Perpetual Trustee Company Limited v Kotevski

Supreme Court of NSW|2009-09-10|Before: Schmidt J

CITATION : Perpetual Trustee Company Limited v Kotevski [2009] NSWSC 954

CATCHWORDS : PROCEDURE - Supreme Court procedure - New South Wales - pleadings - leave sought to amend various pleadings - concurrent wrongdoers - section 35 of the Civil Liability Act 2002 - new allegation of breach of fiduciary duty - equitable compensation claimed - amendments allowed

Civil Liability Act 2002 Civil Procedure Act 2005 LEGISLATION CITED : Consumer Credit (New South Wales) Code 1996 Contracts Review Act 1980 Uniform Civil Procedure Rules 2005

CASES CITED : HSD Co Pty Ltd v Masu Financial Management Pty Ltd, [2008] NSWSC 1279 Ucak v Avante Developments Pty Ltd [2007] NSWSC 367

Plaintiff - Perpetual Trustee Company Limited Defendant - Alexander Kotevski PARTIES : First Cross Defendant to Fourth Cross Claim/Second Cross Defendant to Second Cross Claim - Milanex Pty Ltd Second Cross Defendant to Fourth Cross Claim - Milan Vlasic Cross Defendant to Third Cross Claim - Kevin Lo trading as 'Kevin Lo & Company Solicitors'

Plaintiff - Mr SB Docker of counsel COUNSEL : Defendant - Mr K Connor of counsel with Ms M Avenell of counsel First and Second Cross Defendant - Mr DS Weinberger of counsel

Plaintiff - Kemp Strang SOLICITORS : Defendant - SBA Lawyers First Cross Defendant to Fourth Cross Claim/Second Cross Defendant to Second Cross Claim - McCabe Terrill Lawyers Second Cross Defendant to Fourth Cross Claim - McCabe Terrill Lawyers

9 - IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION POSSESSION LIST

2007/15851 - PERPETUAL TRUSTEE COMPANY LTD v KOTEVSKI

2008/13889 - PERPETUAL TRUSTEE COMPANY LTD v KOTEVSKI

HER HONOUR : These proceedings concern two claims brought in respect of the same property, which are proceeding in tandem. They both concern a claim for possession of land situated at Kogarah, contained in Certificate of Title Folio Identifiers 3/SP3893 and 17/SP3893, following the defendant's alleged failure to repay certain moneys payable under a 2005 loan agreement, despite default notices served in June 2008. The plaintiff claims that it advanced $224,000 to the defendant under the loan agreement and that in respect of that loan, the defendant had given it a mortgage over the property, which was registered. 1 In his defence, the defendant, Alexander Kotevski, an unemployed pensioner now aged 78 years, claims, amongst other things, that Perpetual Trustee Company Ltd's ('Perpetual') agent, Good Home Loans Pty Ltd ('Good Home Loans'), completed and submitted the loan application to Perpetual, without his authority and without making enquiries as to his ability to repay the loan in accordance with its terms; and that the loan application documentation was defective and bereft of information ordinarily required to assess eligibility for a home loan. Mr Kotevski also complains that the credit contract and mortgage are unjust within the meaning of s 70 of the Consumer Credit (New South Wales) 1996 and/or s 7 of the Contracts Review Act 1980 and claims that they should be declared void, or not enforced. 2 There are also four cross claims brought in the proceedings. The first, by Mr Kotevski against Perpetual; the second by Perpetual against Milanex Pty Limited ('Milanex'), who acted for Mr Kotevski in relation to his loan application; the third, by Mr Kotevski against a solicitor, Mr Lo; the fourth, by Mr Kotevski against Milanex and a Mr Vlasic. 3 The matter is listed for hearing for 7 days commencing on Monday next. On 10 September, motions brought by Perpetual, Mr Kotevski, Milanex and Mr Vlasic, seeking leave to amend various pleadings were listed for hearing. It was then announced that Mr Kotevski had reached a settlement with Mr Lo, and Perpetual and Milanex were given leave to serve subpoenas to give evidence on Mr Lo and an employee of his, who he had proposed to call in his case. 4 It is only necessary to here refer to two of the other applications dealt with during the course of the hearing.

The Milanex/Vlasic application 5 I granted leave to Milanex and Mr Vlasic to amend their defence to Perpetual's cross claim, indicating that I would give short reasons for doing so. 6 The contest turned on an amendment seeking to plead that a Mr Micic, Mr Lo and Perpetual were each concurrent wrongdoers pursuant to s 35 of the Civil Liability Act 2002, which provides: 35 Proportionate liability for apportionable claims (1) In any proceedings involving an apportionable claim: (a) the liability of a defendant who is a concurrent wrongdoer in relation to that claim is limited to an amount reflecting that proportion of the damage or loss claimed that the court considers just having regard to the extent of the defendant's responsibility for the damage or loss, and (b) the court may give judgment against the defendant for not more than that amount. (2) If the proceedings involve both an apportionable claim and a claim that is not an apportionable claim: (a) liability for the apportionable claim is to be determined in accordance with the provisions of this Part, and (b) liability for the other claim is to be determined in accordance with the legal rules, if any, that (apart from this Part) are relevant. (3) In apportioning responsibility between defendants in the proceedings: (a) the court is to exclude that proportion of the damage or loss in relation to which the plaintiff is contributorily negligent under any relevant law, and (b) the court may have regard to the comparative responsibility of any concurrent wrongdoer who is not a party to the proceedings. (4) This section applies in proceedings involving an apportionable claim whether or not all concurrent wrongdoers are parties to the proceedings. (5) A reference in this Part to a defendant in proceedings includes any person joined as a defendant or other party in the proceedings (except as a plaintiff) whether joined under this Part, under rules of court or otherwise. 7 Perpetual opposed the amendments, arguing that the pleadings were defective, because they did not specify what cause of action it had against the alleged wrongdoers, as s 35 required. Reliance was placed on the approach of Rothman J in HSD Co Pty Ltd v Masu Financial Management Pty Ltd [2008] NSWSC 1279 and that of Hammerschlag J in Ucak v Avante Developments [2007] NSWSC 367. Rothman J observed at [16] to [18]: 16 There is a complementary duty (s 35A of the Civil Liability Act, above) on the defendant, who invokes the provisions, to inform the plaintiff of relevant information on any person, who may be a concurrent wrongdoer, in default of which there are consequences in costs.

17 As seems obvious from the foregoing, the scheme extends protections that would otherwise be available by issuing a cross-claim. In order to utilise a cross-claim, a defendant must allege a cause of action by it against the cross-defendant. The proportionate liability provisions allow the defendant to allege a cause of action by the plaintiff against the concurrent wrongdoer. Such a right brings with it the correlative duty to specify, in the same way as if there were a cross-claim, the basis for proportionate liability and the basis for identifying a person as a concurrent wrongdoer.

18 It is essential, if these provisions are to operate appropriately, that any defendant be required to plead the proportionate liability defence in a manner that discloses the cause of action and damage in at least as detailed a manner as would be required of any initiating process for such a cause of action. The information should include: (a) the identity of the concurrent wrongdoer;

(b) the basis for the cause of action - if it be contract, identify the contract; if it be tort, identifying the duty, its scope and the breach; and

(c) the damage - the aspects of causation; the alleged extent and proportion of the damages, and the causal connection with the damage said to be suffered by the plaintiff in the substantive proceedings.

In this regard, I agree, with great respect, with the view expressed by McDougall J in his paper "Proportionate Liability in Construction Litigation" (2006) 22 BCL 394 at 400; see also UCAK v Avante Developments [2007] NSWSC 367 (per Hammerschlag J) and Dartberg Pty Ltd v Wealthcare Financial Planning Pty Ltd [2007] FCA 1216; (2007) 164 FCR 450 (per Middleton J). 8 Hammerschlag J observed at [34] to [37]:

34 In order for a person to be a concurrent wrongdoer he must be one whose acts or omissions caused the damage or loss that is the subject of the claim.

35 It follows in my view, that for a defendant to assert that there is a person who is a current wrongdoer the defendant must plead the necessary elements which result in the asserted conclusion. Those elements are: a the existence of a particular person;

b the occurrence of an act or omission by that particular person; and

c a causal connection between that occurrence and the loss that is the subject of the claim.

36 What the defendant in this case has done is to assert a conclusion without the material facts upon which that conclusion depends. This is a course which is not permissible.

37 Here the material facts would have to be the identification of the particular person, the identification of the act or omission of that particular person and the facts which if proven at trial would establish that that act or omission caused the loss or damage that is the subject of the claim.

9 For Mr Kotevski it was submitted that their Honour's approach to these provisions had diverged somewhat, albeit that was reflective of the particular circumstances arising in the two cases. 10 It was Perpetual's case that a claim in respect of a concurrent wrongdoer had to specify what its cause of action against that wrongdoer was. That was an argument which I could not accept, having in mind what is provided in s 35 of the Civil Liability Act, particularly by s 35(3)(a) in relation to a plaintiff's responsibility for the loss or damage in question, and what is provided in s 34: 34 Application of Part (1) This Part applies to the following claims (apportionable claims): (a) a claim for economic loss or damage to property in an action for damages (whether in contract, tort or otherwise) arising from a failure to take reasonable care, but not including any claim arising out of personal injury, (b) a claim for economic loss or damage to property in an action for damages under the Fair Trading Act 1987 for a contravention of section 42 of that Act. (1A) For the purposes of this Part, there is a single apportionable claim in proceedings in respect of the same loss or damage even if the claim for the loss or damage is based on more than one cause of action (whether or not of the same or a different kind). (2) In this Part, a concurrent wrongdoer, in relation to a claim, is a person who is one of two or more persons whose acts or omissions (or act or omission) caused, independently of each other or jointly, the damage or loss that is the subject of the claim. (3) For the purposes of this Part, apportionable claims are limited to those claims specified in subsection (1). (4) For the purposes of this Part it does not matter that a concurrent wrongdoer is insolvent, is being wound up or has ceased to exist or died. (5) (Repealed) 11 That view of these provisions, it seemed to me, particularly accorded with the approach of Hammerschlag J, consistent with the circumstances here arising. In this case, what Milanex seeks to advance is that if it is found that it caused any loss or damage to Mr Kotevski, which is denied, such loss or damage was also the result of what Perpetual, Mr Micic and Mr Lo did, or failed to do, as 'concurrent wrongdoers'. Such a case, it seems to me, is entirely consistent with what is contemplated by s 35 and does not depend on Perpetual itself having a cause of action against each other wrongdoer. 12 Having concluded that the amendments sought had to be allowed, I also took the view that Perpetual had made out a case that an adjournment of the hearing would be necessary, so that it could take steps to investigate the position of Mr Micic, who to that point had not featured in the litigation in this way, so far as Perpetual was concerned; to consider whether it should call further evidence to meet the amended defence, or to itself take further steps in relation to Mr Micic. It also followed that an order for costs thrown away as the result of the adjournment would have to be made against Milanex and Mr Vlasic. In those circumstances, the amendment sought in relation to Mr Micic was not pressed by Milanex and the leave sought was otherwise granted.

Mr Kotevski's application to amend the fourth cross claim 13 This was opposed for Milanex on the basis that if the leave sought was granted, further evidence may need to be called to meet the new allegations sought to be made so late in the proceedings and fresh subpoenas might need to be issued. It was complained that there was no explanation for the late amendment and the proposed amendments raised serious allegations of misrepresentation and fraud, which had not been adequately particularised, contrary to the requirements of the Uniform Civil Procedure Rules 2005. Milanex also filed a motion seeking to argue that the fourth cross claim should be struck out in its entirety. It was not necessary finally to consider that application, given the conclusion which I reached, that the leave sought by Mr Kotevski had to be granted. 14 I reached that conclusion because on a proper consideration of the proposed pleading, it became clear that no allegation of fraud or misrepresentation was sought to be raised. What was pleaded was equitable compensation flowing from specified breaches of fiduciary duties, which it was claimed Milanex and Mr Vlasic owed Mr Kotevski when acting as his agent, or purported agent, in respect of the Perpetual loan. It was Milanex and Mr Vlasic who claim the existence of such an agency. 15 The particulars of the alleged breaches of these duties largely rested on what was contained in an affidavit which had been sworn by Mr Vlasic in March 2009, where he explained the steps which he and Milanex had taken on behalf of Mr Kotevski. Annexed to the affidavit were various documents which Mr Vlasic claimed he had produced and supplied to Good Home Loans on behalf of Mr Kotevski. In his affidavit he said that he had seen Mr Kotevski sign various of those documents, at a meeting which they had both attended. It is Mr Kotevski's case that there was no such meeting, that he did not sign those documents and that Milanex and Mr Vlasic did not act on his behalf. Otherwise, the acts relied on reflected what was said in affidavits by others who had dealt with Mr Vlasic in relation to Mr Kotevski's application. 16 The late amendment came about, it was shown, in order to meet the defence filed by Milanex and Mr Vasic towards the end of July. This was considerably out of time and was advanced on the basis that Mr Kotevski would not be prejudiced by its lateness. Once filed, it came to be appreciated for Mr Kotevski that it was necessary to plead equitable relief in his case, because the provisions of s 35 of the Civil Liability Act did not apply to such relief. Undoubtedly, it would have been preferable for the proposed amendments to have been pursued earlier than the correspondence in evidence showed that they were. Nevertheless, it became apparent that while the amendment raised new legal issues, they were unlikely to raise new evidentiary issues in the case, because not only did the pleadings emerge from Mr Vlasic's own evidence, the pleadings essentially replicated certain pleadings already advanced by Perpetual against Milanex. 17 It was accepted that Milanex and Mr Vlasic would have to be given an opportunity to amend their defence and to put on any further evidence, which they needed to put on, to meet the new claim. No adjournment application was however pressed by Milanex, in the event that leave was granted. 18 It followed, it seemed to me, in all of the circumstances, having in mind the requirements of the Civil Procedure Act 2005, that the amendments had to be allowed, notwithstanding their lateness. 19 The application was governed by the provisions of the Civil Procedure Act, which requires that when exercising its discretion under s 64 to permit amendment to pleadings, the discretion be exercised in accordance with the dictates of justice, s 58 of the Act also requiring that regard be had to the overriding purpose specified by s 56 of the Act, namely 'to facilitate the just, quick and cheap resolution of the real issues in the proceedings'. The matters to which regard must otherwise be had, are those specified in s 57 and s 58. 20 As s 64(2) requires, there is no doubt that the amendments proposed could assist in 'the real questions raised by or otherwise depending on the proceedings', being determined. Also to be considered was whether permitting the amendments would assist in achieving: (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 by the respective parties.

21 I took the view that the proposed amendments would assist in such objectives being achieved. No real adverse practical consequences flowing to Milanex were apparent from this late amendment, arising as it did from Milanex's late defence of Mr Kotevski's cross claim, given what was already at issue in the case. In the circumstances, I was satisfied that justice required that the amendments be permitted and ordered accordingly.

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