IDAMENEO (No 123) Pty Ltd v Thomas Martin Suszko

[2015] SASC 39

SUPREME COURT OF SOUTH AUSTRALIA

(Civil: Application)

IDAMENEO (NO 123) PTY LTD v THOMAS MARTIN SUSZKO

[2015] SASC 39

Judgment of The Honourable Justice Stanley

27 February 2015

PROCEDURE - SUPREME COURT PROCEDURE - SOUTH AUSTRALIA - PROCEDURE UNDER RULES OF COURT - PLEADINGS

PROCEDURE - MISCELLANEOUS PROCEDURAL MATTERS - CROSS-CLAIMS: SET-OFF AND COUNTERCLAIM

Application seeking the recall of an order made dismissing an application by the defendant to amend the defence and to plead a set-off and counterclaim. 

The defendant brings this interlocutory application relying on “fresh” evidence. When the original application was argued, the defendant submitted that PHCL in its accounts treated the “acquisition” of the medical practices as a purchase of goodwill. The defendant contended this was misleading and evidence of the fraud it wished to allege was being perpetrated by the sham contract entered into by the plaintiff and the defendant in the Sale Deed. The defendant submits that the "fresh" evidence relied upon in support of this application has two purposes.  First, the defendant submits that the alteration of the manner in which PHCL treats goodwill is an admission that the Sale Deed was a sham and the plaintiff did not acquire the defendant’s practice, and that the taxation representation of the “acquisition” of his practice by the plaintiff was false and misleading.  Secondly, he submits that the evidence discloses that the plaintiff has attempted to mislead the Court in two relevant ways:  first, he contends that it is evident from the work that PHCL must have undertaken to effect the change in its accounting policy that the plaintiff will not suffer the prejudice it asserts in being ready to meet the case sought to be pleaded by the proposed amendments; and secondly, by failing to disclose that PHCL was well advanced in changing its accounting policy when the application to amend was argued on 13 February 2015.

Whether the "fresh" evidence should be received. Whether the order dismissing the application to amend the defence and to plead a set-off and counterclaim should be recalled.

Held per Stanley J, dismissing the application to recall the order:

1. The test for the reception of fresh evidence has three criteria: first, could the evidence have been obtained with reasonable diligence at the hearing of the application to amend; secondly, is the evidence apparently credible; and, thirdly, is the evidence such that it would probably have an important, but not necessarily decisive, influence on the result of the application (at [6]).

2. The evidence in the half year financial statement and the associated documents was not available at the time the application to amend was argued. The evidence is apparently credible.  However, as is apparent from the reasons for dismissing the application to amend, the basis upon which I refused the application is the lateness of the application in the context of the trial date, the lack of any satisfactory explanation for the delay in bringing the application, the significant costs involved, and most importantly, the fact that allowing the amendment will necessitate the adjournment of the trial (at [7]).

3. I consider the evidence of PHCL’s accounting policy to be of marginal relevance to the central issue at trial, namely, the enforceability of the restraint clause.  Accordingly, I do not consider the evidence would probably have had an important influence on the outcome of the application.  For these reasons, I would refuse to admit the evidence (at [7] - [8]). 

3. I am not prepared to recall the order I made dismissing the application to amend (at [5]). 

4. Even if I had admitted the evidence as fresh evidence, I would nonetheless have refused the application (at [9]).

Ragless v Ipa Holdings Pty Ltd (In Liq) and Carnie (Non-Party) (2012) ACSR 560; R v Dorning (1981) 27 SASR 481, considered.

IDAMENEO (NO 123) PTY LTD v THOMAS MARTIN SUSZKO
[2015] SASC 39

Civil

STANLEY J:

1. On 23 February 2015 the defendant brought an interlocutory application seeking the recall of the order made by me dismissing the application to amend the defence and to plead a set-off and counterclaim.  It did so relying on “fresh” evidence.  The “fresh” evidence consists of a financial report by Primary Health Care Limited (PHCL) for the half year ending 31 December 2014 together with a document entitled “Highlights Summary” and a media release all dated 18 February 2015.  The evidence is that all of these documents were published on that date.  These documents refer, inter alia, to a change in the accounting by PHCL for “the acquisition of healthcare practices”.  In particular, the documents refer to a changed treatment for accounting purposes of the purchase of goodwill where PHCL or its subsidiaries have “acquired” medical practices from doctors who agree to provide medical services to patients from premises owned and operated by PHCL or its subsidiaries. 

2. The principles relevant to the exercise of the Court’s power to recall an order previously made are well settled and are set out in Ragless v Ipa Holdings Pty Ltd (In Liq) and Carnie (Non-Party)[1] where White J said:[2]

   The approach of courts when asked to revoke or vary an interlocutory order of a substantive kind, such as the present, is well settled.  I reviewed many of the authorities in West Beach Trust v Profile Events Pty Ltd.  The power to revoke or vary an interlocutory order of a substantive kind should be exercised only sparingly.  An applicant must show some good reason for the Court to intervene.  Good reason may be shown to exist when there has been some significant change of circumstances; when a party becomes aware of facts which he or she could not reasonably have known at the time of the original hearings; when there has been a change in the relevant law; or when it appears that the order is having an effect which is significantly different from that which was contemplated at the time when it was made.  This approach avoids the injustices and inappropriate use of judicial time and resources which may arise if interlocutory orders can be re‑litigated at will.  However, the overriding principle is that the Court should remain in control of its interlocutory orders and should vary or revoke such orders if the interests of justice require it to do so in the circumstances of a particular case.

   One matter is, however, clear.  The jurisdiction to revoke or vary an interlocutory order of a substantive kind should not be exercised when the real basis for the application is that the original order was wrongly made.  The recourse available to a litigant making that contention is by means of appeal.

   [Citations omitted].

   [1] [2012] SASC 203, (2012) ACSR 560.

   [2] [2012] SASC 203 at [12] – [13], (2012) ACSR 560 at 2-3.

3. When the original application was argued, the defendant submitted that PHCL in its accounts treated the “acquisition” of these medical practices as a purchase of goodwill.   The defendant contended this was misleading and evidence of the fraud it wished to allege was being perpetrated by the sham contract entered into by the plaintiff and the defendant in the Sale Deed. 

4. The defendant submits that the evidence relied upon in support of this application has two purposes.  First, the defendant submits that the alteration of the manner in which PHCL treats goodwill, apparent from the “fresh” evidence, is an admission that the Sale Deed was a sham and the plaintiff did not acquire the defendant’s practice, and that the taxation representation of the “acquisition” of his practice by the plaintiff was false and misleading.  He submits this is highly relevant to the amended case he wishes to plead.  Secondly, he submits that the evidence discloses that the plaintiff has attempted to mislead the Court in two relevant ways:  first, he contends that it is evident from the work that PHCL must have undertaken to effect the change in its accounting policy that the plaintiff will not suffer the prejudice it asserts in being ready to meet the case sought to be pleaded by the proposed amendments; and secondly, by failing to disclose to the Court that PHCL was well advanced in changing its accounting policy when the application to amend was argued on 13 February 2015.  

5. I am not prepared to recall the order I made dismissing the application to amend. 

6. The test for the reception of fresh evidence has three criteria:[3]  first, could the evidence have been obtained with reasonable diligence at the hearing of the application to amend; secondly, is the evidence apparently credible; and, thirdly, is the evidence such that it would probably have an important, but not necessarily decisive, influence on the result of the application. 

   [3]    R v Dorning (1981) 27 SASR 481 at 485 – 486.

7. The evidence in the half year financial statement and the associated documents was not available at the time the application to amend was argued.  The evidence is apparently credible.  However, as is apparent from the reasons for dismissing the application to amend, the basis upon which I refused the application is the lateness of the application in the context of the trial date, the lack of any satisfactory explanation for the delay in bringing the application, the significant costs involved, and most importantly, the fact that allowing the amendment would necessitate the adjournment of the trial with the attendant delay and inconvenience to the parties and other litigants waiting for the trial of their actions.  None of the material sought to be relied on by way of fresh evidence alters my reasons for refusing the application.  On the contrary, I consider that the accounting treatment by PHCL of goodwill said to be obtained in the “acquisition” of the defendant’s medical practice is of marginal relevance to the central issue in the action, namely, the enforceability of the restraint clause in the Sale Deed.    At its highest, the “fresh” evidence amounts to nothing more than evidence that may corroborate the defendant’s existing plea that there was no transfer of goodwill effected by the Sale Deed and the proposed plea by way of defence and in support of the set-off and counterclaim that the Sale Deed was a contract void for illegality.  The application to amend was not dismissed on the basis that the case sought to be pleaded was not arguable but for the reasons set out above.  Further, I cannot accept that the “fresh” evidence demonstrates that the plaintiff would not be prejudiced by the amendments sought.  Not only is that submission mere supposition, but I am satisfied on the basis of the evidence in the sixteenth and seventeenth affidavits of Nicholas McCabe, which includes the affidavit of the CEO of PHCL, Mr Duff, that the amendments, if allowed, would occasion prejudice to the plaintiff which would necessitate the adjournment of the trial.  Finally, I am not satisfied that there was a deliberate attempt by the plaintiff to mislead the Court by omission by the failure to disclose the steps it had taken to effect a change in its accounting policy when the application to amend was argued.  While I can understand the defendant’s suspicion that the plaintiff was knowingly withholding evidence that he considers was relevant to the determination of his application, the fact is that at that time PHCL had not made a definitive decision to change its accounting policy and I am not prepared to find that the plaintiff made a deliberate decision to conceal from the Court evidence that it knew to be relevant to the determination of the application to amend.  As I have indicated, I consider the evidence of PHCL’s accounting policy to be of marginal relevance to the central issue at trial, namely, the enforceability of the restraint clause. 

8. Accordingly, I do not consider the evidence would probably have had an important influence on the outcome of the application.  For these reasons, I would refuse to admit the evidence.  It follows that the application to recall my order dismissing the application to amend must fail. 

9. In any event, even if I had admitted the evidence as fresh evidence, I would nonetheless have refused the application for the same reasons.