Slater v Guo

Background

1. These proceedings concern a contract for sale dated 28 October 2021 of an apartment in Forestville, Sydney (the Property) entered into between the plaintiff as vendor and the defendant as purchaser for a price of $1,402,000 (Contract). The defendant paid the deposit of $140,200 to the stakeholder under the Contract. The date for completion under the Contract was 15 December 2021 but completion did not occur and, following the issue of a notice to complete, the plaintiff terminated the Contract by a notice of termination issued to the defendant on 25 January 2022.
2. On 28 January 2022, the plaintiff commenced these proceedings. The relief sought is a declaration that her notice of termination was valid, and claims for the deposit, damages for her loss on the resale of the Property (less the deposit), interest and costs.
3. On 20 December 2022, the stakeholder under the Contract paid the deposit of $140,200 into Court.
4. It is not in dispute that due to the impecuniosity of the defendant, it is likely that the only amount which the plaintiff will be entitled to recover, if she is successful, is the deposit of $140,200 (plus interest earned thereon).
5. On the current pleadings, the defendant's case is that she did not receive a valid notice to complete and that consequently the notice of termination was wrongfully issued, or alternatively, the plaintiff had earlier repudiated the Contract. By her current cross-claim, the defendant seeks damages for wrongful termination of the Contract.
6. The plaintiff filed her evidence on 1 September 2022 and the defendant filed her evidence on 14 November 2022. On 10 February 2023, the matter was set down for a hearing on 27 July 2023 with an estimate of two days.
7. On 25 July 2023, the matter came before the Equity Duty Judge, Hammerschlag CJ in Equity, as a consequence of the previous solicitors for the defendant having ceased to act for her on 24 July 2023. His Honour referred the defendant to the Registrar for referral to a barrister or a solicitor on the pro bono panel for legal assistance.
8. When the matter came on for hearing on 27 July 2023, I granted the defendant's application to vacate the hearing date. The defendant was self-represented and relied on an affidavit in which she said that she was not fluent in the English language, was suffering from depression and anxiety, and that following the referral referred to in the previous paragraph, a barrister had indicated he was prepared to act for her if the hearing was adjourned. The affidavit was supported by a medical certificate. I adjourned the hearing to 29 August 2023, and ordered the defendant to pay the plaintiff's costs thrown away by the vacation of the hearing.
9. The matter came before the Court again on 16 August 2023. Mr Tang of Counsel appeared for the defendant and informed the Court that there was a new cause of action based on an allegation of unconscionable conduct which the defendant wished to raise in the proceedings. I gave leave to the defendant to file a notice of motion for amendment of her cross-claim by 17 August 2023. As noted above, a notice of motion was filed by the defendant on 18 August 2023.
10. At a subsequent directions hearing on 21 August 2023, I vacated the hearing date of 29 August 2023 and made orders for the service by the defendant on the plaintiff of a revised draft of the proposed amended defence and amended cross-claim (draft amended pleadings), affidavit evidence from the plaintiff setting out her evidence as to the facts in the draft amended pleadings and referred the parties to mediation. A mediation took place on 15 September 2023 but was unsuccessful.
11. Ultimately, the defendant served an affidavit sworn on 26 September 2023 setting out her evidence as to the facts set out in the draft amended pleadings and served a further version of the draft amended pleadings.
12. On 26 September 2023, I listed the defendant's notice of motion for hearing on 24 October 2023 and made orders for the defendant to serve a further version of her draft amended pleadings by 3 October 2023. The latter order was made because the defendant's counsel indicated that some further amendments to the drafts previously served were necessary.
13. On 4 October 2023, without leave, the defendant purported to file an Amended Defence and Amended Cross-Claim. On 20 October 2023, I ordered that the filing of these documents was voided.
14. On the morning of the hearing of the defendant's motion, the defendant served on the plaintiff a further version of the draft amended pleadings. No objection was taken to the late service of these documents.

Proposed new claims

1. The draft amended pleadings seek to raise two new causes of action. First, the defendant alleges that the real estate agent which acted as the vendor's agent under the Contract and the principal of that firm engaged in conduct which was unconscionable within the meaning of s 20 of the Competition and Consumer Act 2010 (Cth), Sch 2 - Australian Consumer Law. They are both to be joined as cross-defendants (for convenience, I will refer to them collectively as the "Agent"). The essence of the allegations can be summarised as follows: 1. Over the period from December 2019 to October 2021, through consistent and regular interaction between the Agent and the defendant, the Agent represented to the defendant that it was acting for the defendant and in her best interests, and would assist her to purchase a property. 2. In the course of that relationship the Agent was aware and observed that the defendant exhibited special disabilities from which she suffered and continued to suffer, including an inability to speak English fluently, only basic comprehension of the English language, no real experience in real property transactions, an impecunious financial position, and a psychiatric or psychological disorder. 3. Between 27 September and 28 October 2021 the Agent represented to the defendant that the Agent would act for the defendant as a "buyer's agent" to purchase the Property. 4. In or about 22 October 2021, the Agent was advised by a mortgage broker associated with the Agent that the defendant could not obtain finance. 5. The defendant signed the Contract as a result of undue pressure and coercion brought to bear on her by the Agent. 6. The Agent represented to the defendant that all purchasers of real property in Australia provide a certificate under s 66W of the Conveyancing Act 1919 (NSW) and exerted pressure upon and coerced her to obtain a s 66W certificate.
2. The second claim is made against the solicitors who acted for the defendant on the purchase (who are to be joined as the fourth cross-defendant). This is essentially that they were negligent in failing to properly advise the defendant on her cooling off rights when they provided a s 66W certificate in respect of the Contract. By reason of that failure, in so far as the defendant is liable to the plaintiff pursuant to the claims made in the statement of claim, the defendant seeks damages from the fourth cross-defendant.
3. The effect of the proposed amendments, if allowed, would be to raise two new causes of action, one alleging unconscionable conduct by the Agent who is alleged to have been acting as agent for both the plaintiff and the defendant, and one alleging negligence by the solicitor who acted for the defendant on the purchase transaction in relation to the s 66W certificate.

Reasons

1. The application is brought pursuant to s 64 of the Civil Procedure Act 2005 (NSW), which gives the Court a discretion to permit an amendment of a pleading, subject to the overriding purpose stated in s 56 being to facilitate the just, quick and cheap resolution of the real issues in the proceedings. The requirement for a just resolution is to be understood in light of the other purposes stated in s 56, being the need for the resolution of the real issues also to be quick and cheap. As the plurality put it in Aon Risk Services Australia Limited v Australian National University (2009) 239 CLR 175; [2009] HCA 27 at [98]: Speed and efficiency, in the sense of minimum delay and expense, are seen as essential to a just resolution of proceedings. This should not detract from a proper opportunity being given to the parties to plead their case, but it suggests that limits may be placed upon re-pleading, when delay and cost are taken into account. … It cannot therefore be said that a just resolution requires that a party be permitted to raise any arguable case at any point in the proceedings, on payment of costs.
2. In addressing an application to amend a pleading, the following factors have been identified as relevant to the exercise of the Court's discretion (Kelly v Mina [2014] NSWCA 9 at [47]): (a) Whether there will be substantial delay caused by the amendment; (b) The extent of wasted costs that will be incurred; (c) Whether there is an irreparable element of unfair prejudice caused by the amendment, arising, for example, by inconvenience and stress caused to individuals or inordinate pressures placed upon corporations, which cannot be adequately compensated for, whatever costs may be awarded; (d) Concerns of case management arising from the stage in the proceeding when the amendment is sought, including the fact that the time of the court is a publicly funded resource, and whether the grant of the amendment will result in inefficiencies arising from the vacation or adjournment of trials; (e) Whether the grant of the amendment will lessen public confidence in the judicial system; and (f) Whether a satisfactory explanation has been given for seeking the amendment at the stage when it is sought.
3. In the present case the factors I regard as relevant are (a), (b), (c) and (f).
4. In relation to delay, there has already been significant delay caused by the proposed amendment and if the application is granted there will be further significant delay. The new causes of action would require joining three new parties to the proceedings and there will be a real factual contest requiring evidence from three or four new witnesses regarding the events surrounding the execution by the defendant of the Contract. The parties estimate that the hearing would take three days (compared to one day on the current pleadings). Due to the Court's existing allocation of hearing dates, if the application is granted the hearing could not occur until February or March next year at the earliest.
5. In relation to wasted costs, Counsel for the defendant frankly conceded that the amended pleadings raise an entirely new and different case in place of the case currently pleaded (although I note that the draft amended pleadings do not formally remove the defendant's existing claims).
6. The evidence of the plaintiff's solicitor, which was not contested, is that the plaintiff has incurred costs to date of $97,818.97 (including GST). Even if the plaintiff is not able to recover, on assessment, all of these costs, it is clear that the wasted costs of the plaintiff if the leave to amend is granted are very significant and given the impecuniosity of the defendant, the plaintiff's prospects of recovering those costs and any additional costs, if she is ultimately successful in the proceedings, are very low. It also follows that the costs of the proceedings, as the position currently stands, are already quite disproportionate in comparison to the amount which the plaintiff can reasonably expect to recover if successful, being the deposit of $140,200. I regard the wasted costs, and overall costs compared to the amount likely to be recovered, as very significant factors against allowing the amendment.
7. In relation to prejudice, I consider that there will be unfair prejudice occasioned to the plaintiff from the amendment. She is an individual litigant who will, if the amendment is allowed, be required to meet an entirely new case of unconscionable conduct based on alleged conduct of others (ie the Agent) rather than herself, which will potentially expose her to further costs which she is unlikely to recover if ultimately successful in her claim. As the plurality indicated in Aon it is relevant to take into account the strain which litigation imposes on individual litigants in relation to both cost and delay: Aon at [100]-[101].
8. Further, the claim of unconscionable conduct relates to conduct of the Agent at a time when, on the defendant's case, the Agent was acting as agent for the defendant. There is a significant element of injustice in requiring the plaintiff to be drawn into a dispute between the defendant and the Agent in circumstances where she is unlikely to recover her costs of meeting it.
9. In relation to the explanation for the delay in bringing the application, the only explanation given by the defendant is that it resulted from a change in her legal representatives following the vacation of the hearing date. However, this does not really address the question why the new causes of action were not raised earlier.
10. The plaintiff put into evidence on this application a number of emails and a text message sent by the defendant to the Agent in October 2021 which throw considerable doubt on the accuracy of the defendant's recollection of events leading up to the execution of the Contract (in particular, the facts alleged at [16(d)] and (e) above). While it is not appropriate to address in any detail on this application the merits of the new claims, the contemporaneous emails and text message of the defendant (at least one of which was put into evidence by the plaintiff in her affidavit of 1 September 2022) suggest that the delay is not the result of some new matter which has only come to light at a late stage of the proceeding. To the contrary, they suggest it is quite possible that a forensic decision was made by the previous legal representatives of the defendant to run the matter in the way it has been under the current pleadings without bringing the new claims in the draft amended pleadings.
11. In this regard, I note that the affidavit of the defendant of 26 September 2023 recounts the critical events leading up to the execution of the Contract by reference to her recollection of the events and the conversations that occurred, without support from any material contemporary documentation, and without explaining away or otherwise dealing with the apparent inconsistency arising from her own contemporaneous written communications with the Agent which have now been put into evidence by the plaintiff.
12. I also note that by declining the defendant's application to amend, the Court will not shut out the defendant from raising the new claims in other proceedings. The defendant can bring a separate action against the Agent for breach of s 20 of the Australian Consumer Law on the basis that he was acting as her agent (which is an allegation made in the draft amended pleading). She can also bring a separate action against her former solicitors for negligence in relation to the provision of the s 66W Certificate. The outcome of these proceedings will determine the amount of the defendant's loss, if she is unsuccessful, for which she would seek compensation in those new proceedings. Given the prejudice in terms of wasted costs and delay to the plaintiff, it is not in the interests of justice that the defendant be allowed at this late stage to bring those new claims in these proceedings.
13. Taking into account all these matters, I declined the defendant's application.

Amendments 30 October 2023 - 30 October 2023 - amendment to coversheet DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 30 October 2023