Rural Bank (A Division of Bendigo and Adelaide Bank Limited (ACN 068 049 178) v Mammoth Investments Pty Ltd
[2019] WASC 409
•11 NOVEMBER 2019
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS
CITATION: RURAL BANK (A DIVISION OF BENDIGO AND ADELAIDE BANK LIMITED (ACN 068 049 178) -v- MAMMOTH INVESTMENTS PTY LTD [2019] WASC 409
CORAM: KENNETH MARTIN J
HEARD: 24 OCTOBER AND 7 NOVEMBER 2019
DELIVERED : 11 NOVEMBER 2019
FILE NO/S: CIV 1923 of 2016
BETWEEN: RURAL BANK (A DIVISION OF BENDIGO AND ADELAIDE BANK LIMITED (ACN 068 049 178)
Plaintiff
AND
MAMMOTH INVESTMENTS PTY LTD
First Defendant
NAVARAC PTY LTD
NAVARAC PTY LTD as trustee for CARCHILD UNIT TRUST
Second Defendants
BELLA GUARDA FARM PTY LTD
Third Defendant
MOONDANCER HOLDINGS PTY LTD
MOONDANCER HOLDINGS PTY LTD as trustee for AB CARATTI FAMILY TRUST NO.3, AB CARATTI FAMILY TRUST NO.4 & ABC CHILD TRUST
Fourth Defendants
ALLEN BRUCE CARATTI
Fifth Defendant
GH1 PTY LTD
Additional Party
MNWA PTY LTD
Second Third Party
GHT (WA) PTY LTD in its own right and as trustee for the THE GUCCE HOLDINGS TRUST
Fourth Third Party
Catchwords:
Practice and procedure - Application to disallow amendments - Trial dates fixed - Repercussions of amendments on trial proceeding - Case management considerations - Admission withdrawn - Need to explanation and leave
Legislation:
Limitation Act 2005 (WA)
Rules of the Supreme Court 1971 (WA)
Result:
Plaintiff's application allowed in part
Fourth and fifth defendants' application dismissed
Category: B
Representation:
Counsel:
| Plaintiff | : | Mr M D Cuerden SC |
| First Defendant | : | Mr G R Donaldson SC (and with Ms R Young on 7 November 2019) |
| Second Defendants | : | Mr G R Donaldson SC (and with Ms R Young on 7 November 2019) |
| Third Defendant | : | Mr G R Donaldson SC (and with Ms R Young on 7 November 2019) |
| Fourth Defendants | : | Dr J T Schoombee |
| Fifth Defendant | : | Dr J T Schoombee |
| Additional Party | : | No appearance |
| Second Third Party | : | No appearance |
| Fourth Third Party | : | Mr A J Mason (and Dr J T Schoombee on 7 November 2019) |
Solicitors:
| Plaintiff | : | Corrs Chambers Westgarth |
| First Defendant | : | Hotchkin Hanly |
| Second Defendants | : | Hotchkin Hanly |
| Third Defendant | : | Hotchkin Hanly |
| Fourth Defendants | : | Metaxas Legal |
| Fifth Defendant | : | Metaxas Legal |
| Additional Party | : | No appearance |
| Second Third Party | : | No appearance |
| Fourth Third Party | : | Roe Legal Services |
Case(s) referred to in decision(s):
Aon Risk Services Australia Ltd v Australian National University [2009] HCA 27; (2009) 239 CLR 175
Attorney‑General of Botswana v Aussie Diamond Products Pty Ltd [No 2] [2009] WASC 301
Belgravia Nominees Pty Ltd v Lowe Pty Ltd [No 6] [2019] WASC 5
Charlton v WA Country Health Service [2017] WASC 223
Crafter v Singh (1990) 2 ACSR 1
Laws v Australian Broadcasting Tribunal [1990] HCA 31; 1990) 170 CLR 70
Norilya Minerals Pty Ltd v Ireland [No 2] [2010] WASC 265
UBS AG v Tyne [2018] HCA 45; (2018) 360 ALR 184
Water Corporation v Cardno BSD Pty Ltd [2009] WASCA 212
KENNETH MARTIN J:
I am dealing with a series of applications by the plaintiff bank, and the fourth and fifth defendants (and third third party), against relatively recent pleadings of the first, second and third defendants. It is important to recognise that a 20 day trial of this civil action (having been commenced in 2016 and later consolidated with CIV 2111 of 2016) commences on 9 December 2019 for an initial sequence of 10 hearing days. There follows a second tranche of 10 successive hearing days for the trial which is scheduled to recommence at between 10 and 21 February 2020.
The basic problem is that recent amendments unilaterally made by the first, second and third defendants to their pleadings are said to carry significant adverse forensic implications and, essentially, put the viability of conducting a trial within that fixed timeframe, at risk.
Given the proximity of the looming trial and the urgency of the present applications made respectively by the plaintiff and by the fourth and fifth defendants to disallow or strike out the recent amendments, I provided the outcome of each of the applications to the parties along with some very brief oral reasons at a hearing of this matter on 7 November 2019. I indicated that I would provide further written reasons. These are those reasons. These reasons will be necessarily summary in their nature. In short, it is more important at this stage for the parties to know the fate of their applications, rather than for a lengthy rehearsal of the considerable procedural history of this matter, or for the content of numerous interlocutory affidavits and lengthy written submissions as filed on each side be rehearsed at any greater length than absolutely necessary.
Background - previous trial orders
There were two sets of orders and directions which I had issued at strategic conferences in these actions, respectively of 22 March 2019 and then, at 27 August 2019.
22 March 2019 strategic conference
At the first of those strategic conferences on 22 March 2019, I fixed provisional trial dates for 20 days over the respective 10 day intervals during December 2019 and February 2020. Obviously, those dates were fixed for some time off. They were necessarily set in order to accommodate counsel's availability and to find the appropriate number of mutually convenient days to resolve what looms as complicated underlying commercial litigation which had been lagging in terms of its progress to trial since commencement of the underlying primary action in 2016 - without any attribution of blame to any quarter.
In short, in early 2019, the matter needed a trial to be listed as soon as feasibly and viably possible in order for the underlying intractable disputes to be resolved. Everyone then agreed with the provisional times allocated during March.
Multiple further directions then followed concerning the required exchange by the respective parties of witness outlines, expert evidence, trial documents, chronologies, mediation and the like. A further strategic conference was fixed to be convened on 27 August 2019.
27 August 2019 strategic conference
During a 27 August 2019 strategic conference, I revised somewhat the earlier directions for pleadings which had been closed but looked then to need only minor adjustments in light of a re-amended consolidated statement of claim as filed by the plaintiff on 27 June 2019. The essence of the plaintiff's pleading changes then were essentially formalities. They dealt with a change of entity and name and associated orders around the plaintiff bank. They did not seem to carry any further significant forensic implications.
By my then re‑opening of the pleadings, order 1 of the orders I made on 27 August 2019 had allowed the first, second and third defendants to file any re‑amended defence and counterclaim by 3 September 2019. After that, orders 2, 3 and 4 dealt with any following ramifications of such amendments. Under order 4, I ordered that there were to be no more amendments to the pleadings without my leave after Wednesday, 2 October 2019. That order was a variation to the normal position applicable under O 21 r 3 of the Rules of the Supreme Court 1971 (WA) (RSC) (which otherwise allows amendments without leave up to seven weeks before the commencement of a trial). As I said at the time:
Does anyone around the table have any difficulty with that? Basically, I want all the pleadings done and dusted by the end of September. So basically, after 2 October no amendments to pleadings without leave … that will be order 4.
There was no dissent from order 4 at the strategic conference of 27 August 2019.
The Allen Caratti parties' application
In line with the timetable I had set by the 27 August 2019 order1 above, the first, second and third defendants amended their defence and counterclaim on 3 September 2019 by a document filed and circulated that day (the September 2019 defence and counterclaim).
That defence and counterclaim pleading has since been overtaken by a further defence and counterclaim filed by the first, second and third defendants, of 2 October 2019 (the October 2019 defence and counterclaim). But I need to dwell for the moment on the earlier September 2019 defence and counterclaim, since its changes are the subject of the application now advanced by the fourth and fifth defendants - namely, to the effect it be disallowed.
On 23 September 2019, the fourth and fifth defendants (and third third party - Mr Allen Caratti - these parties together are also referred to as the 'Allen Caratti parties') by their lawyers had filed a minute by way of interlocutory application seeking that the September 2019 defence and counterclaim, be struck out.
Without attempting to be comprehensive, the essential grievances were that the challenged pleading was in contravention of my directions of 27 August 2019 - as it was then a completely substituted defence and counterclaim pleading and the extensive amendments carried under it were not then properly marked up to accord with RSC O 21 r 9. That lack of proper marking up, however, was subsequently rectified by the first, second and third defendants' lawyers - who provided, albeit late, a marked up version of the amendments by way of showing the many augmentations and excisions within that September 2019 defence and counterclaim.
More significant, however, is an abiding objection against that pleading - on the basis:
(b)the effect of the Substituted Defence is to withdraw admissions made by the first defendant, second defendant and third defendants concerning execution of documents relied on by the plaintiff;
Subsequently, the fourth and fifth defendants and third third party have revised their application; see electronic document 129 of 15 October 2019, seeking to strike out the September 2019 defence and counterclaim, and also the amendments under the following iteration of the October 2019 defence and counterclaim.
It is primarily a dispute over the alleged withdrawal of an asserted admission unilaterally without leave on 3 September 2019 with which I am presently concerned.
To understand this grievance it is necessary to dwell on what looks on the face of it to be a significant change in the responsive position of the first, second and third defendants as regards the authenticity of a significant number of documents ostensibly signed by their director, Mrs Maddeliene Caratti.
The change, in essence, arises from the September 2019 defence and counterclaim which includes new pleas that the signature of Mrs Caratti as a director of the first, second and third defendants (which had been pleaded in all prior iterations of these parties' defence up to September 2019 defence and counterclaim (with one documentary exception)) now altered.
Previously, the plea made was that Mrs Caratti indeed had signed the relevant documents effecting facility arrangement loan transactions with the plaintiff - but under the alleged duress of her son (the fifth defendant and third third party, Mr Allen Caratti). The plea then was that consequently, as regards the plaintiff, the loan facility arrangements were voidable by reason of that conduct.
But there was a change in her position reflected under the September 2019 defence and counterclaim - to the effect that Mrs Caratti, in fact, had not signed any of the transaction documents in question (contrary to the previous pleas) and further, that the observed signature or 'mark' indorsed on the documents (purportedly as hers) was, in fact, not hers and was instead, as now pleaded, a forgery. For convenience, I will refer to this change plea issue as the Mrs Caratti signature issue.
The first, second and third defendants' pleading changes
In illustration of a contended fundamental change of pleaded position as now articulated by the first, second and third defendants, vis‑à‑vis Mrs Caratti, I set out below one paragraph of the previous duress plea. I will follow that by the September 2019 plea concerning Mrs Caratti vis‑à‑vis the same documents. First, however, it is necessary in a context of a submission about withdrawal of an admission to see what the plaintiff pleads in contextual illustration of the point - since it is contended by the first, second and third defendants that what has occurred is not actually withdrawal of any admission in the strict sense, or at all.
Hence, it may be seen that via par 10 of the plaintiff's Re‑Amended Consolidated Statement of Claim filed 27 June 2019 it is pleaded:
By letter of offer dated 27 February 2003, issued by the Plaintiff and accepted by Mammoth [ie the first defendant] on about 28 February 2003, and as varied by Mammoth's acceptance of variations proposed in the Plaintiff's letters dated 22 September 2003, 20 July 2004, 15 November 2004, 8 August 2005, December 2006, April 2008, 21 November 2008, 4 March 2009, 11 May 2009, 2 November 2009 and 30 August 2012, the Plaintiff and Mammoth entered into a written agreement in terms of which the Plaintiff agreed to make available to Mammoth a trading limit facility (account no 300 602 695). Originally having a limit of $6 million varied by Mammoth's acceptance of the Plaintiff's letter of 22 September 2003 until 28 February 2004 to a limit of $6,350,000 then reducing to $6,000,000, further varied by Mammoth's acceptance of the Plaintiff's letter of 20 July 2004 to $6,350,000 and further varied by Mammoth's acceptance of the Plaintiff's letter of 15 November 2004 as pleaded in paragraph 11(b) below to a limit of $1,000,000 or such other amount as may be approved by the Plaintiff in writing (Mammoth Trading Limit Facility).
Prior to 3 September 2019, the first, second and third defendants' amended defence and counterclaim (of 14 May 2018) had responded against the plaintiff's par 10 as follows:
4.Mammoth, Navarac and Bella Guarda deny paragraph 10 of the Statement of Claim and say that:
…
(i)The 27 February 2003 Letter (defined at paragraph 87 below) and the letters of 22 September 2003, 20 July 2004, 15 November 2004, 8 August 2005, December 2006, April 2008, 21 November 2008, 4 March 2009, 11 May 2009 and 2 November 2009 were signed by Maddeliene Caratti as director of Mammoth, Navarac and Bella Guarda in the following circumstances:
(1)Maddeliene Caratti is the mother of Allen Caratti;
(2)Maddeliene Caratti was 75 years of age in 2003;
(3)Immediately prior to execution of each document Allen Caratti personally handed each document to Maddeliene Caratti;
(4)The letters when handed to Maddeliene Caratti had not been signed by any other person;
(5)On each occasion Allen Caratti and Maddeliene Caratti were alone;
(6)On each occasion Allen Caratti yelled at Maddeliene Caratti insisting that she sign each document immediately upon it being handed to her;
(7)Maddeliene Caratti had no opportunity to read any document before being directed to sign them by Allen Caratti;
(8)Maddeliene Caratti had no opportunity to seek advice from any person before being directed to sign each document by Allen Caratti;
(9)Before signing each document Maddeliene Caratti stated to Allen Caratti that Aaron Grant Caratti must sign each document as director of Mammoth and Navarac and that Aaron Grant Caratti must be given an opportunity to read each of them;
(10)On each occasion Allen Caratti said to Maddeliene Caratti that he would ensure that Aaron Grant Caratti signed each document as director of Mammoth and Navarac;
(11)It is inferred from the matters pleaded at 4(i)(1) ‑ (10) that Allen Caratti knew that no document would bind Mammoth or Navarac until signed by Aaron Grant Caratti as director;
(12)At all material times the Plaintiff knew that:
(A)Maddeliene Caratti was the mother of Allen Caratti. If not admitted, particulars of such knowledge will be provided after discovery;
(B)Maddeliene Caratti was 75 years of age in 2003. If not admitted, particulars of such knowledge will be provided after discovery;
(C)Allen Caratti and John Caratti were involved in a dispute concerning the family business, of which the assets of Mammoth and Navarac were parts. The Plaintiff knew this because this was known by Blaxill from at least on or about 14 May 2002;
(D)By reason of the matters pleaded at 4(i)(1) ‑ (10), were Allen Caratti to procure signature of a document by Maddeliene Caratti, Maddeliene Caratti would not receive independent advice in respect of such document. Further particulars of this will be provided after discovery;
(E)Aaron Grant Caratti was the son of John Caratti. If not admitted particulars of such knowledge will be provided after discovery;
(13)At all material times from not later than 14 May 2002 the Plaintiff knew that Allen Caratti regularly coerced Maddeliene Caratti into signing documents in her capacity as a director of companies without permitting her to read documents. The Plaintiff knew this because in 2002 this was stated by John Caratti to Blaxill, a senior officer of the Plaintiff and the agent of the Plaintiff, responsible for the management of Mammoth and Navarac facilities. In 2003 this was stated by John Caratti to Richard Gapper, a senior officer of the Plaintiff and the agent of the Plaintiff, responsible for the management of the Mammoth and Navarac facilities. In 2004 this was stated by John Caratti to Trevor Cross a senior officer of the plaintiff and the agent of the plaintiff responsible for the management of the Mammoth and Navarac facilities;
…
(j)The letter of 30 August 2012 was purportedly signed by Maddeliene Caratti as director of Mammoth, Navarac and Bella Guarda in circumstances where Maddeliene Caratti did not sign the letter of 30 August 2012 and what purports to be her signature is an obvious forgery;
…(my emphasis in bold)
It may be seen from that earlier response for the first, second and third defendants, that apart from one very specific plea seen above as former par 4(j) as regards a letter of 30 August 2012 (where there was an explicit plea of an 'obvious forgery') the then otherwise articulated plea (which carried the signature of senior counsel) was precisely made via par 4 as regards an acceptance of the signature of Mrs Caratti in respect of the 11 specific documents, commencing with the 27 February 2003 letter. But the par 4(j) plea had then also been equally specific - as regards a so‑called 'obvious forgery' in respect of Mrs Caratti's signature as director of Mammoth, Navarac and Bella Guarda on the letter of 30 August 2012.
However, that as formerly pleaded status quo, which had endured as regards Mrs Caratti's signature and those 12 documents from 25 November 2016, now changed on 3 September 2019 under the pleading filed that day.
Relevantly, the September 2019 defence and counterclaim as revised read:
4.Mammoth, Navarac and Bella Guarda deny paragraph 10 of the Statement of Claim and say that:
…
(e)The 27 February 2003 letter and the letters of 22 September 2003, 20 July 2004, 15 November 2004, 8 August 2005, December 2006, April 2008, 21 November 2008, 4 March 2009, 11 May 2009, 2 November 2009 and 30 August 2012 were not signed by Maddeliene Caratti and her signature on each was forged. (my emphasis in bold)
As seen, the global defence plea under the new par 4(e) plea is made in respect of all 12 documents, including the 30 August 2012 letter -formerly the subject of the obvious forgery plea, made under the former par 4(j) - but now deleted.
Under this amendment, all former defence pleas made by reference to alleged duress as regards Mrs Caratti's signature seen appearing on the 11 documents as director on behalf of the first, second and third defendants were now excised and disappeared. As also seen, no plea is made about the identity of a forger or forgers responsible. The plea of forgery as raised as an inference from Mrs Caratti saying that the mark on each document purporting to be her signature is not her mark.
All former particulars under what was the plea made under par 4(i) of the pre‑September 2019 defence and counterclaim were excised, along also with all duress pleas formerly directed at Mr Allen Caratti.
The late change of plea from duress to forgery: is leave required to withdraw an admission?
In short, 'Yes', by my assessment. For the purposes of the controversy over the revised pleadings of the first, second and third defendants the parties exchanged extensive written submissions beforehand. The contention of the first, second and third defendants is that their amendment of September 2019 was filed within the parameters of order 1 of my directions of 27 August 2019. More importantly, they contended that the pleas concerning Mrs Caratti's signature do not amount to a withdrawal of any admission by the first, second and third defendants, as regards her signature on the 11 documents formerly the subject of the plea under par 4(i), prior to amendments.
Acknowledging circumstances under which leave is required to withdraw a pleaded admission - as was explained in Water Corporation v Cardno BSD Pty Ltd [2009] WASCA 212 [19] (Wheeler & Newnes JJA) - the first, second and third defendants nevertheless submit that the present position is different. They say the situation falls within the scope of a plea which can be seen as a positive averment only made by the first, second and third defendants following their primary denial of the par 10 of the plaintiff bank's plea under its statement of claim. To that end, they invoke observations by Le Miere J in Norilya Minerals Pty Ltd v Ireland [No 2] [2010] WASC 265 [35] to say the former plea under par 4(i) as regards Mrs Caratti's signature on the 11 documents was 'not an admission of a substratum of facts which might be characterised in such a way as to be common to the case of both parties'.
They further submit 'the [first, second and third defendants] are entitled to put the [plaintiff bank] to the proof of its cause of action and to raise alternative matters of defence which possibly answer the [plaintiff bank's] claim and without asserting in an absolute sense the truth or correctness of the particulars pleaded'. To that end, they rely upon Le Miere J's observations in Norilya [2] at [32] and in turn to observations by Mason CJ and Brennan J in Laws v Australian Broadcasting Tribunal [1990] HCA 31; (1990) 170 CLR 70, 85.
Further submissions were also put contending that the fourth and fifth defendants hold no proper standing to issue a challenge against any such withdrawal of admission to the plaintiff (if that is the case).
The first, second and third defendants alternatively contend, in effect, that if there is a requirement for leave in respect of a withdrawal of an admission that the admission would only be made towards the plaintiff bank and so, it does not affect other defendants. Here, since the bank, subject to one qualification I mention later, was prepared to live with the 3 September 2019 amendments of the first, second and third defendants (but not, as I later explain, live with the October 2019 defence and counterclaim amendments), the contention was that the Allen Caratti parties suffer no prejudice.
However, I do not accept that submission as regards a lack of standing to challenge. The fifth defendant, Mr Allen Caratti (Mrs Caratti's son), is a party to the action. The late change of plea as regards an attempted withdrawal of a plea which once was premised upon there being a case of his mother's signature - albeit made under his duress - to, on 3 September 2019, a plea of no signature at all by her and, instead, a plea of forgery (by reference to an unnamed forger(s) perpetrator(s)), is significant for him. Furthermore, this change read contextually carries potential implications as regards Mr Allen Caratti, not only reputationally, but also in his capacity as a surety - as against whom the plaintiff bank seeks redress in this litigation in that capacity.
The first, second and third defendants also raise a challenge against the contention that they are bound under the effect of RSC O 30 r 4, by reason of the 11 listed documents having been described in exchanged lists of documents and there being no challenge then to the authenticity of those documents in a wake of the exchanged discovery lists being verified on oath and then circulated during the discovery and inspection process - all happening some time ago.
The contention is that the discovery list of the fourth and fifth defendants of 8 August 2017 only described 'copy', not original, documents. Hence, there could be no deemed admission under RSC O 30 r 4 of the authenticity of the documents on that basis, it was put.
But as regards the discovery list provided by the plaintiff bank's discovery on 18 September 2018, it was also said that none of the as listed documents are described as original. Hence, there could be no deemed admission, it was put. Moreover, it is said that the documents had only been inspected in electronic not original form.
Finally, the first, second and third defendants say that if they are, in fact, assessed as withdrawing an admission by these pleas that they do now seek that leave and so, that it is in the interests of justice to permit such amendments under all the circumstances as described concerning how the instructions for the original duress pleas vis-à-vis Mrs Caratti were only ever obtained via her son, Mr John Caratti, before the former pleading. Mr John Caratti has sworn an affidavit supporting a grant of leave to amend as regards the forgery of his mother's signature, if leave is required: see Mr John Caratti's affidavit of 22 October 2019. Mr John Caratti is effectively the controlling mind of the first, second and third defendants and also the son of Mrs Caratti.
The first, second and third defendants' current solicitor, Mr Michael Mistilis, also swore an affidavit of 22 October 2019 towards attempting to explain the change in position as regards Mrs Caratti and to support leave, if that is required - which, as I explain, it is.
During the course of arguments during a hearing on 24 October 2019, I drew attention in dialogue with senior counsel for the first, second and third defendants to the fact that an application for leave (if there was one) to withdraw the admission then lacked any supporting affidavit from Mrs Caratti. In fact, only hearsay evidence was adduced from her son, Mr John Caratti, and somewhat limited evidence from Mr Mistilis in terms of Hotchkin Hanly being, in effect, the replacement lawyers of record for the first, second and third defendants from since late 2018. If leave is required in order to support the withdrawal of an admission or, alternatively, if the matter is approached simply as one where the amendment made without leave is the subject of objection and a contended disallowance under RSC O 21 r 3, at a minimum there ought be some direct coherent sworn explanation provided by Mrs Caratti herself about this change.
A consequence of that dialogue was that an affidavit from Mrs Caratti was foreshadowed and I allowed seven days for that to happen. In due course, a affidavit was received from Mrs Caratti sworn 31 October 2019 explaining her position as regards the changed plea from alleged duress concerning the 11 documents at issue (see especially par 10).
I assess the present change of pleaded position to be different to that as was described by Le Miere J in Norilya [No 2] - by reference to an express former plea seen under par 4(i) to the effect that the eleven (11) documents were actually signed (albeit to continue with a plea that the signature was made under duress).
That view is reinforced having regard to the explicit plea then contemporaneously made by former par 4(j), concerning the August 2012 letter, which as then was pleaded to be an 'obvious' forgery.
So in respect of the change of signature plea as regards Mrs Caratti having once pleaded that she signed the 11 documents, to the current plea that she did not sign any of them and that her signature was forged, I would assess that to indeed be a withdrawal of an admission in respect of which leave is required. I would also uphold the submission concerning the force of RSC O 30 r 4 as being engaged here in respect of the description of these documents by the plaintiff as not ever being challenged on a basis of a lack of authenticity. See Crafter v Singh (1990) 2 ACSR 1.
In any event, I prefer to approach the whole issue of changed plea on the basis of modern case flow management principles enshrined for the Supreme Court under RSC O 1 r 4A and 4B. Irrespective of an exercise in disputed legal characterisation of admission or otherwise, the force and significance of the change in plea is such that, applying principles articulated by the High Court in Aon Risk Services Australia Ltd v Australian National University [2009] HCA 27; (2009) 239 CLR 175 which were recently re‑emphasised in UBS AG v Tyne [2018] HCA 45; (2018) 360 ALR 184 [80] - [83] (Gageler J), as regards case management and the importance of an explanation for a change and the public interest in litigation being conducted efficiently as well as fairly, I would as a matter of discretion evaluate this changed plea as being so late and so significant in its forensic implications for the trial that an explanation is required before it can be allowed: see Attorney‑General of Botswana v Aussie Diamond Products Pty Ltd [No 2] [2009] WASC 301 [70] (Murphy J, as his Honour then was).
To that end, the following considerations influence me in the affirmative towards allowing leave to amend, but on terms with the first, second and third defendants bearing the costs thrown away if any by the amendment:
(a)Primarily, my assessment is driven by the consideration that - with some allowances being made for time to enable the fourth and fifth defendants to obtain an engagement of a handwriting expert to provide expert evidence to use at the trial, which expert evidence should be gathered within approximately three to four weeks of receiving the original documents (see the affidavit to that end of Benjamin Mick Caratti of 24 October 2019) that the Mrs Caratti signature issue is still capable of being fairly managed and dealt with at trial. That is on the basis that the experts would give evidence on this issue and be cross‑examined during the February 2020 hearing days. The magnitude of the exercise in terms of accommodating a change in position over these issues, I assess, is not so great forensically that it jeopardises all the trial dates. It will certainly require some fine tuning and management. It may be that Mrs Caratti will need to give her own evidence and be cross‑examined during the February 2020 trial dates as well, depending upon the availability of the expert handwriting evidence. The plaintiff may also wish to engage a handwriting expert since the position of the first, second and third defendants was that they do not propose to engage such expert evidence unilaterally on this issue, but that if another party does, then they reserve the right to call responsive expert evidence - and thereby enlivening the plaintiff's potential interest in doing the same. All that, however, on my assessment, is capable of being accommodated without jeopardising the trial dates unduly by a combination of allowing time to respond (until February 2020) and for appropriate orders for costs arising out of the late need to alter position - which satisfactorily addresses this issue in terms of the overall interests of justice.
(b)Second, allied to that consideration is what might emerge as a somewhat farcical position if a trial needs to be run upon the basis of a pleading that does not accord with Mrs Caratti's instructions upon what is a fundamental issue. I add, however, that had it not been for the provision of a sworn affidavit by her upon this issue, the position I take would likely have been to the contrary.
(c)Finally, I have considered Mrs Caratti's affidavit sworn on 31 October, explaining her position as regards this change. Her evidence on the issue will stand as a matter to be evaluated at the trial.
I will discuss this position with counsel upon the publication of these reasons and orders can issue to that end. Plainly, however, the fourth and fifth defendants should have their costs, as should the plaintiff associated with resolving this signature issue - on which, by my assessment, the Allen Caratti parties' objections were substantially vindicated.
I now turn to address the other key issue arising even more fundamentally as between the plaintiff and the first, second and third defendants - concerning the October 2019 defence and counterclaim amendments. But there was also now an amended reply and rejoinder filed by the first, second and third defendants (see electronic document 122 - 'the amended reply and rejoinder') - both of which new pleadings carries some potentially problematic new pleas and against which the plaintiff objects.
The plaintiff's application
The New Debit amendments
There are wholesale new pleas sought to be made by the the first, second and third defendants under their October 2019 defence and counterclaim. These amendments arise under the counterclaim alleging 13 new debts now owed by the plaintiff. I will refer to these new allegations collectively as the 'New Debit amendments'.
Albeit on its face falling within the timing of par 4 of my orders and directions of 29 August 2012, plainly these New Debit amendments were outside the intent of those directions. They require leave. In any event, they were objected to by the plaintiff which, by its amended minute of 9 October 2019, seeks the relief under RSC O 21 r 3 essentially disallowing pars 35A, 35B, 35C, 63 (as it relates to the first to thirteenth debits), 70(b), 75(b) and 80(b) to the first, second and third defendants' October 2019 defence and counterclaim.
The plaintiff also objects to and attacks various paragraphs of the first, second and third defendants' reply and rejoinder (which, as I mentioned, was also filed on 2 October 2019) as regards its pars 86, 89, 92 to 94 and 95 (insofar as it refers to conduct as pleaded in pars 86, 89 and 92).
The plaintiff seeks as well that the earlier leave which I granted under order 13 of my orders of 22 March 2019 to adduce expert evidence now be revoked.
I had given leave by those earlier orders and directions allowing the first, second and third defendants to adduce expert evidence, generally. But on 27 August 2019, I revised that direction. Directions 8 and 9 were then:
8.The First to Third Defendants shall file and serve any reports of the proposed expert evidence of loss and damage by 13 September 2019 and as to expert handwriting evidence by 18 October 2019.
9.Order 8 is without prejudice to the right of the Plaintiff and any other party to apply to revoke the grant of leave to adduce expert evidence by order 13 of the orders on 22 March 2019 on the ground of prejudicial delay by the Defendants in serving expert reports.
As matters have transpired, the first, second and third defendants did eventually file late an expert report of Barton Consultancy of 2 October 2019 (electronic folio document 119) ('the Barton report'). The expert evidence purported to be relied upon by the first, second and third defendants was filed some three weeks after the 13 September 2019 deadline. Mr Barton's report is of some 768 pages.
No expert handwriting evidence was filed by the first, second and third defendants by 18 October 2019, or to date. I refer to earlier observations, however, about a potential for that to be attempted by the first, second and third defendants or the plaintiff depending upon what emerges from the fourth and fifth defendants as regards a forensic handwriting expert report in due course on the Mrs Caratti signature issue.
The plaintiff's disallowance application as regards pars 35A, 35B, 35C and 63 of the October 2019 defence and counterclaim carries significant new issues. Senior counsel for the first, second and third defendants did not seek to dissuade me otherwise. Indeed, his very candid submission as put was that the late amendments introducing new money claims by way of counterclaim (as I best assess it as the common law account of money had and received as a restitutionary remedy) aggregates to a new claim that approaches over $20 million.
Essentially, there was no dissent from senior counsel for the first, second and third defendants to the effect that these new money claim amendments as now pleaded will be only a commencement of a process as regards the new money claims, which will require investigation, including possibly particulars discovery, investigation, expert reports and the like. The ability to commence and run the trial in December 2019 and, indeed, in February 2020 as scheduled or, indeed, even to deal with such freshly emerging issues in February 2020, is accepted as untenable by the new amendments over this issue. If the trial does not run then the position is that apart from 10 convenient days in June 2020, the earliest opportunity to conduct the trial for all concerned will be August 2020.
Senior counsel's closing remarks were to the following end: (ts 95)
… And so there are specific issues, as my friend says, raised on those pleadings in relation to authority. And as my learned friend identifies, 35A and that which follows is in - currently in a slightly different category. And the answer to that, your Honour, is, as I think my friend said when he first stood up, the plea in relation to 35A and the new paragraphs, we're really at the commencement of that. That's what we know in relation to those matters, based on the bank statements. And until we do have a substantive response to those matters from the bank, that is all that we know.
And I think my friends expression was "we're really at the start of that issue, rather than the end of it" - is correct.
Opposing the New Debit amendments, senior counsel for the plaintiff relies on two affidavits of Ms Estelle Blewett, one of the plaintiff's lawyers at Corrs Chambers Westgarth. Essentially, by her first affidavit of 15 October 2019, Ms Blewett speaks of the large scale forensic ramifications of investigation, including witness proofing, inquiries and the like, if these New Debit amendments were permitted. See in particular par 8 of her affidavit as regards likely steps required if the amendments were allowed. The earliest of the debits, of course, raised matters going back to 2002. The 13th debit raises matters concerning 2010.
It is necessary to divert momentarily to see pars 35A, 35B and 35C of October 2019 defence and counterclaim. They read:
35A Further to paragraphs 32 to 35 above, Mammoth, Navarac and Bella Guarda say that:
(a) on 1 April 2002, the Plaintiff purported to create a debit on Navarac Term Loan 226 for $1,000,000.00 (1st Debit);
(b) Navarac Term Loan 226 was purportedly created by the execution of the 27 February letter pleaded at paragraph 22 of the Statement of Claim on 28 February 2003;
(c) prior to making the 1st Debit, the Plaintiff did not receive a written or oral application from Navarac to debit Navarac Term Loan 226 for $1,000,000.00 or any written request to do so from the directors of Navarac;
(d) on 1 April 2002, the Plaintiff purported to create a debit on Navarac Term Loan 200 for $2,140,295.00 (2nd Debit);
(e) Navarac Term Loan 200 was purportedly created by the execution of the 27 February letter pleaded at paragraph 22 of the Statement of Claim on 28 February 2003;
(f) prior to making the 2nd Debit, the Plaintiff did not receive a written or oral application from Navarac to debit Navarac Term Loan 200 for $2,140,295.00 or any written request to do so from the directors of Navarac;
(g) on 20 September 2007 the Plaintiff advanced to MNWA, a company controlled by Allen Caratti, $3,257,000.00 (3rd Debit);
(h) the 3rd Debit was drawn on Navarac Term Loan 200;
(i) none of Mammoth, Navarac or Bella Guarda derived any benefit from the 3rd Debit;
(j) prior to making the 3rd Debit and correspondingly debiting Navarac Term Loan 200, the Plaintiff did not receive a written or oral application from Navarac to debit Navarac Term Loan 200 or any written request to do so from the directors of Mammoth;
(k) on 14 August 2006 the Plaintiff debited Mammoth Term Loan 063 in the amount of $5,750,000.00 (4th Debit);
(l) prior to making the 4th Debit the Plaintiff did not receive a written or oral application from Mammoth to debit Mammoth Term Loan 063 or any written request to do so from the directors of Mammoth;
(m) on 14 August 2006 the Plaintiff debited Mammoth Term Loan 071 in the amount of $5,750,000.00 (5th Debit);
(n) prior to making the 5th Debit the Plaintiff did not receive a written or oral application from Mammoth to debit Mammoth Term Loan 071 or any written request to do so from the directors of Mammoth;
(o) on 14 March 2003 the Plaintiff debited the Mammoth Trading Limit Facility in the amount of $413,741.16 (6th Debit);
(p) prior to making the 6th Debit the Plaintiff did not receive a written or oral application from Mammoth to debit the Mammoth Trading Limit Facility or any written request to do so from the directors of Mammoth;
(q) on 25 August 2003 the Plaintiff debited the Mammoth Trading Limit Facility in the amount of $453,035.95 (7th Debit);
(r) prior to making the 7th Debit the Plaintiff did not receive a written or oral application from Mammoth to debit the Mammoth Trading Limit Facility or any written request to do so from the directors of Mammoth;
(s) on 21 March 2005 the Plaintiff advanced to MNWA, a company controlled by Allen Caratti, $1,000.00 (8th Debit);
(t) the 8th Debit was drawn on the Mammoth Trading Limit Facility;
(u) none of Mammoth, Navarac or Bella Guarda derived any benefit from the 8th Debit;
(v) prior to making the 8th Debit and correspondingly debiting the Mammoth Trading Limit Facility, the Plaintiff did not receive a written or oral application from Mammoth to debit the Mammoth Trading Limit Facility or any written request to do so from the directors of Mammoth;
(w) on 1 September 2005 the Plaintiff debited the Mammoth Trading Limit Facility in the amount of $453,035.93 (9th Debit);
(x) prior to making the 9th Debit the Plaintiff did not receive a written or oral application from Mammoth to debit the Mammoth Trading Limit Facility or any written request to do so from the directors of Mammoth;
(y) on 1 September 2005 the Plaintiff debited the Mammoth Trading Limit Facility in the further amount of $453,035.93 (10th Debit);
(z) prior to making the 10th Debit the Plaintiff did not receive a written or oral application from Mammoth to debit the Mammoth Trading Limit Facility or any written request to do so from the directors of Mammoth;
(aa) on 3 November 2006 the Plaintiff debited the Mammoth Trading Limit Facility in the amount of $453,035.93 (11th Debit)
(bb) prior to making the 11th Debit the Plaintiff did not receive a written or oral application from Mammoth to debit the Mammoth Trading Limit Facility or any written request to do so from the directors of Mammoth;
(cc) on 13 September 2007 the Plaintiff debited the Mammoth Trading Limit Facility in the amount of $453,035.93 (12th Debit);
(dd) prior to making the 12th Debit the Plaintiff did not receive a written or oral application from Mammoth to debit the Mammoth Trading Limit Facility or any written request to do so from the directors of Mammoth;
(ee) on 1 February 2010 the Plaintiff advanced to MNWA, a company controlled by Allen Caratti, $200,000.00 (13th Debit);
(ff) the 13th Debit was drawn on the Mammoth Trading Limit Facility;
(gg) none of Mammoth, Navarac or Bella Guarda derived any benefit from the 13th Debit;
(hh) prior to making the 13th Debit and correspondingly debiting the Mammoth Trading Limit Facility, the Plaintiff did not receive a written or oral application from Mammoth to debit the Mammoth Trading Limit Facility or any written request to do so from the directors of Mammoth.
35B Mammoth, Navarac and Bella Guarda say that by reason of the matters pleaded in paragraph 35A above, none of the:
(a) 1st to 3rd Debits created debts owing to the Plaintiff by Navarac; and
(b) 4th to 13th Debits created debts owing to the Plaintiff by Mammoth.
35C Mammoth, Navarac and Bella Guarda say that had none of the 1st to 13th Debits been debited to the relevant account as pleaded by paragraph 35A above, then:
(a) no debit balance would have existed for any of the respective accounts associated with Navarac Term Loan 200, Navarac Term Loan 226, Mammoth Term Loan 063 or Mammoth Term Loan 071;
(b) the balances of each such account and the Mammoth Trading Limit Facility as at the repayment dates of such accounts would have been in the amounts particulars of which will be provided in the form of an expert report.
The aggregation of the amounts of the 13 New Debit amendments produces the figure in excess of $20 million.
It can be seen as well that the pleas under pars 35A(g) re the third debit, (s) re the eighth debit and (ee) re the 13th debit, are distinctly framed. In contrast to the other 10 debits, the three pleas identify the recipient of the plaintiff's advance.
The other new claimed debts, however, whilst somewhat similar in their framed structures, present as very vaguely constructed.
By brief illustration only, I refer to a so‑called first debit (under par 35A(a)) which says that the plaintiff bank purported to create a debit on the Navarac term loan 226 on 1 April 2002 in the amount of $1 million. Relevantly, under subpar (c) it is then said that the bank 'did not receive a written or oral application' from Navarac (the second defendant) to debit that Navarac term loan 226 for that amount and, further, that there was no 'written request' from the directors of Navarac for the debiting of that term loan.
Ten (10) other remaining new debit claims look to be similarly constructed, as regards amounts extending up to an alleged 12th debit of 13 September 2007 to the Mammoth trading limit facility: see par 35A(cc).
Consequential pleas are seen under pars 35B(a) and (b) in the negative, namely, to the effect that none of the 13 debits created debts owing to the bank by respectively Navarac and Mammoth.
These new pleas had led me to interrogate senior counsel for the first, second and third defendants about them at the hearing on 24 October 2019. The response I received was to the effect that the pleas were really over the alleged unauthorised debiting of interest and costs by the plaintiff bank on the respective amounts - although that does not yet emerge on the face of the pleading (ts 31). Axiomatically that is not satisfactory at such a late stage in the litigation.
I also understood senior counsel as saying that the first, second and third defendants accepted that the advanced moneys the subject of the debits in par 35A (save for the third debit, the eighth debit and the 13th debit) as having been received by either Navarac or Mammoth. Hence, the received benefit of the principal sums is acknowledged as being received (see ts 31) by these defendants (compare that to the response of senior counsel for the plaintiff at ts 102 - 103).
The argument sought to be run is that, having received and used these advances from the plaintiff bank, it was, nevertheless, said to be not legitimate for the plaintiff to claim interest or costs thereon, for reasons not clear to me but which will no doubt be sought to be explained.
It appears obvious that a high degree of pre‑trial investigation work is inevitably going to be required in relation to these new pleas, essentially for the reasons as explained in Ms Blewett's first affidavit, which I accept as valid and of force.
Unlike for the amendments in respect of the Mrs Caratti signature issue, the New Debit amendments, if allowed, would carry the consequence of undermining the ability to proceed with any trial across any of the 20 days, ie, not only during December 2019 but also, on my assessment, given the implications of what they carry with them in terms of associated work and investigations, also for February 2020.
Given all that, I need to investigate the explanation which the first, second and third defendants provide for why it is that these late contentions seeking to counterclaim $20 million, only emerged at 2 October 2019. To that end, I examined two affidavits relied upon for the first, second and third defendants, namely, that of Mr Michael William Mistilis, sworn 22 October 2019, and the affidavit of the first, second and third defendants' director, Mr John Michael Caratti, sworn the same day. Neither is sufficiently persuasive to permit these amendments.
Both those affidavits also dealt with the Mrs Caratti signature issue. However, they also purport to provide the explanation, as regards these 'New Debit' amendments.
I do not purport to summarise all of Mr Mistilis' affidavit. He explains, of course, that his firm replaced Hopgood Gamin as solicitors of record for the first, second and third defendants at 6 November 2018. No convincing explanation, however, is really provided by any of the first, second or third defendants or by Mr John Caratti concerning why the change of firm ensued. A mere change of law firm does not carry with it any right to extra time, absent something more. Mr Mistilis speaks of a significant amount of work that he was immediately confronted with in, effectively, taking over the matter for new clients and of delays acquiring then assessing the large amounts of documents encountered in that task. I accept all that to be the case, but it is ultimately not persuasive enough to delay the trial as fixed.
The Barton Report
Putting aside the Mrs Caratti signature issue, Mr Mistilis commences to speak about Mr Barton's report at par 37 of his affidavit, in a context of a potential requirement for expert evidence as to the loss and damage of the first, second third defendants, and then, his ongoing discussions with Mr Dennis Barton from early April 2019.
Mr Mistilis relates that Mr Barton was formally briefed at 18 July 2019, in anticipation of his report being ready in about one month. However, the report then took even longer to complete. Mr Barton was said to be creating a 'model' for the purposes of conducting calculation (see par 45 of Mr Mistilis' affidavit). Mr Mistilis relates that some written supplementary instructions were provided to Mr Barton, on 10 September 2019. Further oral instructions then issued on 17 September 2019. More materials were provided on 27 September 2019, together with further oral instructions on the same date. In that process, the time limit of 13 September 2019 for expert evidence which I had set under my orders of 27 August 2019 was exceeded.
The Barton report was only filed on 2 October 2019. Mr Mistilis says that his instruction letters are attached to it. As mentioned, I see it extends across some 768 pages. No application was made by the first, second and third defendants for leave to rely upon the Barton report, by then it being filed some three weeks out of time.
As seen, the plaintiff is now seeking that I revoke completely that the leave I granted in March 2019 for reliance by the first, second and third defendants upon such an expert report.
I have not yet been taken to any components of the Barton report, or had the time to attempt to unilaterally digest its content - which on its face looks to be of some complexity. I was told that the report does not have a summary of conclusions. That appears to be the case.
Objecting to a late burden of the need to deal with the Barton report, senior counsel for the plaintiff characterised the plaintiff's objection to it as being at the lower end of priority - in terms of the scale of the plaintiff's grievances. The submission is made on the basis that if the 2 October 2019 debit claims are excised by a denial of leave so that the Barton report deals only with the former pre-October 2019 components of the first, second and third defendants' (still monetarily substantial) counterclaim, that this would then be a lower tier grievance.
The plaintiff, of course, must still need time to assess, digest and assemble a response to what is left of the Barton report, given its late receipt.
I was also told by senior counsel for the plaintiff that his instructor, Ms Blewett, had been required to spend a week engaged in reading the Barton report - an indication of the level of work generated by its unexpected, late arrival.
Explanation of late arrival of the New Debit amendments
Returning, however, to Mr Mistilis' affidavit, I do not find any reference therein to a sufficient explanation for what brought about the late par 35A plea and the following New Debit amendments to the extent of increasing the counterclaim by an extra $20 million.
I turn then to Mr John Caratti's affidavit of some 89 pages in relation to a search for a convincing explanation in respect of that issue. At par 11 of his affidavit, Mr John Caratti refers to the 13 New Debit amendments holding an aggregate value of $20,777,215.83 (par 11). From par 12 onwards he relates that the claims were made in circumstances described. The so-called debit claims follow up to par 55.
What is said by Mr John Caratti in these paragraphs is formulaic. Compare, for instance, par 17 'the first time it became clear to me', to par 21 'the first time I became aware of these entries in the statements produced by the plaintiff'; to par 32 'I became aware that a claim could be made'; to par 36 'the first time it became clear to me'; par 37 'the first time I became aware that a claim could be made in respect of this unauthorised debit'; to par 43 'the first time it became clear to me that a claim could be made in respect of those unauthorised debits'.
I cannot, in the end, evaluate what Mr John Caratti has said, up to his par 55, as being of any help as regards providing a sufficiently coherent and convincing explanation towards what is the reason for the unduly late emergence of what I assume to be an argument over unauthorised debits to various defendants' bank accounts over time and extending back to 2002 by the plaintiff bank - but only being actioned during late 2019 in the wake of, as he would seem to put it, the documents discovered by the plaintiff - eg, par 14 which contains account history details.
Mr John Caratti's affidavit tells me nothing about the bank's monthly statements issued in respect of these accounts or the accessibility of himself and other officers of the first, second and third defendants to render such bank statements (showing debits and credits to each account over time) as they issued from time to time, in order to potentially access such information about debits to these accounts and interest and cost charges thereon by the bank from time to time. The issue is simply not addressed.
An inference is to be drawn that the diligent work of new lawyers, Hotchkin Hanly, from November 2018 and, in particular, Mr Mistilis, has caused new documents to be put in front of Mr John Caratti and by inference it emerges his asserted knowledge that (legal) claims could be made in respect of unauthorised debits arose around early September 2019 in proximity to discussions he was then holding with his lawyer, Mr Mistilis, at this time.
Still the position is left unsatisfactorily vague in terms of a proper explanation for why this $20 million extra claim was overlooked until now.
My assessment is that there is no reason why the first, second and third defendants, competently represented and advised, could not have been pursuing all such claims at the time that their counterclaim issued - then pursuing conceptually similar claims but of lesser magnitude. An inference is that perhaps Mr John Caratti's new lawyers were more diligent or more insightful. But the as given explanation for a late arrival of the New Debit amendments for a $20 million claim at the end, is far from convincing.
Conclusions regarding the plaintiff's objection
By my assessment, these pleas must be disallowed and struck out. I assess them as wholly prejudicial to the ability to proceed with a trial as fixed for December 2019 or in February 2020.
The heavy extra dimensions of the preparatory legal work associated with dealing with these new pleas is, I agree, forensically too much to meet the existing trial dates in December 2019 and February 2020. There is no issue over that assessment.
The question is whether the interests of justice align with deferring those allocated trial dates back to some later time in 2020 (probably to August 2020) when all counsel and witnesses and the court are available to re-hear them - after allowing a fair and reasonable time for the new enquiries and much forensic work of a preparatory kind to be made in order to deal with the new pleas Those August 2020 dates arise from correspondence sent by Mr Mistilis by email on 30 October 2019 to my associate which provided an indication of all parties' availability.
By my assessment, what is asked is simply too much applying sensible modern case management considerations. There remains an intense amount of forensic preparatory work to be done in less than seven weeks prior to the commencement of the trial on 9 December 2019.
The late New Debit amendment pleas deliver unnecessary pressure, indeed chaos, against achieving that objective. But it is also an unsatisfactory solution all round to defer a trial any longer. The trial dates were set a considerable time ago, so that the parties could work up to and achieve a viable and fair trial to all parties. Unlike the pleas in respect of the Mrs Caratti's signature issue already discussed, the greater magnitude of ramifications carried by the New Debit amendment changes is still emerging and cannot be so managed. As the High Court observed in Aon and recently re-emphasised in the UBS AG v Tyne, the interests of justice extend wider than merely the participant parties to include the general public interest as well. There would be unsatisfactory waste, delay and inefficiency if these New Debit amendments were allowed to stand.
The court's resources are diminishingly finite as regards providing opportunities for parties increasingly clamouring for civil trial dates. Waste is intolerable. Furthermore, the trial will canvass events at issue going back to 2002, now over 17 years ago. Already a significant witness for the plaintiffs, a Mr Blaxill, has died. Of course, the longer the matter is kept away from a trial determination, the more danger there is that the reliability of witnesses' memories is impeded.
The first, second and third defendants point out, of course, that Mrs Caratti, at 91 years of age, would almost certainly not be assisted by a delay in the trial. They say, therefore, that they would suffer perhaps a greater prejudice by delay to the trial as regards the jeopardy of her in‑person evidence being lost. Yet they do not oppose a delay.
However, I do not yet assess Mrs Caratti as a significant witness in regard to these New Debit amendments. Their magnitude and the confrontation of forensic preparation implications at an embryonic stage cannot be realistically managed without an unsatisfactory level of waste resulting, which is against the public interest. There will be delay to proceedings already delayed long enough.
I have now weighed all the considerations put by counsel, including the fact that the plaintiff holds a level of security for the claimed indebtedness of the defendants to it. But such considerations are not sufficient to deflect me from disallowing these New Debit claim pleas. They will be disallowed and struck out from the October 2019 defence and counterclaim.
The plaintiff's rejoinder objections
By way of illustration to the objection taken against the rejoinder pleas of the first, second and third defendants under pars 86, 89, 92 - 94 and 95 of the reply and rejoinder, I set out the plea made under par 86 of the rejoinder - which contends for an extension of time under s 38 of the Limitation Act 2005 (WA) - a plea put in the alternative. Paragraph 86 pleads:
If (which is denied) the causes of action have become statute barred, then in the premises of paragraph 85 above, the relevant limitation period can be, and ought to be, extended by this Honourable Court pursuant to s 38 of the Limitation Act 2005 (WA) because:
(a)there was fraudulent or other improper conduct of the plaintiff in making the unauthorised debits at the request and direction of Allen Caratti, as pleaded in paragraph 33 of the Defence, despite:
(i)knowing or suspecting that Allen Caratti was not a director of Mammoth or Navarac;
Particulars of knowledge or suspicion as to Allen Caratti
The particulars to paragraph 3(b) above are repeated.
[Those various pleas 3(b)(i) through to (xv) are seen concerning various oral statements or events on or around commencing at 14 May 2002 to the late Mr Blaxill said to be 'the agent of Elders responsible for the management of the Mammoth and Navarac facilities with Elders].
Six further matters 86(a)(ii) through to (vii) are then seen as extra particulars of the so-called fraudulent or other improper conduct of the plaintiff as alleged in the following terms:
(ii)knowing or suspecting that John Caratti, and not Allen Caratti, was in control of Mammoth;
(iii)knowing or suspecting that Allen Caratti was in dispute with John Caratti and Maddeliene Caratti;
(iv)knowing or suspecting that the purpose for which Allen Caratti requested the funds was to purchase land for companies which were controlled by Allen Caratti or in effect controlled by him being Mammoth Nominees Pty Ltd and Gucce Holdings Pty Ltd, and not for the benefit of Mammoth;
(v)requesting Allen Caratti provide current financial statements for Mammoth and Navarac, which he could not;
(vi)not informing Mammoth, Navarac and Bella Guarda of Allen Caratti's request for, or the fact of, the unauthorised debits;
(vii) providing Allen Caratti with the money to the benefit of itself and Allen Caratti but to the detriment of Mammoth, Navarac and Bella Guarda;
(b)any failure to commence those causes of action within time was attributable to the bank's conduct pleaded in paragraph 86(a) above, in particular the bank's failure to inform Mammoth, Navarac and Bella Guarda of the unauthorised debits, which became known to them in or about late 2012;
(c)the date from which the contractual claims the subject of the counterclaim ought reasonably to have been commenced arose no earlier than 3 July 2012 (three years prior to the writ being filed in CIV 2030 of 2015); alternatively, approximately 8 June 2013 (three years prior to the counterclaim being taken to have been commenced) because Mammoth, Navarac and Bella Guarda:
(i)did not become aware of the unauthorised debits until in or about late 2012;
(ii)did not obtain legal advice about the effect of the unauthorised debits in respect of setting aside a statutory demand until after 20 April 2015 when a statutory demand was served on Mammoth by the Plaintiff;
(iii)did not obtain legal advice about the effect of the unauthorised as a cause of action until just prior to 3 July 2015 when CIV 2030 of 2015 was served;
(d)accordingly, the time in which those causes of action can be commenced ought to be extended to 3 July 2015 (being the date of CIV 2030 of 2015), alternatively, approximately 8 June 2016 (the date on which the counterclaim was taken to have been commenced).
The par 38 extension plea under par 89 is conceptually similar to the par 86 plea as seen in the rejoinder pleading of the first, second and third defendants.
Neither of those pleas were valid as initially framed. It is clear by reference to the terms of the Limitation Act pt 3 div 3 that an extension application made by a party for leave to commence an action on a cause of action in circumstances where the limitation period provided for has expired, needs axiomatically a founding application: see s 43.
An application for extended time by s 38(2) of the Limitation Act (inter alia) falls within the definition of an extension application (see the definition under s 3(1)). The jurisdiction and procedure stipulated for pursuing an extension application is seen clearly set out under s 43(1) - which requires inter alia that an extension application be made by summons in the jurisdiction in which the existing action has been brought. But that had not occurred until the morning of Thursday, 7 November 2018, when a chamber summons to that end was filed.
Whilst seemingly foreshadowed under passing correspondence by the lawyers for the first, second and third defendants, the making of an application under s 38(2) of the Limitation Act (via s 43) upon the basis of a potential further extension of up to three years beyond when the action (here counterclaim) ought reasonably to have been commenced needs to be causatively shown to be attributable to 'fraudulent' or 'other improper conduct' of the defendant. Those two concepts are distinct and should not be rolled together - as seen here.
An extension application by s 38(2) of the Limitation Act made within the context of a commercial trial was dealt with and evaluated by Tottle J in Belgravia Nominees Pty Ltd v Lowe Pty Ltd [No 6] [2019] WASC 5 (see his Honour's reasons commencing under the limitation issue at [400] of those reasons). For that trial there was no assertion of fraudulent conduct. The extension application was only run on the basis of alleged 'improper conduct'. In the process, his Honour assessed and evaluated earlier observations by District Court judges concerning that issue and by Master Sanderson in this court in Charlton v WA Country Health Service [2017] WASC 223 [10]. In the end, Tottle J did assess an existence of improper conduct (see [424]). He also found the essential causation requirement, arising out of a use of the phrase 'attributable to', as between the failure to commence the action and the 'fraudulent or other improper conduct' (see [405] of his Honour's reasons).
Until such time as there was an extension application made on 7 November 2019 by a summons under s 43(1) of the Limitation Act, there was no basis for the court to even contemplate extending time under s 38(2) for a statute barred action. On that basis alone, pars 86 and 89 of the rejoinder were vulnerable to being struck out before 7 November 2019. Now the application is finally brought by chamber summons, then the issue might be evaluated, but the trial dates in December 2019 present as the first viable opportunity for that to be done.
It is necessary that within pt 3 div 3 of the Limitation Act, I draw attention to s 44, which requires a court in deciding upon an extension application, to evaluate (as I would assess it amongst all other relevant matters) some specific considerations referable to the other side; namely, whether the delay in commencing the proposed (here) counterclaim, whatever the merit of the reason for the delay, would unacceptably diminish prospects of a fair trial of the action or, under s 44(b), whether extending time would significantly prejudice the defendant (other than by reason only of the commencement of the proposed action).
Such considerations of fact (particularly under circumstances where one of the plaintiff's main witnesses, Mr Blaxill, has now died) obviously would be at large on the hearing of the extension application made by the first, second and third defendants, in reference to s 38(2) of the Limitation Act.
I also observe in this quarter that the rolled up and undifferentiated nature of the pleas as presently seen made under par 86 and par 89 fail to distinguish between alleged fraudulent conduct and alleged other improper conduct. As crafted, those pleas are embarrassing and could be struck out on that basis, if better particulars are not swiftly provided.
It may be, for instance, depending on the improper conduct being more properly identified, that expert banking practice at the respective times alleged, could become relevant. I say no more than that. But the issue also carries a potential to add some duration to the contest of issues in the looming trial.
Further limitation extension period pleas
In relation to the fraudulent concealment plea as regards the existence of causes of action under Schedule 2 of the Competition and Consumer Act 2010 (Cth) (the Australian Consumer Law), somewhat different considerations arise. There is a real issue towards what would be a Commonwealth limitation period, whether an argument towards a fraudulent concealment is capable of being advanced to extend the limitation period otherwise applicable under s 237(3)(a) of the Australian Consumer Law. Likewise, as regards the plea of estoppel seen under par 94 of the rejoinder in relation to the Australian Consumer Law. There will be need to consider these issues which I do not assess as being so obvious as to be capable of rendering a decision about either way. Hence, the present rejoinder.
Expert evidence: the Barton report
By my assessment, given a disallowance of the 13 New Debit amendment pleas under par 35A and following of the October 2019 defence and counterclaim, I am left to assess whether the remaining components of the Barton report should be allowed to be adduced or whether, as the plaintiff contends, that leave to that end should be wholly revoked. I do not take that severe step.
On my assessment, the plaintiff bank ought to be able to engage against and brief its own expert evidence to deal with the residual components of the Barton report by recommencement of the trial during February 2020. If the plaintiff requires a little more time, or tailored trial directions in that respect, then I would sympathetically evaluate such an application.
However, my impression is that the truncated dimensions of dealing with the Barton report, albeit three weeks later, should be capable of being addressed, by reason of the fortuitous circumstances of the remaining 10 days of the trial being scheduled for February 2020.
In all those circumstances, I do extend time for the first, second and third defendants to rely upon the Barton report, but only in the respects which do not extend to embrace and deal with the 13 New Debit amendments as were sought to be introduced under the amendments to the October 2019 defence and counterclaim.
Conclusion
I will hear the parties in respect of orders appropriate to these results which I foreshadowed at the 7 November 2019 directions hearing.
I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
DW
Associate to the Honourable Justice Martin11 NOVEMBER 2019
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