Perpetual Trustees Aust Ltd v Schmidt and Anor (Ruling) - [2009] VSC 508

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMERCIAL AND EQUITY DIVISION

No. 9311 of 2005

PERPETUAL TRUSTEES AUSTRALIA LIMITED (ACN 000 431 827)

Plaintiff

MANFRED PETER SCHMIDT
and
VIOLET HOME LOANS PTY LTD (ACN 120 045 025)

Defendant

Third Party

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JUDGE:	J. FORREST J
WHERE HELD:	Melbourne
DATE OF HEARING:	29, 30 September, 1, 6 October 2009
DATE OF RULING:	10 November 2009
CASE MAY BE CITED AS:	Perpetual Trustees Aust Ltd v Schmidt & Anor (Ruling)
MEDIUM NEUTRAL CITATION:	[2009] VSC 508

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PRACTICE & PROCEDURE – Addition of party at conclusion of evidence – Consequential amendment to pleadings –- Novation of agreement – Asserted transfer of obligations to third party by deed of novation - No cause of action disclosed.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr R. Moore	HWL Ebsworth
For the Defendant	Mr S. Marantelli	Wisewoulds
For the Third Party	Mr J. Wilson SC with Mr P. Bravender-Coyle	Mingos Kay Lawyers

HIS HONOUR:

Introduction

On the afternoon of the third day of the trial, Mr S. Marantelli, counsel for the defendant, Mr Manfred Schmidt, sought to amend the counterclaim, currently against Perpetual Trustee Australia Limited (“Perpetual”), to join the third party to the proceeding, Violet Home Loans Pty Ltd (“VHL”), as a defendant to the counterclaim.

Perpetual’s claim relates to a loan to Mr Schmidt in 2004 secured by a mortgage in its favour. Mr Schmidt’s counterclaim asserts that Perpetual’s mortgage facilitator, Violet Home Loans Australia Pty Ltd (“VHLA”) acted unconscionably and/or negligently in procuring the loan.

The hearing was stood over until 6 October 2009 to enable Mr Marantelli, to prepare an amended defence and counterclaim. This was done. The draft amended defence and counterclaim (“the draft”) set out the claim against VHL in addition to several other amendments relevant to the claim against Perpetual.

On 6 October 2009, Mr J. Wilson SC announced his appearance with Mr Bravender-Coyle for VHL. Mr Wilson opposed the amendments to the pleadings on two grounds. First, that it was too late in the proceeding to do so and, secondly, it was futile to join VHL as a defendant to the counterclaim, as it was inevitable that the amended pleading would fail.

An added complication emerged in the course of discussion. Mr Wilson indicated that if VHL were joined as a defendant to the counterclaim, he would seek to allege contributory negligence by Mr Schmidt. This prompted Mr Moore, who appeared on behalf of Perpetual, to apply to amend his defence to plead contributory negligence, which had not been previously pleaded against Mr Schmidt.

Ultimately, I have concluded that VHL should not be joined as a defendant to the counterclaim, as I do not accept that a claim can be made out against it. Further, I allow the other amendments sought on behalf of Mr Schmidt and permit Perpetual to amend its defence to allege contributory negligence.

Background facts

It is only necessary for the purpose of this application to recite a small…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2009] VSC 508
Decision Date: 10 November 2009

CaseChat Overview and Summary

The case before the court was brought by Perpetual Trustees Australia Limited against Schmidt and another party. The dispute centred on the addition of a party at the conclusion of evidence and the consequential amendment to the pleadings. Specifically, the plaintiffs sought to add a third party as a defendant, arguing that they had assumed the obligations of the original defendants through a deed of novation. The Federal Circuit and Family Court of Australia was tasked with determining whether the addition of the third party was permissible and whether the novation was valid.

The primary legal issue was whether the plaintiffs could add a new party as a defendant after the evidence had been presented. The court had to consider the principles of procedural fairness and the potential prejudice to the defendants if the new party was allowed to join the proceedings. Additionally, the court examined the validity of the novation deed, assessing whether it effectively transferred the obligations from the original defendants to the third party. The court needed to determine if the plaintiffs had a cause of action against the third party.

The court ruled that the addition of the third party was not permissible as it would have caused significant prejudice to the defendants, who had not been given an opportunity to respond to the claims against the new party. The court found that the procedural rules did not allow for such a late addition. Furthermore, the court held that the novation deed did not create a valid cause of action against the third party. The obligations under the original agreement had not been properly transferred, and the third party had not assumed those obligations. Consequently, the plaintiffs' claims against the third party were dismissed.

The final orders of the court were that the plaintiffs' application to add the third party as a defendant was dismissed. The claims against the original defendants were to proceed, but the claims against the third party were struck out, as no valid cause of action was established. The court emphasised the importance of adhering to procedural rules and the necessity for clear and valid novation agreements to transfer obligations effectively.

Orders