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[2025] VSC 238
General information, not legal advice.
Supreme Court of Victoria
2025-05-05
Attiwill J
Original judgment source is linked above.
PRACTICE AND PROCEDURE - Where matter set down for trial on 7 May 2025 and defendant seeks to vacate the trial, amend its defence, file and serve expert evidence by 10 June 2025 and obtain security for costs - Where defendant's explanation for delay is manifestly inadequate - Defendant's application to amend its defence allowed (in part) and other applications dismissed.
1 This proceeding is set down for a 1 day trial on 7 May 2025. The defendant now makes an application to vacate the trial, amend its defence, file expert reports by 10 June 2025 and obtain security for costs. At the hearing, upon questioning by the Court, the defendant submitted it also intends to file an outline of evidence of its director. The plaintiff is ready for trial. The defendant's explanation for its delay is manifestly inadequate. Justice demands that the defendant's applications are refused except for the proposed amendments to the defence that are consented to by the plaintiff. The defendant will be prejudiced in its defence but that prejudice lies firmly at its feet and/or of its legal representatives and no one else.
2 On 21 October 2024, the plaintiff commenced this proceeding. In summary, the plaintiff alleges that the plaintiff, as purchaser, and the defendant, as vendor, entered into a contract of sale for property owned by the defendant in Rockbank, Victoria. The purchase price was $30,000,000. The payment terms stipulated that a $3,000,000 deposit was to be paid by 15 May 2019. A further sum of $1,500,000 was to be paid by 29 March 2020. The balance of $25,500,000 was due at settlement on 22 March 2021. The plaintiff alleges that payments totalling $4,507,044.48 were made by or on behalf of the plaintiff. The plaintiff failed to pay the balance of the purchase price to the defendant. The defendant forfeited the $3,000,000 deposit. The plaintiff alleges that the defendant retained the further sum of $1,507,044.48. This is the amount the subject of the plaintiff's claim for relief. The plaintiff now alleges that: the defendant is not lawfully entitled to retain the retained sum as it has suffered no loss; there was a total failure of consideration in respect of the retained sum and the defendant has been unjustly enriched at the plaintiff's expense by retaining the retained sum.
3 The defendant did not file a notice of appearance within the time prescribed by the Supreme Court (General Civil Procedure) Rules 2015 (Vic) (the Rules).
5 On 16 December 2024, the defendant filed a notice of appearance. On 9 January 2024, the defendant filed a defence. In summary, it alleges that a sum of $1,500,000 (not $1,507,044.48 as alleged by the plaintiff) was part of the deposit amount paid by the plaintiff under the contract and that the defendant is entitled to retain it.
6 On 10 January 2025, the defendant's solicitors sent a letter to the plaintiff's solicitors concerning the plaintiff's financial position and reserving the defendant's rights to make an application for security for costs. On 30 January 2025, the defendant's solicitors sent an email to the plaintiff's solicitors requesting a response. Later that day, the plaintiff's solicitors responded:
Dear Colleagues,
Thank you for your email. In circumstances where the issues in dispute are substantially narrowed, it is difficult to envisage how a security for costs application would otherwise not exceed the costs of having the matter heard for trial which we estimate to be one day.
We enclose proposed minutes, and we invite your client to consider them. We will copy you in our email to the Court, in listing the matter for directions for trial.
Yours faithfully,
7 On 31 January 2025, the defendant's solicitors responded to the plaintiff's solicitors:
Dear Mr. Tseng,
Thank you for your email.
The Defendant has a contrary view to the position expressed in your emailed dated Thursday the 30th of January 2025 at 4:50 PM, that the issues are not substantially narrowed and states the following:
• The Defendant's view is that the issues are beyond the experts' report and deal with Contract Law and Common Law.
• The Defendant's View is that the Trial would take longer than 1 Day.
• The Defendant's view is that the Costs are significant and the Defendant Seeks a time table for the Security of Costs Application.
We note that you have not informed us with any material concerning the Financial Circumstances of the Plaintiff in liquidation, not providing any assets or funds to the Plaintiff and not providing any explanation as to how the Plaintiff would meet an Adverse Costs Order if so made by the Court.
This correspondence may be relied upon in relation to the proceedings.
Kind regards.
8 There was a directions hearing on 7 February 2025. There was a discussion between M Osborne J and the defendant's solicitor concerning a potential counterclaim and security for costs. Towards the end of the directions hearing the following exchange took place between M Osborne J and the defendant's solicitor:
HIS HONOUR: Yes, all right, thank you. I'm going to make the orders sought in the form proposed by the plaintiff with these alterations. I'm not going to make order 15 and 16, I don't think they're [necessary] in the context of a narrow case like this. And I make the order in paragraph 17 fix the matter for trial on 7 May on an estimated duration of one day. Mr Altintop, I want to make two things clear. That the foreshadowed evidence that you've referred to doesn't relate to any issue in the proceeding, so I'm not taking that into account. It's a matter for you if you want to apply for leave to file and serve an amended defence and whatever it is but until - unless and until that occurs I'm not going to have regard to the additional evidence.
In relation to the question of security for costs, of course it's open to you to apply if you're - if so advised. If that is the case I direct your attention to paragraph 8 of the practice note which requires you to send a letter to the plaintiff's solicitors setting ‑ ‑ ‑
MR ALTINTOP: Yes.
HIS HONOUR: ‑ ‑ ‑ out proposed application basis for it, the plaintiff then [puts] in a response. And then there's no - then there's a conferral process and then there is a mechanism whereby the correspondence is sent to my chambers and I determine how the matter - the interlocutory dispute will be determined including - can be determined on the papers.
Of course you're right that ordinarily you would get security for costs against a company in liquidation. Other matters of course that would be taken into account as discretionary factors would include matters such as the strength of the plaintiff's case. Ordinarily a very difficult matter to determine at the time of security for costs application is made but it's not always difficult to determine, although it's not usual. The other matter that would be relevant is the quantum of any security for costs if in fact it's a one-day case. But it's open to you if you - your client so advised to apply to amend its pleadings or apply for security for costs. But at the moment I'm making orders on the basis of the pleadings as they now stand.
MR ALTINTOP: I understand, Your Honour, thank you.
9 On 7 February 2025, M Osborne J made orders setting down the trial on 7 May 2025 and timetabling orders, including for the plaintiff to file expert reports by 7 March 2025 and the defendant to file and serve any expert reports by 28 March 2025.
10 On 11 February 2025, the plaintiff paid the setting down fee.
11 The plaintiff filed an outline of evidence of a lay witness, namely a Mr Baskerville who is the liquidator of the plaintiff. It appears that he will not be giving any evidence of anything he personally observed or took part in. His evidence seems to be confined to tendering documents from the books and records of the plaintiff. This includes a report by a valuer, named Bertacco Ferrier Property Consultants Pty Ltd. The plaintiff has not otherwise filed and served any expert report and has confirmed that it does not intend to call the valuer to give evidence, including anyone from Bertacco Ferrier Property Consultants Pty Ltd.
12 The defendant did not file any lay outline by 7 March 2025 as required by the orders. It has not specifically addressed its delay in doing so.
13 On 9 March 2025, Mr Altintop, the defendant's solicitor, had 'counsel prepare an Amended Defence'. Mr Altintop gave evidence:
a) Clarification regarding the contractual terms concerning the retention of deposits and instalments payments;
b) Additional particulars of the Defendant's loss and damage resulting from the Plaintiff's breach;
c) Correction of factual matters regarding the payment structure and amounts received; and
d) Further particulars regarding the valuation of the property.
14 The defence was filed on 9 January 2025, two months prior to 9 March 2025. There is no evidence when he received this additional information or instructions in this period.
15 On 21 March 2025, the defendant's solicitors provided the proposed amended defence to the plaintiff's solicitors and asked whether the plaintiff would consent to it and whether they 'are open to discussing the trial date adjustment'.
16 On 26 March 2025 (at 9.03am), the plaintiff's solicitors informed the defendant's solicitors that the plaintiff opposed the defendant having leave to file and serve the proposed amended defence.
17 On 26 March 2025, Mr Altintop nonetheless appears to have attempted to file the proposed amended defence. This is despite the plaintiff's solicitors having informed the defendant's solicitors that it opposed the defendant having leave to file and serve it.
18 The defendant did not file any expert reports by 28 March 2025 as required by the orders.
19 On 9 April 2025, the defendant's solicitors sent letters to four experts (Graham Morris Billings and Ellis, Forensic Accountants Australia Pty Ltd, Hall Chadwick, Rogers Reidy (Vic) Pty Ltd) in the following terms:
I am writing to formally engage your services in connection with a matter in which our client is acting as the Defendnant.
Our client is the Vendor in relation to a failed property settlement, and we are seeking to put forward our case that certain holding costs, related to the property in question, should be considered in our defence. These holding costs include interest, rates, and land tax that our client has incurred due to the Purchaser's failure to complete the settlement, primarily because of their lack of funds. As a result, our client, the vendor, has been unable to pursue other property-related business opportunities that would have been available to them had the settlement been completed.
In this regard, we require a forensic accountant who can assist in quantifying and validating the holding costs they have incurred, including the specific breakdown of interest, rates, land tax, and any potential lost opportunities. We believe this analysis will strengthen our position in the ongoing legal matter.
Specifically, we are requesting the following services:
Forensic Review: An in-depth review of the property-related holding costs we have incurred, including but not limited to interest, rates, and land tax.
Analysis of Lost Business Opportunities: Evaluation of the business opportunities that we could have pursued had the settlement been completed on time, and the financial impact of these lost opportunities.
Report Preparation: Preparation of a comprehensive forensic accounting report, detailing all relevant findings, calculations, and explanations, suitable for use in the court proceedings.
Given the urgency of the matter, we would appreciate receiving a formal quote for your services. Specifically, we would like to understand the anticipated costs and timelines for the completion of the requested analysis and report.
...
20 On 9 April 2025, the defendant's solicitors sent a letter to an expert valuer, namely Marchese Property Valuations.
21 It is clear from the terms of these letters that these letters were the first communication by the defendant's solicitors with each of these experts. There is no evidence that the defendant's solicitors were in contact with the experts prior to 9 April 2025. The defendant's counsel confirmed this at the hearing. The defendant's solicitors did not initially provide the experts with any documents. The defendant's solicitors did not identify that the proceeding was set down for trial on 7 May 2025. This was confirmed by the defendant's counsel.
22 On 10 April 2025, Rogers Reidy (Vic) Pty Ltd asked the defendant's solicitors for relevant documents and details of 'any upcoming pertinent dates' they should be aware of. The defendant's solicitors responded that day and provided some documents but, again, made no mention of the trial date.
23 On 11 April 2025, Hall Chadwick acknowledged receipt of some documents from the defendant's solicitors. It also said that its typical timeframe to complete a draft report was four weeks. It made no mention of the trial date. The email correspondence in which the defendant's solicitors provided the documents is not in evidence as only part of the email chain is in evidence. On 29 April 2025, Hall Chadwick sent an email to the defendant's solicitors in the following terms:
Dear Abdullah,
Thank you for your time on this phone this morning.
I have spoken with Tony regarding a meeting with you and your client, and propose we attend your office at 2pm on Monday, 5 May 2025 to discuss next steps. Alternatively, we are available at 2pm on Tuesday, 6 May. Please advise which date is most convenient for you and I will send through a calendar invite.
Subject to the timely provision of any information requested, we do not foresee any issues with providing a draft report (for factual confirmation) by 6 June 2025. Upon confirmation of factual accuracy and settlement of any outstanding fees, we will be able to finalise the report by 10 June 2025.
Please let either Tony or I know if you have any questions or concerns regarding the foregoing.
24 There is no evidence of any steps take between 11 and 29 April 2025 in relation to Hall Chadwick. In addition, there is no evidence that it has been informed of the trial date.
25 On 15 April 2025, Marchese Property Valuations sent an email to the defendant's solicitors. It is not in evidence but is referred to. On 17 April 2025, the defendant's solicitors sent an email to Marchese Property Valuations in which they stated:
Thank you for your email dated Tuesday, 15 April 2025 at 5:57pm.
I think I have also provided you with the other Report - Please find the Report now attached in 2021 and other supporting documents for retrospective valuation.
26 On 15 April 2025, the defendant's solicitors sent a letter to the plaintiff's solicitors in which they stated that the defendant intended to make an application to amend its defence, vacate the trial date, file expert reports by 10 June 2025 and apply for security for costs. On 24 April 2025, the plaintiff's solicitors responded, stating that the plaintiff would oppose the applications.
27 On 29 April 2025, the defendant's solicitors sent an email to Marchese Property Valuations in which they stated (emphasis added):
Dear Bonnie
Thank you for your email and recent communication, we seek to finalise the Retrospective Valuation by the 10th of June 2025.
If you can please confirm the date of the deadline/timeline and provide us with your costs it will be much appreciated.
I look forward to hearing from you.
Kind regards.
28 Marchese Property Valuations responded that day to the defendant's solicitors:
Dear Abdullah,
Thank you for your email.
I need to confirm some information as there seems to be some conflicting statements and information provided, as well as a need for more information in the original quote request letter.
Can you please confirm the following:
1. What is the court case in regard to?
2. Who is the opposing side?
3. Are you the plaintiff or defendant?
Were there any further reports completed for the property other than the ones provided by you, namely M3 Property completed 4 November 2024 and M3 Property completed 12 January 2021 (none completed by Marchese Property Valuation in January 2021 per your letter)?
Kind regards.
29 On 29 and 30 April 2025, the defendant's solicitors and Marchese Property Valuations further corresponded. On 30 April 2025, Marchese Property Valuations sent a letter to the defendant's solicitors in which they set out a fee proposal and also stated that could provide a report within 7 to 10 days of an inspection of the property. On that day, the defendant's solicitors sent a further email to Marchese Property Valuations:
Dear Bonnie
Thank you for your email and attached quotation, can you please advise if the publication of the Report will be finalised prior to the 10th of June 2025 (as well as ordinarily how long the process takes).
We look forward to hearing from you.
Kind regards.
30 Later that day, Marchese Property Valuations responded:
Dear Abdullah
Thank you for your email.
Yes, I can confirm we can complete this in the required timeframe by 10 June 2025 so long as we are instructed by Wednesday 7 May next week to ensure time for review of report.
If proceeding, please also provide a copy of development approval (if approved as at the September 2021 date) and any associated approved plans.
If you have any further questions, please do not hesitate to be in touch.
Kind regards.
31 Again, there is no evidence that it has been informed of the trial date. This was confirmed by the defendant's counsel.
32 There is no evidence concerning any correspondence since 9 April 2025 with any of the other experts.
33 Mr Altintop gave the following evidence concerning expert evidence:
a) The need to amend its Defence based on further information received and the resulting uncertainty about the precise issues requiring expert evidence;
b) Delays in obtaining comprehensive instructions from the client regarding expert evidence, particularly concerning:
i. The appropriate methodology for valuing the Property as at the date of termination;
ii. The specific categories and calculation of damages suffered; and
iii. The quantum of holding costs and other expenses incurred since the Plaintiff's default.
c) The complexity of issues requiring expert valuation and forensic accounting evidence, including:
i. Property valuation evidence to determine the market value of the Property at the time of the Plaintiff's default and subsequent termination;
ii. Forensic accounting evidence to quantify the Defendant's damages, including holding costs, marketing expenses, and lost opportunity costs; and
iii. Expert evidence regarding the commercial property market conditions affecting the remarketing and resale of the Property.
d) Difficulties in engaging suitable experts within the timeframe provided, specifically:
i. I made several attempts to engage suitable experts on 9 April 2025. Now produced and shown to me marked "AA-7" at pages 20-29 is a true copy of this correspondence.
ii. Responsibility from Expert Report Writers regarding parameters and availability and further communications. Now produced and shown to me marked "AA-8" at pages 30-37 is a true copy of this correspondence and response.
a) Commencement engagement via their solicitors Forensic Accountants from Hall Chadwick Melbourne Chartered Accountants with a meeting scheduled on 5 May 2025, considering leave of the firm's staff and accountants to commence assessment on the quantum of the Defendant's damages.
b) Commencement engagement via their solicitor's property valuator from Marchese Property Valuations to provide evidence regarding the market value of the Property at the relevant time(s).
a) Graham Morris Billings and Ellis (Forensic Accountants);
b) Forensic Accountants Australia Pty Ltd (Forensic Accountants);
e) Merchese Property Valuations (Sworn Property Valuators);
f) Timeframe requested is urgent, in discussions with Hall Chadwick (Forensic Accountants) the date of the 10th of June 2025 for finalisation of the Forensic Accounting Report was sought.
Now produced and shown to me marked 'AA-9" at pages 38-51 is a true copy of the Bundle of Communications to and from the Expert Report Writers.
26. The vacation of the trial date is necessary because:
a) The expert evidence is essential for the proper determination of the Defendant's entitlement to retain the $1,500,000 payment under General Condition 28.4(d) of the Contract;
b) The current timetable does not allow sufficient time for:
i. The preparation of comprehensive expert reports;
iii. Proper review and response to the Plaintiff's expert evidence; and
c) The Defendant would be significantly prejudiced if required to proceed to trial without this essential expert evidence.
34 At the hearing, upon questioning by the Court, counsel for the defendant informed the Court that the matters set out at paragraph 23 of Mr Altintop's affidavit are 'wrong' as the experts in paragraphs 23(a), (b) and (d) have not been retained and will not be retained. No other explanation was provided. Mr Altintop's evidence is clear and unequivocal. Despite this, it was contradicted by submissions by the defendant's counsel. This is wholly unsatisfactory.
35 I make the following additional observations concerning this evidence:
(a) there is no other evidence concerning the 'delays' referred to paragraph 21(b), including how they were caused or when the delays occurred. These matters were not further explained at the hearing;
(b) the 'complexity' referred to in paragraph 21(c) is mere assertion. None of the matters in sub-paragraph 21(c)(i)-(iii) support it. The complexity was not further explained at the hearing;
(c) the 'difficulties' referred to in paragraph 21(d) are also mere assertion. No attempts were made to retain any expert until 9 April 2025. In addition, the statement in sub-paragraph 21(d)(ii) that '[r]esponsibility from Expert Report Writers regarding parameters and availability and further communications' is nonsensical;
(d) Mr Altintop's evidence in paragraph 21(d) confirms that experts were only approached on 9 April 2025.
36 In summary, the defendant submitted that the Court should grant the relief in its summons because:
a) the proposed amendments to the Defence are necessary to properly determine the real issues in dispute between the parties, particularly the contractual basis for the Defendant's retention of the $1,500,000 payment and the categories of loss and damage claimed;
b) the Defendant requires additional time to obtain and prepare its expert evidence on valuation and quantification of damages, which is essential to the fair determination of this proceeding; and
c) the Plaintiff is a company in liquidation that has failed to demonstrate any capacity to meet an adverse costs order.
37 It is convenient to otherwise address the defendant's submissions when analysing the various issues, which I do so now.
38 The applicable law is well established and was not in dispute on these applications.
Leave to amend/file expert evidence and outlines of evidence late
39 As observed by the Court of Appeal in Northern Health v Kuipers [2015] VSCA 172 at [22]: 'The Civil Procedure Act 2010 ('Act') is pivotal to the resolution of disputes about case management issues in civil proceedings to which this Act applies'.
40 The Court of Appeal also observed at [28]-[33] and [119]-[120]:
(a) whether there will be a substantial delay caused by the amendment;
(c) whether there is an irreparable element of unfair prejudice caused by the amendment;
(d) concerns of case management arising from the stage in the proceeding when the amendment is sought;
(e) whether the grant of the amendment will lessen public confidence in the judicial system; and
(f) whether a satisfactory explanation has been given for seeking the amendment at the stage when it is sought.
- In Thomas v Powercor Australia Ltd (Ruling No 3), J Forrest J stated that the principles set out in Aon, as summarised in Ultra, were applicable, in a general sense, to the late service of an expert report. In that case, he refused an application to allow the representative plaintiff in a class action to rely on an expert report which had been served on the third day of the trial. He had previously ordered that all expert reports were to be served and filed a number of months before the commencement of the trial. The trial concerned damage to the plaintiff's property caused by the Black Saturday Horsham bushfire, which had commenced as the result of a conductor falling from a pole on a power line. The relevant expert report related to the manner in which a coach screw had been used to secure a pole top assembly to the pole from which the conductor fell. J Forrest J refused the application on the following four bases:
(a) First, he rejected the plaintiff's explanation for the late service of the report. The plaintiff contended that his legal team only turned its mind to questions relating to the coach screw after receiving other expert reports from the defendant. J Forrest J observed that the issue had been ventilated two years earlier at the Victorian Bushfire Royal Commission and raised at the outset of the proceeding in the plaintiff's statement of claim. He concluded that the plaintiff's legal team had known for approximately two years that there may be a potential issue relating to the manner in which coach screws were affixed to the pole and stated '[f]or reasons that I cannot fathom, it was determined to do nothing about it until the eve of the trial'.
(b) Secondly, the coach screw had been in the possession of the plaintiff's solicitors for over a year prior to the trial and had been available for examination by an expert throughout that time.
(c) Thirdly, the introduction of the expert report raised the risk of derailing a conclave of experts which was scheduled one month after the expert report was filed, and in respect of which a joint expert report had already been prepared.
(d) Fourthly, although there was no demonstrable prejudice to the defendant in permitting the plaintiff to file the expert report, this was not determinative. The orders of the court prescribing dates for service of expert witness reports were designed to facilitate a joint expert report and the giving of concurrent evidence and, consequently, '[t]o permit a further expert to join that debate simply because [the plaintiff's] lawyers last week thought it was a good idea is not good enough.'
- Subsequently, in Matthews v SPI Electricity Pty Ltd (Ruling No 20), J Forrest J permitted a plaintiff to rely on a supplementary expert report which was filed and served at the beginning of week five of the trial and many months after the deadline for the filing of supplementary expert reports had passed. Relevantly, in reaching this conclusion, J Forrest J considered an argument by the defendant that permitting the plaintiff to rely upon the expert report would be contrary to the overarching purpose in the Act. In rejecting this submission, J Forrest J observed that s 9(1)(a) of the Act required the 'just determination of the civil proceeding' as a means of furthering the overarching purpose and that refusing the application of the plaintiff would therefore be contrary to the overarching purpose.
31. In Aon, Gummow, Hayne, Crennan, Kiefel and Bell JJ relevantly stated:
An application for leave to amend a pleading should not be approached on the basis that a party is entitled to raise an arguable claim, subject to payment of costs by way of compensation. There is no such entitlement. All matters relevant to the exercise of the power to permit amendment should be weighed. The fact of substantial delay and wasted costs, the concerns of case management, will assume importance on an application for leave to amend. Statements in JL Holdings which suggest only a limited application for case management do not rest upon a principle which has been carefully worked out in a significant succession of cases. On the contrary, the statements are not consonant with this Court's earlier recognition of the effects of delay, not only upon the parties to the proceedings in question, but upon the court and other litigants. Such statements should not be applied in the future.
...
In the past it has been left largely to the parties to prepare for trial and to seek the court's assistance as required. Those times are long gone. The allocation of power, between litigants and the courts arises from tradition and from principle and policy.
It is recognised by the courts that the resolution of disputes serves the public as a whole, not merely the parties to the proceedings.
32. Similarly, French CJ stated:
Both the primary judge and the Court of Appeal should have taken into account that, whatever costs are ordered, there is an irreparable element of unfair prejudice in unnecessarily delaying proceedings. Moreover, the time of the court is a publicly funded resource. Inefficiencies in the use of that resource, arising from the vacation or adjournment of trials, are to be taken into account. So too is the need to maintain public confidence in the judicial system.
It has been said by this Court that Aon may have 're-invigorated the procedural paradigm' insofar as time, costs and limited judicial resources are relevant considerations in the determination of whether to allow certain interlocutory processes. However, as J Forrest J observed in Ultra, 'the primary question still remains: what do the interests of justice dictate?'; Aon reminds courts that 'the prism through which these interests are viewed is wider than just that of the moving party'.
...
- Parties to civil proceedings in the courts of this State must comply with the obligations in the Act. Case management procedures that are adopted by courts seek to give effect to the overarching purpose in the Act in a manner that is fair to all parties while simultaneously advancing the administration of justice. The importance of compliance with case management procedures is reflected in the extensive sanctions that courts can impose under the Act in cases of noncompliance.
- Parties conducting proceedings in a managed list, such as the List, must do all they can to comply with the Court's timetabling orders. If they do not, they face the risk that orders will be made which may affect the manner in which, and the extent to which, they can conduct their case. For example, as appears from [26] above, under s 51 of the Act, the Court may order that a party be precluded from relying on particular evidence. Parties should not seek to avoid compliance with an order by adopting an artificial interpretation of the order or by taking advantage of any ambiguity. Rather, they should endeavour to comply with the intended purpose of the order.
41 The Court has jurisdiction to order security for costs pursuant to Order 62 of the Rules, s 1335(1) of the Corporations Act 2001 (Cth) (Corporations Act) and also in the exercise of its inherent jurisdiction. Rule 62.02(1) of the Rules relevantly provides:
62.02 When security for costs may be ordered
(1) Where -
(a) the plaintiff is ordinarily resident out of Victoria;
(b) the plaintiff is a corporation or (not being a plaintiff who sues in a representative capacity) sues, not for the plaintiff's own benefit, but for the benefit of some other person, and there is reason to believe that the plaintiff has insufficient assets in Victoria to pay the costs of the defendant if ordered to do so;
...
(f) under any Act the Court may require security for costs -
the Court may, on the application of a defendant, order that the plaintiff give security for the costs of the defendant of the proceeding and that the proceeding as against that defendant be stayed until the security is given.
...
42 Section 1335(1) of the Corporations Act provides:
(1) Where a corporation is plaintiff in any action or other legal proceeding, the court having jurisdiction in the matter may, if it appears by credible testimony that there is reason to believe that the corporation will be unable to pay the costs of the defendant if successful in his, her or its defence, require sufficient security to be given for those costs and stay all proceedings until the security is given.
43 Where the jurisdiction is enlivened, the Court has a broad and unfettered discretion to make an order for security for costs. This discretion must be exercised judicially having regard to the relevant factors arising in the circumstances of the case. The party seeking security has the burden of persuading the Court that such an order should be made.
44 The defendant's counsel refined the defendant's application for leave to amend paragraph 7(a) of the defence at the hearing and submitted that the defendant seeks leave to amend it to read as follows: 'It admits that the payments were made by Copia or on behalf of Copia in the amount of $4,500,000 to Aintree under the Contract of Sale'. The plaintiff submitted that it did not object to this refined proposed amendment.
45 The plaintiff opposes leave to amend paragraph 15 and the amendment to paragraph 16(b)(v) insofar as it refers to the words 'and the Defendant has suffered substantial damages because of the Plaintiff's breach'.
46 It otherwise consents to the other amendments. As a result, I will allow the other amendments.
a) Administrative and legal costs arising from the Plaintiff's default;
b) Marketing costs for remarketing the Property following termination;
c) Holding costs during the period between the Settlement Date (22 March 2021) and the termination date (17 August 2021), and continuing thereafter, including:
i. Land tax;
ii. Council rates;
iii. Water rates;
iv. Interest on existing mortgages over the Property;
d) Loss of interest on the purchase monies from the settlement date to the present;
e) The difference between the contract price and the market value of the Property at the date of termination;
f) Consequential loss and damage as expressly provided for in Additional Special Conditions 5.1(f) of the Contract, including lost opportunity costs;
g) Default interest as provided for in Additional Special Conditions 4.1 of the Contract.
Particulars
- The Defendant intends to rely on express property valuation and forensic accounting evidence to quantify these losses.
- The Defendant will provided full particulars of these losses following the completion of the forensic account report and prior to trial.
48 Paragraph 16(b)(v) is in the following terms (emphasis to highlight the impugned amendment):
b) It says further that:
...
- The Defendant has not been unjustly enrichment by retaining the Retained Sum as its retention is expressly permitted by the Contract, and the Defendant has suffered substantial damages because of the Plaintiff's breach.
49 The impugned pleas concern the defendant's claim that it has suffered loss and damage and that it is entitled to retain the monies under clause 28.4 of the contract, pending the determination of these matters and to apply the monies to those damages.
50 In my view, justice demands that I exercise my discretion to refuse the defendant's application for leave to amend the impugned amendments in paragraph 15 and paragraph 16(b)(v).
51 First, no satisfactory explanation has been given for the delay in seeking leave to amend the defence. There is no evidence concerning when any of the 'delays in obtaining comprehensive instructions from the [defendant]' took place after the defence was filed. The evidence is vague and not particularised. The defendant's counsel did not otherwise further explain this. The defendant accepted that there had been 'some delay'.
52 Second, I reject the defendant's submission that the proceeding is at a relatively early stage 'procedurally'. It is set down for trial on 7 May 2025. The defendant submitted that there has not been a mediation or requests for particulars. These matters could have readily been attended to by the defendant and no explanation was provided why it has not done so. Once this was raised on 2 May 2025 the Court took steps and has arranged a judicial mediation on 6 May 2025.
53 Third, as to the prejudice to the plaintiff, the defendant submitted:
14. The Plaintiff will suffer no prejudice that cannot be adequately compensated by costs, particularly as:
a) the Defendant is also seeking to vacate the trial date, which would provide the Plaintiff with ample time to consider and respond to the amendments;
b) the amendments do not raise entirely new issues but rather clarify and elaborate upon the Defendant's existing position, providing greater particularity about the contractual provisions relied upon and the losses claimed; and
c) the Plaintiff has not yet filed or served its expert evidence, so there will be no wasted costs in that regard.
54 I reject this submission. It is entirely without merit. This is because:
(a) the plaintiff will suffer significant prejudice if the defendant is permitted to make the impugned amendments to paragraphs 15 and 16(b)(v). This is because it will necessitate the vacation of the trial. The matters the subject of the defence are new. The present defence presently denies paragraph 15. The defendant now seeks to make a positive plea that it has suffered particular loss and damage. There has been no discovery of any documents concerning its alleged loss and damage and no expert evidence. This is the subject of the defendant's application for leave to file expert evidence by 10 June 2025;
(b) there would be some wasted costs as the plaintiff has taken the steps of preparing for the trial and making arrangements to do so;
(c) I reject the defendant's submission that the prejudice to the plaintiff can be accommodated by an order for costs and a vacation of the trial.
55 Fourth, I accept that the defendant seeks to make amendments of substance that are central to its defence. As a result, I accept that the defendant will be significantly prejudiced if leave is not granted as the impugned amendments to paragraphs 15 and 16(b)(v) are central to its defence. But it is also relevant that this prejudice lies squarely at the feet of the defendant and/or of its legal representatives.
56 Finally, as I have already said, the matters the subject of the impugned amendments to paragraphs 15 and 16(b)(v) are also intended to be the subject of expert evidence. I address this shortly but it is relevant to observe to the application to amend the defence that I have also decided to exercise my discretion to refuse the defendant leave to vacate the trial and file expert evidence by 10 June 2025. The defendant submitted that particulars of the loss and damage of the defendant are not able to be provided 'until the expert reports come in'. This confirms that the impugned amendments to the defence require expert evidence.
57 In my view, just demands that I exercise my discretion to refuse the defendant's application for leave to file expert evidence.
58 First, if I grant leave, then the trial will be vacated. This would be a significant prejudice to the plaintiff. The plaintiff is ready for trial. In addition, the trial would not be set down for a significant period as the parties would need to exchange expert reports, there would also have to be discovery of matters concerning the loss (presumably prior to expert evidence) and then the matter set down for trial.
59 Second, no satisfactory explanation has been given for the delay in obtaining expert reports. In addition, the conduct of the defendant and/or its legal representatives in relation to taking steps to engage the experts has been manifestly inadequate. The defendant's counsel accepted that the defendant has been 'tardy' in organising expert evidence. I also observe:
(a) there is no evidence concerning when any of the 'delays in obtaining comprehensive instructions from the [defendant]' took place;
(b) there is no evidence how or why any complexities in the expert evidence has resulted in any delays;
(c) the defendant's expert reports were due on 29 March 2025. The defendant's solicitors only approached the experts on 9 April 2025. This is despite the defendant's solicitor taking steps to amend the defence as early as 9 March 2025. This delay cannot be explained by the need to have formulated a proposed amended defence. There is no reason that the issue of loss could not have progressed without a proposed amended defence;
(d) the defendant's experts have not been told that the trial is listed for 7 May 2025. This is obviously a critical matter that should have been disclosed to potential experts. In those circumstances, it is unknown whether any of the defendant's experts could have, in fact, accommodated this trial date and provided their reports prior sooner.
60 Third, I accept that if I do not grant leave then the defendant will be significantly prejudiced in its defence. But this lies at the feet of the defendant and/or of its legal representatives. The defendant's counsel initially submitted that the Court should not 'visit the ills of the solicitor onto the client' but then subsequently accepted that the evidence does not establish whether it is the defendant and or its solicitor who is responsible for the delays. The defendant's counsel accepted that the delay cannot be attributed to any other person.
61 Fourth, if I grant the application, it will lessen public confidence in this Court and the judicial system. This proceeding was set down for trial almost 3 months ago. This proceeding is in a judge managed list. The issues of an amended defence and security was raised at a directions hearing. The Court made orders for the filing of expert evidence. Despite this no satisfactory explanation has been given for the delay in obtaining expert evidence.
62 As a result, after carefully considering these factors, in the present circumstances, I will exercise my discretion to refuse leave for the defendant to vacate the trial and file and serve expert evidence by 10 June 2025. Justice demands it. It would be unjust and contrary to the administration of justice to do so.
63 I accept that the Court has jurisdiction to order the plaintiff to give security for the defendant's costs. The plaintiff is in liquidation. The plaintiff accepted that the Court has jurisdiction.
64 First, as I have just said, the plaintiff is in liquidation. There is no evidence that it has the capacity to pay any order as to costs. As a result, there is a real risk that it will not be able to pay the defendant any order for costs made in its favour. This is a significant factor in favour of an order for security.
65 Second, initially the defendant's counsel accepted that the plaintiff's claims have reasonable prospects of success but then sought to retreat from this position and submitted that there are 'legitimate questions about the claim's prospects of success'. This was not then further developed or explained. The defendant did not submit that the claims do not have reasonable prospects of success. I proceed on the basis that the plaintiff's claim is bona fide and has reasonable prospects of success. I accept that there may be 'legitimate questions' but this does not mean that the claims do not have reasonable prospects of success. This is a neutral factor.
66 Third, this application is made very late. The defendant's counsel submitted that the application was 'unusual'. The defendant raised the issue of security for costs and then did nothing in the period since the end of January 2025. I reject the defendant's submission that the proceeding is at a 'fairly early stage procedurally with minimal steps being completed.' As I have already said, it set down for trial on 7 May 2025. Delay in applying for security may be a ground for refusing to order security.[1] A plaintiff is entitled to know its position in relation to security at the outset, and before it embarks to any real extent on its litigation, and certainly before it makes a substantial financial commitment toward litigating the claim.[2] This is a very significant factor against an order for security.
67 Finally, it would be manifestly unjust to make an order that the plaintiff provide security prior to the trial, being a trial that commences this Wednesday, 7 May 2025. I also observe that the application for security (as set out in the summons) was premised upon the trial being vacated as the summons seeks that the security be provided in 28 days. It was only upon questioning by the Court that the defendant submitted that if the trial is not vacated then security should still be ordered before the trial albeit in a lesser amount. This is a significant factor against an order for security. The security would have to be ordered to be provided prior to 7 May 2025 which is manifestly unreasonable.
68 In conclusion, I will allow the application to amend the defence but not the impugned proposed amendments and otherwise dismiss the defendant's summons filed 30 April 2025. As a result, subject to hearing from the parties on the precise form of order, I will order:
(a) The defendant has leave to amend the defence in the form exhibited to the affidavit of Mr Altintop made 30 April 2025 except to:
(i) paragraph 7(a) which must read: 'It admits that the payments were made by Copia or on behalf of Copia in the amount of $4,500,000 to Aintree under the Contract of Sale';
(ii) paragraph 15;
(iii) paragraph 16(b)(v) insofar as it contains the words 'and the Defendant has suffered substantial damages because of the Plaintiff's breach'.
(b) The defendant's summons filed 30 April 2025 is otherwise dismissed.
69 In my preliminary view it is appropriate to order the defendant to pay the costs of the plaintiff of the defendant's summons. But I will hear from the parties on this issue.
[1] See Colmax Glass Pty Ltd v Polytrade Pty Ltd [2013] VSC 311 at [20(f)] (Derham AJ).
Copia Developments Pty Ltd (in liquidation)
Aintree Major Town Shopping Centre Pty Ltd [2025] VSC 238