Overdean Developments Pty Ltd v Garslev Holdings Pty Ltd (No 2)

[2020] NSWSC 745

Supreme Court

New South Wales

• Amendment notes

Medium Neutral Citation:

Overdean Developments Pty Ltd v Garslev Holdings Pty Ltd (No 2) [2020] NSWSC 745

Hearing dates:

On the papers

Date of orders:

16 June 2020

Decision date:

16 June 2020

Jurisdiction:

Equity - Expedition List

Before:

Williams J

Decision:

Order that the Further Amended Notice of Motion filed by the defendants on 30 August 2019 is dismissed.

Catchwords:

EQUITY – injunctions – interlocutory injunctions – usual undertaking as to damages – application to order the plaintiffs to provide security for an undertaking as to damages proffered to the Court on a previous occasion – no power to order the plaintiffs to provide security retrospectively

EVIDENCE – affidavit evidence – Uniform Civil Procedure Rules 2005 (NSW) r 31.9(1) – whether affidavits filed in other proceedings can be relied upon by the defendants in present proceedings – where not all the parties in other proceedings are the same as the parties in the present proceedings – whether leave should be granted under UCPR r 31.9(2) to the defendants to rely on certain affidavits in the present proceedings in relation to proof of particular facts – limited leave granted

 

PRACTICE AND PROCEDURE – applications – security for costs – jurisdictional basis – Uniform Civil Procedure Rules 2005 (NSW) r 42.21(1)(f) – whether there is a reason to believe that the plaintiffs have divested assets with the intention of avoiding the consequences of the proceedings – where plaintiffs alleged to have made misleading or deceptive statements to the Court concerning their financial position – where evidence does not show that plaintiffs made misleading or deceptive statements – where there is insufficient evidence to quantify the security for costs order sought in any event – security for costs application dismissed

  PRACTICE AND PROCEDURE – applications – summary disposal – where pleadings disclose complex issues of fact and law – where previous application to summarily dispose of the proceedings was dismissed – no relevant change in circumstances to warrant to reconsideration of the application – summary disposal application dismissed

Legislation Cited:

Civil Procedure Act 2005 (NSW), ss 56, 57, 58, 61
Corporations Act 2001 (Cth), s 1335
Superannuation Industry (Supervision) Act 1993 (Cth)
Supreme Court Rules 1970 (NSW), Pt 36 r 7
Uniform Civil Procedure Rules 2005 (NSW), rr 2.1, 18.1–18.9, 31.9, 36.16, 42.21

Cases Cited:

Australian Broadcasting Corporation v Lenah Game Meats Pty Ltd (2001) 208 CLR 199; [2001] HCA 63
Bell Lawyers Pty Ltd v Pentelow (2019) 93 ALJR 1007; [2019] HCA 29
Brimaud v Honeysett Instant Print Pty Ltd (1988) 217 ALR 44
Broadway Plaza Investments v Broadway Plaza Pty Ltd; In the matter of Combined Projects (Arncliffe) Pty Ltd [2019] NSWSC 1082
Cornelius v Global Medical Solutions Australia Pty Ltd (2014) 98 ACSR 301; [2014] NSWCA 65
Cowell v Taylor (1885) 31 Ch D 34
European Bank Ltd v Robb Evans of Robb Evans & Associates (2010) 240 CLR 432; [2010] HCA 6
First Netcom Pty Ltd v Telstra Corporation Ltd (2000) 101 FCR 77; [2000] FCA 1269
Goater v Commonwealth Bank of Australia [2014] NSWCA 265
Gordon v Lever (2018) 97 NSWLR 90; [2018] NSWCA 43
Green (as liquidator of Arimco Mining Pty Ltd) v CGU Insurance Ltd (2008) 67 ACSR 105; [2008] NSWCA 148
Harman v Secretary of State for Home Department [1983] 1 AC 280
Harvey v Phillips (1956) 95 CLR 235
Hearne v Street (2008) 235 CLR 125; [2008] HCA 36
In the matter of Beechworth Land Estates Pty Ltd [2018] NSWSC 1630
In the matter of Beechworth Land Estates Pty Ltd (administrators appointed) [2017] NSWSC 1447
In the matter of Beechworth Land Estates Pty Ltd (admins apptd) and Griffith Estates Pty Ltd (admins apptd); Cussen and of Beechworth Land Estates Pty Ltd v Douglas Estate Holdings Pty Ltd (2019) 140 ACSR 1; [2019] NSWSC 1129
In the matter of Beechworth Land Estates Pty Ltd (in liquidation) and Griffith Estates Pty Ltd (in liquidation) [2018] NSWSC 1703
In the matter of Prime City Capital Investments Pty Ltd [2012] NSWSC 1287
James v Australia and New Zealand Banking Group Limited [2020] NSWCA 101
Jazabas Pty Ltd v Haddad (2007) 65 ACSR 276; [2007] NSWCA 291
Lewis v Nortex Pty Ltd (in liq); Lamru Pty Ltd v Kation Pty Ltd [2002] NSWSC 1193
Modakboard Australia Pty Ltd v Brady [2018] NSWSC 399
Overdean Developments Pty Ltd v Garslev Holdings Pty Ltd (Supreme Court of New South Wales, Sackar J, 6 November 2019)
Overdean Developments Pty Ltd v Garslev Holdings Pty Ltd (Supreme Court of New South Wales, Sackar J, 28 April 2020)
Papas v Grave [2013] NSWCA 308
Phillips v Walsh (1990) 20 NSWLR 206
PPK Willoughby Pty Ltd v Baird [2019] NSWCA 48
Printing Telegraph and Construction Co of Agents AGE & Havas Ltd v Drucker [1894] 2 QB 601
Rajski v Computer Manufacture & Design Pty Ltd [1982] 2 NSWLR 443
Symonds v Vass [2003] NSWSC 170
Vertical Australia Pty Ltd v Air Company Vertical-T LLC; Air Company Vertical-T LLC v Vertical Australia Pty Ltd [2012] NSWSC 719
Vintage Marine Art Pty Ltd v Henderson & Cremer (No. 2) [2019] NSWCA 252
Wentworth v Rogers (No. 12) (1987) 9 NSWLR 400
Wollongong Coal Limited v Gujarat NRE Properties Pty Ltd (2019) 139 ACSR 107; [2019] NSWSC 187

Texts Cited:

J Tarrant, “Consent orders based on binding contracts” (2011) 28 Journal of Contract Law 237
M Legg and N Soo, “Security for an undertaking as to damages – a principled approach” (2016) 10 Journal of Equity 74

Category:

Procedural and other rulings

Parties:

Overdean Developments Pty Ltd as trustee of the Dean Super Fund (First Plaintiff/First Cross-Defendant)
Brian Dean (Second Plaintiff/Second Cross-Defendant)
B.A.D Nominees (NSW) Pty Ltd (Third Plaintiff/Third Cross-Defendant)
Garslev Holdings Pty Ltd (First Defendant/First Cross-Claimant)
Leonardus Gerardus Smits (Third Defendant/Third Cross-Claimant)
Peter Shah Mahommed (Fourth Defendant/Fourth Cross-Claimant)
Vestecorp Financial Services Pty Ltd (Fifth Defendant/Fifth Cross-Claimant)
Jacobus Smits (Sixth Defendant/Sixth Cross-Claimant)

Representation:

Counsel:
D Allen (Plaintiffs/Cross-Defendants)
L Smits, solicitor (Defendants/Cross-Claimants)

Solicitors:
Kekatos Lawyers (Plaintiffs/Cross-Defendants)
Leonardus Smits (Defendants/Cross-Claimants)

File Number(s):

2018/384191

Publication restriction:

N/A

Judgment

INTRODUCTION

1. These reasons for judgment relate to a Further Amended Notice of Motion filed by the defendants on 30 August 2019.

2. The plaintiffs commenced this proceeding in December 2018. The matter was expedited and listed for hearing before Sackar J commencing on 20 May 2019 with an estimated hearing time of six days.

3. That hearing commenced on 20 May 2019 but was adjourned as a result of the plaintiffs’ application for leave to amend their pleading. The statement of claim went through two further iterations thereafter and the matter was ultimately listed for re-commencement of the hearing on 27 April 2020 with an estimate of two weeks. That hearing was vacated on 28 April 2020 due to technical difficulties with the conduct of the hearing by audio visual link described by Sackar J in his reasons for judgment delivered on that day. His Honour did not regard himself as part-heard. [1]

   1. See Overdean Developments Pty Ltd v Garslev Holdings Pty Ltd (Supreme Court of New South Wales, Sackar J, 28 April 2020) at [15].

4. The proceeding has now been listed for final hearing before me, commencing on 22 June 2020.

5. The claims, cross-claims and defences to be heard at that hearing and determined by the Court are pleaded in:

1. Third Further Amended Statement of Claim filed by the plaintiffs on 7 November 2019 pursuant to leave granted by Sackar J on 6 November 2019;

2. Second Further Amended Defence filed by the defendants on 4 December 2019;

3. Statement of Amended First Cross-Claim filed on 30 January 2020 by the defendants/cross-claimants; and

4. Defence to Statement of Amended First Cross-Claim dated 11 December 2019.

6. The pleadings are lengthy and complex.

7. Mr Smits is the third defendant and third cross-claimant in this proceeding. He is also acting as the solicitor for the all defendants and cross-claimants.

8. In correspondence sent to the Court between 8 May and 18 May 2020, Mr Smits stated that the defendants intended to move on the Further Amended Notice of Motion filed on 30 August 2019 and that the vacation of the hearing listed for 22 June 2020 in order to enable “final disposal of the interlocutory applications” in the Further Amended Notice of Motion “seems inevitable”. The notice of motion was originally filed in January 2019. It was then amended on 5 March 2019 and subsequently further amended on 30 August 2019.

9. Having regard to the procedural history briefly outlined above, and recounted in more detail later in these reasons, it would be undesirable, and contrary to ss 56 to 58 of the Civil Procedure Act 2005 (NSW) (CPA), to vacate the hearing listed for 22 June 2020 in order to facilitate the hearing of a notice of motion that was first filed more than a year ago.

10. As I had no available hearing dates prior to 22 June 2020, I made directions on 22 May 2020 to facilitate the determination of the Further Amended Notice of Motion on the papers prior to the commencement of the hearing. However, this was subject to the caveat that, if either party considered that procedural fairness required an oral hearing in relation to any particular aspect of the motion, they should inform the Court. No party has sought an oral hearing.

11. As at 22 May 2020, the defendants had already filed or provided to the Court written submissions in excess of 300 pages, and Mr Smits’ correspondence to the Court in May 2020 and a further submission filed on 21 May 2020 referred to other submissions, affidavits and judgments in other proceedings. The directions made on 22 May 2020 therefore required the defendants to identify in a summary table the material within the very lengthy submissions and affidavits already filed on which they rely in support of the various claims for relief in the Further Amended Notice of Motion (the summary table), and provided for the plaintiffs to file and serve any evidence and submissions in response to the defendants’ material and for the defendants to file and serve any submissions in reply.

12. The Court has received and considered:

1. The defendants’ summary table and the evidence and submissions identified in that table;

2. Submissions of the plaintiffs dated 2 June 2020 and an affidavit of Ben Thomas sworn 25 May 2020;

3. Submissions filed by the defendants on 5 June 2020;

4. Two sets of submissions filed by the defendants on 7 June 2020; and

5. The defendants submissions filed on 12 June 2020.

HISTORICAL BACKGROUND TO THE ISSUES IN DISPUTE IN THIS PROCEEDING

13. Before addressing the defendants’ claims for relief in the Further Amended Notice of Motion, it is convenient to set out a brief explanation of the relationships between the parties and the history of the dealings between them in the context of which the issues in dispute in this proceeding have arisen. The account below is based on judgments of this Court in other proceedings arising from those dealings, and elements of the pleadings filed in this proceeding. It does not purport to be comprehensive or to exhaustively state the issues raised by the parties in this proceeding.

14. BAD Nominees (NSW) Pty Limited is the third plaintiff in this proceeding (BAD Nominees). [2] The second plaintiff (Mr Dean) has been the sole shareholder and director of BAD Nominees since its incorporation in 2008. [3] Until 5 September 2018, BAD Nominees was the trustee of the Dean Super Fund, of which Mr Dean is the sole beneficiary. [4]

    2. Third Further Amended Statement of Claim (3FASOC) at paragraph 1.

    3. Affidavit of Mr Dean sworn on 27 February 2019, filed in this proceeding and relied on by the defendants in support of the Further Amended Notice of Motion, at paragraphs 6–12 and Exhibit BD-1 pp 1–10 and pp 95–107 of that affidavit.

    4. 3FASOC at paragraphs 3–4; Second Further Amended Defence (2FAD) at 2–4; affidavit of Mr Dean sworn on 27 February 2019 at paragraph 9.

15. On 5 September 2018, the first plaintiff, Overdean Developments Pty Ltd (Overdean) replaced BAD Nominees as the trustee of the Dean Super Fund. The validity of Overdean’s appointment as trustee was upheld by Black J in In the matter of Beechworth Land Estates Pty Ltd (in liquidation) and Griffith Estates Pty Ltd (in liquidation) [2018] NSWSC 1703. Mr Dean has been a director of Overdean since 2004 and the sole director since 2018. He has been the sole shareholder of the company since approximately 2006. [5]

    5. 3FASOC at paragraph 5; 2FAD at paragraph 5; affidavit of Mr Dean sworn on 27 February 2019 at paragraphs 6–12 and Exhibit BD-1 pp 1–10 and pp 95–107 of that affidavit.

16. BAD Nominees, as trustee of the Dean Super Fund, is (or, depending on the outcome of issues arising in this proceeding, was) a creditor of Beechworth Land Estates Pty Ltd (BLE). [6] BLE went into administration on 14 July 2014 and subsequently into liquidation on 21 February 2018. [7]

    6. 3FASOC at paragraphs 12–14; 2FAD at paragraphs 12–14; In the matter of Beechworth Land Estates Pty Ltd (admins apptd) and Griffith Estates Pty Ltd (admins apptd); Cussen and of Beechworth Land Estates Pty Ltd v Douglas Estate Holdings Pty Ltd and Others (2019) 140 ACSR 1; [2019] NSWSC 1129 (Parker J Judgment) at [3].

    7. 3FASOC at paragraph 15; 2FAD at paragraph 15; Parker J Judgment at [4].

17. As explained by Parker J in In the matter of Beechworth Land Estates Pty Ltd (admins apptd) and Griffith Estates Pty Ltd (admins apptd); Cussen and of Beechworth Land Estates Pty Ltd v Douglas Estate Holdings Pty Ltd and Others (2019) 140 ACSR 1; [2019] NSWSC 1129 at [2]–[3]:

“BLE was incorporated in October 2012 as a special purpose vehicle for acquiring control of a property development in Beechworth, Victoria, from the financier, Suncorp Metway Limited (“Suncorp”). The original developer was a company called Redhill Estate Developments Pty Ltd (“Redhill”). Redhill had mortgaged the land, which consisted of 39 lots, to Suncorp as security for a loan of $1.55 million. Redhill later defaulted. Rather than exercise its power of sale under the mortgage, Suncorp assigned the debt owed to it by Redhill, and the benefit of the mortgage, to BLE.

BLE funded the purchase by borrowing up to $2 million from [BAD Nominees]. The loan was recorded in a Deed of Loan and secured under a general security agreement dated 1 February 2013….”

18. Shortly after BLE was placed into administration in July 2014, BAD Nominees lodged a proof of debt with the administrators claiming an amount of $807,903.04 owing under the Deed of Loan and general security agreement. [8]

    8. In the matter of Beechworth Land Estates Pty Ltd (administrators appointed) [2017] NSWSC 1447 (Gleeson JA Judgment) at [10]; In the matter of Beechworth Land Estates Pty Limited [2018] NSWSC 1630 (Brereton J Judgment) at [6].

19. In May 2016, Mr Dean on behalf of BAD Nominees entered into a suite of documents with Mr Smits, Mr Peter Shah Mahommed (the fourth defendant and fourth cross-claimant in this proceeding) (Mr Mahommed), and Mr Mahommed’s company Vestecorp Financial Services Pty Ltd (the fifth defendant and fifth cross-claimant in this proceeding) (Vestecorp). [9] The documents relevantly included a client services agreement, a power of attorney and an irrevocable authority and direction. The purpose of Mr Dean entering into these documents on behalf of BAD Nominees was to engage the services of Messrs Smits and Mahommed to facilitate in BAD Nominees’ efforts to recover the debt owed to it by BLE. [10]

    9. 3FASOC at paragraphs 19, 41 and 47; 2FAD at paragraphs 19, 40–42; Brereton J Judgment at [8]–[10].

    10. Brereton J Judgment at [8].

20. The general nature of these documents were described by Brereton J (as his Honour then was) in In the matter of Beechworth Land Estates Pty Limited [2018] NSWSC 1630 at [9]–[10]:

“By the client services agreement, [Vestecorp] and Mr Smits agreed to provide the services of Mr Mahommed and Mr Smits in connection with the exercise of all services, functions and powers under and all matters referred to in the power of attorney, and ancillary and incidental services. Under the client services agreement, the consultants are entitled to remuneration for their services. The power of attorney was executed on behalf of BAD by Mr Dean and bears the date 29 May 2016. It is expressed to be a joint and several appointment of Mr Mahommed and Mr Smits and to operate on and from 5 May 2016 for three years up to and including 5 May 2019. It is expressed in Part 2 to be irrevocable for that three year period, and was registered on 20 September 2017.

The irrevocable authority and direction is addressed to Messrs Smits and Mahommed and to [Vestecorp], and includes the following:

In consideration of your undertaking to execute forthwith the agreed forms of power of attorney and consultancy agreement at the request of Mr Brian Dean, as sole director of BAD Nominees Pty Limited...on 8 May 2016, time being of the strictest essence, BAD hereby:

(1)  Authorises and directs irrevocably you and/or the administrators of Griffiths Estates...and BLE...to pay 25 per cent of all moneys, damages, interests and costs due, owing or payable to BAD in respect of any Griffiths loss referred to in current legal proceeding as directed in writing by you and for your absolute benefit and the balance of 75 per cent thereof shall be paid to BAD.

...

(3)  Without your input and assistance BAD would be unable to marshal or engage the requisite expertise and resources to deal with the enforcement of its alleged loan securities and associated rights or to make or resist any legal challenges against or from the administrator of or any liquidators or receivers or trustees if appointed to BLE, GEP and associated wrong doers, and that BAD carries the risk of payment of all related legal costs, for which BAD undertakes that you will be fully indemnified by BAD.

(4) Acknowledge that you will be at substantial risk for non-payment for provision of your services in the event that you are unsuccessful in recovering moneys for BAD from the administrators.”

21. On 31 May 2016, Mr Dean’s solicitor wrote to Mr Smits and Mr Mohammed purporting to revoke the power of attorney. [11]

    11. Brereton J Judgment at [12].

22. On 10 August 2016, Mr Dean purportedly caused BAD Nominees to enter into a deed pursuant to which BAD Nominees assigned to Maitland Finance and Acquisition Pty Limited (MAFA) the debt owing by BLE to BAD Nominees under the Deed of Loan. [12]

    12. 3FASOC at paragraph 86; Amended First Cross-Claim at paragraph 5(a); Defence to First Cross-Claim at paragraph 5; Gleeson JA Judgment at [13], [27]; Parker J Judgment at [10].

23. In August 2017, the administrators appointed to BLE agreed with BAD Nominees, then under the management of Mr Smits and Mr Mahommed, to make an in specie distribution by transferring BLE’s nine remaining Beechworth lots (to the value of approximately $1 million) to BAD Nominees in partial satisfaction of BLE’s debt owing to BAD Nominees (the BAD Nominees Contract). [13] This transaction was the subject matter of the decision of Gleeson JA in In the matter of Beechworth Land Estates Pty Ltd (administrators appointed) [2017] NSWSC 1447, in which his Honour made declarations to the effect that the contract for the transfer of those lots to BAD had been entered into and that BLE was authorised to sell those lots to BAD. Mr Dean, Mr Smits and Mr Mahommed agreed to the orders and declarations made, so that it was not necessary for Gleeson JA to resolve the question whether Mr Dean (as director of BAD Nominees) or Mr Smits and Mr Mahommed (pursuant to the power of attorney disputed by Mr Dean) had the authority to cause BAD Nominees to enter into the contract.

    13. Parker J Judgment at [5].

21. On 23 February 2018, Brereton J heard and determined the balance of the proceeding that had been heard by Gleeson JA, which involved questions relating to the power of attorney. His Honour described those questions as follows ([2018] NSWSC 1630 at [24]):

“… first, was the power of attorney revocable; secondly, if so, was it in fact revoked; thirdly, if not, has Mr Smits’ retainer nonetheless been terminated in accordance with its terms; and, fourthly, if not, what should be done about the fact there are dual appearances on the record for the defendant in these proceedings.”

25. His Honour held that the power of attorney was irrevocable, that Mr Mahommed in his capacity as attorney had appointed Mr Smits to act as solicitor for BAD Nominees in the proceedings, that it was not open to Mr Dean to terminate that retainer on behalf of BAD Nominees, that Mr Smits’ retainer therefore remained on foot and that Mr Dean was restrained from engaging any other lawyer to act for BAD Nominees in the proceedings until 5 May 2019 (being the date of expiry of the three year term of the irrevocable power of attorney): [2018] NSWSC 1630 at [33], [42]–[43].

26. The issues in dispute in this proceeding commenced in December 2018 include (and I emphasise again that time does not permit a full description of all of the matters put in issue by the parties in their claims and defences):

1. whether Mr Mahommed and Mr Smits procured Mr Dean to execute the suite of documents including the power of attorney in May 2016 (referred to collectively in the Third Further Amended Statement of Claim as “the Agreement”) as part of a conspiracy to perform and charge excessive fees for legal services, and to ensure that they were paid those fees and/or in breach of fiduciary duty owed by Mr Smits to Mr Dean and BAD Nominees, and whether the power of attorney is void, voidable and/or rescinded; [14]

   14. 3FASOC at paragraphs 25–52, 93.

2. whether the Agreement authorised Mr Smits or Mr Mohammed as attorneys to enter into, inter alia, a retainer for the provision of legal services by Mr Smits to BAD Nominees; [15]

   15. 3FASOC at paragraphs 55, 94–104.

3. whether Mr Dean validly terminated the Agreement and/or revoked the power of attorney on 28 May 2016; [16]

   16. 3FASOC at paragraphs 76–82, 246–252.

4. whether, following the making of orders by Brereton J referred to above, the defendants in this proceeding engaged in a further conspiracy to use the power of attorney to transfer the nine Beechworth lots from BAD Nominees to Garslev Holdings Pty Ltd (Garslev) in consideration for fees that Mr Smits and Mr Mahommed would claim that were owing to them by BAD Nominees under the Agreement so that BAD Nominees would receive nothing from the assignment, for Garslev to then sell those lots and use the proceeds to fund a development at Yeppoon in Queensland and for Mr Smits and Mr Mahommed to receive the profits made by Garslev from that development (the Garslev Assignment); [17]

5. whether Garslev, which became the registered proprietor of the nine Beechworth lots on 5 November 2018, has indefeasible title to those lots or whether the registration was procured by fraud; [18]

6. whether deeds purportedly entered into by Mr Smits and Mr Mahommed as attorneys for BAD Nominees under the power of attorney on 5 November 2018, pursuant to which BAD Nominees approved the payment of all current and future tax invoices issued by Mr Smits and Mr Mahommed’s company, Vestecorp, and each of Mr Smits and Vestecorp assigned the right to payment of the invoices to Garslev, are void or voidable; [19]

7. whether Mr Smits and Vestecorp are entitled to payment of invoices issued to BAD Nominees in relation to work said to have been performed under the Agreement and work performed by Mr Smits as solicitor for BAD Nominees; [20]

8. whether the plaintiffs are estopped from litigating their claims in this proceeding, and whether this proceeding is an abuse of process. [21]

   17. 3FASOC at paragraphs 124–199; Amended First Cross-Claim at paragraphs 3(b) and 5(e).

   18. 3FASOC at paragraphs 253–257; Amended First Cross-Claim at paragraph 5.

   19. 3FASOC at paragraphs 258–293.

   20. 3FASOC at paragraphs 309–373; Amended First Cross-Claim at paragraph 6.

   21. Amended First Cross-Claim at paragraph 5.

27. At an inter partes hearing on 10 January 2019, Robb J made orders by consent and without admissions, and upon the plaintiffs giving to the Court the usual undertaking as to damages, restraining the defendants from transferring, encumbering or otherwise dealing with the nine Beechworth lots or the proceeds of sale or mortgage of those lots until 5pm on 25 January 2019.

28. At an inter partes hearing on 25 January 2019, that interim injunction was extended until further order, by consent and without admissions after the Court (Lindsay J) noted the plaintiffs’ usual undertaking as to damages, subject to orders permitting the defendants to sell and complete contracts for sale of the nine Beechworth lots on the condition that they pay the proceeds of sale into court to abide further orders of the Court (save for the first $245,000 of those sale proceeds, which the defendants were entitled to retain).

29. In the defendants submissions in support of the relief claimed in the Further Amended Notice of Motion, and in Mr Smits’ affidavits sworn in relation to the Further Amended Notice of Motion, the orders made by Robb J, as extended and varied by Lindsay J, are typically referred to as “Freezing Orders”. However, as will be apparent from the description above, the orders were not freezing orders but an interim injunction to preserve the properties/sale proceeds that are the subject matter of this proceeding, subject to terms permitting limited dealings with those properties/sale proceeds by the defendants.

30. When this proceeding was first commenced in December 2018, BAD Nominees was named as a defendant because Mr Smits and Mr Mahommed maintained that the power of attorney prevented the plaintiffs’ solicitors acting for BAD Nominees. [22]

    22. 3FASOC at paragraphs 306–307.

31. As noted above, the three year period during which the power of attorney was held by Brereton J to be irrevocable expired on 5 May 2019. The plaintiffs’ submissions dated 2 June 2020 state that Mr Dean revoked the power of attorney on 11 May 2019. At the hearing before Sackar J on 20 May 2019, the plaintiffs were granted leave to file a Further Amended Statement of Claim, which the defendants’ counsel appearing at that hearing described as involving principally the removal of BAD Nominees as a defendant and its addition as plaintiff, and some “tidying up” changes. The defendants did not object to leave being granted. [23]

    23. Transcript, 20 May 2019, page 50, lines 25–49.

32. In November 2019, BAD Nominees and Overdean commenced proceedings against BLE, its former administrators and current liquidator (proceeding 2019/360238). In March 2020, the defendants in those proceedings filed a notice of motion seeking an order that BAD Nominees and Overdean provide security for their costs. That motion was heard before Parker J on 28 April 2020. His Honour ordered that BAD Nominees and Overdean Developments provide security in the sum of $160,000 to be paid in four separate tranches.

FURTHER AMENDED NOTICE OF MOTION

Claims for relief in the Further Amended Notice of Motion

33. The relief sought in the Further Amended Notice of Motion filed on 30 August 2019 falls into the following categories:

1. orders for the first plaintiff to provide “security for costs and/or damages” and an order staying the proceedings until such security is provided. At the directions hearing on 22 May 2020, the defendants clarified that they seek security for costs and security for the plaintiffs’ undertaking as to damages given in support of the interim injunction granted by this Court on 10 January 2019, as varied on 25 January 2019: see prayers 8, 10 and 10A of the Further Amended Notice of Motion;

2. orders discharging or varying order 5 made by this Court on 25 January 2019. Order 5 was the order that required the defendants to pay into court the proceeds of sale of certain properties in excess of $245,000. Order 4 permitted the defendants to sell those properties, subject to order 5, notwithstanding the continuation by order 3 of the interim injunction that had been granted on 10 January 2019: prayers 6A and 6B of the Further Amended Notice of Motion;

3. orders for summary disposal of the proceedings: see prayers 3, 4, 5 and 5A of the Further Amended Notice of Motion;

4. a declaration that no reasonable cause of action is disclosed by the statement of claim: see prayer 1 of the Further Amended Notice of Motion;

5. a declaration that the plaintiffs are estopped from bringing or maintaining these proceedings in the premises referred to in paragraph 5 of the “proposed First Cross-Claim”: see prayer 2 of the Further Amended Notice of Motion. Paragraph 5 of the Amended Statement of First Cross-Claim, which is not marked up as having been amended since the First Cross-Claim was first filed, alleges that the plaintiffs (including the entity that is now the third plaintiff, BAD Nominees) have no capacity to bring or maintain any claim against the defendants by reason of certain assignments, indefeasibility of title to land held by the first defendant and various other matters;

6. other declarations to the effect that the first defendant holds indefeasible title to certain land, the superannuation fund of which the second plaintiff is the trustee is not a complying superannuation fund under the Superannuation Industry (Supervision) Act 1993 (Cth) and regulations under that Act, that certain transactions contravened that Act and regulations and that the superannuation fund has no corpus: see prayers 2A, 2B, 2C and 2D of the Further Amended Notice of Motion;

7. an order that the Registrar in Equity assess, determine and orders in respect of the alleged wrongful lodgement by the plaintiffs of certain caveats: prayer 7 of the Further Amended Notice of Motion;

8. orders adding the plaintiffs’ lawyers as cross-defendants to the proceedings and personal costs orders against the plaintiffs’ lawyers: prayers 13, 13A(a) and 13B of the Further Amended Notice of Motion;

9. an order removing the third plaintiff and reinstating it as the second defendant in the proceeding: prayer 13A(b) of the Further Amended Notice of Motion;

10. orders setting aside four subpoenas issued on 5 July 2019 or allowing objections to be made to inspection of documents produced in response to those subpoenas: prayer 15 of the Further Amended Notice of Motion;

11. an order extending the time for the defendants to file a cross-claim: prayer 16 of the Further Amended Notice of Motion; and

12. orders for the payment by the plaintiffs of the defendants costs of this proceeding (albeit that the proceeding has not yet been finally heard and determined): prayers 11 and 12 of the Further Amended Notice of Motion.

Procedural history of the Further Amended Notice of Motion

34. As I have referred to above, this proceeding was granted expedition on 1 February 2019. The proceeding was thereafter managed by Sackar J in the Expedition List.

35. At a directions hearing on 8 March 2019, orders were made listing for hearing on 21 March 2019 the Amended Notice of Motion that had been filed by the defendants. The relief sought by the defendants in the Amended Notice of Motion was essentially the same as the relief sought in the Further Amended Notice of Motion, save that the Amended Notice of Motion did not include paragraphs 13A, 13B, 15 and 16 that are now included in the Further Amended Notice of Motion (see [33(8)]–[33(11)] above).

36. At a directions hearing on 20 March 2019, Sackar J advised the parties that the hearing of the Amended Notice of Motion would have to be rescheduled due to the continuation of a matter in which his Honour was part-heard. The third defendant, Mr Smits, who appeared for all defendants on that occasion described the Amended Notice of Motion is being directed to: [24]

“… summary disposal of the proceedings .. the release of the funds paid into court … and … security for costs”

24. Transcript, 20 March 2019, page 1, lines 40–50.

37. His Honour questioned the utility of the parties devoting time and resources to an interlocutory hearing when the final hearing was then imminent. His Honour said: [25]

“why should the court devote resources to interlocutory skirmishing, which at very best will give either side leave to appeal, and I’ve then got to, what, turn around and probably vacate the hearing date in May if either of you want to exercise leave to appeal to the Court of Appeal, because it would render the 20th of May hearing probably impractical to proceed.”

25. Ibid, page 2, lines 12–17.

38. Mr Smits replied: [26]

“I respect what your Honour’s saying.”

26. Ibid, line 19.

39. His Honour continued: [27]

“Look, why don’t I simply stand both of your motions [the plaintiff had also filed a notice of motion] over to the hearing of 20 May and you can slug it out on a final basis, commencing that day, and then you can get a final judgment … in which case either of you then if you wish to take the matter further, has an appeal as of right … It seems to me that’s the most cost effective way forward.”

27. Ibid, lines 21–27.

40. The transcript records that neither Mr Smits nor the plaintiffs’ solicitor raised any opposition to that course proposed by his Honour.

41. The final hearing then commenced on 20 May 2019 before Sackar J. As I have already referred to above, it was adjourned as a result of the plaintiffs’ application for leave to amend their pleading. Orders were made by consent on 27 May 2019 granting leave to the plaintiffs to file a Further Amended Statement of Claim, requiring the plaintiffs to pay the defendants’ costs thrown away by reason of the amendment, establishing a timetable for the provision of any particulars requested by the defendants, the filing of a defence to the Further Amended Statement of Claim, the filing of any cross-claim and a defence to any cross-claim, and the service of any further evidence. The proceeding was listed for further directions on 23 August 2019, with liberty to apply. It appears that no orders were sought in relation to the hearing of the defendants’ Amended Notice of Motion.

42. The proceeding was next listed on 30 August 2019 before Sackar J for directions. Mr Smits, who again appeared for the defendants, sought leave to file a First Cross-Claim (the time allowed by the orders made on 27 May 2019 having expired) and leave to file a Further Amended Notice of Motion. His Honour granted leave to the defendants to file both documents, and stood the Further Amended Notice of Motion over to 6 September 2019.

43. Mr Smits again appeared for the defendants at the hearing before Sackar J on 6 September 2019. On that occasion, Mr Smits told his Honour that the defendants did not press the claims in prayers 13, 13A and 13B of the Further Amended Notice of Motion and said that his Honour could strike out those prayers. The Further Amended Notice of Motion was otherwise listed for hearing for half a day on 19 September 2019.

44. Mr Smits again appeared for the defendants at the hearing on 19 September 2019. At the commencement of that hearing, Sackar J asked Mr Smits which parts of the Further Amended Notice of Motion he wished to move on. Mr Smits identified paragraphs 3, 4 and 5 as the parts of the Further Amended Notice of Motion the defendants were moving on. Those are the prayers seeking summary dismissal of the proceeding or orders striking out the plaintiffs’ statement of claim.

45. The transcript records that Sackar J had received a lengthy written submission from the defendants, which his Honour had read. His Honour indicated that the issues raised by the defendants’ submissions in support of the summary disposal relief in the Further Amended Notice of Motion were not appropriate to determine on a summary dismissal or strike out basis and said: [28]

“… this is in effect trying to replace what would be a conventional trial with a mini trial on a whole series of factual issues which I don’t think is appropriate.”

28. Transcript, 19 September 2019, page 2, lines 28–30.

46. Mr Smits replied: [29]

“If your Honour holds that opinion I’m unable to dissuade your Honour.”

29. Ibid, line 32.

47. The balance of the hearing was occupied with the plaintiffs’ application for leave to file a further iteration of the plaintiffs’ pleading. The plaintiffs were granted a further two weeks to finalise the version of the pleading they wished to propound. The defendants’ position in relation to any further version of that pleading was reserved.

48. There was a further hearing on 16 October 2019 after the plaintiff had circulated a further version of its proposed Third Further Amended Statement of Claim. On the application of Mr Smits, who appeared for the defendants, the hearing of the plaintiffs’ application for leave to file that amended pleading was adjourned to 6 November 2019 to allow the defendants further time to prepare submissions in relation to that application.

49. Mr Smits appeared for the defendants at the hearing on 6 November 2019 before Sackar J. The defendants made submissions opposing the plaintiffs’ application for leave to file the Third Further Amended Statement of Claim and reiterating their application for summary disposal. At the conclusion of the hearing, his Honour gave reasons for judgment explaining why the case was not an appropriate vehicle for a summary disposal application, and granting leave to the plaintiffs to file the Third Further Amended Statement of Claim. His Honour said: [30]

“7.   The pleading currently proposed is detailed and complex. That does not mean it is tenable. But in an application to strikeout a pleading, which sometimes, as General Steel in the High Court makes clear, can take some little time. The ultimate problem for a person moving to strikeout a pleading is that it must be assumed that the factual contentions in the pleading are true. That will not be so where a summary disposal application is made on the basis of certain factual materials which may be brought forward. This however is an application based upon the untenable nature of the pleading. In fairness Mr Smits has sought to rely upon factual materials but really to allow [sic – show] certain factual assertions in the proposed pleadings are untenable.

8.   In a summary application of that sort, where summary judgment is sought, frequently the party moving will adduce factual materials before the Court. Such an application was mooted before me at an earlier point in time. The difficulty with that application, particularly in a case like this, is that it will often be entirely inappropriate for a Court, prematurely to make decisions about for example, conversations which are disputed. There may be documents which may be given a particular construction. Here, for example, it is said by the plaintiffs that certain agreements which include a power of attorney should be construed as one agreement. Whereas, there is a counter argument to that which must be viewed separately. Surrounding circumstances in contractual contexts, may or may not be relevant and, therefore, I made it clear to Mr Smits at an earlier point in time that a summary disposal in that sense was not a tenable course, which I favoured.

9.   There is little doubt that the defendants believe they have a very strong case in a number of respects (indeed, they would say, in all respects), and, in particular, this morning Mr Smits appropriately drew the Court's attention to a deed of assignment between [BAD Nominees] and [MAFA] executed in 2016 which in part, at very least, he says is an answer to the claim or claims made by the plaintiffs. Again that may be so, but I do not regard that as appropriate to consider such a matter devoid of a burden of financial [sic – factual] contest.

10.   His written submissions are carefully considered, helpful and extraordinarily detailed. What they do, however, in my view, is highlight the numerous and important factual issues which are in dispute (indeed, hotly contested), between the parties in respect of which the Court must ultimately make a determination.

11. This procedure which I have invited, has proven yet again the futility in cases of this complexity, both factually and legally, in trying to determine, consistent with section 56 and other provisions of the Civil Procedure Act, a quick and efficient shortcut home. In a case like this, sadly, what that exercise has underlined, in my view, is that a strike out procedure is really not appropriate here.”

30. Overdean Developments Pty Ltd v Garslev Holdings Pty Ltd (Supreme Court of New South Wales, Sackar J, 6 November 2019) at [7]–[11].

50. At the conclusion of the hearing on 6 November 2019, Sackar J indicated that the matter would be listed for final hearing for two weeks commencing on 27 April 2020. An order to that effect was made on 7 November 2019, noting an estimated hearing time of 10 days.

51. On 12 November 2019, Sackar J made further orders which are stated to be by consent, but which I infer from the history recounted above were agreed by the parties as being the orders appropriate to give effect to the outcome of the hearing on 6 November 2019. The orders granted leave to the plaintiffs to file and serve the Third Further Amended Statement of Claim and established a timetable for the resulting requests and provision of particulars, the filing of defences to the Third Further Amended Statement of Claim and any amended Cross-Claim and the like. In relation to the Further Amended Notice of Motion, the orders made “by consent” simply provided that the costs of and incidental to the hearing on 6 November 2019 of the defendants’ Further Amended Notice of Motion filed on 30 August 2019 be reserved. No order was made formally disposing of any part of the Further Amended Notice of Motion, even though Sackar J had, in effect, dismissed prayers 3, 4 and 5, the defendants had asked the Court to “strike out” prayers 13, 13A and 13B and the defendants had not given any indication that they intended to move on any other part of the Further Amended Notice of Motion prior to the final hearing. If the defendants had intended to move on any other part of the Further Amended Notice of Motion (as they now say was always their intention), one would have expected the Court to have been informed about this at the hearings on 19 September 2019 and 6 November 2019. One would also have expected the orders made “by consent” on 12 November 2019 to make provision for that interlocutory hearing as soon as possible prior to 27 April 2020 when the final hearing was then listed to commence.

52. At the conclusion of the hearing on 6 November 2019, his Honour listed the matter for final hearing for two weeks commencing on 27 April 2020. That hearing was vacated due to technical problems with the conduct of the hearing remotely, and the matter was then listed for hearing before me commencing on 22 June 2020. As already referred to above, the defendants then began writing to the Court on 8 May 2020 pressing for the Further Amended Notice of Motion to be heard.

CONSIDERATION AND DETERMINATION

Security for costs and security for the plaintiffs’ undertaking as to damages: Prayers 8, 10, 10A

Applicable principles: security for costs

53. Uniform Civil Procedure Rules 2005 (NSW) (UCPR) r 42.21(1) provides:

“(1)   If, in any proceedings, it appears to the court on the application of a defendant:

(a)   that a plaintiff is ordinarily resident outside Australia, or

(b)   that the address of a plaintiff is not stated or is mis-stated in his or her originating process, and there is reason to believe that the failure to state an address or the mis-statement of the address was made with intention to deceive, or

(c)   that, after the commencement of the proceedings, a plaintiff has changed his or her address, and there is reason to believe that the change was made by the plaintiff with a view to avoiding the consequences of the proceedings, or

(d)   that there is reason to believe that a plaintiff, being a corporation, will be unable to pay the costs of the defendant if ordered to do so, or

(e)   that a plaintiff is suing, not for his or her own benefit, but for the benefit of some other person and there is reason to believe that the plaintiff will be unable to pay the costs of the defendant if ordered to do so, or

(f)   that there is reason to believe that the plaintiff has divested assets with the intention of avoiding the consequences of the proceedings,

the court may order the plaintiff to give such security as the court thinks fit, in such manner as the court directs, for the defendant’s costs of the proceedings and that the proceedings be stayed until the security is given.”

54. UCPR r 42.21(1A) sets out matters to which the Court may have regard, in addition to such other matters as it considers relevant, in deciding whether to make an order for security for costs. These matters include the prospects of success or merits of the proceedings. However, it is not generally appropriate to canvass the merits of the plaintiffs’ claim beyond determining whether it is made bona fide and is at least arguable: Jazabas Pty Ltd v Haddad (2007) 65 ACSR 276; [2007] NSWCA 291 at [18] (Basten JA).

55. UCPR r 42.21(1B) provides that an order for security for costs cannot be made against a plaintiff who is a natural person merely on account of his or her impecuniosity. This reflects the general principle that was well established before the introduction of sub-rule (1B) in August 2013: Cowell v Taylor (1885) 31 Ch D 34 at 38; see also, for example, Jazabas Pty Ltd v Haddad (supra) at [12] (Basten JA).

56. In respect of a corporate plaintiff, an order for security for costs may be made on the basis of impecuniosity: UCPR r 42.21(1)(d) and Corporations Act 2001 (Cth), s 1335(1).

57. Section 1335(1) of the Corporations Act provides:

“Where a corporation is a plaintiff in any action or other legal proceeding, the court having jurisdiction in the matter may, if it appears by credible testimony that there is reason to believe that the corporation will be unable to pay the costs of the defendant if successful in his, her or its defence, require sufficient security to be given for those costs and stay all proceedings until security is given.”

58. The principles that apply in determining an application for security for costs against a corporate plaintiff were conveniently summarised by Ward CJ in Eq in Modakboard Australia Pty Ltd v Brady [2018] NSWSC 399 at [242]–[259], which I gratefully adopt without repeating. The defendant must demonstrate a rational basis for believing that the plaintiff will be unable to pay the defendant’s costs. The words “reason to believe” acknowledge that, as a matter of practical reality, the assessment of the plaintiff’s financial position will be based on limited materials in the context of a security for costs application. However, it is not sufficient for the defendant to demonstrate a risk that the plaintiff may be unable to pay costs: Cornelius v Global Medical Solutions Australia Pty Ltd (2014) 98 ACSR 301; [2014] NSWCA 65 at [15]–[17] (Macfarlan JA), [59] (Ward JA); Modakboard (supra) at [244].

59. If the persons standing behind an impecunious corporate plaintiff (its shareholders, directors or beneficiaries under a trust administered by the corporate plaintiff) are themselves exposed to liability for costs, either because they are also plaintiffs and failure of the claims will attract one set of costs orders for which all plaintiffs are liable, or because the shareholders, directors or beneficiaries have personally exposed themselves to any costs order made against the corporate plaintiff by offering an undertaking or indemnity, this may be a powerful consideration against ordering the corporate plaintiff to provide security under UCPR r 42.21(1)(d) and s 1335(1), even if the ability of the shareholders, directors or beneficiaries to meet a costs order is not supported by assets: Vintage Marine Art Pty Ltd v Henderson & Cremer (No. 2) [2019] NSWCA 252 at [20]–[28] (Brereton JA, Bell P and Macfarlan JA agreeing), and the authorities there cited.

60. The Court also has inherent jurisdiction to award security for costs as an incident of its power to regulate its procedures so as to prevent an abuse of its processes. It has been held that, where the plaintiffs have been denuded of assets, this may attract the exercise of the inherent jurisdiction to order an impecunious plaintiff who is a natural person to provide security for costs: see Rajski v Computer Manufacture & Design Pty Ltd [1982] 2 NSWLR 443 at 447; Green (as liquidator of Arimco Mining Pty Ltd) v CGU Insurance Ltd (2008) 67 ACSR 105; [2008] NSWCA 148 at [45] (Hodgson JA, Campbell JA agreeing).

61. Subparagraph (1)(f) was inserted into UCPR r 42.21(1) in August 2013 and appears to be directed to the same object as the inherent jurisdiction above, namely preventing a plaintiff from frustrating the processes of the court in which proceedings are instituted by divesting assets to frustrate the future enforcement of a judgment or costs order by a successful defendant. In my opinion, the test of “reason to believe” in UCPR r 42.21(1)(f) is to be applied in the same manner in which it has been applied in the context of r 42.21(1)(d) and s 1335(1). That is to say, the defendant must demonstrate a rational basis for believing that the plaintiff has divested assets with the intention of avoiding the consequences of the proceedings.

Applicable principles: security for undertaking as to damages

62. The purpose and history of the “usual undertaking as to damages” was explained by the High Court in European Bank Ltd v Robb Evans of Robb Evans & Associates (2010) 240 CLR 432; [2010] HCA 6 at [14]–[15]. The Court explained:

“…The undertaking as to damages is given to the court, for enforcement by the court; it is not a contract between parties or some other cause of action upon which one party can sue the other. It is worth repeating the obvious proposition that such an undertaking is not lightly to be given.

The undertaking as to damages and its origins in equity practice of the 19th century, if not earlier, were explained by Aickin J in Air Express and by Gleeson CJ, Gummow, Kirby, Hayne and Crennan JJ in Mansfield v DPP (WA). The authorities discussed in Mansfield included Russell v Farley, where Bradley J had explained the requirement of the undertaking as a response to the anxiety entertained by the court that otherwise its interlocutory order might lead to damage for which there could be no redress except by an order for costs.”

63. At [17], the Court said:

“A party seeking an equitable remedy is required to “do equity” and this is the origin of the requirement that the party giving an undertaking as to damages submit to such order for payment of compensation as the court may consider to be just.”

64. It is for this reason that the usual undertaking as to damages is required in every case where an interim injunction is sought, unless there are exceptional circumstances. However, the plaintiff is not compelled or ordered to give the undertaking. Rather, the interim injunction is expressed to operate conditionally upon the undertaking being given. The injunction will operate if the plaintiff gives the undertaking. If the plaintiff declines to give the undertaking, the injunction will not operate: see, First Netcom Pty Ltd v Telstra Corporation Ltd (2000) 101 FCR 77; [2000] FCA 1269 at [22] (Beaumont, Burchett and Emmett JJ); Goater v Commonwealth Bank of Australia [2014] NSWCA 265 at [92] (Ward JA), and the authorities there cited.

65. As the Full Court of the Federal Court said in First Netcom (supra) (at [23]–[24]), the terms of the undertaking will be moulded to fit the circumstances of the particular case.

“There is a "usual" form of undertaking as to damages. However, since its terms are a matter for the discretionary judgment for the court, its provisions will be moulded so as to fit the circumstances of the case at hand. These circumstances may include the likelihood of the plaintiff's insolvency, which might produce an inability to discharge any liability to the party enjoined pending a final hearing that might accrue under the undertaking. In that event, the Court is required to exercise its judgment as to what is appropriate in order to ensure the reality of adequate compensation, and not merely an empty form of compensation, to a party who is ultimately successful.

In such a case the court may stipulate a further condition in connection with the undertaking, in the event that the plaintiff should elect to give the undertaking, and thus secure the injunction. The extra condition could be that any contingent liability under the undertaking be appropriately secured - for example see Select Personnel Pty Ltd v Morgan & Banks Pty Ltd (1988) 12 IPR 167. Again, the plaintiff can elect to comply with this condition or decline to do so, but must accept the consequences of its election.”

66. The Full Court continued (at [25]–[26], emphasis added):

“It follows that in strictness the only order made by the Court on an application for interim relief is the injunction itself. It is true that the operation of the injunction may be expressed to be conditional upon performance of a condition precedent. But the court does not direct, let alone order, the performance of such a condition. That is entirely at the plaintiff's election, with the consequences mentioned.

It further follows that such conditions cannot, of their nature, be conditions subsequent. Either the interim injunction comes into operation upon being made, or it does not. In other words, the condition cannot be imposed (or superimposed) retrospectively.”

67. The Full Court varied orders made by the primary judge so as to remove a requirement for the applicant to provide security for an undertaking as to damages that had previously been given before the requirement for security had been imposed by the primary judge’s order.

68. The reasons why conditions applicable to an interim injunction are not imposed after the injunction has been granted are succinctly and, in my respectful opinion, accurately articulated by Associate Professor Michael Legg and Nichole Soo in their article “Security for an undertaking as to damages – a principled approach” (2016) 10 Journal of Equity 74 at 80:

“It may be unfair to an applicant for an injunction to have the court specify an amount of security as ‘the price’ for the injunction but then allow for the amount of security to be increased. The applicant may determine not to persist with the injunction so as to avoid the higher ‘price’ but they are placed in the unenviable position of having to make such a choice after they have embarked on litigation with its associated costs. If the interlocutory injunction is discharged then this may determine the underlying dispute so that further litigation is unable to deliver a meaningful remedy. The costs of the litigation, to the parties and the court, are then wasted. Further, as a matter of policy, repeated applications to vary security are to be avoided as a matter of case management and reducing cost and delay.”

Issues raised by the parties’ submissions

69. The defendants’ submissions referred to UCPR r 42.21, s 1335(1) of the Corporations Act and/or the inherent jurisdiction of the Court. [31]

    31. See, for example, the further submissions of the defendants filed on 5 June 2020 styled “Defendants’ Submissions re FANoM of 30 AUG 19 and Orders made on 02 JUN 20” at paragraphs 30 and 43; cf Affidavit of Leonardus Gerardus Smits sworn on 18 May 2020 at paragraph 29.

70. The substance of the defendants submissions as to the reasons why security for costs and security for the plaintiffs’ undertaking as to damages should be ordered may be summarised as follows:

1. the defendants submitted that the three plaintiffs are impecunious because they have divested their assets. They submitted that the plaintiffs have concealed certain information about their assets from the Court in this proceeding and other proceedings, and have made certain misleading or deceptive statements, and that the Court should infer from these alleged concealments and misleading or deceptive statements that the plaintiffs have divested their assets in order to frustrate the enforcement of any judgment or costs order against them in this proceeding;

2. the defendants submitted that the plaintiffs’ claims are without merit and the Third Further Amended Statement of Claim is defective, including because the plaintiffs’ case in this proceeding is inconsistent with the position taken by the plaintiffs in previous proceedings that BAD Nominees had assigned to MAFA its rights in relation to the debt owing by BLE (see [22] above) and because the plaintiffs’ claims in this proceeding are founded upon matters that (in the defendants’ submission) were decided finally and adversely to plaintiffs in earlier proceedings and the plaintiffs are estopped from maintaining those claims in this proceeding;

3. the defendants submitted that the plaintiffs “have an extensive history of unclean hands and dishonesty in the conduct of the proceedings”;

4. the defendants submitted that they consented, without admissions, to payment of the proceeds of the nine Beechworth lots into court on the terms of the orders made on 25 January 2019 during the Court vacation “as the Court was not able to deal with the underlying matters”. As I understand it, this submission is directed to the question why the continuation of the interim injunction was not contested and/or why no security for the plaintiffs’ undertaking as to damages was sought in January 2019;

5. the defendants submitted that they had sought security for costs “continuously” since 21 January 2019; and

6. the defendants submitted that the plaintiffs have failed to pay costs ordered to be paid to Mr Smits and Mr Mahommed by Brereton J on 23 February 2018.

71. Notwithstanding the reference to s 1335 of the Corporations Act in the written submissions of the defendants, no submissions were directed to the question whether security for costs, or security for the plaintiffs’ undertaking as to damages, should be ordered on the grounds of impecuniosity in the event that the defendants failed to establish a reason to believe that the plaintiffs have divested assets with the intention of avoiding the consequences of the proceedings.

72. The threshold question to be determined in relation to the application for security for costs is therefore whether there is reason to believe that the plaintiffs have divested assets with the intention of avoiding the consequences of this proceeding.

73. The defendants went so far as to submit that the plaintiffs have divested assets. For example, the defendants’ submissions dated 5 June 2020 stated:

“The Court should require sufficient security for the costs in order to avoid the risk that the plaintiffs cannot meet an adverse costs order and to fortify the value of the undertaking as to damages …

The indisputable evidence of the plaintiffs is that they do not have any financial resources or means to pay any adverse costs orders as to costs or damages. The Court should infer that the plaintiffs remain determined to resist any order for security and that [Mr] Dean has attempted to rearrange his financial affairs, not only to avoid payment of costs and damages, but also to frustrate any relief that might be granted to the defendants, who face the real prospect of inability to pay crippling liabilities for accumulated legal costs. It cannot be doubted seriously that Mr Dean has deliberately divested himself of personal assets and [has divested BAD Nominees of assets of the Dean Super Fund] during all of the legal proceedings, so as to make it as difficult as possible, if not impossible, for the applicants to recover any costs or damages. The plaintiffs’ ‘lack of assets and income’ is self inflicted.”

74. However, the test is whether there is reason to believe that that the plaintiffs have divested assets with the intention of avoiding the consequences of this proceeding.

75. I note the reference in the defendants’ submission above to “indisputable evidence” of the plaintiffs’ impecuniosity. However, other submissions made on behalf of the defendants were equivocal about whether the plaintiffs are impecunious. For example, in paragraph 29 of his affidavit sworn on 18 May 2020, Mr Smits made a submission setting out reasons why the defendants sought an order for security for costs, including that (my emphasis):

“There are ample, compelling reasons and material facts to indicate unequivocally that the respondents, who have deposed frequently as to their insolvency or illiquidity in the said proceedings, will not be pay any costs of the [defendants] even if ordered to do so, whether or not they are able to do so.”

76. The plaintiffs’ submissions do not directly address whether the plaintiffs are impecunious. As will become apparent later in these reasons, Mr Dean has given some evidence to the effect that he and Overdean would be unable to meet any order for security for costs in this proceeding, yet there is also evidence that he owns a property at Rutherford, NSW. Neither party’s submissions directed me to the evidence concerning the financial position of BAD Nominees. Presumably, this reflects the defendants’ formulation of the threshold question above, and the fact that the personal exposure of the person standing behind Overdean and BAD Nominees to the costs of these proceedings would be a powerful consideration against the making of an order for security for costs on the grounds of impecuniosity alone: see [14], [15] and [59] above.

77. The plaintiffs submitted that there is insufficient evidence that Mr Dean has dishonestly concealed or disposed of assets in order to make himself judgment proof.

78. The plaintiffs also submitted that the application for security for costs should be dismissed because:

1. the defendants have delayed in prosecuting the application;

2. the defendants are propounding a cross-claim which is not defensive, and the defendants have not offered an undertaking not to prosecute the cross-claim if the plaintiffs’ claims are stayed pending payment of security for costs; and

3. the defendants merely assert what the quantum of their legal costs will be, and this is not a sufficient basis for any order for security for costs.

79. Neither the plaintiffs’ submissions concerning the cross-claim, nor the defendants’ reply to those submissions, were supported by any analysis of the detailed pleading. Both parties’ submissions did not rise above the level of bare assertion.

80. Neither the plaintiffs’ submissions nor the defendants’ submissions addressed the question whether security for an undertaking as to damages can be required by an order made after the Court has granted the interim injunction in support of which the undertaking as to damages was given.

Evidence relied on by the defendants in support of the application for security for costs and security for the plaintiff’s undertaking as to damages

81. The defendants’ summary table identified that they rely on the following affidavits:

1. the affidavit of Leonardus Gerardus Smits sworn on 24 January 2019;

2. the affidavit of Leonardus Gerardus Smits sworn on 29 January 2019;

3. the affidavit of Leonardus Gerardus Smits sworn on 9 December 2019;

4. the affidavit of Leonardus Gerardus Smits sworn on 8 May 2020;

5. the affidavit of Leonardus Gerardus Smits sworn on 18 May 2020;

6. the affidavit of Brian Dean sworn on 29 September 2017 (filed in proceeding 2017/279755);

7. the affidavit of Brian Dean sworn on 9 October 2017 (filed in proceeding 2017/279755);

8. the affidavit of Brian Dean sworn on 18 October 2018 (filed in proceeding 2014/229138);

9. the affidavit of Brian Dean sworn on 7 December 2018 (filed in proceeding 2014/229138);

10. the affidavit of Brian Dean sworn on 28 February 2019;

11. the affidavit of Brian Dean sworn on 18 March 2019;

12. the affidavit of Brian Dean sworn on 30 March 2020 (filed in proceeding 2019/360238);

13. the affidavit of Neil Robert Cussen sworn on 6 April 2020 (filed in proceeding 2019/360238);

14. the affidavit of Andrew Paul Tennent Sutherland sworn 2 March 2020 (filed in proceeding 2019/360238);

15. the affidavit of Peter Shah Mahommed affirmed on 22 September 2017 (filed in proceeding 2017/279755); and

16. the affidavit of Peter Shah Mahommed affirmed on 26 October 2018 (filed in proceeding 2014/229138).

82. The defendants subsequently identified [32] that they also rely on the affidavit of Mr Dean sworn on 21 October 2014 and filed in proceeding 2014/229138.

    32. Defendants’ submissions filed on 12 June 2020 at paragraph 11.

83. The defendants also rely on specific documents produced by the plaintiffs in answer to a notice to produce on 24 April 2020, as identified in the defendants’ summary table.

Defendants’ application for leave to rely on affidavits filed and read in other proceedings: UCPR r 31.9

84. Ten of the seventeen affidavits relied on by the defendants in support of the applications for security for costs and security for the plaintiffs’ undertaking as to damages were filed in other proceedings. Six of those ten affidavits are affidavits of Mr Dean, two are affidavits of Mr Mohammed and the remaining two are the affidavits of Mr Sutherland and Mr Cussen.

85. When this became apparent during the course of considering the Further Amended Notice of Motion on the papers, the Court made directions on 2 June 2020 for the parties to make written submissions directed to:

1. the question whether the affidavits that had been filed in other proceedings were the subject of an obligation not to use them for the purpose of the present proceeding (and, indeed, any proceeding other than that in which each affidavit had been filed); and

2. the question whether the Court should grant leave to the defendants under UCPR r 31.9 to use in this proceeding affidavits filed in other proceedings and, if so, the particular facts in relation to which leave should be granted to use those affidavits.

86. Submissions were received from the plaintiffs on 2 June 2020 and from the defendants on 5 June, 7 June and 12 June 2020.

87. It was common ground between the plaintiffs and the defendants that each of the nine affidavits that had been filed in other proceedings had been read in the proceeding in which the affidavit was filed. It follows that the defendants’ proposed use of those nine affidavits in support of the security for costs and security for undertaking as to damages applications in this proceeding did not contravene any obligation of the kind described in Harman v Secretary of State for Home Department [1983] 1 AC 280: see Hearne v Street (2008) 235 CLR 125; [2008] HCA 36 at [2] (Gleeson CJ); [96]–[98], [105] (Hayne, Heydon and Crennan JJ).

88. UCPR r 31.9 provides:

“(1)   In any proceedings, evidence taken, or an affidavit filed, in other proceedings may not be used as evidence, saving all just exceptions and unless the court orders otherwise.

(2)   Leave may not be granted under subrule (1) except to allow the evidence taken, or affidavit filed, in the other proceedings to be used in relation to the proof of particular facts.”

89. In Wentworth v Rogers (No. 12) (1987) 9 NSWLR 400, the Court of Appeal considered the application of Pt 36 r 7 of the Supreme Court Rules 1970 (NSW), which provided:

“(1)   A party may, with the leave of the Court but saving all just exceptions, read evidence taken, or an affidavit filed or deposited, in other proceedings.

(2)   Subrule (1) does not enable evidence to be taken, or affidavit filed in other proceedings to be read as evidence on any issue at a trial, except in relation to the proof of particular facts.”

90. Although worded differently, the effect of Pt 36 r 7(1) of the Supreme Court Rules and UCPR r 31.9(1) is the same: an affidavit filed in one proceeding may not be read or used in a different proceeding without the leave of the Court. The Court of Appeal referred to this as a rule of long standing in England and in Australia that allowed the evidence from one proceeding to be tendered or read in a different proceeding only where the second proceeding was between the same parties (or their privies) as the first proceeding, and the issues in the two proceedings were the same. Leave would be refused if the parties in the two proceedings were different: (1987) 9 NSWLR 400 at 423 (per curiam).

91. Even where the two proceedings in question involve the same parties (or their privies) and the same issues, leave may only be granted in terms that permits the use of the evidence in the second proceeding in relation to the proof of particular facts: UCPR r 31.9(2); Lewis v Nortex Pty Ltd (in liq); Lamru Pty Ltd v Kation Pty Ltd [2002] NSWSC 1193; In the matter of Prime City Capital Investments Pty Ltd [2012] NSWSC 1287.

92. In their written submissions dated 2 June 2020 and at a directions hearing on 10 June 2020, the plaintiffs informed the Court that they had no objection to the defendants’ proposed use of any of Mr Dean’s affidavits (including those that had been filed in other proceedings), that it was a matter for the Court to determine whether to grant leave under UCPR r 31.9 and that they did not wish to be heard further in relation to the question.

93. In their submissions dated 7 June 2020, the defendants complained that they could not meaningfully comply with the direction requiring them to provide written submissions identifying the particular facts in respect of which they sought leave under UCPR r 31.9 to use the affidavits that had been filed in other proceedings. They described the direction as requiring “the defendants to link the affidavits to mere bald allegations in the [plaintiffs’ Third Further Amended Statement of Claim] and then to link what are essentially un-pleaded or dis-connected material facts, including the relief sought and to identify the missing facts which would avoid the defendants from being taken by surprise.” It is difficult to understand the nature of the exercise described in this submission, but it was clear that it was an exercise significantly different to that called for by the directions made on 2 June 2020. It appeared that the defendants were proceeding on the basis of a misunderstanding of what those directions required. Moreover, because the defendants had taken the view that they could not provide submissions identifying the particular facts in respect of which they sought leave under UCPR r 31.9 to use the affidavits that had been filed in other proceedings, they had not addressed their submissions to other questions relevant to whether leave should be granted under UCPR r 31.9.

94. As a matter of fairness to the defendants, I raised this with the defendants’ solicitor at a directions hearing on 10 June 2020 and confirmed that the directions required the defendants, in respect of each affidavit read in other proceedings on which they seek to rely in support of their applications for security for costs and damages:

1. to identify the particular facts that are relevant to those applications that they rely on those affidavits to prove. This is required because the scope of any leave granted under UCPR r 31.9 must be limited to leave to use the affidavits in relation to the proof of particular facts; and

2. to articulate the reasons why the defendants submit that leave should be granted under UCPR r 31.9 to use each affidavit in relation to the proof of the relevant particular facts.

95. I then asked the defendants’ solicitor whether he wished to reconsider whether the defendants could meaningfully comply with the directions made on 2 June 2020. Mr Smits indicated that he did wish to reconsider and sought two days to file and serve any further submissions in relation to UCPR r 31.9. That further time was granted and further submissions on behalf of the defendants were filed on 12 June 2020.

96. In the further submissions, the defendants submit that the affidavits filed in other proceedings are admissible in this proceeding in relation to the applications for security for costs and security for the undertaking as to damages because the plaintiffs produced the affidavits to the defendants under a notice to produce and in accordance with orders made by Sackar J on 20 April 2020. I reject this submission. The fact that the affidavits were produced to the defendants in this manner has no bearing on whether leave should be granted under UCPR r 31.9.

97. In addition, the defendants submit that they should be permitted to rely on the affidavits because Sackar J made a “general ruling” in this proceeding in late 2019 “to the effect that his Honour would admit all of the subject Affidavits into evidence subject to relevance and application of s 135 and s 136 by the Court”. The defendants did not identify the specific date of the “general ruling” referred to. However, any such ruling would have applied to the hearing before Sackar J in which the ruling was made, and does not apply to any other hearing or to my determination of the Further Amended Notice of Motion on the papers.

98. The defendants refer to the fact that substantial extracts from the affidavits filed in other proceedings were reproduced in the body of the affidavits sworn by Mr Smits on 8 May and 18 May 2020 and filed in this proceeding in support of the defendants’ claims for relief in the Further Amended Notice of Motion. That also has no bearing on the question whether leave should be granted under UCPR r 31.9. To the extent that leave is not granted, those portions of Mr Smits’ affidavits which merely reproduce sections of the affidavits filed in other proceedings will not be taken as read for the purpose of determining the Further Amended Notice of Motion on the papers.

99. The defendants rely on the fact that the plaintiffs do not oppose the use of Mr Dean’s affidavits. That is so, but it does not overcome the requirement for the Court to determine whether or not to grant leave under UCPR r 31.9 in accordance with the principles governing the exercise of the discretion under that rule, as referred to above.

100. Despite having been granted the further time sought on 10 June 2020, the defendants maintain that it is “impracticable if not impossible” for them to comply with the directions requiring submissions directed to UCPR r 31.9. They say that the identification of all of the particular facts on which they rely is “practically impossible” due to alleged deficiencies in the Third Further Amended Statement of Claim. The asserted connection between those alleged deficiencies and difficulties in articulating the facts that the defendants seek to prove for the purpose of their applications for security for costs and security for the undertaking as to damages is not explained, and I fail to see the connection.

101. The defendants submit that the Court should exercise its power under s 61(1) or s 61(2) of the CPA and/or UCPR r 2.1 and/or its inherent jurisdiction to dispense with the requirement for compliance with UCPR r 31.9. Section 61 of the CPA permits the Court to give such directions as it thinks fit (whether or not consistent with the rules of the Court) for the speedy determination of the real issues between the parties to the proceedings. UCPR r 2.1 contains a similar power to make directions for the just, quick and cheap disposal of the proceedings. In my opinion, neither these provisions, nor the Court’s inherent jurisdiction, warrant directions sanctioning non-compliance with UCPR r 31.9 in the circumstances of this case. As referred to above, the rule applies to prevent evidence given in one proceeding from being used in another proceeding involving different parties and/or different issues, which would clearly give rise to a risk of the evidence being taken out of context and presented to the Court in the second proceeding in a manner that does not accurately convey the substance and/or significance of the evidence. I do not consider that it would facilitate the speedy determination or just, quick and cheap disposal of the defendants’ applications to allow multiple affidavits filed and read in other proceedings to be used for the purpose of the defendants’ applications in this proceeding for security for costs and security for the plaintiffs’ undertaking as to damages, without attention to the requirements of r 31.9. That might be a convenient course to the defendants, but it would burden the Court with a large volume of evidentiary material that may have been prepared for the purpose of a contest about different issues between different parties.

102. In relation to each of the affidavits filed in other proceedings referred to in [81] and [82] above, the defendants submissions dated 7 June 2020 identified the parties to those three other proceedings (2014/229138, 2017/279755 and 2019/360238). BAD Nominees is a party to each of those three proceedings. Mr Dean was a party to the 2017 proceeding, but not the 2014 and 2019 proceedings. However, BAD Nominees and Overdean are both parties to the 2014 and 2019 proceedings and the plaintiffs. Mr Dean has been the sole shareholder and director of BAD Nominees since its incorporation in 2008. Mr Dean has been a director of Overdean since 2004 and has been its sole director since 2018. Since approximately 2006, he has been the sole shareholder of the company. Overdean is the current trustee, and BAD is the former trustee, of the Dean Super Fund. Mr Dean is the sole beneficiary of the Dean Super Fund. [33] I am therefore satisfied that the plaintiffs in this proceeding, or their privies, are parties to each of the proceedings 2014/229138, 2017/279755 and 2019/360238.

     33. Mr Dean’s affidavit sworn on 27 February 2019 at paragraphs 6–12 and Exhibit BD-1 pp 1–10 and 95–107. The plaintiffs do not object to the defendants relying on that affidavit in support of their applications for security for costs and security for the plaintiffs’ undertaking as to damages. As the affidavit was filed in this proceeding, no issue concerning UCPR r 31.9 arises.

103. The third and fourth defendants in this proceeding – Mr Smits and Mr Mohammed – were parties to proceeding 2017/279755. According to the Third Further Amended Statement of Claim, Mr Mahommed and Mr Smits were the controlling minds of the first defendant, Garslev, Mr Mahommed was the sole director and controlling mind of the fifth defendant, Vestecorp, and Mr Jacobus Smits (the sixth defendant) was the director of Garslev and acted at the direction of Mr Smits and Mr Mahommed in relation to the affairs of Garslev. I am therefore satisfied that the defendants in this proceeding, or their privies, are parties to proceeding 2017/279755.

104. However, none of the defendants in this proceeding were parties to proceedings 2014/229138 and 2019/360238. In my opinion, this precludes a grant of leave under UCPR r 31.9: see [90]–[91] above and Printing Telegraph and Construction Co of Agents AGE & Havas Ltd v Drucker [1894] 2 QB 601.

105. The defendants made no submissions as to whether the issues in proceeding 2017/279755 were the same as the issues in this proceeding. Proceeding 2017/279755 is the proceeding in which Gleeson JA and Brereton J delivered the judgments referred to above. [34] It appears from those judgments, and from the issues arising in this proceeding referred to in [26] above, that there is some overlap between the issues in the two proceedings. Both proceedings involved issues relating to whether Mr Dean had validly terminated or revoked the power of attorney at the end of May 2016 and whether Mr Dean, on the one hand, or Mr Smits and Mr Mohammed on the other hand, were entitled to appoint solicitors to act for BAD Nominees whilst the power of attorney was operative. The issues in this proceeding are more extensive than in proceeding 2017/279755. However, I consider that it is appropriate to grant leave to the defendants to rely on the affidavits of Mr Dean sworn on 29 September 2017 and 9 October 2017 and filed and read in proceeding 2017/279755 in relation to the proof of the particular facts set out below.

     34. See [23]–[25] above.

135. I also note that the plaintiffs’ submissions did not address the substance of any of the defendants’ submissions concerning the alleged reason to believe that the plaintiffs have divested assets with the intention of avoiding the consequences of the proceedings, and alleged concealment and misleading of the Court. The plaintiffs simply submitted that there was insufficient evidence of dishonest concealment or disposal of assets by Mr Dean to make himself judgment proof.

136. For all of the reasons explained above, the defendants have failed to establish a rational basis for believing that the plaintiffs have divested assets with the intention of avoiding the consequences of this proceeding.

Other matters: Alleged lack of merit in the plaintiffs’ case

138. In his affidavit sworn on 18 May 2020, Mr Smits deposed that the plaintiffs’ claims:

“… have no substantive merit in principle at law or in equity, in the events which happened, nor under the transactional loan securities and the prospects of success are low or hopeless. I refer to the 2FAD [Second Further Amended Defence] and DS 6 [defendants’ submissions dated 23 April 2020], as to which no counter Submissions were filed or served upon me before or after the failed restart of the Hearing on 27 APR 20.”

139. As Sackar J said in his ex tempore reasons for judgment on 6 November 2019, there is little doubt that the defendants believe that they have a very strong case. [43] However, in a case of this complexity, the merits of the parties’ claims and defences can only meaningfully be assessed on a final hearing. To undertake such an assessment will require careful consideration of the pleadings and the evidence. The 340 page length of the defendants’ submissions dated 23 April 2020, which were relied on in support of the Further Amended Notice of Motion in addition to being served for the purpose of the final hearing that was to commence on 27 April 2020, provides some indication of the scope of that task. The Court lacked the resources to undertake that task on the papers. I have explained above the reasons why the Further Amended Notice of Motion needed to be determined on the papers in the circumstances of this case, and no party objected to that course. In any event, as referred to in [54] above, it is not generally appropriate to canvass the merits of the plaintiffs’ claims in the proceeding beyond determining whether it is made bona fide and is at least arguable: Jazabas Pty Ltd v Haddad (supra) at [18] (Basten JA). Given that Sackar J granted leave to file the Third Further Amended Statement of Claim, it is appropriate to determine the applications for security for costs and security for the plaintiffs’ undertaking as to damages on the basis that the claims are made bona fide and are at least arguable.

     43. See [49] above.

Other matters: Alleged unclean hands

140. Paragraph 29 of Mr Smits’ affidavit sworn on 18 May 2020 refers to paragraph 620 of the defendants’ submissions dated 23 April 2020, which in turn sets out 25 matters relied on in support of an allegation that “the plaintiffs’ seek equitable relief from this Court with unclean hands”. This is a defence to the plaintiffs’ claims, the substance of which will need to be considered and determined at the final hearing on the basis of the pleadings and evidence. For the same reasons as those referred to immediately above, it would not be appropriate to canvas the merits of the defence, and assess its impact on the plaintiffs’ claims, for the purpose of determining the applications for security for costs and security for the plaintiffs’ undertaking as to damages.

Other matters: Alleged circumstances in which the defendants consented to the interim injunction without security for the undertaking as to damages

141. I reject the submission that “the Court was not able to deal with” any matters that the defendants may have wished to raise in January 2019 concerning whether the interim injunction should be conditional upon the plaintiffs providing security for the undertaking as to damages. The Court has Duty Judges available during vacation periods. As referred to in [27] and [28] above, both parties appeared before Robb J on 10 January 2019 and again before Lindsay J on 25 January 2019. For the reasons explained in [66]–[68] above, the Court cannot order the plaintiffs to provide security for the undertaking as to damages after the interim injunction has been ordered and, in this case, has already been operating for approximately 18 months.

142. The defendants’ application to vary the terms of the interim injunction is addressed separately below.

Other matters: Submissions in relation to the cross-claim

143. As noted in [79] above, neither party’s submissions provided the Court with any assistance in relation to the question whether the defendants’ cross-claim is defensive in nature. The parties simply made competing assertions. That question has therefore had no bearing on my consideration of the defendants’ application for security for costs.

Other matters: Failure to pay costs ordered by Brereton J on 23 February 2018

144. In paragraph 62 of his affidavit sworn on 8 May 2020, Mr Smits deposed that Mr Dean was ordered pay costs in the hearing before Brereton J on 23 February 2018 in proceeding 2017/279755. Mr Smits deposed that, despite making many written requests for payment of Mr Dean, providing his estimate of party and party costs to Mr Dean, and providing copies of his tax invoices to Mr Dean, no payment had been received.

145. It is not uncommon for parties to litigation to be unable to agree on the amount of costs to be paid in accordance with a court order. In those circumstances, the party seeking payment ordinarily initiates an assessment of the costs. There is no evidence that this step has been taken in relation to costs that Brereton J ordered Mr Dean to pay in proceeding 2017/279755. In those circumstances, the fact that Mr Dean has not paid those costs has no relevance to the defendants’ application for security for costs of this proceeding, in my opinion.

Other matters: Mr Dean

146. Mr Dean, the person standing behind BAD Nominees and Overdean, is personally exposed to any costs order made against the plaintiffs in this proceeding: see [14], [15] and [59] above.

Other matters: delay

147. The defendants’ submission that they have tried to prosecute their applications for security for costs and security for the plaintiffs’ undertaking as to damages is simply not borne out by the procedural history of the Further Amended Notice of Motion set out earlier in these reasons. After filing the Further Amended Notice of Motion on 30 August 2019, the defendants did not seek a hearing of their application for security for costs and security for the undertaking as to damages until Mr Smits’ correspondence sent to the Court in May 2020. I reject the submission.

148. If I had concluded that there was reason to believe that the plaintiffs had divested assets with the intention of avoiding the consequences of this proceeding (such that any impecuniosity was a result of that divestment) then, in circumstances where the evidence is silent as to the nature and extent of any prejudice caused to the plaintiffs by the delay, I would not have regarded the delay as warranting the refusal of an order for security for costs in all the circumstances: PPK Willoughby Pty Ltd v Baird [2019] NSWCA 48. It would have been necessary to consider whether the security should include past costs or be limited to future costs, and the appropriate amount of security.

149. However, for the reasons already explained above, the evidence does not establish that there is a reason to believe that the plaintiffs have divested assets to avoid the consequences of this proceeding.

150. In any event, for the reasons explained below, the defendants have not discharged their onus of adducing evidence that would enable the Court to estimate the costs of the litigation and determine an appropriate amount of security.

Consideration: Quantum of security for costs

151. In light of the conclusions I have reached above, it is not strictly necessary to consider what would have been the appropriate quantum of any security for the defendants’ costs. However, for the reasons that follow, if I had concluded that the circumstances of this case warranted the exercise of the Court’s discretion to make an order for security for costs, I would nevertheless have declined to make the order on the basis that the defendants failed to adduce evidence that would facilitate the determination of an appropriate amount of security.

152. Whilst a “broad brush” approach may be adopted to assessing an amount that will represent sufficient security, the applicant for security bears the onus of adducing evidence that enables the Court to estimate the costs of the litigation. The Court is not bound to accept the applicant’s estimate: Vertical Australia Pty Ltd v Air Company Vertical-T LLC; Air Company Vertical-T LLC v Vertical Australia Pty Ltd [2012] NSWSC 719 at [106] and the authorities there cited; Wollongong Coal Limited v Gujarat NRE Properties Pty Ltd (2019) 139 ACSR 107; [2019] NSWSC 187 at [54]; Broadway Plaza Investments v Broadway Plaza Pty Ltd; In the matter of Combined Projects (Arncliffe) Pty Ltd [2019] NSWSC 1082 at [206].

153. In paragraph 30 of his affidavit sworn on 18 May 2020, Mr Smits deposed that the defendants seek security in the amount of “not less than $500,000” and that this amount “is reasonable and conservative in the context of the cost statements made and referred to” in Mr Smits’ affidavit of 8 May 2020.

154. Mr Smits’ affidavit of 8 May 2020 addresses a wide range of matters, and it is a little difficult to discern precisely which parts of that affidavit he relies on as “costs statements”. I proceed on the assumption that he is referring to paragraphs 77, 80–81 of that affidavit, in which he deposes that:

1. the defendants wished to retain counsel for the hearing, who had estimated that their fees for the preparation and conduct of the hearing would be “not less than $250,000” and that Mr Smits regarded that estimate as being “reasonable, if not conservative”; and

2. the “value” of over 1400 hours’ work done in this proceeding by Mr Smits since November 2019 in preparing pleadings and submissions exceeds $770,000.

155. There is no evidence of the basis of the estimate for counsel’s fees. The defendants, in effect, ask the Court to accept Mr Smits’ conclusion that the estimate is reasonable. The reasons for Mr Smits’ conclusion are not explained in his affidavit.

156. I assume that the “value” that Mr Smits places on his work done since November 2019 is based on his hourly rate of $500 referred to in paragraph 31 of his affidavit sworn on 18 May 2020. However, Mr Smits’ evidence provides no information that would enable the Court to form a broad brush assessment of the extent to which it would be appropriate to include those costs in the quantum of any order for security. There is no evidence going to the question whether, or the extent to which, the work and the time spent was reasonably necessary in all the circumstances. It does not follow from the mere fact that work has been done by a legal practitioner that the costs or a proportion of the costs of that work will ultimately be visited on the other party in the event of a costs order in favour of the legal practitioner’s client, or that those costs should be included or inform the quantum of any security for costs that may be ordered.

157. In paragraph 37 of his affidavit sworn on 18 May 2020, Mr Smits deposed that he estimates that future legal costs in this proceeding will be “substantially in excess of $500,000”. Mr Smits states that this estimate is based on his experience in this proceeding. Mr Smits does not provide any description of the nature of the work that remains to be done for the preparation and hearing of the proceeding to demonstrate how the estimate of “substantially in excess of $500,000” has been arrived at. The evidence does not rise above an assertion.

158. Mr Smits acknowledged in paragraph 39 of his affidavit sworn on 18 May 2020 that he will not be entitled to recover legal costs attributable to his representation of himself as the third defendant in this proceeding: Bell Lawyers Pty Ltd v Pentelow (2019) 93 ALJR 1007; [2019] HCA 29 at [3], [39]–[45], [55] (Kiefel CJ, Bell, Keane and Gordon JJ); [63], [67]–[69] (Gageler J); [85]–[93] (Edelman J)). It follows that the quantum of any security ordered should reflect sufficient security for the costs of the other defendants only. However, the evidence is silent about the extent to which the past and estimated future costs referred to by Mr Smits are attributable to his defence as opposed to the defence of the other defendants.

159. For completeness, I note that in paragraphs 33 to 35 of his affidavit sworn on 18 May 2020, Mr Smits deposed that his “current unpaid and accrued costs” exceed $1,000,000. Mr Smits refers to Schedule B to the Second Further Amended Defence filed in this proceeding which he says lists the invoices that he has issued in respect of those costs. However, it is clear from the column in that schedule specifying the matter or proceeding in relation to which the invoices have been issued that those invoices have not been issued in relation to this proceeding. The costs that are the subject of those invoices are therefore not relevant to the quantum of any security for costs in this proceeding.

160. In paragraphs 39 and 40 of his affidavit sworn on 18 May 2020, Mr Smits deposed that, the lump sum security for costs sought by the defendants – it will be recalled that the amount sought is “not less than $500,000” – will be “substantially below 50% of the indemnity or client costs, after excluding any proportion of costs attributable to my self-representation”. Mr Smits said:

“This is a matter in which it would be appropriate for the Court to make a lump sum determination of the amount of the security for costs guided by the said Affidavits of Mr Mahommed and my extensive involvement and estimates in the extraordinary concealment circumstances.”

161. I do not accept that it would be appropriate for the Court to make a lump sum determination of an amount of security for costs in this matter on the basis suggested.

162. Assuming that the Court was content to apply a 50 per cent discount to the sum of the actual costs incurred to date by the defendants (other than Mr Smits) and the estimated future costs of those defendants in order to arrive at an amount of security, the evidence referred to above does not provide an appropriate starting point for that calculation because the Court has no evidence that would allow the Court to form even a “broad brush” view about the reasonableness or otherwise of the costs incurred to date, the basis and reasonableness of the estimated of future costs and the extent to which those costs relate to Mr Smits’ defence and the extent to which they relate to the other defendants.

163. Mr Smits has undoubtedly had extensive involvement in this proceeding and in related proceedings, but it does not follow that it would be appropriate for the Court to unquestioningly adopt his view about what is an appropriate amount of security. That is, in effect, what the defendants ask the Court to do by failing to put adduce any evidence explaining the costs incurred or the basis of the estimates of future costs.

164. In addition, the relevance of affidavits of Mr Mahommed to the Court’s assessment of an appropriate amount of security is not apparent.

165. For all of those reasons, the defendants have not discharged their onus of adducing evidence that would enable the Court to estimate the costs of the litigation for the purpose of determining the appropriate quantum of security if any order for security for costs were made.

Conclusion: application for security for costs

166. In summary, for all of the reasons above, the evidence does not establish that there is a reason to believe that the plaintiffs have divested assets to avoid the consequences of this proceeding and I have concluded that the Court should not exercise its discretion to make an order for security for costs in all the circumstances of this case. Even if I had reached the opposite conclusion, I would have declined to make the order because the defendants failed to discharge their onus of adducing evidence that would enable the Court to determine an appropriate amount of security. The defendants’ claims relating to security for costs in prayers 8, 10 and 10A of the Further Amended Notice of Motion are therefore dismissed.

Conclusion: application for security for plaintiffs’ undertaking as to damages

167. In summary, the defendants’ application for security for the plaintiffs’ undertaking as to damages is dismissed because an order for security cannot be made after the interim injunction in relation to which the undertaking was given has commenced to run. The defendants’ claims relating to “security for damages” in prayers 8, 10 and 10A of the Further Amended Notice of Motion are therefore dismissed.

Discharge or variation of order 5 made on 25 January 2019: Prayers 6A and 6B

168. The orders made on 25 January 2019 are referred to in [27]–[29] above but is convenient to set them out here in full (emphasising order 5, which the defendants seek to discharge or vary, and excluding orders of a merely procedural nature and reserving costs):

“By and with the consent of the parties, Lindsay J makes the following notations and orders:

1. NOTE that the plaintiffs give to the court the usual undertaking as to damages.

2. NOTE that these orders are made without admissions by any party.

3. Upon the plaintiffs’ undertaking as to damages, ORDER that the interlocutory injunction granted by Robb J on 10 January 2019 by reference to paragraph 1 of the short minutes of order annexed to his Honour’s orders be extended until further order, subject to these orders.

4. ORDER, subject to orders 5-7 inclusive, that notwithstanding that continuing interlocutory injunction, the first defendant may sell and complete contracts for the sale of the lots which are the subject of the injunction.

5. ORDER that from the proceeds of sale of any of the lots the subject of the injunction the first, third and sixth defendants cause to be paid into court to abide further orders of the court the net proceeds of sale after the first $245,000, which may be withheld by them.

6. ORDER that, 48 hours before the time of the time for completion of any sale of a lot the subject of the injunction, the first, third and sixth defendants provide to the plaintiffs a written settlement sheet for the proposed completion.

7. ORDER that, within 28 days of today’s date or such other time as may be agreed in writing between the parties, the first, third and sixth defendants provide to the plaintiffs a written statement accounting for expenditure of the $245,000 withheld from net proceeds of sale as contemplated by order 5.

8. NOTE the agreement between the parties that the first defendant’s land is charged for repayment of the $245,000 should it transpire that the trustee of the Dean Super Fund is not indebted to any of the defendants for the sum of $245,000 or more.

9. NOTE that the plaintiffs by their counsel give to the court an undertaking that they will not lodge a caveat in respect of the charge identified in paragraph 8 of these orders.”

169. The defendants seek an order discharging order 5 above and releasing to the defendants all proceeds of sale of the lots, either absolutely or on the basis of the security provided by order 8 “extended to such moneys to the extent that they are not determined to be due, owing or payable to the defendant”: Further Amended Notice of Motion, prayer 6A.

170. Alternatively, the defendants seek an order varying order 5 above by releasing sufficient proceeds of sale of the lots to reimburse the defendants in respect of payments made, or intended to be made, by the defendant listed in prayer 6B of the Further Amended Notice of Motion and amounting to $2,298,715 in total. This amount significantly exceeds the amount of approximately $719,000 that has been paid into Court pursuant to the terms of the orders made on 25 January 2019. Accordingly, an order in terms of prayer 6B would have the effect of releasing to the defendants absolutely all of the funds paid into court, albeit conditionally on those funds being used to pay expenses included in the list in prayer 6B. The list includes significant amounts said to be payable to the defendants under the suite of agreements entered into by Mr Dean on behalf of BAD Nominees with Mr Smits, Mr Mahommed and Vestecorp in May 2016: see [19]–[20] above. The issues in dispute in this proceeding include whether or not Mr Smits, Mr Mahommed and Vestecorp are entitled to payment under those agreements: see [26] above.

169. If order 5 were discharged absolutely (prayer 6A) or varied to permit the listed payments (prayer 6B), this would, in effect, mean that the interim regime created by the orders made on 25 January 2019 would no longer preserve the status quo until the rights of the parties can be determined at a final hearing of the proceeding. Instead, the proceeds of sale of the Beechworth lots that have been paid into court in accordance with the interim injunction, and to which BAD Nominees claims to be beneficially entitled, would be paid to Mr Smits and Vestecorp. The defendants’ submitted that the proposed extension of the security in order 8 to protect the plaintiffs’ interest, but offered no analysis of the substance of the extent of this protection by reference to evidence of the current value of the proposed security property.

170. In my opinion, the orders made on 25 January 2019 evidence an agreement between the parties, as the plaintiffs’ submitted. It is evident from the terms of the orders that this was not a case in which one party simply capitulated to, or did not object to, the orders sought by the other party. Rather, each party compromised its position in consideration for an element of compromise moving from the other party. The plaintiffs agreed not to seek the continuation of the injunction that had been granted on 10 January 2019 restraining any sale of the Beechworth lots or requiring all sale proceeds to be paid into court. The plaintiffs agreed instead to seek injunctive relief in terms that would allow the properties to be sold and that would allow the defendants to retain $245,000 of the sale proceeds. In return, the defendants agreed to abandon opposition to any injunctive relief and to consent to an injunction on those terms: see James v Australia and New Zealand Banking Group Limited [2020] NSWCA 101 at [16] (Basten JA, Emmett JA agreeing).

171. The Court nevertheless has power to vary the interlocutory orders made by consent on 25 January 2019: [44]

1. on the same basis on which the Court could set aside the underlying agreement of the parties (for example, for misrepresentation or non-disclosure of a material fact where disclosure was required): Harvey v Phillips (1956) 95 CLR 235 and 243–244; James v Australia and New Zealand Banking Group Limited (supra) at [18] (Basten JA, Emmett JA agreeing); see also J Tarrant, “Consent orders based on binding contracts” (2011) 28 Journal of Contract Law 237 at 242–243; or

2. on the basis of the overriding interests of justice, although the fact that the order was the subject of an agreement between the parties will be a relevant consideration when determining what the interests of justice require in all the circumstances of the case: UCPR r 36.16; Symonds v Vass [2003] NSWSC 170, especially at [67]–[80] and the authorities there referred to; see also J Tarrant, “Consent orders based on binding contracts” (supra) at 242, 247–258.

   44. Save that, as explained earlier in these reasons, the Court cannot “vary” an interlocutory injunction by imposing an obligation to provide security for the undertaking as to damages, after the injunction has commenced to run.

174. The defendants’ summary table identified the submissions, but did not identify any evidence, on which the defendants rely in support of the relief claimed in prayers 6A and 6B of the Further Amended Notice of Motion. I have considered the submissions identified, namely, paragraphs 231 to 253, 303 and 370 of the submissions dated 23 April 2020, paragraph 34 of the submissions dated 17 September 2019, and pages 3 and 4 of Part B of the submissions dated 29 August 2019.

175. The defendants submitted that the plaintiffs obtained the injunction granted by Robb J on 10 January 2019 on the basis of a “flimsy, infelicitous” and misleading affidavit sworn by the plaintiffs’ solicitor, Mr Thomas. This submission is misconceived for the following reasons:

1. first, it will be recalled that the orders made on 10 January 2019 were made by consent at a hearing at which both the plaintiffs and the defendants were represented. Mr Smits represented the defendants;

2. second, it is the orders made on 25 January 2019 that the defendants seek to discharge or vary. Those orders were also made by consent at a hearing at which both the plaintiffs and the defendants were represented. For the reasons explained above, the consent orders reflect an agreement reached by the parties on that occasion. Again, Mr Smits represented the defendants;

3. third, if and to the extent that the evidence prepared by the plaintiffs for the purpose of the application for the interim injunction on 10 January 2019 and/or the application for the continuation of the interim injunction on 25 January 2019 was misleading, the Court was not misled because the Court acted on the basis of the parties’ agreed position reflected in the terms of the consent orders;

4. fourth, the matters relied on by the defendants in support of the submission that the plaintiffs’ evidence was misleading are matters that relate to the events and transactions that have given rise to this proceeding, being events and transactions in which Mr Smits was closely involved and intimately familiar when he appeared for the defendants on 10 and 25 January 2019. If the plaintiffs’ evidence was inaccurate in the respects submitted by the defendants (as to which I make no finding in these reasons), Mr Smits would have been well aware of the inaccuracies and so neither he nor the other defendants for whom he appeared would have been misled. For example:

1. paragraph 234 of the defendants’ submissions dated 23 April 2020 take issue with the plaintiffs’ evidence about how the meeting came about between Mr Dean on the one hand, and Mr Smits and Mr Mahommed on the other hand, on 5 May 2020 which led to Mr Dean signing the suite of agreements referred to in [19] and [20] above on behalf of BAD Nominees; and

2. paragraph 249 of the defendants’ submissions dated 23 April 2020 criticises as “dishonest” the plaintiffs’ evidence that Mr Dean had not received any invoices from Mr Smits and Mr Mahommed (as attorneys under the power of attorney) and refers to invoices that the defendants say were issued by Mr Smits.

176. The defendants also submitted that the plaintiffs’ claims are weak and that the defendants are suffering losses by reason of the ongoing operation of the interim injunction on the terms of the orders made on 25 January 2019. As I understand this submission, the defendants seek to have the Court consider now the factors that would have informed the assessment of the balance of convenience in determining whether to grant the interim injunctive relief if the defendants had not agreed to the orders made on 25 January 2019: Australian Broadcasting Corporation v Lenah Game Meats Pty Ltd (2001) 208 CLR 199; [2001] HCA 63, especially at [8]–[13], [18] (Gleeson CJ), [91] (Gummow and Hayne JJ, Gaudron JJ agreeing); see also Papas v Grave [2013] NSWCA 308 at [83] (Emmett JA, Sackville AJA agreeing).

177. In my opinion, the overriding interests of justice do not favour the Court undertaking an assessment of the strength (or otherwise) of the plaintiffs’ claims in order to determine whether the orders made on 25 January 2019 should be varied, on the eve of the hearing at which the plaintiffs’ claims are to be finally determined. This is particularly so in circumstances where the defendants did not press for a hearing of prayers 6A and 6B of the Further Amended Notice of Motion until weeks before the commencement of that final hearing: see [34]–[52] above. In a case of this complexity, it would be a very inefficient use of the publicly funded resources of the Court for the strength of the plaintiffs’ claims to be assessed for interlocutory purposes and then almost immediately thereafter to be the subject of a final hearing. Moreover, there is a risk that any meaningful assessment of the strength of the plaintiffs’ claims for interlocutory purposes may disqualify the judicial officer undertaking that assessment from conducting the final hearing.

178. For all of those reasons, I am not persuaded by the defendants’ submissions that there is a basis to set aside the parties’ agreement underlying the orders made by consent on 25 January 2019, or that the overriding interests of justice warrant the exercise of the Court’s power to vary those orders in the manner sought by the defendants in all the circumstances of this case. Prayers 6A and 6B of the Further Amended Notice of Motion are dismissed.

Summary disposal: Prayers 3, 4, 5 and 5A

179. It is clear from the defendants’ summary table that the applications for summary disposal that they now seek to prosecute are premised on their contentions that the pleadings in the Third Further Amended Statement of Claim fails to disclose a reasonable cause of action or is otherwise defective. The defendants had an opportunity to raise all of these matters at the hearing before Sackar J on 6 November 2019, and did indeed make submissions to his Honour about these matters: see [34]–[52] above. I consider that, in substance, his Honour’s decision to grant leave to the plaintiffs to file the Third Further Amended Statement of Claim dismissed the defendants’ arguments, although that was not reflected in a formal order. The defendants should not now be permitted to reagitate the applications for summary disposal: Brimaud v Honeysett Instant Print Pty Ltd (1988) 217 ALR 44. Accordingly, prayers 3, 4, 5 and 5A of the Further Amended Notice of Motion are dismissed.

Declaratory relief: Prayers 1, 2, 2A, 2B, 2C and 2D

180. The defendants’ summary table provided in accordance with the directions made on 22 May 2020 states in relation to prayers 1 to 2D of the Further Amended Notice of Motion: “Declaratory Relief – Discretionary matters – not pressed upon any interlocutory basis – only sought upon grant of final relief”.

181. A notice of motion facilitates the making of an interlocutory or other application within existing proceedings: UCPR rr 18.1–18.9. A motion is therefore an inappropriate vehicle for claims for substantive final relief such as the declarations sought in prayers 1, 2, 2A, 2B, 2C and 2D of the Further Amended Notice of Motion. Declaratory relief can only be granted on a final basis: Gordon v Lever (2018) 97 NSWLR 90; [2018] NSWCA 43 at [112]–[113] (Sackville AJA, McColl and White JJA agreeing) and the authorities there cited.

182. It is not entirely clear from the statement in the defendants’ summary table whether they contend that their claims for declaratory relief in prayers 1 to 2D of the Further Amended Notice of Motion should be heard and determined at the same time as all other pleaded claims for relief, or after those pleaded claims have been heard and determined.

183. As referred to above, the parties have filed lengthy pleadings in this matter and have had the opportunity to amend those pleadings over time. The cross-claim of the defendants/cross-claimants has been amended as recently as 30 January 2020.

184. At the directions hearing on 22 May 2020, I inquired of the defendants’/cross-claimants’ solicitor whether the declaratory relief sought in prayers 1 to 2D of the Further Amended Notice of Motion was included in the pleadings. Mr Smits was unable to assist me with that inquiry.

185. In my view, it would be inappropriate for any party to make some claims for final relief in the detailed pleadings that have been filed, and at the same time to make other claims for final declaratory relief in a notice of motion. Amongst other reasons, a notice of motion does not require the moving party to plead the material facts relied on in support of the relief claimed.

186. It would be even more inappropriate, in my opinion, for a party to apply for final relief that was not sought in the pleadings, after the determination of the pleaded claims for relief, relying on a notice of motion filed before the final hearing and delivery of judgment: see Phillips v Walsh (1990) 20 NSWLR 206, especially at 209–210 (McLelland J). As noted above, it is not clear whether this is the defendants/cross-claimants’ intention.

187. For these reasons, the appropriate course is therefore to dismiss prayers 1, 2, 2A, 2B, 2C and 2D of the Further Amended Notice of Motion.

Damages for lodgement of caveats: Prayer 7

188. This is an application for relief in the nature of final relief. It is not appropriate to make an application for relief of this nature by way of notice of motion within the proceedings, and to seek to have the motion heard separately from the substantive proceeding. Prayer 7 of the Notice of Motion is dismissed.

Adding the plaintiffs’ lawyers as cross-defendants: Prayers 13, 13A(a) and 13B

189. As referred to in [43] above, these claims for relief were struck out of the Further Amended Notice of Motion on 6 September 2019 at the defendants’ request. This will be noted in the orders that I make to give effect to these reasons and there will be an order dismissing the defendants’ claim for relief in prayers 13, 13A(a) and 13B of the Further Amended Notice of Motion to avoid any potential future confusion that may otherwise arising on the face of court file as to whether or not those claims have been dealt with.

Removing the third plaintiff and reinstating it as the second defendant: Prayer 13A(b)

190. I have considered the defendants’ submissions identified in the defendants’ summary table. In substance, the defendants protested that the amendments introduced by the plaintiffs’ second further amended statement of claim were made without a formal application for leave to amend, and had the effect of removing BAD Nominees as a defendant and substituting it as a plaintiff without any formal application having been made to do so under Part 6 of the UCPR. The defendants submitted that, before this amendment was made, BAD Nominees had filed a defence that had been prepared on its behalf by Mr Smits and Mr Mahommed at a time when they were entitled to do so under the power of attorney that was irrevocable for three years until May 2019. The defendants submitted that it was prejudicial for BAD Nominees to have its previously pleaded positions changed by the filing of the second further amended statement of claim which made BAD Nominees a plaintiff rather than a defendant.

191. The fact is that the power of attorney ceased to be irrevocable on 5 May 2019, it was revoked on 11 May 2019, and Mr Smits and Mr Mahommed are no longer entitled to act as attorneys for BAD Nominees, to engage legal representatives to represent BAD Nominees or to have any role in determining the manner in which BAD Nominees conducts itself in this proceeding. The filing of the second further amended statement of claim on 20 May 2019 was done with the leave of the Court granted by Sackar J after counsel then appearing for the defendants informed the Court that the defendants had no objection. That position was communicated to the Court after the defendants’ counsel specifically noted that BAD Nominees was removed as a defendant and substituted as a plaintiff the second further amended statement of claim: see [30]–[31] above. The defendants are bound by the position adopted by their counsel in not objecting to the removal of BAD Nominees as a defendant and its substitution as a plaintiff. The defendants’ claim for relief in prayer 13A(b) of the Further Amended Notice of Motion is dismissed.

Subpoenas issued on 5 July 2019: Prayer 15

192. The defendants’ summary table in relation to prayer 15 of the Further Amended Notice of Motion simply states: “Leave granted for access”. I assume that events have overtaken this claim for relief and that prayer 15 is therefore no longer pressed. In order to ensure that it is clear from the record that this claim is no longer extant, prayer 15 of the Further Amended Notice of Motion is dismissed.

Extension of time to file cross-claim: Prayer 16

193. The defendants have filed the Statement of First Cross-Claim, and subsequently the Amended Statement of First Cross-Claim, after the filing of the Further Amended Notice of Motion on 30 August 2019. The defendants’ claim for relief in prayer 16 of the Further Amended Notice of Motion is now otiose and is therefore dismissed to avoid any potential future doubt that the whole of the Further Amended Notice of Motion has been disposed of.

Costs of this proceeding: Prayers 11 and 12

194. The Further Amended Notice of Motion seeks relief in terms that relates to the costs of the entire proceeding, not particular applications within or other aspects of the proceeding. It would be premature to make any order in respect of the costs of the entire proceeding before the proceeding has been heard and determined. The defendants’ claim for the relief in in prayers 11, 12 and 13 is therefore dismissed.

ORDERS

195. For the above reasons, I make the following orders:

1. Order that the Amended Notice of Motion filed by the defendants on 30 August 2019 is dismissed.

2. Costs reserved.

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Endnotes

Amendments

17 June 2020 - typographical errors

Decision last updated: 17 June 2020