Leave to re-open before reserve for judgment -
"exceptional circumstances" under UCPR r 31.28(4)
Legislation Cited: Civil Procedure Act 2005 (NSW)
Source
Original judgment source is linked above.
Catchwords
Leave to re-open before reserve for judgment -
"exceptional circumstances" under UCPR r 31.28(4)
Legislation Cited: Civil Procedure Act 2005 (NSW)
Judgment (2 paragraphs)
[1]
EX TEMPORE JUDGMENT
By notice of motion filed 9 July 2019, the plaintiff seeks certain orders in the nature of re-opening his case in chief. Paragraph 1 of the notice of motion seeks that leave be granted to the plaintiff to re-open his case in chief and paragraph 2, that leave be granted to the plaintiff to further amend the Amended Statement of Claim. Late in the contest, the plaintiff informed the court that paragraph 2 is not pressed.
In consequence of that, paragraph 4 of the notice of motion which purported to invite time for the defendant to file a defence to the amended statement of claim is not required to be considered. The substance of the plaintiff's application arises from prayer 3. In that paragraph of the notice of motion, the plaintiff seeks leave be granted to serve and rely on the affidavit of Melanie Jayne Holt sworn on 24 May 2019 within two days of the making of the order.
The affidavit of Ms Holt contains her expert opinion on the subject of whether or not signatures attached to what I will refer to as "loans 1 and 2" being documents which by his affidavit and in the running of the case, the defendant identifies as "written contracts" are authentic copies. The reason I say "authentic copies" is that it is common ground that by Defence filed in March 2018, the defendant denied the plaintiff's allegation of oral contracts and pleaded written Contracts. In both the plaintiff's and defendant's versions, there were two loan agreements.
The plaintiff says that it was not until receipt of the defendant's affidavit of 19 March 2019 that he first saw the documents of loans 1 and 2 in the defendant allegation. In November 2018, when the matter had been before the Court, I am told, for case management toward hearing, the parties were unrepresented. It should however be noted that the plaintiff is a retired solicitor and that he practiced as a solicitor for decades. It cannot be assumed that he was a novice in the law. At that directions hearing, which obviously preceded the defendant's affidavit, neither party indicated that they intended to rely on expert evidence.
After receipt of the defendant's affidavit evidence, the plaintiff caused his solicitors to obtain by letter of brief dated 3 April 2019, Ms Holt's expert opinion as to the authenticity of the copy of his signature on loans 1 and 2. It is common ground that the plaintiff sought production from the defendant of the original documents, loans 1 and 2, and that the defendant did not produce same, save to respond that the defendant does not know their location other than the defendant thought they had been provided to the plaintiff.
The affidavit evidence in the trial covers all lay evidence of the making of the two agreements. That is, in the plaintiff's case, two oral agreements and in the defendant case, two written agreements. The significance of the plaintiff disputing the defendant allegation of written agreements and the significance of the determination of whether the agreements be oral or in writing are not just as to the terms. On each case, the agreements were for a loan.
On the plaintiff case, the loans were personal, agreed himself and the defendant. On the defendant case, the loans were between the plaintiff and a company operated by the defendant. That company has since been placed in liquidation.
I indicated to the parties earlier today that I would be granting leave for the plaintiff to re-open and leave to rely on the expert opinion of Ms Holt by service of her affidavit. I offered that my reasons for determination would be delivered at a later time. The defendant responded that it was not appropriate for the defendant to have to go into evidence until having the benefit of consideration of my reasons. In order to avoid further delay in this matter, the hearing of which was conducted over four days in early June before I went on leave, I deliver these reasons now, in short, and what I hope is sufficient form.
The application to re‑open is made at the completion of evidence, and before judgment is reserved. The application to rely on expert evidence specifically requires consideration under UCPR 31.28(4), which provides that such leave is not to be given where it is opposed, as it is here, unless the Court is satisfied that there are exceptional circumstances that warrant the granting of leave.
In this case, the exceptional circumstances required for consideration under UCPR 31.28 and the special circumstances for leave to re‑open are so closely related that it is appropriate to give these reasons whilst considering those two applications for leave simultaneously. A starting point is to observe that the provisions of the Civil Procedure Act and the Uniform Civil Procedure Rules provide for a regime under which parties are expected to bring their proceedings to Court. Failing compliance with the regime, parties may lose the opportunity of litigating, indeed.
The balance of justice and of procedural discipline are deliberately married in the Civil Procedure Act ss 56 to 58, in particular, and in a fashion explainable and understandable on application of the principles set out in Aon Risk Services Limited v Australian National University (2009) 239 CLR 175; [2009] HCA 27. For the purposes of present consideration, paras 89 to 99 and 112 of that decision have received, in the course of discussion with counsel during their submissions, particular attention and are considered here.
Section 56 describes the overriding purpose of the Act and of the Rules in their application to civil proceedings, to facilitate the just, quick and cheap resolution of real issues in proceedings. Specifically, s 56(2) compels the Court to seek to give effect to the overriding purpose when it exercises any power given to it by the Civil Procedure Act or the Uniform Civil Procedure Rules, and when it interprets any provision of the Act or the Rules. Section 57 provides:
"the purpose of furthering the overriding purpose referred to in s 56(1) when managing proceedings is to have regard to the following objects: (a) the just determination of the proceedings; (b) the efficient disposal of the business of the Court; (c) the efficient use of available judicial and administrative resources; (d) the timely disposal of the proceedings and all other proceedings in the Court at a cost affordable to the prospective parties."
In subs (2) of s 57, it is provided that:
"The Civil Procedure Act and the Uniform Civil Procedure Rules are to be so construed and applied, and the practice and procedure of the Court is to be so regulated as best to ensure the attainment of the objects of furthering the overriding purpose."
Section 58 incorporates deliberately a compulsion upon the Court to have regard to the provisions of ss 56 and 57, when exercising its discretion in accordance with the dictates of justice. This includes in the making of any order or direction for the management of the proceedings. In these proceedings, the orders granting leave to re-open and granting leave to rely on the expert evidence of Ms Holt are precisely orders in the management of the proceedings. In subs (2), s 58 provides:
"For the purpose of determining what are the dictates of justice in a particular case, the court, (a) must have regard to the provisions of ss 56 and 57, and (b) must have regard to the following matters to the extent to which it considers them relevant."
Amongst those "following matters", all of which are considered in my reasons which follow, those which stand out most prominently for consideration here include the degree or lack of expedition with which the parties have approached the proceedings including in their approach to interlocutory activities and the degree to which that lack of expedition particularly on the plaintiff's part has arisen from circumstances beyond the control of the plaintiff. It is helpfully prescribed that the Court should consider the degree to which the plaintiff has acted in order to fulfil its duties, satisfying the overriding purpose and the opportunity which it had to do so. Importantly, the consideration at s 58(2)(b)(vi) is the degree of injustice that would be suffered by the respective parties as a consequence of any order or direction.
The principles set out by the High Court in Aon make plain that application of the overriding purpose (and now as those provisions of the Civil Procedure Act apply) to which I just referred, contemplates not just doing justice between the parties, but also to other litigants. It is the cost to the community of the court and the expectation of the court that the parties will fulfil their obligations under the regime which can weigh very heavily in determination of applications such as here.
Particularly at para 94, the High Court explained that it is not the case as was the application of the plurality judgment in JL Holdings, that parties are entitled to change their pleading by amendment, for instance, except perhaps in extreme circumstances wherein they would be shut out by application of principles of case management.
In particular where a party had a sufficient opportunity to plead his or her case, it may be necessary for the court to make a decision which may produce a sense of injustice in that party for the sake of doing justice to the opponent and to other litigants. Unlike the facts in Aon Risk Services, this is not an application to amend, of course, but an application to re-open.
The principles of case management weigh heavily in this consideration as I have indicated, and those principles are best understood from that decision of the High Court. At para 96, the High Court said, "It is more accurate to say that parties have the right to invoke the jurisdiction and the powers of the court in order to seek a resolution of their dispute", and that the exercise of discretion such as is required in each part of the plaintiff's application here remains a matter for the Court.
In para 99, the High Court said, "It is not the modern view that an order for indemnity costs will always undo a prejudice that a party suffers by" - such as here - a re-opening of the case. It is agreed between the parties that the re-opening of the case will incur at least one day of further evidence. It will cause the defendant to suffer the expense, if it chooses to do so, of retaining expert opinion evidence to meet that of Ms Holt.
However, whereas it is submitted for the defendant that lay evidence will also be required, in my opinion, that is to be seen. Most likely there will either be no further lay evidence required or lay evidence in the very restricted realm of signature or placement of signature upon the document. I repeat, the defendant has given the whole of his evidence of the making and signing of the two loan agreements.
The parties both referred me to the helpful decision of Darke J in Youssef Taouk and Najibi Taouk v Najib Louis (No 1) [2014] NSWSC 656. His Honour considered there a very different case to the case here. Whereas here, granting leave to re-open will be restricted to admission of the expert opinion of Ms Holt and the defendant's response to the admission of that expert evidence; in that case, the attempt was made after judgment was reserved to introduce the evidence of a lay witness whose evidence was expected to be contrary to that of principle lay witnesses going to the factual matrix at the centre of the financial transaction there in dispute. In my opinion, expert opinion of Ms Holt does not mix with the field of the lay evidence of the making of the agreement, but rather is discreet expert opinion arising only from her observation of the copy signatures.
In this, it is to be born in mind because it is particularly relevant, that whereas the plaintiff denies having ever signed the loan agreements, in the absence of the original documents, the only evidence is what appear to be copies of signed loan agreements. Ms Holt therefore expresses an opinion on the authenticity of a copy. Plainly, this is a precise scientific nature of specialist knowledge.
It is obviously away from the field of lay evidence. Therefore, the admission of Ms Holt's evidence as I see it does not cause there to be - as I would understand to have been the situation in the case of Taouk, or in another case - a need to recall or as it were, re-run vast portions of the trial to date. I repeat, it is unlikely that lay evidence will be required in any significant extent.
That said, the important feature that weighs strongly in the interest of justice balanced with that consideration of case management including delay and expense and efficiency of conduct of litigation is that the authenticity of the signatures goes to the very central factual issue of whether or not - as the defendant alleges - the parties made written contracts.
Preceding the CPA and UCPR in Smith v New South Wales Bar Association (1992) 176 CLR 256 at 266 to 267, the plurality set out the principles upon which re-opening is to be considered. Darke J in the Taouk case also applied this authority. On the facts here, as I have said, the evidence is complete, but judgment has not been reserved.
At p 267, the plurality said, "It is difficult to see why" [and I interpose in that situation] "the primary consideration should not be that of embarrassment or prejudice to the other side." To state the obvious as I have observed from the principles laid down in the Aon decision and as the court is compelled to apply under ss 56 to 58 of the CPA, it is not just the other party - the defendant here - whose interests are to be considered, but the public importance of compliance with case management principles.
Nevertheless, the issue to which the evidence of Ms Holt goes being so central, it is important to see how that would balance against prejudice to the other side. I was ably assisted by Mr Hemsworth for the defendant during submissions on the question of prejudice and it is from that opportunity that I have felt comfortable in the observation which I have made that the evidence of Ms Holt is to a discreet area unlikely to invite introduction of extensive lay evidence.
There needs to be an explanation, however, by the plaintiff for these issues arising as they do after the completion of the evidence which the parties brought to court. That explanation is required for both contemplated orders. It is required in order to give proper consideration and weight to those principles of case management required by the CPA, and it is required in order for the Court to understand why it should be satisfied that there are exceptional circumstances, as required by UCPR 31.28(4). To some extent, I have gone to those circumstances.
But in order to continue it in a chronological sense, the main points are, that after receipt of the opinion of Ms Holt on 8 April 2019, which opinion informed the plaintiff that the copy signatures on loan documents were not authentic in her opinion, the plaintiff served the expert report on the defendant on 30 April 2019 and on 1 May 2019 issued a subpoena on the liquidator of the company. In the schedule to the subpoena, the liquidator was required to provide all documents relating to reports to creditors of the company, Alexander and Black Equities and Investments Pty Ltd, that being the company which the defendant says was the party to the loan agreements made in writing with the plaintiff. It also required all proof of debts relating to the company and all documents recording the list of creditors of the company.
By letter of 7 May, the liquidator responded, and amongst the documents was a list of creditors provided by the defendant to the liquidator which did not include the plaintiff. That consequence would be consistent with the plaintiff not being a creditor of the company. In turn, the plaintiff would not be a creditor of the company if the loan agreements were made with the defendant in person as the plaintiff alleges the oral contracts to have been.
It is a serious matter to allege fraud. As of 7 May, the unchallengeable circumstances are that the copy loan agreements were attached to the defendant's affidavit of 19 March 2019, expert opinion informed that the copy signatures did not appear to be authentic, and the plaintiff was not a known creditor of the company on information provided by the defendant to the liquidator. In those circumstances, the plaintiff wrote to the defendant seeking leave to rely on the expert opinion evidence of Ms Holt, which by then was served out of time according to the District Court Civil General Practice Note 1 and the provisions of the UCPR part 31.
The defendant refused to consent to that course and objected to the plaintiff's reliance upon the report. The plaintiff can be criticised for the loss of some weeks here, but one wonders whether, according to the practice of this Court, that would have effected much difference. In this Court, parties are expected to be ready to proceed at hearing. On 24 May 2019, when this matter was listed for hearing to commence on 6 June, the plaintiff's notice of motion seeking to overcome the defendant's objection came before the List Judge.
I understand from the defendant that objection was made on the basis of the plaintiff's failure to serve the expert opinion within the times prescribed by the UCPR regime. The plaintiff also sought to rely on a Reply filed and delivered to the defendant on 24 May 2019. To my understanding, it was not a matter required to be pleaded by Reply, that the plaintiff's response to the defence was that the loan agreements were not authentic, and that written contracts of loan were not made.
Nevertheless, that document of Reply fully informed the defendant of the plaintiff case, including all of the allegations which the plaintiff hoped to make, and including that with support of Ms Holt's opinion that the plaintiff wanted to respond to the defence evidence and Defence by disputing the fact of written loan contracts.
The List Judge refused the application. It was apparent that had it been granted, vacation of the hearing would have been required. On the first day of the hearing before me, the plaintiff renewed the application, but did so frankly stating it was pressed on precisely the same basis as had been brought before the List Judge. The defendant again opposed. On that basis, I refused the application.
The plaintiff elected then to not rely on the Reply. The matter proceeded as a contest between the two witnesses, the plaintiff and the defendant. The plaintiff saying that they made the oral contracts in his evidence and being cross‑examined on that, and the defendant saying that they did not contract orally but for the company entered the two written loan agreements and he was cross‑examined on that.
At the close of the evidence, the plaintiff repeated its application seeking to rely on the expert opinion of Ms Holt. It was on that occasion I permitted the plaintiff to proceed by notice of motion and the affidavit evidence before me today. What had occurred during cross‑examination of the defendant was the obtaining from him that he in fact had not informed the liquidator that the plaintiff was a creditor of the company.
Previously, this was to some extent available because of the liquidators production including that the list of creditors did not include the plaintiff, but it was further obtained in cross‑examination that the defendant conceded he had not produced to the liquidator the loan agreements through oversight on his part. The defendant maintained that during his reporting to the liquidator, he held in his control, custody and possession copies of the loan agreements.
Indeed, he was reluctant to concede that he had failed to produce those to the liquidator. It was put to him at transcript p 96, line 25, the question, "See, the truth of it is that you know and have always known that Paul Herbert Kennedy never lent any money to the company", to which the defendant replied, "No, that's not true, sir", having at transcript p 96, line 19 refused to accept that he failed to produce to the liquidators the loan agreements.
At transcript p 97, lines 15 to 21, he gave the following evidence,
"Q. Isn't the truth of it, you do not adduce any evidence of money being paid to the company's bank account by way of bank statements.
A. I apologise. I believed that I had done that.
Q. Where, sir, in your evidence?
A. If it's not there, it's been overlooked but I believe that I‑‑
Q. Overlooked, is it? Again, like overlooking to send loan agreements to the liquidator.
A. I have those details."
The evidence of the defendant amounting to his not providing details of the loans in that way to the liquidator, that he apparently did not provide the loan agreements to the liquidator, and he did not identify the plaintiff as a creditor to the liquidator are all matters of significant concern and relevance to the question of whether or not the loan contracts into which the plaintiff entered were made with the company.
This evidence expanding as it did on what was available before the List Judge prior the hearing and what was available to the plaintiff in the renewing of its application on the first day of the hearing provides a better opportunity now than on either of those prior occasions in the sense of a more informed opportunity in the interests of justice to observe the importance of the authenticity of signature on the loan agreements and the weight of the challenge to the defendant's allegation of the existence of authentic written loan contracts.
Whereas the defendant has argued that this course of application making by the plaintiff is repetitive and ought be refused particularly on the grounds that the plaintiff exercised its forensic choices to proceed without the evidence of Ms Holt at the hearing and to withdraw its Reply of fraud; in my opinion, it is to be viewed as rather a course in which the plaintiff repeatedly attempted to make the application and continued in a consistent forensic course of doing so, but by compulsion of orders made, was denied an opportunity other than to proceed to the hearing as he did do. These observations satisfy the requirements of ss 56 to 58, and application of the considerations to which I referred under s 58(2), as well identify exceptional circumstances justifying the leave required under UCPR 28(4).
In my opinion, the defendant properly complains that the plaintiff ought have better set out the situation to explain delay more fully in an affidavit, but the common ground of events, and the course of the hearing, pretty much explain the circumstances. The prejudice to the defendant on the central factual issue, the cost and the delay and expense, including the incurring of one more day of hearing, in my opinion, are justified in the interests of justice. It is for these reasons that I exercise my discretion and grant leave for the plaintiff to re‑open to the limited extent of reliance upon the expert opinion of Ms Holt. I find exceptional circumstances permitting the evidence of Ms Holt to be relied upon by the plaintiff in the hearing when it resumes.
I make the following orders:
1. I grant leave to the plaintiff to re‑open its case in chief limited to admission of the evidence of Melanie Jayne Holt by affidavit made by her dated 24 May 2019;
2. I grant leave pursuant to UCPR 31.28(4) for the plaintiff to serve and rely upon the affidavit of Melanie Jayne Holt sworn 24 May 2019. Such service to occur within four days of today's date;
3. I direct the defendant to serve any lay evidence in reply to the expert opinion of Ms Holt on or before 26 August 2019;
4. I direct the defendant to serve any expert opinion evidence in reply to the evidence of Ms Holt upon which he seeks to rely on or before Monday, 2 September; and
5. I return the matter before me part‑heard on Thursday, 10 October 2019, estimate one day‑plus.
[2]
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Decision last updated: 07 August 2019