I. Resolution
72 The Danesi parties' complaint of abuse of process, and the applications that the two proceedings be heard together and that ST be granted leave to rely on the three affidavits that have been referred to, are all interrelated. They cannot be dealt with in isolation.
73 It is of obvious concern, and relevant to any consideration of abuse of process, that ST has commenced the 2021 proceeding against Lauvan in which it asserts a claim that arises from exactly the same factual narrative (i.e., the circulating bank cheques) as a claim that it is already asserting in the 2018 proceeding. That gives rise to issues of Anshun estoppel and abuse of process. ST seeks to overcome those problems by having the two proceedings heard together.
74 It is also of obvious concern that Mr Hancock and ST waited until the last minute before seeking, first, to amend the statement of claim in the 2018 proceeding to bring the new claims and, secondly, to then abandon that and instead commence the new proceeding. It is also true, as is submitted on behalf of the Danesi parties, that Ms Weston's explanation for that conduct is less than comprehensive. The explanation amounts to the following:
(1) To properly understand the evidence that was filed by Lauvan and Mittabel in September 2020 in the 2018 proceeding, it was necessary for her to obtain a copy of the pleadings and affidavits, and a transcript of the evidence, in the NSW Supreme Court proceeding to which reference was made in those affidavits.
(2) Having read the documents from the NSW Supreme Court proceeding, she was able to work out what had occurred with the circulating bank cheques.
(3) That enabled her to form the conclusion that the evidence filed in the 2018 proceeding amounts to an admission that Messrs Danesi, Mullins, Stathakis and Bega, together with Lauvan, agreed to mislead ST as vendor and/or the external financiers in each case to believe that the full contract price was being paid for the apartments, or that ST's directors allowed the sales to be completed without ensuring that the full purchase price was paid which was a breach by them of their duties.
75 That explanation lacks detail, and in particular does not explain why the new claims could not have been formulated at a much earlier time taking into consideration that during the course of the NSW Supreme Court proceeding Mr Bega had sent Mr Hancock emails attaching the affidavits and transcripts and expressly referring to the circulating bank cheques - which he described as a "round robin of funds".
76 I am, however, mindful that it is much easier in hindsight, once particular claims have been formulated, to point back to what evidence was available at a much earlier point in time to support those claims, than it is at the time to identify that evidence in amongst a morass of other information and to formulate claims in reliance on it. I am also mindful of the fact that Mr Hancock and those working with him had a number of issues to deal with, and they were unfunded for long periods of time. These matters are explained in an affidavit by Mr Hancock.
77 The Danesi parties' complaint that the new claims were brought on the eve of the expiry of the limitation period, and had they been brought slightly later there would have been a good defence to them on account of that expiry, needs to be understood in that context. That is because, if a claim is brought within time, it can hardly be a valid complaint that if it had been brought slightly later it would have failed; the point of time limits is that the necessary steps are taken prior to the expiry of the limit and if they are then there can be no complaint about that expiry.
78 In that regard, I do not accept that had the application to amend the statement of claim in the 2018 proceeding proceeded to hearing it would have been refused. The principal objection to leave to amend being granted would have been that the urgency was essentially self-created, which would have been a concern for the Court in the management of its caseload rather than a cause for particular prejudice to the defendants to the 2018 proceeding, i.e., Lauvan and Mittabel. The proceeding had not yet been listed for hearing and not all the evidence had yet been filed. It is true that by the time the amendment application was brought the plaintiffs were late in filing their reply evidence, but I infer that that was because they were considering the defendants' evidence and formulating their new claims.
79 Except for one argument which I will return to, the arguments that are raised by the Danesi parties against the two proceedings being heard together and in favour of a permanent stay or summary dismissal of the 2021 proceeding are all arguments available only to Lauvan and Mittabel because they are the only defendants common to the two proceedings. Dealing first with Mittabel, since no relief is claimed against it in the 2021 proceeding, and it appears to be an unnecessary party to that proceeding, it would appear to have good grounds for that proceeding to be dismissed as against it. I did not understand there to have been much resistance to that course. For the same reason, it would have a valid complaint about the two proceedings being heard together but for the fact that it and Lauvan are commonly represented so it does not appear to cause any practical prejudice, and the fact that the characterisation of the payments by the circulating bank cheques, in which it has a key interest, is common to both proceedings.
80 The only party that faces claims in both proceedings, and which has the complaint that had the new claims been sought to be brought by way of amendment in the 2018 proceeding that would have failed, is Lauvan. That raises the question, what would the position be if the 2021 proceeding was stayed, or dismissed, as against Lauvan? For the reasons already given, on this scenario I will assume that it is also stayed or dismissed as against Mittabel. The result would be that there would be two proceedings with no common defendants but there would be a substantial common narrative, being the narrative of the circulating bank cheques. The characterisation of the payments made by those cheques will be a common issue in both proceedings. There would thus be a risk of conflicting findings in the two proceedings, which is something that as a matter of firm legal policy should be avoided if possible. Those considerations drive one back to allowing the two proceedings to be run together.
81 Mr Sirtes SC, who appears with Ms Avery-Williams for the Danesi parties, submits that I should not adopt that course because of "fundamental unfairness" Lauvan and Mittabel would face in the 2018 proceeding which is that they would not be able to compel Messrs Mullins, Danesi and Stathakis to give evidence in the combined proceeding and they would thus lose their critical witnesses. Mr Sirtes submits that they could not be compelled because they would have become parties to the proceeding. It is this argument that is the only argument that is not only available to Lauvan and Mittabel as the only defendants to the earlier proceeding.
82 That submission does not seem to me to be correct. By s 12 of the Evidence Act 1995 (Cth), except as otherwise provided in that Act every person is competent to give evidence and a person who is competent to give evidence about a fact is compellable to give that evidence. The only exception that comes close to possibly applying is that in s 128, namely that a witness may object to giving particular evidence if it may tend to prove that the witness has committed an offence or is liable to a civil penalty. Neither of those possibilities exist in either of the present proceedings, and if the evidence of the witnesses in question might otherwise tend to prove either of those possibilities then that is already the case on the affidavits that have been filed. That is to say, if they have a valid objection to giving that evidence they have it in the 2018 proceeding on its own without any consideration of the 2021 proceeding.
83 Mr Sirtes submits that the only proper course is to permanently stay the whole of the 2021 proceeding, i.e., not only as against Lauvan and Mittabel. I, however, see no justification for such a course. One might ask rhetorically, why should no proceeding be brought, or continued, against the ten other defendants to the proceeding just because two of the defendants are facing a claim arising from the same factual narrative in another proceeding? Surely, the proper course is to hear the two proceedings together?
84 I simply do not see that there is any unfairness to Messrs Danesi, Mullins and Stathakis, as is submitted, for Mr Hancock and ST to rely on what they have said on affidavit to assert a new claim against them. One must assume in their favour that what they have said on affidavit is the truth. If that is so, and it gives rise to some civil liability, why should it not be relied on? I accept that forensic choices were made by Lauvan and Mittabel on what evidence they filed in the 2018 proceeding that may have been different if they had realised that additional claims would be asserted in reliance on that evidence. However, in the ordinary course of litigation choices are made all the time and on each such occasion the consequences of those choices must be considered. There was no representation by the plaintiffs in that case, whether express or implied, that they would not seek to bring further claims; there is no basis for an estoppel and none is relied on. It goes without saying that one should expect that if one files evidence which, if true, gives rise to a civil liability that an opposing party will rely on that evidence to assert that liability. It often happens in the course of a civil proceeding that an additional claim is introduced on the basis that if the defendant's version is accepted, then an alternative claim will succeed. That is in effect what ST pleads in the 2021 proceeding.
85 I do not accept that Messrs Danesi, Mullins and Stathakis have any legitimate complaint about their affidavits in the 2018 proceeding being used as a basis to assert liability against them and others in the 2021 proceeding. It has been asserted that that is unfair, but I am not persuaded that it is, at least not relevantly so.
86 I accept that the 2018 proceeding will take longer than it would otherwise have taken, and potentially considerably longer because of the many additional defendants in the 2021 proceeding which is a factor that gives rise to inevitable further delays and the potential for cross claims. If Lauvan and Mittabel had a real interest in the 2021 proceeding progressing towards finality quickly, then they could have sought to have the claims in that proceeding other than the claim for overpayment under the facility agreement, which is the one that overlaps with the 2021 proceeding, progress separately and for the overpayment claim to be dealt with with the claims in the 2021 proceeding. They have not done that, although it is still open to them to do so.
87 In any event, I do not consider that delay to be decisive. I take it into account, but it does not outweigh the other considerations.
88 I cannot see the relevance of the fact that only transactions involving the Bega family companies are the subject of the 2021 proceeding and not other transactions involving other parties. There is certainly insufficient basis for me to draw the inference that is pressed upon me, namely that the 2021 proceeding is some kind of stratagem in concert with Mr Bega to return the proceeds of the litigation to Bega family members.
89 Insofar as the Harman obligation is concerned, I consider that special circumstances have been amply established for the reasons advanced on behalf of Mr Hancock and ST as recorded above (at [71]). Shortly put, the purpose for which the affidavits are relied on is to assert claims against the party who filed those affidavits, being Lauvan, and a number of other parties that arise from the same factual circumstances underpinning the proceeding in which the affidavits were filed. Moreover, because of the impending time bar it was not practical for Mr Hancock to seek leave to use the affidavits before bringing the new proceeding. Instead he sought that leave essentially as soon as the new proceeding had been brought.
90 In the result, in my view the proper course for the two proceedings, in order to do justice between the parties, and in recognition of the interests of creditors in the liquidation of ST and the overarching purpose of the civil practice and procedure provisions, is the following:
(1) The Danesi parties' application to stay or dismiss the 2021 proceeding should be dismissed.
(2) There should be an order that the two proceedings are heard together and that the evidence in one is evidence in the other.
(3) There should be an order that, to the extent necessary, Mr Hancock and ST are excused from the Hearne v Street obligation in respect of the affidavits of Messrs Danesi, Mullins and Stathakis as referred to in the statement of claim in the 2021 proceeding nunc pro tunc.