Supreme Court New South Wales Medium Neutral Citation: Schacht v Thompson and Staunton trading as Staunton & Thompson Lawyers (No. 2) [2012] NSWSC 169 Hearing dates: 28 February 2012 Decision date: 28 February 2012 Jurisdiction: Common Law Before: Johnson J Decision: Defendants' further application to rely upon paragraph 26(b)(iv) of the pleading filed on 22 February 2012 is refused. Catchwords: PRACTICE AND PROCEDURE - professional negligence claim - further application by Defendants to amend Defence - leave refused Legislation Cited: Family Law Act 1975 (Cth) Civil Procedure Act 2005 Cases Cited: Schacht v Thompson and Staunton trading as Staunton & Thompson Lawyers (No. 1) [2012] NSWSC 168 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 (on further application by defendants for leave to amend defence - T80) 1JOHNSON J: Yesterday afternoon, I delivered judgment in which I refused the Defendants leave to amend the Defence so as to rely upon certain paragraphs contained within paragraph 26 (b)(iii) to (vi): Schacht v Thompson and Staunton trading as Staunton & Thompson Lawyers (No. 1) [2012] NSWSC 168. 2Amongst the rejected paragraphs was paragraph 26(b)(iv), which provides: ""Material change of circumstances, including the birth of a child and Ms Dieziger becoming the carer for the children and also becoming ill and unable to work and suffering hardship (s90K(1)(d) of the Family Law Act 1975 (Cth))." 3This morning Mr Cheshire, counsel for the Defendants, has renewed the application to amend the Defence to rely upon that subparagraph. The issue arose this morning because of a direction which I gave yesterday that counsel for the Defendants inform the Plaintiff whether he intended to seek to call the ex-wife of the Plaintiff, Ms Dieziger, as a witness in the Defendants' case, and if so as to what issues. 4The email that was sent in response to that order (MFI2) identified a desire to call Ms Dieziger to give evidence with respect to: "A defence pursuant to s.90K(1) (d), for which the Defendant will renew an application." 5That is the present renewed application. 6The judgment delivered yesterday recounts the history of this matter in some detail. What is clear is that the first time that the Defendants have raised in a pleading any intention to rely upon s.90K(1)(d) Family Law Act 1975 (Cth) was in the document filed on 22 February 2012, in relation to which I ruled yesterday. 7At the same time, it is accepted by counsel for the Defendants that there was no prior indication before late last week that Ms Dieziger might be called as a witness in these proceedings. 8Orders were made by the Court, in the ordinary way, for the Defendants to file and serve lay evidence in these proceedings. The first such order was made on 4 November 2009, requiring the filing and service of lay evidence by 5 February 2010. A second order was made on 7 April 2010, which required the service of the Defendants' lay evidence by 14 May 2010. 9In addition, Practice Note Number SC CL7 (the Professional Negligence List Practice Note) operated so that certainly by no less than six weeks before the trial date, the evidence of the Defendants' witnesses should have been served, and a witness list was to be served not less than one month before the trial. 10Until last week, the only non-expert witness whom the Defendants have indicated that they intended to call in these proceedings was Mr Andrew Corish, the solicitor with the Defendants at the relevant time who had the carriage of the matter. 11In support of the current application, Mr Cheshire points to the development of the s.90K(1)(d) issue through the reports of the Hon Peter Rose QC, one of the Defendants' expert witnesses. In the report of 20 December 2011, there is a passing reference to s.90K(1)(d) at paragraph 19. That report flags that it is a possible issue, emphasising the fact that "hardship" must be demonstrated. 12In a further report of the Hon Peter Rose QC dated 1 February 2012 (at pages 9 and 10), there is further reference to the s.90K(1)(d) issue, with some possibilities raised as to matters that may be relevant to that question, including the birth of the second child and health issues surrounding the ex-wife. The report again emphasises that the relevant provision of the Family Law Act 1975 (Cth) requires "hardship" to be established. 13On 3 February 2012, Hislop J granted leave to the Defendants to rely upon the reports of the Hon Peter Rose QC. There was no indication at that point of any intention to seek to amend the pleading to add a s.90K(1)(d) issue. 14The former Judges of the Family Court of Australia, the Hon Joseph Kay and the Hon Peter Rose QC, met and provided a joint report dated 27 February 2012, with which I have been provided. That report (at page 3) refers to the spousal maintenance issue and refers as well to the s.90K(1)(d) issue. The joint report indicates that the Plaintiff's wife had an arguable case of substance to set aside the 2002 agreement under s.90K(1)(d), but that success was not certain. The argument would have relied upon the birth of the second child and the imbalance of the parties' financial resources, as demonstrating hardship sufficient to justify the setting aside of the earlier agreement. A further relevant factor may have been changes in the wife's health, due to thyroid cancer and radiation treatment. The report states, however, that there is an absence of instructions regarding the impact of the health issue on the wife's capacity to earn income in the foreseeable future and a medical prognosis. Further, although the provisions of clause 21 are imprecise, the open-ended nature of the spousal maintenance provision may have militated against a finding that she would suffer hardship. 15I pause to note that clause 21 of the 2002 agreement is elsewhere said by the two experts to be, in their opinion, void. However, if clause 21 did operate, it would lead to spousal maintenance estimated at $500.00 per week for a period of at least three years following separation depending upon the circumstances. 16Mr Cheshire's first submission this morning was that the amendment should be allowed; the issue should be litigated; the Plaintiff's affidavit of 24 June 2011 will bear upon these issues; and, in addition, he would seek to call the ex-wife to ask her about the birth of the second child, her state of health from 2002 to 2012, the development of thyroid cancer and its impact upon her ability to earn income and care for the child and matters of that type. 17Mr Braham SC, for the Plaintiff, opposes the application. He submits that the amendment should not be allowed at all, being brought out of time and far too late to allow it to be fairly litigated in these proceedings. 18Mr Cheshire put as a fallback position that, even without the evidence of the wife (whatever it may be) the Plaintiff's affidavit of 24 June 2011 will bear upon these issues and that there is a crossover, in any event, between these issues and the clause 21 maintenance issue. He submits, therefore, that the Defendants ought be allowed by way of an amendment to the Defence to litigate these issues, even in a confined way, and not including any evidence from the wife. 19In response to Mr Cheshire's fallback position, Mr Braham SC submits that that is not a fair and proper way of proceeding in this case, that if this issue is to be litigated at all, then the Plaintiff ought to have had an opportunity, by way of proper notification in pleadings, that this was an issue that was to be litigated by reference to s.90K(1)(d). 20I am not, in this judgment, seeking to give any ruling upon the scope of the clause 21 maintenance issue. There may be further argument about that and possible further objection. 21What I am considering at this stage is the Defendants' renewed application to amend the Defence in one respect. It seems to me that the reports of the Hon Peter Rose QC flagged the issue, in a way that should have led the Defendants, if they wished to litigate this question, to have brought it to a head at an earlier time. There was an opportunity on 3 February 2012 when the matter was before Hislop J. It is no answer to that, it seems to me, to say that the matter was before Hislop J for a limited purpose only. It is quite apparent that the issues before Hislop J at that time included the consequences which may flow from the late provision of the reports of the Hon Peter Rose QC, which included the portions upon which the Defendants now seek to rely on this application. 22The issue was not flagged at that time. The Defendants already had in mind calling the ex-wife, as a subpoena had issued on 2 February 2012. None of this was communicated to the Plaintiff's legal representatives or the Court. 23The Plaintiff is entitled to fair and reasonable notice of the issues to be litigated in the proceedings. That is to be done by way of the pleadings, and compliance with Court orders with respect to the service of evidence. They are linked issues in this case. 24As to the Defendants' primary submission that the amendment should be allowed, and that the ex-wife should be called to give evidence on these matters, it seems to me that such a course is fraught with risk as to the just, quick and cheap resolution of the proceedings. To allow the ex-wife to be called to give evidence, without anyone knowing what account she would give of her illness, and the impact of it on her ability to earn income, would be manifestly unfair to the Plaintiff. The Plaintiff would have to have a proper opportunity to test such evidence and that may include the obtaining of medical evidence, and perhaps evidence which goes to her ability to work, given the health conditions from which the ex-wife has unfortunately suffered. 25I well understand why Mr Cheshire proposed a fallback position, and it is to that which I now turn. 26A fundamental difficulty with the fallback position is that it seeks to confine the Plaintiff to matters which have been raised in the evidence and in affidavits as a means of responding to this issue. The Plaintiff, I suppose, could seek at this point to obtain further evidence which may bear on this issue. But why should parties to litigation, bound by s.56 Civil Procedure Act 2005 , be allowed to conduct proceedings in a manner that leads to this result? 27A fundamental problem for the application is the time when all of this is being done by the Defendants. If these matters were to be ventilated, then the time for it to be done was when the first report of the Hon Peter Rose QC raised them. It is being done now in a way which is eroding the hearing time. 28It is my task, doing the best I can, to determine what the interests of justice require with respect to this further application to amend the pleadings. 29Having regard to the matters which I have adverted to, I am not persuaded that it would be appropriate to allow the amendment which is sought. I decline the Defendants' further application to amend the Defence to rely upon the s.90K(1)(d) issue. ********** 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: 08 March 2012