National Australia Bank Ltd v C & O Voukidis Pty Ltd - [2015] NSWSC 185

Supreme Court

New South Wales

Amendment notes

Medium Neutral Citation: National Australia Bank Ltd v C & O Voukidis Pty Ltd [2015] NSWSC 185
Hearing dates: 9 & 18 December 2014
Date of orders: 13 March 2015
Decision date: 13 March 2015
Jurisdiction: Common Law
Before: Davies J
Decision:
(1) With regard to the Defence to the Second Further Amended Statement of Claim:
(a) paragraphs 2, 3, 4, 5, 9A, 9B and 17 are struck out to the extent that the pleading in each paragraph extends beyond an admission of the paragraph in the Second Further Amended Statement of Claim to which each responds;
(b) Paragraphs 24 to 34 are struck out;
(c) Paragraphs 48 and 49 are struck out. Leave is given to the Fourth Defendant to re-plead the matters contained in paragraph 48.
(d) If paragraph 75 of the Second Further Amended Statement of Claim is withdrawn, paragraph 37 of the Defence should be struck out.
(2) Dismiss the Fourth Defendant’s Notice of Motion as amended filed 3 November 2014;
(3) Paragraphs 31, 32, 33 and 34 of the Second Cross-Claim filed 7 May 2014 are struck out;
(4) The Fourth Defendant is to pay the Plaintiff’s costs of the Plaintiff’s Notice of Motion filed 14 November 2014;
(5) The Fourth Defendant is to pay the Plaintiff’s costs of the Fourth Defendant’s Notice of Motion filed 3 November 2014.
Catchwords: PROCEDURE – amendment of pleadings – application to file amended Cross-Claim – amended pleading introduces new claims and reinstates claims formerly abandoned – no explanation for delay or for having previously abandoned claims – admissions in pleadings – application to withdraw – no explanation for making of admissions nor of reasons for seeking to withdraw admissions – need for explanation – applications refused - application to strike out defences – no reasonable cause of action disclosed
GUARANTEE AND INDEMNITY – rights of surety – against creditor – claim by creditor against guarantor for shortfall after sale of property – whether provisions of guarantee require payment by guarantor before claim can be made against creditor – duty under s 420A Corporations Act 2001 – whether provides a remedy to guarantor
Legislation Cited: Civil Procedure Act 2005 (NSW)
Contracts Review Act 1980 (NSW)
Corporations Act 2001 (Cth)
Court Procedure Rules 2006 (ACT)
Legal Profession Act 2004 (NSW)
Cases Cited: Aon Risk Services Australia Ltd v Australian National University [2009] HCA 27; (2009) 239 CLR 175
Apex Pallett Hire Pty Ltd v Brambles Holdings Ltd (Full Court of Supreme Court of Victoria, 8 April, 1988, unreported)
Artistic Builders Pty Ltd v Elliot and Tuthill (Mortgages) Pty Ltd [2002] NSWSC 16; (2002) 10 VPR 19,565
Australia and New Zealand Banking Group Ltd v Bangadally Pastoral Co Pty Ltd (1978) 139 CLR 195
Commercial Bank of Australia Ltd v Amadio (1983) 151 CLR 447
Commonwealth Bank of Australia v Hannaford (No 2) [2013] NSWSC 574
Coopers Brewery Ltd v Panfida Foods Ltd (1992) 26 NSWLR 738
Drabsch v Switzerland General Insurance Co Ltd (Supreme Court of NSW, Santow J, 16 October 1996, unreported)
Dymocks Book Arcade Pty Ltd v Capral Ltd (formerly Alcan Australia Ltd) [2011] NSWSC 1423
Forsyth v Blundell (1973) 129 CLR 477
Garcia v National Australia Bank Ltd (1998) 194 CLR 395
GE Capital Australia v Davis [2002] NSWSC 1146; 920020 11 BPR 20,529
General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125
Hannaford v Commonwealth Bank of Australia [2014] NSWCA 297
Hollis v Vabu Pty Ltd (2001) HCA 44; (2001) 207 CLR 21
Johnson v Buttress (1936) 56 CLR 113
Maile v Rafiq [2005] NSWCA 410
National Australia Bank Ltd v C & O Voukidis Pty Ltd [2014] NSWSC 384
Permanent Custodians Ltd v AGB Developments Pty Ltd [2010] NSWSC 540
Yerkey v Jones (1939) 63 CLR 649
Texts Cited: O’Donovan, Modern Contract of Guarantee (Thomson Reuters 2014)
Category: Procedural and other rulings
Parties: National Australia Bank Ltd (Plaintiff)
Olga Voukidis (Fourth Defendant)
Representation:
Counsel:
P Reynolds (Plaintiff)
P Afshar (Fourth Defendant)
Solicitors:
Gadens Lawyers (Plaintiff)
Spinks Eagle Lawyers (Fourth Defendant)

File Number(s): 2012/82867

Judgment

These proceedings concern a number of facilities provided by the National Australia Bank Ltd to the Fourth Defendant, her husband, and companies connected with them including C & O Voukidis Pty Ltd, Jedda Projects Pty Ltd and Koombari Pty Ltd. The Fourth Defendant was a borrower under some facilities and a guarantor in respect of others. She gave a mortgage over two properties she owned at 37 Thompson Street, Drummoyne and 344 Elizabeth Drive, Vincentia.
The proceedings commenced on 13 March 2012 seeking possession of properties at 5 Wyatt Avenue, Burwood, 60 Belmore Street, Burwood and 9 Chelmsford Avenue, Maroubra in addition to the Drummoyne and Vincentia properties.
The proceedings also named Nicholas and Georgina Anastasopoulos as Second and Third Defendants respectively and sought possession of their property at 9 Chelmsford Avenue, Maroubra. Leave to discontinue the proceedings against those Defendants was given on 10 September 2012.
On 3 April 2014 after a contested hearing for summary judgment Campbell J gave a judgment for possession of the properties at 5 Wyatt Avenue, Burwood and 37 Thompson Street, Drummoyne. His Honour found that there was an arguable defence in relation to the Vincentia property and refused summary judgment in respect of that property.
There have been a number of iterations of the Statement of Claim with the present form of it being a Second Further Amended Statement of Claim filed 17 October 2014. That form of the Statement of Claim significantly changed the claim made from being one simply for possession of properties to one that added a claim for debt under the facilities and the guarantees.
This judgment relates to a Notice of Motion filed by the Fourth Defendant on 3 November 2014 seeking leave to amend a cross-claim by the Fourth Defendant against the Plaintiff, and a Notice of Motion filed 14 November 2014 by the Plaintiff to strike out certain paragraphs of the Fourth Defendant’s Further Amended Defence filed 3 November 2014. Some of those paragraphs are said to have withdrawn admissions previously made by the Fourth Defendant without the leave of the Court.
At the hearing of these Motions each side sought and was granted leave to amend their Motions. The Fourth Defendant by her Amended Notice of Motion sought leave to withdraw the admissions challenged by the Plaintiff in its Notice of Motion. The Plaintiff added a prayer that certain paragraphs of the Second Cross-Claim filed by the Fourth Defendant on 7 May 2014 be struck out.
So that a proper understanding can be gained of the competing positions of the parties on these Motions it will be necessary to set out in some detail both the past pleading and chronology of the proceedings to the present time.

Procedural history and pleadings

The original Statement of Claim filed 13 March 2012 relevantly pleaded the following matters:

2.   At all material times:
(a)   the first defendant, second defendant, third defendant, fourth defendant, Christos Voukidis (Mr Voukidis), Jedda Projects Pty Ltd ACN 094 060 027 (Jedda) and Koombari Pty Ltd ACN 094 015 782 (Koombari) were customers of the plaintiff;
(b)   the fourth defendant is a guarantor of the facility provided by the plaintiff to the first defendant;
(c)   the second defendant, third defendant and fourth defendant are guarantors of the facility provided by the plaintiff to Jedda;
(d)   the second defendant, third defendant and fourth defendant are guarantors of the facility provided by the plaintiff to Koombari; and
(e)   the first defendant is a guarantor of the facility provided by the plaintiff to the fourth defendant and Mr Voukidis.
…
NAB Portfolio Facility – Account No 751360306
7.   The plaintiff extended a portfolio facility with a limit of $1,840,000 to the fourth defendant and Mr Voukidis, and the fourth defendant and Mr Voukidis agreed to maintain the facility within the agreed limit (Second Portfolio Facility).
Particulars
The terms of the Second Portfolio Facility are set out in the plaintiffs letter of offer dated 14 December 2007 and letter of variation dated 29 October 2010.
8.   The terms and conditions of the Second Portfolio Facility enable the plaintiff to require the fourth defendant and Mr Voukidis to make repayment in full of all money owing under the Second Portfolio Facility, plus interest upon default by the fourth defendant and Mr Voukidis. The interest rate for the Second Portfolio Facility is currently 6.59% per annum.
Business Mortgage Overdraft -Account No 529886796
9.   The plaintiff extended an overdraft facility with a limit of $500,000, to Jedda and Jedda agreed to utilise the facility within the agreed limit (Overdraft).
Particulars
The terms of the Overdraft are set out in the plaintiff’s letter of offer dated 8 March 2006.
10.   The terms and conditions of the Overdraft enable the plaintiff to require Jedda to make repayment in full of all money owing under the Overdraft plus interest upon default by Jedda.
The interest rate for the Overdraft is currently 16.01% per annum.
Bills Facility Acceptance and Discount - Fixed Rate and National Flexible Bill Facility (now Matured Bills Facility Account No. 176544714)
11.   The plaintiff extended two bill facilities with a total limit of $2,500,000 Koombari (Bills Facility).
Particulars
The terms of the Bills Facility are set out in the plaintiff’s letters of offer dated 6 December 2003, 8 December 2003 and 22 December 2004.
12.   The terms and conditions of the Bills Facility enable the plaintiff to require Koombari to make repayment in full of all money owing under the Bill Facility plus interest upon default by Koombari. The interest rate for the Bill Facility is currently 16.80% per annum.
…

20. …

Bills Facility
4.(sic)   Koombari has defaulted under the terms and conditions of the Bill Facility and the Second by failing to make the required payments when due.
5.(sic)   Koombari has further defaulted under the terms and conditions of the Bills Facility by failing to comply with the plaintiff’s notice dated 9 May 2011 and demand dated 20 May 2011.
…
Guarantees
First Guarantee
33.   In order to secure the obligations of Jedda under the Overdraft, Koombari, Mr Voukidis, the second defendant, third defendant and fourth defendant entered into a written guarantee and indemnity whereby the second defendant, third defendant and fourth defendant guaranteed, jointly and severally, payment of any monies due and owing by the Jedda to the plaintiff to a limit of $500,000, plus interest, costs, fees, charges and expenses (First Guarantee).
…
Third Guarantee
35.   In order to secure the obligations of Koombari under the Bill Facility, Jedda, Mr Voukidis, the second defendant, third defendant and fourth defendant entered into a written guarantee and indemnity whereby the second defendant, third defendant and fourth defendant guaranteed, jointly and severally, payment of any monies due and owing by the first defendant to the plaintiff to a limit of $2,500,000.00, plus interest, costs, fees, charges and expenses (Third Guarantee).
Fourth Guarantee
36.   In order to secure the obligations of the fourth defendant and Mr Voukidis under the Second Portfolio Facility, the first defendant entered into a written guarantee and indemnity whereby the first defendant guaranteed payment of any monies due and owing by the fourth defendant and Mr Voukidis to the plaintiff to a limit of $2,450,000.00, plus interest, costs, fees, charges and expenses (Fourth Guarantee).

In the Fourth Defendant’s Defence filed on 21 May 2012 (and then filed again on 2 July 2012) the Fourth Defendant admitted all of those paragraphs, except paragraphs 33 and 35, without qualification. In relation to paragraphs 33 and 35 the Fourth Defendant pleaded as follows:

33. As to paragraph 33 of the Statement of Claim say that she admits signing a document she now understand to be the First Guarantee, she otherwise refers to and repeats the matters set out in paragraphs 94 and 95 hereof and otherwise denies the First Guarantee is binding on her as alleged.
…
35. As to paragraph 35 of the Statement of Claim say that she admits signing a document she now understand to be the Third Guarantee, she otherwise refers to and repeats the matters set out in paragraphs 94 and 95 hereof and otherwise denies the Third Guarantee is binding on her as alleged.

Paragraphs 92, 94 and 95 of that Defence were as follows:

92.   The Fourth Defendant says that-
(a)   the Plaintiff effected a sale of property owned by Koombari with settlement occurring on 22 December, 2011 whereby the Plaintiff received net sale proceeds of $1,236,939.11;
(b)   the market value of the property was in the vicinity of $2.2 million;
(c) the sale was at a gross undervalue and in breach of the Plaintiff's duties as mortgagee in possession, alternatively the duties of a receiver pursuant to section 420A of the Corporations Act 2001 (Cth); and
(d)   if (which is expressly denied) she has any liability to the Plaintiff pursuant to the Third Guarantee, she is entitled in equity to have the amount of any liability reduced by an amount equal to the undervalue
94.   The Plaintiff took no steps to advise the Fourth Defendant to obtain independent legal advice or to recommend that she obtain independent legal advice when it provided security documents to her Husband for him to make available to the Fourth Defendant for signature and return to the Bank associated with entry of guarantees and execution of security documents. In such circumstances the Plaintiff constituted the Husband of the Fourth Defendant as an agent of the Plaintiff in the signature of guarantees and documents whereby the Fourth Defendant and properties owned by her became security for loans made to Koombari Pty Limited, Jedda Projects Pty Limited and C & O Voukidis Pty Limited.
95.   In circumstances where the Fourth Defendant is married to Christos Voukidis:-
(a)   The Plaintiff provided security documents to Christos Voukidis to make available to the Fourth Defendant to sign;

(b)   The Plaintiff did not advise the Fourth Defendant to obtain independent legal advice before signing documents;
(c)   The Plaintiff knew or should have known that the Fourth Defendant reposed trust and confidence in her Husband in matters of business where he was the person directly involved in the business activities, to the knowledge of the Plaintiff;
(d)   The Plaintiff has obtained guarantees from the Fourth Defendant, it would be unconscionable and there is a presumption of undue influence and/or alternatively the guarantees were executed based on trust and confidence between the Fourth Defendant and her Husband;
(e) The guarantees are unjust in the circumstances in which they were entered pursuant to Section 7 of the Contracts Review Act 1980 and should be declared void;
(f)   The guarantees were procured on behalf of the Plaintiff and ought to be set aside;

(g) The Plaintiff should not be entitled to enforce any guarantees against the Fourth Defendant and should execute a discharge of security and provide a release to the Fourth Defendant in respect of guaranteed debts of Koombari Pty Limited, Jedda Projects Pty Limited and C & O Voukidis Pty Limited.

On 12 July 2012 the Plaintiff filed an Amended Statement of Claim which, apart from some cosmetic amendments, pleaded that the various mortgages secured the obligations by the Fourth Defendant under the facilities and the First Guarantee, the Second Guarantee and the Third Guarantee. The First Guarantee executed 14 March 2006 secured the obligations of Jedda Projects Pty Ltd under its overdraft of $500,000. The Second Guarantee secured the obligations of C & O Voukidis Pty Ltd (the First Defendant) in relation to a facility to that company of $1.65 million. The Third Guarantee secured the obligations of Koombari Pty Ltd of two bill facilities totalling $2.5 million.
The Fourth Defendant filed an Amended Defence to the Amended Statement of Claim on 13 August 2012. The admissions to paragraphs 2, 7, 8, 9, 10, 11, 12, 20.4, 20.5 and 36 remained. The pleading to paragraphs 33 and 35 which were, in substance unchanged, now read as follows:

Admits that she signed the document but does not admit the balance of the contents of paragraph 33 [or 35] of the Amended Statement of Claim.

Significantly, the pleading in paragraphs 94 and 95 of the first defence was omitted. What had previously been paragraph 92 of the original defence was reproduced in identical terms as paragraph 94. The position was, therefore, that the only substantive defence was that the sale of property owned by Koombari was at a gross undervalue and in breach of s 420A of the Corporations Act.
On 13 August 2012 the Fourth Defendant also filed a cross claim against the Second and Third Defendants claiming contribution from them as co- guarantors.
On 27 November 2012 the Plaintiff filed a Further Amended Statement of Claim. Apart from a renumbering of some paragraphs in a manner that was confusing and unnecessary, the only other change made was to what had been paragraph 92 of the Amended Statement of Claim and was now paragraph 86 of the Further Amended Statement of Claim to assert that it was the Fourth Defendant rather than the First Defendant that had failed to comply with the fifth mortgage demand.
On 13 December 2012 directions were made by Schmidt J providing for the Fourth Defendant to file and serve any notice of motion seeking leave to file an amended defence or cross claim by 18 January 2013 and for the Plaintiff to provide and serve any notice of motion seeking summary judgment by the same date. It is not clear why, when a Further Amended Statement of Claim had been filed, it was necessary for leave to be granted to the Fourth Defendant to file and serve a further defence. However, on 18 January 2013 each of the parties filed a notice of motion. The Plaintiff sought summary judgment. In the case of the Fourth Defendant, she sought leave simply to amend her Defence of 18 January 2013.
Both Motions were heard by Campbell J on four dates in late February and early March 2013.
On 3 April 2014 Campbell J made orders for possession of the properties at 5 Wyatt Avenue, Burwood and 37 Thompson Street, Drummoyne: National Australia Bank Ltd v C & O Voukidis Pty Ltd [2014] NSWSC 384. His Honour dismissed the summary judgment application in relation to the Vincentia property and gave leave to the Fourth Defendant to re-plead the Defence that she sought to file. That leave was granted in the light of what his Honour had to say about the proposed defences as follows:

[45]   The proposed Amended Defence essentially raises four matters as follows:
(a)   The failure to apply the surplus from the proceeds of the sale of the other Burwood property in reduction of the liabilities of Mrs Voukidis;
(b)   Applying the amount of the term deposit monies, other than in accordance with Mrs Voukidis' instructions;
(c) Selling property owned by Koombari at what is said to be a gross undervalue. In respect of this, Mrs Voukidis asserts a breach of the Bank's duties as mortgagee in possession or alternatively under s 420A of the Corporations Act; and
(d)   The release of the security of the Vincentia property referred to above.

[46] I did not understand the argument about the surplus funds to be pressed as one which would deny the Bank its entitlement to possession. On the basis of Inglis and the other authorities I have referred to above, this is the correct approach. One might add, that it is difficult to see how both the first defendant and the fourth defendant can have the benefit of the same fund. But this is a mere matter of set-off which can be dealt with later in terms of the claim asserted by the fourth defendant.
[47] As I have recounted above, the term deposit funds have now been released from the freezing order and have been applied to the reduction of Mrs Voukidis' liability. Whether she has some continuing claim in relation to loss suffered by her because the funds were not applied as she would have wished can be determined at a subsequent hearing. This is not a matter which disentitles the mortgagee bank to an order for possession. The claims in respect of the sale at a gross undervalue, again are money claims which can be ventilated later and by application of Inglis and the other authorities referred to above do not disentitle the Bank to possession for default on the mortgage. The Bank relied upon the decision of Bryson J in GE Capital Australia v Davis & Ors (2002) 11 BPR 20,529. Whether this decision provides a complete answer to this claim can be decided once the facts are known. It is not necessary for me to decide that matter now.

On 7 May 2014 the Fourth Defendant filed a Second Cross-Claim against the Plaintiff. Although the proceedings had commenced on 13 March 2012 this was the first time a cross-claim against the Plaintiff was filed. No explanation for that delay has been given.
The Cross-Claim contained what were called Four Complaints.
Complaint One was entitled “Failure to apply proceeds of sale”. It pleaded that in or around late 2011 the First Defendant entered into a contract for the sale of 64 Belmore Street, Burwood and that sale settled in March 2012. The Fourth Defendant alleged that the Bank was under an obligation to apply the whole of the net proceeds of sale in reduction or extinction of two liabilities owed by the First Defendant to the Bank. These facilities were the FlexiPlus Mortgage Facility (of $1,650,000 to the First Defendant) and the second was the Second Portfolio Facility (of $1.84 million) where the Fourth Defendant was a principal debtor.
Complaint Two was entitled “Failure to apply term deposit moneys”. This complaint alleged that when the Fourth Defendant and her husband sold their matrimonial home at 5 Appian Way, Burwood for the purpose of reducing their obligations to the Bank, a bank officer, Mr Bradley See, required $725,000 to be placed in a term deposit which would be released for the Fourth Defendant and her husband as they required it. This term deposit was not released in a timely manner leading to the suffering of damage by the Fourth Defendant.
It appears that the funds the subject of both complaints, were subject to a freezing order imposed by Pembroke J in this Court in separate proceedings. Those proceedings and the freezing order related to proceedings in Victoria involving the Fourth Defendant and her husband.
The Third Complaint headed “Sale at gross undervalue” was the same complaint that first appeared in paragraph 92 of the original Defence and subsequently as paragraph 94 in the Amended Defence (see [11] above).
The Fourth Complaint concerned the release of the Vincentia security. The complaint there was that the Bank promised to release the Vincentia property when the portfolio facility was reduced to $1.84 million from moneys from the sale of 5 Appian Way, Burwood and a further mortgage taken over Thompson Street, Drummoyne. That was the matter in respect of which Campbell J determined should go to trial as a defence to the Plaintiff’s claim for possession.
The matter came before me for judicial directions on 25 July 2014. Counsel for the Fourth Defendant sought an adjournment of two weeks on the basis that the Fourth Defendant had instructed a new firm of solicitors who had received eight boxes of documents from the previous solicitors. It was said that the solicitors needed time to get on top of the material. Counsel frankly acknowledged that the new solicitors had previously acted for the First Defendant in the matter. When there was no explanation about why the solicitors had been changed I refused to adjourn the proceedings and directed that the Fourth Defendant was to file and serve her evidence on or before 22 August 2014. Nothing was said by the Fourth Defendant about a need for expert evidence. This is particularly relevant to the claim based on the breach of s 420A of the Corporations Act.
Notwithstanding those directions and the refusal of the adjournment, the evidence was not served until 3 September 2014. It did not include any expert evidence.
When the proceedings came before Campbell J on 3 October 2014 the Fourth Defendant indicated that she wished to serve an amended cross claim against the Bank. She was directed to serve the proposed form of that cross claim by 10 October 2014, and that was done. The solicitors for the Bank said that they would not consent to the proposed Amended Cross Claim and sent a detailed letter on 14 October setting out the reasons why they did not consent.
On 17 October the Plaintiff filed a Second Further Amended Statement of Claim pursuant to orders made on 3 October 2014 by Campbell J. I shall return to that document presently.
On 20 October 2014 the solicitors for the Fourth Defendant sent a further proposed Amended Cross Claim to the Bank’s solicitors. The Bank again refused its consent to the filing of that proposed cross claim, and that refusal has led to the Fourth Defendant’s present Motion for leave to do so.
The Amended Second Cross-Claim sought to be filed by the Fourth Defendant is pleaded as follows:

RELIEF CLAIMED
1   A declaration that each of the First Guarantee, the Second Guarantee and the Third Guarantee is not a binding agreement enforceable as against the Cross-claimant.
2 To the extent any of the First Guarantee, the Second Guarantee or the Third Guarantee is otherwise enforceable, an order that that guarantee is unjust in the circumstances in which it was entered into made pursuant to section 9 of the Contracts Review Act 1980 (NSW)(Act).
3 To the extent any of the First Guarantee, the Second Guarantee or the Third Guarantee is otherwise enforceable, an order pursuant to section 7 of the Act that that guarantee be set aside or, alternatively, that guarantee is void or unenforceable as against the Cross-claimant.
4 In the alternative, to the extent any of the First Guarantee, the Second Guarantee or the Third Guarantee is otherwise enforceable and not liable to be set aside, an order pursuant to section 7 of the Act varying that guarantee such that the liability of the Cross-claimant under the Guarantee be limited to the fair market value of the properties secured pursuant to the loans in relation to which each of the First Guarantee, the Second Guarantee or the Third Guarantee was given.
5   In the alternative, to the extent the Third Guarantee is otherwise enforceable and not liable to be set aside, an order that the Cross-claimant is discharged from any obligations she has pursuant to the Third Guarantee.
6   In the alternative, damages for breach of contract.
7 In the alternative, damages for breach of section 420A of the Corporations Act 2001 (Cth).
8   In the alternative, equitable damages.
9   Costs.
10   Interest.
11   Any further or other order the Court thinks fit.
PLEADINGS AND PARTICULARS
1   The Cross-claimant is the fourth defendant in the proceeding and the wife of Mr Christos Voukidis (Husband).
2   From 2005 to 2008 (Relevant Period), the Husband conducted various businesses, including the businesses of Jedda Projects Pty Ltd (Jedda) and Koombari Pty Ltd (Koombari), and communicated directly, and without any involvement by the Cross-claimant, with the Cross-defendant.
3.   In the Relevant Period, the Husband obtained finance from the Cross-defendant in relation to the various businesses conducted by the Husband through corporations associated with or related to him.
4.   At all relevant times:
a.   The Cross-claimant was the wife of the Husband;
b.   The Cross-claimant trusted the Husband to conduct and make decisions concerning all financial matters relating to their household, including all financial transactions and loans;
c.   The Husband was an accountant and businessman;
d.   The Husband conducted all of the financial matters relating to their household, including all financial transactions and loans; and
e.   The Cross-claimant was not informed about state and financial position of any of the businesses, in which the Husband was involved, or in which he had an interest.

First Guarantee
5.   In March 2006, the Cross-claimant signed a document entitled    "Guarantee and Indemnity" (First Guarantee).
6.   The Cross-claimant signed the First Guarantee in circumstances where:
a.   The Cross-claimant trusted the Husband to conduct and make decisions concerning all financial matters relating to their household, including all financial transactions and loans;
b.   The Husband asked the Cross-claimant to sign the First Guarantee;
c.   The Husband told the Cross-claimant that the Second Defendant and the Third Defendant had signed the First Guarantee;
d.   The Husband had provided the Cross-claimant with no information about the state and financial position of Jedda;
e.   The Husband had provided the Cross-claimant with no information that Jedda had already defaulted in performing its obligations pursuant to the Overdraft;
f.   The monies borrowed by Jedda pursuant to the Overdraft did not benefit the Cross-claimant and were instead to used to fund various construction projects by the Husband;
g.   The Cross-defendant had provided the Cross-claimant no information concerning the financial position of Jedda, including the fact that Jedda had already defaulted in performing its obligations pursuant to the Overdraft; and
h.    The Cross-defendant signed the First Guarantee at home, in the presence only of the Husband and not at any of the Cross-defendant's premises or in the presence of any of the Cross-defendant's employees or agents.

7   In the premises:
a.   the Cross-claimant's signature on the First Guarantee was procured under the undue influence of the Husband; and
b.   the Cross-claimant derived no benefit from the monies purportedly secured by the First Guarantee.

8   By reason of the matters set out in paragraphs 6 and 7 above, it would be unconscionable to permit the Cross-defendant to assert such legal rights as it may have under the First Guarantee.
Second Guarantee
9   In August 2005, the Cross-claimant signed a document entitled "Guarantee and Indemnity” (Second Guarantee).
10   The Cross-claimant signed the Second Guarantee in circumstances where:
a.   The Cross-claimant trusted the Husband to conduct and make decisions concerning all financial matters relating to their household, including all financial transactions and loans;
b.   The Husband asked the Cross-claimant to sign the Second Guarantee;
c.   The Cross-defendant signed the Second Guarantee at home, in the presence only of the Husband and not at any of the Cross-defendant's premises or in the presence of any of the Cross-defendant's employees or agents; and
d.   In or around August 2005, the Cross-defendant represented to the Husband and the Cross-claimant that the Second Guarantee secured only payment of the FlexiPlus Mortgage Facility (Limitation Representation).
Particulars
i.    The Limitation Representation was oral and was made by Melody Gall, who was an employee or agent of the Cross-defendant at in August 2005 to the Husband.
ii.    The Husband repeated the Limited (sic) Representation orally to the Cross-claimant.

11   In the premises:
a.   the Cross-claimant's signature on the Second Guarantee was procured under the undue influence of the Husband; and
b.   the Cross-claimant signed the Second Guarantee based on the Limitation Representation.

12   By reason of the matters set out in paragraphs 10 and 11 above, it would be unconscionable to permit the Cross-defendant to asset (sic) such legal rights as it may have under the Second Guarantee.
Third Guarantee
13   In June 2006, the Cross-claimant signed a document entitled "Guarantee and Indemnity” (Third Guarantee).
14   The Cross-claimant signed the Third Guarantee in circumstances where:
a.   The Cross-claimant trusted the Husband to conduct and make decisions concerning all financial matters relating to their household, including all financial transactions and loans;
b.   The Husband asked the Cross-claimant to sign the Third Guarantee;
c.   The Husband had provided the Cross-claimant with no information about the state and financial position of Koombari;
d.   The Husband had provided the Cross-claimant with no information that Koombari had already defaulted in performing its obligations pursuant to the Bills Facility;
e.   The monies borrowed by Koombari pursuant to the Bills Facility did not benefit the Cross-claimant and were instead to used for Koombari's business by the Husband;
f.   The Cross-defendant had provided the Cross-claimant no information concerning the financial position of Koombari, including the fact that Koombari had already defaulted in performing its obligations pursuant to the Bills Facility; and
g.    The Cross-defendant signed the Third Guarantee at home, in the presence only of the Husband and not at any of the Cross-defendant's premises or in the presence of any of the Cross-defendant's employees or agents.

15   In the premises:
a.   the Cross-claimant's signature on the First Guarantee was procured under the undue influence of the Husband; and
b.   the Cross-claimant derived no benefit from the monies purportedly secured by the Third Guarantee.

16   By reason of the matters set out in paragraphs 14 and 15 above, it would be unconscionable to permit the Cross-defendant to asset (sic) such legal rights as it may have under the First Guarantee.
17   Based on the matters set out in paragraphs 2 to 16 above, the Cross-claimant seeks relief in accordance with paragraph 1 of the prayers for relief herein.
Code of Banking Practice
18   By accepting the signature of the Cross-claimant, the Cross-defendant agreed:
a.   by clause 31.1 of the Guarantee, that the Code of Banking Practice (Code) would apply to the First Guarantee, the Second Guarantee and the Third Guarantee (together, Guarantees) and that the Code would form part of any agreement that came into existence by reason of the Cross-claimant signing the Guarantees;
b.   by clause 28.2 of the Code, that the Cross-claimant's liability is limited to a specific amount, plus other liabilities such as interest and recovery costs, that are described in the Guarantees or is limited to the value of a specific security at the time of recovery;
c.   by clause 28.4(b) of the Code, that the Cross-defendant would tell the Cross-claimant about any dishonour on any facility held by the First Defendant, Jedda or Koombari that has occurred within 2 years before informing the Cross-claimant of these matters;
d.   by clause 28(c) of the Code, that the Cross-defendant would tell the Cross-claimant whether any of the FlexiPlus Mortgage Facility, the Bills Facility or the Overdraft would not be provided if the Guarantees were not provided;
e.   by clause 28(d) of the Code, that the Cross-defendant would provide the Cross-claimant with:
any financial accounts or statement of financial position given to the Cross-defendant by the First Defendant, Jedda or Koombari within 2 years prior to the day on which this information is provided;
the latest statement of account relating to the FlexiPlus Mortgage Facility, the Bills Facility or the Overdraft for a period during which a dishonour occurred, in relation to which the Cross-defendant was required to give the Cross-claimant information in accordance with clause 28.4(b) of the Code;
f.    by clause 28.5 of the Code, the Cross-defendant would not ask the Cross-claimant to sign the Guarantees unless the Cross-defendant had provided the Cross-claimant with the information required by clause 28.4 of the Code;
g.   by clause 28.6(a) of the Code, the Cross-defendant would not give the Guarantees to the First Defendant, Jedda or Koombari, or anyone acting on behalf of the First Defendant, Jedda or Koombari to arrange the signing of the Guarantees; and
h.    by clause 39.1 of the Code, that it would be bound by the Code in respect to the Guarantees.
i.    by clause 28.6(b) of the Code, the Cross-defendant would ensure that it attended on the signing of the Guarantees and that the signing would be in the absence of the debtor.
j.     by clause 26.1 of the Code, the Cross-defendant agreed that it would not accept the Cross-claimant as a co-debtor under the Bills Facility or the Overdraft in circumstances where it was clear on the facts known to it that the Cross-claimant would not receive any benefit under either the Bills Facility or the Overdraft.

19   In the premises, the Cross-defendant breached the provisions of the Code.
Particulars
i.     Contrary to clause 28.4(b) of the Code, the Cross-defendant failed to tell the Cross-claimant the fact that Jedda had defaulted in performing its obligations pursuant to the Overdraft;
ii.    Contrary to clause 28.4(b) of the Code, the Cross-defendant failed to tell the Cross-claimant the fact that Koombari had defaulted in performing its obligations pursuant to the Bills Facility;
iii.     Contrary to clause 28(c) of the Code, the Cross-defendant failed to tell the Cross-claimant that the FlexiPlus Mortgage Facility, the Bills Facility or the Overdraft would not be provided if the Guarantees were not provided;
iv.     Contrary to clause 28(d) of the Code, the Cross-defendant failed to provide the Cross-claimant with:
I. any financial accounts or statement of financial position given to the Cross-defendant by Jedda or Koombari within 2 years prior to the day on which this information is provided in circumstances where Jedda and Koombari had defaulted in performing their obligations pursuant to the Overdraft and the Bills Facility respectively;
II. the latest statement of account relating to the Bills Facility or the Overdraft for a period during which any defaults occurred, in relation to which the Cross-defendant was reguired to give the Cross-claimant information in accordance with clause 28.4(b) of the Code;

b.   Contrary to clause 28.5 of the Code, the Cross-defendant asked the Cross-claimant to sign the Guarantees, and accepted those Guarantees, in circumstances where Cross-defendant had not provided the Cross-claimant with the information required by clause 28.4 of the Code;
c.   Contrary to clause 28.6(a) of the Code, the Cross-defendant gave the Guarantees to the Husband to arrange the signing of the Guarantees;
d.   Contrary to clause 28.6(b) of the Code, the Cross-defendant did not attend on the signing of the Guarantees and did not ensure that the Guarantees were signed in the absence of the Husband;
e.   Contrary to clause 26.1 of the Code, the Cross-defendant accepted the Cross-claimant as a co-debtor under the Guarantees when it was clear on the facts known to the Cross-defendant, or in circumstances where it ought to have known, that the Cross-claimant would not receive any benefit under the Guarantees.
20   By reason of the Cross-defendant's breach of the Guarantees and the Code, the Cross-claimant suffered loss and damage.
Particulars
The Cross-claimant's loss and damage is equal to any liability she has under the Guarantees.

Sale of the Properties
21   In 2011, the Cross-defendant appointed receivers and managers (Receivers and Managers) to a property located at level 11, 50 Clarence Street, Sydney and 4 car parking spaces owned by Koombari (together, Properties) purportedly pursuant to the terms of the Bills Facility.
22   In November or December 2011, the Receivers and Managers sold the Properties.
23   At all relevant times, including when they sold the Properties, the Receivers and Managers acted as agents for the Cross-defendant.
Particulars
i.    The Receivers and Managers acted, at all times, on the Cross-defendant's instructions.
ii.    Further and better particulars will be provided after the completion of discovery.

24 In the premises, the Cross-defendant was joint (sic) and severally liable for acts or omissions of the Receivers and Managers.
Particulars
The Cross-defendant appointed the Receivers and Managers to the Properties.
The Receivers and Managers acted, at all times, on the Cross-defendant's instructions.
The sale of the Properties by the Receivers and Managers was within the scope of the Receivers' and Managers' agency with the Cross-defendant.

25 In the premises, the Cross-defendant was vicariously liable for the acts or omissions of the Receivers and Managers.
Particulars
The Cross-defendant appointed the Receivers and Managers to the Properties.
The Receivers and Managers acted, at all times, on the Cross-defendant's instructions and the Cross-defendant controlled their decisions.
The Receivers and Managers were the agents of the Cross-defendant.
The sale of the Properties by the Receivers and Managers was within the scope of the Receivers' and Managers' agency with the Cross-defendant.

26 The Receivers and Managers had a statutory duty pursuant to section 420A of the Corporations Act 2001 to exercise reasonable care and skill in the management and sale of the Properties so as to ensure that they would sell the property at market value or for at (sic) the best price reasonably obtainable.
27   The Receivers and Managers had a duty implied by law to take reasonable care in discharging their functions in relation to the management and sale of the Properties.
28   In breach of their duties as set out in paragraphs 26 and 27 above, the Receivers and Managers failed:
a.   to take reasonable care to ensure that the Properties were sold at market value and or the best price reasonably obtainable; and
b.   to take reasonable care in discharging their functions in relation to the management and sale of the Properties.

Particulars
i.    The market value of the Properties was over $2.2 million.
ii.    The Receivers and Managers sold the Properties for a substantially lower price than the market value of the Properties, for approximately $1.2 million.
29   By reason of the matters set out in paragraph 28 above, the Receivers and Managers breached their duties.
30   By reason of the matters set out in paragraphs 24 and 25, the Cross-defendant is liable for breaches by the Receivers and Managers.
31   By reason of the breach by the Receivers and Managers of their duties, Koombari suffered loss and damage.
Particulars
The Cross-claimant's loss and damage is equal to any liability she has under the Third Guarantee equal to the difference between the reasonable market value of the Properties and the Sale Price.
ii.    Further and better particulars will be provided after discovery.

32 The Cross-claimant has a right as guarantor to be subrogated to the rights of Koombari and claim as against the Cross-defendant, by way of damages, equitable compensation and/or by way of equitable set off the difference between what would have been realised by the Receivers and Managers, had they acted with due care and skill, and the amount of the actual sale price of the Properties.
33 In the alternative to paragraph 32 above, by reason of the breaches by the Receivers and Managers of their duties set out in paragraphs 26 and 27 above, the Cross-claimant should be discharged of any obligations she has pursuant to the Third Guarantee.
Relief pursuant to the Act
34 By reason of the matters set out in paragraphs 4 to 20 of this Cross-claim, the Guarantees were unjust, having regard to the circumstances in which they were signed, within the meaning of that term as used in section 7 of the Act.
35 By reason of the matters set out in paragraphs 4 to 20 of this Cross-claim, the Cross-claimant is entitled to relief pursuant to section 7 of the Act.

A few preliminary matters should be noted about this pleading. First, the Fourth Defendant has pleaded matters concerning the Second Guarantee in paragraphs 9 to 12. The Plaintiff has abandoned its claim on the Second Guarantee in the Second Further Amended Statement of Claim. That Second Guarantee was in respect of the obligations of the First Defendant. Where the Plaintiff is not seeking to enforce rights under the Second Guarantee the pleading in paragraphs 9 to 12 is embarrassing and should not be allowed.
Secondly, paragraphs 18 to 20, which deal with breaches of the Code of Banking Practice, have been raised for the first time since the proceedings commenced.
Thirdly, paragraphs 21 to 33 are in effect an expanded version of what was originally contained in paragraph 92 of the original Defence and subsequently paragraph 94 of the Amended Defence (see [11] above]). However, no further particulars have been provided of what was said to be the breach by the Receivers and Managers of their obligations under s 420A of the Corporations Act 2001 (Cth). Moreover, paragraph 27 alleges a duty that is not known to Australian law; Forsyth v Blundell (1973) 129 CLR 477; Australia and New Zealand Banking Group Ltd v Bangadally Pastoral Co Pty Ltd (1978) 139 CLR 195. When that was pointed out to him, the Fourth Defendant’s counsel said that paragraph 27 will be omitted from any cross-claim filed.
On 3 November 2014 the Fourth Defendant filed a Further Amended Defence. It is the pleading in that Defence which has given rise to the Bank’s present Motion.
In the meantime on 11 November 2014 the proceedings were listed for directions before Campbell J. Various directions were made in relation to the service of lay and expert evidence. The Fourth Defendant was to serve any proposed expert evidence by 12 December 2014. The matter was fixed for a final hearing for five days commencing 4 May 2015.
As indicated earlier the Second Further Amended Statement of Claim was a significantly different document from the earlier iterations of the Statement of Claim. Because the properties at 5 Wyatt Avenue, Burwood, 9 Chelmsford Avenue, Maroubra and 37 Thompson Street, Drummoyne had been sold, claims for possession in respect of those properties were omitted. Further, the position with regard to the outstanding debt was now clarified with the exception of what would be received from the sale of the Vincentia property if the Plaintiff was entitled to possession of that property.
The Second Further Amended Statement of Claim relevantly pleaded as follows (omitting passages struck through):

1.   The plaintiff was and is a company duly incorporated and entitled to sue in its corporate name and style.
2.   At all material times:
(a)   the first defendant, second defendant, third defendant, fourth defendant, Christos Voukidis (Mr Voukidis), Jedda Projects Pty Ltd ACN 094 060 027 (Jedda) and Koombari Pty Ltd ACN 094 015 782 (Koombari) were customers of the plaintiff,
(b)   the fourth defendant is a guarantor of the facility provided by the plaintiff to the first defendant,
(c)   the second defendant, third defendant and fourth defendant are guarantors of the facility provided by the plaintiff to Jedda,
(d)   the second defendant, third defendant and fourth defendant are guarantors of the facility provided by the plaintiff to Koombari, and
(e)   the first defendant is a guarantor of the facility provided by the plaintiff to the fourth defendant and Mr Voukidis.
The Facilities
…
NAB Portfolio Facility - Account No 751360306
7.   The plaintiff extended a portfolio facility with a limit of $1,840,000 to the fourth defendant and Mr Voukidis, and the fourth defendant and Mr Voukidis agreed to maintain the facility within the agreed limit (Second Portfolio Facility).
Particulars
The terms of the Second Portfolio Facility are set out in the plaintiff's letter of offer dated 14 December 2007 and letter of variation dated 29 October 2010.
8.   The terms and conditions of the Second Portfolio Facility enable the plaintiff to require the fourth defendant and Mr Voukidis to make repayment in full of all money owing under the Second Portfolio Facility, plus interest upon default by the fourth defendant and Mr Voukidis or upon cancellation by the plaintiff of the facility (irrespective of default). The interest rate for the Second Portfolio Facility is currently 5.25% per annum.
Business Mortgage Overdraft - Account No 529886796
9.   The plaintiff extended an overdraft facility with a limit of $500,000, to Jedda and Jedda agreed to utilise the facility within the agreed limit (Overdraft).
Particulars
The terms of the Overdraft are set out in the plaintiff's letter of offer dated 8 March 2006.
10.   The terms and conditions of the Overdraft enable the plaintiff to require Jedda to make repayment in full of all money owing under the Overdraft plus interest upon default by Jedda or upon expiry of the Overdraft on 30 April 2006. The interest rate for the Overdraft is currently 14.67% per annum.
Bills Facility Acceptance and Discount - Fixed Rate and National Flexible Bill Facility (now Matured Bills Facility Account No. 176544714)
11.   The plaintiff extended two bill facilities with a total limit of $2,500,000 Koombari (Bills Facilities).
Particulars
The terms of the Bill Facilities are set out in the plaintiff's letters of offer dated 6 December 2003, 8 December 2003 and 22 December 2004.
12.   The terms and conditions of the Bill Facilities enable the plaintiff to require Koombari to make repayment in full of all money owing under Bill Facilities plus interest upon default by Koombari or upon expiry of the Bills Facilities on 30 December 2006 and 31 December 2007. The interest rate for the Bill Facilities is currently 15.46% per annum.
Default

…

Second Portfolio Facility
17.   The fourth defendant and Mr Voukidis have defaulted under the terms and conditions of the Second Portfolio Facility by failing to maintain the facility within the agreed limit.
18.   The fourth defendant and Mr Voukidis have further defaulted under the terms and conditions of the Second Portfolio Facility by failing to comply with the plaintiff's notices dated 9 May 2011 and demands dated 20 May 2011.
Overdraft
19.   Jedda has defaulted under the terms and conditions of the Overdraft by failing to maintain the facility within the agreed limit.
20.   Jedda has further defaulted under the terms and conditions of the Overdraft by failing to comply with the plaintiff's notice dated 9 May 2011 and demand dated 20 May 2011.
Bills Facilities
20A.   Koombari has defaulted under the terms and conditions of the Bill Facilities and the Second by failing to make the required payments when due.
20B.   Koombari has further defaulted under the terms and conditions of the Bill Facilities by failing to comply with the plaintiff's notice dated 9 May 2011 and demand dated 20 May 2011.
Demands
…
Second Portfolio Facility
27.   By way of notice of demand dated 20 May 2011 to the fourth defendant and Mr Voukidis, the plaintiff made the balance of the Second Portfolio Facility due and payable by demanding the payment of $1,904,517.07 (Second Portfolio Facility Demand).
28.   The fourth defendant and Mr Voukidis have failed to comply with the Second Portfolio Facility Demand and, in any event, the plaintiff has cancelled the Second Portfolio Facility.
29.   As at 7 March 2012 2 October 2014, the sum of $2,329,419.17 is due and owing to the plaintiff by the fourth defendant and Mr Voukidis in respect of the Second Portfolio Facility.
Overdraft
…
Guarantees.
First Guarantee
33.   In order to secure the obligations of Jedda to the plaintiff, the fourth defendant entered into a written guarantee and indemnity whereby the fourth defendant guaranteed payment of any monies due and owing by the Jedda to the plaintiff to a limit of $500,000, plus interest, costs, fees, charges and expenses and provided an indemnity in respect of the same (First Guarantee).

…

Third Guarantee
35. In order to secure the obligations of Koombari to the plaintiff, the fourth defendant entered into a written guarantee and indemnity whereby the fourth defendant guaranteed payment of any monies due and owing by the first defendant to the plaintiff to a limit of $2,500,000.00, plus interest, costs, fees, charges and expenses and provided an indemnity in respect of the same (Third Guarantee).
…
75. The Fourth Mortgage enables the plaintiff to enter the Drummoyne
property upon default by the fourth defendant, under the terms, conditions and covenants of the Fourth Mortgage.

The Defence to the Second Further Amended Statement of Claim was relevantly pleaded as follows (omitting underlining):

PLEADINGS AND PARTICULARS
The Fourth Defendant:
1.   Admits the contents of paragraph 1 of the Second Further Amended Statement of Claim.
2.   In relation to paragraph 2 of the Second Further Amended Statement of Claim, the fourth defendant:
a.    says that the plaintiff extended to Jedda Projects Pty Ltd (Jedda) an overdraft facility with a limit of $500,000 with the account number 529886796 (Overdraft):
b.    says that she signed a document entitled "Guarantee and Indemnity” in March 2006 where Jedda was the customer (First Guarantee):
c.    says that the plaintiff extended to the first defendant a facility with a limit of $1,650,000 with the account number 552369500 (FlexiPlus Mortgage Facility);
d.    says that the first defendant mortgaged a property at 5 Wyatt Avenue, Burwood in the State of New South Wales, to secure only its obligations under the FlexiPlus Mortgage Facility (First Mortgage);
e.    says that the first defendant mortgaged a property at 60 Belmore Street, Burwood, in the State of New South Wales, to secure only its obligations under the FlexiPlus Mortgage Facility (Second Mortgage);
f.   says that she signed a document entitled "Guarantee and Indemnity in August 2005 where the first defendant was the customer (Second Guarantee);
g.   says that the plaintiff extended to Koombari Pty Ltd (Koombari) two bills facilities with a limit of $2,500,500 with the account number 176544714 (Bills Facilities)
h.     says that she signed a document entitled "Guarantee and Indemnity” in June 2006 where Koombari was the customer (Third Guarantee);
i.     says that she signed a document entitled "NAB Portfolio Facility Agreement Details" with the account number 751355427 (Second Portfolio Facility) as customer of the plaintiff;
j.    savs that the she mortgaged a property at 37 Thompson Street, Drummoyne, in the State of New South Wales, to secure only her obligations under the Second Portfolio Facility (Fourth Mortgage);
k.    savs that the first defendant executed a document entitled "Guarantee and Indemnity” in relation to the Second Portfolio Facility (Fourth Guarantee);
I.     says that she mortgaged a property at 344 Elizabeth Drive. Vincentia. in the State of New South Wales, to purchase the said property; and
m.    otherwise, does not admit paragraph 2 of the Further Amended Statement of Claim.

…
3.   In relation to paragraphs 7 and 8 of the Second Further Amended Statement of Claim, the fourth defendant:
a.   repeats paragraph 2 above; and
b.   otherwise does not admit paragraphs 7 and 8 of the Second Further Amended Statement of Claim.

4.   In relation to paragraphs 9 and 10 of the Second Further Amended    Statement of Claim, the fourth defendant:
a.   repeats paragraph 2 above; and
b.   otherwise, does not admit paragraphs 9 and 10 of the Second Further Amended Statement of Claim.

5.   In relation to paragraphs 11 and 12 of the Second Further Amended Statement of Claim, the fourth defendant:
a.   repeats paragraph 2 above; and
b.   otherwise, does not admit paragraphs 11 and 12 of the Second Further Amended Statement of Claim.

…
9A Does not know and cannot admit the contents of paragraph
20A of the Second Further Amended Statement of Claim and;
9B.   Does not know and cannot admit the contents of paragraph 20A of the Second Further Amended Statement of Claim.
…
16.   In relation to paragraph 33 of the Second Further Amended Statement of Claim, the fourth defendant:
a.   repeats paragraph 2 above; and
b.   otherwise, does not admit paragraph 33 of the Second Further Amended Statement of Claim.

…

17.   In relation to paragraphs 35 and 36 of the Second Further Amended Statement of Claim, the fourth defendant:
a.   repeats paragraph 2 above; and
b.   otherwise, does not admit paragraph 35 and 36 of the Second Further Amended Statement of Claim.
…
24.   Admits the contents of paragraph 46 of the Second Further Amended Statement of Claim.
25.   Does not admit the contents of paragraph 47 of the Second Further Amended Statement of Claim.
26.   Does not know and cannot admit the contents of paragraph 48 of the Second Further Amended Statement of Claim.
27.   Admits the contents of paragraph 49 of the Second Further Amended Statement of Claim.
28.   In relation to paragraph 50. 50A and 50B of the Second Further Amended Statement of Claim, the fourth defendant:
a.    repeats paragraph 2 above;
b.   relies on the terms of the First Mortgage and the FlexiPlus Mortgage Facility; and
c.   otherwise, denies paragraph 50 of the Second Further Amended Statement of Claim.

29.   Does not admit the contents of paragraph 51 of the Second Further Amended Statement of Claim.
30.   Does not admit the contents of paragraph 52 of the Second Further Amended Statement of Claim.
31.   Admits the contents of paragraph 53 of the Second Further Amended Statement of Claim.
32.   Denies the contents of paragraph 54 of the Second Further Amended Statement of Claim.
33.   Admits the contents of paragraph 55 of the Second Further Amended Statement of Claim.
34.   Admits the contents of paragraph 56 of the Second Further Amended Statement of Claim.
…
37.   Does not admit the contents of paragraph 75 of the Second Further Amended Statement of Claim.
…
48.   In answer to the whole of the Second Further Amended Statement of Claim, the fourth defendant savs that plaintiff has received funds which it should have applied in discharge of any liability of the fourth defendant to it but has failed or refused to do so, particulars of which have been provided to the plaintiff.
49.   In further answer to the whole of the Second Further Amended Statement of Claim, the fourth defendant says the following:
a.   At all relevant times:
i.    The fourth defendant was the wife of Christos Voukidis (Husband):
ii.    The fourth defendant trusted the Husband to conduct and make decisions concerning all financial matters relating to their household, including all financial transactions and loans;
iii.    The Husband was an accountant and businessman;
iv.    The Husband conducted all of the financial matters relating to their household, including all financial transactions and loans; and
v.    The fourth defendant was not informed about state and financial position of any of the businesses, in which the Husband was involved, or in which he had an interest;
vi.    From 2005 to 2008 (Relevant Period), the Husband conducted various businesses, including the businesses of Jedda and Koombari, and communicated directly, and without any involvement by the fourth defendant, with the plaintiff;
vii.    In the Relevant Period, the Husband obtained finance from the plaintiff in relation to the various businesses conducted by the Husband through corporations associated with or related to him.
b.   The fourth defendant signed the First Guarantee in circumstances where:
i.    The fourth defendant trusted the Husband to conduct and make decisions concerning all financial matters relating to their household, including all financial transactions and loans;
ii.    The Husband asked the fourth defendant to sign the First Guarantee;
iii.    The Husband told the fourth defendant that the second defendant and the third defendant had signed the First Guarantee;
iv.    The Husband had provided the fourth defendant with no information about the state and financial position of Jedda;
v.    The Husband had provided the fourth defendant with no information that Jedda had already defaulted in performing its obligations pursuant to the Overdraft;
vi.    The monies borrowed by Jedda pursuant to the Overdraft did not benefit the fourth defendant and were instead to used to fund various construction projects by the Husband;
vii.    The plaintiff had provided the fourth defendant no    information concerning the financial position of Jedda    including the fact that Jedda had already defaulted in    performing its obligations pursuant to the Overdraft;    and
viii.    The plaintiff signed the First Guarantee at home, in the    presence only of the Husband and not at any of the    plaintiff's premises or in the presence of any of the    plaintiff's employees or agents.

c.   In the premises:
i.     the fourth defendant's signature on the First Guarantee    was procured under the undue influence of the    Husband; and
ii.     the fourth defendant derived no benefit from the    monies purportedly secured by the First Guarantee.
d.   By reason of the matters set out above, it would be unconscionable to permit the plaintiff to assert such legal rights as it may have under the First Guarantee.
e.   The fourth defendant signed the Second Guarantee in    circumstances where:

i.    The fourth defendant trusted the Husband to conduct    and make decisions concerning all financial matters    relating to their household, including all financial    transactions and loans;
ii.    The Husband asked the fourth defendant to sign the    Second Guarantee;
iii.    The plaintiff signed the Second Guarantee at home, in    the presence only of the Husband and not at any of the    plaintiff's premises or in the presence of any of the    plaintiffs employees or agents; and
iv.   In or around August 2005, the plaintiff represented to    the Husband and the fourth defendant that the Second    Guarantee secured only payment of the FlexiPlus    Mortgage Facility (Limitation Representation).

Particulars
A.    The Limitation Representation was oral and was made    by Melody Gall, who was an employee or agent of the    plaintiff in August 2005 to the Husband.
B.    The Husband repeated the Limited (sic) Representation    orally to the fourth defendant.
f.   In the premises:
i.     the fourth defendant's signature on the Second    Guarantee was procured under the undue influence of    the Husband; and
ii.    the fourth defendant signed the Second Guarantee    based on the Limitation Representation.

g.   By reason of the matters set out above, it would be    unconscionable to permit the plaintiff to asset such legal rights    as it may have under the Second Guarantee.
h.    The fourth defendant signed the Third Guarantee in    circumstances where:
i.    The fourth defendant trusted the Husband to conduct    and make decisions concerning all financial matters    relating to their household, including all financial    transactions and loans;
ii.    The Husband asked the fourth defendant to sign the    Third Guarantee;
iii.    The Husband had provided the fourth defendant with    no information about the state and financial position of    Koombari;
iv.    The Husband had provided the fourth defendant with    no information that Koombari had already defaulted in    performing its obligations pursuant to the Bills Facility;
v.    The monies borrowed by Koombari pursuant to the Bills    Facility did not benefit the fourth defendant and were    instead used for Koombari's business by the Husband;
vi.    The plaintiff had provided the fourth defendant no    information concerning the financial position of    Koombari. including the fact that Koombari had already    defaulted in performing its obligations pursuant to the    Bills Facility; and
vii.    The plaintiff signed the Third Guarantee at home, in the    presence only of the Husband and not at any of the    plaintiff's premises or in the presence of any of the    plaintiff's employees or agents.
i. In the premises:
i.    the fourth defendant's signature on the First Guarantee       was procured under the undue influence of the          Husband; and
ii.    the fourth defendant derived no benefit from the monies
purportedly secured by the Third Guarantee.

j;    Based on the matters set above, the fourth defendant denies       that she is liable to the plaintiff under the First Guarantee, the       Second Guarantee and the Third Guarantee or otherwise.
k.    By accepting the signature of the fourth defendant, the plaintiff          agreed:
i.   by clause 31.1 of the Guarantee, that the Code of    Banking Practice (Code) would apply to the First    Guarantee, the Second Guarantee and the Third    Guarantee (together, Guarantees) and that the Code    would form part of any agreement that came into    existence by reason of the fourth defendant signing the    Guarantees;
ii.     by clause 28.2 of the Code, that the fourth defendant's       liability is limited to a specific amount, plus other          liabilities such as interest and recovery costs, that are       described in the Guarantees or is limited to the value of       a specific security at the time of recovery;
iii.     by clause 28.4(b) of the Code, that the plaintiff would       tell the fourth defendant about any dishonour on any       facility held by the First Defendant, Jedda or Koombari       that has occurred within 2 years before informing the       fourth defendant of these matters;
iv.    by clause 28(c) of the Code, that the plaintiff would tell       the fourth defendant whether any of the FlexiPlus          Mortgage Facility, the Bills Facility or the Overdraft          would not be provided if the Guarantees were not          provided;
1.   by clause 28(d) of the Code, that the plaintiff         would provide the fourth defendant with:
2.   any financial accounts or statement of financial       position given to the plaintiff by the First          Defendant, Jedda or Koombari within 2 years       prior to the day on which this information is          provided;
3.   the latest statement of account relating to the       FlexiPlus Mortgage Facility, the Bills Facility or       the Overdraft for a period during which a          dishonour occurred, in relation to which the          plaintiff was required to give the fourth          defendant information in accordance with          clause 28.4(b) of the Code;
v.    by clause 28.5 of the Code, the plaintiff would not ask       the fourth defendant to sign the Guarantees unless the       plaintiff had provided the fourth defendant with the          information required by clause 28.4 of the Code;
vi.    by clause 28.6(a) of the Code, the plaintiff would not       give the Guarantees to the First Defendant, Jedda or       Koombari, or anyone acting on behalf of the First          Defendant, Jedda or Koombari to arrange the signing       of the Guarantees; and
vii.    by clause 39.1 of the Code, that it would be bound by       the Code in respect to the Guarantees.
viii.    by clause 28.6(b) of the Code, the plaintiff would          ensure that it attended on the signing of the             Guarantees and that the signing would be in the          absence of the debtor.
ix.     by clause 26.1 of the Code, the plaintiff agreed that it       would not accept the fourth defendant as a co-debtor       under the Bills `Facility or the Overdraft in             circumstances where it was clear on the facts known to       it that the fourth defendant would not receive any          benefit under either the Bills Facility or the Overdraft.
l.    In the premises, the plaintiff breached the provisions of the          Code.

Particulars
A.   Contrary to clause 28.4(b) of the Code, the plaintiff    failed to tell the fourth defendant the fact that Jedda    had defaulted in performing its obligations pursuant to    the Overdraft:
B.   Contrary to clause 28.4(b) of the Code, the plaintiff    failed to tell the fourth defendant the fact that Koombari    had    defaulted in performing its obligations pursuant    to the Bills Facility:
C.   Contrary to clause 28(c) of the Code, the plaintiff failed    to tell the fourth defendant that the FlexiPlus Mortgage    Facility, the Bills Facility or the Overdraft would not be    provided if the Guarantees were not provided;
D.   Contrary to clause 28(d) of the Code, the plaintiff failed    to provide the fourth defendant with:
(a)    any financial accounts or statement of financial       position given to the plaintiff by Jedda or          Koombari within 2 years prior to the day on          which this information is provided in             circumstances where Jedda    and Koombari had       defaulted in performing their obligations          pursuant to the Overdraft and the Bills Facility       respectively;
(b)    the latest statement of account relating to the       Bills Facility or the Overdraft for a period during       which any defaults occurred, in relation to which       the plaintiff was required to give the fourth          defendant information in accordance with          clause 28.4(b) of the Code;
E.   Contrary to clause 28.5 of the Code, the plaintiff asked    the fourth defendant to sign the Guarantees, and    accepted those Guarantees, in circumstances where    plaintiff had not provided the fourth defendant with the    information required by clause 28.4 of the Code
F.   Contrary to clause 28.6(a) of the Code, the plaintiff    gave the Guarantees to the Husband to arrange the    signing of the Guarantees;
G.   Contrary to clause 28.6(b) of the Code, the plaintiff did    not attend on the signing of the Guarantees and did not    ensure that the Guarantees were signed in the absence    of the Husband;
H.    Contrary to clause 26.1 of the Code, the plaintiff    accepted the fourth defendant as a co-debtor under the    Guarantees when it was clear on the facts known to the    plaintiff, or in circumstances where it ought to have    known, that the fourth defendant would not receive any    benefit under the Guarantees.
m.    By reason of the plaintiff's breach of the Guarantees and the          Code, the fourth defendant suffered loss and damage, which          the fourth defendant claims should be set off against any             liability she owes to the plaintiff-Particulars The fourth             defendant's loss and damage is equal to any liability she has          under the Guarantees.
n.    In 2011. the plaintiff appointed receivers and managers             (Receivers and Managers) to a property located at level 11, 50          Clarence Street, Sydney and 4 car parking spaces owned by          Koombari (together. Properties) purportedly pursuant to the          terms of the Bills Facilities.
o.    In November or December 2011, the Receivers and Managers          sold the Properties.
p.    At all relevant times, including when they sold the properties,          the Receivers and Managers acted as agents for the plaintiff.

Particulars
A.   The plaintiff appointed the Receivers and             Managers to the Properties.
B.   The Receivers and Managers acted, at all times, on the
plaintiff's instructions.
C.   The sale of the Properties by the Receivers and          Managers was within the scope of the Receivers' and       Managers' agency with the plaintiff.
q.    In the premises, the plaintiff was joint (sic) and severally liable          for acts or omissions of the Receivers and Managers.

Particulars
A.   The plaintiff appointed the Receivers and             Managers to the Properties.
B.   The Receivers and Managers acted, at all times, on the
plaintiffs instructions.
C.   The sale of the Properties by the Receivers and          Managers was within the scope of the Receivers' and       Managers' agency with the plaintiff.
r.    In the premises, the plaintiff was vicariously liable for the acts          or omissions of the Receivers and Managers.
Particulars
A.   The plaintiff appointed the Receivers and Managers to       the Properties.
B.   The Receivers and Managers acted, at all times, on the
plaintiffs instructions and the plaintiff controlled their       decisions.
C.   The Receivers and Managers were the agents of the       plaintiff.
D.   The sale of the Properties by the Receivers and          Managers was within the scope of the Receivers' and       Managers' agency with the plaintiff.
s. The Receivers and Managers had a statutory duty pursuant to section 420A of the Corporations Act 2001 to exercise reasonable care and skill in the management and sale of the Properties so as to ensure that they would sell the property at market value or for at the best price reasonably obtainable.
t.    The Receivers and Managers had a duty implied by law to take
reasonable care in discharging their functions in relation to the    management and sale of the Properties.
u.    In breach of their duties as set out in above, the Receivers and
Managers failed:
iii.     to take reasonable care to ensure that the Properties    were sold at market value and or the best price    reasonably obtainable; and
iv.    to take reasonable care in discharging their functions in    relation to the management and sale of the Properties

Particulars
A.   The market value of the Properties was over    $2.2 million.
B.   The Receivers and Managers sold the    Properties for a substantially lower price than    the market value of the Properties, for    approximately $1.2 million.
v.    By reason of the matters set out above, the Receivers and             Managers breached their duties.
w.    By reason of the matters set out above, the plaintiff is liable for
breaches by the Receivers and Managers.
x.    By reason of the breach by the Receivers and Managers of          their duties, Koombari suffered loss and damage.
y.    The fourth defendant has a right as guarantor to be subrogated          to the rights of Koombari and claim as against the plaintiff, by          way of damages, equitable compensation and/or by way of          equitable set off the difference between what would have been          realised by the Receivers and Managers, had they acted with          due care and skill, and the amount of the actual sale price of          the Properties.
z.    In the alternative to paragraph (v) above, by reason of the             breaches by the Receivers and Managers of their duties set          out above, the fourth defendant should be discharged of any          obligations she has pursuant to the Third Guarantee.
aa.    By reason of the matters set out above, the Guarantees             were unjust, having regard to the circumstances in which they          were signed, within the meaning of that term as used in section          7 of the Contracts Review Act 1980 (Act).
bb. By reason of the matters set out above, the fourth defendant is entitled to relief pursuant to section 7 of the Act.

95. The fourth defendant denies that the plaintiff is entitled to the relief it seeks.

The passages marked in italics respond to paragraphs in the Second Further Amended Statement of Claim that are no longer pursued by the Bank and have been struck through in the form of the pleading filed in accordance with the Rules.
The Fourth Defendant swore and filed an affidavit in support of her Motion to file the Amended Cross-Claim. However, her counsel announced at the outset of the hearing of the Notices of Motion that he did not intend to read or rely on that affidavit. The Fourth Defendant said through her counsel that in relation to delay she relied on the evidence that the Bank put forward in discrete respects. That evidence was not identified.
The result of this was, therefore, that there was no evidence at all in relation to the Amended Motion by the Fourth Defendant seeking leave to withdraw admissions made in the earlier forms of the Defence. Nor was there any evidence explaining why particular defences and claims which were initially pleaded but then abandoned were now being sought to be relied upon again. This concerned, particularly, claims under the Contracts Review Act 1980 (NSW), claims for unconscionability and what was said to be undue influence. Nor was there any explanation why a claim was being made for the first time in reliance on alleged breaches of the Code of Banking Practice.
In Aon Risk Services Australia Ltd v Australian National University [2009] HCA 27; (2009) 239 CLR 175:

[103] The fact that an explanation had been offered for the delay in raising the defence was regarded as a relevant consideration in J L Holdings. Generally speaking, where a discretion is sought to be exercised in favour of one party, and to the disadvantage of another, an explanation will be called for. The importance attached by r 21 to the factor of delay will require that, in most cases where it is present, a party should explain it. Not only will they need to show that their application is brought in good faith, but they will also need to bring the circumstances giving rise to the amendment to the court's attention, so that they may be weighed against the effects of any delay and the objectives of the Rules. There can be no doubt that an explanation was required in this case.

Rule 21 there referred to is from the Court Procedure Rules 2006 (ACT) and is the equivalent of s 56 Civil Procedure Act 2005 (NSW).

I expressed the view in Commonwealth Bank of Australia v Hannaford (No 2) [2013] NSWSC 574 at [73]:

that the explanation for delay will in most cases not be regarded as subsidiary to showing the bona fides of the proposed amendment.

The Court of Appeal apparently accepted this view: Hannaford v Commonwealth Bank of Australia [2014] NSWCA 297 at [21] and [98]-[100].
As in Aon and Hannaford, there can be no doubt that an explanation was required in this case.
The Fourth Defendant submitted that I should infer the reason for the desire to file the amended Cross-Claim. It was said that the timing was relevant. It came after evidence had been filed by the husband and immediately after the Plaintiff had provided the form of its proposed Second Further Amended Statement of Claim.
Whilst I accept that the Plaintiff changed its claim from one seeking only possession of the properties to one seeking debt in addition, that came about because the other properties had been sold and the debt position had been thereby clarified. That change obviously had an impact on defences that could be raised, but it is difficult to see why it had any consequences for the Cross-Claim.
Further, the evidence of the Fourth Defendant’s husband was evidence filed by the Fourth Defendant’s solicitors. The material in that affidavit concerning the Fourth Defendant, particularly the entry into the various facility arrangements, must have been known to the Fourth Defendant from the outset. What she signed, what advice she received and the circumstances of her signing were not matters that she learnt for the first time from her husband’s affidavit. In any event, as I have mentioned, she had earlier pleaded undue influence and the Contracts Review Act.
I cannot infer that either the evidence of the husband or the proposed Second Further Amended Statement of Claim provides any reason for the need or desire to amend the Cross-Claim.

Withdrawal of admissions

This issue concerns paragraphs 2, 7, 8, 9, 10, 11, 12, 20.4, 20.5 and 36 of the Statement of Claim and the Amended Statement of Claim. Of those paragraphs, paragraphs 7 and 9 remain in the Second Further Amended Statement of Claim without any amendment. Paragraph 2 has only been altered in the Second Further Amended Statement of Claim by omitting references to the Second and Third Defendants who are no longer pursued by the Bank. The pleading in paragraph 2 against the Fourth Defendant is unamended.
Paragraph 11 has not been altered in substance. All that has changed is that the bill facilities referred to were previously defined as “bills facility” and are now defined as “bill facilities”. In the same way paragraphs 20A and 20B (formerly numbered as 20.4 and 20.5) refer to “bill facilities” rather than “bill facility”.
The Fourth Defendant submitted that what is pleaded by the Plaintiff and what has been admitted are effectively matters of law, and disputed that what was done was withdrawing admissions as to fact. I do not agree. A reading of the paragraphs mentioned above shows that facts are clearly asserted. While some of them may also involve conclusions related to legal matters (“is a guarantor”, “has defaulted” etc) the allegations are essentially factual assertions which even a person without legal training understands. Here, of course, the Fourth Defendant was a practising lawyer. The assertions made in the paragraphs were admitted clearly and without qualification.
Leave would be necessary to withdraw those admissions.
In respect of paragraph 8 the underlined words (“or upon cancellation by the Plaintiff of the facility (irrespective of default)”) have been added. Nothing else has been changed. Similarly, in paragraph 10 the underlined words (“or upon expiry of the overdraft on 30 April 2006”) have been added. Otherwise, both paragraphs have simply been amended to show the reduced interest rate that is current at the date of filing the Second Further Amended Statement of Claim rather than the rate current at the time of filing the earlier iterations of the document. Clear and unqualified admissions were made to those paragraphs with the exception of the added underlined words and leave is necessary to withdraw such admissions. However, the Fourth Defendant is entitled to plead other than by admission if there is an appropriate basis for doing so to the added underlined words.

[56] In my view there is nothing to indicate that it was the intention of the legislature that sub-s 420A(1) should confer any right or remedy on guarantors or other persons who involve themselves contractually in consequences of the exercise of the power of sale, but the guarantor is entitled to rely on the availability to the mortgagor of a remedy, whether the remedy was that previously established by Pendlebury v Colonial Mutual Life Assurance Society Ltd (1912) 13 CLR 676 or is now the remedy available to the mortgagor on breach of the duty declared by sub-s 420A(1); the guarantor is entitled to have an equitable remedy on the basis that the mortgage accounts are taken on whatever may be the principle truly applicable to taking mortgage accounts. In my opinion the equitable remedies which in an earlier state of the law were available to a guarantor where there was a breach of the mortgagee’s duty to a mortgagor corporation are now to be tested by reference to whether there was a breach of the duty stated in sub-s 420A(1). (emphasis added)
[32] This view of Bryson J has been followed by Young CJ in Eq (as he then was)

in Ultimate Property Group Pty Ltd v Lord [2004] NSWSC 114, (2004) 60 NSWLR 646 at [87] and [94], and Florgale Uniforms Pty Ltd v Orders [2004] VSC 65 at [388].

What Bryson J said in Davis has direct application here. The Fourth Defendant has no claim based on s 420A. The rights given by the section are not rights a guarantor has.
The further point from Davis is that any rights a guarantor has are subject to the agreement made between the guarantor and the creditor. Bryson J said at [85]:

The protection extended to the guarantor in Equity is related to the guarantor’s right to be subrogated to the rights of the principal creditor against the security if the guarantor pays out all the secured debt. The protection extended in Equity may have had its origin in this right of subrogation. The availability of protection is subject to any provision in the contract between the guarantor and the principal creditor which qualifies or limits the guarantor’s rights; in this case the qualification is of high importance, because of provisions of the guarantee with which I will deal. The guarantor cannot complain of any conduct of the creditor, or of any dealing with the secured security property which was authorised by the terms of the contract of guarantee, or by the terms of the security granted by the debtor.

In Davis the relevant terms of the guarantee were these:

8.1 As long as the Guaranteed Money or other money payable under this guarantee and indemnity remains unpaid, the Guarantor may not without the consent of GE Capital:
(a) in reduction of its liability under this guarantee and indemnity, raise a defence, set-off or counterclaim available to itself, the Debtor or a co-surety or co-indemnifier against GE Capital or claim a set-off or make a counterclaim against GE Capital; or
…
(d) claim to be entitled by way of contribution, indemnity, subrogation, marshalling or otherwise to the benefit of a Security Interest or guarantee or a share in it now or subsequently held for the Guaranteed Money or other money payable under this guarantee and indemnity.
…

9.1 The Guarantor agrees to make all payments to GE Capital under this guarantee and indemnity in immediately available funds to the account and in the manner notified by GE Capital to the Guarantor.
9.2 The Guarantor agrees to make payments without set-off or counterclaim and free and clear of any withholding or deduction for Taxes unless prohibited by law.

Of these clauses Bryson J said:

[98] The effect in substance of the provisions of the guarantee including cl 8.1(a) is that there is no limit on the right to resort to the courts if the guarantor first meets the obligation the protection of which is the primary purpose of the guarantee and indemnity, and pays the amount of the debt. It is well established in this area of the law that the guarantor can have recourse to securities given by a principal debtor to indemnify himself, but that he cannot do so until he has paid the whole debt. The validity of modifications of what would under the general law be the rights of guarantors is well established. These contractual provisions extend the ways in which the guarantors’ remedies are postponed, and extend the creditor’s freedom from competition in enforcement of its rights. The condition which must be fulfilled is directly related to the purposes of the agreement. [99] In my opinion the operation of cl 8.1 and cll 9.1 and 9.2 of the Guarantee according to their terms is not contrary to any principle of law.

The position in the present case is indistinguishable. The relevant parts of clauses 14 and 15 are clear and unequivocal. The guarantor must pay her full liability to the Plaintiff before any cross-claim can be brought because the guarantor “gives up any right against the Bank” until the whole liability is paid. Bearing in mind the principles in General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125, the claim cannot succeed.
If I am wrong concerning those matters, two other matters cause concerns about this claim being allowed to be maintained. First, as I have said, the claim is not properly pleaded to allege the acts and omissions of the Receivers and Managers that are said to give rise to the breach of duty that s 420A imposes. The Plaintiff says that it is not a matter of particulars only, although even particulars of the breaches have not been provided. Rather, the Plaintiff says, it would be necessary to plead specific acts and omissions to which appropriate response can be made in any pleading that answers the matter. The Plaintiff says that the failure of the Fourth Defendant since at least May 2012 to identify and plead those acts and omissions ought to result in the claim being struck out and the Fourth Defendant prevented from pursuing it.
Secondly, despite a number of directions requiring the Fourth Defendant to serve evidence including expert evidence, no evidence concerning this claim has been served. There is no evidence, for example, of what is said to be the market value of $2.2 million. There is no evidence of any wrongful acts of the Receivers and Managers. Indeed, there is no evidence at all about what steps the Receivers and Managers took to effect the sale.
There is no explanation from the Fourth Defendant why no evidence has been served in this regard. I was informed from the bar table that the Fourth Defendant has been reluctant to engage valuers or other experts before she could be certain that she would be allowed to rely on this defence and claim. Quite apart from there being no evidence to support this assertion, it does not withstand scrutiny. The matter has been pleaded as a defence and as part of the cross-claim since May 2012. The Plaintiff did not file its Motion to strike out the claim from the Defence until November 2014. Further, it only refused consent to the proposed amended cross-claim on 14 October 2014 (for the first time). By that time the Fourth Defendant had been directed to serve all of her evidence more than a month before.
In my opinion, these two matters when taken together, mean that the present pleading in the Further Amended Defence should be struck out and the Fourth Defendant should not be permitted to plead it in its present form in the proposed Amended Second Cross-Claim. If the only problem was that no evidence had been served in respect of the Defence and the claim I would not have considered the mere absence of evidence to be a proper basis for striking out the pleading. The lack of evidence might mean that the Fourth Defendant would fail at the final hearing but the lack of evidence is not sufficient to justify summary dismissal. However, the pleading is also defective. At this relatively late stage in the proceedings, with a hearing date fixed, the defects in pleading may have been able to be overlooked had there been evidence served that demonstrated the basis for the claimed breaches of s 420A. In the absence of evidence it cannot be assumed that any breaches will be able to be demonstrated.
It is not sufficient, as the Fourth Defendant says in the proposed Amended Second Cross-Claim that further and better particulars will be provided after the completion of discovery. The Fourth Defendant has not, at any stage, sought directions in respect of discovery. Although her counsel said that it was not possible to get discovery until the status of the pleading was known, the claim in respect of s 420A has been one of the issues pleaded since the first Defence was filed. No attempt has been made in that time to obtain the discovery that is said to disclose the further particulars. It is not clear to me how the Fourth Defendant’s solicitors have been able properly to provide the certificate required by s 347 of the Legal Profession Act 2004 (NSW) in respect of this claim.
No reasonable cause of action or defence is disclosed in the pleading of this issue.

(3) Contracts Review Act and undue influence (Defence 49(a) to (j), (aa) and bb))

The Plaintiff objects to what is contained in paragraph 49 (a) to (j) and 49 (aa) and (bb) because the substance of these matters was pleaded in the original Defence, thereafter omitted and not relied upon by the Fourth Defendant to resist the summary judgment application brought by the Plaintiff.
This issue was pleaded as a defence in paragraph 95 of the original defence filed 21 May 2012. It was omitted from the defence to the Amended Statement of Claim filed on 13 August 2012. It did not appear in the Second Cross-Claim filed 7 May 2014. It then appeared in expanded form in the proposed Amended Second Cross-Claim forwarded to the Plaintiff’s solicitors on 10 October 2014. It was similarly included in the second version of that proposed Amended Second Cross-Claim and it appeared as paragraph 49 in the Defence to the Second Further Amended Statement of Claim filed 3 November 2014.
Significantly, it was not relied upon as a defence to the summary judgment application before Campbell J. In that application summary judgment was sought of the two properties owned by the Second Defendant which had been provided as security for the facilities and the guarantees. The Drummoyne property was provided as security for the second portfolio facility in respect of which the Fourth Defendant was a primary debtor and in respect of the first and third guarantees for the debts of Jedda and Koombari. The Vincentia property was provided as security for the first and third guarantees for Jedda and Koombari.
There is no explanation why the Contracts Review Act and undue influence were not relied upon in defence of that summary judgment application. Rather, the admissions in the defences were that the Fourth Defendant had executed the first and third guarantees.
Counsel for the Fourth Defendant made clear that what the Fourth Defendant relied upon was not unconscionable conduct in what was described by Mason J in Commercial Bank of Australia Ltd v Amadio (1983) 151 CLR 447 at 461 as the narrow sense of the term. Rather, undue influence of the type described by Dixon J in Johnson v Buttress (1936) 56 CLR 113 at 134-135 was relied upon. The principle in Yerkey v Jones (1939) 63 CLR 649 and Garcia v National Australia Bank Ltd (1998) 194 CLR 395 was invoked. Some of the particulars given of undue influence are more relevant to unconscionable conduct and matters with which the Contracts Review Act is concerned. However, all of the particulars were relied upon for both undue influence and a Contracts Review Act defence. The Plaintiff submitted that the matters pleaded did not demonstrate undue influence in the manner understood by that principle.
In the absence of any explanation for why these issues were omitted between August 2012 and October 2014, why the Fourth Defendant wishes to reintroduce them at this late stage, and why they were not relied upon as defences to the summary judgment claims, the Fourth Defendant should not be permitted now to rely on these matters whether by way of defence or cross-claim. It would result in the Fourth Defendant adopting an inconsistent position with regard to the mortgages and guarantees from the position that she adopted when the summary judgment application was brought. The effect of that judgment was that she was bound by the guarantees and the mortgages at least insofar as the property in Drummoyne was concerned. Permitting her to rely on these defences to the present claim for debt has the potential to result in inconsistent judgments.
Further, the Fourth Defendant’s approach is quite inconsistent with ss 56, 57 and 59 of the Civil Procedure Act. The absence of any explanation does not properly enable me to exercise any discretion in favour of the Fourth Defendant where, prima facie, s58(2)(b)(ii) of the Act operates against the Fourth Defendant.

(4) The Second Guarantee (Defence 49(e) to (g))

The Plaintiff also objects to paragraph 49 (e),(f) and (g) because they plead a defence in respect of the Second Guarantee which is not relied upon by the Plaintiff in its claim.
That is an additional reason why these paragraphs should be struck out. As noted earlier in relation to the proposed Amended Cross-Claim (at [33] above), the Plaintiff makes no claim with respect to the Second Guarantee. There is nothing to defend in that regard. Paragraphs 49(e) to (g) are embarrassing and should be struck out.

(5) The Banking Code (Defence 49(k) to (m))

The Plaintiff says that paragraph 49 (k) to (m) should not be allowed because this matter has not hitherto been pleaded as a defence and no explanation has been provided why it is raised at this late stage.
As noted earlier in relation to the proposed Amended Cross-Claim (at [34] above), the claim based on breaches of the Banking Code has not hitherto been raised. Once again, there is no explanation for this.
What is pleaded is a claim for breach of contract on the basis that the Banking Code was said to form part of the agreement to sign the guarantees. It is said that by the Plaintiff’s breach of the guarantees and the Code the Fourth Defendant suffered loss and damage which should be set off against any liability she owes to the Plaintiff. The loss and damage is said to be equal to any liability she has under the guarantees.
As pleaded, this is not a defence to the claim. It is a claim for damages which can form part of any cross-claim that is allowed to be brought but should not form part of the defence. However, for reasons which will be discussed, the claim is not maintainable at the present time in the cross-claim.
These paragraphs in the defence should be struck out.

(6) Use of funds (paragraph 48)

The Plaintiff submitted that the pleading in this paragraph was embarrassing in that it failed to identify the funds referred to, failed to identify the basis for asserting that the Fourth Defendant’s liability would have been discharged and failed to specify the particulars said to have been already provided.
Campbell J was asked to deal with a summary judgment application for possession of the properties. His Honour refused summary judgment in relation to the Vincentia property and then gave leave to re-plead the Defence with certain restrictions. One of the restrictions was that the defence about the surplus funds did not disentitle the Bank to possession of the Vincentia property. However, as I have noted, since that judgment the Plaintiff has amended to make a claim for debt. The claim that the Bank received funds, from the sale of a property or otherwise, but did not properly apply those funds with the result that the debt claimed exceeds that which is due, must be a defence that a person is entitled to plead. Campbell J did not purport to suggest otherwise.
The Plaintiff says that any funds not applied were the funds frozen by order of Pembroke J in the other proceedings. That, however, is a matter of fact which will need to be ventilated at a final hearing. In any event, there is minimal evidence before me about the freezing order. The matter cannot be determined on any summary interlocutory basis.
The difficulty is that in the pleading in paragraph 48 of the Defence there is no identification of the funds the Bank is supposed to have received nor any pleading relating to its obligation to use those funds to discharge or reduce the liability of the Fourth Defendant. The paragraph purports to overcome this by saying that particulars have been provided to the Plaintiff.
I do not consider that to be adequate pleading having particular regard to the history of this matter. The Defence is filed in relation to an amended Statement of Claim that makes a new claim, namely, a claim for debt in addition to possession of the Vincentia property. Further, particulars cannot take the place of a pleading per se, nor can particulars cure a bad pleading: Dymocks Book Arcade Pty Ltd v Capral Ltd (formerly Alcan Australia Ltd) [2011] NSWSC 1423 at [27]-[30], approved by the Court of Appeal in Hannaford at [36].
The Defence in relation to the use of funds should be properly pleaded and particularised. Paragraph 48 will be struck out with leave to the Fourth Defendant to re-plead that Defence.

(7) Paragraph 37 of the Defence

The Plaintiff seeks that paragraph 37 of the Defence be struck out. This paragraph does not admit the pleading in paragraph 75 of the Second Further Amended Statement of Claim. The pleading in the Defence is consistent with earlier non-admissions to the claim in earlier iterations of paragraph 75.
The Plaintiff says that the matter in paragraph 75 concerns the claim to possession of the Drummoyne property which has already been the subject of a summary judgment for possession. If that is so, paragraph 75 is irrelevant and ought no longer to be pleaded. If it is pleaded for some other purpose the pleading in paragraph 37 of the Defence must be allowed to remain.

Conclusions on the Defence to the Second Further Amended Statement of Claim

Since leave is not given to the Fourth Defendant to withdraw admissions, paragraphs 2,3,4,5,9A, 9B and 17 of the Defence to the Second Further Amended Statement of Claim will be struck out to the extent that the pleading in each paragraph extends beyond an admission of the paragraph in the Second Further Amended Statement of Claim to which each responds
Paragraphs 24 to 34 of the Defence will be struck out.
Paragraphs 48 and 49 of the Defence will be struck out but leave will be given to the Fourth Defendant to re-plead the matters contained in paragraph 48.
If paragraph 75 of the Second Further Amended Statement of Claim is withdrawn, paragraph 37 of the Defence should be struck out.

Fourth Defendant’s Motion to amend the Cross-Claim

A number of the determinations I have made already with regard to the Fourth Defendant’s Defence will have similar consequences for the pleading of the proposed Amended Cross-Claim.

(1) Claim based on s 420A Corporations Act (proposed cross-claim 21-33)

For the reasons given in paragraphs [65] to [89] above the Fourth Defendant is not entitled to make this claim in the present proceedings.

(2) The second guarantee (proposed cross-claim 9-12)

For the reasons given at [98] above no claim in respect of the second guarantee should be brought.

(3) Contracts Review Act and undue influence (proposed cross-claim 1-17, 34-35)

For the reasons given at [90]-[96] above these claims may not be brought.

(4) Code of Banking Practice (proposed cross-claim 18-20)

The Fourth Defendant claims damages for the breaches of the Code and then wishes to set-off those damages against what is claimed by the Plaintiff to be owing (see proposed cross-claim paragraph 20 at [32] above and Defence paragraph 49 (m) at [40] above). Clauses 14.7, 15.1 and 15.2 of the Guarantee preclude this course. For the reasons given at [77] to [83] above this claim is not currently available.

There is, in any event, no explanation for this claim being brought at this late stage in the proceedings. The highest the matter was put appeared to be that the new lawyers acting for the Fourth Defendant took the view that such claim should be made notwithstanding the way the matter had hitherto been conducted.
If I am wrong in my conclusion at [120] above, I would not otherwise have prevented the Fourth Defendant from bringing this claim. It does not seem to me that the Plaintiff will suffer any irreparable prejudice or any real prejudice if this claim is allowed to be brought. Indeed, the Plaintiff’s complaint concerning this claim, apart from general complaints about delay, is that the pleading in relation to the claim is defective. The Bank does not assert prejudice by the bringing of this claim.
However, I accept the Bank’s submissions that the claim is inadequately pleaded. Particulars (i) and (ii) under paragraph 19 assume defaults on the part of Jedda and Koombari. Were the claim to be maintained, the precise identification of defaults should be pleaded as material facts because they are the specific breaches alleged.
Further, paragraph 19(e) is embarrassing. It asserts that “it was clear on the facts known to the cross-defendant, or in circumstances where it ought to have known, that the cross-claimant would not receive any benefit under the guarantees”. The facts known are not pleaded, nor are the circumstances that justify the assertion that the Bank ought to have known the matter set out.
At a time when this claim is able to be maintained, the Fourth Defendant would need to re-plead the claim in accordance with these reasons.

Conclusions on proposed Amended Second Cross-Claim

None of the claims sought to be made in the proposed Second Cross-Claim may be brought in the present proceedings.

Plaintiff’s Amended Motion to strike out portions of the Second Cross-Claim filed 7 May 2014

The Plaintiff seeks, presumably on the assumption that it successfully resists the filing of the proposed amended Second Cross-Claim, to strike out those paragraphs of the existing Second Cross-Claim that deal with sale at a gross undervalue.
The reasons I have given in relation to this claim apply equally to the claim as made in the existing Second Cross-Claim. Principally, the Fourth Defendant is precluded as a matter of law in bringing or maintaining this claim until her whole indebtedness is paid to the Plaintiff. Thereafter, for the reasons given at [84] to [88] the claim is disallowed as a matter of discretion.

Conclusion

I make the following orders:

With regard to the Defence to the Second Further Amended Statement of Claim:

paragraphs 2, 3, 4, 5, 9A, 9B and 17 are struck out to the extent that the pleading in each paragraph extends beyond an admission of the paragraph in the Second Further Amended Statement of Claim to which each responds;

Paragraphs 24 to 34 are struck out;

Paragraphs 48 and 49 are struck out. Leave is given to the Fourth Defendant to re-plead the matters contained in paragraph 48.

If paragraph 75 of the Second Further Amended Statement of Claim is withdrawn, paragraph 37 of the Defence should be struck out.

Dismiss the Fourth Defendant’s Notice of Motion as amended filed 3 November 2014;

Paragraphs 31, 32, 33 and 34 of the Second Cross-Claim filed 7 May 2014 are struck out;

The Fourth Defendant is to pay the Plaintiff’s costs of the Plaintiff’s Notice of Motion filed 14 November 2014;

The Fourth Defendant is to pay the Plaintiff’s costs of the Fourth Defendant’s Notice of Motion filed 3 November 2014.

**********

Amendments

18 March 2015 - No amendments made

Decision last updated: 18 March 2015

Medium Neutral Citation:	National Australia Bank Ltd v C & O Voukidis Pty Ltd [2015] NSWSC 185
Hearing dates:	9 & 18 December 2014
Date of orders:	13 March 2015
Decision date:	13 March 2015
Jurisdiction:	Common Law
Before:	Davies J
Decision:	(1) With regard to the Defence to the Second Further Amended Statement of Claim: (a) paragraphs 2, 3, 4, 5, 9A, 9B and 17 are struck out to the extent that the pleading in each paragraph extends beyond an admission of the paragraph in the Second Further Amended Statement of Claim to which each responds; (b) Paragraphs 24 to 34 are struck out; (c) Paragraphs 48 and 49 are struck out. Leave is given to the Fourth Defendant to re-plead the matters contained in paragraph 48. (d) If paragraph 75 of the Second Further Amended Statement of Claim is withdrawn, paragraph 37 of the Defence should be struck out. (2) Dismiss the Fourth Defendant’s Notice of Motion as amended filed 3 November 2014; (3) Paragraphs 31, 32, 33 and 34 of the Second Cross-Claim filed 7 May 2014 are struck out; (4) The Fourth Defendant is to pay the Plaintiff’s costs of the Plaintiff’s Notice of Motion filed 14 November 2014; (5) The Fourth Defendant is to pay the Plaintiff’s costs of the Fourth Defendant’s Notice of Motion filed 3 November 2014.
Catchwords:	PROCEDURE – amendment of pleadings – application to file amended Cross-Claim – amended pleading introduces new claims and reinstates claims formerly abandoned – no explanation for delay or for having previously abandoned claims – admissions in pleadings – application to withdraw – no explanation for making of admissions nor of reasons for seeking to withdraw admissions – need for explanation – applications refused - application to strike out defences – no reasonable cause of action disclosed GUARANTEE AND INDEMNITY – rights of surety – against creditor – claim by creditor against guarantor for shortfall after sale of property – whether provisions of guarantee require payment by guarantor before claim can be made against creditor – duty under s 420A Corporations Act 2001 – whether provides a remedy to guarantor
Legislation Cited:	Civil Procedure Act 2005 (NSW) Contracts Review Act 1980 (NSW) Corporations Act 2001 (Cth) Court Procedure Rules 2006 (ACT) Legal Profession Act 2004 (NSW)
Cases Cited:	Aon Risk Services Australia Ltd v Australian National University [2009] HCA 27; (2009) 239 CLR 175 Apex Pallett Hire Pty Ltd v Brambles Holdings Ltd (Full Court of Supreme Court of Victoria, 8 April, 1988, unreported) Artistic Builders Pty Ltd v Elliot and Tuthill (Mortgages) Pty Ltd [2002] NSWSC 16; (2002) 10 VPR 19,565 Australia and New Zealand Banking Group Ltd v Bangadally Pastoral Co Pty Ltd (1978) 139 CLR 195 Commercial Bank of Australia Ltd v Amadio (1983) 151 CLR 447 Commonwealth Bank of Australia v Hannaford (No 2) [2013] NSWSC 574 Coopers Brewery Ltd v Panfida Foods Ltd (1992) 26 NSWLR 738 Drabsch v Switzerland General Insurance Co Ltd (Supreme Court of NSW, Santow J, 16 October 1996, unreported) Dymocks Book Arcade Pty Ltd v Capral Ltd (formerly Alcan Australia Ltd) [2011] NSWSC 1423 Forsyth v Blundell (1973) 129 CLR 477 Garcia v National Australia Bank Ltd (1998) 194 CLR 395 GE Capital Australia v Davis [2002] NSWSC 1146; 920020 11 BPR 20,529 General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125 Hannaford v Commonwealth Bank of Australia [2014] NSWCA 297 Hollis v Vabu Pty Ltd (2001) HCA 44; (2001) 207 CLR 21 Johnson v Buttress (1936) 56 CLR 113 Maile v Rafiq [2005] NSWCA 410 National Australia Bank Ltd v C & O Voukidis Pty Ltd [2014] NSWSC 384 Permanent Custodians Ltd v AGB Developments Pty Ltd [2010] NSWSC 540 Yerkey v Jones (1939) 63 CLR 649
Texts Cited:	O’Donovan, Modern Contract of Guarantee (Thomson Reuters 2014)
Category:	Procedural and other rulings
Parties:	National Australia Bank Ltd (Plaintiff) Olga Voukidis (Fourth Defendant)
Representation:	Counsel: P Reynolds (Plaintiff) P Afshar (Fourth Defendant) Solicitors: Gadens Lawyers (Plaintiff) Spinks Eagle Lawyers (Fourth Defendant)
File Number(s):	2012/82867