Kayserian Nominees (No 1) Pty Ltd v J R Garner Pty Ltd

[2008] NSWSC 426

CITATION:	Kayserian Nominees (No 1) Pty Ltd v J R Garner Pty Ltd [2008] NSWSC 426
HEARING DATE(S):	28 April 2008
JURISDICTION:	Equity Division Expedition List
JUDGMENT OF:	Brereton J
EX TEMPORE JUDGMENT DATE:	28 April 2008
DECISION:	Vacate hearing appointed to commence today and adjourn to 20 June 2008. Grant leave to plaintiff to file Further Amended Statement of Claim and to rely on late affidavits.
CATCHWORDS:	PROCEDURE – Application by plaintiff to rely on affidavit evidence served out of time provided for by directions – where application made on first day set down for hearing – where defendant has chosen not to prepare to deal with new issues raised by late affidavit evidence – where justice of case requires some of the late affidavit evidence be adduced – considerations of prejudice to defendant – whether defendant should be allowed election to vacate hearing – effect of election on admissibility of affidavit evidence – where defendant elects to proceed with hearing and plaintiff then applies to vacate - PROCEDURE – Application to further amend Statement of Claim where the Court had previously noted that no party intended to amend its pleadings – where application made on first day set down for hearing – considerations of prejudice to opposing party – whether opposing party should be allowed election to vacate hearing – effect of election on amendment of Statement of Claim - where defendant elects to proceed with hearing and plaintiff then applies to vacate.
CATEGORY:	Procedural and other rulings
PARTIES:	Kayserian Nominees (No 1) Pty Ltd (plaintiff) J R Garner Pty Ltd (defendant)
FILE NUMBER(S):	SC 3528/07
COUNSEL:	Mr J R Clarke (plaintiff) Mr J E Armfield (defendant)
SOLICITORS:	Forest Legal (plaintiff) Patterson Houen & Commins (defendant)

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
EXPEDITION LIST

BRERETON J

Monday 28 April 2008

3528/07 Kayserian Nominees (No 1) Pty Ltd v J R Garner Pty Ltd

JUDGMENT (ex tempore)

1 HIS HONOUR: In the substantive proceedings, which are set down for hearing before me as an expedited matter to commence today for two days, the plaintiff Kayserian Nominees (No 1) Pty Limited claims specific performance of a Contract for Sale of commercial premises made between it as purchaser and the defendant JR Garner Pty Limited as vendor on 8 January 2007. The contract included a Special Condition 13, which made completion subject to the issue of a building certificate under (NSW) Environmental Planning and Assessment Act 1979, s 149D. No such certificate issued prior to the date for completion fixed by the contract, and the vendor purported to rescind on that account. The essential issue in the current proceedings is whether the vendor was entitled to rescind, the purchaser contending primarily that the vendor was in default of its express or implied obligation to do all things reasonable on its part to obtain the certificate and, alternatively, that the purchaser, for whose benefit the condition had been inserted, has waived the condition.

2 The proceedings were commenced by Statement of Claim filed on 9 July 2007. On 10 September 2007, the Registrar made directions by consent requiring the plaintiff to file and serve an Amended Statement of Claim by 14 September, and the defendant to file and serve an Amended Defence by 24 September, to which date the matter was adjourned. On 24 September, the Registrar directed that the plaintiff serve affidavits on which it intended to rely by 2 November, and the defendant serve affidavits on which it intended to rely by 30 November 2007, with subpoenas to be returnable on 11 October; the matter was adjourned to 4 December 2007. On 4 December, the Registrar adjourned the matter to 25 January 2008, on which date directions were made that the plaintiff serve affidavits in reply by 13 February and the proceedings were adjourned to 15 February 2008.

3 On 15 February, the matter came before me in the Expedition List when, by consent, it was adjourned to 22 February, on which date I fixed the matter for hearing before me to commence today, and made directions, including that no party may read at the hearing without the leave of the Court any affidavit which had not already been served, save that the plaintiff may file further affidavits by 14 March, and the defendant may file affidavits in reply by 28 March. I also noted that no party proposed to amend its pleadings.

4 On 8 April 2008, Mr Kayserian, the principal of the plaintiff, telephoned his then solicitor, Mr Psaltis, and told him he was ceasing to use his professional services in this matter, forthwith. Later the same day, he confirmed those instructions in writing. On 9 April, Mr Psaltis filed notice that his retainer had been terminated. On 11 April, the plaintiff retained its present solicitors, who filed a Notice of Change of Solicitor on or about 15 April 2008. On 14 April 2008, the plaintiff's new solicitors informed the Court and the defendant that they had been instructed and of counsel who had been briefed, adding, "Please note that we will be seeking leave to file and serve an expert building report from Craig Nisbett of Sydney Building Reports which is currently being prepared."

5 The defendant's solicitors responded by letter on 14 April, indicating that they were instructed to strenuously object to the plaintiff now seeking to put on additional evidence with the consequent delay in the hearing of the matter. On 18 April, the plaintiff's solicitor served a copy of Mr Nisbett's affidavit sworn that day, and wrote to my Associate asking to have the matter re-listed for the purpose of seeking leave to rely on that affidavit and also a further affidavit of Mr Kayserian yet to be sworn. As I was on vacation from 12 April, it was indicated that the application would be dealt with at the commencement of the hearing. The defendant's solicitors responded that they maintain the position of objecting to the adducing of any further evidence.

6 When the matter was called on for hearing today, the plaintiff sought to rely not only on the affidavit of Mr Nisbett and an affidavit of Mr Kayserian sworn 23 April 2008, but also on an affidavit of Mr Gregory Patten sworn 24 April 2008. Moreover, the plaintiff seeks leave to further amend the Statement of Claim, in the form of a draft Further Amended Statement of Claim handed up in Court this morning.

7 As it may be that the consequences will vary depending upon precisely what is and is not admitted, and although I thought it useful to have an overview of the entirety of the applications to be made before ruling on them, I propose to deal first with Mr Nisbett's affidavit.

8 Mr Nisbett is a building consultant. It is sought to adduce from him expert evidence as to the cost of the rectification work that would have been required to procure the issue of the building certificate, and the time which such works would have taken. That evidence is intended to underpin Mr Kayserian's affidavit evidence to the effect that had he been aware of those matters, he would have had the works undertaken and himself incurred the costs, subject to any possible claim to recoup it later, so that a certificate could issue before the completion date. Mr Patten, who is a Council employee and who had at least part of the conduct of the matter at the Council, would give evidence to the effect that, had the works referred to by Mr Nisbett been undertaken, a certificate would have issued.

9 Although there was previously evidence served in the defendant's case to the effect that the defendant had been informed by a building consultant or engineer of an estimate of the costs of rectification works, that evidence was not adduced as expert evidence – as is apparent from the circumstance that no attempt was made to comply with (NSW) Uniform Civil Procedure Rules, Schedule 7, or the other requirements for the adducing of expert evidence – but to explain what steps had been taken by the defendant to obtain a building certificate and when and why those steps were taken. Mr Nisbett's evidence would raise for the first time the quantification of the costs of the rectification works and the time which such works would have taken.

10 I accept that the defendant is not today in a position to deal with that evidence and is entitled to an opportunity to do so. I also accept, given the time frame in which the plaintiff was able to obtain such evidence, that it may well have been possible for the defendant to position itself to deal with Mr Nisbett's evidence by today, whereas – as it was entitled – it chose not to do so and instead to take objection at the hearing to the plaintiff's late served material. In those circumstances, I do not think that the question of the plaintiff being out of time on the one hand, and the defendant not having used its best endeavours to be in a position to meet the plaintiff's late evidence on the other, is an entirely clear cut one. In short, it seems to me that the defendant not unreasonably chose not to prepare itself to deal with the late served evidence in time for today, but in doing so it also took the risk that if that evidence were admitted, the matter might not be able to proceed today.

11 Accordingly, in respect of Mr Nisbett's evidence, the justice of the case seems to me to be that I should permit the evidence to be adduced, but on the basis that should the defendant desire an adjournment to meet it, then it will have that adjournment and the costs thrown away on an indemnity basis.

12 Mr Kayserian's affidavit is in part a curative affidavit, which puts into admissible form matters already raised in earlier affidavits, or provides greater particularity and more cogent proof in respect of some of that material. In those respects, I do not consider that the late service of Mr Kayserian's affidavit evidence occasions significant prejudice, and I would admit it. Insofar as Mr Kayserian addresses what he would have done had he known the matters now deposed to by Mr Nisbett, the admissibility of his affidavit is contingent upon the admissibility of Mr Nisbett's evidence which I have decided to admit upon the terms previously mentioned.

13 So far as Mr Patten's evidence is concerned, I accept that it too is potentially relevant on the question of the time which it would take to perform the rectification works. It, however, is served very late, and was not apparently foreshadowed even in the correspondence of 13 April, and there is no realistic possibility that even using best endeavours the defendant could have been in a position to investigate the underlying facts and meet that material today.

14 If the defendant elects to take its chances with Mr Nisbett's affidavit and proceed today, I would not be inclined to admit Mr Patten's evidence. On the other hand, if the matter is to be adjourned in any event to permit the defendant to investigate Mr Nisbett's evidence and respond to it, then that will also afford an opportunity to deal with Mr Patten's evidence.

15 So far as the application for leave to amend the Statement of Claim is concerned, I do not think the amendments to the particulars in paragraph 7 significantly alter the case in such a way as would prejudice the defendant's ability to meet it, and I would allow those amendments. However, the defendant could not reasonably be expected to meet, today, the case sought to be raised by paragraph 8A (which for the first time alleges that the defendant's purported rescission was arbitrary, capricious or unreasonable) and paragraph 15 (which for the first time raises a claim for relief against forfeiture). If the case were to proceed today, I would not permit the amendments in paragraphs 8A and 15. But, again, if the matter were otherwise to be adjourned, I would permit those amendments and an opportunity to deal with them.

16 Accordingly, I make the following orders:

(1) Grant leave to the plaintiff to adduce expert evidence of Craig Nisbett, Building Consultant, as contained in his affidavit sworn 18 April 2008.

(2) Grant leave to the plaintiff to rely on the affidavit of Mr Nisbett sworn 18 April 2008 notwithstanding that it was served outside the time permitted for the service of affidavit evidence.

(3) Grant leave to the plaintiff to further amend the Statement of Claim by filing a document in the form of that entitled “Further Amended Statement of Claim” initialled by me, dated this day and placed with the papers, omitting therefrom proposed paragraphs 8A and 15.

(4) Reserve leave to the defendant to apply for the adjournment of the hearing of the proceedings. In that respect I indicate that the Court will be able to hear the matter on 5 and 6 June, or 12 and 13 June, or 23, 24 and 25 June.

(5) Refuse leave to the plaintiff to rely on the affidavit of Mr Gregory Patten sworn 24 April 2008.

(6) Reserve leave to the plaintiff to renew the application for leave to rely on that affidavit and to amend the Statement of Claim by reinstating paragraphs 8A and 15 in the event that the defendant seeks an adjournment.

(7) Grant leave to the plaintiff to rely on the affidavit of Hagop Jack Kayserian sworn 23 April 2008 notwithstanding that it is served outside the time limited for the service of affidavit evidence.

[The defendant did not seek an adjournment. The plaintiff thereupon applied for an adjournment.]

17 Given my view of the procedural history, to which I have already referred, it is with considerable reluctance that I accede to the application. However, it seems to me that the defendant has not identified any such substantial or irremediable prejudice arising from an adjournment for a month or two as would justify shutting out the plaintiff from running the case which the plaintiff, on advice, now wishes to conduct. Accordingly, I will accede to the plaintiff's application for an adjournment, but the plaintiff must pay the costs thrown away, on an indemnity basis.

18 In determining to what date the proceedings should be adjourned, it seems to me that I must give weight to the fact that the defendant wishes to proceed today and is ready to do so and ought not through the plaintiff’s default be deprived of counsel and solicitor of its choice – in whom, no doubt, something has already been invested, even if in counsel's case he has only come into the matter but recently, and also bearing in mind that the costs of changing counsel have already once been incurred by the defendant. As it is the plaintiff who is seeking an adjournment in order to enable it to run a case which it is out of time otherwise to run, I think, as Mr J R Clarke more or less acknowledges, that less weight can be given to the convenience and/or availability of the plaintiff's lawyers, although I do accept that the plaintiff should not be required to give evidence on the day on which he returns to the country from overseas.

19 While I have some reservations that the matter will be finished in a day and a half, it seems to me that with the written submissions that have already been exchanged, that should be just about possible.

20 My orders are:

(1) Vacate the hearing appointed to commence before me today.

(2) Adjourn the proceedings to Friday 20 June 2008 at 11:00am before me for hearing for two days concluding on Monday 23 June 2008.

(3) Order that the plaintiff pay the defendant's costs of today and otherwise occasioned or thrown away by the adjournment, such costs to be assessed on an indemnity basis.

(4) Grant leave to the defendant to proceed to assessment of those costs forthwith.

(5) Extend time for service by the defendant of any affidavit evidence in reply to the affidavits of Mr Nisbett, Mr Kayserian, and Mr Patten to 19 May 2008.

(6) Grant leave to the plaintiff to further amend its Statement of Claim by filing a document in the form of the “Further Amended Statement of Claim” initialled by me, dated this day and placed with the papers, with paragraphs 8A and 15 reinstated.

(7) Grant leave to the plaintiff to rely at the hearing, subject to all just objections, on the affidavit of Mr Patten sworn 24 April 2008, notwithstanding that it was served outside the time limited for the service of the plaintiff's affidavit evidence.

(8) Note that in the event that either party proves at the hearing that it has suffered damage, I would be inclined to order that the quantum of damages be determined upon inquiry rather than at the substantive hearing.

(9) Grant leave to the defendant to amend the cross-claim by inserting, in the claims for relief, an inquiry as to damages.

(10) Extend time for service of further evidence by the plaintiff, strictly limited to evidence in reply to any further affidavit material served by the defendant, to 2 June 2008.

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