National Australia Bank v Caporale

Summary judgment and strike out defence 5Rule 12.7 of the UCPR provides for dismissal of proceedings for want of due dispatch by either of the parties. 6Rule 13.1 of the UCPR provides: "13.1 Summary judgment (cf SCR Part 13, rule 2; DCR Part 11A, rule 2; LCR Part 10A, rule 2) (1) If, on application by the plaintiff in relation to the plaintiff's claim for relief or any part of the plaintiff's claim for relief: (a) there is evidence of the facts on which the claim or part of the claim is based, and (b) there is evidence, given by the plaintiff or by some responsible person, that, in the belief of the person giving the evidence, the defendant has no defence to the claim or part of the claim, or no defence except as to the amount of any damages claimed, 7 the court may give such judgment for the plaintiff, or make such order on the claim or that part of the claim, as the case requires. (2) Without limiting subrule (1), the court may give judgment for the plaintiff for damages to be assessed. (3) In this rule, a reference to damages includes a reference to the value of goods." Rule 13.4(1) provides that the court may dismiss proceedings generally, or in relation to any claim for relief, in three circumstances. These are, if the proceedings are frivolous or vexatious, or if no reasonable cause of action is disclosed, or if the proceedings are an abuse of the process of the court. 8Rule 14.28(1) of the UCPR provides that the court may at any stage of the proceedings order that the whole or any part of a pleading be struck out if the pleading firstly, discloses no reasonable cause of action or defence or other case appropriate to the nature of the pleading, secondly, has a tendency to cause prejudice, embarrassment or delay in the proceedings, or thirdly, is otherwise an abuse of the process of the court. 9Rule 14.28(2) provides that the court may receive evidence on the hearing of an application for an order under subrule (1). 10In Commonwealth of Australia v Griffiths [2007] NSWCA 370; (2007) 70 NSWLR 268, Beazley JA (with whom Mason agreed) said: "11 The general principles relating to the summary disposal of proceedings are well-known: see General Steel Industries Inc v Commissioner for Railways (NSW) & Ors [1964] HCA 69; (1964) 112 CLR 125 at 129. If it is demonstrated that there is a real question to be tried, the matter is inappropriate for the entry of summary judgment: Dey v Victorian Railway Commissioners [1949] HCA 1; (1949) 78 CLR 62. The tests stated in the authorities as to whether it is appropriate that a case be disposed of by the entry of summary judgment include statements such as that the matter is "so obviously untenable that it cannot possibly succeed"; "manifestly groundless" or "would involve useless expense": see General Steel Industries at 129. 12 The summary disposal of proceedings or part thereof deprives a party of the right to a contested hearing. For that reason it is said that the requirement for establishing that there is no triable issue is demanding: Air Services Australia v Zarb (Court of Appeal, 26 August 1998, unreported). In Webster & Anor v Lampard [1993] HCA 57; (1993) 177 CLR 598, Mason CJ, Deane and Dawson JJ said at 602: '... the issue before the learned Master on the application for summary judgment was not whether [the plaintiffs] would probably succeed in their action against [the defendant]. It was whether the material before the Master demonstrated that that action should not be permitted to go to trial in the ordinary way because it was apparent that it must fail. The power to order summary judgment must be exercised with 'exceptional caution' and 'should never be exercised unless it is clear that there is no real question to be tried.' (Citations omitted)" 11The issue in these current proceedings before me is whether the defendants should be given a further opportunity to amend their defences that seek production of documents and be granted leave to file a cross claim. It is necessary to consider the history of these proceedings.

Procedural history 12On 14 June 2010, statements of claim were filed for the Bank. On 19 July 2010, the defences were filed. 13On 6 August 2010, the Registrar made orders that a notice of appearance for defendants be filed within seven days; the defendants serve any prepared amended defence on the plaintiff within 14 days of receiving a response to a request for particulars to be made by the defendants. 14On 16 August 2010, Brown Wright and Stein Lawyers filed a notice of appearance on behalf of the defendants. 15On 8 September 2010, Davies J struck out the defences filed 19 July 2010. His Honour ordered the plaintiff to answer particulars by 5.00 pm on 10 September 2010 and the defendants to file and served defences by 5.00 pm on 1 October 2010. Defences were filed on 1 October 2010. The matter was listed for directions before Davies J on 1 November 2010. 16On 1 November 2010, Davies J made an order that the defences be filed and served by 5.00 pm on 10 November 2010. His Honour listed the plaintiff's notices of motion returnable before himself on 15 November 2010. His Honour also ordered that the defendant issue a notice to produce to be served by 5.00 pm on 8 November 2010. 17On 15 November 2010, Davies J directed the defendants to provide particulars of times of conversations after March 2007 relied on to evidence variations of terms of payment arrangements took place. These particulars were to be provided by 5.00 pm on Wednesday, 17 November 2010. It is these alleged oral variations to the agreements that form the basis of the defendants' defences. His Honour also made orders that the defendants were to file and serve any affidavits in response to the plaintiff's motion by 5.00 pm on 26 November 2010. But his Honour went further and ordered that any affidavits served by the defendants after 26 November 2010 could not be relied upon except with leave of the court. Leave was granted to the parties to approach the list clerk to obtain a hearing date. 18On 24 January 2010, Mr Michael Collins of Gadens Lawyers emailed the Listings Manager relevantly stating: "After discussions with the solicitor acting for the defendants, Mr Chris Wilkinson who is copied on this email, we understand that this date is suitable to all parties. Could you kindly confirm that our client's motions filed on 29 October 2010 in each of the 5 proceedings are listed for hearing on 22 March 2011 ." 19The motions were listed for hearing and were heard on 22 March 2011. The parties' solicitors had agreed that this date was suitable to both the plaintiff and the defendants' solicitors (although they subsequently filed a notice of ceasing to act). 20On 13 March 2011, the defendants disregarded the orders of the Court requiring leave before filing any further affidavits. Mrs Rosa Caporale, in her affidavit filed 3 March 2011, deposed "that they require the documentation requested in the notice to produce to ensure that procedural fairness has been observed, and allow them to have the information to ensure that they can finalise their defence and application for the cross claim. Ms Caporale says there exists uneven playing field between the plaintiff and the defendants, where the power of the plaintiff can only be balanced by the courts procedural fairness provisions and allowing the defendants all opportunities to defend themselves against the plaintiff's claim." The defendants filed a further affidavit at the hearing (with leave) and raised these matters again. They also asserted that there was public interest in not making the orders sought by the plaintiff. 21On 15 March 2011, the matter was listed before the Registrar to hear an application by the defendants to vacate the hearing date. The Registrar confirmed the hearing date of 22 March 2011 and granted leave to the defendants to a file notice of motion dated 13 March 2011, which was to be listed for hearing on 22 March 2011 (now superseded).

The defences as currently pleaded 22The defendants assert in their current defences (filed 1 October 2010) that they "are not in default as the plaintiff agreed to vary the terms of the payment arrangements in and around March 2007 of the original agreement". 23In oral submissions Ms Caporale asserted that there were other oral agreements with the Bank but until she is able to examine the Bank's documents, she is unable to plead when these agreements allegedly took place and the terms of those agreements. The defendants in their defences, also assert that the plaintiff had undertaken in misleading and deceptive conduct under the Fair Trading Act 1987, by leading the defendants to believe that they had varied the contract and payment arrangements so that no payments were due until a major project was completed. The defendants' case at its highest appears to be the Bank's alleged variation of this agreement in March 2007.

Consideration 24The defendants have not complied with the orders made by Davies J on 15 November 2010. Critically, the defendants were to provide particulars of the times when variations of the terms of payments took place, other than March 2007. The defendants said that after an initial discussion with the bank in about March 2007, there were subsequent conversations that confirm and corroborate the making of the agreements. On 15 November 2010 at the hearing before Davies J, Mr Dowdy of counsel accepted that it was reasonable for his clients (the defendants) to identify when these subsequent conversations took place in an endeavour to narrow the notice to produce. Counsel also agreed that it was reasonable that this be done by 17 November 2010. Even as at the date of this hearing before me, this has still not been done. 25At the hearing of these motions, the defendants were given a further opportunity to identify the dates and provide particulars of the alleged variations to terms of payments that took place but Ms Caporale did not take up this opportunity. She declined and asserted that she had provided these details in documents that she had prepared for her solicitor and she had a copy of that document with her. As some of the contents of this document may have been the subject of legal privilege, the Court requested that over the luncheon adjournment, she could write down those details and provide them to the plaintiff and to the Court. She declined because in order to do so, she said that she would have to refer to bank statements and she would need to refer to her diary notes, which she did not have in court. 26So far as the notices to produce were concerned, on 12 November 2010, the solicitors for the bank wrote to the solicitor then acting for the defendant and informed them that in order to save the costs of their client filing a motion seeking that the notices be set aside, would the defendants agree to limit the notices to documents created between 1 February 2007 and 30 April 2007. The Bank had already undertaken a relevant search of its documents and its solicitor had been instructed that the bank had no documents to produce. So far as the Bank is concerned there is no record of any variation to the agreements, oral or otherwise, during the period 1 February 2007 to 30 April 2007. 27The defendants submitted that an adjournment also should be granted so they can have access to the documents sought in the notices to produce. It is not necessary to reproduce the list of documents sought in the latest notice to produce. Suffice to say it is too wide and should be set aside. Another reason they sought an adjournment was because it was in the public interest. There is a brochure attached to Ms Caporale's affidavit. It shows a photo of the Illawarra Employment & Teachers Centre, Dapto, NSW (known as IETC). The proposal states: "Proposal IETC proposes to build the Illawarra Employment & Teaching Centre at Dapto on 50 ha on the northern part of the Stage 1 West Dapto release. The area adjoins the existing Dapto & Horsley township, just 200 metres from Dapto Railway Station.

• The unique Centre:
• Comprises of a cluster of integrated small businesses which will be the vehicle for the practical training teaching and employment at IETC
• In partnership with TAFE & UOW, and Mission Australia, whom provide support the theory training for the apprentices & trainees on site at IETC, and help address the local and national skills shortage
• Helps achieve the objectives of the Illawarra Strategy, training and accommodation facility to augment the existing education facilities to be utilized by the existing and future growth of population estimated to be an increase of 50,000 people by 2020 in the West Dapto Precinct
• Securitisation is assured through a combination of returns from the businesses, partnerships and sale and lease back arrangements of buildings." And the IETC would provide: "Education, Training & Employment IETC will provide:

1. 3,500 training education and employment packages for students
2. 500 employment jobs for teachers and other support staff
3. 3,500 student and staff accommodation units at IETC
4. generate a further $1.3 billion in economic activity in the region and the economy generally
5. valuable road and bridge infrastructure for the Dapto community
6. immediate and ongoing employment, training and investment for the Illawarra.
7. reduce the carbon footprint by up 80% especially in water and energy savings." 28As best I can understand, the defendants' submission is that they will use the properties the Bank seeks to possess as securities to in order to exchange contracts for the purchase of some of the property on the IETC site. 29Public interest may arise where the outcome will potentially benefit more than just the plaintiff or will uphold some interest common to other members of the community ( G E Dal Pont, Law of Costs , (2003) LexisNexis Butterworths at 1010). 30A key consideration is that the litigation in question is of interest and value to more than just the plaintiff, or in other words the plaintiff can be seen as representing more than just its own interests. Kirby P declined to make an order for security on costs on the basis of public interest in Maritime Services Board of New South Wales v Citizens Airport Environment Association Inc ( Third Runway Case ) (1992) 83 LGERA 107 . There would be some public interest involved in having the overall project completed but the defendants aside from making these assertions have not produced any evidence to support their financial involvement in the project. 31It is also important to keep s 56 of the Civil Procedure Act 2005 in mind. It reads: "(1) The overriding purpose of this Act and of rules of court, in their application to civil proceedings, is to facilitate the just, quick and cheap resolution of the real issues in the proceedings. ..." 32The purpose of pleadings is inform each party of the case they have to meet in order to give effect to the overriding purpose of the Civil Procedure Act and the rules of the court. Allegations of oral variations to written agreements, must be supported by pleading the date or dates of the conversations and the terms of the oral variations. The current defences still do not do this, despite the defendants being given numerous opportunities to do so. The defences filed 1 October 2010 are not properly pleaded. They do not disclose a proper or reasonable defence. They should be struck out. 33The next issue is whether I should, in the exercise of my discretion, grant the defendants a further opportunity to replead their defences. The defendants have had the benefit of legal advice from 15 August 2010 through to at least February 2011. The defendants have had their original defences struck out and they have been granted leave to replead. The amended defences still suffer from the same vice. There has been no real effort to properly plead the defences. The defendants have disregarded the court's previous directions. Even at the hearing before me, the defendants were not prepared to at least provide the dates of the purported variations to the contracts they had with the bank. Ms Caporale adhered to her earlier approach in submissions, that she needed all the documents referred to in the notices to produce to be able to provide the dates. 34These proceedings were commenced on 14 June 2010. The defendants have not made any payments on any of the loans since early 2007. The fact that the project has not yet been built, I think, may be the reason why the defendants say they do not have to pay. The defendants have been given a period of seven months and despite the Court's directions, still have not articulated and properly pleaded defences. In my view they have had adequate time to do so. They had the benefit of legal representation. If the defendants were to be given leave to file a further amended defence there is no assurance to the Court that the defendants will plead proper defences. It is my view that the defences should be struck out in accordance with Part 14.28 of the Uniform Civil Procedure Rules . No further opportunity should be given to replead them.

Orders 35In all proceedings: (1) The defendants' motion filed 22 March 2011 is dismissed; (2) Orders are made in accordance with paragraph (2) of the plaintiff's notice of motion filed 29 November 2010. That is: (a) the defendants' defence filed 1 October 2010 is struck out pursuant to Rule 14.28 of the Uniform Civil Procedure Rules; and (b) leave is granted to apply for default judgment for the plaintiff against the defendants in accordance with the statement of claim pursuant to Rule 16.18 of the Uniform Civil Procedure Rules in the Registry. 36Costs are discretionary. The plaintiff has been successful both with its notice of motion and in the proceedings. The defendants are to pay the plaintiff's costs of the motion filed 29 November 2010 and the costs of the proceedings.

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: 16 May 2011