Sturesteps v Khoury

[2020] NSWSC 201

Supreme Court

New South Wales

Medium Neutral Citation:

Sturesteps v Khoury [2020] NSWSC 201

Hearing dates:

6 March 2020

Date of orders:

06 March 2020

Decision date:

06 March 2020

Jurisdiction:

Equity

Before:

Kunc J

Decision:

Leave to amend defence granted

Catchwords:

CIVIL PROCEDURE — Pleadings — Amendment

Legislation Cited:

Civil Procedure Act 2005 (NSW)
Evidence Act 1995 (NSW)

Category:

Procedural and other rulings

Parties:

Beryl Donna Sturesteps as the representative of the estate of the late George Osvald Sturesteps (First Plaintiff)
Beryl Donna Sturesteps (Second Plaintiff)

  Dieb Peter Khoury (First Defendant)
Benjamin and Khoury Pty Limited ACN 104 057 043 (Second defendant)

Representation:

Counsel:

 

C J Bevan (Plaintiffs)
M Condon SC (Defendants)

 

Solicitors:

  Bingham Law (Plaintiffs)
Roberts & Partners Lawyers (Defendants)

File Number(s):

2014/24406

Publication restriction:

No

EX TEMPORE Judgment (REVISED)

1. These proceedings have a long and involved history which it is not necessary for me to recite. They are fixed before me for final hearing for 10 days commencing on 22 June 2020.

2. The principal forensic feature that informs the present applications is that the first plaintiff, George Osvald Sturesteps, died shortly after swearing his affidavit in reply in these proceedings. He is now represented by the second plaintiff as the representative of his estate. The first defendant, Mr Khoury, is a solicitor and the second defendant is his incorporated firm. The plaintiffs sue the defendants for fees allegedly overpaid by the plaintiffs to the defendants. That simple description belies the complex factual and legal issues which are raised by the current pleadings.

3. The Court has before it a motion by the defendants for leave to file a second further amended defence to the second further amended statement of claim, and to rely upon an affidavit of Mr Khoury sworn 26 February 2020.

4. Dealing first with the question of relying on the affidavit, two main objections were taken by Mr C Bevan of Counsel, who appears for the plaintiffs. First, there was said to be prejudice to his clients because in so far as Mr Khoury's latest affidavit raises allegations which, in the ordinary course, would call for response from Mr Sturesteps, Mr Sturesteps was no longer available to do so. Second, complaint was made about the volume of material referred to in the latest affidavit, being an exhibit of apparently some 500 pages. Given that the hearing is some 3 months away, the second reason is not a sufficient one to prevent the defendants from relying on Mr Khoury's latest affidavit.

5. However, further attention needs to be given to Mr Bevan's first objection. The principal consideration in determining an application of this kind is to ensure that the overriding purpose set out in s 56 of the Civil Procedure Act 2005 (NSW) (the “Act”) is met, namely that the real issues in dispute between the parties are determined in a way that is just, quick and cheap.

6. Bearing that purpose in mind, the appropriate course to follow is to allow the affidavit to be relied upon. However, granting that leave is not to pre-determine the question of what parts of Mr Khoury's affidavit (including material relating to Mr Sturesteps and transcripts of recorded conversations between Mr Khoury and Mr Sturesteps) will ultimately be admissible at trial.

7. If one thing is clear from the history of these proceedings, it is that what is and is not important will not be completely clear until the hearing commences. The pleadings are extensive, as is the evidence. In the experience of the Court, it is only when the matter comes on for hearing and the parties, and most importantly the Court, are fully apprised of the issues that are genuinely in dispute, that the Court will be in a position to determine the importance of any evidence sought to be adduced from Mr Khoury and the degree of prejudice that may be occasioned to the plaintiffs by the absence of Mr Sturesteps.

8. The plaintiffs will be adequately protected by being able to object to the admissibility of the relevant parts of Mr Khoury’s affidavit on grounds including ss 135, 136 and 138 of the Evidence Act 1995 (NSW) taking into account the prejudice to the plaintiffs by reason of the fact that Mr Sturesteps is no longer available to respond to new evidence from the defendants. The same point applies to the attempt to introduce transcripts of telephone and other conversations. Those matters will be able to be dealt with adequately in the usual way at hearing on the question of admissibility.

9. For these reasons, the Court is satisfied that it is appropriate to allow the defendants to rely on Mr Khoury's latest affidavit. The extent to which any part of that affidavit will be admissible will be a matter to be determined at trial. Now is not the time to attempt, in effect, to make such decisions.

10. Turning to the question of the amendments to the defence, that issue is to be determined in accordance with s 64 of the Act, which includes:

“64 AMENDMENT OF DOCUMENTS GENERALLY

(1) At any stage of proceedings, the court may order:

(a) that any document in the proceedings be amended, or

(b) that leave be granted to a party to amend any document in the proceedings.

(2) Subject to section 58, all necessary amendments are to be made for the purpose of determining the real questions raised by or otherwise depending on the proceedings, correcting any defect or error in the proceedings and avoiding multiplicity of proceedings. …”

11. As is often the case in a vigorously contested and complex piece of commercial litigation such as this, the question of permitting an amendment ultimately turns on the prejudice that it may occasion to the other party (see s 58(2)(b)(vi) of the Act). The defendants have candidly conceded that the only reason for the relatively extensive additional defences and related matters now sought to be pleaded being raised at this time is because there has been a change in the defendants’ entire legal team.

12. The plaintiffs have drawn to attention that there have been a number of changes in the defendants’ legal team, but that is neither here nor there. The team who, as far as the Court is aware, is the team that will be conducting the hearing in 3 months’ time has taken the view that, in the interests of their clients, the proposed amendments should be made.

13. Turning to the question of prejudice, many of the objections taken by Mr Bevan to the proposed amendments are that they are bound to fail as a matter of law. Again, the determination of a motion of this kind is not the time to spend a great deal of time and effort on everybody's part to attempt to determine definitively whether Mr Bevan's legal submissions are correct. Some of those defences, although matters of law, will also turn on the view that the Court takes as to the relevant facts. It is premature and contrary to s 56 of the Act to now be diverted by attempting to resolve whether or not Mr Bevan's legal objections to the proposed amendments are well taken. They may well be, but if his arguments are correct, they will be just as correct at the end of the hearing and can be more appropriately dealt with then, when the Court is fully seized of all the facts which the parties wish to adduce.

14. In those circumstances, no prejudice is occasioned to the plaintiffs by allowing those amendments.

15. There are a number of other amendments to which objection has been taken on the basis that, on one view, further evidence from Mr Sturesteps would be required to meet them. Mr Bevan has addressed the Court in relation to those, and Mr Condon SC has made it clear that in relation to those parts of the proposed pleading, all that is relied upon is the existing evidence that has been served (including some of Mr Sturesteps’ evidence) and, in some cases, the additional evidence constituted by Mr Khoury's latest affidavit and the annexures thereto. Mr Bevan has quite properly accepted that if the universe of evidence is as Mr Condon SC has indicated, then the plaintiffs cannot submit that they are prejudiced by the amendments.

16. Section 64(2) of the Act provides that “subject to section 58, all necessary amendments are to be made for the purpose of determining the real questions raised by or otherwise depending on the proceedings”. I am satisfied, having regard to s 58 Act, that for the reasons I have given, it is appropriate that leave be granted for the amendments to be made so that the real questions depending on the proceedings may be litigated.

17. The orders of the Court in relation to the defendants’ motion are:

1. The defendants are to file and serve the second further amended defence to second further amended statement of claim which appears under tab 7 of exhibit P1 within 7 days.

2. The defendants have leave to rely upon at trial the affidavit of Dieb Peter Khoury sworn 26 February 2020 and the exhibits thereto but, for the avoidance of doubt, making clear that all rights of the plaintiffs to object to the admissibility of any part of that evidence are reserved.

3. On or before 12 April 2020, the plaintiffs are to file and serve:

1. any reply to the second further amended defence to the second further amended statement of claim; and

2. any evidence in reply to the affidavit of Mr Khoury referred to in order 2.

4. The defendants are to pay the plaintiffs’ costs thrown away by reason of the amendments.

5. The costs of the defendants’ motion are otherwise to be the parties' costs in the cause.

6. There will be liberty to any party to apply on 3 days' notice by email to my associate and, for the avoidance of doubt, that liberty relates to any aspect of the proceedings.

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Decision last updated: 09 March 2020