Gahlot v Singh
[2025] VCC 731
•29 May 2025 (ex tempore)
| IN THE COUNTY COURT OF VICTORIA AT MELBOURNE COMMERCIAL DIVISION | Revised Not Restricted Suitable for Publication |
GENERAL LIST
Case No. CI-24-03739
| MEENAKSHI GAHLOT | Plaintiff |
| v | |
| DALBIR SINGH | First Defendant |
| and | |
| MANINDER KAUR LEHAL | Second Defendant |
| and | |
| AMARBIR SINGH | Third Defendant |
| and | |
| RUPINDER KAUR RAINA | Fourth Defendant |
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JUDGE: | HIS HONOUR JUDGE WISE | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 29 May 2025 | |
DATE OF JUDGMENT: | 29 May 2025 (ex tempore) | |
CASE MAY BE CITED AS: | Gahlot v Singh & Ors | |
MEDIUM NEUTRAL CITATION: | [2025] VCC 731 | |
REASONS FOR DECISION
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Subject:SUMMARY JUDGMENT
Catchwords: Application to re-open case, summary judgment, prior to perfection of orders, evidence of solicitor’s alleged conflict, mistaken apprehension of familial relationship, fiduciary duty and disclosure, knowing assistance in dishonest breach, equity and procedural fairness, Civil Procedure Act 2010 (Vic) s 64, interests of justice.
Legislation Cited: Legal Profession Unform Law Australian Solicitors’ Conduct Rules 2015; Civil Procedure Act2010
Cases Cited:Marriner v Australian Super Developments Pty Ltd [2016] VSCA 141; PCCEF Pty Ltd v Geelong Football Club Ltd [2018] VSC 258; Ezra Abrahams Pty Ltd v Milburn [2017] VSCA 355; Urban Transport Authority of NSW v Nweiser (1992) 22 NSWLR 471; Law Society of New South Wales v Harvey [1976] 2 NSWLR 171; O’Reilly v Law Society of New South Wales (1998) 24 NSWLR 204; Sewell v Zelden [2010] NSWSC 1180;
Judgment:
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Ms C Twidale | Mendis & Gibson Lawyers |
| For the Defendant | Mr J Paterson | Black and Macleod Lawyers |
EX TEMPORE:
A. Introduction and background
1I have before me today an application by the defendants to re-open their defence to an application by the plaintiff for summary judgment. The circumstances in which the application comes to be made are unusual. After the application was heard and oral reasons were delivered on 19 May 2025, the parties were directed to forward to my chambers orders that reflected the Reasons for Decision which they duly did. Before those orders were formally authenticated, defendants’ counsel (Mr Paterson) emailed my chambers advising that a matter had arisen which may lead to him being required to make an application to re-open his case. He requested the Court to withhold perfecting judgment for the moment. I agreed to do so and ultimately gave him the opportunity to make this application to re-open the defendants’ case.
2The claim itself is a claim by the plaintiff to recover moneys loaned to the defendants. It also seeks judicial sale of two properties that were charged as security for the repayment of the loan.
3The plaintiff brought on a summary judgment application, largely on the basis that the defendants admitted that the loan had been made, admitted that they had executed the loan agreement and admitted that sums were outstanding. Their defences largely sprung off an allegation that their solicitor at the time, Mr Rajiv Dalal, had acted not only for them in drafting the loan agreement, but also had acted for the plaintiff. The defence relied on at the hearing of the application was that in so doing, Mr Rajiv Dalal had acted in a conflict of duties that he owed to two clients – the defendants and the plaintiff. It was said that in acting in such a conflict of interest he had not obtained the defendants’ fully-informed consent and thus the loan agreement was vitiable.
4The defendants relied on four items of evidence to make good their defence and to demonstrate that Mr Rajiv Dalal had acted as solicitor for the plaintiff as well as for them. At the conclusion of the hearing I gave Reasons for Decision in which I considered each item of evidence and ultimately held that none of them supported the proposition that Mr Rajiv Dalal had acted as solicitor for the plaintiff at the same time as acting for the defendants.
5The other defences put forward sprang off the same proposition.
6On that basis I held that the defendants had no reasonable prospects of succeeding in their defences to the plaintiff’s claim and therefore, I determined to allow the application for summary judgment.
7One of the items of evidence that was relied upon was a bank transaction request form which was utilised to initiate the transfer of the loan funds to the defendants in compliance with the lender’s obligations under the executed Loan Agreement. That form noted that the party requesting the transfer t was a Mr “Randhir Singh Dalal”. The defendants apprehended that the named Mr Randhir Singh Dalal in that form may in fact have been Mr Rajiv Dalal, their solicitor. They said that this demonstrated that Mr Rajiv Dalal had acted not only as their solicitor, but also as the solicitor for the lender.
8During the course of that hearing I asked Mr Twidale (counsel for the plaintiff) to obtain an instruction as to the identity of the named “Randhir Singh Dalal” in that application for transfer.
9He obtained an instruction from his client who was sitting in the body of the Court and informed the Court that Mr Randhir Singh Dalal was the plaintiff, Mr Meenakshi Gahlot’s, father-in-law.
10I also note that the evidence disclosed that Ms Meenakshi Gahlot’s husband one a Mr “Sandeep Kumar”. Clearly that surname is not the same as Dalal.
11It was therefore not entirely clear as to whether and if so what relationship there was between Mr Randhir Singh Dalal (the transferor of the funds) and Mr Rajiv Dalal (the solicitor for the defendants).
12As matters transpired, the further matter that Mr Paterson wished to rely upon in applying to re-open his case is that it transpires that Mr Randhir Singh Dalal is not only the father-in-law of Meenakshi Gahlot, but is also the father of Rajiv Dalal. Mr Paterson says that the late discovery of this matter leads him to wish to rely upon a different and further defence to that which he initially put before the Court.
13This background gives rise to two issues.
(a) should the defendants’ application to re-open their case be permitted; and
(b) if so, should the application for summary judgment brought by the plaintiff be granted in light of all of the evidence, including the new evidence.
14To an extent, both issues merge, in that the importance of the evidence that the defendants wish to rely on (a factor in considering leave to re-open) brings into play the strength or otherwise of the causes of action that it goes in support of. I will therefore consider the questions together.
B. Principles on leave to reopen
15The test that emerges on the question of whether the defendant should be permitted to re-open their case was succinctly stated in Marriner v Australian Super Developments Pty Ltd.[1]
“In Inspector-General in Bankruptcy v Bradshaw, Kenny J summarised the circumstances in which a court may grant a party leave to reopen his or her case, as follows:
‘The authorities indicate that, broadly speaking, there are four recognised classes of case in which a court may grant leave to re-open, although these classes overlap and are not exhaustive. These four classes are (1) fresh evidence; … (2) inadvertent error; … (3) mistaken apprehension of the facts; and (4) mistaken apprehension of the law. In every case the overriding principle to be applied is whether the interests of justice are better served by allowing or rejecting the application for leave to re-open … .
Where a case has been closed and judgment reserved, exceptional circumstances will be required for a court to allow the case to be reopened. This rule applies with even greater force where reasons for judgment have already been delivered but final orders have not yet been made. The rule is necessary to ensure finality in litigation and the efficient administration of justice, and to avoid a reopened hearing being ‘bedevilled by arguments about … the scope of the re-opened proceeding’.”
(Citations and footnotes omitted.)
[1][2016] VSCA 141 at paragraphs [184] and [185].
16In PCCEF Pty Ltd v Geelong Football Club Ltd,[2] Croft J had to determine an application for leave to re-open a case under circumstances where the application was made after final orders had been perfected. I note that it is common ground that, by contrast, the Orders in the case before me had not yet been perfected.
[2][2018] VSC 258
17At paragraph [24] of that decision, his Honour set out a lengthy passage from a recent Court of Appeal decision in Ezra Abrahams Pty Ltd v Milburn.[3]
[3][2017] VSCA 355 at paragraphs [46]-[57]
“The overriding principle is ‘whether, taken as a whole, the justice of the case favours the grant of leave to re-open.’ This principle was stated as follows by Kirby J in Goldsmith v Sandilands … :
The guiding principle for the grant or refusal of leave to call evidence in response to the evidence of another party, where this is sought by a party, is, ultimately, what the justice of the case — including procedural fairness — requires. That principle should not become unduly entangled in precedents or procedural rules.
Whilst efficiency and economy in the conduct of civil trials are important requirements of the contemporary trial process, those objectives are valid only as they contribute to just outcomes. Once the trial process is under way, rigidity should be avoided, certainly at a time before the evidence has been closed and before the decision foreshadowed or announced. To exclude relevant evidence during a trial, in response to evidence tendered by another party in its case, simply because it could, or should, have been adduced earlier may, in particular circumstances, deny the party tendering such evidence the fair opportunity to present its case. It may render that party unjustly hostage to the defective perception, imagination and industry of its legal representatives. This is why a large discretion is reserved to the trial judge in civil trials to admit or reject evidence in rebuttal or reply. In an appeal, the exercise of the judge’s discretion in such matters is subject to the usual restraints upon appellate disturbance of discretionary decisions.
There are four recognised categories of case in which a court may grant leave to reopen a party’s case: where fresh evidence, unavailable or not reasonably discoverable previously, becomes known and available; where there has been inadvertent error; where there has been a mistaken apprehension of the facts; and where there has been a mistaken apprehension of the law. These categories are not closed.
Where… a party relies on the ‘inadvertent error’ category in applying to re-open its case for the purpose of adducing additional evidence, the nature and reasons for the error are relevant in considering whether it is in the interests of justice to grant the application.
The distinction between the omission of evidence due to an error by counsel, and a tactical decision on counsel’s part not to adduce that evidence, was considered in Urban Transport Authority of NSW v Nweiser. In that case, the plaintiff claimed damages for personal injuries against his employer. Counsel for the defendant employer decided not to call a particular witness because of an erroneous belief that the witness’s evidence would be inadmissible. Counsel closed the defendant’s case and, as the plaintiff did not adduce any evidence, counsel commenced his final address. The next morning, upon resumption of the hearing, counsel sought leave to re-open the defendant’s case to call the witness. The primary judge refused leave on the basis that counsel had made a deliberate decision not to call the witness.
The New South Wales Court of Appeal held that the judge had erred. The Court discussed three different situations involving a failure by counsel to adduce evidence: first, where the failure is unintentional; secondly, where the failure is deliberate but based on a factual or legal misapprehension; and thirdly, where the failure is deliberate and is intended to gain a tactical advantage for counsel’s client in the litigation. We will refer to these, respectively, as ‘the Nweiser unintentional category’, ‘the Nweiser intentional but mistaken category’ and ‘the Nweiser tactical category’.
Clarke JA, with whom Mahoney and Meagher JJA agreed, held that the judge had erred in basing his decision on the fact that counsel’s decision not to call the witness was deliberate, without taking into account the fact that that decision was based on a misapprehension. Clarke JA stated the relevant principles as follows:
‘Where, as here, a defendant announced the closing of its case and, there being no case in reply, a short time later sought leave to re-open because its counsel realised he had made a mistake it is difficult to discern how the interests of justice would be furthered by disallowing an application to re-open to call evidence which was clearly relevant to, and may have had a significant impact on, the issues in the case. It is true that the fact that there has been a deliberate decision not to call the witness whose evidence it is later sought to lead in a re-opened case is a relevant consideration. But there may be a number of reasons why a deliberate decision is made. It may, for instance, be made for tactical reasons.
On the other hand it may be that in the heat of the moment counsel has inadvertently overlooked facts proven in the opponent’s case or has otherwise acted on some misapprehension. Where the failure to lead evidence from a witness whom it is afterwards desired to call results from a tactical decision by counsel the courts will usually be disinclined to grant an application to re-open. Even in these circumstances, however, the court has a discretion to grant an application by a party to re-open its case and the interests of justice may dictate that the application be allowed. In short the fact that a deliberate decision was taken for tactical reasons is not decisive but remains an important factor.
If, however, counsel inadvertently fails to call a witness different considerations arise and, as it seems to me, if counsel makes a deliberate decision based on a mistaken apprehension of the nature of the evidence called against his client or the admissibility of the evidence which he seeks to call the justice of the case may well point to the granting of the application. The decision made by counsel in this case although a deliberate one stands in a very different category from one based on tactical grounds. It is more appropriately regarded as one in which counsel had made a mistake or failed to appreciate the relevance and admissibility of the evidence which he omitted to lead. … The principle which should guide the court in determining whether to grant an application for leave to re-open is whether the interests of justice are better served by allowing or rejecting the application as the case may be. No doubt it is relevant to take account of a number of matters such as likely prejudice to the party resisting the application and the reasons why the evidence was not led in the first place, but there is not, in my opinion, any hard and fast rule which requires the court to reject an application where the decision not [to] call the witness in the party’s case was a deliberate one. Of course that does not mean that that is not a very relevant consideration. It is. Where, for instance, a decision was based on tactical grounds it may be difficult to resist the conclusion that the interests of justice were better served by the rejection of the application. But even in that circumstance there may be cases in which it is felt that the client whose application it is should not have to suffer for his or her counsel’s deliberate decision. Where the decision is not made for tactical reasons and is based on a mistaken apprehension of the law or the facts the case is more appropriately to be considered as one in which the application has resulted from an error by counsel.
As noted in Nweiser, prejudice to the opposing party is a relevant factor to be weighed in the balance when determining whether it is in the interests of justice to allow a party to reopen its case. Clarke JA held that, on the facts of that case, the plaintiff would not have been prejudiced if the defendant had been permitted to re-open its case. This was because all that had happened between the closing of the defendant’s case and the application to re-open was that the defendant’s counsel had commenced his closing address. Clarke JA said that the position may be different where a party seeks leave to re-open its case after the other party has called evidence and it would be unjust to allow the first party to call further evidence.
Another matter which Clarke JA stated may be relevant to the exercise of the discretion whether to grant leave to re-open a party’s case is the importance of the evidence to be called if leave were granted. He said that, if the evidence could not possibly affect the outcome of the trial, or was peripheral to the main issues, then the trial judge may well be justified in refusing to grant leave. He concluded that the evidence to be given by the proposed witness in that case was relevant to the central issue at trial.
The issue of prejudice was discussed in Smith v New South Wales Bar Association, which involved a disciplinary proceeding against a barrister. In that case, an application to re-open the barrister’s case for the purpose of adducing additional evidence was made after the hearing had concluded and judgment had been delivered, but before the order was entered. Brennan, Dawson, Toohey and Gaudron JJ stated the following:
‘If an application is made to re-open on the basis that new or additional evidence is available, it will be relevant, at that stage, to enquire why the evidence was not called at the hearing. If there was a deliberate decision not to call it, ordinarily that will tell decisively against the application [to re-open]. But assuming that that hurdle is passed, different considerations may apply depending upon whether the case is simply one in which the hearing is complete, or one in which reasons for judgment have been delivered. It is difficult to see why, in the former situation, the primary consideration should not be that of embarrassment or prejudice to the other side. In the latter situation the appeal rules relating to fresh evidence may provide a useful guide as to the manner in which the discretion to re-open should be exercised. …
Not every case involving error will invite further evidence: it will depend entirely on the issue that is opened up. If the issue is one that invites further evidence, then, prima facie and subject to the ordinary rules of evidence, that evidence should be allowed. We say prima facie because there may be situations in which the particular evidence involved would cause embarrassment or prejudice such that, in the circumstances, it would be unfair to allow it.
“[W]here the defendant’s case has not been gone into and there is ready to be tendered some additional evidence which by accident, mistake or want of foresight has not been tendered before the prosecution case is closed, it is — to use the words of Cave J in Hargreaves v Hilliam … ‘a very fit and proper thing to allow the evidence to be given unless there is some very good reason.’”
(Emphasis added and ootnotes omitted.)
18I wish to emphasise that in that decision the Court of Appeal recognised the four categories of a case in which a Court may grant leave to re-open as set out by Kenny J in the passage referred to above. The Court of Appeal noted that “‘these categories are not closed’”. The Court of Appeal also noted that the New South Wales Court of Appeal in Urban Transport Authority of New South Wales v Nweiser[4] articulated numbers of distinctions in the categories where an application was made to re-open. The Court of Appeal noted that there are different situations involving a failure by counsel to adduce evidence:
“…first, where the failure is unintentional; secondly, where the failure is deliberate but based on a factual or legal misapprehensions; and thirdly, where the failure is deliberate and is intended to gain a tactical advantage for the counsel’s client in the litigation.”[5]
[4](1992) 22 NSWLR 471
[5]Ezra Abrahams Pty Ltd v Milburn (supra) at paragraph [50]
19Their Honours noted the difference between these cases and particularly noted that on occasions it may be that counsel has inadvertently overlooked facts proved in an opponent’s case or has otherwise acted on some other misapprehension. The New South Wales Court of Appeal (seemingly with the approval of the Victorian Court of Appeal) said, “[e]ven in these circumstances, however, the court has a discretion to grant an application by a party to re-open its case and the interests of justice may dictate that the application be allowed”.[6] The court noted that if:
“… counsel inadvertently fails to call a witness different considerations arise … if counsel makes a deliberate decision based on a mistaken apprehension of the nature of the evidence called against his client or the admissibility of the evidence which he seeks … .”[7]
and under those circumstances the justice of the case may well point to the granting of application. The Court of Appeal in the Ezra case noted that prejudice to the opposing party is a relevant factor to be weighed into balance when determining whether it is in the interests of justice to allow a party to re-open its case. The Court of Appeal also noted that another matter relevant to the exercise of the discretion is the importance of the evidence to be called if leave was granted.
[6](Ibid) at paragraph [50]
[7](Ibid) at paragraph [51]
20Croft J continued at paragraph 25:
“It is clear from the cases that “truly exceptional circumstances” are required before a party will be permitted to reopen its case after judgment has been delivered, as is the case here. In Australian Super Developments Pty Ltd v David Wellesley Marriner & Ors (No 2), judgment had been delivered but final Orders had not yet been made. Sloss J stated as follows:
Where, as here, reasons for judgment have actually been delivered and all that remains is the making of final orders for the entry of judgment and costs, truly exceptional circumstances would be required to be demonstrated before the case could be re‐opened. Furthermore, the applicant would also be required to satisfy the court that there was no lack of reasonable diligence on its part to bring forward the recently obtained evidence: see Commonwealth Bank of Australia v Quade.
In this way, the state of the proceeding is relevant not only for ascertaining whether the Court has jurisdiction to hear an application for leave to re‐open, but also for, assuming the Court does have such jurisdiction, considering whether leave ought to be granted.”
(Citations and footnotes omitted.)
C. Consideration
21The defence previously run by the defendants, was that Rajiv Dalal stood in a position of conflict of competing duties., By that I mean that, if it was the case he acted as solicitor to both parties, his duty to the defendants as borrowers would stand in conflict to his duty as solicitor for the lenders. Under those circumstances it would put him in an impermissible conflict of interest which, of course, as is well known, is a breach of his fiduciary obligations owed to each client to act solely in the best interests of that client.
22It was said by the defendants that that was so because Mr Rajiv Dalal had acted for the plaintiff as well as the defendants in drawing the loan agreement. As I have indicated above, four items of evidence were relied upon. At the first hearing I was not satisfied that any of those items of evidence was sufficient to raise a reasonable prospect that Mr Rajiv Dalal had acted for both parties and it was on that basis that I granted the application for summary judgment.
23One of those items of evidence, as I have said above, was a transfer receipt which showed that the funds were transferred by Randhir Singh Dalal. While Mr Twidale informed me that this was the father-in-law of the lender, I now note the following matters:
(a) it was not disclosed that Randhir Singh Dalal was also the father of Rajiv Dalal and
(b) It was not disclosed that despite Mr Dalal Senior being the father of the plaintiff’s husband, the husband bears a different surname to that of his father.
24By reasons of these two matters it was thus not obvious that Mr Dalal Senior was also the father of Mr Rajiv Dalal. To explain that further, had the plaintiff’s husband shared the surname with his father, Mr Dalal Senior, it would have been clearer that not only was he the father-in-law of the plaintiff lender, but he was also the father-in-law of Mr Rajiv Dalal (the defendants’ solicitor).
25I have been informed from the Bar table today by Mr Twidale, with apparent acceptance by Mr Paterson, that the non-sharing of the surnames is a cultural matter by which Mr Dalal Senior’s son was able to simply choose his own surname;
26Mr Paterson for the borrowers says that it was entirely unclear to him at the last hearing that Randhir Singh Dalal – the transferor of the funds and father-in-law of the plaintiff ꟷ was in fact the father of his client’s solicitor, Mr Rajiv Dalal. The significance of this fact is that Mr Paterson says, had he understood this to be so, on behalf of the defendants he would have run a different case to demonstrate that his clients had reasonable prospects of successfully defending the proceeding. That case was that Mr Rajiv Dalal stood in a position of conflict between his own interest through his familial relationship with his father, who was the ultimate source of the loan fundsand his duty to act only for the benefit of his clients, the borrowers.
27I note that Legal Profession Unform Law Australian Solicitors’ Conduct Rules 2015 as current at 31 May 2022[8] provides as follows:
“12. Conflict concerning the solicitor’s own interests
12.1A solicitor must not act for a client where there is a conflict between the duty to serve the best interests of a client and the interests of the solicitor or an associate of the solicitor, except as permitted by this Rule.”
[8] Which encompasses the date of execution of the loan agreement.
28The glossary provides the following definitions:
Associate in reference to a solicitor means:
…
(e)a member of the solicitor’s immediate family…
immediate family means the spouse … or a child, grandchild, sibling, parent or grandparent of a solicitor.”
29This articulation of the Solicitors’ Practice Rules is said in Halsburys Law of Australia” at [250 – 2010] to reflect the “general fiduciary law”.
30So much is supported by Law Society of New South Wales v Harvey,[9] where his Honour Street CJ said the following:
“A conflict of interest which is avoidable, and ought to be avoided, is that which arises from a deliberate proposal of the solicitor that his client deal with him. If, for example, a client seeks aid or advice from a solicitor concerning lending or borrowing, or the acquisition or disposal or dealing with assets, the solicitor will disregard his primary duty as a solicitor referred to so trenchantly by Lord Westbury, if he uses the occasion to become the party who deals with his client. It can make no difference if he is not a party directly, but the transaction is with a company in which he has an interest.”
[9][1976] 2 NSWLR at [171]
31The same principle was reinforced in O’Reilly v Law Society of New South Wales,[10] where Kirby P said:
“… where the solicitor has an interest in the finance provided, however indirect, there is an inevitable risk of the reality, or appearance, of a conflict of interest and duty. That risk can only be avoid by the most scrupulous conduct on the part of the solicitor. Depending upon any special terms of the retainer ,such conduct will oblige him or her to do at least the following:
(a) to disclose the interest fully and candidly to the client, preferably confirmed in writing in case of later disputes or inquiries;
(b) to advise and facilitate the provision of independent advice where that is appropriate and to do so in more than a perfunctory way; and
(c) to advise on, and facilitate access to, alternative sources of funds, particularly where these may be to the client’s advantage, being more beneficial than those which the solicitor can provide directly or through any associated company in which he or she has an interest, however indirect.”
[10](1998) 24 NSWLR 204 at 209
32Having regard to these principles, Mr Paterson submits that had he been aware of the identity of Randhir Singh Dalal as the father of his clients’ then solicitor, he would have submitted that Mr Dalal stood in a conflict of the duty he owed to his clients and the interest he had by reason of his own father being the ultimate provider of the funds to the plaintiff lender. He would have submitted that Mr Rajiv Dalal failed to give his clients any sufficient advice about this fact and thus did not comply with his fiduciary obligations, in such a way as to have relieved him of the conflict of interest. In this way, Mr Paterson says that Mr Rajiv Dalal breached his fiduciary obligations owed to the defendants.
33Mr Paterson also refers to evidence that the plaintiff, Mr Randhir Singh Dalal and Mr Rajiv Dalal all lived under the same roof. He says that by reason of this fact the plaintiff should be taken to have known of Rajiv Dalal’s breach of fiduciary duty or wilfully shut their eyes to the obvious.
34Now, in order to be liable under the second limb of Barnes v Addy, that is knowing assistance in a breach of fiduciary duty, the breach by the fiduciary must have been dishonest or fraudulent. The principles were set out in Sewell v Zelden.[11]
[11][2010] NSWSC 1180 at [81] and [82].
35Mr Paterson says that to the extent that Mr Rajiv Dalal failed to make proper disclosure of his conflict of interest and duty and to ensure that his clients obtained appropriate advice of the consequences of this fact, such breach was dishonest. In so submitting he opens the door to a claim by his clients, the defendants, directly against the plaintiff, Ms Gahlot, for knowing assistance in a dishonest breach of fiduciary duty by Mr Rajiv Dalal.
36Now Mr Twidale says the circumstances disclosed on the affidavit material is sufficient to show that the borrowers must have known that Randhir Singh Dalal was the father of Rajiv. He points to evidence that the borrowers visited Rajiv Dalal at his home and say that they are aware that he, Rajiv, lived with his father, brother and sister-in-law and their children. Indeed on one occasion in the affidavit it was said that he “met” them.
37Contrary to Mr Twidale’s submission, I am not prepared to infer from that material alone that on any of these occasions Mr Randhir Singh Dalal was introduced by name or that his relationship was explained.
38Under those circumstances I cannot conclude that the defendants knew, when the name of Mr Randhir Singh Dalal appeared on the money transfer request document that was in evidence before me on the last occasion that they should have concluded that that person was Rajiv Dalal’s father.
39But even if this is wrong, it seems plain that Mr Paterson did not know this. Putting the matter at its highest, it may be that the matter was a misapprehension by counsel of that fact. This of course answers the third category of cases in which an application to re-open will be granted.
40When asked in court on the last occasion to clarify the relationships, it was not clearly put that the name on the transfer form belonged to the person who was the father of Mr Rajiv Dalal. Rather it was said that he was the father-in-law of the plaintiff whose surname is “Gahlot”. This obscures the facts that (a) Ms Gahlot is married to Sandeep Kumar, (b) that Sandeep Kumar is in fact the son of Randhir Singh Dalal, and (c) that Sandeep Kumar is Rajiv Dalal’s brother.
41So, if it is the case that Mr Paterson had misapprehended those facts, he was not disabused of that matter by the plaintiff when asked by the Court to provide clarification.
42To the extent that Mr Paterson made a decision not to run a case of conflict of interest and duty on the last occasion, rather than the case he did, this may be classified as a deliberate decision that was based on a misapprehension of the facts. This is one such circumstance that the New South Wales Court of Appeal (as endorsed by the Victorian Court of Appeal in the Ezra decision) described as a case where it is appropriate to re-open.
43I note that Mr Twidale has properly conceded that his client suffers no prejudice other than costs if the case was re-opened.
44The guiding principle that I am to apply is “whether the interests of justice are better served by allowing or rejecting the application as the case may be” and bearing in mind that the circumstances here must be “truly exceptional”.
45One of the matters that informs my discretion is that the substantive application is for summary judgment. That is, its effect is to deprive the defendants the opportunity to have their case decided at trial upon full evidence in the normal course. Without wrongly shifting the burden in respect of this application to re-open on to the plaintiff (when it sits with the defendants) I consider that the fact of the nature of the application being for summary judgment is one matter to be weighed in the balance in exercising my discretion.
46The primary matters that lead me to the view that the interests of justice require that the defendants be permitted to re-open their case and that this case is exceptional are:
(a) the substantial application made is for summary judgment;
(b) that Mr Dalal Senior was an ultimate lender was nowhere made clear on the evidence until this was explained in court in answer to a question from me.
47It was plain that the defendants (or at least their legal advisers) did not know who Randhir Singh Dalal was – this is clear from the fact that they actually floated the possibility that the name on the transfer form actually referred to Mr Rajiv Dalal.
48When the answer was given to the query about who the person was, it was not couched in terms that made it obvious that Randhir Singh Dalal was in fact the defendant’s solicitor’s father.
49In answering the question that he was the plaintiff’s father-in-law and that the evidence otherwise disclosed that the plaintiff’s husband was Mr Sandeep Kumar (who did not share a surname with Mr Dalal Senior) – merely injected further lack of clarity about the relationships.
50The Court may infer that in not giving full and complete advice relating to the existence of the conflict, it may be (and I do not need to decide the point at this stage of proceedings) that Mr Rajiv Dalal may have breached his fiduciary duty dishonestly.
51Having regard to what is known of the close family relationships and that they all lived together under the same roof, the plaintiff may (and at this stage I do not need to decide the matter finally) be liable as a knowing assister in Rajiv Dalal’s dishonest and fraudulent breach of his fiduciary duty (if that is what is ultimately found).
52Given the lack of clarity about the identity of Randhir Singh Dalal as Rajiv Dalal’s father, I consider that Mr Paterson may have misapprehended that fact and thus not cast the case for the defendants as one of knowing assistance in a dishonest breach of fiduciary obligation.
53I note that at this stage I only need to consider whether the defence of knowing assistance is “fanciful” or enjoys “no reasonable prospects of success”.
54I do not consider that it is either of those.
55In the matrix of doing what the interests of justice require, I note that at this stage of the proceedings none of the principal players have yet gone on oath. Neither the plaintiff, Mr Rajiv Dalal, nor any of the defendants. All evidence has been given by solicitors on information and belief, save for one affidavit by Mr Dalal Senior. I make no criticism of them having adopted that course. However, as is usual in applications such as this, no one has been tested in cross-examination as to what actually occurred and what was known. Given the confusion about who knew what and when, I have grave concerns about entering summary judgment for the plaintiff at this stage. Under those circumstances, even if I had concluded that the defence of knowing assistance in a dishonest breach of trust did not enjoy any real prospects of success I have the power under s64 of the Civil Procedure Act 2010, which reads as follows:
“Despite anything to the contrary in this Part or any rules of court, a court may order that a civil proceeding proceed to trial if the court is satisfied that, despite there being no real prospect of success the civil proceeding should not be disposed of summarily because—
(a) it is not in the interests of justice to do so; or
(b) the dispute is of such a nature that only a full hearing on the merits is appropriate.”
56Under those circumstances, I would have concluded that as so little is known of the true facts at this stage that I should exercise my discretion under s64 of the Civil Procedure Act to send the matter to trial in any event.
57It may be thought that I have overlooked the fact that it was open to the defendants to have run a case against the plaintiff of knowing assistance in a dishonest breach of fiduciary duty by Mr Rajiv Dalal – to the extent that he stood in a conflict by reason that his sister-in-law obtained a benefit from the loan. I note firstly, it is not clear that the relationship between himself and his sister-in-law is a prohibited relationship for the purposes of a breach of his own interest and duty under the Uniform Practice Rules.
58But that is a different case to the one that is now articulated and does not impinge on the proper exercise of my discretion. The true facts that Rajiv Dalal’s father was the ultimate lender, were only revealed after the hearing had concluded, and thus clarified the cause of action that Mr Paterson now relies on.
59I therefore conclude that the defendants should be given leave to re-open their defence to the plaintiff’s application for summary judgment.
60For the reasons already given I consider that the defendant’s proposed defence is not fanciful and does enjoy reasonable prospects of success.
61Mr Twidale submitted that on the basis of the admitted facts I should enter judgment in respect of the money sums alone or alternatively order the defendants to pay into court the amount of the principal of the loan. He said this on the basis that if the defence (and presumably counterclaim) succeeded, under ordinary principles the plaintiff would only be obliged to disgorge the profits that she made as a consequence of entering into the transaction. I am not entirely certain that that is the case. It is also open to a party who succeeds on an equitable cause of action of this nature to obtain equitable compensation. Exactly how that equitable causation might play out cannot be known until the full facts have been ventilated after trial. Under those circumstances I will not adopt either of the two proposals put by Mr Twidale.
62For those reasons the plaintiff’s application for summary judgment will be dismissed.
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Certificate
I certify that these 19 pages are a true copy of the judgment of His Honour Judge Wise delivered on 29 May 2025.
Dated: 11 June 2025
Liam Crough
Associate to His Honour Judge Wise.
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