GAMBOTTO v GAWA PTY LIMITED (IN LIQUIDATION) FORMERLY KNOWN AS A & G FORMWORK SUPREME COURT OF NEW SOUTH WALES — COURT OF APPEAL HANDLEY JA 28 March 1995 [1995] NSWCA 163 Handley JA. On 28 October 1994 Windeyer J gave reasons for judgment in the matters of A & G Formwork Contractors Pty Ltd (In Liquidation) v Gambotto & Anor and Napoli Constructions Pty Ltd v Gambotto & Anor. On 3 November he made final orders entering judgment for the plaintiff in the first proceedings for $2,238,976.13 and costs and for the plaintiff in the second proceedings for $255,145.40 and costs. On 25 November the appellants appealed as of right and on 1 December they applied for a stay of those judgments and orders until their appeal was heard and determined. In the same notice of motion they sought orders releasing assets bound by earlier Mareva injunctions to enable them to fund the costs of their appeal. The motion came before Mahoney JA on 9 December when it was adjourned by consent to 20 February when it came before me. After argument that day I indicated that I would not order the release of assets to enable the appellants to fund their appeal. Substantial funds for payment of legal costs had previously been released from Marevaemployment records, and the other evidence as to a system carried on with the knowledge of the respondents for the minimisation of workers" compensation insurance was irrelevant or peripheral. 3. His Honour erred in finding that the second appellant Ruth Gambotto had converted any moneys or property of the first and second respondents. The third ground is not a ground of appeal at all as required by SCR Pt 51 r 8(1)(c). In any event the trial Judge noted that the retainer of the moneys sued for was not disputed by the defendants. The first ground challenges a discretionary decision of the trial Judge on the second day of the trial to refuse the defendants leave to amend. On any view the appellants face a heavy burden in challenging such an order but in the present case those difficulties are insurmountable. Windeyer J noted that the proposed amendments did not comply with the Court's rules as to pleading. This was no mere technicality because they sought to raise an allegation of conspiracy to defraud but failed to set out clearly the nature of the fraud. Moreover this application for leave to amend was not the first made by the appellants. On 7 March 1994 the Registrar ordered the defendants to file an amended statement of defence by 15 March. On 18 March the plaintiffs moved to strike out those parts of the amendments which pleaded lack of clean hands. Master McLaughlin made that order on 24 March and on | July an appeal from that order was dismissed by Brownie J who granted leave to amend. On 20 September Hulme J struck out a further amended defence and adjourned a further JOBNAME: No Job Name PAGE: 2 SESS: 1 OUTPUT: Mon Feb 25 18:12:24 2008 /reports/caseml]/case/urj/9508058 UNREPORTED JUDGMENTS application for leave to amend to 28 September stating that if there was then a properly drawn pleading raising the matters sought to be raised the application for leave might succeed but if there was no such pleading it would fail. No furtherpleading was filed. The matter was again before Hulme J on 10 and 11 October when an application by the defendants for an adjournment of the trial then fixed for 17 October was dismissed. In the light of this history I am satisfied that the first ground of appeal is hopeless. The second ground of appeal raises a factual argument. The plaintiff companies made false 'wages' declarations to reduce their liability for workers" compensation premiums. Substantial amounts were involved. The directors or former directors denied knowledge of this but the trial Judge found to the contrary. The appellants" point is that the existence of these arrangements supported their case that agreements also existed which entitled them to retain the moneys in question for their own benefit. The trial Judge dealt with this point as follows: But while I do not accept all the denials of plaintiffs witnesses, and am satisfied that they had knowledge of what may be described as the payment records ... that would in no way mean that the agreement alleged to exist did exist. They of course deny that there was any agreement made as to commission. I do not think it necessary to spend any further time delving into this question because in my view the case is so clear that the defendants have no entitlement whatever to retain the commission that it would be purposeless to go into that subcontracting question any further. I see no basis for concluding that his Honour fell into error in taking this view. The defendants bore the onus of establishing the existence of agreements with the companies which entitled them to retain the moneys in question. There was no dispute that the moneys in question had been retained. The trial Judge was not satisfied that the agreements relied upon had been proved. In one case, as finally particularised, that agreement was said to be partly oral and partly oral. In the other case it was said to bewholly oral. His Honour said that the document relied upon did not support the agreement alleged and this conclusion has not been challenged. More significantly his Honour did not accept the oral evidence of Mr Gambotto that such agreements were made, preferring the oral evidence of the directors to the contrary. Moreover he accepted evidence from Mr Nesci, a solicitor, that Mr & Mrs Gambotto originally acknowledged their liability for the sums claimed by the first plaintiff and offered a charge over their properties to secure repayment. Mrs Gambotto was not called as a witness. The trial Judge listed twelve matters (pp 10-14) which led him to conclude that it was 'perfectly clear that defendants had no entitlement to retain the commission'. The appellants having failed to discharge the burden of proof which lay on them face a difficult task in the appeal in any event. See Dearman v Dearman (1908) 7 CLR 549 at 553. Their task is even greater in this case as his Honour found positively that no such agreements had been made. The appellants wish to contend that the deliberate understatement of the companies" ""wages' bills were established facts which were inconsistent with his Honour's ultimate findings or made them glaringly improbable. Compare Brunskill v \WAMBOTTO v GAWA PTY LIMITED (IN LIQUIDATION) FORMERLY KNOWN AS A & @ FORMWORK (Handley JA) (Handley JA) Sovereign Marine Insurance (1985) 59 ALJR 842 at 844. There is no substance in this point and I need only refer to Mr Nesci's evidence. In my opinion the appeal on the existing grounds, or those grounds as proposed to be amended in the manner suggested in Mr Masterman's 5 opinion cannot succeed. In these circumstances I decline to order a stay of proceedings. The appellants" motion should be dismissed with costs. Orders accordingly.