FEDERAL COURT OF AUSTRALIA Radin v Commonwealth Bank of Australia [1999] FCA 419 MICHAEL RADIN v PETER DAVID RODGERS & ANOR MICHAEL RADIN v COMMONWEALTH BANK OF AUSTRALIA v & ANOR COMMONWEALTH BANK OF AUSTRALIA & ANOR v STEFANOVIC & ORS NX 57 OF 1994 NG 695 OF 1995 NG 632 OF 1996 LINDGREN J 30 MARCH 1999 SYDNEY IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY NX 57 OF 1994 IN THE MATTER OF MICHAEL RADIN BETWEEN: MICHAEL RADIN Applicant AND: PETER DAVID RODGERS First Respondent COMMONWEALTH BANK OF AUSTRALIA (ACN 123 123 124) Second Respondent IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY NG 695 OF 1995 BETWEEN: MICHAEL RADIN Applicant AND COMMONWEALTH BANK OF AUSTRALIA (ACN 123 123 124) AND First Respondent MARTIN RUSSELL BROWN Second Respondent IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY NG 632 OF 1996 BETWEEN: COMMONWEALTH BANK OF AUSTRALIA (ACN 123 123 124) First Applicant MARTIN RUSSELL BROWN Second Applicant AND: LILY STEFANOVIC First Respondent SNEZANA MIKI MILICEVIC Second Respondent MICHAEL RADIN Third Respondent SUSAN McTEGG Fourth Respondent DENNIS IAN HILL Fifth Respondent JUDGE: LINDGREN J DATE: 30 MARCH 1999 PLACE: SYDNEY REASONS FOR JUDGMENT 1 These three matters are being heard together. In proceeding NG 695 of 1995, Mr Radin, the applicant, applies for leave to amend his statement of claim by the insertion of a new paragraph 29A. The application for leave is opposed by the first respondent ("the Bank") and by the second respondent ("Mr Brown") who is a receiver appointed by the Bank. 2 The argument has centred around three grounds of opposition. The first is that no reasonable cause of action is disclosed and therefore the amendment would be futile. The second is that the Court does not have power to grant the leave because the proposed amendment would plead a cause of action, in the sense of the facts on which the amendment is based, which arose after the proceeding was commenced on 7 September 1995. The third is that, as a matter of discretion, I should not allow the amendment. I will deal with the three grounds in that order. 3 I turn to the first ground. The proposed paragraph 29A relies on paragraph 6A of short minutes of orders made in the Supreme Court of New South Wales on 13 October 1995 in the proceeding which was, at that time, proceeding No 50129 of 1995 in that Court, prior to its transfer to this Court on 19 July 1996. 4 By a Deed of Sale and Consent dated 5 March 1993 ("the Deed of Sale"), Mr Radin sold his legal practice known as "Radin & Associates" to the first and second respondents ("the Purchasers"). More precisely, what he sold was the goodwill, plant and equipment, what was called "the Radin Work in Progress", and such interests if any, that the vendor, Mr Radin, might have or acquire in what was described as "the Third Party Work in Progress". Importantly, the sale did not include what, in the Deed of Sale, were called "the Radin Debts" (nor did it include certain other property not immediately relevant). The Radin Debts represented, again only in outline, the money value of Mr Radin's entitlement to render bills of costs for work done in respect of "Completed Matters" and certain other moneys. The expression "Completed Matters" was defined. Again, in broad terms only, there were excluded from the sale, fees which Mr Radin had earned for work that he had completed and for which he was entitled to bill. 5 By clause 5.1, the Purchasers promised Mr Radin that they would render bills of costs in respect of Completed Matters and try to collect the outstanding fees. By 5.4, the Purchasers were stated to be entitled to charge and be paid by Mr Radin their reasonable professional fees and disbursements in respect of work carried out by them in accordance with instructions received from Mr Radin, or otherwise reasonably undertaken by them in carrying out their obligations under clause 5. Finally, by clause 5.5, Mr Radin promised to render reasonable assistance, and to provide available information to the Purchasers, in connection with work or action taken by them under clause 5. 6 By order 6A of 13 October 1995 the Supreme Court ordered as follows: "... that the second defendant [Ms Milicevic] receive out of the joint account such moneys as represent the reimbursement to her of proper disbursements incurred, or as may hereafter be incurred, by her from time to time in collecting the moneys dealt with unders [sic] Orders 5 and 6, provided however, that the second plaintiff approve such payment as truly representing the reimbrusement [sic] to her of such disbursements, and to this end, the second defendant may from time to time present to the second plaintiff claims for such reimbursements, and the second plaintiff shall make and communicate a decision on such claims within 14 days of notification of the claims and shall not unreasonably withhold his approval thereto and shall authorise such claims as he approves to be paid to her out of the joint account within 7 days after the date of his approval." 7 The first ground of attack by the Bank on the proposed amendment is that order 6A is not a contractual undertaking to Mr Radin. The relevant subparagraphs of the proposed paragraph 29A are as follows: "(i) The applicant has sought by Snezana Miki Milicevic from time to time for Martin RussellBrown [sic] to pay disbursements in the manner prescribed by order 6(A). (j) The said Martin Russell Brown has not complied with the provisions of order 6(A), in that: (1) He has failed to make and communicate a decision on claims for reimbursement within fourteen (14) days of being notified. (2) He has from time to time unreasonably withheld his approval to reimburse (3) He has failed to authorise claims that he had approved to be paid within 7 days of giving such approval. (k) By reason of these breaches the Applicant has failed to fulfill [sic] his obligations under the Deed of Arrangement (paragraph 29A (d) above.) (l) Further, the Applicant has lost his opportunity to pursue the "Radin debts" as defined under the Deed of Sale. (m) the Applicant has suffered or is likely to suffer loss and damage and claims the relief set out in his amended application." 8 I think it is correct that order 6A of 13 October 1995 is on its face not contractual. On its face it is an order enforceable by Ms Milicevic. That is to say, if Mr Brown prevented Ms Milicevic from receiving the proper disbursements referred to, and refused to give the approval or approvals provided in order 6A, she would be entitled to come to the Court to enforce the order or orders. Apparently there has been some disputation between Ms Milicevic and Mr Brown concerning order 6A and there has been at least one previous application to the Court in relation to it. 9 I cannot see, at least so far as the pleading of the proposed paragraph 29A goes, how order 6A gives rise to an obligation enforceable by Mr Radin. It may be that it would be possible to reformulate the pleading in some way. It may be that quite apart from the making of order 6A, there was a contract between Mr Brown and Mr Radin, but this is not pleaded in the proposed para 29A. If this were all, I would not allow the present amendment but would give Mr Radin liberty to replead. 10 I turn now, however, to the second ground of opposition. It does seem to me that the Court does not have power, even if it would otherwise be minded to do so, to allow this amendment. The proceeding was commenced in the Supreme Court on 7 September 1995. However, when one looks at the proposed para 29A, it is clear that order 6A of 13 October 1995 is at the heart of it. The order and the alleged noncompliances with it, post-date the commencement of the proceeding. There is a long line of authority which establishes that under the general law, a pleading cannot be amended to introduce a cause of action which post-dates the commencement of the proceeding, the reason being that the amendment dates back to that commencement. It suffices to refer to Wigan v Edwards (1973) 47 ALJR 586 at 596 per Mason J and Baldry v Jackson [1976] 2 NSWLR 415 (CA). I do not think that O 13, sub-r 2(7) of the Federal Court Rules overcomes the problem. That sub-rule provides: "An amendment may be made notwithstanding that the effect of the amendment will be to add or substitute a new claim for relief or another foundation in law for a claim for relief if the new claim for relief or foundation in law for that claim arises out of the same facts or substantially the same facts as those already pleaded to support existing claims for relief by the party applying for leave to make the amendment." 11 Clearly that provision is designed to allow a different legal complexion to be placed upon the same facts, preceding the commencement of a proceeding, as those on which the initial claim for relief or other foundation in law was made or based. 12 Here, the amendment would be based not just on order 6A but on the course of dealing subsequently between Mr Radin, Ms Milicevic, the Bank and Mr Brown - that is, on facts which could not have been pleaded as at 7 September 1995. For this reason, I do not have power to allow the amendment. 13 I turn to the third ground, which is to the effect that even if I have power to allow the amendment, I should not do so. In summary, the discretionary grounds relied on by the Bank and Mr Brown are that the application is made too late, that it would open up evidence of a wide ambit which they are not in a position to meet, and that there is no irremediable prejudice to Mr Radin. I will not deal with these grounds in great detail. Certainly Mr Radin does not and could not dispute this: the application for leave to amend is made very late. Yesterday was the first day of the hearing. The proceeding had been fixed for hearing since 17 December last year. Earlier hearing dates for these proceedings of April 1998 were vacated. 14 Likewise, it is not really in contest that the range of evidence opened up would be wide. Affidavits of Ms Milicevic sworn 22 February 1996, 1 May 1996, 9 April 1998, and 17 March 1999, would, at least arguably, in whole or in part, be made relevant. Likewise it could not be disputed that it is unreasonable to expect the Bank to meet all that evidence immediately. Of course, this problem could be overcome by an adjournment. But Mr Radin does not suggest that he is at present in a position to pay the costs of the Bank and Mr Brown thrown away, and apparently he is not. 15 The next point is that there is no irremediable prejudice to Mr Radin. In response to this, Mr Radin says that there is an irremediable prejudice because he would not be able to bring this claim in a separate proceeding (I should record that the Bank and Mr Brown, through senior counsel, have made the point that no Anshun point would be taken in a later proceeding brought by Mr Radin) because he may be a bankrupt by that time and his trustee in bankruptcy would be unlikely to bring the proceeding. I do not know about that. I have already indicated that I will certainly not be deciding these fairly complicated cases in the immediate future. I do not think in any event that that consideration outweighs the others to which I have referred. 16 All things considered, on the discretionary grounds to which I have referred, coupled with the fact that any amendment would have to be reformulated in any event with consequential delay in the hearing, I would not allow the amendment. I decline to allow the amendment. I certify that the preceding sixteen (16) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Lindgren . Associate: Dated: 30 March 1999 Proceeding NX 57 of 1994 The applicant appeared on the hearing in person Solicitors for the first respondent: Eakin McCaffery & Cox Counsel for the second respondent Mr R G Forster SC and Mr R S Hollo Solicitors for the second respondent: Abbott Tout Proceeding NG 695 of 1995 The applicant appeared on the hearing in person Counsel for the respondents: Mr R G Forster SC and Mr R S Hollo Solicitors for the respondents: Abbott Tout Proceeding NG 632 of 1996 Mr R G Forster SC and Mr R S Hollo Counsel for the applicants: Solicitors for the applicants: Abbott Tout Counsel for the first and second respondents: Mr M R Gracie Solicitors for the first and second respondents: Crisp & Associates The third respondent appeared on the hearing in person The fourth and fifth respondents did not appear Date of Hearing: 30 March 1999 Date of Judgment: 30 March 1999