Motion to Strike Out Defence Dismissed in NSW Supreme Court

The Court dismissed a motion to strike out part of the defence, holding that the defence was not manifestly untrue or an abuse of process, despite the claimant's arguments.

Supreme Court New South Wales

Medium Neutral Citation: [NAME] v [NAME] [2016] NSWSC 1505 Hearing dates: 19 October 2016 Date of orders: 19 October 2016 Decision date: 19 October 2016 Jurisdiction: Common Law Before: Beech-Jones J Decision: (1) Notice of Motion filed 13 October 2016 dismissed. (2) Plaintiff to pay the defendant's costs of the Motion on an indemnity basis. Catchwords: Motion to strike out Defence – asserted Defence based on evidence that could not be true – argument untenable – still no question no principle Cases Cited: [NAME] v Carneys Lawyers [2015] NSWSC 1080 Category: Procedural and other rulings Parties: [NAME] (Plaintiff) [COMPANY] (Second Defendant) Representation: Counsel: [redacted] [NAME] (Second Defendant)

Solicitors: [redacted] [NAME] (Second Defendant) File Number(s): 2015/226349

EX TEMPORE Judgment 1. HIS HONOUR: By Notice of Motion filed 13 October 2016 the plaintiff, [NAME], seeks to strike out paragraph 14 of the Defence filed by the defendant [COMPANY] ("[NAME]"). To understand the Notice of Motion, it is necessary to say something about the background to the proceedings.

2. In his Second Further Amended Statement of Claim, [NAME] sues [NAME] as the legal entity said to be the responsible agent acting for the vendor of the property known as "Reevesdale" that he purchased in 2007. In broad terms, [NAME] complains that to the knowledge of the relevant [NAME] representative, [NAME], and without his knowledge, there was a development proposal to place a quarry on a nearby property, [ADDRESS], which, if pursued, had the potential materially to affect the value and enjoyment of Reevesdale. [NAME] claims that because of that development, actions were taken by his financier to require him to sell properties because the amount he paid for Reevesdale was substantially below its actual value and that ultimately he suffered significant financial loss.

3. In paragraph 21 of his Statement of Claim, [NAME] recounts a conversation that was said to be had with [NAME], when he was inspecting the property, at which [NAME] was asked why the property was being sold. Paragraph 21 pleads that [NAME] stated it was because one of the vendors had a fear that they had seen ghosts at the property and she did not want to return. Paragraph 21 also pleads that was the "sole reason given by [NAME] in response to the express inquiry from the plaintiff as to the reasons behind the sale."

4. Paragraph 22 of the Second Further Amended Statement of Claim then pleads as follows: "At no stage subsequently did [NAME] say anything else that was material before exchange of contracts and settlement (which both occurred on 24 July 2007) by way of explanation or qualification of the reason given to the plaintiff for the Vendor's decision to sell Reevesdale. At the time of contracts and settlement the plaintiff was wholly unaware of the intended quarry development on the adjacent land at [ADDRESS]."

1. Paragraph 23 then alleges that [NAME] knew there were plans to develop [ADDRESS], and specifically pleads that "The reason that the Vendor was selling was because of the threat posed to Reevesdale by the potential development of [ADDRESS]."

1. Paragraph 14 of [NAME] pleads as follows: "The Defendant denies paragraph 22 of the Further Amended Statement of Claim and said that, after [NAME] had accompanied the Plaintiff on the inspection of Reevesdale, [NAME] spoke to the Plaintiff and informed him that there was a proposed quarry on the [ADDRESS]." 1. [NAME] now seeks to strike out paragraph 14 of the Defence. In his Notice of Motion he contends that the paragraph is: "…manifestly untrue and is designed to cause prejudice to or cause a delay in the prosecution of this case and is otherwise an abuse of process and is in derogation of the duty of the pleader to have an honest belief in the truth of the pleading."

1. In support of this contention, he has filed his own affidavit denying there was any such conversation with [NAME].

2. In defence of the motion, the solicitor for [NAME] has stated on oath that paragraph 14 of the defence was supported by an affidavit, filed in other Supreme Court proceedings involving [NAME], by [NAME] who has since passed away.

3. In his affidavit of 21 April 2015 filed in those other proceedings (2012/306629), which were between [NAME] and the solicitors who acted for him on the purchase, [NAME] states that at some stage he met [NAME] at the property and they had a conversation in which [NAME] asked him about some placards that were displayed on the road leading to the property that complained about a quarry proposal. [NAME] claims that he said to [NAME], "I don't know much about it. I'll make some inquiries." [NAME] then says that after that visit he "stopped at a house in [ADDRESS] that had a placard on the front of it." He says he knocked on the door, had a conversation with the man who answered and he told [NAME] that he was "protesting against a quarry that they want to build on [ADDRESS]". [NAME] said that person described themselves as "an organiser of the action group" and stated that "[t]here are legal proceedings over the development application." [NAME] states that after that conversation he then telephoned [NAME] and told him that he had spoken: "…to a man in Bungonia about the placards you asked about. He told me there is a proposed quarry on the [ADDRESS]. He said that it would have an effect on Bungonia and the area. There would be construction and trucks and all that stuff. He told me they are going through court at the moment. I have his contact details if you would like them."

1. In his affidavit [NAME] states that [NAME] then said, "Thanks for that. I'll make some inquiries."

2. The materiality of this conversation, if it is shown to have occurred, is obvious. If it were proven that [NAME] was aware of the quarry proposal and its potential to affect Reevesdale before he purchased it, that would at the very least cause significant damage to his case.

3. On this application [NAME] has obtained an affidavit from the secretary of the Bungonia Progress Association, who it appears was involved in the protest action at the quarry. She said that a subcommittee of the association was formed which was called the "[COMPANY]." The deponent says that no members of that subcommittee lived on the [ADDRESS]. [NAME] contends that the effect of that affidavit is to so comprehensively undermine [NAME]'s version as to warrant the striking out of paragraph 14 of the Defence.

4. Otherwise, in terms of whether paragraph 14 of the Defence should be struck out, I also note that in [NAME] v Carneys Lawyers [2015] NSWSC 1080 at para 23, Adamson J accepted the contested aspects of [NAME]'s evidence that I have described.

5. The effect of all this is to reveal that there is a contestable issue of fact as to whether or not [NAME] was advised prior to the purchase of the quarry proposal. There is no basis for suggesting that it is not open to [NAME] to plead, in reliance upon [NAME]'s affidavit, the facts asserted in paragraph 14 of its Defence.

6. An assessment of whether, and if so, to what extent, the affidavit of the person from the Bungonia Progress Association undermines [NAME]'s assertion as to what he told [NAME] is a classic matter of fact to be determined at the trial. On a strike-out application it is simply not possible for the Court to reach any conclusion that [NAME]'s evidence was either untruthful or unreliable, much less that it was so untruthful and so unreliable that it cannot even be deployed by the defendant.

7. It follows that the Notice of Motion filed 13 October 2016 must be dismissed. [Parties address on costs]

1. Counsel for [NAME] seeks that the plaintiff pay the costs of the Motion on an indemnity basis. He points to an email dated 14 October 2016 from the defendant's solicitor to the plaintiff, advising that even though [NAME] may seek to argue at trial that the evidence of [NAME] should not be accepted, that did not mean there was a problem with the Defence.

2. In the end, I do not think there is any basis to deny the application for indemnity costs. The Notice of Motion was doomed from the outset, because it was based on a fundamental misconception of the role of the Court at an interlocutory stage compared with the trial stage. Despite a number of difficulties affecting [NAME], I think with a moment's reflection he should have been able to appreciate that. I see no reason why the defendant should have to incur costs because an unreasonable Notice of Motion was persisted with.

3.

Accordingly, I order the plaintiff to pay the defendant's costs of the Motion on an indemnity basis.

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Amendments 23 May 2017 - Name of Counsel corrected on coversheet 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: 23 May 2017