Magoffin v Anobis Pty Ltd

Case [2023] QDC 102

DISTRICT COURT OF QUEENSLAND

CITATION:

Magoffin v Anobis Pty Ltd & Ors [2023] QDC 102

PARTIES:

JOHN EDWARD MAGOFFIN

(plaintiff)

v

ANOBIS PTY LTD ACN 169 138 130

(first defendant)

and

ASSIK TOMMY JORDAN TOMSCOLL AND SIBONA KEMA
(second defendants)

FILE NO:

Cairns District Court 68 of 2018

DIVISION:

Civil

PROCEEDING:

Application

ORIGINATING COURT:

Cairns District Court

DELIVERED ON:

20 June 2023

DELIVERED AT:

Brisbane

HEARING DATE:

17 March 2023

JUDGE:

Byrne KC DCJ

ORDERS:

1.   The applications filed on 9 March 2023 are dismissed.

2.   The defendants are to pay the plaintiff’s costs of, and incidental to the hearings of 28 February 2023, 3 March 2023 and 17 March 2023 on the standard basis, as agreed or as assessed.

3.   The matter is to be mentioned in the Brisbane District Court at 9.30am on 6 July 2023 for the purposes of case management.

4.   The parties have liberty to appear by videolink or telephone at that hearing.

CATCHWORDS:

PROCEDURE – JUDGMENTS AND ORDERS – AMENDING, VARYING AND SETTING ASIDE – GENERAL RULES – Where the plaintiff sues for money owed under a guarantee – where a defence was filed in a timely manner which did not include a counterclaim – where just over 4 years later the defendants solicitor was given leave to withdraw - where 4 months later the plaintiff successfully applies to dispense with the defendants’ signatures on a Request for Trial Date – where days before the next mention the defendants engage new solicitors – where the defendants now apply to set aside the order dispensing with their signatures and for leave to file an amended defence and counterclaim – where there are no new facts – where there is an arguable case for differing defences and a counterclaim – whether leave should be granted given the delay on the part of the defendants.

LEGISLATION:

CASES:

Competition and Consumer Act 2010 (Cth) Sch 2, s 18, s 20, s 30

Property Law Act 1974 (Qld) s 71, s 72, s 75

Uniform Civil Procedure Rules 1999 (Qld) r 5, r 376, r 430, r 667, r 668

Aon Risk Services Australia Limited v Australian National University (2009) 239 CLR 175
Nationwide News Pty Ltd [2013] NSWCA 335
Port of Melbourne Authority v Anschun Pty Ltd (1981) 147 CLR 589
Twigg v Twigg [2022] NSWCA 68

Younan v Nationwide News Pty Ltd [2013] NSWCA 335

COUNSEL:

Mr D.T. Forbes for the applicants/defendants.

Mr C. Ryall for the respondent/plaintiff.

SOLICITORS:

Strategic Lawyers for the applicants/defendants.

Walkers Lawyers for the respondent/plaintiff.

Introduction

  1. The defendants apply to set aside an order dispensing with their signatures on a request for trial date and for leave to file an amended defence including, for the first time in the litigation, a counterclaim. They accept that the second application cannot succeed unless the first does. Both applications are opposed. 

    Background

  2. For some of the material period, the plaintiff and Mr Lagois were solicitors and partners of a law firm styled The Law Office Cairns…

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AGLC
Magoffin v Anobis Pty Ltd [2023] QDC 102
Case
[2023] QDC 102
Decision Date

CaseChat Overview and Summary

The case of Magoffin v Anobis Pty Ltd involves a dispute between the plaintiff and the defendants, Anobis Pty Ltd, over an amount of money owed under a guarantee. The plaintiff is seeking half of the default interest amount, which is $250,000, against the first defendant, with the alternative being the same amount sought against the second defendants on the Guarantee. The defendants have applied to set aside an order dispensing with their signatures on a request for trial date and for leave to file an amended defence and counterclaim. Both applications are opposed by the plaintiff. The defendants have not provided a draft of the proposed amended defence and counterclaim.

The legal issues in this case revolve around the defendants' delay in filing their amended defence and counterclaim, and whether leave should be granted given this delay. The defendants argue that there is an arguable case for differing defences and a counterclaim, while the plaintiff argues that the defendants are bound by an implied undertaking to conduct the litigation expeditiously. The court must consider the strength of the case based on the amended defence and counterclaim, as well as the delay in the present matter and whether any such action would be met with a pleaded defence of laches.

The court found that there is an arguable case based on breaches of fiduciary duty, but it is not without its difficulties. The court also found that the applications were not argued on the basis that r 376 of the UCPR was relevant, either directly or indirectly, and so that need not be further considered. The court concluded that the applications filed on 9 March 2023 are dismissed, and the defendants are to pay the plaintiff’s costs of, and incidental to the hearings of 28 February 2023, 3 March 2023 and 17 March 2023 on the standard basis, as agreed or as assessed.

The court ordered that the matter is to be mentioned in the Brisbane District Court at 9.30am on 6 July 2023 for the purposes of case management, and the parties have liberty to appear by videolink or telephone at that hearing.

Orders

Orders of the court

1. The applications filed on 9 March 2023 are dismissed.

2. The defendants are to pay the plaintiff’s costs of, and incidental to the hearings of 28 February 2023, 3 March 2023 and 17 March 2023 on the standard basis, as agreed or as assessed.

3. The matter is to be mentioned in the Brisbane District Court at 9.30am on 6 July 2023 for the purposes of case management.

4. The parties have liberty to appear by videolink or telephone at that hearing.

Background

Background to the litigation

The defendants apply to set aside an order dispensing with their signatures on a request for trial date and for leave to file an amended defence including, for the first time in the litigation, a counterclaim. They accept that the second application cannot succeed unless the first does. Both applications are opposed. Background For some of the material period, the plaintiff and Mr Lagois were solicitors and partners of a law firm styled The Law Office Cairns (“TLO”). They also jointly owned, as trustees, a certain commercial property in Cairns (“the subject property”). A tenant of the subject property was a corporate entity that was the service company for TLO. Another corporate entity was a tenant of a different part of the premises, and it operated a real estate agency. The director of that second entity was Mr Smith. A chronology of events will be of assistance: Additionally, TLO acted for the defendants, in various capacities, in unrelated matters both before, during, and after the sale. Also, in addition to those events tabled above, there were various attempts by the plaintiff to progress the matter at different times which were resisted on a number of bases but most regularly the border closures and travel restrictions around COVID-19. The plaintiff seems to have acted cautiously in light of the explanations given. The plaintiff’s claim is for $250,000, namely half of the default interest amount as against the first defendant which the two sellers were owed. Alternatively, the same amount is sought as against the second defendants on the Guarantee. The filed defence was prepared by solicitors, seemingly in light of the advice received from Counsel dated 24 April 2017. It can be accepted that it is not an exemplar of drafting excellence and is lengthy and repetitive, but it does attempt to comprehensively deal with the defence of the claim in light of Counsel’s advice. It can be accepted that it does not raise some of the matters now said to be important, and it does not plead a counterclaim as against the plaintiff, Mr Lagois or Mr Smith. Broadly speaking, it asserts that:a)Both Mr Lagois and Mr Smith acted for both sellers in the two contracts and the Deed of Recission.b)Mr Lagois and TLO acted as a solicitor for all defendants in various legal matters prior to and after the first and second contracts and the Deed of Recission being executed.c)The day after paying $2000 to “take the property off the market” the female second defendant said she did not want to proceed with the purchase. Mr Smith refused to refund the money and said he would arrange finance to facilitate the purchase.d)The sellers and Mr Smith represented the value of the property to be $4 million. The second defendants indicated that they would offer a purchase price once a valuation report was provided.e)The settlement did not occur as finance was not approved. Subsequently, Mr Lagois wrote agreeing to an extension of the settlement date, without penalty, on 17 occasions. The contract did not become unconditional during this time.f)Mr Lagois led the second defendants to believe that the second contract had to be signed. The various documents, including the Deed of Recission and the Guarantee, were not explained to them and they were not given the opportunity to read them. The second defendants were advised that the purchase price in the second contract would meet the bank valuation, thereby facilitating the provision of finance to complete the contract. The second defendants did not have legal representation at that time, although Mr Lagois had been retained by them previously.g)The second defendants had no understanding of the obligations of the first defendant under the Deed of Recission, nor of their obligations under the Guarantee. In particular, they were unaware that the Guarantee required them to pay money on completion of the second contract.h)Mr Smith became aware that that the valuations would not reflect the $4 million figure represented to the defendants. One, obtained in July 2016, valued the property at $2,540,00, the same figure as the settlement price in the second contract signed 6 months earlier. A later valuation obtained by the defendants valued the property at $2,000,000.i)At the time of signing the first contract, the sellers represented that the property earned gross rental income of about $300,000 p.a. At the time of signing the second contract, the sellers represented that the property was fully tenanted and earned gross rental income of about $350,000 p.a. In fact, it was never fully tenanted and at the time of the second contract the rental income was a little under $150,000 p.a. The service company for TLO had negotiated a reduction in rent prior to that time from $265,882 p.a. to $120,000 p.a.j)The sellers and their agent also misrepresented the outgoings for the property, which also affected the decision to proceed with the purchase.k)There were other misrepresentations made in the course of their dealings of which the plaintiff, Mr Lagois and Mr Smith must have been aware.l)On or about 8 July 2016 Mr Smith, as agent for the sellers, wrote to the defendants to the effect that there would be no penalties for the delayed settlement of the second contract.m)The plaintiff and Mr Lagois elected not to require payment of the default interest at the time the second contract settled.n)As to the claim against the first defendant, defences of misleading and deceptive conduct[6], unconscionable conduct within the meaning of the unwritten law[7], false or misleading representations about sale of land[8], common law unconscionable conduct and unjust enrichment arise. It is further asserted that the relevant clause in the Deed of Recission is a penalty clause and unenforceable. In any event, there had been an election to waive and an estoppel by the failure to claim the default interest at the time of the settlement of the second contract.o)As to the claim of the Guarantee against the second defendant, defences arise of misleading and deceptive conduct[9], common law unconscionable conduct, and unconscionable conduct within the meaning of the unwritten law[10]. p)Further it is said that both the Deed of Recission and the Guarantee are void and unenforceable.[6]S 18(1) of the Australian Consumer Law (“ACL”).[7]S 20(1) of the ACL.[8]S 30(1)(c) of the ACL.[9]S 18(1) of the ACL.[10]S 20(1) of the ACL.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

Full text does not contain this section.

Ratio Decidendi

Legal Principle Established

The plaintiff submits that:(a)The defendants are bound by the implied undertaking to conduct the litigation expeditiously.[16][16]Rule 5 of the UCPR.(b)The Court has the power to grant the present applications, but should be loath to do so where:(i)the defendants appeared at the hearing in which the order was made;(ii)there is no evidence that circumstances have materially changed since the order was made; and(iii)there is no, or insufficient, evidence to explain the failure to act earlier, or to explain the delay generally.(c)There are reasons to doubt that a fiduciary duty as between the plaintiff and the defendant could be established in any event.(d)Any action of the type now contemplated by the defendants is time barred and, separately, would be met with a defence of laches. (e)Allowing the amendment to occur would notably increase the time and expense of determining the matter which was commenced over five years earlier.(f)In circumstances where there has not been a draft of the amended defence and counterclaim provided, it is unknown the precise basis on which it would be pursued and, given the history of the matter, it cannot be assumed that it would be expeditiously pursued if the applications were granted.Consideration The defendants correctly concede that leave to file an amended defence and counterclaim cannot be granted unless Fantin DCJ’s order to dispense with their signatures is set aside. However, that does not mean that the strength of any case based on the amended defence and counterclaim is irrelevant to the precedent issue. I consider that there is an arguable case involving a breach of fiduciary duty against the plaintiff, although clearly not as strong as that against each of Mr Lagois and Mr Smith. I accept that any such action, whether brought against any or all of the three possible defendants and whether pleaded as a separate cause of action or as a counterclaim would likely be met with a pleaded defence of laches. While not adjudicating on the success of any such defence, the delay in the present matter means it is not without, at least, some merit. Further, it may be that a limitation period would be applied to any separate action now commenced in equity[17] and that is a relevant consideration in determining whether to effectively allow the defendants to amend their defence and plead a counterclaim.[18] The applications were not argued on the basis that r 376 of the UCPR was relevant, either directly or indirectly, and so that need not be further considered, especially where the defendants have not provided a draft of the proposed amended defence and counterclaim.[17]Twigg v Twigg [2022] NSWCA 68 [172]-[197].[18]Rule 376 of the UCPR. In summary, there is an arguable case based on breaches of fiduciary duty but it is not without its difficulties. Turning now to the other aspects of the application to set aside Fantin DCJ’s order, somewhat surprisingly, neither party has expressly referred to the power to set aside the order, namely rr 667 and 668 of the UCPR.