Nguyen v Phan

[2015] VSC 32

IN THE SUPREME COURT OF VICTORIA Not Restricted

AT MELBOURNE
COMMERCIAL COURT

S CI 2012 06727

MINH NGUYEN & ORS	Plaintiffs
v
TU PHAN & ORS	Defendants

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JUDGE:	ELLIOTT J
WHERE HELD:	MELBOURNE
DATES OF HEARING:	9 FEBRUARY 2015
DATE OF RULING:	10 FEBRUARY 2015
CASE MAY BE CITED AS:	NGUYEN v PHAN
MEDIUM NEUTRAL CITATION:	[2015] VSC 32

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PRACTICE AND PROCEDURE – Pleadings – Amendment – Delay – Application for leave during trial – Very recent appreciation of pleading issues – No material prejudice to defendants – Leave granted to amend statement of claim – Leave refused to amend reply and defence to counterclaim – Supreme Court (General Civil Procedure) Rules 2005 (Vic), r 36.01(1)(a)

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APPEARANCES:	Counsel	Solicitors
For the Plaintiffs	Mr IG Waller QC with Mr HL Redd and Ms KL Burgess	Baker & McKenzie
For the Defendants	Mr MD Wyles QC with Dr TJF McEvoy and Mr DJ Fahey	Arnold Bloch Leibler

HIS HONOUR:

A.       The applications

1. Yesterday, the plaintiffs sought leave to amend the statement of claim in this proceeding in the form of the proposed third further amended statement of claim dated 9 February 2015 (the “Proposed Statement of Claim”).  The Proposed Statement of Claim includes, for the first time, allegations of an express trust in relation to each of the first agreement, the second agreement and the third agreement set out at paragraphs 9, 11 and 20 respectively of the existing statement of claim. Leave was also sought to amend the plaintiffs’ reply and defence to counterclaim.  

B.       The circumstances

1. The trial commenced on 26 November 2014.  Accordingly, the application can only be viewed as very late. 

1. The reason for the delay was explained by senior counsel for the plaintiffs who stated, in effect, that the issue the subject of the Proposed Statement of Claim only became apparent to him recently by reason of issues raised by the defendants.  It is correct that the defendants have been raising issues in relation to the pleadings throughout the course of the trial, some of which have been ventilated before the court.

1. Senior counsel for the plaintiffs candidly admitted that the issues the subject of the application for amendment should have been put more clearly earlier.  I agree.

1. The plaintiffs submitted the issue now sought to be raised expressly in the Proposed Statement of Claim ought to have been apparent to the defendants prior to the amendment application. I reject this submission.  The case now put on the basis of an express trust was not apparent on a fair reading of the previous iterations of the statement of claim.

1. That said, the use of the word “own” in each of paragraph 9(a), with respect to the first agreement, paragraph 11(d), with respect to the second agreement, and paragraph 20(c)(iv), with respect to the third agreement, is clearly ambiguous.  The word “own” was present in those paragraphs of the statement of claim long before the trial commenced.  That word was used in the context of alleging what had been agreed with respect to the shares of the companies the subject of this dispute.  Despite the ambiguity of the language used, the wording was not the subject of challenge by the defendants at the start of the trial. On 1 meaning of the word “own”, it would embrace the notion of beneficial ownership only, rather than legal ownership or both legal and beneficial ownership.

1. Further, I accept the indication from the bar table that senior counsel for the plaintiffs believed the use of “own” connoted beneficial ownership and that that meaning was conveyed when the previous versions of the statement of claim were filed and served; albeit I do not accept that a fair reading of each of those pleadings as a whole conveyed the meaning now sought to be conveyed in the Proposed Statement of Claim.

1. In any event, in contrast to the circumstances in Aon Risk Services Australia Ltd v Australian National University,[1] there is no suggestion that the plaintiffs have made a conscious decision to refrain from seeking leave to amend until a time after the need to amend was apparent.

   [1](2009) 239 CLR 175, 198-199 [51]-[54], 216 [107]-[109] (Gummow, Hayne, Crennan, Kiefel and Bell JJ).

1. The application must be considered in the context of the trial as it now stands.  The key witnesses for the plaintiffs have completed their evidence.  It is possible further evidence from these witnesses may need to be adduced if the amendments are allowed.  Ordinarily, at this stage of a lengthy trial, this would weigh heavily against leave being granted. 

1. However, until very recently, namely approximately 2 February 2015, the defendants had conducted their defence and prosecuted their counterclaim on the understanding that the agreements alleged in paragraphs 9, 11 and 20 of the existing statement of claim were, or at least may have been, advanced by the plaintiffs as legally binding contracts.  Cross-examination of the plaintiffs’ key witnesses was conducted on that basis.  The cross-examination was extensive and thorough in seeking to both challenge the plaintiffs’ version of events and put the first defendant’s competing version.

1. I am satisfied that the defendants did not refrain from exploring exhaustively all of the relevant facts and circumstances surrounding the alleged formation of each of the pleaded agreements.  Accordingly, very little, if any, prejudice in this regard will arise if the proposed amendments are allowed.  This conclusion arises out of the fact that a court would be required to engage in substantially the same exercise in determining, on the 1 hand, whether a contract had been entered into and, on the other hand, whether a trust had been established.[2]

   [2]See, for example, Byrnes v Kendle (2011) 243 CLR 253, 286 [102] (Heydon and Crennan JJ).

1. In addition, the underlying facts pleaded by the plaintiffs in support of their case of an express trust have not materially changed.[3]  Rather, it is the alleged result of the facts, as pleaded, that is the subject of the amendment; namely that the facts, as pleaded, gave rise to the express trusts alleged.  In seeking to establish the existence of the trusts alleged in the Proposed Statement of Claim, the plaintiffs will be confined strictly to the material facts and particulars the subject of the statement of claim as filed.  In those circumstances, I do not expect any further evidence will be required.

   [3]However, see par 15 below in respect of a proposed addition to the particulars to paragraph 9 of the Proposed Statement of Claim.

1. Further, the plaintiffs have not closed their case.  The witnesses previously called are available for further cross-examination if, contrary to my expectations, further cross-examination is necessary. The plaintiffs have indicated they will not oppose further cross-examination, if any were to be required by the defendants.

C.       The rulings

1. Although the timing of the application is unfortunate, the court should in appropriate circumstances, pursuant to rule 36.01(1)(a) of the Supreme Court (General Civil Procedure) Rules 2005 (Vic), seek to ensure that the real questions in controversy between the parties are determined. In the absence of any relevant material prejudice being apparent, leave ought to be granted with respect to the allegations concerning the alleged express trusts. Accordingly, leave will be granted to add paragraphs 10A, 17A and 20A to the statement of claim.

1. An additional sentence has been added to the particulars to paragraph 9 of the Proposed Statement of Claim, namely “From 1 July 2002 the 4 of us will be shareholders in the new Roo”.[4]  In support of this amendment, reliance is placed upon the evidence in chief of Thuy Phan, transcript 142 lines 6-8 and of Son Phan at transcript 1322 lines 8-10.  While there might be some argument to suggest that the evidence of Son Phan does not go that far, the evidence given by Thuy Phan clearly supports the particulars introduced by paragraph 9 of the Proposed Statement of Claim.  In those circumstances, the amendment to the particulars will also be allowed so that the pleading reflects the evidence.

   [4]“Roo” is a reference to Roo Sheetmetal Pty Ltd, the fourth defendant.

1. For completeness, I refer to 2 further matters regarding the Proposed Statement of Claim.

1. First, it was submitted by senior counsel for the defendants that there is an inconsistency between paragraph 10A and paragraph 20A of the Proposed Statement of Claim.  Paragraph 10A reads as follows:

By reason of paragraph 9, at all material times between 1 July 2002 and 4 May 2009, Tu held all of the shares in Roo Sheetmetal on trust for himself, the second plaintiff, the third plaintiff (Joseph) and the fourth plaintiff (Son) in equal proportions. 

1. Paragraph 20A reads as follows:

By reason of paragraph 20, since 4 May 2009:

(a)Tu has held all of the shares in Roo Sheetmetal on trust for Roo and Oz Sheetmetal (known as Oz Sheetmetal until 16 June 2009);

(b)Minh and Thuy have held all of the shares in Roo and Oz Sheetmetal on trust for each of the family members in equal proportions.

1. On the face of the pleading there is no conflict.  The trust alleged in paragraph 10A was said to exist until 4 May 2009.  It is plain that, when paragraphs 10A and 20A are read in conjunction, the trust said to be created in July 2002 was superseded by the trust alleged to be created on 4 May 2009.

1. Secondly, I refer to the proposed new paragraph 12A. There was no opposition to this amendment. It reflects the evidence. Leave will be granted in this regard.

1. The plaintiffs also seek to amend their reply by way of a proposed fourth amended reply and defence to counterclaim.  In my view, the pleading is not in a satisfactory form.  This is not entirely of the plaintiffs’ doing.

1. By email dated 4 February 2015 sent by the plaintiffs’ counsel at 7.04 pm, I was informed that certain paragraphs of the defence and counterclaim were no longer necessary in light of the manner in which the plaintiffs now put their case.  Those paragraphs included paragraph 9A, which is the subject of 1 of the proposed amendments in paragraph 11 of the proposed reply and defence to counterclaim. 

1. In my view, the appropriate course is to allow the defendants to file and serve their defence and counterclaim to the Proposed Statement of Claim, which amendment should take account of what was contained in the email to the court of 4 February 2015.  I note the email came from counsel for the plaintiffs, but there has been no suggestion from counsel for the defendants (to whom the email was copied) that it was inaccurate.

1. In any event, the current defence and counterclaim should only contain allegations of what is now being pressed by the defendants and no further allegations. 

1. Once this is done the plaintiffs should then file a further reply and defence to counterclaim, which pleading will require leave if any issues are sought to be raised by the plaintiffs that have not previously been raised in the replies and defences to counterclaim filed with the court.

D.       Conclusion

1. Leave will be granted for the plaintiffs to file and serve a statement of claim substantially in the form of the Proposed Statement of Claim. Leave will be refused with respect to the reply and defence to counterclaim.

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