Supreme Court New South Wales Medium Neutral Citation: Samir and Susan Gindy v Holden Street Pty Ltd [2012] NSWSC 1269 Hearing dates: 10 October 2012 Decision date: 24 October 2012 Jurisdiction: Equity Division Before: AsJ Macready Decision: Leave granted to file amended pleading provided: 1. Cross-claimant to pay the costs thrown away as a result of the amendment 2. Cross-claimant pay the costs of the plaintiffs in respect of all directions hearings in this court from 31 May 2011 to the present incurred by the plaintiffs except to the extent that orders have already been made to date in respect of any particular days in favour of the plaintiffs Catchwords: PROCEDURE - leave sought to amend cross-claim - substantial delays in proceedings - discretion to allow amendments - prejudice to parties Legislation Cited: Uniform Civil Procedure Rules Cases Cited: Aon Risk Services Ltd v Australian National University [2009] HCA 27; (2009) 239 CLR 175 Category: Interlocutory applications Parties: Samir Gindy Plaintiff Susan Gindy Plaintiff Holden Street Pty Ltd 1st Defendant Murray John Hall, 2nd Defendant John Edward Magrath 3rd Defendant Representation: Counsel: E.W. Young (Plaintiff) L.T. Livingston (3rd Defendant) Solicitors: Plaintiff: Colin Biggers & Paisley Third Defendant: Shine Lawyers File Number(s): 2007 / 293783 Judgment 1This is the hearing of the third defendant's application by way of notice of motion filed 27 June 2012 seeking leave for him, as a cross-claimant to the second cross-claim, to file and serve the second further amended cross-claim in the form attached to the affidavit of Rebecca Jancauskas sworn on 13 June 2012. 2The plaintiffs oppose the grant of leave referring particularly to the lack of explanation for the substantial delay in the case. 3The proceedings were originally in the District Court and the first cross-claim brought by Mr Magrath was filed on 4 August 2008. An amended second cross-claim was filed on 6 February 2009. That claim, together with the hearing by the plaintiffs, was listed for hearing in the District Court on 9 March 2010 but vacated on Mr Magrath's application on 5 August 2010 to transfer the proceedings to this Court. 4After some delays caused by Mr Magrath, a transfer order was made on 15 April 2011 which included orders that any amended cross-claim be filed by 27 April 2011. An amended pleading was filed within time or has been filed since. 5On 31 May 2011, the Court stood the matter over to 21 June 2011 to allow Mr Magrath to deal with matters raised in correspondence. On 21 June 2011, the Court again stood the matter over to 2 August 2011 to allow Mr Magrath to inform Mr and Mrs Gindy of his proposed procedural progression of the matter. 6At the directions hearing of 2 August 2011, Mr Magrath's counsel informed the Court of the bankruptcy of Mr Hall and the matter was stood over to 27 September 2011. On 27 September 2011, the matter was stood over to 14 December 2011 as Mr Magrath had taken no steps. 7At the directions hearing on 14 December 2011, counsel for Mr Magrath informed the Court that Mr Magrath was in financial difficulty and there was a creditors petition against him in the Federal Magistrates Court by BMW Australia. The matter was stood over to 3 February 2012. 8Mr Magrath did not appear and was not represented at the directions hearing of 3 February 2012 when the matter was stood over to 24 February 2012. The Court also ordered that a letter be issued to Mr Magrath pursuant to the Uniform Civil Procedure Rules r 13.6 warning of summary dismissal of proceedings. Costs were ordered against Mr Magrath in favour of the Gindys. 9At the hearing of 24 February 2012 Mr Magrath, through his representative, sought that the matter be stood over. The matter was stood over to 21 March 2012 and the Court ordered costs against Mr Magrath in favour of the Gindys payable forthwith. The Court also ordered that the cost order for 3 February 2012 be payable forthwith. 10On 21 March 2012, the Court ordered Mr Magrath to serve his proposed amended pleadings by 11 April 2012 and stood the matter over to 30 April 2012. 11On 30 April 2012, the Court granted Mr Magrath further time to finalise his proposed draft amended pleadings. On 30 May 2012, Mr Magrath was ordered to file and serve a notice of motion to amend his pleadings by 27 June 2012. Costs were ordered against Mr Magrath in favour of the Gindys for the hearings of 30 May 2012 and 14 June 2012 payable forthwith. 12Mr Magrath filed the present notice of motion on 27 June 2012. The nature of the claims made and the cross-claims 13The cross-claim, which is the amended first cross-claim filed on 6 February 2009, sought orders rendering unenforceable guarantees given by the second defendant to the plaintiff pursuant to s 72 of the Fair Trading Act 1987. The second claim was under the Contracts Review Act 1970 and the third an order for equitable set-off. The substance of the claim is set out by reference to the defence to the amended statement of claim filed in the proceedings. 14In paragraphs 15-23 the substance of the pleading is a misrepresentation case based upon the contract of sale made 27 July 2006. The misleading and deceptive conduct was the subject of written representations contained in the contract of sale. 15In the claim now sought to be filed as the amended first cross-claim, the claims for relief under the Contracts Review Act and equitable set-off are deleted. There is also a change in the claim to make it under both the Trade Practices Act 1974 (Cth) and the Fair Trading Act 1987 being the relevant acts governing the conduct in question. It also seeks damages for loss for breaches of the Trade Practices Act and the Fair Trading Act. 16The substance of the cross-claim is still exactly the same, namely, misleading and deceptive conduct in respect of the written representations contained in the contract for sale. 17The essence of the misleading conduct was the representation that the property was leased and that there was no subsisting breach of the lease and as a result there was a substantial rental yield of the property. 18The claim for damages is different but it was something that was flagged some time ago by the defendants on 23 December 2010. At that time, there was a suggestion that rather than a cross-claim there would be a new statement of claim and the new proposed cross-claim included. The present claims, including the contractual claim in the same terms, also sought damages. 19It is noteworthy that in respect of another cross-claim in the District Court proceedings there were sworn affidavits by the present plaintiffs' conveyancer. The deponent was Mr P. Shak and in his affidavit of 22 February 2010 there is clear evidence of discussions with the plaintiffs about the inclusion of cl 58.4 in the lease. In accordance with that evidence, it is plain that the plaintiffs knew that they had problems with the tenant but still agreed to put cl 58.4 in the lease so that the sale would go ahead. 20Plainly the cross-claim is one in respect of which one could say that there is a prima facie case for the cross-claimant. Explanation for delay 21The plaintiff submitted that the cases make it clear that the processes of exercising the discretion to allow amendments involve a balancing exercise of the interests of both parties to the litigation and the other litigants in the court system. 22In support of this submission, the plaintiffs naturally referred to the decision of Aon Risk Services Ltd v Australian National University [2009] HCA 27; (2009) 239 CLR 175. The plaintiffs helpfully summarised some of the principles taken from this case in these terms: (1)To be taken into the exercise of interlocutory discretions is "[the] waste of public resources and undue delay, with the concomitant strain and uncertainty imposed on litigants ... Also to be considered is the potential for loss of public confidence in the legal system which arises where a court is seen to accede to applications made without adequate explanation or justification ...". (2)A party is not "to be rewarded by weighing in its favour the disruptive consequences of its own application" (in this case, the notice of motion disrupting the matter being set down for hearing, and the need for an amended defence to the cross-claim and further affidavits and other evidence, including expert evidence, discovery and subpoenas). (3)There is no "right" to amend, and "An application for leave to amend a pleading should not be approached on the basis that a party is entitled to raise an arguable claim, subject to payment of costs by way of compensation". (4)"Speed and efficiency, in the sense of minimum delay and expense, are seen as essential to a just resolution of proceedings. This should not detract from a proper opportunity being given to the parties to plead their case, but it suggests that limits may be placed upon re-pleading, when delay and cost are taken into account. It cannot therefore be said that a just resolution requires that a party be permitted to raise any arguable case at any point in the proceedings, on payment of costs". (5)It has been long recognised that "personal litigants are likely to feel the strain of litigation more than business corporations or commercial persons ... The stated object [of the rules], of minimising delay, may be taken to recognise the ill-effects of delay upon the parties to proceedings and that such effects extend to other litigants who are also seeking a resolution in their proceedings". (6)Whilst an application to amend will not necessarily be refused because of some waste of costs and some degree of delay, "It is the extent of the delay and the costs associated with it, together with the prejudice which might reasonably be assumed to follow and that which is shown which are to be weighed against the grant of permission to a party to alter its case. Much may depend upon the point the litigation has reached relative to a trial when the application to amend is made. There may be cases where it may properly be concluded that a party has had sufficient opportunity to plead their case and that it is too late for a further amendment, having regard to the other party and other litigants awaiting trial dates. (7)When the court is considering whether to exercise its discretion to allow an amendment to pleadings, "[i]nvariably the exercise of that discretion will require an explanation to be given where there is delay in applying for an amendment" and that "[n]ot only will they need to show that their application is brought in good faith, but they will also need to bring the circumstances giving rise to the amendment to the court's attention, so that they may be weighed against the effects of any delay and the objectives of the Rules". (8)Although a party has a right to bring proceedings, "limits will be placed upon their ability to effect changes to their pleadings, particularly if litigation is advanced". (9)"[D]elay and costs are undesirable and that delay has deleterious effects, not only upon other parties to the proceedings..., but to other litigants". 23The plaintiffs placed great emphasis on what they say is a complete lack of explanation for the failure to bring a cross-claim within the numerous times which the Court has given the opportunity for Mr Magrath to do so. 24In the affidavit of Rebecca Jancauskas sworn 13 June 2012, the solicitor referred to the order giving leave by Associate Justice Hallen to file and serve any amended statement of claim (meaning cross-claim) by 27 April 2011. In paragraph 3 they state, "We did not comply with Associate Justice Hallen's order". I am asked to infer that this is an admission by them that it was their fault that the failure occurred. 25When one comes to the end of 2011, there is some clue as to what might be the cause, namely the statement that Mr Magrath was in financial difficulty and had a creditors petition against him in the Federal Magistrates Court by BMW Australia. 26During early 2012, the Court once again gave further time to serve his proposed pleadings and then bring the motion for leave to amend his pleadings. There is no explanation as to why these delays occurred in the early part of 2012. Eventually the motion was filed on 26 June 2012 and the delay thereafter is not due to Mr Magrath. 27As the plaintiffs point out, invariably the exercise of discretion to allow an amendment to the pleadings will require an explanation to be given where there is delay in applying for an amendment. This is so the Court is able to carry out the appropriate weighing of any explanation against the effects of any delay and the objectives of the rules. 28Here there is some explanation, namely solicitor's fault for some delays in the first half of 2011 and a possible explanation towards the end of 2011, that of Mr Magrath's business partner's pending bankruptcy. The proceedings were delayed on a number of occasions by adjournments in 2012 because of the bankruptcy of Mr Magrath's business partner. But that had nothing to do with the progressing of Mr Magrath's claim. Essentially there are no explanations for the first six months of delay in the year 2012. The number of things to be balanced against this minimal explanation of delay include: (i)There is a strong and viable cross-claim not dependent upon the vagaries of oral evidence but which is clear. (ii)The substance of the claim has not changed since it was first propounded in 2009. (iii)Mr Magrath has progressed the claim by serving a detailed quantum report in December 2011. (iv)As yet no hearing date has been fixed. 29It is suggested that there will be substantial further recasting in the evidence necessary and further costs be incurred by the plaintiffs. Naturally of course any costs thrown away as a result of the amendment should be recoverable against Mr Magrath. Given the nature of the closeness of the claim in a factual sense to that which was propounded initially, I doubt that the additional cost will be substantial even though there is a claim for damages in place of the claim for relief from the guarantee and indemnity. I acknowledge that there will be some additional evidence which the plaintiffs will have to call to deal with the damages now claimed. 30This amendment comes before the matter is set down for hearing and there is not a waste of precious court time in respect of an abandoned hearing or part of a hearing. 31In my view, subject to the appropriate protection being provided to the plaintiffs in respect of costs, these factors tend to suggest that it is appropriate for the Court to allow the amendment. 32I note that there has been no reference to any specific prejudice caused by the delay but there is the usual prejudice which one cannot identify simply by the passing of time. As was stated by McHugh J in Brisbane South Regional Health Authority v Taylor (1996) 186 CLR 541 at 551: "The discretion to extend time must be exercised in the context of the rationales for the existence of limitation periods. For nearly 400 years, the policy of the law has been to fix definite time limits (usually six but often three years) for prosecuting civil claims. The enactment of time limitations has been driven by the general perception that '[w]here there is delay the whole quality of justice deteriorates'. Sometimes the deterioration in quality is palpable, as in the case where a crucial witness is dead or an important document has been destroyed. But sometimes, perhaps more often than we realise, the deterioration in quality is not recognisable even by the parties. Prejudice may exist without the parties or anybody else realising that it exists. As the United States Supreme Court pointed out in Barker v Wingo, 'what has been forgotten can rarely be shown'. So, it must often happen that important, perhaps decisive, evidence has disappeared without anybody now 'knowing' that it ever existed. Similarly, it must often happen that time will diminish the significance of a known fact or circumstance because its relationship to the cause of action is no longer as apparent as it was when the cause of action arose. A verdict may appear well based on the evidence given in the proceedings, but, if the tribunal of fact had all the evidence concerning the matter, an opposite result may have ensued. The longer the delay in commencing proceedings, the more likely it is that the case will be decided on less evidence than was available to the parties at the time that the cause of action arose." (Citations omitted.) I note that this general prejudice exists. 33It seems to be me, given all these factors, I should allow the amended pleading to be filed and that order will be subject to orders that: (i)the cross-claimant pay the costs thrown away as a result of the amendment; (ii)the cross-claimant pay the costs of the plaintiffs in respect of all directions hearings in this court from 31 May 2011 to the present incurred by the plaintiffs except to the extent that orders have already been made to date in respect of any particular days in favour of the plaintiffs; (iii)leave to assess forthwith. 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 November 2012