Supreme Court New South Wales Medium Neutral Citation: Credit Solutions Group Pty Ltd v Obelisk Ventures Pty Ltd [2019] NSWSC 50 Hearing dates: 8 November 2018 Date of orders: 08 February 2019 Decision date: 08 February 2019 Jurisdiction: Common Law Before: Davies J Decision: (1) Grant leave to the defendants to serve a cross-claim pleaded in accordance with these reasons for judgment on the following conditions: (a) The amended defence filed 2 October 2018 is struck out with leave to the defendants to serve a further amended defence pleaded in accordance with these reasons for judgment; (b) Payment by the defendants to the plaintiff of the principal sum loaned pursuant to the agreement dated 19 September 2013. (2) Any further amended defence and cross-claim is to be served on the plaintiff's solicitors within 28 days of today. (3) The defendants are to pay the plaintiff's costs of the Notice of Motion. Catchwords: CIVIL PROCEDURE – specialist lists - Possession List – pleadings – form and content of pleading - leave sought to file and serve cross-claim out of time – where pleadings assert a number of conclusions in the absence of material facts – imprecise and inconsistent pleadings – facts pleaded across two separate pleadings – whether the proposed cross-claim was embarrassing – whether the cross-claimants should be permitted to file any subsequent cross-claim MORTGAGES – mortgages and charges generally – rights and liabilities of mortgagor and mortgagee – whether finance broker the agent of mortgagor or mortgagee Legislation Cited: Australian Securities and Investments Commission Act 2001 (Cth) ss 12DA, 12DB, 12GM Contracts Review Act 1980 (NSW) s 9 Cases Cited: Fitzgerald v Watson [2011] NSWSC 736 McGuirk v The University of New South Wales [2009] NSWSC 1424 Morlend Finance Corporation (Vic) Pty Ltd v Westendorp [1993] 2 VR 284 Texts Cited: Nil Category: Procedural and other rulings Parties: Credit Solutions Group Pty Ltd (Plaintiff) Obelisk Ventures Pty Limited (First Defendant) International Events & Speakers Pty Ltd (Second Defendant) Maxwell Daniel Markson (Third Defendant) Westpac Banking Corporation (Fourth Defendant) Representation: Counsel: A Smith (Plaintiff) M Klooster (First, Second & Third Defendants) No appearance (Fourth Defendant) Solicitors: Summer Lawyers (Plaintiff) Yates Beaggi Lawyers ((First, Second & Third Defendants) File Number(s): 2017/343959 Publication restriction: Nil Judgment 1. The defendants by Notice of Motion filed 2 November 2018 seek leave to file and serve a cross-claim out of time. They have served the proposed cross-claim. The plaintiff opposes leave being granted. The plaintiff's claim 1. On 14 November 2017, the plaintiff filed a statement of claim in relation to a loan of $300,000 that it had made on 19 September 2013 to Markson Sparks! Pty Limited, later known as Obelisk Ventures Pty Limited (the first defendant), and International Events & Speakers Pty Ltd (the second defendant). The loan was guaranteed by Maxwell Daniel Markson (the third defendant). 2. The loan was for a period of three months expiring on 19 December 2013. Security was taken by way of an equitable mortgage over land owned by the third defendant at 12 Lola Road, Dover Heights. There was a first registered mortgage on the land to Westpac, and for that reason Westpac has been named as fourth defendant in the proceedings. A caveat was lodged on 30 September 2013 in respect of the mortgage granted by the third defendant. 3. The loan was not repaid on 19 December 2013 and a further agreement was made in January 2014 to extend the loan to 18 March 2014 on condition that the defendants pay the sum of $54,000 in interest repayments. On or about 23 January 2014 the first and second defendants paid $36,000 to the plaintiff. The plaintiff agreed to defer the payment of the balance of $18,000 to the revised repayment date of 18 March 2014. 4. In March 2014 the plaintiff and the first and second defendants agreed to extend the time for repayment of the principal together with any outstanding interest to be paid by instalments between 18 March 2014 and 18 June 2014. This revised agreement was reflected in a variation deed executed on 24 March 2018. This variation is referred to in the proposed cross-claim (to which I will come) as the "1st Variation". 5. The defendants paid $18,000 on or about 24 March 2014 and paid other amounts totalling $222,000 between March and July 2014. 6. A notice of default was issued on 27 June 2016. 7. The plaintiff filed a statement of claim on 14 November 2017 asserting that there had been default on 18 June 2014 in that the balance of the principal sum together with interest thereon had not been paid in full by that date. 8. In the statement of claim the plaintiff claimed an entitlement to recover the sum of $427,650 as at 13 November 2017 against the first, second and third defendants. The statement of claim sought relief against the land by seeking a declaration that it was subject to an equitable mortgage, and an order that the third defendant specifically perform the agreement to give possession of the land to the plaintiff. Procedural history 1. Apparently, a defence was filed on 8 May 2018 but that defence does not appear on the file. 2. On 24 May 2018 an amended statement of claim was filed making relatively inconsequential amendments. A defence to the amended statement of claim was filed on 4 June 2018. The defence did not disclose a proper defence to the claim made. That was a matter aired at a Judicial Directions Hearing on 6 July 2018. On that day I made directions that the first, second and third defendants were to file an amended defence and cross-claim by 20 July 2018. That was not done and the parties agreed that the time for the filing and serving of an amended defence and a cross-claim should be extended to 24 August 2018. I made orders in chambers to that effect on 9 August 2018. 3. The defendants failed to comply with that order. No satisfactory reason for that failure was given at the next directions hearing on 14 September 2018. Nevertheless, in the absence of strong objection from the plaintiff's solicitor, I directed that drafts of the proposed amended defence and the proposed cross-claim were to be served on the plaintiff's solicitor by 28 September 2018 so that the plaintiff could decide if it consented to those proposed pleadings. Contrary to my directions, the defendants (a) filed an amended defence on 2 October, and (b) failed to serve any proposed cross-claim. 4. At the subsequent directions hearing on 10 October 2018, no satisfactory reason was given for either of those breaches. I again extended time for the first, second and third defendants to serve a proposed cross-claim by 15 October 2018. I directed that if consent was not given to the filing of the cross-claim by 19 October a motion was to be filed and served by 23 October, returnable before me on 26 October. 5. At the next directions hearing on 25 October I was informed that a proposed cross-claim had been served on 16 October. The parties had been in subsequent negotiations about the form of the cross-claim. The position was, however, that the solicitor for the plaintiff did not agree to the proposed cross-claim being filed. In those circumstances I directed that, if agreement had not been finally reached by 31 October, a notice of motion was to be filed by 2 November and made returnable before me on 8 November. That was done and the motion came before me for determination on 8 November 2018. The defence 1. The amended defence filed 4 June 2018 in substance admits the loan agreement, the equitable mortgage and the variations to the loan agreement, although those variations were said to be subject to various payments some of which were made by the defendants. 2. The substantive defence to the proceedings appears in paragraphs 57-86 of the amended defence. That substantive defence relies on breaches of various representations made by three people said to be agents of the plaintiff. Those persons are David Cacciola, the sole director of the plaintiff, Ian Lazar, a broker who was said to be the plaintiff's agent, and David Rod who is alleged to be the plaintiff's solicitor and agent. The proposed cross-claim 1. In the motion, the plaintiff seeks leave to join four additional parties as cross-defendants and to file and serve the proposed cross-claim which formed part of an exhibit to one of the affidavits in support of the motion. Those additional parties are David Cacciola, Ian Lazar, David Rod and Mr Rod's firm, Spectrum Legal Pty Limited. 2. The cross-claimants are the first, second and third defendants. The cross-claim seeks declarations and orders under s 12GM of the Australian Securities and Investments Commission Act 2001 (Cth) that the loan documents are void or should be varied, that all of the cross-defendants engaged in conduct contrary to ss 12DA and 12DB of the ASIC Act, and that the plaintiff (the first cross-defendant) should pay to the cross-claimants the sum of $35,800. 3. The cross-claim pleads that each of Cacciola, Lazar and Rod made representations at various times to the cross-claimants essentially about interest rates, fees, and refinancing in relation to the loan agreements. Those representations were alleged to be misleading and deceptive. It is pleaded that, if the representations made prior to the signing of the loan documents in September 2013 had not been made, the defendants would not have entered into the loan agreement. It is pleaded that, if the subsequent representations had not been made, the defendants would not have entered into the variations of the loan agreement. 4. The loss is said to be overpayment of fees and interest. It is also alleged that the plaintiff agreed not to register any interest over the land at Dover Heights unless there was a default under the loan agreement. The defendants plead that a caveat was lodged on 3 October 2013, although the Statement of Claim pleads that it was lodged on 30 September 2017. This was said to have prevented the third defendant from refinancing the Westpac loan. 5. The cross-claim also pleads a further variation of the loan agreement on or about 4 August 2014 whereby the interest rate would be reduced to 4.5% per month if $150,000 was paid by Mr Markson to the plaintiff by 29 July 2014. This variation (described in the proposed cross-claim as "the 2nd Variation") is not referred to in the Amended Defence. 6. Unconscionability is also pleaded in respect of the loan agreement and the variation by assertions of inequality of bargaining power, an inability to negotiate terms, an inability to protect the cross-claimants' interests, by the exertion of undue pressure on the cross-claimants, and because the cross-claimants did not have the opportunity to obtain legal advice prior to signing the loan agreements. Submissions 1. The plaintiff submitted that leave should not be given to the defendants to file the proposed cross-claim for a number of reasons. First, the material facts in relation to the alleged agency of Mr Lazar and Mr Rod have not been pleaded. Secondly, the pleading of various representations is confusing, and therefore embarrassing, when most of the representations were alleged to have been made after the loan agreement was entered into in September 2013. Thirdly, there are inconsistencies in the pleading of the representations between the amended defence and the proposed cross-claim. Fourthly, if it was established that the representations were made, that they were misleading and deceptive, and that the defendants suffered loss and damage by reliance on them, those matters only entitled the defendants to a monetary judgment and do not provide any defence to the claim for possession which arises by virtue of defaults under the deed of loan and guarantee dated 19 September 2013. 2. The defendants submitted that proposed pleadings should be allowed, and summarised in their written submissions why the pleading was appropriate as follows: (a) First, the Proposed Pleading identifies relevant material facts upon which each cause of action is founded, more specifically: (i) Paragraphs 1 to 8 identifies [sic] the parties. The claims brought against the Second to Fifth Cross-Claimants are maintainable so long as damage caused by the conduct constituted by the making of the statements is proved: Janssen-Cilag Pty Limited v Pfizer Pty Limited [1992] FCA 437. (ii) Paragraphs 12 to 26 set out the four proposed loan agreements. Whilst none of these proposed loan agreements were entered into, the pertinent terms of the each proposed loan agreement are set out as these are consistent with July, August, 12 September and 19 September Representations founding the alleged misleading or deceptive conduct. (iii) Paragraphs 27 to 30 sets [sic] out the Representations the Defendants rely on. Each of the Representations is a material fact that ought be pleaded: Bradford Third Equitable Benefit Society v Borders [1941] 2 All ER 205 at 211. Fulsome particulars are provided as to the manner and nature of each Representation. (iv) Paragraphs 31 to 34 sets [sic] out the Loan Agreement entered into between the parties which is the subject of the Statement of Claim. (v) Paragraphs 35 to 42 pleads [sic] the other requisite elements of the cause of action including that they were made in trade or commerce and that the Defendants relied on them. (vi) Paragraphs 43 to 47 sets [sic] out the material facts constituting performance of the Loan Agreement the subject of the Statement of Claim. (vii) Paragraphs 48 to 50 sets [sic] out additional Further Representations made after the Loan Documents were entered into but before the Deed of Variation was signed. Particulars are provided as to the manner and nature of each Representation. (viii) Paragraphs 51 to 54 sets [sic] out the Variation to the Loan Agreement the subject to of [sic] the Statement of Claim. (ix) Paragraph [sic] 55 to 61 set out the other requisite elements of the cause of action including that the Representations were made in trade or commerce, the reasons why they are false or misleading or likely to mislead or deceive and that the Defendants relied on them when entering into the Loan Agreement and the subsequent variation. (x) Paragraph 62 sets out further performance of the Loan Agreement (as varied). (xi) Paragraphs 63 to [sic] sets out those matters that establish unconscionable conduct. (b) Second, the Plaintiff has not sought further and better particulars at any time with respect to the Proposed Pleading. (c) Third, each of the matters raised in the letter from Summer Lawyers dated 12 October 2018 has been fulsomely addressed. (d) Fourth, the Proposed Pleading is verified and accordingly the Court can draw some comfort with respect to the existence of each material fact supporting the causes of action. (e) Fifth, the Court should be mindful to avoid arid technical disputes which do not advance any litigation but only cause delay and expense, contrary to the obligation imposed the Civil Procedure Act 2005: see Aon Risk Services Australia Ltd v Australian National University [2009] HCA 27. (f) Sixth, the Proposed Pleading states with sufficient clarity the case that must be met by the Cross-Defendants and properly define [sic] the issues. Legal principles 1. In McGuirk v The University of New South Wales [2009] NSWSC 1424 Johnson J said at [29]-[35]: [29] In Gunns Limited v Marr [2005] VSC 251, Bongiorno J observed at [57]: "Not only must the pleading inform the defendants of the case they must meet now, but it must clearly set out the facts which the plaintiffs must assert to make good their claim with sufficient particularity to enable any eventual trial to be conducted fairly to all parties. Vague allegations on very significant matters may conceal claims which are merely speculative. If this be not the case, the plaintiffs must put their allegations clearly." Embarrassing Pleadings [30] A pleading is embarrassing where it is "unintelligible, ambiguous, vague or too general, so as to embarrass the opposite party who does not know what is alleged against him": Meckiff v Simpson [1968] VR 62 at 70; Gunns Limited v Marr at [14]-[15]. [31] In Shelton v National Roads & Motorists Association Limited [2004] FCA 1393 at [18], Tamberlin J explained the concept of "embarrassment" with respect to pleadings: "Embarrassment in this context refers to a pleading that is susceptible to various meanings, or contains inconsistent allegations, or in which alternatives are confusingly intermixed, or in which irrelevant allegations are made that tend to increase expense. This is not an exhaustive list of situations in which a pleading may be embarrassing: see Bartlett v Swan Television & Radio Broadcasters Pty Ltd (1995) ATPR 41-434." [32] A pleading may be embarrassing even though it contains allegations of material facts sufficient to constitute a cause of action, if the material facts alleged are couched in expressions which leave difficulties or doubts about recognising or piecing together what is referred to: Northam v Favelle Favco Holdings Pty Limited (Bryson J, 7 March 1995, BC9504276 at 5-6). [33] Although the pleading of a conclusion may, in some circumstances constitute a material fact, nevertheless, the pleading will be embarrassing if allegations are made at such a level of generality that the defendant does not know in advance the case it has to meet: Charlie Carter Pty Limited v Shop Distributive and Allied Employees Association (1987) 13 FCR 413 at 417-418. In such a case, the appropriate remedy is to strike out the pleading rather than to order the provision of particulars, as it is not the function of particulars to take the place of the necessary averments in a pleading: Trade Practices Commission v David Jones (Australia) Pty Limited (1985) 7 FCR 109 at 112-114. [34] Rule 14.28 UCPR provides that pleadings that involve non-compliance are liable to be struck out as an embarrassment. However, generally the Courts recognise that a wide range of discretionary considerations arise where there is a failure to comply with the technical requirements of the pleading rules: Beach Petroleum NL v Johnson (1991) 105 ALR 456 at 466. In many instances, the appropriate order may be to strike out the offending pleading, but grant leave to amend: Rubenstein v Truth & Sportsman Limited [1960] VR 473 at 476; H 1976 Nominees Pty Limited v Galli (1979) 30 ALR 181 at 186. [35] It is not the function of the Court to draw or settle a party's pleading. The Court is confined to the function of ensuring that pleadings are within the rules and fulfil the functions for which they exist. Objectionable matter that is so mingled with other matter may lead to the conclusion that the pleading as a whole would tend to embarrass the fair trial of the action ought be struck out: Turner v Bulletin Newspapers Co Pty Limited (1974) 131 CLR 69 at 72, 87-88, 97-98; Gunns Limited v Marr at [57]-[58]; Fleet v Royal Society for the Prevention of Cruelty to Animals NSW and Ors [2005] NSWSC 926 at [55]. Consideration 1. In my opinion, the defendants should not be given leave to file the proposed cross-claim for the reasons which follow. 2. First, the overall pleading is embarrassing, not the least reason for which is that different representations have been included in the amended defence from those which appear in the proposed cross-claim, and the proposed cross-claim purports to incorporate the representations from the amended defence. To understand this problem it is necessary to summarise the allegations about the representations in each of the pleadings. 3. The amended defence pleads three different sets of representations which are called Refinance Representations, Interest Rate Representations and a Syndication Fee Representation. The Refinance Representations were said to be "prior to the defendants' execution of the 2013 documents" (paragraph 61). Those representations were said to be made by Mr Lazar. The Refinance Representations also allege representations by Mr Cacciola "from in or around October 2013 until the commencement of this proceeding". Although Mr Cacciola's representations and Mr Lazar's representations in that regard occurred at different times, they are together referred to as the "Refinance Representations". Somewhat confusingly, paragraph 65 of the amended defence says that in reliance on the Refinance Representations the defendants executed the 2013 documents. Since they were executed on 19 September 2013 it is difficult to see how representations made by Mr Cacciola from October 2013 until November 2017 (when the proceedings commenced) can have been relied upon to enter into the loan documents on 19 September 2013. Those Refinance Representations are picked up and relied upon in paragraphs 35, 36, 41, 61 and 63 of the proposed cross-claim. 4. The Interest Rate Representations were said to have been made by Mr Lazar and/or Mr Rod "at or about the time the defendants executed the 2013 documents" (paragraph 71 of the amended defence). The difficulty with that pleading is understanding whether they were made before or after the execution of the documents on 19 September 2013, a matter that is obviously crucial. The Interest Rate Representations are similarly picked up in paragraphs 35, 36, 41, 61 and 63 of the proposed cross-claim. 5. The Syndication Fee Representation was similarly said to have been made by Mr Lazar and/or Mr Rod "at or about the time the defendants executed the 2013 documents" (paragraph 78 of the amended defence). Similar comments to those made in respect of the Interest Rate Representations apply because the Syndication Fee Representation is picked up in paragraphs 35, 36, 41, 61 and 63 of the proposed cross-claim. 6. In addition to the aforementioned representations that the proposed cross-claim purports to incorporate from the amended defence, the proposed cross-claim pleads the following representations: (a) July 2013 Representations (paragraph 27); (b) August 2013 Representations (paragraph 28); (c) 12 September 2013 Representations (paragraph 29); (d) 19 September 2013 Representations (paragraph 30); (e) 20 September 2013 Representations (paragraph 48); (f) October 2013 Representations (paragraph 49); and (g) March 2014 Representations (paragraph 50). All of those are picked up in paragraphs 61 and 63 of the proposed cross-claim to assert that they amounted to unconscionable conduct and that, if they had not been made, the cross-claimants would not have entered into the First and Second Variations of the deed. The first four sets of representations ((a)-(d) above) were said to have been relied upon by the defendants in entering into the loan documents and, if they had not been made, the defendants would not have done so. 1. It is far from clear that some or all of the representations in (c), (d) and (e) above are different from some or all of the representations detailed in the Amended Defence. The approximate dates and subject matter suggest they are the same. However, the lack of precision of the pleading does not permit a definite conclusion about that. 2. In my opinion, and taking into account the matter referred to in [32] above, it is highly inappropriate for the representations alleged by the defendants to be spread over two separate pleadings, with paragraphs in the subsequent pleading purporting to incorporate representations from the earlier pleading. The proposed cross-claim is a morass which neither the plaintiff nor the Court should be expected to wade through to understand what is being alleged and what is said to flow from the various representations pleaded in both documents. 3. Secondly, the issue of agency in relation to Mr Lazar and Mr Rod arises as a significant issue in the proposed cross-claim. The plaintiff accepts that Mr Cacciola, a director of the plaintiff, is an agent of the plaintiff in respect of representations he is alleged to have made. Neither Mr Lazar nor Mr Rod is in the same position. The plaintiff asserts that Mr Lazar is a finance broker, and a finance broker is in law ordinarily regarded as the agent of the borrower and not the agent of the lender: Morlend Finance Corporation (Vic) Pty Ltd v Westendorp [1993] 2 VR 284 at 308; Fitzgerald v Watson [2011] NSWSC 736 at [25]. 4. The difficulty in relation to the proposed cross-claim concerning Mr Lazar's agency is the lack of pleading of material facts which point to the existence of that agency. The cross-claimants plead in paragraph 6.2 that Mr Lazar was the agent or authorised representative of the plaintiff. The particulars provided are these: (a) Lazar held actual, implied actual or ostensible authority to act on behalf of Credit Solutions. (b) The relationship of agent or authorised representative arose sometime prior to 4 July 2013. (c) Lazar was involved in management decisions of Credit Solutions, including whether to provide finance to the Cross-Claimants and the terms of such finance, (d) The manner in which Lazar conducted himself and the nature of each transaction he was involved in as outlined in paragraphs 9 to 28, 48 and 49 below induced the Cross-Claimants to believe that Rod [sic] was the agent and/or authorised representative of Credit Solutions. (e) At no point in time did any of the conduct of Lazar put the Cross-Claimants on inquiry that he did not have the requisite authority to facilitate the transactions the subject of this Cross-Claim as outlined in paragraphs 9 to 28, 48 and 49 below. It should be noted that the reference to "Rod" in particular (d) is a conceded error, and should read "Lazar". 1. It may be observed that the matters relied upon for establishing Mr Lazar's agency are all described as particulars. No material facts are pleaded. In any event, none of the matters particularised are other than conclusions without the basic facts being set out. Further, pleading elsewhere in the proposed cross-claim points strongly against the conclusion that Mr Lazar was the agent of the plaintiff. Paragraph 27.1 alleges that Mr Lazar made a representation that he represented "lots of lenders who are wealthy and loan or invest money in projects similar to the projects". Paragraphs 13, 16, 19 and 22 all plead that Mr Lazar provided various documents to Mr Markson at various times where two companies, Tripod Funds Management Pty Ltd and Meridien Securities Limited, were the proposed lenders. Neither of those companies has any connection with the plaintiff. 2. Mr Klooster of counsel for the defendants/cross-claimants submitted that if they are not able to make out their case of agency in relation to Mr Lazar they will fail in that regard. Further, he said the cross-claim seeks to add Mr Lazar as a personal cross-defendant as an alternative to the claim of agency of the plaintiff. The former of those submissions is no answer to the complaint that the plaintiff makes, which is that no material facts are pleaded to justify the claim that Mr Lazar was an agent of the plaintiff and that, therefore, the plaintiff is bound by all of the representations Mr Lazar made. Since the cross-claimants need leave to file this proposed cross-claim they need to demonstrate that the claims they make are reasonably arguable. In the absence of material facts about Mr Lazar in that regard, the matter is not reasonably arguable. 3. As far as Mr Rod is concerned, the allegation in paragraph 7 of the proposed cross-claim is that Mr Rod was the plaintiff's solicitor. In that way, it was alleged he was the plaintiff's agent. The particulars in paragraph 7.3, as with the particulars in relation to Mr Lazar, are all conclusions. There are no material facts pleaded about Mr Rod apart from his being the plaintiff's solicitor. That fact alone is not sufficient to ground a claim that he had the authority to bind the plaintiff for every representation that he made. 4. Thirdly, the proposed cross-claim includes a considerable amount of irrelevant material. Paragraphs 12-26 concern proposed loans to the defendants from Tripod Funds Management Pty Ltd and Meridien Securities Limited, none of which resulted in loans being advanced (paragraph 26 of the proposed cross-claim). The justification given for including those paragraphs by Mr Klooster was so that the interest rate relativities could be seen between those proposed loans and what eventuated in the loan made by the plaintiff and the subsequent representations made by Mr Lazar and Mr Rod. Those relativities are not relevant to the pleaded claim, which is that promises were made about interest rates that were not adhered to. Whether those interest rates were greater, less than or equal to interest rates in other proposed loans does not inform whether the alleged promises were kept. In that way, none of the material in those paragraphs contains material facts for the claims which are being made. 5. Fourthly, the pleading of the proposed cross-claim is replete with errors as Mr Klooster acknowledged. The names of Lazar, Rod and Cacciola are used interchangeably for each other and for Mr Markson on a large number of occasions. In that regard the pleading must be regarded as embarrassing. 6. Fifthly, paragraph 31 refers to Mr Rod requesting Mr Markson to "resign [scil. re-sign] loan documents as the changes discussed on 12 September 2013 had been made". However, it is nowhere alleged that earlier forms of the documents had been signed or how they differed from the documents being re-signed. 7. Sixthly, paragraph 33.7 pleads: The plaintiff would not register any interest in the Dover Heights property, except in the event of default. Paragraph 45 then provided: The caveat prevented Markson from obtaining a refinance of the Westpac first registered mortgage over the Dover Heights property. 1. The deed of loan provided for collateral security which included a: Mortgage over 12 Lola Road, Dover Heights from the guarantor to be registered only in the event of default under this agreement by the Borrower. Item 16 in the schedule to the deed provided: The lender agrees not to register any interest in the property known as 12 Lola Road, Dover Heights except in the event of a default of this or the Collateral Security. 1. Lodgement of a caveat is not a registration of an interest in the property. A caveat is a device to protect an interest that has already been created. Mr Klooster ultimately accepted that he could not press the pleading concerning the caveat. 2. Sixthly, paragraphs 65 to 70 do not constitute pleading of material facts. Rather, they are a recitation of matters contained in s 9 of the Contracts Review Act 1980 (NSW), which are matters the Court is bound to consider in any application or defence under that Act. The particulars provided for paragraph 69 do not save that paragraph because neither of them refers to a lack of opportunity to obtain legal advice. 3. Seventhly, paragraph 72 asserts a conclusion, and does not plead the material facts to support an allegation of a failure to act in good faith. 4. Finally, the pleading concerning the 2nd Variation has two problems. On the face of the pleaded variation the consideration is past consideration. Further, the claim in respect of the 2nd Variation does not appear to go anywhere. Paragraph 54.2 pleads that in consideration of Markson paying $150,000 by 29 July 2014 the interest rate would be reduced to 4.5% per month. However, the loss said to be suffered in reliance on (inter alia) the 2nd Variation, referred to in paragraph 60, makes no reference to interest above 4.5% but only interest above 3%. 5. These matters taken together lead me to the conclusion that the proposed cross-claim should not be permitted to be filed. The plaintiff submitted that because the matter was now five years from the making of the September 2013 agreement, and because the litigation had been on foot for 12 months, the Court should in its discretion refuse to allow any cross-claim to be filed. Alternatively, the defendants should not be permitted to cross-claim in these proceedings against persons who could not be regarded properly as agents of the plaintiff, chiefly Mr Lazar but also (it was faintly suggested) Mr Rod. In any event, the plaintiff submitted that it should be made a condition of any leave to file a further cross-claim that the defendants either pay or provide some security for the principal sum outstanding to the plaintiff. 6. I do not consider that the defendants should be precluded from filing a cross-claim, properly pleaded, against the plaintiff. Although there have been defaults on the part of the defendants and the proceedings were instituted on 14 November 2017, I do not think that those matters are sufficient to preclude the defendants, by reason of delay, from bringing a cross-claim when there is no explanation on the plaintiff's part for having delayed more than three years in commencing the proceedings after the final default. Nor do I think the defendants should be precluded from joining Mr Lazar and Mr Rod to the present cross-claim if they can demonstrate a cause of action against those persons. 7. However, I consider it appropriate to make it a condition of the filing of any further cross-claim that the principal sum should be paid or secured to the plaintiff. I note that Mr Klooster said that he would not be heard to argue against that proposition. 8. It is entirely unsatisfactory, as I have said, that the various representations relied upon by the defendants should be split between the amended defence and any cross-claim. The amended defence was filed contrary to directions I gave. If it had been brought forward in its present form together with the proposed cross-claim, I would not have permitted the documents to be filed in their present forms. Accordingly, it will be a further condition of any leave to serve a further proposed cross-claim that the amended defence be struck out and re-pleaded to take account of what I have said in these reasons. If, on the other hand, the defendants do not wish to pursue a cross-claim the existing amended defence can stand, since there is no challenge to that pleading standing alone. 9. The amended defence filed was the second defence which has effectively been struck out, assuming a cross-claim is to be filed. Moreover, the defendants have been given a number of opportunities to plead a cross-claim. The leave to serve a properly pleaded defence and cross-claim should be understood by the defendants as their last chance to do so. The amount claimed in the cross-claim does not justify the incurring of further costs beyond the leave that is now being given. 10. I make the following orders: 1. Grant leave to the defendants to serve a cross-claim pleaded in accordance with these reasons for judgment on the following conditions: 1. The amended defence filed 2 October 2018 is struck out with leave to the defendants to serve a further amended defence pleaded in accordance with these reasons for judgment; 2. Payment by the defendants to the plaintiff of the principal sum loaned pursuant to the agreement dated 19 September 2013. 1. Any further amended defence and cross-claim is to be served on the plaintiff's solicitors within 28 days of today. 2. The defendants are to pay the plaintiff's costs of the Notice of Motion. ********** 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 February 2019