Krajovska v Krajovska
[2011] NSWSC 906
•26 July 2011
Supreme Court
New South Wales
Medium Neutral Citation: Krajovska v Krajovska & Ors [2011] NSWSC 906 Hearing dates: 26 July 2011 Decision date: 26 July 2011 Jurisdiction: Equity Division Before: Black J Decision: Paragraphs 79 - 80 of the Defence filed by the Second, Third and Fourth Defendants be struck out; leave to file an Amended Statement of Cross-Claim refused.
Catchwords: Striking out of part of a defence which discloses no arguable defence; refusal of leave to file Amended Statement of Cross-Claim; application of Civil Procedure Act sections 56 - 59 and Uniform Civil Procedure Rules r 14.28. Legislation Cited: - Civil Procedure Act 2005 (NSW) - s 56, s 57, s 58, s 59, s 60
- Conveyancing Act 1919 (NSW) - s 44(1)Category: Interlocutory applications Parties: Stojanka Krajovska (Plaintiff/First Cross Defendant)
Cveta Krajovska (First Defendant/First Cross-Claimant)
Biljana Todorovic (Second Defendant/ Second Cross-Claimant)
Slobodan Krajovski (Third Defendant/Third Cross-Claimant)
Daniel Krajovski (Fourth Defendant/Second Cross Defendant)Representation: Counsel:
G.M. McGrath (Plaintiff/First Cross Defendant)
Ms D.G. Reid (First, Second and Third Defendants/First, Second and Third Cross-Claimants)
V.R.W. Gray (Fourth Defendant/Second Cross Defendant)
Solicitors:
Stojanovic Solicitors (Plaintiff/First Cross Defendant)
Isho & Associates (First, Second and Third Defendants/First, Second and Third Cross-Claimants)
File Number(s): 2010/285460
Judgment
Background
Two issues have arisen at the commencement of the hearing in these proceedings. The first is whether paragraphs 79 and 80 of the Defence filed by the First, Second and Third Defendants should be struck out and the second is whether the First, Second and Third Defendants should be granted leave to file an Amended Statement of Cross-Claim in the form that has been handed to me.
By way of background, the Plaintiff in these proceedings seeks equitable remedies in respect of the sale of a property at Wetherilll Park in Sydney and a farm at Buxton. The Plaintiff is eighty years old. The First Defendant is her daughter-in-law and the Second, Third and Fourth Defendants are her grandchildren. The Fourth Defendant has presently filed a submitting appearance in the proceedings, but has indicated that position would change if the First, Second and Third Defendants were granted leave to file the Amended Cross-Claim.
When the matter was previously listed before me on 20 July 2011, the First, Second and Third Defendants indicated that they did not press a previous version of the Cross-Claim which had been filed on 20 June 2011 and had no objection to it being struck out. I pointed out on that occasion that the consequence of taking that course would be that no Cross-Claim would exist if leave was not granted to file the Amended Statement of Cross-Claim. I will, for good order's sake, strike out the Cross-Claim filed on 20 June 2011 on the basis that it is no longer pressed.
Paragraphs 79 - 80 of the Defence
I turn now to deal with the Plaintiff's application to strike out paragraphs 79 and 80 of the Amended Defence filed by the First, Second and Third Defendants. The Plaintiff relies on r 14.28 of the Uniform Civil Procedure Rules which allow the Court to strike out a pleading, or part of a pleading, where it discloses no reasonable cause of action or has a tendency to cause prejudice, embarrassment or delay.
Paragraph 79 of the Defence pleads that the Plaintiff travelled to Macedonia in July 2009 and, while in Macedonia, gifted properties owned by her to the Fourth Defendant, and that the First, Second and Third Defendants were not informed of those transactions.
The first sentence of paragraph 80 denies that the First, Second and Third Defendants took advantage of the Plaintiff in any way. That sentence does not appear to be necessary to the pleading so far as that denial appears elsewhere in the Defence. The second sentence of paragraph 80 contends that the First, Second and Third Defendants at all times acted in accordance with the "conventional basis of dealings between the Plaintiff and her family". It appears likely that that paragraph refers to the particulars to paragraph 39 of the Defence which refers to such a conventional basis and that sentence adds nothing to those particulars.
The third and fourth sentences of paragraph 80 contain an allegation that the Fourth Defendant received the benefit of the transfer of certain Macedonian properties. In my view, that further allegation cannot create a defence to the Plaintiff's claim. The First, Second and Third Defendants' complaints as to a separate transaction by which the Plaintiff gave certain Macedonian properties to the Fourth Defendant are not an answer to a claim brought by the Plaintiff against the First, Second and Third Defendants in respect of the dealings with two Australian properties in issue in the proceedings. If the transfer of the Macedonian properties to the Fourth Defendant occurred in the exercise of the Plaintiff's free will, then it establishes nothing as to the circumstances of the transfer of the Australian properties to different parties some time before. If the transfer of the Macedonian properties to the Fourth Defendant occurred under circumstances of undue influence, that may provide a basis for the Plaintiff to assert a claim against the Fourth Defendant, but it does not establish a defence for the First, Second and Third Defendants.
Accordingly, in my view, paragraphs 79-80 of the Defence should be struck out under r 14.28 of the Uniform Civil Procedure Rules because they do not disclose a defence as a matter of law.
Amended Cross-Claim
The First, Second and Third Defendants also seek leave to file an Amended Cross-Claim in circumstances that the previous Cross-Claim is no longer pressed by them, as noted above. The Plaintiff and the Fourth Defendant (who, as noted above, had filed a submitting appearance in respect of the Plaintiff's claim) resist the application for leave to file that Amended Cross-Claim on substantive and case management grounds.
The Court's power to grant such leave is to be exercised having regard to sections 56-59 of the Civil Procedure Act 2005 (NSW). Section 56 of that Act requires the Court as well as the parties to have regard to the overriding purpose which is the just, quick and cheap resolution of the real issues in the proceedings. Section 57 deals with case management, and, in particular, requires the Court's practice and procedure to be regulated to ensure specified objects are met including the just determination of the proceedings, the efficient disposal of the Court's business, the efficient use of available judicial and administrative resources, and the timely disposal of the proceedings and overall proceedings in the court at a cost affordable by the respective parties. Section 58 requires the Court in the management of the proceedings, including in dealing with amendments, to seek to act in accordance with the dictates of justice. The Court would not grant leave to file and serve the Amended Cross-Claim if that Cross-Claim would be struck out under r 14.28 of the Uniform Civil Procedure Rules as not disclosing a cause of action or having a tendency to cause prejudice, embarrassment or delay.
I will first deal with the amendments sought to be made with respect to paragraphs 1-10 of the Amended Statement of Cross-Claim which I understand to found the relief claimed in paragraphs 1-2 (and possibly also paragraph 4) of the Amended Statement of Cross-Claim. Counsel has advised me in the course of argument this morning that those paragraphs are not pressed due to a limitations issue arising in respect of those paragraphs and it is therefore not strictly necessary for me to make a decision as to whether I would grant leave because those paragraphs are not pressed.
However, I will make some observations in that regard. Paragraphs 1-10 of the Amended Statement of Cross-Claim would have pleaded several factors which seek to establish a trust by which the Plaintiff held the Wetherill Park property for the First Defendant and her husband, Todor, who was the Plaintiff's son. The First, Second and Third Defendants contend there is nothing new in those paragraphs. On the other hand, the Plaintiff and the Fourth Defendant argued that those paragraphs raise new issues and would have required further evidence to meet them.
Had the application to amend these paragraphs been pressed, I would not have allowed it. At least in their present form, there seem to me to be significant difficulties with the pleading. Paragraph 6 refers to the creation of a "resultant" trust. This may be intended to refer to what is usually known as a resulting trust, but the paragraph does not plead how or when that trust was created. Paragraph 7 alleges the First Defendant and the Plaintiff held the Wetherill Park property as joint tenants with equal shares. Paragraph 8 in turn assumes the existence of shares in the property held by the Defendant and the Plaintiff and asserts the existence of a trust without identifying how, when or on what basis the trust arose. I would have denied leave to file the Amended Statement of Cross-Claim in respect of these paragraphs by reason of these deficiencies in the pleading.
Counsel for the Plaintiff also raised two other matters which I would not have found sufficient to decline to grant leave to file the Amended Statement of Cross-Claim in respect of these paragraphs. The first is that no breach of the alleged trust is established. I would not have regarded that as sufficient basis to deny leave because I understand the paragraphs, had they otherwise been properly pleaded, were directed towards establishing the existence of a trust which was sought to found declaratory relief rather than to establish breach of it. Second, Counsel for the Plaintiff raised a significant point as to the operation of s 44(1) of the Conveyancing Act 1919 (NSW) which might ultimately have been fatal to these paragraphs of the Cross-Claim had they been pressed but which would not, in my view, have prevented the grant of leave to file that Cross-Claim.
I turn now to paragraphs 11-17 of the Amended Statement of Cross-Claim which plead circumstances relating to the transfer of the Macedonian properties held by the Plaintiff to the Fourth Defendant. They in turn overlap with paragraphs 79-80 of the Defence which I have struck out for the reasons noted above.
These paragraphs allege a perception by "family and friends" of undue influence exercised by the Fourth Defendant on the Plaintiff and the belief of family and friends that the Plaintiff would not make decisions of her own accord. In my opinion, an allegation of the perception and belief of unidentified persons is embarrassing and is incapable of establishing the fact of undue influence. Paragraph 18 in turn pleads a conclusory allegation of unconscionability and does not, in my view, properly plead the material facts upon which it is founded, to the extent that that allegation is said to arise from anything other than the perception of family and friends.
There is a further and more fundamental deficiency with the pleading in paragraphs 11-17 of the Amended Statement of Cross-Claim. These paragraphs appear to be intended to support the relief claimed in paragraph 3 of the Amended Statement of Cross-Claim: that the Fourth Defendant pay seventy-five per cent of the amount of any sum of money ordered to be paid to the Plaintiff by the First, Second and Third Defendants. I do not understand, and the submissions of the First, Second and Third Defendants' Counsel have not persuaded me, that the matters pleaded are capable of supporting such relief. In particular, I do not understand how an allegation that the Fourth Defendant had unconscionably influenced the Plaintiff in respect of the transfer of the Macedonian properties by her to him could give rise to any cause of action of the First, Second and Third Defendants supporting the order that the Fourth Defendant make the payment claimed. On that basis alone I would have declined leave to file the Amended Cross-Claim so far as paragraph 3 of the relief claimed and paragraphs 11-18 of the Amended Cross-Claim are concerned.
I should add that the matters that were sought to be raised by these paragraphs of the Cross-Claim would have required further evidence from both the Plaintiff and the Fourth Defendant. The Plaintiff, in opposing leave to amend, relies on an affidavit of Steven Stojanovic sworn 26 July 2011 which indicates that the Plaintiff would have wished to lead valuation evidence in response and further evidence from the Plaintiff personally which would have involved delay by reason of the need for translation. The Fourth Defendant, in opposing leave to amend, relies on the affidavit of Bobi Dancevski sworn 25 July 2001 which indicates that, had the amendment been permitted, the Fourth Defendant would have needed to lead evidence in response to the Amended Cross-Claim, potentially including valuation evidence in respect of the Macedonian lands.
In these circumstances, even if I had found that the Amended Statement of Cross-Claim were arguable as a matter of law so as to support a grant of leave, case management considerations would likely have required that either I did not grant that leave or, alternatively, that I only did so on terms that the hearing date be vacated and, the First, Second and Third Defendants pay costs relating to the vacation of the hearing date, potentially on an indemnity basis.
It is ultimately not necessary for me to decide the matter solely on case management grounds because I have found that the relief claimed in paragraph 3 and the matters pleaded in paragraphs 11-18 of the Amended Statement of Cross-Claim do not give rise to a properly arguable cause of action and I have not allowed the amendment on that basis.
Orders
In these circumstances I order that paragraphs 79-80 of the Defence be struck out pursuant to r 14.28 of the Uniform Civil Procedure Rules. I also decline to grant leave to the First, Second and Third Defendants to file their Amended Cross-Claim.
Costs
The Plaintiff and the Fourth Defendant seek orders for costs, consequential on the orders which I have made above.
So far as the Fourth Defendant is concerned, I consider there is a clear case that the First, Second and Third Defendants should be ordered to pay his costs of the application. He was previously a submitting defendant. He became an active respondent to this application and will now, following the refusal of leave to file the Amended Statement of Cross-Claim, return to being a submitting defendant. He would not have been required to take an active role in the proceedings but for the application for leave to file the Amended Statement of Cross-Claim against him. I therefore order that the First, Second and Third Defendants pay the Fourth Defendant's costs of and incidental to the application to file the Amended Statement of Cross-Claim, as agreed or as assessed.
The case for an order for costs in favour of the Plaintiff is not as strong because she would have had to be present at the hearing today in any event. However, time which could have been used in the hearing of the substantive proceedings has instead been used in argument as to paragraphs 79-80 of the Defence and the Amended Statement of Cross-Claim and the Plaintiff has been successful in sustaining the position she advanced. In my view, costs of the application for leave to amend should follow the event. I therefore order that the First, Second and Third Defendants should pay the costs of the Plaintiff of and incidental to the Plaintiff's application to strike out paragraphs 79-80 of the Defence and of the application to file the Amended Statement of Cross-Claim, as agreed or as assessed.
Counsel for the Fourth Defendant also put to me that the circumstances were such that an order for costs on an indemnity basis were warranted. I have held that the Amended Statement of Cross-Claim does not disclose a proper cause of action so far as the claims which were pressed by the First, Second and Third Defendants were concerned. However I have not formed the view that the matter rises to the level that indemnity costs are justified and I order that costs be paid on the ordinary basis and not on an indemnity basis.
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Decision last updated: 23 August 2011
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