the proceedings were commenced in December 2004 by ANU against three insurers. It claimed an indemnity for losses it had suffered by reason of the destruction of and damage to buildings and their contents at its Mount Stromlo complex by fire. ANU’s insurance broker, AON, was joined to the proceedings in June 2005. The claim against AON was limited to its failure to arrange the renewal of insurance over some of the property (allegedly uninsured). ANU reached a settlement with the insurers for sums which did not reflect the full replacement value of the property.

14 ANU sought an adjournment of the trial and foreshadowed an application for leave to amend its claim to allege a substantially different case. It alleged that under a different contract for services AON had been obliged to ascertain and declare correct values to the insurers and provide certain advices to ANU regarding insurance. Leave was granted to ANU to make substantial amendments to its claim.

15 Rule 501(a) of the Court Procedures Rules 2006 (ACT) requires that all necessary amendments of a document must be made for the purpose of deciding the real issues in the proceedings, that is those raised, perhaps un-clearly, in the pleadings at the time of the application for leave to amend and may extend beyond the pleadings. To be regarded as a real issue and for amendment to therefore be necessary, the relevant dispute or controversy must exist at the time of the application. Amendments raising entirely new issues fall to be considered under the general discretion given by r 502 read with the objectives of rule 21.

16 Rule 21 provides that Chapter 2 and the other provisions of the rules are to facilitate the just resolution of the real issues in civil proceedings to achieve

(a) the just resolution of the real issues; and
(b) the timely disposal of the proceedings and all other proceedings in the court, at a cost affordable by the respective parties.

The purposes stated in r 21 reflect the principles of case management.

17 The judgment of the five Justices quoted with evident approval the observations of Lord Griffiths in Ketteman v Hansel Properties Ltd [1987] AC 189 at 220 that justice cannot always be measured in money and that a judge is entitled to weigh in the balance the strain the litigation imposes upon litigants.

18 The five Justice stated at [102]:

“The objectives stated in r 21 do not require that every application for amendment should be refused because it involves the waste of some costs and some degree of delay, as it inevitably will. Factors such as the nature and importance of the amendment to the party applying cannot be overlooked. Whilst r 21 assumes some ill-effects will flow from the fact of a delay, that will not prevent the parties dealing with its particular effects in their case in more detail. It is the extent of the delay and the costs associated with it, together with the prejudice which might reasonably be assumed to follow and that which is shown, which are to be weighed against the grant of permission to a party to alter its case. Much may depend upon the point the litigation has reached relative to a trial when the application to amend is made. There may be cases where it may properly be concluded that a party has had sufficient opportunity to plead their case and that it is too late for a further amendment, having regard to the other party and other litigants awaiting trial dates. Rule 21 makes it plain that the extent and the effect of delay and costs are to be regarded as important considerations in the exercise of the court's discretion. Invariably the exercise of that discretion will require an explanation to be given where there is delay in applying for amendment.”

AON dealt with the Rules in the ACT Supreme Court. Sections 56, 58 and 64 of the Civil Procedure Act 2005 govern the position in New South Wales.

19 The plaintiff relied heavily upon the decision of the Victorian Court of Appeal in Equuscorp Pty Ltd v Wilmoth Field Warne [2007] VSCA 280. The trial judge granted applications by Equus to reopen its case after the hearing was completed and leave to amend its pleadings (both its claim and its defence to Wilmoth Field Warne’s amended counterclaim) to contend that the agreement was void under s 102 of the Legal Practice Act 1996 (No 35) (Vic) because:

“… the points were arguable and they turned upon questions of statutory construction without any need for further evidence, and because, if successful they would have profound effect on the result.”

At [23] the joint judgment stated:

“A party will normally be given leave to make amendments to pleadings necessary to enable the real questions in controversy between the parties to be determined, provided that any consequential prejudice to the other party can be compensated by the imposition of terms, such as an adjournment or costs orders.”

At [24] the joint judgment further stated:

“Although leave will generally be given to a party to amend pleadings where it is necessary in the interests of justice …”

It was pointed out that the facts were unusual in that Equus did not seek leave to amend its pleadings until after two hearings had concluded and a judgment on preliminary issues had been handed down. The late stage at which the application was made was troubling.

20 Reference was made to the judgment of five Justices in De L v Director General, NSW Department of Community Service (No 2) (1997) 190 CLR 207 at 215 where it was held that the High Court may reopen its judgment or orders:

“… if it is convinced that in its earlier consideration of the point it has proceeded ‘on a misapprehension as to the facts or the law’, where ‘there is some matter calling for review’ or where ‘the interests of justice so require’. … By such expressions of the power to reopen final orders courts seek to recognise competing objectives of the law. On the one hand, there is the principle of finality of litigation … On the other hand, courts recognise that accidents and oversights can sometimes occur which, unrepaired, will occasion an injustice.”

At 223 the five Justices continued:

“It is one thing to permit reopening of the orders to allow consideration of a matter accidentally overlooked so that it may be taken into account. It is another to provide relief where the party seeking it has, by its own confession, not done all that might have been done to raise the point when it was timely and appropriate to do so.”

The High Court occupies a unique position at the top of the Australian judicial system.

21 In Equus at [27] the Victorian Court of Appeal thought it was necessary to give considerable weight to Equus’ application being made at a very late stage of the proceedings. The Court of Appeal re-iterated that the trial judge was required to consider the competing objectives of promoting finality in the litigation and promoting the interests of justice.

22 I am required to consider, in determining whether the interests of justice require Mr Farrell to be permitted to amend his Statement of Claim and whether the prejudice to the defendants could be compensated by the imposition of terms including making appropriate costs orders (Equus at [29]). On the view I take this may involve the plaintiff in re-opening his case.

23 The plaintiff also relied on Kavia Holdings Pty Ltd v Bevillesta Pty Ltd (No 2) [2006] NSWSC 1160 (Palmer J). That judge rejected the submission that the plaintiff by seeking further declarations was seeking to reopen the judgment, holding that the amendments did not seek a result different from the decision already made, but sought to supplement and clarify the terms of the declaration as originally sought, which the judge had indicated he would be prepared to make if it had practical utility. The Judge held that the amendments sought additional declarations which would give such utility to the declaration already sought. The judge, after noting that judgment in the proceedings had not yet been entered, continued at [22]:

“No final orders have been made. Formulation of the draft orders has revealed the real issue underlying the dispute between the parties. In my opinion, in the interests of finality and expediency, the real issue should be resolved in these proceedings and leave to amend should be given.”

24 The Court has power after judgment is delivered to allow further amendments to the pleadings. The question that usually arises is whether, having regard to particular facts, it should do so. I regard Kavia Holdings as a different case on the facts.

25 The claim under s 37A of the Conveyancing Act came before the Court for hearing on 11 November 2008. The defendants were represented on that occasion. The plaintiff sought a declaration as against Mr and Mrs Gray that the transfer of Mr Gray’s half interest in a Bathurst property on 30 October 2003 was an avoidable transfer pursuant to s 37A (T 28 of 11 November 2008). At T 30 Mr Farrell submitted that the declaration sought should be made first and that the plaintiff would then be in a position to approach the current mortgagee and to ascertain if some consensual arrangement could be arrived at. If no consensual arrangement could be reached with the Mortgagee, consideration would have to be given to whether such mortgagee should be joined.

26 At T 31 it was pointed out that in paragraph 6 of the Amended Statement of Claim the plaintiff sought an order setting aside the transfer. The plaintiff accepted that would have to be reframed and a declaration sought. At T 34 counsel for Mr Farrell stated:

“… we accept the position that the interests of GEL as first registered mortgagee could not be prejudiced by any order. We could not seek any order that prejudices them, subject to any evidence we can muster as to their knowledge, which we don’t have at this point.”

As to the question of the utility of a declaration, counsel for the plaintiff responded:

“That would mean that there has been a refinance in terms opposed to an order of the Court. Thereby that potentially contemptuous act would put out of the plaintiff’s reach any capacity to satisfy a judgment. It cannot be … that by the contempt the second defendant or possible contempt that the first defendant has escaped any consequences of his actions and, in fact, the consequences of the judgment. If this transfer is not undone … for reasons of this mortgage or this refinance, the position is that a refinancing in contempt of the Court has totally frustrated the Court’s process and the the plaintiff’s capacity to execute its judgment.”

27 Section 37A(3) of the Conveyancing Act provides that s 37A does not extend to any estate or interest in property alienated to a purchaser in good faith not having, at the time of the alienation, notice of intent to defraud creditors. Under s 7 purchaser includes “mortgagee”. It was not suggested that the current mortgagee had not advanced the moneys stated in the mortgage, nor that any of the mortgages since the transfer of 30 October 2003 had not done so in good faith. It was not suggested that the current mortgagee or any previous mortgagee had at the time of the mortgage notice of the intent of Mr Gray to defraud creditors.

28 On 11 November 2008 I granted the plaintiff leave to amend the relief sought (T 39) but I did not give the plaintiff leave to join fresh parties. The plaintiff was to consider whether it sought to amend more widely. There were problems with a subpoena that had been issued on behalf of the plaintiff addressed to the former solicitors for the defendants and payment of the expenses. The plaintiff anticipated that it would want to use some of the documents held by the former solicitors on the contempt motion against her.

29 I will not narrate the course of events from 11 November 2008 to 13 November 2009. As noted in paragraph 6 of my Reasons of 30 November 2009, the s 37A application was part-heard at the end of the hearing on 11 November 2008. Neither of the defendants was present nor represented when the hearing of the s 37A application resumed on 13 November 2009, so that the hearing proceeded ex parte. On that latter date I also heard the contempt motions.

30 In the judgment of 30 November 2009 the claim of the plaintiff under s 37A of the Conveyancing Act is discussed in paragraphs 40 to 67. In paragraph 44 I traced the mortgage history of a Bathurst property.

31 Apart from the valuation report of Ralph Toyer and Associates as at 7 November 2008, the valuation estimates were approximations and not such as could be acted upon. They gave but a broad outline of value sufficient to show that when Mr Gray executed a transfer of his half interest in a Bathurst property he was dealing with an asset of value and similarly that when the mortgages were executed that property had value. It appears that the moneys borrowed were used to renovate and extend that property. I do not know whether the valuation of $360,000.00 as at 7 November 2008 is still current, nor what the current registered mortgagee would prefer. I have not seen the terms of that mortgage.

32 During the hearing of the s 37A application, the Court raised with counsel for the plaintiff whether there was any utility in making declarations as to events that had taken place in late October 2003 involving the transfer of Mr Gray’s interest in a Bathurst property to his wife in view of the subsequent registered mortgages. Neither the current registered mortgagee nor any of the previous registered mortgagees had been joined as a party, nor was any application made to join any of them. There appeared to be considerable difficulties in respect of these registered mortgages, particularly where the mortgagee had been paid out and the mortgages discharged. Fresh mortgages had been given. It is too late to re-order events.

33 I was not prepared to make a declaration as between the plaintiff and the defendants and then adjourn these proceedings while the plaintiff entered into negotiations with one or more of the current or previous registered mortgagees, or contemplate proceedings between the plaintiff, the defendants and one or more of the registered mortgagees or contemplate a separate proceedings between the plaintiff and one or more of the current or previous registered mortgagees. It was not suggested that the plaintiff was able to adduce admissible evidence that could lead to any consensual arrangement. I was given to understand that the plaintiff did not wish to join any mortgagee because it was thought that the plaintiff’s position would be stronger if he first had a declaration as between himself and the defendants and it was desired to avoid any costs liability to a mortgagee if proceedings against that mortgagee were unsuccessful. Multiple proceedings involve heavy costs burdens.

34 The plaintiff submitted that leave to make the amendments sought should be given for these reasons:

a) The amendments do not require any new evidence.
I do not agree that no new evidence would be required. Valuation evidence would be required at some stage. Further, the plaintiff in paragraph 25 of the proposed amendments alleges that the mortgage of 22 December 2005 between Mrs Gray and Perpetual Trustee Company Ltd for $220,000 and the mortgage of 8 March 2007 between Mrs Gray and GLE Custodians Pty Ltd for $265,000 are “voidable at the instance of this Honourable Court”. In paragraph 26 it is stated that the Court would grant remedies sufficient to avoid the transfer and these two mortgages to the extent that they have the capacity to frustrate the plaintiff’s entitlement to damages interest and costs in these proceedings and to avoid the frustration of the Court’s orders.
The Court would not and could not destroy the protection given by s 37A(3) of the Conveyancing Act.
b) The litigation is still presently on foot.
The Court’s orders of 30 November 2009 have not been passed and entered but the proceedings have reached an advanced stage. Mr Gray has been dealt with for contempt and entered into the undertakings required under s 86(5) of the Crimes (Sentencing Procedure) Act 1999 pursuant to the orders of 16 June 2010.
c) The amendments sought follow from the finding made in paragraphs 58 to 64 of the judgment of 30 November 2009.
Useful relief not adversely affecting third parties must be able to be obtained. That is a major problem in the present case.
d) The amendments sought will not necessitate further submissions or, at the most, brief submissions.
That is unduly optimistic. Further evidence and submissions will be required.
e) The amendments sought will not prolong proceedings as they flow from the findings the amendments seek to give effect to the findings made.
I disagree. While there were some findings favourable to the plaintiff, the Court declined to grant relief under s 37A of the Conveyancing Act 1919 because of the registered mortgages and s 37A(3).
f) The amendments, if allowed, will not result in any derogation from promoting the finality of litigation.
I do not agree. To obtain any useful result, one or more of the registered mortgagees will have to be avoided. Section 37A(1) speaks of alienations of property being avoided at the instance of any person prejudiced thereby. This is subject to s 37A(3).

35 The plaintiff submitted that this litigation will be wasted if the amendments are not allowed and that the amendments seek to give efficacy to the resources employed in this litigation and that it is in the interests of justice that this occur, especially as the amendments do not raise new issues. Any waste of resource (including costs) is due to the plaintiff’s case being pleaded insufficiently and requisite amendments not being sought until after the delivery of judgment.

36 The proceedings did resolve the partnership issues and the contempt issues, but the proceedings have not resulted in the plaintiff being paid the moneys due to him. That is a very important matter. The plaintiff has incurred much expense in bringing these proceedings and the contempt motions. Mr Gray, with his failures to comply with directions and orders and by seeking adjournments, has wrongly delayed and hindered the plaintiff in recovering the moneys due to the plaintiff and such conduct has resulted in Mr Farrell incurring extra expense.

37 The difficulties the plaintiff faces lie in the registered mortgages and the protection afforded to the registered mortgagees by s 37A(3) of the Conveyancing Act.

38 I have considered whether the interests of justice require Mr Farrell to be permitted either to further amend his Statement of Claim or to reopen his case and whether the prejudice to the defendants in either instance could be compensated for by the imposition of terms including making appropriate costs orders. I do not think it can be. The costs are already out of proportion to the issues involved.

39 The amounts of money at issue in these proceedings, both as to the partnership and costs, are important to Mr Farrell and Mr Gray. Nevertheless, a sense of proportion must be kept. The legal costs of a further hearing would be substantial. Costs would continue to escalate. The relief sought in the proposed Third Amended Statement of Claim is wide ranging and would reopen the matter for consideration. I would apply the principles of case management. I think that the principle of finality should prevail. The Amended Statement of Claim was filed in early October 2004. Some of the intervening delay must be attributed to the first defendant. The hearing of the s 37A claim commenced on 11 November 2008. Some of the problems with the Amended Statement of Claim were canvassed. The proceedings were adjourned and the plaintiff was not ready to proceed for some months. The hearing resumed and concluded on 13 November 2009. The plaintiff has sufficient opportunity to plead his case and it is too late for a further amendment.

40 While the Court has power to allow amendments to the Statement of Claim at any stage, it is necessary to give considerable weight to the plaintiff’s application being made at a very late stage, that is, after the judgment of 30 November 2009 and after the Court had pointed out the difficulties of the relief sought and the declaration foreshadowed on both 11 November 2008 and 13 November 2009.

41 The affidavit in support of the motion of 3 May 2010 did not adequately outline why the application to amend was made after judgment was delivered. I have not overlooked the terms of the proposed Third Amended Statement of Claim and the allegations as to the mortgages to Perpetual Trustee Company Ltd ($220,000) and GLE Custodians Pty Ltd ($265,000).

42 I have assumed that in paragraphs 8 and 9 of the relief claimed in the proposed Third Amended Statement of Claim the date 8 December 2007 should read 8 March 2007.

43 In respect of the partnership matters I have previously made costs orders against Mr Gray, but they are separate from the s 37A application. As the s 37A portions of the Statement of Claim did not succeed but major findings were made against Mr and Mrs Gray after an initial contest, I would make no order as to the costs of that portion of the proceedings.

44 The contempt motion against Mrs Gray was dismissed with no order as to costs in the judgment of 30 November 2009.

45 My provisional view is that Mr Gray should be ordered to pay Mr Farrell’s costs of the contempt motion against Mr Gray, but I am prepared to hear argument on this point. That matter was overlooked on 16 June 2010.

46 I would dismiss the plaintiff’s motion of 3 May 2010. As to the costs of that motion, the solicitor for Mrs Gray was not ready to proceed with that motion as against her on 16 June 2010. An adjournment was sought and I gave directions as to written submissions. If the matter had proceeded on 16 June 2010, as it could and should have, the written submissions on her behalf and those on behalf of the plaintiff would have been unnecessary.

47 There is no sufficient basis to award the defendants their costs of the application of 3 May 2010 on an indemnity basis. The defendants complained that they received no reply to their faxed letter of 25 May 2010, which relevantly reads:

“… your notice of motion does not set out the legal basis upon which your client seeks to have the statement of claim amended. … the affidavit in support does little more than explain why your client has failed to comply with the timetable and we cannot see how the facts set out in your affidavit provide any basis to support the making of the orders sought.

Please advise as a matter of urgency whether your client intends to file and serve any further material.”

48 By faxed letter of 2 June 2010 the defendants’ solicitors sought a reply to their letter of 25 May. It was pointed out that the plaintiff’s motion and evidence were filed almost two weeks after the dates fixed in the Court’s directions (of 7 April 2010). It is not usual for a Notice of Motion to set out the legal basis for the orders sought. Mr Edward’s affidavit of 29 April 2010 annexed a copy (or draft) of the proposed Third Amended Statement and contained this paragraph:

“14. I request the leave of this Honourable Court to file the Third Amended Statement of Claim which has the purpose of seeking additional relief based on the facts found in the case and recorded in the Judgment of this Honourable Court dated 30 November 2009 (‘Judgment’) in order that the Judgment can be given effect and to avoid the circumstance that the Judgment will be rendered nugatory because of the relevant transfer of assets to the Second Defendant that are outlined in the Judgment.”

49 That should have alerted the defendants to what the motion was designed to achieve and its legal basis. While the defendants would have been helped by a reference to the authorities and some expansion of the matters stated in paragraph 14, especially the reasons why the application to amend was not made until after the delivery of the judgment, the plaintiff was entitled to advance the case it did on the basis of what was stated in paragraph 14 quoted above. The defendants did not give full effect to paragraph 14.

50 The motion was unsuccessful but the defendants should not have been unprepared to meet the plaintiff’s case against the second defendant. This caused costs to be incurred unnecessarily. The justice of the case will be met by ordering the plaintiff to pay one third of the defendants’ costs of the application of 3 May 2010.

51 I have not overlooked the other submissions contained in the written submissions of the parties but I have concentrated on what seemed to be the principal issue in dispute between the parties and that raised by the Motion of 3 May 2010.

52 I make the following additional orders to those made on 30 November 2009 and 16 June 2010:

1. Dismiss that part of the Statement of Claim seeking relief under s 37A of the Conveyancing Act.
2. No order as to the costs of either party of the s 37A part of those proceedings.
3. Dismiss the application of the plaintiff of 3 May 2010.
4. Order the plaintiff to pay one third of the costs of the defendants of the application of 3 May 2010, such costs to be set off against those payable by the defendants to the plaintiff.
5. Order the first defendant to pay the costs of the plaintiff of the contempt motion against him. Reserve leave to the first defendant to move to discharge the order within 14 days and to argue the question of costs.

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