Reliance Financial Services Pty Ltd v La Hood

LEGISLATION CITED : (NSW) Uniform Civil Procedure Rules 2005

CASES CITED : Lemery Holdings Pty Ltd v Reliance Financial Services Pty Ltd [2008] NSWSC 1344

Reliance Financial Services Pty Ltd (plaintiff) Jamilie Josephine Joan La Hood (first defendant) PARTIES : Permanent Trustee Australia Ltd (second defendant) Permanent Trustees Victoria Ltd (third defendant) Swart & Associates Pty Ltd (fourth defendant)

COUNSEL : D A Allen (plaintiff) M K Rollinson (first defendant)

SOLICITORS : Proctor & Associates (plaintiff) William O'Brien (first defendant)

IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION

15776/07 Reliance Financial Services Pty Limited v Jamilie Josephine Joan La Hood

JUDGMENT (ex tempore) 1 His Honour: In these proceedings the plaintiff Reliance Financial Services Pty Ltd ("Reliance"), now in liquidation, claimed against the defendant Jamelie Josephine Joan La Hood possession of three properties and judgment for a monetary sum in respect of loans said to have been advanced by the plaintiff to the defendant. Some of those advances were made on various dates during the period 3 August 2001 to 15 July 2003 totalling some $1,145,000: in addition a sum of $13 million (including more than $12 million in interest) is said to be owed pursuant to a deed of 23 January 2002.

2 The plaintiff was prosecuting the proceedings until early 2008. Its Amended Statement of Claim was filed on 12 February 2008. The matter came before the Court on 10 March 2008 when directions for defences and cross-claims and affidavits were made. 3 According to Mr David Cassaniti, an accountant for the plaintiff, an administrator was appointed on 22 April 2008. 4 The matter returned before the Court on 2 May 2008, when there were appearances for the plaintiff and defendant. The Court was apparently advised that an administrator had been appointed to the plaintiff, and that the administrator would determine the future of the proceedings. The Court noted that the plaintiff company was now in administration and that the administrator was considering whether the matter would proceed, and adjourned the proceedings to 16 May 2008. 5 On 16 May there was an appearance for the defendant only, with the plaintiff not appearing after being called three times. The Court adjourned the proceedings, as the court file records, to 6 December 2008, and directed that a letter be issued to the plaintiff pursuant to Uniform Civil Procedure Rules r 13.6.

6 On 19 May, the Court issued a letter to the solicitors for both parties, advising that the proceeding were adjourned for directions on 8 December 2008 at 9am (6 December being a Saturday). At that stage the solicitor on the record for the plaintiff was Proctor & Associates, but Pateman Legal were acting for the administrator. Mr Jim Kekatos, who had conduct of the matter from Proctor & Associates, said he received the letter notifying the December date and discussed it with the solicitor who had conduct of the matter at Pateman Legal, asking her to ensure there was an appearance on 8 December. 7 After receipt of the Court's letter of 19 May, the defendant's solicitor, Mr O'Brien, wrote to the Court on 22 May, recording that according to his notes that the Registrar had adjourned the matter to 6 June 2008 (not 8 December), and requesting that the matter be corrected. On 27 May, Mr O'Brien wrote again to the Court, referring to a telephone message apparently left by the Registry on 26 May in which the Registry confirmed its view that the matter had been adjourned to 8 December. Mr O'Brien pressed that that was in error and asked that the matter be relisted on 6 June 2008, and alternatively, that an appointment made for him to see the Registrar, and "correct this important error". As a result, the Registry had the matter relisted for 6 June 2008.

8 On 28 May, the Registrar wrote to Proctor & Associates advising that the matter was listed on 6 June and not 8 December as previously advised; that on the last occasion there was no appearance by the plaintiff; and that if there was no appearance on 6 June the Court may dismiss the proceedings. Mr Kekatos says that he did not see or take any notice of this subsequent letter, since his firm was no longer acting, the matter being in the hands of Pateman Legal; although at that stage he had filed no Notice of Ceasing to Act and Pateman Legal had filed no Notice of Change of Solicitor. In any event, there was no appearance on behalf of the plaintiff on 6 June 2008, and the Court made an order dismissing the proceedings pursuant to rule 13.6.

9 On 28 July 2008, Reliance, having gone into liquidation as a result of a winding up order made on 28 June 2008, an application was made by interlocutory process in proceeding 2445/08 for a declaration that the loans, the subject of the proceedings, were assets of Reliance Financial Services NSW Pty Limited ("Reliance NSW") and that that company had been appointed trustee of the relevant trusts in place of Reliance Financial Services. It is unclear at this stage whether the service copy named Ms La Hood as a party, although one of the orders claimed in it referred to the loans the subject of the present proceedings. The interlocutory process on the Court file does not name Ms La Hood as a respondent, but order 2(g) refers specifically to the La Hood proceedings as one in respect of which an order was sought that Reliance NSW be given conduct of the proceedings. However, it appears that that interlocutory process was served on Mr O'Brien's office on 28 July 2008. In circumstances where Ms La Hood was not a party to proceedings 2445/08, except perhaps as a respondent to the interlocutory process, and where the proceedings against her had been dismissed, it is hardly surprising that Mr O'Brien might not have given close attention to the interlocutory process.

10 Meanwhile, on 25 July 2008, Church & Grace Solicitors filed a Notice of Change of Solicitor in the present proceedings "to act as the plaintiff's solicitors in these proceedings in place of Stephen Pateman", having been appointed to act by Reliance's liquidator.

11 On 11 November 2008, in proceedings 2445/08, I declared that Reliance NSW had been appointed trustee of the Reliance Discretionary Trust in place of Reliance and that the loans, the subject of various proceedings including the present proceedings, were assets of the Reliance Discretionary Trust. As it appeared that the next requisite step would be the substitution of Reliance NSW for Reliance in each of the proceedings, including the La Hood proceedings, I directed that the La Hood proceedings be listed before me on 24 November and that Reliance NSW notify Ms La Hood of the date, time and place of that appointment, of the substance of the orders made, of the proposal that on 24 November an order be made in each proceeding substituting Reliance NSW for Reliance, and providing a copy of my reasons for judgment.

12 On 21 November, the Friday before 24 November, the solicitors for Reliance NSW notified Mr O'Brien that on Monday 24 November they would be seeking an order setting aside any order dismissing the proceedings, leave to file an Amended Defence and Cross-Claim, directions in respect of evidence and pleadings, and a listing before the Registrar with a view to allocating a hearing date. The letter did not refer to the proposed substitution of Reliance NSW, nor did it enclose a copy of my reasons. Mr O'Brien replied later on 21 November, "I have no idea what you are talking about. This matter was dismissed with costs on 6 June 2008". It seems that Proctor & Associates had become aware of the order dismissing the proceedings some time, but not long, before 21 November 2008.

13 On 24 November, being unsatisfied that appropriate notice had been given to Ms La Hood, I granted leave to Reliance NSW to file and serve by 28 November a Notice of Motion claiming an order setting aside the order of dismissal made on 6 June, such motion to be returnable on 8 December 2008. That had not been done by 8 December when, on Reliance NSW's application, I adjourned the proceedings to 19 December and extended time for filing the relevant motion to 11 December 2008. 19 December proved inconvenient for Mr O'Brien, and at his request the application was adjourned to today.

14 By its Notice of Motion filed on 12 December, Reliance seeks an order setting aside the order of dismissal made on 6 June 2008 and a further order substituting Reliance NSW for Reliance (in liquidation) as plaintiff. 15 The proceedings were dismissed in circumstances where they had been actively prosecuted until May 2008, but the plaintiff then failed to attend before the Court twice. That occurred in circumstances where the plaintiff was in administration, and there was doubt as to who was entitled to represent it. It occurred also in circumstances where the plaintiff had been notified, initially at least, that the proceedings had been adjourned until December but the matter was then relisted on 28 May for 6 June, on relatively short notice.

16 Suffering the dismissal of proceedings, in which a very large sum of money and property is at stake, for that type of default in that context is a very serious and, in my view, excessive price; all the more so when some of the transactions in question are more than six years of age and the Reliance interests might encounter limitation difficulties were they to be compelled to commence fresh proceedings. The defendant has not adduced any evidence of prejudice, and though I do not overlook that type of prejudice which arises from the resurrection of proceedings which the defendant was entitled to think was over, on balance, I do not think that prejudice begins to approach the prejudice which the plaintiff would suffer from the permanent dismissal of these proceedings. 17 In my view, therefore, the order for dismissal should be set aside.

18 My judgment in Lemery Holdings Pty Ltd v Reliance Financial Services Pty Ltd [2008] NSWSC 1344 explains why I am of the view that Reliance NSW should be substituted for Reliance (in liquidation). Assuming that Ms La Hood was not on notice, or not on adequate notice, of that hearing - a matter which is debatable - one of the reasons for directing that the matter be listed and affording her an opportunity to be heard on the motion in this respect was so that she could, if she wished, reargue the issue or raise any matters particular to her present case.

19 Mr Rollinson - pragmatically - if I may say has taken the view that on questions of general principle it would be unlikely that I would depart from the views reflected in the 11 November decision. He has sought to raise no matters of particular special relevance to Ms La Hood's case in that respect.

20 Accordingly: 1. I order that the order made on 6 June 2008, dismissing the proceedings pursuant to UCPR r 13.6, be set aside.

2. I order that Reliance Financial Services NSW Pty Limited be substituted for Reliance Financial Services Pty Limited in liquidation as plaintiff in the proceedings.

3. I direct that within 14 days the substituted plaintiff file and serve its Further Amended Statement of Claim.

4. I adjourn the proceedings to 31 March 2009 in the Common Law Possession List. **********

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