Westgem Investments Pty Ltd in Its Own Right Trustee for Hossean Pourzand and Jenny Maria Pourzand ATF the Helen Trust v Commonwealth Bank of Australia Ltd [No 8] - [2025] WASC 33

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CIVIL

CITATION:   WESTGEM INVESTMENTS PTY LTD IN ITS OWN RIGHT TRUSTEE FOR HOSSEAN POURZAND AND JENNY MARIA POURZAND ATF THE HELEN TRUST -v- COMMONWEALTH BANK OF AUSTRALIA LTD [No 8] [2025] WASC 33
CORAM:   COBBY J
HEARD:   10 FEBRUARY 2025
DELIVERED          :   10 FEBRUARY 2025
FILE NO/S:   CIV 2722 of 2012
BETWEEN:   WESTGEM INVESTMENTS PTY LTD IN ITS OWN RIGHT TRUSTEE FOR HOSSEAN POURZAND AND JENNY MARIA POURZAND ATF THE HELEN TRUST
First Plaintiff

HOSSEAN POURZAND IN ITS OWN RIGHT TRUSTEE FOR THE HELEN TRUST & THE SHERIN TRUST & THE POURZAND TRUST
First Named Second Plaintiff

JENNY MARIA POURZAND IN ITS OWN RIGHT TRUSTEE FOR THE HELEN TRUST & THE SHERIN TRUST & THE POURZAND TRUST
Second Named Second Plaintiff

PAKWEST PTY LTD (RECEIVERS AND MANAGERS APPOINTED) IN ITS OWN RIGHT TRUSTEE FOR NEWPORT SECURITIES PTY LTD & TRUSTEE FOR VARIOUS OTHER COMPANIES
Third Plaintiff

NEWPORT SECURITIES PTY LTD (RECEIVERS AND MANAGERS APPOINTED) ATF THE PAKWEST TRUST THE NEWPORT FAMILY TRUST & THE LUKE SARACENI FAMILY TRUST
Fourth Plaintiff

OAKCURE PTY LTD OWN CAPACITY AND TRUSTEE FOR THE PARRY TRUST
Fifth Plaintiff

SEAPORT PTY LTD (RECEIVERS AND MANAGERS APPOINTED) IN ITS OWN RIGHT TRUSTEE FOR THE SEAPORT TRUST
Sixth Plaintiff

LUKE SARACENI
Seventh Plaintiff

MAYPORT NOMINEES PTY LTD (RECEIVERS AND MANAGERS APPOINTED) IN ITS OWN RIGHT TRUSTEE FOR THE MAYPORT UNIT TRUST
Eighth Plaintiff

QUEEN STREET PROPERTIES PTY LTD IN ITS OWN RIGHT TRUSTEE FOR THE QUEEN STREET PROPERTIES
Ninth Plaintiff

GRAND EDITION PTY LTD (RECEIVERS AND MANAGERS APPOINTED) IN ITS OWN RIGHT TRUSTEE FOR THE FARAH INVESTMENT TRUST NO 4
Tenth Plaintiff

LMS HOLDINGS PTY LTD ATF THE SARACENI FAMILY TRUST
Eleventh Plaintiff

TOKYO CITY PTY LTD ATF THE TOKYO CITY TRUST
Twelfth Plaintiff

MAREE SARACENI PTY LTD ATF THE TOKYO CITY TRUST AND THE LUKE SARACENI FAMILY TRUST
Thirteenth Plaintiff

MAREE ANN SARACENI
Fourteenth Plaintiff

SINGLE HOLDINGS WA PTY LTD ATF THE TUART INVESTMENTS UNIT TRUST
Fifteenth Plaintiff

SARACEN PROJECT MANAGEMENT PTY LTD ATF THE SARACEN PROJECT MANAGEMENT TRUST
Sixteenth Plaintiff

CARDUP INDUSTRIAL LAND HOLDINGS PTY LTD IN ITS OWN RIGHT TRUSTEE FOR THE CARDUP INDUSTRIAL LAND TRUST AND THE CARDUP INDUSTRIAL LAND TRUST NO 2
Seventeenth Plaintiff

GOLDCUP NOMINEES PTY LTD ATF THE PAKWEST TRUST
Eighteenth Plaintiff

GOLDEN WEST PROPERTIES PTY LTD ATF THE POURZAND FAMILY TRUST THE OZRA TRUST THE GOLD HOUSE TRUST AND JENNY'S TRUST
Nineteenth Plaintiff

AND

COMMONWEALTH BANK OF AUSTRALIA LTD
First Defendant

WESTPAC ADMINISTRATION 2 LTD
Second Defendant

WESTPAC ADMINISTRATION 3 LTD
Third Defendant

Catchwords:

Practice and procedure - Application to reopen to amend pleadings – Application made after final judgment entered - Where error occasioned by plaintiffs' solicitors - Whether interests of justice favour grant of leave to reopen - Where prejudice to plaintiffs outweighs prejudice to defendants

Legislation:

Nil

Result:

Application granted
Leave to reopen and to amend granted

Category: B

Representation:

Counsel:

First Plaintiff	:	Mr W A D Edwards & Mr D J Pratt
First Named Second Plaintiff	:	Mr W A D Edwards & Mr D J Pratt
Second Named Second Plaintiff	:	Mr W A D Edwards & Mr D J Pratt
Third Plaintiff	:	Mr W A D Edwards & Mr D J Pratt
Fourth Plaintiff	:	Mr W A D Edwards & Mr D J Pratt
Fifth Plaintiff	:	Mr W A D Edwards & Mr D J Pratt
Sixth Plaintiff	:	Mr W A D Edwards & Mr D J Pratt
Seventh Plaintiff	:	Mr W A D Edwards & Mr D J Pratt
Eighth Plaintiff	:	Mr W A D Edwards & Mr D J Pratt
Ninth Plaintiff	:	Mr W A D Edwards & Mr D J Pratt
Tenth Plaintiff	:	Mr W A D Edwards & Mr D J Pratt
Eleventh Plaintiff	:	Mr W A D Edwards & Mr D J Pratt
Twelfth Plaintiff	:	Mr W A D Edwards & Mr D J Pratt
Thirteenth Plaintiff	:	Mr W A D Edwards & Mr D J Pratt
Fourteenth Plaintiff	:	Mr W A D Edwards & Mr D J Pratt
Fifteenth Plaintiff	:	Mr W A D Edwards & Mr D J Pratt
Sixteenth Plaintiff	:	Mr W A D Edwards & Mr D J Pratt
Seventeenth Plaintiff	:	Mr W A D Edwards & Mr D J Pratt
Eighteenth Plaintiff	:	Mr W A D Edwards & Mr D J Pratt
Nineteenth Plaintiff	:	Mr W A D Edwards & Mr D J Pratt
First Defendant	:	Ms J N Taylor SC & Ms A Pieniazek
Second Defendant	:	Ms J N Taylor SC & Ms A Pieniazek
Third Defendant	:	Ms J N Taylor SC & Ms A Pieniazek

Solicitors:

First Plaintiff	:	Jackson McDonald
First Named Second Plaintiff	:	Jackson McDonald
Second Named Second Plaintiff	:	Jackson McDonald
Third Plaintiff	:	Jackson McDonald
Fourth Plaintiff	:	Jackson McDonald
Fifth Plaintiff	:	Jackson McDonald
Sixth Plaintiff	:	Jackson McDonald
Seventh Plaintiff	:	Jackson McDonald
Eighth Plaintiff	:	Jackson McDonald
Ninth Plaintiff	:	Jackson McDonald
Tenth Plaintiff	:	Jackson McDonald
Eleventh Plaintiff	:	Jackson McDonald
Twelfth Plaintiff	:	Jackson McDonald
Thirteenth Plaintiff	:	Jackson McDonald
Fourteenth Plaintiff	:	Jackson McDonald
Fifteenth Plaintiff	:	Jackson McDonald
Sixteenth Plaintiff	:	Jackson McDonald
Seventeenth Plaintiff	:	Jackson McDonald
Eighteenth Plaintiff	:	Jackson McDonald
Nineteenth Plaintiff	:	Jackson McDonald
First Defendant	:	King & Wood Mallesons
Second Defendant	:	King & Wood Mallesons
Third Defendant	:	King & Wood Mallesons

Case referred to in decision:

Westgem Investments Pty Ltd in its own right and as trustee for Hossean Pourzand and Pourzand as trustee for the Helen Trust [No 5] [2019] WASC 310

COBBY J:

The plaintiffs have applied by chamber summons filed 17 September 2024 for leave to reopen their case and amend their pleadings.
Although the application is filed in the name of all of the plaintiffs, the scope of the present application is confined to applications by Jenny Maria Pourzand to reopen the plaintiffs' case and amend the statement of claim to plead that, upon the proper construction of two guarantees to which she is a party, her liability is limited to the assets of the Helen Trust, and in the alternative, that those two guarantees should be rectified so that both instruments would have that effect.
For the reasons which follow, I have determined to allow the application, notwithstanding that it is made very late and that the explanation given for the failure to raise the matters identified in the application at an earlier stage of the proceedings is less than complete.
This is the plaintiffs' second application for leave to reopen and to amend. The first was made by summons filed on 27 February 2019, some six months after judgment was reserved following a trial of four separate actions that took place between April and July 2018.
I adopt, without repeating here, Tottle J's summary of the events which gave rise to the litigation between the parties and the amendments sought in the first application in Westgem Investments Pty Ltd in its own right and as trustee for Hossean Pourzand and Pourzand as trustee for the Helen Trust [No 5].[1]
[1] Westgem Investments Pty Ltd in its own right and as trustee for Hossean Pourzand and Pourzand as trustee for the Helen Trust [No 5] [2019] WASC 310 (Westgem No 5). Terms defined in those reasons bear the same meaning where used here.
On 29 August 2019, Tottle J granted the plaintiffs leave to amend in the terms summarised at [16] of his Honour's reasons for decision.
The first claim the plaintiffs, or more particularly Mrs Pourzand, now wish to raise is that on its proper construction the MOFA Pourzand Guarantee binds Mrs Pourzand only in her capacity as trustee of the Helen Trust or otherwise limits the amount which the Security Trustee can recover against Mrs Pourzand to the value of all of the assets of the Helen Trust.
The MOFA Pourzand Guarantee is already pleaded at [56.3.6] of the seventh further amended second substituted statement of claim filed 20 September 2019. The instrument identifies the guarantors to be Hossean Pourzand and Hossean and Jenny Maria Pourzand as trustee for the Helen Trust.
Mrs Pourzand contends that the distinction drawn between how she and Mr Pourzand are identified as guarantors in the instrument is such that it is clearly arguable that Mrs Pourzand's liability under the MOFA Pourzand Guarantee, on its proper construction, is limited to the assets of the Helen Trust.
It is said that, because Mr Pourzand is identified as a party to the guarantees both as an individual and, together with Mrs Pourzand, as the trustee of the Helen Trust, Mr Pourzand was to be personally liable under each guarantee and also liable, together with Mrs Pourzand, as trustees of the Helen Trust. The distinction drawn between how Mr and Mrs Pourzand are described as guarantors is said to give rise to the inference that Mrs Pourzand was not to be personally liable, her liability being limited to the assets of the Helen Trust.
The second claim the plaintiffs wish to raise in respect of the MOFA Pourzand Guarantee would arise only if they failed on that construction argument. In that event, the plaintiffs seek to argue that at the time that the MOFA Pourzand Guarantee was executed, all the parties to it were of the understanding that the guarantee was to bind Mrs Pourzand only in her capacity as trustee of the Helen Trust and not in her own right and capacity, so that the amount which the Security Trustee could recover against Mrs Pourzand was to be limited to the value of the assets of the Helen Trust. It is said that, if the MOFA Pourzand Guarantee does not have that effect upon its proper construction, there was a common mistake as to the effect of the instrument and the MOFA Pourzand Guarantee should be rectified so as to have that effect.
The plaintiffs also seek to be permitted to raise essentially identical claims in relation to the First Restated MOFA Pourzand Guarantee, which is presently pleaded at [98.3.4] of the seventh further amended second substituted statement of claim.
The First Restated MOFA Pourzand Guarantee is alleged to have comprised one of a number of security documents provided to the Security Trustee on or about 22 September 2022 in the context of a variation to the existing Multi-Option Facility Agreement. Mr and Mrs Pourzand were identified in the First Restated MOFA Pourzand Guarantee as guarantors in the same manner as in the MOFA Pourzand Guarantee.
Senior counsel for the plaintiffs informed me that the plaintiffs intend to rely exclusively on contemporaneous documents if the application were granted and disavowed any intention to adduce oral evidence.
All of the claims now sought to be raised are very similar, albeit not identical, to those allowed to be made in 2019 by Tottle J in Westgem [No 5] in respect of the Second Additional Securities.
The claims now sought to be raised were capable of being identified prior to the trial of the proceedings in April 2018, and prior to the plaintiffs' first application for leave to re-open and amend in February 2019. The present claims are sufficiently similar to those previously allowed by Tottle J that it is reasonable to think that they should have been identified in 2019, with the other amendments then pursued by the plaintiffs.
The present application to reopen was supported by the affidavit of Neil Philip Gentilli filed 17 September 2024, in which he deposed:
2.Late last year [i.e. 2023] I became aware of the decision of the Supreme Court of New South Wales in Reliance Financial Services Pty Ltd v Antalija Developments No 4 Pty Ltd(No 4) [2023] NSWSC 1260 (Reliance) handed down on 26 October 2023 as a result of a weekly circular email from a Sydney law firm.
3.The reasons for decision in that case refer to Carter Holt Harvey Woodproducts Australia Pty Ltd v The Commonwealth [2019] 268 CLR 524 handed down on 19 June 2019 (Carter Holt Harvey).
4.I was on leave in late December 2023 and January 2024 and in February 2024 I sought the opinion of counsel on the existing rectification claims and referred them to the authorities referred to above.
5.On 18 March 2024 I received counsel's opinion (to which I do not waive privilege) which recommended that this application be made in respect of the MOFA Pourzand Guarantee and the Restated MOFA Pourzand Guarantee, copies of which are attached marked NPG-1 and NPG-2.
6.These claims were not made earlier as I was not aware of the decision in Carter Holt Harvey until late last year and although I had read the 2 guarantees many times, I was under the impression until I read that decision that while Mr Pourzand was liable in his own right, Mrs Pourzand was only liable to the extent of the assets in the Helen Trust and I did not understand the defendants to be contending otherwise until I was told that this application would be opposed, as set out in paragraph 10 below. I am informed by Mr Pratt and Mr Edwards KC, the plaintiffs' counsel in this matter and believe that they were not aware of the decisions referred to above until after I sent Mr Pratt a copy of the decision in Reliance on 6 December 2023.
7.The opinion was provided to the plaintiffs in March this year and in May 2024 I received instructions to make this application.
…
Mr Gentilli further deposes that he believes that all documents upon which the plaintiffs would rely in the proposed amendments to their pleadings are already in evidence except for an executed copy of a deed of trust covenant in respect to the Helen Trust, and that it should not be necessary for any additional evidence to be adduced by the plaintiffs if they were granted leave to make the proposed amendments and to reopen their case to make submissions in respect of them.
There is nothing in Reliance or Carter Holt Harvey of direct relevance to the claims the plaintiffs now seek to make. Both decisions do, however, refer to the long established principle that a trustee is ordinarily personally liable for all debts or liabilities incurred as a trustee, irrespective of whether the trustee contracted in that capacity, so that the creditor knew of the existence of the trust, or not.
In his affidavit sworn 27 February 2019 sworn in support of the first application to reopen, Mr Gentilli deposed, in effect, that none of the plaintiffs' legal advisers had considered the precise terms of (amongst other instruments) the guarantees on which the defendants rely in their counterclaim, which include the MOFA Pourzand Guarantee and the First Restated Pourzand Guarantee, in the context of the other agreements made between the various parties in relation to the MOFA and the subsequent variations thereto.
I infer from Mr Gentilli's 17 September 2024 affidavit that, notwithstanding that the law on the point was well established and that the terms of the guarantees were considered prior to February 2019, he believed prior to reading of the decision in Reliance that Mrs Pourzand was liable only to the extent of the assets held by the Helen Trust, despite the fact that there is no provision in either the MOFA Pourzand Guarantee or the First Restated Pourzand Guarantee expressly limiting the extent of her liability. Further, it would seem from [6] of his affidavit that neither he nor counsel for the plaintiffs had had regard to the applicable law in considering the extent of Mrs Pourzand's liability under the MOFA Pourzand Guarantee and the Restated MOFA Pourzand Guarantee before late 2023 at the earliest.
The failure to raise the matters the subject of the present application earlier is therefore, if Mr Gentilli's evidence is accepted, attributable to a different reason (to use a neutral expression) than that which gave rise to the application in 2019. Further, that failure is to be attributed to the plaintiffs' legal representatives, rather than Mrs Pourzand personally.
Although I have some concerns regarding the lack of clarity in Mr Gentilli's 17 September 2024 affidavit, on balance I consider that his explanation should be accepted. In coming to that conclusion, I have had particular regard to the fact that there is no apparent reason, other than the inadvertence to which Mr Gentilli indirectly refers, why the plaintiffs, and Mrs Pourzand in particular, did not raise the matters the subject of the present application when they sought leave to reopen and amend in 2019. I have been unable to identify any potential forensic or strategic advantage, but easily identifiable risks, to the plaintiffs in delaying the present application for so many years.
On that basis, in determining the application I apply, without repeating, Tottle J's summary of the principles governing applications to reopen after the delivery of judgment at [63] ‑ [81] and the amendment of pleadings at [95] - [97] in Westgem [No 5], bearing in mind that Tottle J allowed the previous application to reopen and amend prior to delivering judgment in the proceedings, and that the plaintiffs' appeal from that judgment has been determined.
A further factor I take into consideration is that, somewhat unusually, this is not a case where all issues between the parties have been determined, notwithstanding the entry of judgment and the appeal therefrom. As identified by Tottle J in Westgem [No 5],[2] the defendants cannot enforce the remedies they contend are open to them under the Second Additional Securities until the trial of the defendants' counterclaim is held and judgment on that claim is delivered. In particular, the extent of Mrs Pourzand's liability under the Second Additional Securities is yet to be determined.
[2] Westgem [No 5] [102].
It appears to me that the trial of the matters in respect of which Tottle J has already granted leave to reopen and the defendants' counterclaim is likely to be heard later this year.
On my assessment, the issues now sought to be raised by Mrs Pourzand are incremental to those already due to be heard by the court at that trial. Although the extent of the evidence to be adduced by the defendants in response to the claim is unknown, a matter to which I return below, I consider that the issues Mrs Pourzand now raises are unlikely to add more than one or two days to the length of the trial, and that the trial itself is unlikely to the significantly delayed were the present application granted.
I accordingly consider that case management considerations are not determinative of the application, although I have regard to them in considering the application.
As to the merits of the claims Mrs Pourzand now seeks to pursue, I consider each raises a serious question to be tried, although it is not possible to form a view as to the ultimate strength of each claim, in part because the defendants have not identified the whole of the evidence upon which they would rely.
Turning to the prejudice which Mrs Pourzand would suffer were the present application to be refused, she essentially submits that if the application is not granted she may be held liable to the defendants for many millions of dollars which she cannot pay, in circumstances where she may not be personally liable to the defendants at all.
The defendants read the affidavit of James Lu-Wen Wang sworn 21 October 2024 in opposition to the application. Mr Wang is the solicitor with the conduct of the matter on behalf of the defendants.
His evidence is that, in addition to identifying any further documents which may be relevant to the new claims, he considers that the defendants would need to speak to and proof at least four witnesses in relation to the claims the subject of the application, three of whom gave evidence at the trial. He also disposes that relevant witnesses are no longer employed by the defendants, although he did not identify how many of them have left the defendants' employment, and that one witness has died. It is not possible to assess the extent of the prejudice to the defendants arising from that person's death, as the position held by that person at the relevant times, the extent of his involvement in the negotiations between the parties and the importance of the evidence that person might have provided is not addressed in Mr Wang's affidavit.

Further, the First Restated Pourzand Guarantee was provided on the same day as the Second Additional Securities, being on or about 22 September 2010. As the First Restated Pourzand Guarantee and the Second Additional Securities appear to have been provided as part of the security required by the defendants in relation to the Restated MOFA, I consider that it is likely that the persons who are potential witnesses for the defendants in relation to the matters in respect of which Tottle J granted leave to reopen and amend in 2019 are also witnesses to the claims now sought to be raised by Mrs Pourzand. I accordingly infer that the defendants have already identified the witnesses able to give evidence as to the parties' intentions regarding the First Restated Pourzand Guarantee and the Second Additional Securities and proofed those witnesses in relation to the Second Additional Securities, but, if that has not occurred, the defendants will not likely suffer any significant prejudice if they are now required to also identify and proof those persons in relation to the two guarantees now under consideration.
The defendants further point out that the claims now sought to be made by Mrs Pourzand concern instruments executed 16 and 14 years ago, such that the recollections of witnesses are likely to be impaired due to the passage of time. While I accept that is so, as I have been told that Ms Pourzand does not intend to adduce any oral evidence in support of the new claims and intends to rely solely upon the contemporaneous documents passing between the parties, I consider this concern to be of lesser significance than might otherwise have been the case.
On balance, I consider that the prejudice to Mrs Pourzand if she is not permitted to pursue the relatively limited claims identified in the present application outweighs the prejudice to the defendants were the application to be granted. In my view, the similarity of the legal issues between the amendments permitted by Tottle J in 2019 and the amendments presently sought to be made and the likelihood that any communications between the parties relevant to the negotiations regarding the securities to be provided to the defendants occurred between the same persons as who were involved in the negotiation of the instruments, the subject of the 2019 amendments means that the interest of justice favour the grant of the application, notwithstanding that the defendants will undoubtedly suffer some prejudice as a consequence.
Accordingly, I will grant the plaintiffs leave to again reopen their case and to amend in terms of the application. I will hear from the parties as to the precise from of the orders to be made and as to costs, although my preliminary view is that the plaintiffs should pay the costs of the application.

I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
LT
Associate to the Hon Justice Cobby
10 FEBRUARY 2025