The amendments to the defence
22 The respondent characterises the reasons for the amended defence as being, first, in order to bring the defence into line with the evidence that has been served in the proceeding, and, second, in order to take account of further relevant documents which have only recently been discovered by it during the course of work undertaken in complying with its discovery obligations.
23 Most of the proposed amendments to the defence are relatively innocuous. They are in the nature of correcting errors and bringing the defence into line with the affidavits that have been filed by the respondent. Although every single proposed amendment, including amendments of the most innocuous kind, is objected to and opposed by the applicant, there is no proper basis to oppose the amendments except for the proposed amendments to paragraph 14 which, as will been seen, are substantive and raise special considerations.
24 The proposed amended defence seeks to delete much of paragraph 14 and replace it with a different version of events with regard to the signing of the loan and mortgage documents. The proposed amendments include the following averments that are relevant for present purposes:
(1) On or about 24 December 2014, Mr Hadfield telephoned the applicant and informed her that the loan documents and the mortgage documents would be posted to her.
(2) On 24 December 2014, Mr Hadfield completed, signed and dated an internal bank document by which he requested that the loan and mortgage documents be posted to the applicant.
(3) On or about 31 December 2014, a letter of that date was posted to the applicant which enclosed the loan and mortgage documents to be executed by the applicant.
(4) The loan and mortgage documents were received by the applicant.
(5) The applicant signed the loan agreements on or about 14 January 2015 and the mortgage documents on or about 12 January 2015.
(6) The applicant's signing of the two mortgage documents was witnessed by Elmedina Durakovic who was not an employee, agent or officer of the bank.
(7) On or before 21 January 2015, the applicant provided the respondent with signed copies of the documents that had been sent to her on 31 December 2014.
25 The significance of those amendments is immediately apparent. Instead of accepting a centrally important aspect of the applicant's case, namely that she executed the documents in the presence of the respondent's relevant lending officer, the respondent now seeks to say that the applicant executed the documents at a location remote from it and witnessed by someone not employed by it.
26 The respondent requires leave to amend paragraph 14 of the defence, not only because r 16.51 of the Federal Court Rules 2011 (Cth) does not apply and thus under r 16.53 leave is required, but additionally because of the application of r 26.11(2). That rule provides that in the absence of consent from the other party, a party cannot withdraw an admission, or any other plea that benefits another party, in a defence or subsequent pleading unless the court gives leave. The existing paragraph 14 of the defence is in material respects a pleading that benefits the applicant by accepting material parts of her version, and the proposed amendment seeks to withdraw that by putting forward a different version that is at odds with the applicant's version.
27 The applicable principles with regard to whether leave to withdraw an admission or other pleading that benefits another party are, relevantly, the following, noting that for simplicity I will refer only to the withdrawal of an admission:
(1) The court has a broad discretion to weigh up all matters with the overall question being to ensure that there is a fair trial: Jeans v Commonwealth Bank of Australia Ltd [2003] FCAFC 309; 204 ALR 327 at [18] and [23] per Hill, Madgwick and Conti JJ.
(2) The court will require an explanation for the making of the admission which is now sought to be withdrawn; the explanation must be a sensible one based on evidence of a solid and substantial character: Celestino v Celestino [1990] FCA 449 at 8 [12] per Spender, Miles and von Doussa JJ (noting that the AustLII MNC for this case is [1990] FCA 299).
(3) The object of the courts is to decide the rights of the parties, and not to punish them for mistakes they make in the conduct of their cases; if the mistake is not fraudulent or intended to overreach, can be corrected without injustice to the other party, and if not corrected will not lead to a decision on the real matters in controversy, it should generally be corrected: Celestino at 7 [10].
(4) The overriding consideration is the interests of justice: Australian Competition and Consumer Commission v Construction, Forestry, Mining and Energy Union [2007] FCA 1390 at [4] per Finn J.
(5) The court will not lightly permit a party to withdraw an admission where the other party has acted to its detriment on the admission or is otherwise prejudiced by the withdrawal; if the other party has in good faith relied on the admission to its detriment so as to give rise to an estoppel the court will not permit the admission to be withdrawn: Celestino at 10 [14].
28 There are also other relevant factors to be considered that are applicable more generally to the amendment of pleadings. In Australian Competition and Consumer Commission v Productivity Partners Pty Ltd (No 2) [2020] FCA 863 at [6], with reference to Aon Risk Services Australia Ltd v Australian National University [2009] HCA 27; 239 CLR 175 at [5], [30], [71], [90], [93], [94], [98] and [102], I identified those factors to include the following:
(1) prejudice to another party that cannot be adequately compensated by an award of costs, which would include the inevitable prejudice of unnecessary delay where that exists;
(2) inefficiencies in the use of the court as a publicly funded resource arising from the vacation or adjournment of trials;
(3) the need to maintain public confidence in the judicial system, which has a potential to be lost where a court is seen to accede to applications made without adequate explanation or justification;
(4) the objective of doing justice between the parties;
(5) the objective that the pleadings identify the "real" issues between the parties;
(6) the overriding purpose of the civil practice and procedure provisions in s 37M of the Federal Court of Australia Act 1976 (Cth), namely to facilitate the just resolution of disputes according to law and as quickly, inexpensively and efficiently as possible; and
(7) the nature and the importance of the amendment to the party that is seeking it.
29 On its interlocutory application for leave to amend the defence, the respondent initially relied on the affidavit of Ms Salameh that was sworn on 10 March 2021, which was read, and it tendered the affidavits of Mr Hadfield and Mr Cussans as evidence of what they have deposed to, to show what evidence the respondent will adduce at trial.
30 Ms Salameh's affidavit did not give an explanation for why paragraph 14 of the defence came to be drafted in the terms in which it was, in circumstances where Mr Hadfield's affidavit that was subsequently served as part of the respondent's evidence in the principal case was in significantly different terms. In that regard, Mr Hadfield's first affidavit identified that he was the lending manager at the respondent's Wynyard Branch who dealt with the applicant when she first came into that branch in mid-October 2014 to discuss re-financing her loans. Mr Hadfield said that he had a number of meetings with the applicant at the Wynyard Branch throughout October 2014 and that he had subsequent meetings with her in November 2014 and December 2014. He then said the following:
74 Following our previous meeting on or about 23 December 2014, I caused two Residential Loan Agreement Offers (Loan Offers) to be made by the credit team on 31 December 2014. Copies of the Loan Offers are at tab 11.
75 From 25 December 2014 until 12 January 2015 I was on leave and working remotely and was not working at the Wynyard Branch.
76 As I was on annual leave, I was not involved in the issuance of the Loan Offers to Ms Selvaratnam or the execution of the mortgage agreements.
77 Having had the opportunity to review the CLAS Notes Summary (at tab 2) I can see that a representative of mortgage services, Luisa Sidoti, sent the Loan Offers and mortgage documents to Ms Selvaratnam on 2 January 2015. The documents were sent to the address at 14/24 Wolseley Street (although it is misspelled).
31 In his second affidavit that was served in the principal proceeding, Mr Hadfield gave further details with regard to records in the custody of the bank from which he concluded that the relevant contract and mortgage documents were posted to the applicant on 2 January 2015. He then stated the following:
28 I did not see or meet Ms Selvaratnam on or about 14 January 2015. I deny that she executed the Loan Offers in my presence. I should add that when meeting with customers for the purpose of the execution of loan offers, it was my usual and invariable practice to do the following:
(a) provide printed copies of the loan contracts to the customer and verbally discuss the contents of such contracts in detail;
(b) direct the customer to the critical aspects of the loan contracts (including but not limited to the loan amount, repayment obligations, interest rates, and obligations under relevant mortgage provisions); and
(c) witness the customer's signature on mortgage documents in my capacity as a Justice of the Peace.
32 That evidence is clearly contradictory to what is pleaded in paragraph 14 of the defence.
33 It was submitted on behalf of the applicant that Mr Hadfield's first affidavit was not contradictory to the respondent's original defence. This was because in it he said that in the period October 2014 to January 2015 he had had several meetings with the applicant. In responding to a particular paragraph of the applicant's affidavit he denied that the applicant said words to him as she alleged, but he did not deny that the meeting at which she said that she had said those words had occurred. It was submitted that in those instances Mr Hadfield had dealt specifically with matters supportive of the applicant on whether he had met her at the branch of the bank 14 January 2015, whereas when he said that he had not had any dealings with the applicant after 24 December 2014 when he went on leave that was merely a general statement.
34 Patently, the reverse is true. Mr Hadfield specifically denied having any dealings with the applicant after 24 December 2014 when he went on leave and mentioned the time period October 2014 to January 2015 as the period in which he had had several meetings with the applicant as that was the general period to which he was responding - that is, the period in which the applicant had had dealings with the respondent. I therefore do not accept that Mr Hadfield's first affidavit supports the defence as originally pleaded.
35 On the state of the evidence at the hearing of the application on 30 March 2021, it was fully explained why the respondent wished to amend paragraph 14 of its defence in the manner indicated, namely to bring the defence into line with the evidence that the respondent had served and to take account of further documents that had been discovered. But what seems to have been overlooked was the need to give an explanation of how the original paragraph 14 came to be pleaded in the way in which it was. Recognising the importance of the amendment and concerned to do justice between the parties, including not deciding the amendment on the basis of the apparent oversight, I gave the bank the opportunity to file an affidavit giving such an explanation by 5.00 pm that day and I stood the matter over until 2.00 pm the following day.
36 At about 5.30 pm on 30 March 2021, the respondent filed a further affidavit of Ms Salameh. Her affidavit explained the following:
(1) In the weeks prior to filing a defence, steps were taken to identify the loans officer
referenced in the applicant's statement of claim.
(2) The respondent identified the loans officer as Mr Hadfield, who, as stated above, had been an employee of the respondent until about June 2017.
(3) Shortly after Mr Hadfield was identified and located, Rebecca Laban, a special counsel for the respondent, arranged a telephone meeting with Mr Hadfield for the purpose of discussing specific allegations made against the respondent in the statement of claim. Due to the COVID-19 pandemic and Mr Hadfield's busy work commitments, a telephone meeting was arranged for 8 September 2020, which was two days before the defence was due to be filed and served.
(4) On 8 September 2020, a telephone meeting was held between Mr Hadfield, Ms Laban, a solicitor for the respondent, junior counsel and a senior solicitor at Westpac. During the telephone meeting:
9 …
(e) Mr Hadfield was provided with some limited background documents by courier a few hours prior to the Telephone Meeting taking place. There was some urgency in conducting the Telephone Meeting because the defence was due to be filed on 10 September 2020.
(f) During the Telephone Meeting, Mr Hadfield was asked about his recollection of his interactions with Ms Kengaranee Selvaratnam (Ms Selvaratnam), the Applicant in the Proceeding, during the period from about October 2014 to January 2015.
(g) Within the time available, Mr Hadfield gave his recollection about a number of allegations raised by Ms Selvaratnam in the Statement of Claim. At that time of the Telephone Meeting, Mr Hadfield was asked to recollect events from approximately 6 years earlier, in circumstances where he had not had any dealings with Ms Selvaratnam or anyone from the Respondent in relation to the matter prior to his contact from NRF on about 4 September 2020, as detailed above.
(h) During the Telephone Meeting, Mr Hadfield said that he did not have a particular recollection of meeting with Ms Selvaratnam to sign the loan documents and that in most cases, where a customer's application for a loan had been approved, his usual practice was to arrange for the customer to come into the branch where he worked and sign the relevant loan documents, at which time he would provide a summary of the documents and also witness the signing of the mortgage, which he could do as a Justice of the Peace.
(5) Following the telephone meeting, steps were quickly taken to prepare the defence.
(6) In circumstances where Mr Hadfield had said that he did not have a particular recollection of meeting with the applicant to sign the relevant loan documents, the defence was prepared in accordance with Mr Hadfield's usual practice. It is now clear that the way in which paragraph 14(a) was drafted was a mistake.
(7) Mr Hadfield was not provided with the defence either before or after it was filed and he did not approve or authorise its contents.
(8) On 4 December 2020, a second meeting was held with Mr Hadfield for the purpose of preparing his evidence in chief. By that time, Mr Hadfield had had time to reflect on the events of 2014 and 2015 and his dealings with the applicant, and was provided with a copy of the applicant's affidavit dated 18 November 2020, which detailed the applicant's dealings with the respondent.
(9) During the second meeting, Mr Hadfield was adamant that he was not personally involved in the issuance of the loan offers to the applicant on 31 December 2014 and he was on annual leave at the time, that the relevant loan documents and mortgage were issued and sent by the respondent's mortgage services department, that he did not meet with the applicant at the time she signed the loan contracts and mortgage documents, and that his last contact with the applicant was a telephone discussion on 24 December 2014.
37 At the resumed hearing of the interlocutory application on 31 March 2021, Mr King, who appeared for the applicant, said that he was not in a position to deal with the matter that afternoon. In particular, he said that he wished to file an affidavit by the applicant dealing with the prejudice that the withdrawal of the existing paragraph 14 would create and also to explore the possibility of having subpoenas issued. Because the respondent had been granted an indulgence to file the further affidavit, and the applicant had had very little time to deal with it, in the interests of justice I stood the matter over so that the applicant could further consider her position, file an affidavit and take such other steps as she may be advised. In order to accommodate the availability of Mr King who was not available for a lengthy period of time, the matter was stood over until 10 May 2021.
38 The applicant filed a further affidavit on 12 April 2021. The affidavit contained mostly submissions and contentions with regard to why I should not accept Ms Salameh's explanation for how paragraph 14 of the defence came to be pleaded in the way in which it was and why the respondent now wishes leave to amend it. None of that was helpful, or admissible. The affidavit also sought to reply to Mr Hadfield's substantive version of events with regard to the execution of the loan and mortgage documents. That is also not helpful as it can be accepted that the applicant and Mr Hadfield have different versions of those events. The question before me at this stage is whether leave should be granted to the respondent to plead Mr Hadfield's version so as to be able to advance that version at trial with the result that the two competing versions will be before me at trial, not to choose between those versions at this stage.
39 On the prejudice that she would face if I were to allow the amendments, the applicant deposed to the following:
(1) Her solicitors would have to consider whether to reopen the pleadings "which have been completed and otherwise closed."
(2) Her solicitors would have to "recast the whole case of and concerning the unconscionable and wrongful conduct of Mr Hadfield."
(3) She would have to pay additional costs "for reopening the case."
(4) She has suffered considerable personal distress and anguish.
(5) There is a risk to her case and delay "in starting it all over again, which will require answering 22 proposed amendments to the defence."
(6) She is a person "of small means and only a part-time employee" and feels that she is "being crushed by this dispute."
40 Save for some documents which were tendered which I will come to, the applicant did not depose to or adduce any other evidence relevant to the exercise of my discretion.