McMillan Investment Holdings Pty Limited v Mangos

[2023] NSWSC 1078

Supreme Court

New South Wales

Medium Neutral Citation:

McMillan Investment Holdings Pty Limited v Mangos & Ors [2023] NSWSC 1078

Hearing dates:

6 September 2023

Date of orders:

7 September 2023

Decision date:

07 September 2023

Jurisdiction:

Common Law

Before:

Chen J

Decision:

(1)   Order that the first and second defendants’ notice of motion filed 29 August 2023 be dismissed.

(2)   Order that the first and second defendants pay PMFPL Pty Limited, Paul Fordyce and the plaintiff’s costs of, and incidental to, the notice of motion filed 29 August 2023.

(3)   Order that the third defendant’s notice of motion filed 1 September 2023 be dismissed.

(4)   Order that the third defendant pay PMFPL Pty Limited, Paul Fordyce and the plaintiff’s costs of, and incidental to, the notice of motion filed 1 September 2023.

(5)   Vacate the listing before Davies J on 15 September 2023.

(6)   Confirm, in line with the orders made on 24 August 2023, the matter is listed for status review before Chen J on 20 September 2023.

(7)   Order that any application by the third defendant for referral to a barrister or solicitor on the pro bono legal panel, under rule 7.36(1) be filed and served by 11 September 2023, 5pm.

(8)   Direct that any application filed in accordance with order 7 above, be filed with the associate to Chen J.

(9)   List any application for pro bono legal assistance before Chen J on 13 September 2023 at 9:30am.

Catchwords:

CIVIL PROCEDURE – originating process – applications to amend cross-claims – where hearing is in less than six weeks – whether grant of leave in accordance with the dictates of justice – whether prejudice occasioned upon the cross-defendants

Legislation Cited:

Civil Procedure Act 2005 (NSW)

Uniform Civil Procedure Rules 2005 (NSW)

Cases Cited:

Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175; [2009] HCA 27

Birmingham City Council (Appellant)vAbdulla [2013] 1 All ER 649; [2012] UKSC 47

Bomanite Pty Ltd v Slatex Corp Aust Pty Ltd (1991) 32 FCR 379; [1991] FCA 536

Brisbane South Regional Health Authority v Taylor (1996) 186 CLR 541; [1996] HCA 25

Capic v Ford Motor Company of Australia Limited (Late Evidence) [2020] FCA 1117

Cement Australia Pty Ltd v Australian Competition and Consumer Commission (2010) 187 FCR 261; [2010] FCAFC 101

Crawley v Vero Insurance Ltd [2012] NSWSC 593

Hans Pet Constructions Pty Limited v Cassar [2009] NSWCA 230

McMillan Investment Holdings Pty Ltd v Mangos [2021] NSWSC 1635

Richards v Cornford (No 3) [2010] NSWCA 134

Tepko Pty Ltd v Water Board (2001) 206 CLR 1; [2001] HCA 19

Warragamba Winery Pty Ltd v State of New South Wales [2010] NSWSC 66

White v Overland (2001) 67 ALD 731; [2001] FCA 1333

Category:

Procedural rulings

Parties:

McMillan Investment Holdings Pty Limited (plaintiff)
John Bernard Mangos (first defendant/first cross-claimant to fourth cross-claim)
Natalie Mangos (second defendant/second cross-claimant to fourth cross-claim)
Christopher Wallace (third defendant/first cross-claimant to fifth cross-claim) (self-represented)
PMFPL Pty Ltd (first cross-defendant to fourth cross-claim/first cross-defendant to fifth cross-claim)
Paul Fordyce (second cross-defendant to fourth cross-claim/second cross-defendant to fifth cross-claim)

Representation:

Counsel:
J T Svehla (plaintiff)
B K Nolan (first and second defendant/first and second cross-claimant to fourth cross-claim)
A Avery-Williams (cross-defendants)

Solicitors:
Somerset Ryckmans (plaintiff)
Yates Beaggi Lawyers (first and second defendant)
Sparke Helmore Lawyers (cross-defendants)

File Number(s):

2018/218097

Publication restriction:

Nil

JUDGMENT

Introduction

1. This is an application by John Mangos and Natalie Mangos (together, the ‘fourth cross-claimants’ or, ‘the first and second defendants’), by notice of motion filed 29 August 2023, and Christopher Wallace (‘the fifth cross-claimant’ or ‘the third defendant’), by notice of motion filed 1 September 2023, to amend their respective cross-claims against PMFPL Pty Ltd and Paul Fordyce (‘the cross-defendants’). The fourth cross-claim was filed on 22 July 2022. The fifth cross-claim was filed on 29 July 2022.

2. The cross-defendants oppose the grant of leave.

3. The cross-claims belong to a wider web of litigation commenced by McMillan Investment Holdings Pty Limited on 16 July 2018: those proceedings, alongside a number of cross-claims, are listed for hearing for 12 days commencing 16 October 2023.

4. The fourth cross-claimants rely upon an affidavit from John Mangos affirmed 30 August 2023. The cross-defendants rely upon an affidavit of Malcolm Cameron affirmed 1 September 2023. The fifth cross-claimant relies upon an affidavit of Christopher Wallace filed 8 November 2021.

The proceedings and parties: a short summary

5. I will outline some of the key facts of the broader dispute, and relevant matters of background. Most of them are uncontroversial. In what follows, I have grouped them into four parts. The first part provides a sketch of the plaintiff’s claim. The second part summarises the fourth cross-claim, and the nature of the proposed amendments to that cross-claim. The third part summarises the fifth cross-claim, and the nature of the proposed amendments to that cross-claim. The fourth part sets out the procedural history, with emphasis upon what has occurred since late 2021.

The plaintiff’s claim

6. Until recently, the plaintiff brought proceedings against the defendants as debtors, guarantors and/or mortgagors for monies said to be owed under various instruments including a facility agreement, general security deed and mortgage all dated on or around 27 March 2015 and an agreement entered in early 2016.

7. Put very simply, in connection with those instruments, there were two claims. The first was a claim pursuant to the facility agreement, whereby the plaintiff sought recovery of a loan made to two companies – now in liquidation (Sydney Allen Printers Pty Ltd and Sydney Allen Manufacturing Pty Ltd). That loan was guaranteed by the first and third defendants and secured by way of general security deed and mortgage over property owned by the first and second defendants located at Illawong, NSW. The second was a claim pursuant to a loan agreement dated 27 January 2016 between it and the first and second defendants, for the amount of $150,000.

8. It is unnecessary to describe them further at the present time: those claims were dismissed by orders made on 24 August 2023. Subsequently, the plaintiff filed the fourth further amended statement of claim on 25 August 2023 – a revised pleading that reflected the order dismissing those parts of the plaintiff’s claim.

9. The claim that the plaintiff seeks to pursue, by that pleading, is rather confined: it relates to what has been described as the “Westpac debt claim”. There is a claim against all defendants in relation to that debt, although the amounts owed in connection with it are apparently different: in connection with the first and second defendants, the claim is approximately $75,000; in connection with the third defendant, the claim is approximately $150,000.

10. It appears that, in relation to the claim against the first and second defendants, the plaintiff claims interest (possibly confined only to 9 days), as well as its legal costs in connection with that debt. In relation to Mr Wallace, the issues are slightly greater apparently because he has made no payments towards the alleged debt.

11. The cross-defendants (specifically, only the incorporated legal practice) were also a defendant to the third cross-claim – a cross-claim filed by the plaintiff on 9 September 2019, but dismissed by order on 24 August 2023.

The fourth cross-claim and the proposed amendment

The fourth cross-claim

12. The fourth cross-claim was filed by the first and second defendants on 22 July 2022 against PMFPL Pty Ltd and Paul Fordyce.

13. Broadly speaking, the fourth cross-claimants allege that the cross-defendants were negligent in the provision of advice relating to the fourth cross-claimants’ entry into the three instruments identified above – that is, the facility agreement, general security deed and mortgage all dated on or around 27 March 2015 – as well as a later agreement, in relation to a loan entered between the plaintiff and first defendant in early 2016 involving $150,000.

14. Some further details to that claim are as follows (the paragraph references are to those in the fourth cross-claim). The first defendant was relevantly a director of two businesses – Sydney Allen Printers Pty Ltd and Sydney Allen Manufacturing Pty Ltd (pars 1 and 2). In early 2015, Sydney Allen Printers was involved in a dispute (par 6). The cross-defendants were retained to act for the first defendant and, later, the second defendant. The cross-defendants gave advice in connection with a resolution which involved the payment of approximately $850,000 plus GST to the creditor (par 14).

15. The money involved in the settlement was to be by facility agreement between the plaintiff (as lender) and Sydney Allen Printers (as borrowers). The first and third defendants were guarantors of that agreement (par 18(a)). In addition, the first and third defendants executed a general security agreement, and the second defendant executed a mortgage over property that she owned at Illawong, NSW.

16. The first defendant’s claim is that he relied upon the advice provided by the cross-defendants (par 24), but otherwise it is alleged that the cross-defendants failed to give any specific advice in relation to the three instruments to the fourth cross-claimants (pars 24, 25, 26, 30 and 31).

17. In mid-2015, Sydney Allen Printers fell into arrears with a different creditor (par 32). The plaintiff agreed to fund the settlement of that dispute which required the first defendant to enter into a loan agreement with the plaintiff (pars 33-34). The documentation prepared by the cross-defendants – described in the pleading as the ‘$150K Loan Documents’: par 35 – was executed by the first and second defendants in early 2016 (pars 41-43).

18. The claim by the fourth cross-claimants is that the cross-defendants breached the duty of care owed to them in connection with the three instruments and the $150K Loan Documents (pars 44-48). The case is also put that the cross-defendants engaged in misleading and deceptive conduct, contrary to s 18(1) of the Australian Consumer Law (pars 59-63), but the conduct relied upon to support that claim is the same conduct for the claim in negligence.

19. By May 2016 both Sydney Allen Printers and Sydney Allen Manufacturing had been placed into liquidation, and various secured creditors, including the plaintiff, took steps to enforce their security via the various instruments, described above (pars 53 and 54).

20. The “loss/damage” case that was put by the fourth cross-claimants was set out in pars 57-58 of the fourth cross-claim – as follows:

57. As a result of the failure of SAP [Sydney Allen Printers] and SAM [Sydney Allen Manufacturing] as set out above, [the first defendant] and [the second defendant] suffered loss and damage by becoming liable for amounts advanced by [the plaintiff] to SAP and or SAP or alternatively were unable to seek indemnification from SAP and or SAM for amounts lent to SAP and or SAP by [the plaintiff].

58. As a result of the failure of [the cross-defendants] to register the Wallace security [the first defendant] and [the second defendant] will suffer loss and damage by becoming liable for amounts claimed by [the plaintiff] which is denied, or alternatively, unable to seek contribution from Mr Wallace.

The proposed amendment to the fourth cross-claim

21. By the proposed amended fourth cross-claim, the fourth cross-claimants seek to add an ‘additional head of damage’ suffered in the following terms:

58A Further, the Cross Claimants make a claim for damages for:

(a) the loss of the opportunity to use the monies the Cross Claimants paid for and on behalf of SAP and SAM (SAP and SAM Monies) pursuant to the Documents and $150k Loan Documents to construct a home on the Second Cross-claimant’s real property situated at 23 Riverview Avenue, Woolooware, New South Wales, the purchase of which property was completed on 5 April 2019, before the sharp escalation of building and construction costs in mid-2023, occasioned by the sharp increase in the costs of construction materials, the decrease in the availability and supply of these materials, and the shortage of skilled trades and labour throughout New South Wales; and

Particulars

(i) The difference in the cost of the building and construction of a residential dwelling (the Home) in 2019 and the cost of the building and construction of the Home in early 2024.

(ii) The difference in the period of time required to complete the building and construction of the Home in 2019 and 2024.

(b) the costs of alternate accommodation the Cross Claimants have paid for since in or around April 2019 by reason of their inability to use the SAP and SAM Monies paid to build and construct the Home on their real property.

Particulars

Had the Cross Claimants not lost use of monies to fund the building and construction of the Home, the Cross Claimants would have by no later than 2020 been able to reside in the Home. Due to the inability to construct the Home, the Cross Claimants have lived in rented accommodation and incurred the cost of paying rent and will continue to do so for the further period required in which to complete construction of the Home in or about late 2024 or early 2024.

(c) The Reasonable costs of defending proceedings brought by the Plaintiff including interest on those costs.

Particulars

In order to meet their costs of the proceedings, the Cross Claimants have during the course of the proceedings drawn down entirely upon their superannuation and have lost the benefit of the interest those funds might otherwise have attracted were they to have remained within the superannuation fund.

22. A number of matters should be noted in connection with what is contained in the fourth cross-claim, and what is contained within the proposed amended fourth cross-claim. First, the fourth cross-claim is specifically pleaded on the footing that the cross-claimants would not have entered into any of the transaction documents (pars 49-50, albeit that alternate cases are put) and that a result of the failure of the cross-defendants to properly advise them was that they became liable for amounts advanced by the plaintiff to Sydney Allen Printers and Sydney Allen Manufacturing. That is, they were otherwise required to use money to deal with those obligations, rather than have the benefit of those funds for their own use. Secondly, it follows that the fourth cross-claimants, on the case they had always maintained, lost the opportunity to use the money that they had paid on behalf of Sydney Allen Printers and Sydney Allen Manufacturing. Put another way, the factual basis underpinning the amendments to the fourth cross-claim were all in existence at the time that cross-claim was filed in July 2022. (I address this further in [47]ff, below). Thirdly, although the claim for the “reasonable costs of defending proceedings” brought by the plaintiff arguably stands in a slightly different category to the claims in pars 58A(a) and (b), the fourth cross-claimants sought to characterise them in the same way – namely, a “loss of the opportunity” to use the money. Fourthly, although not appearing to form part of this new claim, it may well be, based upon the evidence from the first defendant (first defendant’s affidavit, pars 8-10), that the genesis of this loss arose following orders made by Davies J on 4 April 2019 – which required money to be paid into Court, to the plaintiff as well as to provide a mortgage over a property. If that is the position, then it should be noted that there is no reference – at all – to any of these matters in the proposed amendment.

23. In relation to the further claims contained within the proposed amended fourth cross-claim, the fourth cross-claimants accept that they would require, in order to prepare evidence to support those claims, at least four weeks to serve evidence from the first and second defendant, as well as expert evidence from three experts – a quantity surveyor, a forensic accountant and a valuer (first defendant's affidavit, pars 25-26).

The fifth cross-claim and the proposed amendment

The fifth cross-claim

24. The fifth cross-claim was filed by the third defendant on 29 July 2022 against PMFPL Pty Ltd and Paul Fordyce. Although not in identical terms, the fifth-cross-claim – in its current form – replicates in substance the fourth cross-claim in alleging negligence of the cross-defendants. Neither the fifth cross-defendant, nor the cross-defendants, suggested during submissions that there were any material differences: I therefore proceed on the footing that there is no present point of distinction between the claims advanced against the cross-defendants by the first and second defendants (as earlier set out), and those advanced against the cross-defendants by the third defendant.

The proposed amendment to the fifth cross-claim

25. The fifth cross-claimant filed and served a form of the fifth cross-claim that contained the proposed amendment. The proposed amendment was not underlined, but the fifth cross-claimant confirmed during submissions that it was confined to the amendment contained within par 41(a). Put simply, by that proposed amendment, the fifth cross-claimant seeks to claim as damages the costs of defending the proceedings (when represented) and for mental anguish and stress in the following terms (proposed amended fifth cross-claim at [41](a)):

41(a). Further, the Cross Claimant makes a claim for damages

In respect of the Cross Claimants’ cost of defending (while represented) Litigation brought for M.I.H. Such cost directly attributed to PMF Legal and Paul Fordyce due to conflict of interest and lack of legal advice in this matter. Consequently Mr. Wallace has and continues to suffer severe mental anguish and continuing stress.

These factors have resulted in him being unemployable.

The procedural history: a summary

26. The matter was fixed for hearing shortly after the parties were given a direction on 22 February 2021 to approach the listing manager to obtain a hearing date: the hearing allocated was for 10 days, commencing on 7 February 2022.

27. The hearing, however, was vacated by orders made by Davies J on 14 December 2021: McMillan Investment Holdings Pty Ltd v Mangos [2021] NSWSC 1635. The essential reason for the adjournment of that hearing was due to the failure of the first, second and third defendants to file and serve all evidence upon which they relied in accordance with multiple orders made by the Court. So much is apparent from the judgment of Davies J (at [4]-[14]):

4. I have been case managing these proceedings since February 2019. There has been a constant failure to comply with orders made to prepare these proceedings for hearing. The parties were directed on 22 February 2021 to approach the listing manager to obtain a hearing date that hearing date was eventually appointed, as I have said, on 7 February 2022.

5. On 22 February I directed that the first, second and third defendants were to file and serve all evidence on which they relied in response to the plaintiff's evidence and to serve evidence in support of cross-claims that they had brought. They were to do that by 19 April 2021. They did not do so. They made no attempt to relist the matter to explain why they had not done so, despite liberty to apply being accorded to the parties.

6. On 2 June 2021 the parties agreed that an extension of time would be provided to the defendants to file and serve all their evidence. I made orders in chambers on 2 June, which gave the defendants until 28 June 2021 for the filing and service of that evidence. They did not do so. Nobody relisted the matter before me to explain why that had not happened.

7. The proceedings came back before me on 8 October 2021 where time was, again, extended to the defendants to file and serve their evidence, but on this occasion guillotine orders were put in place to ensure that the evidence would be filed, so that the other parties would have the time to respond to that evidence and the hearing could proceed on 7 February 2022.

8. Once again the defendants did not comply with the orders to serve their evidence. Evidence was served on a drip-feed basis from dates subsequent to 22 October until November 2021. The overall result is that the defendants have taken more than nine months to file evidence, which was directed in February to be filed.

9. It is perfectly clear to me that there is now not the time for the other parties adequately to respond to the evidence that has been served late, although without leave, at the present time. No application has been made by any of the defendants by notice of motion for leave to file and serve their evidence out of time.

10. I am also satisfied, from the evidence contained in the affidavit of the plaintiff's solicitor, that it is inappropriate for the present hearing to proceed on 7 February 2022. That is partly because of what is said in that affidavit in relation to the overlap of issues between the proceedings and the anticipated proceedings in the Federal Court on the one hand, and the present proceedings on the other. It is also because there are examination proceedings that have been conducted in the Federal Court and which have been adjourned to the first two dates of the hearing of the proceedings fixed in this Court.

11. What is likely to emerge in those examinations may have some relevance for the issues to be determined in the present case. Although the matter of commonality of issues is by no means clear, it seems to me entirely unsatisfactory that the proceedings in this Court should proceed to a final hearing until that matter is clarified.

12. When the proceedings were before me on 8 October 2021 I warned the defendants that if they did not file their evidence in accordance with the directions made I would likely vacate the hearing of 7 February. That does not appear to have been a sufficient impetus to them to abide by the orders of the Court.

13. For all of those reasons the hearing of 7 February 2022 will be vacated.

14. The principal reason, however, that I have vacated the hearing of 7 February was because there is not now sufficient time for the other parties to respond to the late evidence put forward by the defendants, even if that evidence is now complete. In those circumstances the first, second and third defendants should pay the costs of the plaintiff's motion of 10 December 2021.

28. Consistent with the remarks of Davies J in his reasons at [4], it should be noted that the proceedings have been before the Court dealing with interlocutory issues, case management of the proceedings, or the making of orders on at least 47 occasions.

29. On 14 April 2023 Davies J set the matter down for final hearing commencing 16 October 2023 for 12 days. On that day his Honour also granted the first, second and third defendants relief from guillotine orders that precluded them from relying upon additional evidence.

30. On 3 August 2023 the matter was before Cavanagh J to deal with the plaintiff, in substance, discontinuing its claims against the first, second and third defendants in connection with the various instruments executed on or around 27 March 2015 and in early 2016. His Honour made a number of procedural orders, plainly with a view to streamlining the proceedings in light of those developments. It will be necessary to return to some of those orders, and what followed in consequence, later.

31. On 24 August 2023 a number of applications were listed before me. For present purposes it is relevant to note that on that date I made orders dismissing those parts of the third further amended statement of claim (the version of the pleading that was then current) that concerned the instruments executed on or around 27 March 2015 and in early 2016 (order 1), and dismissing the third cross-claim (the pleading that, relevantly here, sought relief against the incorporated legal practice) (order 4).

Legal principles: leave to amend

32. The relevant principles are not in doubt. They may be summarised as follows.

33. The Court may, at any stage of the proceedings, grant a party leave to amend any document in the proceedings: Civil Procedure Act 2005 (NSW) (‘CPA’), s 64(1). Section 64(2) relevantly provides that “… all necessary amendments are to be made for the purpose of determining the real questions raised by or otherwise depending on the proceedings …”. The power is to be exercised in accordance with the overriding purpose of the CPA, and the dictates of justice: ss 56-58 of the CPA.

34. In relation to these provisions, the following two matters should be noted. First, the power contained within s 64 of the CPA is conditioned upon a requirement that the Court follow the dictates of justice (as prescribed in s 58 of the CPA) in deciding whether to make any order including, relevantly here, “any order for the amendment of a document …”: s 58(1)(a)(i) of the CPA. Secondly, regard to both ss 56 and 57 is “statutorily compulsory” pursuant to s 58(2)(a) of the CPA: see Hans Pet Constructions Pty Limited v Cassar [2009] NSWCA 230 at [38].

35. The factors to be considered in the exercise of discretion to grant leave to amend include (see Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175; [2009] HCA 27 at [102] (‘Aon’)):

1. the nature and importance of the amendments to the party applying;

2. the delay in making the amendments, and the explanation for it; and

3. any prejudicial effect on the opposing party.

36. Another issue, bearing in mind the High Court’s statements in Aon and s 57 of the CPA, is that any leave to amend is not to be granted without a consideration of the requirements of case management and efficiency of the conduct of proceedings: see Aon at [5]; [23]; [93]; [95] and [111].

The basis for the grant of leave: the fourth cross-claimants

37. The fourth cross-claimants advance a number of partly overlapping reasons to support the grant of leave to rely upon the proposed amended fourth cross-claim – being: first, the importance of the amendment; secondly, the absence of prejudice; thirdly, any costs thrown away would be minimal because the cross-defendants are yet to put on their evidence and because there should be a separate determination of liability, with issues of quantum to be determined at a later point; and, fourthly, the fourth cross-claimants have adequately explained the delay, and it is not the product of a deliberate tactical or forensic decision. The ultimate submission was that the justice of the case required leave to be granted to the fourth cross-claimants.

The importance of the amendment

38. The fourth cross-claimants argue that the importance of the amendment “cannot be understated” and that it is appropriately described as a “newly discovered loss” (fourth cross-claimants’ submissions at [4]). I am prepared to accept that the proposed amendment identifies an arguable claim for damages against the cross-defendant, and in that general sense is important. It is, however, difficult to fully evaluate the claim because, as I have explained, the pleading is not altogether clear and, importantly, the claims remain in their relative infancy.

The absence of prejudice

39. The fourth cross-claimants next submitted that any “prejudice” to the cross-defendants “can be suitably addressed by determining liability and quantum separately” or, as was later submitted, “by way of a short assessment hearing or referral” (fourth cross-claimants’ submissions at [5] and [8]). A related submission was that any costs thrown away would be minimal because the cross-defendants are yet to put on their evidence and because there should be a separate determination of liability.

40. I do not accept, as a means to assuage the undoubted prejudice that would flow to the cross-defendants if the amendment were granted, that it is appropriate to have separately determined, as was submitted, the issue of liability – with “quantum” to be determined at a later point. That is for the following reasons.

41. First, the general practice is that there should be a trial of all issues, not one or some: Tepko Pty Ltd v Water Board (2001) 206 CLR 1; [2001] HCA 19 at [168]. Secondly, whilst the Court retains the discretion to order a separate determination of any question, the exercise of the discretion should be approached with a degree of care and caution. In Crawley v Vero Insurance Ltd [2012] NSWSC 593 at [17], Beech-Jones J (as his Honour then was) described it as “an exceptional measure”. Here, there was no formal application for an order under r 28.2 of the Uniform Civil Procedure Rules 2005 (NSW) – nor any identification of the “questions” to be determined – simply a submission, that was not developed further, that a separate determination should occur to ‘solve’ the problem created by the proposed late amendment. Thirdly, as the cross-defendants essentially submitted, even a preliminary consideration of that proposed course is problematic: as the claim is expressed as one for loss of opportunity, there is likely to be a significant degree of overlap between issues of quantum and causation. Not only does that make a separate determination unattractive, but it also most likely makes it impractical: there is, at a minimum, a prospect that there would need to be cross examination of the fourth cross-claimants on separate occasions, a fact that the fourth cross-claimants readily conceded. In this last respect, accepting this to be so, there is the further potential for credibility findings which can create difficulties, such as the potential for the trial judge to disqualify themselves, as both the plaintiff and cross-defendants submitted: Warragamba Winery Pty Ltd v State of New South Wales [2010] NSWSC 66 at [12]-[14].

42. The cross-defendants submitted that they would need time to investigate, and respond to, the newly advanced case – particularly given the nature of the evidence likely to be served – and that they would be quite unable to do so within the short period of time before the hearing. The cross-defendants submitted that the claims were entirely new and, in effect, required them to defend a claim which was, in effect, “to be commenced afresh” (Aon at [99]). The fourth cross-claimants did not contest that characterisation. It is unnecessary to make a precise finding about this: it suffices to find (and I do) that these are distinctly different, and undoubtedly new, claims that would require considerable investigation and response.

43. The fourth cross-claimants during the course of submissions “rejected” any suggestion that the hearing date would need to be vacated in consequence of the proposed amendment, and evidence anticipated to be served by the fourth cross-claimants. This submission was based upon their earlier one – that I do not accept: namely, there should be an order for a separate determination of “liability”. To the extent that the submission was broader, I do not accept it. In my respectful view, it is quite unrealistic to think that the cross-defendants could somehow deal with this new case, fairly, prior to the hearing and it would be oppressive to require them to do so. That is particularly so given the fourth cross-claimants have indicated that they would not be in a position to serve their evidence to support the “new” claims for around four weeks. Assuming the fourth cross-claimants serve their evidence in the time indicated, it would mean that the cross-defendants would be served with the material at some point during the course of the week prior to the scheduled hearing. As I later explain, in my view, to accede to the fourth cross-claimants’ application inevitably would require the hearing to be adjourned.

44. It also follows that I do not accept the fourth cross-claimants’ related submission that there would be, in effect, minimal costs consequences by allowing the amendment. In my view there would be considerable costs ramifications given that I consider allowing the amendment would require an adjournment of the hearing.

Explanation for delay

45. The fourth cross-claimants accepted, given the circumstances and the timing of their application, that an explanation for the delay in making the current application was called for. The fourth cross-claimants argued, however, that there is an explanation for the delay – said to be the “recent discovery, only a fortnight ago … as to the significant increase in the likely construction costs of the planned new home at Cronulla” compared to those from 2019 for the same proposed build (fourth cross-claimants’ submissions at [7]). Further, they submitted that the proposed amendment is not the product of a deliberate tactical or forensic choice (fourth cross-claimants’ submissions at [10]).

46. Some context is needed for these submissions. The evidence from the first defendant was in his affidavit at par 22 – and was to the effect that, upon “learning that the plaintiff has sought to discontinue its claims” the fourth cross-claimants then revisited their “plans to build our new home on Cronulla”: the first defendant was then advised that there would be an increase in cost, as well as a longer build time, when compared to 2019.

47. In a limited sense, it might be accepted that this was a “new discovery”: the discussion only took place, I infer, somewhat recently. Nevertheless, it is apparent that what is alleged to be the underlying basis for this claim – namely, the incurring of expenses and the loss of use of money – was present at all times, and certainly from 2019. The fourth cross-claimants accepted, during submissions, that the “underlying facts are the same. I accept that the retention of money is the fulcrum of all of these…”. As was pointed out by the cross-defendants during submissions:

1. the facts that underlie the new claim in par 58A(a) – essentially the fourth cross-claimants did not pursue the development of the home in Cronulla/Woolooware due to lack of funds consequent upon compliance with the orders made by Davies J on 4 April 2019 – were known by the first defendant at that time: first defendant’s affidavit, par 14 and 15;

2. the facts that underlie the new claim in par 58A(b) – essentially that the fourth cross-claimants were required to live in rental accommodation because the Cronulla/Woolooware property was at that time “uninhabitable” in and around mid-2019, requiring them to move into rental accommodation – were known by the first defendant at that time: first defendant’s affidavit, par 17; and

3. the fact that underlie the new claim in par 58A(c) – essentially that the fourth cross-claimants were required to fund the litigation brought by the plaintiff, these facts were known by the first defendant from 2019 onwards: first defendant’s affidavit, par 20.

48. In my view there is, contrary to what the fourth cross-claimants at least implicitly submitted, nothing new or recent about the underlying facts.

49. It may well be that the fourth cross-claimants did not turn their mind to these claims before then – but the evidence was silent upon that issue. Further, the evidence said nothing about why their lawyers did not; as it happens, there was no evidence from the lawyers for the fourth cross-claimants.

50. When this was raised during the course of submissions, counsel for the fourth cross-claimants relied upon what was said in Cement Australia Pty Ltd v Australian Competition and Consumer Commission (2010) 187 FCR 261; [2010] FCAFC 101 at [51]-[52] – to the effect that the explanation can be offered by counsel for a party – and, further, to that end, advised that counsel was “only asked to consider this application recently following [the first defendant’s] instructions”.

51. I do not doubt that, in a given case, it may be appropriate to act upon an explanation proffered by counsel retained by a party. But here, the explanation only goes so far: it explains what occurred after the fourth cross-claimants gave instructions; it says nothing about what occurred before then.

52. Generally speaking, there is a need to explain “both ends” of the delay. As was said in Capic v Ford Motor Company of Australia Limited (Late Evidence) [2020] FCA 1117 at [22]:

In cases where such an indulgence is sought it is incumbent upon the party seeking the indulgence to explain how the delay in its actions has come about.  But a delay is a finite period of time and hence, like many things, has both a beginning and an end. Any explanation for the delay must generally wrestle with both of these ends, or at the very least acknowledge them.  It must lay bare both why it is only now that the action is sought to be taken but also, and perhaps more importantly, why it was not taken when it should have been.  Often the former will be reasonably obvious.  Usually it is the latter which is of most discretionary significance.  But both are important.

53. Here, the explanation proffered explains the end, but not the beginning – that is, why this issue was not considered and investigated well before now. There is, thus, a partial explanation only.

54. In furtherance of the ‘explanation’ advanced, the fourth cross-claimant also submitted that any delay “is to be viewed against the backdrop of the recent radical capitulation by the plaintiff of its claims” (fourth cross-claimants’ submissions at [7]).

55. I do not accept that submission. It is difficult to see how the dismissal of parts of the plaintiff’s claim against the first and second defendants (the fourth cross-claimants) could generate these claims, when their presence in the third further amended statement of claim did not.

Additional matters

56. There are a number of other matters that are also relevant to a consideration of whether the leave sought by the fourth cross-claimants should be granted. They are as follows.

57. First, it goes without saying that the proposed amendment is made exceedingly late: the hearing is scheduled to commence on 16 October 2023, a little over five weeks away. Given the impending hearing date, the fact that this claim is still in its infancy is concerning, as is the fact that there are more than arguable issues with the form of the pleading – for example: (a) the proposed pleading does not – at least not clearly – seek to link up with what is contained in pars 8 and 9 of the first defendant’s affidavit; and, as to this, the consent orders which were made in 2019 were not orders at the ‘behest’ of the plaintiff but constituted a settlement between the plaintiff and the first and second defendants following an interlocutory dispute (affidavit of Malcolm John Cameron affirmed 1 September 2023 at [68]-[72]); and, (b) no attempt has been made to identify – at least not clearly – how defending the plaintiff’s claim (and incurring costs in consequence) is a loss attributable to the acts or omissions of the cross-defendants. This suggests, as the cross-defendants submitted, that the pleading is likely to undergo revision or, at a minimum, there is likely to be issues about its form in any case moving forward and productive of further delay.

58. It is, in my respectful view, no answer to say – at this late stage of the proceedings – as the fourth cross-claimants did during submissions, that the cross-defendants could make a request for further and better particulars. The obligation to plead all material facts rests upon the fourth cross-claimants, an obligation that is particularly important given the close proximity to the hearing.

59. Secondly, it is also relevant to give consideration to the “degree of expedition” with which the fourth cross-claimants have approached the proceedings, including “the degree to which they have been timely in their interlocutory activities” (s 58(2)(b)(ii) of the CPA).

56. I have earlier set out some of the procedural history: see [26]-[31], above. To that I would add the following.

57. The matter was relisted, initially before Cavanagh J, on 3 August 2023. On that occasion, the fourth cross-claimants gave no indication of their intent to amend; in fact, on 17 August 2023 they advised the parties (and the Court) by email that they intended to proceed upon the fourth cross-claim “as pleaded without amendment” (affidavit of Malcolm John Cameron affirmed 1 September 2023, annexure G). That response was provided because, when listed before Cavanagh J on 3 August 2023, his Honour made an order requiring the fourth cross-claimants to confirm whether – given the indication by the plaintiff that significant parts of the third further amended statement of claim were to be “discontinued” – they continued to press the parts of the fourth cross-claim (and, if so to identify those parts of it) by 9 August 2023. The fourth cross-claimants did not comply with that order by 9 August 2023, but did so (on 17 August 2023) only following a complaint raised by the solicitors for the plaintiff that there had been no compliance with Cavanagh J’s orders.

58. Notwithstanding what was indicated in that correspondence dated 17 August 2023, during the course of submissions on 24 August 2023, counsel for the fourth cross-claimants foreshadowed the possibility, in general terms only, that an application might be made for leave to amend the fourth cross-claim. Having floated that possibility, I made orders requiring the filing and service of any application by the fourth cross-claimants for leave to amend the fourth cross-claim.

59. It could not be said that the fourth cross-claimants have been timely in their interlocutory activities. In my respectful view, the opposite is so. Their failure to comply with the orders of the Court on the last occasion required the adjournment of the hearing in December 2021, and the inevitable consequence of any grant of leave to amend the fourth cross-claim would be a second adjournment of the hearing.

60. Thirdly, in my view, the efficient disposal of the business of the Court, the efficient use of available judicial resources and the timely disposal of the proceedings at a cost affordable by the respective parties (ss 57(1)(b)-(d) of the CPA; Aon at [5]; [23]; [93]; [95] and [111]), all favour rejection of the application for leave: the matter has been the subject of ongoing and regular case management, specifically overseen by Davies J since February 2019. More recently, the matter has been before Cavanagh J and myself on a number of occasions in order to provide directions and orders to ensure the finalisation of evidence for the hearing in October 2023. The application would inevitably involve an adjournment of a 12 day hearing, on the back of the earlier adjournment. It would also mean that, if the matter was fixed for hearing for a two-week block, there would not be an available hearing date until approximately this time in 2024. It would, in my view, work a considerable degree of injustice – particularly given that the key events occurred in 2015 and 2016 – to grant the fourth cross-claimants leave to file the amended fourth cross-claim when the result of that order must be to adjourn the hearing date once again. It would also be antithetical to the “case management considerations” referred to in ss 57(1)(b)-(d) of the CPA and Aon at [5]; [23]; [93]; [95] and [111].

61. Fourthly, and partly following on from the above matter, there will be inevitable delay by an adjournment – which will have the consequence of the matter being fixed for hearing at around this time in 2024. Given the key events giving rise to the alleged liability are alleged to have occurred in the period February-March 2015 and early 2016 and the fact that proceedings were commenced in 2018, any further delay of the proceedings would, at a minimum, be highly undesirable and unfortunate. Although made in a slightly different context, it is worth noting the remarks of Lord Sumption in Birmingham City Council (Appellant) v Abdulla [2013] 1 All ER 649; [2012] UKSC 47 at [41] which I consider to be relevant in the present context: “Delay impoverishes the evidence available to determine the claim, prolongs uncertainty, impedes the definitive settlement of the parties' mutual affairs and consumes scarce judicial resources in dealing with claims ...”. Justice McHugh in Brisbane South Regional Health Authority v Taylor (1996) 186 CLR 541, 551; [1996] HCA 25 made similar remarks.

62. Further, to the extent that the fourth cross-claimants submitted that the amendment should be allowed because the litigation was “hard fought” and that the litigation itself was a “costly and necessary evil” (relying upon what was said in White v Overland (2001) 67 ALD 731; [2001] FCA 1333 at [4]), I do not accept that submission. As to it, I would simply and respectfully echo the remarks of Allsop P in Richards v Cornford (No 3) [2010] NSWCA 134 at [44]:

… parties are entitled to expect that the costly and stressful, though necessary evil that is litigation be resolved with reasonable despatch so as to minimise, where reasonably possible, the time during which people are subjected to its rigours and strains.

67. Fifthly, I do not consider that an order for costs would ameliorate the prejudice that would be suffered. As was said in Bomanite Pty Ltd v Slatex Corp Aust Pty Ltd (1991) 32 FCR 379, 392; [1991] FCA 536 (cited approvingly in Aon at [100]): “Costs recoverable even on an indemnity basis will not compensate for time lost and duplication incurred where litigation is delayed or corrective orders necessary”. It should be noted, however, that there was no offer to indemnify all parties in connection with costs (the fourth cross-claimants submission was that in practical terms there was unlikely to be any costs thrown away or additional costs incurred by the cross-defendants, should leave be granted). Further, absent any evidence about the capacity for the fourth cross-claimants to meet those costs, I would be unprepared to infer that such an order would, at least in some way, be sufficient. Given the fourth cross-claimants did not address this matter in this way, it is unnecessary to pursue it further.

68. In terms of the “just” resolution and the dictates of justice (ss 56(1), 57(1)(a) and 58(2) of the CPA), I have considered the matters relied upon by the parties, and those additional matters to which reference has been made. These matters all feed into that assessment.

69. In my view the justice of the case requires the application for leave to amend the fourth cross-claim be refused.

The basis for the grant of leave: the fifth cross-claimant

70. The fifth cross-claimant (the third defendant) filed written submissions. They largely – if not precisely – mirrored the written submissions of the fourth cross-claimants.

71. In line with what the fourth cross-claimants submitted, the fifth cross-claimant essentially argued that leave should be granted for the following reasons.

72. The fifth cross-claimant argued that the amendment is important and any prejudice suffered by the cross-defendants can be dealt with by determining liability and quantum separately (fifth cross-claimant’s submissions at [4]-[5], [9]). I am prepared to accept that there is, at least possibly, an arguable case: but it is quite difficult to meaningfully assess this given the compressed way in which it has been pleaded.

73. In relation to the submission that there should be a separate determination of liability, for the reasons that I have given in connection with the fourth cross-claimants application, it is inappropriate for there to be any separation of questions: see [40]-[45], above. The position is not different because the fifth cross-claimant seeks to advance what appears to be a claim for personal injury damages, and resultant economic loss, in consequence of any alleged breach. Further, in connection with the proposed claim about legal costs incurred when the fifth cross-claimant was legally represented, it is readily apparent that those underlying facts were known certainly by 2019 (the time at which the fifth cross-claimant’s solicitors ceased to act for him), if not before.

74. The fifth cross-claimant next argued that there is a satisfactory explanation for the delay, and it is not the product of a deliberate tactical or forensic choice (fifth cross-claimant’s submissions at [7]).

75. I do not accept this submission. The fifth cross-claimant did not adduce any evidence seeking to explain the lateness of his application to amend. It was not suggested by evidence, or even during argument, that any psychological sequelae was something that only developed in and around the time of the filing of the notice of motion. Nor can it be inferred that the dismissal of parts of the plaintiff’s claim provide an explanation for the application and its lateness. Nor, respectfully, do I accept that the circumstances have “changed to because of lack of finances”. There would need to be some evidence to enable me to meaningfully assess that contention, and there was not.

76. The fifth cross-claimant also argued that any costs thrown away would be minimal because the cross-defendants are yet to put on their evidence and, further, there should be a separate determination of liability, with issues of quantum to be determined at a later point (fifth cross-claimant’s submissions at [8]).

77. I do not accept this submission, essentially for the reasons that I have given in connection with the identical submission raised by the fourth cross-claimants in their application: see [40]-[44], above.

78. There are a number of other reasons which, in my view, tell against the grant of leave. They are as follows.

79. First, as with the application by the fourth cross-claimants, this application is exceedingly late given the impending hearing date. Secondly, I accept, as the cross-defendants submitted, that the allegations raised by the fifth cross-claimant would require not only a proper pleading and particulars, but evidence – which would require a response. The fifth cross-claimant gave no indication about the nature and extent of evidence that would be served in connection with the proposed further claim and it is a somewhat difficult predictive exercise to anticipate what this might involve, and when it might transpire. That this is so would (as with the application by the fourth cross-claimants), I find, inevitably lead to delay and an inability to have the matter fairly dealt with at the forthcoming hearing. Fourthly, I have taken into account the manner in which the fifth cross-claimant has participated in interlocutory activities. The position in this respect is not materially different to the position of the fourth cross-claimants, as to which see [59]-[63], above. Put simply, the hearing was adjourned on the last occasion in consequence of the failure of the first, second and third defendants (here, the cross-claimants) complying with the orders of the court. To accede to this application would inevitably lead to the adjournment of the forthcoming hearing – something that would again be the consequence of the failure of the fifth cross-claimant to attend to interlocutory activities in a timely way. Fifthly, the “case management considerations”, addressed in the context of the application by the fourth cross-claimants, apply with equal force to the current one: see [64] above.

80. My assessment of the “just” resolution and the dictates of justice requires the application for leave to amend the fifth cross-claim to be refused.

Orders

81. For the above reasons I make the following orders:

1. Order that the first and second defendants’ notice of motion filed 29 August 2023 be dismissed.

2. Order that the first and second defendants pay PMFPL Pty Limited, Paul Fordyce and the plaintiff’s costs of, and incidental to, the notice of motion filed 29 August 2023.

3. Order that the third defendant’s notice of motion filed 1 September 2023 be dismissed.

4. Order that the third defendant pay PMFPL Pty Limited, Paul Fordyce and the plaintiff’s costs of, and incidental to, the notice of motion filed 1 September 2023.

5. Vacate the listing before Davies J on 15 September 2023.

6. Confirm, in line with the orders made on 24 August 2023, the matter is listed for status review before Chen J on 20 September 2023.

7. Order that any application by the third defendant for referral to a barrister or solicitor on the pro bono legal panel, under rule 7.36(1) be filed and served by 11 September 2023, 5pm.

8. Direct that any application filed in accordance with order 7 above, be filed with the associate to Chen J.

9. List any application for pro bono legal assistance before Chen J on 13 September 2023 at 9:30am.

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Decision last updated: 07 September 2023