Trust Co. Fiduciary Services Ltd v Hassarati

Supreme Court of NSW|2011-06-08|Before: Davies J

dis (Seventh Cross-Defendant) Joseph Capogreco (proposed Cross-Defendant) Representation: A A Henskens (Plaintiff/First Cross-Defendant) I Leong (Second Defendant/ Second Cross-Defendant) G Fletcher (Third and Fourth Defendants) P Barham (Fifth Defendant) J Downing (Third Cross-Defendant) D Priestley (Sixth & Seventh Cross-Defendants) M Dicker (Mr Capogreco) Gadens Lawyers (Plaintiff/First Cross-Defendant) Forum Law (Second Defendant/ Second Cross-Defendant) Bransgroves Lawyers (Third and Fourth Defendants) Gibson Howlin Lawyers (Fifth Defendant) Middletons (Third Cross-Defendant) HWL Ebsworth Lawyers (Sixth & Seventh Cross-Defendants) Connery Partners (Mr Capogreco) File Number(s): 2009/295712

Judgment 1This is an application by a Cross-Defendant, John Maait, to file a cross-claim seeking contribution under s 5 Law Reform (Miscellaneous Provisions) Act 1946 and equitable contribution. The application is opposed by a number of the other parties.

Procedural history 15Alvera filed a Defence and a cross-claim on 23 October 2009. The cross-claim named 6 Cross-Defendants as follows: Trust Company Fiduciary Services Ltd (formerly known as Permanent Trustee Company Ltd - First Cross-Defendant Lily Hassarati - Second Cross-Defendant John Maait - Third Cross-Defendant Trade Capital Australia Pty Ltd - Fourth Cross-Defendant Stuart Buchan - Fifth Cross-Defendant Joseph Kotowicz - Sixth Cross Defendant 16That part of the cross-claim brought against Mr Maait (the present Applicant) recited the background facts that I have set out earlier up to Alvera becoming the registered proprietor of the Thornleigh land on 20 December 2001. It pleaded that in or around November 2001 Mr Maait, acting on behalf of Alvera, made an application to this Court for the administration of the estate of Tony Hassarati. 17It then went on to say this: [16] Maait owed a duty of care to the First Defendant to provide advice exercising the due care and skill expected of a competent solicitor. [17] Alternatively, it was a term of his retainer with the First Defendant that he would render services with the due care and skill expected of a competent solicitor. [18] In breach of his duty of care or in breach of the terms of the retainer, Maait: a. Failed to recognise that the First Defendant's appointment as administrator of Tony Hassarati's estate did not have the effect of making her executrix of Said Hassarati's estate; b. Failed to advise that further application for the appointment of an executor to the estate of Said Hassarati was necessary; c. Failed to recognise that Tony Hassarati's interest in the Land was only as life tenant and not as legal and beneficial owner; d. Failed to recognise that the First Defendant does not hold title to the Land in fee simple, but only in her capacity as Administrator of Tony Hassarati's estate; e. Failed to recognise that Josephine Hassarati retains an interest in the Land as life tenant; [19] The First Defendant relied upon Maait to exercise due care and skill in ensuring that the administration of the estate of Tony Hassarati was properly administered and that the appropriate beneficiaries hold title to the Land in accordance with their entitlement. [20] The First Defendant's title to the Land was subject to a life tenancy (arising under the will of Said Hassarati) and to the interests of other beneficiaries. [21] But for the negligence of Maait, the First Defendant would not be the registered proprietor of the Land and the dealings which are the subject of the Plaintiffs statement of claim would not have occurred. [22] As a result of Maait's negligence the First Defendant has suffered loss and damage. 18It is not easy to discern from this pleading precisely what Mr Maait was retained to do and what he actually did or failed to do that resulted in Alvera becoming the registered proprietor of the land. It may be inferred that he was responsible for the registration of a transfer to Alvera rather than a transmission application but that is not made clear by the pleading itself. When it is alleged that he failed to recognise various matters it is again not made clear what his acts or omissions were that followed from a failure so to recognise the matters set out, since failing to recognise those in themselves is unlikely to amount to negligence. In one sense, that inadequate pleading gives rise to one of the difficult issues for determination in the proceedings, namely, when, and how, loss and damage were first suffered by Alvera. 19The cross-claim by Alvera against the Plaintiff was put on the basis of the Contracts Review Act 1980. It asserted that the Plaintiff knew or ought to have known that Alvera would have relied on Lily because of the parent-daughter relationship and that Alvera was in a position of special disadvantage. 20Her cross-claim against Joseph Kotowicz alleged negligence against him in relation to the advice he was retained by Lily to provide to Alvera concerning the loan from the Plaintiff. 21The cross-claim against Trade Capital Australia Pty Ltd and a broker Stuart Buchan is now of no relevance because those parties have been released from the proceedings. 22On 4 November 2009 Alvera filed an Amended Cross-Claim. This pleading contained the most minor amendments to the cross-claim brought against the Plaintiff and Mr Kotowicz. The cross-claim against Mr Maait remained in the form originally pleaded. 23On 8 February 2010 Mr Maait filed a Defence to Alvera's cross-claim. Apart from his other defences, he pleaded, pursuant to Pt 4 Civil Liability Act 2002, that if he was found to have caused loss and damage to Alvera then her claim was an apportionable claim under s 34(1) CLA, and the other concurrent wrongdoers were Lily Hassarati, the Plaintiff, Trade Capital, Mr Buchan, Mr Kotowicz and Konstan Lawyers (the firm where Mr Kotowicz worked). 24On 17 March 2010 Alvera filed a second Amended Cross-Claim which, apart from an inconsequential amendment to the pleading against Lily, added cross-claims against Simon Konstantinidis, the employer of Joseph Kotowicz and the principal of the firm Konstan Lawyers, against CKM and against NAB. The claim against Mr Konstantinidis was entirely related to the cross-claim already made against Mr Kotowicz. The cross-claims against CKM and NAB asserted that the loans made by them were unjust within the meaning of the Contracts Review Act. 25The cross-claim against Mr Maait remained unaltered. 26On 30 September 2010 Alvera filed a Third Amended Cross-Claim. This pleading made some amendments to the cross-claim pleaded against the Plaintiff to add assertions that the Plaintiff had engaged in unconscionable conduct. It made similar amendments to the claim against the NAB. 27The most significant amendment in the Third Amended Cross-Claim was the addition of Joseph Capogreco as Tenth Cross-Defendant. The claim alleged that in November 2003 Mr Capogreco was retained by Lily to provide independent legal advice to Alvera in relation to the CKM loans. She alleged that he did not comply with his duties either at common law or under Solicitors' Rule 45 to provide her with proper advice which was independent of Lily. 28On 3 December 2010 I delivered judgment in Bank of Western Australia Ltd v Tannous [2010] NSWSC 1319. In that case a claim was made for possession of land by reason of default under a loan agreement. The proceedings were defended (inter alia) by reliance on the Contracts Review Act . The loan obtained from the Plaintiff had been partly used to repay an earlier mortgagee. The Defendants alleged that the loan obtained from the earlier mortgagee was also unjust and ought to be set aside under the Contracts Review Act . The earlier mortgagee was joined to the proceedings for that purpose. It asked for summary dismissal of the claim against it. 29In acceding to that application I said: [43] Where there is an issue about the unjustness of a contract or mortgage paid out by an incoming mortgagee who is the Plaintiff in proceedings, the issue is not determined by joining that prior mortgagee as a party to the proceedings. Rather, the issue is determined in the context of the discretionary order at the second stage of the Contracts Review Act proceedings. That is so, because the issue forms part of the controversy between the Plaintiff and the Defendants. The justiciable issue is what order should be made in circumstances where the contract made between the Plaintiff and the Defendants is held to be unjust. There is no justiciable issue between the Defendants and the mortgagee/lender whose contract has been completed and whose mortgage has been discharged. 30Presumably in reliance on Tannous , at the Directions hearing before me on 8 February 2011 Alvera sought to file Notices of Discontinuance of her cross-claim against Trade Capital, Mr Buchan (both of whom had been concerned with an earlier loan), CKM, NAB and Mr Capogreco. No party, including Mr Maait, objected to the Notices of Discontinuance. 31In the meantime, the solicitors acting for Alvera had prepared a draft Fourth Amended Cross-Claim which removed those parties and made some other amendments. No party objected to leave being given to Alvera to file that cross-claim and leave was duly granted. 32Thereafter Alvera filed a Fourth Amended Cross-Claim on 18 February 2011 which discontinued the cross-claims against Trade Capital and Mr Buchan, against CKM and NAB, and against Mr Capogreco, presumably because Mr Capogreco was the solicitor who advised in relation to the CKM loan. The cross-claim against Mr Maait remained unaltered. 33In addition, the Plaintiff had prepared a Further Amended Statement of Claim which added Royal Guardian Mortgage Corporation Pty Ltd and Anthony Tomazin (who appear to have been mortgage originators in respect of one or more of the earlier loans) and CKM. The claim against CKM was effectively a contingent one for restitution of the monies paid by the Plaintiff to CKM to discharge its loan in the event that Alvera was successful in establishing that the CKM loan was unjust within the meaning of the Contracts Review Act . Leave was granted on 8 February 2011 to the Plaintiff to file the Further Amended Statement of Claim. Orders were also made that Alvera, Lily, Mr Maait and Konstan Lawyers give discovery. 34The net effect of the orders of 8 February 2011 was that CKM remained in the proceedings but as a Defendant to the Plaintiff's claim rather than as a Cross-Defendant in Alvera's cross-claim. Mr Capogreco and the earlier lenders and their associates ceased to be cross-defendants in Alvera's cross-claim and, therefore, ceased to be parties in the proceedings. 35On 20 May 2011 Mr Maait filed a Defence to the Fourth Amended Cross-Claim, well beyond the 28 day period allowed for in the Rules. However, in fairness to Mr Maait, it ought to be noted that the proceedings were being case-managed and no Directions were made on 8 February or 14 March 2011 that required the Cross-Defendants to the Fourth Amended Cross-Claim to file Defences within any period of time. The first such direction was made on 12 May 2011 when Mr Maait was directed to file and serve his defence by 25 May 2011 which he did. I mention this matter because of submissions, to which I will come presently, by counsel for Lily. 36This Defence contained a similar, but not identical, pleading to the earlier defence filed by Mr Maait to the cross-claim. In relation to the pleading of proportionate liability it added Mr Capogreco as a further concurrent wrongdoer. 37On 23 May 2011 Mr Maait filed the present Notice of Motion seeking leave to file a cross-claim. I am told that notice was given to the other parties about a week before the filing date that Mr Maait intended to do this. The cross-claim seeks contribution or indemnity pursuant to s 5 Law Reform (Miscellaneous Provisions) Act 1946 and equitable contribution. The proposed defendants to the cross-claim are all of those parties alleged in Mr Maait's Defence to the Fourth Amended Cross-Claim who were said to be concurrent wrongdoers in terms of the proportionate liability provisions of the Civil Liability Act with the exception of Trade Capital and Mr Buchan. The proposed cross-defendants are, therefore, Lily Hassarati, Joseph Capogreco, Joseph Kotowicz and Simon Konstantinidis.

The submissions 38The application to amend was opposed by Lily, Mr Capogreco and Konstan Lawyers. 39Mr Dicker of counsel for Mr Capogreco opposed the application on 3 bases. First, he drew attention to paragraph 21 of the Fourth Amended Cross-Claim which says: But for the negligence of Maait, the First Defendant would not be the registered proprietor of the Land and the dealings which are the subject of the Plaintiffs statement of claim would not have occurred. 40Mr Dicker points out that in the proposed cross-claim Mr Maait repeats, in paragraph 1, the pleading in the Fourth Amended Cross-Claim. He says that "the dealings which are the subject of the Plaintiff's Statement of Claim" must be a reference to the loan transaction between the Plaintiff on the one hand and Lily and Alvera on the other. He says that those words cannot be a reference to the loan with which Mr Capogreco was involved because that loan is not a dealing into which the Plaintiff entered. He draws attention to paragraph 35 of the proposed cross-claim which asserts that consequent upon Mr Capogreco's conduct Alvera entered into the CKM loan arrangements. Paragraph 36 then asserts that by reason of that Alvera suffered loss and damage. 41Mr Dicker says that the loss and damage referred to in paragraph 21 of Alvera's Fourth Amended Cross-Claim is the loss and damage occasioned by entering into the Plaintiff's loan. That means, he submits, on the proper construction of the pleading the loss and damage from the entry into the CKM loan cannot be the damage that is referred to as the same damage that Mr Maait caused in 2001. 42Secondly, Mr Dicker submits that on the basis of Dillingham Constructions Pty Ltd v Steel Mains Pty Ltd (1975) 132 CLR 323 the successive damage suffered as a result of Mr Maait's acts and omissions, Mr Capogreco's acts and omissions and by the entry into the Plaintiff's loans cannot be considered the same damage for the purposes of s 5(1) Law Reform (Miscellaneous Provisions) Act 1946. 43Thirdly, he submits that delay and unfairness should as a matter of discretion mean the application is refused. 44Mr Leong of counsel for Lily opposed it on 2 principal bases. First, he submitted that the time for filing the cross-claim was 28 days after service of the Fourth Amended Cross-Claim. He submitted that the delay of 2 months until the Motion was filed was unacceptable and should result in a refusal of the application. Secondly, he submitted that the law was clear that loss and damage was first sustained in the matter only when there was a default under the present loan. That post-dated 26 July 2004 (the operative date for the proportionate liability provisions of the CLA) and the result was that any cross-claim seeking contribution under s 5 was doomed to failure: Reinhold v New South Wales Lotteries Commission (No. 2) [2008] NSWSC 187. He submitted that the law on when damage was first suffered clearly appeared from decisions such as Wardley v State of Western Australia (1992) 175 CLR 514 and Cassis v Kalfus [2001] NSWCA 460. 45The distinction Mr Leong draws in relation to the cases of Forster v Outred [1982] 1 WLR 86 and Wardley concerns the irreversibility of detriment. He says that if a person enters into a loan or gives a guarantee nothing happens which is irreversible at the time of entry into the transaction. On the other hand the purchase of an asset, perhaps on the wrong advice of a solicitor or a valuer, is irreversible once the contract is entered into. He submits that the entry into the loans by Alvera were not irreversible until the default in relation to the Plaintiff's loan upon which the Plaintiff now sues. 46Mr Leong also opposes the new claim made in the proposed cross-claim based upon the breach of equitable duty said to be owed by Lily to Alvera. Mr Leong says that this is a wholly new claim and does not appear to be based on anything obtained from discovered documents or otherwise identified in the affidavit of Lucy Williams relied upon in support of the Motion. He says, in any event, that the cause of action is not properly articulated. 47Mr Leong opposed the amendments, even though his client was already a party to the proceedings, on the basis of the additional costs that would flow from the allowance of the cross-claim. 48Mr Priestley, counsel for Konstan Lawyers, opposed the bringing of the cross-claim for the reasons articulated by Mr Dicker and Mr Leong. He amplified those matters by drawing attention to the small time period in which his clients were involved. In that regard he pointed to the fact that any claim against his clients only arose in 2005 when they acted in relation to the CKM loan. In those circumstances Mr Priestley submitted that any damage caused by Mr Maait could not be the same damage alleged against Konstan Lawyers.

When was loss first suffered? 49It is not necessary to come to a final view about when loss was first sustained by Alvera to determine the present application. If, however, I formed the view that there was no reasonable argument in favour of the proposition that loss was first sustained prior to 26 July 2004 then Mr Maait's application would fail based on the principles in General Steel Industries v Commissioner for Railways (1964) 112 CLR 125. 50Despite the force of the argument principally put by Mr Leong, but supported by Mr Dicker and Mr Priestley, I cannot be satisfied that an argument that loss and damage occurred prior to 26 July 2004 is completely hopeless nor doomed to fail. I accept that it may be necessary to deal with argument "even of an extensive kind" and still come to the view that a particular claim is hopeless: General Steel Industries at 130. However, 2 matters in particular weigh with me in reaching the view that I should not decide this vexed question on this application. The first reason derives from the statement at the conclusion of the plurality judgment in Wardley at 533 which there suggested that it was undesirable that limitation questions "of the kind under consideration" should be decided in interlocutory proceedings in advance of the hearing of the action except in the clearest of cases. Although what is at stake in the present matter is not a limitation question, the enquiry is the same, namely, when loss and damage is first suffered. 51Secondly, and not unrelated to the first, a resolution of the issue is likely to depend upon factual findings that can only be made at the hearing of the matter. 52On the question of law, I do not think the matter is as clear as Mr Leong submits. I had reason to consider a similar enquiry in Ross v Cook [2009] NSWSC 671. That was the hearing of a separate question where there was an Agreed Statement of Facts. The claim was one by a mortgagee against a valuer that led to the loan of money. The issue was argued on the basis that there was a conflict between what had been said by the High Court in Kenny & Good Pty Ltd v MGICA (1999) 199 CLR 413 on the one hand and in HTW Valuers (Central Qld) Pty Ltd v Astonland Pty Ltd (2004) 217 CLR 640 on the other. 53I determined that there was no conflict between them because the former case was concerned with a mortgagee suing a valuer in respect of an allegedly negligent valuation whereas the latter concerned the entry into a contract by a purchaser in reliance on a valuation. In such a situation it is relatively easy to make the dichotomy that Mr Leong makes in his submissions between asset purchases and creation of loans. Mr Leong speaks in the latter case of the detriment being reversible whereas in the former case it is irreversible. 54It does not seem to me, however, that the question is so easily answered when the person suffering the loss is not a purchaser or a mortgagee but is a mortgagor. 55The High Court in Wardley did not suggest that Forster v Outred was wrongly decided. The plurality judgment said that the decision was explicable by reference to the immediate effect of the execution of the mortgage on the value of the Plaintiff's equity of redemption. 56Subsequent decisions in the Court of Appeal including Cassis v Kalfus and Winnote Pty Limited v Page [2006] NSWCA 287 have endorsed the correctness of Forster v Outred on that basis. In a case concerning the entry into a mortgage by a mortgagor, Schmidt J followed Forster v Outred in holding that the mortgagor suffered damage when he entered into the mortgages advised to him: Permanent Custodians Limited and Anor v King and Ors [2010] NSWSC 509 at [40] and [44]. With respect, that must be correct based on the facts in that case. It is also a strong indication that an argument that damage was first suffered by Alvera before July 2004 is not hopeless. 57The second reason for not determining the issue of when loss was first suffered on this application is that it is likely it will turn on questions of fact which will need to be decided at the trial. One fact which is likely to throw light on the issue of when loss was first suffered is whether Alvera was a joint borrower of the monies with Lily or whether she was merely in the position of a guarantor. If she was a joint borrower it is more likely that loss was first suffered at the time she entered into the transactions as a borrower and a mortgagor. If Mr Maait had put her in that position by bringing about her registration as the registered proprietor of the property or if he had not properly advised her about her limited ownership it might be more readily argued that he had brought about the loss that was occasioned by her entering into a mortgage and loan agreement that she could not otherwise have done. 58In that regard it should be noted that, although paragraph 32A of the Fourth Amended Cross-Claim (a paragraph not pleaded in earlier versions of the Cross-Claim) alleged that Alvera was guarantor of the NAB loans and the CKM loan, the Defence of the Plaintiff (as the First Cross-Defendant to that Cross-Claim) in paragraph 8 denied that Alvera was a guarantor under the CKM loan and asserted that she was a principal debtor under that loan. It may be of some passing relevance to note that paragraph 13 of the Defence of CKM to the Plaintiff's Further Amended Statement of Claim says that the funds advanced by the Plaintiff to CKM were "lent to and paid to the First Defendant and the Second Defendant" although they were physically received by CKM pursuant to a direction from the First and Second Defendants. That paragraph might lend some support to the notion that Alvera was a borrower under the CKM loan. 59Independently of the issue of whether Alvera was a co-borrower, there now seems to be some evidence that default under the CKM loan took place, perhaps in April in May of 2004, but certainly before 26 July 2004. Even if it is assumed that entry into a loan which remains not in a default position does not constitute loss (perhaps by virtue of what is said in Wardley ) it seems doubtful that the same can be said of a loan when a default occurs. Once default occurs interest becomes payable that would not otherwise be payable and there may be other fees or detriment, including the need to enter into a larger loan to repay the first loan in default. Those are matters which can only be determined when the full facts are available at a trial. 60Even on the assumption that loss and damage was first suffered prior to 26 July 2004 (perhaps when Alvera became registered proprietor of the land, or perhaps when she became involved in the loans from either the NAB or CKM, or perhaps even when there was a default under the CKM loan) the further issue is whether that loss and damage can be regarded as the same loss and damage alleged against Mr Capogreco and Konstan Lawyers. Both Mr Dicker and Mr Priestley say that it cannot be regarded as the same loss and damage, partly pointing to the fact that the latter loss and damage occurred at a much later time and partly in reliance on Dillingham Constructions . Mr Downing of counsel for Mr Maait, on the other hand, points to Mahony v Kruschich (Demolitions) Pty Ltd (1985) 156 CLR 522, a case involving a work injury followed by further injury from the medical treatment in respect of the first injury. 61The judgment in Mahony discussed the decision in Dillingham Constructions. The judgment identified the important distinction made in Dillingham between "damage" and "damages". The Court went on to say (at 527): [C]oncurrent tortfeasors whose negligent acts or omissions occur successively rather than simultaneously may both be liable for the same damage, being a foreseeable consequence of both torts, although one is liable for some only of the damage for which the other is liable and an award of damages against the one would necessarily be less than an award of damages against the other. ... A negligent tortfeasor does not always avoid liability for the consequences of a plaintiff's subsequent injury, even if the subsequent injury is tortiously inflicted. It depends on whether or not the subsequent tort and its consequences are themselves properly to be regarded as foreseeable consequences of the first tortfeasor's negligence. A line marking the boundary of the damage for which a tortfesor is liable in negligence may be drawn either because the relevant injury is not reasonably foreseeable or because the chain of causation is broken by a novus actus interveniens. 62It is clear from those and other passages that Mahony v Kruschich is not to be regarded as a case confined to medical negligence following an injury. Certainly, the Court said that where an injury is exacerbated by medical treatment the exacerbation may easily be regarded as a foreseeable consequence for which the first tortfeasor is liable (at 529), but that is an instance of the more general principle. 63The significant matter for the present case from Mahony v Kruschich is that the case reached the High Court as an appeal against the striking out of the cross-claim by a judge hearing a Motion to that effect. The decision was not a final decision after a trial. In that regard the High Court said (at 530): If, when the action comes to trial, it is proved that an aspect of the plaintiff's condition is properly to be regarded as a foreseeable consequence of both Kruschich's negligence and Dr Mahony's negligence, Kruschich will be entitled to seek contribution under s 5(1)(c) from Dr Mahony in respect of so much of the damages awarded against it as relates to that aspect. 64That last passage highlights again the dangers of resolving these sort of questions on interlocutory applications. It will ultimately be dependent upon the facts of the case proved at the trial whether the damage caused by Mr Capogreco and Konstan Lawyers was a foreseeable consequence of Mr Maait's negligence. 65Mr Dicker argues that the groundwork has not been laid for that in any event because the proposed cross-claim contains no pleading that the later transactions were reasonably foreseeable at the time of Mr Maait's acts and omissions. 66I am not so sure that that is so. It is to be recalled that paragraph 21 of the Fourth Amended Cross-Claim pleads that but for the negligence of Mr Maait, the dealings which are the subject of the Plaintiff's Statement of Claim would not have occurred. For reasons which I will discuss in the next section of this judgment it is certainly arguable that paragraph 21 is a reference to all of the loan agreements, or at least is sufficient to include the CKM loan. 67Mr Priestley's further point, that because the tort alleged against his client was not complete until 2005 the damage flowing from it cannot be the same damage that Mr Maait caused, seems to me to be answered by what the High Court said in Mahony (at 531): [T]he circumstance that the first tortfeasor is alone liable for whatever damage is caused before the subsequent tort is committed is no argument against apportioning liability for the damage caused by both tortfeasors. 68The precise nature of the damage caused by each tortfeasor, together with factual questions touching upon the foreseeability of the later damage, are matters which cannot be resolved on an application like the present. Mr Maait's position is arguable in that regard, and he should not be precluded from filing his cross-claim based on those arguments alone.

Mr Capogreco's pleading point 69Mr Capogreco points to paragraph 21 of the Fourth Amended Cross-Claim and to the fact that in the proposed cross-claim by Mr Maait he repeats without admissions the pleadings in the Fourth Amended Cross-Claim. Mr Capogreco's point is simply that what is being referred to in paragraph 21 is only the loan agreement with the Plaintiff and not the loan agreement, for example, with CKM, with the result that any negligence of Mr Capogreco is entirely irrelevant to the proposed cross-claim. He cannot, it is argued in those circumstances, be a concurrent tortfeasor because the damage that is said to be the same damage as that suffered by Mr Maait's negligence was only the entry into the Plaintiff's loan. 70I do not see that the reading of paragraph 21 of the Fourth Amended Cross-Claim is so confined. As it happens, the Further Amended Statement of Claim deals not only with the dealings the Plaintiff had with the First and Second Defendants but also deals with the dealings CKM had with those Defendants. Indeed, the Further Amended Statement of Claim was expressly filed to add a claim in respect of the CKM dealings. 71In any event, given the history of the various loans, it seems entirely artificial to ignore the successive loans from NAB and CKM when determining the damage for which Mr Maait should be liable and, in turn, the contribution that any other negligent party should make to any verdict against Mr Maait in respect of that damage. 72In my opinion, the form of the pleading (although I accept that it is not entirely clear) does not provide a reason for not permitting the proposed cross-claim.

Discretionary considerations 73Applications to amend must now be dealt with in accordance with the principles in Aon Risk Services Australia Limited v Australian National University (2009) 239 CLR 175. In substance, the present application is one to amend (something which Mr Maait accepts) because the cross-claim has the substantive effect of putting an alternative perspective on that part of the defence of Mr Maait that deals with proportionate liability. In any event, and however the application is to be characterised, I consider that I am bound to consider the matter in the light of the principles discussed in Aon . 74The decision in Aon was reached in the light of, and having regard to, r 21 of the Court Procedure Rules of the ACT. The plurality judgment made clear that the starting point for any such application must be the Rules governing such application in the relevant jurisdiction - see at [55] and [58]. The equivalent provision in NSW is s 56 Civil Procedure Act 2005. 75The plurality judgment said: [102] The objectives stated in r 21 do not require that every application for amendment should be refused because it involves the waste of some costs and some degree of delay, as it inevitably will. Factors such as the nature and importance of the amendment to the party applying cannot be overlooked. Whilst r 21 assumes some ill-effects will flow from the fact of a delay, that will not prevent the parties dealing with its particular effects in their case in more detail. It is the extent of the delay and the costs associated with it, together with the prejudice which might reasonably be assumed to follow and that which is shown, which are to be weighed against the grant of permission to a party to alter its case. Much may depend upon the point the litigation has reached relative to a trial when the application to amend is made. There may be cases where it may properly be concluded that a party has had sufficient opportunity to plead their case and that it is too late for a further amendment, having regard to the other party and other litigants awaiting trial dates. Rule 21 makes it plain that the extent and the effect of delay and costs are to be regarded as important considerations in the exercise of the court's discretion. Invariably the exercise of that discretion will require an explanation to be given where there is delay in applying for amendment. [103] The fact that an explanation had been offered for the delay in raising the defence was regarded as a relevant consideration in J L Holdings . Generally speaking, where a discretion is sought to be exercised in favour of one party, and to the disadvantage of another, an explanation will be called for. The importance attached by r 21 to the factor of delay will require that, in most cases where it is present, a party should explain it. Not only will they need to show that their application is brought in good faith, but they will also need to bring the circumstances giving rise to the amendment to the court's attention, so that they may be weighed against the effects of any delay and the objectives of the Rules. There can be no doubt that an explanation was required in this case. 76Whilst the proposed cross-claim is put forward late, the delay in that regard is not significant bearing in mind the procedural history of the matter and, particularly, in the light of the fact that there were significant changes in approach by the filing of the Further Amended Statement of Claim on 15 February 2011 and the filing of the Fourth Amended Cross-Claim on 18 February 2011. Further, the first time any orders were made for discovery in the matter was on 23 September 2010. There were delays in the parties completing discovery at that time, and despite subsequent directions on 6 December 2010 it was not completed chiefly, it would seem, because there remained disputes about the form of the pleadings both from the point of view of the Plaintiff and Alvera. 77However, the solicitors acting for Mr Maait provided to all of the other parties copies of categories of documents for discovery by 27 November 2010. Relevantly, discovery was only provided by Alvera's solicitors on 21 March 2011, by Lily's solicitors on 31 March 2011, by the solicitors for Konstan Lawyers on 31 March 2011 and by CKM's solicitors on 17 May 2011. 78Ms Lucy Williams, the solicitor acting for Mr Maait, swore in her affidavit in support of the application to file the cross-claim that at the date of her affidavit no party had produced a copy of the CKM loan agreement. It could not be ascertained directly, therefore, who the borrowers were under that agreement. She also deposed to the fact that the discovered documents appeared to show (although the position was not clear) that Alvera may have been a co-borrower in respect of the second NAB loan, and that there were defaults under the CKM loan prior to 26 July 2004. For reasons that I have discussed, they are significant matters in relation to the issue of when loss was first suffered. 79On the basis of what appears in Ms Williams' affidavit, and particularly the matters I have set out in the 3 preceding paragraphs, I consider that there has been an adequate explanation for the delay in making the present application. 80Putting aside the special position of Mr Capogreco (which I will discuss presently) there does not seem any reason, as a matter of discretion arising out of any delay on the part of Mr Maait, not to permit the filing of the cross-claim at this time. The issues raised by the proposed cross-claim are factual matters which are effectively already covered by Mr Maait's defence to Alvera's Cross-Claim where he asserts that other persons were concurrent wrongdoers. What the proposed cross-claim effectively raises is a new issue of law concerning when loss and damage was first suffered. Apart from the need of the parties named as Cross-Defendants in the proposed cross-claim to file a defence it does not seem to me that the proposed cross-claim will otherwise delay the proceedings which are some way off from obtaining a hearing date in any event. 81Given the stage the proceedings have reached, where the finalisation of pleadings is still being effected (and I note in this regard that CKM has foreshadowed an application to re-join NAB to the proceedings), where discovery is not quite complete, and no hearing is imminent, I do not consider that anything said in Aon provides any justification for refusing the present application because, for example, particular forensic decisions have already been taken which this proposed amendment would change. As I have noted, the starting point should be the appropriate statutory positions governing the litigation, namely, ss 56 - 58 Civil Procedure Act . In particular, I have regard to s 58(2)(b)(vi) concerning the degree of injustice that would be suffered by respective parties if leave to file a cross-claim were refused. There may be considerable injustice to the Applicant if leave were not granted but little or no injustice to the existing parties (who do not include Mr Capogreco) if leave were granted. 82The main concern I have relates to the position of Mr Capogreco, and that concern arises because he was released from the proceedings, and the proposed cross-claim would have the effect of bringing him back into the proceedings. 83I think it most unfortunate that the solicitors acting for Mr Maait raised no objection to the Notice of Discontinuance against Mr Capogreco and raised no objection to the filing of the Further Amended Statement of Claim that had the effect of removing him as a party to the proceedings. Such objections would at least have put Mr Capogreco on notice that his release from the proceedings (which, by virtue of the fact that it was by discontinuance, could not have been prevented by Mr Maait - Cf James Hardie & Co Pty Ltd v Seltsam Pty Ltd (1998) 196 CLR 53) may only have been temporary. The issue is, therefore, whether as a matter of discretion, Mr Capogreco's expectation that he would no longer be a party to the proceedings should prevent the filing of the present cross-claim against him. The further matter associated with this is that adding Mr Capogreco as a party again will involve a delay which will exceed any delay occasioned by the cross-claim against existing parties. Mr Capogreco was a party to the proceedings for a relatively brief period of time and there will no doubt be some necessary catching up so that he is in the same position as the other Cross-Defendants. 84Although I have some sympathy for Mr Capogreco's position, and although I consider that the matter is finely balanced, I consider that Mr Maait should be permitted to cross-claim against Mr Capogreco in the way proposed. My reasons can be briefly stated. 85First, the period of time since Mr Capogreco was released is not a lengthy one. Secondly, there seems little doubt that Mr Capogreco will be required to give evidence in the proceedings even if the pleadings were left in their present form. It was Mr Capogreco who provided the advice to Alvera with regard to the CKM mortgage. That advice will be of crucial importance in the proceedings. That is not only because of the need to determine whether or not Alvera was a co-borrower under that loan, but also because it is asserted that that contract (the CKM loan) was unjust with the implications that that has in relation to the enforceability of the Plaintiff's loan which is asserted to be a loan both to Lily and to Alvera. 86Thirdly, but less significantly, where the Cross-Claim against Mr Maait is already being defended on the basis that Mr Capogreco is a concurrent wrongdoer, and all the other alleged concurrent wrongdoers are parties to the proceedings, and will be parties by virtue of Mr Maait's Cross-Claim, it seems entirely unsatisfactory that Mr Capogreco should not be considered a proper party to the proceedings - see for example Pt 6.25 UCPR. It was submitted on behalf of Mr Capogreco that it would be more appropriate for Mr Maait to commence separate proceedings against him at a later time if it was appropriate to do so. That does not seem to be in anybody's interests, least of all Mr Capogreco's, when he is clearly to be an important witness in the present proceedings. To have separate proceedings brought against Mr Capogreco at some time in the future seems hardly consistent with the dictates of s 56 Civil Procedure Act 2005.

The equitable claim 87The proposed cross-claim pleads breaches of fiduciary duty by each of Lily, Mr Capogreco and Konstan Lawyers. The claim in respect of Lily was said to arise from the relationship of trust and confidence between Lily and Alvera and partly bases itself on paragraphs 23 to 37 of the Fourth Amended Cross-Claim. 88The claims of breach of fiduciary duty against the 2 firms of solicitors are said to arise from the fact that each firm also acted on behalf of Lily when they acted for Alvera and were therefore in a position of conflict. 89Mr Leong on behalf of Lily made particular objection to the new equitable claim. His objections were that it was brought late (that is, not within 28 days of the Fourth Amended Cross-Claim being served) and because there was no explanation for why it was now brought. He was also critical of the pleading of the claim. 90In my opinion, these equitable claims are so closely aligned with the claims based on negligence that no additional factor requires their exclusion from the cross-claim. Indeed, in the light of various cautions expressed in Bristol and West Building Society v Mothew [1998] Ch 1, it may ultimately transpire that the so-called breaches of fiduciary duty amount to no more than further particulars of negligence. I express no concluded view on that.

Costs 91Mr Maait has been successful in his application to file the proposed cross-claim. In relation to the parties who did not oppose the filing of the cross-claim (the Plaintiffs, the First, Third, Fourth and Fifth Defendants) those parties should bear their own costs of the application. 92The existing parties to the proceedings who opposed the application were the Second Defendant (Lily) and the Sixth and Seventh Cross-Defendants (Konstan Lawyers). These parties were not only already parties in the proceedings but had been identified as concurrent wrongdoers in Mr Maait's Defence to the Fourth Amended Cross-Claim. The result of allowing the filing of the cross-claim against them amounted, in effect, only to a change of form and not one of substance. Because they were parties to the proceedings there would have been an apportionment between them on the Defence filed by Mr Maait if it was shown that loss was first occasioned after 26 July 2004 in accordance with Pt 4 Civil Liability Act . The issue in relation to that part of the Defence would have involved the same arguments that are raised by the claims for contribution in the cross-claim. 93Although those parties had an undoubted right to resist the filing of the cross-claim on the basis that they were arguably better off in meeting only the proportionate liability defence, they were unsuccessful in resisting the filing of the cross-claim. On the other hand, the application was, in substance, an application to amend. The ordinary rule there is that the party seeking leave should pay the costs thrown away by reason of the amendment. Balancing those considerations I consider that the Second Defendant on the one hand and the Sixth and Seventh Cross-Defendants on the other should jointly pay 50% of the Applicant's costs of the Motion. 94Mr Capogreco is not in the same position for the reasons I have already discussed. He had ceased to be a party to the proceedings in the circumstances that I have outlined, and he had a strong argument on discretionary grounds that the proposed cross-claim should not be permitted to proceed against him. Although he was unsuccessful in opposing the filing of the cross-claim I do not consider that it would be fair to him either to order that he pay the Applicant's costs or that he simply bear his own costs in relation to the Motion. The appropriate order is that, as concerns him, the costs of the Motion should be his costs in the cause.

Amendments by other parties 95At the conclusion of the hearing of the Motion, application was made by Mr Priestley that if leave was granted to the Applicant to file the cross-claim, I should grant leave to the other parties who wished to make similar claims under s 5 Law Reform (Miscellaneous Provisions) Act 1946. So that the proceedings are properly constituted I consider that I should accede to that application.

Conclusion 96I make the following orders: (1) Leave to the Third Cross-Defendant to file the Second Cross-Claim in the form attached to the Notice of Motion of 23 May 2011. (2) Leave to any other party to file a cross-claim seeking contribution pursuant to s 5(1)(c) Law Reform (Miscellaneous Provisions) Act 1946. (3) In relation to the Plaintiffs, the First, Third, Fourth and Fifth Defendants, no order as to costs. (4) The Second Defendant on the one hand and the Sixth and Seventh Cross-Defendants on the other hand jointly pay 50% of the Third Cross-Defendant's costs of the Motion. (5) Mr Capogreco's costs of the Notice of Motion are to be Mr Capogreco's costs in the cause.

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: 20 June 2011

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