Helou v M and J Enterprises Australia Pty Ltd (No 5)

[2017] NSWSC 921

Supreme Court

New South Wales

Medium Neutral Citation:	Helou v M & J Enterprises Australia Pty Ltd (No 5) [2017] NSWSC 921
Hearing dates:	5 July 2017
Date of orders:	14 July 2017
Decision date:	14 July 2017
Jurisdiction:	Common Law
Before:	Hoeben CJ at CL
Decision:	(1)   Leave is granted to the cross-claimants, Miloslav Gligorijevic and Jagoda Gligorijevic, to withdraw admissions 4, 8, 9, 10, 11, 12, 14, 15, 16, 17 and 19 in the Notice to Admit Facts and Documents, dated 14 October 2015, filed on behalf of George Helou. (2)   Leave is granted to the cross-claimants to file the Second Further Amended Statement of Cross-Claim, dated 7 April 2017, and attached to the cross-claimants’ Notice of Motion of 21 April 2017. (3)   The cross-claimants are to pay 70 per cent of the cross-defendants’ costs of the motion.
Catchwords:	PRACTICE AND PROCEDURE – rules 17.3 and 17.6 Uniform Civil Procedure Rules 2005 (NSW) – application to withdraw admissions contained in Notice to Admit Facts and Documents – no response to Notice – reasons for no response – party serving notice did not change its position in reliance on admissions – leave sought to file Amended Statement of Cross-Claim – extent of amendments not restricted by earlier decision of Court – leave granted to withdraw admissions and to file Amended Statement of Cross-Claim – COSTS – successful party seeking indulgence of the Court – successful party to pay a proportion of unsuccessful party’s costs.
Legislation Cited:	Uniform Civil Procedures Rules 2005 (NSW) – r 17.3, 17.6
Cases Cited:	Blair v Curran [1939] HCA 23; 62 CLR 464 Helou v M & J Enterprises [2016] NSWSC 1202
Category:	Procedural and other rulings
Parties:	George Helou – Plaintiff M & J Enterprises Australia Pty Ltd – First Defendant Jagoda Gligorijevic – Second Defendant Milosav Gligorijevic – Third Defendant Milosav Gligorijevic – First Cross-Claimant Jagoda Gligorijevic – Second Cross-Claimant George Helou – First Cross-Defendant Rita Helou – Second Cross-Defendant
Representation:	Counsel: Mr J R Young – Plaintiff/Cross-Defendants Mr M Rollinson – Defendants/Cross-Claimants   Solicitors: G & S Law Group Pty Ltd – Plaintiff/Cross-Defendants Benjamin & Khoury Pty Ltd – Defendants/Cross-Claimants
File Number(s):	2014/248914

Judgment

1. HIS HONOUR:

Nature of proceedings

The cross-claimants rely upon a Notice of Motion filed 21 April 2017 which seeks the following orders:

1. Leave be given to withdraw the admissions made by the cross-claimants to the following facts set out in the cross-defendants’ Notice to Admit Facts and Documents, dated 14 October 2015.

4, 8, 9, 10, 11, 12, 14, 15, 16, 17, 19

2. Leave to file and serve a Second Further Amended Statement of Cross-Claim, dated 7 April 2017.

3. Such orders as the Court deems appropriate.

4. Costs.

Factual background

2. The following recitation of facts should not be taken as findings by the Court. They are essentially based on the cross-claimants’ Second Further Amended Statement of Cross-Claim (2 FASC). This is because the position of the cross-defendants in relation to the issues raised is not known at this time. Nevertheless, given the nature of the issues raised by the Notice of Motion that recitation provides a sufficient background.

3. In 2012 George Helou (GH) was the registered proprietor of a farm and farmhouse at Tahmoor and Milosav Gligorijevic (MG) and Jagoda Gligorijevic (JG) were the registered proprietors of a residence at Marrickville. Rita Helou (RH) is GH’s wife. During 2012 MG and JG had lent $100,000 to GH’s brother, Monir Helou. After discussions between GH and RH on the one hand and MG and JG on the other, a document prepared on behalf of the Helous was signed on 29 November 2012. Hereafter that document is referred to as the “Original Agreement” (OA).

4. The OA provided, in essence:

• A recital that MG and JG had lent to Aussie Tome Fresh Pty Ltd (ATF) (a company associated with the Helous), $100,000. (This is a reference to what MG and JG had lent to Monir Helou).

• A recital that ATF wished to borrow up to another $300,000 from MG and JG.

• That GH and RH agreed to buy the Marrickville property from MG and JG for a price of $850,000, of which the Helous were to be credited with having paid $170,000 and on settlement, the vendors MG and JG were to lend back $300,000 of the balance to ATF.

• The Helous were to employ MG and JG as live-in managers at Tahmoor at a wage of $1,000 net per week for at least one year.

• MG and JG were to have options to buy back Marrickville for $680,000 (net outlay $850,000 minus $170,000) and to buy Tahmoor for $600,000 (net outlay $1 million minus $400,000 that ATF had been lent).

5. The OA was performed to some extent. MG and JG say that they complied with it to the extent that they were able but that the Helous did not.

6. MG and JG transferred the Marrickville property outright to GH and RH on 7 December 2012. After further discussions, MG and JG moved into Tahmoor in July 2013 and began managing and working the farm. At GH’s request (beyond any obligation in the OA) they paid his farm supply bills, bought new supplies and paid the bank mortgage instalments on Tahmoor. They did not receive the promised wages.

7. In August 2013 GH told MG and JG that the sale to them of the Tahmoor property must go ahead immediately. On 26 August 2013 a contract for sale of Tahmoor by GH to a company associated with MG and JG, M & J Enterprises Australia Pty Ltd (MJE) was signed. The sale was never completed. A contract for sale of Marrickville back to MG and JG was also signed on 19 March 2014 but did not complete. In May 2014 the Helous sold and transferred the Marrickville property to a third party. The mortgage on the Marrickville property was discharged on the occasion of that transfer but no proceeds net of that went to MG and JG.

8. On the occasion of the purchaser obtaining and moving into Marrickville, some personal property of MG and JG remained there and was never recovered by them.

9. In January 2015 GH evicted MG and JG from Tahmoor, having earlier brought these proceedings as an action for possession against them. Various personal property of MG and JG was at Tahmoor when they were evicted which was never recovered and the loss of which they did not consent to.

10. On 24 August 2016, Campbell J gave judgment (Helou v M & J Enterprises [2016] NSWSC 1202) by consent for possession of the Tahmoor in favour of GH. In addition, Campbell J made the following relevant orders:

“(1)    Sever the cross-claim from the proceedings for separate hearing and adjourn that matter for hearing on a date to be fixed by the Registrar.

…

(3)    Adjourn the plaintiff's claim for monetary relief to be heard with the cross-claim.

…   

(6)    The defendants are to file and serve an amended cross-claim in accordance with my reasons on or before 14 September 2016.

(7)    The plaintiff is to file any responsive amended statement of claim, defence to cross-claim or reply on or before 28 September 2016.

(8)    List the matter before the Common Law Case Management Registrar at 9am on 5 October 2016 for directions as to the exchange of further evidence, if any, and to fix a date for hearing of the outstanding matters.

(9)    Direct that the defendants are to be treated as the moving party on the further hearing and are to bear any further fee required for allocation of any such hearing.”

11. In the course of his judgment, Campbell J said:

“21   I indicated that view to Mr Khoury and he has obtained instructions to consent to judgment in favour of the plaintiff for possession. I will enter that judgment in due course, but it should be clearly understood that the entry of that judgment is without prejudice to the rights of the defendants to fully ventilate the issues they wish to further in their cross‑claim, including those issues in relation to the contract for the sale of land.

22   I acknowledge the force of Mr Young's argument that the overriding purpose in this case does not favour the grant of an adjournment to enable the defendants to regularise their cross-claim. And I accept that until the plaintiff sees any amended pleading it is impossible for Mr Young to say whether or not the plaintiff can meet the amended case on the basis of the evidence already read, or whether additional evidence will need to be marshalled. I think however that overall the interests of justice in identifying the true issues in dispute between these parties favour the grant of an adjournment. That will allow what seems to be the differences between the parties to be fully aired and resolved by judicial determination in due course.”

12. By the 2 FASC, MG and JG no longer agitate claims to obtain possession or specific relief regarding the Tahmoor or Marrickville properties. Their claims are for money only.

• Under the OA, repayment of the $100,000 lent in 2012 and their wages for 78 weeks' work at Tahmoor.

• Under later agreements made orally with GH and RH, acceding to his various requests, as set out above, for the reimbursement of money outlaid to pay GH’s debts.

• The value of their personal property at Tahmoor and Marrickville, not returned to them when the Helous retook possession of the Tahmoor property and sold Marrickville to a third party.

13. These claims are made notwithstanding that the transactions contemplated by the OA never came to fruition. Except for the repayment of the $100,000 lent in 2012 and the 78 weeks’ wages, their claims do not depend upon the OA but arise from subsequent events.

The Notice to Admit Facts and Documents

14. The cross-claimants do not dispute the authenticity of any of the documents referred to in the Notice. They dispute only some of the facts alleged. They submit that by doing so, they do not contradict anything in the judgment of Campbell J.

15. It is common ground that the Notice was dated 14 October 2015 and was emailed and posted to the solicitors for the cross-claimants on that date. It is also common ground that no response was received to the Notice after it was served and accordingly, the provisions of r 17.3 of the Uniform Civil Procedures Rules 2005 (NSW) came into effect so that the facts and documents in the Notice were deemed to be admitted as against the cross-claimants.

16. The cross-claimants rely upon the circumstances set out in JG’s affidavit of 14 June 2017 to explain why they made no response to the Notice. That affidavit deposes that in 2015 MG was hospitalised as a result of suffering a stroke. His condition was critical and JG was constantly at his bedside. After 10 October 2015, he was recovering at home but his abilities were significantly diminished, in particular his speech. JG deposed that it was impossible for MG and herself to attend any court proceedings or to consider responding to the Notice in October 2015.

17. The affidavit goes on to explain that MG’s disability has continued thereafter and there is annexed to the affidavit a report of 6 June 2017 from a Dr van Gelder, neurosurgeon, to the effect that the stroke affected his speech, memory and balance. He continues to have partial seizures. He has an aneurism which is not able to be treated and continues to be disabled.

18. The affidavit also has annexed a letter from the cross-claimants’ solicitors, dated 26 October 2015, addressed to the plaintiff/cross-defendants’ solicitors advising of MG’s health problems and requesting their consent to an adjournment of the hearing which had been fixed for two days before Harrison AsJ. That consent was not forthcoming but Harrison AsJ granted the adjournment of the matter which, as indicated above, eventually came before Campbell J.

19. Although there is no mention in the solicitors’ letter of the Notice, the Court was asked to infer that the focus of the cross-claimants’ solicitors at the time was the imminent hearing and MG’s inability to give evidence or otherwise participate in it and that is why nothing was done about the Notice and the 14 day time limit was allowed to expire. I am prepared to draw that inference.

20. Thereafter, nothing seems to have been done about the Notice. No further mention was made of it in the dealings between the parties until submissions were made on behalf of the plaintiff/cross-defendants in the proceedings before Campbell J. I infer that the fact of the Notice was overlooked by the solicitors for the cross-claimants during that period. The Notice played an important role in the proceedings before Campbell J in that it relieved GH as plaintiff from having to strictly prove matters which established his right to obtain possession of the Tahmoor property.

21. The cross-claimants submitted that if the admissions are withdrawn, it would not create a situation where the cross-claimants were questioning any finding of fact of Campbell J nor any issue that was concluded before Campbell J. In that regard, it was accepted by the cross-claimants that when the matter was before Campbell J, no application to withdraw the admissions was made. This was because the issues in the cross-claim were not being argued on that occasion, given the application for an adjournment of the cross-claim and for leave to amend it.

22. The cross-claimants submitted that there was no suggestion that the admissions in the Notice had caused the plaintiff/cross-defendants to change their position or otherwise gave rise to an estoppel preventing the withdrawal of the admissions. The only detriment which would be suffered by the plaintiff/cross-defendants would be that the cross-claimants would be able to fully ventilate their claim for financial loss.

23. The cross-claimants submitted that they were not disputing the authenticity of documents so that it remained an open question as to whether those documents to which the cross-claimants were parties, might at the end of the day defeat some of the contentions which they make. The cross-claimants accepted that it was the fact that subsequent to the OA, on two occasions, they executed, or their company executed, contracts for sale and on two occasions those contracts were not completed.

24. The cross-claimants submitted that Admissions 8, 9 and 10 may well not be accurate. Admission 8 asserts that the contract for the sale of the Tahmoor property by the Helous to the cross-claimants was on foot on 11 October 2013 and that the Helous (as vendors) were ready, willing and able to complete the contract on that date. The cross-claimants relied upon the affidavit of Mr Panopoulos. The effect of that affidavit was that on 28 October 2013 no-one on behalf of the vendors had attended at the time and place designated for settlement. The cross-claimants submitted that at least prima facie that raised real doubt as to the readiness of the vendors/Helous to settle on that date.

25. The Helous submitted that little weight could be placed on the affidavit of Mr Panopoulos in circumstances where there was no evidence from the cross-claimants to the effect that they or the company MJE were in a position to settle the purchase of the Tahmoor property at the nominated place and time. They submitted that in those circumstances, the submission relying upon the affidavit of Mr Panopoulos went nowhere.

26. The cross-defendants submitted that there was no other evidence adduced to challenge any of the other facts in the Notice which were deemed to be admitted but in relation to which a withdrawal of the admission was now sought.

27. The cross-defendants submitted that it would be an easy matter to adduce such evidence if it existed.

28. The cross-defendants submitted that despite the illness of MG in October 2015 there was nothing to stop JG from providing instructions in relation to the Notice. They submitted that her concern for MG does not provide a sufficient justification for her failure to do so. They submitted that the matter was twice before the Court, first before Harrison AsJ in November 2015 and then subsequently Campbell J in August 2016. On neither occasion was any application made to withdraw the admissions.

29. The cross-defendants submitted that no application to withdraw the admissions in the Notice was made until they raised in correspondence the proposition that the 2 FACS in its terms traversed some of the facts deemed admitted by the Notice.

30. The cross-defendants submitted that to some extent there was a Blair v Curran [1939] HCA 23; 62 CLR 464 issue because the judgment for possession was based, at least in part, on the Notice to Admit Facts. In those circumstances, the cross-claimants were estopped from challenging not only the order by Campbell J, but the evidence on which it was based.

Consideration

31. The admissions in the Notice came to be made by operation of the Rules of Court. The position of the cross-claimants is that the Notice was not acted upon when it was served because of personal health issues affecting MG and thereafter appears to have been overlooked by their solicitors. In other words, the admissions were not made as part of a considered process of reasoning. On the contrary, no consideration was given to them at all.

32. There is an explanation offered for this, i.e. the serious illness of MG from which he has still not recovered. Since MG appears to have played a significant role in the various transactions with the cross-defendants, his inability to give evidence meant that the hearing before Harrison AsJ could not proceed. One can understand why, in those circumstances, the focus of the solicitors would have been on the need to adjourn the hearing which had been fixed for 3 – 4 November 2015, rather than on the Notice which had been served in the middle of October. While that provides a partial explanation for why nothing was done in the 14 days after service of the Notice, it does not account for the lack of activity during the ensuing 10 months until the matter came before Campbell J. Quite clearly, the fact of the Notice and its significance was overlooked by the solicitors. It is moot to observe that this should not have occurred. It is, however, not the fault of the cross-claimants.

33. If in reliance upon the Notice, the cross-defendants had changed their position, or had otherwise acted upon the admissions so that their withdrawal would produce a significant detriment, it would be extremely difficult for the cross-claimants to succeed in obtaining leave to withdraw the admissions. That is not this case. The admissions in the Notice enabled GH to establish his right to possession of the Tahmoor property without being put to strict proof of each of the elements necessary to obtain that order. There is no evidence that the cross-defendants altered their position in any way as a result of the admissions in the Notice.

34. Although the affidavit of Mr Panopoulos is far from determinative in relation to admission 8, it does make clear that admission 8 looked at in isolation is potentially misleading. On the cross-claimants’ case at the time specified in the Notice to Complete in relation to the Tahmoor property, it may well have been that GH was not ready, willing and able to complete the sale. To the extent that that is relevant to the cross-claim (which is not altogether clear), it may well be a contestable issue.

35. Although reference was made to the decision in Blair v Curran, counsel for the cross-defendants was unable to identify any indispensable fact, which was established by the judgment of Campbell J, which would prevent any one of the claims in the 2 FASC being pursued.

36. The matters raised by the cross-claimants in the 2 FASC are relatively straightforward. They depend upon a series of conversations with GH. If the admissions which the cross-claimants seek to withdraw are allowed to remain, I anticipate that the orderly hearing of the 2 FASC will be significantly lengthened and needlessly complicated by a series of objections based on the extent to which evidence or questions conflict with the admitted facts.

37. As I raised with counsel for the cross-defendants in the course of argument, the position in which the cross-claimants find themselves at the present time is a most unfortunate one. From a position where they were advancing money to GH, his brother and advancing moneys for the benefit of GH and were the owners of the property at Marrickville, they now own no property and are so impecunious that their solicitors are representing them on a pro bono basis.

31. To the extent that they say that they have been taken advantage of by the cross-defendants, they are entitled to have their day in court and commensurate with the obvious estoppels created by the order for possession by Campbell J, and the sale to a third party of the Marrickville property, present their claim in court without the presentation of that claim being unduly restricted by the admissions in the Notice which they now seek to withdraw. For the above reasons, I would grant leave to the cross-claimants to withdraw the admissions in the Notice which they have enumerated.

Second Further Amended Statement of Cross-Claim

39. The cross-defendants challenge the 2 FASC on two bases. The first is that it raises new material which was not before Campbell J and therefore is not covered by the order of Campbell J allowing the cross-claimants to file and serve an Amended Cross-Claim. Implicit in the cross-defendants’ submission is that the Amended Cross-Claim could only relate to matters which were specifically raised before his Honour.

40. The second basis of challenge is the way in which the 2 FASC has been pleaded. The Court’s attention was drawn specifically to paragraph 16 of the 2 FASC which is in the following terms:

“16   Properly construed in the context of the discussions and events preceding its execution, by the Original Agreement, George and Rita Helou assumed the liability of Monir Helou or of ATF to repay the loan of $100,000 that had been made to Monir Helou during 2012, or alternatively guaranteed to M and J Gligorijevic the repayment of that loan in the event that it was not applied in the manner contemplated by the Agreement.”

41. The cross-defendants submitted that such a pleading was imprecise and involved general allegations which were rolled up and not properly particularised.

42. The cross-defendants submitted that this paragraph was typical of the pleading in the 2 FASC.

Consideration

43. In the course of submissions before Campbell J, various matters were raised when reference was made to the cross-claim as it was then pleaded. In particular, his Honour referred to the possibility of an amendment to claim restitution. There is nothing, however, in his Honour’s reasons which in terms or even by implication would restrict the 2 FASC to matters raised before his Honour on that occasion. As his Honour made clear, he was aware that the cross-claim could not proceed on that day and that the intention was to amend it. His Honour, however, was not concerned to stipulate or restrict the precise nature of the amendments. This is clear from the extracts from his Honour’s judgment set out at [11] hereof.

44. The cross-defendants submitted that [19] of his Honour’s judgment did restrict the extent to which the cross-claim could be amended.

“19   In effect, it might be thought that the case on each side of the record have been somewhat like ships passing in the night. Although the claim for restitution of these funds has not been articulated with pellucid clarity, it has been relatively clear on the face of the pleadings that that formed a basis of the defendants' cross-claim.”

45. I do not read that paragraph as in any way seeking to restrict the amendment of the cross-claim. If it did, it would be contrary to his Honour’s later direction that “the entry of that judgment is without prejudice to the rights of the defendants to fully ventilate the issues they wish to further in their cross-claim including those issues in relation to the contract for sale of land”.

46. Accordingly, there is no substance in the cross-defendants’ first objection to the 2 FASC.

47. In relation to the form of the pleading itself, it is true that paragraph 16 of the 2 FASC, to which the Court was taken, is very much a rolled up claim. When one reads the OA and paragraph 15 of the 2 FASC, which seeks to summarise the contents of the OA, the meaning of paragraph 16 is tolerably clear. The pleader is asserting that the effect of the OA is that GH and RH assumed the liability of Monir Helou or ADF to repay the $100,000 which had been loaned by the cross-claimants. The alternative basis is the liability of GH and RH as guarantors.

48. To the extent that there is ambiguity in the paragraph, such as the parties to and the contents of the “discussions”, and the identification of “events preceding its execution”, this can be resolved by a request for particulars.

49. I have concluded that the 2 FASC is pleaded in sufficiently precise terms to allow it to stand. To the extent that further particulars are required of the document, then these can be requested in due course by the cross-defendants.

50. The challenge to the form of the 2 FASC has not been made out.

Costs

51. Although the cross-claimants have succeeded in their motion, most of the argument was concerned with the withdrawal of the admissions in the Notice, rather than the form of the 2 FASC. In seeking the withdrawal of the admissions, the cross-claimants were seeking an indulgence of the Court which would not have been necessary had the Notice and its contents been attended to with due diligence. In those circumstances, despite their success the cross-claimants should pay 70 per cent of the cross-defendants’ costs of the motion.

Orders

52. The orders which I make are:

1. Leave is granted to the cross-claimants, Miloslav Gligorijevic and Jagoda Gligorijevic, to withdraw admissions 4, 8, 9, 10, 11, 12, 14, 15, 16, 17 and 19 in the Notice to Admit Facts and Documents, dated 14 October 2015, filed on behalf of George Helou.

2. Leave is granted to the cross-claimants to file the Second Further Amended Statement of Cross-Claim, dated 7 April 2017, and attached to the cross-claimants’ Notice of Motion of 21 April 2017.

3. The cross-claimants are to pay 70 per cent of the cross-defendants’ costs of the motion.

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Decision last updated: 14 July 2017