Federal Court of Australia Selvaratnam v St George – A Division of Westpac Banking Corporation (No 2) [2021] FCA 486 File number: NSD 655 of 2020 Judgment of: STEWART J Date of judgment: 10 May 2021 Catchwords: PRACTICE AND PROCEDURE – application by the respondent to file a cross-claim and amended defence – where respondent sought to bring the cross-claim so that the hearing of the proceeding can determine finally all disputes – suitable explanation from the respondent as to why the cross-claim had not been filed earlier – where proposed amended defence seeks to withdraw a pleading that benefits the applicant – leave to amend required under rr 16.53 and 26.11(2) of the Federal Court Rules 2011 (Cth) – where applicant has not demonstrated any significant relevant prejudice by the amendments – where respondent provided sensible explanation for the amendments – where refusing leave to amend would lead to irremediable prejudice to the respondent – leave to file a cross-claim and amended defence granted PRACTICE AND PROCEDURE – application by the applicant to cross-examine a deponent on the respondent's application to file an amended defence – where cross-examination would be a dry run for the trial – where cross-examination at the interlocutory stage would give unfair advantage to the applicant – leave to cross-examine refused Legislation: Australian Securities and Investments Commission Act 2001 (Cth) ss 12CB, 12DA Contracts Review Act 1980 (NSW) Federal Court of Australia Act 1976 (Cth) s 37M National Consumer Credit Protection Act 2009 (Cth) Federal Court Rules 2011 (Cth) rr 16.53, 26.11(2) Cases cited: ABL Nominees Pty Ltd v Mackenzie (No 2) [2014] VSC 529 Aon Risk Services Australia Ltd v Australian National University [2009] HCA 27; 239 CLR 175 Australian Competition and Consumer Commission v Construction, Forestry, Mining and Energy Union [2007] FCA 1390 Celestino v Celestino [1990] FCA 449 Dale v Clayton Utz (a firm) [2012] VSC 577 Friends of Hinchinbrook Society Inc v Minister for Environment (No 1) (1996) 69 FCR 1 Australian Competition and Consumer Commission v Productivity Partners Pty Ltd (No 2) [2020] FCA 863 Jeans v Commonwealth Bank of Australia Ltd [2003] FCAFC 309; 204 ALR 327 Jin v State of South Australia [2016] FCA 1065 National Mutual Life Association of Australasia Ltd v Tolfield Pty Ltd [2011] FCA 1309 Parker v HG Innovations Pty Ltd (No 2) [2020] FCA 906 Pfizer Ireland Pharmaceuticals v Samsung Bioepis AU Pty Ltd [2017] FCAFC 193 Quach v Marks [2021] FCA 335 Scanlon v American Cigarette Co (Overseas) Pty Ltd (No 1) [1987] VR 261 Wu v Avin Operations Pty Ltd (No 3) [2006] FCA 1321 Yunghanns v Elfic Pty Ltd (No 2) [2000] VSC 113; (2000) 1 VR 92 Division: General Division Registry: New South Wales National Practice Area: Commercial and Corporations Sub-area: Commercial Contracts, Banking, Finance and Insurance Number of paragraphs: 64 Date of hearing: 30 and 31 March 2021, 10 May 2021 Counsel for the Applicant: P E King Solicitor for the Applicant: Sydney Commercial Lawyers Pty Ltd Counsel for the Respondent: A R Zahra SC and F Tao Solicitor for the Respondent: Norton Rose Fulbright Australia ORDERS NSD 655 of 2020 BETWEEN: KENGARANEE SELVARATNAM Applicant AND: ST GEORGE – A DIVISION OF WESTPAC BANKING CORPORATION Respondent order made by: STEWART J DATE OF ORDER: 10 May 2021 THE COURT ORDERS THAT: 1. The respondent is granted leave to file an amended defence in the form of annexure CS-1 to the affidavit of Claudine Salameh dated 10 March 2021 by 4.00 pm on 11 May 2021. 2. The respondent pay the costs thrown away by the filing of the amended defence. 3. The respondent pay the costs of the hearing on 31 March 2021. 4. The respondent pay its own costs of preparing and filing the interlocutory application dated 10 March 2021 and the affidavits of Claudine Salameh dated 10 March 2021 and 30 March 2021. 5. The applicant otherwise pay the costs of the respondent's interlocutory application filed on 10 March 2021. 6. The time for the applicant to file and serve her defence to the statement of cross-claim is extended to 17 May 2021. 7. The applicant file and serve any amended reply to the amended defence by 7 June 2021. 8. If the applicant proposes to make any amendment to her originating application or statement of claim as a consequence of the filing of the cross-claim or the amended defence, the applicant serve on the respondent, by 7 June 2021, the proposed amended originating application and/or proposed amended statement of claim. 9. If the applicant serves any proposed amended originating application and/or proposed amended statement of claim in accordance with order 8 above, the respondent notify the applicant by 11 June 2021 whether it consents to or opposes the filing of those documents, or to what extent. 10. By 18 June 2021, the applicant: (a) file and serve the proposed amended originating application and/or proposed amended statement of claim if consented to by the respondent under order 9 above; or otherwise (b) file and serve an interlocutory application seeking leave to file the proposed amended originating application and/or proposed amended statement of claim, together with any evidence to be relied on in support of the interlocutory application. 11. The proceeding is listed for further case management on 23 June 2021. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. REASONS FOR JUDGMENT (Revised from the transcript) STEWART J: Introduction 1 The respondent applies by interlocutory application to be granted leave to file an amended defence to the applicant's statement of claim, and it applied for leave to file a cross-claim. 2 The matter was commenced by the filing of an originating application and statement of claim on 12 June 2020. The applicant claims that she made enquiries with the respondent regarding refinancing two loans she held in respect of two real properties, and that the respondent ultimately approved the applicant for two loans totalling $850,000 secured by mortgages over the properties. It was what is referred to as a re-financing arrangement, as the applicant previously had finance from another financial institution. 3 The applicant claims that she was unable to afford the repayments on the loans granted to her by the respondent. She claims that the respondent contravened provisions of the National Consumer Credit Protection Act 2009 (Cth), including by failing to make reasonable enquiries regarding the applicant's financial situation, in granting her the loans. She claims that the respondent contravened ss 12DA and 12CB of the Australian Securities and Investments Commission Act 2001 (Cth), including by making representations to the applicant that the loans she applied for were suitable for her. 4 In addition, the applicant claims that the respondent contravened the Banking Code of Practice, including by failing to exercise due diligence and skill in making a proper assessment of whether the loans provided to her were suitable in the circumstances, and further, that the loans constitute contracts that are unjust under the Contracts Review Act 1980 (NSW). 5 The applicant claims that, as a result of obtaining the loans from the respondent in the circumstances alleged, she defaulted on one of the loans and the respondent repossessed and sold the property that was mortgaged to secure the loan. The applicant seeks compensation, damages and ancillary orders. The existing pleading 6 At the centre of the applicant's case is what is pleaded in paragraph 14 of the statement of claim. The paragraph is long but for present purposes, the following averments in it are relevant: (1) On 14 January 2015, the respondent's "loans officer" presented to the applicant two residential loan agreement offers and mortgage documents for execution which she signed where indicated by the loans officer (particulars (a)-(d)). (2) The loans officer did not explain the contents of the documents and the applicant did not read or understand them (particular (e)). 7 Paragraph 4 of the statement of claim had identified the "loans officer" as being named Carl. 8 At the first case management hearing on 13 August 2020, I ordered the respondent to file and serve a defence by 3 September 2020. On 3 September 2020, I vacated that order and ordered the respondent to file and serve a defence by 10 September 2020. 9 On 10 September 2020, the respondent filed its defence. In relation to paragraph 14 of the statement of claim, in paragraph 14 of the defence the respondent made the following averments which are presently relevant: (1) On 14 January 2015, the applicant visited the Wynyard branch of the respondent where she met Mr Carl Hadfield (a Lending Manager employed by the respondent – pleaded in paragraph 4 of the defence). (2) Mr Hadfield presented the applicant with copies of two residential loan agreement offers and copies of the forms of mortgage for the two properties. (3) Mr Hadfield provided the applicant with an opportunity to read the loan offers and the forms of mortgage. (4) Mr Hadfield provided the applicant with a verbal summary of the key terms of each of the loan offers. (5) On 14 January 2015, the applicant executed the loan offers and forms of mortgage in favour of the respondent. 10 It can immediately be seen that in critical respects paragraph 14 of the defence accords with paragraph 14 of the statement of claim, namely that the applicant visited the respondent's Wynyard branch on 14 January 2015 and in the presence of Mr Hadfield executed the relevant documents. The differences between the paragraphs relate principally to what it is said that Mr Hadfield did or did not explain to the applicant, but those are not presently relevant. 11 The applicant filed a reply on 24 September 2020. In relation to paragraph 14 of the defence, the reply pleads to the issues of what was or was not explained to the applicant and is premised on the applicant and Mr Hadfield being together at the time that the applicant executed the documents on 14 January 2015. The procedural history 12 The parties attended an informal settlement conference on 15 October 2020 and a court-annexed mediation on 11 February 2021, neither of which resulted in a resolution of the proceeding. 13 On 22 October 2020, I ordered that the applicant's affidavit evidence be filed and served by 19 November 2020 and that the respondent's affidavit evidence be filed and served by 15 December 2020. 14 The applicant filed affidavits of her general practitioner, her daughter and herself on 19 November 2020. The respondent filed affidavits of Carl Hadfield, Matthew Cussans, Lynne Price and Claudine Salameh on 15 and 16 December 2020. Mr Cussans and Ms Price are employees of the respondent, and Ms Salameh is the respondent's solicitor. Mr Hadfield was employed by the respondent from August 2014 to June 2017, but at the time of deposing his affidavit he was employed by a different bank, ANZ bank. 15 On 17 December 2020, I ordered the applicant to file and serve any affidavit evidence in reply on or before 29 January 2021. I also ordered that the parties give standard discovery. 16 On 29 January 2021, the applicant filed an affidavit of her own in reply. In the meanwhile, and subsequently, the parties made discovery and provided access to documents. 17 The respondent filed an affidavit of John Puglisi, a real estate agent, on 4 February 2021. It filed additional affidavits of Mr Hadfield and Mr Cussans on 25 and 27 March 2021. At the hearing of the interlocutory application on 30 March 2021, I granted the respondent ex post facto leave to file those affidavits late. The cross-claim 18 The cross-claim seeks orders for possession of the remaining mortgaged property and for judgment against the applicant for the amount for which she continues to be indebted to the respondent. The respondent sought to bring the cross-claim so that the hearing of the proceeding can determine finally all disputes between it and the applicant. 19 The respondent rightly submitted that if it were not granted leave to file the cross-claim and it were successful in the proceeding, then any future enforcement action by the respondent could give rise to another round of litigation which would expose the parties to further expense and delay and require the use of additional resources. 20 The applicant advanced no cogent reason why the respondent should not be granted leave to file a cross-claim and she identified no relevant prejudice should leave be granted. 21 The evidence already filed in the case in respect of the claim also deals with the issues underlying the cross-claim. The respondent made it clear that it does not require to file any further evidence in support of the cross-claim – the evidence that it has already filed in answer to the applicant's claim will be relied on to support the cross-claim. Every consideration of efficiency and the value in avoiding a multiplicity of proceedings supported leave being granted. There was also a suitable explanation from the respondent as to why the cross-claim had not been filed earlier – essentially related to the settlement discussions and mediation that were ongoing. For those reasons I granted leave to the respondent to file its cross-claim. The amendments to the defence 22 The respondent characterises the reasons for the amended defence as being, first, in order to bring the defence into line with the evidence that has been served in the proceeding, and, second, in order to take account of further relevant documents which have only recently been discovered by it during the course of work undertaken in complying with its discovery obligations. 23 Most of the proposed amendments to the defence are relatively innocuous. They are in the nature of correcting errors and bringing the defence into line with the affidavits that have been filed by the respondent. Although every single proposed amendment, including amendments of the most innocuous kind, is objected to and opposed by the applicant, there is no proper basis to oppose the amendments except for the proposed amendments to paragraph 14 which, as will been seen, are substantive and raise special considerations. 24 The proposed amended defence seeks to delete much of paragraph 14 and replace it with a different version of events with regard to the signing of the loan and mortgage documents. The proposed amendments include the following averments that are relevant for present purposes: (1) On or about 24 December 2014, Mr Hadfield telephoned the applicant and informed her that the loan documents and the mortgage documents would be posted to her. (2) On 24 December 2014, Mr Hadfield completed, signed and dated an internal bank document by which he requested that the loan and mortgage documents be posted to the applicant. (3) On or about 31 December 2014, a letter of that date was posted to the applicant which enclosed the loan and mortgage documents to be executed by the applicant. (4) The loan and mortgage documents were received by the applicant. (5) The applicant signed the loan agreements on or about 14 January 2015 and the mortgage documents on or about 12 January 2015. (6) The applicant's signing of the two mortgage documents was witnessed by Elmedina Durakovic who was not an employee, agent or officer of the bank. (7) On or before 21 January 2015, the applicant provided the respondent with signed copies of the documents that had been sent to her on 31 December 2014. 25 The significance of those amendments is immediately apparent. Instead of accepting a centrally important aspect of the applicant's case, namely that she executed the documents in the presence of the respondent's relevant lending officer, the respondent now seeks to say that the applicant executed the documents at a location remote from it and witnessed by someone not employed by it. 26 The respondent requires leave to amend paragraph 14 of the defence, not only because r 16.51 of the Federal Court Rules 2011 (Cth) does not apply and thus under r 16.53 leave is required, but additionally because of the application of r 26.11(2). That rule provides that in the absence of consent from the other party, a party cannot withdraw an admission, or any other plea that benefits another party, in a defence or subsequent pleading unless the court gives leave. The existing paragraph 14 of the defence is in material respects a pleading that benefits the applicant by accepting material parts of her version, and the proposed amendment seeks to withdraw that by putting forward a different version that is at odds with the applicant's version. 27 The applicable principles with regard to whether leave to withdraw an admission or other pleading that benefits another party are, relevantly, the following, noting that for simplicity I will refer only to the withdrawal of an admission: (1) The court has a broad discretion to weigh up all matters with the overall question being to ensure that there is a fair trial: Jeans v Commonwealth Bank of Australia Ltd [2003] FCAFC 309; 204 ALR 327 at [18] and [23] per Hill, Madgwick and Conti JJ. (2) The court will require an explanation for the making of the admission which is now sought to be withdrawn; the explanation must be a sensible one based on evidence of a solid and substantial character: Celestino v Celestino [1990] FCA 449 at 8 [12] per Spender, Miles and von Doussa JJ (noting that the AustLII MNC for this case is [1990] FCA 299). (3) The object of the courts is to decide the rights of the parties, and not to punish them for mistakes they make in the conduct of their cases; if the mistake is not fraudulent or intended to overreach, can be corrected without injustice to the other party, and if not corrected will not lead to a decision on the real matters in controversy, it should generally be corrected: Celestino at 7 [10]. (4) The overriding consideration is the interests of justice: Australian Competition and Consumer Commission v Construction, Forestry, Mining and Energy Union [2007] FCA 1390 at [4] per Finn J. (5) The court will not lightly permit a party to withdraw an admission where the other party has acted to its detriment on the admission or is otherwise prejudiced by the withdrawal; if the other party has in good faith relied on the admission to its detriment so as to give rise to an estoppel the court will not permit the admission to be withdrawn: Celestino at 10 [14]. 28 There are also other relevant factors to be considered that are applicable more generally to the amendment of pleadings. In Australian Competition and Consumer Commission v Productivity Partners Pty Ltd (No 2) [2020] FCA 863 at [6], with reference to Aon Risk Services Australia Ltd v Australian National University [2009] HCA 27; 239 CLR 175 at [5], [30], [71], [90], [93], [94], [98] and [102], I identified those factors to include the following: (1) prejudice to another party that cannot be adequately compensated by an award of costs, which would include the inevitable prejudice of unnecessary delay where that exists; (2) inefficiencies in the use of the court as a publicly funded resource arising from the vacation or adjournment of trials; (3) the need to maintain public confidence in the judicial system, which has a potential to be lost where a court is seen to accede to applications made without adequate explanation or justification; (4) the objective of doing justice between the parties; (5) the objective that the pleadings identify the "real" issues between the parties; (6) the overriding purpose of the civil practice and procedure provisions in s 37M of the Federal Court of Australia Act 1976 (Cth), namely to facilitate the just resolution of disputes according to law and as quickly, inexpensively and efficiently as possible; and (7) the nature and the importance of the amendment to the party that is seeking it. 29 On its interlocutory application for leave to amend the defence, the respondent initially relied on the affidavit of Ms Salameh that was sworn on 10 March 2021, which was read, and it tendered the affidavits of Mr Hadfield and Mr Cussans as evidence of what they have deposed to, to show what evidence the respondent will adduce at trial. 30 Ms Salameh's affidavit did not give an explanation for why paragraph 14 of the defence came to be drafted in the terms in which it was, in circumstances where Mr Hadfield's affidavit that was subsequently served as part of the respondent's evidence in the principal case was in significantly different terms. In that regard, Mr Hadfield's first affidavit identified that he was the lending manager at the respondent's Wynyard Branch who dealt with the applicant when she first came into that branch in mid-October 2014 to discuss re-financing her loans. Mr Hadfield said that he had a number of meetings with the applicant at the Wynyard Branch throughout October 2014 and that he had subsequent meetings with her in November 2014 and December 2014. He then said the following: 74 Following our previous meeting on or about 23 December 2014, I caused two Residential Loan Agreement Offers (Loan Offers) to be made by the credit team on 31 December 2014. Copies of the Loan Offers are at tab 11. 75 From 25 December 2014 until 12 January 2015 I was on leave and working remotely and was not working at the Wynyard Branch. 76 As I was on annual leave, I was not involved in the issuance of the Loan Offers to Ms Selvaratnam or the execution of the mortgage agreements. 77 Having had the opportunity to review the CLAS Notes Summary (at tab 2) I can see that a representative of mortgage services, Luisa Sidoti, sent the Loan Offers and mortgage documents to Ms Selvaratnam on 2 January 2015. The documents were sent to the address at 14/24 Wolseley Street (although it is misspelled). 31 In his second affidavit that was served in the principal proceeding, Mr Hadfield gave further details with regard to records in the custody of the bank from which he concluded that the relevant contract and mortgage documents were posted to the applicant on 2 January 2015. He then stated the following: 28 I did not see or meet Ms Selvaratnam on or about 14 January 2015. I deny that she executed the Loan Offers in my presence. I should add that when meeting with customers for the purpose of the execution of loan offers, it was my usual and invariable practice to do the following: (a) provide printed copies of the loan contracts to the customer and verbally discuss the contents of such contracts in detail; (b) direct the customer to the critical aspects of the loan contracts (including but not limited to the loan amount, repayment obligations, interest rates, and obligations under relevant mortgage provisions); and (c) witness the customer's signature on mortgage documents in my capacity as a Justice of the Peace. 32 That evidence is clearly contradictory to what is pleaded in paragraph 14 of the defence. 33 It was submitted on behalf of the applicant that Mr Hadfield's first affidavit was not contradictory to the respondent's original defence. This was because in it he said that in the period October 2014 to January 2015 he had had several meetings with the applicant. In responding to a particular paragraph of the applicant's affidavit he denied that the applicant said words to him as she alleged, but he did not deny that the meeting at which she said that she had said those words had occurred. It was submitted that in those instances Mr Hadfield had dealt specifically with matters supportive of the applicant on whether he had met her at the branch of the bank 14 January 2015, whereas when he said that he had not had any dealings with the applicant after 24 December 2014 when he went on leave that was merely a general statement. 34 Patently, the reverse is true. Mr Hadfield specifically denied having any dealings with the applicant after 24 December 2014 when he went on leave and mentioned the time period October 2014 to January 2015 as the period in which he had had several meetings with the applicant as that was the general period to which he was responding – that is, the period in which the applicant had had dealings with the respondent. I therefore do not accept that Mr Hadfield's first affidavit supports the defence as originally pleaded. 35 On the state of the evidence at the hearing of the application on 30 March 2021, it was fully explained why the respondent wished to amend paragraph 14 of its defence in the manner indicated, namely to bring the defence into line with the evidence that the respondent had served and to take account of further documents that had been discovered. But what seems to have been overlooked was the need to give an explanation of how the original paragraph 14 came to be pleaded in the way in which it was. Recognising the importance of the amendment and concerned to do justice between the parties, including not deciding the amendment on the basis of the apparent oversight, I gave the bank the opportunity to file an affidavit giving such an explanation by 5.00 pm that day and I stood the matter over until 2.00 pm the following day. 36 At about 5.30 pm on 30 March 2021, the respondent filed a further affidavit of Ms Salameh. Her affidavit explained the following: (1) In the weeks prior to filing a defence, steps were taken to identify the loans officer referenced in the applicant's statement of claim. (2) The respondent identified the loans officer as Mr Hadfield, who, as stated above, had been an employee of the respondent until about June 2017. (3) Shortly after Mr Hadfield was identified and located, Rebecca Laban, a special counsel for the respondent, arranged a telephone meeting with Mr Hadfield for the purpose of discussing specific allegations made against the respondent in the statement of claim. Due to the COVID-19 pandemic and Mr Hadfield's busy work commitments, a telephone meeting was arranged for 8 September 2020, which was two days before the defence was due to be filed and served. (4) On 8 September 2020, a telephone meeting was held between Mr Hadfield, Ms Laban, a solicitor for the respondent, junior counsel and a senior solicitor at Westpac. During the telephone meeting: 9 … (e) Mr Hadfield was provided with some limited background documents by courier a few hours prior to the Telephone Meeting taking place. There was some urgency in conducting the Telephone Meeting because the defence was due to be filed on 10 September 2020. (f) During the Telephone Meeting, Mr Hadfield was asked about his recollection of his interactions with Ms Kengaranee Selvaratnam (Ms Selvaratnam), the Applicant in the Proceeding, during the period from about October 2014 to January 2015. (g) Within the time available, Mr Hadfield gave his recollection about a number of allegations raised by Ms Selvaratnam in the Statement of Claim. At that time of the Telephone Meeting, Mr Hadfield was asked to recollect events from approximately 6 years earlier, in circumstances where he had not had any dealings with Ms Selvaratnam or anyone from the Respondent in relation to the matter prior to his contact from NRF on about 4 September 2020, as detailed above. (h) During the Telephone Meeting, Mr Hadfield said that he did not have a particular recollection of meeting with Ms Selvaratnam to sign the loan documents and that in most cases, where a customer's application for a loan had been approved, his usual practice was to arrange for the customer to come into the branch where he worked and sign the relevant loan documents, at which time he would provide a summary of the documents and also witness the signing of the mortgage, which he could do as a Justice of the Peace. (5) Following the telephone meeting, steps were quickly taken to prepare the defence. (6) In circumstances where Mr Hadfield had said that he did not have a particular recollection of meeting with the applicant to sign the relevant loan documents, the defence was prepared in accordance with Mr Hadfield's usual practice. It is now clear that the way in which paragraph 14(a) was drafted was a mistake. (7) Mr Hadfield was not provided with the defence either before or after it was filed and he did not approve or authorise its contents. (8) On 4 December 2020, a second meeting was held with Mr Hadfield for the purpose of preparing his evidence in chief. By that time, Mr Hadfield had had time to reflect on the events of 2014 and 2015 and his dealings with the applicant, and was provided with a copy of the applicant's affidavit dated 18 November 2020, which detailed the applicant's dealings with the respondent. (9) During the second meeting, Mr Hadfield was adamant that he was not personally involved in the issuance of the loan offers to the applicant on 31 December 2014 and he was on annual leave at the time, that the relevant loan documents and mortgage were issued and sent by the respondent's mortgage services department, that he did not meet with the applicant at the time she signed the loan contracts and mortgage documents, and that his last contact with the applicant was a telephone discussion on 24 December 2014. 37 At the resumed hearing of the interlocutory application on 31 March 2021, Mr King, who appeared for the applicant, said that he was not in a position to deal with the matter that afternoon. In particular, he said that he wished to file an affidavit by the applicant dealing with the prejudice that the withdrawal of the existing paragraph 14 would create and also to explore the possibility of having subpoenas issued. Because the respondent had been granted an indulgence to file the further affidavit, and the applicant had had very little time to deal with it, in the interests of justice I stood the matter over so that the applicant could further consider her position, file an affidavit and take such other steps as she may be advised. In order to accommodate the availability of Mr King who was not available for a lengthy period of time, the matter was stood over until 10 May 2021. 38 The applicant filed a further affidavit on 12 April 2021. The affidavit contained mostly submissions and contentions with regard to why I should not accept Ms Salameh's explanation for how paragraph 14 of the defence came to be pleaded in the way in which it was and why the respondent now wishes leave to amend it. None of that was helpful, or admissible. The affidavit also sought to reply to Mr Hadfield's substantive version of events with regard to the execution of the loan and mortgage documents. That is also not helpful as it can be accepted that the applicant and Mr Hadfield have different versions of those events. The question before me at this stage is whether leave should be granted to the respondent to plead Mr Hadfield's version so as to be able to advance that version at trial with the result that the two competing versions will be before me at trial, not to choose between those versions at this stage. 39 On the prejudice that she would face if I were to allow the amendments, the applicant deposed to the following: (1) Her solicitors would have to consider whether to reopen the pleadings "which have been completed and otherwise closed." (2) Her solicitors would have to "recast the whole case of and concerning the unconscionable and wrongful conduct of Mr Hadfield." (3) She would have to pay additional costs "for reopening the case." (4) She has suffered considerable personal distress and anguish. (5) There is a risk to her case and delay "in starting it all over again, which will require answering 22 proposed amendments to the defence." (6) She is a person "of small means and only a part-time employee" and feels that she is "being crushed by this dispute." 40 Save for some documents which were tendered which I will come to, the applicant did not depose to or adduce any other evidence relevant to the exercise of my discretion. Leave to cross-examine 41 At the resumed hearing on 10 May 2021, Mr King applied for leave to cross-examine Ms Salameh on the respondent's application to amend its defence. As Mr Hadfield and Mr Cussan's affidavits had not been read on the application, there was no basis to require them for cross-examination, which the applicant had sought to do. Their affidavits were served as the respondent's evidence in the principal proceeding and they can be cross-examined when and if their affidavits are read at trial. Their affidavits were only tendered on the interlocutory application as evidence of what they have said that they will say at trial, not in reliance on the truth of what they say. 42 Ms Salamah's affidavits are in a different category. They were read on the interlocutory application and the respondent relies on them for the truth of what they say. 43 As Nicholson J said in Scanlon v American Cigarette Co (Overseas) Pty Ltd (No 1) [1987] VR 261 at 272, "there is a clear discretion in the court to permit cross-examination on affidavits or otherwise: … In interlocutory matters … such a discretion is normally exercised somewhat sparingly." That statement has been approved in this Court on numerous occasions. See, for example, Friends of Hinchinbrook Society Inc v Minister for Environment (No 1) (1996) 69 FCR 1 at 17 per Branson J; Wu v Avin Operations Pty Ltd (No 3) [2006] FCA 1321 at [18] per Kenny J; National Mutual Life Association of Australasia Ltd v Tolfield Pty Ltd [2011] FCA 1309 at [10] per Collier J; Quach v Marks [2021] FCA 335 at [7] per Abraham J. 44 A relevant factor which will weigh against exercising the discretion in favour of allowing cross-examination in an interlocutory application is if the proposed cross-examination will involve a rehearsal of, or dry run at, the issues relevant to the trial. Such a cross-examination will trespass upon issues of fact that go to the core of the proceeding, and it may give an unfair advantage to one side. See Scanlon at 273; Yunghanns v Elfic Pty Ltd (No 2) [2000] VSC 113; (2000) 1 VR 92 at [18] per Warren J; Dale v Clayton Utz (a firm) [2012] VSC 577 at [77] per Hollingworth J; ABL Nominees Pty Ltd v Mackenzie (No 2) [2014] VSC 529 at [49] per Derham AsJ. 45 Albeit in a different context, namely an interlocutory application for discovery, in Pfizer Ireland Pharmaceuticals v Samsung Bioepis AU Pty Ltd [2017] FCAFC 193 at [126] per Perram J it was said that: it will be unusual for it to be useful for a prospective respondent to conduct the application as if it were a preliminary trial. The procedure is interlocutory and summary with cross-examination almost never allowed. The Court should not indulge efforts to conduct a prospective respondent's case as if it were a dress rehearsal for a trial. 46 See also Parker v HG Innovations Pty Ltd (No 2) [2020] FCA 906 at [31] per Collier J and Jin v State of South Australia [2016] FCA 1065 at [30]-[31] per White J. 47 In the present interlocutory application, there is no particular factual dispute to be resolved by cross-examination. Although the applicant challenges the respondent's version with regard to how paragraph 14 of the defence came to be drafted in the way in which it was, she has unsurprisingly not adduced any evidence to gainsay that version – these are not matters about which she would have any knowledge. The real underlying question is whether or not what is now sought to be pleaded is true. That will be a critical issue in the trial. The interlocutory application is not the occasion to explore that issue in cross-examination, and to allow it would give unfair advantage to the applicant. 48 The respondent's explanation for how the error came to be made in the pleading is quite plausible. It does not depend on which version of the defence, the original or the proposed amended, is true. As I have said, that will be a core issue at the trial. 49 Also, cross-examination of Ms Salameh on what exactly Mr Hadfield said in the telephone conference with him before the defence was pleaded, and then in the conferences with him thereafter and how the pleading error occurred – which was the principal object of the cross-examination that was sought – would merely be a dry run for the trial. Such cross-examination would also likely lead to disputes about client legal privilege. The reliability of Mr Hadfield's version of the relevant events will be a critical issue at the trial. It would be quite wrong to decide that issue, or facts relevant to the determination of that issue, at an interlocutory stage. 50 In the circumstances, it is not in the interests of justice to allow the applicant's proposed cross-examination. For these reasons I refused it. Leave to amend the defence 51 In my assessment, the respondent has given an explanation for how paragraph 14 came to be pleaded that is sensible and is based on evidence of a solid and substantial character. It was obviously a mistake, presumably the result of the combined product of pressures of time and inexperience of junior members of the legal team, to plead a positive version with regard to how the applicant was dealt with on the basis of Mr Hadfield's usual practice when he had no recollection at that time of exactly how the applicant had been dealt with and had not yet had the opportunity to review all relevant documents to revive his memory. However, as the authorities that I have already identified make clear, the object in deciding whether or not to grant leave to amend in these circumstances is not to punish a party for mistakes they have made in the conduct of the case; the object of the court is to decide the rights of the parties in the dispute. 52 The applicant has not been able to point to any significant relevant prejudice. She has not, for example, acted to her detriment in reliance on the original pleading. I accept that the original pleading favours her and if the amendments are allowed it will prejudice her because she will now have to establish material aspects of her version which were otherwise admitted. But that is not relevant prejudice. If it were, a court would never allow an admission or a pleading favourable to the other party to be withdrawn. She will be in essentially the same position that she would have been in had the mistake not been made, with her version and that of Mr Hadfield in competition. 53 The applicant's complaint about delay that will be caused by the amendments is not borne out by a consideration of the relevant facts. At the hearing on 30 March 2021, one of the matters that was dealt with was listing the matter for trial. The matter was listed on an estimate of five days commencing on 29 November 2021. It has not been suggested that if I allow the amendments the case will not be ready for trial. I also do not accept that there will be much that will have to be done with regard to the pleadings or the evidence. Evidence of the conflicting versions has already been served and the applicant's reply to paragraph 14 of the defence is consistent with her version. If she chooses to amend the reply in the light of the new paragraph 14, that will be brief and simple. It has not been identified on her behalf how she might have to recast her case. 54 As to the expense and "being crushed by this dispute", I accept, of course, that allowing the amendments will cause the applicant additional expense. Some of that will be met by the costs order that will inevitably go with leave to amend and which the respondent accepts, namely that the respondent pay the costs thrown away by the amendments. Other costs will likely be costs in the cause. With regard to the overall burden on the applicant, it has no doubt not made her position any better that numerous prolix affidavits covering irrelevant and inadmissible matters have been prepared and filed for her, or that groundless and trivial objections have been taken to most of the amendments as well as on other issues. 55 At some length with reference to many of the documents that have been discovered by the respondent, Mr King set out to demonstrate that the new version of paragraph 14 of the defence is false and on that basis to assert that the amendments should not be allowed as being contrary to the fact. The shortcoming of that approach is that just what the "fact" is, is contested. Mr Hadfield's affidavits, if read and accepted at trial, will establish the new paragraph 14. It would be quite wrong to go into those matters at this interlocutory stage and reject Mr Hadfield's version on the basis of the inferences that Mr King asks me to draw without Mr Hadfield having had the opportunity to defend his version in cross-examination. All the many difficulties with the respondent's version on these issues that Mr King says that the documents demonstrate will no doubt be put to good use by him at the trial. They may have the result that Mr Hadfield's version is ultimately rejected. But these are all matters for then and not for now. 56 Mr King also placed considerable reliance on Aon, submitting that this case is analogous and just as the High Court found that the amendments in that case should have been refused, so too should the amendments in this case. But in truth the two cases are worlds apart. In Aon the amendments were sought on the third day of a four week trial of a proceeding that had been on foot for two years, and the amendments would have necessitated the adjournment of the trial. Also, the reason for the amendments had been inadequately explained. As appears from the procedural history I have set out above, and from my conclusion with regard to the explanation for the amendments, this case has none of those features. 57 A critical consideration to me in the exercise of my discretion is that the case is prepared in such a way that the real issues in dispute can be presented for resolution at the trial. As indicated, at the heart of the dispute between the parties is the different versions of what took place with regard to the execution of the loan and mortgage documents. The applicant's version and Mr Hadfield's versions are irreconcilable. A choice is going to have to be made. To deny Mr Hadfield's version to be pleaded will eliminate the opportunity to make that choice, and it will leave the respondent hamstrung in adducing evidence in support of the version mistakenly pleaded by it. That would lead to the trial, on this issue at least, being farcical. It will also lead to irremediable prejudice to the respondent. 58 In the circumstances, if the trial is to be fair, leave to amend must be granted. The interests of justice go only one way on this question. 59 In those circumstances I will order that the respondent is granted leave to file an amended defence in the form of annexure CS-1 to the affidavit of Claudine Salameh dated 10 March 2021 and that the respondent pay the costs thrown away by the filing of the amended defence. I will hear the parties on the remaining questions of costs. Thereafter on costs 60 In the ordinary course, the costs should follow the event. The result would be that the applicant pay the costs of the respondent's interlocutory application, in respect of leave to file both the cross-claim and the amended defence. That is particularly supported by the consideration in this case that prior to filing its interlocutory application, the respondent sought by inter-solicitor correspondence the consent of the applicant to the filing of both the cross-claim and the amended defence. The applicant initially consented to the cross-claim but not the amended defence, and subsequently changed her position and opposed also the filing of the cross-claim. 61 Notwithstanding the position in the ordinary course, in the present case there are considerations which in my view call for a different result. 62 First and foremost is the fact that by its amended defence the respondent has sought to significantly alter its position to the applicant's detriment by withdrawing a pleading that is to the applicant's benefit. That required an explanation of how the original mistaken pleading came about. As explained, the respondent failed to proffer such an explanation until, at the hearing on 30 March 2021, I gave it an opportunity to do so. That necessitated that the matter be stood down to 31 March 2021 when the hearing on the interlocutory application was reconvened. On that occasion, the applicant should have been in a position to consent to the application. 63 The respondent's oversight in failing to proffer the requisite explanation from the outset means that the consent that it sought by way of correspondence prior to filing its interlocutory application was on an incomplete basis. In those circumstances, I consider that it should pay its own costs of the preparation and filing of the interlocutory application and the preparation and filing of the affidavits of Ms Salameh. Also, it should pay the costs of the hearing on 31 March 2021 because, but for its oversight, no hearing on that day would have been required. 64 As I have found that the applicant otherwise had no reasonable basis to oppose leave being granted to file both the cross-claim and the amended defence, the applicant should pay the costs of the application. I certify that the preceding sixty-four (64) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Stewart. Associate: Dated: 11 May 2021