David Williamson v Vince Scarano

Judgment 1These reasons dispose of two Notices of Motion, the defendant's Notice of Motion filed on 1 July 2011 seeking Summary Disposal under Uniform Civil Procedure Rules 2005 (NSW) r 13.4 and the plaintiff's Notice of Motion of 13 October 2011 seeking leave to file Further Amended Statement of Claim. The proceedings relate to interests in a house at Ermington which has been sold since the Amended Statement of Claim was filed, and the sale was completed on 20 January 2011. At the relevant times until then the defendant was its sole registered proprietor. 2The plaintiff and the defendant's daughter Angela lived together for some years as domestic companions and later as a married couple, and they have two children, the elder being their son who was born in 2001. The plaintiff and Angela lived at several different places before they occupied the Ermington house in December 2001. From time to time the defendant employed the plaintiff to do maintenance work on commercial properties, and later to do cleaning work. The plaintiff and Angela continued to live in the house at Ermington until Angela left in December 2008. They have lived separately since then, and have made arrangements for the care of their children to be shared. 3The plaintiff alleges that in August 2001, after the defendant acquired the house at Ermington, the parties had a conversation in the course of which the defendant said to the effect that he wanted the plaintiff and Angela to live in the house and to contribute to paying the mortgage; that the plaintiff could pay Angela $150 a week which she would put towards paying the mortgage on the property and the defendant would contribute money for her to put towards the mortgage; and the defendant also said that he would give the plaintiff a 50% interest in the property. Pleadings show that it is contested whether there was such a conversation at all, and if there was, what its terms were, and what its effect was. Neither party wrote or signed any note or record of such an arrangement. To succeed the plaintiff would have to obtain a finding that the defendant committed to give the plaintiff a 50% share in the property if the plaintiff made the payments towards the mortgage. Affidavits filed show that there is much in issue about whether, when and how payments were made, and what character payments had, whether as rent, contributions towards a mortgage or otherwise. It is the plaintiff's case that at some later times he worked for the defendant in lieu of making payments. Almost every detail of the plaintiff's case about payments and contributions is disputed in fact. 4The plaintiff claims that after Angela left he continued to make payments to the defendant, and continued to live in the house; that in or about September 2009 he had a conversation with the defendant in which he asked for his interest in the house to be resolved, and various possible arrangements were discussed, some involving payment of money to the plaintiff, some involving purchase of the house by the plaintiff at less than market value. The plaintiff continued to make payments to the defendant at the rate of $300 per week until May 2010, when he vacated the house after the defendant, through his lawyer, threatened to evict him. 5The plaintiff lodged a caveat against the title to the house about 27 July 2010. The plaintiff gave notice soon afterwards for the caveat to lapse. The plaintiff commenced these proceedings by Statement of Claim on 3 August 2010. The plaintiff then applied by Notice of Motion of 17 August 2010 for an order extending the caveat, and the application was heard and dismissed by White J on 24 August 2010 for reasons then stated: [2010] NSWSC 975. There was little evidence before White J supporting the caveat other than the plaintiff's verification of the Statement of Claim; there was a lengthy affidavit by the defendant. White J's findings were interlocutory and do not create estoppel or res judicata . His Honour made a careful and extensive review of discretionary considerations and the balance of convenience and after observing "... it could not be said that the plaintiff's case is one of apparent prima facie strength" and saying to the effect that the balance of convenience was adverse to extending the caveat, dismissed the Notice of Motion with costs. 6The relief claimed in the Statement of Claim was (1) a declaration that the defendant held his interest in the house on trust for himself and the plaintiff in proportions to be determined by the court, (2) alternatively a declaration that the house was charged for an amount equivalent to the value of the plaintiff's monetary and non-monetary contributions towards the property, and interest. There were claims for (3) an inquiry and (4) costs. In the pleading it was claimed that a conversation between the parties about August 2001 constituted a representation that the plaintiff would gain a half interest in the house if he made payments. It was also claimed that in a conversation about the same time, the defendant invited the plaintiff to improve the property, and said that the parties would share the costs. Work was done under this arrangement from August to November 2001; details of the work were alleged extensively. Further allegations relate to arrangements from time to time for paying contributions or treating them as paid when cleaning and other work was done. It was then alleged at [20-21]) that there was a proprietary estoppel arising out of the representations about obtaining a half share and the plaintiff's acting on them. Alternatively at [23-25] that the facts gave rise to a constructive trust or an equitable charge and that the parties had a common intention that the plaintiff would obtain a half interest in the property and had acted in various ways on that intention, and that it was unconscionable for the defendant to retain the benefit of the plaintiff's contributions towards the house; and that the property is impressed either with a trust or with a charge in favour of the plaintiff coextensive with the value of his monetary and non-monetary contributions. 7In this and later forms of the Statement of Claim it was never clear whether the plaintiff's contention was that he should in some way recover the sum total of the value of his contributions in money and in work, or whether he should recover the contribution to the value of the property when sold which was attributable to his contributions. In this respect the plaintiff's claim lacks coherence. It is plain that a payment or part of a payment which goes towards interest does not have the same significance as a contribution which goes to reduce capital of the mortgage debt and thus recognisably to increase the value of the asset when sold. The interest only buys time and the time is used up for the advantage of living in the house. It is also plain that work or materials used to alter a house property have a different impact, less or more, on the value of the house when sold 10 years later than the money value of the contribution when made. At no point in pleading or in argument did the plaintiff's position become clear. 8White J's reasons included observations adverse to the constructive trust claim. The plaintiff by leave filed an Amended Statement of Claim on 9 November 2010. This omitted the claim for a declaration that the defendant held the land on trust for himself and the plaintiff in proportions to be determined, and substituted a claim for a declaration that the land was charged with payment to the plaintiff of "a sum equivalent to the value of the Plaintiff's monetary and/or non-monetary contributions towards the Property and interest". This was incoherent in the same way as before. There were also amendments relating to work carried out by friends and acquaintances of the plaintiff, and under barter arrangements. There were allegations supplementing the claim for proprietary estoppel, and alternatively for an equitable charge. However all allegations claiming a constructive trust or equitable charge were omitted. The defendant filed his Defence to the Amended Statement of Claim on 7 February 2011 with comprehensive traverses of allegations of fact, and raised a number of other matters of defence. 9The plaintiff swore his first affidavit on the facts on 20 May 2011 and dealt extensively with the facts in support of his case; he also replied to the defendant's affidavit. The plaintiff also obtained affidavits of several friends and acquaintances dealing with work that they had done on the house. 10There were many events and communications between the solicitors for the parties in preparation for hearing. The defendant's solicitors asked for further and better particulars on 26 August 2010 and in response the plaintiff's solicitors advised on 22 September 2010 that the plaintiff intended to apply for directions to extend the timetable to accommodate amendments. The Amended Statement of Claim was not filed within the time limited, a draft was served on 26 October 2010 and the Amended Statement of Claim was filed on 9 November 2010 after another extension of time had been obtained. The defendant asked for particulars of the amended document on 3 November 2010 and the plaintiff's solicitors replied on 30 November 2010. There were communications and attendances to obtain further directions extending the timetable. The plaintiff was aware that the defendant wished to sell the property from information in the defendant's evidence and from what was said before White J. The plaintiff's solicitors asked for information about the sale on 8 December 2010 and the defendant's solicitors replied on 14 December 2010 to the effect that contracts had been exchanged and settlement was anticipated on 20 January 2011. The plaintiff's solicitors sought an undertaking to preserve the funds arising from the sale, and on 20 December 2010 offered an undertaking to prosecute the proceedings expeditiously. The defendant declined to give an undertaking, and there has not ever been an application to the court to restrain or control dealings with the proceeds of sale. On 31 January 2011 the Registrar made further timetable directions. These were not complied with, and there were further communications and directions about extending the timetable. The plaintiff's affidavit evidence was forthcoming in May 2011. On 20 June 2011 the timetable was again extended. Various timetable provisions were not complied with. There was no application for discovery. 11On 1 July 2011 the defendant applied for Summary Disposal. There were communications and two directions hearings about preparing the Motion for hearing and identifying the affidavits to be read: the defendant relied on the pleadings and existing affidavits, apart from a formal affidavit, and the plaintiff's solicitors stated on 12 August 2011 that the plaintiff would not serve any evidence on the Notice of Motion. On 19 August 2011 the Registrar appointed 27 October 2011 for hearing the Notice of Motion for Summary Disposal. There were communications about preparation of submissions and bundles of documents. There was no indication that a further amendment was being considered or that discovery was required. 12On 5 October 2011 the plaintiff's solicitors stated that the plaintiff sought consent to file a Further Amended Statement of Claim, and furnished a draft, which of course had not been filed. On 12 October 2011 the defendant's solicitors advised that the amendment would be opposed and complained about non-compliance with directions for filing the plaintiff's submissions. On 13 October 2011 the plaintiff filed the Notice of Motion for leave to amend; this document and the supporting formal affidavit were served only on 26 October 2010, the day before the hearing. The affidavit in support contains the briefest of formal explanations for the application, to the effect that the house was sold about 20 January 2011, as a result of the sale several claims required further amendment, that new counsel had been briefed in August 2011 and "5. As a result of new Counsel being briefed, I received instructions from the Plaintiff to reinstate the Plaintiff's claim based upon constructive trust. 6. The Plaintiff wishes to put on a further affidavit in support of his case. There has been no discovery in the matter to date and the matter has not been listed for hearing." 13White J ordered that the plaintiff pay the costs of the caveat proceedings, but did not make (and there was no occasion for making) a direction for payment of costs forthwith so those costs are payable at the conclusion of the proceedings; UCPR r 42.7(2). 14I heard the motion for leave to amend first, because if it succeeded the defendant's application for Summary Disposal was unlikely to succeed. At the hearing the plaintiff's counsel produced a revised (or fourth) version of the proposed Statement of Claim, and asked me to make further directions consequential on the amendment, fixing a timetable for further evidence and requiring the defendant to give discovery to the plaintiff "... of all documents a. Relating to amounts expended by the Defendant on the improvement and renovation of the house ... over the period August 2001 to December 2010. b. Relating to the purchase and sale of the house by the Defendant." 15In addressing whether there should be an amendment to allow the plaintiff to introduce or reintroduce allegations of a constructive trust or equitable charge I should have regard to several provisions of the Civil Procedure Act 2005 (NSW). Addressing s 64, on first consideration the application to raise again a constructive trust claim again appears to meet the mandatory requirements of s 64(2) that all necessary amendments are to be made for the purpose of determining the real questions depending on the proceedings. However there are strong reasons against concluding that this amendment is a real question depending on the proceedings. When the litigation began in August 2010 there was a constructive trust claim; and an allegation to similar effect in the caveat was the subject of adverse observations by White J. This led, some months later and after extended consideration, to the Amended Statement of Claim in November 2010 from which the constructive trust claim was withdrawn. Thereafter preparation for hearing and forensic decisions continued in the absence of any such claim; there were a number of directions hearings, the defendant verified and filed his defence, the plaintiff prepared and swore his own lengthy affidavit and obtained affidavits from several others, and all this took place on the footing that there was no such claim. The prospect of such a claim was not heard of again until October 2011, late in the preparation for hearing of the Notice of Motion for Summary Disposal, which had been filed on 1 July 2011. It did not come to the surface in two directions hearings or otherwise, until it was first heard of when the plaintiff's solicitors stated that it was under consideration and produced a draft on 5 October 2011. The Notice of Motion and affidavit in support with draft were filed on 13 October 2011 but not served until 26 October 2011. No evidence whatever is offered explaining the time used and the delay, or the choice of a time late in the preparation for hearing of the Notice of Motion, and no evidence is offered of the course of reasoning which led to the claim first being abandoned, then revived; except for a simple attribution to a change of counsel which occurred in August 2011. This is not an explanation at all. If it were, it was an explanation for bringing the amendment forward in August 2011. It is plain that amending the Statement of Claim to omit this claim was a carefully considered step undertaken with deliberation and that forensic advantages must have been foreseen; avoiding the kind of adverse judicial response which it evoked from White J is a ready example. No explanation was offered of whatever circumstances or reasoning led to its revival and merely to attribute it to a change of counsel explained nothing. The claim must have been abandoned earlier for a good reason, I am not told what that was, and I am not told why the claim is now brought back. I find it irresistible to infer that this is a forensic manoeuvre and not a sincere endeavour to bring forward a matter for adjudication, a contrivance to stave off Summary Disposal. In my finding the constructive trust claim has been brought forward again for the improper purpose of giving colour to resistance to the application for Summary Disposal. 16The plaintiff's case when addressed on the limited basis of the pleadings does not appear to be strongly supported; the conversations as alleged are quite barely expressed and it can be expected that there will be issues about whether they formed a reasonable basis on which to act and commit resources. Nothing was said, according to what is in the pleadings, about how much the mortgage debt was, how much the instalments required were, or how long it would take to pay the mortgage off and when the plaintiff could expect to get a half share. It is hard to suppose that in an arrangement which existed in reality these things would not be established, or at least discussed. Overall, the claim is highly contentious. There is also the difficulty of understanding the measure of the advantage it is now said the plaintiff should receive. It is still the case, as White J said, that it could not be said that the plaintiff's case is one of apparent prima facie strength. 17Section 64(2) has effect subject to section 58, which in turn requires reference to ss 56 and 57. The considerations mentioned in s 58(2)(b)(ii) relating to expedition, and to timely interlocutory activity, are strongly adverse to the plaintiff's application. Constructive trust was first alleged, then abandoned after deliberation, then brought back at an inappropriate time when there had been an adverse procedural development. I should also have regard to s 56(3) and the duty of the plaintiff to participate in the processes of the court. In exercise of the discretion conferred by s 64(1) I am not prepared to allow an amendment to reintroduce the constructive trust claim. 18A striking aspect of the application for discovery was that it was not made during the many earlier directions hearings, and was first made without notice before me in the course of the amendment application. The plaintiff's affidavit of 20 May 2011 deals extensively with the work, labour and materials used in 2001, and shows that the plaintiff does not have documents relating to any particular expenses at that time. It is notable that the plaintiff's counsel did not ask for mutual discovery, but asked only that the defendant give discovery. This would be a remarkable arrangement, but what underlay it was that the plaintiff's evidence makes it plain that the plaintiff has nothing to discover. This is, I suppose, not surprising in relation to work done in a period which ended in November 2001, and litigation which was not commenced until August 2010. In view of the time which passed before there was a controversy it would be oppressive to order the defendant to give discovery of such documents, more so in the absence of any mutuality. I also regard it as oppressive to require the defendant to give discovery of documents relating to his purchase of the house in 2001, for similar reasons and also because the details of his purchase, before (as it is alleged) he had any arrangement with the plaintiff, could be no more than marginally relevant. The request for discovery of documents relating to the sale was reasonable, although it would be enough to produce the contract and the settlement sheet to show how the proceeds were disposed of. 19There are factors which support allowing an amendment to allege events which have happened since the Amended Statement of Claim was filed; the defendant has sold the house, collected the proceeds and has not given the plaintiff any accounting or distribution. These are new facts, and unless some such amendment is made, the case made on the Amended Statement of Claim is completely untenable, because the only claim of substance is the claim for a charge over the house and the defendant no longer owns the house. If the claim remains as it is without some such amendment it must be dismissed. Some amendments alleging facts relating to the sale and the defendant's retention of the proceeds, and claiming a charge over the proceeds would be understandable; but that conjectural fifth version of the Statement of Claim was not produced, although the plaintiff's counsel alluded to some such amendment orally in reply. 20The defendant's counsel put the application for Summary Disposal on a number of other bases which I would not uphold; they related to the defendant's contentions on the facts as shown in his affidavit, and in my opinion none of these bases is unarguably correct so as to support Summary Disposal. At the core of decision on the merits is what in fact was said (if anything relevant was said) between the parties in August 2001, and the meaning and effect of the words used; and these are not issues on which Summary Disposal could be ordered. 21I am prepared, subject to terms, to allow the plaintiff to amend so as to allege facts relating to disposition of the property by the defendant, receipt by the defendant of proceeds and the claim to a charge over the proceeds. However, I am prepared to do so only on stringent terms relating to costs. By this stage costs in the litigation must be considerable. The parties had a day in court in August 2010 before White J, the plaintiff was ordered to pay the costs but those costs are not yet payable; enforcement is deferred until disposition of the proceedings. Significant time has passed since then, enough time, with better conduct of the litigation, for the proceedings to have been heard and disposed of. Most of the time lost should be attributed to the conduct of the proceedings on behalf of the plaintiff; time taken to decide to amend and to amend, time taken to produce the plaintiff's affidavit evidence, time taken to produce the plaintiff's next amendment proposal in the face of impending Summary Disposal. 22Costs have not been assessed and paid, though if the proceedings had been well conducted they would probably have been disposed of by now, and costs entitlements would have to be met. The plaintiff has had all the advantages of delay and deferred payment, and the defendant has had all the disadvantage. Costs have been occasioned by the amendments, and upon the plaintiff's present position, the first amendment was wrong and should not have been made. The litigation has been seriously delayed, and a hearing should have been appointed more or less a year ago. If the plaintiff does not obtain amendments, formal as they are, accommodating the claim to the fact that the house has been sold, there must be summary disposition because without some amendment the plaintiff cannot succeed. In the circumstances I am of the view that a limited amendment should be allowed, but only on terms which reverse the disadvantage relating to long pendency of the litigation and unavailability of enforcement of costs ordered in August 2010 and occasioned by amendments since. 23In my opinion I should grant limited leave to amend on terms which require the plaintiff, if he is to take advantage of leave to amend, first to pay a significant sum to the defendant on account of costs incurred and potentially to be incurred in these proceedings. The defendant's counsel contended that if there was to be an amendment it should be on terms that the plaintiff pay all the defendant's costs of the proceedings to date, and referred me to a number of authorities where this course has been taken or considered. I have not followed that course but have decided to require an interim payment on account of costs, without prejudice to entitlements to costs when ascertained after the litigation is concluded. I have not attempted to assess the defendant's costs, but the amount which I will require the plaintiff to pay is, it is clear, less than the defendant has incurred in the conduct of the litigation so far, both the costs of the caveat application, the first amendment and the present application which the plaintiff will be ordered to pay, and also the general costs of conduct of the proceedings. If the litigation is to go off in a new direction, the defendant should be relieved of a significant part of the burden thus far imposed on him. 24My orders are: Upon the plaintiff's Notice of Motion of 13 October 2011