Plaintiff v Defendant

(a) In 2012, the deceased and her husband requested that the plaintiff live with them and care for them on the basis that they were elderly, ill and unable to care for themselves;

(b) From 2012, the plaintiff and his partner, Mrs Gerdov, lived with the deceased and her husband at the Bundoora property;

(c) The plaintiff also owned a house in Noble Park that he had purchased some years earlier ('the Noble Park property');

(d) In March 2015, the deceased's husband died and the deceased stated to the plaintiff that if he were to sell the Noble Park property and continue to live with and care for her, she would sell him the Bundoora property for half of its market value ('the alleged agreement');

(e) On an unknown date, the plaintiff agreed with the deceased and sold the Noble Park property, thereby suffering detriment in reliance on the alleged agreement.

3 On the basis of the alleged agreement in March 2015, the plaintiff seeks a declaration that the Bundoora property is held on trust for him and an order that the defendant sell the property to him for one half of the market value of the property as at May 2015, pursuant to the alleged agreement.

4 The defendant denies the existence of the alleged agreement and has defended the proceeding on the basis of the claims set out in the statement of claim.

5 Formal orders for discovery were not considered necessary as the relevant documents ought to have been provided by the plaintiff in accordance with his obligations under the Civil Procedure Act 2010. This turned out not to be the position and it became necessary for the defendant to obtain orders for discovery on 10 March 2017. Correspondence then passed between the practitioners for the parties. Affidavits of documents were filed by the plaintiff on 12 April 2017, 14 April 2017 and 24 April 2017. Further orders for discovery were obtained by the defendant on 12 May 2017. The plaintiff filed a further affidavit of documents on 18 May 2017 that was also inadequate. The plaintiff filed another affidavit of documents on 24 May 2017 which was acceptable to the defendant. Significant difficulties were then encountered by the defendant in obtaining production of the documents.

6 Mediation of the proceeding was delayed due to the plaintiff's failure to provide discovery and the plaintiff causing difficulties in arranging a mediation such that it was necessary for orders to be made appointing a mediator. The mediation was finally arranged, however, it did not commence as the plaintiff did not attend at the venue until two hours after the scheduled commencement time, by which point the defendant had left the mediation.

7 As a result of the plaintiff's discovery, the defendant formed the view that the plaintiff would be unable to establish that he suffered any detriment and therefore his estoppel claim would fail. Accordingly, on 9 June 2017, the defendant filed a summary dismissal application on the ground that the plaintiff's claim had no prospect of success. Leave was subsequently granted to the defendant to amend his summons so that summary dismissal was sought not only under r 23.01 of the Supreme Court (General Civil Procedure) Rules 2015 ('the Rules') but also under s 63 of the Civil Procedure Act 2010. The hearing was scheduled for 16 June 2017.

8 On 13 June 2017, the plaintiff through his solicitors, Erhardt & Associates, sought another adjournment on the basis that his counsel was unavailable due to personal reasons. The adjournment was resisted by the defendant and the plaintiff had reasonable time in which to arrange for alternative counsel to be retained.

9 On 15 June 2017 at 3.50pm, the solicitors for the plaintiff, Erhardt & Associates, filed a notice of solicitor ceasing to act. On 16 June 2017, the return date of the dismissal summons, the plaintiff appeared in person. The defendant's application was adjourned to 20 June 2017. On that date, the plaintiff's current solicitor, Mr Ian Hone, filed a notice that he had commenced to act for the plaintiff. The fact that the plaintiff was unrepresented on 16 June, the timing of the change of solicitors and the identity of the new solicitor aroused the Court's concern. First, the situation forced an adjournment of the summary dismissal application and, secondly, Mr Hone has previously appeared for the plaintiff styling himself as a 'solicitor advocate' instructed by Erhardt & Associates. On 20 June 2017, counsel for the plaintiff sought another adjournment on the ground that the defendant's application for summary dismissal was short served. The hearing of the defendant's application was adjourned to 11 August 2017.

10 On 14 July 2017, the plaintiff purported to serve an amended statement of claim on the defendant. The proposed amended statement of claim was intended to overcome certain issues raised by the defendant' summary dismissal application. No application to amend the statement of claim was filed by the plaintiff.

11 The first time that counsel for the plaintiff mentioned to the Court the proposed amendment to the plaintiff's claim was at the return date for the summary dismissal application on 11 August 2017. At this time, the plaintiff still had not filed an application to seek leave to file an amended statement of claim. At the hearing, the plaintiff was given leave to file and serve a summons by 25 August 2017 to seek leave to file and serve his amended statement of claim.

12 No document was filed and served by that time and no extension of time was sought by the plaintiff. On 14 September 2017, the Court reminded the plaintiff's solicitor, Mr Hone, that he had not filed a summons seeking leave to amend the plaintiff's claim. Mr Hone failed to respond to the Court until 27 September 2017 when he informed the Court and the defendant via email that the application had been filed with a return date of 27 October 2017 and that the delay in filing was caused by the plaintiff issuing a new related proceeding. By return email at 7.00 pm on 27 September 2017, the solicitor for the defendant informed the Court his office had not yet been served with the plaintiff's application. A review of the Court file revealed that the plaintiff's application had been filed on 18 September 2017. At the same time as filing that application, the plaintiff issued a new proceeding, numbered S CI 2017 03738, seeking to remove the defendant as the executor of the estate and the appointment of an independent administrator ('the removal proceeding'). That application was heard on the same day as this application to amend the statement of claim, and the reasons for the removal application being dismissed are delivered simultaneously with these reasons.[1]

Plaintiff's application to amend his statement of claim

13 The plaintiff's proposed amended statement of claim is exhibited to the affidavit of Mr Hone sworn 18 September 2017. The proposed amendments are not adequately marked on the document to reflect all amendments. In respect of the proposed amendments, Mr Hone refers to certain paragraphs in the plaintiff's affidavits sworn 19 June 2017 and 14 July 2017 without any explanation.

14 The substance of the plaintiff's proposed amended statement of claim makes significant alterations to the material facts supporting the basis of the plaintiff's claim and alters the plaintiff's detriment claim. The date and the terms of the alleged agreement are different, as are the parties to the alleged agreement, which are now said to include the plaintiff's wife, Mrs Gerdov and the deceased's husband. These amendments do not seem to accord with the facts deposed by the plaintiff in his two affidavits.

15 An application to allow a claim to be amended is in the discretion of the Court.[2] Justice is the paramount consideration and the Court must consider the extent to which the interests of justice require that a party should be allowed to have a judicial determination on the merits of the claim.[3] The party bringing an application to amend its pleadings 'will ... need to bring the circumstances giving rise to the amendment to the court's attention, so that they may be weighed against the effects of any delay and the objectives of the Rules'.[4]

16 Many factors bear upon the exercise of this discretion,[5] however, the following principles may be distilled from the authorities:

(a) An application to amend should be made promptly after the necessity for amendment arises and an explanation for any delay will be required if the Court is to exercise its discretion in favour of amendment;[6]

(b) All such amendments should be made as are necessary to enable the real questions in controversy between the parties to be decided;[7]

(c) The object of courts is to decide the rights of the parties, not to punish them for mistakes made in the conduct of their case by deciding otherwise than in accordance with their rights;[8] and so error or mistake of the party seeking to amend, if not fraudulent, will not bar the grant of leave if any prejudice to the amendment would cause to the other party can be met;[9]

(d) It is not a relevant type of prejudice that allowance of an amendment will or may deprive the other party of a success the party would achieve if the amendment were not allowed;[10]

(e) An amendment will ordinarily be allowed in circumstances where the amendment can be done without any harm to the other party, which cannot be compensated for by the imposition of terms such as an award of costs;[11] and

(f) Where a plaintiff makes a late amendment without which, the action will fail, the defendant is entitled to costs of the action down to the date of amendment.[12]

17 After 14 months, the plaintiff now seeks to amend his constructive trust claim. The plaintiff's proposed amendment substantially alters the factual basis of the plaintiff's claim and is, in essence, a new claim. This only occurred as a result of the defendant determining that the plaintiff's pleaded case had no prospect of success, after an arduous discovery process by the defendant. The plaintiff has not provided any realistic explanation for his delay in seeking to amend his claim. The explanation is found in the defendant's summary judgment application. This was the catalyst for the plaintiff's substantial and material change to his claim.

18 The authorities provide that justice is the paramount consideration on an amendment application. The Court must consider the extent to which the interests of justice require that a party should be allowed to have a judicial determination on the merits of his or her claim. If the amendment were not allowed, the plaintiff would be deprived of a determination of the merits of his claim. In allowing the proposed amendments, the defendant has a somewhat a clearer understanding of the case against him and time to prepare his defence.

19 As set out above, the procedural history of this proceeding to date has been unsatisfactory, with significant delays caused by the plaintiff and his advisers. In addition to the history set out, some months after the plaintiff issued his proceeding, his then solicitors, Erhardt & Associates, filed a summons on 27 October 2016 seeking to restrain the defendant's then solicitors from acting for the defendant on the basis of alleged conflict of interest. To avoid unnecessary costs being incurred, the defendant instructed his solicitors to cease acting for him. The Court found the application to restrain the defendant's former solicitors should not have been made and dismissed the plaintiff's application for costs.[13]

20 With the proposed amendments, the interlocutory steps in the proceeding must re- commence for the new claim. The defendant is prejudiced by the amendment as he has incurred significant costs in defending the claim to date, including the application to amend the claim. These costs are wasted costs as they were incurred in defending a claim that has now been abandoned.

21 The defendant is the executor of the estate of the deceased. An executor or trustee is entitled as of right to indemnity out of the trust for expenses properly incurred, that is, all costs except to the extent that they are of an unreasonable amount or have been unreasonably incurred. The defendant has acted reasonably and prudently in conducting the defence of the proceeding and is entitled to his costs on an indemnity basis. In the absence of a realistic explanation from the plaintiff about the delay in applying for leave to amend his claim the plaintiff should pay the defendant's costs personally.

(a) Leave be granted to the plaintiff to file and served an amended statement of claim substantially in the form of exhibit 'IGH-1' to the affidavit of Mr Hone sworn 18 September 2017, and each amendment must be marked to distinguish it from the original statement of claim;

(b) The plaintiff personally pay the defendant's costs of and incidental to the proceeding to date, including the hearing of the plaintiff's application to amend his claim, on an indemnity basis, to be taxed in default of agreement; and

(c) The plaintiff bear his own costs without indemnity from the estate of the deceased.

23 The parties are to provide minutes of further directions in the proceeding by 29 November 2017.

[1] Molnar v Butas (No 3) [2017] VSC 711 (22 November 2017).

[2] Ketteman v Hansel Properties Ltd [1987] AC 189, 220.

[3] Queensland v JL Holdings Pty Ltd [1997] HCA 1; (1997) 189 CLR 146, 155; Aon Risk Services Australia Ltd v Australia National University (2009) 239 CLR 175, 214 [100]; Royal v Alcoa of Australia Ltd [2004] WASCA 269 (23 November 2004) [82]; Ketteman v Hansel Properties Ltd [1987] AC 189, 220.

[4] Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175, 215 [103].

[7] Ketteman v Hansel Properties Ltd [1987] AC 189, 212; Commonwealth v Verwayen (1990) 170 CLR 394, 456.

[8] Pringle v Everingham [2006] NSWCA 195; (2006) 46 MVR 58, 68 [48]; Cropper v Smith (1884) 26 Ch D 700, 710.

[9] Ketteman v Hansel Properties Ltd [1987] AC 189, 212; see also Queensland v JL Holdings Pty Ltd [1997] HCA 1; (1997) 189 CLR 146, 152-5.

[10] Ketteman v Hansel Properties Ltd [1987] AC 189, 203.

[11] Commonwealth v Verwayen (1990) 170 CLR 394, 456, 464, 482.

1. [12] Beoco Ltd v Alfa Laval Co Ltd [1995] QB 137, 154; cited with approval in Harrington v Greenwood Grove Estate Pty Ltd (No 2) [2011] NSWSC 1598 (20 December 2011) [4]; Ciaglia v Ciaglia [2010] NSWSC 723 (2 July 2010) [9].

[13] Molnar v Butas [2017] VSC 298 (29 May 2017) [34].