Fish Records Pty Ltd v Dylgolo Pty Ltd

[2011] NSWSC 746

Supreme Court

New South Wales

Medium Neutral Citation:	Fish Records Pty Ltd v Dylgolo Pty Ltd [2011] NSWSC 746
Hearing dates:	14 July 2011
Decision date:	14 July 2011
Jurisdiction:	Equity Division
Before:	Gzell J
Decision:	Leave to file cross-claim and cross-summons and leave to amend refused.
Catchwords:	PROCEDURE - Miscellaneous procedural matters - Leave to file cross-claim - first day of trial - against plaintiff and new party - Uniform Civil Procedure Rules 2005, Pt 9 r 9.1 - Civil Procedure Act 2005, s 22 - leave to amend - Civil Procedure Act, s 64(1)(b)
Legislation Cited:	Uniform Civil Procedure Rules 2005 Civil Procedure Act 2005 Court Procedures Rules 2006 (ACT)
Cases Cited:	Queensland v J L Holdings Pty Ltd [1997] HCA 1; (1997) 189 CLR 146 Aon Risk Services Australia Limited v Australian National University [2009] HCA 27; (2009) 239 CLR 175
Category:	Procedural and other rulings
Parties:	Fish Records Pty Ltd (Plaintiff) Dylgolo Pty Ltd (Defendant)
Representation:	Counsel R Washington (Plaintiff) C Wood (Defendant) Solicitors Shana Randan & Co Solicitors (Plaintiff) O'Neill Partners (Defendant)
File Number(s):	2011/0079585

EX TEMPORE Judgment

1. A first cross-claim with cross-summons adding a non-party as second cross-defendant was filed on 7 July 2011. The cross-claim raised a cause of action against the new party as guarantor of a lease between the plaintiff and the defendant. The matter has been set down for trial for two days before me commencing today.

1. An application is made today to amend the first cross-claim and cross-summons by including in the alternative that if payments made and appropriated to an alleged deficiency under an earlier lease are deemed to be in reduction of liabilities accrued under the current lease, judgment is sought against the first and/or second cross-defendants.

1. The Uniform Civil Procedure Rules 2005, Pt 9, r 9.1 provides as follows:

"A party (the cross-claimant), may make a cross-claim:

(a) in proceedings commenced by statement of claim, within the time limited for the party to file a defence; or

(b) in proceedings commenced by summons, before the return day specified in the summons,

or within such further time as the court may allow."

1. The cross-summons was not brought within the time specified in the rule.

1. Section 22 of the Civil Procedure Act 2005 contains the following:

"(1) Subject to subsection (2), the court may grant to the defendant in any proceedings (the first proceedings) such relief against any person (whether or not a plaintiff in the proceedings) as the court might grant against that person in separate proceedings commenced by the defendant for that purpose.

(2) Relief may not be granted under this section against a person who is not a plaintiff in the first proceedings unless the relief relates to, or is connected with, the subject of the first proceedings."

1. The first proceedings ignored the position of the new cross-defendant as guarantor. The case was then a question of whether there was a shortfall under the first lease and whether the lessor could appropriate rental payments made since the commencement of the current lease against that shortfall.

1. To allow the cross-claim to raise additionally a claim for indemnity against a guarantor is to change the nature of the case and while there is a peripheral connection between what is now sought to be done additionally and that which was pleaded originally, that similarity is far outweighed by the necessity for the matter to be investigated if I make an order that the cross-claim may be filed out of time.

1. The Civil Procedure Act , s 64(1)(b) enables the court to grant leave to a party to amend a pleading at any stage in the proceedings, but the court in entertaining such an application must have regard to the overriding purpose in s 56 and s 58 of the Act to facilitate the just, quick and cheap resolution of the real issues in the proceedings and to act in accordance with the dictates of justice. So the court must consider the nature of the proposed amendment and its consequence for the other parties and the expeditious conduct of the proceedings.

1. There is no entitlement to an amendment subject to payment of costs. In Queensland v J L Holdings Pty Ltd [1997] HCA 1; (1997) 189 CLR 146 at 154, the majority said that if it was arguable, the applicants should be permitted to argue it, provided that any prejudice to J L Holdings might be compensated by costs. At 155, they said that case management should not have been allowed to prevail over the injustice of shutting the applicants out from raising an arguable defence.

1. But in Aon Risk Services Australia Limited v Australian National University [2009] HCA 27; (2009) 239 CLR 175 at [96]; 212, the High Court rejected those propositions.

1. Rule 21 of the Court Procedures Rules 2006 of the Australian Capital Territory was similar to s 56 of the Uniform Civil Procedure Rules . At [97]; 213 the majority said that such rules had J L Holdings in mind and could not be ignored.

1. In this case, if the cross-claim is allowed to be ventilated, notwithstanding the late service, there will not only be prejudice to the plaintiff and the second cross-defendant, but also, there will be a ramification with respect to other litigants who might have had their matters dealt with in the two days allocated to this case.

1. If the cross-claim is allowed there will, of necessity, be an adjournment of the proceedings to allow the plaintiff and second cross-defendant to explore the new allegations raised.

1. It was submitted that all matters should be dealt with at the same time. That is a desirable principle, but what must be balanced against that proposition is the need for an adjournment and the consequent vacation of the hearing today and tomorrow.

1. It was submitted that there was some concern about a possible Anshun estoppel if the guarantee claim against the proposed second cross-defendant was not heard in these proceedings. I doubt that that is so. The current proceedings are in a cause of action for debt. The proposed claim against the guarantor is in a cause of action for an indemnity. They being different causes of action against different parties, they are cumulative and there is, I would have thought, no bar to bringing separate proceedings against the guarantor should the application for leave to proceed with the cross-claim be disallowed.

1. In all the circumstances, I am of the view that the court should not make an order to allow for the filing of the first cross-claim and cross-summons out of time under the Rules and the Court should not grant the application to amend the first cross-claim in the manner I have stated.

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Decision last updated: 18 July 2011