Medich v Bentley-Smythe Pty Ltd

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FEDERAL COURT OF AUSTRALIA

Medich v Bentley-Smythe Pty Ltd [2010] FCA 494

Citation: Medich v Bentley-Smythe Pty Ltd [2010] FCA 494
Parties: RON MEDICH PROPERTIES PTY LTD v BENTLEY-SMYTHE PTY LTD, CONTROL RISKS INTERNATIONAL PTY LTD, ACETT PTY LTD, MICHAEL LOCH MCGURK and KIMBERLEY FRANCIS ANN MCGURK
File number: NSD 224 of 2009
Judge: STONE J
Date of judgment: 19 May 2010
Legislation: Federal Court Rules O 13 r 2(2)
Cases cited:

Davis v Insolvency and Trustee Services Australia (No.1) [2009] FCA 562

Zahra v Francica [2009] NSW SC 1206

Date of hearing: 14 May 2010
Place: Sydney
Division: GENERAL DIVISION
Category: No Catchwords
Number of paragraphs: 20
Counsel for the Applicant: S Duggan
Solicitor for the Applicant: Bamford Lawyers
Counsel for the Respondents: F Kunc SC
Solicitor for the Respondents: Holman Webb, Lawyers

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

GENERAL DIVISION

NSD 224 of 2009
BETWEEN:

RON MEDICH PROPERTIES PTY LTD
Applicant
AND:

BENTLEY-SMYTHE PTY LTD
First Respondent

CONTROL RISKS INTERNATIONAL PTY LTD
Second Respondent

ACETT PTY LTD
Third Respondent

MICHAEL LOCH MCGURK
Fourth Respondent

KIMBERLEY FRANCIS ANN MCGURK
Fifth Respondent

JUDGE:

STONE J

DATE OF ORDER:

19 MAY 2010

WHERE MADE:

BRISBANE (VIA VIDEO LINK TO SYDNEY)

THE COURT ORDERS THAT:

1.The applicant has leave to amend the Further Amended Application, the Amended Statement of Claim and the Defence to the Second Cross Claim.

2.The applicant pay the respondents’ costs of the Notice of Motion filed on 10 May 2010.

Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
The text of entered orders can be located using Federal Law Search on the Court’s website.


IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

GENERAL DIVISION

NSD 224 of 2009
BETWEEN: RON MEDICH PROPERTIES PTY LTD
AND:

BENTLEY-SMYTHE PTY LTD
First Respondent

CONTROL RISKS INTERNATIONAL PTY LTD
Second Respondent

ACETT PTY LTD
Third Respondent

MICHAEL LOCH MCGURK
Fourth Respondent

KIMBERLEY FRANCIS ANN MCGURK
Fifth Respondent

JUDGE:

STONE J

DATE:

19 MAY 2010

PLACE:

BRISBANE (VIA VIDEO LINKE TO SYDNEY)

REASONS FOR JUDGMENT

  1. By Notice of Motion filed on 10 May 2010, the applicant, Ron Medich Properties Pty Ltd seeks the Court’s leave to amend the Application, the Statement of Claim and the Defence to the Second Cross Claim in this proceeding.  Since that time the Application and the Statement of Claim have gone through several iterations, the applicant having filed an amended application, an Amended Statement of Claim and a Further Amended Application.  References to the documents in these reasons should be understood as referring to the iteration current at the date of hearing the Notice of Motion unless otherwise indicated.

  2. The applicant’s Notice of Motion has been brought on for hearing as a matter of urgency because of the time limits effectively imposed on the amendment of the pleadings in orders made by the Supreme Court of New South Wales.  At the heart of the proposed amendments is a claim to an unregistered…

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Details
Case
[2010] FCA 494
Decision Date

CaseChat Overview and Summary

In the case of Medich v Bentley-Smythe Pty Ltd, the plaintiff, Medich, sought leave to amend his pleadings in a proceeding against Bentley-Smythe Pty Ltd and others, including a deceased individual, McGurk. The plaintiff's proposed amendments related to claims of a constructive trust and subrogation regarding a sum of $3.8 million used to pay a mortgage debt. The defendants opposed the amendments, arguing that they lacked evidentiary support, were futile, and would cause irremediable prejudice.

The legal issues before the court included whether the delay in seeking amendments warranted refusal of leave, the sufficiency of evidence to support the proposed claims, the futility of the claims, and the potential prejudice to the defendants if the amendments were allowed. The court considered the procedural flexibility in allowing amendments and the need for evidence scrutiny at the trial stage, rather than the pleading stage.

The court found that the delay in seeking amendments was not a valid reason to deny leave, given the early stage of the proceedings and the absence of significant disruption to the defendants. Regarding the sufficiency of evidence, the court held that pleadings are not evidence and dismissed the defendants' argument based on the lack of supporting evidence at this stage. The court also rejected the claim of futility, stating that the potential failure of the proposed claims was a matter for trial, not the pleading stage. The court acknowledged the defendants' concern about prejudice but concluded that the proposed amendments were not so obviously futile as to warrant refusal of leave.

The court granted leave for the plaintiff to amend his pleadings, noting that the defendants' concerns about prejudice and evidentiary support would be addressed at trial. The court's decision allowed the plaintiff to pursue his claims, subject to the defendants' ability to respond and present their evidence in due course.

Orders

Orders of the court

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Background

Background to the litigation

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Evidence

Evidence Before The Court

In the circumstances I do not regard the delay as a reason, per se, for refusing leave to amend. Although the present proceeding was commenced in March 2009 for reasons that, at least in part, are understandable, including the death of Mr McGurk, it has not progressed very far. Discovery is still to be completed, the evidence is not closed and no trial date has been set. That being so the proposed amendments should not cause undue disruption to the progress of the matter. Evidence to support claim The respondents submit that there is no evidence to support the claims made in the proposed amendments. Rather, they say, the evidence filed to date is directly contrary to the claims made in the proposed amendments. They also submit that the Court should not allow the applicant to bring “an uncorroborated claim against a deceased person” having regard to the care with which the claimant’s evidence must be scrutinised. Both these submissions must be rejected. As explained above, at [10], pleadings are not a matter of evidence. For this reason the respondents’ reliance on Zahra v Francica [2009] NSWSC 1206 is misplaced. The need for careful scrutiny of evidence in respect of claims against a deceased estate to which Bryson AJ refers in that case, is not relevant at the pleading stage of a proceeding.Futility of claim The respondents submit that the proposed amendments disclose no cause of action and are therefore futile. The proposed amendments claim, inter alia, that as a consequence of the applicant providing the sum of $3.8 million that was used to pay the amount owing under the mortgage to BankWest, the Cremorne property was impressed with a constructive trust for repayment of that amount to the applicant. Alternatively, it is claimed that the applicant is subrogated to the interests of BankWest under the mortgage. It is yet to be seen whether the claims made in the proposed amendments can be substantiated by evidence. The respondents submit that there is already evidence from Mr McGurk and Mr Medich that shows that the claim is bound to fail. Whether that is the case is a matter to be addressed at trial not at the pleading stage. For a proposed amendment to be a futility it would be necessary for this to be clear on the face of the pleading and for it to be so obviously futile that it would have been struck out if it had appeared in the original pleading. The decision of Foster J in Davis v Insolvency and Trustee Service Australia (No 1) [2009] FCA 562 is an example. His Honour refused to allow amendments that were contrary to well-established principles of constitutional law; see in particular [57]-[58]. The proposed amendments are not futile in that sense. Prejudice to respondents The most substantial of the objections that the respondents make to the proposed amendments is that of irremediable prejudice. The arrangements pursuant to which the $3.8 million was paid by the applicant were made between Mr McGurk and Mr Ron Medich. Given the death of Mr McGurk the respondents say that they will be seriously prejudiced in their attempt to respond to allegations made at this late stage and to reply to evidence that may be adduced by the applicant. They claim that the prejudice they would suffer could not be remedied by the common means of adjournment and/or imposition of costs.

Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

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