Westgem Investments Pty Ltd v Commonwealth Bank of Australia Ltd [No 5] - [2019] WASC 310

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CIVIL

CITATION:   WESTGEM INVESTMENTS PTY LTD IN ITS OWN RIGHT AS TRUSTEE FOR HOSSEAN POURZAND AND JENNY MARIA POURZAND ATF THE HELEN TRUST -v- COMMONWEALTH BANK OF AUSTRALIA LTD [No 5] [2019] WASC 310
CORAM:   TOTTLE J
HEARD:   20 JUNE 2019
DELIVERED          :   29 AUGUST 2019
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 - Where application brought six months after judgment reserved following trial - Where final judgment not entered - Where error occasioned by plaintiffs' solicitors - Whether applicant must show absence of fault or neglect before leave to reopen granted - Whether interests of justice favour grant of leave to reopen - Where prejudice to plaintiffs outweighs prejudice to defendants

Legislation:

Rules of the Supreme Court 1971 (WA), O 1 r 4A and r 4B, O 21 r 5

Result:

Application allowed, leave to re-open case granted

Category: B

Representation:

Counsel:

First Plaintiff	:	Mr W A D Edwards
First Named Second Plaintiff	:	Mr W A D Edwards
Second Named Second Plaintiff	:	Mr W A D Edwards
Third Plaintiff	:	Mr W A D Edwards
Fourth Plaintiff	:	Mr W A D Edwards
Fifth Plaintiff	:	Mr W A D Edwards
Sixth Plaintiff	:	Mr W A D Edwards
Seventh Plaintiff	:	Mr W A D Edwards
Eighth Plaintiff	:	Mr W A D Edwards
Ninth Plaintiff	:	Mr W A D Edwards
Tenth Plaintiff	:	Mr W A D Edwards
Eleventh Plaintiff	:	Mr W A D Edwards
Twelfth Plaintiff	:	Mr W A D Edwards
Thirteenth Plaintiff	:	Mr W A D Edwards
Fourteenth Plaintiff	:	Mr W A D Edwards
Fifteenth Plaintiff	:	Mr W A D Edwards
Sixteenth Plaintiff	:	Mr W A D Edwards
Seventeenth Plaintiff	:	Mr W A D Edwards
Eighteenth Plaintiff	:	Mr W A D Edwards
Nineteenth Plaintiff	:	Mr W A D Edwards
First Defendant	:	Mr P J Jopling QC & Mr E A Gisonda
Second Defendant	:	Mr P J Jopling QC & Mr E A Gisonda
Third Defendant	:	Mr P J Jopling QC & Mr E A Gisonda

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(s) referred to in decision(s):

Aon Risk Services Australia Ltd v Australian National University [2009] HCA 27; (2009) 239 CLR 175
Autodesk Inc v Dyason (No 2) [1993] HCA 6; (1993) 176 CLR 300
Damberg v Damberg [2001] NSWCA 87; (2001) 52 NSWLR 492
De L v Director-General, NSW Department of Community Services (No 2) [1997] HCA 14; (1997) 190 CLR 207
Di Stasio Pty Ltd v R & K Services Pty Ltd [2018] VSCA 340
DJL v The Central Authority [2000] HCA 17; (2000) 201 CLR 226
Eastman v Director of Public Prosecutions (ACT) [2003] HCA 28; (2003) 214 CLR 318
Embleton Motor Co Pty Ltd v St Kilda Beach Taxi School and Staffing Pty Ltd [2014] WASCA 183
Ezra Abrahams Pty Ltd v Milburn [2017] VSCA 355
FYD Investments Pty Ltd v Promptair Pty Ltd [2017] FCA 1097
G D Pork Pty Ltd v Derby Industries Pty Ltd [2018] WASC 223
Goldsmith v Sandilands [2002] HCA 31; (2002) 190 ALR 370
Hightime Investments Pty Ltd v Lungan [No 2] [2010] WASC 296
Inspector-General in Bankruptcy v Bradshaw [2006] FCA 22
Lashansky v Legal Practitioners Complaints Committee [2005] WASCA 217
LED Builders Pty Ltd v Eagle Homes Pty Ltd [1999] FCA 1141
Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd [2015] HCA 37; (2015) 256 CLR 104
New Energy Minerals Ltd v Arena Structured Private Investments (Cayman) LLC [2019] WASC 259
Simic v New South Wales Land and Housing Corporation [2016] HCA 47; (2016) 260 CLR 85
Smith v New South Wales Bar Association [1992] HCA 36; (1992) 176 CLR 256
Spotlight Pty Ltd v NCON Australia Ltd [2012] VSCA 232; (2012) 46 VR 1
State Rail Authority (NSW) v Codelfa Construction Pty Ltd [1982] HCA 51; (1982) 150 CLR 29
University of Wollongong v Metwally (No 2) [1985] HCA 28; (1985) 60 ALR 68
Urban Transport Authority of New South Wales v Nweiser (1992) 28 NSWLR 471
Water Corporation v Cardno BSD Pty Ltd [2009] WASCA 212
Wentworth v Woollahra Municipal Council [1982] HCA 41; (1982) 149 CLR 672
Westgem Investments Pty Ltd v Commonwealth Bank of Australia Ltd [No 3] [2018] WASC 73
Westport Insurance Corporation v Gordian Runoff Ltd [2011] HCA 37; (2011) 244 CLR 239

TOTTLE J:

The application to re-open - introduction

The plaintiffs have applied for leave to re-open and for leave to amend their pleadings by withdrawing admissions in order to make new claims.[1] The application was brought by way of a chamber summons filed on 27 February 2019, some six months after judgment was reserved following a trial of liability issues in four separate actions that took place between April and July 2018.
[1] The pleadings the plaintiffs seek leave to amend are the Sixth further amended second substituted statement of claim filed on 7 June 2018, and the reply and defence to counterclaim filed on 14 June 2018.
The litigation arises out of a commercial property development in the Perth Central Business District known as Raine Square. The first plaintiff, Westgem Investments Pty Ltd, was the developer. It was incorporated by Mr Luke Saraceni and Mr Hossean Pourzand as a special joint venture vehicle for their interests. Westgem claims damages from the defendants who financed the development. The other plaintiffs are parties to the action because they gave guarantees and securities in support of Westgem's borrowings. The plaintiffs seek to have the guarantees and securities set aside. By their counterclaim the defendants claim from the guarantor plaintiffs the balance of Westgem's debt they say is due after realisation of various securities. The quantification of the amount claimed by the defendants is an issue to be determined, if necessary - that is if the guarantees are not set aside - in a second 'quantum' trial. The defendants say the balance of the debt presently exceeds $217 million.
Finance for the development was advanced to Westgem under the terms of an agreement, the Multi-Option Facility Agreement, made on 8 April 2008 (the MOFA) and amended from time to time thereafter. Under the terms of the MOFA various guarantees and securities were provided. Pursuant to an agreement made in November 2009 (18 November Letter Agreement) further guarantees and securities were provided (the First Additional Securities).
If given leave to re-open the plaintiffs wish to advance claims that focus on inconsistencies between the terms of various documents that form part of a suite of security documents, in particular inconsistencies between the terms of:
(a)on the one hand, two instruments of guarantee, the Restated MOFA Limited Guarantee and the Restated MOFA Pourzand Guarantee (the Restated MOFA Guarantees[2]); and
(b)on the other hand, further securities that also incorporated guarantees and indemnities (the Second Additional Securities).
These guarantees and securities were provided pursuant to the terms of an amendment to the MOFA made on 23 September 2010 by a Deed of Amendment and Restatement: Multi-Option Facility Agreement - Raine Square (the Restated MOFA).
[2] There were other guarantees given pursuant to the Restated MOFA but they are not relevant to the present application.
The Second Additional Securities included mortgages of real property (the Second Additional Mortgages provided by the Second Additional Mortgagors) and a charge over units in a unit trust, the Tuart Unit Charge. In the Appendix to these reasons, I list the Second Additional Securities.
The securities provided pursuant to the MOFA, the 18 November Letter Agreement and the Restated MOFA, were provided in favour of the third defendant to hold as 'Security Trustee' for the first and second defendants.
The contentions the plaintiffs wish to advance are essentially twofold:
(a)first, the Second Additional Securities were provided by the Second Additional Security Providers solely in their capacities as trustees of various trusts on whose behalf they held the property that was the subject of the Second Additional Securities; and
(b)second, the liability of the Second Additional Security Providers is limited to the amount the Security Trustee has and can recover by enforcing its rights against the secured property the subject of the Second Additional Securities.
If the plaintiffs' contentions are accepted the Second Additional Security Providers will have no further liability for the majority of the balance of the debt claimed by the defendants because, with one exception, the Second Additional Securities have been realised by the defendants. The realisation of the Second Additional Securities has produced recoveries of approximately $28.4 million. One of the securities, a first registered mortgage over 1 Keane Road, Forrestdale, a property owned by the tenth plaintiff, Grand Edition Pty Ltd, has not been realised. In 2010 a range of values of between $8,250,000 and $12,400,000 was given for this property.[3]
[3] Defendants' outline of closing submissions - Schedule 5.1 and the documents referred to (DEF.201.041.0001, 0265).
By this application the plaintiffs seek to address the difficulty constituted by admissions made in the reply and in the defence to counterclaim that are contrary to the contentions they now wish to advance.
The plaintiffs say that the admissions were made as a result of inadvertence on the part of their lawyers.
It is convenient to begin by outlining how the questions of the capacity of the Second Additional Security Providers and the extent of their liability have been addressed in the pleadings.

The pleadings

The action was commenced on 17 October 2012 by writ of summons indorsed with a statement of claim. The statement of claim has been amended ten times. The Fifth Further Amended Second Substituted Statement of Claim was filed and served shortly before the commencement of the liability trial.[4] At that stage the pleading (excluding schedules) comprised 447 paragraphs extending over 241 pages. The last set of amendments to the statement of claim were made on 7 June 2018. These amendments consisted of the deletion of a large number of paragraphs that pleaded claims that had been abandoned by the plaintiffs.
[4] The pleading added a new claim. The defendants applied unsuccessfully to strike out the application, see Westgem Investments Pty Ltd v Commonwealth Bank of Australia Ltd [No 3] [2018] WASC 73.
The plaintiffs' reply and defence to counterclaim was amended four times, with the last amendments being incorporated in a pleading filed on 14 June 2018.
The paragraphs of the pleadings that address the issue of the capacity in which the Restated MOFA Guarantors and the Second Additional Security Providers granted the Restated MOFA Guarantees and the Second Additional Securities respectively and the issue of the extent of the liability of the Second Additional Security Providers are as follows:
(a)Pars 98.3.2 and 98.3.5 of the statement of claim - the plaintiffs plead that the Restated MOFA Limited Guarantee and the Second Restated MOFA Pourzand Guarantee were given on about 22 September 2010. The plaintiffs who gave each of these guarantees are referred to as trustees of specified trusts.
(b)Par 98.4 of the statement of claim - the plaintiffs plead that the Second Additional Securities and two other securities, a mortgage defined as the Restated MOFA Australind Mortgage and a share mortgage (the Seaport Share Mortgage) granted by Mr Saraceni, were provided on or about 22 September 2010. Each of the Second Additional Securities is pleaded as having been granted by each Second Additional Security Provider as a trustee of a specified trust or trusts. The plaintiffs plead the Tuart Unit Charge in par 98.4.10 of the statement of claim and allege that it was granted by Newport as trustee for the Newport Family Trust.
(c)Par 98(b) of the defence - the defendants admit the matters pleaded in pars 98.2 to 98.4.9 of the statement of claim, thus, the defendants are taken to admit that the Second Additional Securities pleaded in pars 98.4.1 - 98.4.9 were provided by the Second Additional Security Providers in their capacities as trustees. The defendants plead that they would refer to the documents for their full terms, meaning and effect but this cannot be understood to qualify the admission in par 98(b). Nor, given the defendants' specific pleading in response to the capacity in which Newport granted the Tuart Unit Charge (see subparagraph (d) below) could the admission be understood as implicitly reserving to the defendants the right to argue that the Second Additional Security Providers granted the Second Additional Securities in their personal capacities as well as in their trustee capacities.
(d)Par 98(c) of the defence - the defendants plead that the Tuart Unit Charge was granted by Newport beneficially and as trustee for the Newport Family Trust. The defendants' plea about the capacity in which Newport executed the Tuart Unit Charge was first made on 22 December 2014.
(e)Par 98(c) of the reply - the plaintiffs admit par 98(c) of the defence, that is, they admit that the Tuart Unit Charge was granted by Newport beneficially and as trustee for the Newport Family Trust. This admission is inconsistent with the plea in par 98.4.10 of the statement of claim that pleads that the Tuart Unit Charge was granted by Newport as trustee. This admission was first made on 6 March 2015 and remains in the current version of the statement of claim.
(f)Pars 115 and 116 of the counterclaim - in par 115 the defendants refer to par 98 of the defence. By par 98(b) of the defence they admit, subject to the exception of the Tuart Unit Charge, that the Second Additional Securities were provided by the Second Additional Security Providers as trustees. Inconsistently with that admission, in par 116 of the counterclaim the defendants plead that the Second Additional Mortgages were provided by the mortgagors in their own right and as trustee(s) for the respective trusts.
(g)Par 117 of the counterclaim - the defendants plead the effect of various express terms of the Second Additional Mortgages. For present purposes, the relevant effect may be summarised as an assumption by the Second Additional Mortgagors of an obligation to pay the entirety of the debt due to defendants under the Restated MOFA.
(h)Par 120 of the counterclaim - the defendants plead the effect of various express terms of the Tuart Unit Charge. For present purposes, the relevant effect may also be summarised as an assumption by Newport of an obligation to pay the entirety of the debt due to the defendants under the Restated MOFA. The allegations in pars 117 and 120 of the counterclaim were first pleaded on 22 December 2014.
(i)Par 116 of the defence to counterclaim - the plaintiffs admit that the grantors of the the Second Additional Mortgages were as pleaded in par 116 of the counterclaim. This admission is inconsistent with the allegations as to the capacity in which the Second Additional Mortgagors granted the Second Additional Mortgages in par 98.4 of the statement of claim. The plaintiffs plead that they would refer to the Second Additional Mortgages for the full terms, meaning and effect. Again I do not understand the intention to refer to the full terms of the documents to qualify the admission.
(j)Pars 117 and 120 of the defence to counterclaim - the plaintiffs admit that the Second Additional Mortgages and the Tuart Unit Charge contained terms 'generally as pleaded' by the defendants. These admissions were first made on 6 March 2015.
Before leaving the current pleadings I note a further point made by the defendants, that is, on 11 August 2017 the plaintiffs amended the statement of claim as it then stood (the Third Further Amended Statement of Claim) to include a claim for the rectification of a security known as the MOFA Share Mortgage but did not seek any rectification of any of the other securities. The defendants do not oppose rectification of the MOFA Share Mortgage.

The proposed amendments

The plaintiffs' proposed amendments may be summarised as follows:
(a)an amendment to the statement of claim to make a claim based on the proper construction of the Tuart Unit Charge to the effect that the total amount for which Newport is liable under the Tuart Unit Charge is limited to the amount which the Security Trustee could recover by enforcing its rights against the secured property the subject of the Tuart Unit Charge, alternatively, to seek rectification of the Tuart Unit Charge by amending it to include a term that accords with the proper construction as contended for by the plaintiffs;
(b)an amendment to the statement of claim to make a claim based on proper construction of the Second Additional Mortgages to the effect that:
(i)the Second Additional Mortgage Providers are only bound by the Second Additional Mortgages in their trustee capacities and not in their own right; and
(ii)the total amount for which the Second Additional Mortgage Providers are liable under the Second Additional Mortgages is limited to the amount which the Security Trustee could recover by enforcing its rights against the secured property the subject of the Second Additional Mortgages; alternatively,
(iii)an amendment to seek rectification of the Second Additional Mortgages by the inclusion in each of them of a term that accords with the proper construction of them contended for by the plaintiffs.
(c)an amendment to par 98 of the reply to deny that the Tuart Unit Charge was granted by Newport in its own right; and
(d)an amendment to pars 116, 117 and 120 of the defence to counterclaim so as to rely on the proposed amendments to the statement of claim outlined above in order to limit the liability of Newport and the Second Additional Mortgage Providers under the Tuart Unit Charge and the Second Additional Mortgages respectively.

The claims the plaintiffs wish to raise on re-opening

The contractual framework

It is convenient to begin by referring to the critical Transaction Documents (a defined term in the Restated MOFA) to which the plaintiffs' submissions were directed.

The Restated MOFA

Schedule 1 of the Restated MOFA contains a list of the guarantors, including the Restated MOFA Guarantors. Each of the Restated MOFA Guarantors is described as being a trustee of a specified trust or trusts. It was a condition precedent of the Restated MOFA that a number of Transaction Documents were executed and provided to the defendants. These included a deed of consideration and acknowledgement and 34 'New Security Documents' listed in Schedule 4 of the Restated MOFA. The 'New Security Documents' included the Second Additional Mortgages. In the descriptions of the Second Additional Mortgages the grantor of each Second Additional Mortgage is described as a trustee of a specified trust or trusts. By way of example, the mortgage provided by Mr and Mrs Pourzand (Restated MOFA 251 St Georges Terrace Mortgage) is described as follows:
mortgage dated on or about the date of this Deed given in favour of the Security Trustee by Hossean Pourzand and Jenny Maria Pourzand as trustees for the Sherin Trust over lot 11 on diagram 63311, being the whole of the land contained in certificate of title volume 1964 folio 1

Deed of Consideration and Acknowledgement

The parties to this deed were Westgem, the defendants and the existing and prospective guarantors.[5] One of the purposes of the deed was to record that consideration had been provided to those who were giving guarantees and providing securities. The Second Additional Security Providers were described in Schedule 1 of the deed by reference to their trustee capacities and the Second Additional Securities (with the exception of the Seaport Share Mortgage) were described in Schedule 3 of the deed as being granted by the Second Additional Security Providers in their capacities as trustees.

The deed of guarantee and indemnity - limited (Restated MOFA Limited Guarantee)

[5] RSQ.006.0002.0215.

The parties to this deed were recorded as:
(1)the Security Trustee;
(2)Pakwest as trustee for:
(i)Westview as trustee for the Westview Trust; and
(ii)Oakcure as trustee for the Zahra No 2 Trust.
(3)Pakwest as trustee for:
(i)Cityscape as trustee for the Faramaz Trust; and
(ii)Rangeway as trustee for the Rangeway Investments Trust.
(4)Newport as trustee for the Newport Family Trust;
(5)Mayport as trustee for the Mayport Unit Trust;
(6)Queen Street Properties as trustee for the Queen Street Properties Trust; and
(7)Grand Edition as trustee for the Farah Investment Trust No 4.
The deed recorded the guarantees given by each guarantor and referred to the securities granted by each of them (defined as the Security Documents) and in referring to the securities described each as a trustee of a specified trust or trusts.
The plaintiffs draw attention to the guarantee and indemnity provision in cl 3 read in conjunction with the limit of liability provision in cl 4. Clauses 3 and 4 read as follows:[6]
[6] RSQ.006.0002.0269 at 0277.
3Guarantee and indemnity
3.1 Guarantee
The Guarantor unconditionally and irrevocably guarantees to the Security Trustee the punctual payment to the Finance Parties by the Debtor of the Guaranteed Money as and when it becomes due.
3.2 Payment on demand
If the Debtor defaults in the punctual payment of any of the Guaranteed Money, the Guarantor must pay the whole of the Guaranteed Money to the Security Trustee immediately on demand. The Security Trustee may make a demand on the Guarantor even if the Security Trustee has not made a demand on the Debtor.
3.3Indemnity
The Guarantor unconditionally and irrevocably indemnifies each Finance Party against all demands, claims, suits, actions, damages, liabilities, losses, costs, charges and expenses that may be made or brought against or suffered or incurred by any Finance Party if the Guaranteed Money:
(1) is not or has never been recoverable by the Finance Parties from the Debtor or from the Guarantor as surety;
(2) cannot be enforced against the Debtor or against the Guarantor as surety; or
(3) is not paid to the Finance Parties for any other reason,
including by reason of:
(4) any lack of authority or power or any legal limitation, disability or incapacity of or affecting any person;
(5) the Debtor's obligation to pay the Guaranteed Money or any transactions relating to the Guaranteed Money being void, voidable or otherwise unenforceable (even if a Finance Party knew or ought to have known of the matters or facts relating to those circumstances); or
(6) the Liquidation of the Debtor.
3.4 Payment on demand under indemnity
The Guarantor must pay to the Security Trustee immediately on demand all amounts due to the Finance Parties under clause 3.3. The Security Trustee may make a demand on the Guarantor even if the Security Trustee has not made a demand on the Debtor.
3.5Separate and principal obligation
The Guarantor agrees that:
(1)the indemnity contained in clause 3.3 is a separate and distinct obligation and is not restricted by the guarantee in clause 3.1; and
(2)the Guarantor's liability under clause 3.3 is that of principal debtor.
4Limit of liability
4.1Limit
(1)This clause 4.1 is subject to clause 4.2.
(2)This document is a continuing guarantee and indemnity for the whole of the Guaranteed Money.
(3)Despite any other clause in this document, the total amount for which a Guarantor is liable under clause 3 is limited to the amount the Security Trustee can obtain from enforcing its rights in connection with the Security Documents granted by that Guarantor in favour of the Security Trustee.
(4)Clause 4.1(3) does not limit the amount the Security Trustee can claim from each Guarantor; clause 4.1(3) merely limits the amount the Security Trustee can ultimately recover from each Guarantor.
4.2Limit does not apply
(1)Other than in respect of Grand Edition Pty Ltd as trustee for the Farah Investment Trust No. 4 (Grand Edition), clause 4.1(3) does not apply to a Guarantor if a Security Document granted by that Guarantor in favour of the Security Trustee dated on or about the date of this document is void or voidable or unenforceable.
(2) If a Security Document granted by Grand Edition in favour of the Security Trustee is void or voidable or unenforceable then, in those circumstances only, the limit under clause 4.1(3) does not apply to Grand Edition and an alternative limit that is equal to the amount realised in any sale or disposal of lot 1 on deposited plan 46467, being the whole of the land contained in certificate of title volume 2655 folio 899, shall apply to solely Grand Edition for the purposes of that clause 4.1(3).

Guarantee and indemnity - (Mr Pourzand and Mrs Jenny Pourzand) - (Restated MOFA Pourzand Guarantee)

This guarantee was expressed to be given by Mr Pourzand and Mrs Pourzand 'as trustee for the Sherin Trust'. This document contains a reference to the 'Guaranteed agreement' which is defined as the 'Multi-Option Facility Agreement - Raine Square dated 23 April 2008 between the Debtor, the Guarantors, each Credit Provider, the Facility Agent and the Security Trustee as amended, restated and varied from time to time'. It also contains a reference to the 'maximum amount' which is defined as follows:
1 The maximum amount for which you are liable under this guarantee and indemnity is limited to the amount the Security Trustee can obtain from enforcing its rights in connection with the Security Document granted by you in favour of us dated on or about the date of this guarantee and indemnity. However, this limit does not apply if:
·you have breached any obligation you owe under any Security Document;
·you have given us or any other Finance Party incorrect or misleading information, or failed to inform a Finance Party if any information, declaration, representation or warranty is no longer correct or no longer misleading, in connection with that Security Document; or
·that Security Document is void or unenforceable.
2 The limit in clause 1 does not limit the amount the [sic] we can claim from you, it just limits the amount the [sic] we can ultimately recover from you.
There is no definition of the 'Security Document' referred to in the definition of 'maximum amount' but the plaintiffs submit that the Security Document must be a reference to the Restated MOFA 251 St Georges Terrace Mortgage as that is the only 'Security Document' executed by Mr Pourzand and Mrs Pourzand in their capacities as the trustees of the Sherin Trust.

Deeds of Trust Covenant

Each trustee of the trusts in whose name the Second Additional Securities were expressed to be provided, together with a separate group of parties referred to collectively as 'Trust Covenantors', entered into a deed of trust covenant with the Security Trustee. The 'Trust Covenantors' were defined as those who were either 'guardians, appointors, unitholders, beneficiaries or discretionary beneficiaries' of each trust. Clause 3 of each deed of trust covenant read as follows:[7]
3 Declaration
3.1 The Trustee hereby acknowledges, covenants and declares that the Trustee does not and will not have any beneficial estate or interest in the Mortgaged Property but that the Mortgaged Property has been acquired and is and will be held by the Trustee upon trust pursuant to the provisions of the Trust Deed for the benefit of the Trust Covenantors and each other beneficiary of the [named trust] and shall ultimately form part of the trust fund and the corpus of the [named trust].
3.2 The Trustee hereby acknowledges, covenants and declares that the Mortgaged Property will only be dealt with by the Trustee in accordance with the Trust Deed.
[7] RSQ.006.0002.0821.
The 'Mortgaged Property' referred to in each deed of trust covenant was the real property the subject of the Second Additional Mortgage granted by the trustee to the Security Trustee. In each deed the trustee gave various warranties as to the trustee's authority to enter into the deed, and the trustee and the Trust Covenantors entered into various covenants with the Security Trustee. The apparent relevant commercial purpose of those covenants was to ensure that the trustee and the Trust Covenantors did not alter the constitution of the trust or conduct its affairs in a manner that adversely affected the value of the security provided to the Security Trustee.

Second Additional Mortgages

Clause 1.1(9) of each Second Additional Mortgage defines 'Mortgagor' as follows:
Mortgagor means the person or persons described as 'Mortgagor' on the cover sheet of this Mortgage and includes the relevant person or persons in their capacity as trustee of the [named trust].
Clause 1.5 provides:
The parties each acknowledge and agree that the Mortgagor enters into this Mortgage and is bound as trustee for the [named trust].
Clause 2 provides as follows:
2.Payment of Secured Money
2.1Payments and Performance
The Mortgagor must:
(1)(obligation to pay) punctually pay the Secured Money when it becomes payable in accordance with the terms of the Transaction Documents or any other written agreement between the Mortgagor and the Finance Parties or, in the absence of any agreement or after default under any agreement, on demand by the Security Trustee; and
(2)(satisfaction of Obligations) satisfy, or procure the satisfaction of, the Obligations in accordance with the terms of the Transaction Documents or any other written agreement between the Mortgagor and the Finance Parties.
Each Second Additional Mortgage includes a term in cl 1.2 to the effect that expressions used in the mortgage had the meanings given to them in the MOFA. 'Secured Money' is not defined in Second Additional Mortgages but it is defined in the MOFA as meaning, in effect, all money that was owed under the MOFA.[8]
[8] Clause 1(137) of the MOFA (RSQ.006.0001.0030).
Clause 3 of each Second Additional Mortgage sets out a number of representations and warranties by the mortgagor. These included representations as follows:
(a)by cl 3.1(3):[9]
[9] A clause in these terms appears where the mortgagor is a trustee for a single trust. Where the mortgagor is a trustee for more than one trust the clause refers to each relevant trust.
(trusts) the Mortgagor enters into this Mortgage as sole trustee of the [named trust] in relation to the Secured Property comprising the trust fund of the [named trust] and as beneficial owner in relation to any other Secured Property;
(b)by cl 3.2(1)
(1) Without limiting any other representation or warranty contained in this clause 3, the Mortgagor, as trustee of the [named trust] (Trust), represents and warrants that:
(a) it is empowered by the trust deed or deeds by which the Trust was constituted or to which the Trust relates (Trust Deed):
(i) to enter into and perform this Mortgage and each other Transaction Document to which it is a party, including any transactions under them; and
(ii) to carry on its business as now conducted or contemplated and to own its property and assets, in its capacity as trustee of the Trust and there is no restriction or condition upon such activity by it;
(b) all necessary resolutions have been duly passed and all consents, approvals and other procedural matters have been obtained or attended to as required by the Trust Deed for the entry into and performance by it of this Mortgage and each other Transaction Document to which it is a party, including any transactions under them;
(c) it is the sole trustee of the Trust;
(d) no property of the Trust has been resettled or set aside or transferred to any other trust or trusts;
(e) the Trust has not been terminated, nor has the date or any event for the vesting of the assets of the Trust occurred; and
(f) the Mortgagor's right of indemnity out of, and lien over, the assets of the Trust has not been limited in any way.
Clause 15 of each Second Additional Mortgage provides:
15.Guarantee
15.1Without limiting the generality of the other provisions of this Mortgage, the Mortgagor unconditionally guarantees the due and punctual payment by the Borrower of the Secured Money as and when the same will become due and also the performance of the obligations of the Borrower in connection with, and which form part of, the Secured Money and will keep the Security Trustee indemnified against all losses, damages, costs, charges and expenses that the Security Trustee may incur by reason of or arising out of any default or failure for any reason on the party [sic] of the Borrower in payment of the Secured Money or in performance of the Borrower's obligations (including those which form part of the Secured Money) to the Secured Trustee.

The Tuart Unit Charge

In the Tuart Unit Charge Newport is described as the trustee of the Newport Family Trust. Clause 6 of the Tuart Unit Charge contains a number of representations and warranties on the part of Newport. Clause 6.2 provides:[10]
(1) The Security Provider enters into this document:
(a)as sole trustee of the Trust in relation to the Secured Property comprising the trust fund of the Trust and as beneficial owner in relation to any other Secured Property; and
(b) as trustee of the Trust, whether or not it has the capacity to enter into this document as trustee of the Trust.
[10] RSQ.006.0002.0393.
Clause 6.2(2) sets out a number of specific representations and warranties made by Newport as 'trustee of the Trust'. The Trust is defined as the Newport Family Trust (cl 1.1(14)).
The charging clause in the Tuart Unit Charge, cl 3, provides:
3Mortgage and reassignment
3.1Security by Security Provider
The Security Provider, as beneficial owner:
(1)charges by way of fixed charge; and
(2)transfers by way of mortgage;
the Secured Property in favour of the Security Trustee to secure the payment of the Secured Money.
3.2Nature of Security
To the extent that the Security Provider does not have the legal title to the Secured Property, the Security Provider, as beneficial owner, will transfer the Secured Property by way of mortgage to the Security Trustee immediately legal title to the Secured Property is acquired.
3.3Discharge
The Security Trustee will at the request of the Security Provider discharge the Security Interests created by this document and reassign the Secured Property to the Security Provider if the Secured Money is paid and satisfied in full and in the Security Trustee's reasonable opinion:
(1)there is no prospect that money or damages will become owing (whether actually or contingently) by the Security Provider to the Finance Parties; and
(2)no payment towards the satisfaction of the Security Provider's obligation to pay the Secured Money is likely to be void, voidable or refundable under any law (including any law relating to Liquidation).
3.4 Limit of liability
Despite any other clause in this document, the maximum liability of the Security Provider under this document is the aggregate of A$17,000,000 plus all interest (including any default interest), costs, fees and expenses incurred by or owing to the Security Trustee or any other Finance Party under, pursuant to or in connection with this document.
3.5 Priority amount
(1) The maximum prospective liability (as defined in the Corporations Act) secured by this document for the purpose of fixing priorities under section 282 of the Corporations Act but for no other purpose is the Maximum Prospective Liability Amount.
(2) The Security Trustee may at any time lodge a notice under section 268(2) of the Corporations Act on behalf of the Security Provider specifying an increase in the maximum amount of the prospective liability referred to in clause 3.5(1) and from the date of lodgement the amount of the Maximum Prospective Liability Amount will be varied to the amount specified in the notice.
(3) This document secures the payment of all prospective liabilities of the Security Provider to the Finance Parties and the Secured Money is not limited to the Maximum Prospective Liability Amount.
The Secured Property is defined as follows:
(a) all Units in the Unit Trust owned by the Security Provider at any time, whether beneficially or as trustee of a Trust (which, as at the date of this document, equal 204 Units); and
(b) all Rights in respect of the Units referred to in clause 1.1(12)(a);
The 'Unit Trust' was defined as the Tuart Investments Unit Trust. 'Rights' were defined in cl 1.1(11) as:
(a) all of the present and future right, title and interest of the Security Provider in all Distributions, other monetary amounts, interest, allotments, offers, rights, bonus units and other benefits or privileges;
(b)the present and future rights of the Security Provider in the Units resulting from any consolidation, subdivision, conversion, redemption, cancellation, re-classification or forfeiture; or
(c)any other rights of the Security Provider in the Units;
Distributions were defined to mean all distributions of money or secured property, cl 1.1(4).

The plaintiffs' contractual construction claim

The plaintiffs develop the contractual construction claim they wish to run if given leave to re-open as follows.
First, the plaintiffs invoke the principle that documents in a suite of contractual documents are to be read and construed as a whole.[11]
[11] Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd [2015] HCA 37; (2015) 256 CLR 104; [46] - [52] (French CJ, Nettle and Gordon JJ).

Second, the plaintiffs contend that cl 1(9) and cl 1.5 in each of the Second Additional Mortgages give rise to an ambiguity as to the capacity in which each mortgagor granted the mortgage. This is because 'Mortgagor' is defined to include the relevant person in their capacity as trustee and cl 1.5 does not exclude the Mortgagor in its own right.
Third, the plaintiffs contend that the ambiguity is resolved by reference to the provisions of the Restated MOFA, the Restated MOFA Limited Guarantee, the deed of consideration and acknowledgement and the deeds of trust covenant. All of these documents refer to the Second Additional Mortgages being granted by the Second Additional Mortgagees in their trustee capacities. The plaintiffs argue that once the Second Additional Mortgages are read in the context of these other documents it is clear that in each case the mortgagor was intended to be the trustee of the trust which was the beneficial owner of the land and that it entered into the mortgage solely in its capacity as trustee.
Fourth, the plaintiffs contend that the term 'Secured Money' in the Second Additional Mortgages should be construed as being limited to secure the amount of the liability under the guarantee given by the mortgagor in each case consistent with the provisions of the Restated MOFA Limited Guarantee and the Restated MOFA Pourzand Guarantee that limit the liability of the guarantors under those guarantees. The plaintiffs submit that to do otherwise would make the Restated MOFA Limited Guarantee and the Restated MOFA Pourzand Guarantee redundant and meaningless and bring about an absurd result.
Fifth, the plaintiffs contend the intention of the parties becomes even clearer if regard is had to the factual matrix and the drafting history of the suite of documents. In this respect, the matters relied upon by the plaintiffs may be summarised as follows:
(a)The Restated MOFA was preceded by negotiations that commenced in May 2010. On 16 June 2010 an 'indicative terms sheet' setting out the terms on which the defendants was prepared to continue to fund the development was sent to Mr Saraceni and Mr Pourzand and their financial adviser, Mr Mark Clohessy. In this term sheet the guarantees to be provided by the Second Additional Security Providers were described as being 'limited to the securities provided'. A terms sheet in relevantly identical terms was approved by the Executive Risk Committee of the Commonwealth Bank of Australia on 30 June 2010.
(b)In an email sent on 6 July 2010 to Mr Saraceni, Mr Pourzand and Mr Clohessy, the defendants' solicitor commented upon the additional securities to be provided as follows:[12]
[12] BKW.502.012.2635.
As you may be aware, the Financiers are each in the process of determining whether they are able to provide further funding for the Raine Square project on revised terms. While we are not in a position to comment on the status of that process for each of the Financiers, we have been instructed that any revised terms … would require … additional securities to be taken in support of the revised facilities.
I set out below the documentation structure for those existing securities to be varied and also the proposed additional securities.
…
(1) The proposed additional securities consist of the following:
(a)…
(b) 3 x limited guarantees from the new corporate trustee mortgagors that will grant the above new mortgages, limited in each case to the value of the security properties. These will be based on the form of guarantees used in the original financing in April 2008;
(c)…
(d) in respect of the existing second ranking mortgages taken as collateral for the various cost overruns, new guarantees will be required from each of those mortgagors, limited in each case to the value of the relevant security property (also based on the form of guarantees used in the original financing) (emphasis supplied)
(c)Among the documents provided to Mr Saraceni, Mr Pourzand and Mr Clohessy were drafts of the Restated MOFA Limited Guarantee, the Restated MOFA Pourzand Guarantee, the deeds of trust covenant and drafts of the Second Additional Mortgages. The draft Restated MOFA Limited Guarantee and the Restated MOFA Pourzand Guarantee limited the liability of the guarantors to the amount that could be obtained by enforcing the securities. There was no such limitation in the draft Second Additional Mortgages. Further, in each of the draft Second Additional Mortgages cl 1.5 recorded that the Mortgagor (as defined) was entering into the mortgage in its trustee capacity and in its own right. The clause read:
The parties each acknowledge and agree that the Mortgagor enters into this Mortgage and is bound in its own right and as trustee for the [named trust].
Each draft deed of trust covenant included a recital that:
The Trustee in its own right and as trustee of the trust has granted or is about to grant the Security [or Securities as the case may be] and the Guarantee in favour of the Security Trustee.
(d)On 29 July 2010, in response to an email from the defendants' solicitor, Mr Clohessy made a statement to the effect that there was 'no issue' with the draft mortgages.
(e)On 20 August 2010, the defendants' solicitor sent a further email to Mr Saraceni, Mr Pourzand and Mr Clohessy which attached a first draft of the Restated MOFA, amended versions of the draft deeds of trust covenant and an amended version of the Restated MOFA Limited Guarantee. In the email, referring to the draft deeds of trust covenant, the defendants' solicitor stated:[13]
[13] BKW.502.012.4078.
We have amended these documents so that apart from the Borrower, the parties are only entering into these documents in their trustee capacity and not in their own right.
And referring to the amendments to Restated MOFA Limited Guarantee, the defendants' solicitor stated:
We have amended this document so that the parties are only entering into the guarantee document in their trustee capacity and not in their own right.
The accompanying draft documents had been amended in accordance with these comments.
(f)On 26 August 2010, the defendants' solicitor sent further draft documents to the plaintiffs' representatives. These included a draft of the Second Additional Mortgage expressed to be provided by Mr and Mrs Pourzand as trustees for the Sherin Trust. The draft contained a tracked amendment to cl 1.5 of the previous draft to delete the words 'in its own right'. The amended clause read:
The parties each acknowledge and agree that the Mortgagor enters into this Mortgage and is bound as trustee for the Sherin Trust.
Each of the other Second Additional Mortgages contained amendments to the same effect.

The plaintiffs' rectification claim

In the alternative to their claim based on the proper construction of the Second Additional Mortgages, the plaintiffs seek rectification of the relevant Second Additional Securities so that they conform with what they contend was the true agreement between the parties.
The plaintiffs rely on the principles governing the remedy of rectification articulated by Gageler, Nettle and Gordon JJ in Simic v New South Wales Land and Housing Corporation.[14]
[14] Simic v New South Wales Land and Housing Corporation [2016] HCA 47; (2016) 260 CLR 85 [103].
In relation to the capacity in which the Second Additional Security Providers entered into the Second Additional Securities, the plaintiffs say that the true agreement between the parties appears from the terms sheets to which I have referred, the drafting history, the terms of the Restated MOFA, the deed of consideration and acknowledgement, the deeds of trust covenant, the Restated MOFA Limited Guarantee and the Restated MOFA Pourzand Guarantee.
In relation to the limitation of the amount recoverable under the Second Additional Mortgages and the Tuart Unit Charge, the plaintiffs say that the true agreement can be ascertained from the terms sheets, the Restated MOFA, Restated MOFA Limited Guarantee and the Restated MOFA Pourzand Guarantee.

Evidence in support of the new claims

The plaintiffs intend to rely exclusively on the contemporaneous documents and have disavowed any intention to call oral evidence. If given leave to re-open, all but four of the documents on which the plaintiffs wish to rely are included in the evidence already given at the liability trial. The additional documents which the plaintiffs seek to have admitted into evidence are the deed of trust covenant entered into by Mr Pourzand and Mrs Pourzand as trustees of the Sherin Trust and the deed of trust covenant entered into by Rangeway Investments Unit Trust Pty Ltd and two further potentially relevant documents that were not specifically described.[15]
[15] ts 3791.

Evidence on the applications

The plaintiffs' evidence

The plaintiffs relied on two affidavits sworn by Mr Neil Gentilli on 27 February 2019 and 18 June 2019. In the primary affidavit, that of 27 February 2019, Mr Gentilli deposed as follows:
2. As far as I am aware, none of the plaintiffs' legal advisers had, until the dates referred to below (except in relation to the MOFA Share Mortgage) checked the precise terms of the various security documents pursuant to which the defendants counterclaim (the subject of the plaintiffs' application) to verify that they were consistent with the terms of the other documents in the suites of documents of which they form part or against antecedent documents or drafts of the security documents. (In so saying, I do not intend to waive privilege in any materials produced by the plaintiffs' solicitors or counsel or provided to them by way of instructions by their clients of IMF Bentham Limited, which funds this litigation on behalf of the plaintiffs).
3.On 20 November 2018, I received an email from solicitors acting for the Pourzand family in other matters, requesting my advice as to aspects of the counterclaim against various Pourzand family members and entities involved in this litigation. (I do not intend to waive privilege in relation to that email.)
4.In the course of researching for the purposes of responding to this request for advice, I reviewed some of the security documents and other documents referred to in the proposed amendments which the plaintiffs now seek to make to their pleadings in this action and came to the view that some of the Second Additional Securities did not appear in some respects to accord with other documents relating to the same transactions and that I needed to review all such documents and related correspondence.
5. I worked through the relevant documents (and numerous others not relevant to this application) in December 2018 and early January 2019 and sent letters foreshadowing different aspects of this application (and additional matters not now included in the application) to the solicitors for the defendants on 11 and 22 January 2019. Approximately a week after I sent each letter, I received a letter stating that the application would be opposed.
6.Since then, I have worked to finalise the terms of the amendments to the pleadings the subject of this application with junior counsel and sent a copy of the application as filed to the solicitors for the defendants on 14 February 2019 for the purposes of conferral.
At the hearing of the application senior counsel for the defendants objected to par 2 of Mr Gentilli's affidavit on the ground that it contained hearsay material and Mr Gentilli had not set out the sources or grounds of his information or belief as required by O 37 r 6(3A) of the Rules of the Supreme Court 1971 (WA). A further ground of objection was that the evidence was vague and ambiguous. Although Mr Gentilli's affidavit had been served shortly after it had been sworn, the defendants' written outline of submissions did not refer to the objections to it and no notice of them was given to the plaintiffs' solicitors or to the court. I digress to say that I respectfully endorse Master Sanderson's recent observations that when a party takes objection to parts of an opponent's evidence the preferred course is to give notice of the objection in the objecting party's written submissions unless, of course, the court has directed that objections be dealt with in some other way.[16]
[16] New Energy Minerals Ltd v Arena Structured Private Investments (Cayman) LLC [2019] WASC 259 [5].
In any event, leave was given to the plaintiffs to call Mr Gentilli so that evidence as to the sources or grounds of the information for the statements made by him in par 2 of the affidavit could be given.
Mr Gentilli's evidence was to the effect that the sources of information were Mr Pratt and Mr Wilson, both legal practitioners with Jackson McDonald, the plaintiffs' solicitors, and Mr Edwards of junior counsel and Mr Newlinds SC of counsel, both of whom appeared on the plaintiffs' behalf at the liability trial. In cross-examination Mr Gentilli said that it was possible that he had spoken to Mr May of junior counsel who had also appeared on the plaintiffs' behalf at the liability trial but he was not sure. Again in cross-examination Mr Gentilli said that he had not spoken to Mr Pourzand, Mrs Pourzand, Ms Maria Saraceni, Mr Matthew Ellis of MGB Legal or Mr Chris Pearce of McKenzie Moncrieff, but that he had spoken to Mr Saraceni. In response to a question from me, Mr Gentilli clarified that when he said that he had not spoken to Mr Pourzand, Mrs Pourzand, Ms Saraceni, Mr Ellis or Mr Pearce, he meant to convey that he had not spoken to them in relation to the matters dealt with in par 2 of his affidavit.[17]

The defendants' evidence

[17] ts 3787 - 3791.

The defendants relied upon the affidavit of Mr James Wang sworn on 17 April 2017.
In the first 52 paragraphs of his affidavit Mr Wang provides an overview of the plaintiffs' application, reviews the relevant pleading history, and sets out in some detail the defendants' contentions to the effect that the plaintiffs have conducted the litigation in a manner that has been inefficient and caused the defendants to incur substantial wasted costs.
Mr Wang deposes that the defendants intend to defend the case the plaintiffs wish to run if the plaintiffs' present applications are granted. He deposed that no decision has yet been made as to whether the defendants will put on positive defences to the new claims. The balance of Mr Wang's affidavit (pars 52 - 95) is primarily directed to explaining why the applications are opposed and to establishing the prejudice that the defendants contend they will suffer if leave to re-open is granted.
Mr Wang deposes that the plaintiffs' applications are opposed for the following reasons:
(a)The relevant security documents are clear on their face and rectification claims are difficult to prove.
(b)There are contemporaneous documents which show a position regarding the parties' intentions that is inconsistent with the positon now advanced by the plaintiffs.
(c)The plaintiffs were represented by experienced lawyers and advisers throughout the negotiations leading up to the execution of the Restated MOFA and related security documents, and those advisers were content with the terms of the relevant documents.
(d)There has been significant delay in raising the new case; over eight years have elapsed since the transaction documents were executed.
(e)The claims that the plaintiffs now wish to raise were not raised when the defendants first made claims on the basis of the securities in 2011.
Mr Wang gives evidence about the work the defendants would need to undertake in order to defend the new case. That work includes: the identification of new documents (in addition to those identified as relevant by the plaintiffs); proofing of witnesses and potentially the preparation of further witness statements; seeking additional discovery and seeking the production of documents (eg, documents over which legal privilege has been claimed); issuing of subpoenas to third parties; the review of documents produced; preparation of an amended defence and preparation for the hearing.
Mr Wang outlined the ways in which the defendants would be prejudiced if leave to re-open was granted. He referred to the following:
(a)The witnesses who may be able to give evidence on the issues are no longer employed by the defendants and it is not known if they will cooperate in giving further evidence. Further, the defendants will be prejudiced because the delay in raising the new claims means they have been deprived of the opportunity to obtain evidence on the issues earlier when the evidence was fresher. Securing the cooperation of and proofing new witnesses will be difficult. Witnesses will continue to bear considerable strain and anxiety associated with the giving of evidence (particularly in circumstances where the plaintiffs have not given evidence).
(b)Since the end of the trial the defendants' legal team has changed significantly and currently one senior counsel and two solicitors remain available to work on the proceedings. Other members of the team have moved to working on other matters.
(c)Any evidence led will need to be assessed in the context of the other issues in the proceedings. It is inefficient to have to undertake this assessment after the conclusion of the liability trial as the defendants' lawyers will have to re-acquaint themselves with the issues. Substantial time and expense will be thrown away in doing so given that the trial ended nine months ago. Mr Wang estimates that 12 to 16 weeks will be needed to undertake the steps he considers are necessary to deal with the new claims and that the costs involved will exceed $400,000.
(d)The quantum trial will involve quantification of the loss and damage suffered. It will involve valuation and other expert evidence rather than lay evidence from bank officers. As such, it cannot be said, as the plaintiffs contend, that any prejudice to the defendants is limited because there has to be a further hearing in any event.

The submissions

There was a substantial overlap between the submissions made by the parties in relation to each aspect of the plaintiffs' application: re‑opening; leave to amend; and leave to adduce further evidence, and it is convenient to provide one summary of the submissions on all issues.

Plaintiffs' submissions

The plaintiffs' principal submissions may be summarised as follows:
(a)The question to be answered is whether the interests of justice favour permitting the plaintiffs to raise arguments which have substantial merit and which would prevent the plaintiffs from being exposed to obligations which they did not agree to assume in the order of $200 million.
(b)This is a case in which exceptional circumstances exist: the defendants' claims are for approximately $200 million and if the plaintiffs succeed they will avoid personal liability for that amount or such amount as may be found to be due to the defendants. Virtually all of the documents relied upon for the new case are in evidence and no oral evidence will be called by the plaintiffs. The defendants have not said what evidence they might rely upon and have not taken any steps to find out if there is any such evidence notwithstanding that they have had notice of the application for a number of months.
(c)The injustice to the plaintiffs must be balanced against any prejudice to the defendants, keeping in mind that it was always contemplated that the trial would be separated into two parts and not all evidence has been led. The plaintiffs accept that the prejudice to the defendants includes costs involved in investigating and defending the claims and the effect of the elapse of time on the ability to adduce evidence from those who were involved in the transactions on the defendants' behalf. The costs should not be regarded as a significant or a particularly persuasive factor in the scheme of the issues in the case. As to the possibility of prejudice flowing from the elapse of time, the plaintiffs contend that the best evidence of the intentions of the parties is to be found in the contemporaneous documents. In support of this contention, the plaintiffs characterise the witness statements tendered as part of the defendants' case at the liability trial as essentially narratives based on the contemporaneous documents.
(d)The failure to plead the points the subject of the application was not the result of any tactical decision but instead due to inadvertence. There was no disentitling 'deliberate or neglectful conduct' - the litigation was run conscientiously.
(e)The merits of the new claims are compelling.
(f)The consequences of not allowing the application, in the context of the interests of justice, are that the Second Additional Security Providers will be exposed to a liability they never agreed to assume and the defendants stand to make an enormous windfall from securities which do not reflect the agreement between the parties.
(g)The defendants have not made any 'real inquiries' about the merit of the case the plaintiffs wish to advance and 'virtually no attempt' has been made by the defendants to ascertain whether there is in fact any evidence upon which they can rely to oppose the plaintiffs' proposed case and how readily available it is. The plaintiffs contend that this has enabled the defendants to theorise about the difficulties that they will encounter if leave to re-open is granted in order to demonstrate prejudice. Thus, the plaintiffs say the weight that can be accorded to the difficulties referred to in Mr Wang's affidavit about obtaining evidence from witnesses is diminished.
(h)It is not essential for the plaintiffs to call oral evidence as to the Second Additional Security Providers' subjective intentions -those intentions may be inferred from the contemporaneous documents.

Defendants' submissions

The defendants' principal submissions may be summarised as follows:
(a)A trial should only be re-opened in exceptional circumstances and with great caution. The plaintiffs had a proper opportunity to plead their case. New claims made well after the conclusion of the trial should not be allowed. Not only was the application to re-open made at a late stage but it was made some nine years after the parties entered into the transactions to which the new claims relates.
(b)It is necessary for a party who seeks to re-open its case to show that the circumstances giving rise to the application arose through no neglect or default of the applicant. The conduct of the plaintiffs' advisers was 'plainly deficient'. This was not a case of inadvertent error. Moreover, if the plaintiffs' lawyers have made bad decisions about admissions then there are other steps open to the plaintiffs to secure redress for any loss suffered by them.
(c)A failure by the plaintiffs' lawyers to check the precise terms of various security documents does not warrant the re‑opening of a trial, especially when such an explanation is advanced against a background where challenges to other securities have already been made.
(d)Case management principles dictate the need to manage litigation efficiently and expeditiously and those principles weigh heavily against the application to re‑open.
(e)Likewise, the power to grant leave to amend a pleading after the conclusion of a trial and, in particular, an application to amend pleadings to withdraw admissions, faces special difficulties and again case management principles weigh against the grant of leave. In this context, it is a relevant factor that the admissions have been present in the plaintiffs' pleadings for some years. The defendants prepared their case on the basis that the new issues were not in dispute and this influenced the approach taken to obtaining instructions, discovery, witness preparation, witness selection, and the presentation of evidence. In this respect, the defendants rely on the general principles applicable to withdrawal of admissions to which I refer in more detail below.
(f)The contractual construction argument has no merit. The meaning of the words in the relevant documents is clear and cannot be said to be an absurdity. Thus, the plaintiffs require an order for rectification but they will not be able to discharge their heavy onus without giving any direct evidence about their subjective intentions at the time the documents were signed.
(g)The defendants will suffer the prejudice identified by Mr Wang.
(h)There is less imperative for a trial to be re‑opened in commercial matters as opposed to cases involving criminal or family law matters.
(i)The potential detriment to the plaintiffs is not clearly established - there is no evidence about the assets that would be exposed if the application was unsuccessful. Consequently, the significance of the proposed evidence and submissions in the context of the trial cannot be determined.

Principles governing applications to re-open

The general principle

This court has the power to permit a party to re‑open a case after the trial has concluded.[18] In exercising the discretion the overriding principle is whether taken as a whole the justice of the case favours the grant of leave to re-open.[19] The power to re-open should be exercised sparingly.[20]

The cases - a non-exhaustive classification

[18] DJL v The Central Authority [2000] HCA 17; (2000) 201 CLR 226 [34] (Gleeson CJ, Gaudron, McHugh, Gummow & Hayne JJ) cited in Lashansky v Legal Practitioners Complaints Committee [2005] WASCA 217 [128] (Wheeler & McLure JJA and Miller AJA).

[19] Urban Transport Authority of New South Wales v Nweiser (1992) 28 NSWLR 471, 475G - 476A (Clarke JA, Mahoney and Meagher JJA agreeing); Inspector-General in Bankruptcy v Bradshaw [2006] FCA 22 [26] (Kenny J); Spotlight Pty Ltd v NCON Australia Ltd [2012] VSCA 232; (2012) 46 VR 1 [26] (Harper & Tate JJA and Beach AJA).

[20] Wentworth v Woollahra Municipal Council [1982] HCA 41; (1982) 149 CLR 672, 684 (Mason ACJ, Wilson and Brennan JJ).

In Inspector-General in Bankruptcy v Bradshaw,[21] Kenny J identified four overlapping, but not exhaustive, classes of cases in which the court may grant leave to re-open. They are: (a) fresh evidence; (b) inadvertent error; (c) mistaken apprehension of the facts; and (d) mistaken apprehension of the law.
[21] Inspector-General in Bankruptcy v Bradshaw [2006] FCA 22.
There is a distinction between applications made before judgment and those made after judgment and, within the latter category, there is a further distinction to be drawn between those made before and after formal entry of orders.

Is the discretion to permit re-opening conditioned by the absence of neglect or default on the part of the applicant?

In their submissions the defendants argued that the power to re-open will not be exercised if the application is occasioned by neglect or default on the applicant's part.[22] In support of this proposition the defendants relied on a line of High Court authority that included: Wentworth v Woollahra Municipal Council,[23] Autodesk Inc v Dyason (No 2),[24] and De L v Director-General, NSW Department of Community Services (No 2)[25] and the decision of the Victorian Court of Appeal in Di Stasio Pty Ltd v R & K Services Pty Ltd.[26]
[22] Defendants' outline of submissions [30].
[23] Wentworth v Woollahra Municipal Council [1982] HCA 41; (1982) 149 CLR 672, 684 (Mason ACJ and Wilson and Brennan JJ).
[24] Autodesk Inc v Dyason (No 2) [1993] HCA 6; (1993) 176 CLR 300, 303 (Mason CJ).
[25] De L v Director-General, NSW Department of Community Services (No 2) [1997] HCA 14; (1997) 190 CLR 207, 215 (Toohey, Gaudron , McHugh , Gummow and Kirby JJ).
[26] Di Stasio Pty Ltd v R & K Services Pty Ltd [2018] VSCA 340 (Tate, McLeish and Niall JJA).
For the reasons developed below, I do not accept that the power to permit a party to re-open after the hearing has been concluded but before judgment has been delivered can only be exercised in the absence of fault on the part of the applicant, whether constituted by neglect or default or otherwise.

Authorities - applications to re-open made after the delivery of judgment

For the purposes of analysis of the cases relied upon by the defendants reference should first be made to the decision in State Rail Authority (NSW) v Codelfa Construction Pty Ltd.[27] In Codelfa the High Court was concerned with an application to re-open and vacate orders made following the delivery of judgment on the grounds that there had been a failure to accord procedural fairness. The orders had not been passed and entered. The application was dismissed. Mason J (as his Honour then was) and Wilson J described the power to re-open as follows:
... it is a power to be exercised with great caution. There may be little difficulty in a case where the orders have not been perfected and some mistake or misprision is disclosed. But in other cases it will be a case of weighing what would otherwise be irremediable injustice against the public interest in maintaining the finality of litigation. The circumstances that will justify a rehearing must be quite exceptional.
[27] State Rail Authority (NSW) v Codelfa Construction Pty Ltd [1982] HCA 51; (1982) 150 CLR 29, 38.
Codelfa was applied in University of Woolongong v Metwally (No 2).[28]In that case the question of the retrospective operation of the Racial Discrimination Amendment Act 1983 (Cth) was removed to the High Court from proceedings in the New South Wales Court of Appeal. The High Court made orders that presumed the constitutional validity of the Racial Discrimination Act 1975 (Cth) as it was not contested. The unsuccessful party, Mr Metwally, applied to vary the orders that had been entered. The application was dismissed. In a joint judgment (Gibbs CJ, Mason, Wilson, Brennan, Deane and Dawson JJ) cited Codelfa and said:[29]
The present is not a case in which an order was made by mistake or as a result of fraud, or a case in which by some accident an order has been made against a party who was not heard. Mr Metwally was represented - and competently represented - in the argument before this court.
[28] University of Wollongong v Metwally (No 2) [1985] HCA 28; (1985) 60 ALR 68 (Gibbs CJ, Mason, Wilson, Brennan, Deane and Dawson JJ).
[29] University of Wollongong v Metwally (No 2), (71).
In Wentworth v Woollahra Municipal Council the unsuccessful appellant before the High Court (who at that stage was acting in person) applied to vacate the orders made by the court and for leave to re-open. The application was dismissed and in a joint judgment Mason ACJ, Wilson and Brennan JJ said:[30]
However, as we had occasion to point out recently in State Rail Authority of New South Wales v Codelfa Construction Pty Ltd, the circumstances in which this Court will reopen a judgment which it has pronounced are extremely rare. The public interest in maintaining the finality of litigation necessarily means that the power to reopen to enable a rehearing must be exercised with great caution. Generally speaking, it will not be exercised unless the applicant can show that by accident without fault on his part he has not been heard. (Footnote omitted)
[30] Wentworth v Woollahra Municipal Council (684).
In Smith v New South Wales Bar Association[31], following a hearing in the New South Wales Court of Appeal, the appellant's name had been removed from the roll of barristers. The appellant applied to re-open on the grounds that a critical aspect of the facts had been misstated by Samuels JA, whose factual findings had been adopted by the other members of the court. The appellant also sought leave to present further evidence. There was no dispute that an error had been made by the court and leave to re-open was granted. The Court of Appeal ruled, however, that it would not have regard to the appellant's further evidence. The appeal to the High Court concerned the ruling that the further evidence not be admitted and a contention that the appellant had been denied procedural fairness in the context of a finding about his honesty. As to the considerations bearing on the application to re-open and to adduce further evidence, Brennan J (as his Honour then was), Dawson, Toohey and Gaudron JJ said:[32]
It is again necessary to distinguish between the considerations which may bear on a decision to re-open and the processes involved in reconsideration once a case has been re-opened. If an application is made to re-open on the basis that new or additional evidence is available, it will be relevant, at that stage, to inquire why the evidence was not called at the hearing. If there was a deliberate decision not to call it, ordinarily that will tell decisively against the application. But assuming that that hurdle is passed, different considerations may apply depending on whether the case is simply one in which the hearing is complete, or one in which reasons for judgment have been delivered. It is difficult to see why, in the former situation, the primary consideration should not be that of embarrassment or prejudice to the other side. In the latter situation the appeal rules relating to fresh evidence may provide a useful guide as to the manner in which the discretion to re‑open should be exercised. But those considerations bearing on re‑opening are not decisive of the question whether, a matter having been re‑opened by reason of error, further evidence can be called.
Not every case involving error will invite further evidence: it will depend entirely on the issue that is opened up. If the issue is one that invites further evidence, then, prima facie and subject to the ordinary rules of evidence, that evidence should be allowed. We say prima facie because there may be situations in which the particular evidence involved would cause embarrassment or prejudice such that, in the circumstances, it would be unfair to allow it. (Emphasis supplied)
[31] Smith v New South Wales Bar Association [1992] HCA 36; (1992) 176 CLR 256.
[32] Smith v New South Wales Bar Association (266 - 267).
In Autodesk Inc v Dyason (No 2) after delivery of judgment but before formal entry of it, the unsuccessful respondent in the appeal applied to re-open on the ground that, without fault on their part, they had not had the opportunity to be heard on three issues involved in or determined by the judgment. The application was dismissed. After giving examples of cases in which the power to re-open had been exercised. Mason CJ stated:[33]
These examples indicate that the public interest in the finality of litigation will not preclude the exceptional step of reviewing or rehearing an issue when a court has good reason to consider that, in its earlier judgment, it has proceeded on a misapprehension as to the facts or the law. As this court is a final court of appeal, there is no reason for it to confine the exercise of its jurisdiction in a way that would inhibit its capacity to rectify what it perceives to be an apparent error arising from some miscarriage in its judgment. However, it must be emphasised that the jurisdiction is not to be exercised for the purpose of reagitating arguments already considered by the court; nor is it to be exercised simply because the party seeking a rehearing has failed to present the argument in all its aspects or as well as it might have been put. What must emerge, in order to enliven the exercise of the jurisdiction, is that the court has apparently proceeded according to some misapprehension of the facts or the relevant law and that this misapprehension cannot be attributed solely to the neglect or default of the party seeking the rehearing. The purpose of the jurisdiction is not to provide a backdoor method by which unsuccessful litigants can seek to reargue their cases.
[33] Autodesk Inc v Dyason (No 2) (302).
Each of Codelfa, Metwally, Wentworth, Smith and Autodesk were decisions concerning applications to re-open after the delivery of judgment. In none of these cases was the application occasioned by a mistake on the part of the applicant's lawyers.
De L v Director-General, NSW Department of Community Services involved an application to re-open after delivery of judgment and it was a case in which the application to re-open was necessitated by a mistake or oversight on the part of the lawyers for the unsuccessful respondent, the Director-General, and those acting for the intervenor, the Attorney‑General for the Commonwealth. The High Court was asked to vacate costs orders made after the delivery of judgment. The orders had been pronounced but not entered. The ground upon which the application was made was that the court had accidentally failed to have regard to reg 7 of the Family Law (Child Abduction Convention) Regulations 1986 (Cth). This provided that a person such as the Director-General who exercised the powers and performed the functions of the Commonwealth Central Authority should not be subject to any order to pay costs in relation to the exercise or performance of such powers or functions. Neither the Director-General nor the Attorney-General had referred to that regulation during the course of submissions. In her submissions opposing the application De L submitted that the source of the problem was the failure by the respondent and the Attorney-General to refer to reg 7 in their submissions. In their joint judgment Toohey, Gaudron, McHugh, Gummow and Kirby JJ said that they considered there was force in De L's submission but they were nevertheless prepared to allow the respondent to re-open. Their Honours expressed the applicable principles as follows:[34]
The power of this Court to re-open its judgment or orders is not in doubt. The Court may do so if it is convinced that, in its earlier consideration of the point, it has proceeded 'on a misapprehension as to the facts or the law, where 'there is some matter calling for review' or 'where the interests of justice so require'. It has been said repeatedly that a heavy burden is cast upon the applicant for reopening to show that such an exceptional course is required 'without fault on his part', ie without the attribution of neglect or default to the party seeking reopening. By such expressions of the power to re-open final orders, courts seek to recognise competing objectives of the law. On the one hand, there is the principle of finality of litigation which reinforces the respect that should be shown to orders, final on their face, addressed to the world at large and upon which conduct may be ordered reliant upon their binding authority. On the other hand, courts recognise that accidents and oversights can sometimes occur which, unrepaired, will occasion an injustice. (footnotes omitted)
[34] De L v Director-General, NSW Department of Community Services (No 2) (215).
In concluding that the Director-General should be permitted to re‑open Toohey, Gaudron, McHugh, Gummow and Kirby JJ said:[35]
[W]e believe that this is a proper case in which to permit reopening. An important consideration is that the orders of this Court, although publicly announced, were not perfected. That is, the formal entry of the orders in the Court’s records was not made before the present motion was filed. ... Courts have always treated differently applications to reopen final orders which, although pronounced publicly, have not been finally entered in the Court’s records. Different considerations arise when this latter step has been taken.
The oversight of reg 7 occurred by accident. The focus of submissions was, naturally enough, upon the substance of the contest, in which there were several points of difficulty. The Court did not address specific questions on costs either to counsel for the Director-General or counsel for the Attorney-General, intervening. Even assuming that the general costs discretion applied, it has been exercised without regard to the possible application of reg 7 and the purposes for which the regulation was made. For economy and efficiency, the Director-General, sensibly enough, left most of the argument of the appeal to the Solicitor-General, appearing for the Attorney-General. The application to vacate the costs order was made promptly. (footnotes omitted)
[35] De L v Director-General, NSW Department of Community Services (No 2) (216).
Di Stasio Pty Ltd v R & K Services Pty Ltd was also a case in which the application to re-open was made after judgment was delivered. In Di Stasio the respondent builder, R&K had sued the owner of a building for progress claims due under a building contract for renovation work. R&K was permitted by the trial judge to re-open its case after delivery of judgment to make good a critical deficiency in its evidence in respect of one of its claims. The deficiency, highlighted in the judgment, was a failure to serve a tax invoice that was equal in value to the architect's certificate that corresponded to the progress claim. The service of the tax invoice was required by the applicable contractual provision. After judgment had been delivered R&K served a tax invoice and applied to re-open to amend its pleading and adduce the tax invoice in evidence. The trial judge characterised the omission by R&K's lawyers as an inadvertent error and allowed the application. The owner, Di Stasio, appealed.
In its submissions Di Stasio emphasised that the application had been made after the delivery of judgment and that a distinction was to be drawn between those applications made after judgment and those made before judgment. It was submitted that in the former case exceptional circumstances were required before leave to re-open will be granted.[36] Di Stasio submitted that where judgment has been delivered, the focus of a re‑opening application is on whether the discretion should be exercised because the process of adjudication has gone astray. That does not include a situation where a party is simply seeking, after judgment, to fortify its case by calling additional evidence when it failed to put in such evidence due to a misapprehension of the facts or the law attributable solely to the neglect or default of the party seeking the rehearing or its legal representative. Di Stasio submitted that R&K's failure to serve a tax invoice at an earlier date was not inadvertence but neglect that disentitled R&K from being permitted to re-open.
[36] Di Stasio Pty Ltd v R & K Services Pty Ltd [59].

The merits of the plaintiffs' new claims

The merits of the new claims are a relevant consideration.
In their submissions the plaintiffs addressed in some detail the merits of the case they wished to run if permitted to re-open and supported their position by reference to the contemporaneous documents. In their responsive submissions the defendants did not engage with the merits in the same depth and, of course, the defendants foreshadowed that they may wish to adduce further evidence. In those circumstances, it would be wrong for me to express any view on the merits beyond saying that in my assessment both the construction claim and the rectification claim raise serious questions to be tried.

The reason for re-opening

The plaintiffs bring their application on the basis that their lawyers made an inadvertent error in making the admissions contained in par 98(c) of the reply and pars 116 and 117 of the defence to counterclaim that they now seek leave to withdraw.
The evidence about the error made by the plaintiffs' lawyers contained in Mr Gentilli's affidavit of 27 February 2019 was problematic. The inclusion of hearsay evidence in inadmissible form in par 2 of the affidavit knowing that the affidavit was to be relied upon in a contested application was surprising. Additionally, the explanation of the error given by Mr Gentilli lacked the clarity and detail that might be expected in an affidavit sworn in support of an application to re-open based on the inadvertence of a party's lawyers. I note also that there was no explanation for the inconsistency between the allegations made in the statement of claim as to the capacity in which the Second Additional Security Providers entered into the Second Additional Securities and the admissions in the reply and defence to counterclaim.
Criticism of Mr Gentilli's explanatory evidence must be tempered by an appreciation of the context in which the situation has arisen. The litigation between the parties is complex and factually detailed. Teams of lawyers were engaged on both sides of the litigation for a number of years preceding the liability trial. The length of the pleadings attests to the number of issues to be determined (although the scope of the litigation was reduced as a consequence of the plaintiffs abandoning parts of their case immediately prior to and during the course of the trial). The preparation for the liability trial involved the consideration of many thousands of documents.
In litigation of this nature the preparation of pleadings and the preparation for and running of the case is a collaborative undertaking involving a team of lawyers extending over a number of years. Of necessity, team members rely on the work undertaken by others. Litigation of this magnitude creates situations in which, from time to time, as the majority said in De L, 'accidents and oversights can sometimes occur'. This can occur notwithstanding the competence and experience of the lawyers involved.
The facts of the present case may be contrasted with the facts in Nweiser, Ezra, Di Stasio and FYD each of which involved readily identifiable forensic decisions in comparatively simple cases made principally by one lawyer in each case. In the present case, where there has been a team of lawyers working on a complex case over a number of years, it is understandable that it is difficult to provide a precise and detailed explanation of an error contained in pleadings settled some three years before the liability trial commenced and nearly four years before Mr Gentilli was required to provide an explanation of the error.
I accept Mr Gentilli's evidence to the effect that the plaintiffs' legal team did not check the precise terms of the Second Additional Securities. The plaintiffs' primary claim in respect of the Second Additional Securities is that they should be set aside. That claim does not depend on the precise terms of the securities but on the circumstances in which they were granted and the conduct and knowledge of the defendants. I infer that the terms of the Second Additional Securities to which I have referred in the course of outlining the contractual framework and the inconsistencies between the terms of the Second Additional Securities and the Restated MOFA Limited Guarantee, the Restated MOFA Pourzand Guarantee, the deed of consideration and acknowledgment and the deeds of trust covenant were overlooked by the plaintiffs' lawyers when preparing and settling the various iterations of the reply and defence to counterclaim.
There are two circumstances that combine to give rise to this inference. First, there is the plea in the statement of claim that the Second Additional Securities were provided by the Second Additional Security Providers in their capacities as trustees of the various trusts - a position inconsistent with the admissions in the subsequent pleadings that they were also provided by the Second Additional Securities Providers 'in their own right'. Second, in my view, a competent legal practitioner acting for the Second Additional Security Providers who carefully examined the deeds of trust covenant, the Restated MOFA Limited Guarantee, the Restated MOFA Pourzand Guarantee and the Second Additional Mortgages would be unlikely to admit that the Second Additional Mortgages were granted by the Second Additional Security Providers in their own right or that the Tuart Unit Charge was granted by Newport in its own right. This is not to say that the only construction to be placed on these securities is that they were granted by trustees acting solely in their trustee capacity or indeed that this is the preferable construction - I make the observation from an entirely neutral perspective. Rather, it is to acknowledge that a competent practitioner considering the terms of these documents would appreciate that there was an issue as to the capacity in which the Second Additional Security Providers had granted the Second Additional Mortgages. The plaintiffs' lawyers were experienced competent lawyers and it is unlikely that, otherwise than as a consequence of oversight, they would intentionally have made an admission adverse to the Second Additional Security Providers' interests.
The reasoning in the preceding paragraph also leads me to conclude that the relevant admissions were not made as part of a deliberate tactical decision - they were not a Nweiser tactical decision but a Nweiser deliberate but mistaken decision made as a consequence of an oversight - perhaps more accurately, a hybrid of the Nweiser inadvertence and Nweiser deliberate but mistaken categories.
In my view, the inference that the admissions were made as a result of an oversight on the part of the plaintiffs' legal advisers arises from the circumstances even if no weight is attached to Mr Gentilli's evidence.

The weight to be attached to the admissions the plaintiffs seek to withdraw

When considering the weight to be attached to the admissions in the context of both the application to re-open and the application to amend the pleadings, it is appropriate to take into account that the court is not bound by admissions made by the parties. In Embleton Motor Co Pty Ltd v St Kilda Beach Taxi School and Staffing Pty Ltd Newnes JA, with whom Murphy JA and Edelman J relevantly agreed, observed:[54]
… in any event a court is not bound to act on admissions made by a party: Gramophone Co Ltd v Magazine Holder Co; Termijtelen v Van Arkel. Whether a court should act on an admission, or the weight that should be given to an admission, will depend upon all the circumstances. In the present case, the primary judge had before him extensive evidence from both sides in relation to the agreement, upon which his Honour quite properly based his decision. (citations omitted)
[54] Embleton Motor Co Pty Ltd v St Kilda Beach Taxi School and Staffing Pty Ltd [2014] WASCA 183 [46].
In Damberg v Damberg,[55] Heydon JA (with whom Spigelman CJ and Sheller JA agreed) described the court's attitude to admissions as follows:
In short, the courts are averse to pronouncing judgments on hypotheses which are not correct. To do so is tantamount to giving advisory opinions and to encouraging collusive litigation. On the other hand, the courts will act on admissions of or agreements about matters of fact where there is no reason to doubt their correctness. But they are reluctant to do so where there is reason to question the correctness of the facts admitted or agreed.
[55] Damberg v Damberg [2001] NSWCA 87; (2001) 52 NSWLR 492 [160].
In this case, the admissions made by plaintiffs concern the construction of the Second Additional Securities. As such, they concern questions of law.[56] I have already stated that I consider the construction issue raises a serious question as to the correctness of the admissions. As I am not bound by the admissions and there is a serious question to be tried about them, even if I was to refuse the leave sought by the plaintiffs to re-open, the requirements of the rules of procedural fairness are such that I should extend to the parties an opportunity to make further submissions on the issues.

The nature and extent of the hearing required if leave to re-open is granted

[56] Westport Insurance Corporation v Gordian Runoff Ltd [2011] HCA 37; (2011) 244 CLR 239 [82] (Heydon J).

If permitted to re-open, the only interlocutory steps to be completed from the plaintiffs' perspective are the amendments to the pleadings foreshadowed in the applications. The plaintiffs intend to adduce no oral evidence and the additional documentary evidence is limited to the four documents referred to at [49]. In my assessment, if re-opening and amendment of the pleadings is permitted as sought by the plaintiffs', their case should occupy no more than one to two days of hearing time.
It is more difficult to make an assessment of the work the defendants will be required to complete to prepare for a re‑opened hearing and the length of time their case on the re‑opened issues may take.
In his affidavit Mr Wang deposed about the need to conduct a further review of the defendants' discovered documents to identify documents relevant to the plaintiffs' new claims, to the possibility of seeking further discovery from the plaintiffs and from third parties by the issue of subpoenas and to the possibility of challenging claims to legal professional privilege previously made in respect of some of the plaintiffs' documents. Mr Wang also deposed to the necessity to proof witnesses in relation to the new issues.
My assessment of the work that the defendants will be required to undertake to prepare for a re‑opened trial and the time that the defendants' case on re‑opening will take is made in the context of the evidence given, and the submissions made, in the course of the liability trial.
The commercial background to the development, the circumstances in which the MOFA was executed and the commercial imperatives that led to the renegotiation of the MOFA have been canvassed thoroughly in the evidence given in the liability trial. The steps in the negotiation of the facility documentation that culminated in the Restated MOFA and, among other instruments, the Second Additional Securities, were events also covered by the defendants' evidence and submissions in the liability trial. In responding to the plaintiffs' claim that the defendants engaged in unconscionable conduct in the context of the negotiation and execution of the Restated MOFA, the defendants submitted that the terms of the Restated MOFA and the Second Additional Securities were the subject of substantial negotiations between the parties. The defendants incorporated into their written closing submissions a schedule of the documents they contended evidenced the negotiation of the Restated MOFA and the Second Additional Securities.[57] The schedule referred to many of the documents relied upon by the plaintiffs to establish the merits of the claims they now wish to raise.
[57] Defendants' outline of closing submissions - Schedule 5.3 - Negotiations of Facility Documents June 2010 to September 2010 (DEF.201.041.0001, 0241).
In their submissions the plaintiffs described the liability trial as a 'documentary trial'. In my view, this is an apt description that reflects the heavy reliance by both sides on the contemporaneous documents and inferences arising from those documents.
I accept that the defendants' lawyers will need to review the documents available to them with an eye attuned to the claims that the plaintiffs now wish to raise, and that the defendants may need to search for further relevant documents, but my assessment based on the existing documentary evidence is that it is unlikely that the determination of the construction claim will result in any significant expansion of the documentary evidence. I accept that it is possible, as Mr Wang deposes, that there may be interlocutory applications concerning further discovery or the production of documents in answer to subpoenas but, given the nature and extent of the documentary evidence already before the court, I think the scope for applications of that nature is limited.
In his affidavit Mr Wang referred in general terms to the necessity for the defendants to speak to and proof potential witnesses and then make a decision as to which witnesses may be called. My assessment, however, is that the construction issues will be determined solely by reference to the relevant contemporaneous documents. This assessment reflects the documentary nature of the trial process to date and the restrictions on adducing evidence of parties' subjective intentions on issues of contractual construction. The scope for the defendants to adduce oral evidence in order to 'explain and contextualise' relevant documents, as it was put by Mr Wang in his affidavit evidence, is limited.
The rectification claim may well, however, involve the defendants adducing oral evidence going to their subjective intentions. Whilst the possibility of such oral evidence must be accepted, my assessment is that any such oral evidence would be of a limited nature because, as with other issues in this action, the primary focus will be on the contemporaneous documents and what might be inferred from them.
My assessment of the evidentiary scope of the re-opened hearing and the nature of the legal submissions is that the re-opened hearing is likely to last between three and four days, depending on whether the defendants call witnesses.

Prejudice to the defendants if leave to re-open is granted

I accept that leave to re-open may involve potential prejudice to the defendants of the nature described in Mr Wang's affidavit. That is, first, the defendants cannot be assured of co‑operation from potential witnesses and the recollections of witnesses will have faded with the passage of time; and second, having to prepare for and defend a re‑opened case will be more time consuming and expensive than if the new claims had been dealt with in the liability trial, and the preparation and running of the re‑opened case will be more difficult because the team of lawyers has disbanded. I also accept a re‑opening may re‑impose strain and anxiety on potential witnesses.
I am required to make an assessment of how the potential prejudice may impair the defendants' ability to defend the new claims. I have already recorded my view that the contractual construction claim will be resolved solely by reference to documentary evidence. On that basis, my assessment is that the potential prejudice to which Mr Wang deposed is unlikely to have an impact on the defendants' ability to defend the construction claims.
As to the rectification claim, whilst I accept that oral evidence of subjective intentions may be required, I think it is likely the contemporaneous documents and inferences to be drawn from them will constitute the evidence that determines the outcome of the rectification claim as well as the contractual construction claim, and that would have been so had the rectification claim be made at an earlier stage in the action. Thus, I accept there is the potential for the defendants' ability to defend the rectification claim to be impaired by difficulties of the nature described by Mr Wang but, because of my view of the importance of the documentary evidence, I do not accept the prejudice is sufficient to weigh decisively against the grant of leave to re-open.
I accept the inefficiency inherent in permitting the plaintiffs to re-open will have time and cost consequences of the nature described by Mr Wang but I have reservations that the consequences will be as severe as described by Mr Wang in his affidavit because, in my assessment, the claims the plaintiffs seek to raise are confined in nature and, as already explained, the evidence will be largely, if not exclusively, documentary.
In making an assessment of the potential prejudice that the defendants may suffer if the plaintiffs are permitted to re-open I have considered whether the defendants have suffered prejudice in the form of forensic decisions made in the course of the litigation that cannot now be reversed or overcome. I recognise that had the plaintiffs made the rectification claims before the liability trial the defendants may have included evidence relevant to the defendants' subjective intentions in the statements of their witnesses who were involved in the negotiation of the Restated MOFA, but I have not otherwise been able to identify any forensic decisions that have consequences that prejudice the defendants' ability to defend the new claims.

Prejudice to the plaintiffs if leave to re-open is refused

The following analysis of the prejudice that may be suffered by the plaintiffs if leave to re-open is refused proceeds on the premise that the application to set aside the Second Additional Securities fails.
The defendants' advisers calculated that the total amount owing to the defendants as of 31 March 2019, inclusive of default interest, was $217,876,310.[58] This figure takes into account $28,436,693 applied in reduction of Westgem's debt from the realisation of the Second Additional Securities up to the conclusion of the liability trial.
[58] Affidavit of James Yu-Wen Wang sworn 17 April 2019, par 92.
If the Second Additional Security Providers were to succeed in their claim that they are not liable otherwise than in their trustee capacities or that the liability of each of them was limited to the amount realised by the defendants from enforcing the Second Additional Securities, then they would not be liable, either in their personal capacities or at all, for the balance of the debt due to the defendants of approximately $200 million. If the plaintiffs are not permitted to re-open, then they will not be able to argue the serious questions raised by them as to the basis upon which the defendants claim this sum. The prejudice to the Second Additional Security Providers in those circumstances is both plain and severe. They will either be obliged to pay approximately $200 million which they may not owe to the defendants and if they cannot pay they face insolvency or bankruptcy. Conversely, assuming the Second Additional Security Providers have the capacity to pay some or all of the $200 million, the defendants stand to gain a substantial benefit to which they may have no legal entitlement.
The defendants may realise a windfall gain to which they are not entitled if the Second Additional Securities Providers are not permitted to re-open. In these circumstances, it would not be in the interests of justice to confine the Second Additional Securities Providers to their rights of action against their lawyers.

Summary

I consider that the interests of justice favour a grant of leave to the plaintiffs to re-open and to make the amendments proposed by them to their pleadings. My reasons, distilled from the observations made in the preceding analysis, are as follows.

First, unless permitted to re-open, the Second Additional Security Providers will not be able to advance claims that raise serious questions and, if they fail in their primary case that the guarantees be set aside, they will be subject to enforcement action by the defendants to recover amounts for which they may have no liability and to which the defendants may have no entitlement. Such a result is not in the interests of justice.
Second, the prejudice to the plaintiffs inherent in the situation described in the preceding paragraph outweighs the prejudice to the defendants in permitting re-opening.
Third, in the circumstances of this case, the objective of a just determination of the litigation weighs more heavily than the inefficiency inherent in permitting the re-opening. The consequences that flow from this inefficiency are attenuated, in part, because the claims that the plaintiffs wish to raise are confined and will not extend the evidentiary and factual matrix as it presently stands to any significant extent and, in part, because the re-opening of the case can be managed in way that does not delay the enforcement of the Second Additional Securities in the event that the plaintiffs' claims fail and the defendants succeed.
Fourth, I am satisfied that the admissions made by the plaintiffs that they now seek to withdraw were due to inadvertent error on the part of the plaintiffs' lawyers. It is not in the interests of justice to allow the defendants the opportunity to recover from the plaintiffs sums in the region of $200 million to which they may have no legal entitlement and to confine the plaintiffs to any rights they may have against their lawyers for that oversight.
Fifth, the court is not bound by the admissions made by the plaintiffs and, as attention has now been drawn to the question of whether those admissions correctly reflect the proper construction of the relevant documents, further submissions will be sought from the parties in any event.

Appendix

Second Additional Security Providers

         Second Additional Securities

Seaport Pty Ltd ACN 085 027 176 as trustee for the Seaport Trust

         Restated MOFA Myer Fremantle
          Mortgage

Mayport Nominees Pty Ltd ACN 070 052 603 as trustee for the Mayport Unit Trust

          Restated MOFA 218 Rockingham
          Mortgage

Hossean Pourzand and Jenny Maria Pourzand as trustees for the Sherin Trust

         Restated MOFA 251 St Georges Tce
         Mortgage

Newport Securities Pty Ltd ACN 050 217 439 as trustee for the Newport Family Trust

         Restated MOFA Caves Road Mortgage

Queen Street Properties Pty Ltd ACN 076 299 477 as trustee for the Queen Street Properties Unit Trust

         Restated MOFA Myer Fremantle
          Mortgage

Pakwest Pty Ltd ACN 099 949 890 as trustee for:

(a) Westview Asset Pty Ltd ACN 119 774 266 as trustee for the Westview Trust; and

(b) Oakcure Pty Ltd ACN 075 388 564 as trustee for the Zahra No.2 Trust;

         Restated MOFA 18 The Esplanade
          Mortgage

Pakwest Pty Ltd ACN 099 949 890 as trustee for:

(a) Cityscape Investments Pty Ltd ACN 143 905 131 as trustee for the Faramaz Trust; and

(b) Rangeway Investments Pty Ltd ACN 111 258 087 as trustee of the Rangeway Investments Trust;

         Restated MOFA 502 Hay Street
          Mortgage

Grand Edition Pty Ltd ACN 127 106 209 as trustee for the Farah Investment Trust No. 4

         Restated MOFA Forrestdale Mortgage

Newport as trustee for the Newport Family Trust

         Charge by Newport as trustee for the
          Newport Family Trust over all of its units
          in the Tuart Investments Unit Trust

I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.

JB
Associate to the Honourable Justice Tottle

29 AUGUST 2019

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

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 5] [2019] WASC 310 (S)
CORAM:   TOTTLE J
HEARD:   24 OCTOBER 2019
DELIVERED          :   24 OCTOBER 2019
PUBLISHED           :   31 OCTOBER 2019
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:

Costs - Costs following an application for an indulgence of the court - Where plaintiff successful in application - Where defendant acting reasonably in opposing application - Where plaintiff should pay costs of the application notwithstanding success - Whether costs should be on indemnity basis - Turns on own facts

Legislation:

Legal Profession (Supreme and District Courts) (Contentious Business) Determination 2018 (WA)
Legal Profession Act 2008 (WA), s 280(2)

Result:

Costs question determined
Defendants' application for costs granted in part

Category: B

Representation:

Counsel:

First Plaintiff	:	Mr N Gentilli
First Named Second Plaintiff	:	Mr N Gentilli
Second Named Second Plaintiff	:	Mr N Gentilli
Third Plaintiff	:	Mr N Gentilli
Fourth Plaintiff	:	Mr N Gentilli
Fifth Plaintiff	:	Mr N Gentilli
Sixth Plaintiff	:	Mr N Gentilli
Seventh Plaintiff	:	Mr N Gentilli
Eighth Plaintiff	:	Mr N Gentilli
Ninth Plaintiff	:	Mr N Gentilli
Tenth Plaintiff	:	Mr N Gentilli
Eleventh Plaintiff	:	Mr N Gentilli
Twelfth Plaintiff	:	Mr N Gentilli
Thirteenth Plaintiff	:	Mr N Gentilli
Fourteenth Plaintiff	:	Mr N Gentilli
Fifteenth Plaintiff	:	Mr N Gentilli
Sixteenth Plaintiff	:	Mr N Gentilli
Seventeenth Plaintiff	:	Mr N Gentilli
Eighteenth Plaintiff	:	Mr N Gentilli
Nineteenth Plaintiff	:	Mr N Gentilli
First Defendant	:	Mr E A Gisonda
Second Defendant	:	Mr E A Gisonda
Third Defendant	:	Mr E A Gisonda

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(s) referred to in decision(s):

Briggs v Curtis Quick & Associates (Unreported, WASC Full Court, Library No 980141, 30 March 1998)
Currie v Currie [No 2] [2019] WASCA 2 (S)
CVW Group Holdings Pty Ltd v Addison [2011] WASC 267 (S)
Gaskin v Ollerenshaw [2010] NSWSC 788
Griffin v Coe [No 2] [2012] NSWSC 1239
Lucantonio v Kleinert [2009] NSWSC 1277
Stanley v Layne Christensen Company [2006] WASCA 56
Westgem Investments Pty Ltd v Commonwealth Bank of Australia Ltd [No 5] [2019] WASC 310
Yara Australia Pty Ltd v Oswal [2012] WASCA 264

TOTTLE J:

(This judgment was delivered extemporaneously on 24 October 2019 and has been edited from the transcript)

Introduction

The parties have been unable to reach agreement on the costs orders that should follow my decision to allow the plaintiffs to re-open their case.[59]
[59] Westgem Investments Pty Ltd v Commonwealth Bank of Australia Ltd [No 5] [2019] WASC 310.
There are two issues:
(a)Was the defendants' opposition to the plaintiffs' application unreasonable with the result that the general rule that a party seeking an indulgence must pay its opponent's costs should not apply in this case?[60]
(b)If the general rule is not displaced, so the plaintiffs are ordered to pay the defendants' costs, should those costs be assessed on an indemnity basis?
[60] See Briggs v Curtis Quick & Associates (Unreported, WASC Full Court, Library No 980141, 30 March 1998) (Owen & Parker JJ); Stanley v Layne Christensen Company [2006] WASCA 56 [51] - [55] (Wheeler JA, Steytler P & Pullin JA agreeing).
The application to re-open was heard as part of the trial but it is common ground that if an indemnity costs order is not made the costs of the application should be taxed as if it was an application in chambers to which item 10 of the Legal Profession (Supreme and District Courts) (Contentious Business) Determination 2018 (WA) applied and that a special costs order should be made under s 280(2) of the Legal Profession Act 2008 (WA) removing the limits on the amount of time for which costs may be recovered under items 10(a) and (b). I am satisfied that the circumstances of this application warrant the making of a special costs order.

The defendants' opposition to the application was not unreasonable

In my view the defendants acted reasonably in opposing the application to re-open. I have reached that conclusion for the following reasons:
(1)The decision to re-open involved the exercise of a discretion requiring the weighing of many competing factors. The outcome of such an exercise is a matter upon which reasonable minds may differ. Hindsight should not be used to say that opposition to an application was unreasonable only because the opposition was ultimately unsuccessful.
(2)Applications to re-open are approached with caution.
(3)This is not a case in which the only consideration was the merits of the plaintiffs' claim. Other considerations (as my reasons disclosed) were relevant. Those considerations included the questions of the efficient conduct of the trial process, the requirement for expedition and the finality of litigation. Those factors weighed against the plaintiffs' application.
(4)The responsibility for the need to re-open lay entirely with the plaintiffs.
(5)The evidence relied upon by the plaintiffs was problematic, as described in my primary reasons.
(6)The defendants will be subject to prejudice of the general nature which they have described (even if I do not accept their view of the extent of that prejudice).
(7)In allowing the plaintiffs' application for leave to re-open I did not record and do not accept that the defendants' arguments in opposition were devoid of merit or otherwise plainly untenable.
I add that I am not willing to infer that the defendants' opposition to the application was motivated by the prospect of a windfall gain to which they are not entitled. No conclusion has been reached on the merits of the plaintiffs' claims. Put another way the defendants may well be successful in showing that they are entitled to recover the funds pursuant to the relevant securities.
The plaintiff should pay the defendants' costs of the application to re‑open in accordance with the general rule.

The circumstances do not justify an order for indemnity costs

I do not, however, accept that the circumstances of this case are such that an indemnity costs order is warranted. The principles by which applications for indemnity costs are determined are well known. It is unnecessary for me to repeat the statements of Murphy JA with whom McLure P relevantly agreed in Yara Australia Pty Ltd v Oswal,[61] but I note that an indemnity costs order is exceptional in nature and is seen as a mark of disapproval on the part of the court of the improper or unreasonable conduct of litigation.
[61] Yara Australia Pty Ltd v Oswal [2012] WASCA 264 [33].
In support of their application for indemnity costs the defendants primarily relied on two decisions of the New South Wales Supreme Court in Gaskin v Ollerenshaw[62] and Lucantonio v Kleinert.[63] Each of these cases involved an application for an indulgence and indemnity costs were ordered. I do not doubt that other examples exist where indemnity costs were ordered in similar circumstances.
[62] Gaskin v Ollerenshaw [2010] NSWSC 788.
[63] Lucantonio v Kleinert [2009] NSWSC 1277.
In Griffin v Coe [No 2],[64] Davies J was considering the appropriate costs orders to be made in relation to a successful application to re-open the case. His Honour referred to but declined to follow the previous decisions of Gaskin v Ollerenshaw and Lucantonio v Kleinert.After referring to these cases and the awards of indemnity costs made, his Honour said:[65]
Neither of the Judges in those cases offered further reasons for making the costs payable on an indemnity [basis].
…
The Plaintiffs were successful in having the application re opened. In those circumstances, although it is appropriate that the Plaintiff pay the costs of the re-opening because the Plaintiffs were seeking an indulgence, the costs should be payable on the ordinary basis.
[64] Griffin v Coe [No 2] [2012] NSWSC 1239.
[65] Griffin v Coe [No 2] [5], [8].
In CVW Group Holdings Pty Ltd v Addison,[66] Le Miere J declined to order indemnity costs in an application for an indulgence. In that case the defendants had pursued an appeal against a springing order, however the defendants' solicitors had failed to apply for a stay of the time to comply with the springing order pending the outcome of the appeal. Prior to the appeal being determined the springing order executed and judgment was entered against the defendant. The defendants were successful in their appeal against the springing order and his Honour found that even if the appeal was unsuccessful he would have extended the time for complying with the springing order. His Honour recorded that the conduct of the defendants fell below the standard expected of litigants and their legal representatives, but still ultimately concluded that indemnity costs were not justified in the circumstances.
[66] CVW Group Holdings Pty Ltd v Addison [2011] WASC 267 (S).
There is limited precedential value in the authorities because of the variation in the factual circumstances of each case. The ability to award costs on an indemnity basis, even in applications to reopen, remains at the discretion of the court to be exercised judiciously and according to the facts of each individual case.
As I have said, I do not consider that the plaintiffs' conduct in this case has been improper or so unreasonable as to justify an order for indemnity costs. I do not need to repeat all that I said in my substantive reasons for allowing the plaintiffs to reopen. The matters which the plaintiffs sought to be brought before the court were important to the final resolution of the parties' claims. As I recorded in those reasons, it is in the interests of justice for the issues to be determined, irrespective of the reasons why they were not included in the issues to be resolved at the liability trial. The plaintiffs were ultimately successful in what was a hotly contested application. In those circumstances, I consider that costs should be awarded on a party and party basis, taking into account the making of a special costs order.
In that last respect, what was said by the Court of Appeal in Currie v Currie [No 2],[67] to the effect that a properly crafted special costs order may obviate the need for an indemnity costs order (though not directly applicable) reinforces my view that an indemnity costs order is not appropriate in this case.[68]
[67] Currie v Currie [No 2] [2019] WASCA 2 (S).
[68] Currie v Currie [No 2] [15] (Murphy, Mitchell & Beech JJA).

I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.

AS
Research Orderly to the Honourable Justice Tottle

31 OCTOBER 2019

Second Additional Security Providers	Second Additional Securities
Seaport Pty Ltd ACN 085 027 176 as trustee for the Seaport Trust	Restated MOFA Myer Fremantle Mortgage
Mayport Nominees Pty Ltd ACN 070 052 603 as trustee for the Mayport Unit Trust	Restated MOFA 218 Rockingham Mortgage
Hossean Pourzand and Jenny Maria Pourzand as trustees for the Sherin Trust	Restated MOFA 251 St Georges Tce Mortgage
Newport Securities Pty Ltd ACN 050 217 439 as trustee for the Newport Family Trust	Restated MOFA Caves Road Mortgage
Queen Street Properties Pty Ltd ACN 076 299 477 as trustee for the Queen Street Properties Unit Trust	Restated MOFA Myer Fremantle Mortgage
Pakwest Pty Ltd ACN 099 949 890 as trustee for: (a) Westview Asset Pty Ltd ACN 119 774 266 as trustee for the Westview Trust; and (b) Oakcure Pty Ltd ACN 075 388 564 as trustee for the Zahra No.2 Trust;	Restated MOFA 18 The Esplanade Mortgage
Pakwest Pty Ltd ACN 099 949 890 as trustee for: (a) Cityscape Investments Pty Ltd ACN 143 905 131 as trustee for the Faramaz Trust; and (b) Rangeway Investments Pty Ltd ACN 111 258 087 as trustee of the Rangeway Investments Trust;	Restated MOFA 502 Hay Street Mortgage
Grand Edition Pty Ltd ACN 127 106 209 as trustee for the Farah Investment Trust No. 4	Restated MOFA Forrestdale Mortgage
Newport as trustee for the Newport Family Trust	Charge by Newport as trustee for the Newport Family Trust over all of its units in the Tuart Investments Unit Trust