Mendonca v Matthews Folbigg Pty Ltd & Anor [2022] NSWSC 764 | Case summary

Consideration

Whilst there was some discussion during oral submissions about deficiencies in the proposed further amended statement of claim and indeed whether the plaintiff could possibly succeed on the cause of action she seeks to pursue, the defendants did not seek to resist leave being granted on the basis that the document discloses no cause of action or that the cause of action was so hopeless that it was doomed to fail.
Nor did the defendants submit that the failure to document claim (as it is put by the plaintiff on this application) would necessarily be an abuse of process because it must involve going behind the judgment in the Tonna proceedings.
Having regard to both the oral and written submissions of the defendants, I took the defendants' real position to be that the plaintiff had already been refused leave to pursue the failure to document claim and she should not be permitted to simply file a new motion seeking the same orders on the same basis.
As set out in s 64 of the Civil Procedure Act 2005 (NSW) (CPA), at any stage of the proceedings the Court may order that any document in the proceedings be amended. Subject to s 58 CPA, all necessary amendments are to be made for the purpose of determining the real questions in the proceedings.
Of course, any order that the Court might make must have regard to the overriding purpose of the CPA which is to facilitate the just, quick and cheap resolution of the real issues in the proceedings (s 56). The Court must seek to give effect to that overriding purpose when it exercises any power given to it by the CPA (s 56(2)).
Further, in determining whether to make an order granting leave to amend the statement of claim, it is necessary to have regard to both s 57 and s 58. That is, in determining whether to make an order for the amendment of the statement of claim, the Court must seek to act in accordance with the dictates of justice. In determining the dictates of justice in a particular matter, it is necessary to have regard to the matters set out in s 58(2)(a) and (b).
The Court must strive to make orders that not only allow for the proper case management of the proceedings but allow for a just determination of the proceedings.
These principles are not in dispute. It is their application in the context of a second application to amend the statement of claim which is in dispute.
The defendants refer to Brimaud v Honeysett Instant Print Pty Ltd ("Brimaud"), [5] specifically in respect of considering the issue of multiple interlocutory applications. In particular, reference was made to the observations of McLelland J as follows: [6] "Interlocutory orders, of their very nature, create no res judicata or estoppel, and the court retains jurisdiction to set aside, vary or discharge an interlocutory order up to the time of the final disposition of the proceedings. However, the general rationale of the principles last referred to applies even in the case of interlocutory orders. It would be conducive to great injustice and enormous waste of judicial time and resources if there were no limit on the power of a party to have any interlocutory application or order relitigated at will. The overriding principle governing the approach of the court to interlocutory applications is that the court should do whatever the interests of justice require in the particular circumstances of the case. In giving effect to that general principle, and in recognition of the public and private interests earlier referred to, rules of practice have been developed in accordance with which the discretionary power of the court to set aside, vary or discharge interlocutory orders will ordinarily be exercised."
As I understand the defendants' submissions, they suggest that it is necessary for the plaintiff to establish that there has been a material change in circumstances since the original application or that there has been new material found which could not have reasonably been adduced at the time of the original application.
Whilst those factors might be relevant and, in some cases, determinative, I do not consider that the presence of those factors must always operate as a prerequisite to success on a further interlocutory application, such as an application to amend a document.
Firstly, it must be remembered that the further application in Brimaud was made after an original contested hearing in which orders were made which were contemplated would remain in operation until the conclusion of the proceedings. It may be that in those circumstances and in respect of the subsequent applications essentially seeking the same orders, the factors referred to in Brimaud, such as the availability of new evidence or a material change in circumstances, would be determinative.
However, not all interlocutory applications involve an attempt to vary orders that were contemplated as lasting until the conclusion of the proceedings. The current application is of a different type to that considered in Brimaud.
In any event, Brimaud has been considered in a number of subsequent cases. [7]
Indeed, in Nominal Defendant v Manning, the Court (per Heydon JA (as his Honour then was) and Foster AJA) rejected the proposition that there is a general rule which would preclude an unsuccessful applicant for interlocutory orders from repeating the application simply because the applicant sought to rely on additional relevant factors which would not amount to fresh evidence. Only Mason P (in dissent) suggested that it was a rule of practice that an interlocutory order made after a hearing should not be set aside, varied or discharged except to accommodate a change of circumstances or where evidence has become available which was not available at the earlier time.
In any event, this is not an application to set aside, vary or discharge the earlier orders of Wilson J.
Further, in Liu, the Court rejected the proposition that there is any preclusive rule in relation to the bringing of a second interlocutory application. [8]
Indeed, Brimaud was determined prior to the introduction of the CPA and, in particular, ss 56 to 58 to which I have already referred.
In my view, the proper approach to an application such as this is not now governed by the observations of McClelland J in Brimaud (in the sense of there being some preclusive rule) but rather the approach summarised by McColl JA in Liu as follows: [9] "In summary, accordingly, the overriding principle governing the approach of the court to interlocutory applications is that the court should do whatever the interests of justice require in the particular circumstances of the case. That consideration also applies to a second interlocutory application concerning the same, or what is substantially the same, issue or an attempt by a litigant who has unsuccessfully resisted an interlocutory application to re-agitate the same question. However, in determining what the interests of justice require, the court will have regard, among other matters, to the nature of the first interlocutory application, the nature of the change in position and whether any matter relied upon to change the basis upon which the challenged earlier order was made, was open to be advanced at the earlier hearing."
That approach is, of course, consistent with the principles set out in ss 56 to 58 CPA. Further, the approach is not varied according to whether the application is the first, second or third interlocutory application. As observed by McColl JA in Liu, the Court should do whatever the interests of justice require in the particular circumstances of the case, even in respect of an application which is substantially the same or an attempt to reagitate the same question in a subsequent application. As observed by her Honour, the matters referred to in Brimaud will be relevant but they are not determinative.
In the circumstances, I do not consider that the plaintiff's application must be dismissed on the basis that some of the paragraphs contained in the current proposed further amended statement of claim were contained in the proposed further amended statement of claim which were the subject of orders by Wilson J.
The issue that thus arises is whether, having regard to the principles which I have outlined, the dictates of justice mandate that the plaintiff's further attempt to amend the statement of claim should be permitted.
There are only two bases, as identified by the defendants in their written submissions, as to why the application should be rejected: 1. Firstly, the defendants say that it is not permissible for the plaintiff to pursue another application of the same substance as was determined by Wilson J; and 2. Secondly, the defendants submit that there are deficiencies in the further amended statement of claim in any event and that no cause of action is disclosed.
During oral submissions, I took Mr Donaldson SC not to be emphasising the latter ground. Whilst he complained of deficiencies in the further amended statement of claim, it does not seem to me that those purported deficiencies are such that would justify refusing leave to amend. Further, it does not seem to me that the claim as articulated in the further amended statement of claim is so hopeless or that the pleading discloses no cause of action that I should refuse leave to amend.
Mr Donaldson SC articulated likely conceptual and evidentiary difficulties with the claim which the plaintiff proposes to pursue but these are matters for any hearing.
The plaintiff pursues this application on the basis that: 1. She does not seek to go behind or challenge any finding of fact made in the time of proceedings; 2. She is not seeking any orders which would be inconsistent with any findings made in the Tonna proceedings; 3. For the purposes of the failure to document a claim, she accepts that the agreement is as determined in the Tonna proceedings; and 4. She maintains that if the defendants had documented that agreement, then there would have been no dispute between the parties and the Tonna proceedings would not have arisen. In those circumstances, she would not have incurred any costs in the Tonna proceedings.
Litigation against legal advisers arising out of unsuccessful litigation is not an abuse of process. Plainly there are limits on the scope of such litigation, such as advocates' immunity, but an Anshun estoppel [10] will generally not arise in proceedings involving different parties.
According to the plaintiff (and I am not able to or required to make any determinative finding about this) the proposed further amended statement of claim does not reflect any challenge to the correctness of the decision in the Tonna proceedings or any particular finding.
In determining whether the interests of justice permit the filing of a further amended statement of claim in the form proposed by the plaintiff, it is necessary to have regard to the earlier judgment of Wilson J. This is because the defendants submit that her Honour must be taken to have considered and dealt with the failure to document claim as part of her Honour's earlier judgment, albeit in a global way.
The defendants submit that it must be that her Honour determined to strike out those paragraphs as being an abuse of process.
On the other hand, the plaintiff, whilst acknowledging that the failure to document claim was part of the earlier proposed further amended statement of claim, submits that her Honour did not make findings regarding that aspect.
Her Honour summarised the essential allegations in the proposed further amended statement of claim on which she was required to rule as follows: "In the [proposed further amended statement of claim] the plaintiff asserts that the defendants breached contractual and common law duties of care to her by failing to advise her that her purchase from the Tonnas was likely to give rise to the Tonnas having a proprietary interest in the Galston Property, and to advise her of the differing legal and economic consequences of the purchase. She alleges that the defendants also breached the fiduciary obligations owed to her by failing to cease to act for her in circumstances where there was a possibility of a conflict between them and the plaintiff, given that they also acted for the Tonnas. It is the plaintiff's proposed claim that, had she been properly advised by the defendants, she would not have purchased the Galston property in the way that she did, but rather would have ensured that her purchase was not subject to any claim, entitling her to the full benefit of economic gains made in the Galston property."
Her Honour then went on to review the findings in the Tonna proceedings, observing that the findings of fact as to the intentions of the plaintiff and the Tonnas were important and indeed fundamental to the decision of Ward CJ in Eq (as her Honour then was). [11]
Next, her Honour makes reference to the not pleaded or particularised intention of the plaintiff in entering into the arrangement with the Tonnas. As her Honour said: [12] "It is the unstated foundation of the [proposed further amended statement of claim] that the plaintiff's firm intention was the acquisition of an investment property, an intention which was frustrated by the failures of the defendants. Necessarily, a critical part of the claim rests upon the asserted intentions, one which is contrary to the facts found by Ward CJ in Eq."
Her Honour went on to say: [13] "To pursue that claim, it would be necessary to relitigate the issue of Dr Mendonca's intention in and understanding of her entry into the Amended Substitution Solution. It would also be necessary to advance a case that traversed the findings of Ward CJ in Eq to the effect that both the Tonnas and the plaintiff intended that the Tonnas would acquire an interest in the Galston property with the plaintiff's purchase of it."
This led to the finding: [14] "The plaintiff's [proposed further amended statement of claim] would necessarily assert factual matters that contradict or are inconsistent with findings of fact made by Ward CJ in Eq on the basis of the same evidence as would be advanced in the proposed case. The defendant argues, and I accept, that the plaintiff is estopped from doing so, in accordance with the principle first given in Port of Melbourne Authority v Anshun Proprietary Limited (1981) 147 CLR 589; [1981] HCA 45."
Further, her Honour went on to observe that the present claim against the solicitors could have been advanced together with the Tonna proceedings. [15] She observed that even though the defendants were not joined to the earlier litigation, the issues involved could have and should have been determined at the same time as the Tonna proceedings.
The defendants do not adopt that finding or make that submission for the purposes of this application.
No party suggests any error in her Honour's approach and no appeal was filed. However, Mr Donaldson SC acknowledged that the effect of her Honour's orders (striking out the amended statement of claim) was not to dismiss the proceedings entirely. Her Honour refused leave to the plaintiff to file the proposed further amended statement of claim. Mr Donaldson SC also acknowledged that the defendants did not seek any further order to bring the whole proceedings to an end.
It follows that the proceedings remain on foot. The current pleading is the original statement of claim. The defendants have not filed any defence. That must be so as, if the effect of her Honour's orders was to dismiss the proceedings as a whole, the plaintiff could hardly bring a further application to amend the statement of claim.
Thus one factor to consider in determining the interests of justice is that the proceedings remain on foot. This is not a case in which the plaintiff is seeking to set aside earlier final orders. This application proceeded on the basis that it was an interlocutory application in respect of existing proceedings.
It did not proceed on the basis that the plaintiff was attempting to reinstate the proceedings which had already been dismissed.
The second factor of significance in considering the interests of justice is that there is no reference to the failure to document claim in the earlier judgment on the first application to amend the statement of claim. Although the defendants suggest that it formed part of the proposed further amended statement of claim at that time, it must be that her Honour's attention was not directed to this third type of claim as a separate and distinct aspect of the statement of claim.
Alternatively, on consideration of the whole of the statement of claim proposed at that time, it must be that the plaintiff was proceeding on a different premise, that is, one which must have necessarily involved a challenge to the findings in the Tonna proceedings.
On this application, the defendants do not submit that the failure to document claim must necessarily involve a challenge to the findings of fact in the Tonna proceedings. Rather, they cast doubt on how the plaintiff could be pursuing such a claim, having regard to what the defendants suggest are inherent inconsistencies in earlier evidence from the plaintiff.
I am thus not required to determine whether the failure to document claim is an abuse of process in that it operates as an attack on the findings in the Tonna proceedings.
The plaintiff's earlier attempts to file a properly pleaded and formulated claim have been unsuccessful. It would be contrary to the quick, just and cheap resolution of the real issues in the proceedings to allow for these proceedings to go forward on the basis of the original statement of claim.
Mr Donaldson SC suggests that I should dismiss the proceedings but there is no application before me to do so.
I do not accept that, on an application to amend a document which is governed by particular rules in the Uniform Civil Procedure Rules 2005 (NSW), as well as ss 56 to 58 CPA, there is any preclusive rule dependent upon a material change in circumstances or fresh evidence.
It may be, as the defendants submit, that the earlier application was dealt with on a global basis but there is no specific finding that the failure to document claim constitutes an abuse of process or would be subject to an Anshun estoppel. Nor is it submitted that there should be on this application as the plaintiff has quite plainly identified that she is proceeding on the basis of the facts found in the Tonna proceedings.
She says that is what she has pleaded and that if this matter goes forward, she must be bound by that concession. That is, her case is that the defendants should have documented the agreement in the terms found in the Tonna proceedings. It is not for me to comment on the strengths or weaknesses of that case.
As the case is going forward on the basis that there is no challenge to the facts found in the Tonna proceedings and as there is nothing in the earlier interlocutory judgment which suggests a case which proceeds only on the basis of the failure to document claim and without any challenge to any facts in the Tonna proceedings would be an abuse of process, I am satisfied that it is in the interests of justice that the plaintiff be granted leave to amend the statement of claim in accordance with the document annexed to the notice of motion.
I thus make the following orders: 1. Leave is granted to file the further amended statement of claim in the form annexed to the motion. 2. I order that the defendants file defences within 28 days of service of the further amended statement of claim. 3. I order that the costs of the motion are costs in the cause. 4. Should any party seek a variation of that order, I grant liberty to apply on 3 days' notice. 5. I list the matter in the Professional Negligence List on Friday 5 August 2022 for case management.

Endnotes

Tonna v Mendonca [2019] NSWSC 1849.
See Mendonca v Tonna [2020] NSWCA 196.
(2001) 53 NSWLR 198; [2001] NSWCA 142 at [32] (Handley JA).
See Mendonca v Matthews Folbigg Pty Ltd [2021] NSWSC 554.
(1988) 217 ALR 44.
At 46.
See, for example, Liu v The Age Company Ltd (2016) 92 NSWLR 679; [2016] NSWCA 115 ("Liu"); Capilano Honey Ltd v Dowling (No 2) [2018] NSWSC 865; Nominal Defendant v Manning (2000) 50 NSWLR 139; [2000] NSWCA 80 ("Nominal Defendant v Manning").
At [13] (Beazley P); [292] (Ward JA agreeing).
At [199].
See Port of Melbourne Authority v Anshun (1981) 147 CLR 589; [1981] HCA 45.
Mendonca v Matthews Folbigg Pty Ltd [2021] NSWSC 554 at [33].
Ibid at [40].
Ibid at [41].
Ibid at [44].
Ibid at [47]. DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 10 June 2022

Mendonca v Matthews Folbigg Pty Ltd & Anor

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