In the matter of Azzurri Group Holdings Pty Ltd

Catchwords: CIVIL PROCEDURE – extension of time – application to rely on expert evidence served out of time – where expert evidence is essential to the Plaintiffs’ case – where explanation for delay in serving expert evidence provided – where no prejudice identified by Defendant – extension granted

Legislation Cited: Civil Procedure Act 2005 (NSW) s 56
Uniform Civil Procedure Rules 2005 (NSW) r 31.28

Cases Cited: Commonwealth Bank v Invest (No 7) [2017] NSWSC 440
Correa and The Spanish Club Limited (subject to Deed of Company Arrangement) v Kenneth Michael Whittingham [2012] NSWSC 266
The Owners Strata Plan No 94784 v Mirvac Projects Pty Ltd [2024] NSWSC 741

Category: Procedural rulings

Parties: Peter Martino (First Plaintiff)
2B6 Enterprises Pty Ltd (Second Plaintiff)
Azzurri Group Holdings Pty Ltd (First Defendant)
Azzurri Concrete Group Pty Ltd (Second Defendant)
MPD Developments Pty Ltd (Third Defendant)
Donato D’Angola (Fourth Defendant)
Sogase Pty Ltd (Fifth Defendant)
Mario D’Angola (Sixth Defendant)
Balli Constructions Pty Ltd (Seventh Defendant)
Azzurri Concrete Enterprises Pty Ltd (Eighth Defendant)
Azzurri Concrete Pty Ltd (Ninth Defendant)

Representation: Counsel:
A P Cheshire SC / J Cook (Plaintiffs)
E A J Hyde (Defendants)
Solicitors:
AJL Legal (Plaintiffs)
Paradise Charnock Hing (Defendants)

File Number(s): 2023/151182

REVISED EX TEMPORE JUDGMENT – 11 JUNE 2025

1. This judgment concerns an application by the Plaintiffs to extend the time for service of their expert evidence.

2. On 17 March 2025, there was a directions hearing in this matter at which the Court made, relevantly, the following orders (the 17 March Orders):

“1. Direct the plaintiffs to file and serve their expert evidence by 28 April 2025, no evidence to be relied on if not filed and served by that date without leave.

2. Direct the defendants to file and serve any expert evidence by 10 June 2025, no evidence to be relied on if not filed and served by that date without leave.

2A. List the matter in the Corporations Directions List on 16 June 2025 to confirm the hearing date.

…

5. Tentatively list the matter for hearing before Nixon J with a 5-7 day estimate on 22-25 and 29-31 July 2025.

…

8. The parties advise Black J by 4pm, 19 March 2025, whether any agreed variation of the tentative dates would better accommodate their expert availability.”

3. On 19 May 2025, the Plaintiffs served an expert report of Mr Andrew Clifford of RSM Australia Pty Ltd (the Clifford Report). This report was served exactly three weeks after the date specified in the 17 March Orders, and more than two months before the trial is due to commence.

4. On 26 May 2025, the Plaintiffs took steps to relist the matter so as to make an application for leave to rely on the Clifford Report. This application was opposed by the Defendants.

Relevant Principles

5. There was a dispute between the parties as to the relevant principles.

6. The Defendants contended that the Plaintiffs’ application must be determined by reference to r 31.28 of the Uniform Civil Procedure Rules 2005 (NSW) (UCPR), which relevantly provides as follows:

(1) Each party must serve experts’ reports … on each other active party:

(a) in accordance with any order of the Court; …

…

(3) Except by leave of the Court, or by consent of the parties,

(a) an expert’s report … is not admissible unless it has been served in accordance with this rule;

…

(4) Leave is not to be given as referred to in subrule (3) unless the court is satisfied:

(a) that there are exceptional circumstances that warrant the granting of leave; …

7. The Defendants, in their written submissions, relied on Black J’s summary of the principles relevant to the exercise of discretion pursuant to r 31.28(4) in Dolores Correa and The Spanish Club Limited (subject to Deed of Company Arrangement) v Kenneth Michael Whittingham [2012] NSWSC 266 at [10]-[13]. In that decision, his Honour refused to grant leave for an expert report to be admitted into evidence at trial, which had not been served in accordance with r 31.28.

8. The Defendants also relied on the decision of Campbell J in Commonwealth Bank v Invest (No 7) [2017] NSWSC 440, in which his Honour adopted and applied the principles in Correa. This, too, was a decision to refuse leave to admit an expert report into evidence at trial.

9. Each of those cases approached the issue of the admissibility of the report into evidence by reference to the requirement for “exceptional circumstances”.

10. However, as the Plaintiffs submitted, the Court is not, on this application, determining whether the Clifford Report should be admitted into evidence. Instead, the issue is whether the Court should extend time for the service of the Plaintiffs’ expert evidence, to the date when the Clifford Report was served. The Court has the power to grant such an extension pursuant to, for example, r 1.12 of the UCPR (which gives the Court power to, by order, extend any time fixed by any order of the Court), or r 2.1 of the UCPR (which gives the Court power to make such orders for the conduct of the proceedings, whether or not inconsistent with the UCPR or any other rules of Court, as appear convenient for the just, quick and cheap disposal of the proceedings).

11. If the Court grants leave pursuant to r 1.12 or r 2.1 to extend the time for service of the Plaintiffs’ expert evidence to 19 May 2025, being the day when the Clifford Report was served, then the Clifford Report will, in terms of r 31.28(1), be a report that was served in accordance with the orders of the Court (as varied). In that scenario, there will be no need for leave to be sought under r 31.28(4) or for exceptional circumstances to be established in order for the Clifford Report to be admitted into evidence at trial.

12. The power granted under rr 1.12 and 2.1 is to be exercised in accordance with the overriding purpose set out in s 56 of the Civil Procedure Act 2005 (NSW), and the other case management principles set out in Part 6 Div 1 of that Act.

13. Having regard to those matters, I do not accept that, on the present application, it is a prerequisite for the grant of such an extension that the Plaintiffs establish “exceptional circumstances” warranting the extension.

14. Instead, the power to extend time is to be exercised judicially, having regard to all of the circumstances of the case and in such a manner as to seek to facilitate the just, quick and cheap resolution of the real issues in the proceedings.

Determination

Evidence is critical to Plaintiffs’ case

15. As a starting point, the Plaintiffs submitted, and the Defendants did not dispute, that the Clifford Report is essential to establishing the Plaintiffs’ claims.

16. The First Plaintiff, Mr Peter Martino, previously worked for the Azzurri G****roup of Companies (which comprises the First, Second, Third, Seventh, Eighth and Ninth Defendants) as its Chief Executive Officer. He claims to have held interests of around 14% in the Azzurri Group, either directly or indirectly through the Second Plaintiff, 2B6 Enterprises Pty Ltd.

17. The Plaintiffs’ case is that, after the First Plaintiff was effectively frozen out of management of the Azzurri Group from the middle of 2022, the Defendants wrongly served a breach notice under the Shareholders Agreement in May 2023 and embarked on a process for the compulsory acquisition of the Plaintiffs’ interest, including obtaining a valuation of those interests in the amount of $234,000. The Plaintiffs contend that there were deficiencies in the compulsory acquisition process, and that the Defendants’ conduct amounted to oppressive conduct.

18. Upon the commencement of this proceeding in June 2023, the Plaintiffs sought interlocutory orders restraining the completion of the compulsory acquisition of their interests in the Azzurri Group. This application was resolved on the basis of an undertaking proffered by the Defendants to pay any shortfall in financial entitlements that the Plaintiffs might establish. The compulsory acquisition subsequently completed.

19. The Plaintiffs submitted that, in these circumstances, the remedy they seek is essentially a financial one, being the alleged difference between the true value of their interests in the Azzurri Group and the amount that was claimed to be payable for the compulsory acquisition of those interests.

20. The Clifford Report provides an opinion on the value of the Plaintiffs’ interests in the Azzurri Group at different dates, based on alternative sets of financial information relating to the Azzurri Group (a matter to which I return below). The values given in the Clifford Report, on those alternative bases, range from $3.4m to $11.0m.

21. Having regard to those matters, I accept the Plaintiffs’ submissions that:

22. the Plaintiffs’ case depends on establishing the true value of their interests in the Azzurri Group;

23. the Defendants were permitted to complete the compulsory acquisition process on the basis of an undertaking to pay any assessed loss to the Plaintiffs; and

24. the Clifford Report is essential to establishing the true value of those interests, and the extent of the Plaintiffs’ assessed loss, and indicates (if his evidence is accepted) that the Plaintiffs have suffered a very substantial loss.

25. I therefore approach this application on the basis – which, as previously stated, was not disputed by the Defendants – that the evidence in question is critical to the Plaintiffs’ case.

Orders of 17 March 2025

23. It is necessary to have regard both to the terms of the orders made by the Court on 17 March 2025 and the circumstances in which those orders were made.

24. As at 17 March 2025, no orders had previously been made for the service of expert evidence, despite the matter having been commenced in June 2023. That was due, at least in part, to there having been an extensive and ongoing dispute about discovery and access to documents, which had been the subject of correspondence and a number of hearings over the previous six months.

25. Accordingly, the 17 March Orders, including the qualified guillotine order in respect of expert evidence, were not made in circumstances where there had been any prior non-compliance with an order for the service of expert evidence, let alone any repeated non-compliance. This may explain why Black J stated, at the time of making the qualified guillotine order, that he was “tentatively” doing so.

26. Another explanation for his Honour “tentatively” making this order, and also “tentatively” listing the matter for hearing was that it was not clear, at the time that the orders were made, whether the parties’ experts would be available for the specified hearing dates. This explains why the parties were directed to inform his Honour’s chambers whether it was necessary to vary those dates in order to accommodate the experts’ availability.

27. In addition, Black J made an order that the matter be listed for directions on 16 June 2025, after the dates which had been directed for the service of expert evidence, in order “to confirm the hearing date”. It follows that those orders contemplated that it may be necessary, in mid-June, to move the hearing that was scheduled to commence on 22 July 2025, in the event that the expert evidence was served late.

28. It follows that, although the matter was listed for hearing on 17 March 2025, at the time that the orders for service of expert evidence were made, it was understood that this was a tentative listing which would need to be confirmed, and might need to be moved depending on either the experts’ availability or any slippage in the service of the experts’ reports.

29. The present application falls to be determined in that context.

Explanation for delay

30. I accept that, generally, a party seeking leave to extend a date for the service of expert evidence should provide an adequate, comprehensive and candid explanation for their failure to comply with the orders of the Court: see The Owners Strata Plan No 94784 v Mirvac Projects Pty Ltd [2024] NSWSC 741 at [14] (Stevenson J).

31. In that regard, the following matters are of particular significance.

32. First, Black J made the qualified guillotine order in circumstances where his Honour had been informed that the Plaintiffs had retained an expert who had been briefed, in early 2025, with documents discovered by the Defendants, who had subsequently made a number of further document requests which had been communicated to the Defendants, and with whom the Plaintiffs’ solicitor had “liaised … for the production of a report”.

33. The expert in question was not Mr Clifford (who had not been retained by the Plaintiffs as at the time of the 17 March Orders), but PricewaterhouseCoopers. Following the making of the 17 March Orders, the Plaintiffs’ solicitor ascertained that PricewaterhouseCoopers were unavailable for the hearing dates ordered by the Court.

34. On 21 March 2025, the Plaintiff’s solicitor sent a letter of appointment to Mr Clifford, together with a link to documents discovered by the Defendants. (There is evidence that the Plaintiffs had formed the view, on around 14 March 2025, that they would engage Mr Clifford to prepare a report, subject to conflict checks being completed. However, it remains the case that Mr Clifford was retained, and briefed with the Defendants’ documents, only some days after the 17 March Orders were made.)

35. There was evidence on this application of communications back and forth between the Plaintiffs’ solicitor and Mr Clifford. It is apparent from those documents that there continued to be regular communication throughout the period of some eight weeks from when Mr Clifford was retained (21 March 2025) to when his report was served (19 May 2025).

36. Secondly, further significant documents came to light after the 17 March Orders were made and after Mr Clifford was retained.

37. On Friday, 14 March 2025, being the business day before the 17 March Orders were made, the Plaintiffs issued a subpoena to Bespoke Financial Advisory Pty Ltd, who had acted as finance broker for the Defendants.

38. This subpoena sought various financial information relating to the Defendants, including a copy of the consolidated annual financial statements for the financial year ending 30 June 2023 for the Second Defendant (Azzurri Concrete Group Pty Ltd) and its subsidiaries, which had been provided to Bespoke by the Azzurri Group.

39. The Plaintiff’s solicitor, Mr Laface, deposed that he received various documents sent directly to his offices in response to this subpoena (the “Bespoke” Documents). There is a factual dispute both as to whether the “Bespoke” Documents in fact came from Bespoke, and as to whether they are genuine documents of the Defendants.

40. The parties agreed that I am not in a position to, and do not need to, resolve this factual dispute for the purposes of this application. I have accordingly proceeded on the basis that the “Bespoke” Documents may in fact represent financial information relating to the Defendants, which the Defendants had provided to Bespoke.

41. The “Bespoke” Documents include financial statements for the Azzurri Group, apparently signed by Mr Donato D’Angola, which report results significantly better than those in the financial statements which have been discovered by the Defendants. (I note that Mr D’Angola denies signing the financial statements in the “Bespoke” Documents, and deposes that he does not know who prepared them.)

42. The discrepancies are significant. In particular, the documents discovered by the Defendants report that the Azzurri Concrete business had, in the 2023 financial year, a loss of $7.365m before tax, while the “Bespoke” Documents state that the business had, in the same financial year, a profit of $8.439m before tax.

43. The Defendants pointed out, and the Plaintiffs accepted, that Mr Laface did not state in his affidavit precisely when he received these documents. However, I do not consider this omission to be critical. It is evident, from the fact that the subpoena was issued on Friday 14 March 2025, that no documents had been received in response to the subpoena (let alone reviewed) by the morning of Monday 17 March 2025, when the orders for expert evidence were made. The Plaintiffs would doubtless have drawn this development to the Court’s attention at the hearing if they were aware of such a significant matter, particularly since there was discussion at that directions hearing regarding issues with discovery and the production of documents.

44. I infer, from the correspondence which is before the Court, that the “Bespoke” Documents were received in early April, since they were briefed to Mr Clifford on 3 April 2025 at 2.13pm.

45. This conclusion is supported by the fact that, from 4 April 2025, Mr Laface began making a series of requests to the Defendants’ solicitor for the Defendants to provide, by way of an affidavit from a director, an explanation as to whether the figures in the material previously discovered by the Defendants were correct, having regard to the figures in the “Bespoke” Documents.

46. This request was made on 4 April 2025, and repeated on 7 April, 9 April and 14 April 2025.

47. The Defendants’ solicitor indicated, on 9 April 2025, that his clients did not intend to provide any such affidavit, but Mr Laface responded that the Defendants’ solicitor should nonetheless give an explanation as to “how [the Defendants have] provided two sets of figures to various parties”. Further, Mr Laface stated on 14 April 2025 that if the Defendants did not provide an explanation, the Plaintiffs would rely on the Defendants’ failure to do so “should [the Defendants] seek to object to or oppose any part of [the Plaintiffs’] expert evidence”.

48. No such explanation was forthcoming. (It should be noted that if Mr D’Angola’s evidence is accepted, the Defendants were unable to provide any such explanation, since they do not know who prepared the “Bespoke” Documents which contain the higher profit figures, and dispute their authenticity.)

49. I am satisfied, given the matters set out above, that it was reasonable for Mr Laface, before giving further instructions to Mr Clifford, to make enquiries as to which of the two sets of financial information was accurate, and to seek an explanation for the variance, given that those were matters critical to the valuation exercise being undertaken by Mr Clifford (as shown by the extent of the variance in the valuation figures based on the alternative sets of financial information).

50. Having not received any such explanation in response to his requests in the first half of April 2025, Mr Laface proceeded to instruct Mr Clifford to prepare his report on the two alternative sets of financial information relating to the Defendants. The first draft report was prepared and provided on 24 April 2025 (being the last business day before 28 April 2025, when the expert evidence was due to be served).

51. Given those matters, I am satisfied that there has been an adequate explanation for the failure to comply with the orders for service of expert evidence by 28 April 2025.

Lack of prejudice

52. Finally, the Defendants did not identify any prejudice if the Court were to grant the extension sought by the Plaintiffs. The Defendants’ solicitor, Mr Cabrera, did not, for example, depose that, in the event that leave was granted to rely on the Clifford Report and the hearing date was maintained, the Defendants would not be able to prepare a responsive report. The highest that the submission was put in writing was that the grant of leave would “prejudice the ability of the hearing date being maintained” (though, as noted, there was no evidence to substantiate that this was so).

53. Counsel for the Defendants acknowledged that the Defendants had retained an expert valuation witness, that they intended to serve a report from this expert whether or not the Plaintiff’s application was granted, and that their expert was able to prepare his report in a short space of time. (As set out below, the Defendants subsequently confirmed, after these ex tempore reasons were delivered, that their expert could provide a responsive report by early July 2025 and that the hearing date could be maintained.)

Conclusion

54. Having regard to those matters, I have determined that the time for service of the Plaintiffs’ expert evidence should be extended, and the Plaintiffs should be granted leave to rely on the Clifford Report. I am satisfied that this will facilitate the just, quick and cheap resolution of the real issues in these proceedings regarding the value of the Plaintiffs’ interests in the Azzurri Group.

55. Further, if (contrary to the reasons outlined above) it was necessary for the Plaintiffs to establish exceptional circumstances warranting the grant of such leave, I would have been satisfied that they had done so. In particular, I note the following matters:

56. the Plaintiffs only received the alternative set of financial documents relating to the Defendants some time after the 17 March Orders were made;

57. that evidence was critical to the preparation of Mr Clifford’s valuation report;

58. the Plaintiffs sought, but did not receive, an explanation for the variance between the financial statements which had been discovered by the Defendants and those in the “Bespoke” Documents; and

59. on this basis, the Plaintiffs proceeded to instruct Mr Clifford to prepare his report based on two alternative sets of financial information, which increased the time taken to complete the report.

60. At the conclusion of the hearing, the Plaintiffs submitted that costs should either be reserved, or be costs in the cause. However, in circumstances where the Plaintiffs failed to comply with the orders made by the Court for the service of their evidence, and then sought an indulgence from the Court, I accept the Defendants’ submission that the appropriate order is that the Plaintiffs’ pay the Defendants’ costs of the application for an extension of the time for service of their expert evidence. Further, if the Plaintiffs had applied to the Court for an extension as soon as it became apparent that they were unable to comply with the timetable for expert evidence (by, for example, seeking to have the matter relisted for directions in the Corporations List on 28 April 2025), and had provided the explanation for the delay that is set out above, it is likely that an extension would have been granted at that time, which would have saved much of the expense of the present application.

61. Following the delivery of these reasons, the Defendants confirmed that they could file and serve their expert evidence by 4 July 2025, and the Plaintiffs confirmed that they could file any evidence in reply by 11 July 2025, with the parties’ experts being available to meet in conclave and prepare a joint report by 21 July 2025. I made directions to this effect which will ensure that, despite the late service of the Plaintiffs’ expert evidence, the hearing dates will be maintained and the parties will be able to comply with their existing arrangement (which was noted in the orders of 17 March 2025) to participate in a privately arranged mediation to be held before 9 July 2025.

ORDERS

58. For those reasons, at the conclusion of the hearing, I made the following orders:

59. Extend the time for compliance with order 1 made on 17 March 2025 to 19 May 2025.

60. Grant leave to the Plaintiffs to rely on the report of Mr Clifford, served on 19 May 2025.

61. The Plaintiffs pay the Defendants’ costs of the application for an extension of time for their expert evidence.

62. Vacate Orders 2 and 3 made on 17 March 2025, and

(a) direct the Defendants to file and serve any expert evidence by 4 July 2025, no evidence to be relied on if not filed and served by that date without leave; and (b) direct the Plaintiffs to file and serve any expert evidence in reply by 11 July 2025, no evidence to be relied on if not filed and served by that date without leave.

5. Direct the parties’ respective experts to confer in conclave and produce a joint report by 21 July 2025.
6. Vacate the directions listing on 16 June 2025.
7. Confirm the matter for hearing before Nixon J with a seven-day estimate on 22-25 and 29-31 July 2025.

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Amendments

13 June 2025

Amended 13.06.25 - Amended decision date