Wen Guo Jin v St George Bank Limited

Judgment 1HER HONOUR: These proceedings arise from a loan transaction pursuant to which St George Bank Ltd advanced substantial sums to a number of parties. The proceedings were commenced by Mr Wen Guo Jin by way of "pre-emptive strike" (as the matter was put by Mr Jin's counsel) seeking relief in respect of Mr Jin's contention that certain security documents, to which he is purportedly a party, were not in fact signed by him. 2Before the Court are two notices of motion concerning a third cross-claim filed in the proceedings by Mr Jerry Li and other parties. The notices of motion first came before me on 30 November 2010 by way of referral to me sitting as Duty Judge that day. The first in time is a notice of motion filed by the plaintiff on 12 November 2010 seeking an order that the amended pleading of the third cross claim filed 9 November 2010 be dismissed or struck out. 3The second in time is a notice of motion filed by the third cross-claimants on 18 November 2010 seeking leave to file an amended third cross-claim. The motions, in effect, raise the same substantive issue, namely the third cross-claimants' entitlement to file a document in the form of the document in fact filed on 9 November 2010. The reason the third cross-claimants need leave in respect of that document, notwithstanding the fact that it has already been filed, is that it was accepted by the Registry through inadvertence, there having been no order of the Court or leave granted permitting that to occur. 4When the motions came before me on 30 November 2010, after hearing some argument in the matter, I indicated and I think counsel for the third cross-claimants accepted that there did appear to be some force in some of the complaints made in respect of the pleading that had been filed. 5Mr O'Connor, who appeared for the third cross-claimants, sought an opportunity to prepare a further draft of the amended third cross-claim and the proceedings were stood over to 15 December 2010. On the adjourned date, a further opportunity was sought to amend the pleadings again and the proceedings were stood over to a date in February, ultimately re-listed on 22 February 2011. 6On that occasion, counsel for the third cross-claimants again sought an opportunity to amend the part of the third cross-claim which remained in dispute between the parties, namely paragraph 18. The need for that adjournment was occasioned by the fact counsel had only recently received a substantial affidavit containing a narrative of the financial dealings between the parties which he needed to consider and take into account in the amendment. 7I made directions on that occasion for a further draft to be served on the plaintiff by 4 March 2011 and stood the proceedings over to yesterday, 9 March 2011. The further draft of the amended third cross-claim was not distributed in accordance with my direction but was provided in time for the plaintiff to meet it. Yesterday I heard argument as to the remaining disputes in respect of that draft. 8Mr Henskins, who appeared on behalf of the plaintiff (the first defendant to the third cross-claim) raised three objections to the form of the most recent draft of the pleading. First, he noted that paragraph 14(a), which had previously been removed from the cross-claim in an earlier draft, had reappeared in its old form. Mr Henskins had previously submitted that that paragraph ought not to be the subject of leave to amend on the grounds that it was inconsistent with the terms of an affidavit sworn by Mr Li and with another pleading filed by him in the proceedings. It appeared that, in light of those submissions, although I made no determination in respect of them, Mr Li accepted that the contentions in that form should be removed, since the amended pleading served on 13 December 2010 omitted that paragraph. 9It is not clear to me whether paragraph 14(a) has been re-inserted through inadvertence. In that respect I note that the current form of the paragraph includes other words previously omitted, so that it identifies, confusingly, two different dates on which the relevant event is alleged to have occurred and two different parties alleged to have transferred the interest in question. Plainly, if it was intended to revive the allegation previously seen fit to be omitted it cannot be revived in the form in which it presently stands. 10Accordingly, leave will not be granted to file any amended cross-claim which includes a paragraph in that form. 11The second issue raised by Mr Henskins may appear to have entailed a level of punctiliousness; it is that the third cross-claimants have, for the third time, failed in the draft amendment circulated to comply with the requirements of Rule 19.5 of the Uniform Civil Procedure Rules. The specific complaint made by Mr Henskins is that the draft amendment is not marked up so as to disclose the amendments. I note, having looked at Rule 19.5 overnight, that there are additional respects in which the draft circulated does not comply with the requirements of that Rule. These are not mere formalities. A draft amendment which fails to identify the changes from an earlier draft is apt to cause confusion and to waste time when legal representatives are required first to identify what is different before turning their minds to whether they should object to the changes. Any further amended draft cross-claim must comply with all of the requirements of that Rule. 12The final and most substantive objection to the pleading is to paragraph 18. That paragraph was previously the subject of a complaint by the plaintiff that it was incomprehensible. It was said, indeed, to be so incomprehensible that the plaintiff could not even craft any sensible request for particulars, but I doubt whether that was a fair complaint. In any event, it has been replaced by paragraphs 18 to 25 in the latest draft. 13Before turning to the detail of those paragraphs it is worth bringing to mind the principles in relation to pleadings, although those principles should be well known to all of the parties concerned. First and foremost, as I was reminded during the hearing, the court must seek to give effect to the overriding purpose of the Civil Procedure Act 2005 and the Uniform Civil Procedure Rules to facilitate the just, quick and cheap resolution of the real issues in the proceedings. It may be acknowledged that the overriding purpose will not be attained by insistence on perfection in pleadings. Nor, however, will it be attained if a pleading that is apt to confuse is permitted to stand in the interests of saving time and costs. 14The principal vice of the paragraphs included in the latest draft is that they adopt language which, although providing a level of factual detail, wholly fails to identify the relevant parties, the relevant transactions and the legal consequences of those transactions. 15In Northam v Favelle Favco Holdings Pty Limited (unreported) NSWSC 7 March 1995 at 5 Bryson J noted that a pleading may be embarrassing even though it does contain allegations of material facts sufficient to constitute a cause of action if the material facts are couched in expressions which leave difficulties or doubts about recognising or piecing together what is referred to, or if imprecise words are used. His Honour expressed the view that "procedural justice can be upset just as much by opportunistic advocacy exploiting a choice among several possibilities as by an ambush from complete concealment". 16The paragraphs in the draft third cross-claim to which I have referred recite the following basic facts: first, that the first cross claimant, Mr Jerry Li, registered a company called HSJ Group Australia Pty Ltd; secondly, that his accountancy firm, Jerry Li & Co (which I note is the third cross-claimant) became accountants for that company; third, that a company called Austwide Construction entered into a contract with HSJ for construction works associated with premises in Parramatta; and fourth, that a Mr Fred Coote, a director of Austwide, opened a bank account. Against those basic facts, the following Delphic allegation is made in paragraph 22 of the draft cross-claim: The plaintiff and the first cross claimant were nominated as authorised signatories of the account in the capacity as partners for the financial management of the account. 17There is then a series of allegations which amount, in effect, to contentions that at the request of the plaintiff either Mr Li or his accountancy firm paid a series of cheques from the bank account either to the plaintiff or to a company said to be "the plaintiff's company". It is further alleged that in the event that the plaintiff did not repay "these loans" it was understood that the first cross-claimant would have to make up the shortfall in "the Austwide account" and that subsequently the plaintiff would become liable to the cross-claimant "for any additional funds that he may have to advance to the company". 18It may be gleaned from those allegations that the claim sought to be brought is, in effect, a claim by Mr Li and entities associated with him for an indemnity from Mr Jin arising from the contention that Mr Li has repaid debts allegedly owed by Mr Jin. 19However, the pleading fails to identify a series of material facts. The pleading identifies Austwide as the contractor in respect of the commercial development premises but it is not clear whether the funds advanced were Austwide's or those of HSJ or some other entity. The allegation in paragraph 22 set out above wholly fails to identify the capacity in which the plaintiff and the first cross-claimant acted as signatories on the account. The owner of the account is not identified. Paragraph 23 of the pleading is again notable more for what it does not say than what it does say. That paragraph states: During the period from around 15 May 2002 to 18 February 2003, Jerry Li & Co at the request of the plaintiff made payments to the plaintiff and Aus-Pacific (the plaintiff's company) totalling $686,600.00. These payments were understood to be loans from the company account that would have to be repaid by the Plaintiff. 20It is not clear whether the payments referred to are alleged to have been made by Mr Li in his own right or in some other capacity. The reference to "the company account" suggests that the funds advanced were those of HSJ but, again, that is far from clear. 21Finally, I note that the reference at the conclusion of the paragraph to the understanding of unidentified parties introduces a wholly irrelevant and embarrassing consideration. There is a similar contention in paragraph 24. It is well established that the subjective understanding of the parties as to the effect of a contract is irrelevant. The proper construction of the agreement, if there was one, falls to be determined according to the objective construction of the acts and words said to give rise to the agreement. (See generally Toll v Alphapharm [2004] HCA 52; 219 CLR 165 at [35]). It follows that a draft pleading that includes paras 18 to 24 in their present form should not be the subject of any grant of leave. 22As I indicated at the hearing yesterday, I do think the third cross-claimants should have a further opportunity to bring in another draft. However, the reason I have taken care to publish these reasons in some detail is that it has been foreshadowed on behalf of the plaintiff that the time is fast approaching when they will consider moving the court for an order dismissing the cross-claim without leave to amend. 23I heard the parties yesterday on the question of costs of the notices of motion. It will be clear from the history I have recited that the plaintiff has had a measure of success in its motion. Mr O'Connor argued that the need to bring the matter before the court, particularly before the duty judge, could have been obviated if a measure of common sense and co-operation had been brought to bear. In my view, however, the problems with the amended pleading thus far have been such as to warrant an application to have it struck out. In that respect, I accept, as submitted by Mr Henskins on behalf of the plaintiff, that a party that concedes that a pleading requires amendment cannot complain that his opponent failed to tell him how to plead his case. In my view, the plaintiff should have his costs of the two motions. 24I direct the third cross-claimants to serve a further proposed amended third cross-claim within 21 days of today. I order the third cross-claimants to pay the plaintiff's costs of the two motions. I stand the proceedings over to 4 April 2011.