Moskios v Splendid Developments Pty Ltd; Bishay v Moskios

Judgment - eX TEMPORE 1CAMPBELL JA : Splendid Development Pty Ltd is a company of which Mr Bishay is the sole director, member and secretary. Mr Moskios entered into a contract with one or other or both of Splendid Developments and Mr Bishay whereby whoever was the other party to the contract, agreed to construct a childcare centre. Mr Moskios formed the view that there were some defects in the construction work. He started some litigation, naming both Mr Bishay and Splendid Developments as defendants. In particular, paragraph 1 of the Statement of Claim that was filed on 20 June 2008 alleged that the contract for construction of the childcare centre was entered with Mr Bishay and Splendid Developments. 2On 10 September 2009 Judicial Registrar McDonald heard argument on an application made by Mr Moskios for leave to amend the Statement of Claim. One of the amendments Mr Moskios sought was to raise a somewhat different claim of misrepresentation to one that he had endeavoured to plead earlier, concerning an alleged misrepresentation that conferred a right to damages under the Trade Practices Act or the Fair Trading Act . In discussion near the end of argument that day with Mr Drummond, counsel for Mr Bishay, the Judicial Registrar sought clarification of the effect that Mr Drummond contended would arise from disallowance of the application to include the misrepresentation claims. "JUDICIAL REGISTRAR: So what would that leave? It would leave a claim in respect of an overpayment. DRUMMOND: It leaves the contract claim. JUDICIAL REGISTRAR: Right, okay. DRUMMOND: Sorry, Judicial Registrar - we take no issue there is a contractual claim. JUDICIAL REGISTRAR: No, I just wanted to clarify that, I thought that was the case. DRUMMOND: Yes. We take no issue there's a contractual claim. JUDICIAL REGISTRAR: And that for these purposes it's appropriate that the court determine whether that's between Moskios and Bishay and/or Splendid. DRUMMOND: Yes. JUDICIAL REGISTRAR: Right. DRUMMOND: What it does not allow to remain alive is the representation case ..." (emphasis added) 3In reply, the then counsel for Mr Moskios, Mr Bland said, "Judicial Registrar, it's clear there is a question as to whether Mr Bishay was a party to the contract" . That proposition was not contested on that occasion. 4The Judicial Registrar reserved her decision and delivered a judgment on 14 October 2009. The Judicial Registrar permitted some amendments of the Statement of Claim, though not all of the amendments had been sought. The order she pronounced orally in open court was that Mr Moskios should have leave to file only an Amended Statement of Claim concerning the amended claim pleaded in paragraphs 8-28 of the Statement of Claim. Mr Moskios had sought to make amendments that had been sought to be made to paragraph 1, so that it alleged that the contract for construction of the childcare centre was one that had been entered with Mr Bishay and Splendid Developments jointly and severally. Originally paragraph 1 had alleged simply that it had been entered between Mr Moskios, and Mr Bishay and Splendid Developments. The effect of the Judicial Registrar's decision is that that amendment to paragraph 1 was not permitted. 5The judgment included, as a reason for not permitting the amendment that was sought to paragraph 1, a conclusion that some answers to a request for particulars amounted to an admission that Mr Bishay had signed the contract only in his capacity as a director of Splendid Developments. After the order was pronounced, the following exchange occurred: "BLAND: ... if I was instructed to make an application to recant the particular that was provided in November last year as to Mr Bishay's role-- JUDICIAL REGISTRAR: It's an admission isn't it though, Mr Bland? You would have to seek to withdraw an admission. BLAND: I would. That can be done. JUDICIAL REGISTRAR: It can be done, but it hasn't been done today. BLAND: No, but I'm saying if such was taken, I would need to do that reasonably quickly of course, and I would need to do it on the instructions of my client. But then paragraphs 1 and 2 to 7 may have some relevance in these proceedings." 6In the course of Mr Drummond making an application for indemnity costs, the transcript then records: "DRUMMOND: ... these are discrete issues which have been determined in favour of the defendant, which has effectively brought to an end the proceedings other than that possibly in contract, depending upon what happens, but effectively in the absence of any application to withdraw the concession proceedings against Mr Bishay have in effect - or should be brought to an end. Hence we would seek if there is to be any re-agitation about that issue, so as to protect Mr Bishay in respect of his costs, that he should have the entitlement under clause 42 for those costs to be paid forthwith, because in effect the two motions have been directed almost entirely at the claim being brought against him, leaving aside - and we have always maintained that the contractual claim against Splendid, there was no issue at least at this stage. JUDICIAL REGISTRAR: But he would be entitled anyway to assess them forthwith if he's not a party to the proceedings, wouldn't he? BLAND: That's correct. DRUMMOND: He would be entitled to them because the proceedings against him will come to an end, yes. JUDICIAL REGISTRAR: Mr Bland has just conceded that, so that order will not be necessary. JUDICIAL REGISTRAR: What do you say, Mr Bland? BLAND: Given what you have said and what has fallen, I make no submissions on costs except to say that - no, I don't, because I have no instructions at this stage as to whether we should seek to withdraw the admission. JUDICIAL REGISTRAR: On the basis that Mr Bland has made no submissions about the indemnity costs application, I order the plaintiff to pay the defendant's costs on an indemnity basis. I note that the effect of these orders is to finalise the proceedings against Mr Bishay, which would entitle him to assess his costs forthwith. That may assist any costs assessor who looks at the proceedings. 7The terms of the orders that were entered into the Court's computer system differed from that which the Judicial Registrar had pronounced in open court in two presently relevant respects. The first was that leave to amend was granted but "leave to rely on any claim pleaded other than that pleaded in paragraphs 8-28 of the proposed statement of claim (together with the original version of paragraph 1 subject to the deletion of the reference to Mr Bishay)" . As well, the order stated: "Note proceedings against Mr Bishay are finalised and therefore he is able to assess his costs forthwith" . 8The leave to amend that Judicial Registrar McDonald granted has never been availed of. 9The present dispute arose when Mr Moskios made another application for leave to amend the Statement of Claim in a manner that would have retained an allegation that Mr Bishay was one of the parties to the building contract. Indeed because paragraph 1 of the original Statement of Claim had never been amended, the extant pleading of Mr Moskios had at all times contended that Mr Bishay was party to the contract. The nub of the dispute in the present matter concerns whether Mr Moskios had already been shut out from contending that Mr Bishay was a party to the contract or, if that had not already been decided, whether at an interlocutory stage Mr Moskios should be shut out from contending that Mr Bishay was a party to the contract. 10On 1 April 2011 her Honour Judge Gibb gave reasons and made orders concerning five notices of motion, of which three are presently relevant. 11The first was a notice of motion by Splendid Developments dated 1 April 2010 seeking that the proceedings against it be struck out for want of prosecution. The second was a Notice of Motion by Mr Moskios dated 30 April 2010 seeking, to the extent necessary, leave to withdraw admissions contained in answers to particulars dated 9 September 2008 and 4 November 2008 and leave to file and serve an amended statement of claim. The third was a Notice of Motion by Mr Bishay dated 4 March 2011 seeking an order that the orders that her Honour Judge Gibb had made on 1 March 2011 granting leave to Mr Moskios to file and serve an Amended Statement of Claim be revoked. 12By the time of the hearing before Judge Gibb, Mr Moskios had changed his legal representation. He gave evidence, that Judge Gibb accepted, that he had not given instructions for any admissions that were contained in the Answers to Particulars on 9 September 2008 and 4 November 2008, but rather his instructions to his solicitors had always been that Mr Bishay was party to the contract, and that his solicitors had not kept him informed about the progress of the matter. In particular Mr Moskios gave evidence that he had not found out about the orders of Judicial Registrar McDonald until March of 2010. 13Her Honour Judge Gibb declined to strike out the proceedings for want of prosecution. She was of the view that no relevant admission had been made in the Answers to Particulars but in any event to the extent necessary she granted leave for any such admission to be withdrawn. Part of the reason for her finding that no relevant admission had been made was that Mr Bishay had proved difficult to serve and substituted service had not become effective against him at the time of the relevant requests for particulars. Another part of the reason for that finding was that the wording said to be an admission was unclear. 14She did not find that Mr Bishay would suffer prejudice as a consequence of the withdrawal. She was of the view that the decision of Judicical Registrar McDonald had not finalised the proceedings against Mr Bishay because all the Judicial Registrar had done was to grant leave to amend on certain terms, and Mr Moskios had chosen not to exercise the leave, and so the terms had never come into operation. She granted leave for an Amended Statement of Claim to be filed and served and declined to revoke her own order granting such leave. She ordered that Mr Bishay and Splendid jointly and severally pay the costs of all motions. 15Mr Bishay now seeks leave to appeal from all the decisions of Judge Gibb that I have just identified. As a defensive measure against the prospect that leave to appeal might be granted Mr Moskios has filed a summons seeking to extend the time in which to seek leave and leave to appeal from the orders of Judicial Registrar McDonald made and purportedly entered on 14 October 2009 in the District Court. 16The proceedings were listed for hearing concerning the principal relief claimed in the District Court commencing on 1 August 2011. However that hearing date was vacated last week, on 22 July, because of these applications in the Court of Appeal. The hearing of the present application in this court was expedited before the hearing date had been vacated. 17Leave to appeal is needed because all of the decisions involved are interlocutory. 18Questions of whether the Answers to Particulars that are at the heart of the present dispute gave rise to an estoppel preventing Mr Moskios from suing Mr Bishay or whether the orders of Judicial Registrar McDonald gave rise to a res judicata are already pleaded in Mr Bishay's defence to the proceedings. Thus he will not be shut out from running them and will have a right of appeal concerning whatever decision the judge who hears the trial might make about them. Further, as counsel for Mr Moskios specifically put in his written submissions in the present application (thereby creating an obstacle to any subsequent argument that raising the point on appeal is an abuse of process), Mr Bishay will be able to challenge on appeal the correctness of the interlocutory decisions to which the present application relates; Gerlach v Clifton Bricks (2002) 209 CLR 478; Tamworth Base Hospital v Durant [2000] NSWCA 209 at [62]. That appeal rights will be preserved if leave is refused concerning a proposed interlocutory appeal such as the present is a relevant consideration in the disposition of the application for leave: Oldfields Pty Ltd v Alfar (1996) 70 ALJR 560. 19This court is often ready to grant leave to appeal from an interlocutory decision if the appeal has substantial prospects of success and if, if the appeal were to be successful, the parties would be spared the time and trouble of a trial: Kessy v Golledge [1999] NSWCA 424 at [41]; Durant at [67]. However as Handley JA said in Durant at [68]: "The position is quite different where reversal of an interlocutory order would not avoid a first trial, or require a second trial. In this class of case the court has been frugal in the grant of leave for the reasons given by Jordan CJ in In the Will of Gilbert (1946) 46 SR (NSW) 318 at 322-3". 20In the present case granting leave to appeal will not stop there being a trial, as the case will continue against Splendid. Furthermore, Mr Bishay and Splendid have the same solicitors and counsel acting for them. Thus, permitting the case to proceed seems to be the more efficient and cost effective way of advancing the real issues in dispute. 21The decisions concerning which leave to appeal is sought are discretionary decisions concerning matters of practice and procedure. On an actual appeal the test for appellate review of a discretionary decision that relates to a matter of practice and procedure is the same as the test for appellate review of any other discretionary decision, namely, that in House v The King (1936) 55 CLR 499; Micallef v ICI Australia Operations Pty Ltd [2001] NSWCA 274 at [45]. 22However, as a matter of fact there is often a particular difficulty in being able to satisfy the criteria for appellate intervention concerning a discretionary judgment that is one relating to a matter of practice and procedure and that is the reason underlying the approach adopted by Jordan CJ in In the Will of Gilbert , mentioned earlier. 23Apart from the considerations to which I have already referred, the grounds of appeal that are sought to be raised have insufficient prospects of success on appeal to justify the grant of leave. There are poor prospects of success for an argument that, in light of Judicial Registrar McDonald's decision, Judge Gibb was in error, in a way that would be corrected on appeal in accordance with the House v The King criterion, in considering the application for amendment at all. There are poor prospects of succeeding in an argument that, when in the District Court there is an entered order that differs in substance from an order that has been pronounced in open court, the entered order prevails over the order that was pronounced. 24In any event, even if the order of Judicial Registrar McDonald in the terms it was entered were the decisive text, there are poor prospects of success for an argument that, when the leave has not been availed of, it has the effect of removing Mr Bishay from the proceedings. Even if her Honour Judge Gibb were wrong in taking the view that there had been no admission in the Answers to Particulars - a matter on which I expressly state no view - the prospect of showing that her discretion miscarried in a way that can be corrected in accordance with House v The King when she granted leave for an admission to be withdrawn seem poor. The prospects of success in arguing that Mr Bishay being disappointed in a desire to make himself judgment-proof was a relevant type of prejudice concerning these proceedings are also poor. Mr Bishay has incurred some costs in having a bill of costs prepared and assessed but there is no reason why that is not a matter that can be taken into account in any ultimate order of costs that is made in the proceedings if the judge who makes that ultimate order thinks it appropriate to do so. 25Further, the requirement in section 56 of the Civil Procedure Act for the court to exercise its discretion in a way that will "facilitate the just, quick and cheap resolution of the real issues in the dispute" favours the question of whether Mr Bishay personally was a party of the contract being actually decided by a court, rather than foreclosed. 26For these reasons I would propose that the summons seeking leave to appeal that Mr Bishay brings concerning the decision of her Honour Judge Gibb be dismissed with costs. 27MACFARLAN JA : I agree. 28WHEALY JA : I agree. 29CAMPBELL JA : The order of the court is therefore the order that I have proposed.