Australia and New Zealand Banking Group Ltd v Alirezai [2001] QSC 439

[?.O<?D QSC ~ JFbGJ . . State Reporting Bureau (~ Queensland Govemin.ent ~ Department of justice ~nd At!om<:y-Get><:ral Transcript of Proceedings Copyright in this transcript is vested in the Crown. Copies thereof must not be made or sofd without the written authority of the Director, State Reporting Bureau. SUPREME COURT OF QUEENSLAND CIVIL JURISDICTION MULLINS J No 81049 of 1997 AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED (ACN 005 357 522)- and MOSHEN ALIREZAI and MOSHEN ALIREZAI and AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED (ACN 005 357 522) and MALCOLM JACKSON BRISBANE .. DATE 09/11/2001 RULING REVISED COPIES ISSUED State Reporting Bureau Date l'f I I I I O f Plaintiff Defendant Plaintiff by Counterclaim First Defendant by Counterclaim Second Defendant by Counterclaim I 11, ;4 floor, The Law Courts, George Street, Brisbane, a. 4000 Telephone: (07) 3247 4360 Fax: (07) 3247 5532 1 -- 1 of 17 -- 09112001 D.7 T14/MV16 M/T 2/2001 (Mullins J) HER HONOUR: This is a very late application to amend the defence and counterclaim of the defendant. The evidence in the trial was completed yesterday. The matter was adjourned until today in anticipation that the parties would make their submissions as a result of the completion of the evidence. At the commencement of the hearing today, Mr North of Senior Counsel for the defendant, Mr Alirezai, applied for leave to amend the defence and counterclaim as set out in the draft which has become Exhibit 126. Mr North also applied for leave to amend the defendant's reply. The draft of the proposed amended reply is Exhibit 127. Mr Daubney of Senior Counsel for the plaintiff, opposes all amendments. Some of Mr Daubney's submissions are set out in the written objection, which is Exhibit 128, and those arguments were expanded upon in oral submissions. The principles that apply to the amendment to a pleading are settled. Mr Daubney referred me to State of Queensland v. J L Holdings Pty Ltd (1997) 189 CLR 146. In the joint judgment of Justices Dawson, Gaudron and McHugh it is stated 1 10 2 30 4P ( I at page 155 to the effect that justice is the paramount · 50 consideration in determining such an application. The application for amendment in J L Holdings was made some months in advance of trial, even before the date for trial was fixed. The factors that were relevant to the exercise 2 RULING 60 -- 2 of 17 -- 09112001 D.7 Tl4/MV16 M/T 2/2001 (Mullins J) of the discretion in that case were different to those in this case where the evidence has been completed. The fact that evidence in a trial has been completed does not preclude amendment being made if, on balancing consideration of all the relevant factors, justice requires the amendments to be made. I have considered each of the amendments against the background of the evidence that has been given in the trial and whether it is likely that the ambit of the evidence would have been affected, if the amendment had been made at an earlier stage of the trial. Having regard to the nature of the plaintiff's claim and the nature of the defendant's counterclaim, that appears to be an appropriate path to take. Some of the amendments that are proposed are ancillary. Others are more significant 1 10 20 30 amendments and I will deal with those first. 40 The first amendment in this category is that in paragraph llA. Paragraph llA deals with an allegation that the bank knew that Mr Sarlak was in a position to influence Mr Alirezai, or had a motive or interest in insuring that Mr 50 Alirezai executed the bill of mortgage. The particulars that were provided in support of that allegation up until the proposed amendment were the bank's knowledge of the conduct of the account held by Sarlak Enterprises with the bank. 60 3 RULING -- 3 of 17 -- 09112001 D.7 T15/NW15 M/T 2/2201 (Mullins J) The amendment that is proposed is an allegation that the bank knew or ought to have known that Mr Sarlak was in a position to influence Mr Alirezai because of its knowledge of the matters that are set out in paragraphs l(d) to l(j) of the defence and counterclaim, that Mr Sarlak and Mr Alirezai had been friends for some years, that each were Iranian and the matters·referred to in paragraph 5 of the defence and counterclaim which was a prior loan by Mr Sarlak of $50,000 to Mr Alirezai. Mr North supported the amendment on the basis that some of those matters are caught up in other allegations in the pleading. Mr Daubney opposed the amendment on the basis that the bank's defence of the counterclaim was conducted jointly with that of Mr Jackson, one of its officers. If the allegation that is now sought to be inserted in paragraph llA had been made at an earlier time, it would have caused inquiry to be made of Mr Jackson about his knowledge of those matters. It is apparent from the course of the evidence that has been given that it is only as a result of Mr Jackson's knowledge that the bank could have had knowledge of those matters that are now sought to be alleged as known by the bank or as matters which ought to have been known by the bank. Mr Daubney submitted that there was therefore a clear potential for claims for indemnity as between the bank and Mr Jackson to arise. This is a valid basis for opposing the amendment. If it had been made at an earlier stage, it may very well have changed 4 RULING 1 10 20 30 50 60 -- 4 of 17 -- 09112001 D.7 T15/NW15 M/T 2/2201 (Mullins J) how the bank conducted its case and whether the bank's representatives also represented Mr Jackson. I therefore refuse the amendment to paragraph llA. In relation to paragraphs 20 and 20A and the consequential amendment to paragraph 21, these amendments raise an issue which certainly during the course of evidence occurred to me as being a very relevant consideration as to whether or not 1 10 the bank could rely on the certificate of independent advice 20 given by Mr Kennedy. The amendments that are sought to be made reflect the evidence that has been given in the course of the trial. My reaction to the amendments is that it is unlikely that the 30· ambit of the evidence would have been altered in any way if this amendment had been made at an earlier stage of the trial. As Mr North submitted, the issue of whether or not the bank could rely on the certificate of independent advice given by Mr Kennedy was raised on the pleadings. This is a 40 refinement -of that issue. I consider that the justice of the case requires this amendment to be made so that complete consideration can be given to all matters which are relevant to the role that Mr Kennedy played in advising Mr Alirezai and in furnishing the certificate of independ_ent advice to the bank. I will therefore allow the amendments to paragraphs 20, 20A 50 and 21 and the consequential amendments which are made to 60 5 RULING -- 5 of 17 -- 09112001 D.7 T15/NW15 M/T 2/2201 (Mullins J) subsequent paragraphs to include the references to these paragraphs as a result of the amendments being made which I have just allowed. For the same reasons, I will allow the amendments to paragraphs 35(m) and (n), 35A and 36 which raise an identical issue in relation to the certificate of independent advice given by Mr Kennedy in respect of the 1993 bill of mortgage. I will also allow the consequential amendments to subsequent paragraphs as a result of allowing the amendments to 35, 35A and 36 which I have just allowed. The next substantial amendment is to paragraph 24 and the consequential amendments to paragraph 28. These are amendments which are raised at this stage in order to, in most instances it appears, amend paragraph 24 so that it accords with the evidence given in Mr Alirezai's case. I am not disposed to allow the amendment to paragraph 24 and the consequential amendment to paragraph 28 at this stage. If it is the case that the amendments are simply amendments to reflect the evidence, then it may be that it is appropriate at the time that reasons for judgment are 1 10 20 30 delivered to consider at that stage whether it is necessary · 50 for those amendments to be made and to hear the parties on the amendments at that stage. I refer to the submission made by Mr North that the amendments are in respect of allegations which the bank 6 RULING 60 -- 6 of 17 -- 09112001 D.7 T15/NW15 M/T 2/2201 (Mullins J) responded to simply with non admissions. That could be a relevant consideration to take into account after findings have been made on the evidence. At this stage, I am not in a position to come to a conclusion about whether the proposed amendments to paragraph 24 do in fact reflect the evidence and I consider it premature to entertain the application to amend paragraph 24 and to make the concomitant change to paragraph 28. In relation to paragraph 27A, in the course of argument I made my attitude clear to the amendments that were proposed to the last paragraph that was sought to be inserted in paragraph 27A. I do not consider that the amendment that commences with the opening words: "The first defendant knew that Sarlak in the past had misused his position of influence of the following" - and is followed by two paragraphs lettered (a) and (b), would have resulted in no change to the evidence adduced in the case if the amendment had been made at an earlier stage. I'consider that it would be unfair to the bank to permit that amendment to be made at this stage. In relation to the other amendments to paragraph 27A I accept Mr Daubney's submission in relation to that amendment which accords with those he made in relation to paragraph llA. I will therefore not allow the balance of the amendments proposed to paragraph 27A. Now, where does that 1· 10 20 30 40 50 leave the amendment to paragraph 30? 60 7 RULING -- 7 of 17 -- 09112001 D.7 Tl6/RB28 M/T 2/2001 (Mullins J) MR NORTH: Your Honour, I'd still seek to rely on the allegation in paragraph 27A in support of paragraph 30 notwithstanding----- HER HONOUR: Yes, that seems to be a machinery amendment, doesn't it? 1 MR NORTH: Yes, your Honour. 10 HER HONOUR: I will allow the amendment to paragraph 30. It is a wrap-up pleading and the amendment simply amends the reference to p~eceding paragraphs which are relied on to make the allegation in paragraph 30. That also follows for 20 the amendment to paragraph 30(c) as well. It is the correction of an error and will be allowed. The amendments to paragraph 37(a) are disallowed. That follows from my ruling in relation to paragraphs 24 and 28. It may be that an application to amend paragraph 37 might need to be revisited if it becomes appropriate to consider a later application in relation to paragraphs 24 and 28. Paragraph 38 is minor and will be allowed. The amendment to paragraph 47 is not strictly necessary to be made but I will allow it to be made on the basis that the market value of Lot 2 in the particulars is shown as $120,000. Similarly I will allow the amendment to paragraph 48. The amendment to paragraph 50 is an amendment to the particulars which captures provisions that have been previously pleaded. It appears to be in the nature of a correction and I will allow the amendment to paragraph 50. Is 53 in the same nature? 8 RULING 30 . 50 60 -- 8 of 17 -- 09112001 D.7 T16/RB28 M/T 2/2001 (Mullins J) MR NORTH: Your Honour, that's just trying to term it in better English - literally. HER HONOUR: I will allow the amendment to paragraph 53 and 1· I will allow the amendment to paragraph 54. The amendment 10 to paragraph 58(b) (iv) depends on whether - actually, I don't think it does depend on whether I allow the amendment to paragraph 9. MR NORTH: No, your Honour, it doesn't. HER HONOUR: Is it just a minor one or - well, the agreement that's referred to is an agreement between the plaintiff and Sarlak Enterprises, isn't it? Back in paragraph 9. Oh, I see, because you're making the amendment to the particulars in paragraph 9. MR NORTH: Whatever meaning it has will depend on what the 20 agreement is as described in 9. 30 HER HONOUR: Yes. MR NORTH: But I'd prefer the description of it to remain in the one paragraph. So if you make that amendment there, your Honour, it is machinery and it's effect will depend on what your Honour rules on 9. HER HONOUR: I will allow the amendment to paragraph 58(b) (iv). That appears to be minor. MR NORTH: Could I just mention that paragraph 55 has another minor amendment? Your Honour didn't expressly refer to it as you went through. It's just to the particulars. HER HONOUR: I will allow the amendment to paragraph 55. That is minor and consistent with the amendment to paragraph 48. I will allow the amendment to paragraph 58(f). Part of the amendment made there reflects the amendments made to paragraphs 20A and 35A which I have allowed. The other 9 RULING 40 . 50 60 -- 9 of 17 -- 09112001 D.7 T16/RB28 M/T 2/2001 (Mullins J) amendment that is sought to be made there is the addition of the words, "or any adequate" before the words "independent advice". I am not convinced that it is absolutely necessary for that amendment to be made in order to permit a finding that Mr Alirezai did not receive any adequate independent advice prior to the execution of the bills of mortgage. I consider that that allegation is caught up within the allegation that Mr Alirezai did not receive any independent advice because it goes to the sufficiency of the advice. Because I do not consider that it would have made any difference to the ambit of the evidence, whether that amendment was made earlier or not, I will allow that amendment as well. I will allow the amendments that incorporate paragraph 62A, 62B and 62C. Those amendments to some extent reflect amendments that have been made by the deletion of particulars in paragraph 63 which is a concomitant amendment which I will allow. I do not consider that the substance of those new paragraphs is so different to what has already been pleaded that it 1 10 2 30 would have altered the ambit of the evidence. If there is a 50 concern by the bank that it would have, I am willing to entertain an application from the bank that witnesses of Mr Alirezai be recalled or that the bank be permitted to call further evidence itself. 60 10 RULING -- 10 of 17 -- 09112001 D.7 Tl6/RB28 M/T 2/2001 (Mullins J) Although I am concerned about the public policy of the finality of litigation, having regard to the allegations that have been made in this particular proceeding, I consider that the justice of the case requires that Mr Alirezai be permitted to make the amendments that are set out in paragraphs 62A, 62B and 62C. Mr Daubney's submission was that, if those amendments had been made earlier, Mr Alirezai may have been cross-examined about his knowledge of the financial circumstances of Mr Barlak and Barlak Enterprises gained from Mr Barlak. Mr North responded that the actual knowledge of Mr Alirezai about the financial circumstances of Mr Barlak and Barlak 1 10 20 Enterprises could only be relevant as to what the bank may 30 know about Mr Alirezai's knowledge. I accept Mr North's submission. That leaves paragraph 8. I will not allow the amendments to paragraph 8. They seem to be amendments which propose to be 40 made as a tidying up exercise on Mr Alirezai's part. I do not consider that they are necessary to be made in order to allow me to determine this matter. The amendments in paragraph 8 that I have just referred to are the deletion of the words "by Barlak Enterprises'' in all the lettered subparagraphs. There is a further amendment that is sought to be made by Mr Alirezai to paragraph 8 which I will permit and that is the . 50 insertion of the reference to Barlak in the particulars to 60 11 RULING -- 11 of 17 -- 09112001 D.7 T17/FLC4 M/T 2/2001 (Mullins J) paragraph 8. That appears to be a relatively minor amendment. There is a concomitant amendment made in the particulars to paragraph 9 which I will allow. I do not consider that it is appropriate at this stage to make the other amendment that is proposed to paragraph 9 which was the deletion of the words "by Sarlak Enterprises". Now have I covered enough? MR NORTH: Perhaps I did not hear your Honour. I didn't 1 10 know that your Honour expressly ruled on the proposed 2 amendments to paragraph 62. HER HONOUR: I will allow the amendments to paragraph 62. Paragraph 62 again is a pleading that refers back to previous paragraphs. Part of the amendment to paragraph 62 reflects the amendments that I have allowed to paragraphs 20A and 35A. I do not see that any prejudice is caused to the bank by allowing Mr Alirezai to refer to the other paragraphs that are sought to be referred to in paragraph 62. I allow the amendment that is proposed by way of the deletion of the particulars to paragraph 62. MR NORTH: And, your Honour, then there's paragraphs 72, 76 and 78 and 79, they all look to be machinery ones and 81. HER HONOUR: The amendment to paragraph 72 has already been covered by my ruling and it is allowed. The minor amendments to paragraphs 76, 78, 79 and 81 will be allowed. I therefore give----- 12 RULING 30 . 50 60 -- 12 of 17 -- 09112001 D.7 T17/FLC4 M/T 2/2001 (Mullins J) MR DAUBNEY: I'm sorry to interrupt, your Honour, on our shopping list----- HER HONOUR: Yes. MR DAUBNEY: -----we had paragraph 14A(g). HER HONOUR: I will allow the amendment to paragraph 12. It seems to be minor and it is simply a deletion of particulars which can not be sustained in any case. I will not allow the amendment to paragraph 14A(g). It appears to me after considering the submissions that were made that that amendment is either inconsequential on one view or, if it is not inconsequential, it has the effect that it could affect the ambit of the evidence and I will not allow it on that basis. MR DAUBNEY: And I also had paragraph 37(c) on page 22 on my shopping list. I know your Honour did subparagraphs (a) and (b) but I didn't hear your Honour refer to (c). It may have been covered----- HER HONOUR: No, I will not allow the amendment to - I thought I ruled that I would not allow the amendments to 37. Yes, I ruled that I would not allow - I see I did not say 37 (c) . MR DAUBNEY: Yes. HER HONOUR: Well, I also will not allow the amendment to paragraph 37(c) because it is a concomitant amendment to that which was proposed in relation to paragraph 24. 13 RULING 1 10 20 30 40 . 50 60 -- 13 of 17 -- 09112001 D.7 T17/FLC4 M/T 2/2001 (Mullins J) MR DAUBNEY: Thank you. HER HONOUR: Now, you will wish to plead. That leaves the amendment to the reply. Consistently with the ruling that I've made in relation to the defence and counterclaim, the amendments should be allowed to the reply. Is that your----- MR DAUBNEY: Yes. MR NORTH: That's my hopeful expectation, your Honour. HER HONOUR: Well----- MR NORTH: But, yes, it seems to----- HER HONOUR: It seems to follow. All right. Now, I'll give the defendant Mr Alirezai leave to file and serve a defence and counterclaim amended in accordance with those amendments which I have indicated I will allow from the draft which is Exhibit 126. Now, can you have that filed by Monday? MR NORTH: I'm instructed so, yes, your Honour. HER HONOUR: That's to be filed and served by 4 p.m. on Monday 12 November 2001 and I give the defendant leave to file and serve a further reply in accordance with Exhibit 1 10 20 30 4 127 again by 4 p.m. on Monday 12 November. When do you want · 50 to have to file your defence to the counterclaim? MR DAUBNEY: Can your Honour bear with me, I'll take some instructions please. 14 days if your Honour pleases. HER HONOUR: Well, is it going to effect your submissions? MR DAUBNEY: Yes. 14 RULING 60 -- 14 of 17 -- 09112001 D.7 T17/FLC4 M/T 2/2001 (Mullins J) HER HONOUR: So you 1 re not going to be in a position to start the submissions this afternoon? MR DAUBNEY: Well, with respect, your Honour, we can't start our submissions this afternoon. HER HONOUR: next Friday. All right. Well, I was going to - I thought by What about Monday week? MR DAUBNEY: We're in your Honour's hands. We would in any event ask for liberty to apply in case we need to seek an appropriate extension but at this stage if your Honour is prepared to order Monday week. HER HONOUR: I will give you leave to file and serve an amended reply and answer by 4 p.m. on Monday 19 November 2001. So that means we will have to adjourn the hearing of the submissions until after you have had an opportunity to file your defence and consider any application that you wish to make by way of recalling witnesses or seeking to put in further evidence. MR DAUBNEY: That's quite right, your Honour. HER HONOUR: So when will you be in a position to - will you be in a position by 4 p.m. on 19 November to advise whether 1 10 20 30 or not any further application----- 40 MR DAUBNEY: Yes, yes, we will do that. By 4 p.m. on that day we'll be in a position to advise as to whether any further applications will be sought to be made - or sought to be brought. HER HONOUR: On or before 4 p.m. on Monday, 19 November 2001, the plaintiff must notify the defendant and my associate as to whether any application will be made as a result of the allowance of the amendments to the defence and counterclaim. 15 RULING 50 60 -- 15 of 17 -- 09112001 D.7 T18/MLM27 M/T 2&3/2001 (Mullins J) HER HONOUR: So it will be that on or before 4 pm on Monday 19 November 2001 the defendants by counterclaim must notify my associate and Mr Alirezai's solicitors as to whether any application will be made as a result of the allowance of amendments to the defence and counterclaim. HER HONOUR: In relation to costs the defendants by counterclaim seek an order that their costs of today be paid by the plaintiff by counterclaim on an indemnity basis and that they also receive the costs thrown away by the amendment. The plaintiff by counterclaim does not oppose some order for costs in favour of the defendants by counterclaim but opposes that the order be on an indemnity basis. A party who seeks the leave of the Court to make a late amendment must be prepared to bear is the costs that arise as a result of the making of a late application. This application for amendment was made at the end of the entire evidence. It could have been some or some parts of it could have been foreshadowed at an earlier stage. It is therefore appropriate as a consequence of allowing the amendments which I have allowed and the plaintiff by counterclaim obtaining the benefit of that exercise of discretion in his favour, that the costs of today be paid by the plaintiff by counterclaim. 16 RULING 1 10 20 30 50 60 -- 16 of 17 -- 09112001 D.7 Tl8/MLM27 M/T 2&3/2001 (Mullins J) I do not consider the circumstances are such that the plaintiff by counterclaim should have to bear those costs on an indemnity basis. I therefore order that the plaintiff by counterclaim pay the defendants by counterclaim costs of the application for leave to amend the defence and counterclaim, to be assessed on the standard basis and the costs of the defendants by counterclaim amending the reply and answer. I think that covers it. HER HONOUR: In relation to the orders that I have made today I order that there be liberty to apply. Otherwise the trial is adjourned to a date to be fixed by consultation between the parties and then with my associate. 17 RULING 1 10 20 30 40 50 60 -- 17 of 17 --