Costi Cohen Pty Ltd v Bo [2025] NSWDC 176 | Case summary | Zoe

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Costi Cohen Pty Ltd v Bo [2025] NSWDC 176 | Case summary | Zoe

This is an application by the Defendant to file an amended defence to the Plaintiff's claim.
Mr Folino Gallo of counsel, who has appeared for the Plaintiff, opposes the amendments on two very narrow grounds.
The first is that he submits, as a matter of either law, the Court rules, or proper practice and procedure, those portions of the amended defence which pray in aid various protective provisions found in misleading or deceptive conducts provisions of the Australian Consumer Law ("ACL"), the unconscionable conduct provisions of the ACL and the unfair contract provisions of the Contracts Review Act 1980 (NSW), all require a party seeking such relief in a defensive way to not only plead the matter in a defence (or perhaps to not plead the matters in a defence at all), but rather to plead them in a cross-claim and to claim relief in the cross-claim. The fundamental point being, at least relief must be claimed by way of cross-claim.
The second point is a drafting matter which turns on a submission that in various paragraphs following [45] of the proposed defence, there is a reference to paragraph [3] of the amended defence, which paragraph asserts there is no binding contract. If that is correct, it would mean that none of the paragraphs following [45] would have any work to do because each of them proceeds upon the premise that there has been found, contrary to the Defendant's primary position, to be a contract.
Dealing with the first point first, I have been taken to two decisions, being Britannia Pty Ltd v Parkline Constructions Ltd (2006) 67 NSWLR 9, and in particular to what Hodgson JA said, at paragraphs [7] to [11], which observations were agreed to by Tobias JA and at least not traversed by Basten JA, together with the decision of Hungerford ADCJ in 2009 of Stallion Civil Group Pty Ltd v Tresedar Pty Ltd [2009] NSWDC 125.
Each of those decisions were in the context of the Building and Construction Industry Security of Payment Act 1999 (NSW). That Act, of course, by its terms, expressly prevents a person seeking to challenge an interlocutory adjudication under that Act from filing any cross claim. Nonetheless, the decisions are expressed in terms that a person defending a claim who seeks positive relief on any basis is entitled to do so by way of either defence or "an interlocutory application." It is unclear to me what such an interlocutory application would look like.
I have always understood, although based on these authorities it would appear that I might have been wrong, that a party seeking relief of the type sought by the Defendant did need to do so by a cross claim. I have a strong feeling that each of the decisions relied upon by the Defendant were driven by the particular statutory restrictions of the Building and Construction Industry Building and Payment Act and, perhaps, were not intended to have the broader application that as written they seem to have. Certainly, the true ratio of each of those cases is limited to claims concerning that Act. Uninstructed by the authorities, I remain of the view that it is ordinarily necessary to seek relief under remedial legislation by way of cross-claim. I do not think it would be appropriate for me to decide this on a final basis what may be a very important question of law on an interlocutory application such as this. I will simply note that, on the authorities relied on by the Defendant, the matter is arguable.
I propose to deal with the matter as a matter of practice and procedure and to try and kill off the risk of there being some last-minute application by the Defendant to file a cross claim, which in light of the history of this argument the Plaintiff would no doubt strongly oppose. As a matter of case management as a condition of filing the proposed amended defence I am going to direct the Defendant to file a cross claim which does not need to plead out any of the facts in the amended defence again. It can do that by reference to paragraphs in the defence but then it should seek positive relief. If I am wrong, and that is not required as a matter of law, it will do no harm. If I am right, it will make the chances of the hearing running in an orderly manner more likely.
I also think it is better procedurally because it will then require the Plaintiff to file a proper defence to the cross claim rather than perhaps masking real issues raised in their response to the defence. Again, this would have the benefit of precluding any debate at a final hearing as to whether an issue should or should not have been raised by reply, which has always been a difficult and elusive concept. The point is if the matter is pleaded out in a cross-claim and a defence to cross-claim, I think the chances of the real issues in dispute being exposed early will greatly increase.
As to the second issue, my view is that whilst I understand Mr Folino Gallo's concern, I think it is clear enough and in this judgment I will make it clear that I read every portion of the pleading from paragraph [45] to the end as being truly in the alternative to the Defendant's primary case, which is there is no contract as alleged at all. In those circumstances, I do not think there is any confusion by the reference in the second part of the pleading to paragraph [3]. It is simply a reference to the alleged contract which, by that stage of the hypothetical argument, will have been held to be a valid contract.
For those reasons, I am satisfied that the Defendant should be given leave to file the amended defence.
As far as costs are concerned, whilst I am not suggesting that any of the submissions made today were not appropriate, they were very much of a technical nature and I do think from the time that the Plaintiff was served with the notice of motion, acting reasonably, it should have consented to the orders sought, in which case there would have been a very good argument that the Defendant should pay all of the costs thrown away as a result of the amendment and the notice of motion.
The orders I make are:
Pursuant to s 65 of the Civil Procedure Act 2005 (NSW) and r 19.6 of the UCPR, leave is granted to the Defendant to amend his Defence in accordance with the amendments set out in the draft Amended Defence marked as MFI-1 on this Motion.
It is a condition of this leave, that the Plaintiff, at the same time as filing the Amended Defence, file a Cross-Claim seeking the statutory relief referred to in the Amended Defence.
Direct the amended Defence and Cross-Claim to be filed and served by 19 May 2025.
Direct the Plaintiff/Proposed Cross-Defendant to file and serve any evidence in reply or in answer to the Cross-Claim on or before 16 June 2025.
The Plaintiff is to pay the Defendant's costs of the Motion filed 25 April 2025. The Defendant is to pay the costs thrown away as a result of the amendment other than the costs of the Motion.