Mayart Pty Ltd v Knight
[2020] VCC 1169
•6 August 2020
| IN THE COUNTY COURT OF VICTORIA AT MELBOURNE COMMERCIAL DIVISION | Revised Not Restricted Suitable for Publication |
Case No. CI-18-04868
| MAYART PTY LTD & ORS | Plaintiffs |
| v | |
| PHILIPPA CHRISTINE KNIGHT & ORS | Defendants |
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JUDGE: | HIS HONOUR JUDGE COSGRAVE | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 14 July 2020 | |
DATE OF RULING: | 6 August 2020 | |
CASE MAY BE CITED AS: | Mayart Pty Ltd & Ors v Knight & Ors | |
MEDIUM NEUTRAL CITATION: | [2020] VCC 1169 | |
REASONS FOR RULING
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Legislation Cited: Civil Procedure Act 2010 (Vic); County Court Civil Procedure Rules2018 (Vic); Evidence Act 2008 (Vic); Instruments Act 1958 (Vic); Property Law Act 1958 (Vic).
Cases Cited:ABL Nominees Pty Ltd v Mackenzie (No 2) [2014] VSC 529; Aon Risk Services Australia Limited v Australian National University (2009) 239 CLR 175; Coal and Allied Operations Pty Ltd v Australian Industrial Relations Commission (2000) 203 CLR 194; Collie v Merlaw Nominees Pty Ltd (in liq) (2001) 37 ACSR 361; Divcon (Australia) Pty Ltd v Devine Shipping Pty Ltd [1996] 2 VR 79; GSA Industries Pty Ltd v NT Gas Ltd (1990) 24 NSWLR 710; Jeanes v Commonwealth of Australia [2005] VSC 488; Queensland v JL Holdings (1997) 189 CLR 146; Tony Sadler Pty Ltd v McLeod Nominees Pty Ltd (1994) 13 WAR 323; Trevor Roller Shutter Service Pty Ltd v Crowe [2011] VSCA 16; Wimpole Properties Pty Ltd v Beloti Pty Ltd (No 2) [2011] VSC 85.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiffs | Dr M Wolff | Noble Lawyers Pty Ltd |
| For the First Defendant | Mr M J Galvin, QC | |
| For the Third Defendant | The third defendant appeared in person |
HIS HONOUR:
Nature of application
1 This is an application by the third defendant (“Mr Knight”) to file and serve an amended defence.
Background
2 The proceeding was commenced by writ filed on 26 October 2018. It concerns two apartments in a development at a property at 39 Parkers Road, Parkdale (“the property”). The former second defendant (“RVA”), who is no longer a party to the proceeding held a mortgage over the property. Beginning in about 2015, RVA as mortgagee completed a development on the property comprising 12 apartments. The plaintiffs claim an interest in apartments 10 and 11 based upon arrangements which they say they entered with the proprietor of the property, the first defendant (“Ms Knight”). In obtaining their interests, the plaintiffs say that they negotiated with her then husband, Mr Knight.
3 In a judgment given in the proceeding on 30 August 2019, Judge Woodward granted the plaintiffs leave to file a further amended statement of claim dated 8 July 2019.
4 Subsequently, on 9 October 2019, Judge Woodward vacated the then trial date and relisted the proceeding for hearing on 11 May 2020 as a cause to be heard before a judge on an estimate of three to five days. His Honour made the usual panoply of interlocutory orders including one that the defendants were to file and serve any defence to the further amended statement of claim by 4.00pm on 29 October 2019.
5 In the further amended statement of claim, the plaintiffs made a variety of claims, some on an alternate basis, including damages for breach of contract, a declaration of trust, and damages in respect of Mr Knight’s failure to honour the guarantee he gave regarding the obligations of the vendor, Ms Knight.
6 Mr Knight has become a self-represented litigant in the proceeding. However, he has a law degree with first class honours and exhibits substantial familiarity with legal terms and concepts. He presented to the court as intelligent, articulate, and capable. The court book revealed that Mr Knight has considerable experience in the finance area having worked on many large transactions.
Third defendant’s application
7 Mr Knight relied upon an affidavit sworn 10 June 2020 in support of his application. The affidavit was short and made several points. Mr Knight claimed that he received the plaintiffs’ discovered documents only on about 26 May 2020 after serving a notice to produce earlier that month. Mr Knight maintained that the discovered documents required that he file an amended defence to narrow the matters in dispute, to allow him a fair hearing, and to enable him to properly plead his defence. Mr Knight asserted that, because he believed pleadings had not closed, he was entitled to file and serve the new defence as a matter of right.
8 Mr Knight also filed a submissions in support of his application. He referred to Order 36.01 of the County Court Civil Procedure Rules 2018 (“the Rules”) and the court’s power to allow amendments to pleadings. He contended that, as a general rule, the parties should be entitled to an amendment even at a late stage in a trial in order to permit the real issues in dispute to be resolved. He referred to the High Court judgment in Queensland v JL Holdings[1] and the fact that no principle of case management could supplant the aim to attain justice.
[1](1997) 189 CLR 146, 154.
9 In his oral submissions, Mr Knight relied upon the affidavit and written submissions. He sought to make much of the plaintiffs not completing discovery in accordance with the orders of Judge Woodward and how he saw for the first time in May 2020 certain documents he claimed to be previously unaware of. Mr Knight was especially emphatic in his submissions about a document which he said was central to the plaintiffs’ case. It purported to be an agreement but was not signed by any of the defendants. On this basis, Mr Knight argued that he could not be liable as a guarantor because there was no written document signed by him as required by section 126 of the Instruments Act 1958 (Vic).
10 Mr Knight recognised that his proposed defence was late but argued that, even if he had complied with Judge Woodward’s order of October 2019, he would still have sought to amend his claim after seeing the discovered documents.
11 In giving reasons for allowing the amendment, Mr Knight said that:
·he was desirous of putting fewer issues in dispute and to reduce the cost and time of the proceeding;
·it was just to allow a party to defend the claims made against them; and
·granting the application would reduce the time required to determine the dispute and, in reducing the length of the trial, would significantly lower the cost to the parties.
12 The plaintiffs filed written submissions in opposition to the application for leave. They identified four principal grounds for objection to the application:
(a)Mr Knight provided no proper factual basis for the proposed late filing of the amended defence.
(b)the amended defence effectively withdrew a substantial number of admissions without seeking leave and without providing any proper basis for the withdrawal.
(c)the amended defence did not disclose arguable defences because they were flawed and lacked a proper factual basis.
(d)the filing of the amended defence would seriously prejudice the plaintiffs and would result in significant wastage of costs and time.
13 The plaintiffs argued that it was apparent from Mr Knight’s affidavit that there was little in the way of supporting evidence to explain the lateness of the defendant’s application and the new matters raised in the amended defence. The proposed changes were substantial, affecting nearly 50 paragraphs in the pleading.
14 The plaintiffs pointed to the impact of the proposed pleadings whereby Mr Knight sought to withdraw admissions in over 40 paragraphs of the existing defence. The plaintiffs argued that this could only be done by consent or with leave of the court and they urged the court not to grant leave in circumstances where the application made no mention of Mr Knight’s wish to withdraw these admissions and he provided no basis upon which they could be properly withdrawn.
15 The plaintiffs submitted that the defences sought to be raised were not arguable but were fatally flawed and hence, it was futile to allow the amendments.
Knight’s affidavit material
16 The first issue to address is the affidavit material relied upon by Mr Knight. The plaintiffs objected to the last sentence in paragraph 6 and the whole of paragraphs 7–9 inclusive. Paragraphs 6–9 of the affidavit of Mr Knight read as follows:
“6. On May 14, 2020, the third defendant served a form 29C notice to produce on the Plaintiffs. That notice was complied with by the plaintiffs on 26 May 2020. It has taken me 14 days to review the documents, understand their relevance, or lack of relevance, and prepare my amended defence. I do not believe I have delayed in any way since discovery was completed by the Plaintiffs.
7. Amongst the documents listed in the Electronic Court Book and subsequently produced by the Plaintiffs, were various documents that took the Third Defendant by surprise as he has never seen these documents previously and they form a fundamental aspect of the plaintiff’s (sic) claims.
8. The documents discovered by the Plaintiffs require an amended defence to be filed and served to narrow the matters in dispute, to allow the third defendant a fair hearing in this matter and for the third defendant to properly plead his defence.
9. I am of the belief, pursuant to SUPREME COURT (GENERAL CIVIL PROCEDURE) RULES 2015 - REG 14.08 a) and b), pleadings in this proceeding have not closed and the third defendant is at liberty to file and serve his defence.”
17 The objection to the sentence in paragraph 6 was that it was irrelevant and constituted opinion evidence. I agree that Mr Knight’s belief about the delay is irrelevant and I strike out that sentence.
18 The plaintiffs objected to the whole of paragraph 7 on the basis that it was opinion evidence and inadmissible. Paragraph 7 of the affidavit does not wholly comprise an opinion from Mr Knight. He would know whether or not he was surprised by certain documents and whether he had seen them previously. Mr Knight’s evidence about these matters does not appear to me to be especially relevant, but that objection was not taken. The statement that the documents form a fundamental aspect of the plaintiffs’ claim is an opinion, and is inadmissible. I would therefore strike out the last clause in paragraph 7.
19 The plaintiffs objected to the whole of paragraph 8 also on the basis that it purported to be expert evidence. I regard it as partly an expression of opinion, and hence not admissible, but primarily a submission and I will treat it as such.
20 Again, the plaintiffs object to the whole of paragraph 9 on the basis that it contravenes the opinion evidence rule in section 76 of the Evidence Act 2008 (Vic). I agree that Mr Knight’s belief is irrelevant. As a question of law, I regard his belief as incorrect. Rule 14.08 of the Rules provides as follows:
“14.08 Close of pleadings
Unless the Court otherwise orders, pleadings shall be closed—
(a) where no pleading beyond a defence is ordered or served, at the expiration of 30 days after service of the defence;
(b) where pleadings beyond a defence are ordered or served, at the expiration of 30 days after service of the last of those pleadings.”
21 Here, Judge Woodward permitted the filing of an amended defence to the further amended statement of claim by 29 October and any reply by 18 November. Arguably, no pleading was ordered – rather, it was permitted, as was the plaintiffs’ reply, if any defence were filed. On any view of Rule 14.08, more than 30 days has elapsed since the time specified for the filing of the defence and reply. Accordingly, pleadings closed last year.
22 Even if that were incorrect, Judge Woodward spelled out a time for the delivery of any defence. That situation is governed by Rule 14.04(c). The time for filing without leave has expired and Mr Knight had no entitlement to file and rely upon an amended defence.
23 I will regard Mr Knight’s affidavit as a combination of facts, opinions, and submissions. I shall have regard only to the admissible evidence and treat his submissions in the same way as I would treat those of any other party.
Background
24 By way of background, I note that Mr Knight failed to file any defence to the plaintiffs’ further amended statement of claim within the time allowed by Judge Woodward.
25 Earlier, the plaintiffs filed an application, supported by evidence and submissions, to strike out the defendant’s previous defence dated 18 March 2019. That is the defence which Mr Knight currently relies upon. In response, Mr Knight provided the proposed amended defence to the parties on about 9 June 2020.
26 On 10 June 2020 the Commercial Registry of the Court informed the parties as follows:
“The third defendant is, however, in breach of the deadline contained in Judge Woodward’s order. The third defendant in his request for interlocutory determination will need to explain the delay.”
27 On 11 June 2020, in response to the communication from Registry, Mr Knight filed a request for interlocutory determination (“the application”), together with the affidavit of 10 June 2020.
28 In the request for interlocutory determination, Mr Knight, apart from pointing out that he believed the application was unnecessary because pleadings had not closed, said that Judge Woodward’s order was no longer relevant because it was made in the context of an assumed trial date of 11 May 2020. However, on 4 May 2020, Judicial Registrar Burchell had vacated the trial and refixed it for 16 November 2020.
29 In his request for interlocutory determination, Mr Knight said that his current defence did not follow the paragraph pleadings of the plaintiffs’ further amended statement of claim, and to that extent, was difficult to follow and did not raise all proper and available defences to the plaintiffs’ claims as outlined in their new pleading.
30 Mr Knight claimed that the plaintiffs finalised discovery on 8 May 2020 when they served the electronic court book for trial and an affidavit of documents, or alternatively, on 26 May when the plaintiffs produced documents in response to a Form 29C notice which he served. Mr Knight said that some documents were produced for the first time and he was unaware of them and taken by surprise. Mr Knight said that until discovery was complete and all the documents became available, he did not believe a defence to the further amended statement of claim was necessary despite the irregularity with the paragraph numbers.
31 Mr Noble, the plaintiffs’ solicitor, swore in his affidavit that the plaintiffs’ affidavit of documents was produced on 13 February 2020 and sent by email to Mr and Ms Knight respectively on 28 February 2020. Mr Noble said that the usual way of making discovery is to produce an affidavit of documents, serve it upon the opposing party, and then respond to any notice to produce or request for inspection or copy documents. Mr Noble said that at the time of serving the affidavit of documents, his office was not aware of any problem with service (noting that Mr Knight claimed he was not served in February and did not receive the affidavit until May this year). Mr Noble received an automatic ‘out of office’ reply from the solicitors then acting for Ms Knight when serving the plaintiffs’ affidavit of discovery.
32 Mr Noble was surprised by the allegation that Mr Knight had not been served. During the nearly two years he had been acting in the case when he had served the affidavit of discovery by email, Mr Noble said this was the first time he had heard of an email not reaching the intended recipient. This was particularly surprising because the same email address was used successfully both before and after the day in question for other items of email correspondence.
33 In order to avoid further difficulties, Mr Noble said that, since the pre-trial directions hearing on 4 May 2020, his office had sought from Ms Knight and Mr Knight delivery confirmations and read receipts for emails sent to either of them in relation to significant matters.
34 Pursuant to orders made by Judicial Registrar Burchell on 4 May 2020 that the plaintiffs file and serve their affidavit of documents by 8 May 2020, the plaintiffs filed the affidavit at court on 7 May and again served the first and third defendants on 8 May. The plaintiffs’ solicitors used the same email address for Mr Knight as they had used in February. They sought delivery confirmation and read receipts from Ms Knight and Mr Knight. They received a confirmation from Mr Knight.
35 Mr Noble said that Mr Knight served a notice to produce by email on 14 May and by email and letter on 18 May. His office advised Mr Knight that the documents identified were available for collection.
36 On 26 May 2020, Mr Knight collected the documents from Mr Noble’s office.
37 The evidence regarding discovery is of some concern. It is odd that an email address used successfully for service of documents both before and after a particular date in February 2020 should fail in relation to one party on a single occasion. Given its importance to his application, it is even more odd that while Mr Knight asserted the non-receipt of the affidavit of documents in February 2020 in his submissions, he did not swear to this in his supporting affidavit.
Legal principles
38 Whether or not to grant a pleading amendment is a discretionary decision in the sense that no single consideration and no combination of considerations is necessarily determinative of the result. The judge has some latitude about choosing which decision to make.[2]
[2]See Coal and Allied Operations Pty Ltd v Australian Industrial Relations Commission (2000) 203 CLR 194 at [19] quoted by Gummow, Hayne, Crennan, Kiefel and Bell JJ in Aon Risk Services Australia Limited v Australian National University (2009) 239 CLR 175 at [89].
39 Whereas at one time courts were quite liberal about allowing pleading amendments, at least where the inconvenience to the other party could be mollified by a costs order, the position has changed in recent years. The altered attitude is reflected partly by the introduction of legislation like the Civil Procedure Act 2010 (Vic) (“the CPA”) and partly by the approach now taken by the courts as reflected in decisions such as Aon Risk Services Australia Limited v Australian National University.[3]
[3](2009) 239 CLR 175.
40 A main purpose of the CPA was to reform and modernise the law’s practice, procedure, and processes relating to civil proceedings in Victorian courts. Another main purpose was to provide for an overarching purpose in relation to the conduct of civil proceedings to facilitate the just, efficient, timely, and cost effective resolution of the real issues in dispute.[4] The CPA sets out its overarching purpose and section 8 requires that courts give effect to the overarching purpose in the exercise of any of its powers or the interpretation of those powers.
[4]Civil Procedure Act 2010 (Vic), ss 1 and 7.
41 Hence, in making any order or giving any direction in a civil proceeding, the court is to further the overarching purpose by having regard to various objects including the just determination of the civil proceeding, the efficient conduct of the business of the court, the efficient use of judicial and administrative resources and the timely determination of the civil proceeding.[5]
[5]Ibid, section 9.
42 In Aon, the High Court made the point that in considering how to deal with amendment applications, there is a variety of matters to which the court can properly pay regard: the extent to which allowing the amendment would waste the public resource of the court and its officers; the strain and uncertainty on litigants; the potential for loss of public confidence in the judicial system; the scope for delay; and the effect on other litigants.
43 Courts have now decided that achieving the just, timely, and cost effective resolution of disputes is a matter of public interest to the court and other litigants and is not confined solely to the parties in the subject action.
44 The Victorian Court of Appeal in Trevor Roller Shutter Service Pty Ltd v Crowe said:[6]
“As we construe Aon, it was about the impropriety of granting a party leave to make a late amendment to a pleading, in circumstances where that party had failed to act expeditiously, and where to allow the amendment was likely to be productive of wasted costs and resources. More generally, Aon may be thought to have re-invigorated the procedural paradigm, to some extent and for some time diminished by J L Holdings, that time, costs and limited judicial resources are relevant considerations in the determination of whether to allow late applications for amendment and invoke other interlocutory process.”
[6][2011] VSCA 16 at [42].
45 Aon made clear that an application for leave to amend a pleading should not be approached on the basis that a party is entitled to raise an arguable claim, subject to payment of costs by way of compensation. There is no such entitlement. All matters relevant to the exercise of the power to allow amendment should be weighed up. The fact of substantial delay, wasted costs, and the concerns of case management will assume importance on such applications.
46 The judgment of Gummow, Hayne, Crennan, Kiefel and Bell JJ in Aon commented that:[7]
“A party has the right to bring proceedings. Parties have choices as to what claims are to be made and how they are to be framed. But limits will be placed upon their ability to effect changes to their pleadings, particularly if litigation is advanced. That is why, in seeking the just resolution of the dispute, reference is made to parties having a sufficient opportunity to identify the issues they seek to agitate.”
[7]Aon Risk Services Australia Limited v Australian National University (2009) 239 CLR 175 at [112].
47 The applicable rule for considering amendment applications is Rule 36.01(1) of the Rules, which provides as follows:
“For the purpose of:
(a) determining the real question and controversy between the parties to any proceeding; or
(b) correcting any defect or error in any proceeding; or
(c) avoiding multiplicity of proceedings;
a court may at any stage order that any document in the proceeding be amended or that any party have leave to amend any document in the proceeding.”
48 In this context, “document” includes originating process, indorsement of claim and a pleading.
49 Any application to amend should be made promptly after the need for the amendment arises. Derham AsJ conveniently summarised the relevant principles to be applied in Victoria in ABL Nominees Pty Ltd v Mackenzie (No 2),[8] where he said:
[8][2014] VSC 529.
(a)the power to amend in Rule 36.01 authorises the court to order that a party have leave to amend any pleading for the purpose of determining the real question in controversy between the parties to any proceeding, correcting any defect or error, or avoiding multiplicity of proceedings;
(b)an amendment which is futile because it is obviously bad in law will not be allowed;
(c)if a proposed amendment would be liable to be struck out if it were in an original pleading, either because it was bad in law or defective as a pleading, then leave to file it will not be given;
(d)the test is best expressed in the words of section 63 of the CPA: if the amendment has no real prospect of success at trial, that would be a highly relevant and probably decisive factor in the exercise of the discretion; and
(e)principles about amendments and repleading limits on re‑pleading can properly take account of the factors identified by the High Court in Aon Risk Services Australia Ltd v Australian National University.[9]
[9](2009) 239 CLR 175.
50 An application for significant amendments to a pleading is traditionally made by summons supported by an affidavit which explains the reason for the amendment, any delay in making the application, and includes as part of the affidavit material a draft of the proposed pleading. Parties commonly include factual matters which support the change or changes sought so that the court knows that there is a proper basis for the amendment.
51 As noted above, courts now examine more critically applications made to amend pleadings shortly before or at trial where an adjournment of the trial could result. No longer is it the case that the courts approach such applications on the assumption that a party is entitled to amend its pleading to raise an arguable point, subject only to paying the costs thrown away. As Samuels JA said in GSA Industries Pty Ltd v NT Gas Ltd[10] “the emollient effect of an order for costs as a panacea may now be consigned to Aladdin’s cave ... rejected as one of the fairy tales in which we no longer believe”.
Consideration
[10](1990) 24 NSWLR 710, 716.
52 The present application is made several months before the trial which is scheduled for November this year. However, the case was issued in 2018 and has been listed for trial previously on 12 November 2019 and 11 May 2020. If the current trial date were to be vacated, the next available date would be around May or June next year. In my view, this case already has an unenviable history of delay with two trial dates being vacated. Generally speaking, a proceeding ought be ready to go to trial on its third allocated date. In making that observation, I accept that, on occasion, there will be exceptional circumstances which render it appropriate to vacate a trial for a third time and allocate another trial date.
53 Mr Knight filed no affidavit material which satisfactorily explained the delay in bringing this amendment application.
54 In an interlocutory application, I cannot make any final determination on whether the third defendant received the plaintiffs’ affidavit of documents by email in February this year. However, there are sound reasons for believing that he did. Mr Knight offered no explanation why the particular email address worked satisfactorily to receive communications from the plaintiffs both before and after the date in question. Although Mr Knight made submissions to the effect that he did not receive the plaintiffs’ affidavit of discovery in February this year, he did not swear that he failed to receive the affidavit at that time.
55 Mr Knight argued that documents he saw for the first time in May this year caused him to seek to rely upon the new pleading. He referred in particular to a document which he said was crucial to the plaintiffs’ case and was not signed by him. Hence, in the absence of writing in accordance with the Instruments Act, he said that he could not be liable as guarantor.
56 I was a little troubled by this submission. First, I would expect that a person as intelligent and capable as Mr Knight would know if he had signed a guarantee. Yet, he effectively asks the court to accept that until he saw this unsigned document, he was apparently unaware that he had available to him as a defence to the claim against him that he did not sign any guarantee. When someone is sued, they usually know whether they have a defence to the claim against them. This is why, under the Rules of Court, a defendant is expected to plead a defence to a statement of claim within a specified time, and discovery of relevant documents only occurs after that. The discovery process and the documents are to support or undermine the contentions of one or other parties and to assist in elucidating the relevant facts. The process is not designed to operate as a fishing expedition where a defendant can trawl through documents looking for a potential defence. Further, Mr Knight did not explain why he waited until May 2020 to pursue the plaintiffs for discovery or why he waited so long to inspect the file at court.
57 Secondly, even if Mr Knight did see an unsigned document in the discovery, the court book also reveals a loan agreement between Mayart Pty Ltd and Ms Knight in which Mr Knight is named as the guarantor and both Ms Knight and Mr Knight appear to have signed the document. For these reasons, in the absence of a better explanation by Mr Knight, I am not satisfied that he has adequately explained the delay since last October in seeking to amend his defence.
Viability of the defences raised
58 The plaintiffs contend that the defences raised by Mr Knight are weak and that they have no real prospect of success.
59 Mr Knight did not file any, or any substantial, affidavit material explicitly in support of the facts underlying the amended pleading. To that extent, there was no factual underpinning of the claims which Mr Knight has sought to raise.
60 The proposed amended defence for which leave is sought raises a number of issues. Without addressing every point, there are several which recur throughout the document:
(a)the contracts of sale for apartments 10 and 11 were rescinded in September 2018, just over a month before the plaintiffs issued the present proceedings.
(b)the first plaintiff has no standing to bring the proceeding, because the fourth plaintiff had no rights or benefits capable of being transferred to the first plaintiff. Nor was proper notice of any assignment given to the third defendant pursuant to section 134 of the Property Law Act 1958 (Vic). The agreement which Ms Knight and Mr Knight entered was as a result of a mistake of fact.
(c)there was no agreement between Mr Knight and any plaintiff and any agreement with guarantors must be evidenced in writing signed by the party to be charged as required by the Instruments Act
(d)laches and acquiescence operated to prevent the plaintiffs from bringing a claim. If the plaintiffs had a claim, they should not have waited from approximately April 2015 until October 2018 to initiate proceedings.
Rescission notice
61 Mr Knight refers to the terms of the contract which provide that the contract for sale of the apartment is conditional upon registration of the plan of subdivision by the Registrar of Titles. If the plan of subdivision is not registered within 36 months of the date of the contract of sale, the contract can be rescinded by either the purchaser of the vendor.
62 The evidence suggests that the rescission notice applied only to apartment 11 because there is only one rescission notice discovered and included in the court book, even though there were contracts of sale for two apartments.
63 The plaintiffs raised issues about the authority or lack thereof of the person who signed the rescission notice and whether it was even served. I also note that, at the hearing, I was not directed to any evidence disputing the plaintiffs’ contention that the plaintiffs paid the defendants $625,000 for the two apartments in August 2014, Ms Knight promised to repay the money, the third defendant guaranteed the obligations of Ms Knight, and neither of them actually repaid the money. Indeed, Mr Knight agreed in an affidavit filed in the proceeding that the plaintiffs paid in full for their apartment.
64 Even if there were no issues with the rescission notice, and it was valid and effective, if a rescission notice is served, then all moneys paid under the rescinded contract must be repaid to the purchaser. This was the position here as well, as set out in special condition 8.2 of the sale contract. Mr Knight did not direct me to any evidence that the $625,000 or any part thereof was repaid to the purchasers.
Standing
65 The plaintiffs also attacked Mr Knight’s standing argument and the related argument about section 134 of the Property Law Act.
66 There was in the court book a loan agreement between two of the plaintiffs as lender and Ms Knight as borrower. Clause 14.3 of the agreement enabled the lender to transfer or deal with the lender’s interest in the agreement free from equities, set-off, or cross-claims, without the borrower’s consent. To that extent, the plaintiffs argued that there was a contractual right to assign.
67 The plaintiffs contended that Mr Knight’s reliance on section 134 of the Property Law Act was misplaced. Unless and until notice is given to a borrower of the assignment, the assignee cannot enforce its claim. However, it appears that the fourth plaintiff as the assignor remains a party to the proceeding so it can enforce its rights against any borrower and guarantor if the notice provision is yet to be complied with.
Mistake of fact
68 Mr Knight’s argument about mistake of fact is difficult to assess. It is asserted in the proposed amended defence but it is not clearly explained. More particularly, because there is no affidavit material filed in support of the application, it is not possible to clearly understand the nature and circumstances giving rise to the alleged mistake.
Laches and acquiescence
69 The laches and acquiescence defences are raised in various places within the proposed pleading. The thrust of the defence is that, in effect, the conduct by one or more of the plaintiffs is such that it would be inequitable or unreasonable to allow them to assert its or their claimed rights against Mr Knight.
70 However, the mere fact of delay is not enough by itself to constitute laches and acquiescence. There must be more, such as the loss of documentation or the unavailability of a witness due to the delay. Neither the affidavit evidence nor the proposed pleading describe the specific prejudice which Mr Knight sustained due to the delay complained of.
71 In summary, on the evidence I consider it likely that Mr Knight will face major challenges in establishing these defences. In particular, as they currently stand, the defences of rescission, mistake, and laches and acquiescence, seem to have limited prospects of success. The weaknesses identified by the plaintiffs are real and substantial.
Withdrawal of admissions
72 Another factor to take into account is the consequential withdrawal of admissions if Mr Knight is allowed to rely upon the proposed amended defence. Victorian courts have taken slightly different views regarding the withdrawal of admissions. For example, Gillard J in Jeanes v Commonwealth of Australia[11] said that as a general proposition, amendments should be allowed unless it will cause prejudice to the other party which cannot be overcome in some way. His Honour set out the applicable principles as follows:
[11][2005] VSC 488.
· the general rule is to allow an amendment unless it causes prejudice which cannot be overcome.
· a party will not be allowed to amend if it raises a false issue or does not raise an arguable defence.
· the question is of justice between the parties to ensure the real issues in question are decided.
· the burden of proof or persuasion may be crucial where there are disputed facts.
· it is not necessary to show that an admission was inadvertent or made through error – the major determinant is doing justice between the parties.
· it is not necessary for the amending party to have a reasonable explanation for its conduct, but a court frequently requires an explanation for a change to a pleading. In the face of compelling reasons of justice, the absence of an explanation or an inadequate explanation will not be a sufficient basis to refuse the amendment.
73 In Divcon (Australia) Pty Ltd v Devine Shipping Pty Ltd[12] Beach J said that a party should not be able to withdraw an admission without good cause – for example, the admission was made in error by the party who gave instructions, or there was a misapprehension of the position by a party’s solicitors or counsel.
[12][1996] 2 VR 79, 80,
74 Warren CJ adopted this view of the matter in Collie v Merlaw Nominees Pty Ltd (in liq).[13] Judd J accepted her Honour’s statement of principle in Wimpole Properties Pty Ltd v Beloti Pty Ltd (No 2).[14]
[13](2001) 37 ACSR 361.
[14][2011] VSC 85 at [61].
75 I note also that the Western Australian Supreme Court in Tony Sadler Pty Ltd v McLeod Nominees Pty Ltd[15] said that the withdrawal of an admission is not to be permitted lightly.
[15](1994) 13 WAR 323.
76 In my view, the court is entitled to have regard to the fact that a pleading is an important court document, the purpose of which is to set out the party’s case. It is usually produced in a formal and calculated manner. By comparison, when one party serves a notice to admit, the opposing party fails to respond within the required time, and admissions are deemed to have been made, it is more understandable that a failure to respond could be as a result of inadvertence or oversight. Seeking to change a pleading and withdraw admissions previously made in a defence is a qualitatively different exercise.
77 As noted previously, the amendment proposed by Mr Knight is extensive, effecting changes to about 50 paragraphs of the defence and withdrawing around 40 admissions. While the number of affected paragraphs regarding the admissions sounds significant, I accept that some relate to allegations against the first or second defendants,[16] and, in a number of instances, such allegations would have to be proved in any case to the extent that those defendants deny the allegations. Where that is the case, the withdrawal of Mr Knight’s admission would not have any substantial impact.
Proposed pleading
[16]The second defendant is no longer a party to the proceeding.
78 Mr Knight’s proposed pleading does not comply with the Rules. It is confusing, repetitive, and difficult to read. For example, Mr Knight denies each and every allegation in paragraph 49 and then, in the same paragraph, says that he does not plead to the allegations in paragraph 49(a) or (b) because it contains no allegation of fact or law against him. The defences of laches and acquiescence are not set out in paragraphs and refer to factual matters which are not readily explained or understood in the context of this dispute. Other deficiencies are obvious from a reading of the document.
Other factors
79 There is a range of other discretionary factors to which a court can have regard in deciding whether to allow a pleading amendment. The factors include: whether there will be substantial delay caused by the amendment; the extent of wasted costs which will be incurred; whether there is an irreparable element of unfair prejudice caused by the amendment arising, for example, by inconvenience and stress caused to individuals or inordinate pressures placed upon corporations which cannot be adequately compensated by costs; concerns of case management arising from the stage in the proceeding when the amendment is sought; whether a satisfactory explanation has been given for seeking the amendment at the stage when it was sought.
80 If the amendment were allowed, then the plaintiffs will require time to consider the filing of a reply and will probably also have to re‑examine their proofs to ensure that any matters which previously required no evidence to be led in relation to Mr Knight can be proven. At this point, it cannot be said with any certainty the extent to which the plaintiffs may be prejudiced in having to locate a witness now rather than in November last year.
81 Of necessity there will be some delay in the preparation of the case for trial if the amendment is granted. However, provided the parties work diligently, I do not consider that the trial date will inevitably be lost. Because of this expectation, concerns about case management do not weigh heavily upon me. If the November 2020 trial date is retained, then there should be no inconvenience to other litigants in the Commercial Division of the court, and no inefficiency in relation to the use of judicial resources.
82 Again, there will be some cost consequences if the amendment is permitted. As suggested above, the plaintiffs might need to file a reply and perform additional work to check that matters previously admitted and now denied can be proven. There may well be costs thrown away due to the changes in the Amended defence.
Questionable submissions
83 In his submissions, Mr Knight made statements such as:
· the contents of his affidavit were not objectionable, and all evidence was admissible;[17]
[17]Paragraph 7 reply submissions dated 2 July 2020.
· the filing of an amended defence does not require a withdrawal of previous admissions;[18]
[18]Paragraph 3 reply submissions dated 2 July 2020.
· it was necessary for Mr Knight to amend his defence because he was desirous of putting fewer issues in dispute to reduce the cost and time of the proceeding;[19]
[19]Paragraph 14B submissions dated 25 June 2020.
· granting the application would reduce the overall time required to finally determine the matter;[20]
· granting the application would significantly reduce the parties’ costs, particularly reducing the length of the trial.[21]
[20]Paragraph 17 submissions dated 25 June 2020.
[21]Paragraph 18 submissions dated 25 June 2020.
84 Whether they emanate from counsel or a self-represented litigant, I do not welcome submissions which flout common sense and readily observable fact. Understandably, when I pressed him in argument, Mr Knight could not explain how creating a range of contested issues by withdrawing admissions could shorten the case. Nor could he explain the submission that the proposed defence did not require a withdrawal of prior admissions. Wasting the time of other parties and the court with submissions which are palpably false does not assist the court or the attainment of the overarching purpose set out in the CPA. Moreover, making such submissions does nothing to engender confidence in the court that the party making such submissions is a person of integrity whose submissions have an arguable foundation in fact and law.
Conclusion
85 In circumstances where:
(a)Mr Knight has not given a satisfactory explanation for seeking to amend his defence so long after the time allowed last year by Judge Woodward;
(b)Mr Knight has not filed affidavit evidence explaining the nature of the proposed amendments or the factual basis for them;
(c)Mr Knight has not addressed the issue of the withdrawal of admissions by explaining to the court the reason or reasons for wanting to renege upon the admissions made in the defence filed;
(d)the proposed pleading fails to comply with the Rules; and
(e)apart from the issue about conformity with the Rules, even when read generously, several of the proposed defences in the amended pleading face major challenges,
I consider that the overarching purpose of the CPA and the interests of justice are best served by refusing the defendant’s application.
86 Subject to hearing from the parties, I propose to order that:
(a) the third defendant’s application to file an amended defence be dismissed; and
(b) the third defendant pay the plaintiffs’ costs of and incidental to the application, including reserved costs, such costs to be taxed on a standard basis in default of agreement.
87 Although I have ruled against Mr Knight in respect of this application, I note that he remains at liberty to make a further application to amend should he so wish. If Mr Knight wants to do this, he should act promptly.
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