Hannaford v Commonwealth Bank of Australia

Judgment 1BEAZLEY P: I have had the advantage of reading the reasons of Tobias AJA in draft. I agree with his Honour's reasons and with the orders he proposes. 2EMMETT JA: This appeal arises out of a guarantee given by the appellant, Ms Susan Hannaford, to the respondent, the Commonwealth Bank of Australia (the Bank), in respect of the obligations to the Bank of Susan Hannaford Pty Ltd (the Company). On 22 August 2013, Campbell J directed the entry of judgment in the sum of $4,651,041.90 in favour of the Bank against Ms Hannaford, in her capacity as guarantor of the obligations of the Company. By notice of appeal filed on 30 October 2013, Ms Hannaford appeals from that judgment, as well as from another judgment of Campbell J on 22 August 2013 and a judgment of Davies J on 23 May 2013. The substance of Ms Hannaford's complaint is that Davies J refused leave to her to amend her defence and cross-claim. 3Davies J concluded that the application to amend the defence and cross-claim should be refused having regard to the matters listed in s 58(2)(b) of the Civil Procedure Act 2005 (NSW) (the Procedure Act). First, his Honour concluded that no adequate explanation had been provided for the delay in making the amendment. Second, his Honour concluded that Ms Hannaford could not be said to have been unaware of rights that she may have under the Contracts Review Act 1980 (NSW) that she sought to raise by the amendments. Third, his Honour had regard to the dilatory way in which the defendants, including Ms Hannaford, had acted during the course of the proceedings with particular reference to the failure to serve the proposed amended cross-claim and amended defence, as well as the repeated failures to serve evidence in accordance with court directions. Fourth, his Honour had regard to the fact that the proposed amended cross-claim would be the fifth attempt to raise the matters sought to be raised by Ms Hannaford and that the limit had already well and truly been reached to justify a refusal of leave. Fifth, his Honour considered that allowing the amended pleadings would have the effect that the proceedings would take at least double the length of time that was already needed. Sixth, his Honour had concern as to the bona fides of the claim being sought to be made. Therefore, taking into account the various matters to which his Honour had referred, his Honour concluded that to permit amendment would be contrary to the provisions of the Procedure Act and the Bank would suffer actual prejudice by reason of the delay and the increase in costs of a longer hearing. 4In the light of the refusal to amend, the issues before Campbell J were, in a sense, straight forward. While the appeal is brought from the judgment ordered by Campbell J, the substantive ground involved impugning the decision of Davies J. On an appeal from a final order, an appellate court can correct any interlocutory order that affects the final result (see Gerlach v Clifton Bricks Pty Ltd [2002] HCA 22; 209 CLR 478 at [6]). Hence, any error in the exercise of discretion by Davies J would constitute a ground for setting aside the final order made by Campbell J. 5The error that Ms Hannaford alleged on the part of Campbell J in his second judgment on 22 August 2013 was in his Honour's rejecting an application for an adjournment or stay of her proceedings. That ground, in addition to the grounds based on the alleged erroneous exercise of discretion by Davies J, involved establishing that the decisions were made on the basis of a wrong principle, or by failing to take account of relevant considerations or by taking into account irrelevant considerations (see House v The King [1936] HCA 40; 55 CLR 499 at 504-505). 6I have had the considerable advantage of reading in draft form the proposed reasons of Tobias AJA. I agree with his Honour, for the reasons proposed by him, that the appeal should be dismissed with costs. 7TOBIAS AJA: This appeal arises out of three decisions of single judges of the Common Law Division of the Court. The first, and most significant, is that of Davies J who on 23 May 2013 dismissed a notice of motion filed on behalf of the appellant on 12 April 2013 seeking to amend her defence to the respondent's claim under a guarantee (the guarantee) allegedly entered into by her in 2004 to secure the obligation of Susan Hannaford Pty Limited (the Company) in respect of a loan agreement between it and the respondent: Commonwealth Bank of Australia v Susan Hannaford Pty Ltd (No 2) [2013] NSWSC 574. 8The second is the decision of Campbell J of 22 August 2013 rejecting an application by the appellant for an adjournment or stay of the respondent's proceedings seeking to enforce the guarantee (the proceedings) which had been fixed for final hearing on that day: Commonwealth Bank of Australia v Susan Hannaford Pty Ltd (No 4) [2013] NSWSC 1174. 9The third is also that of Campbell J whereby, following the final hearing of the proceedings on 22 August 2013, he entered judgment in favour of the respondent against the appellant on the guarantee in the sum of $4,651,041.90: Commonwealth Bank of Australia v Susan Hannaford Pty Ltd (No 5) [2013] NSWSC 1175. 10Although a summons for leave to appeal from the decision of Davies J (it being an interlocutory decision) was filed on 21 August 2013, it was common ground that no such leave is now required given the final judgment of Campbell J in the proceedings on 22 August 2013: Gerlach v Clifton Bricks Pty Ltd [2002] HCA 22; (2002) 209 CLR 478 at [6]-[7]; Michael Wilson & Partners Ltd v Nicholls [2011] HCA 48; (2011) 244 CLR 427 at [78] where it was noted that in general, any interlocutory order which affects the final result can be challenged in an appeal against final judgment without, in effect, the necessity to pursue an application for leave to appeal from that interlocutory decision. 11In the present case, the appellant seeks to challenge all three decisions on the bases that first, Davies J's discretion in refusing to permit the appellant to amend her defence miscarried; secondly, that Campbell J's discretion to refuse an adjournment or stay of the final hearing of the proceedings also miscarried; and, thirdly, that as a consequence of each of those miscarriages, Campbell J's decision to enter judgment against the appellant in the absence of the amended defence rejected by Davies J should be set aside and that there should be a retrial in which the appellant should be permitted to rely upon the amended defence so rejected. It accordingly follows that the essential issue for determination on the appeal concerns the decision of Davies J. If it be held that his Honour's exercise of discretion in rejecting the amended defence miscarried, it was accepted that the final hearing before Campbell J would have miscarried (notwithstanding that there is no separate challenge to his Honour's findings on that occasion) and the judgment he entered should be set aside. In those circumstances whether or not Campbell J erred in exercising his discretion to refuse the adjournment of that hearing would become academic. 12Given these grounds of appeal, it will be necessary to first, state the principles to be applied by this Court when considering an appeal against a discretionary decision and, secondly, state and analyse in some detail the pleadings and evidence before each of their Honours. 13The appellant accepted that appellate intervention with respect to the challenged decisions will be warranted upon the principles stated in House v the King [1936] HCA 40; (1936) 55 CLR 499 at 504-505. Thus she ultimately abandoned her original grounds of appeal and, with the Court's leave, has filed an amended notice of appeal in which she alleges, with regard to the interlocutory decisions of Davies J and Campbell J, that each erred in the exercise of their discretion by: "(a) taking into account material errors of fact; (b) failing to take into account or giving insufficient weight to relevant matters; (c) arriving at a result so unreasonable or unjust as to suggest that one of the foregoing categories of error had occurred, even though the error in question may not have expressly appeared on the face of the reasoning."

The Relevant Legal Principles to be Applied by the Court of Appeal 14Each of the interlocutory decisions of Davies J and Campbell J that are under direct challenge was a discretionary decision on a matter of practice and procedure. In Micallef v ICI Australia Operations Pty Ltd [2001] NSWCA 274 at [45] Heydon JA, with the agreement of Sheller JA and Studdert AJA, applied the principles of House v The King at 504-505 and emphasised that a discretionary judgment on a matter of practice and procedure can only be overturned in limited circumstances. In particular, any attack on decisions of that character must fail unless it can be demonstrated that the decision maker: "(a) made an error of legal principle, (b) made a material error of fact, (c) took into account some irrelevant matter, (d) failed to take into account, or gave insufficient weight to, some relevant matter, or (e) arrived at a result so unreasonable or unjust as to suggest that one of the foregoing categories of error had occurred, even though the error in question did not explicitly appear on the face of the reasoning." 15It will be apparent that the appellant's amended grounds of appeal (at [13] above) relevantly mirror the foregoing statement of principle. 16However, that statement of principle now has to be considered in the light of the relevant provisions of the Civil Procedure Act 2005 (NSW) (CP Act). That consideration is conveniently to be found in the recent judgment of Barrett JA, with whom Ward and Leeming JJA agreed, in Kelly v Mina [2014] NSWCA 9. His Honour stated the relevant principles and their application to a motion for leave to amend a defence and cross-claim, in the following terms: "[44] The appellant says that the judge's decision to refuse leave to amend affected the result of the trial in a fundamentally adverse way entailing miscarriage of justice that requires correction of the interlocutory decision: Gerlach v Clifton Bricks Pty Ltd [2002] HCA 22; (2002) 209 CLR 478 at [4] - [8]. [45] The amendment application was governed by s 64 of the Civil Procedure Act 2005 which, in subsection (1), provides that, at any stage of proceedings, the court may order that any document in the proceedings be amended, or that leave be granted to a party to amend any document in the proceedings. Section 64(2) then provides: 'Subject to section 58, all necessary amendments are to be made for the purpose of determining the real questions raised by or otherwise depending on the proceedings, correcting any defect or error in the proceedings and avoiding multiplicity of proceedings.' [46] The judge's decision was obviously discretionary, so that appellate intervention will be warranted only upon the principles stated in House v The King [1936] HCA 40; (1936) 55 CLR 499 at 505. The fact that the decision was a decision on a matter of practice and procedure means that this Court should be slow to interfere and ought not to reverse the judge's decision unless convinced that it is plainly erroneous: Adam P Brown Male Fashions Pty Ltd v Philip Morris Inc [1981] HCA 39; (1981) 148 CLR 170. As Bryson JA said in State of New South Wales v Mulcahy [2006] NSWCA 303 at [3], 'such appeals are, appropriately, kept on a tight rein'. [47] Particularly in light of the opening words of s 64(2), it is not controversial that the provisions in Part 6 Division 1 of the Civil Procedure Act were binding on the primary judge and that, in accordance with s 58, his Honour was bound to seek to act in accordance with the dictates of justice and, in so doing, to have regard to s 56 concerning the 'overriding purpose' of the Act and rules of court in their application to civil proceedings; also that, in addressing the amendment application in the particular statutory context, his Honour was required to take into account a combination of factors identified by the High Court in Aon Risk Services Australia Pty Ltd v Australian National University [2009] HCA 27; (2009) 239 CLR 175 and usefully summarised by Vickery J in Namberry Craft Pty Ltd v Watson [2011] VSC 136 (at [38]) as follows: '(a) Whether there will be substantial delay caused by the amendment; (b) The extent of wasted costs that will be incurred; (c) Whether there is an irreparable element of unfair prejudice caused by the amendment, arising, for example, by inconvenience and stress caused to individuals or inordinate pressures placed upon corporations, which cannot be adequately compensated for, whatever costs may be awarded; (d) Concerns of case management arising from the stage in the proceeding when the amendment is sought, including the fact that the time of the court is a publicly funded resource, and whether the grant of the amendment will result in inefficiencies arising from the vacation or adjournment of trials; (e) Whether the grant of the amendment will lessen public confidence in the judicial system; and (f) Whether a satisfactory explanation has been given for seeking the amendment at the stage when it is sought.' [48] As this Court has emphasised more than once, Part 6 Division 1 of the Civil Procedure Act made substantive and important changes to the law so that considerations of promptness and efficiency in the conduct of civil litigation are afforded a new and special importance which may sometimes provoke a sense of injustice in a party who has failed to proceed with despatch." (Citations omitted.)

The Legal Principles Applied by Davies J on the Application for Leave to Amend 17Davies J set out the legal principles applicable to an application to amend a defence at [65]-[73] of his reasons. At [65] his Honour recorded s 64(2) of the CP Act. He noted that the application to amend was subject to s 58 of the CP Act and that s 58(1)(a)(i) makes express reference to orders for amendment of documents and provides that the Court must seek to act in accordance with the dictates of justice. His Honour then set out s 58(2) which requires the Court to have regard to the provisions of ss 56 and 57 and also to the following matters which are considered relevant, namely: "(ii) the degree of expedition with which the respective parties have approached the proceedings, including the degree to which they have been timely in their interlocutory activities, (iii) the degree to which any lack of expedition in approaching the proceedings has arisen from circumstances beyond the control of the respective parties, (iv) the degree to which the respective parties have fulfilled their duties under section 56(3), ... (vi) the degree of injustice that would be suffered by the respective parties as a consequence of any order or direction." 18At [67] his Honour noted that many of the matters listed in s 58(2) were relevant to a consideration of the application before him. He also noted that it was mandatory for the Court to have regard to ss 56 and 57. Relevantly, s 56(1) provides that the overriding purpose of the CP Act and the rules of court (Rules) is to facilitate the just, quick and cheap resolution of the real issues in the proceedings. Section 56(2) makes it mandatory for the Court to give effect to that overriding purpose when exercising any power given to it by or under the CP Act or Rules. 19Section 57(1) is in the following terms: "For the purpose of furthering the overriding purpose referred to in section 56(1), proceedings in any court are to be managed having regard to the following objects: (a) the just determination of the proceedings, (b) the efficient disposal of the business of the Court, (c) the efficient use of available judicial and administrative resources, (d) the timely disposal of the proceedings, and all other proceedings in the court, at a cost affordable by the respective parties." Section 57(2) requires the practice and procedure of the Court to be so regulated as best to ensure the attainment of those objects. 20Davies J then referred (at [68]) to the decision of the High Court in Aon Risk Services Australia Ltd v Australian National University [2009] HCA 27; (2009) 239 CLR 175, noting that even before Aon Risk this Court in Dennis v Australian Broadcasting Corporation [2008] NSWCA 37 had said (at [29]) that the duty imposed by the CP Act and particularly s 56: "... constitutes a significant qualification of the power to grant leave to amend a pleading under s 64 of the Civil Procedure Act." 21Of particular relevance to his Honour's decision were his following observations at [72]-[73] of his reasons: "[72] A further significant point that emerges from Aon Risk is the need for an explanation for the delay in raising the matter in respect of which amendment is sought. The joint judgment said at [103]: 'Not only will [the parties seeking the 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.' [73] In my opinion, that is likely to mean that the explanation for delay will in most cases not be regarded as subsidiary to showing the bona fides of the proposed amendment." 22I turn now to the relevant factual material.

Procedural Background 23On or about 29 April 2004 pursuant to a loan agreement entered into by the Company (the loan agreement), the respondent lent $5.5 million (the loan) to the Company partly to refinance a loan of $4 million owing to Perpetual Nominees Limited. At the date of the loan, the appellant and her daughter, Marquessa Hannaford, were directors of the Company. Without intending any disrespect, for ease of reference I shall refer to Marquessa Hannaford by her first name. At that time, being on or about 29 April 2004, Marquessa had just turned 18 years of age. 24The loan was secured by a mortgage over a property at Balgowlah Heights (the property) which was the home of the appellant and her daughter. It was also secured by guarantees given by each of them. 25The Company defaulted in the repayment of the loan whereupon on 4 January 2010 the respondent instituted the proceedings by the filing of a Statement of Claim in the Supreme Court seeking an order for possession of the property and for judgment against the Company, Marquessa and the appellant (together, the defendants) for the amount outstanding on the loan which, with interest, was close to $6 million. Relevantly, paragraph 11 of the Statement of Claim pleaded that by way of guarantee the appellant unconditionally guaranteed the punctual payment to the respondent of all money owing at any time by the Company to the respondent in relation to the loan agreement. Paragraph 12 alleged that the respondent had made demand for payment of the relevant amount from both the appellant and Marquessa. On 22 March 2010, separate defences were filed on behalf of the Company and the appellant on the one hand, and Marquessa on the other. Both are in identical terms and I will refer to both collectively as the First Defence. The First Defence did not put in issue the loan, the mortgage or the fact that there was default in repayment. Accordingly, on 1 June 2011 the respondent filed a notice of motion seeking a money judgment against the defendants and, alternatively, judgment against the Company for possession of the property. 26On 28 September 2011 that part of the notice of motion seeking possession of the property was heard by Hidden J who, on 24 August 2012, held that the respondent was entitled to possession of the property and made orders accordingly: Commonwealth Bank of Australia v Susan Hannaford Pty Limited [2012] NSWSC 1094. In so doing his Honour rejected a defence raised by the defendants to the effect that the respondent had entered into what was referred to as a "switching agreement" by which the requirement for monthly payments of principal of the loan and interest was varied to monthly payments of interest only. It was alleged that in breach of that agreement the respondent continued to apply payments to the principal of the loan. Various other defences based upon the switching agreement were pleaded and rejected. Although the switching agreement defence was pleaded by both Marquessa and the appellant in their original and amended defences to the respondent's claim under the guarantee, it has now been abandoned. 27The Company is now in liquidation. Furthermore, by 7 March 2013 the respondent had discontinued the proceedings against Marquessa. However, it will be necessary to refer to the defences filed by Marquessa when tracing the history of those filed by the appellant including that rejected by Davies J. In this respect, it is those parts of the defences advanced by Marquessa and the appellant seeking relief under the Contracts Review Act 1980 (NSW) (the CR Act) from their obligations under the guarantees that requires particular consideration, as the appellant's case is that her reliance on the CR Act constituted the core of her defence to the respondent's claim against her and that Davies J should have permitted the amendments to her pleadings to allow that defence to be properly ventilated.

(a) The First Defence 28As noted above, the First Defence to the Statement of Claim was filed on 22 March 2010. Notwithstanding the submission on the appeal that the First Defence appeared not to have been drafted with legal assistance, it was verified before Mr A Kumar of counsel who also provided the necessary certificate under s 347 of the Legal Profession Act 2004 (NSW). It would be reasonable to infer that Mr Kumar was, at very least, aware of its contents and regarded them as sufficient to justify his certificate. Furthermore, although the defendants purported to be acting for themselves, at that time Rockliffs Solicitors (Rockliffs) were on the record as solicitors for the defendants. 29Paragraphs 10-11 of the Statement of Claim pleaded the guarantee by Marquessa (paragraph 10) and by the appellant (paragraph 11). Paragraphs 12-14 pleaded demands under the guarantees and failure to pay. Paragraph 9 of the First Defence denied paragraphs 10-14 of the Statement of Claim. It then continued: "In reply to paragraphs 10-14 of the Statement of Claim, the defendants say that the plaintiffs [sic] is seeking payments in breach of the agreement between the plaintiff and defendant and on erroneous basis. The defendants say that these demands are not made in accordance with the varied agreement and thus is not due and payable." 30At [15] of his reasons, Davies J expressed the view that the reference in paragraph 9 of the First Defence to "the agreement" was a reference to the switching agreement. Although this was challenged by the appellant on the hearing of the appeal, in my view his Honour's understanding of the reference to "the agreement" in that paragraph was clearly correct. That interpretation is consistent with the claim made in the First Defence that the switching agreement "varied" or "amended" the loan agreement, and with other references in the First Defence to the "agreement" and "varied agreement" on the one hand, and to the "loan" or "loan agreement" on the other. Accordingly, paragraph 9 of the First Defence is of no assistance to the appellant's assertion that the First Defence pleaded the CR Act. 31Paragraph 12 of the First Defence then pleaded as follows: "The advance is in respect of home loan. The defendants deny the monies claimed by the statement of claim is payable, in the alternative, the defendants say that the agreement is unjust and seek that pursuant to s 7, 8 and 9 of the Contract Review Act 1980 the agreement be voided and/or varied on just terms. The defendants further say that the loan is unjust, unfair and unconscionable under Consumer Credit (New South Wales) Act 1995, TPA and ASIC Act and the general law." 32Again, it is not clear as to which "agreement" is being referred to. At [13] of his reasons, Davies J considered that the context suggested that it was the loan agreement that was said to be unjust, although his Honour acknowledged that s 6(1) of the CR Act would have precluded relief being granted to the Company in respect of that agreement. When one reads the First Defence as a whole, it is apparent that there is substance in his Honour's view. Nowhere in that pleading is there any reference to a guarantee: only to an "agreement", "varied agreement", "variation agreement" or "varied contract". It seems to me, as it did to Davies J, that paragraph 12 was not directed to the guarantees but only to the loan agreement. Of course, if the loan agreement was unjust and was varied (on some basis other than the CR Act), then the amount recoverable under the guarantees of Marquessa and the appellant would reflect any variation to its terms. 33Paragraph 16 of the First Defence then alleged that the respondent's conduct was unconscionable under s 51AA of the Trade Practices Act 1974 (Cth) or certain sections of the Australian Securities and Investments Commission Act 2001 (Cth) as well as under the general law. Particulars of that allegation were then pleaded of which the following is presently relevant: "The plaintiff failed to allow an opportunity for the defendants to have legal advice, failed to provide the defendants an opportunity to read the documents in the circumstances where the bank changes the terms at will and unconscionably and in breach of TPA and in breach of Contracts Review Act and the Credit Act and made in the contravention of the law." 34At [13] of his reasons, Davies J observed that there was no further pleading regarding the CR Act; nor were any particulars or details given of how "the agreement" was said to be unjust. His Honour made no reference to either paragraph 16 of the First Defence or the particulars referred to in the preceding paragraph. This was said by the appellant to constitute a mistake of fact on his Honour's part. 35The allegations in the particulars to paragraph 16 that the defendants were not given the opportunity of obtaining legal advice or of reading the documentation would be relevant to any claim under the CR Act if pleaded but in fact appear to be directed to breaches of different legislation (notwithstanding the reference to the CR Act in the particulars). Furthermore, as I have indicated (at [32] above), it is difficult to discern from the First Defence that any of the allegations contained therein were pleaded other than to the loan agreement. 36At [13] his Honour correctly drew a distinction between a pleading and particulars. Particulars cannot take the place of a pleading per se; nor can particulars cure a bad pleading: Dymocks Book Arcade Pty Ltd v Capral Ltd (formerly Alcan Australia Ltd) [2011] NSWSC 1423 at [27]-[30] (Ward J) and cases cited there. Paragraph 16 of the First Defence was a pleading and was not directed to the CR Act. The latter was referred to only in the particulars. The function of particulars is not to expand the issues defined by the pleadings, but to provide sufficient detail as to the cause of action as to put the opposing party on notice as to the case to be met: Goldsmith v Sandilands [2002] HCA 31; 76 ALJR 1024 at [2] (Gleeson CJ) citing Bruce v Odhams Press Ltd [1936] 1 KB 697 at 712-713 (Scott LJ). In these circumstances I would not accept the appellant's submission that [13] of Davies J's reasons contained a relevant mistake of fact sufficient to have caused his Honour's discretion to miscarry.

(b) The First Amended Defence 37The proceedings could not be advanced after the filing of the First Defence due to the referral of the dispute between the parties to the Financial Ombudsman Service, which did not complete its investigation of the matter until March or April 2011 with no alteration to their contractual arrangements. In the meantime, Rockliffs had ceased to act for the defendants. However, according to Davies J (at [19]), although there had been no solicitor on the record for the defendants since November 2010, on each occasion when the matter was mentioned before the Registrar they had counsel appearing, presumably by direct access retainer. However, as will appear, it was the delay on the part of the appellant between April 2011 and May 2013, some two years, in seeking to amend her defence to plead a properly particularised claim based on the CR Act, that was her undoing before Davies J. 38On 17 May 2011 the defendants filed a notice of motion seeking leave to cross-claim against the respondent. That application was supported by an affidavit sworn by the appellant on 17 May 2011. As noted by Davies J at [23] of his reasons, on 19 May 2011 he directed that that notice of motion be returnable before him on 17 June 2011. At the same time he directed, at the respondent's request, that it file and serve a notice of motion for summary judgment returnable on the same day. His Honour also directed that the defendants were to serve any affidavits in response to the summary judgment application by 14 June 2011. On that date, as observed by his Honour at [24] of his reasons, the appellant swore an affidavit of some 69 paragraphs containing 25 annexures (the 14 June affidavit). It will be necessary to refer later in further detail to that affidavit given the allegations the appellant sought to make in the amended defence rejected by Davies J (Draft Second Amended Defence). 39It is sufficient to note at this point that at [26] Davies J remarked that the majority of the 14 June affidavit was concerned with the switching agreement and that the sole reference in the affidavit to the CR Act was in paragraph 23 which simply asserted that as the loan was wholly or predominantly for personal, domestic and household purposes, the CR Act was applicable to "the agreement", an obvious reference to the loan agreement. At [27] his Honour observed that no facts or particulars relevant to the CR Act or to any unjustness in relation to either the loan agreement or the appellant's guarantee was set out in the affidavit. However, he noted "passing references" to the guarantee at paragraphs 20 and 24 of the affidavit. Importantly, his Honour observed (correctly) that nowhere was it suggested that the appellant did not know that she had executed a guarantee. I shall return to the appellant's attack on [27] below when dealing with the rejected Draft Second Amended Defence. 40On 15 June 2011 the defendants filed a notice of motion seeking leave pursuant to r 19.5 of the Uniform Civil Procedure Rules 2005 (NSW) to amend their defences. On 29 June 2011 a Notice of Appointment of Solicitor for the defendants was filed by Belgrave Lawyers. Those solicitors wrongly (in that they did not have leave) filed in the Registry a cross-claim (the substance of which later became the First Cross-Claim) on behalf of the defendants which, inter alia, pleaded under the heading "Unjust Contract/Contract Review Act 1980" the following: "36. Marquessa Hannaford is the second cross-claimant in this proceeding. 37. At the time of the loan origination with second cross-claimant, Marquessa Hannaford was a teenager of 16 years old. 38. The second cross-claimant was induced to sign the guarantor documents without any understanding of the documents being signed. 39. In breach of the Contract Review Act the second cross-claimant was not provided legal advice in relation to the mortgage documents or guarantor documents and was coerced by the cross-defendant [the respondent] into signing the documents without independent legal advice." 41Davies J observed at [33] that the relief claimed did not include any relief under the CR Act. Furthermore, it is readily apparent that paragraphs 36-39 of the cross-claim related only to Marquessa. No similar claim was made by the appellant. 42At [35] and [36] of his reasons, Davies J noted that although a motion to amend the defence was filed on 15 June 2011, no form of proposed defence or any affidavit in support of the motion was served and it was not until the night before 29 July 2011, when the matter came back before his Honour, that a proposed amended defence was served on the respondent's solicitor. His Honour then stood the motions over to 5 August 2011. At that hearing, Davies J directed that the cross-claim filed without leave be removed from the Court file and that a further draft amended defence and draft cross-claim be served by 19 August 2011 on the respondent's solicitors. He stood the motions over part heard to 2 September 2011. 43Amended draft pleadings were served and a further hearing took place on that date. The pleadings were found to be defective. His Honour then made orders that the defendants were to serve a further draft defence and further draft cross-claim by 9 September 2011. He stood the motions over part heard to 16 September 2011. On that date a further hearing took place and his Honour delivered judgment granting leave to the defendants to file further draft pleadings with certain amendments that he specified. 44An amended defence (First Amended Defence) and cross-claim (First Cross-Claim) were filed on 21 September 2011. At [88] of his reasons, Davies J set out paragraph 3 of the First Cross-Claim, observing that it had also appeared in earlier forms of that document. That paragraph was as follows: "Pursuant to the loan agreement the [Company] was the mortgagor and [the respondent] was the mortgagee and [Marquessa] and [the appellant] signed separate guarantee contracts purportedly guaranteeing the [Company's] obligations under the loan agreement." 45Under the heading "Unjust Contract/Contracts Review Act 1980", paragraph 7A of the First Amended Defence was pleaded in reply to paragraph 10 of the Statement of Claim, which pleaded Marquessa's guarantee. It alleged that the guarantee was unjust having regard to the circumstances at the time it was entered into and that she sought, pursuant to ss 7, 8 and 9 of the CR Act, that the guarantee be declared unjust and be voided. The pleading then set out a number of particulars including that at the time of entering into the guarantee Marquessa was less than 18 years of age and that she did not have independent legal advice; nor was she informed by the respondent of a need for such advice. 46Marquessa then relevantly alleged that she signed the guarantee in circumstances where the respondent did not inform her of the need for independent legal advice; that she did not understand and/or appreciate that what she was signing or getting into; that the effect of the documents she was signing was not properly explained to her by the respondent; that the terms of the loan and guarantee were not negotiable and that there was material inequality of bargaining power between her and the respondent. In effect, these allegations relied upon the matters referred to in s 9(2)(a), (c), (e(i)), (h), (i) and (j) of the CR Act. 47Significantly, as pointed out by Davies J at [40] of his reasons, the various drafts of the pleadings put forward during the three days of hearing of the motions and in the pleadings ultimately filed on 21 September 2011, the only claim in relation to the CR Act was by Marquessa. There was no such claim by the appellant notwithstanding that both she and Marquessa were represented at the hearing by Mr Mahmoud Mandoh who had been their solicitor since about July 2011.

(c) The appellant seeks leave to file the Draft Second Amended Defence and Draft Amended Cross-Claim 48The appellant submitted that his Honour was in error when at [40] he stated that no claim under the CR Act had been pleaded by her in the various drafts of pleadings and those ultimately filed on 21 September 2011. She also relied on a draft defence emailed to his Honour's associate (at his request) on 4 August 2011. However, that draft, relevantly, merely repeated paragraphs 9, 12 and 16 of the First Defence. For reasons already referred to, his Honour was not mistaken in what he said at [40] which was directed to the absence of any CR Act defence to the appellant's guarantee. 49As I have noted, the matter proceeded to summary judgment for possession of the property before Hidden J on 28 September 2011. Having made an order for possession on 24 August 2012, on 5 September 2012 his Honour directed that as to the balance of the relief sought in the Statement of Claim (relating in particular to the claims under the guarantees), the defendants were to file and serve any further evidence by 28 September 2012. That direction was not complied with. An affidavit was filed by Marquessa on 4 December 2012 but none was filed by the appellant. When the matter came before Davies J on 7 February 2013 he directed the defendants to serve all affidavits on which they intended to rely by 1 March 2013. Again, no further evidence was filed by that date on behalf of the appellant. 50However, when the matter came before his Honour on 12 April 2013 Mr Mandoh sought to hand up an affidavit of the appellant sworn 11 April 2013 (the 11 April affidavit) indicating that he would seek leave to amend the First Cross-Claim and the First Amended Defence filed on the appellant's behalf as she wished to raise a defence under the CR Act. His Honour directed Mr Mandoh to file a notice of motion seeking leave to further amend the appellant's First Amended Defence and First Cross-Claim, which he did on the same day. 51When that motion came on for hearing before his Honour on 10 May 2013 Mr Mandoh sought not only to read the 11 April affidavit but also a further affidavit by the appellant of 9 May 2013 (the 9 May affidavit). This affidavit had been handed to counsel for the respondent for the first time after the hearing commenced, notwithstanding that his Honour had directed any affidavits to be relied upon by the appellant to be served by 1 March 2013. The only explanation for these delays was that Mr Mandoh had only received instructions from the appellant with regard to the relevant documents on 9 May. At [53] of his reasons, Davies J noted that when such instructions were sought was not disclosed; nor was any other explanation provided by the appellant for the late provision of instructions to her solicitor. 52At [54] of his reasons his Honour, in reference to the appellant's two affidavits of 11 April and 9 May, observed as follows: "The matters contained in Susan Hannaford's affidavits concerning the basis for any claim under the Contracts Review Act had never been raised in any affidavits filed or served earlier in the proceedings nor in any form of the pleading put forward. In summary in the affidavits the [appellant] said that at the time she signed some loan documents with the Bank she did not understand that she was signing a personal guarantee. She simply understood it was a refinance of the Company's home loan. She said she felt pressured to sign the documents, that she did not receive any legal advice and that the Bank's representative said that she did not need legal advice because the documents were standard company mortgage documents that were not negotiable." (Emphasis added.) 53At [55] and [57] his Honour noted that in neither of her affidavits did the appellant give any explanation for not having raised the CR Act defence at an earlier time. Notwithstanding a letter from her medical practitioner referring to her heart condition and noting that she was unfit for work for the period 6 March 2013 to 9 April 2013, his Honour recorded that that report did not assist in providing an explanation for her failure to swear affidavits in accordance with his directions or for her failure to raise what he referred to as a "new claim" any time during the previous two years. As noted at [37] above, that two year period commenced in or about April 2011 when the investigations of the Financial Ombudsman Service were completed. 54In relation to the delay, Mr Mandoh filed an affidavit sworn 9 May 2013, the relevant parts of which his Honour set out in full at [60] of his reasons. In that affidavit Mr Mandoh noted that he had been dealing with Marquessa who asserted that she was providing instructions on behalf of the defendants including her mother. He deposed that he did not have any direct contact with the appellant as he was told by Marquessa that she was overseas and unwell. She was in fact living in California but appeared to have returned to Australia from time to time. Mr Mandoh further deposed that he had indicated on a number of occasions to Marquessa that he could not continue to act for the appellant if he could not get instructions directly from her. Paragraph 6 of his affidavit then stated: "On or about 8 April 2013, I received a telephone call from Susan from the United States of America. She stated to me words to the following effect, that at the time of signing the loan documents: (a) she was unaware that there was a personal guarantee in the loan documents that she signed with the plaintiff's representatives; (b) she had received no legal advice whatsoever from any legal practitioner in relation to her rights and obligations as a personal guarantor; (c) the guarantee that was in the documents was not explained to her; (d) she did not understand what a personal guarantee was or what it's (sic) implications were; (e) she believed that the Balgowlah Heights property, 30A Beatty Street, Balgowlah Heights was the security for the company refinance." 55At [87] of his reasons, on the issue of the bona fides of the appellant's claim based on the CR Act, Davies J recorded paragraphs 6, 9 and 10 of the 11 April affidavit in which she swore that she did not recall signing a guarantee; that the loan documents were produced by the respondent's representative but were not explained to her; and that she did not understand that there was a personal guarantee involved. Further she was certain that she did not receive any legal advice from any solicitor in relation to the guarantee (which was correct) and that the respondent's representative stated that she did not need legal advice to sign standard company mortgage documents the terms of which were not negotiable. She repeated that she had no idea that she was signing a personal guarantee, let alone one for $5.5 million. She alleged that the documents were bundled together in a pile on her kitchen/dining room table with the respondent's representative pointing out where her signature was required at pre-marked locations with "sign here" post-its. She was not given any opportunity to read the individual pages one by one. 56Although Davies J purported (at [54]) to summarise the contents of the two affidavits of the appellant relied upon and, as I have indicated, recorded various paragraphs of her 11 April affidavit, his Honour did not refer to those paragraphs of the 9 May affidavit upon which, as will be seen, the Draft Second Amended Defence and Draft Amended Cross-Claim that his Honour went on to reject was, to a significant extent, reliant. 57At paragraph 10 of the 9 May affidavit, and consistent with the content of her earlier affidavit of 11 April, the appellant deposed that the respondent instructed her and her daughter to sign various documents referred to as "standard non-negotiable mortgage documents" without legal advice and without explanation as to the seriousness of the transaction or documents signed. At paragraph 15 she set out part of a letter, a copy of which was annexed to her affidavit, from Endeavour Law dated 30 April 2004 in which that firm stated that they did not act for the appellant for the purpose of advising her in relation to the loan facility. That letter was addressed to the Company care of the appellant at an address in Los Angeles. It indicated that it was enclosing a series of documents including "Deed of Guarantee for Susan Louise Hannaford and Marquessa Hannaford". 58At paragraph 16 she set out the relevant part of a letter on the respondent's letterhead dated 3 May 2004 (the 3 May letter) addressed to the directors of the Company at the address of the property and purportedly signed by a Mr Steve Kiproff, described as "Mobile Banking Team CBD". The Court was informed by counsel for the respondent that Mr Kiproff was still employed by it. 59The 3 May letter commenced "Dear Mrs Hannaford and Miss Hannaford". It then referred to recent discussions with a solicitor from Endeavour Law. It stated, consistent with Endeavour Law's letter of 30 April 2004, that the respondent had been informed by that solicitor that it was not his duty to advise either the appellant or her daughter on whether or not to sign the mortgage related documents. Importantly, the letter continued in the following terms: "It is not necessary for you or your daughter to have legal advice or a solicitor present for the signing of the mortgage documents as one of our mobile bankers will assist you [to] complete this process. We have not yet received but will require the following forms to complete our branch record. As stated a personal guarantee for the home loan for you and your daughter will not be required." (Emphasis added.) 60At paragraph 17 of the 9 May affidavit, the appellant noted that a Consumer Credit Contract (Contract) was entered into and signed on behalf of the respondent, and by Marquessa and herself on 3 May 2004. She asserted that at all times the respondent represented that personal guarantees were not required. She annexed a copy of the Contract to her affidavit. That document, each page of which appeared to have been signed in the bottom right hand corner by the appellant, contained a box marked "K Security" which listed the following: "Guarantee by Susan Louise Hannaford Guarantee by Marquessa Hannaford." 61Those two items in the box had been crossed out by hand and in the right hand margin of the document, adjacent to the crossed out items, the letters "Inits" had been handwritten, obviously a request for the alteration to the document to be initialled. There then appeared the initials of at least two or three persons the identity of whom was not directly established although one of them could possibly be those of the appellant. However at paragraph 17 of her affidavit she deposed that the reference to the guarantees was "struck through and excluded from the contract by the Commonwealth Bank and then signed by the Commonwealth Bank, Marquessa Hannaford and Susan Hannaford". The Contract so annexed appears to be signed on behalf of the Company by the appellant. 62At paragraph 19 of her 9 May affidavit the appellant asserted that the respondent misrepresented the contents of the loan documents by stating that a guarantee was not required and then later hiding the guarantee documents from both her and her daughter in a bundle of mortgage documents. 63Finally, at paragraphs 23, 24 and 25 the appellant stated that the reason that her defence could not have been amended at an earlier time was due to a combination of "serious issues" of which only two were then revealed. The first was that she currently resided overseas (in California) and due to an ongoing heart condition which involved repeated admissions to hospital, for medical reasons she was unable to travel back to Australia. However, I note that this, if it be the case, did not prevent the appellant giving the necessary instructions to Mr Mandoh to file an amended defence on her behalf in reliance upon the matters contained in the 11 April and 9 May affidavits, both of which were sworn in the United States before the Australian Consul General. The second reason given was that on 19 April 2012 her de facto partner of 28 years had died. No explanation was given as to why that second reason prevented her from attending to this matter which was of particular significance to her and possibly even more so given her partner's death. At paragraph 27 the appellant asserted that she would suffer prejudice if the amendment to her defence was not permitted. This was, no doubt, self-evident. 64Before setting out the contents of the Draft Second Amended Defence in respect of which leave to file was sought, it is instructive to refer further to the 14 June affidavit of the appellant and referred to by Davies J at [24] of his reasons: see [38] above. Although his Honour sought to summarise aspects of that affidavit in the paragraphs following [24] of his reasons, I think it is helpful to refer to it in a little more detail. It should be noted that the affidavit was sworn by the appellant in Sydney. 65At paragraphs 59-69 of the 14 June affidavit, the appellant purports to respond to an affidavit of Ms Helen Denkha sworn 31 May 2011 (the Denkha affidavit). Ms Denkha was a bank officer employed by the respondent. 66At paragraphs 7-9 of her affidavit, Ms Denkha refers to the loan and to the security provided over the property. Paragraphs 10 and 11 were in the following terms: "First Guarantee 10. [Marquessa] entered into a deed of guarantee (First Guarantee) with [the respondent] in order to secure the [the Company's] obligations under the Agreement. A copy of the First Guarantee appears at page 58 of the Exhibit. Second Guarantee 11. [The appellant] entered into a deed of guarantee (Second Guarantee) with [the respondent] in order to secure the [the Company's] obligations under the Agreement. A copy of the Second Guarantee appears at page 66 of the Exhibit." The exhibit referred to was a paginated bundle of documents which apparently included copies of the guarantees signed by the appellant and Marquessa. 67At paragraphs 15, 16 and 17 of the affidavit Ms Denkha deposed to Marquessa defaulting under the First Guarantee and in paragraphs 18 to 20 she deposed to the appellant defaulting under the Second Guarantee. 68The appellant responded to paragraphs 11 and 18-20 of the Denkha affidavit at paragraphs 64 and 69 of the 14 June affidavit as follows: "64. In response to clause 11 of Helen Denkha's affidavit dated May 31 2011 I am unable to respond as page 66 of the exhibit referenced in the affidavit has not been provided by the plaintiff. ... 69. In response to clause 18 of the affidavit of Helen Denkha dated May 31, 2011 the defendants were not served and therefore did not fail to comply with demands." 69There is an apparent inconsistency between the appellant's response to paragraph 11 of the Denkha affidavit and the instructions which she gave Mr Mandoh on or about 8 April 2013 to the effect that she was unaware that she had signed a personal guarantee and that she did not recall signing any such document (recorded at paragraph 6 of Mr Mandoh's affidavit) unless she was asserting that she could not remember signing the guarantee without being provided with the copy exhibited. But her response does not sit well with her assertion that the respondent represented that a guarantee by her was not required. 70Although the appellant never explained why she did not produce the 3 May letter until it was annexed to the 9 May affidavit, counsel for the appellant on the appeal accepted that the letter was at all times in her possession and control. One would therefore infer that she had the letter in her possession when she swore the 14 June affidavit. If she truly considered that the respondent did not require her to enter into a personal guarantee, one asks rhetorically why did she not produce the letter in response to paragraph 11 of the Denkha affidavit? In addition, and in further response to that paragraph, why did she not assert that she was unaware that she was signing a personal guarantee? These matters, although not referred to by Davies J, were clearly relevant to the bona fides, or lack thereof, of her application for leave to further amend her defence in order to suddenly raise the issue to which the 3 May letter gives rise, namely, that the respondent did not require her to enter into a personal guarantee of the Company's debt. 71It is further instructive to consider other paragraphs of the appellant's 14 June affidavit which are also inconsistent with her assertion before Davies J that she did not know she was signing a personal guarantee and that the respondent had represented to her in the letter and otherwise that she was not required to enter into a guarantee. 72At paragraph 4 the appellant stated that she had reviewed the books and records of the defendants as they related to the "loan, guarantees and mortgage" with the respondent. At paragraph 20 she stated that pursuant to the loan agreement with the respondent, the Company was the mortgagor and she and her daughter "were guarantors". At paragraph 24 she deposed that she and her daughter "as individual guarantors" were entitled to full protection under the Consumer Credit Code and NSW credit code. 73These paragraphs, at least prima facie, indicate that the appellant was aware that she had signed a guarantee and that she understood what the guarantee required of her. This was confirmed by some of the annexures to the affidavit. One such annexure was a copy of the Contract signed on behalf of the Company by Marquessa. It contained the same Clause K as to the security for the loan as the form of that contract annexed to the 9 May affidavit: see at [60] above. The difference, however, was that the reference to the two guarantees was not crossed out. Only the reference to a second property over which a registered mortgage was to be taken as security was crossed out by hand. The same handwritten reference to "Inits" appeared in the right hand margin. One of the sets of initials there clearly appears to be those of the appellant and the others appear to be similar to those on the form of the Contract annexed to the 9 May affidavit where the reference to the guarantees is crossed out. 74A further annexure to the 14 June affidavit was a letter from Marquessa to the respondent relating to a proposed transfer of the property from the Company to the appellant in order to relieve her and her daughter from paying land tax thereon. That letter is dated 17 September 2008 and refers to confirmation by the respondent of its consent to allow the transfer of the property from the Company into the individual name of the appellant "providing that the guarantors remain the same". The letter further asserts that: "[a]s agreed, the transfer will not change the terms or guarantors on the home loan which remain the same". Although that letter was signed by Marquessa, the appellant must have been aware of its contents as it is an annexure to her affidavit. In fact at paragraph 33 of the affidavit, she deposed that she wrote the letter, even though Marquessa signed it. 75The final document to which I wish to refer is the Draft Second Amended Defence in support of which the appellant (as the third defendant) swore the 11 April and 9 May affidavits. It is appropriate to set out the part of the pleading that related to the CR Act in full (which the Draft Amended Cross-Claim repeated in the same terms): "5. Unjust Contract/Contracts Review Act 1980 (i) In reply to paragraphs 11-15 and the whole of the plaintiff's Statement of Claim insofar as it refers to and/or affects the third defendant, the third defendant states that her personal guarantee in favour of the plaintiff, guaranteeing the first defendant's obligations under the loan agreement ("the guarantee") is unjust having regard to the circumstances at the time it was entered into and seeks pursuant to sections 7, 8 and 9 of the Contracts Review Act 1980 ("CRA"), that the guarantee be declared unjust and not be enforced by the Court pursuant to ss 7(1)(a) of the CRA. Particulars of Unjust Contract (a) Clause (K) of the Consumer Credit Contract annexed hereto and marked "A" signed by the third defendant excluded personal guarantees for both Marquessa Hannaford and Susan Hannaford; (b) The third defendant entered into the Consumer Credit Contract on the basis that personal loan guarantees were not required, the requirement of a personal guarantee was crossed out of the loan contract by the Commonwealth Bank and signed and agreed by the Commonwealth Bank, Susan Hannaford and Marquessa Hannaford; (c) The Commonwealth Bank wrote a letter to the third defendant dated April 29, 2004 annexed and marked "B" advising that personal guarantees for the third defendant and her daughter would not be required and legal advice was unnecessary; (d) The third defendant was unaware that the documents she was signing contained a personal guarantee; (e) At the time of entry into the guarantee, the third defendant received no independent or other legal advice in relation to her rights and obligations as a personal guarantor of the first defendant's obligations under the loan; (f) At this time the plaintiff did not inform the third defendant of the need for independent legal advice and in fact wrote to the third defendant to advise that legal advice was unnecessary; (g) The effect of the guarantee she was signing was not explained to the third defendant by the plaintiff or it's [sic] representatives; (h) The third defendant did not understand the effect of the guarantee; (i) The terms of the loan documents were expressed to the third defendant by the plaintiff and/or it's [sic] representatives as being not negotiable; (j) The bank required the third defendant's teenage daughter and company director and her approximately fifteen year old friend to witness the signing of what was later discovered to be the third defendant's [sic] loan guarantee; (k) The terms of the guarantee were unreasonable to comply with as at the relevant time the third defendant was unemployed and had no personal income (and in the case of her daughter's personal guarantee, impossible to comply with, as she had not finished school and had no income); (l) The third defendant was pressured into signing the guarantee by the plaintiff and/or it's [sic] representatives, namely the latter stated to her words to the effect that: (i) the bank's representative placed undue pressure on the third defendant by coming to her residence unannounced and making unwanted sexual advances under the implied threat that should the third defendant not comply with the sexual advances that the bank representative had the power to cancel the loan; (ii) the third defendant was required to sign the voluminous loan documents then and there on the first occasion she had seen these documents, otherwise the loan approval would expire and the loan will be cancelled, and did not have any proper opportunity to read the documents she was required to sign; and (iii) the third defendant's daughter was a minor child of seventeen years of age at the loan inception and was told by the bank to sign and leave the mortgage documents undated and that the bank would date the mortgage documents when she turned eighteen; (iv) the settlement was delayed by the bank on at least one occasion because the third defendant's daughter, Marquessa was seventeen years old and had not yet turned eighteen; (v) the third defendant's daughter, was required by the plaintiff to be appointed a director of the first defendant, four days after her 18th birthday on March 18, 2004 and if this did not occur, the plaintiff threatened to not proceed with settlement of the company refinance." (Emphasis added.) It was common ground on the appeal that the reference in sub-paragraph (c) to a letter of 29 April 2004 was in fact a reference to the 3 May letter.

(d) The appellant is cross-examined 76On 10 May 2013 the appellant was cross-examined by telephone link between Sydney and California. In a non-responsive answer to a question she asserted that she had no knowledge of executing the respondent's guarantee at all and she stated on a number of occasions that she was told by the respondent that no guarantee was required either by her or her daughter. She also repeated that she was not aware of signing a guarantee because she had the 3 May letter which stated that she did not need to do so and she acknowledged that she had always been unaware of any guarantee because of that letter. In re-examination by Mr Mandoh she said that she had been told on the telephone prior to 3 May that it was not going to be necessary for her to sign a guarantee and that she then "got it in writing". It is thus apparent from her cross-examination that from the time of its receipt, which was apparently on or before she signed the mortgage documents, she had the 3 May letter in her possession and relied on the fact that it stated that she did not need to sign a guarantee. 77An issue then arose between Mr Mandoh and his Honour with respect to the issue of delay and, in particular, the delay in the appellant instructing Mr Mandoh that the respondent had advised her that she did not need to sign a guarantee. His Honour noted that there was no explanation in any of the appellant's affidavits as to why the representation contained in the 3 May letter had not been the subject of prior instructions. Mr Mandoh stated that he wished to ask one question as to why the appellant did not provide instructions to incorporate her current position in the pleadings when the previous application to amend the pleadings was made, presumably a reference to the application to amend in September 2011. His Honour responded: "That is so crucial that it ought to have been in this affidavit." (His Honour was referring to the 9 May affidavit.) 78His Honour then permitted Mr Mandoh to ask the appellant to explain why she had not provided him with instructions in 2011 when the application was made to amend the First Defence. She responded that it was because of her heart condition and the history of hospital admissions which she had unfortunately had over the past several years. She said that that condition had made her unfit to travel. That was, she said, the reason why she had not given Mr Mandoh instructions in 2011. His Honour then asked the appellant whether her heart condition prevented her speaking on the telephone to which she responded in the negative although she stated that her condition was exacerbated by stress. Mr Mandoh took the matter no further. In the foregoing circumstances it is unsurprising that his Honour concluded (at [77]) that there was no evidence from the appellant about how it was that for the first time in 2013 she realised that she did not know she had signed a guarantee when the claim against her personally had always been made on the basis that she had.

Davies J Refuses Leave to Amend 79Having regard to the matters listed in s 58(2)(b) of the CP Act, his Honour determined at [75]-[79] of his reasons that the application to further amend the defence and cross-claim should be refused for the following, amongst other, reasons (which I summarise): (a)Any explanation concerning delay was entirely inadequate particularly as nothing in the medical evidence suggested that the appellant was incapable of giving instructions. Her heart condition was not a serious impediment to the proper conduct by her of the proceedings in 2011. His Honour also noted (as he had at [28]) that she was in Sydney in 2011 when she swore the 14 June affidavit. (b)It could not be said that the appellant was not aware of her rights under the CR Act as reference was made to it in the various iterations of the pleadings advanced from the time of the First Defence in March 2010 through to the First Amended Defence and First Cross-Claim filed on 21 September 2011. It was difficult to understand what might have occurred as late as February 2013 to cause the appellant to realise that she had no knowledge of signing a guarantee. Apparently an affidavit was prepared on her behalf at that time which was not before his Honour but which he assumed was, in substance, the same as the 11 April affidavit. Thus he said (at [77]): "There is no evidence from the [appellant] about how it is that for the first time in 2013 she realised that she did not know she signed the guarantee when the claim against her personally had always been made on the basis of that guarantee." (c)His Honour had regard to the dilatory manner in which the defendants had acted during the course of the proceedings, details of which he then set out (at [78]). In particular he referred to the repeated failures to serve evidence in accordance with court orders as well as the late service of the draft pleading and affidavits for the hearing of the motion for leave before him. His Honour found that none of those failures in due expedition arose from circumstances beyond the appellant's control. (d)The First Cross-Claim filed on 21 September 2011 (which contained a claim by Marquessa under the CR Act) was the fourth attempt to plead the matter sought now to be raised by the appellant. The Draft Amended Cross-Claim in respect of which leave was sought (and which included a claim by the appellant under the CR Act in the same terms as in the Draft Second Amended Defence as noted at [75] above) would be the fifth attempt to raise that matter. Reference was made to the approach in Dennis v Australian Broadcasting Corporation at [26] to the effect that where there are multiple applications to replead, at a particular point a limit can be said to have been reached to justify the refusal of a further amendment. A similar point was made in Aon Risk at [102]. That point had already been well and truly reached in the present case to justify a refusal of leave. 80I interpolate that there was no suggestion that there was not regular communication between Marquessa and the appellant. In fact it was conceded by counsel for the appellant during argument on the appeal that a reasonable inference could be drawn that there was. Marquessa at all times during the proceedings asserted that she was acting not only on her own behalf but also on behalf of the Company and her mother. Marquessa must have been aware that she was raising a defence under the CR Act. It would be surprising if she did not inform the appellant of that fact. Marquessa swore an affidavit on 4 August 2011 in support of her application for leave to file a cross-claim explaining the delay in doing so. It is noteworthy that she did not swear an affidavit in support of the appellant's application before Davies J to further amend her defence based, in substantial part, upon the contents of the 3 May letter. As the representation contained in the letter applied to Marquessa as much as it did to the appellant, there was no explanation as to why Marquessa did not seek to rely upon it when in September 2011 she sought to amend her defence to include a claim under the CR Act. 81At [86] his Honour referred to the issue of prejudice to the respondent and at [87] he dealt with the issue of the bona fides of the appellant's claim to amend. After setting out paragraphs 6, 9, 10 and 16 of the 11 April affidavit, at [88] his Honour observed that she did not say when it was that she discovered that Marquessa had signed a personal guarantee and thereafter what enquiry she might have made about whether she, the appellant, had signed one. 82His Honour then noted that the First Cross-Claim filed on 21 September 2011, as well as in earlier forms of that document, had at paragraph 3 pleaded that Marquessa and the appellant had signed separate guarantee contracts purportedly guaranteeing the Company's obligations under the loan agreement. 83At [89] Davies J considered that that pleading was inconsistent with what the appellant now wished to advance, namely, that she was unaware that she signed such a guarantee. This may not be strictly correct for if she had been informed that she was not required to sign a guarantee then she may well have been unaware that she had in fact signed such a document. However, looking at the matter most favourably to the appellant, if paragraph 3 of the First Cross-Claim was merely accepting that she signed such a guarantee although she had not been aware of it at the time, there was no explanation for why she did not raise her lack of awareness by no later than the date of its filing or at earlier times when the various forms of that pleading were proffered. If the appellant had been unaware that she signed a guarantee one might have expected a statement to that effect in her answer in the First Amended Defence to paragraph 11 of the Statement of Claim. 84At [90] his Honour noted that a number of the particulars of unjustness raised by Marquessa in the First Cross-Claim were common to both her and the appellant given the complaints now made by the latter in her affidavits. Finally, at [91] he concluded that if the appellant's present complaints about such matters were genuine, one might have expected them to have been pleaded on her behalf in 2011 if not at the time the First Defence was filed in March 2010. Thus he observed: "Where there is no explanation for not having done so I am entitled to be sceptical about why, at this late stage and in the light of the conduct of this litigation by the defendants, the matter of the unjustness of the guarantee is now being raised for the first time." His Honour accordingly determined that to permit the amendment would be contrary to the provisions of ss 56-58 of the CP Act and as a consequence he refused the appellant leave to amend her defence and to file a cross-claim based on the CR Act.

Did the discretion of Davies J miscarry? 85In addition to the matters dealt with at [34]-[36] above, the appellant submitted that Davies J had made a number of other mistakes of fact which vitiated the exercise of his discretion. The first was that his Honour erred in failing to recognise that in the First Defence filed in 2010 the appellant had pleaded a claim under the CR Act as that statute was mentioned in that defence which was prepared when there was no solicitor on the record. I have already dealt with this last assertion at paragraph [28] above and I reject it. 86The next alleged error of fact was that his Honour was incorrect when he stated in the first sentence of [54] of his reasons (which I have recorded at [52] above), that the matters contained in the 11 April and 9 May affidavits had never been raised in any affidavits filed or served earlier in the proceedings nor in any form of the pleading now advanced. It was again asserted that the First Defence raised the CR Act, as did the draft referred to at [48] above. However the first sentence of [54] of his Honour's reasons states, in my view accurately, that it was the matters contained in the 11 April and 9 May affidavits "concerning the basis for any claim under the CR Act" (my emphasis), which had never been previously raised in any previous affidavits or pleadings. The only previous affidavit of relevance was that of 14 June and the CR Act issue was not raised therein. Nor was it raised in the First Defence. In my view there is no substance in this complaint. 87Furthermore, Davies J acknowledged at [54] of his reasons the appellant's allegations in her affidavits that she did not receive legal advice; that she was told by the respondent's representative that she did not need such advice as the contents of the documents were non-negotiable and that she did not understand that she was signing a personal guarantee. But as his Honour remarked at [76], the essential point was that none of those allegations had been pleaded as a defence under the CR Act to the respondent's claim under the guarantee at a time when they should have been and there was no acceptable explanation as to why not, given that to the appellant's knowledge the CR Act was particularised as part of the defence to the claim against the Company under the loan agreement as noted at [36] above. 88The appellant further submitted that Davies J erred when at [27] of his reasons he remarked that the "only passing references to the guarantee" in the 14 June affidavit were in paragraphs 20 and 24 to which I have referred at [72] above. It should be noted that his Honour also stated that nowhere in that affidavit did the appellant suggest that she did not know that she had executed a guarantee. 89The 14 June affidavit was sworn in response to the respondent's summary judgment application (referred to at [25]-[26] above), which related directly to its claim against Marquessa and the appellant founded on their guarantees and supported by the Denkha affidavit. 90As I understand the submission, the appellant contended that Davies J erred at [27] because, as the appellant deposed at paragraph 64 of her 14 June affidavit, she was unable to respond to paragraph 11 of the Denkha affidavit (which asserted that the appellant entered into a deed of guarantee with the respondent in order to secure the Company's obligations under the loan agreement) as she had not been provided with a copy of the guarantee which formed part of the exhibit to the affidavit. Accordingly, so it was submitted, the appellant was not then in a position to deal with the assertions in paragraphs 4, 11 and 18-20 of the Denkha affidavit in relation to the guarantee. Nor was she in a position, for the same reason, to advance a defence under the CR Act directed to the guarantee purportedly signed by her. 91In my view there is no merit in these submissions. As the respondent contended, the appellant must have appreciated that she was responding to an application for summary judgment for over $5 million pursuant to the guarantee into which it was said she had entered. Furthermore, as recorded at [72]-[74] above, there were various acknowledgements by the appellant in her 14 June affidavit of the guarantee without any suggestion of any unfair conduct on the part of the respondent relating to the circumstances surrounding its execution. 92The appellant's response at paragraph 64 of her 14 June affidavit to paragraph 11 of the Denkha affidavit was, therefore, odd given the allegations contained in the Draft Second Amended Defence relied upon before Davies J. She did not need to see the guarantee in order to make those allegations and, in particular, the assertions that she was unaware she was entering into a guarantee or that the respondent did not require her to enter into a guarantee at all. 93Accordingly, I accept the respondent's submission that the relevant paragraphs of the Denkha affidavit and the appellant's response thereto strongly support the correctness of his Honour's findings at [27] of his reasons. 94It will be appreciated from the foregoing that I have rejected the appellant's submissions that Davies J took into account material errors of fact as well as the other alleged errors relied upon in argument. However, although not the subject of an express submission on the appeal, it was implicit in the appellant's argument that it was being alleged that his Honour failed to take into account a material consideration, namely, the 3 May letter and the representation contained in it that the respondent did not require the appellant or her daughter to enter into a personal guarantee in respect of the loan. Certainly, Mr Mandoh had submitted to his Honour that the letter was "crucial" to her defence, as clearly it was. Of course, given the matters to which I have referred above which are capable of supporting the proposition that at all material times the appellant was fully aware that she had signed a personal guarantee, the genuineness of the 3 May letter would no doubt loom large on a final hearing. However, Davies J did not refer to it in his reasons notwithstanding its prima facie relevance to the appellant's defence against the respondent's claim on the guarantee. 95Failure to consider a material consideration in the exercise of a discretion may cause that discretion to miscarry if the relevant failure is such as to satisfy the appellate court that the exercise of judgment by the trial judge was wrong: Gillfillan v Australian Securities and Investments Commission [2012] NSWCA 370; 92 ACSR 460 at [176] (Sackville AJA, Beazley P and Barrett JA agreeing). Upon the assumption that there was a failure in the present case, then the issue is whether, in all the circumstances, that failure is such as to satisfy this Court that Davies J's exercise of his discretion to reject the Draft Second Amended Defence, which for the first time sought to plead the representation contained in the 3 May letter, was wrong. 96His Honour must have been aware of the manner in which it was sought to rely upon that letter in the Draft Second Amended Defence and Draft Amended Cross-Claim which was before him: see the emphasised part of that pleading at [75] above. He must also have been aware that if the letter was genuine and the representation was in fact made, then that would be a factor relevant to the appellant's claim, as sought to be pleaded, that the guarantee was unjust within the meaning of the CR Act. In this respect, the 3 May letter was referred to in the draft amended pleading as a particular of the guarantee being unjust within the meaning of the CR Act. 97It is true that when dealing with the issue of bona fides at [87] of his reasons, Davies J did not refer to the 3 May letter but only to the allegations of the appellant that she was unaware that she was signing a personal guarantee, that she had not received legal advice and had been informed that such advice was not necessary. His Honour also referred to the alleged shock sustained by the appellant when she discovered that she had been "tricked" by the respondent into signing the guarantee. In essence, his Honour's finding of lack of bona fides was based upon the appellant's allegation that she was unaware that she had signed a personal guarantee. Of course, if she had been told that no such guarantee was required but yet, without her knowledge or understanding, she signed such a document when placed in front of her without realising what it purported to be, then that would be consistent with the representation upon which she sought to rely in her Draft Second Amended Defence. 98The difficulty faced by the appellant is that his Honour's finding at [72]-[73], [75] of lack of bona fides as well as unexplained delay (the latter informing the former) applies equally to the 3 May letter and the failure of the appellant to rely upon it at the same time as she was alleging that she had not been given an opportunity to read the documents or obtain legal advice. His Honour's further finding that if the appellant's present complaints were genuine one might have expected them to have been pleaded on her behalf in 2011 if not in 2010 when the First Defence was filed, also applies to her reliance upon the 3 May letter for the first time in May 2013. 99It follows that the discretionary considerations which resulted in Davies J rejecting the appellant's application for leave to file the Draft Second Amended Defence apply equally to her reliance upon the 3 May letter as upon the assertions that she was unaware that she was signing a personal guarantee of the Company's loan. Accordingly, in my view the failure by his Honour to refer and to give weight to the 3 May letter in his reasons refusing the appellant leave to amend did not result in a wrong exercise of his discretion. 100But even if his Honour's discretion did miscarry, it would still fall to this Court to re-exercise that discretion and for the reasons indicated I would without hesitation come to the same conclusion as did Davies J that given the overriding obligations under ss 56-58 of the CP Act and in the light of the comments of the High Court in the joint judgment in Aon Risk at [103] recorded by his Honour at [72], the lack of bona fides on the part of the appellant and her failure to properly explain her delay in raising the 3 May letter as a relevant consideration to her defence, this Court's discretion should be exercised against the granting of leave for the appellant to file the defence upon which she now wishes to rely. 101Accordingly, for the foregoing reasons in my view Davies J was correct to reject the proposed amendments and to order that the appellant's notice of motion filed on 12 April 2013 be dismissed with costs.

The Interlocutory Decision of Campbell J 102The proceedings were set down for final hearing before Campbell J on 22 August 2013. On that day counsel appeared for the appellant but only on the limited basis that he had been instructed to apply to have that hearing adjourned. His Honour granted the appellant leave to file in court an affidavit of the appellant sworn 20 August 2013 (20 August affidavit) in which she deposed to the fact that she had terminated the retainer of Mr Mandoh on the basis that he had negligently omitted to include her "core defence" under the CR Act in the her First Amended Defence filed with the leave of Davies J on 21 September 2011. 103In that affidavit the appellant asserted that the application to vacate the hearing date could not have been raised any sooner as she had only discovered in the previous few days the "gross negligence" of Mr Mandoh in that he "negligently deleted my original core defence of the Contracts Review Act when filing amended pleadings in or about 2011". She asserted that her defence under the CR Act was always her "core defence" raised in reply to the Statement of Claim from the inception of the proceedings on 4 January 2010. 104The appellant further asserted that the Contract clearly provided that personal loan guarantees were not required by her and her daughter (an apparent reference to the document referred to at [60]-[61] and the fact that the reference to guarantees by her and her daughter had been crossed out). She also raised the 3 May letter in support of this assertion (though it was described as a letter of 4 May 2004) at paragraph 14 of her affidavit. She further sought to clarify the explanation for the delay that she had deposed to in her 11 April affidavit, stating that the explanation of illness and hospitalisation, though an ongoing impediment to her conduct of the proceedings, was not intended to explain the delay in bringing a CR Act defence. At paragraph 7, she stated that her defence under the CR Act was "always pled in reply to the statement of claim" and that the explanation for delay deposed to in the 11 April affidavit related only to the delay in the "amendment of the pleadings to simply further particularise the original [CR Act] defence and cross-claim". 105The appellant then referred to her proposed appeal to this Court from the order of Davies J dismissing her application for leave to file her Draft Second Amended Defence, asserting that the problems with the pleadings needed to be corrected in order for her to have a fair and just trial as her only defence to the dispute involving the validity of the loan agreement and the circumstances of the contract at the time of signing and whether or not the loan guarantee was unenforceable under the law in the circumstances, was based on the CR Act. 106Counsel then reiterated to Campbell J that it was only recently when the appellant was considering an appeal from the decision of Davies J that she discovered that the First Amended Defence filed on 21 September 2011 had neglected to include her "core defence" based on the CR Act. 107Counsel then submitted to his Honour that the Court was faced with the prospect of a genuine defence under the CR Act and the discovery of some documents which would support that defence (presumably the 3 May letter and the version of the Contract in which the reference to the guarantees had been crossed out) but that his client was faced with a trial about to occur on pleadings that excluded that defence. Counsel then continued: "So I am instructed to appear to seek the court's grace in respect of reviewing the file and understanding how this circumstance may have arisen and providing a new timetable that might allow the third defendant to be properly prepared and to instruct a solicitor that can properly understand the nature of the defence and plead that properly and have the opportunity so that a fair hearing can be provided." 108There then followed an exchange between his Honour and counsel for the appellant and the respondent, his Honour being informed by counsel for the appellant that a summons for leave to appeal from the orders of Davies J, together with a draft notice of appeal and a summary of the appellant's argument on the leave application, had been filed only the previous day, 21 August 2013. 109Counsel for the respondent objected to much of the 20 August affidavit on the basis that it contained conclusions rather than statements of fact to which his Honour responded that he had before him "an interlocutory application being an application for an adjournment". Counsel for the appellant then stated that he really only had one primary submission to make, namely, that the defence based on the CR Act which the appellant wished to raise was, inadvertently or otherwise, omitted from the First Amended Defence in respect of which Davies J had granted leave to file in September 2011. Through circumstances which were, therefore, beyond the appellant's control, her defence was excluded which would cause her irremediable harm if she was not allowed to plead it and the hearing was to proceed without her "core defence" being before the Court. 110After hearing counsel for the respondent who opposed any adjournment, counsel for the appellant in reply submitted that given the prejudicial effect of the appellant not being able to plead her true defence, the interests of justice outweighed any prejudice to the respondent and the public interest which justified an adjournment. Campbell J then delivered judgment rejecting the application for an adjournment after which counsel for the appellant withdrew and the matter proceeded to final hearing ex parte.

The Reasons of Campbell J for Rejecting the Adjournment Application 111At [4] of his reasons Campbell J noted that counsel for the appellant announced his appearance on the basis that he had a limited retainer for the sole purpose of making an application for an adjournment of the hearing. In fact, as his Honour noted at [7], the application was, in effect, for a stay of the proceedings on the ground that on the previous day the appellant had lodged a summons seeking leave to appeal from the decision of Davies J. 112His Honour then summarised the appellant's claim based on the 9 May affidavit and the 3 May letter. Significantly, at [11] he noted that the appellant's case based on the CR Act had all been put before Davies J who in a "very careful judgment" rejected the application for leave to amend. His Honour noted that that application was not renewed before him. 113At [14] his Honour observed that the central question that he had to decide was whether the application for leave to appeal filed the previous day was a circumstance which, in the interests of justice, required him to exercise his discretion to stay the proceedings to enable the application for leave to appeal to proceed. After citing a number of authorities and referring to the appellant's 20 August affidavit, he concluded (at [24]) that her explanation in that affidavit relating to when she realised that the defence and cross-claim based on the CR Act that she now sought to assert had been omitted from her First Amended Defence due to the alleged negligence of her then legal advisors was: "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." Accordingly, his Honour did not regard her explanation as to why the application for a stay had been made at the very last minute as satisfactory. 114At [28] his Honour referred to Aon Risk and at [29] he rejected the appellant's application. However, he noted the possibility that if he proceeded to hear the proceedings and a judgment adverse to the appellant was entered, then in the event that it was established that there was demonstrable error in the judgment of Davies J resulting in the necessity for a new trial, then that would be an unfortunate outcome. However, as there was no satisfactory explanation for her failure to bring forward any application for leave to appeal "with proper celerity" and as it was not clear to his Honour in light of the amended pleadings filed on 21 September 2011 that the application to raise the CR Act had been brought in good faith rather than as an attempt at the last minute to delay the final hearing in the proceedings, he considered that in the proper exercise of his discretion he should refuse the application for an adjournment or for a stay.

Did Campbell J's Discretion Miscarry? 115The appellant submitted that Campbell J's discretion had miscarried in that his Honour had proceeded in the mistaken belief that the appellant was aware of the deficiencies in her First Amended Defence filed on 21 September 2011 and, further, in the mistaken belief that the appellant had provided instructions to her solicitor in relation to that pleading. However, at [24] of his reasons his Honour remarked that she must have been aware in the May 2013 application before Davies J that the core of her defence had been omitted from her First Amended Defence filed 21 September 2011. He then qualified his statement that the appellant must have known at that time that the failure to raise the matter was the fault of her lawyers only "if she provided instructions in relation to it". 116However, in my view his Honour was correct in stating that it must have been obvious to the appellant in May 2013 that what she regarded as the core of her defence had not been included in her then Amended Defence. Yet she did not assert before Davies J that she was unaware of that fact whether due to the alleged negligence of her solicitor or otherwise. Her explanation that she did not become aware of the omission until shortly before 20 August his Honour found to be unimpressive. Of course, there was no such evidence before Davies J. 117In my view the appellant's complaints to the effect that the discretion of Campbell J miscarried cannot be sustained. No error has been demonstrated which would justify appellate intervention with respect to the exercise by his Honour of his discretion to refuse the application for an adjournment or stay.

Conclusion 118It follows from the foregoing that in my view the appellant has not demonstrated relevant error either on the part of Davies J or Campbell J in the exercise of their respective discretions. It follows that the orders made by Campbell J in his substantive judgment on the final hearing of the proceedings are immune from challenge. I would therefore propose that the appeal be dismissed with costs.

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