Aon Risk Services Australia Ltd v Australian National University

Affidavit evidence

1. As I noted above, the Plaintiffs rely on the affidavit dated 25 November 2021 of their solicitor, Mr Macinnis, in support of the application. Mr Macinnis sets out the background to the proceedings and outlines their procedural history, pointing to delays in service of the Defendants' evidence and delays in respect of the Defendants' discovery. The Parilo parties placed substantial weight on those delays in submissions, but those delays did not relate to the filing of expert evidence, which is governed by the requirements of UCPR 31.28 which I address below, nor did they occur after the matter had been set down for hearing and in a manner that would prejudice the other parties and the community by requiring the vacation of a lengthy hearing at a late stage. That evidence also assumes a causal connection between the Defendants' delays and the Parilo parties' late amendment of their pleadings and failure to comply with orders as to expert evidence, which was not established for the reasons that I noted below. Mr Macinnis also refers to the late service of an affidavit of Ms McCallum, one of the DVT directors, and leave might well have been refused to read that affidavit, where it was served out of time, had it caused any prejudice to the Parilo parties. However, the Parilo parties did not suggest they would suffer any such prejudice or oppose the DVT Directors' application for the extension of time to read that affidavit, even after their application for leave to lead expert evidence out of time was refused. Mr Macinnis also addresses the position as to service of expert reports and the amendment application and I address his evidence in that regard below. The Parilo parties also rely on the affidavit dated 8 December 2021 of their solicitor, Mr Vuaran, and I address aspects of his evidence below.
2. I also have regard to the Plaintiffs' procedural chronology provided at the hearing of the application. With respect to that chronology, it appears to me to have the same difficulty as the affidavit evidence on which the Plaintiffs relied in respect of the application, namely that it seeks to distract attention from information which has been available to the Plaintiffs for a considerable period to allow them to advance the claims which they now seek to bring and prepare their expert reports, by referring to delays in receiving other information which did not prevent their compliance with the Court orders as to expert evidence or seeking to amend their claims at an earlier point.
3. The JV Companies and the DVT Defendants rely on the affidavits dated 4 December 2021 and 10 December 2021 of their solicitor, Ms Yum, which I address below. The Taylor parties in turn rely on the affidavits dated 3 December 2021 and 7 December 2021 of their solicitor, Mr Jaramillo, which highlights the possibility of another further cross-claim by the Taylor parties in response to any claim brought by DVT in respect of the issues as to directors' fees and legal costs. Mr Jaramillo also refers to the steps being taken by the Taylor parties to assess the evidence which they will need to lead in respect of the proposed amendments and to issues which limit their ability to respond to Mr McKinnon's late expert report before the commencement of the hearing.

The Parilo parties' application for leave to file a Further Amended Originating Process and Further Amended Points of Claim

1. As I noted above, the Parilo parties seek to file a Further Amended Originating Process, which amends their earlier claim for an order that the Taylor parties purchase their shares in the JV Companies for fair market value, to also seek an adjustment for directors' fees paid to the DVT Directors and for legal fees allegedly wrongly incurred in these proceedings, excluding the costs of giving certain discovery. They also seek directions and orders for an inquiry and report into certain matters, implicitly seeking to defer the determination of those matters until after the hearing, although they did not seek an order for a separate hearing in that regard or address the matters which would be relevant to whether such an order should be made.
2. I first address the applicable principles. I must exercise my discretion whether to allow the amendments having regard to ss 56-58, 60 and 64 of the Civil Procedure Act 2005 (NSW). In particular, s 58 of the Civil Procedure Act requires the Court to have regard to the dictates of justice when considering an order for, inter alia, the amendment of a document, and requires the Court to have regard to the provisions of ss 56 and 57 of the Act. Section 56 identifies the overriding purpose of the just, quick and cheap resolution of the real issues in dispute, and s 57 requires proceedings to be managed having regard, inter alia, to their just determination. Section 64 relevantly provides that, at any stage of the proceedings, the Court may order that leave be granted to a party to amend any document in them and, subject to s 58, all necessary amendments are to be made for the purpose of determining the real issues raised by the proceedings and avoiding multiplicity of proceedings.
3. I also have regard to the case law including Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175; (2009) 258 ALR 14; [2009] HCA 27 which emphasised the significance of delay not only for particular proceedings, but for the Court system generally. The High Court there recognised, in the context of an amendment application, that a costs order cannot be treated as an automatic solution for failures to comply with case management requirements and also pointed to the strain imposed on litigants and the cost to the community of late amendment applications. In their joint judgment, five members of the Court observed (at [98]) that: "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."
4. The joint judgment also observed (at [113]) that: "In the past it has been left largely to the parties to prepare for trial and to seek the court's assistance as required. Those times are long gone. The allocation of power, between litigants and the courts arises from tradition and from principle and policy. It is recognised by the courts that the resolution of disputes serves the public as a whole, not merely the parties to the proceedings."
5. Similar views were expressed by the Chief Justice (at [35]) and by Heydon J (at [154]-[156]). I also have regard to the Court of Appeal's observations in Bi v Mourad [2010] NSWCA 17 and in Hans Pet Constructions Pty Limited v Cassar [2009] NSWCA 230 at [36], which emphasise the significance of case management requirements for the community and the Court system generally.
6. Subsequently, in UBS AG v Tyne as Trustee of the Argot Trust (2018) 360 ALR 184; [2018] HCA 45, in dealing with a different question, the plurality of the High Court referred to Aon and noted (at [38]) that: "As the joint reasons in Aon Risk Services Australia Ltd v Australian National University explain, the 'just resolution' of a dispute is to be understood in light of the purposes and objectives of provisions such as s 37M of the [Federal Court Act]. Integral to a 'just resolution' is the minimisation of delay and expense. These considerations inform the rejection in Aon of the claimed 'right' of a party to amend its pleading at a late stage in the litigation in order to raise an arguable claim. The point is made that a party has a right to bring proceedings but that choices are made respecting what claims are made and how they are framed. Their Honours speak of the just resolution of the dispute in terms of the parties having a sufficient opportunity to identify the issues that they seek to agitate."
7. Turning now to the amendments sought, the Parilo parties seek to introduce paragraph 79AA of the Further Amended Points of Claim which alleges that the DVT Directors failed to disclose directors' fees and legal fees paid since 1 July 2018 in specified aspects. That amendment is not opposed and I made orders permitting it by consent.
8. Second, the Parilo parties seek to introduce in paragraph 104R of the Further Amended Points of Claim which in turn refers to new paragraphs 119A-119K of the Further Amended Points of Claim and alleges that the DVT Directors, in breach of the proper purposes duty, caused the JV Companies to pay unauthorised and excessive directors fees to them and caused them to incur and pay the DVT Directors' and the JV Companies' legal fees in these proceedings. New paragraphs 119A-119D of the Further Amended Points of Claim then plead the amount of directors' fees paid for the financial year ended 30 June 2019, 30 June 2020, 30 June 2021 and the first quarter of the financial year ending 30 June 2022, and new paragraph 119D also pleads costs and disbursements, which appear to be referable to work done by the insolvency firm with which the DVT Directors are associated ("DVT"). New paragraph 119E pleads a lack of entitlement to pay directors fees under cl 80 of the JV Companies constitutions. That allegation would also raise much more complex issues as to the contractual arrangements under which the DVT Directors and DVT were engaged in the matter.
9. Alternatively, the Parilo parties contend the directors' fees are excessive because they include fees for work done by DVT, but do not identify whether they contend that that work should not have been done or that it should have been done by that firm without being remunerated for doing it. They also seek to plead, without identifying any material facts, an allegation that those fees exceed a reasonable amount where the DVT Directors "have failed to fulfil their mandate" and Mr Taylor, one of the Taylor parties, is taking the day-to-day management, operations and administration of the JV Companies.
10. Turning now to the evidence in respect of this amendment, Mr Vuaran's affidavit refers to a request made by the Parilo parties on 12 July 2021 that the DVT Directors provide the 2021 financial statements for the JV Companies and to the provision of material on discovery by the DVT Directors. This evidence appears to be directed to establish a justification for the delay in making any amendment to bring a claim in respect of the DVT Directors' fees. It plainly does not do so, because the claim now made includes claims for the financial years ending 30 June 2019 and 30 June 2020 and the claim could readily have been made at an earlier date, in respect of those years, and then updated when the financial report for the year ended 30 June 2021 became available. That would not have caused the prejudice to the Defendants, or the hearing date, which arises from the late attempt to introduce that claim at this point.
11. Mr Vuaran also refers to a request made by the DVT Directors' solicitors on 1 November 2021 to defer the amendment pending a response to a letter dated 26 October 2021 from the Plaintiffs' solicitors. I have had regard to that matter, but it is ultimately of little significance, where the prejudice arising from this late amendment would equally have arisen had the amendment application been brought on 1 November 2021, rather than on 15 November 2021. Mr Vuaran also refers to a proposed cross-claim exhibited to Ms Yum's affidavit, to which I refer below, and to the suggested absence of any earlier claim that there was a contract of the form addressed in that cross-claim. That, however, is not an answer to the fact that the DVT Directors would need to be allowed an opportunity to bring that cross-claim, or possibly DVT would need to be allowed to bring the opportunity to bring separate proceedings, to be heard together with these proceedings, if the new issues in respect of DVT's remuneration were permitted to be raised in the Parilo parties' claim.
12. Ms Yum in turn refers to the reports which have been provided to the Parilo parties and other shareholders since the appointment of the DVT Directors to the JV Companies in May 2018 disclosing that fees were being charged to the Companies by the DVT Directors and their staff at DVT. That is a significant matter, so far as an amendment is only now sought to be made, at this late stage, to attack the charge for those fees. Ms Yum also addresses a dispute as to the scope of a discovery order made by Leeming JA, sitting in the Corporations List, in December 2020 in that respect, which it is not necessary to determine in this application. Ms Yum also notes that the constitutional provisions applicable to the payment of such fees have not changed during the period of the proceedings, so that any issue as to the authorisation of those fees has existed since the proceedings commenced. Ms Yum's evidence, which I accept, is that the DVT Directors would be significantly prejudiced by the late amendment to raise an issue of "excessive" fees, given the proximity to the final hearing, and she identifies the need for additional lay and expert evidence if this issue were permitted to be raised. I have no doubt that the DVT Directors and their legal representatives would, acting prudently, seek to lead such evidence and that the need to do so would require the vacation of the hearing date. Ms Yum also identifies the possibility that DVT may need to be joined to the proceedings as a necessary party, and might itself seek to bring a claim to support its entitlement to the fees that it has charged. The need for joinder is reduced to the extent that, as Mr Einfeld indicated in submissions, the claim in respect of those fees is made only against the DVT Directors and no claim is made against DVT for payment of fees made to it. However, that does not exclude the possibility that any claim brought by DVT to sustain its fees would need to be heard together with these proceedings, forcing the vacation of the hearing in these proceedings and likely delaying them by some time.
13. Third, the Parilo parties seek to introduce paragraph 119H of the Further Amended Points of Claim, which would introduce a claim relating to the JV Companies and the DVT Directors' legal fees for this litigation, which again does not plead the material facts, although it is particularised by reference to evidence from which the Defendants and the Court are invited to deduce the facts which are alleged. Mr Macinnis' affidavit addresses that proposed amendment and he relies on the proposition that no relief is sought against the JV Companies, although the Parilo parties in fact seek an order under s 233 of the Corporations Act that the JV Companies be wound up.
14. Ms Yum's evidence is that the question of payment of the legal costs in the proceedings had previously been raised in them, once before Leeming JA in December 2020 and again before me in May 2021, and neither application resulted in a restraint against the DVT Directors from using the Company's assets to pay legal fees, although Leeming JA ordered the provision of monthly reports in respect of the payment of such fees, which it appears have been made since that order was made. Ms Yum's evidence is also that the Parilo parties have not served substantive evidence in respect of this issue. I give little weight to that matter, where that would be a difficulty for the Parilo parties rather than the Defendants if the matter proceeded to hearing. However, Ms Yum also gives evidence, which I accept, that the JV Companies and the DVT Directors would need to lead expert evidence, possibly including evidence of a costs consultant, in order to respond to this new claim, and that again would likely require the vacation of the hearing date. By her further affidavit dated 10 December 2021, Ms Yum also addresses further matters in respect of the allegations concerning the DVT Directors' fees and possibility of a cross-claim by DVT, and additional lay evidence that may be required in that respect, and addresses steps that are to be taken to sell properties owned by the JV Companies in 2022.
15. Turning now to the Parilo parties' submissions in respect of the amendment, Mr Einfeld, with whom Mr Smith appears, refers to the factual background of the proceedings and outlines the proposed further amendments. They submit, uncontroversially, that the payment of unauthorised directors' fees can be oppressive, but that provides no answer to the delay in raising this claim, until it could not be dealt with other than by denying the Defendants an opportunity to respond to it, or vacating a lengthy hearing date, with prejudice to the Defendants and the community. Mr Einfeld in turn recognised a potential area of dispute, so far as the DVT Directors' position is that they have not been paid directors' fees, although DVT has been paid fees in respect of services it has provided. Mr Einfeld addresses the merits of the Parilo parties' proposed claim in respect of those fees, but that again provides no explanation for the delay in bringing it. Mr Einfeld also addressed the basis of the claim that fees were excessive, but does not explain how that can be established without scrutiny of the work done by DVT, whether that work was necessary and justified and whether the fees charged for it were out of market, all of which depend on matters of evidence. Mr Einfeld also submits that the quantification of the extent to which the DVT Directors' (or DVT's) fees were excessive can only take place after findings on liability, implying that separate hearings as to liability and quantum would be needed. No application has been made for a separation of liability and quantum and there is no basis to think that the requirements for a separate trial of those matters would be satisfied, where credit issues may be involved in both.
16. Mr Einfeld also submits that the proposed amendment as to the DVT Directors' (or DVT's) fees gives rise to narrow factual issues and submits that responsibility for delay lies with the DVT Directors. I do not accept either submission, where the factual issues raised by the amendment will at least require evidence as to the work that DVT Consulting has done and the justification or otherwise of that work, and where I have noted above that the Parilo parties did not need either full discovery or access to the financial statements for the year ended 30 June 2021 in order to bring a claim that extends back to the financial year ended 30 June 2019, where they have had access to the amounts of fees paid throughout the proceedings. Turning now to the amendment in respect of the payment of legal fees, Mr Einfeld referred to the joint representation of the JV Companies and the DVT Directors in the proceedings, and submits that no relief is sought against the JV Companies, neglecting the fact that a winding up order is sought against them.
17. Mr Einfeld also submits that this issue does not give rise to any factual disputes other than the quantum of the fees properly incurred by the JV Companies in giving discovery. I do not accept that submission, where there will plainly be a dispute as to whether the winding up order sought against the JV Companies justifies their involvement in the proceedings and the steps which they have taken to defend them. I also do not accept that the question of any right to indemnity of the DVT Directors, or DVT, is only a legal issue, where it plainly depends upon the factual circumstances in which the DVT Directors were appointed and DVT was engaged to provide services to the JV Companies. Mr Einfeld and Mr Smith again submit that quantification of the extent to which the JV Companies have paid the DVT Directors' fees is properly determined after findings on liability, again raising the prospect of a split hearing for liability and quantum, for which no orders have been sought and for which no justification has been identified.
18. The evidence as to this amendment has, it seems to me, three implications. First, it emphasises the Parilo parties' delay in seeking final relief as to this matter, where a dispute as to the payment of legal costs has existed for over a year and twice previously been before the Court. Secondly, it highlights the difficulty of a claim that the DVT Directors are not entitled to use the JV Companies' assets to pay legal fees, where a winding up order is sought against those companies, and the case law has recognised that that is one situation in which a company may properly take an active role in opposing oppression proceedings: Power v Eckstein (2010) 77 ACSR 302; [2010] BSWSC 136 at [119]-[120]. Third, it highlights the risk of prejudice to the DVT Directors if the amendment was permitted and the hearing dates retained, and the risk of prejudice to the community if the hearing dates are vacated. I also have regard to the prejudice to the public interest, the community and the administration of justice of late amendments which have the consequence that lengthy hearings are vacated, with prejudice extending beyond the parties to the community generally, and the issues which I have addressed in, among other matters, Re Elsmore Resources Ltd [2016] NSWSC 884 and Re Bishay Developments Pty Ltd [2019] NSWSC 29 at [31].
19. I did not find it necessary to hear the Defendants' Counsel in respect of the amendment application, other than in respect of the proposed joinder of DVT and DVT's proposed cross-claim. I am comfortably satisfied that I should not grant leave to amend other than in respect of those matters where the amendment is not contested, given the Parilo parties' delay in seeking the amendments and the proximity of the hearing; the prejudice to the Defendants of either forcing them to lead evidence as to the issues raised by the amendments with insufficient time to do so prior to that hearing, or vacating the final hearing date; and the substantial prejudice to the community in vacating a lengthy hearing at a late stage.

Extension of time to lead expert evidence

1. As I noted above, the Parilo parties also seek an order that the time for them to serve several expert reports be extended by about six weeks from 8 October 2021, the date on which that expert evidence was due to be filed, to 23 November 2021. As I noted above, Mr Einfeld accepted that this was in substance an application for leave to rely on an expert report filed out of time, pursuant to rule 31.28 of the Uniform Civil Procedure Rules.
2. Turning to the applicable principles, the relevant expert reports were not filed or served in accordance with the Court's directions and UCPR r 31.28(3) has the result that the Parilo parties cannot rely on them without leave of the Court or by the parties' consent. Rule 31.28(4) in turn provides that leave is not to be given unless the Court is satisfied that, relevantly, there are exceptional circumstances that warrant the grant of leave. That concept was considered in Yacoub v Pilkington (Australia) Ltd [2007] NSWCA 290 at [66]-[67] where Campbell JA referred to his judgment in San v Rumble (No 2) [2007] NSWCA 259 at [59]-[69] and observed that, inter alia, exceptional circumstances are out of the ordinary course or unusual, special or uncommon and cannot be circumstances that are regularly, routinely or normally encountered, and can exist by reference to quantitative or qualitative factors. His Honour noted that whether circumstances are exceptional for the purposes of a particular provision depended on the rationale of that provision and required consideration of the particular facts. His Honour also observed that: "In the context of r 31.18(4) [the predecessor of UCPR r 31.28(4)], any decision about whether there are exceptional circumstances would need to bear in mind the explicit statement of objectives of a Court in the management of litigation contained in ss 56-59 Civil Procedure Act 2005."
3. In New South Wales v Tyszyk [2008] NSWCA 107, Campbell JA quoted that passage and held that exceptional circumstances were in that case established where the reports had already been cross-examined on, had been in the plaintiff's possession for over a year, a reasonable time for the plaintiff to deal with the tender of the reports had elapsed and there was a lack of any identifiable prejudice to the plaintiff. On the other hand, in Correa v Whittingham [2012] NSWSC 266, I held that exceptional circumstances were not established where an expert's report was served shortly before the commencement of the hearing, and there would be real prejudice in placing the defendant in a position where it had no practical alternative to leading expert evidence in response with insufficient time to prepare it, or seeking to vacate the hearing date; and I also observed (at [13]) that: "There also seems to me to be a lack of exceptionality in the present circumstances which are, in substance, a case of late retainer of an expert and late service of his report. That is, regrettably, not out of the ordinary course or special, although it is perhaps less common in recent years than in earlier years where the Courts and the parties were less conscious of the need of the parties and the community for the just, quick and cheap resolution of matters in dispute."
4. That approach was also taken by Campbell J in Commonwealth Bank v Iinvest (No 7) [2017] NSWSC 440, in holding that exceptional circumstances were not established to allow a late expert report to be read.
5. Turning now to the relevant evidence, Mr Macinnis refers to the Parilo parties' request for documents in relation to a third party, the Bush Doctor Pty Ltd ("Bush Doctor") from the DVT Directors, which was not the subject of any order by the Court for the production of documents, and to the DVT Directors' production of those documents on a voluntary basis. Mr Macinnis recognises that, on 31 May 2021, over six months ago, the Court made orders setting a timetable for expert evidence and listing the proceedings for hearing. There can be no suggestion that the Parilo parties have not had ample time to prepare their expert evidence or ample notice of the dates on which the matter was listed for hearing.
6. Mr Macinnis observes that, on 10 November 2021, Mr McKinnon completed an expert report in relation to bush regeneration issues which was the primary focus of the application to read expert evidence out of time under UCPR 31.28. Mr Macinnis also notes that the parties attended a mediation on 11 November 2021 and 19 November 2021, and the proceedings were not resolved at that mediation. It was apparent from Mr Macinnis' evidence that the Parilo parties or their legal representatives, on 10 November 2021, decided not to comply (albeit late) with the Court's directions as to the service of Mr McKinnon's report at that time. They did not seek the other parties or the Court's approval to that course, and the Court would have refused that approval had it been sought and required immediate service of that report if it was to be relied on at the hearing. Mr Macinnis' evidence was that: "The reports were not served in advance of the mediation out of concern that serving evidence the day before the mediation would prejudice the prospects of a settlement."
7. That concern was plainly misplaced because, first, the Plaintiffs had no option to choose not to comply with the Court's orders as to service of expert evidence and, second, they could hardly have been criticised for doing what the Court's orders required them to do, albeit late, by serving Mr McKinnon's report as soon as they received it. I recognise that there is no punitive element involved in the Court's decision whether exceptional circumstances are established to warrant the grant of leave to lead expert evidence out of time under UCPR r 31.28, but the decision of a party or its legal representatives to delay service of an expert report in breach of the Court's orders as to expert evidence is not a particularly prospective start to such an application.
8. Mr Macinnis then further addresses the delay in service of Mr McKinnon's report, which was ultimately served nearly two weeks after it had been received by the Plaintiffs, on 23 November 2021. He seeks to explain that delay by reference to a delay in the Parilo parties' receiving the Bush Doctor reports, but the Court had not ordered the production of those reports, at all or by any particular time; and the Court's order for the Parilo parties to serve their expert evidence was not conditioned on any proposition that the Defendants would first provide other expert reports to the Parilo parties. Mr Einfeld in turn submitted that the Parilo parties' need for the Bush Doctor's reports reflected the fact that Mr McKinnon had not visited the properties as to which he was giving expert evidence, and would on the Bush Doctor reports, but any proposition that Mr McKinnon's report did not need to be served in accordance with the existing orders, if the Defendants did not first produce the Bush Doctor reports so he could avoid any need to inspect those properties was not raised with Court, nor would it have been accepted by the Court had it been raised with it.
9. Mr Vuaran also addresses steps taken by the Plaintiffs to seek to obtain production of Bush Doctor's reports, and acknowledges that those reports were provided to the Parilo parties in early September 2021, now over three months ago, although he refers to advice then provided by the DVT Directors that there was an incorrect current expenditure figure in those reports which would be corrected. There is no suggestion in the evidence, and none was put in submissions, that that error was material to the limited matters for which Mr McKinnon relies on the Bush Doctor reports so as to justify deferring preparation of Mr McKinnon's report beyond that date. Mr Vuaran also leads evidence of Mr McKinnon's explanation of delays experienced in preparing his report since 3 August 2021, which largely relate to Mr McKinnon giving priority to other matters over the preparation of his reports in this matter. That evidence provides little explanation of the delay beyond 3 August 2021, and no explanation of the absence of work to prepare those reports between the date on which orders for expert evidence were made in May 2021 and 3 August 2021.
10. Ms Yum addressed the orders for expert evidence were made on 31 May 2021, requiring the service of expert reports by 8 October 2021 as I noted above; Ms Yum notes that Mr McKinnon gave a fee estimate to the Parilo parties' solicitors on 11 May 2021, and there is no further explanation of what occurred between the date of that fee estimate and the letter of instruction provided to Mr McKinnon on 3 August 2021, some two months after the orders for expert evidence were made; and the Parilo parties delayed for two weeks in serving Mr McKinnon's report from the date they received it, as I have noted above, so that the experts' reports were not served until 25 November 2021. Ms Yum's evidence is, and I accept, that by 3 September 2021, the Parilo parties have been provided all instructions given to and the final reports from the Bush Doctor. Ms Yum's evidence is also that, and I accept, invoices for work done by Monty Managers Pty Ltd which are the subject of comment in Mr McKinnon's report had been made available to the Parilo parties since at least October 2020, when they were exhibited to an affidavit of Ms McCallum filed in the proceedings.
11. Ms Yum in turn refers to the prejudice caused to the JV Companies and the DVT Directors by the delay in service of expert evidence, of at least six weeks beyond the date when the Court had ordered that such evidence be served, and her evidence is that there would be insufficient time for them to engage an expert within a specialist field and deliver an expert report prior to the hearing, and she refers to the numerous inquiries which she has made in that respect. Ms Yum's evidence is, and I accept, that substantial additional work will be required from an order to respond to Mr McKinnon's report, if the Parilo parties were permitted to rely upon it and that would again require the vacation of the hearing date.
12. By her further affidavit dated 10 December 2021, Ms Yum makes a number of minor corrections to her earlier affidavit, and refers to further steps that she has taken to progress the retainer of an expert to respond to Mr McKinnon's report, and the fact that that expert could not complete her report prior to the commencement of the hearing, and to the prejudice to which the JV Companies and the DVT Directors would be exposed by being unable to produce evidence in response to Mr McKinnon's report.
13. I have also had regard to Mr McKinnon's report and I note that Mr McKinnon's reliance on the Bush Doctor reports, the need for which is said to have justified the Parilo parties' failure to comply with the Court's orders as to service of their expert evidence, relate to general references to, for example, lantana (presumably a reference to the management of lantana) having "fallen" behind schedule, without identifying where or to what extent that occurred or identifying any significance of that matter. Mr McKinnon also refers to an observation in the Bush Doctor reports that the "current numbers of planted plants are not representative of the required numbers", again without identifying the extent to which that has occurred, which is then followed by speculation as to the potential effects of that unquantified shortfall on the value of the property which are neither shown to have occurred nor quantified in Mr McKinnon's report.
14. I also note (although it is not necessary to the decision that I have reached) that there are significant difficulties with the admissibility of that report, by reason of the lack of identified assumptions; the fact that significant parts of the report appear to reason from the lack of information provided to Mr McKinnon, rather than from information or factual assumptions; and other parts of the report gloss documents or advance conclusions as to the operation of legislation, which is outside Mr McKinnon's expertise. Had leave been granted to the Parilo parties to rely on that report, it seems to me that much of it would have been rejected for failure to comply with the admissibility requirements for an expert's report, and the balance might well then have been rejected under s 135 of the Evidence Act 1995 (NSW), because its probative balance did not exceed the waste of time that would have been involved in dealing with it.
15. Mr Einfeld also submits that Mr McKinnon's evidence is essential for the Parilo parties to prove their case regarding overpayments to two third parties, and that the properties subject to biobanking agreements could have been sold, and that the prejudice to the Parilo parties would be "irremediable" if leave is not granted to rely on Mr McKinnon's evidence. He did not draw any attention to any evidence supporting that submission, and I am not persuaded that that is correct. If Mr McKinnon's evidence were in truth essential for the Parilo parties to prove their case regarding those matters, then they would have faced fundamental difficulties irrespective of whether leave was now granted to rely on it under UCPR r 31.28, because of the likelihood that large parts of it are inadmissible, and the balance could be excluded under s 135 of the Evidence Act for the reasons noted above. In any event, even if Mr McKinnon's evidence is significant, important, or even essential for the Parilo parties to prove their case, the question whether it should now be admitted, in circumstances that the Defendants could not fairly be required to respond to it prior to the hearing date, or the hearing date should otherwise be vacated, is not determined by reference only to the interests of the Parilo parties, but requires that the Court also have regard to the interests of the other parties, the community and the administration of justice.
16. Mr Einfeld submits that the delays in serving Mr McKinnon's report were attributable to two matters, namely delays in obtaining material from the DVT Directors and "unforeseen demands on Mr McKinnon's time". I do not accept that submission. First, I have noted above the Parilo parties did not expose to the Court, and the Court would not have accepted had they done so, that they proposed to delay leading their expert evidence-in-chief until after they obtained the Bush Doctor's reports from the Defendants, because they preferred, or Mr McKinnon preferred, not to inspect the properties as to which he was giving evidence. Second, I do not accept that "unforeseen demands" on Mr McKinnon's time provide exceptional circumstance for the purposes of UCPR r 31.28, where the Parilo parties had six months to lead their expert evidence, and Mr McKinnon also had several months to prepare his report, despite the Parilo parties' delay in instructing him. That delay was then increased by a further two weeks, when the Plaintiffs chose not to serve that expert report when they received it, in the circumstances to which I referred above. While Mr Einfeld fulsomely apologised for the Plaintiffs' failure to restore the matter before the Court at that time, that is not the point where, had the matter been restored at that time, the Court would have pointed out the existing orders required the Plaintiffs to serve its report when received, albeit late, rather than delay its service for a further two weeks. The prejudice arising from this matter is not any offence to the Court, but prejudice to the other parties and to the administration of justice, where the loss of two weeks at this point significantly increased the risk that the hearing date would have to be vacated if leave were granted to rely on Mr McKinnon's evidence.
17. The Parilo parties also submit that the Defendants did not take any step to retain an expert, despite leave being granted to adduce evidence on the issue on May 2021. I give little weight to that matter, because the Defendants could reasonably wish to review the Plaintiffs' expert report, in order to confirm that the expert they retained had proper qualifications to respond to it, particularly where evidence was to be led in a specialist field. They likely would have had sufficient time to do so had the Plaintiffs not failed to comply with the Court's orders in respect of service of Mr McKinnon's report.
18. I also did not find it necessary to hear the Defendants' Counsel in respect of the amendment application, other than in respect of the proposed joinder of DVT and DVT's proposed cross-claim. I declined to grant leave under r 31.28 of the UCPR to rely on Mr McKinnon's report served out of time or to extend the time for service of that expert report in a manner that would allow, in effect, leave to rely on that report out of time. I am comfortably satisfied that no exceptional circumstances have been established to support a grant of leave to lead Mr McKinnon's evidence and the grant of leave under that rule would not promote the just, quick and cheap resolution of the real issues in the proceedings.
19. To the extent that there are exceptional circumstances here, it seems to me that they were matters that indicate that an extension of time should not be granted. These include the Parilo parties' approach to the Bush Doctor's reports and their delaying Mr McKinnon's report even after they had received those reports in September 2021; their not restoring the matter to the Court, at the time of their default, and thereby depriving the Court of an opportunity to address the continuance of that default; their delay in serving the report had been received from Mr McKinnon, which increased the prejudice to other parties of the service of a late report; and the fact that reliance on Mr McKinnon's report, given the delay in its service, would require that a long hearing date, allocated for a considerable time, now be vacated, and that course is adverse to other members of the community and other litigants and destructive of the administration of justice.

Property valuation reports

1. Mr Macinnis' evidence is also that, on 8 November 2021, a property valuer, Mr Smith, completed property valuations. Mr Macinnis also addressed delays in the provision of the property valuation reports, but does not explain why the property valuer was not briefed until late August 2021, when orders for expert evidence were made in May 2021. Ms Yum responds that a property valuer was not briefed by the Parilo parties until late August 2021, nearly three months after the orders to file and serve expert evidence were made. This matter was otherwise given little attention by the parties in the application, and I relisted the matter after determining this application in respect of Mr McKinnon's report in order to address the question whether leave should be granted to the Parilo parties to rely on these valuations. They then indicated they would make no further submissions in respect of that application and subsequently indicated the application for that leave was not pressed. I vacated that listing and have not determined any application in respect of those reports since it was not pressed.

Other matters and orders

1. For completeness, I had also raised the possibility that any amendment and any leave to lead expert evidence might only be granted on the basis of an offer by the Parilo parties that they would pay the Defendants' costs thrown away on an indemnity basis, to be assessed on a gross sum and paid within a short period of that assessment. Mr Einfeld submitted that the Parilo parties would consent to such an order. I am not persuaded that such an order is sufficient to address the detriments involved in permitting the amendments or granting leave to rely on the expert evidence out of time. My attention has not been drawn to any evidence that the Parilo parties have the financial capacity to meet such an order, where the costs thrown away by amendments of this character and late expert evidence so close to the hearing date may be significant, and such an order would also not compensate other litigants who have been shut out of hearing dates by reason of the allocation of a hearing date for this matter, or address the wider loss suffered by the administration of justice where the determination of proceedings are significantly delayed and lengthy hearings are vacated at a late stage.
2. For these reasons, I made the following orders at the conclusion of the hearing of this application on 13 December 2021, in respect of the Plaintiffs' Interlocutory Process: 1. Grant leave to the Plaintiffs to file and serve a Further Amended Points of Claim incorporating only the proposed amendment in paragraph 79AA by 4:00 pm on 15 December 2021, and direct the respective Defendants to file and serve their Defence to the Further Amended Points of Claim by 4:00 pm on 22 December 2021. 2. Otherwise dismiss the Interlocutory Process and direct the Plaintiffs pay the costs of and incidental to their Interlocutory Process filed 25 November 2021 as agreed or as assessed.

DVT Directors' Interlocutory Process

1. Turning to the DVT Directors' Interlocutory Process filed 4 December 2021, I ordered that the time for them to serve their further lay evidence in respect of the affidavit of Ms McCallum, to be relied on at a final hearing, be extended from 3 September 2021 to 26 October 2021, where that order was not opposed. I declined to grant leave to the DVT Defendants to file and serve an Amended Defence to the Amended Points of Claim, for the reasons set out in a separate ex tempore judgment and below.
2. By that Interlocutory Process, the DVT Directors seek, inter alia, an order that they be granted leave to file and serve an Amended Defence to the Amended Points of Claim which introduces paragraph 104Q.1A in that Amended Defence. That paragraph seeks to rely on the business judgment rule under s 180(2) of the Corporations Act 2001, which relevantly provides that: "A director or other officer of a corporation who makes a business judgment is taken to meet the requirements of subsection (1), and their equivalent duties at common law and in equity, in respect of the judgment if they: (a) make the judgment in good faith for a proper purpose; and (b) do not have a material personal interest in the subject matter of the judgment; and (c) inform themselves about the subject matter of the judgment to the extent they reasonably believe to be appropriate; and (d) rationally believe that the judgment is in the best interests of the corporation. The director's or officer's belief that the judgment is in the best interests of the corporation is a rational one unless the belief is one that no reasonable person in their position would hold."
3. The DVT Directors seek to invoke that provision in respect of their decisions and conduct in selling plant and equipment at the amounts at which it was sold and making specified payments. Plainly, an assessment of those decisions would potentially be fact-intensive so far as, for example, the sale of plant and equipment might require an assessment of the value of that plant and equipment and the making of payments to third parties might require an assessment of the basis on which those payments were made, the nature of the services provided and the value of those services to warrant the amounts paid for them. The proposed paragraph pleads, by way of assertion, that the DVT Directors made a business judgment as to those matters, although it does not identify when that judgment was made or how it was made or with reference to what matters it was made, and then pleads that that business judgment was made with the DVT Directors having informed themselves about the subject matter of each such matter to the extent they reasonably believed to be appropriate and rationally believing the judgment was in the best interests of the JV Companies. Again, that paragraph does not pleading any material facts as to how the directors informed themselves, or what they considered was the relevant subject matter to inform themselves about, or the content of what they "reasonably believed to be appropriate" in informing themselves of those matters. The pleading also does not identify the basis on which they say they rationally believed the judgment was in the best interests of the JV Companies.
4. Mr Einfeld, for the Parilo parties, opposes the amendment, on the basis that particulars have been sought and not provided and that there is a degree of concern on the Parilo parties' part as to when they will be received. Mr Adamopoulos, who relevantly appears for the DVT Directors, responds that the particulars will identify the matters relied on, although there was a hint in the way he put it that they will do so by reference to evidence rather than by identification of the material facts in a way in which a pleading ought to do. The requirements for a proper pleading are well-established. In Gunns Ltd v Marr [2005] VSC 251 at [57], in a passage followed by Garling J in Young v Hones [2013] NSWSC 580 at [82], and which I followed in Iacullo v Iacullo [2013] NSWSC 1517, Bongiorno J pointed to the need for a pleading to inform the defendants of the case they must meet and to set out the facts which the plaintiffs assert with sufficient particularity to allow a trial to be conducted fairly to all parties. His Honour observed, relevantly for present circumstances, that "vague allegations on very significant matters may conceal claims which are merely speculative". Similar observations were made by Harper J in Downer Connect Pty Ltd v McConnell Dowell Constructors (Aust) Pty Ltd [2008] VSC 77 at [2]-[4], where his Honour emphasised the role of pleadings, not only in informing the parties of the case which they have to meet, but also in identifying for the Court the issues which have to be decided.
5. In addition to those cases, to which I referred to my ex tempore judgment, I should add that, in Great Southern Finance Pty Ltd (in liq) v Rhodes (2014) 103 ACSR 137; [2014] WASC 431 at [46]ff, Beech J observed that, where a director has made a decision that is a business judgment, attention must be given to the requirements of paras (a)-(d) of s 180(2) as they relate to that decision (or decisions); the onus of proof lies on the director who relies on that section to establish the requirements of paras (a)-(d); and, in order to plead the defence under that section, "it is a necessary first step to identify the decision(s) constituting the relevant business judgment(s)" and that requirement was not satisfied in that case where the pleading did not plead any specific or identifiable business judgment.
6. It seems to me that, here, with respect, the DVT Directors' pleading in proposed paragraph 104Q.1A is formalistic, in the sense that it simply identifies the matters necessary to establish a business judgment rule defence under s 180(2) of the Corporations Act and blandly asserts their existence, without identifying the material facts which are relied on to establish them. The Parilo parties, having received that defence, would be none the wiser as to the substance of the defence, or what considerations the DVT Directors had in fact taken into account, and were relying on to seek to establish the defence. In that respect, it seems to me that there is significant prejudice to the Plaintiffs in being required to meet a defence in that form, and it is no answer to that prejudice to say that particulars which have not presently been provided may be provided in the future.
7. For these reasons, I declined to grant leave to file and serve the Amended Defence to the Amended Points of Claim in the form annexed to the Fourth and Fifth Defendants' Interlocutory Process dated 3 December 2021.

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: 22 December 2021