Commonwealth Bank of Australia v Susan Hannaford Pty Ltd

EX TEMPORE Judgment 1This matter is listed for hearing of the bank's claim against the third defendant. The claim is based upon a contract of guarantee. It is alleged that the third defendant guaranteed the mortgage debt of the first defendant, a corporation which she controlled, which corporation is now in liquidation. By force of s471B Corporations Act 2001 (Cth) the proceedings against it are stayed. 2The proceedings have a long history detailed in a decision of Hidden J, Commonwealth Bank of Australia v Susan Hannaford Pty Ltd [2012] NSWSC 1094; and of Davies J, Commonwealth Bank of Australia v Susan Hannaford Pty Ltd (No 2) [2013] NSWSC 574. It is unnecessary for me to go over the ground covered by their Honours in those judgments. 3The judgment of Davies J given on 23 May 2013 concerned an application by the third defendant to amend her defence and/or cross-claim to rely upon the provisions of the Contracts Review Act 1980 (NSW). In a judgment running to 93 paragraphs over 27 pages Davies J refused that application. 4When the matter was called before me this morning, Mr GW Stapleton of counsel announced his appearance for the third defendant on what might be referred to as a limited retainer. The limited retainer was for the sole purpose of making an application for the adjournment of the hearing. He was given leave to file in court an affidavit of the third defendant sworn on 20 August 2013, which was read. 5Mr JM White of counsel, who appears for the defendant, with respect to him, sensibly took the attitude that although the affidavit was informal in form, he would not take objections to it except to the extent that he submitted I should read the conclusions expressed in various places in the affidavit as submissions advanced on behalf of the third defendant. 6Mr Stapleton explained that he was retained over the telephone yesterday only, and although he was able to indicate to Mr White yesterday evening that he expected to receive instructions to apply for an adjournment, those instructions were not confirmed until 10pm because the third defendant is currently in the United States of America. 7Although it was expressed as an adjournment application, in effect the application is for a stay of the proceedings. The ground of the stay is that yesterday, 21 August 2013, the third defendant lodged a summons seeking leave to appeal from the decision of Davies J, together with the white folder required by the rules, incorporating the necessary additional documents. 8A notice of intention to appeal had been filed on 23 May 2013, that is to say the very day upon which Davies J handed down his decision. Today's hearing date was fixed by his Honour soon thereafter. 9The claim under the Contracts Review Act, which the third defendant wishes to raise, is effectively that she did not enter into a contract of guarantee or, if she did, the circumstances in which her signature was procured were relevantly unjust. In this regard she relies upon a letter annexed to her affidavit of 9 May 2013, which was read before Davies J. That letter is dated 3 May 2004 and purports to be from an officer of the plaintiff which states, in part, that it is not necessary for the third defendant, inter alia, to obtain legal advice and that personal guarantees for the home loan will not be required. 10A further annexure is said to be a consumer credit schedule, which has on page five of six typed material relating to security deleted and initialled, she says, by her and on behalf of the bank. The deletions from the typed document exclude one of two properties as security and delete the reference to personal guarantees. I interpolate that Hidden J granted summary judgment in respect of an order for possession and the property referred to on that document has been sold. 11As I have said, all of this was put before Davies J and in his very careful judgment his Honour rejected the application for leave to amend. That application is not renewed before me. 12I should say that Mr White has made it clear that the bank disputes the authenticity of those documents. However no investigation has been undertaken into that question by the bank given that his Honour refused the application for leave to amend. 13Given the refinement of Mr Stapleton's application, it is unnecessary for me to go into some of the matters that were ventilated before me or that are raised in the affidavit. 14It seems to me the central question that I have to decide is whether the application for leave to appeal filed yesterday is a circumstance which, in the interests of justice, requires me to exercise my discretion to stay the current proceedings to enable the application for leave to appeal to proceed. 15In support of the application I have considered the summary of argument prepared on behalf of the third defendant by counsel other than Mr Stapleton. However, I think it is not for me as a judge of the Common Law Division to make any assessment of whether or not the application for leave has any real prospect or is indeed fairly arguable. I will only observe that the decision of Justice Davies is in relation to a matter properly referred to as one of practice and procedure, and as I understand the rules of restraint applied by the Court of Appeal, the third defendant will have a very high bar to clear to obtain leave: Re In the Will of Gilbert (1905) 22 WN (NSW) 186. 16Moreover, as Mr White argued, it is important to bear in mind that the refusal of the stay will not stultify any appeal. It is clear and settled law that any right of appeal arising out of an interlocutory judgment inures until final judgment: Gerlach v Clifton Bricks Pty Ltd [2002] HCA 22; 209 CLR 478, Crowley v Glissan (No 1) [1905] HCA 13; 2 CLR 402. 17Moreover, in resisting the application Mr White has reminded me of the significance of the so-called efficiency provisions of the Civil Procedure Act 2005 (NSW). Those provisions were, I think it is fair to say, extremely influential in Justice Davies' decision. With respect, properly so. 18A question may arise about the significance of the efficiency provisions in a context where a successful appeal from the refusal of leave to amend, in due course, would result in significant waste of time and costs. A like question was considered by the Court of Appeal in Itek Graphix Pty Ltd v Elliott [2002] NSWCA 104; 54 NSWLR 207. That case of course concerned an appeal from an interlocutory decision refusing to extend time under a limitations provision. At page 236 [164] Ipp JA (as his Honour then was), with the agreement of Spiegleman CJ and Sheller AJA, expressed the principle that an interlocutory appeal should be brought forward in advance of the trial where the outcome of the appeal is capable of finally determining the litigation. 19In the course of his judgment his Honour referred to the decision of Handley JA in Tamworth Base Hospital v Durant [2000] NSWCA 209 at [66], where his Honour referred to the manifest inconvenience - in some cases - of not dealing with appeals from interlocutory decisions in advance of the trial. Those considerations involve weighing and assessing the efficient expenditure of the Court's judicial resources and time, and the parties' time and money. 20A significant matter referred to by Mr White, as referred to by the High Court in Aon Risk Services Australia Ltd v Australian National University [2009 HCA 27; 239 CLR 175, is that adjournments (for that will be the effect of a successful stay application) inconvenience not only the Court and the parties, but also the community generally to the extent that other litigants with pending cases have been denied a hearing date for no good effect. That matter is significant. 21I should say that although the matter the third defendant wishes to ventilate in the Court of Appeal goes to the very validity of the contract upon which she is sued, the amended defence filed on her behalf on 21st September 2011 does not challenge the validity of the contract of guarantee. Paragraph 85 of that document contents itself by pleading as follows: The defendants do not deny nor admit paragraphs 11 and 13 of the statement of claim. Paragraph 11 is the averment of the contract of guarantee. 22Notwithstanding language reminiscent of politicians neither confirming nor denying something, under the rules I suppose that phraseology amounts to a traverse, although it is not a form of words that I have seen employed in this context and certainly it is suggested to an ordinary reader a position of complete neutrality in respect of validity of the contract of guarantee. This is a most surprising pleading if the real case that the third defendant always wished to ventilate is that the contract of guarantee is invalid. 23The explanation that the third defendant extends in her affidavit of 20th August 2013 is that the amended defence and the cross claim that omitted the contracts review case she now seeks to advance was drafted by the negligence of her then legal advisers. She also says that she only became aware of their negligence in recent days when she was preparing for today's hearing. 24I find that that explanation difficult to understand, because given the application to amend in May, of which she was undoubtedly aware, it must have been obvious to her then that what she regarded as the core of her defence had not been properly pleaded in the proceedings. If she provided instructions in relation to it she must have known at that time that the failure to raise the matter was the fault of her lawyers. So that explanation does not satisfactorily explain why this application for a stay is made at the very last minute. Moreover, there is no explanation as to why the appeal documents were not filed until yesterday. 25I accept that those documents were filed within the three months permitted by the rules when a notice of intention to appeal is filed. I also accept that it is not uncommon to find the leave documents filed at the end of the three month period, given that documents take time to prepare and counsel are often busy. However, in a situation like the present where the hearing date was fixed within a short time of Justice Davies's judgment, and it was known, apparently, that an application for leave to appeal was going to be advanced, one would have expected, to use the vernacular, that all the stops would have been pulled out to make sure that the documentation was filed with great promptitude and certainly well within the three month period, not at the end of it. 26There is nothing in the third defendant's affidavit which explains this relative delay in the context of the present case. There is no evidence as to when a brief to advise, and if appropriate draft the appeal documents, was delivered to counsel. In view of these omissions it is impossible for me to infer that the reason for that comparative delay is that counsel was too busy, or neglected to do the work, or for some good reason was not able to attend to it well before yesterday. 27In the current regime of adjectival law governing this Court's civil business the failure of a party seeking an indulgence to provide a satisfactory explanation for delay is often critical. As Justice Davies pointed out in his decision, the plurality judgment in the High Court in Aon at [103] states: Not only will [the party seeking leave] need to show that their application is brought in good faith, but they will also need to bring the circumstances giving rise to the amendment to the court's attention, so that they may be weighed against the effects of any delay and the objectives of the Rules 28In Aon the High Court disapproved of its earlier decision in State of Queensland v JL Holdings Pty Limited [1997] HCA 1; 189 CLR 146. Following that decision the profession had the idea, based upon the approach taken in the 19th century after the enactment of the Judicature Act in England, that an amendment of importance would almost always be permitted subject to costs. That rule is normally attributed to Cropper v Smith (1884) 26 Ch D 700, whether correctly or not. But certainly that lenient approach is no longer the predominant approach. 29The one matter which gives me pause is the possibility - I could not put it any higher than that - that if I proceed today an appeal from any judgment adverse to the third defendant entered might be allowed on the basis of demonstrable error in the judgment of Justice Davies resulting in the necessity of a new trial. As unfortunate as that outcome would be, as there is no satisfactory explanation for the failure of the third defendant to bring forward any application for leave to appeal with proper celerity, and as it is not clear to me in light of the amended pleadings filed on or about the 23rd of September 2011 that the application to raise the Contracts Review Act has been brought in good faith, rather than in an attempt at the last minute to delay these proceedings, I consider the proper exercise of my discretion is that I should refuse the application, whether it be for an adjournment or for a stay. Accordingly, I order the third defendant's application is refused.