Karl Suleman Enterprizes Pty Ltd (in liq) v Pham

Judgment (ex tempore) 1HER HONOUR: In the referrals list before me yesterday was a notice of motion filed on 28 March 2013 by a company in liquidation, Karl Suleman Enterprises, seeking expedition pursuant to r 51.60 of the Uniform Civil Procedure Rules of proceedings that the company has brought seeking leave to appeal from the refusal by Beech-Jones J for leave for the company further to amend its Further Amended Statement of Claim in proceedings in the Common Law Division of the Court. 2The decision from which leave is sought to appeal was handed down on 28 February 2013. An earlier application for leave to amend had been granted by Harrison AsJ in November 2011. That decision was the subject of a successful appeal heard by Beech-Jones J in June 2012. 3The Common Law Division proceedings, as presently constituted, raise causes of action in negligence, breach of contract and breach of fiduciary duty against Mr Pham and parties referred to together as the Pham defendants. Mr Pham is a solicitor who was allegedly retained by Karl Suleman Enterprises to assist it in establishing an investment scheme and to advise the company as to the operation of that scheme. Various breaches of the corporations legislation by Karl Suleman Enterprises (including prohibitions on conduct of unregistered managed investment schemes) are pleaded. There is no allegation of such a breach of the Corporations Act 2001 (Cth) by Mr Pham or the Pham defendants, nor of any involvement in such a breach by Mr Pham or the Pham defendants. 4The amendments disallowed by Beech-Jones J in February this year in essence raise allegations that Mr Pham was involved in breaches of the Corporations Act by Mr Suleman. (The earlier amendments, the subject of the successful appeal, related to his alleged involvement in the company's contraventions.) Under the proposed amendments relief was being sought under s 1325(2) of the Corporations Act. Leave was also sought to plead a new cause of action under the former s 1005 of the Corporations Act for breach of s 999 of that Act. The disallowed amendments are set out in his Honour's judgment. 5Before his Honour, the Pham defendants contended that the Court did not have the power to allow the amendments which sought to add a cause of action under the former s 1005. (The contention by the Pham defendants was that ss 64 and 65 of the Civil Procedure Act 2005 cannot operate to effect an extension of the time limits for commencement of an action of the kind specified in s 1005 subs (2).) His Honour rejected that contention. 6His Honour nevertheless dismissed the application for leave to amend by the company on discretionary grounds, having regard in particular to what was said in Aon Risk Services Australia Ltd v Australian National University [2009] HCA 27; 239 CLR 175. His Honour considered that the application to make the amendments was too late, too poorly explained and of doubtful utility when weighed against the likely impact on the Pham defendants (and the interests of the other litigants) and that to allow the amendments would carry with it an appreciable risk that the hearing date would be lost. 7In essence, his Honour found that this was a case in which the company had had sufficient opportunity to plead its case and that it was too late for further amendments having regard to the interests of the Pham defendants and the other litigants. 8The company appreciates that if the application for leave to amend is to be successful the company needs to establish error in the House v King sense. It points to three matters in this regard. First, it is contended that his Honour failed to take into account that, although the matter had been fixed for hearing, that hearing date had only recently been fixed and in circumstances where it is said the application to amend was anticipated by the parties and the Court. 9Secondly, it is said that his Honour misapplied Aon as to the relevance of the explanation of delay (it being said that the question is not whether there was a "proper" explanation, as such, but simply whether there was an explanation at all). 10Thirdly, it is said that his Honour erred in his reference to the importance of the amendment (on the basis that it is suggested that that was not considered by his Honour to be a positive reason for granting leave but as something overcoming a basis as to why leave should otherwise be refused). 11The present application before me is simply for expedition of the appeal proceedings. That must be seen against the fact that the Common Law Division proceedings have been on foot for a considerable period of time and the hearing has been listed to commence in June for three weeks. 12Senior Counsel for the company (Mr Ashhurst SC) accepts that if, as a matter of practicality, the Court cannot accommodate the application for expedition or if prejudice is shown by Mr Pham and the Pham interests as a result of expedition, then the issue (as to whether leave should have been granted for the amendments) will have to await the decision in the substantive proceedings. 13For Mr Pham, the prejudice that is identified is the potential loss (and consequent delay) of the hearing date. It is acknowledged that if the hearing of the application for leave to appeal/appeal is expedited that will inevitably divert resources from preparation of the hearing itself but it is not suggested, as I understand it, that that is a basis on which expedition should be refused. 14Rather, the prejudice said to be suffered by Mr Pham is that, as a sole practitioner, he has been subject to proceedings involving a substantial claim against him for a considerable time; that this is a late application to amend in order to include new causes of action against him; and that the delay (though only minor) in the bringing of the motion for expedition is such that it should not be accommodated only two months before the hearing date if that will have an appreciable likelihood of causing the hearing date to be lost. 15In terms of the chronology of events, the Common Law Division proceedings were fixed for hearing on 4 July 2012, after his Honour had upheld the appeal against the decision of Harrison AsJ. There were directions hearings held in the matter on 18 March and 22 March 2013. On 18 March, a trial plan was put in place for the trial commencing in June. On 22 March (two days after advice had been given by Senior Counsel for the company in relation to an application for leave to appeal from the decision handed down in February), the matter was before the Court for directions and there was no reference to any foreshadowed application to appeal from the decision in February. 16Given that the decision on 28 February was on entirely discretionary grounds and serious allegations have been raised, and given that the proceedings have been on foot for a considerable time, it is submitted by Mr Pritchard SC (for the Pham defendants) that expedition should not be granted. 17The high point, it seems to me, of the application for expedition on the part of the company is that there is the potential (if expedition is not granted) of there being a three-week fully contested trial followed by an appeal and then a possible remittal of the matter. Therefore, Mr Ashhurst points to the potential for duplication of costs in the matter. 18If the application for leave were heard in advance and were unsuccessful then there is no question that the hearing dates will not be lost. The issue is whether, if the application for leave (whether or not heard concurrently with the appeal) is successful, there is an appreciable risk of the loss of the hearing date. 19Relevant considerations on an expedition application have been said to include the risk of increased costs as a result of duplication and delay, although the authority referred to for that proposition in Ritchies (Moorebank Recyclers v Tanlane [2012] NSWCA 115) was considering the duplication of costs in relation to compliance with conditions of a development consent (and the applicant losing its place in the development queue), not the duplication of costs of potentially having two hearings in this Court relating to similar issues. 20I have had regard to the principles outlined in Aon (see [30] per French CJ and at [35] and particularly [99]-[103] per the plurality). I have also had regard to the mandate imposed under s 56 of the Civil Procedure Act 2005 (NSW) for powers under the Rules to be exercised with the overriding aim of facilitating the quick, just and cheap resolution of the real issues in dispute between the parties. 21I am not satisfied that, in circumstances where there is potential prejudice to the respondents by reason of a delay in a hearing date that has been fixed since July last year and in circumstances where no application for a stay or vacation of the hearing date was sought either when the notice to amend was filed on 24 July 2012 or at any point thereafter, it is in the interests of justice to expedite the hearing of these proceedings. 22I have taken into account in that regard the fact that my inquiries of the Registrar in the Court of Appeal are such that if the application for leave to appeal and the appeal were to be heard concurrently it is unlikely that the matter could be listed before some time in early May and that even that is unlikely to be practicable without de-listing other matters that have already been listed for hearing before the Court of Appeal. 23In the course of argument on the expedition application Mr Pritchard indicated that if leave to appeal is granted then the respondents would be filing a notice of contention in relation to the rejection by his Honour of their contention that the Court had no power to give leave for the amendment of the pleadings in order to include a cause of action statute barred under the Commonwealth legislation (and that it might be necessary for the Court to sit a five judge bench to hear that notice of contention). 24Ultimately, whether or not it were necessary for a five judge bench to deal with issues raised on such a notice of contention, it would not be practicable for the Court to deal with a concurrent hearing of the leave application and appeal in sufficient time prior to the commencement of the hearing in June or with sufficient time to permit the orderly preparation of a considered judgment in relation to those issues before the commencement of the hearing in June. 25For those reasons, I am not satisfied that expedition should be granted. 26However, I raised during the course of the expedition argument whether consideration had been given to whether this was a matter that would appropriately be dealt with by way of a concurrent hearing of the application for leave to appeal and the appeal itself; or simply for a hearing in the first instance of the application for leave to appeal. That issue has not, as I understand it, yet been addressed by this Court. If the matter were to be considered suitable to proceed simply as an application for leave then it could be fixed for hearing next week. That would have, it seems to me, the advantage that one then would know whether or not leave to appeal had been granted. 27If leave to appeal were not granted then the issue of loss of the hearing date would not arise and there would not be a need for further costs to be incurred in relation to the present appeal proceedings. 28If, on the other hand, leave to appeal were granted from what is accepted to be a wholly discretionary decision on the part of the primary judge then it will be a matter for the parties what further application, if any, one or other of the parties may seek to make in relation to the hearing date. 29Therefore, subject to inquiring as to Counsel's convenience, I will dismiss the application for expedition but I propose to list the application for leave to be heard as a leave only application on 15 April 2013. 30I will order that the costs of the notice of motion for expedition be the respondent's costs of the appeal. 31After giving the above reasons an issue was raised as to whether security should be provided for the anticipated costs of the leave only application. I was informed that the Pham defendants' motion for security for costs was listed in the Registrar's list on the morning of 15 April 2013. Mr Pritchard sought security in the sum of $15,000 for the leave only application. Counsel appearing for the company at the time I gave these reasons (Mr Duggan) was unable to obtain instructions on that issue but did not oppose me dealing with this issue on the following basis. 32Without expressing any view on the security for costs application, I made the listing of the matter for a leave only application on 15 April 2013 conditional on the provision to the respondents of security in the sum of $15,000 in a form acceptable to the respondents by 12 April 2013, in effect as the condition of the early listing of the leave only application.