FEDERAL COURT OF AUSTRALIA Cutler v Derwent Howard Media Pty Ltd, in the matter of Derwent Howard Media Pty Ltd (Subject to Deed of Company Arrangement) [2011] FCA 79 Citation: Cutler v Derwent Howard Media Pty Ltd, in the matter of Derwent Howard Media Pty Ltd (Subject to Deed of Company Arrangement) [2011] FCA 79 Parties: NICHOLAS CUTLER v DERWENT HOWARD MEDIA PTY LTD (SUBJECT TO DEED OF COMPANY ARRANGEMENT) ACN 129 920 458, NICHOLAS CRAIG MALANOS and CHRISTOPHER DAMIEN DARIN File number(s): NSD 830 of 2010 Judge: JAGOT J Date of judgment: 3 February 2011 Catchwords: PRACTICE AND PROCEDURE- application to file a further amended defence Cases cited: Aon Risk Services Australia Limited v Australian National University (2009) 239 CLR 175; [2009] HCA 27 Date of hearing: 3 February 2011 Place: Sydney Division: GENERAL DIVISION Category: Catchwords Number of paragraphs: 7 Counsel for the Plaintiff: Mr R Carruthers Solicitor for the Plaintiff: Dibbs Barker Lawyers Counsel for the Defendants: Mr J Darams Solicitor for the Defendants: Eakin McCaffery Cox IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION NSD 830 of 2010 IN THE MATTER OF DERWENT HOWARD MEDIA PTY LTD (SUBJECT TO DEED OF COMPANY ARRANGEMENT) ACN 129 920 458 BETWEEN: NICHOLAS CUTLER Plaintiff AND: DERWENT HOWARD MEDIA PTY LTD (SUBJECT TO DEED OF COMPANY ARRANGEMENT) ACN 129 920 458 First Defendant NICHOLAS CRAIG MALANOS Second Defendant CHRISTOPHER DAMIEN DARIN Third Defendant JUDGE: JAGOT J DATE OF ORDER: 3 FEBRUARY 2011 WHERE MADE: SYDNEY THE COURT ORDERS THAT: 1. Leave be granted to the defendants to further amend the Notice of Grounds of Defence in the form annexed and marked A to the Notice of Motion dated 2 February 2011 by 4 p.m. on 4 February 2011. 2. The hearing dates of 3 and 4 February 2011 be vacated. 3. Costs be awarded to the plaintiff for costs thrown away by reason of the further amendment of the Amended Defence and the vacation of the hearing date. 4. The parties exchange categories of any further discovery documents by 24 February 2011. 5. The parties exchange any Supplementary List of Documents by 3 March 2011. 6. Inspection of any supplementary discovered documents take place on or before 10 March 2011. 7. Any further affidavits upon which the defendants will rely be filed and served by 24 March 2011. 8. Any affidavits in reply to be relied upon by the plaintiff be filed and served by 14 April 2011. 9. Liberty to apply on 3 days' notice. 10. The matter be set down for hearing on 30 and 31 May 2011. 11. The parties be granted access to the documents produced in response to the subpoena issued to Franchise Entertainment Group Pty Ltd. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. The text of entered orders can be located using Federal Law Search on the Court's website. IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION NSD 830 of 2010 IN THE MATTER OF DERWENT HOWARD MEDIA PTY LTD (SUBJECT TO DEED OF COMPANY ARRANGEMENT) ACN 129 920 458 BETWEEN: NICHOLAS CUTLER Plaintiff AND: DERWENT HOWARD MEDIA PTY LTD (SUBJECT TO DEED OF COMPANY ARRANGEMENT) ACN 129 920 458 First Defendant NICHOLAS CRAIG MALANOS Second Defendant CHRISTOPHER DAMIEN DARIN Third Defendant JUDGE: JAGOT J DATE: 3 FEBRUARY 2011 PLACE: SYDNEY REASONS FOR JUDGMENT 1 By a notice of motion filed in Court today, the defendants ask that they be granted leave to file a further amended defence. 2 I accept that the proposed further amended defence would broaden the scope of the case. In the proposed further amended defence, the defendants allege that the plaintiff provided his services to two nominated companies without the written consent of the first defendant, which conduct constituted a ground justifying termination of the employment contract. That allegation is particularised by reference to clients or former clients of the first defendant, including and (I infer) not limited to the entities nominated in the particulars. This is a broader allegation than that previously contained in the same paragraph of the amended defence filed on 17 September 2010, which alleged a breach of the employment contract by the plaintiff providing services to a nominated company by actions described as "soliciting the business" of two nominated entities. 3 For this reason I accept the submission of the plaintiff that they are not ready to meet the proposed amended case of the defendants today. There is then the question of whether the defendants should be granted leave to amend the defence given that the consequence of so doing will be the vacation of these hearing dates, costs thrown away by reason of that vacation, additional costs of preparing for a hearing at some time in the future, inconvenience to all parties (including the Court), and distress to those parties involved in the litigation (recognising that the plaintiff is an individual, being a former employee of the first defendant). 4 In this case I do not think that the defendants can be excluded from relying on their proposed further amended defence. First, the proposed further amended defence raises a clearly arguable proposition. Second, that arguable proposition is of obvious importance to the defendants' defence of the proceedings. Third, although broader than the case as previously pleaded, it is not unrelated to that case. Both cases raise the issue of the plaintiff's relationship with CMMA Holdings Pty Ltd and Custom Made Media Pty Ltd. Fourth, although there has been delay in the making of the application (it being made on the first day of the hearing), the history of this proceeding bears no resemblance to that in the decision of Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175; [2009] HCA 27. 5 The proceeding was commenced on 6 July 2010. The matter had one directions hearing before me on 19 October 2010. On that date, the matter was listed for hearing today and tomorrow (being 3 and 4 February 2011). Up until this time the proceeding appeared to have been conducted with admirable efficiency by both parties, which is entirely appropriate having regard to the relatively small sum in dispute. Although I accept that there will be personal distress for the individuals involved, that does not seem to be a sufficient reason to exclude the defendants from running the case that they seek to put in the further amended defence. While there will be some delay, this too seems to me to be insufficient to exclude the defendants. I accept that costs are not a total remedy for the consequences of granting leave to further amend the defence, but they will go a considerable way toward ameliorating any prejudice the plaintiff may suffer if there are additional costs occasioned by reason of the grant of leave. 6 For these reasons I am minded to grant the defendants leave to file the further amended defence. 7 I am not persuaded either that there should be an order either for indemnity costs, or that the costs should be paid forthwith. Although the application was made on the first day of the hearing, nothing in the procedural history of this matter takes it out of the ordinary. I am not satisfied that there has been any unreasonable conduct such as to warrant an indemnity costs order, or that the status of the plaintiff as an individual is such as to warrant such an order or an order that costs be paid forthwith. I am satisfied that there should be an order in favour of the plaintiff for costs thrown away by reason of the grant of leave to rely on the further amended defence and the consequential vacation of the hearing date, but those costs should be as agreed or taxed. I certify that the preceding seven (7) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Jagot. Associate: Dated: 10 February 2011