New South Wales Supreme Court CITATION : National Australia Bank Limited v John Edward Roberts & Ors [2002] NSWSC 1048 FILE NUMBER(S) : SC 50009/01 HEARING DATE(S) : 25/10/02 JUDGMENT DATE : 25 October 2002 National Australia Bank Limited (Plaintiff) John Edward Roberts (First Defendant) Karan Ann Roberts (Second Defendant) Capital House Custodians Pty Limited (Fourth Defendant) PARTIES : News-Express Technologies Pty Limited (Fifth Defendant) Neil Colin Mansfield (Seventh Defendant) Salvatore Panucci (Eighth Defendant) Jeffrey James Meads (Ninth Defendant) Well Connected Holdings Pty Limited (Tenth Defendant) JUDGMENT OF : Einstein J Mr Macfarlan QC (Plaintiff) Mr Hammerschlag SC & MA Jones (First and Second Defendants) COUNSEL : R Ward (Fourth, Eighth and Tenth Defendants) M Bowen (Fifth and Seventh Defendants) RN Gye (Ninth Defendant) Dibbs Barker Gosling (Plaintiff) Holding Redlich (First and Second Defendants) SOLICITORS : Kemp Strang (Fourth, Eighth and Tenth Defendants) Duffield & Duffield (Fifth and Seventh Defendants) Greg Judd & Associates (Ninth Defendant) CATCHWORDS : Practice and Procedure - Application to vacate - Hearing date fixture - Change of solicitor - Overriding purpose rule - Exercise of discretion DECISION : Application to vacate fixture dismissed. IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION COMMERCIAL LIST Einstein J Friday 25 October 2002 ex tempore Revised 6 November 2002 50009/01 National Australia Bank Limited v John Edward Roberts & Ors JUDGMENT 1 There is before the Court a Notice of Motion filed on 25 October 2001 by the first and second defendants seeking an order vacating the final hearing of the proceedings presently listed to commence on 3 February 2003. The application is opposed. 2 In support of the application Mr Hammerschlag SC has read without objection affidavits by Ms Sylvia Fernandez of 20 September 2002 and 23 October 2002. In opposing the application Mr Macfarlan QC, has read the affidavit of Mr Justin Kang made on 24 October 2002. 3 The position with respect to the fifth and seventh defendants represented by Mr Bowen of counsel, the fourth, eight and tenth defendants represented by Mr Ward of counsel, and the ninth defendant represented by Mr Gye of counsel, is that they are neutral in relation to the application. They have not sought to be heard in relation to the application and, as I understand it, would abide the decision of the Court. 4 The proceedings were commenced on 6 February 2001 against the first to ninth defendants. There have been two amended pleadings filed on behalf of the plaintiff, namely an amended summons filed on 6 April 2001 and a further amended summons, being the current pleading (joining the tenth defendant) filed on 19 April 2002. 5 There is a history of non-compliance by the first and second defendants with directions and orders given from early days in the proceedings. The history is carefully outlined in Mr Kang's affidavit of the 24 October 2002, [paragraphs 10 through to 17]. 6 The net result in relation to that history apropos the position of the first and second defendants is that they did file on 24 May 2001, some eighteen months ago, defences to the then form of summons. But notwithstanding directions given in this regard they have failed to file amended defences to the 19 April 2002 further amended summons. Likewise notwithstanding the 5 July 2002 directions in relation to the service and the filing of affidavits in answer to the plaintiff's claim [extended consensually to 6 September 2002], those affidavits were not filed by that date. The directions hearings of 20 September and 4 October, required the filing and service of defences by 18 October. That set of directions has not been complied with. The current date for filing and service of affidavits is 1 November 2002 which of course has not yet been reached. 7 Mr Hammerschlag has squarely based the application for the vacation of the hearing date fixture upon the circumstance that his now instructing solicitors, Holding Redlich, following some discussions with Mr Roberts in mid September, received instructions on behalf of the first and second defendants on 18 September. 8 A Notice of Ceasing to Act as Solicitor was filed by Morgan Lewis Alter on 12 September 2002. 9 The submission is that by reason of the matters set out in the two affidavits by Ms Fernandez and Mr Hammerschlag's personal assessment of the nature of the matter and of the step which he perceives will be required to bring the matter to a state of readiness for a final hearing, it is said to be simply not practicable for the first and second defendants, to be required to litigate on the dates now fixed for hearing. Mr Hammerschlag relies upon the proposition referred to by Priestley JA in Cohen v McWilliam (1995) 38 NSWLR 476 at 477, in terms citing Sir Samuel Griffith: "the right of every man to a fair hearing before he is condemned lies at the root of the tree of justice". 10 The principles upon which the Court operates are not in doubt. Clearly and as the High Court in State of Queensland v JL Holdings Pty Ltd (1996) 189 CLR 146 pointed out, mistakes by legal advisors are not to be sheeted home to their clients [cf Cropper v Smith (1884) 26 Ch D 700 at 710 per Bowen LJ at 710]. The object of the Courts is to decide the rights of parties and not to punish them for mistakes they make in the conduct of their cases by deciding otherwise than in accordance with their rights. 11 It is however, always the case that the particular facts, matters and circumstances before the Court require the closest of scrutiny in order for the court to determine whether or not, for example, an application for leave to amend a pleading should be granted or, as in this case, a final hearing date should be vacated. 12 As always the proper exercise of the discretion involves applying the principles to the facts, matters and circumstances of the particular case. 13 The position of the parties in terms of the application to vacate the fixture requires careful attention to the detail. 14 The nature of the proceedings is spelled out in the summons in its most recent form and generally summarised in paragraph 19 of Mr Kang's affidavit. 15 These are complex proceedings in the commercial list which have been on foot for some twenty months. 16 The plaintiff's claims are against · the first defendant for judgment in the amounts outstanding on a facility provided to him by the plaintiff; · the first and second defendants for amounts outstanding under respective guarantees and indemnities provided by them; · the second defendant for possession of a property at Seaforth pursuant to a registered mortgage; · all defendants on claims of fraud, misleading and deceptive conduct and knowing involvement in the same in respect of a number of lease finance facilities provided by the plaintiff. 17 A recent development has been the service by the plaintiff of notices of termination of lease purchase agreements. Mr Macfarlan has made plain that the plaintiff proposes to seek leave to amend the present form of summons so as to include claims by the plaintiff on guarantees in respect of the leases or lease purchase agreements. I am satisfied that those claims should not give rise to any particular difficulty in terms of the matters which have been proposed to be litigated on existing pleadings, it being made plain that the plaintiff will be in a position to file amended pleadings to bring in that additional claim on Monday 28 October 2002. 18 Mr Hammerschlag has made plain that one of the areas in respect of which his now clients have difficulty, apparently concerns, as he sees it, the limited catchment area by way of bank documents and files relating to the relationships between the plaintiff, his clients and the sundry businesses referred to in the pleadings. In that regard the Court has been taken to a Notice to Produce served on the plaintiff on 20 August 2002. [to be found at page 18 of Mr Kang's affidavit] 19 On examination, whilst that notice to produce and the materials presumably produced regularly in response to it, do cover a number of relevant documents, it is clear that the Notice to Produce could not be said to be akin in any way, shape or form to a discovery order. 20 In those circumstances, no discovery order having been made, Mr Hammerschlag addressed attention to the difficulties which his now clients may have, even with the new team of solicitors, in preparing for the final hearing. 21 During the course of the addresses the Court inquired of the plaintiff, as to the position with respect to discovery. I have ascertained that it would apparently be possible and practicable for full discovery to be given by the plaintiff on all issues seven days following the joinder of issue, namely the filing by the first two defendants of defences to the final (it is hoped) form of pleading sought to be propounded by the plaintiff. 22 Mr Macfarlan, in obtaining those instructions, made clear that it was not impossible that, at some stage in the coming weeks, his client, if I made such an order, would seek leave to have the order re-visited for whatever reason may become apparent. As I see it any application of that nature (or any other application made by any party to the proceedings) must be determined upon its then merits by whichever judge has the conduct of determining such application. But it is appropriate to make plain that in the decision, which I have come to, which is that the motion should be dismissed, an important parameter of my concern is that the first and second defendants, by their new team of lawyers particularly do have the fullest ambit of discovery, which is practicable. 23 Mr Macfarlan emphasised that not withstanding the careful manner in which Ms Fernandez has treated her and her firms involvement with these proceedings from the occasions when they first became involved, there is simply no material on the affidavits, whether on information and belief or otherwise, as to what occurred during the nineteen or thereabouts months prior to the solicitor change over. 24 Mr Hammerschlag has submitted that this is really not a matter of any relevance and is to be explained by Ms Fernandez having deposed to the fact that there were no adequate draft statements on file when she received the file from the previous solicitor, which could be used as a basis for affidavit evidence. There were no draft defences in the claims made by the plaintiff in its further amended summons. 25 In my view Mr Macfarlan's submission is one of substance. 26 It is always necessary to stand back from the detail on an application to vacate a hearing date and I have endeavoured to do so. Two matters in particular should be mentioned. The first is that there is now still some three months prior to the commencement of the final hearing date now fixed. The second has been my endeavour to follow, as closely as I have been able to, the statements by Ms Fernandez as to the defences which she has deposed "may be available to her clients". [See paragraph 22 of her affidavit of 23 October 2002] 27 I am satisfied from in particular the materials appended to Mr Kang's affidavit and his careful description of the history of these proceedings, and of proceedings which may be regarded as related or as having raised ancillary, but connected issues, that each of the claims which Ms Fernandez believes may be available by way of defences, is by no means a new claim. The possibilities of such claims were mooted as long ago as eighteen months. [See Morgan Lewis Alter letter 22 March 2001 to be found at page 20 of Mr Kang's affidavit; see also the detail in the cross claim filed by the first and second defendant on 4 June 2001 and struck out by Justice Hunter on 27 July 2001]. Those cross claims are replete with a number of material allegations, including allegations concerning the alleged breach of contract in relation to the overdraft facilities. [See paragraph 10, and the allegations of "misleading and deceptive representations of forbearance" in paragraphs 14 to 17]. 28 A recent development in this State, which the Court is also entitled and indeed required to take closely into account, relates to Part 1 of the Supreme Court Rules as modified by Amendment No. 337, which elucidates the overall objectives of practices and procedures as specified in the Rules. The overriding purpose of the Rules is to facilitate the "just, quick and cheap resolution of the real issues" in civil proceedings. The overriding purpose clause imposes an obligation on the Court to give effect to the overriding purpose when it exercises any of its powers. 29 In my view on the materials presently before the Court in relation to this application, the overriding purpose rule makes clear that the proper exercise of the Court's discretion is to dismiss the Notice of Motion. 30 The factors taken into account in reaching this decision include: · the background to these proceedings; · the time which the proceedings have been on foot; · the dilatory approach of the first and second defendants over an extremely extended time to the Court's directions; · the scant materials grounding the application; · the fact that the proceedings have been fixed for hearing since early July of this year; · my view that a competent legal team working apace and assisted by a timetable which will require, (unless this be later vacated) full discovery by the plaintiff, should permit these defendants sufficient time with which to be in a position to litigate the matters to be litigated in the final hearing; · the fact that the long vacation will be required for continued preparation. 31 There is always a limit to the extent to which the court will bow to a claim that a hearing date must be vacated by reason of problems with legal advisors in terms of a change. But the evidence discloses no more than that fact. 32 The Court takes into account all the facts, matters and circumstances including, of course, relevant prejudice to a plaintiff. The relevant prejudice to the plaintiff here simply involves the amount of time that the proceedings have been on foot, the plaintiff's entitlement regularly to bring the defendants before the Court for the purpose of determination of the proceedings and of course the nature of the proceedings themselves. 33 The evidence further includes a concern by the plaintiff's instructing solicitor in relation to Mr Macfarlan's availability, it being the case that the plaintiff may have to engage different senior counsel, as there is a real prospect he would not be available for a further three to four week hearing until near the end of the 2003 calendar year. That is a consideration which the Court is entitled to weigh in the balance. These cases are no doubt difficult to prepare and a plaintiff is entitled to the benefit of senior counsel, who has been briefed where that is practicable. Having said that, had the materials and the submissions satisfied me that in the interests of justice it was simply not practicable for the first and second defendants to be obliged to litigate the final hearing on the dates currently fixed, with all respect to Mr Macfarlan and his availability, that factor would not and could not have inclined me to do otherwise than to vacate the hearing day. Counsel's convenience, where the Court is able to take it into account, will be taken into account. There are other senior counsel. I certify that paragraphs 1 – 33 are a true copy of the reasons for judgment herein of the Hon. Justice Einstein given on 25 October 2002 ex tempore and revised on 6 November 2002 ___________________ Susan Piggott Associate 6 November 2002 Last Modified: 11/14/2002 DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.