Appeal Dismissed: Court Upholds Summary Judgment Against Claimant

The Court of Appeal dismissed the claimant's appeal, upholding the District Court's decision to strike out the defence and enter judgment for the opponent. The District Court found the claimant's defence vexatious and an abuse of process due to repeated delays and non-compliance with court directions.

[ADDRESS] of Appeal

CITATION: [NAME] v [NAME] & Anor (No 2) [2005] NSWCA 378

HEARING DATE(S): 27 October 2005

JUDGMENT DATE: 3 November 2005

JUDGMENT OF: [NAME] JA at 1; [NAME] at 25

DECISION: 1 Time for the filing of the summons for leave to appeal is extended to 20 January 2005.; 2 Summons dismissed.; 3 Claimant to pay the opponents costs of the summons.

CATCHWORDS: PRACTICE – District Court – pleading – summary judgment – no question of principle - ND

District Court Act 1973 LEGISLATION CITED: District Court Rules 1973

Foran v Wight (1989) 168 CLR 385 CASES CITED: [COMPANY] (1933) 48 CLR 457

[NAME] (Claimant) [NAME] (First Opponent) PARTIES: [COMPANY] (Second Opponent)

FILE NUMBER(S): CA 40051 of 2005

[NAME] (Claimant) COUNSEL: [redacted]

[NAME] (Claimant) SOLICITORS: [redacted]

LOWER COURT JURISDICTION: District Court

LOWER COURT FILE NUMBER(S): DC 5182 of 2003

LOWER COURT JUDICIAL OFFICER: Rolfe DCJ

IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 40051 of 2005

[NAME]

3 NOVEMBER 2005 [NAME] v [NAME] & ANOR (No 2) CATCHWORDS

PRACTICE – District Court – pleading – summary judgment – no question of principle FACTS

The opponent sued the claimant in the District Court for debt. The Judge acting under [NAME] struck out the claimant's defence, refused leave to amend and entered judgment in favour of the opponent. The claimant argued that the Judge was not entitled to strike out his defence, should have given him leave to amend, and was not entitled to enter judgment for the opponent. He also argued that the promise sued on was joint and the other promisors were not joined, and the benefit of the promise was held jointly by the opponent and others and the other promisees had not been joined.

HELD: (1) The claimant's continued delays in filing his evidence in breach of directions that he do so combined with the failure of his defence, after two amendments, to disclose a triable issue entitled the Judge to find that the defence was vexatious and an abuse of process so that [NAME](1)(a) and (b) were satisfied; (2) Non-joinder of parties did not defeat the judgment; (3) DCR Pt 9 r 12(1) which prohibits departure in pleading does not prevent amendments that are inconsistent with the pleading being amended. ORDERS

(1) Time for the filing of the summons for leave to appeal is extended to 20 January 2005.

(2) Summons dismissed.

(3) Claimant to pay the opponents costs of the summons.

[NAME]

3 NOVEMBER 2005 [NAME] v [NAME] & ANOR (No 2) Judgment 1 [NAME] JA: This is a summons for leave to appeal from the judgment of Rolfe DCJ of 27 September 2004 who struck out, under [NAME], the claimant's (herein [NAME]) notice of grounds of defence filed on 1 July 2004, refused leave to amend, and entered judgment in favour of [NAME] for $347,636.68 (later amended by consent to $335,708.68). 2 [NAME] purported to appeal as of right but later filed a summons for leave to appeal out of time. [ADDRESS] should cure the procedural irregularity. [NAME] now accepts that the orders of Rolfe DCJ were interlocutory, and that leave to appeal is required pursuant to s 127(2)(a) of the District Court Act. 3 The proceedings arose from the dissolution of business relationships between the parties which had been carried on through various companies, trusts, and partnerships. The dissolution was affected by an agreement of 20 December 2002. Clause 6 relevantly provided: "[[NAME]] to pay the sum of $350,000 to [[NAME]] on the following terms -

i. $50,000 on the Transfer Date;

ii. the Balance of $300,000 shall be payable on or before the 30th June 2003. In the event the $300,000 is not paid before 1st March 2003 interest shall be payable at an interest rate equivalent to 9% per annum backdated to the Transfer Date. The backdated interest is due and payable on 1 March 2003 with monthly interest payable in arrears on the last day of each month.

iii. [[NAME]] will be granted by [[NAME]] a mortgage over the shares held by [[NAME]] in GDK to the value of the $300,000 as security for the $300,000.

iv. [[NAME]] to provide a personal guarantee to [[NAME]] regarding the payment of the $300,000.

v. [[NAME]] to acknowledge that the payment of these funds satisfies all previous and future entitlements [[NAME]] may have with regard to GDK and associated entities including all Legal Charges outstanding to [NAME]." 4 [NAME] paid [NAME] the $50,000 due on the Transfer Date, which was the date the agreement was signed, but did not pay the sum of $300,000 due on 30 June 2003. [NAME] sued for this amount together with accrued interest. [NAME]'s verified defence filed on 16 January 2004 contained in para 3 a plea in confession and avoidance as follows: "In relation to paragraph 3, the defendant admits clause 6 of the Agreement provided for the payment of the sum of $350,000 but also says that clause 6 contained other terms. The defendant relies on the entirely of the Agreement." 5 Paragraph 6 asserted that the Agreement was amended before 23 September 2003 and para 7 pleaded that [NAME] was estopped from enforcing the Agreement by reason of negotiations between 30 June and 11 November 2003. 6 On 14 [NAME] was given leave to amend his defence within 14 days. An amended defence was not filed in time. On 25 June he was again given leave to amend his defence on or before 28 June. An amended defence was not filed in time. On 28 June an amended defence was sworn, and this was filed on 1 July pursuant to an extension of time granted ex parte by Rolfe DCJ. 7 The second defence contained para 3 as before, and in paras 6-13 alleged breaches by [NAME] of cls 3, 9 and 10 of the Agreement, and in para 14 it alleged that [NAME]'s obligation in cl 6 to pay $300,000 was conditional upon performance of cls 3, 9 and 10 by [NAME]. In paras 15-16 [NAME] pleaded a set-off of $472,414.53. 8 A notice of motion to strike out the first defence and enter judgment for the plaintiff was filed by [NAME] on 22 July. This came before Rolfe DCJ on 5 August and was adjourned part-heard to 27 September. [NAME] filed a notice to motion on 25 August seeking leave to further amend his defence in terms of the draft annexed to the notice of motion. The notices of motion were heard on 27 September. 9 [NAME]'s draft third defence pleaded non-performance by [NAME] of alleged conditions precedent in cls 3, 14(iv) and 14(v) of the Agreement, which prevented the sum of $300,000 becoming due and owing to [NAME]. It did not plead a contractual variation or estoppel and there was no defence of set-off. 10 The case had been case managed in the Court's Commercial List and on 13 [NAME] was directed to file and serve "all evidence" on which he intended to rely by 7 May. He did not comply with this direction. A further direction for the filing of "all evidence" by [NAME] was given on 25 June, such evidence to be filed by 5 July. This direction was not complied with. On 5 August Rolfe DCJ directed [NAME] to serve by 16 August "all evidence relied on by the defendant in order to make out the defence" to be pleaded in any draft further amended defence. Affidavits by [NAME] were sworn on 7 and 16 August. The Judge found that these did not comply with the Court's direction. 11 The Judge dealt first with the motion for leave to amend the defence. The draft further amended defence relied on non-performance by [NAME] of alleged conditions precedent. The Judge was not satisfied that the provisions relied upon were conditions precedent, but found that there was no evidence before the Court of any breach by [NAME] of the clauses in question. This situation arose, at least in part, from the decision of counsel for [NAME] not to read the latter's affidavit of 4 August, or paras 1-19 of his affidavit of 16 August. He did attempt to read paras 20-21 but they were rejected because [NAME], although given notice in good time to attend for cross-examination, did not do so and his absence was not explained. The Judge therefore refused leave to amend and dismissed [NAME]'s motion. His decision to reject the two paragraphs was not seriously challenged. 12 The Judge then struck out the defence of 1 July under [NAME]. He said he was doing this on the Court's own motion, but [NAME]'s amended motion sought the entry of judgment, and senior counsel appearing for him made an oral application for that defence to be struck out by the Court doing this of its own motion. 13 The Judge said that "in reality this was all about whether or not the defendant could establish to the satisfaction of the Court that there is at least some evidence to support his contention that there was a triable issue". He held that the defence of 1 July was an abuse of the process of the Court in the light of [NAME]'s repeated failures to comply with directions of the Court and put on "any satisfactory or adequate evidence … to support his contention that there is some sort of breach of the Agreement by the plaintiff". 14 [NAME](1), so far as relevant, provides: (1) Where a pleading: (a) discloses no reasonable … defence …, (b) has a tendency to cause prejudice … or delay in the proceedings, or (c) is otherwise an abuse of the process of the Court, the Court may, on the application of a party or of its own motion, at any stage of the proceedings … order that … the pleading be struck out." 15 The defence of 16 January in substance admitted that, but for the contractual variation or estoppel relied on, the debt was due. Those defences were abandoned in the defence of 1 July which relied on non-performance of alleged conditions precedent in cls 3, 9 and 10 of the Agreement, and a set-off. The defence of set-off and reliance on non-performance of alleged conditions precedent in cls 9 and 10 were abandoned in the proposed third defence. It is evident that [NAME] and his advisers were having great difficulty in finding any defence. 16 In my judgment [NAME]'s obligation under cl 6 to pay $300,000 to [NAME] on or before 30 June 2003 was not subject to any conditions precedent in cls 3, 6, 9, 10, or 14. None of these were in terms or in substance a condition precedent to [NAME]'s obligations in cl 6. The parties could have provided for a conveyancing type settlement under which payment by [NAME] was concurrent with and mutually dependent upon performance by [NAME] and entities he controlled of some or all of their obligations under the Agreement. Compare Foran v Wight (1989) 168 CLR 385. This was not done. 17 Instead fixed sums were payable by [NAME] on or before fixed dates, and the sum sued for attracted interest from the Transfer Date if it was not paid by 1 March 2003. Where a contract for the sale of land provides that the purchase money or any part thereof is payable on a fixed date, not being the agreed date for completion, the vendor can sue for the price, or the instalment, if it is not paid on the due date: [COMPANY] (1933) 48 CLR 457, 476 per Dixon J. This was not a contract for the sale of land but the same principles apply and with added strength. 18 In my judgment therefore those parts of the defence of 1 July which had not been abandoned in the proposed third defence did not disclose any defence to the action and the Judge was entitled to find that Pt 9 r 17(1)(a) and (b) were satisfied. This is not a case where the defence was "otherwise an abuse of the process of the Court" within para (c), but it is clear, both in substance and as a matter of construction, that the cases within paras (a) and (b) are also regarded as an abuse of the Court's process. 19 The Judge was therefore fully entitled to strike out the defence of 1 July under r 17(1), and under r 17(3) to grant leave to [NAME] to have judgment entered on his behalf. 20 [NAME] argued that [NAME]'s promise in cl 6 was not given to [NAME] alone, but to him and his associated companies and trusts in accordance with the definition of [NAME] ([NAME]) in the Agreement. He also submitted, for similar reasons, that the promise of [NAME] was a joint promise made by him and his associated companies and trusts and the necessary parties are not before the Court on either side of the record. This point was not raised during the hearing on 27 September and it is too late to raise it in this Court. DCR Pt 7 r 7 provides: "(1) An action shall not be defeated by reason of the … non-joinder of any person as a party. (2) [ADDRESS] may in any action determine the issues or questions in dispute so far as they affect the rights and interests of the parties." 21 If the non-joinder does not defeat an action, it certainly cannot defeat a judgment, and while the judgment stands the rights under cl 6ii are res judicata and no-one else can sue or be sued for the debt. 22 Senior counsel appearing for [NAME] in the District Court relied on an alleged inconsistency between para 3 of the first defence and para 3 of the second and submitted that this involved a breach of DCR Pt 9 r 12(1). This provides: (1) A party shall not in any pleading make an allegation of fact, or raise any ground or claim, inconsistent with a previous pleading of his." 23 The reliance of [NAME]'s then counsel on r 12(1) was misconceived. The rule, as its heading indicates, is directed against departure in pleading. This normally occurs when a plaintiff's reply asserts facts which are inconsistent with his statement of claim. A departure of this kind was prohibited under the rules of Common Law pleading in use in this State prior to 1972 (Bullen & Leake, 3rd ed, pp 568, 733, 819). The rule against departure did not and does not inhibit amendments to a pleading which are inconsistent with a prior version of that pleading. In any event, as [NAME] pointed out, para 3 of the second defence was for all practical purposes in the same terms as para 3 of the first defence. However these errors do not affect the judgment and orders under challenge. 24 In my judgment therefore the proposed appeal would fail in substance and in these circumstances leave to appeal should be refused. I propose the following orders:

(2) Summons dismissed.

(3) Claimant to pay the opponents costs of the summons. 25 [NAME]: I agree with [NAME] JA. **********

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.