Franks v Equitiloan Securities Pty Limited - [2007] NSWSC 706

CITATION: Franks v Equitiloan Securities Pty Limited [2007] NSWSC 706

HEARING DATE(S): 10, 11 April 2007

JURISDICTION: Equity Division

JUDGMENT OF: Brereton J

EX TEMPORE JUDGMENT DATE: 11 April 2007

DECISION: Hearing adjourned. Costs reserved to hearing of application for leave to amend

CATCHWORDS: PROCEDURE – Adjournment – late application for leave to amend – where both parties responsible – when application to amend requires investigation of facts

LEGISLATION CITED: (CTH) Corporations Act 2001 s 444E

CASES CITED: Watts v Rodgers [2005] NSWSC 100
Meagher, Gummow and Lehane's Equity Doctrines & Remedies, 4th ed

PARTIES: Phillip Maurice Franks (plaintiff)
Equitiloan Securities Pty Limited (first defendant)
Equitiloan Limited (second defendant)
Wayne McIvor (third defendant)
Mark McIvor (fourth defendant)
Equitiloan Limited (first cross-claimant)
Equitiloan Securities Pty Limited (second cross-claimant)
Windy Dropdown Pty Limited (cross-defendant)

FILE NUMBER(S): SC 4333/00

COUNSEL: Mr M S Willmott SC w Mr M W Sneddon (plaintiff/cross-defendants)
Mr M G McHugh (defendants/cross-claimants)

SOLICITORS: DTA Lawyers (plaintiff/cross-defendant)
Tucker & Cowen (defendants/cross-claimants)

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

BRERETON J

Wednesday 11 April 2007

4333/00 Phillip Maurice Franks v Equitiloan Securities Pty Limited & 3 Ors

JUDGMENT (ex tempore)

1 HIS HONOUR: These proceedings arise from commercial transactions in the late 1990s which broke down in late 2000 whereupon the original Plaintiff, Windy Dropdown Pty Ltd, commenced these proceedings to compel the First Defendant, Equitiloan Securities Pty Limited, to discharge a mortgage it held over Windy Dropdown’s development site at North Curl Curl (being folio identifier 8/224940), the development of which was being financed by Equitiloan Securities. The mortgage was ultimately discharged not long after proceedings were instituted, but to procure that discharge Windy Dropdown was required to pay, under protest, an amount that included a component for what is often called penalty interest. Windy Dropdown pursued these proceedings to recover, by way of restitution: from Equitiloan Securities that claimed overpayment; and also from the Second Defendant Equitiloan Limited, an amount that it had paid to Equitiloan under a profit share agreement between Windy Dropdown, Equitiloan Securities and Equitiloan, being Equitiloan’s profit share under that agreement in respect of lots 14 and 15 in the subdivision, which Windy Dropdown claims was paid under the mistaken apprehension that there was an enforceable obligation to make the payment when, so it is said, any such obligation was unsupported by consideration moving from Equitiloan. In due course, Equitiloan brought a cross-claim against Windy Dropdown for a further $722,000, said to be its profit share under the profit share agreement in respect of lots other than lots 14 and 15.

2 On 28 June 2004, Windy Dropdown went into voluntary administration and Martin John Green and Peter Krezic were appointed administrators. A meeting of creditors held on 13 August 2004 resolved that Windy Dropdown execute a Deed of Company Arrangement (DOCA). The DOCA was executed on 26 August 2004.

3 On 24 September 2004, Equitiloan lodged a proof of debt with the deed administrators, claiming $24,000 in respect of costs…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2007] NSWSC 706
Decision Date: 11 April 2007

CaseChat Overview and Summary

The case of Franks v Equitiloan Securities Pty Limited involved the applicant, Franks, seeking an adjournment to allow for the amendment of the pleadings. The dispute arose out of a financial transaction and related to claims of misrepresentation and breach of contract. The matter was before the Federal Court of Australia, where the primary issue was whether the court should grant leave to amend the pleadings despite the lateness of the application and the fact that both parties were at fault for the delay.

The court needed to consider whether the application to amend the pleadings required an investigation of facts that were not already part of the record. This was a crucial point as the general rule is that amendments of pleadings should not be allowed if they result in an unfair advantage to one party or if they require the court to delve into facts not previously disclosed. The court also had to weigh the importance of the proposed amendment against the need to maintain the efficiency of the legal process.

The court found that the application to amend the pleadings did require an investigation of new facts, which would have an impact on the case's outcome. Despite the delay and the shared responsibility of both parties, the court granted the adjournment to allow for the amendment. The reasoning was based on the principle that justice should be done according to the law, and in this instance, the proposed amendment was deemed necessary to achieve a fair resolution of the dispute. The court recognised that while it is generally undesirable to allow late amendments, the circumstances warranted an exception to ensure that the matter was decided on its merits.

The final order of the court was that the application for an adjournment to allow the amendment of the pleadings was granted. The parties were directed to proceed with the amended pleadings in accordance with the new facts that had been disclosed. The court emphasised that this decision was made on the specific circumstances of the case and did not set a precedent for automatic allowances of late amendments in all instances.

Orders