Notaras & Anor v Hugh & Ors

• 1 - IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION Professional Negligence List

20217/98 Irene Notaras & Anor v Robert Hugh & Ors 20212/98 Irene Notaras & Anor v Graeme Newman & Anor

Judgment on costs 1 His Honour: The defendants have applied for an order that the plaintiffs pay the costs of the proceedings on an indemnity basis; alternately, on a party and party basis up to the date specified for acceptance in their respective notices of compromise and indemnity costs thereafter. 2 The notices of compromise served by the respective defendants were in identical terms, namely, that each set of defendants would pay $10,000 with costs on a party and party basis, time for acceptance 28 days. The Newman Psaltis notice was dated 12 June 2002 and was sent under cover of a letter bearing that date. The Sly & Weigall notice was undated. It was sent under cover of a letter dated 9 July 2002. The respective dates of expiry of the notices were 10 July and 6 August 2002. 3 Indemnity costs may be awarded where proceedings have been brought and prosecuted with no real prospect of success: Colgate-Palmolive Co v Cussons Pty Limited (1993) 46 FCR 225; Fountain Selected Meats (Sales) Pty Limited v International Produce Merchants Pty Limited (1998) 81 ALR 397; or where the opposite party has been guilty of conduct in relation to the proceedings which has caused unreasonable delay and expense: Ragata Developments Pty Limited v Westpac Banking Corp (Federal Court of Australia, Davies J, 5 March 1993, unreported); Wentworth v Rogers [1999] NSWCA 403 at [85]. 4 Part 52A r 22 has no application where a wholly successful defendant has served an offer of compromise. Indemnity costs may, however, be ordered as from the date of expiry of a notice of compromise served by a wholly successful defendant if, in the circumstances of the case, not accepting the offer was unreasonable: CBA Investments Ltd v Northern Star Limited (No 2) [2002] NSWCA 146; SMEC Testing Services Pty Limited v Campbelltown City Council [2000] NSWCA 323 at [37]; Multicon Engineering Pty Limited v Federal Airports Corporation (1996) 138 ALR 425 at 451-452; Coshott v Learoyd [1999] FCA 276 at [37]-[50]. 5 Part 52A r 22 should be amended so that the rule applies where a wholly unsuccessful plaintiff has failed to accept an offer of compromise served by the defendant. Such a plaintiff should be in no better position as to costs than a plaintiff who has recovered less than the amount specified in an offer of compromise served by the defendant. The operation of the rule discriminates irrationally against wholly successful defendants.

No real prospect of success 6 The defendants assert that there was no real prospect of the plaintiffs succeeding in the proceedings. It should be assumed that the plaintiffs had no real prospect of succeeding in any of the ways pleaded but abandoned in the course of the hearing. The only case for consideration is the way the plaintiffs put their claim in final address. That was that the plaintiffs lost a chance, being not less than a negligible chance, of retaining the properties as a result of an allegedly negligent failure by the defendants to apply for an injunction to restrain the sales. At the core of that case was the assertion that, if such an injunction had been granted, the plaintiffs would have been able to retain the properties by raising alternative finance on them to pay out the bank at an available $3.3m. 7 I held that a breach of duty on the part of the defendants in not advising and applying for an injunction had not been established. I also held that it had not been established that there was more than a negligible chance that such an injunction would have been granted if applied for, nor that there was more than a negligible chance that the plaintiffs would have obtained such alternative finance if such an injunction had been granted, nor that there was more than a negligible chance that the plaintiffs could have serviced the alternative borrowings if such alternative finance had been obtained. 8 Those findings do not determine the present issue in favour of the defendants. However, whatever be the situation in relation to other elements of the plaintiffs' claim, the plaintiffs had no real prospect of establishing the last of those elements, namely, that there was more than a negligible chance that the plaintiffs would have been able to service alternative finance. The implications of that finding are that the plaintiffs had no real prospect of establishing that there was more than a negligible chance of avoiding the sale of the properties or the sale of property of equivalent value, irrespective of anything the defendants could and should have done. In other words, there was no real prospect of the plaintiffs establishing that the damage of which they complained (being loss of the chance of holding the properties without losing properties of equivalent value) would have been avoided by action on the part of the defendants. 9 My findings concerning the financial situation of the plaintiffs appear in my principle judgment at [151]-[161]. 10 Further to the findings in [161] of my principle judgment, there was no real prospect of establishing more than a negligible chance of receiving income from Oxford St beyond the rental income in fact received, in view of the considerations mentioned in my principle judgment at [83] and [162]-[164]. As to possible revenue from Bourke St at $130 per square metre, the vague evidence adduced in that regard is referred to in my principle judgment at [165]. There was no real prospect of establishing a more than negligible chance of receiving rental income at that rate or at any other rate on that evidence.

Conduct of proceedings causing unreasonable delay and expense or unnecessarily protracting the proceedings 11 Concerning the claim for indemnity costs on the ground of conduct by the plaintiff in relation to the proceedings having caused unreasonable delay and expense, I make findings in accordance with the facts stated in the outline of submissions in relation to costs provided by counsel for Newman Psaltis, under the headings, "The conduct of the proceedings by the plaintiffs including the abandonment of claims", "Lack of candour" and "Evidence of quantum", and in their document "Procedural chronology". 12 I also make findings in accordance with the facts as stated in the outline of submissions in relation to costs provided by counsel for Sly & Weigall under the headings, "The conduct of the proceedings by the plaintiffs", "Abandonment of claims", "Lack of candour" and "Evidence as to quantum"; and in their document "Chronology of amendments and concessions". 13 Copies of the documents referred to above are annexed to and form part of this judgment. (I have omitted sections of the documents not referred to in the two previous paragraphs.) 14 Parties must be allowed to supplement their case by amendment. Counsel must be free to abandon claims upon further consideration. However, where the over-all effect of the conduct of the proceedings is that substantial time is taken up and substantial expense is incurred in relation to claims which are unsustainable, the consequence may be an order for costs on an indemnity basis. 15 In the present case, the prosecution of claims which were later abandoned by the plaintiffs because they could not be sustained caused unreasonable expense and unnecessarily protracted the proceedings to an extent that an order for costs on an indemnity basis should be made on this ground as well as on the ground of no real prospect of success.

Failure to accept offers of compromise 16 It is unnecessary to decide whether, as held by Rolfe J in Multicon Engineering, a burden of persuasion shifts to the opposite party to establish that non-acceptance was not unreasonable where a wholly successful defendant has served a notice of compromise. 17 I accept the submission that the offer to pay an aggregate of $20,000 and costs on a party-and-party basis was tantamount to giving the plaintiffs no more than the opportunity of discontinuing the proceedings at little or no cost to themselves, and that acceptance of the offers would have put no money of significance in the plaintiffs' pocket, if any money at all, after paying their own costs as between solicitor and client. 18 It could, therefore, only have been unreasonable for the plaintiffs to refuse the offers if they ought reasonably to have considered that there was no real prospect of success in the proceedings. I am satisfied, for the reasons I have given in this judgment, that there was in fact no real prospect of success, that the plaintiffs, properly advised, ought to have so believed on the facts known to them; and that it was, accordingly, unreasonable for them not to have accepted the offers. 19 That being the case, there should be an order for costs on a party-and-party basis up to the dates of expiry of the notices and for indemnity costs thereafter but for the defendants' entitlement to indemnity costs for the whole of the proceedings on other grounds.

Result 20 The plaintiffs are ordered to pay the defendants' costs of the proceedings on an indemnity basis.

No. 20212 OF 1998 DEFENDANTS' OUTLINE OF SUBMISSIONS ON COSTS

The conduct of the proceedings by the Plaintiffs, including the abandonment of claims

The conduct of the proceedings by the Plaintiffs has caused unreasonable delay and expense. The Plaintiffs amended their claim a number of times during the trial and also made concessions and abandoned reliance on particular evidence late in the piece. In that regard, the Defendants refer to the following:-

(a) The Plaintiffs abandoned large parts of the claim in relation to the conduct of the hearing before Rolfe J in September/October 1993, (see paragraphs 11(ii), (iii), (iv), (vi), (vii) and (x) from the Amended Statement of Claim, which were abandoned by letter dated 20 February 2003);

(b) On 17 March 2003, the Plaintiffs gave notice of a proposed amendment to paragraph 9 of the Further Amended Statement of Claim to claim a lost opportunity to conclude a deal with the Bank at $3.3M and on 27 March 2003, a Second Further Amended Statement of Claim was filed, reflecting that amendment;

(c) On 13 March 2003 and 18 March 2003, the Plaintiff's abandoned reliance on a large part of the expert evidence from Harold Shaw, accountant, (transcript at 1172 and 1358). Ultimately, Mr Shaw's evidence went only to the extent of overcharging by the bank and was not relied upon in relation to Enijar's capacity to meet the cost of financing and the quantification of the Plaintiffs' losses arising from the sale of the Bourke Street and Oxford Street properties;

(d) On 20 March 2003, the Plaintiffs abandoned the claim for the loss of opportunity to redevelop Oxford Street, (transcript at 1457). That abandonment rendered the evidence of the quantity surveyors, (Mr Wallace, Mr Duckitt and Mr Meredith), redundant;

(e) There were numerous amendments and revisions made to the valuer's' evidence that the plaintiff relied upon, particularly that of Mr Marsh, Mr Stamoulis and Mr McNeilly, ( transcript at 861-869, 1165, 1174, 1176 and 1243-1244);

(f) During submissions on 5 May 2003, the Plaintiffs abandoned the claim that the Defendants acted negligently in failing to obtain documents in relation to the Bon Trading Account and Enijar Account, (transcript at 1713-1716);

(g) In a similar vein, on 5 May 2003, the Plaintiffs largely abandoned the claim that the Defendants acted negligently in failing to use Mr Clarke's calculations so as to determine the level the Bank's overcharges, (transcript 1713-1716);

(h) On 6 May 2003, the Plaintiffs abandoned the claim based on the failure of the Defendants to seek an adjournment of the hearing before Rolfe J in September/October 1993, (transcript at 1729)

As the above summary indicates, it was only at the commencement of final addresses and in the course of argument that significant parts of the case were abandoned. This rendered a large part of the affidavit evidence, cross-examination and written submission unnecessary and irrelevant. Further, the Plaintiffs' lack of candour in relation to the obviously significant issues relating to their relationship with the Bank and the conduct of their facilities, their attempts to refinance and the ability to service loans also caused further unnecessary expense and contributed to the length of the proceedings. Finally, the state of the Plaintiffs' evidence in relation to quantification and the manner in which it prosecuted its claims caused unnecessary delay and expense. These matters are considered in more detail below.

Up until final oral address, the Plaintiffs maintained the claims in paragraphs 8 to 11 of the Third Further Amended Statement of Claim relating to the alleged negligent performance by the Defendants of their retainer in defend the proceedings brought by the Bank against the First Plaintiff in the Commercial Division of the Supreme Court, which were ultimately heard by His Honour Justice Rolfe in September/October 1993. When the hearing in this matter commenced, the Plaintiffs relied on 11 particulars of conduct, but six of these (sub-paras 11(ii), (iii), (iv), (vi), (vii) and (xii)) were not pressed during the hearing. However, the remainder of the particulars continued to be prosecuted until they were abandoned during the course of final address and argument: (see Judgment [32], [151]). The maintenance of these claims, which required detailed examination of the events which occurred right up to the end of the September/October 1993 hearing resulted in considerable waste of costs in the preparation and running of the case, and extended the hearing of the trial. It necessitated:

(a) Extensive evidence from Mr Newman and Mr Psaltis as to their conduct of the proceedings. In her evidence in chief Ms Notaras had hardly touched on these matters, (see paragraphs 57 and 58 of her affidavit sworn 5 April 2001);

(b) Lengthy cross-examination of Ms Notaras, (see transcript at 246-289 and 780-786));

(c) Further costs in the preparation and assembly of the chronological bundle, (see exhibit A volumes IV-V);

(d) Unnecessary written submissions, (see Defendants' Narrative of Events - Section A, paragraph 344 and following and Defendants' Outline Submissions on Breach and Causation, paragraphs 33 - 42 and 75 - 77).

In a number of important respects, the Plaintiffs were not candid or forthright in the production of documents that were relevant to central issues in the proceedings.

The issue of the Plaintiffs' ability to obtain refinance was always a central aspect of the Plaintiffs' case. The Plaintiffs did not present a full account of their attempts to refinance in their evidence in chief; (see paragraph 44 of Ms Notaras' statement of 5 April 2001 and paragraph 3 of Ms Notaras' statement dated 16 July 2002). It was necessary to issue numerous subpoenas, many years after the date of the transactions to attempt to obtain documents germane to these issues. The Plaintiffs produced documents, which must at all times have been known to be discoverable, at various stages of the proceedings. It was only during the trial, for example, that the Plaintiffs produced a letter from Roberts Lumley & Associates dated 6 July 1992, (exhibit D 3/9D).

The Plaintiffs raised the prospect of obtaining finance from Morlend Finance, in the first statement of Mr Marsh. It transpired that, in fact, the Plaintiffs had already applied to Morlend Finance. However, the relevant documents which evidence the application to Morlend, (exhibit D3/9E-9O) were only produced after the Defendants had filed an affidavit of Mr Landy, a director of Morlend Finance. He was asked to attend from Melbourne for cross-examination. However, his evidence was not challenged except in one minor respect, (see Judgment [115]). Further, it was necessary to recall Mr Marsh who, when shown Mr Landy's affidavit, agreed it would have been difficult to persuade Morlend to finance Ms Notaras or her companies in 1992, (see Judgment [174]).

The Plaintiffs were also less than candid in revealing their true financial position. It was necessary to issue subpoenas to obtain tax records, and bank statements to reveal the parlous state of the Plaintiffs' financial position, which the plaintiff would not admit despite sustained cross-examination. One particular example was the First Plaintiff's claims that if the Bank had told her at various times that the Second Defendant was in default of its obligations under its' commercial bill acceptance facility, she could have obtained funds from other sources, such as her Westpac accounts at Grafton, in order to rectify the situation. It was only after subpoenas to various banks were issued and the First Plaintiff was confronted with the bank statements that she conceded that she simply did not have the necessary funds available, (transcript 52, 720, 1535-1537 and 1633). The First Plaintiff's evidence on this issue amounted to obfuscation, (Judgment [54]).

The Plaintiffs' approach to the question of what the true overdraft limit was on the Bon Trading Account was similarly obstructionist, (see Defendants' Narrative of Events - Section A, paragraphs 18 - 34 and Judgment [53]).

The Plaintiffs' lack of candour put the Defendants to further expense and lengthened the hearing. It also required detailed expert evidence from Mr Gower, which was ultimately not challenged, (see Judgment [158]).

The Plaintiffs' evidence as to quantum was deficient. The attempts to adduce further evidence and to patch up otherwise inadmissible evidence lengthened the trial and put the Defendants to yet further expense.

None of the valuation evidence led by the Plaintiffs remained intact:

(a) The evidence of Mr McNeilly, who purported to give evidence in relation to valuation of the Bourke St property was abandoned entirely, (transcript at 1490]);

(b) The original statement of Mr Stamoulis was largely abandoned. Instead Mr Stamoulis produced two significant valuations, which bore little resemblance to his original evidence, (see statement of 7 April 2003 and the voluminous annexures and exhibits thereto);

(c) Large portions of Mr Marsh's first statement of 27 August 2002 were ruled inadmissible, (transcript at 852-866). The Plaintiffs ultimately did not rely on that statement and served a fresh statement dated 5 March 2003. That statement was objected to on numerous grounds and it was then wholly recast, so that the statement of 5 March 2003 was not relied upon, (transcript at 1151-1163). A statement dated 13 March 2003 was then served, which became exhibit J. However, that statement also required further arguments as to its admissibility, (transcript at 1202-1241);

(d) Very late in the proceedings the Plaintiffs sought to adduce a great deal of documentary evidence, which either had not been discovered or in relation to which no notification had been given to the Defendants, to support a claim for damages for legal costs and expenses associated with the various proceedings to which they had been party. Much time and effort was wasted before the Plaintiffs moved the Court for separate relief in relation to these matters, which had the effect of deferring the quantification of the Plaintiffs' claims to a Master for assessment, (see Third Further Amended Statement of Claim and transcript at 1489-1490, 1500, 1567-1571, 1574 and 1606-1608)

PROCEDURAL CHRONOLOGY Date Document/Transcript/Event Nature of Change 24 July 1998 Statement of Claim filed 28 February 2002 Report of Mr Gower served on Plaintiffs 1 March 2002 Report of Mr Boyce served on Plaintiffs 6 June 2002 Mediation 12 June 2002 Offer of Compromise served on Plaintiffs 17 February 2003 Hearing commences 20 February 2003 Abandonment of claims by letter Particulars (ii), (iii), (iv), (vi), (vii), & (x) concerning the conduct by Newman Psaltis of the defence of the Plaintiff in the State Bank proceedings were abandoned 25 February 2003 T 401/402 Acceptance that amount of overcharging was about $600,000 4 March 2003 Conclusion of the evidence of Ms Notaras 10 March 2003 Conclusion of the non-expert witnesses called by Newman Psaltis 10 March 2003 T 1025 No challenge to the evidence of Mr Jucovic QC 13 March 2003 T 1172 The Plaintiffs abandoned reliance on much of Mr Shaw's evidence 17 March 2003 Letter The Plaintiffs raised a new claim that they lost an opportunity to conclude a deal with the bank at $3.3 million 18 March 2003 T 1353.23 Concession that the Bank was entitled to retire the bill for the overdraft account 18 March 2003 T 1358 The Plaintiffs abandoned reliance on much of Mr Shaw's evidence 18 March 2003 T 1407/1408 No challenge to Mr Gower's evidence 20 March 2003 T 1457 Abandonment of the claim for the loss of opportunity to redevelop Oxford Street 26 March 2003 Second Further Amended Statement of Claim Omitting allegation that if the true debt had been identified the Plaintiff either would not have been in default or could have remedied the position prior to sale 29 April 2003 T 1595-1601 No challenge to most of Mr Landy's evidence 1 May 2003 Conclusion of evidence 5 May 2003 T 1713 Abandonment of the claim that Newman Psaltis failed to obtain documents in relation to the Bon Trading and Enijar accounts 5 May 2003 T1713-1716 The Plaintiffs abandoned the claim that Newman Psaltis should have used Mr Clarke's calculations to determine the level of bank overcharging 5 May 2003 T 1716/1717 Acceptance that the Bank would simply have issued fresh section 57 Notices to replace those issued in May 1991 if invalid 6 May 2003 T 1729 The Plaintiffs abandoned the claim that Newman Psaltis should have applied for an adjournment of the State Bank proceedings 6 May 2003 T 1730, T1733 All matters concerning the claim against Newman Psaltis for the conduct of the defence of the State Bank proceedings were abandoned

B. The conduct of the proceedings by the Plaintiffs

The conduct of the proceedings by the Plaintiffs has caused unreasonable delay and expense. The Statement of Claim was not issued until July 1998 (immediately before the expiration of the limitation period) and was not served until 29 February 2000 (see paragraph 3 of affidavit of David Ferguson sworn 23 June 2003). The delay in commencing proceedings made it more difficult for the Defendants to recapture the evidence.

The Plaintiffs amended their claim a number of times during the trial. However, it was only at the commencement of final address and in the course of argument that a significant part of the case was abandoned. This rendered a large part of the affidavit evidence, cross examination, written submissions and preparation unnecessary and irrelevant. Further, the Plaintiffs' lack of candour in relation to the obviously significant issues relating to their relationship with the Bank and the conduct of their facilities, their attempts to refinance the unchallenged debt and the ability to service loans also caused further unnecessary expense and contributed to the length of the proceedings. Finally, the state of the Plaintiffs' evidence in relation to quantification and the manner in which it prosecuted its claims caused unnecessary delay and expense. These matters are considered in more detail below.

Up until final oral address, the Plaintiffs maintained the claims in paragraphs 9 to 11 of the Third Further Amended Statement of Claim relating to the alleged negligent performance by the solicitors of their retainer to defend the proceedings brought by the State Bank against Ms Notaras in the Commercial Division of the Supreme Court, which were ultimately heard by His Honour Justice Rolfe (the Bank's proceedings). When the hearing commenced the Plaintiffs relied on 12 particulars of alleged negligence. Four of these (sub-paras 11(iii), (iv), (vi), (xii)) were abandoned during the hearing upon filing of the Second Amended Statement of Claim on 27 March 2003. However, the remainder of the particulars in paragraph 11 continued to be prosecuted until they were abandoned during the course of final address and argument: (see Judgment [32], [151]).

The maintenance of these claims, which required detailed examination of the events which occurred after May 1993 when the Bank commenced proceedings in the Commercial Division resulted in considerable waste of costs in the preparation and running of the case, and extended the hearing of the trial. It necessitated:

(a) extensive evidence from Mr Mathas in his first affidavit as to his conduct of the retainer (see for example paragraphs 221 - 305 of Mr Mathas' affidavit of 6 July 2001). In her evidence in chief Ms Notaras had hardly touched on these matters (see paragraphs 57 and 58 of her affidavit sworn 5 April 2001);

(b) lengthy cross examination of Ms Notaras (see for example T635-T730);

(c) costs in the preparation and assembly of the chronological bundle (see exhibit A volumes IV-V);

(d) detailed written submissions which became otiose (see Defendant's submissions Part I - Narrative of Events paragraph 159ff, Part II - Outline of Submissions paragraphs 234-276).

The Plaintiffs also abandoned upon the filing of the Second Further Amended Statement of Claim the allegation in paragraph 7(v) that Sly & Weigall had failed to advise Ms Notaras in relation to negotiating a settlement after the sale of the properties by the Bank. That allegation had made it necessary to pursue in the evidence in some detail the advice which was given to Ms Notaras after the sale of the properties in July and August 1992. This too resulted in a waste of costs in the preparation and running of the case.

Further, throughout the hearing, on a number of occasions the Plaintiffs abandoned reliance on particular evidence. This included the following:

(a) on 13 March 2003 and 18 March 2003, the Plaintiffs abandoned reliance on a large part of the expert evidence for Mr Harold Shaw, Accountant (T1172 and 1358). Ultimately, Mr Shaw's evidence went only to the extent of overcharging by the Bank and was not relied upon in relation to Enijar's capacity to meet the cost of financing and the quantification of the Plaintiffs' losses arising from the sale of the Bourke St and Oxford St properties; (b) the Plaintiffs maintained a claim for the loss of opportunity to develop 17 Oxford St, Paddington, notwithstanding that evidence from Ms Notaras concerning the proposed development in her statement of 5 April 2001 was ruled inadmissible (see in particular paragraphs 62 and 64 of exhibit A) and the express invitation to supplement such evidence had not been taken up (T37). It was only following service of Mr Meredith's quantity surveyors' report on behalf of the Defendants that the Plaintiffs swiftly agreed (without discussion or conclave between the quantity surveyors (see T1400, 1434) to abandon a claim for the loss of opportunity to re-develop Oxford St (T1457). The Defendants agreed at the same time they would not assert that the Plaintiffs would in fact have been financially worse off had the redevelopment been pursued. The claim for the loss of opportunity to develop 17 Oxford St should never have been brought or maintained; (c) there were numerous amendments and revisions made to the valuation evidence that the Plaintiffs relied upon, particularly that of Mr Marsh, Mr Stamoulis and Mr McNeilly (see T861-869, 1165, 1174, 1176 and 1243-1244). The Plaintiffs' evidence as to quantum will be considered more closely below.

In a number of important respects the Plaintiffs were not candid or forthright in the production of documents that were relevant to central issues in the proceedings.

The issue of the Plaintiffs' ability to obtain refinance was always a central aspect of the Plaintiffs' case. The Plaintiffs did not present a full account of their attempts to refinance in their evidence in chief; see paragraph 44 of Ms Notaras' statement of 5 April 2001 and paragraph 3 of Ms Notaras' statement dated 16 July 2002. It was necessary to issue numerous subpoenas, many years after the date of the transactions to attempt to obtain documents germane to these issues. The Plaintiffs produced documents, which must at all times have been known to be discoverable, at various stages of the proceedings. It was only during the trial, for example, that the Plaintiffs produced a letter from Roberts Lumley & Associates dated 6 July 1992 (exhibit D 3/9D).

During the hearing of the proceedings, the Plaintiffs made available further documents on 1 April 2003 and again on 23 April 2003, several weeks after the commencement of the proceedings. A further list of documents was served on 16 April 2003 (see paragraphs 18-20 of Mr Ferguson's affidavit).

The Plaintiffs had raised the prospect of obtaining finance from Morlend Finance, in the first statement of Mr Marsh. It transpired that, in fact, the Plaintiffs had already applied to Morlend Finance. However, the relevant documents which evidenced the application to Morlend (exhibit D3/9E-9O) were only produced after the Defendants had filed an affidavit of Mr Landy, a director of Morlend Finance.(see T 1510.5). Ms Notaras was not able to give any credible explanation as to why these obviously crucial documents had not been referred to or produced previously (T1518-1520). Mr Landy was asked to attend from Melbourne for cross-examination. However, his evidence was not challenged in cross examination except in one minor respect (see Judgment [115]). Further, it was necessary to recall Ms Notaras and Mr Marsh who, when shown Mr Landy's affidavit, agreed it would have been difficult to persuade Morlend to finance Ms Notaras or her companies in 1992 (see Judgment [174]).

The Plaintiffs were also less than candid in revealing their true financial position. It was necessary to issue notices to produce to the Plaintiffs and subpoenas to various financial institutions (for example Westpac (see exhibits 18 and 19) and Macquarie Bank (exhibit 23)) to obtain tax records, and bank statements and the like to reveal the parlous state of the Plaintiffs' financial position. One example of this was Ms Notaras' assertion that she could have obtained funds from other sources, such as her Westpac accounts at Grafton. It was only after subpoenas to various banks were issued and the First Plaintiff was confronted with the bank statements that she conceded that she simply did not have the necessary funds available (see T52, 720, 1535-1537 and 1633). Ms Notaras' evidence was correctly characterised as obfuscation (see judgment [54]). This put the Defendants to further expense and, with cross examination on the documents lengthened the hearing. It also required detailed expert evidence from Mr Gower, which was ultimately not challenged Judgment [158]).

The Plaintiffs evidence as to quantum was deficient. The attempts to adduce further evidence and to patch up otherwise inadmissible evidence lengthened the trial and put the Defendants to yet further expense.

None of the valuation evidence led by the Plaintiffs remained intact:

(a) the evidence of Mr McNeilly, who purported to give evidence in relation to valuation of the Bourke St property was supplemented during the hearing and then abandoned entirely (see T1483-1485 esp. at 1485.17, 1490);

(b) the original statement of Mr Stamoulis was largely abandoned. Instead Mr Stamoulis produced two significant valuations during the hearing, which bore little resemblance to his original evidence (see affidavit of 7 April 2003 and the voluminous annexures and exhibits thereto);

(c) large portions of Mr Marsh's first affidavit of 27 August 2002 were ruled inadmissible (see T852-867). The Plaintiffs ultimately did not rely on that statement and served a fresh statement dated 5 March 2003 (see T869-877). That statement was objected to on numerous grounds and then recast, so that the statement of 5 March 2003 was not relied upon (T1151-1163). The Plaintiffs then served a third statement of Mr Marsh dated 13 March 2003, (Exhibit J). That statement also required further argument as to its admissibility (see for example T1202-1241).

(d) very late in the proceedings the Plaintiffs sought to adduce a great deal of documentary evidence, which either had not been discovered or in relation to which no notification had been given to the Defendants, to support a claim for damages for legal costs and expenses associated with the various proceedings to which they had been party. Much time and effort was wasted before the Plaintiffs moved the Court for separate relief in relation to these matters, which had the effect of deferring the quantification of the Plaintiffs' claims to a Master for assessment (see Third Further Amended Statement of Claim and T1489-1490, 1500, T1567-1571, 1574, T1606-1607).

Sly & Weigall rely on the Chronology of Amendments and Concessions prepared on behalf of Newman Psaltis and make the following further references

Date Document/Transcript/Event Nature of Change Particulars in para 11 (iii), (iv), (vi), & (xii) relating to conduct by Sly & Weigall of defence of the Plaintiff in the State Bank proceedings were abandoned 18 February 2003 Abandonment of claims by letter Particular para 7(v) concerning failure to advise Plaintiff to negotiate a settlement after sale of the properties is also abandoned. 27 February 2003 Further Amended Statement of Claim Amendments included an allegation (para 7(iv)(b)) that Sly & Weigall were negligent in failing to commence proceedings on the basis that the State Bank was estopped from relying on the notices by reason of negotiations 11 March 2003 Conclusion of the non-expert witnesses called by Sly & Weigall Further Valuation Evidence 13 March 2003 T1174 - 1175 Plaintiffs serve further valuation evidence of Mr Mr Stamoulis and Mr McNeilly.

Plaintiffs abandon reliance on Stamoulis Statement of 31 May 1991 and McNeilly statement of 5 April 2001. They propose to read further statements of Stamoulis and McNeilly of 13 March 2003 but after argument seek leave to supplement. Abandonment of Valuation Evidence 21 March 2003 T1470-1485 Directions are made for further proposed valuation evidence of both Mr Stamoulis and Mr McNeilly

7 April 2003 Further Valuation Evidence Plaintiffs serve further valuation evidence of Mr Stamoulis in relation to Bourke St and Oxford St properties with voluminous annexures. All matters concerning the claim against Sly & Weigall for the conduct of the defence of the State Bank proceedings were abandoned

5 and 6 May 2003 T 1730, T1733, esp T 1739 - 1740 Plaintiffs abandon claim that Sly & Weigall failed to obtain documents in relation to the Bon Trading and Enijar accounts

Plaintiffs abandon claim that Sly & Weigall should have used Mr Clarke's calculations to determine the level of Bank overcharging

Last Modified: 10/21/2003 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.