These proceedings, which have been listed for hearing today and tomorrow, relate to a claim for the recovery of a commercial debt. The broad outline of the plaintiff's claim is that it financed the business activities of a company which engaged in commercial joinery fitting-out restaurants and the like. The system of finance was for the plaintiff to advance to the borrower the amount shown on the face of invoices issued to the borrower's customers, taking an assignment of the chose in action evidenced by the invoice. It purported to then give notice of the assignment in accordance with the provisions of the relevant legislation which in New South Wales is s 12 Conveyancing Act 1919 (NSW).
There are a number of legal issues relating to the effectiveness of the assignment, so far as I have informed myself from reading the pleadings, including whether there was a purported assignment of future property. There are also factual issues between the current parties about whether at any time the defendant, who is the sixth defendant in the proceedings overall, incurred a liability in respect of the invoice upon which the plaintiff principally relies.
The matter had been case managed by the Registrar and had been set down for hearing about 12 months ago for these dates. After the matter was fixed for hearing procedural steps continued under an agreed timetable although there was not strict compliance with it. It may be necessary to return to that last point later.
The plaintiff has applied for an adjournment and other relief. The principal ground for the adjournment is that the defendant served an affidavit of the defendant himself, sworn on 13 November 2018, during the last week.
There are a number of points that Mr Wood of counsel makes in relation to the matter but I will record that the application for the adjournment and the other interlocutory relief sought is strenuously opposed by Mr Robertson of counsel for the sixth defendant. I have been taken to a deal of documentation that has been prepared both for the substantive hearing and for the resolution of the question of whether the matter should be adjourned.
I should say that the plaintiff moved quickly to bring the matter back before the Court once the affidavit was received. By then the matter had been allocated to me for hearing this week but my professional commitments were such that I was unable to entertain the application which the plaintiff wished to advance before today. I note that the argument has taken about an hour and a half and most of the morning will have been eaten up by the time I deliver these reasons. However, I make that observation not in criticism of either party but only to demonstrate that the question was one of some complexity. I should say that the sixth defendant's affidavit which seems, with respect, to contain pertinent evidence is some 31 pages in length and consists of 149 paragraphs. There are also numerous documents referred to in an exhibit which runs to 81 tabs. It is a substantial and substantive document.
The history of the procedural matters may be briefly summarised in this way. On 15 September 2017 the matter came before Hammerschlag J as the commercial list judge. His Honour refused an application to transfer the proceedings from this division to the commercial list but made directions by the consent of the parties. This included a requirement that the active defendants, including the sixth defendant, should serve any evidence including affidavits upon which they proposed to rely by 24 November 2017.
After the service of the plaintiff's affidavits the solicitors for the sixth defendant wrote to the solicitors for the plaintiff on 29 November 2017, inter alia, in the following terms:
"Our client considers that on the evidence, that your client has served, your clients cannot possibly succeed on their pleaded case. That being so, there is no occasion for our client to serve any evidence in answer.
Our client again invites your client to abandon its proceedings against our client".
There was no correspondence or other communication between then and the date of the service of the sixth defendant's affidavit which resiled from or changed that position. There was no intimation at any time that the sixth defendant for more abundant caution or otherwise had changed its mind and decided to prepare and serve an affidavit. Mr Robertson, however, did offer an explanation for that change of position which related to the provision by the plaintiff's list of documents to be tendered. That list was provided late as it happens. And secondly, the provision of further and better particulars. I should say that the request for particulars was not made until 6 September 2018, notwithstanding that the case commenced in 2016. The particulars were provided with appropriate promptitude by letter on 18 September 2018. That letter made clear that the plaintiff relied upon a particular invoice, referred to as a written quotation in the answer to particulars, that had been provided twice by the borrower to the sixth defendant: first, on 7 July 2014 and again on 4 February 2015.
That invoice was in the sum of $757,308.16. A copy of the written quotation was attached to the particulars. Mr Robertson argued that the tender bundle and in particular the refinement of the plaintiff's case contained in the provision of particulars caused the sixth defendant to decide for abundant caution that an affidavit should be prepared.
It is worth noting at this point that I was not taken to any document which emanated from the sixth defendant's camp, which suggested to the plaintiff that the proposed tender bundle, or the provision of particulars, somehow changed the nature of the case that the sixth defendant considered it had to meet, except for the statement contained in the late served affidavit itself.
Notwithstanding the strength of the letter written on 29 November 2017, which I would regard as being a statement in entirely unqualified terms, without any reservation of position, there was no letter written to the plaintiff's solicitors to the effect that, although the sixth defendant still regarded his case to be strong, and his defence indefeasible, he had changed his mind about his evidential position and had decided to prepare evidence for service lest he made a decision at the close of the plaintiff's case to go into evidence. There is no doubt in my mind, on my understanding of the issues and the nature of the plaintiff's case, as I have said, that the evidence contained in Mr Osborne's affidavit, if it is read and accepted at the hearing, is pertinent and contains facts which are highly relevant to the question of whether the plaintiff can make good its case.
In propounding the need for the adjournment, Mr Wood points out that the evidence of Mr Osborne, should it be read, might require him to lead, or attempt to lead, evidence from a Mr Corkery, who seems to be the guiding mind of the borrower, and who, according to the affidavit, had a number of salient conversations with Mr Osborne. And also from a former officer of the plaintiff company, a Mr Dean, from whom no affidavit has been obtained. His evidence could well be relevant for in a compendious way Mr Cameron, who has prepared an affidavit, asserts that Mr Dean had a number of conversations with Mr Osborne about what the plaintiff says (and the sixth defendant denies) is the sixth defendant's liability to the plaintiff.
Mr Robertson points out that, so far as the trial is concerned, Mr Osborne's affidavit may not be read; that the sixth defendant may adhere to its view about the strength of its position at the close of the plaintiff's case. But if, for abundant caution or otherwise, counsel decides to read Mr Osborne's affidavit in the sixth defendant's case, then I could deal with the question whether any adjournment was necessary at that time. And should I be of that view, I inferred from what Mr Robertson said, there would be no opposition to the matter going over part‑heard, if necessary.
I have made clear to the parties that I have the two days for which this case was set down at the request of the parties, but I have a part‑heard matter recommencing on Thursday; and that I am uncertain of my capacity to finish a part‑heard case, at this stage of the year, before the end of term, given the consideration that there are many other matters, civil and criminal, which have already been listed. The Court, including the Common Law Division, is normally very busy leading up to the end of the law term and the commencement of the long vacation. I must say, I would have thought - whether the affidavit of Mr Osborne was prepared for an abundance of caution or for some other prudent forensic purpose - where a party who in unequivocal terms informs the opposing party that he does not intend to file and serve any evidence in accordance with directions made in that regard, and then changes his mind about that, it was really, in the modern way in which proceedings are conducted in this Court, for that party to telegraph his change of mind, as soon as possible, to the other side and the Court, so that directions could be made either adjourning the case, if necessary, or setting aside additional days, if possible, to accommodate what must be, on any view of it - if the defendant elects to go into evidence - a matter which will prolong the hearing well beyond the two days originally estimated.
And I would have thought that his change of mind needed to be telegraphed as soon as it was made, not only to maximise the opportunity for the Court to accommodate the change of mind but also to provide the opponent with the opportunity to meet the new evidence with such further evidence of its own as it considered appropriate and necessary in the circumstances of its case. And with great respect, I did not find it a satisfactory response to say that there may be no problem because the sixth defendant may decide not to read his affidavit.
It seems to me that, as I have said, this is not the way that litigation is to be conducted in this day and age. Certainly, the defendant has the right, as the responding party, to make his own decision, at the close of the plaintiff's case, whether it is necessary for him to go into evidence. And if that occurs, there can be no complaint from a plaintiff, regardless of the expectation that the plaintiff may have harboured in its own mind, as to what might happen at the end of its case. But it is quite a different thing to say, well there is really no problem here because we might never use this, and if we decide to, then we can have the argument about the adjournment then.
In my own view, I think this is inconsistent with what has been described, as Mr Wood reminded me, as 'the cards on the table approach' to civil litigation. It is sufficient, I think, to refer to the case he drew to my attention of Benn v State of New South Wales [2016] NSWCA 314 ("Benn v State of New South Wales"). At [62], Gleeson JA with whom Meagher JA and Johnson J agreed, cited the well-known passage from the judgment of Allsop J (as the Chief Justice then was) in White v Overland [2001] FCA 1333 at [4]. It may be said in 2018 that Allsop J's decision is the locus classicus of what might be described as the change to the modern approach to the conduct of civil litigation now encapsulated for State courts in the provisions of the Civil Procedure Act 2005 (NSW).
I am satisfied that were learned counsel to decide, in the exercise of his discretion to read Mr Osborne's affidavit at the close of the plaintiff's case, the plaintiff would be prejudiced. Sometimes it is difficult to tell the extent of the prejudice because when new issues are raised, unless they are investigated and additional witnesses interviewed, one cannot know whether the new material is likely to prejudice the opposing party in a forensic way.
It is also the purpose of the Court in making directions for the early exchange of evidence that the parties on both sides of the record will be better informed as to the true nature of the issues that have to be decided, and will have an opportunity without injustice to the other parties, to obtain any further evidence needed to meet those issues as they are defined, or perhaps better put refined, by the exchange of the actual evidence to be read.
During his very careful argument, which was not without persuasion, Mr Robertson did not elect to withdraw the affidavit of Mr Osborne, or make an election now not to read it. I do not criticise him for that, he sought properly to stay his hand until the close of the plaintiff's case. But that just demonstrates the difficulty. It is better that the plaintiff present its case all at the one time in an orderly fashion. It would be inimical to the orderly conduct of civil litigation if there was an adjournment and either plaintiff was given the opportunity to investigate and call further evidence before the defendant went into evidence, or some exceptional leave was given to call that evidence in reply, even though patently, if it was material, the further evidence should have been led in chief.
The mischief of delaying the decision is that it could well be that the investigation of the matters raised for the first time in Mr Osborne's affidavit could take some weeks, and we are approaching, as I have said, the long vacation. That would involve an adjournment of some months, and probably the disruption of other cases already fixed for hearing in the first half of next year. It is better that cases be fully prepared before the hearing commences.
In due course I will order that the proceedings be adjourned for the reasons that I have just given. However, it is necessary to return to the other grounds of relief sought. In accordance with the modern practice, only limited discovery was ordered between the parties. As generally occurs, categories of discovery were propounded in this case, relevantly, by the plaintiff. There was then negotiation between the solicitors as to the form in which the categories would be expressed. Discovery was then provided in those specific categories. I think it true to say that general discovery is never ordered these days or certainly but rarely ordered.
As it happens, the sixth defendant provided discovery in an unverified form, and I am informed by Mr Robertson, and I accept, so did the plaintiff. It seems to me that so far as discovery has already been provided in that form, each side should be taken to have waived the requirement of the Uniform Civil Procedure Rules 2005 (NSW) ("the Rules") that generally discovery be verified, and I would not order that the discovery already provided should be given again in verified form. I say that each party has waived the requirement of verification, given that each party has taken other steps in the proceedings after the discovery was given without complaint.
However, it does seem to me from Mr Osborne's affidavit that there are documents which were not discovered, which probably with the benefit of hindsight, should have been. Now, learned counsel on either side of the record, took me to the categories of discovery which had been agreed to be provided by the sixth defendant in some details, and I do not propose to rehearse those detail in this judgment. It seems to me that although specific discovery is the order of the present day, one is to bear in mind that discovery puts an obligation on the party giving it to search for and provide documents that might reasonably fall within the categories agreed. I do not regard it as the law that one should take a literal, completely grammatical, or niggardly approach to what is called for.
Mr Woods has identified 12 documents attached to Mr Osborne's affidavit which were omitted from the discovery given. I have used the word omitted deliberately. I am not satisfied on the material before me that there was any withholding of documents in a deliberate sense, but it does follow, in my view, that when the mind was concentrated upon the preparation of Mr Osborne's affidavit, further documents came to mind and perhaps came to light which could, and probably should, have been discovered.
I do not propose to go through each of the 12 documents. I will not summarise the arguments put in respect of each of them. It does seem to me that the documents identified should have been discovered because they certainly relate to the issues in the case and I think fairly fall within one or another of the categories agreed upon between the parties. I think their relevance can readily be tested in a very simple way and that is to say that they are relevant to Mr Osborne's narrative of fact for which, if the affidavit is read, the sixth defendant will contend. I accept that may be something of a rough and ready test, but to my mind, it is an adequate one for present purposes.
It may well be that Mr Osborne's affidavit having been prepared all the documents that might be within the sixth defendant's power and custody or control have been reviewed and those considered most pertinent have now been provided in a supplementary way as annexures to his affidavit. However, given that extra documents have been provided, I am of the view that there should be a second run over the target and that what I will call supplementary discovery should be provided by the sixth defendant to the plaintiff. Obviously, that should include the 12 documents the great majority of which Mr Wood said were new to the plaintiff.
Given that it is necessary there be supplementary discovery, I am of the view that it should be verified in accordance with the Rules. The fact that a party already has a copy of a document which the other party may otherwise be obliged to discover is no answer to the latter party's obligation to give discovery. Often it is just as important to know that the party had the document as it is to know the document exists. I will make a direction in that regard.
It is also the plaintiff's case that I should direct the sixth defendant to file and serve a Further Amended Defence. The basis of that argument, as I understand it, is that given that there are additional facts arising out of the affidavit of Mr Osborne, those facts, if they are material, ought to be pleaded. I am rather with Mr Robertson on the view that it is exceptional for a court to order at the suit of one party that its opponent file an amended pleading. More routinely the Court may require the party to re-plead but only in limited circumstances.
At the end of the day, however, the parties have the responsibility for preparing their own pleadings, not the opponent and not the Court. The adequacy of the pleadings may well be an issue which arises at the hearing but that is a different question. It seems to me that the question of whether evidence is admissible because it is relevant to an issue raised on the pleadings is a different question. If it transpires at the hearing, for example, that Mr Osborne's affidavit is read and there is an objection to its relevance that can be determined by the judge on the pleadings as they stand and as issue has been joined by the parties themselves. I would not order the sixth defendant to amend his defence.
This brings me then to the final question which is the cost thrown away by reason of the adjournment. Mr Robertson argued that as it is the plaintiff's application for an adjournment and if the plaintiff wants to adjourn the proceedings which have been set down as long as 12 months ago then the plaintiff should bear the costs, or each party should bear its or his own. However, given the findings I have made, it seems to me that an obligation fell upon the sixth defendant in accordance with the principles discussed by Gleeson JA in Benn v State of New South Wales to bring forward its change of position at an early time. He has not done so.
As I have indicated I am prepared to grant the plaintiff's adjournment, it seems to me that on a conventional application of principle, given that it is the defendant who has caused the need for the plaintiff to apply for the adjournment, that the defendant should pay the plaintiff's costs. I can see no reason, however, to order those costs on an indemnity basis. Nor can I see any reason to depart from the general rule that costs are assessable and payable at the conclusion of the proceedings.
I do not regard the sixth defendant, or his lawyers, as being in any way guilty of any dereliction. I am of the view that they should have moved sooner to bring this matter to the attention of the Court and the plaintiffs. But that seems to me to be conduct which falls a long way short of dereliction justifying an order for indemnity costs. Moreover, these proceedings are commercial proceedings between commercial parties.
I am of the view that the usual or ordinary basis is a sufficient basis for the costs to be assessed on. I am also conscious of the consideration that there are very hot issues between the parties; and I am in no position to say, obviously, at this stage, which or who is likely to win. And it would be inappropriate for me to do so. But given the fortunes of litigation, clearly, either the plaintiff or the sixth defendant will be successful at the end of the day; there does not seem to be much scope on these types of issues for any middle position. Perhaps I am wrong about that, but my point is that the costs can be assessed when the result is known; and, for instance, if the sixth defendant is successful, then the costs payable under the order I will pronounce today can be off-set against the costs it will recover. But I see no reason to depart from the general terms of the Rules, as I have said, that costs can be assessed and fall to be paid at the conclusion of the litigation.
The orders I will make are as follows:
1. The hearing date is adjourned.
2. The sixth defendant is to provide supplementary discovery in verified form in accordance with my reasons, on or before 3 December 2018.
3. The plaintiff is to provide proposed further directions for the exchange of evidence necessitated by the adjournment, on or before 6 December 2018.
4. List the matter for further directions before the Registrar at 9:00am on 11 December 2018 for the purpose of fixing a fresh hearing date.
5. Note: it is my intention, in making order (4) that the hearing date should be fixed, regardless of whatever timetable the Registrar thinks is appropriate, or is agreed between the parties. If there is a dispute, doubtless the Registrar will sort it out.
6. The sixth defendant is to pay the plaintiff's costs thrown away by reason of the adjournment.
[3]
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Decision last updated: 04 December 2018