National Australia Bank v Priestley

[2012] NSWSC 387

Supreme Court

New South Wales

Case Title:

National Australia Bank v Priestley

Medium Neutral Citation:

[2012] NSWSC 387

Hearing Date(s):

12 April 2012

Decision Date:

24 April 2012

Jurisdiction:

Common Law

Before:

Schmidt J

Decision:

1. Leave to file the amended defence is refused.

2. Any further amended defence on which the defendants seek to rely should be filed and served within 14 days.

3. The matter is adjourned to 9 May 2012 at 9:30am for directions.

Catchwords:

PROCEDURE - pleadings - leave to file amended defence refused - final opportunity sought to plead defence - leave granted for any further amended defence to be filed

Legislation Cited:

Uniform Civil Procedure Rules 2005

Cases Cited:

Gunns Limited v Marr [2005] VSC 251
Horton v Jones (No. 2) (1939) 39 SR (NSW) 305
McGuirk v The University of New South Wales [2009] NSWSC 1424

Texts Cited:

Category:

Procedural and other rulings

Parties:

National Australia Bank Limited
ABN 12 004 044 937 (Plaintiff)
Christopher William Priestley (First Defendant)
Claire Priestley (Second Defendant)

Representation

- Counsel:

Counsel:
Mr D Sulan (Plaintiff)

- Solicitors:

Solicitors:
DibbsBarker Lawyers (Plaintiff)
Pryor Tzannes & Wallis Solicitors (Defendants)

File number(s):

2011/292621

Publication Restriction:

JUDGMENT

1. By motion of 22 March 2012, the defendants sought leave to file an amended defence in terms annexed to an affidavit sworn by their solicitor, Mr Robert Macaulay. The leave sought was opposed, given the terms of the proposed amended defence, which it was submitted would be liable to be struck out. The plaintiff's final position was that if its submissions were accepted, but the view were taken that the defendants should have a final opportunity to plead their defence, the motion should be kept on foot; that the defendants should be directed to serve any further proposed amended defence within 14 days; and that the application then be considered further. That submission was supported by the defendants.

2. It was not suggested that the plaintiff would thereby be prejudiced. That accorded with the defendants' position, which it should be noted was somewhat contradictory. On the one hand, it was argued that the value of the property was such that the defendants had sufficient equity in the property for there to be no prejudice in the further leave which they sought to amend the defence being granted and that they ought to be given an opportunity to pursue an orderly sale of the property, which would maximise the return which they could achieve on their equity. On their own case, therefore, there is still considerable equity in the property and that there are active steps being pursued by the defendants to achieve a sale on favourable terms. The amended defence pleaded, however, that the plaintiff had acted unconscionably, on a basis designed to ensure that the defendants had no equity in the secured property. No particulars were provided of this, or other serious allegations as to unconscionable conduct.

3. In the circumstances I have concluded that the course finally urged for the plaintiff is the course which should be adopted. It was frankly conceded for the defendants that their original defence was properly struck out, as not disclosing any defence to the plaintiff's claim. The circumstances in which the defendants had come to file the motion were explained. Initially their legal advice was deficient and for a considerable time they were in a position where they were unable to reach their property, where their records were kept, as the result of floods.

4. It was also conceded that the case which the defendants sought to advance was unusual in certain respects, alleging as it did that the parties had entered a wider agreement than the written loan and mortgage documents revealed, with certain oral terms claimed to have been agreed before the formal documents were executed and some afterwards.

5. While the plaintiff's case was otherwise resisted, I am satisfied that its submissions as to the deficiencies in the proposed pleadings had considerable force. The Uniform Civil Procedure Rules 2005 require that pleadings contain only material facts, not evidence (Rule 14.7). When documents or spoken words are referred to in pleadings, the effect of the document or spoken words must, so far as material, be stated (Rule 14.9). The defence must specifically plead any matter which, if not pleaded, would take the opposite party by surprise (Rule 14.14). The case which the defendants seek to pursue is that there were terms implied into the agreement, as the result of oral representations made by the plaintiff's agents. It is also pleaded that all of the implied terms were breached, but no particulars of the alleged breaches are provided.

6. The defence must not only identify the precise manner in which the defendants claim the implied terms came into existence, but also how it is alleged they were breached. As discussed by Bongiorno J in the context of a statement of claim in Gunns Limited v Marr [2005] VSC 251at [57]:

   "Not only must the pleading inform the defendants of the case they must meet now, but it must clearly set out the facts which the plaintiffs must assert to make good their claim with sufficient particularity to enable any eventual trial to be conducted fairly to all parties. Vague allegations on very significant matters may conceal claims which are merely speculative. If this be not the case, the plaintiffs must put their allegations clearly."

7. It is well settled that a court will not allow an amendment if it is so obviously futile, that it would be liable to be struck out if it had appeared in the original pleading (see Horton v Jones (No 2) (1939) 39 SR (NSW) 305 at 309 - 310). As Johnson J also recently discussed in McGuirk v The University of New South Wales [2009] NSWSC 1424 at [32] - [35]:

   "32 A pleading may be embarrassing even though it contains allegations of material facts sufficient to constitute a cause of action, if the material facts alleged are couched in expressions which leave difficulties or doubts about recognising or piecing together what is referred to: Northam v Favelle Favco Holdings Pty Limited (Bryson J, 7 March 1995, BC9504276 at 5-6).

   33 Although the pleading of a conclusion may, in some circumstances constitute a material fact, nevertheless, the pleading will be embarrassing if allegations are made at such a level of generality that the defendant does not know in advance the case it has to meet: Charlie Carter Pty Limited v Shop Distributive and Allied Employees Association (1987) 13 FCR 413 at 417-418. In such a case, the appropriate remedy is to strike out the pleading rather than to order the provision of particulars, as it is not the function of particulars to take the place of the necessary averments in a pleading: Trade Practices Commission v David Jones (Australia) Pty Limited (1985) 7 FCR 109 at 112-114.

   34 Rule 14.28 UCPR provides that pleadings that involve non-compliance are liable to be struck out as an embarrassment. However, generally the Courts recognise that a wide range of discretionary considerations arise where there is a failure to comply with the technical requirements of the pleading rules: Beach Petroleum NL v Johnson (1991) 105 ALR 456 at 466. In many instances, the appropriate order may be to strike out the offending pleading, but grant leave to amend: Rubenstein v Truth & Sportsman Limited [1960] VR 473 at 476; H 1976 Nominees Pty Limited v Galli (1979) 30 ALR 181 at 186.

   35 It is not the function of the Court to draw or settle a party's pleading. The Court is confined to the function of ensuring that pleadings are within the rules and fulfil the functions for which they exist. Objectionable matter that is so mingled with other matter may lead to the conclusion that the pleading as a whole would tend to embarrass the fair trial of the action ought be struck out: Turner v Bulletin Newspapers Co Pty Limited (1974) 131 CLR 69 at 72, 87-88, 97-98; Gunns Limited v Marr at [57]-[58]; Fleet v Royal Society for the Prevention of Cruelty to Animals NSW and Ors [2005] NSWSC 926 at [55]."

8. There were also no particulars provided of other allegations made, such as, for example, that the defendants suffered from a special disadvantage of which the plaintiff was aware. Nor were there particulars provided of the basis upon which it was claimed that the Bank had what was presumably intended to be a fiduciary duty, albeit described as a 'fiduciary duty of care', or the basis upon which it was claimed that such a duty had been breached. The defence must not only identify the facts and circumstances that the defendants say gave rise to the duty alleged, but also how it was breached.

9. Given the inadequacies of the proposed amended defence, the leave sought to proceed on that pleading must be refused. Nevertheless, I am also satisfied that the circumstances are such that as a matter of justice the defendants must have a final opportunity to properly plead their defence.

Orders

1. For these reasons, I make the following orders:

   1. Leave to file the amended defence is refused.

   2. Any further amended defence on which the defendants seek to rely should be filed and served within 14 days of this judgment.

   3. The matter is adjourned to 9 May 2012 at 9:30am for directions.

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