Iris Apartments Pty Ltd v Shaw
[2022] VCC 1851
| IN THE COUNTY COURT OF VICTORIA AT Melbourne COMMERCIAL DIVISION | Revised Not Restricted Suitable for Publication |
General List
Case No. CI-21-00094
| Iris Apartments Pty Ltd (ACN 150 533 583) | Plaintiff |
| v | |
| Bradley Allan Shaw | First defendant |
| and | |
| Jennifer Shaw | Second defendant |
| and | |
| Registrar of Titles | Third Party |
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JUDGE: | HER HONOUR JUDGE A RYAN | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 3 November 2022 | |
DATE OF RULING: | 10 November 2022 | |
CASE MAY BE CITED AS: | Iris Apartments Pty Ltd v Shaw | |
MEDIUM NEUTRAL CITATION: | [2022] VCC 1851 | |
RULING
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Subject:PRACTICE AND PROCEDURE – Review of a decision by a judicial registrar – pleading amendments
Catchwords: Review of judicial registrar’s decision to dismiss application to amend defence – Rule 84.03 of the County Court Civil Procedure Rules 2018 – application to amend defence prior to trial
Legislation Cited: Civil Procedure Act 2010; County Court Civil Procedure Rules 2018; Evidence Act 2008
Cases Cited:ABL Nominees Pty Ltd v MacKenzie (No 2) [2014] VSC 529; Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175; Bendigo and Adelaide Bank Limited v Grahame [2020] VSC 86; Brakatselos v ABL Nominees Pty Ltd [2012] VSCA 231; Business Service Brokers Pty Ltd v Optus Mobile Pty Ltd (No 3) [2022] VSC 283; Cargill Australia Limited v Viterra Malt Pty Ltd (No 18) [2018] VSC 772; Greensill v Piper Alderman & Ors (Ruling) [2022] VSC 622; Namberry Craft v Watson [2011] VSC 136; Northern Health v Kuipers [2015] VSCA 172; Perpetual Trustees Australia Limited v Schmidt & Anor [2010] VSC 67; Southern Motors Pty Ltd v Australian Guarantee Corporation Ltd [1980] VR 187; Wheelahan v City of Casey (No 12) [2013] VSC 316
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr J D S Barber SC | Keith R Cameron Solicitors |
| For the First Defendant | Mr H De Kock | BSP Lawyers |
| For the Second Defendant | Mr P Miller | PCL Lawyers |
| For the Third Party | No appearance |
HER HONOUR:
1Two interlocutory applications were listed for hearing on 3 November 2022 being:
(a) the first defendant’s notice to review filed 19 October 2022. The first defendant seeks a review of orders made by Judicial Registrar Muller on 12 September 2022 (“the orders”),[1] whereby the first and second defendants were refused leave to amend their defences; and
(b) the second defendant’s summons filed 2 November 2022. The second defendant seeks leave to file and serve an amended defence in the form of the proposed amended defence exhibited to the affidavit of Joanna Shaft sworn on 31 October 2022. Unlike the first defendant, the second defendant did not seek a review of the orders but made a fresh application seeking leave to file an amended defence.
[1]The orders are dated 12 September 2022. The substance of the orders was communicated to the parties by email on 19 September 2022, and reasoned orders provided on 26 September 2022.
2The first defendant relies upon an affidavit of Nicholas Gerard McCarthy dated 9 September 2022; a judicial review PDF bundle provided to the Court on 21 October 2022 (being the materials before the Judicial Registrar); and outlines of submissions dated 9 September 2022. The first defendant seeks leave to rely on the further affidavit of Matthew Peter Elefanty sworn 30 September 2022 (“the further affidavit of Mr Elefanty”), and to file and serve a revised amended defence and counterclaim as exhibited to the further affidavit. He also relies upon an additional outline of submissions dated 28 October 2022.
3The second defendant relies upon the affidavit of Joanna Shaft dated 31 October 2022; an outline of submissions dated 3 November 2022; and the documents listed in Annexure A to those submissions.
4The plaintiff relies upon the affidavit of Nicole Chong dated 28 October 2022 and an outline of submissions dated 3 November 2022.
5The plaintiff opposes the applications for leave to amend at this late stage, in circumstances where the proceeding is listed for trial on 29 November 2022 and where the defendants have not properly explained why these amendments were not sought earlier. No objection was taken to the form of the proposed amendments. The plaintiff has foreshadowed that it may apply to vacate the trial date if the amendments are granted. Consequently, the plaintiff submits that it is not in the interests of justice to permit the amendments because of the prejudice it will suffer if leave is granted.
The plaintiff’s claim
6In its amended statement of claim dated 9 September 2021, the plaintiff alleges that on or around 20 April 2011, the defendants gave a guarantee in connection with a loan agreement between Phoenix Business Development Group Pty Ltd (“Phoenix”) (since re-named Essendon Apartment Developments Pty Ltd (in liquidation)) and Pro Tem Finance Pty Ltd (“Pro Tem”). Under the guarantee, the defendants agreed to guarantee the due and punctual payment of all amounts then or subsequently due for payment by the borrower, Phoenix. On about 8 October 2012, Pro Tem registered mortgages over the defendants’ two properties located in Maribyrnong and Kensington as additional security for the loan advanced by Pro Tem.
7On about 8 February 2013, Pro Tem and the plaintiff entered into a deed of assignment of mortgage and debt, by which Pro Tem agreed to assign its interest under the loan agreement, the guarantee, and the mortgages to the plaintiff.
8On about 13 May 2020, the plaintiff demanded that the defendants pay the amount of the debt owed by Phoenix together with interest, which the defendants have failed to pay.
9The plaintiff commenced this proceeding by writ dated 14 January 2021. It claims the defendants defaulted under the mortgages over the Kensington and Maribyrnong properties. It seeks possession of the two properties and payment of the outstanding debt amount of $1,221,979.85, plus interest and costs.
10The first defendant, by his defence dated 24 September 2021, inter alia denies signing the guarantee and indemnity and the mortgages relied upon by the plaintiff. The second defendant, by her defence dated 23 September 2021, inter alia says the assignment to the plaintiff was ineffective, the debt figure is incorrect, and the claimed debt and interest are statute barred.
First defendant’s application
11The first defendant’s application is made pursuant to Rule 84.03 of the County Court Civil Procedure Rules 2018 (“the Rules”). A review under Rule 84.03 is conducted by way of a hearing de novo. The Court may exercise all power and discretions vested with the Court in respect of the subject matter of the review and confirm, vary, or set aside the order of the judicial registrar. The parties may rely upon any affidavits used and any evidence given orally before the judicial registrar. By leave of the Court, the parties may rely upon affidavits or oral evidence not given before the judicial registrar. It is not incumbent for the Court to find any error on the part of the judicial registrar to arrive at a different conclusion. Nevertheless, it is appropriate for the Court to give such weight to the judicial registrar’s decision as appears proper in the circumstances.[2]
[2] See the discussion in Bendigo and Adelaide Bank Limited v Grahame [2020] VSC 86 at [15]-[18]
12The hearing de novo requires the party seeking the orders to establish all the relevant matters. The nature of the review is such that the date for the determination of relevant facts is the date when the matter comes before the judge, not the date on which the application was dealt with by the judicial registrar.[3]
[3]Southern Motors Pty Ltd v Australian Guarantee Corporation Ltd [1980] VR 187 at 191
Leave to rely on the further affidavit of Mr Elefanty
13The first defendant seeks leave to rely on the further affidavit of Mr Elefanty. The plaintiff objects to the Court receiving the affidavit into evidence on this application.
14Rule 84.03(7)(b) of the Rules provides that each party to a review of a judicial registrar’s decision by a judge may “by leave of the Court, rely upon any affidavit or oral evidence not used or given before the judicial registrar”.
15The plaintiff relies on the case of Brakatselos v ABL Nominees Pty Ltd,[4] where the Court of Appeal held (in dealing with the then rule 77.06(7) of the Supreme Court General Civil Procedure Rules 2005 which imposed a requirement for “special” leave) that parties seeking to rely on further evidence on a re-hearing de novo are required to explain to the Court why this evidence could not have been adduced before the Associate Judge.[5] The plaintiff argues the same requirement arises in this Court but should be applied less stringently given the absence of the requirement for “special” leave under the comparable rule. The plaintiff submits that the further affidavit of Mr Elefanty does not explain why the evidence contained in his affidavit could not have been adduced before the Judicial Registrar.
[4] [2012] VSCA 231
[5]At [32] (Redlich JA, with Nettle JA and Davies AJA agreeing)
16The first defendant relied upon several matters in support of his application for leave to rely on the further affidavit of Mr Elefanty. It was pointed out that information provided by Mr Rohrt, the liquidator of one of the companies whose obligations the plaintiff alleges the first defendant guaranteed, was not available to the first defendant at the time of the hearing before Judicial Registrar Muller. In his further affidavit, Mr Elefanty describes a settlement conference between Mr Rohrt and Mr McCarthy, a solicitor for the first defendant, which took place on 20 September 2022, some eight days after the decision of the Judicial Registrar. Mr Elefanty deposes that at that meeting, Mr Rohrt made various statements regarding an alleged shortfall payment during the settlement of the Essendon property, which was previously unknown to the first defendant.
17The first defendant emphasises Mr Rohrt’s status as an independent witness and an officer of the Court, submitting that his proposed evidence outlined in the further affidavit of Mr Elefanty is highly relevant and likely to be credible and probative. Counsel for the first defendant argued that this new evidence would merely permit the first defendant to plead more precisely the allegations the subject of his amended defence. The amended defence and counterclaim the first defendant now seeks to file is different to the pleading put before the Judicial Registrar in consequence of this new information.
18In response to the first defendant’s application, the plaintiff submits that the new material sought to be filed could have been put before Judicial Registrar Muller in the previous application.[6] Conceding that the relevant conversation is said to have occurred after the hearing before the Judicial Registrar, the plaintiff notes that the further affidavit of Mr Elefanty does not explain why the evidence of alleged statements made by Mr Rohrt could not have been adduced beforehand, or Mr Rohrt approached earlier.
[6] Cf Brakatselos v ABL Nominees Pty Ltd [2012] VSCA 231 at [32]
19I will grant leave for the first defendant to rely upon the further affidavit of Mr Elefanty. The evidence in the further affidavit is relevant and therefore admissible. I am not persuaded by the plaintiff’s submission that the first defendant must first explain why the evidence was not adduced earlier before leave can be granted to amend. The relevant conversation with the liquidator took place after the hearing before the Judicial Registrar. Whilst an enquiry could have been made earlier, I am not satisfied that this omission constitutes a sufficient reason for refusing leave to the first defendant to rely upon the new material in the present review.
20The plaintiff objects to paragraph [12] of the further affidavit of Mr Elefanty on the basis that it contains second-hand hearsay: namely, that he deposes not to what Mr Rohrt said at a meeting on 20 September 2022 but what Mr McCarthy reported to him that Mr Rohrt said. Mr McCarthy is another solicitor working at the same firm as Mr Elefanty, namely BSP Lawyers who act for the first defendant. It can be noted that hearsay is admissible in interlocutory applications.[7] I am not prepared to rule the paragraph is inadmissible, but accept the hearsay nature of the evidence affects the weight that it should be given.
[7]Evidence Act 2008, s75; County Court Civil Procedure Rules 2018, r43.02(2)
Principles regarding amendment of pleadings
21The general principles relating to applications to amend pleadings were succinctly referred to by Elliott J in Cargill Australia Limited v Viterra Malt Pty Ltd (No 18):[8]
“In deciding whether to grant leave to a party to amend its pleadings, the court must consider whether the proposed amendments facilitate the identification of the real issues in dispute and the just resolution of the proceeding.
The power to grant leave to a party to amend its pleading to raise an arguable issue is a discretionary power. There is no right or entitlement for a party to amend its pleading subject to the payment of costs referable to the amendment. The nature and importance of the proposed amendments must be considered. This factor must be weighed against case management considerations such as cost, delay and the potential for unfair prejudice to other parties to the proceeding, the court and other litigants that might arise if the proposed amendments are allowed.
Further, in exercising the power to grant leave, the court may give any direction or impose any term or condition it thinks fit.”
[8][2018] VSC 772 at [32]-[34], citations omitted
22Where an application to amend pleadings is sought shortly before trial, the primary determination to be made is what the interests of justice dictate.[9]
[9]See Greensill v Piper Alderman & Ors (Ruling) [2022] VSC 622 (“Greensill v Piper Alderman & Ors”) at [7]
23In Greensill v Piper Alderman & Ors, Justice John Dixon reinforced the position that “absent extraordinary circumstances, leave to amend will be granted”.[10]
[10]At [8]
24The Court must also have regard to the relevant provisions of the Civil Procedure Act 2010 in applications for leave to amend.[11] It is important for judicial officers to engage with the Act’s provisions in balancing the competing interests of the parties and those of the administration of justice more generally.
[11]See Connock J in Business Service Brokers Pty Ltd v Optus Mobile Pty Ltd (No 3) [2022] VSC 283 at [28], citing Northern Health v Kuipers [2015] VSCA 172
25In Perpetual Trustees Australia Limited v Schmidt & Anor,[12] J Forrest J observed that following Aon Risk Services Australia Ltd v Australian National University:[13]
“(a)courts must now consider the wider public interest and the efficient use of limited court resources when deciding whether to grant applications to amend pleadings;
(b)that parties will not be permitted to raise any arguable case in any stage of proceedings subject only to payment of costs; and
(c)amendments that produce delay impact on the entire court system and affect parties desirous of utilising that particular court system.”
[12] [2010] VSC 67 at [112]
[13] (2009) 239 CLR 175 (“Aon Risk Services”)
26Other considerations include whether there is an irreparable element of unfair prejudice to the plaintiff caused by the amendments that cannot be adequately compensated for, and whether a satisfactory explanation has been given by each of the defendants for seeking the amendment so near in time to the trial.[14]
[14]Namberry Craft v Watson [2011] VSC 136 at [38] per Vickery J, citing Aon at [5] per French CJ
First defendant’s submissions
27In relation to the review application, while acknowledging the limits placed upon re-pleading by the High Court in Aon Risk Services, the first defendant relies on the decision of Derham AsJ in ABL Nominees Pty Ltd v MacKenzie (No 2),[15] in which His Honour held that:[16]
“…pleadings are not an end in themselves. They are a means of ensuring that real issues of controversy are raised for determination in a way that is procedurally fair, both to a plaintiff and a defendant. This allows claims and defences to be clearly articulated, granting parties an opportunity to present their case properly prepared, on clear notice of allegations and defences raised in the proceedings. On this basis, the authorities clearly establish that, absent extraordinary circumstances, leave to amend will be granted.”
[15] [2014] VSC 529
[16] At [22], citations omitted
28Counsel submitted that Aon Risk Services was distinguishable on this basis, and that “extraordinary circumstances” precluding the grant of leave did not arise in this matter.
29The first defendant argues that the proposed amendment would merely allow him to articulate his existing defence more precisely. In this regard, counsel for the first defendant notes that the possibility of a set off had already been raised by the second defendant in paragraph 15(e) of her defence dated 23 September 2021.
30The first defendant submits that a grant of leave to rely on the further affidavit of Mr Elefanty and its revised amended defence would both facilitate the just and efficient resolution of the proceeding. It would also be consistent with the purpose of the power to amend under rule 36.01 of the Rules, which is to ensure that the real questions in controversy between the parties are decided.
Plaintiff’s submissions in opposition
31The plaintiff submits if the extensive new allegations included in the first defendant’s proposed amendments were allowed, it would need to prepare a serious and detailed responsive case, imperilling the trial date of 29 November 2022. In this regard, the plaintiff suggests that it would be necessary for it to seek further evidence from Ms Marie Peterson from Partner’s Legal. Ms Peterson was the solicitor acting for Essendon Apartment Developments Pty Ltd and the liquidator at the time of the sale of the Essendon property, and attended the settlement of the Essendon property. The plaintiff has not yet had any success in locating her.
32Finally, the plaintiff suggests that the first defendant has not satisfactorily explained his delay in seeking to amend his defence, noting that the public interest in the efficient despatch of the Court’s business is liable to be defeated by late applications for substantial amendments to a party’s case. On this basis, it submits that the application should be dismissed.
33In response, counsel for the first defendant repeated his contention that the evidence for which leave was sought was clearly relevant and went to the very heart of the matter. He reiterated that the proposed amendments merely sought to articulate the legal consequences flowing from the new evidence, noting that the Court would hear evidence from Mr Rohrt at trial in any case. Suggesting that fraud in this context means conduct unfair to the guarantor but goes no further, the first defendant submitted that it would be unjust to prevent the defendants from addressing the legal issues that arise from the evidence proposed to be adduced.
Second defendant’s submissions
34The second defendant also submits that the proposed amendments to her defence, which allege that there were sufficient proceeds of the sale to pay the debt allegedly owed to the plaintiff and to discharge the mortgage over the property in full, are of fundamental importance to the proceeding. A helpful chronology of the factual background to this dispute is set out in more detail in the affidavit of Ms Shaft, the solicitor acting for the second defendant, sworn 31 October 2022.
35In the hearing before me, the second defendant submitted that interlocutory orders such as those made by the Judicial Registrar on 26 September 2022 do not create either res judicata or an issue estoppel. While she accepts that there must be limits on litigants reagitating interlocutory applications, she emphasises that it is no abuse of process for a litigant to pursue an application where circumstances have changed. The second defendant points out that, whereas at the hearing before the Judicial Registrar the trial date was set for two weeks’ hence, the original court date has since been vacated of the Court’s own motion and reset for 29 November 2022. While the time frame before trial remains short, the plaintiff has now been on notice of the proposed amendment for approximately six weeks. The application for leave to amend her defence is therefore unlikely to cause undue prejudice to the plaintiff.
36The second defendant argues that given the procedural history in relation to the sale of the Essendon property, it is unfair for the plaintiff to look to the guarantors for payment. Noting that none of the documents discovered show exactly what happened to the shortfall payment alleged by Mr Rohrt, indirect references in documents and the hearsay evidence from Mr Elefanty strongly point towards a set off in line with paragraph 15(e) of the second defendant’s current defence. She emphasises that Mr Iskaff, the director of the plaintiff who was present at the settlement, ought to be able to say exactly what happened and would be called to give evidence at trial in any event.
37The second defendant notes that her proposed amendments do not affect paragraph 15(e) of her original defence, which does refer to a potential set off. The issue regarding the sale of the Essendon property and discharge of that mortgage has been part of the second defendant’s case since late last year. The second defendant notes that since Mr Iskaff and Mr Rohrt will give evidence on that issue even if the amendment is not allowed; allowing the amendment merely allows her to better articulate the legal consequences flowing from that evidence, rather than substantially changing the nature of the case put against the plaintiff.
38The second defendant further submits that the interests of justice strongly weigh in favour of grant of leave. Counsel noted that while there had been unfortunate delay occasioned by the voluminous nature of the documents produced on USB by Mr Rohrt and staffing issues at the second defendant’s solicitor’s offices, it was not of a nature that would significantly prejudice the plaintiff. To that end, counsel submitted that the events in question had always been within the plaintiff’s knowledge given that its director was present at settlement, and that the impact of delay must be weighed against the importance of the amendment and broader interests of justice.
39Counsel noted that while prejudice to the plaintiff is a factor, and one tied to whether the trial would need to be adjourned, there remains some time before the trial date. On the basis that the plaintiff has had the proposed amended pleading since 9 September 2022, he suggested it was not unfair for the plaintiff to be required to reply to the amendments within two weeks, with another week for the defendants to respond if necessary, so that the pleadings would be regularised by time of trial. Noting that the plaintiff wished to confer with Ms Peterson before the trial if the amendments were granted, the second defendant suggested that there was no reason that she could not be contacted during the three and a half weeks before the trial.
40In the event that the Court did consider the trial would need to be adjourned if the proposed amendments are allowed, the second defendant submits that the nature of the proposed amendments are nevertheless such that it is in the interest of justice to allow them. She submits that any delay and any prejudice caused to the plaintiff by reason of an adjourned trial must be balanced against the requirement for a just determination of the proceeding, which involves a consideration of all the available defences. The second defendant submits that it would be unjust to deny her recourse to the proposed defence in equity given the clear evidentiary and legal merit of the proposed amendments.
Plaintiff’s submissions in opposition
41In response, the plaintiff notes that it is not permissible to make the same arguments to two judicial officers, and that the only material change in circumstances compared to the previous application is that the trial date has been refixed. The plaintiff claims that this is not a change that enables the second defendant to effectively ignore the Judicial Registrar’s decision.
42The plaintiff further describes the second defendant’s application as incompetent, suggesting that if the second defendant does not wish to accept the Judicial Registrar’s decision, she must proceed by way of review under Order 84, not by making a separate application to a judge for the same relief.
43The plaintiff rejects the submission that it had been on notice of the second defendant’s proposed amendments since 9 September 2022. Counsel for the plaintiff noted that, while the Judicial Registrar had notified parties of his decision by 19 September and circulated detailed reasons in orders dated 26 September, the second defendant’s summons was only issued on 31 October, without any substantive explanation for the delay in making a fresh application. The plaintiff argues in particular that Ms Shaft’s affidavit should not be permitted to be relied upon, because it does not explain why the evidence it seeks to adduce could not have been adduced before the Judicial Registrar. It also notes that paragraph [44] of Ms Shaft’s affidavit refers impermissibly to hearsay evidence.
44I will allow Ms Shaft’s affidavit to be received into evidence for the same reasons that I allowed the further affidavit of Mr Elefanty. Further, Ms Shaw’s affidavit does provide some explanation for the delay, including the fact that two solicitors handling the matter left the firm on 30 August and 11 October 2022 respectively, leading to some delay whilst she and her principal familiarised themselves with the matter.
45Counsel for the plaintiff submitted that the second defendant’s application if granted would, in the same way as the first defendant’s, imperil the trial date. He reiterated that the amendment would require the plaintiff to locate Ms Peterson, claiming that would be necessary despite the second defendant’s submissions regarding Mr Iskaff, and claiming there was neither any evidence that Mr Iskaff was present at settlement, nor any documentary evidence of the set off claimed.
46In response, counsel for the second defendant explained that the delay in filing the application from 19 September to 31 October 2022 was caused by the staffing issue described by Ms Shaft in her affidavit and outlined at paragraph [44] above which, while unfortunate, could not be laid at the feet of the second defendant herself. He also noted that the plaintiff had been on notice of the issues raised in paragraph 15(e) of the second defendant’s defence for some time, and that as such the plaintiff ought to have sought out Ms Peterson several months ago.
Consideration
47Where a defendant seeks to raise an affirmative allegation in support of a denial of a plaintiff’s claim, the defendant bears the evidentiary onus, and it is a matter that must be pleaded.[17] This is one factor that weighs in favour of permitting an amendment to the defences.
[17]Greensill v Piper Alderman & Ors (Ruling) [2022] VSC 622 at [26], citing Wheelahan v City of Casey (No 12) [2013] VSC 316 at [25(b)]
48The plaintiff did foreshadow a possible adjournment application should I grant the defendants leave to file the amended defences. This would likely cause substantial delay in the proceeding. But this is just one factor to take into account when exercising my discretion and is not definitive. As always, the consideration must be - where do the interests of justice best lie?
49The plaintiff itself caused an earlier trial date to be vacated because it failed to pay a hearing fee. The trial on 29 November 2022 is the second trial date allocated. As is customary in the Commercial Division, trial dates are allocated at an early stage, but in practice many of these hearings are adjourned for a variety of reasons. The mere fact that the trial on 29 November 2022 may go off is not of itself, in my view, a sufficient reason to refuse the amendment now sought taking into account the wider public interest and the efficient use of limited court resources when considering these types of applications. There is arguably still time for the plaintiff to attempt to locate Ms Petersen and to seek instructions about the factual matters raised in the amended defences from Mr Iskaff, who should have direct knowledge of the matters alleged. The new allegations raising equitable defences as propositions of law, such as unfair conduct by a mortgagee towards a guarantor, should be capable of being dealt with in a reply in time for the hearing.
50The other matter relied upon by the plaintiff is that the defendants should have investigated this issue at an earlier time. Whilst there has been some tardiness, this is in part excused by the fact that two solicitors acting for the second defendant left their employment, and the relevant conversation with the liquidator only happened after the hearing before the Judicial Registrar. It can be accepted that the defendants should have been more diligent, but I am not satisfied that this factor is sufficient to warrant the refusal of leave to amend.
51I do not consider the second defendant’s application is an abuse of process. Parties can, for example, bring more than one summary judgment application, and multiple applications to amend pleadings are often made at trial or even after trial to conform with the case as run. The application made to the Judicial Registrar was made orally and without any application on foot or evidence in support, which was why the Judicial Registrar declined to grant leave. This omission is now cured in the application before me.
52It would also lead to an undesirable and anomalous result if the first defendant was granted leave to amend because it commenced a review application, but the second defendant was denied leave because of the form of her application. It is in the interests of justice that both defendants should be permitted to raise similar defences which go to the heart of the controversy, being whether the underlying debt sought from them as guarantors remains due and payable.
53I am of the view that the defendants should be given leave to amend their defences. Despite cogent arguments presented by the plaintiff, the circumstances are not so extraordinary as to prevent the grant of leave. It is an important issue in controversy as to what happened to the funds provided at the settlement of the Essendon property and whether there was a set off by the plaintiff of some million dollars or not. No doubt, Mr Rohrt and the plaintiff’s director will be questioned closely at trial about what occurred and how any settlement funds were applied. If there was a set off between entities controlled by the plaintiff, then that might in turn affect the plaintiff’s entitlement to recover the debt claimed under the guarantee from the defendants. In my view, the interests of justice dictate that the defendants should be allowed to pursue this issue, and it is one which should be squarely pleaded so as to put the plaintiff on proper notice. I will therefore grant leave to the defendants to file and serve their proposed amended defences.
Costs and form of orders
54Whilst the first and second defendants have succeeded in obtaining leave to file their amended defences, I am of the view that they should, as is usual, bear the cost of obtaining that indulgence. This is particularly so where, as the plaintiff correctly pointed out, the defendants were dilatory and this issue ideally could and should have been addressed at an earlier stage.
55Unless the parties wish to make any submissions to the contrary about costs, I will make the following orders:
(1)Order 5 of the orders made by Judicial Registrar Muller dated 12 September 2022 is set aside.
(2)By 4.00pm on 13 November 2022, the first defendant has leave to file and serve an amended defence and counterclaim in the form exhibited to the affidavit of Matthew Peter Elefanty sworn 30 September 2022.
(3)By 4.00pm on 13 November 2022, the second defendant has leave to file and serve an amended defence in the form exhibited to the affidavit of Joanna Shaft sworn 31 October 2022.
(4)The first defendant pay the plaintiff’s costs of and incidental to the application for review filed 30 September 2022, together with the plaintiff’s costs thrown away by reason of the amendments to the first defendant’s defence and counterclaim, to be taxed on the standard basis in default of agreement.
(5)The second defendant pay the plaintiff’s costs of and incidental to the summons filed 31 October 2022, together with the plaintiff’s costs thrown away by reason of the amendments to the second defendant’s defence, to be taxed on the standard basis in default of agreement.
(7)Reserve liberty to the parties to apply by email to the Commercial Registry ([email protected]) for further directions upon giving reasonable notice to all other parties.
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Certificate
I certify that these 18 pages are a true copy of the Reasons for Ruling of Her Honour Judge A Ryan delivered on 10 November 2022.
Dated: 10 November 2022
Associate to Her Honour Judge A Ryan
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