Supreme Court New South Wales Medium Neutral Citation: Combined Projects (Kogarah) Pty Ltd v Sayour [2017] NSWSC 1207 Hearing dates: 7 September 2017 Date of orders: 07 September 2017 Decision date: 08 September 2017 Jurisdiction: Common Law Before: Lonergan J Decision: See para [49] Catchwords: CIVIL PROCEDURE – pleadings – amendment to statement of claim – additional plaintiff – additional causes of action – unexplained delay – failure to clarify case as pleaded – vacation of hearing date Legislation Cited: Civil Procedure Act 2005 (NSW) s 56 Cases Cited: Aon Risk Services (Australia) Ltd v Australian National University (2009) 239 CLR 175; [2009] HCA 27 Nowlan v Marson Transport Pty Ltd (2001) 53 NSWLR 116; [2001] NSWCA 346 White v Overland [2001] FCA 1333 Category: Procedural and other rulings Parties: Combined Projects (Korgarah) Pty Ltd (Plaintiff) Moustafa Sayour (Defendant) Representation: Counsel: J Stoljar SC & B Michael (Plaintiff) J Gatland & D Smallbone (Defendant) Solicitors: Corrs Chambers Westgarth (Plaintiff) Adams & Partners Lawyers (Defendant) File Number(s): 2017/22780 Publication restriction: Nil Judgment 1. The Plaintiff in these proceedings ("CPK") filed a notice of motion on 31 August 2017 seeking leave to file and serve a proposed further amended statement of claim ("PFASOC"). The amendments in broad terms, seek to add a further Plaintiff to the proceedings and to expand the causes of action pursued. A copy of the PFASOC is attached to this judgment. 2. The Defendant opposed the application on a number of bases, including that the proposed amendments were not properly pleaded and amenable to being struck out and that the timing materially prejudices the Defendant as a costs order is not protective of the probable loss of the hearing date. 3. The proceedings are currently listed for hearing on 15 September 2017 with a hearing estimate of 1 day. The hearing was set down at the first directions hearing on 27 June 2017. The proceedings had been commenced by Statement of Claim in January 2017. 4. For the reasons which follow, I have determined that leave to file the PFASOC should be given but that such leave necessitates the vacation of the hearing date. At the end of this judgment I propose a series of case management orders. Background and procedural chronology 1. The proceedings arise out of a transaction between CPK and/or a Mr Fouad Dieri and the Defendant, Moustafa Sayour. A sum of $1.8 million was paid by way of electronic funds transfer from an account held by CPK to the Defendant on 2 November 2015. It is the nature of this payment that is in issue in these proceedings. 2. CPK asserts in its Statement of Claim that this sum was advanced as a loan to the Defendant and that the loan has not been repaid despite requests for payment. 3. A Defence was filed on 17 March 2017 which, in effect, admitted receipt of the $1.8 million, but denied that sum was received from CPK. The Defendant says that he received the sum from Fouad Dieri and that it was paid CPK at the "request and direction of Fouad Dieri". The Defence denied that there was a loan as alleged in the Statement of Claim and denied that CPK was entitled to make the demand for repayment. 4. At the Directions hearing on 27 June 2017 the matter was set down for hearing on 15 September 2017 with no complaint about inadequacy of the Defence being raised at that time. 5. For reasons that remain unexplained, there was a delay of 3 months before CPK's solicitors requested particulars of the Defence by letter dated 18 July 2017. That letter complains that the Defence does not disclose "what the Defendant alleges is the true nature of the payment he admits receiving or the circumstances in which he alleges the payment was received". 6. The response from the Defendant a week later amounted to a refusal to answer the request stating, "We are instructed that the matters that you have raised will be addressed in our client's evidence". 7. That is not satisfactory compliance with a legal representative's obligations pursuant to s 56 of the Civil Procedure Act 2005 (NSW) in circumstances where it is clear a party has asked for assistance in narrowing and understanding the issues in the case. Nor is waiting almost 3 months to make the request consistent with the obligations held by CPK's legal representative. 8. There is a further delay in replying to the non-responsive letter from the Defendant's solicitor. Rather than listing the matter for directions, the solicitor for CPK drew the Defendant's solicitors' attention to s 56 of the Civil Procedure Act and the unsatisfactory nature of their letter and foreshadowed that it "may be necessary" to amend the Statement of Claim. 9. No application is made until almost a month later. 10. It appears that there are no documents that evidence the basis upon which the sum of $1.8 million was provided to the Defendant other than two bank records and a CPK balance sheet. There is a CPK bank account extract describing the $1.8 million transaction as "Loan from Fouad Dieri". There is also a letter from Mr Dieri on CPK letterhead dated 2 November 2015 directed to the Commonwealth Bank of Australia, headed "Re: Request for bank transfer": Can you please organise a bank transfer of $1.8 million from our CBA account [numbers provided] to the following account: Account Name: Moustafa Sayour [Account References] Ref/Description: Loan from Fouad Dieri 1. Third, there is a document described as a "Balance sheet of CPK" dated June 2016 referring to a loan to Moustafa Sayour in the sum of $1.8 million. CPK's (Plaintiff) submissions 1. Senior counsel for CPK submitted that the compass of the amendments in the PFASOC is narrow and is in effect simply the addition of two different legal characterisations of the same facts which are also of narrow compass. (The pleadings relating to an alleged resulting trust set out in paragraphs 4A and 12 were abandoned). 2. The addition of these causes of action and the addition of Mr Dieri as the Second Plaintiff has arisen because of an imprecise unhelpful Defence and matters set out in the affidavits of the Defendant served in mid-August 2017. 3. CPK's solicitor was concerned that the Defendant "may advance a case" that either the transaction was a gift from Mr Dieri personally or that the transaction was a loan from Mr Dieri. This meant that there was a need for Mr Dieri to be added as a Second Plaintiff and for there to be a pleading in the alternative to the pleaded case as set out in the PFASOC. No further evidence is to be filed for Mr Dieri associated with the proposed amendments. 4. Senior counsel for CPK argued that there was no need to vacate the hearing date, and that matters raised in the Defendant's solicitor's affidavit in support of its opposition to the proposed amendments contained irrelevant distracting information about other proceedings. He also argued that a cause of the lateness of CPK's application was the Defendant's failure to provide particulars when requested and by filing a Defence that was opaque to analysis. Defendant's submissions 1. Counsel for the Defendant submitted that there was no explanation as to why Mr Dieri was not included in the proceedings from March 2017 given the pleading in paragraph 4 of the Defence which denied CPK paid the money to the Defendant and specifically asserted that Mr Dieri paid the money. 2. Second, the PFASOC was liable to be struck out as embarrassing and incompetent because the affidavit evidence of Mr Dieri that the money was paid by CPK, and not by him in a personal capacity was at odds with the alternative case now sought to be pleaded. 3. Third, the PFASOC was not in final form given the concession that the allegations in paragraphs 4A and 12 were not to be pressed. 4. Fourth, the allegations pleaded in paragraphs 10 and 11 of the PFASOC were opaque to analysis and required repleading. 5. Fifth, the PFASOC was first provided to the Defendant's solicitor as an annexure to Mr Delaney's affidavit in support of the notice of motion on 31 August, rather than any opportunity being given to discuss the proposed amendments and narrow the issues prior to resorting to an application to the Court. It was served very late and in close proximity to the date fixed for hearing. 6. Sixth, a letter of the Defendant's solicitor dated 6 September 2017 pointing out the ways in which the PFASOC was inadequate was not met with a substantive reply to what was a genuine request for clarification and accordingly, the terms of the debate were not able to be narrowed prior to appearance before the Court. 7. Relevant to the issue of costs as well as the substantive application are three periods of unacceptable delay. The first between March when the Defence was filed and June when the proceedings were set down for hearing; the second between June and the letter of request for information about the Defence dated 18 July; and the third, the period between the service of the affidavit evidence by the Defendant on 18 August and the filing of the notice of motion on 31 August. It was submitted these unexplained delays should disqualify CPK from being permitted to amend. In the alternative, if the amendment is granted, CPK should pay all of the associated costs including costs thrown away by the vacation of the hearing date. Decision 1. The application is made pursuant to r 19.1 of the Uniform Civil Procedure Rules 2005 which provides in effect that a Plaintiff cannot amend its statement of claim after the date is fixed for trial without leave of the Court. In Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175; [2009] HCA 27 at [5], [23], and [30] per French CJ and [98], [111] per Gummow, Hayne, Crennan, Kiefel and Bell JJ, the High Court dealt with considerations relating to the proper exercise of a judge's discretion when considering the application for amendment and associated adjournment. 2. At [98], reference to minimisation of delay and expense as essential elements of the just resolution of proceedings is highlighted: Of course, a just resolution of proceedings remains the paramount purpose of r 21 [equivalent to Civil Procedure Act 2005 (NSW) s 56]; but what is a "just resolution" is to be understood in light of the purposes and objectives stated. 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. The Rule's reference to the need to minimise costs implies that an order for costs may not always provide sufficient compensation and therefore achieve a just resolution. 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. And further at [111]: 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. There is no such entitlement. All matters relevant to the exercise of the power to permit amendment should be weighed. The fact of substantial delay and wasted costs, the concerns of case management, will assume importance on an application for leave to amend... 1. Those remarks are salient for this particular application. Whilst there is no explanation for some of the periods of delay, there is no doubt that efforts made by CPK's solicitor to define issues between the parties was met with resistance. 2. I accept the submissions of senior counsel for CPK that the basic factual assertions are of a narrow compass, however the introduction of the proposed Second Plaintiff and the alternative cases sought now to be made introduce at least some level of additional complexity to the proceedings. 3. These are matters which may need to be met by further evidence from the Defendant. They certainly require at the least further instructions from the Defendant to be obtained and formalised. There may need to be other evidence of affidavits prepared. 4. It was reasonably clear in the Defence filed in March 2017 that issue was being taken with the assertion that CPK paid the $1.8 million to the Defendant. It was pleaded that it was Mr Dieri who made the payment. Why that distinction was thought to be essential is not clear and I do not need to understand that for the purposes of this Application, however was clear at that stage that issue was being taken about the correct identity of the person or organisation who made the payment to the Defendant and was therefore entitled to make any claim in relation to that payment. 5. The bank records referred to in paragraph 14 of this judgment indicate that there was at least some cause for querying whether the payment was made by CPK or by Mr Dieri in his personal capacity. That should have led to initial consideration being given to the inclusion of Mr Dieri as a party to the proceedings and certainly within a short time after the Defence was served given the matters it placed in issue. 6. It is however inconsistent with the Uniform Purpose Rule and s 56 of the Civil Procedure Act for parties, when a request is made for clarification of the case to be met, to simply rebuff the request with a one-line letter telling the other party to wait until their evidence is served. That is an approach to litigation that is to be discouraged. It portrays an attitude of trial by ambush which has been frowned upon by this Court for many years. In Nowlan v Marson Transport Pty Ltd (2001) 53 NSWLR 116; [2001] NSWCA 346, the Court of Appeal drew attention to the abandonment of ambush theory in the District and Supreme Courts, and the need for matters to be readied expeditiously. The Court referred to the comments by Allsop J (as he then was) in White v Overland [2001] FCA 1333 at [4] where attention is drawn to the following: However, by way of general principle I would simply like to make perfectly plain my view that in the efficient and proper conduct of civil litigation, even civil litigation hard fought between parties, it should always be recognised that in the propounding of issues for trial the parties should take steps to ensure that all relevant parties to the dispute are cognisant of what the issues are. Any practice of quietly leaving footprints in correspondence or directions hearings to be uncovered some time later in an attempt to reveal that a matter was always in issue should be discouraged firmly. Even if something has been said, where it is evident, or indeed suspected, that the other side is proceeding on the basis of a misconception or has not appreciated something, as a general rule, efficiency, common sense and an appreciation of the costs and resources (both public and private) likely to be wasted by confusion in litigation will mandate that a party through his or her representative ensure that the other is not proceeding on a misconception or that the other does appreciate something that has been said. Litigation is not a game… (emphasis in original) 1. I accept the submissions of counsel for the Defendant that there were unacceptable delays on the part of CPK in raising its difficulties with understanding the Defence but the Defendant's solicitor did not help in taking the position it did. 2. It is clear that for the orderly progress of this litigation, it is not reasonable to expect the parties to now scramble and rush important steps of preparation even if (as stated by Senior Counsel for CPK) the pleadings can proceed exactly as currently drafted with the removal of paragraphs 4A and 12. 3. The amendments proposed necessitate vacation of the hearing date given that there are only 5 clear working days to ready the matter for hearing. There are areas of opacity on both sides of the litigation fence as to what is actually being asserted was the true nature of the transaction between the parties. 4. I accept the submissions made on behalf of the Defendant to the effect that on vacation of the hearing date, the matter should be listed for directions and case management only after completion of the necessary steps directed towards preparation, and that such directions hearing should be a date after 1 November 2017. 5. It is unfortunate that the application to amend came so late. There are a number of delays on the part of CPK that remain unexplained, however the conduct of the Defendant in its refusal to assist in understanding and narrowing the issues compounded the problem. It is hoped that a more cooperative approach between the parties will be engaged from now. 6. I accept that the amendment is necessary to deal with all the relevant issues and in particular, the question of the person or entity that provided the $1.8 million to the Defendant, although it means vacation of the hearing date. 7. Accordingly, I propose to grant leave to CPK to file and serve the PFASOC with the removal of paragraphs 4A and 12. Costs Submissions for CPK 1. Senior counsel for CPK very properly conceded that, should his client be granted the indulgence of the amendment, the costs of and associated with the vacation of the hearing date should be paid by CPK. I will make a costs order to that effect. 2. With respect to the costs of the notice of motion, Senior Counsel for CPK submitted that CPK's delays were outweighed by the fact that the matter could have been dealt with earlier by prompt, responsive clarification from the Defendant and because it was not forthcoming, the Defendant's position did not become clear (and is still not entirely clear) as to the bases upon which the claim is being defended. Submissions for the Defendant 1. Counsel for the Defendant submitted that although CPK has been successful on the Application, it was inappropriately close to the hearing date and the Defendant has a right to take a primary position to protect this hearing date. Due to no fault of the Defendant, these matters were raised late. CPK should pay the Defendant's costs of the application as well as the costs thrown away by vacation of the hearing date. 2. It was also submitted that I should order that the costs be assessable and payable forthwith because the Defendant is involved in other litigation and was bearing the burden of a multiplicity of legal expenses. Submissions in reply for CPK 1. Senior counsel for CPK submitted in reply that such a submission was not one that would provide an appropriate reason for an order that costs be assessable and payable forthwith. Decision 1. Whilst CPK has had success on its notice of motion, the Application was brought very late and has led to vacation of the hearing date. The delays remain mostly unexplained and are unsatisfactory. 2. However, there has been fault on both sides in failing to properly disclose, agitate and narrow areas for debate in the proceedings. This late application is the end result of this course of conduct on both sides. Accordingly, I order each party bear its own costs of the notice of motion. I decline to make an order that costs be assessed or payable forthwith. Orders 1. I make orders as follows: 1. I grant leave to the Plaintiff to file and serve a Further Amended Statement of Claim in the form appended to the affidavit of Samuel Delaney sworn 31 August 2017 excluding paragraphs 4A and 12 on or before 14 September 2017. 2. Any request for particulars of the Further Amended Statement of Claim is to be made on or before 28 September 2017. 3. The Defendant is to file his defence to the Further Amended Statement of Claim on or before 12 October 2017. 4. The Plaintiffs are to request any further and better particulars of the Defence on or before 26 October 2017. 5. The Defendant is to reply to the requests for further and better particulars of the Defence on or before 9 November 2017. 6. The matter is to be listed for directions before the registrar and for referral for case management if considered necessary at 9:00 am on Thursday 16 November 2017. 7. The hearing date set down for Friday 15 September 2017 is vacated. 8. The Plaintiff is to pay the costs of and associated with the vacation of the hearing date. 9. Each party is to bear its own costs of the notice of motion filed 31 August 2017. 10. Liberty to restore on 2 days' notice. ********** 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: 21 February 2018