Plaintiffs v Defendant

1 This matter comprises two proceedings with respect to the same subject matter:

(a) A proceeding commenced by Mr Paul Malcolm Burkett ("Burkett") against Bendigo and Adelaide Bank Limited ("BEN") - S CI 2018 00837 - ("the Burkett Proceedings"); and

(b) A proceeding commenced by BEN and ABL Nominees Pty Ltd as Trustee for the Lighthouse Trust No 12 ("ABLN") against Burkett - S CI 2018 00839 - ("the Bank Proceedings").

2 By summons filed on 20 December 2018 in the Bank Proceedings, Burkett seeks:

(a) Orders granting leave to Burkett to withdraw the admission in paragraph 36(a) of the Amended Defence to the Amended Statement of Claim filed 13 April 2017 ("the Amended Defence**"**) that Burkett was a group member in the Great Southern group proceeding (No. S CI 2011 04071) ("the Group Proceeding"); or

(b) Alternatively, an order pursuant to s33KA Supreme Court Act 1986 ("the Act") bringing his group membership to an end.

3 Although Burkett also seeks an order in the Summons pursuant to s33J of the Act extending the time for Burkett to opt out of the Group Proceeding, Burkett no longer pursues this order.

4 For the reasons that follow, I refuse the application.

5 On 7 December 2018, I delivered judgment in Burkett v Bendigo and Adelaide Bank Ltd (No 2) ('the trial judgment').[1] Inter alia, the case concerned a claim made by BEN and ABLN ('the Bank Parties') against Burkett in respect of liability outstanding under a loan agreement to which Burkett was borrower, pursuant to which it was claimed that ABLN advanced the sum of $251,250 ('Burkett Loan'). Burkett sought declarations that he was not liable under the agreement sought to be enforced.

6 The Bank Parties sought to respond by pointing to the Deed of Settlement approved by this Court on 11 December 2014 under s 33V Supreme Court Act 1986 ("the Deed of Settlement") in Clarke (as Trustee of the Clarke Family Trust) v Great Southern Finance (receivers and managers appointed) (in liquidation)[2] ("Clarke"). According to the Bank Parties, the provisions of the Deed of Settlement precluded a person in Burkett's position was from raising the matters he had sought to raise, by consequence of his position as a group member in the Great Southern group proceedings.

7 At paragraph 125 of the trial judgment, I noted:[3]

As indicated previously, the Bank Parties contend that a complete answer to Burkett's defences in this proceeding is provided by the provisions of the Deed of Settlement. Burkett has admitted and does not contest that he was a group member, is bound by the Deed of Settlement and that he is 'personally ... part of the Group and bound by the settlement deed negotiated by the Group'.

8 Ultimately, I concluded that the terms of the Deed of Settlement, properly construed, precluded the raising of the Defences that Burkett sought to raise in response to the claims of the Bank Parties.[4]

9 It is readily observable from the trial judgment that Burkett's admission of group membership is central to the resolution of the proceeding in favour of the Bank Parties.

10 In paragraph 36(a) of the Amended Defence, Burkett states:

In answer to paragraph 51 of the further amended Statement of Claim, the defendant:

1. admits that the Borrower and the defendant were Group Members in the Group Proceeding, as they did not 'opt out' of the Group Proceeding;

11 Burkett seeks leave of the Court to withdraw the admission pursuant to r 25.02(5) Supreme Court (General Civil Procedure) Rules 2015 ('the Rules'). Rule 25.02(4)(b) of the Rules permits a defendant to withdraw their defence or any part of it at any time in a proceeding,[5] subject to the restriction imposed by r 25.02(5) that withdrawal of an admission or any other matter operating for the benefit of any other party requires the consent of that other party or the leave of the Court.[6]

12 An admission in a pleading is a serious step for a party to take. It means that proof is no longer required or permitted of the fact admitted as the fact is no longer in controversy between the parties.[7] Consequently, withdrawal of an admission is not permitted easily.[8]

13 In Divcon v Devine Shipping, Beach J stated:[9]

As a matter of principle a party who has made an admission in a pleading should not be entitled to withdraw that admission without good cause, for example, that the admission was made in error by the party who prepared or gave the instructions for the preparation of the pleading, or as the consequence of a misapprehension by counsel or solicitor concerning the client's instructions.

14 The Court's power to grant leave to a party to amend a pleading pursuant to r 36.03 of the Rules is also relevant. Whether an amendment should be granted is a matter of discretion, the exercise of which should be guided by an assessment of where justice lies. The discretion is broad and unfettered and it is neither possible nor desirable to attempt to enumerate the factors the Court will bring to account.[10] However, modern case management considerations, including the effect of an adjournment on court resources and the competing claims of other litigants, are relevant.[11]

15 It is instructive to consider Burkett's application in the context of the conduct of these proceedings. Burkett could have chosen to "not admit" or "deny" his status as a group member. There is no evidence that to suggest the admission was made in error or as the consequence of confusion or misapprehension by counsel or Burkett's solicitor. Instead, Burkett's legal representatives made a deliberate choice, forensic or otherwise, to make an admission as to his group membership. He maintained the admission throughout the course of the proceedings. Now, with the benefit of hindsight and published reasons, Burkett seeks to avoid the consequences of his admission and pursue an argument that had been available at the time of pleading and throughout the trial. I consider it would not facilitate the just, efficient and timely resolution of the issues in dispute to permit Burkett to further amend his Defence so as to withdraw the admission.[12]

16 Further, it is not without significance that Burkett's legal representatives agreed to not withdraw his admission in consideration for the plaintiff's consent to the transfer of proceedings from New South Wales to Victoria. There is an overarching interest, as a matter of public policy, in maintaining the integrity of such agreements.

17 In Wilkinson v Perisher Blue Pty Ltd,[13] the New South Wales Court of Appeal observed:

Agreements are made between solicitors as to ... matters of practice and procedure all the time. Without such agreements, the conduct of litigation would be needlessly expensive and in practical terms, almost impossible to manage. There is a public interest in solicitors being held to their agreements in the course of litigation. This is particularly so when the solicitors concerned are experienced and know exactly what they are agreeing to.

18 Once more, there is no suggestion that Burkett's legal representatives did not appreciate the consequences of what they were agreeing to when they agreed, on behalf of Burkett, to not withdraw Burkett's admission of group membership. It would not be just and convenient in the circumstances to permit Burkett to withdraw his admission and in so doing, directly undermine a clear agreement reached between legal practitioners in the context of facilitating efficient case management.

19 Consequently, it follows that Burkett's application for leave to withdraw the admission in paragraph 36(a) of the Amended Defence should fail.

Burkett's Group Membership - s 33KA Supreme Court Act 1986

20 Further, I decline to exercise the discretion afforded to me pursuant to s 33KA of the Act, such that Burkett would cease to be a group member.

21 It is necessary to note at the outset that Burkett, as a group member, lacks standing to bring an application under s 33KA of the Act. Standing is limited to parties to a group proceeding, as opposed to non-party group members.[14] However, the Court may make an order under s 33KA of the Act of its own motion.[15]

22 As I observed in Parker's Application, whilst many provisions of Part 4A of the Act are identical to those of Part IVA of the Federal Court of Australia Act 1976 (Cth), s 33KA is unique to the Victorian legislation.[16] Section 33KA appears to protect, in some circumstances, the wholly unknowing group member "at any time, whether before or after judgment",[17] whilst ss 33J and 33K respectively apply to group members opting out prior to the beginning of trial, or when group membership becomes apparent during the course of trial.[18]

23 In Clarke, Judd J refused an application by several groups of objectors to the Deed of Settlement to avoid group membership. His Honour relevantly observed:[19]

There are no prescribed circumstances in which these powers may be exercised, although some circumstances are readily apparent. For example, to maintain the integrity of the group by removing those who do not share an essential characteristic, or to prevent an abuse of process or unfairness. The power is obviously designed to be exercised by the court in the management of a proceeding which, although a group proceeding, is conducted by parties within the construct of the adversarial system. The powers granted under ss33KA and 33ZF are not intended, in my view, to be invoked by group members to avoid the binding effect of an adverse judgment or terms of settlement negotiated prior to judgment, once approved by the court.

24 In Parker's Application, I granted an application under s 33(KA)(1)(a) of the Act to exclude the Applicant from group membership, in circumstances where notice of the right to opt out could not and did not reach the group member. Accordingly, the Applicant's right to advance his own defences, unburdened by group membership and its attendant consequences, and should be protected by s 33KA.

25 In this case, Burkett submits it is just and expedient that he be removed as a group member. He seeks to distinguish his own circumstances from those in Clarke and align them with those in Parker's Application, submitting that both Parker and he were ignorant of facts which, had they been known, were materially relevant to whether the applicant should continue as a group member.

26 I cannot accept this submission. The facts in Parker's Application were exceptional, and occurred in the context of the applicant's move to Singapore and almost complete severance of his ties to Australia. The applicant neither updated his contact details nor informed the Great Southern Scheme of his move, and only learned of the group proceedings on 6 July 2017. Burkett was not only aware of the existence of the group proceedings, but made a deliberate choice to admit to group membership in the course of pleadings and the conduct of his case. The application before the Court involves the precise circumstances envisaged by Judd J in Clarke in which His Honour observed the statutory powers are not intended to be used. I agree with Judd J.

27 Accordingly, I conclude it would not be just and expedient in the circumstances to bring Burkett's group membership to an end pursuant to s 33KA of the Act.

28 For the preceding reasons, I decline to grant the relief sought. Burkett has failed to demonstrate sufficient cause to support the grant of leave to withdraw his admission of group membership in paragraph 36(a) of the Amended Defence. In the context of the manner in which Burkett has chosen to conduct these proceedings, it would not be in the interests of justice to allow Burkett to retrospectively withdraw an admission after the delivery of the trial judgment, with the benefit of those reasons, with the effect that Burkett will avoid the adverse consequences of the Court's decision. Further, to allow Burkett to withdraw his admission at this stage of the proceeding would directly undermine the agreement reached by the parties' legal representatives in relation to the transfer of the proceedings from New South Wales to Victoria. Courts should uphold the integrity of such agreements, especially in the context of their role of facilitating case management and the just, efficient and timely resolution of civil proceedings.

29 The use of s 33KA of the Act to terminate Burkett's group membership in the circumstances suggested would be inapposite and should be resisted. Burkett seeks to rely on s 33KA to avoid the binding effect of an adverse judgment, in the context of an admission he consistently maintained over the full course of these proceedings. In this context, I consider it would not be just and expedient in all the circumstances to bring Burkett's group membership to an end.

30 The application is dismissed. I will hear the parties on the matter of costs.

[1] [2018] VSC 723.

[2] [2014] VSC 569.

[3] Burkett v Bendigo and Adelaide Bank Ltd (No 2) [2018] VSC 723, [125].

[5] Supreme Court (General Civil Procedure) Rules 2015, r 25.02(4)(b).

[6] Supreme Court (General Civil Procedure) Rules 2015, r 25.02(5).

[7] Divcon v Devine Shipping [1996] VicRp 58; [1996] 2 VR 79 at 80 ("Divcon") cited with approval in Collie v Merlaw Nominees Pty Ltd [2001] VSC 39; (2001) 37 ACSR 361, [94]-[98] ("Collie").

[8] Collie, [97] citing Cooper's Brewery Limited v Panfida Ltd (1992) 26 NSWLR 738.

[9] Divcon [1996] VicRp 58; [1996] 2 VR 79 at 80.

1. [10] Ketterman v Hansel Properties Ltd [1987] AC 189 at 220 cited with approval in Tony Sadler Pty Ltd v McLeod Nominees Pty Ltd (1994) 13 WAR 323 at 332 ("Tony Sadler"); see also Ridolfi v Rigato Farms Pty Ltd [2001] 2 Qd R 455, [20]; Jeans v Commonwealth Bank of Australia Ltd [2003] FCAFC 309; (2003) 204 ALR 327, [18].

[11] Tony Sadler (1994) 13 WAR 323 at 333; Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175.

[12] Civil Procedure Act 2010, ss 7, 8.

[13] [2012] NSWCA 250.

[14] Murray v Great Southern Managers Aust Ltd (an Application by Garry James Parker) [2018] VSC 416, [23] ("Parker's Application"); Clarke v Great Southern Finance Pty Ltd (in liquidation) [2014] VSC 569, [22] ("Clarke").

[15] Parker's Application [2018] VSC 416.

[17] Ibid; Supreme Court Act 1986, s 33KA(1).

[19] Clarke [2014] VSC 569, [24].