Permanent Custodians Limited v Nobilo and Others

Supreme Court of NSW|2011-12-12|Before: Johnson J, Santow J, Sperling J

JUDGMENT 1JOHNSON J : By Notice of Motion filed 1 August 2011, the Applicants, Vincent Parisi and Anthony Pascale, seek leave to withdraw an admission made in the Defence to the Second Cross-Claim filed on 21 June 2010. The application extends as well to the withdrawal of the same admission which was included in the Amended Defence to the Second Cross-Claim filed in December 2010. 2The application is opposed by the Respondents, John and Jakica Nobilo.

The Nature of the Proceedings 3On 17 December 2009, the Plaintiff, Permanent Custodians Limited, commenced proceedings against the Defendants, John and Jakica Nobilo, and their daughter Judy Saad, seeking judgment against the Defendants in a monetary sum and judgment for possession of land at Glenwood arising from alleged mortgage default. 4On 27 March 2010, Mr and Mrs Nobilo filed a Defence to those proceedings. They also issued two Cross-Claims, one against the Plaintiff and the other (on 28 April 2010) against the Applicants, Mr Parisi and Mr Pascale, who are both solicitors and the principals of the law firm known as Hunter Lawyers. 5The Defence and Cross-Claim filed by Mr and Mrs Nobilo allege that the loan was made to Ms Saad to enable her to refinance an existing loan. In effect, Mr and Mrs Nobilo were said to be guarantors and to have provided their property as security although, in the first instance, it was asserted that any mortgage is not effective in favour of the Plaintiff. 6By the Second Cross-Claim, Mr and Mrs Nobilo allege that the Applicants were retained by Ms Saad in connection with the loan and mortgage. One of the matters alleged to form part of the retainer was for the Applicants to arrange a transfer of 1% of the Glenwood property to Ms Saad, such transfer being a requirement of the lender. The Applicants were said to owe fiduciary duties to Mr and Mrs Nobilo as a result of advice given by them. 7Paragraph 33 of the Second Cross-Claim said: "By acting for Judy [the Third Defendant] in relation to the 1% Transfer, the Proposed Loan and the Proposed Mortgage, the cross-defendants had interests conflicting with their duties to the cross-claimants." 8Paragraph 22 of the Defence to the Second Cross-Claim relevantly said: "In relation to paragraph 33 of the Second Cross-Claim, the Cross-Defendants: a. admit that they acted for the Cross-Claimants' daughter in relation to the 1% Transfer; b. deny that they acted for the Cross-Claimants' daughter in relation to the Proposed Loan and Proposed Mortgage."

The Present Application 9The Applicants seek leave to withdraw the admission made in paragraph 22(a) of the Defence to the Second Cross-Claim. They wish to assert now that they did not act for Ms Saad, on what was described as the 1% transfer. 10In support of the application, the Applicants rely upon the affidavit of Siobahn Bridget Moore sworn 29 July 2011. In addition, the Applicants rely upon the documents contained in Exhibit AP1. 11Ms Avenell, counsel for the Respondents, objects to parts of the affidavit of Ms Moore, being paragraphs 13, the opening sentence of paragraph 18 and paragraph 36. The objection contends that this material is hearsay and contains conclusions expressed by the deponent. 12Section 75 Evidence Act 1995 provides that, in an interlocutory proceeding, the hearsay rule does not apply to evidence if the party who adduces it also adduces evidence of its source. The portions of the affidavit of Ms Moore which are objected to do identify the relevant source. In these circumstances, I allowed these parts of the affidavit to be read, subject to submissions concerning the weight to be attached to them. 13As Davies J observed in his judgment of 9 December 2011 on a related question ( Permanent Custodians Limited v Nobilo [2011] NSWSC 1494 at [23]), the real dispute on the present application concerns the nature of the instructions the Applicants received themselves, rather than what instructions Ms Moore received when she came to act for the Applicants, after they were joined to the proceedings. 14Neither Applicant has gone on affidavit for the purpose of this application. Rather, reliance is placed upon the affidavit of Ms Moore which refers to affidavits of other persons, including Mr Pascale. 15Accordingly, there is no affidavit from Mr Pascale which asserts directly that the factual matters contained in the relevant admission are wrong, or explains how he came to verify pleadings containing that admission in June and December 2010. 16It will be necessary to assess the evidence relied upon on the application with this omission in mind. 17Ms Avenell read the affidavit of Stephen Blanks affirmed 5 August 2011 which annexed affidavits filed for the Applicants in the principal proceedings. Submissions were made concerning their content.

Applicable Principles 18The onus lies upon the Applicants to demonstrate that leave should be granted to them to withdraw the admission and to rely upon a Further Amended Defence to the Second Cross-Claim. 19The relevant principles to be applied on such an application are not in doubt. The Court will consider whether the admission is contrary to the actual facts or was made inadvertently and without due consideration of material matters. The Court will consider prejudice to the Respondents (if the admission is withdrawn) and prejudice to the Applicants (if the admission is not withdrawn): Drabsch v Switzerland General Insurance Co Limited (Santow J, 16 October 1996, unreported); NM Rural Enterprises Pty Limited v Rimanui Farms Limited [2010] NSWSC 969 at [11]. 20The Court is after the truth so that, in principle, an erroneous admission should be able to be withdrawn unless other factors outweigh that decision, with the principal factor that might outweigh the decision being prejudice to the other party because of the way in which that party has prepared his or her case on the basis of the admission: For The Good Times Pty Limited v Coltern Pty Limited [2007] NSWSC 108 at [3]. 21A Court may permit an admission in a pleading to be withdrawn if it is made in error or when new evidence has come to light: SLE Worldwide Australia Pty Limited v Wyatt Gallagher Bassett Pty Limited [2005] NSWSC 816 at [56]. It has also been said that, where an admission has been made by mistake, relief will be granted provided that the matter is seriously in question in the proceedings and the opposite party has not acted on the admission to its detriment: Australia and New Zealand Banking Group Limited v Bechely-Crundall (Sperling J, 11 June 1996, unreported).

Submissions of the Parties 22Mr Colquhoun, counsel for the Applicants, submits that the application should be granted upon the basis of the matters contained in Ms Moore's affidavit. He submits that it has been demonstrated that Ms Moore had received only limited instructions in relation to the allegations concerning the 1% transfer at the time of the preparation of the pleading containing the admission. Thereafter, according to the affidavit of Ms Moore, further investigations conducted in the context of preparing evidence on behalf of the Applicants revealed that, despite Ms Saad's involvement in the 1% transfer, the Applicants had acted for Mr and Mrs Nobilo in respect of the proposed transfer of an interest in the property to Ms Saad, and not for Ms Saad. 23Mr Colquhoun submits that Ms Moore has not been cross-examined on her affidavit, so that the Court should accept her evidence that the admission has been made inadvertently and that leave should be granted for it to be withdrawn. 24Mr Colquhoun submits that it was not to the point that Mr Pascale had not sworn an affidavit relied upon directly in support of the application. He submits that insistence upon such an affidavit on an application such as this would turn the application into an interlocutory factual dispute to be determined effectively ahead of trial. He submits that this was a trial issue which ought be determined by a Judge on the merits, and not left to resolution against the Applicants by way of the admission. He submits that there is no prejudice to the Respondents if leave to withdraw the admission is granted. He submitted, as well, that the purposes of s.56 Civil Procedure Act 2005 would be served if leave to withdraw the admission was granted. 25Ms Avenell relies strongly upon the decision of Brereton J in Stafford v Kekatos (No. 2) [2008] NSWSC 1044 at [32]-[33]. Ms Avenell submits that the decision of Brereton J has direct application to this case where there is no affidavit from Mr Pascale, the solicitor who had acted for Mr and Mrs Nobilo in 2006. This was particularly so, Ms Avenell submits, given that Mr Pascale had verified the pleading contained in the admission on two occasions. 26Ms Avenell did not assert that the Respondents were prejudiced, but submitted that the Applicants had failed to make out a case for the grant of leave, given that it had not been demonstrated that the admission had been made inadvertently and that it was contrary to the actual facts. 27Ms Avenell pointed to a number of contemporaneous documents in Exhibit AP1 and Exhibit SB1 which, she submitted, supported a conclusion that the Applicants did indeed act for Ms Saad on the 1% transfer. Amongst these documents were contemporaneous file notes which pointed to instructions being given to the Applicants directly by Ms Saad. Specific documents referred to included a letter from Mr Pascale to Ms Saad (copied to Mr and Mrs Nobilo) dated 11 May 2006 enclosing the tax invoice for fees and thanking Ms Saad for her instructions. The tax invoice, also dated 11 May 2006, was directed to Ms Saad and sought payment of fees for all steps which the Applicants appeared to have undertaken for Ms Saad and Mr and Mrs Nobilo. The letter from Mr Pascale to Ms Saad was headed "Your transfer from Nobilo" and the tax invoice was headed "Saad transfer from Nobilo" (Exhibit SB1, pages 142-143).

Decision 28In determining an application for leave to withdraw an admission, the Court has a broad discretion to weigh up all matters which are relevant to the application. The determination must be made by reference to the evidence adduced at the hearing of the application. 29It is necessary for the Applicants to demonstrate that the admission was contrary to the actual facts or was made inadvertently and without due consideration of material matters. 30This is not a case where the contemporaneous documents are inconsistent with the Applicants having acted for Ms Saad on the 1% transfer. If the contemporaneous documentation pointed clearly in the opposite direction to the admission made, then the Applicants could readily demonstrate that the admission was contrary to the actual facts. However, the contemporaneous documentation to which the Court was taken at the hearing of this application tends to support a conclusion that the Applicants were indeed acting for Ms Saad for all purposes, including the 1% transfer. Arguments to the contrary were based upon the construction of a few documents which might allow a contrary argument, but certainly do not demonstrate that the argument is good. 31Further, the evidence does not demonstrate that Mr Pascale instructed Ms Moore in a certain way (which ought to have seen the admission not being made), but with Ms Moore misunderstanding her instructions or, in some way, erring by including the admission in the pleadings. The evidence relied upon by the Applicants tends to suggest that further consideration has been given to the case which they seek to advance, with it being perceived that the admission is contrary to their interests at trial. 32In my view, approaching the present application on this basis does not require counsel for the Respondents to cross-examine Ms Moore so as to put these propositions. The onus remains upon the Applicants to demonstrate a proper foundation for the exercise of discretion in their favour. 33In my view, the decision of Brereton J in Stafford v Kekatos (No. 2) is pertinent. Indeed, considerations of this type were referred to by Davies J in his judgment of 9 December 2011 at [23]. With respect, I agree with Davies J that the real issue on the present application does not concern the credibility of Ms Moore's evidence, but the content and source of such evidence as the Applicants seek to rely upon, without any affidavit from Mr Pascale asserting directly that the admission is contrary to the actual facts and explaining how he came to verify pleadings on two occasions which contained that admission. 34I do not accept the submission of Mr Colquhoun that a consequence of an affidavit from Mr Pascale being read in support of the application would be a pretrial interlocutory hearing at which the Court would be required to consider and determine what the true facts were in this respect. Rather, the provision of such an affidavit (which asserted directly that the admission was contrary to the actual facts and explained directly how Mr Pascale came to twice verify pleadings which contained the admission) would furnish direct evidence on the issue to be determined on the application. 35As I mentioned during the course of submissions by Mr Colquhoun, if the Applicants had sought to rely upon such an affidavit, then the Judge hearing an application for leave to withdraw the admission may well have disallowed any cross-examination which sought to explore what was a trial issue. Without such an affidavit, however, the Applicants are left to make submissions based upon inference and impression, and not direct evidence of factual error. 36I accept that the Respondents cannot point to any prejudice for the purpose of this application. I bear in mind, however, that the admission was made in pleadings and was verified twice by a solicitor who was a party to the proceedings. 37I note, as well, that the substantive hearing of the proceedings is listed for 13 February 2012, with a five-day estimate. 38In all the circumstances, I am not persuaded that the Applicants should be granted leave to withdraw the admission, or to rely upon the Further Amended Defence to the Second Cross-Claim annexed to the Notice of Motion filed 1 August 2011. In my view, such a conclusion is not inconsistent with the purposes of s.56 Civil Procedure Act 2005 . 39I make the following orders: (a) the Notice of Motion filed 1 August 2011 is dismissed; (b) the Applicants are ordered to pay the Respondents' costs of the Motion.

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: 08 February 2012

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