Supreme Court New South Wales Medium Neutral Citation: Schacht v Thompson and Staunton trading as Staunton & Thompson Lawyers (No. 1) [2012] NSWSC 168 Hearing dates: 27 February 2012 Decision date: 27 February 2012 Jurisdiction: Common Law Before: Johnson J Decision: Defendants' application to rely upon paragraphs 26(b)(iii) through to (vi) of pleading filed on 22 February 2012 is refused. Catchwords: PRACTICE AND PROCEDURE - professional negligence claim - directions a month before trial for filing of amended pleadings - Plaintiff complies with direction - Defendants do not and file pleading out of time shortly before trial - Defendants' pleading goes beyond terms of direction - application by Defendants at trial to rely on amended pleading - associated application by Defendants to call as a witness former wife of Plaintiff - very late notice of application - no statement or affidavit of former wife served - leave refused to rely at hearing on contested amendments Legislation Cited: Civil Liability Act 2002 Family Law Act 1975 (Cth) Civil Procedure Act 2005 Uniform Civil Procedure Rules 2005 Cases Cited: Aon Risk Services Australia Limited v Australian National University [2009] HCA 27; 239 CLR 175 Texts Cited: --- Category: Interlocutory applications Parties: Daniel Schacht (Plaintiff) Bruce Lockhart Thompson and Dennis Michael Stanton trading as Staunton and Thompson Lawyers (Defendants) Representation: Mr PS Braham SC; Mr DA Lloyd (Plaintiff) Mr A Cheshire (Defendants) Riley Gray-Spencer Lawyers (Plaintiff) HWL Ebsworth Lawyers (Defendants) File Number(s): 2009/297435 Publication restriction: --- Judgment (application by defendants for leave to amend defence - T61) 1JOHNSON J : The present proceedings involve a claim for damages by the Plaintiff, Daniel Schacht, against the Defendants, Bruce Lockhart Thompson and Dennis Michael Staunton trading as Staunton & Thompson Lawyers. 2The proceedings were commenced by a Statement of Claim filed on 9 February 2009. The claim is one of professional negligence against the Defendants arising from the giving of advice with respect to family law issues in 2002 and 2003, and the drafting and settlement of a Financial Agreement. I say no more about the issues than that for present purposes. 3This judgment relates to issues which have arisen at the commencement of the hearing before me today. The matter was listed, with a five-day estimate, commencing today. 4The Court has been informed that there was a mediation in June 2011, (which failed) so that the parties thereafter proceeded to take steps for a contested hearing in this Court. 5It came to pass that the Defendants indicated an intention to rely upon expert evidence. The Plaintiff had previously served expert evidence in the form of reports of the Hon Joseph Kay, a former Judge of the Family Court of Australia. The Defendants indicated an intention to rely upon expert evidence in the form of reports of the Hon Peter Rose QC, a former Judge of the Family Court of Australia, and Mr Ian Kennedy, solicitor. 6The matter was before Registrar Bradford at the end of January 2012, at which time the Registrar was informed that there was a contested interlocutory issue as to whether the Defendants ought be allowed to rely upon the expert evidence which had been served out of time. 7The matter was referred to Hislop J, the Professional Negligence List Judge. The matter came before Hislop J on 3 February 2012, and a number of issues were discussed, and orders made, several by consent. 8The Plaintiff had indicated that, because of some of the matters raised in the Defendants' expert evidence, there was a desire to amend the Statement of Claim to reflect issues which were responsive to the Defendants' expert evidence. 9By consent, Hislop J made orders, including orders that the Plaintiff was to have leave to file and serve, by 10 February 2012, an Amended Statement of Claim dealing with the matters raised in paragraphs 16 and 17 of the report of the Hon Peter Rose QC of 1 February 2012, and the Defendants were to file and serve a Defence to the Amended Statement of Claim by 17 February 2012. Other orders were made which it is not presently necessary to mention. 10The Plaintiff did file an Amended Statement of Claim on 10 February 2012. The Amended Statement of Claim contained some limited amendments at paragraphs 35.6, 35.7, 36.10A and 36.10B which reflected the foreshadowed amendments raised before Hislop J. 1117 February 2012 came and went, and the Defendants did not file any amended pleading. 12On 22 February 2012, a Defence to the Amended Statement of Claim was filed. This was apparently accepted in the Registry in a manner which is now common, where there is no scrutiny as to whether the pleading is limited by any grant of leave in the case. 13The Defence to the Amended Statement of Claim is not marked up in any way. It is a document which does not indicate, on its face, what parts are new. The submission has been made for the Defendants that, in effect, it was not an Amended Defence, it was a Defence to an Amended Statement of Claim, and thus technically it would not need to be marked up. 14I have to say, as a Judge sitting in a busy Court, that this approach is not an attractive one. It is helpful to see what it is that the document does that alters the previous position of the litigant. The pleading as filed on 22 February 2012 did not achieve that. 15A document has been prepared (MFI1) which does identify the changes. 16The pleading as filed includes new material at paragraphs 19 and 20. Those paragraphs refer expressly to s.5O Civil Liability Act 2002 . Initially, there was objection by the Plaintiff to these paragraphs; but after submissions, that objection was withdrawn. I am satisfied that, by a slightly circuitous route, the parties are in a position to litigate the question of the application of s.5O Civil Liability Act 2002 . I do not pause to further consider that aspect. 17Paragraph 26(a)(ii) introduces a paragraph in that part of the document. Again, objection was taken to this; but after submissions, that objection was withdrawn. It seems clear enough that the reference in the original Defence to s.90 Family Law Act 1975 (Cth) was an error, and that a reference to s.90F of that Act was intended. Further, that part of the pleading related more directly to paragraph 26(a) of the Defence. I accept that that part of the pleading ought stand. 18Further and substantial amendments were proposed to paragraph 26(b), and in particular, paragraph 26(b)(iii) through to (vii). Mr Braham SC, for the Plaintiff, objected to the Defendants being allowed to rely upon these pleadings. Ultimately, Mr Cheshire, counsel for the Defendants, did not press subparagraph (vii). The present controversy relates to paragraph (iii) through to paragraph (vi). 19At the outset, I approach this matter upon the basis that the window of opportunity which the Defendants had to file a Defence to the Amended Statement of Claim closed on 17 February 2012 (Rule 19.3(a) Uniform Civil Procedure Rules 2005 ). No application was made, pursuant to the liberty to apply granted by Hislop J, nor was any application made to me once it was indicated to the parties last Thursday (23 February 2012) that I was the trial Judge in the matter. 20It seems to me that the present application should be approached upon the basis that the Defendants seek leave to amend the original Defence (filed on 22 October 2009) to incorporate these matters, and to rely upon them at the hearing which is already under way. 21On the face of it, the Defendants would have had significant difficulty in contending that these paragraphs fell within what Hislop J allowed in the first place. But the position is even worse than that for the Defendants, because they did not take the relevant step within the time that Hislop J allowed, in any event. 22I approach the matter with ss.56-61 Civil Procedure Act 2005 in mind. The Court must seek to give effect to the overriding purpose to facilitate the just, quick and cheap resolution of the real issues in dispute. The parties are, of course, under a statutory obligation to do that, as are their legal representatives. 23Section 58 provides that the dictates of justice ultimately are a powerful factor, and s.61 provides for directions as to practice and procedure generally, and s.62 directions to the conduct of the hearing. 24It is the fact that the Defendants did not notify the Plaintiff at all, before the service of this document on 22 February 2012, of any intention to rely upon the matters contained in paragraph 26(b)(iii) to (vi). 25Mr Cheshire has submitted that, back in January 2010, the Plaintiff discovered some documents from the 2006 Federal Magistrates Court proceedings which bear upon this issue, in particular, some further and better particulars upon which the Plaintiff's ex-wife was going to rely at a certain point in those proceedings. 26In the end, the ex-wife relied upon one basis only to attack the Financial Agreement relevant to this case, and that was a ground which succeeded. Some documents containing broad expressions of possible grounds for setting aside the Financial Agreement were flagged without, as I read them, any real particularisation of what was asserted. In reality, the ex-wife did not need to go to those issues, because she succeeded in setting aside the Financial Agreement on a more fundamental basis. 27Thus, the Defendants were on notice back in January 2010 of issues that might raise the possible application of s.90K Family Law Act 1975 (Cth) , and in particular, that the paragraphs now referred to in paragraph 26(b) of their Amended Defence may arise. 28Armed with those documents, the Defendants have given consideration to calling the ex-wife in these proceedings. I have been informed from the bar table, and there has been no objection to me receiving this information in this way, that the Defendants sought the co-operation of the ex-wife to provide a statement or affidavit which could have been served in accordance with the timetable fixed by the Court. Mr Cheshire informs me that the ex-wife would not co-operate in that process. Thus, the Defendants were faced with the forensic dilemma as to what to do, in circumstances where they did not know what the ex-wife may say. 29What the Defendants did and did not do, may be summarised as follows. They did not mention until late last week, in any dealings with the Plaintiff, the possibility that the ex-wife may be called in the proceedings. They did not mention on 3 February 2012, at the directions hearing before Hislop J, that they were thinking of calling the ex-wife. This was the case even though, I am told, a subpoena had issued on 2 February 2012 for the purpose of requiring the attendance of the ex-wife to give evidence at these proceedings. 30From 3 February 2012 until late last week, there has been no indication of an intention to call the ex-wife. Now the Court is told that the Defendants seek to call the ex-wife on the issues which are raised in this part of the Amended Defence. The reality, however, is that Mr Cheshire would be calling the ex-wife blind, without knowing what her evidence would be. 31Mr Cheshire has submitted that an affidavit of the Plaintiff, affirmed 24 June 2011, has been served, and that that affidavit seems to touch upon the same line of country as evidence which may be adduced from the ex-wife. These issues include the pre-separation standard of living of the parties, events after separation and issues including the health of the ex-wife. 32Mr Braham SC has submitted that that affidavit was not intended to go to these issues, but that, in any event, he does not propose to read that affidavit at this hearing. 33Thus, I approach the present interlocutory ruling upon the basis that the affidavit of the Plaintiff, affirmed 24 June 2011, will not be read at the hearing. It does not raise issues or evidence which the Defendants will need to meet. 34What one has then are the letters obtained on discovery back in January 2010, which (in a generalised way) identified some of the s.90K heads of argument. The Defendants seek to call the ex-wife at the hearing to, in a sense, put some meat on the bones of those letters of particulars. That would be done without counsel for the Defendants knowing precisely what the meat would be. 35I raise this aspect at this stage because it bears upon a number of matters. This is not just a question whether the Defendants should be allowed to amend the pleading in the manner sought. To allow that to happen, in my view, would impact in a very significant way upon this hearing. 36The case is now reaching the end of the first day of its five-day estimate. I am delivering this judgment to sort out what are the issues in the case. 37The evidence, as I apprehend it, will involve the Plaintiff giving evidence as the only non-expert witness in the Plaintiff's case. The Defendants would seek to call Mr Andrew Corish, who was the solicitor with the carriage of the matter at the relevant time. If allowed, the Defendants would seek to then call the ex-wife. 38The experts, the Hon Mr Rose QC and the Hon Mr Kay, have conferred for the purpose of giving concurrent evidence. The solicitor experts, Mr Kennedy and Mr Holmes, have not as yet met, although it would be highly desirable that they did so. But clearly, the experts could not be called to give any evidence until the factual evidence was complete. And indeed, if the Plaintiff gives evidence, it is not clear to me how Mr Cheshire could cross-examine him as to any matters that would emerge from the ex-wife's evidence, because he would not know what the wife was going to say. 39How that would impact forensically on the progress of the case is a troubling question. Whether the Court would be called upon to allow the case to run in various phases, to meet the convenience of the Defendants, may well arise for consideration. But all of this is happening because last week, after the time allowed for Hislop J, the Defendants sought to raise for the first time in the Amended Defence issues that were simply not raised before. 40All of this, it seems to me, identifies strong discretionary reasons for not allowing the Defendants to proceed down this path. This is not only to give effect to the well known principles stated by the High Court of Australia in Aon Risk Services Australia Limited v Australian National University [2009] HCA 27; 239 CLR 175, it is also to give effect to the responsibility that I have as trial Judge, under s.56 and following of the Civil Procedure Act 2005 , to ensure that the real issues in dispute are litigated justly, quickly and cheaply. 41It seems to me that the current process involves a speculative approach by the Defendants, with the distinct prospect that, if they are allowed to have an Amended Defence with these paragraphs in, this hearing will be fractured, and that all of that will undermine the purposes of the Civil Procedure Act 2005 . 42If there be any complaint from the Defendants that the approach which I propose to take operates unfairly to them, the answer lies in their responsibilities under s.56 Civil Procedure Act 2005 . The Plaintiff can hardly be criticised for saying, at this stage, that he is here to meet this case, and that this has not been raised before. This is not a theoretical or technical point. It seems to me to be an area which will have a real and detrimental impact upon the hearing. 43Accordingly, I do not propose to allow the Defendants to rely upon paragraphs 26(b)(iii) through to (vi) of the pleading filed on 22 February 2012. 44I make the following orders: (a) I direct the Defendants to furnish to the solicitor for the Plaintiff, and to my associate, no later than 9.30 am tomorrow a Defence to the Amended Statement of Claim which accords with MFI1, in particular as to paragraphs 19, 20 and 26(a)(ii), but excludes paragraph 26(b)(iii) through to (vii), and which excludes paragraphs 35 and 36, which were not pressed by Mr Cheshire; (b) the question of the costs of this particular application I reserve until a later time. ********** Amendments 09 March 2012 - amended medium neutral citation Amended paragraphs: coversheet 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. Decision last updated: 09 March 2012