Venn v Bendigo Bank Limited (No 2)
[2007] QDC 266
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- Unreported Judgment
- Venn v Bendigo Bank Limited (No 2)[2007] QDC 266
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Venn v Bendigo Bank Limited (No 2)[2007] QDC 266
Venn v Bendigo Bank Limited (No 2)[2007] QDC 266
DISTRICT COURT OF QUEENSLAND
CITATION: | Venn & Anor v Bendigo Bank Limited (No 2) [2007] QDC 266 |
PARTIES: | STUART VENN and JUDITH VENN (TRUSTEES FOR THE S & J VENN FAMILY TRUST) Plaintiffs/Applicants V BENDIGO BANK LIMITED ABN 1106804918 Defendant/Respondent |
FILE NO/S: | D387/2004 |
DIVISION: | Civil |
PROCEEDING: | Application |
ORIGINATING COURT: | District Court of Queensland at Maroochydore |
DELIVERED ON: | 9 November 2007 |
DELIVERED AT: | Brisbane |
HEARING DATE: | 5 November 2007 at Brisbane |
JUDGE: | Alan Wilson SC, DCJ |
ORDER: | 1 Application dismissed 2 Applicant to pay the respondent’s costs of and incidental to the application fixed at $7,115.00 3 Plaintiff to deliver final written submissions by 4pm 28 November 2007 4 Liberty to apply on two days notice |
CATCHWORDS: | PRACTICE AND PROCEDURE – AMENDMENT OF PLEADINGS AFTER CONCLUSION OF TRIAL – RE-OPENING OF EVIDENCE – DISCRETION – RELEVANT FACTORS – where plaintiffs claimed import of evidence available at trial only became apparent to them after trial finished – whether leave to amend pleading and reopen evidence should be granted UCPR, r 171 Cases considered: Australasian Meat Industry Employees Union (WA Branch); ex parte Ferguson (1986) 67 ALR 491 Henderson v Henderson (1843) 67 ER 313 Lactos Fresh Pty Ltd v Finishing Services Pty Ltd [2006] FCA 219 Loutfi v C Czarnikow Ltd [1952] 2 All ER 823 Smith v New South Wales Bar Association (No. 2) (1992) 176 CLR 256 Venn v Bendigo Bank [2006] QDC 319 |
COUNSEL: | Mr T Macklin for the Plaintiffs/Applicants Mr D P de Jersey for the Respondent/Defendant |
SOLICITORS: | Warren Gardiner & Co for the Plaintiffs/Applicants Middletons Solicitors for Defendant/Respondent |
- [1]In this unusual application the plaintiffs seek leave to make significant amendments to their pleading, and pursue other associated relief. The first aspect of the application which makes it unusual is that it has been brought after the conclusion of a four day trial of the action to which it relates in the District Court at Maroochydore and during a period in which the parties were, pursuant to directions given at the end of the hearing, preparing and exchanging final addresses in the form of written submissions.
- [2]The matter already had something of an unusual and complex history. It related to transactions surrounding the construction of an apartment building in Bowen in 2001-2003. The companies which owned the land and built the premises were each trustees for a unit trust in which the plaintiffs held units (for a family trust). The loss the plaintiffs claimed in the action (a little over $100,000) is the amount they allegedly contributed to the unit trust.
- [3]The Amended Statement of Claim upon which the trial was conducted was delivered by the plaintiffs around 17 February 2006. It raised a claim for pure economic loss and contained 38 pages and a prayer for $100,416.40 for damages for negligence, and interest. The difficulties the plaintiffs faced in an action for relief of that kind and generally in the proceeding as pleaded were considered by Dodds DCJ in Venn v Bendigo Bank [2006] QDC 319, in which his Honour nevertheless declined an application by the Bank to strike out their claim and pleadings.
- [4]The present application seeks the following principal relief:
…
- That the plaintiffs have leave to amend their Statement of Claim, filed 17 February 2006 in accordance with the draft Amended Statement of Claim to be served with this Application.
- Further, or in the alternative, that the defendant’s witnesses called at trial, Patrick John Freney and Moira Carter, be recalled and that the plaintiff’s Counsel have the opportunity to further cross-examine each of them in relation to the matters (or some of them) which are set out generally in the affidavit of Stuart Venn filed in support of this application and the amended Statement of Claim …
…
- Further, in the alternative that the plaintiffs have leave to file and serve forthwith upon the following witness for the defendant … a subpoena directed to that person requiring that person to attend to give evidence at any resumed hearing.
(The person referred to in para 6 of the Application is Mr Scott Elkington, who was said to be the Queensland State Manager, Retail (of, it is presumed, the defendant Bank)).
- [5]The action has its genesis in the Bank’s loan of $2.6 million to the development company constructing the units and, in particular, the first disbursements from those loan funds. The Bank’s case was, in short, that the plaintiffs and all other persons and companies associated with the construction of the apartments knew (and it was a term of the loan) that from the $2.6m the Bank intended paying $360,000 to the National Australia Bank to discharge a mortgage over the land, plus its own legal fees and some interest. The Bank asserts these various sums, amounting in total to about $384,000, were lawfully deducted from the first disbursement of $799,000 and explain the amount of the actual first ‘progress’ payment of $415,000 to the builder. Simple arithmetic shows, of course, that the first payment allegedly made to the building company was in an amount not discordant with the Bank’s case.
- [6]The plaintiffs’ case, as opened and conducted at the trial, involved an intense focus upon that transaction and an allegation that it was an element in short payments to the builder which were ultimately connected to the plaintiffs’ alleged losses. In his written Opening delivered before the trial began, Counsel for the plaintiffs said:
23. It is an essential part of the plaintiffs’ case that the Builder was paid slightly in excess of $300,000 less than it ought to have been paid pursuant to the first progress claim…
- [7]Information about this early transaction appears in a variety of documents including statements prepared by Bank officers which purport to show a history of the $2.6m loan. These statements were produced, in several forms, before and during the trial by the Bank. They contain, among other figures, some which accord with the amounts and sums just set out, and others which have different figures; it is the differences which have, as it appears from the plaintiffs’ submissions, excited this application.
- [8]As I understood the plaintiffs’ proposed new and much longer Statement of Claim and the submissions advanced by their Counsel, the various forms in which those Bank statements appeared – called (by the plaintiffs) version 1, version 2 and version 3 – are now alleged to reveal that the Bank had some other, fraudulent intent in respect of the payments it made during this first disbursement of loan funds. In any event, things in them are said to give rise to a fiduciary duty owed by the Bank to the plaintiffs and to attract a right to additional relief including the amount previously claimed - $100,416.40 - as damages not only for negligence but also fraud, or breach of fiduciary obligation and duty, or equitable fraud; and, for $150,000 as aggravated, punitive or exemplary damages.
- [9]In the proposed amended pleading, and in Mr Venn’s affidavit supporting this application and, also, in oral and written submissions from Counsel (presented in four large ring-bound volumes) the primary focus appears to be upon the differences in, and between, these Bank documents. Version 2, in particular, is said to contain figures for which the Bank has advanced no satisfactory explanation. These figures are said (as I understood the submission) to coincide with other, relevant figures (being the difference between the amount of the loan, the quoted price for building the apartment building and the amount of ‘client equity’ or contribution the developer would be required to make to bridge the gap between the actual cost of the building and, the amount of the Bank’s loan) in a way which means the plaintiffs can reasonably allege, it is said, that the Bank’s conduct was deceitful and fraudulent.
- [10]These claims do not admit of ready comprehension – or, at least, I have not found it easy to grasp the submissions advanced for them. Counsel for the plaintiffs, in his oral submissions (and a document he handed up, called ‘Oral Submissions’) described what he called a ‘EUREKA type moment’ after the trial had finished in which he observed a difference between figures appearing in versions 1 and 2 of the Bank statement. It was only from that time, he said, that the plaintiffs ‘… can be said to have been in possession of what was ultimately needed to allege and seek to prove the deceit and lies, the reconstructions and the cruel rejection of my client’s claims that something VERY WRONG had happened here’. The submission goes on to describe what is called, by Counsel, a ‘devilishly deceitful scheme’ which allowed the Bank to ‘cover’ itself by ‘… never being exposed to more than some 2.2 million of borrowings’. As these extracts suggest, the submissions are couched in passionate language but I have not found it easy to grasp what they signify.
- [11]Doing the best I can the gist of the plaintiffs’ new case appears to be that, in the absence of proof that the National Australia Bank was paid out, the defendant Bank was never exposed to more than some $2.2 million of risk for the loan because it had either repaid most of the balance of about $400,000 to itself or, disbursed that sum for its own purposes which included discharging the ‘client equity’ – the amount the borrowers would be obliged to contribute to make up the shortfall between the loan, and the actual quoted cost of the building work – leaving the borrower to make up the difference to the builder.
- [12]A preliminary difficulty is that there is nothing surprising or novel about elements of this contention: reference to the payment of the first disbursement from the loan was contained in the plaintiffs’ opening at trial, and the evidence focussed upon it; and it has always, as I understand it, been the Bank’s case that as a condition of the loan of $2.6m some large sums unrelated to payments to the builder (the mortgage over the relevant parcel of land to the National Australia Bank, and some loan expenses) would be paid from it. If the evidence supported that conclusion then, on any view, the borrower would only ever have had about $2.2m of the loan to pay the builder. These things, it seems to me, have always been manifest in the action and nothing in the version 2 document (or the other versions) is, now, new or innovative. They already figured strongly in the things to be determined in the judgment which should follow the trial.
- [13]Nor is there anything truly novel in the ‘new’ evidence presented in support of this application. Mr Venn admits that he first saw version 1 around September 2003 and Counsel for the plaintiffs concedes that versions 1 and 2 were provided by the defendant well before the trial began. Indeed, version 2 had been earlier supplied to a forensic accountant who provided an expert, pre-trial report to the plaintiffs. Version 3 did not, certainly, appear until the morning of the last day of the trial. However, it does not appear to loom large in the present application and did not ultimately inconvenience or embarrass the plaintiffs or their Counsel: after version 3 was disclosed on 25 October 2007, the plaintiffs were allowed two adjournments between about 10am until, ultimately, 2pm in order to allow Counsel to take instructions about the documents. Importantly, too, the plaintiffs thereafter successfully applied to have one of the defendant’s witnesses, the Bank officer Mr Freney, recalled and cross-examined about that version. The plaintiffs have already had, I am satisfied, every reasonable opportunity to question all relevant defence witnesses about all three versions of the document.
- [14]In summary, then, the plaintiffs’ application is made after a lengthy trial on the basis, not that new evidence has been discovered but, rather, that the significance of certain documents disclosed during the action only became apparent to the plaintiffs and Counsel after the trial ended. No explanation (save for the ‘eureka-type moment’ experienced by Counsel) has been offered as to why the alleged connection between the three versions of the Bank statements, and the claims for fraud or breach of fiduciary duty which might spring from them, were not apparent before and during the trial. The statements and their various versions, which are now said to have sinister implications and to justify significant changes to the pleadings after the end of the trial, were available either before or during the trial itself and were the subject of detailed cross-examination of relevant defence witnesses by Counsel for the plaintiffs.
- [15]In addition to these practical hurdles the plaintiffs confront the problems that there is some evidence that the National Australia Bank was indeed paid $360,000 from the first ‘progress’ payment (and no compelling evidence to the contrary); and, that there is nothing in the alleged ‘new’ evidence which is plainly persuasive that the Bank had an intention to, or did, deceive or defraud any party associated with the loan – and, certainly, nothing which adds in a meaningful way to allegations the plaintiffs had already made to that effect during their evidence and submissions at the trial. Nor did the plaintiffs’ evidence or written or oral submissions from Counsel identify facts, matters or circumstances showing, in an understandable or persuasive way, how that evidence might be relied upon at a further hearing to prove the new allegations of fraud, or breach of fiduciary duty.
- [16]While the court has a discretion to allow a party to reopen its case in order to admit fresh evidence the discretion will, ordinarily, only be exercised where the interests of justice require it. That circumstance, the authorities show, will usually only be manifest where the evidence would most probably affect the result; could not by reasonable diligence have been previously discovered; and, perhaps, that no prejudice would ensue to another party by reason of its introduction at such a late stage[1]. The decision of the High Court in Smith v New South Wales Bar Association (No. 2) (1992) 176 CLR 256 suggests that the possibility of embarrassment or prejudice is a ‘primary’ consideration[2]. When an application of the present kind is brought the court will also, as older authority shows, ask whether the parties exercising reasonable diligence might not have brought that evidence forward at the proper, earlier time: Henderson v Henderson (1843) 67 ER 313, at 319.
- [17]Leave to amend pleadings after the close of evidence will usually only be granted where the matter involved has been raised in the course of trial, and been the subject of evidence, and was addressed by Counsel: Loutfi v C Czarnikow Ltd [1952] 2 All ER 823, at 824. Weinberg J refused leave to amend pleadings after the close of evidence in Lactos Fresh Pty Ltd v Finishing Services Pty Ltd [2006] FCA 219 for reasons which included, among others, the fact that the applicant’s submissions were not compelling:
[124]… it is clear that the strength of the applicant’s case, in relation to the proposed amendment, is a relevant consideration, when determining whether to grant leave to amend. Had the applicant demonstrated a stronger case, regarding this issue, I may have been minded to allow the applicant to reopen its case, and the respondents to adduce further evidence in response. When all that can be said is that there is an arguable case, the balance of convenience weighs against adopting that course (emphasis added)
- [18]For reasons already explored, the plaintiffs’ case here is far from compelling. The proposed allegations of fraud and/or breaches of fiduciary duty are diffuse and unclear and do not coherently disclose a reasonable basis for the new claims,[3] and were not unfairly categorised by Counsel for the Bank as embarrassing. Nothing about the alleged discrepancies has been shown to have any particular significance, or even relevance, or any qualities which could fairly and reasonably be described as unusual, puzzling, troubling or sinister. Nor, for that matter, was the late disclosure of version 3 sinister. It was explained in open court by the Bank’s Counsel, who accepted responsibility for the failure and apologised to the court for the inadvertence[4].
- [19]Even if the contrary view had been reached about the plaintiffs’ new ‘evidence’, other factors would nevertheless count strongly against the relief they seek. First, the documents upon which they now purport to rely for the new relief were available at trial, and the defendant’s witnesses were cross-examined about them. Secondly those documents have not been shown to possess, now, some properties or meaning which were not explored at trial. Finally, the amendments seek to introduce a new, and very serious, cause of action after the proceeding has been on foot for many years and, of course, after a trial has been held.
- [20]The plaintiffs’ application is misconceived and without merit and must be dismissed. I will hear further argument about amendments to the timetable for submissions set at the end of the trial, and the costs of this application.