AON Risk Services Australia Ltd v Australian National University

Ms Gleeson's evidence in support of the application

1. Turning now to this further application, the Plaintiff foreshadowed an application for a range of orders, including an order for vacating the delayed hearing dates, on 27 March 2018, immediately before the Plaintiff was due to file her further affidavit evidence, although, as I noted above, further affidavit evidence of Mr Chae has in fact been filed. The application was then filed on 29 March 2018, supported by an affidavit of Ms Gleeson, the solicitor acting for Ms Chae, who had also given evidence in support of the earlier application to vacate the earlier hearing date.
2. By her affidavit dated 29 March 2018, Ms Gleeson referred to numerous subpoenas issued by the Plaintiff in late February 2018, after the earlier hearing date had been vacated, and to some difficulties in respect of the responses to those subpoenas. Those matters do not seem to be out of the ordinary, but any difficulty arising from them would possibly be exacerbated because those subpoenas had been issued so late. Ms Gleeson also refers to the production of documents by the Defendants on 2 March 2018, in relatively modest four lever arch folders of documents. An issue arose in respect of access to the documents, which was not drawn to my Associate's attention until a week after it arose, and was resolved on the day on which it is drawn to my Associate's attention. Ms Gleeson also refers to the Defendants' notice of an issue to admit facts, and to steps taken to review documents produced in response to the subpoenas issued, although these appear to be ordinary steps in respect of the preparation of a matter for hearing, albeit the review of documents may again have been undertaken over a short period because of the Plaintiff's late issue of subpoenas.
3. It appears from Ms Gleeson's affidavit that, some ten days before the Plaintiff's evidence was due on the extended timetable, she first briefed an accounting expert, although I have noted above that the value of shares in the Company had been in issue for many months, having only received instructions to engage that expert on that day. It appears the expert who was engaged was one who was already due to go on holidays for two weeks in the period leading up to the hearing, and that is a matter which is now relied on by the Plaintiff in order to seek the various orders including the vacation of the hearing date. Ms Gleeson also refers to having met with the Plaintiff's father and a person employed by him to obtain further instructions as to the Company's business model on 23 March 2018, without offering any further explanation as to why that had not occurred previously, when the valuation of the shares in the Company had been in issue for a significant period. Ms Gleeson also refers to the fact that some of the subpoenas which had been issued, late in the Plaintiff's preparation for hearing, had either not been complied with, or at least no documents had been produced. A failure to produce documents is, of course, not evidence of non-compliance with the subpoena if no relevant documents exist. The lateness of addressing these issues is, necessarily, the consequence of the Plaintiff's late issue of the subpoenas in the proceedings.
4. Ms Gleeson in turn refers to a proposed amended pleading, and to a preliminary expert report provided by the expert now retained by the Plaintiff, and gives evidence that it would not be possible for matters relating to that amended pleading and expert evidence to be finalised until various steps have been taken. In particular, the expert indicated he would require several weeks after the receipt of instructions and documents - which I assume he was provided with when retained - to prepare his report, but that period includes the two weeks on which he would be on leave prior to the hearing date.

The applicable principles

1. It is convenient to deal with the Plaintiff's application in steps, because it turns, primarily, upon a proposed amendment to the Further Amended Statement of Claim. It was ultimately not necessary to hear Mr Carnovale, who appears for the Defendants, on the application, because I was comfortably satisfied, for reasons that I will indicate below, that the Further Amended Statement of Claim should not be permitted, because the paragraphs which constitute the core of the amendment would properly be struck out, and the orders sought should not be made as a consequence.
2. I have regard, in respect of the question as to whether the amendments should be permitted, to several principles which are applicable to an amendment of pleadings. I refer to those principles, for completeness, although they are ultimately not determinative of this application, because of the deficiency in the form of the proposed pleadings to which I refer below. I am required to exercise my discretion whether to allow the amendments having regard to the principles of ss 56-58 and 64 of the Civil Procedure Act 2005 (NSW). Section 58 requires the Court to have regard to the dictates of justice when considering an order for the amendment of a document and requires the Court to have regard to the provisions of ss 56 and 57. Section 56 identifies the overriding purpose of the just, quick and cheap resolution of the real issues in dispute in the proceedings and s 57 requires proceedings to be managed having regard, inter alia, to the just determination of the proceedings. Section 64(2) provides, subject to s 58, for all necessary amendments to be made for the purpose of determining the real questions raised by the proceedings.
3. I have regard to the High Court's decision in AON Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175 where the High Court, in the context of an amendment application, emphasised the significance of delay in proceedings, and the fact that a costs order should not be treated as an automatic solution to problems created by failures to conform with the objectives of case management. I also have regard to the observations of the Court of Appeal in Hans Pet Constructions Pty Ltd v Cassar [2009] NSWCA 230 at [36], which emphasise that questions of amendment, and case management more generally, have public as well as private implications for the relevant parties.

Application for leave to file Further Amended Statement of Claim

1. In this case, however, it seems to me that the reason why the amendment should be granted is not, or is at least not only, the consequence of its lateness but turns upon that nature of the amendment sought. The amendment seeks to include, by way of relief, additional paragraphs 3A and 3B in the Further Amended Statement of Claim, with the second of those paragraphs having been introduced after the amended application was filed. Those paragraphs seek orders for compensation to the Plaintiff or alternatively to the Company and an order for damages against the Second and Third Defendants. That relief appears to turn on proposed paragraph 49A of the Further Amended Statement of Claim, which I should set out in full in respect of the pleading, but not in respect of the particulars to it. This proposed paragraph relevantly provides: "In the period from not later than 24 March 2017, without the knowledge or consent of the Plaintiff or of Ms Kim, the Second Defendant and/or the Third Defendant have caused or permitted the [Company] contrary to the interests of the [Company] and the interests of the members as a whole, to deal with the assets or profits of the [Company], including in respect of pre-payments of commissions to tour agents, without ensuring any corporate benefit for the [Company] and/or in such a manner as has caused loss to the [Company] and/or has advantaged others at the expense of the [Company]" [emphasis added].
2. The proposed paragraph 49A seems to me to attack, in the period from 24 March 2017, an indeterminate range of dealings with assets or profits of the Company, of which the prepayments of commissions is then cited as an example in an inclusive manner. Every dealing with an asset or profit of the Company in that period potentially falls within this allegation, and every such dealing is then open to attack on the alternative bases that it was without corporate benefit for the Company or took place in a manner that caused loss to the Company, or has advantaged others at expense of the Company. If the pleading was not intended to have that width, the allegation could have readily been pleaded as directed to, rather than as inclusive of, the treatment of prepayments of commissions.
3. The paragraph is then particularised by a range of factual statements, which in the ordinary course should be pleaded as material facts, including matters such as reduction in monthly sales, payment of commissions, the rate at which commissions are paid, the fact that payments were made to particular entities and that consulting fees or purchases were paid. I do not doubt that these matters might properly be raised, although there is a real question whether they can properly be treated as particulars, so that they can be, possibly, amended at will rather than by seeking leave to amend the relevant pleading from the Court. The pleading is not, however, confined in any way to the particularised matters and the language in the pleading indicating that it "includes" certain matters makes clear that it is not so confined. The particulars are also not confined, because the particulars make clear that the Plaintiff reserves a "right" to provide further particulars following the production of documents and service of expert evidence. Mr Livingston, frankly, in submissions made clear that the intent was that further matters could be included in this paragraph, or that matters could be omitted from this paragraph, as the Plaintiff's investigations continued in the month until the hearing date, or the longer period after the hearing date was vacated.
4. The role of pleadings is, of course, to define the issues in the proceedings and provide the bases upon which evidence may be ruled admissible or inadmissible at trial upon the grounds of relevance: Dare v Pulham [1982] HCA 70; (1982) 148 CLR 658 at 664. It is well established that pleadings should state with sufficient clarity the case that must be met by a defendant so as to define the issue for decision and ensure the basic requirements of procedural fairness, namely that a party should have the opportunity to meet the case against him or her: Banque Commerciale SA (on liq) v Akhil Holdings Ltd [1990] HCA 11; (1990) 169 CLR 279 at 286, 296, 302-303. That observation has often been cited, including by this Court in Young v Hones [2013] NSWSC 580 at [82] which I followed in Iacullo v Iacullo [2013] NSWSC 1517. In Downer Connect Pty Ltd v McConnell Dowell Constructors (Aust) Pty Ltd [2008] VSC 77 at [2]-[4], Harper J emphasised the role of the pleading in revealing to the opposite party how the party pleading puts its case, and rejected the view that it was an answer to a failure to do so to suggest that the defendant ought to know, for itself, what the case is against it. A similar approach was taken by Johnson J in this Court in McGuirk v University of New South Wales [2009] NSWSC 1424 at [21]ff. Importantly, for present purposes, his Honour also there noted (at [30]-[33]) that a pleading would be embarrassing, so as to be liable to be struck out, if it had the consequence that the opposite party would not know what is alleged against it, or if the allegations are made at such a level of generality that the defendant does not know in advance the case he has to meet.
5. It seems to me that proposed paragraph 49A in its present form does not identify the case that the Defendant has to meet, with any real particularity, and is not a proper pleading. The Defendant is told is that it faces a case in respect of the subject matter of dealings with the assets or profits of the Company, and some or all or of those dealings are said to be not for the corporate benefit of the Company, or to have caused loss to the Company, or to have advantaged unidentified others at the Company's expense. That is not confined, but merely illustrated, by an inclusive statement by reference to the prepayments of commissions, and the particulars which are provided equally do not seek to confine the allegation. Mr Livingston, when these matters were raised in submissions, equally did not confine the pleading. He did not suggest, for example, that the proposed pleading should be read as directed only to prepayments of commissions, or to the particularised matters, but instead expressly reserved the ability to introduce other matters in it. In those circumstances, it seems to me that that paragraph would properly be struck out as embarrassing, and an amendment to include it should not be granted.
6. That is not to say that the Plaintiff would not have been permitted to amend the pleading, to introduce an identified, properly pleaded allegation, directed to a particular matter, as to which material facts were pleaded, and as to which the limits of the allegation were defined. Whether that was the case would have depended upon the more general principles to which I have referred above. That question does not arise here, because this paragraph is not such a confined allegation, but its antithesis. For that reason, the first relief sought in the Interlocutory Process, seeking leave to file the Further Amended Statement of Claim, should not be allowed. There is no suggestion, as I understand it, that the additional relief claimed can be supported, other than by reference to paragraph 49A which I have declined to permit.

Application for production of further documents

1. That would, in large part, be sufficient to deal with other aspects of the application, which appear to be consequential upon the amendment to the Further Amended Statement of Claim, although I will address those other aspects for completeness. The Plaintiff also seeks production of numerous categories of the documents in a manner that is analogous to discovery, although the particular categories are not addressed in the manner required by Supreme Court Equity Practice Note 11. Mr Livingston points out that the categories proposed for disclosure are, to some extent, drawn from the preliminary report of the Plaintiff's proposed expert witness, but that is not an answer to that proposition because there is no suggestion that the expert witness has turned his mind to the requirements of that Practice Note, which are not the expert's responsibility but the legal practitioner's responsibility.
2. The importance of that Practice Note should not require further emphasis, after the period in which it has been in force. In Re Felan's Fisheries Pty Limited [2017] NSWSC 1273, which was another case in which the application for disclosure was not supported by affidavit evidence of the legal practitioner as required by that Practice Note, I noted that the Practice Note represented an important aspect of the process for disclosure in the Equity Division in this Court. The Practice Note specifically requires that the evidence be directed to the reason why disclosure is necessary for the resolution of the real issues in dispute in the proceedings, the classes of documents in respect of which disclosure is sought, and the likely cost of such disclosure. In this case, it does not appear that the Plaintiff's solicitors have devoted their minds to that matter, as distinct from simply adopting the categories proposed by the accounting expert, without any consideration to whether they relate to the real issues that presently exist in the proceedings, or the likely costs of disclosure.
3. The Court has emphasised the significance of the Practice Note in several decisions including Leighton International v Hodges [2012] NSWSC 458, where McDougall J emphasised the importance of that initiative in dealing with the costs of litigation, and also in Armstrong Strategic Management and Marketing Pty Ltd v Expense Reduction Analyst Group Pty Ltd [2012] NSWSC 393, where Bergin CJ in Eq emphasised the intent that the Practice Note would confine disclosure to the matters in issue in the proceedings. In Re Felan's Fisheries Pty Limited above, I observed that there are several reasons why it is necessary for an affidavit in support of disclosure to address the requirements of the Practice Note, one of which was that the deponent's addressing those matters by affidavit was likely to focus his or her mind on the question of what discovery was truly necessary to the resolution of the real issues in dispute in the proceedings. Had the solicitors who appear for the Plaintiff sought to undertake the assessment required by Practice Note SC Eq 11 in the this case, they would likely have realised that the Plaintiff's proposed discovery categories were, to a significant extent, in anticipation of a case that was not yet pleaded, and which might or might not in the future be sought to be included within the expansive scope of proposed paragraph 49A of the proposed Further Amended Statement of Claim, to which I have referred above. A claim for discovery of that note seems to me to subvert the policies reflected by that Practice Note.
4. It seems to me that disclosure should not be ordered, first because the paragraph of the proposed pleading which supports it has not been permitted, and second because the application for it was non-compliant with the Court's requirements for an application for disclosure in substantial and important respects. Compliance with those requirements is more, rather than less, important where expansive disclosure is sought shortly before a hearing is set down and relied on in part to seek to vacate the hearing date.

Application for leave to lead expert accounting evidence

1. Third, the Plaintiff seeks leave to lead expert accounting evidence in relation to the Plaintiff's losses, "including losses incurred by reason of the allegations pleaded at paragraph 49A of the Further Amended Statement of Claim... and any further losses as may be uncovered by [the expert] from his further forensic investigation into the Company's financial affairs."
2. A moment's consideration of that formulation will indicate that the leave sought extends, first, to the range of possible attacks on dealings of the Company set out in paragraph 49A of the Further Amended Statement of Claim, which I have not permitted. It then extends further to other losses which are not presently pleaded, but might be identified by the accountant's further forensic investigations. It seems to me that the Court ought not grant that leave, first, because it has not permitted paragraph 49A of the Further Amended Statement of Claim which underpins the application for it, and second because it should ordinarily not permit leave to lead accounting expert evidence as to matters outside the scope of the pleaded case. In any event, the Plaintiff does not seek to surmount one further hurdle, which is that she could not, even if such leave were granted, lead such further evidence unless she is released from the existing guillotine order, which would likely only occur when an affidavit and expert's report is available for review, and when its implications for the hearing can be assessed.
3. The Plaintiff seeks an order that she serve her expert report, some five weeks after the date of the orders, but that question does not now arise where leave to lead the expert evidence has not been granted. The Plaintiff also seeks orders that the Defendants serve further affidavit evidence, and expert evidence in response to the accountant's report, within a specified period after the date of that report. Again, that issue does not arise.

Application to vacate hearing date

1. Finally, the Plaintiff seeks an order that the hearing fixed for 11 May 2018 and 15-18 May 2018 be vacated, that being her second application to vacate the hearing date in this matter, within a short period. It would be possible to address that matter on the basis that the question simply does not arise, because the orders which were relied on to support the vacation of the hearing date, namely, the amendment of the Statement of Claim, the orders sought as to further disclosure and the leave to lead further expert evidence have not been made, for the various reasons to which I have referred above. I should, however, say something further as to matters relevant to such an application to which I referred in Re Felan's Fisheries Pty Limited above. I would also be required to exercise the discretion whether to vacate a hearing date having regard to ss 56-58 of the Civil Procedure Act, to which I have referred above. Relevant matters would include the just determination of the proceedings, the efficient disposal of the Court's business, the efficient use of available judicial administrative resources, and the timely disposal of the proceedings and all other proceedings in the Court at a cost affordable by the respective parties. I would be required to have regard to the provisions of s 56-57 of the Civil Procedure Act, to which s 58 refers, and I would proceed on the basis that the case has a degree of difficulty or complexity about it. I would also be required to have regard to the degree of expedition with which the parties had approached the proceedings.
2. While Mr Livingston submitted that the solicitors now retained for the Plaintiff have worked hard since they were appointed, it does not seem to me that that is a full answer to the fact that these proceedings have been on foot for a considerable time. The case that the Plaintiff now seeks to bring was open to her throughout the period in which the proceedings have been on foot. I should emphasise that I do not treat this matter as in any way adverse to the Plaintiff, or adverse to her former or present legal advisers, but it is simply a relevant matter in respect to the exercise of discretion. The discretion whether to vacate a hearing date is also not to be exercised only having regard to the interests of the parties, or one of them. The Court's convenience, for the Court's sake, is not a matter of any significance. What is however, a matter of great significance, as I noted in my earlier decisions in Re Elsmore Resources Ltd [2016] NSWSC 884 at [13] and again in Re Felan's Fisheries above at [25], is that the community funds the justice system and depends upon access to the justice system. The vacation of a lengthy hearing (and a hearing of five days is a reasonably lengthy hearing) shortly before it is due to commence has the practical likelihood that other litigants will be shut out of hearing dates which would otherwise have been set in that period, and is significantly disadvantageous to the public interest in the proper administration of justice. It is no answer to that proposition, even in a busy list, to say that other matters will be allocated because other litigants will often not be ready to be allocated hearing dates at short notice.
3. In the event, these matters do not presently arise, because the premise of the Plaintiff's application to vacate the hearing date was that she would be permitted to take steps, including amending the pleading, seeking disclosure, and leading expert evidence, which she will not be permitted to take because of the difficulties in her approach to those matters. In those circumstances, no question of vacating the hearing date presently arises. If, in due course, the Plaintiff reformulates an amendment, which is narrow and precise, that question may or may not be capable of being revisited. One difficulty would be that any further application, that narrows the matters in issue or properly formulates the Plaintiff's case, would be brought an even shorter time before the hearing was due to commence.
4. For all these reasons, the Plaintiff's Interlocutory Process filed 29 March 2018 should be dismissed with costs.

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