Tomanovic Multiown Pty Limited v Interlux Projects Pty Limited [2020] NSWSC 48

Supreme Court New South Wales

Medium Neutral Citation: Tomanovic Multiown Pty Limited v Interlux Projects Pty Limited [2020] NSWSC 48 Hearing dates: 6 February 2020 Date of orders: 06 February 2020 Decision date: 06 February 2020 Jurisdiction: Equity Before: Parker J Decision: See [39] Catchwords: CIVIL PROCEDURE – hearings – adjournment – inadequate time estimates – late retention of legal solicitors and counsel – costs

CIVIL PROCEDURE – pleadings – amendment Legislation Cited: Civil Procedure Act 2005 (NSW), ss 64(1), 64(2) Contracts Review Act 1980 (NSW), s 6(2) Cases Cited: Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175 Category: Procedural and other rulings Parties: Tomanovic Multiown Pty Limited (Plaintiff) Interlux Projects Pty Limited (First Defendant) Daniel Mudri (Second Defendant) Jessica Mudri (Third Defendant) Miroslav Mudri (Fourth Defendant) Representation: Counsel: VR Gray (Plaintiff) E Ball/B Mawassi (First, Second, Third Defendants)

Solicitors: Corporate & Civil Legal (Plaintiff) Doyles Construction Lawyers (First, Second, Third Defendants)

M Mudri (Fourth Defendant – Self-Represented) File Number(s): 2018/246780 Publication restriction: Nil

Judgment – EX TEMPORE Revised and reissued on 10 February 2020 1. The trial in these proceedings was fixed last year to commence before me today with an estimate that the hearing would last for one day. As I will describe in more detail in a moment, when the proceedings were called on for hearing it became apparent that the case would not finish, or at least was highly unlikely to finish, in one day. Due to my commitments there was no alternative but to vacate the hearing date so that a fresh trial date can be fixed in due course. When this became apparent counsel for the plaintiff applied for an order that the first, second and third defendants pay the plaintiff's costs thrown away as a result of the adjournment. Meanwhile, shortly before the hearing the second and third defendants had made an application to amend their defences. This judgment deals with these two applications. 2. The plaintiff in these proceedings is a company controlled by Mr Zoltan Tomanovic. It operates as the trustee for his superannuation fund. In these proceedings the plaintiff seeks to recover amounts which allegedly remain due pursuant to a loan made in 2011. 3. It appears that the loan was made in response to a request made by Mr Miroslav Mudri who is the fourth defendant. There had previously been business dealings between Mr Tomanovic and Mr Mudri who was a builder and property developer but the loan was made to the first defendant, Interlux Projects Pty Ltd. This is a company controlled by Mr Daniel Mudri and Ms Jessica Mudri who are the second and third defendants. Mr Daniel Mudri is the son of Mr Miroslav Mudri and Ms Jessica Mudri is his wife. 4. The obligations of Interlux as borrower were guaranteed by Mr Daniel Mudri and Ms Jessica Mudri and (in a separate document) Mr Miroslav Mudri. A guarantee was also obtained from Ms Brenda Smart who was originally the fifth defendant, she is bankrupt and proceedings have not been pursued against her. 5. The amount of the loan was $300,000 and its term was for one year. The loan agreement (which was in the form of a deed) required that Interlux repay at the expiry of the loan period the sum of $830,000. This was made up of the principal amount ($300,000) and a further sum of $530,000 which represented the plaintiff's return. That amount was to be satisfied by a transfer of one of four lots in a proposed redevelopment to be carried out by Interlux at Moranbah in Queensland. The loan agreement provided that prior to repayment the lot in question was to be valued and that if its valuation was less than $500,000 the cash amount equal to the deficit would be paid. Alternatively, if for some reason the transfer of the property could not be achieved at the satisfaction of the lender by the due date or within some other time frame agreed by the lender then the amount of $530,000 was to be paid in cash. It hardly needs to be said that a return of $530,000 on a one year loan of a principal sum of $300,000 seems an extraordinarily high one; it has been calculated as an effective rate of interest of 176 per cent. 6. It appears that the loan was not repaid on the due date although the sum of $300,000 was subsequently paid. In addition, a property or properties were transferred to the plaintiff at an undervalue, this is agreed to have amounted to a further repayment of $150,000. In these proceedings the plaintiff claims the remainder of its return together with interest from 2012. The amount claimed is approximately $760,000. 7. The defendants have pleaded numerous defences to the plaintiff's claim. These include misleading and deceptive conduct; unconscionable conduct (based in part on what is alleged to have been the unfavourable nature of the transaction); and, in the case of the first, second and third defendants, a further defence that the transaction was procured through undue influence on the part of Mr Miroslav Mudri. 8. Affidavits have been filed from Mr Tomanovic for the plaintiff and from each of Mr Daniel Mudri, Ms Jessica Mudri and Mr Miroslav Mudri for the various defendants. Initially Interlux was represented by a firm of solicitors, Doyles Construction Lawyers, but none of the individuals were represented. Doyles ceased to act for Interlux but shortly before the trial was due to commence Doyles went back on the record for Interlux and also went on the record for Mr Daniel Mudri and Ms Jessica Mudri. 9. When the matter was called on before me the first, second and third defendants were represented by counsel instructed by Doyles. The plaintiff was also represented by counsel, Mr Gray, who has been acting since the beginning of the proceedings. Mr Miroslav Mudri was unrepresented but appeared in Court intending to conduct his defence in person. 10. The situation I therefore faced at the beginning of the trial was that the defences raised issues of fact concerning the circumstances in which the loan agreement and associated documents were entered into; there were four witnesses of fact all of whom were to be cross-examined by one party or another; among the defendants there was a divergence of interest with the interests of the first, second and third defendants being in important respects opposed to those of Mr Miroslav Mudri; and one of the parties namely Mr Miroslav Mudri, was unrepresented. 11. It seemed to me in these circumstances unrealistic to think that the case could be completed in one day. Indeed it seems to me questionable whether the evidence could even be completed within that period given that numerous objections have been made and the cross-examination of the plaintiff alone was estimated by counsel for the first, second and third defendants to be likely to take between one and two hours. Counsel for both the plaintiff and the first, second and third defendants made it clear in answer to questions from me that they too doubted that the hearing could be completed within time. 12. I should say that when I looked at the file and the Court Book last week I was concerned about whether the case could be finished in one day and counsel for the parties raised the issue in correspondence with my Associate. I would have been prepared to consider the question at a directions hearing earlier this week but I was informed that Mr Miroslav Mudri was not available and that he opposed any adjournment. It appears today that he may have been available but he confirmed at today's hearing that he was opposed to an adjournment. I took the view that as he was unrepresented and it did not seem possible to secure his attendance by consent that I would have to deal with the matter when it was called on for hearing today. 13. Mr Miroslav Mudri, as I have just indicated, took the position that the proceedings should be dealt with and that there should be no adjournment. This was perfectly understandable from the point of view of any litigant, particularly an unrepresented litigant who finds himself embroiled in litigation of this character, but I did not think, for the reasons that I have given, that it was realistic. As I have said, I considered that there was no alternative but to adjourn the proceedings so they could be refixed for a proper length of time, I would think that would be at least two and possibly more days.