The applicant's application for security against the respondent & incidental orders (prayers 6(d) and 2)
The applicant submits, firstly, that the Court 'slipped' in accepting certain submissions made by the respondent about the capacity of Leda Holdings Pty Ltd - the newly joined defendant - to pay costs, may be relevant to the decision to order security. The applicant secondly submits that the Court did not take into account, entirely or sufficiently, prejudice to the applicant by reason of its incurring costs up to the point of joinder. The applicant argues that I was wrong to do so. It argues, in particular, that I erred in failing to distinguish Concrete Constructions Pty Ltd v Dalma Framework [1998] NSWSC 472. The applicant further submits that the Court erred in accepting the respondent's submissions in certain respects relating to this application.
If any, or all, of these errors were made, then the applicant should direct its complaints about them to the Court of Appeal. They are not remedied by recourse to the Court's power to vary or set aside orders, or under the slip rule.
Mr Clancy also points out in his most recent affidavit that there were contradictions between what was said in the cross-claim and earlier evidence not before the Court, at the hearing. This, it was said, cast doubt upon the genuineness of the cross-claim.
Such points, again, were either argued (in substance), in which case, the applicant is now rearguing them; or if they were not argued, could and should have been argued at the hearing. The applicant had fair opportunity of pointing out alleged 'contradictions' but did not do so. The Brimaud principle is not engaged and nor, in my view, any irregularity or other ground to constitute 'sufficient cause' established for the purposes of r 36.15.
The application that the respondent provides security is dismissed.
The applicant did not identify some other basis (other than an aid to illuminate the respondent's financial position for an application for security) for the categories of financial and other documents specifically identified in prayer 2(a)-(d) of the motion relevant to this application. That being so, the factual substratum to sustain an order that the respondent provide limited discovery of documents relevant to its financial position is also dismissed.
[2]
Application to set aside the order for the applicant to provide security to the respondent (prayer 6(b))
The reasoning underlying the order that the applicant provide security for the respondent's costs is set out at [97]-[119] of My Earlier Reasons.
The applicant's written submissions in chief in support of this particular application in its notice of motion fell into two parts of that document: paragraphs 1-18 and 23-43. Much of the content of these submissions was repetitive and either involved re-argument of matters canvassed during the hearing, or raised arguments that had not been raised at all. The least that could be said is that most of the submissions were argumentative and constituted a broad assault on the correctness of My Earlier Reasons. The proper forum for complaints of that kind is the Court of Appeal.
The applicant submits that the Court did not have regard to the circumstance that Mr Williamson was a second cross-defendant when considering the respondent's application for security on the principal claim. That meant that not only could Mr Williamson be jointly liable for the respondent's costs on the cross-claim should that succeed, but he would be very likely be ordered to pay the respondent's costs on the principal claim as well. This submission was not made during the hearing. It is too late for it to be considered now.
At the hearing of the respondent's application for security, no submission was advanced that Mr Williamson was likely to have the wherewithal to personally meet any costs order made against the applicant and he gave no undertaking to the Court about his ability or willingness to assume liability for the respondent's costs if an adverse costs order was made against the applicant on the principal claim. At any rate, this is not a 'slip' capable of remedy under r 36.17 of the UCPR, but a complaint about an argument not raised at the hearing with no indication why it could not have been raised.
The applicant further submits that because of the respondent's conduct, the Court did not consider whether the respondent caused or contributed to the applicant's impecuniosity. The applicant then submits that the Court underestimated the multiple species of prejudice to the applicant by the respondent's failure to disclose its impecuniosity. The applicant submits that the Court did not investigate the strength of the applicant's claim and should have found that it had very good prospects; that the Court was wrong to find that the prejudice it had sustained by a late application for security was diluted because the respondent was seeking security for its future costs and wrong to characterise the respondent's cross-claim as being defensive in nature. The applicant challenges, at a factual level, that the applicant had a degree of forewarning that it might bring an application for security. The applicant submitted, that, for a range of reasons, the respondent's cross-claim was not 'defensive'.
These are all matters which might arguably amount to error, but, as indicated, they provide no grounds for setting aside or varying the order. They all involve an invitation to reargue earlier submissions or, alternatively, canvas new submissions which were not, and which could have, been raised.
[3]
Mr Williamson's affidavit
The applicant purported to rely upon Mr Williamson's affidavit dated 22 June 2021. This, as indicated, was filed outside the timetable the Court directed for service of evidence for the motion. This was one of multiple instances of the applicant not complying with Court directions made on 17 June 2021. No leave was sought to rely upon it and the applicant's reliance upon it added to the existing burden for the respondent to prepare, in an already compressed period (2 days), evidence and make submissions in response to the present applications.
Be that as it may, Mr Williamson's affidavit, speaking broadly, concerned his more current (that is, since the hearing occurred in May) state of employment and financial position and financial capacity - as recently as 16 June 2021 - as well as the loss which he says he, or the plaintiff, suffered as a result of the conduct by the respondent, or other entities or persons associated with the respondent's corporate group, his past funding of the plaintiff and his request for a variation in the amount of quantum of security that the applicant be ordered to pay.
Some of this - the new work commencing on 21 June 2021 - is undoubtedly "new", in the sense of events post-dating the hearing, with reference being made to the applicant obtaining one client and having prospects for obtaining another potential client - but much of his affidavit was not 'new' in that sense: including what Mr Williamson had deposed in his affidavit about the loss sustained by the applicant because of the respondent's conduct or his funding of the applicant in the proceeding to date.
In particular, Mr Williamson did not, at the hearing of the applications give evidence of the unexecuted preliminary service agreement he deposed to having been entered into between NPI and an entity alternatively referred to as 'Catapult' or 'Sunrise Tweed Pty Ltd' on 15 May 2020, shortly before the hearing. Even now, he only puts forward the front page of an unexecuted document without exhibiting the entirety of the agreement to enable the Court to ascertain its terms. Nor was evidence put forward as to the state of negotiations before that date, or the state of negotiations with a developer, PDC Pty Ltd; also referred to in Mr Williamson's affidavit. No evidence has been given that despite the indication that a deposit would be paid, any payment has actually been received.
No evidence, independent or otherwise, has been given as to what the overall expected value of the present or prospective contract will be and, in the case of the arrangement with Catapult, Mr Williamson's evidence suggests revenue is likely to fluctuate. At any rate, to the extent that projections are made of the revenue anticipated from new clients there is no indication of what the applicant's outgoings are likely to be.
In the absence of persuasive and independent financial documentation, the Court has been left to grapple with Mr Williamson's vague, but inherently self-serving, assertion - which was not even articulated at the hearing in May - that "I have always expected that (the applicant) would have money to pay the costs once this matter came to a hearing". That evidence of Mr Williamson's state of mind is not, and never could be, compelling evidence to overturn a judicial finding that there was a reason to apprehend impecuniosity; which enlivened the Court's jurisdiction to order security.
The applicant then offered to provide an undertaking for the applicant's costs. There was no inkling of such undertaking at the hearing; nor any disclosure by Mr Williamson of his personal assets or financial position; such as would indicate the value of any such undertaking.
I am not persuaded that the Brimaud principle, with the two requirements I have alluded to, is engaged; or that Mr Williamson's evidence of developments occurring after delivery of reasons would compel a different conclusion.
[4]
No sufficient cause established to set aside orders
Finally, before moving on from the applicant's applications to set aside the orders that it provide security for costs and rejecting its application that the respondent provide security, I have reviewed the extensive catalogue of supposed 'irregularities' identified in Annexure B of the applicant's written submissions in reply. None of them, in my opinion, warrant the epithet 'irregularity', as distinct from an arguable misstatement.
To the extent that complaints are made about non-disclosure of information on the respondent's behalf, an application to set aside or vary is not synonymous with an application for an ex parte injunction, whereby legal representatives for applicants for such injunction have sometimes onerous obligations of disclosure. Here, the applicant was legally represented. No point was taken by Counsel appearing for the applicant about any of the misstatements or omissions to disclose at the hearing. No point was taken after the hearing whilst judgment was reserved.
Further, it is not to the point that no official transcript of the hearing became available until many weeks after My Earlier Reasons were published. It is up to legal representatives for parties to take their own record of what is said at a hearing. That is especially so if they have not taken steps to procure transcripts expeditiously before a hearing commences. I am not satisfied that the position of the applicant was that its representation at the hearing was so incompetent that it permitted the respondent, through its practitioners, to conduct itself in such a way that the parties' respective cases were not fairly presented to the Court. But this is the effect of the applicant's position.
Further, even if any or all of the putative misstatements or omissions, constitute irregularities, I am not persuaded that they were of such materiality as to have affected the determination of those applications such as to engage the power under r 36.15 of the UCPR.
[5]
Application to vary quantum of security
The applicant submitted that the quantum for the award of security was excessive. However, in the circumstances which occurred, the applicant did not, at the hearing, furnish evidence in opposition in a sufficiently timely way so as to enable it to be admitted, to contest the respondent's case on quantum of the security. It complains that the Court did not take into account a range of reasons why the amount of security eventually ordered might be reduced. If that was so, one short response is that those reasons were not addressed by the applicant's Counsel at the hearing when it should have been. At any rate, if there was error, it is appropriate for the applicant to invoke appellate rights.
The applicant says the Court should now consider Mr Williamson's most recent affidavit, in which Mr Williamson requests that the quantum of security be reduced to $80,000, spread over 12 months, with quarterly payments.
Mr Williamson's request for reduced quantum of security was not made at the hearing, and is not then, or now, supported by independent evidence estimating the respondent's future costs. The application to vary the quantum of the security provided to the respondent is rejected.
[6]
Application to vary the number and timing of tranches and the amounts of tranches
No such request, for a greater staggering of security, through payment in multiple tranches was made at the hearing; after the respondent's Counsel had asked for security to be provided in two tranches, one in the near term and one relatively shortly before the hearing. It should have been.
Nevertheless, the Court is not in the business of creating insuperable barriers to corporate applicants prosecuting a claim so long as the interests of the respondent can be adequately protected. This application is based upon information obtained after the hearing. In particular, where there is evidence to indicate that corporate income may be in a position to pay a tranche of security somewhat later than the current timetable. Mr Williamson's evidence indicates that revenue is likely to come in from August 2021. The respondent objected to Mr Williamson's evidence in support of this application; because the evidence was not before the Court at the hearing. That may be so, but this particular evidence was not available at the earlier hearing. I see no real prejudice to the respondent, if the security be staggered in greater intervals than recognised in My Earlier Reasons. Although I earlier expressed criticism that the state of negotiations had not been disclosed at the hearing, I accept that since the hearing, there have been some tangible indications that monies might come in, albeit in a lumpy fashion and, in my view, the Court should do what it reasonably can, within the limits of fairness to both parties, to assist the applicant to demonstrate its compliance with the order to provide security.
This was not a matter (other than through its stated objection to Mr Williamson's evidence) which the respondent addressed in its written submissions. Although the respondent understandably indicated that it was confined in what it could write, in its submissions, by the page limit, I expect that if there was serious prejudice to it in increasing the tranches, and varying the amounts of the tranches, it would have said so. Mr Kalde was also silent on the subject in his affidavit in response; which was not limited, in terms of court directions, as to the scope of subject-matter it could address.
Neither in relation to the present notice of motion, nor at the hearing on 20 May 2021 did the parties provide an estimate of when the case could run at trial. If Mr Clancy's evidence is anything to go by, in terms of the work to be performed, however, and having regard to the circumstance that this proceeding commenced in 2019, I expect that the hearing would likely occur before the end of 2022. Doing the best I can, therefore, the quarterly tranches, commencing, say on 15 August 2021, would occur on 15 November 2021, 15 February 2022, 15 May 2022, 15 August 2022. That is five quarterly tranches.
The date for the first tranche is selected having regard to Mr Williamson's recent evidence as to when he expects payment to be made. In selecting this date, the Court has extended the period in which the first tranche of security has been made. The extension of the date is, in the circumstances, generous. However, with that generosity, the applicant should understand that in a proceeding with this age and the procedural imbroglio that the parties have enveloped this Court in over the last 7 months, will come a corresponding strictness in the enforcement of deadlines for the provision of security; with the potentially far-reaching procedural consequences which may follow to the applicant if those dates for the tranches are not complied with.
The Court is minded to vary order 7, which was made on 28 May 2021, so that the order is as follows:
"(7) The security is to be provided in the following tranches:
1. $30,000 to be paid by 15 August 2021;
2. $30,000 to be paid by 15 November 2021;
3. $30,000 to be paid by 15 February 2022;
4. $30,000 to be paid by 15 May 2022; and
5. $30,000 to be paid by 15 August 2022."
Order 8, made on 28 May 2021, is also varied as a consequence of the variation to order 7, so that it is to be as follows:
"(8) The proceeding on the Amended Statement of Claim is to be stayed if security is not provided in compliance with order 7"
[7]
Applications for the provision of discovery, information, for the respondent to amend its defence and deferral of time for applicant to file amended pleading (prayers 2-5)
At the directions hearing of this matter, following the filing of the motion on 17 June 2021, Mr Clancy, the applicant's legal representative, submitted that it was only through developing an appreciation of the content of the evidence that was before the Court on 20 May 2021 and reviewing My Earlier Reasons that the applicant became concerned that there may be potentially other defendants connected to the existing defendant and the subject transaction that it may join and that it is entitled to receive information about them before it files its amended statement of claim.
But, in his recent affidavit, Mr Clancy indicated that he had a suspicion or belief that there may have been several other potential defendants, in addition to Leda Holdings Pty Ltd and Mr Ell, even before the commencement of the proceeding in 2019, but for forensic reasons, the applicant's approach was to keep the case simple and select the respondent as the sole defendant.
The applicant did not apply for preliminary discovery (under r 5.2 of the UCPR) for documents that might have enabled it to ascertain the correct defendant to sue before commencing a proceeding.
In Mr Clancy's written submissions on this application, he referred to procedural history and essentially submitted that at no stage from May 2019 to 8 March 2021 did the respondent state that it was not the correct defendant, that it was sued in the wrong capacity, or had no assets against which the applicant might enforce a judgment. Nor did it yield any undertaking as to costs to enable the applicant to proceed with its claim against the respondent alone. Mr Clancy wrote that the respondent was at all times, among other things, under a duty to disclose to the applicant its commercial relationships so that the applicant would know of its case.
Not having done so, Mr Clancy submits, the Court should compel the respondent to take a range of pro-active steps, identified in various orders in its motion, to indicate the true position about those arrangements before it amends.
[8]
Omission to seek preliminary discovery
One of the applicant's difficulties relating to this application is, as I have indicated, that the applicant did not avail itself of the opportunity to apply for preliminary discovery prior to commencing the proceeding. This was so, notwithstanding Mr Clancy's now admitted doubts that he was satisfied who the appropriate contracting party should be. These omissions are reflected in ss 58(2)(b)(i) and 59 of the CP Act and weigh against the exercise of the discretion in the applicant's favour.
[9]
Further procedural context leading up to the determination of the joinder & amendment applications
Mr Clancy refers to some of the procedural history, but he omits some of the procedural context concerning the applicant's applications for joinder and amendment. As noted in My Earlier Reasons, a comprehensively re-written proposed amended statement of claim was supplied to the Court when the application was heard on 20 May 2021. This was after the respondent's solicitor sent its letter to the plaintiff's solicitor on 8 March 2021 containing the revelation about the defendant's status as a corporate trustee. Before then, the parties' lawyers had been in correspondence about the plaintiff's proposed amended pleading since at least June 2020 [2] .
After it was served, the revised proposed amended statement of claim had been subjected to serial objections by the respondent, partly in correspondence prior to the hearing, and partly during the hearing of the application itself, many of which did not need to be ultimately considered. The Court did, however, suggest that the applicant take heed of them when re-pleading after the grant of leave ([64] of My Earlier Reasons).
Stripped to fundamentals, the Court granted leave to the applicant to amend its pleading, substantially for the purposes of joining Leda Holdings Pty Ltd, the holding company of a group of companies of which the respondent is a subsidiary, and which are all under the effective control of Mr Ell.
The proposed amended pleading before the Court at the hearing relevantly contained a broad and non-particularised allegation of agency as between the respondent and Leda Holdings Pty Ltd and Mr Ell. In the form in which the notice of motion was presented, no application was brought by the applicant for further 'information' to be provided by the respondent, by way of limited discovery, further particulars, or indeed any direction that the respondent file an amended defence before the applicant file its amended pleading. In other words, when the application to amend was argued before the Court on 20 May 2021, the applicant was taken to have had the belief that it had sufficient information to plead and particularise its case against Leda Holdings Pty Ltd (and Mr Ell). This was especially so in circumstances where the respondent had foreshadowed many objections to the joinder of Leda Holdings Pty Ltd (and Mr Ell) and the amendments directed to the proposed cause of action against it but the applicant nevertheless pressed its amendment application.
At paragraphs [34]-[35] of My Earlier Reasons, I indicated that it was reasonably arguable, at the level of principle, for the applicant to allege that the respondent was the contracting party with the applicant, as an undisclosed principal, and referred to certain uncontroversial factual circumstances, which might make it so. I had, separately, indicated that there was no reasonably arguable action against Mr Ell.
In its written submissions in opposition to the present motion, the respondent says that some of the evidence the applicant now relies upon casts doubt upon its claim of agency. In the absence of invoking appellate processes itself, it is not appropriate for the respondent to canvas what I said about the joinder of Leda Holdings Pty Ltd; or for the Court to reconsider the correctness of that decision.
[10]
Reasons for new applications
The applicant now says that there may be other potential entities associated with the respondent in respect to which it wishes to entertain an action for potential joinder and potential further amendment. The suspicion, or doubts which Mr Clancy had before he filed the pleading in May 2019 about the correct contracting party which, he effectively says, was dispelled by the respondent's conduct (omitting to state the correct contracting party), has apparently revived.
However, in the way that the applications brought by the applicant were presented to the Court on 20 May 2021, information that might have been ascertained was not sought. This did not accord with the requirement in r 18.2 of the UCPR that all necessary applications be raised in the same motion. This requirement is also reflected in ss 58(2)(ii) and 59 of the CP Act. There was, as Mr Clancy's written submissions recognise, a decent interval (8 March 2021 to 20 May 2021), in which period the parties' solicitors already exchanged substantial correspondence and the applicant may have taken steps to obtain further information about the defendant's relations with other entities in the corporate group and, if dissatisfied with the information supplied, applied to the Court for orders to get it.
Contrary to Mr Clancy's belief, the respondent's putative non-disclosure of information that the applicant wanted, after 8 March 2021, did not leave the applicant with "no alternative (but) to press on with the amendments" and its application to join only Leda Holdings Pty Ltd and Mr Ell. To the extent that inquiries were actually stifled by the respondent to such degree that the applicant did not consider that it was ready to pursue joinder or to plead, it was arguably open for the applicant to apply to the Court to invoke court process to obtain that information before seeking the Court's determination of the applicant's applications for joinder, amendment and security. But at least if it was not arguable to do so then, it is harder to still to see why it is arguable to do so now after a contested application to amend has been determined.
It is not necessary to decide the question for present purposes, but in my opinion, there must be significant doubt about a party seeking to invoke the Court's exercise of procedural powers, such as joinder or amendment to a pleading, if it lacks faith as to whether those powers truly need to be exercised; but thinks that something else relevant to an application may be incomplete or missing. Judges asked to decide disputes, including interlocutory disputes, are entitled to assume that they are ripe for determination and, if they are not, are entitled to expect the parties to indicate if they are not. Otherwise, there is the risk of a waste of judicial time and resources. These considerations are reflected in s 57(1)(c) of the CP Act.
Another of the difficulties for the applicant is that all of Mr Clancy's points were, or could have been, the subject of argument before the Court when its application was heard on 20 May 2021. It is not to the point that submissions that were argued were not, in retrospect, argued as well as the applicant would have liked them to be. This does not justify re-agitating an application to advance the points again, or new points, in the hope that they might yield a different result.
Further, nothing that was said in argument by the respondent, or indicated by the Court in My Earlier Reasons, which, objectively, might have encouraged the notion that there were other potential defendants in the wings, which could not have been explored before the hearing occurred. In this respect Mr Clancy protests that he had not read the respondent's written submissions at the hearing on 20 May 2021 (and, I infer, the transcript) until after the hearing. But the applicant was represented by Counsel at the hearing. To the best of my recollection, the applicant's Counsel was supplied with the respondents' written submissions proximate to the point of time when the Court was supplied them. As I have indicated, Counsel for the applicant did not seek any extended period of time to consider the respondent's written submissions, complain that she was caught by surprise by their content, or sought opportunity to respond, in writing, to them (an opportunity which was offered to her at the hearing).
Further still, the applicant did not press for an adjournment of the hearing on 20 May 2021, or deferral of its applications for joinder and amendment even after purportedly learning, for the first time, matters which it now says justify re-orienting the sequence of further case-management directions; and, especially, deferring the requirement for it to amend pending completion of further requisitions to be made of the defendant.
Even after judgment on the applications was reserved, the applicant did nothing to indicate that it was taken by surprise by something the respondent's Counsel said, or wrote, in his oral and submissions for the Court; that there was something which was misrepresented or not disclosed, which was material to the applications. The applicant did nothing between the period when judgment was reserved (20 May 2021) to the publication of the judgment (28 May 2021). That suggests something in itself about the substance of the applicant's present complaint that matters that were material to the determination of the various applications were either misrepresented or not disclosed.
On multiple levels, this is not conduct consistent with a party's obligation to assist the Court to further the overriding obligations of case-management.
[11]
Practical consequences if the applications are acceded to
What the applicant now seeks would necessarily entail putting the respondent to work and expense, before it files its amended pleading. In effect, the applicant is saying to the Court that it made a forensic mistake in prosecuting its application only to apply to join Leda Holdings Pty Ltd (successfully) and Mr Ell (unsuccessfully) before taking steps to exhaust factual inquiries about whether there might be other entities to sue. It appears to be now girding its loins to potentially bring a new amendment application, or joinder application, involving potentially additional parties; or, at the very least, it seeks the Court's sanction to coerce the respondent to provide further information before it re-pleads. It is seeking orders requiring the defendant to do certain things which might, but possibly might not, enable it to bring new applications, down the line. It is, effectively, in the same position now that it was in before it started the proceeding in the first place: doubtful as to who to sue and is seeking, as at least one of the remedies, relief that is akin to an order for preliminary discovery.
This course would not justify any setting aside or variation of orders made, based as they were on the applications that were before the Court on 20 May 2021; and the way in which they were prosecuted and defended by the parties, represented as they were by Counsel.
They are, in substance fresh applications, made by a party which is subject to a subsisting order to provide security for costs and which has not availed itself of preliminary discovery nor brought the applications, when arguably it was open for it to do so, prior to the hearing on 20 May 2021.
The respondent raises certain additional formal points objecting to these applications. It says that the discovery being sought amounts to preliminary discovery, which is not now permissible. It says that there is no power to direct a defendant to provide particulars of correspondence; as distinct from court pleadings (such as a defence). It says that some of the documents which the applicant seeks may be privileged. It opposes any further application to amend. It is unnecessary, for present purposes, to consider the validity of these objections.
The plain design of the Court's orders made on 28 May 2021 was to limit the work (and cost) that the respondent needed to do in defence of the proceeding (on the statement of claim) until the applicant had provided security for its costs. It was consistent with that design that the applicant file an amended pleading (in accordance with My Earlier Reasons) before it was required to provide such security. An alternative, which was available to, and considered by the Court, prior to the making of the orders on 28 May 2021, was simply to make no other order other than that the applicant provide security for the respondent's costs.
The applicant's applications now would up-end that design. The applicant would require the respondent to provide limited discovery, answer what is, or are, in effect interrogatories and amend its own Defence before the applicant filed its amended pleading.
The Court is not attracted to that course. It would subvert the purpose and effect of that order for security if the respondent was now to bear additional expense before the applicant amended its pleading. Further, if the applicant is unable to meet the order that it provides security, and the proceeding is thereafter stayed or dismissed, the resultant effort on the part of the respondent will have been a waste of time and cost. The existing orders for the quantum of the security would also need to be revisited. The applicant notably did not propose, or accept, that it furnish additional security to meet the additional costs to be incurred by the respondent in complying with these orders, notwithstanding the Court's finding that it is likely that it will not be able to meet the respondent's costs, generally, should it lose in the ultimate event. To the contrary, elsewhere in Mr Clancy's written submissions, the applicant asks that the quantum of the order for security be reduced.
It is also inappropriate for the Court to accede, in effect, to a fishing expedition prior to the applicant filing its amended statement of claim, to determine whether there may be other potential defendants whom the applicant wishes to consider should be joined.
Although the letter of 8 March 2021 from the respondent's solicitor was supplied in conformity with what the respondent's solicitor described as a duty of disclosure to the Court, it is not self-evident to me that a party sued in litigation falls under a duty of disclosure to the other party to provide information which indicates that the pleader has chosen the wrong defendant to sue. There is force to Mr Kalde's point, made in his affidavit, that it is not conventionally the job of one party to make out its adversary's case. No authority was cited by Mr Chancy to support the novel application other than the generalised assertion that the respondent may be in default of case management obligations. To whatever extent the CP Act has been transformative in forcing parties and practitioners to consider the imperatives of case management, it has not, however, altered civil litigation as being adversarial in nature and does not provide dispensation for parties from turning their minds to the various statutory provisions and rules which might arm them sufficiently to commence or defend proceedings without depending upon their adversaries to plug the gaps in the pleading or proof of their cases.
The Court is not minded to accede to an application to subvert the procedural consequences that fall from an order, regularly made, that the applicant provide security, in all the circumstances referred to.
For all of these reasons, I am not persuaded that the dictates of justice support the applications represented by prayers 2, 3 and 4 in the plaintiff's notice of motion.
[12]
The expiry of the period in the grant for leave to amend
It is pertinent to note that in the circumstances that have occurred, the time for the plaintiff to file its amended pleading, as ordered on 28 May 2021, has now passed. By the operation of r 19.3 of the UCPR, the grant of leave has ceased to have effect, subject to the grant of an extension of time (r 1.12(1) of the UCPR). It now appears, reading Mr Clancy's most recent affidavit, that the applicant does not seek to have that extension; but is bent upon bringing fresh applications for joinder or amendment based upon a proposed amended pleading that is different to that which was before the Court on 20 May 2021; after coercing the respondent to provide further information. The Court would not lightly propose to extend an indulgence, by way of extension of time for a grant of leave, to a party where that would be futile; that is, where the party in whose favour the indulgence is granted is not willing to take advantage of it.
But if my impression of what Mr Clancy requests is wrong, I am prepared to grant the indulgence of extending, retrospectively, the time to file an amended pleading, as I had directed on 28 May 2021.
Otherwise, the effect of my orders on 28 May 2021 is that no further application by the applicant should be entertained by this Court unless and until such time as the applicant has complied with its obligation to provide security. In short, my orders are intended to ensure that the respondent is not put to expense until, at the earliest, 16 August 2021, by which point the applicant will have been required to provide the first tranche of security.
[13]
Consequential orders (prayers 6(a) and (c), 7 & 8)
The leave granted to the plaintiff to file and serve an amended statement of claim, under order 2 made on 28 May 2021 is extended to 6 July 2021.
To repeat what was said earlier in these reasons, order 7 made on 28 May 2021 is varied as follows:
"(7) The security is to be provided in the following tranches:
1. $30,000 to be paid by 15 August 2021;
2. $30,000 to be paid by 15 November 2021;
3. $30,000 to be paid by 15 February 2022;
4. $30,000 to be paid by 15 May 2022;
5. $30,000 to be paid by 15 August 2022".
Order 8, made on 28 May 2021, is also varied as a consequence of the variation to order 7, so that it is as follows:
"(8) The proceeding on the Amended Statement of Claim is to be stayed if security is not provided in compliance with order 7".
Save for those variations, the applicant has not succeeded in its remaining applications in its notice of motion.
The variation to the date in order 2 is a pure indulgence granted to the applicant. It should ordinarily pay the respondent's costs of such variation.
To the extent that the applicant succeed in obtaining a variation of order 7 (and correspondingly, order 8), that was the result of information not available at the earlier hearing (Mr Williamson's evidence of the prospective financial position of the applicant) but which, to some degree, may have been the subject of some argument at the hearing (such as the number of tranches) and also the grant of an indulgence extended by the Court in circumstances where no application was made, when it should have been, to stagger the provision for security over more tranches than the two in number which had been submitted by the respondent. The costs of applying for a variation of orders 7, and consequently order 8, made on 28 May 2021 are to be costs in the cause.
There is otherwise, no reason to set aside or vary any of the orders made on 28 May 2021, and no reason to make the consequential orders for costs identified in the applicant's notice of motion.
Other than the variations to the orders of 28 May 2021 indicated, the plaintiff's notice of motion dated 10 June 2021 is dismissed.
For the reasons indicated, save for the qualification that the costs of the variation to orders 7 & 8 be costs in the cause, the appropriate order for costs is, presumptively, an order that the applicant pay the respondent its costs of the notice of motion.
However, in the respondent's written submissions, it appears that application may be made for a special costs order.
I grant liberty to apply to the parties to seek any variation on the costs order relating to the plaintiff's notice of motion dated 10 June 2021, as follows:
1. The applicant for such variation file and serve a notice of motion with a supporting affidavit and written submissions not exceeding 3 pages by 7 July 2021;
2. The respondent for such variation file written submissions in response, not exceeding 3 pages (excluding attachment of evidentiary material) by 12 July 2021.
3. The applicant for such variation is to file written submissions in reply not exceeding a single page within 14 July 2021.
4. Such application for a special costs order will be determined on the papers.
5. The said submissions should be supplied, by email, to my Associate.
I have noted above multiple instances where the applicant's written submissions on these applications exceed the page limits directed by the Court. In the peculiar times in which we live, Courts are readily resorting to make determinations of interlocutory disputes 'on the Papers', to obviate logistical challenges associated with the normal requirement for parties, and legal representatives, to attend Court. Courts do so, however, in the expectation that procedures set in place, for the 'just, quick and cheap' determination of interlocutory disputes, are observed. Part of this is a requirement that directions for page limits are complied with. Whilst it is, of course, possible for page limits to be varied, for demonstrable good cause, Courts expect them to be complied with. Unilateral departure by parties from directions are not be condoned. It should not be necessary for me to say this, but the parties should understand that compliance with the directions in paragraph 116 is expected, and further, a party who exceeds the applicable page limit referred to therein should not expect its written submissions to be read, to the extent that they go over the stipulated limit.
[14]
Endnotes
A fourth affidavit of Mr Clancy's, being dated 20 May 2021, relating to the applicant's application for security against the respondent on the cross-claim, was rejected for lateness.
Affidavit of Mr Kalde, 22/4/21, pars 13-21 (Exhibit 2 at the hearing on 20 May 2021)
[15]
Amendments
30 June 2021 - Fixed typo
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Decision last updated: 30 June 2021
On 28 May 2021, I published reasons for judgment in interlocutory applications brought by both the plaintiff and the defendant in this proceeding (Ranclose Investments Pty Ltd v Leda Management Services Pty Ltd [2021] NSWDC 210) ('My Earlier Reasons'). The hearing of the applications occurred on 20 May 2021.
In the plaintiff's case, applications were brought, by way of a notice of motion (as amended, dated 19 May 2021) for amendment to its statement of claim (prayer 1), for joinder of Leda Holdings Pty Ltd and Mr Robert Ell (prayer 2) and for security for costs against Leda Management Services Pty Ltd, being a cross-claimant (prayers 5-7 (incl) and 10). In the defendant's case, it applied for an application for security for costs against the plaintiff.
The Court determined that leave be granted to the plaintiff to join Leda Holdings Pty Ltd (but not Mr Ell), the plaintiff should file an amended pleading to reflect the reasons in the judgment, but rejected the application for security against Leda Management Services Pty Ltd on the cross-claim. The Court also determined that the plaintiff should provide security for the defendant's costs. In terms of sequencing, the Court directed that the plaintiff file its amended pleading first, and then provide security, in two tranches.
Relevant provisions and principles
The applications present a combination of new applications that had not been brought in the amended notice of motion dated 19 May 2021 (prayers 2-4), a renewal of an application previously rejected (prayers 6(d) & 7), and applications to set aside or vary earlier orders under any or all of r 36.15, r 36.16 and r 36.17 (prayers 5, 6(a)-(d)).
Section 56 of the Civil Procedure Act 2005 (NSW) (the 'CP Act') identifies that its overriding purpose (and those of the Uniform Civil Procedure Rules 2005 (NSW) (the 'UCPR')) is "to facilitate the just, quick and cheap resolution of the real issues in the proceedings."
Section 57 elucidates the 'overriding purpose' identified in s 56 by reference to the objects of: (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; and (d) the timely disposal of the proceedings, and all other proceedings in the court, at a cost affordable by the respective parties.
Section 58(1)(a)(iii) of the CP Act provides that in deciding whether to make any order of a procedural nature, the court must seek to act in accordance with the 'dictates of justice'. By s 58(2)(a), in determining what are the dictates of justice in a particular case, the court must have regard to the provisions in ss 56 and 57 of the CP Act and may have regard to the list of considerations which appear in s 58(2).
Part 5 of the UCPR provides a regime for 'preliminary discovery'. Specifically, r 5.2(2) provides that a court may, upon application, make orders for the examination of a person or for the discovery of documents in the circumstances set out in r 5.2(1). Those circumstances are that it appears to the Court that the applicant, having made reasonable inquiries, is (relevantly) "unable to sufficiently ascertain the identity … of a person concerned for the purpose of commencing proceedings against the other person" (r 5.2(1)(a)) and "some person other than the applicant .. may have information, or may have or have had possession of a document or thing, that tends to assist in ascertaining the identity … of the person concerned."
Rule 18.6(1) of the UCPR provides that a party's notice of motion must include, so far as practicable, all applications that the party desires to make in relation to the proceedings and that, having regard to the nature of the proceedings, can conveniently be dealt with at the one time.
The Court's powers to set aside or vary orders (or judgments) are set out in rr 36.15, 36.16 and 36.17 of the UCPR. By its notice of motion, the applicant invokes each of these powers as alternative sources of power.
General approach to applications to set aside or review orders
Exhibited to Mr Clancy's affidavit in support of this application was a large bundle of documents amounting to 186 pages.
The applicant also served submissions in chief well in excess of the page limit (5 pages) directed by the Court. The briefest perusal of those submissions indicates that the applicant takes issue virtually with every adverse finding made against it that explained the Court's determination of the applications and its orders.
At the hearing of the original applications, on 20 May 2021 the applicant's Counsel read three affidavits of Mr Clancy [1] . The applicant's Counsel gave verbal (but did not supply to the Court written) submissions; during the course of which Counsel for the applicant also made oblique reference to an earlier affidavit of Mr Williamson, dated 5 June 2020, without actually reading it.
Certain pertinent circumstances, noting Mr Clancy's repeated references to the content of the respondent's written submissions at the hearing on 20 May 2021, and his evidence that he did not personally read the respondent's written submissions until after the hearing (and his inclusion, in the applicant's submissions "in reply", of numerous transcript references), include that the applicant's Counsel did not request additional time to consider the respondent's written submissions before addressing the Court; nor sought the opportunity to serve written submissions in reply to the respondent's written or verbal submissions.
Another common refrain in the applicant's submissions is that certain evidence or submissions made on the applicant's behalf were not addressed. This alleged omission was relied upon to partly justify the Court's exercise of its discretion to re-open and thereafter set aside or vary the orders. On an analogous application to the Court of Appeal to review earlier orders made by a single Judge of the Court, in Hassan v Sydney Local Health District (No.2) [2021] NSWCA 122, Bell P (Basten JA and Leeming JA agreeing) recently observed, at [15]-[19]:
"15. Just because a judgment may not mention or refer to every affidavit relied upon or submission made does not mean that that evidence and/or those submissions have not been considered …..
16. There is no necessity for as busy a court as the New South Wales Court of Appeal to refer in its interlocutory decisions to all evidence relied upon or submissions made in such circumstances: cf. Mohareb v Saratoga Marine Pty Ltd [2020] NSWCA 235 at [44]. Just as neither the need nor the appearance of justice require that reasons be given for every decision by a judicial tribunal, as McHugh JA (as his Honour then was) observed in Soulemezis v Dudley (Holdings) Pty Ltd (1987) 10 NSWLR 247 at 279 (Soulemezis), so too not every argument raised will need to be addressed in the context of a decision on practice and procedure, such as that of Gleeson JA, or a decision reviewing such a decision, such as was made in the review judgment. That is especially so where the submissions made are misconceived or repetitive or overly discursive.
17. To say this is not to detract from the central importance of reasons for judgment as outlined in cases …. Considerations of proportionality and the Court's obligation to give effect to the overriding purpose in s 56 of the Civil Procedure Act 2005 (NSW) call, however, for discriminating judgment by this Court as to where and how to strike a balance in dealing with motions and voluminous evidence of the kind that was before the Court for the purposes of the review judgment and as is before this Court on this motion.
18. To adapt a further observation of McHugh JA's in Soulemezis at [79], justice is a multi-faceted concept and the limited nature of judicial resources and the cost to litigants and the general public in requiring reasons on every argument …. must also be weighed. A similar observation was made by Basten JA in Resource Pacific at [48]:
"Transparency in decision-making is an important value, but it is not cost free, and may involve separate parameters of quantity and quality."
19.The same sentiment is also reflected in the statement in the joint judgment of French CJ and Kiefel J in Wainohu at [56], that the duty to give reasons does not apply to every interlocutory decision and that the "content and detail of the reasons to be provided will vary according to the nature of the jurisdiction which the court is exercising and the particular matter the subject of the decision."
In this case, the applicant filed its application to set aside or vary interlocutory orders within the 14-day period prescribed by r 36.16(3A) of the UCPR.
Rule 36.15 deals with the entitlement of a litigant, as of right, to have orders set aside for sufficient cause, if the order was made "irregularly, illegally or against good faith".
A recurring feature of the applicant's submissions in chief, and its submissions in reply, is that a misstatement, of evidence or in the respondent's submissions, is, individually or collectively, taken to constitute an 'irregularity' (although in the applicant's submissions in chief, they were more frequently characterised as 'slips') I do not accept that a misstatement, without more, constitutes an "irregularity" for the purposes of r 36.15 of the UCPR. If it did, it would provide ready passage for litigants, dissatisfied with the results of litigation, to undercut the principle of finality; a principle which is scarcely acknowledged by the applicant in its submissions. As is indicated in the commentary in Ritchie's Uniform Civil Procedure NSW (Lexis Nexis) ("Ritchie") [36.15.10] (omitting citations), 'irregularities' conventionally arise because of non-compliance with specific provisions governing the entry of an order and do not include: errors attributable to forensic decisions of parties, errors in the merits of the substantive decision or where a judgment is challenged on the basis of discovery of fresh evidence.
Further, even where an 'irregularity' (and thereby 'sufficient cause') is established, the power to set aside or vary an order remains discretionary. The power is not exercisable for irregularities which are inconsequential: Commonwealth Bank of Australia v Buffett (1993) 114 ALR 245. Common cases where the discretion is not exercised are where an irregularity has been waived, or condoned, or relates to a substantive matter not raised as an issue in proceedings: Ritchie at [36.15.18].
In Mohareb v State of New South Wales (No.2) [2021] NSWDC 215 ('Mohareb'), I referred to principles underlying the Court's exercise of its power to set aside and vary orders under r 36.16. I wrote:
"[15] The power to set aside an order under r 36.16, which is also discretionary in nature, is potentially exercisable where an applicant may demonstrate error in the Court's reasoning, because of misapprehension of the facts or law where such misapprehension cannot be attributed solely to the neglect or default of the applicant. But it is improper to invoke the power for the purpose of re-arguing a question decided after full argument: Wentworth v Woollahra Municipal Council (1982) 149 CLR 672 and Autodesk Inc v Dyason (No.2) (1993) 176 CLR 300. As Mason CJ said in the latter decision (at 301-2) that the exercise of a jurisdiction to open a judgment is to be "exercised with great caution, having regard to the importance of the public interest in the finality of litigation". His Honour added (at 303) that the purpose of the rule is "not to provide a backdoor method by which unsuccessful litigants can seek to re-argue their cases".
[16] In the decision in the matter of Aquaqueen International Pty Limited (No 2) [2014] NSWSC 947 at [2] and [3], Brereton J stated that the Court's power to vary or set aside orders under 36.16(3)(a) "is subject to the significant limitation imposed by the public interest in maintaining the finality of litigation, which requires great caution in the exercise of the power, especially where the variation sought would have the practical effect of reopening the proceedings to enable a significant rehearing. The power will be exercised in such circumstances as where it is established that the original judgment or order was affected by a misapprehension of law or fact or a failure to afford a proper opportunity to be heard, but it is not exercised so as to permit a general reopening of the case.
[17] Rule 36.16(3) plainly envisages variation of interlocutory orders, but not where the application for variation is, in substance or effect, an attempt to appeal against the original order: Woodcroft v DPP (Cth) (2000) 174 ALR 60 at [52], or, perhaps an attempt reargue the merits of what I had determined: Mahommed v Unicomb [2021] NSWCA 108 at [7]. Further, even if the application does not amount to a de facto appeal, or application to re-open, but amounts to the same or similar application being brought as was dealt with, a court should not alter an interlocutory order unless there has been a material change in circumstances since the application was heard, or the discovery of new material which could not reasonably have been put before the Court on the hearing of the original application: Brimaud v Honeysett Instant Print Pty Ltd (1988) 217 ALR 44 ('Brimaud'); also De Varda v Austin [2019] NSWCA 133".
When referring to the Brimaud principle, although I linked it to rule 36.16(3) above, the principle is conceptually distinct. The principle permits alteration of an interlocutory order, but not through the means of re-opening of a party's case. It is, as indicated, a fresh application, conventionally regarded as being based upon two requirements. First, there must be a material change of circumstances since the hearing of the original application and, secondly, there must be a discovery of material which could not reasonably have been put before the Court at the time of the hearing of the original application.
Amongst other submissions which the applicant made in reply, is that some of the authorities that have considered the scope of the Court's power to set aside and vary orders predate the enactment of the CP Act and are accordingly, outdated. No authority was cited for that extraordinarily broad submission. I do not accept that submission. Nothing that was said, for example, in Woodcroft, or Brimaud, is inconsistent with the provisions of the CP Act. The principles are too well-established to be overridden by a primary judge asked to review his or her own decision.
Another conspicuously novel submission made by the applicant was that if its arguments are in fact, to be properly characterised as arguments that amount to a de facto appeal against the orders in My Earlier Reasons, then this course is justified by the circumstance that neither party has the ability or inclination to appeal; and that the overriding test is the 'dictates of justice'. That submission is, of course, contrary to the authority for Woodcroft and would not and could not be sanctioned in any event. If it was accepted, it would give rise to the spectre that a party dissatisfied with the result in an interlocutory dispute could keep on trying to persuade the Court, which made the interlocutory order, that it should be altered. That would be plainly vexatious and, at any rate, is the antithesis of the principle of finality which is anterior to the exceptional exercise of the discretion of the power to set aside or vary orders.
Rule 36.17 is the 'slip rule', which permits an "accidental slip or omission, in … an order" (emphasis supplied) to be corrected. That power is discretionary. There is no time limit to correct an error of that kind: L Shaddock & Associates Pty Ltd v Parramatta City Council (No.2) (1982) 151 CLR 590 at 594-5.
The applicant's submissions in chief contain a litany of suggested omissions in My Earlier Reasons to consider certain evidentiary matters as amounting to 'slips'. But r 36.17, by its terms, is intended to address errors which arise from a "clerical mistake, or an accidental slip or omission". The rule is not intended to deal with matters of controversy or substance: Newmont Yandal Operations Pty Ltd v The J Aron Corp [2007] NSWCA 195 at [140]-[142], [185], [194]. It has been said that a useful litmus test is whether the supposed error, had it been drawn to the court's attention at the relevant time would have been corrected as a matter of course: Hatton v Harris [1892] AC 547 at 558. Rule 36.17 cannot be used to supplement or vary final orders by making substantive alterations to determine points that where not argued, considered or decided at the hearing: D'Angola v Rio Pioneer Gravel Co Pty Ltd [1977] 2 NSWLR 227. Further, as I had said in Mohareb at [20], the 'slip' rule is used to correct orders, not the reasoning underlying orders.
Although those observations concerned a different court, referred to a different procedural rule and were made in the context of an interlocutory application brought by a self-represented litigant, in my view they apply with just as much force to represented parties in relation to disputes on matters of practice and procedure. Further, I would, with respect, adapt those observations in reference to interlocutory applications before the District Court of New South Wales, another "busy" Court.
I would also add to those observations by saying that where, at an interlocutory application, voluminous material is tendered by parties represented by legal representatives, the Court is entitled to expect that the parties' legal representatives will draw to the Court's attention, pertinent parts of the evidence relied upon in framing submissions; whether they be written, or in the applicant's case on 20 May 2021, purely oral.