WALTHAMSTOW PTY LTD -v- CARATTI [No 3] [2023] WASC 413 (30 October 2023)

1. At the directions hearing held on Friday, 20 October, a number of directions were made, largely by consent, to program further steps in CIV 3136 to ensure it was ready for trial, including the grant of leave to allow the plaintiff to file an amended pleading and to rely on a supplementary witness statement of Mr Masel.
2. The directions included modifications to the pre-existing timetable to ensure the process for resolving objections could be completed, additional documents could be added to the trial bundle, and changes in the timing for opening submissions could be accommodated.
3. So, despite all of the recent activity, it appeared that the trial of action CIV 3136 was ready to proceed as listed and both counsel indicated as much at the hearing before me on Tuesday, 24 October.

1. The proposed further steps in CIV 2283 were not capable of resolution at the hearing on Friday, 20 October, which necessitated that a further hearing be scheduled, which took place on 24 October. At that hearing, and in contrast to action CIV 3136, I was far from comfortable that the trial of action CIV 2283 was similarly ready, despite what appears to be a considerable volume of work and attention in recent weeks by the solicitors for the plaintiff, since coming onto the record.[3]
2. Following the directions hearing on Friday, I directed my associate to communicate to the solicitors for the parties to draw several matters to the attention of counsel to ensure that all matters of relevance could be canvassed at the next hearing. The substance of the email sent on Friday, 20 October was as follows:

Ahead of the directions hearing on Tuesday, his Honour invites the counsel for the parties to consider the following matters in addition to the matters which were canvassed at the hearing today:

• Whether any of the issues in CIV 3136 of 2019 or CIV 2283 of 2021 may be suitable to be heard at a separate hearing following the conclusion of the listed 10 day hearing, pursuant to the power in O 32 r 4 RSC.
• Whether any case management directions referred to in O 4A r 2 RSC would assist with the management of the trial.
• Whether the course of events since March 2023, at which time the court determined and ruled on the plaintiff's application to have the trial of the three actions heard together, has been such that it is no longer appropriate for the two actions to be heard together at one trial.

By identifying these matters, the court is not expressing any particular view. Rather, these matters are raised to ensure the parties have an opportunity to canvass all issues ahead of the next hearing. (emphasis added)

1. The third issue raised in the email is one that I have considered over the past week or so as the case manager of these actions, pursuant to the power to review an action at any time: O 4A r 5(1) RSC. In essence, it appeared to me that several of the points of commonality across the three actions (which have now been reduced to two actions) which formed the basis for the orders made in March this year may have reduced in significance. I emphasized some of these matters during the course of the hearing on 24 October.[4] One particular point of note is that the issues agitated in the action which had fallen away (namely, CIV 3016) provided the 'common glue' that bound all three actions together.
2. The clear position of both parties at the hearing on 24 October remained, nonetheless, that the actions should continue to be heard together. On balance, I agreed with that approach. I therefore approached the latest applications and my assessment of the case management considerations on the basis that the actions should continue to be heard together at one trial. I will return to this issue later.

1. The specific applications which were pressed by the plaintiff at the hearing on 24 October, which had been held over from the directions hearing on 20 October, were for leave to:

(a) file the proposed second amended substituted reply and defence to counterclaim dated 17 October; and

(b) rely on the supplementary witness statement of Steven Alick Masel which had been filed on 19 October.

1. Emerging out of these applications, at least as I apprehended matters, were additional issues requiring the court's consideration, namely:

(a) whether the plaintiff should be given leave to withdraw an admission in its pleadings; and

(b) whether the grant of leave as sought by the plaintiff would necessitate an adjournment of the listed trial of action CIV 2283; and

(c) in the event an adjournment of the listed trial of action CIV 2283 was appropriate, whether the present orders requiring the action to be heard together with CIV 3136 should be revisited.

1. As to the importance and relevance of case management considerations in determining an application to amend a pleading (and equally to file late evidence), the applicable principles are those set out in Beech J's decision in Hightime Investments Pty Ltd v Lungan [No 2].[5] His Honour made reference in that decision to the principles expressed by the High Court in Aon Risk Services Australia Ltd v Australian National University.[6] I refer in particular to the statements made in the concluding paragraphs of the joint judgment of the plurality in Aon Risk Services Australia Ltd v Australian National University,[7] including the following important statement of principle:

An application for leave to amend a pleading should not be approached on the basis that a party is entitled to raise an arguable claim, subject to payment of costs by way of compensation. There is no such entitlement. All matters relevant to the exercise of the power to permit amendment should be weighed. The fact of substantial delay and wasted costs, the concerns of case management, will assume importance on an application for leave to amend.[8]

1. In Hightime Investments Pty Ltd v Lungan [No 2], which dealt with pleading amendments, Beech J also made reference to the goals and objects respectively stated in O 1 r 4A and r 4B RSC. The goal in O 1 r 4A and the objects in O 1 r 4B(1) are to be borne in mind when exercising the power to permit amendment to pleadings, and to disallow such amendments.
2. With particular regard to the goal in O 1 r 4A and the objects in O 1 r 4B(1), the Court of Appeal in Mann v Bankwest - A Division of Commonwealth Bank of Australia[9] further emphasised the following propositions from the High Court's decision in Aon Risk Services Australia Ltd v Australian National University, namely:

(a) that the point may be reached where a party has had a sufficient opportunity to plead his or her case such that it is too late for further amendment so as to do justice to the other party and other litigants;

(b) much depends on the point the litigation has reached relative to the trial; and

(c) it has been recognised that when an application is made late in the day, and requires that dates set down for trial be vacated, the applicant bears a heavy burden to show why leave should be granted. In such a case the public interest in the timely and efficient resolution of legal proceedings and the effective use of court resources is a relevant consideration.

1. Reference was also made during the course of the hearing before me on 24 October to Murphy J's decision in Attorney‑General of Botswana v Aussie Diamond Products Pty Ltd.[10] As explained by Murphy J, the Aon Risk Services Australia Ltd v Australian National University principles require that in cases where an indulgence is sought, particularly in or close to the trial where there is an obvious potential for serious disruption to the litigation, there should be a proper explanation for the application, showing that it is brought in good faith and bringing to the court's attention, in a candid way, the circumstances giving rise to the application.[11]
2. The paragraphs in the plaintiff's proposed pleading which were in dispute were [6(ab)], [6(bb)], [6(d)], [8], [9], [20], and [26], although ultimately counsel for the plaintiff did not press the amendments to [6(ab)] and [20] (which concerned the practical completion issue).
3. Although only particular paragraphs were the subject of complaint, it should be made clear that it was ultimately necessary for the plaintiff to satisfy the court that it should be permitted to advance all of the amendments detailed in the pleading, given the lateness of the amendments. In this regard, I should observe that the affidavit sworn by Mr Tharby, to which I have earlier referred, provided the court with the appropriate explanation and background to the circumstances leading to the amendments proposed in the plaintiff's draft pleading. The affidavit also attached a copy of the relevant loan agreement to provide context to the amendments which were sought. In my view, this is precisely the type of affidavit material which Murphy J had in mind when making his comments in Attorney‑General of Botswana v Aussie Diamond Products Pty Ltd. The filing of such an affidavit is a necessary, but not a sufficient, step in an application in these circumstances.
4. The opinion I reached following the hearing on 24 October was that there had been delays in preparing material by both the plaintiff and the defendants (although leave had been granted without opposition to the late filing of the defendants' material), and there was a strong likelihood of prejudice to the defendants by reason of the new matters contained in the plaintiff's amended pleading and the supplementary statement of Mr Masel. I was not satisfied that all of the material in Mr Masel's statement, and all of the proposed amendments, were merely responsive to the defendants' late filed material, as I have mentioned above.
5. The balancing of the prejudice between the parties, and the case management considerations, was best resolved in my view by not denying the plaintiff the ability to mount its case in the manner it was proposing (other than as to the practical completion issue, which I will return to), but the concomitant and inevitable result of this approach was that I considered that to proceed with the trial of CIV 2283 would cause material prejudice to the defendants. In this regard, I accepted the submissions made by counsel for the defendants at the hearing.
6. Perhaps putting it another way, if the trial of action CIV 2283 was to proceed on 6 November, I would have declined leave to the plaintiff to rely on the supplementary statement and to advance the amendment to [6(bb)] of the proposed pleading (concerning the satisfaction of the security available), as well as the practical completion amendments, of course. As I formed the view the trial of the action should be adjourned (a step this court does not take lightly given its impact on other litigants), I considered it appropriate to grant the plaintiff leave. This was something of an unusual case in which both parties must share the responsibility for the trial being delayed.
7. As to the practical completion issue, which emerges from [6(ab)] and [20] of the proposed pleading, and which is the subject of Mr Caratti's affidavit in opposition sworn on 24 October, I formed the view that leave should not be granted to advance these amendments. That said, ultimately, counsel for the plaintiff did not press them, but for the avoidance of doubt, I ordered that leave be refused in any event. I did so because I formed the view that the introduction of issues into this litigation as to whether the project had reached practical completion would necessitate a lengthy adjournment of the trials and require the defendants to adduce additional lay evidence (and possible expert evidence) on this subject matter.
8. My more detailed analysis of the pleading amendments and the new supplementary statement of Mr Masel, and the question of leave being granted in relation thereto, is set out in Attachment A to these reasons.

1. The foregoing presented something of a dilemma, with two actions listed for trial to be heard together, but with one of them being at a problematic stage and likely to cause material prejudice to the defendants if it proceeded (being CIV 2283).
2. Having considered on my own motion in the week ending 20 October whether the orders for the actions to be heard together might be re-evaluated, but having heard from both counsel on 24 October that the parties considered the matters should remain in lockstep, I formed the view that that course remained appropriate. The extant factors which point in favour of maintaining this approach include:

(a) the commonality of the parties to their actions;

(b) the commonality of the parties' respective solicitors in the actions;

(c) the commonality of the claims in the actions (although the claims relate to different instruments and factual contexts);

(d) the similarity of the features of the relationship between the plaintiff lender and the defendant borrowers/guarantors;

(e) the evident savings in costs and trial time;

(f) the reduction in occasions in which the witnesses and any experts for the parties are required to attend court for cross-examination;

(g) quite importantly, the potential risk of inconsistent findings if the matters are detached from one another for the purposes of trial; and

(h) the possibility of two judges being required to determine the actions if they were heard separately, rather than one.[12]

1. As noted above, I therefore approached the latest applications and my assessment of the case management considerations on the basis that the actions should be heard together at one trial. The case management considerations identified in my earlier reasons fundamentally remain relevant.[13]
2. It followed in the circumstances that both matters should be adjourned in my view to be re-listed for trial in early 2024. I circulated orders to this effect on 25 October (which are set out under Heading G of these reasons) which led to an application being filed on the afternoon of 25 October by the plaintiff to set aside or vary certain of those orders. I will address that application next.

F. Plaintiff's application to set aside or vary orders Overview

1. The court summarised the plaintiff's application in an email to the parties sent on the afternoon of 25 October, as follows:

His Honour understands the plaintiff's application is in effect for orders which would maintain the trial of action CIV 3136 of 2019 commencing on 6 November 2023, with that trial to proceed on its own without a hearing of action CIV 2283 of 2021 at the same time. His Honour notes that the issue as to whether the two remaining actions should be heard together was the subject of the email sent by the court to the parties on Friday, 20 October 2023.

The specific orders which are now sought are:

• in CIV 2283 of 2021, that order 4...of the orders made on 25 October 2023 be varied to delete the words from "to be heard at the same time.."; and
• in CIV 3136 of 2019, that order 1 of the orders made on 25 October 2023 be set aside and the original order made in March 2023 for the matters to be heard together now be vacated (being order 2 of the orders made on 16 March 2023).

1. The plaintiff's application could not be listed on 26 October by reason of the unavailability of counsel for the defendants, and was listed for 2.00 pm on Friday, 27 October. The application was opposed by the defendants.
2. In support of the application, the affidavit of Mr Masel affirmed on 26 October was filed. I have carefully reviewed that affidavit. In summary, Mr Masel wishes for the trial of CIV 3136 to proceed on its own commencing on 6 November. He deposes to the enormous impact and stress of this litigation on him personally, professionally and in terms of his financing business, he deposes that the amount outstanding in CIV 3136 is approximately $10.5m (whereas the amount in CIV 2283 is around $1.46m), he deposes to the various personal commitments and holidays he has already planned for 2024 having put his life on hold for some time while these matters were prepared for trial, he raises a concern as to the impact of recoverability of the loans if the matter is delayed (albeit in quite general terms), and he raises the potential difficulties in finding a 10 day period between 19 February and 24 April 2024 (the dates identified by the court) in order to re-list the trial.
3. No written submissions were filed by either party for the purposes of the hearing on 27 October, but detailed oral submissions were made by both counsel at the hearing. In substance, plaintiff's counsel made submissions to the effect that the orders made on 25 October which adjourned CIV 3136 should be set aside and the trial of that action should proceed as planned, commencing on 6 November.

1. Quite properly, counsel for the plaintiff first addressed the question as to the jurisdiction of the court to set aside or vary its past orders. Counsel for the defendant submitted that there was no available jurisdiction in the circumstances, and raised a concern as to the lack of notice of the basis of the application and whether the argument was being put solely on the basis of a denial of natural justice or the more broader rubric of the interests of justice.
2. In my view, the court has jurisdiction to set aside the orders in question, as submitted by the plaintiff. The orders are procedural in nature, but in any event, there is jurisdiction to set aside orders of a substantive nature. It is sufficient for present purposes to observe that I respectfully agree with the summary of the relevant principles assembled by Corboy J in Commonwealth Bank of Australia Ltd v Saraceni[14] (which builds upon the earlier, considered analysis of this issue by Steytler P in Commonwealth of Australia v Albany Port Authority[15]), as follows:

1. The following propositions are relevant to an application to discharge or vary an order previously made by the court:

(a) A court may discharge or vary an interlocutory order in its inherent jurisdiction: Commonwealth of Australia v Albany Port Authority [2006] WASCA 185 [23] - [24] (Steytler P) and [70] (Pullin JA).
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> (b) That will be so even if the order was made by consent: Commonwealth v Albany Port Authority [24], Steytler P citing with evident approval RD Werner & Co Inc v Bailey Aluminium Products [1988] FCA 142; (1988) 18 FCR 389 and Ansons Pty Ltd v Merlex Corporation Pty Ltd [2001] WASC 204.
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> (c) An order that has been entered may be discharged or varied: Ryan Nominees Pty Ltd v Western Australian Planning Commission [2003] WASCA 134 [2], adopting what was said by Sanderson M in Ansons v Merlex [49].
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> (d) The court may vary or discharge an order that deals with 'substantive' rather than 'procedural' rights and obligations: see generally the instances cited by Steytler P in Commonwealth v Albany Port Authority [23] - [29].

1. Master Sanderson stated in Ansons v Merlex that the power to discharge or vary an order should be exercised with care and only in the most unusual circumstances. McKechnie J (with whom Barker J agreed) repeated that statement in Ryan Nominees. However, his Honour added that the overriding consideration was the interests of justice in the particular case: [3]. 2. It may well be that a discretion to discharge or vary an interlocutory order according to the interests of justice in the particular case should not be further circumscribed by imposing a requirement that the power only be exercised in the most unusual circumstances. However, I accept that the interests of justice must encompass the interests of the parties and the public in the efficient management of the interlocutory processes involved in civil litigation. Efficient and economical case management will generally require interlocutory disputes and associated issues to be finally determined as they arise. It is, in my view, in that sense that it may be said that the circumstances in which a court will revisit an interlocutory order that it has previously made will be rare.

1. The plaintiff's contention, summarised succinctly, was that the court should exercise this jurisdiction on the basis that the plaintiff would wish to have had an opportunity to submit that the two actions should no longer be heard together had the plaintiff been fully apprised of the possibility that both actions might be adjourned, thus allowing CIV 3136 to proceed to trial as listed. Additionally, the plaintiff submits it was denied an opportunity to place evidence before the court as to the prejudice suffered by the plaintiff in the event both actions were adjourned.
2. The defendants opposed the application and maintained that all parties were on notice that the prospect of both actions being adjourned was an outcome of the hearing listed for 24 October, and further submitted that it was somewhat ironic the plaintiff, who had originally sought orders for the actions to be heard together, and who had submitted on 24 October that the actions should remain together, was only days later advancing the contrary argument. Counsel for the defendants took me through the transcript of the hearing on 24 October to demonstrate that the prospect of both matters being adjourned was on the cards.
3. Be that as it may, it seemed to me in hindsight that the email communication sent to the parties on 20 October (which was intended to 'ensure the parties have an opportunity to canvass all issues ahead of the next hearing' but did not expressly identify the prospect of both matters being adjourned), and the reality that the majority of the hearing on 24 October was devoted to issues concerning the grant of leave for the filing of pleadings and a fresh witness statement in CIV 2283 rather than the question of adjournment, may have operated to the prejudice of the plaintiff.
4. I therefore approached the hearing on 27 October on the basis that the application was reasonably brought by the plaintiff, that the court had the necessary jurisdiction to entertain the application, but the court should exercise the jurisdiction with care and only in the most unusual circumstances should prior orders be set aside or varied. At the conclusion of the lengthy hearing, I indicated I would dismiss the application and briefly explained my reasoning for doing so, but indicated I would publish formal reasons to explain my conclusions. My reasons are as follows:
5. First, I was not persuaded, having heard the submissions of the plaintiff and upon reviewing the affidavit of Mr Masel, that these matters would have led to any different conclusion at Tuesday's hearing. That being so, I concluded that it was not appropriate to exercise the jurisdiction to set aside or vary the orders I made on 25 October.
6. Second, while I accept the submission of the plaintiff that the plaintiff did not understand that the adjournment of both actions was a possible outcome of the hearing on 24 October, the combined effect of the email from the court on 20 October and the discussion during the course of the hearing as to these matters, together with the defendants' appreciation that this was an outcome to be addressed at the hearing, lead me to conclude that the plaintiff's complaint as to being denied procedural fairness is not overly compelling. Certainly, it is not sufficiently compelling to warrant the court setting aside or varying orders so recently made, at a hearing at which all parties were represented. Could the email which was sent to the parties on 20 October have been expressed in more emphatic language? I accept it could have been. But the course of the hearing on 24 October demonstrates the issues were raised.[16]
7. Third, a continuing difficulty with the plaintiff's position, namely that the actions should now be de-linked, which is a volte-face relative to the position adopted at the hearing on 24 October and the position which formed the basis of the application in March of this year, is that it will require the following:

(a) a trial of CIV 3136 to proceed for some 8 to 10 days (although fewer days may be required) commencing on 6 November 2023;

(b) for me as the trial judge to prepare reasons for decision in respect of that action, which I estimate will take three months, but bearing in mind the Christmas break may not be completed until late April 2024;

(c) for a trial of CIV 2283 to be listed for some 8 to 10 days (although fewer days may be required) at some point from late January, or in February, or perhaps later, in front of a different trial judge;

(d) will require the parties to incur additional legal fees by reason of the duplication of trial time and getting up;

(e) will require the lay witnesses to give evidence and attend for cross-examination on two occasions (which has an impact on all witnesses, but I have evidence before me of its particular impact on one of the witnesses in the case); and

(f) may result in inconsistent findings of the court as between the two actions on matters that have a close similarity involving the same parties and the same witnesses.

1. In my view, the foregoing scenario is one which should be avoided if at all possible.
2. Fourth, while the court is not unsympathetic to the strain of this litigation upon Mr Masel and the impact on his life and his business interests, I can reasonably infer that the litigation has given rise to similar impacts for the defendants. Matters of this nature, personal to one of the litigants before the court, must be balanced against the broader interests of the administration of justice, including the demands on the court's resources and the impact on other users of the court. There is balancing of interests which needs to be undertaken. There is, in the present circumstances, no perfect solution but I must find the best way to minimise prejudice to all parties and to give recognition to the goals and objects in O 1 r 4A and 4B.
3. Fifth, and importantly, during the course of the hearing on 27 October and as a result of my insistence on being informed by the parties of the available dates for all parties, counsel and witnesses,[17] it became apparent that the parties could accommodate a trial of the actions commencing on 29 January 2024, which is a modest delay relative to the previous listing of 6 November 2023. Accordingly, issues of delay did not appear to me to be a significant factor in the overall analysis and I considered that many of the factors identified by Mr Masel in his affidavit therefore assumed less weight.
4. Sixth, in my view, and allied to the matters identified in the fourth reason above, the objects as stated in O 1 r 4B RSC of disposing efficiently of the business of the court and maximising the efficient use of available judicial and administrative resources loom large in the present circumstances, as does the imperative of avoiding decisions of this court with inconsistent findings.[18] While the court itself had raised the need to evaluate the continuing appropriateness of the combined hearing orders made in March, there remain good reasons for those orders to remain undisturbed (as I have explained above). Additionally, it is relevant that the parties have, over the past seven months or so, approached their preparation of the matters on the basis that both actions would be heard together. Fundamentally, I was most reluctant to depart from that assumed basis, and to disturb the previous orders which were the subject of my considered reasons in March, and certainly not at a hearing listed on short notice where both parties had only days before submitted that the actions should remain connected.
5. Accordingly, I dismissed the plaintiff's application to set aside or vary the orders made on 25 October. Following short submissions on the issue of costs, I ordered that the costs of the application be the defendants' costs in the cause.

1. The orders I made on 25 October (following the hearing on 24 October) were as follows:

1. The plaintiff has leave to file and serve the second amended substituted reply and defence to counterclaim in the form of the minute of proposed second amended substituted reply and defence to counterclaim dated 17 October 2023, save for:

(a) proposed paragraph 6(ab); and

(b) the proposed amendments to paragraph 20.

1. For the avoidance of doubt, the plaintiff's application for leave to withdraw the admission in paragraph 20 of the amended substituted reply and defence to counterclaim dated 15 September 2023 (concerning paragraph 39 of the substituted amended defence and counterclaim dated 17 September 2023), which admission was first pleaded by the plaintiff in its pleading filed on 22 February 2023, is refused.
2. The plaintiff has leave to rely on the supplementary witness statement of Steven Alick Masel dated 19 October 2023.

1. The trial of the action listed to commence on Monday, 6 November 2023 be vacated and the trial be relisted for 10 days commencing on a date to be fixed no earlier than Monday, 19 February 2024, to be heard at the same time as the trial of the action in CIV 3136 of 2019, with evidence in each trial to be treated as evidence in the other action.

1. The directions hearing listed for 27 October 2023 be vacated. Strategic conference to be held
2. The action be listed for a strategic conference at 2.15pm on Thursday, 2 November 2023, or such other date as is suitable for the most senior counsel briefed for each party to be available to appear.
3. The strategic conference will be listed for 2 hours duration and be held on the record.
4. The objective of the strategic conference will be to make directions for the future management of the action through to the trial with particular regard to:

(a) the state of the pleadings and the identification of the primary issues to be resolved by the court at trial;

(b) whether any party intends to seek leave to adduce additional lay evidence and, if so, the basis for leave being granted;

(c) whether any party intends to seek leave to adduce additional expert evidence and, if so, the basis for leave being granted;

(d) whether any party intends to seek orders for the provision of further discovery and inspection and, if so, the basis for those orders being sought;

(e) the arrangements which are sought by the defendants as to the manner in which Ms Bazzo will give evidence at trial;

(f) the manner and order in which the evidence in each action will be heard at trial; and

(g) the variations which should now be made to the trial orders including as to objections to evidence, the trial bundle, papers for the judge, and provision of submissions and chronologies.

1. Costs of the hearing on 24 October 2023 be reserved.

1. The trial of the action listed to commence on Monday, 6 November 2023 be vacated and the trial be relisted for 10 days commencing on a date to be fixed no earlier than Monday, 19 February 2024, to be heard at the same time as the trial of the action in CIV 2283 of 2019, with evidence in each trial to be treated as evidence in the other action.

1. The directions hearing listed for 27 October 2023 be vacated.

1. The action be listed for a strategic conference at 2.15pm on Thursday, 2 November 2023, or such other date as is suitable for the most senior counsel briefed for each party to be available to appear.
2. The strategic conference will be listed for 2 hours duration and be held on the record.
3. The objective of the strategic conference will be to make directions for the future management of the action through to the trial with particular regard to:

(a) the state of the pleadings and the identification of the primary issues to be resolved by the court at trial;

(b) whether any party intends to seek leave to adduce additional lay evidence and, if so, the basis for leave being granted;

(c) whether any party intends to seek leave to adduce additional expert evidence and, if so, the basis for leave being granted;

(d) whether any party intends to seek orders for the provision of further discovery and inspection and, if so, the basis for those orders being sought;

(e) the arrangements which are sought by the defendants as to the manner in which Ms Bazzo will give evidence at trial;

(f) the manner and order in which the evidence in each action will be heard at trial; and

(g) the variations which should now be made to the trial orders including as to objections to evidence, the trial bundle, papers for the judge, and provision of submissions and chronologies.

1. Unless any party wishes to make submissions on the costs of the hearing on 24 October 2023 (which they should do by email to my associate, copied to the other party, within seven days of the date these reasons are published), I intend to order that the costs be in the cause.

1. As to the plaintiff's application to set aside or vary the orders made on 25 October, I made the following orders:

1. The plaintiff's application made by minute of proposed orders dated 25 October 2023 is dismissed.
2. The costs of the application be the defendants' costs in the cause.
3. The trial of the action is to commence on Monday, 29 January 2024 for a period of 10 days through until no later than Friday, 16 February 2024, with the precise trial dates in this period to be fixed by order in due course, and to be heard at the same time as the trial of the action in CIV 3136 of 2019, with evidence in each trial to be treated as evidence in the other action.

1. The plaintiff's application made by minute of proposed orders dated 25 October 2023 is dismissed.
2. The costs of the application be the defendants' costs in the cause.
3. The trial of the action is to commence on Monday, 29 January 2024 for a period of 10 days through until no later than Friday, 16 February 2024, with the precise trial dates in this period to be fixed by order in due course, and to be heard at the same time as the trial of the action in CIV 2283 of 2021, with evidence in each trial to be treated as evidence in the other action.

Analysis of the Plaintiff's Proposed Second Amended Substituted Reply and Defence to Counterclaim and the Supplementary Statement of Mr Masel

Amendments to the reply and defence to counterclaim in CIV 2283

1. The proposed introduction of paragraph 6(ab) and the amendments to paragraph 20 effectively raise a question as to whether the project had reached 'practical completion'. The pleading represents a response to the defendants' allegation that the plaintiff was obliged to pay the balance of an advance. Importantly, the pleading from the defendants that the plaintiff was so obliged was not formally made until mid-September 2023, although I note the defendants had previously pleaded that the plaintiff's refusal represented a breach of the loan instrument (see [12.5]) so the introduction of the additional word 'as it was obliged to do' may be seen as making emphatic what was already pleaded.
2. The pleading is as follows:
   1. The plaintiff denies paragraph 12.4 of the Defence and says that it did not provide the balance of the Advance as:

(ab) at the time of the alleged requests, the project had not reached practical completion;

1. The plaintiff admits paragraph 39 of the Defence save to say that the plaintiff was not satisfied that practical completion of the project had been reached, (stage 2 not having been completed) yet still advanced the sum of $1,000,000 to the Borrowers by drawing a cheque made payable to Herdsman Technology Pty Ltd at the direction of the second defendant.
2. There was some debate between counsel and the bench during the hearing on 24 October as to precisely how this pleading fits within the context of the contractual provisions and the circumstances of the second drawdown. I note the definition of the 'Second Drawdown Date' in the loan instrument provides that the phrase means:

...the date of practical completion of the subdivision of the Property.

1. The definition includes no requirement for the plaintiff to be 'satisfied' whether practical completion has been achieved.
2. A principal difficulty with the pleading is that, for some time, the plaintiff has admitted the allegation put forward by the defendants in their counterclaim that the plaintiff was 'satisfied of practical completion' in December 2014 when it made the payment of $1.0m.[19] Properly, counsel for the plaintiff acknowledged that leave would be needed to withdraw this admission.
3. Ultimately, counsel for the plaintiff did not press these amendments, but for the avoidance of doubt, I have ordered that leave be refused in any event. I have done so because I formed the view that the introduction of issues into this litigation as to whether the project had reached practical completion would necessitate a lengthy adjournment of the trials and require the defendants to adduce additional lay evidence (and possible expert evidence) on this subject matter.

1. The proposed introduction of paragraph 6(bb) involves an allegation that the plaintiff was not satisfied with the security available to pay the sum of $470,551 requested by the first defendant. The pleading is as follows:
   1. The plaintiff denies paragraph 12.4 of the Defence and says that it did not provide the balance of the Advance as:

(bb) during the period 2 October 2015 to 8 November 2016, the plaintiff was not satisfied with the security available to pay the $470,551 requested by the first defendant;

1. On analysis, the amendment to the pleading introduces a specific allegation that the plaintiff was not satisfied with the level of security available where no express allegation to this effect had previously been made. The dates identified in the new plea essentially line up with the date of the request allegedly made by the first defendant (2 October 2015) and the date on which the ATO lodged a garnishee notice with the plaintiff (8 November 2016). It is during this period the plaintiff asserts it was not satisfied with the security available. The significance of this allegation rests upon cl 26.2 of the loan instrument which provides that:

26.1 The Lender may (at the Lender's complete discretion) withhold any portion of the Advance requested by the Borrower to be drawn down if the Lender is not satisfied with the security available, the financial circumstances of the Borrower or the Guarantor, the progress of the development of the Property or such other matter that the Borrower in its absolute discretion views as being relevant.

1. I accept the language of cl 26.2 of the loan instrument had previously been pleaded (see [6(b)] and [21(b)]) but the plea was previously expressed in a conditional sense. That is: the plaintiff was entitled to withhold any portion of the advance if the plaintiff was not satisfied with the security available. One might query, if the previous plea was sufficient, why was the amendment needed at all. In my view, the new plea is required to ensure the plaintiff can mount a positive case that the security was not adequate, on its assessment. This aspect of the plaintiff's case is now the subject of new evidence in Mr Masel's statement. See for example [80] - [84] of that statement.
2. So, although the relevant clause has been pleaded by the plaintiff for some time, I could not be satisfied the defendants were on notice or prepared to respond to a case which positively asserts reliance on this provision. That is, I do not find it would have been clear to the defendants from the pleading to date that the plaintiff intended to rely on the effect of this clause as part of its response to the counterclaim.
3. In the event the trial of CIV 2283 was to proceed on 6 November, I would have declined leave to the proposed amendment in paragraph 6(bb).

1. The proposed amendments to paragraph 6(d) allege that Mr Masel was informed of certain additional matters by the ATO during a particular conversation. It appears these matters are also addressed in Mr Masel's supplementary witness statement. The pleading is as follows:
   1. The plaintiff denies paragraph 12.4 of the Defence and says that it did not provide the balance of the Advance as:

(d) in or around late 2016 to early 2017, Mr Masel had a telephone conversation with Ross Burns from the ATO in relation to the Garnishee Notice, the effect of which was that Mr Burns advised Mr Masel that the plaintiff was not permitted to release any funds under the Loan Agreement that would be paid to the benefit of the second defendant including paying any funds directly to the City of Wanneroo, or to any other entity nominated by the first or second defendant to pay to the City of Wanneroo, as Mr Burns maintained that such payments would be to the ultimate benefit of the second defendant.

1. In my view, while they are late, these additional factual matters are of a narrow compass and will involve minimal prejudice to the defendants in responding thereto. Leave should be granted in this respect.

1. The proposed amendments to paragraph 8 place something of a new skin on old bones, and reflect matters which were the subject of the witness statement of Mr Masel filed in May 2023 (at [19] and [27] thereof). The pleading is as follows:

Extension of Loan Agreement did not discharge the guarantee

1. The plaintiff admits paragraph 14.1 of the Defence save to and says that:

(a) it was the first defendant, Mr Caratti, who first orally requested the First Extension in or around November 2015 in a conversation with Mr Masel, alternatively the first defendant knew of and consented to, or alternatively acquiesced to the First Extension;

Particulars giving rise to first defendant's knowledge and acquiescence

(i) The After the First Extension, the first defendant subsequently directed that payments be made to the plaintiff towards the Outstanding Amount (as defined in cl 1.1) after the date of the First Extension.

(ii) The After the First Extension, the first defendant formally consented to the Second and Third Extensions.

(b) the first defendant is estopped from claiming that the First Extension discharged the first defendant's guarantee contained in the Loan Agreement on the basis of the particulars to paragraph 8.a. above.

15 In my view, while they are late, these amendments do not introduce new matters and will occasion no material prejudice to the defendants in responding thereto. Leave should be granted in this respect.

1. Paragraph 9 responds to the defendants' allegations in [14.2] of their Counterclaim concerning the Ankar point.[20] Previously, the paragraph denied the defendants' allegation that the extension of the term of the loan agreement increased the potential liability under the guarantee with the consequence the guarantee was discharged, and repeated the matters in paragraph 8. The pleading is as follows:
   1. The plaintiff denies paragraph 14.2 of the Defence and repeats paragraph 8 above and says further that:

9.1 the extension did not alter the terms of the Loan Agreement other than the Repayment Date;

9.2 at all times, throughout the life of the loan (including the negotiation of the Loan Agreement itself), the first defendant dealt with the plaintiff on behalf of the Borrower and was aware, as at the date of the First Extension and subsequently, of the amounts outstanding under the Loan including the accumulated interest in arrears;

9.3 the First Defendant requested the First Extension on behalf of the Borrower, alternatively acquiesced to it, and was aware at all times of the concomitant effects, upon the guarantee, arising from that First Extension should the Borrower not pay amounts due, when they were due, under the Loan Agreement.

1. The additional matters sought to be added to paragraph 9 travel beyond the pleadings as the stood, although the degree to which they do is not capable of precise assessment at this stage. It can be said that the pleadings formerly raised matters of knowledge, consent and acquiescence on the part of the first defendant in his capacity as guarantor. The amendments seek to raise broader issues of the first defendant's knowledge, which may require additional evidence to be put on by the defendants and may need further discovery from the plaintiff. I am however conscious that these matters have emerged in some respects in response to the late evidence filed by the defendants and, as the first defendant has been on notice of the knowledge, consent and acquiescence issues, I consider leave should be granted for the amendments.

1. There is a modest amendment proposed to paragraph 26. The pleading states:
   1. The plaintiff denies paragraphs 45, 48 - 50 inclusive, repeats paragraph 6 above and says further that non-payment of the $295,679.45, which was never requested by the borrower or the defendants, did not, in and of itself, cause the delay in the issue of titles for the Security Property or any loss as pleaded, or at all.
2. The amendment clarifies a matter which was already the subject of the plaintiff's pleadings, in paragraph 6(a). In my view, while they are late, these amendments do not introduce new matters and will occasion no prejudice to the defendants in responding thereto. Leave should be granted in this respect.

Supplementary statement of Mr Masel in CIV 2283

1. The witness statement of Mr Masel dated 19 October is some 15 pages in length and deals with a number of subjects. I did not understand there to be an objection that the matters in the statement would travel beyond the plaintiff's pleading (assuming leave was granted to the proposed amendments).
2. The proposed evidence concerning the plaintiff's record keeping practices prior to 2010 and after 2010 are matters which do not appear to be responsive to the late evidence filed by the defendants. I refer to [1] - [17] of the supplementary statement.
3. The proposed evidence concerning the numerous historical loans referred to in the defendants' pleading are matters which do not appear to be responsive to the late evidence filed by the defendants. I refer to [18] - [64] of the supplementary statement. These issues appear to have been raised by the defendants in its defence as long ago as November 2022: see the Second Amended Defence and Counterclaim dated 7 November 2022 at [4.3.2].
4. The remaining matters in the statement appear to be wholly or partly at least in response to matters raised in the late evidence filed by the defendants. I refer to [65] - [101] of the supplementary statement. These matters concern the clearance fees on the Tuxedo Rise Project, the witness' assessment of the loan to value ratio on that project and the progress of the project, the City of Wanneroo clearance fees, the garnishee notice issued by the ATO in respect of Ms Bazzo, and certain top up payments.
5. In summary, my broad assessment is that the evidence sought to be led through this statement could, in certain respects, have previously been included in the statement of Mr Masel which was served in May 2023 (pursuant to the court's timetable), but in other respects is responsive to the evidence of the defendants which was only served in late September 2023. It is difficult for the court to accurately assess the extent to which the material is merely responsive.
6. In these circumstances, I inferred that the new material will lead to a degree of prejudice to the defendants in having to respond thereto at relatively short notice before the trial of the matter. The precise level of prejudice is difficult to determine, and Mr Caratti's affidavit did not descend into detail on these matters.
7. Making the best assessment I can, in the event the trial of CIV 2283 was to proceed on 6 November, I would have declined leave to the plaintiff to rely on the proposed statement.

I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.

[1] For the reasons explained in Walthamstow Pty Ltd v Caratti [2023] WASC 76.

[2] The reasons in Walthamstow Pty Ltd v Caratti [No 2] [2023] WASC 363 provide some context in this regard.

[3] As detailed in the affidavit of Alexander James Tharby sworn 24 October 2023.

[5] Hightime Investments Pty Ltd v Lungan [No 2] [2010] WASC 296.

[6] Aon Risk Services Australia Ltd v Australian National University [2009] HCA 27; (2009) 239 CLR 175.

[7] Aon Risk Services Australia Ltd v Australian National University [111] ‑ [114] (Gummow, Hayne, Crennan, Kiefel and Bell JJ).

[8] Aon Risk Services Australia Ltd v Australian National University [111].

[9] Mann v Bankwest - A Division of Commonwealth Bank of Australia [2020] WASCA 35.

[10] Attorney‑General of Botswana v Aussie Diamond Products Pty Ltd [2009] WASC 301.

[11] Attorney‑General of Botswana v Aussie Diamond Products Pty Ltd [70].

[12] Indeed, the significance of the commonality of claims and issues in the actions lies in the risk of inconsistent findings of fact being made by this court in multiple actions because the evidence presented in each action may not be the same, and the potential for the inconsistent application of the law to those findings if different judicial officers hear those actions. As I earlier noted: 'Where there is a risk of inconsistency on minor or less material questions, the balancing exercise may ultimately permit the orthodox separation of actions to be maintained. Where the risk pertains to central or significant questions, the policy dictates of avoiding that risk carry greater weight.': Walthamstow Pty Ltd v Caratti [50].

[13] 'For my part, I would prefer to approach the matter on the firmer footing that the combined hearing of the actions will: (1) almost certainly require far less hearing time than consecutive hearings of the actions; (2) likely reduce the legal costs of the parties in the sense there is only one trial to get-up for, only one cross-examination process for each non-expert and expert witness, and of course a reduction in hearing time typically translates to lower costs; (3) minimise duplication and wastage of resources; (4) need the trial judge to prepare one set of reasons for decision dealing with all issues rather than three separate sets; (5) likely lead to an overall quicker time for the three actions to be concluded at trial; and (6) likely to minimise the risk of fragmentation of the litigation through potential appeals, which appeals might otherwise be brought at different times, in respect of each of the trial outcomes if they are heard one after the other.': Walthamstow Pty Ltd v Caratti [58].

[14] Commonwealth Bank of Australia Ltd v Saraceni [2013] WASC 115.

[15] Commonwealth of Australia v Albany Port Authority [2006] WASCA 185.

[16] At the hearing on 24 October, as prompted by my associate's email on 20 October I discussed with the parties whether the matters retained a sufficient degree of commonality to be heard together and, depending on that determination, whether one or both matters should be adjourned to a later date. While canvassing all possible consequences of the matters remaining together, or being split, I suggested that 'the other scenario in light of that to consider is whether a short adjournment of the trial dates into the new year could serve to keep both matters together.' (ts 52). I also canvassed the possibility of the trial dates being retained for CIV 3136 in order to properly utilise the resources the court had already made available (ts 53). Counsel for the plaintiff opposed any adjournment of either matters (ts 55) as well as an adjournment of CIV 2283 (ts 58) (if the trial dates were to be retained just for CIV 3136). The plaintiff also expressed a strong opposition to the potential for separate trials for both actions due the factual commonalities (ts 58).

[17] Following an email sent by my associate to the parties on 26 October 2023 outlining the availability of the court for various periods from 22 January 2024 and by allowing the defendants an opportunity to make enquiries of trial counsel during a break in the hearing.

[18] A factor which I identified I my earlier reasons, and which had been relied upon by the plaintiff in its application to have the matters heard together: Walthamstow Pty Ltd v Caratti [8], [53] and [70].

[19] Substituted Amended Defence and Counterclaim dated 17 September 2023 [39]. The admission appears to have been first introduced in February 2023 through the introduction of [20] to the plaintiff's pleading.

[20] Ankar Pty Ltd v National Westminster Finance (Australia) Pty Ltd [1987] HCA 15; (1987) 162 CLR 549.