Moneytech Finance Pty Ltd v Diamond Made Pty Ltd [2017] NSWSC 836 (23 June 2017)

Last Updated: 23 June 2017

Supreme Court New South Wales

Case Name:	Moneytech Finance Pty Ltd v Diamond Made Pty Ltd
Medium Neutral Citation:	[2017] NSWSC 836
Hearing Date(s):	22 March 2017
Decision Date:	23 June 2017
Jurisdiction:	Common Law
Before:	Button J
Decision:	(1) Pursuant to r 19.1 of the Uniform Civil Procedure Rules 2005 (NSW), the plaintiff is granted leave to file and serve an amended statement of claim in the proceedings. (2) The matter is listed before the Common Law Registrar at 9AM on 5 July 2017. (3) The costs of the proceedings before me are costs in the cause.
Catchwords:	PROCEDURE – civil – claim to recover money subsequent to assignment of debt – application to amend statement of claim to include proper plaintiff – competing application to strike out statement of claim – application to amend statement of claim granted
Legislation Cited:	Civil Procedure Act 2005 (NSW), s 56
Cases Cited:	General Steel Industries Inc v Commissioner for Railways (1964) 112 CLR 125; [1964] HCA 69
Category:	Procedural and other rulings
Parties:	Moneytech Finance Pty Ltd (Plaintiff) Diamond Made Pty Ltd (First Defendant) Diamond Made Group Pty Ltd (Second Defendant) Charles Thomas Corkery (Third Defendant) Morney Muir Schlebusch (Fourth Defendant) Andrew Robert Wishart t/as Andrews Quality Meats (Fifth Defendant) Andrew Kent Osborne t/as Pizza Pasta Please Campbelltown (Sixth Defendant) AM: PM Restaurant Pty Ltd t/as Shores Restaurant Grill Lounge & Bar (Seventh Defendant)
Representation:	Counsel: C D Wood (Plaintiff) R Gall (Fifth Defendant) S Robertson (Sixth Defendant) G Wilks (Seventh Defendant) Solicitors: BBW Lawyers (Plaintiff) Holloway Jenkins (Fifth Defendant) Clayton Utz (Sixth Defendant) Pryor Tzannes & Wallis (Seventh Defendant)
File Number(s):	2015/368657
Publication Restriction:	Nil

JUDGMENT

Introduction

1. This judgment resolves a motion of the plaintiff, Moneytech Finance Pty Ltd (Moneytech Finance), seeking to amend a statement of claim that it filed on 16 December 2015. The fundamental proposition of Moneytech Finance is an acceptance that its claim as currently pleaded is doomed to failure. It is said, however, that, by way of the joinder of a second plaintiff, Diamond Made Trading Pty Ltd (Diamond Made Trading)(a company closely associated with Moneytech Finance), the claim is good in law and should be permitted to proceed.
2. The fifth, sixth and seventh defendants resist the orders sought. They are Mr Andrew Wishart t/as Andrews Quality Meats (Quality Meats), Mr Andrew Osborne t/as Pizza Pasta Please Campbelltown (Pizza Pasta), and AM: PM Restaurant Pty Ltd t/as Shores Restaurant Grill Lounge & Bar (Shores Restaurant). Their further position is that if, in accordance with their submissions, I do not make the orders sought by the first plaintiff, then the proceedings should simply be dismissed. The bulk of the submissions of the active defendants were made by counsel for Pizza Pasta.

Background

3. The background of the motion can be shortly stated; the transcript of the hearing at pp 15-16 reflects the following, which was undisputed by the parties.
4. The allegation is that Diamond Made Pty Ltd (Diamond Made), the first defendant, was a building company. It obtained a loan from the plaintiff (or possibly the proposed second plaintiff) whereby the plaintiff would pay the trade debts owing by third parties to Diamond Made on behalf of third parties for whom Diamond Made had done building work. In return for the provision of those moneys, Diamond Made would assign its trade debts to the plaintiff. The plaintiff asserts that those assignments were valid, including by way of notice to the trade debtors. Each of the active defendants was a trade debtor of Diamond Made.
5. The debt of Diamond Made to Moneytech Finance was secured by way of assets of Diamond Made, or the Diamond Made Group Pty Ltd (DMG), the second defendant. Mr Charles Corkery (the third defendant) and Mr Morney Schlebusch (the fourth defendant) gave personal guarantees to Moneytech Finance of the debt owing by Diamond Made to Moneytech Finance.
6. Diamond Made has gone into liquidation. Moneytech Finance has obtained default judgments against Diamond Made, DMG, Mr Corkery, and Mr Schlebusch. The remaining claim is against the active defendants, they being the fifth, sixth and seventh defendants whom I have discussed.
7. I have said that each of the active defendants is an alleged trade debtor of the first defendant. The position is slightly more refined with regard to Pizza Pasta: the allegation is that Pizza Pasta was the lessor of a pizza shop to its lessee. The allegation is further that, acting as the agent of the lessee, the lessor, Pizza Pasta, contracted with Diamond Made in order to achieve a new fit out to the leased premises.
8. Due to the seemingly chaotic state of accounts of Diamond Made, Moneytech Finance is in no position to say precisely when work was allegedly done by Diamond Made for the active defendants. Nor is it in a position to say precisely when the alleged liability of each of the active defendants arose to Diamond Made. Counsel for Moneytech Finance also accepted that it would have been possible for Moneytech Finance and its associated entities to manage its own supervision of the affairs of Diamond Made, relevant to the debts now alleged to be owed to Moneytech Finance, much more closely.

Submissions of the plaintiff

9. Counsel for Moneytech Finance accepted that, due to the structure of the alleged assignment of the debts, and the relationship between Moneytech Finance and the associated entity, Diamond Made Trading, the claim as currently pleaded must fail. But he submitted that there is no reason why I should not permit the proposed second plaintiff to be substituted for the plaintiff. In particular, he submitted that that important but, in a sense, technical alteration to the claim occasions no prejudice to any of the active defendants.
10. Separately, he accepted that the chronology of alleged events – including when debts are said to have arisen, when the assignment is alleged to have taken place, and when notice of the assignment is alleged to have been given to any of the trade debtors – is important to the success of his claim. And he accepted that, as currently proposed to be pleaded, that chronology is not completely clear.
11. He submitted, however, that each of the active defendants well knows whether it entered into a contract with Diamond Made for building work to be done; well knows whether the work was actually done; well knows whether it was done satisfactorily; and, in particular, well knows when any or all of those events occurred. In other words, despite the lack of temporal clarity in the proposed new pleading, he submitted that it occasions no prejudice to any of the active defendants. Indeed, he noted that the active defendants have already filed defences to an earlier version of the claim, thereby demonstrating that that defendants are quite capable of understanding the claim, and responding to it with regard to matters that are both legally and factually disputed.
12. As for the assertion that, depending on whether the claim is to be advanced in accordance with common law or equitable doctrine, it may be incumbent upon him to join the alleged assignor of the debts to the proceedings, he submitted that the alleged assignor is indeed the first defendant. And if some further step is required to be taken, he submitted that I would hardly reject the claim on that basis, bearing in mind the very high test enunciated in General Steel Industries Inc v Commissioner for Railways (1964) 112 CLR 125; [1964] HCA 69.
13. Finally, with regard to various criticisms made of the particulars of his claim, he accepted the validity of some of them on the morning of the hearing, and indicated that yet further amendments to the proposed amended claim should be understood as pressed. But his position was that I should be slow to reject a claim based upon criticisms of the wording of particulars, in light of his submission that the claim is in truth a simple one, and tolerably clear.

Submissions of the defendants

14. As I have said, counsel for Pizza Pasta helpfully provided the majority of the submissions on behalf of the active defendants, with some brief supplementation.
15. The basal submission is that the claim of the plaintiff is simply too factually and legally unclear to be permitted to proceed. In particular, it was said that the chronology of events is absolutely critical, in that the dates upon which events occurred will determine not only the principles that apply to the claim, but, in truth, whether the claim will succeed or fail. In particular, it was said that the date of the alleged giving of notice of the purported assignment to Moneytech Finance of the alleged debts of the active defendants will be absolutely critical. And yet, as currently pleaded, none of the active defendants have a clear picture of the chronology of events said to underpin the claim.
16. Counsel asked rhetorically how it can be that a defendant can be asked to respond to a claim when its factual bases are so unclear that the defendant cannot know its legal foundations.
17. The correct approach, it was submitted, is not to permit the plaintiff to continue to pursue so opaque a claim. Rather, the claim as it stands should be dismissed, and the plaintiff should pursue preliminary discovery in an effort to get its claim into good order, including with regard to specificity of events, and specificity of legal doctrine.
18. Separately, it was said that, if it be the case that the claim is founded upon equitable principle (a matter that is unclear), then the plaintiff must actively engage the asserted assignor in the proceedings. That has not occurred; on that separate, contingent basis, the claim should be struck out.
19. A detailed criticism was made of the adequacy and clarity of the particulars of the claim, even as amended as late as during the course of the hearing. Again, it was said that that simply adds to the prejudicial unintelligibility of what it is that the active defendants are being called upon forensically to meet.
20. Finally, in response to the submission that defences have already been filed, including by Pizza Pasta, it was said that that hardly counts against the submission now made; in particular, the defence of Pizza Pasta was patently prepared by a person without the benefit of legal advice.

Determination

21. Turning to my determination, and contrary to the submission of the active defendants, to my mind the claim of the plaintiff against the active defendants is tolerably clear. Indeed, my summary of my understanding of it (which was, as I have said, not impugned by any of the parties at the hearing, and which appears at pp 15-16 of the transcript of that hearing) was based upon a reading of the papers preparatory to the hearing.
22. As I have said, to my mind the claim of the plaintiff “boils down” to the proposition that: Moneytech Finance or its associated entity, Diamond Made Trading, lent money to Diamond Made; Diamond Made did work for the active defendants, giving rise to debts owed by them to Diamond Made; Diamond Made assigned its trade debts to Diamond Made Trading; and those trade debts are owed by the active defendants to Diamond Made Trading. Whether that is in truth the case as a matter of fact or law is, of course, another matter entirely. But to my mind the active defendants can readily appreciate what it is that is being alleged against them.
23. Furthermore, the fact that some defences have been filed in response to a previous version of that claim, whilst not determinative, goes some way to supporting that proposition.
24. It is quite true that the plaintiffs are in no position to set out the chronology of events underpinning their claim. And I also accept the undisputed proposition that that chronology will affect the legal or equitable principles upon which any such claim can be made. But there is nothing to suggest that knowledge of the chronology of whether or when a contract was agreed between an active defendant and Diamond Made; whether or when work was carried out pursuant to it; whether any such work was satisfactory; and, in particular, whether or when any notice of any assignment of any debt arising was given to an active defendant is denied to the active defendants; quite the contrary. And if that be the case, then each active defendant can respond to the claim in an amended defence.
25. As for the suggestion that the claim must be rejected and the true remedy is preliminary discovery, I do not accept that that is consonant with the guiding principles with regard to the conduct of civil litigation to be found in s 56 of the Civil Procedure Act 2005 (NSW). I repeat: I consider the claim is tolerably clear; I accept that the plaintiff has done its best to set out the bases of it; and I accept that the active defendants are in a position to respond to it, because they must be aware of what passed between themselves and Diamond Made.
26. Separately, I accept the submission of counsel for the plaintiffs that the contingent question of the joinder of Diamond Made as an active party to this claim against the alleged trade debtors of Diamond Made should not lead to dismissal of the claim at this stage. If it becomes apparent that further steps indeed need to be taken by Diamond Made against further parties ancillary to this claim, then my expectation is that the plaintiff will do so.
27. Finally, as for the detailed critique of the particulars, I do not consider that to be a basis upon which this claim should be struck out. Speaking generally, I dare say that all particulars in any statement of claim filed in this Court could be the subject of some sort of valid criticism or improvement. Here, for example, it was said that invoices allegedly issued by Diamond Made to the active defendants were particularised as founding the claim, when in truth what should have been particularised was the alleged debt owed by the active defendants to Diamond Made (see the written submissions of the sixth defendant at [18]). So much may be accepted as a matter of strict legal correctness; but I do not consider that such matters should prohibit the claim from proceeding. Yet again: to my mind the claim made by Moneytech Finance and Diamond Made Trading, and which the active defendants must meet, is sufficiently clear.
28. In short, I propose to make the orders sought in the motion of Moneytech Finance, as amended on the morning of the hearing. It can be understood that my orders refer to the final iteration of the amended pleading proffered by counsel for the plaintiff.
29. Separately, it follows from the fact that I will permit the amendment including the second plaintiff that I should not strike out the claim as doomed to failure as made by the first plaintiff. But because of my insistence at the hearing that the questions be determined sequentially, I say nothing more about the notice of motion of counsel for Pizza Pasta to that effect; it may be that there are other bases for such an order with regard to which he would wish to be fully heard.
30. Dealing further with ancillary matters, it follows that the notice to produce of the plaintiff to which reference was made before me remains on foot.
31. Finally, I think that the matter should return promptly to the list of the Common Law Registrar, and I shall make an order to that effect.

Costs

32. With regard to costs, there are a number of countervailing considerations.
33. On the one hand, the plaintiff achieved victory in a hard-fought motion that called for detailed written and oral submissions by two members of the Bar. That argues for an order for costs in favour of the plaintiff.
34. On the other hand, by its nature, the application was seeking an indulgence, in that it was a variation of a claim previously filed.
35. On the same hand, at least some of the amendments proposed by counsel for the plaintiffs were acquiescences to the correctness of criticisms, previously made by the lawyers for the active defendants, of previous versions of the claim.
36. Further on the same hand, those amendments were made at a very late stage; indeed, some of them were being proposed and adjusted during the course of the hearing before me.
37. Seeking to weigh up those countervailing considerations, and as an exercise of discretion, I think that the costs of the proceedings before me should be costs in the cause.

Orders

38. I make the following orders:
    • (1) Pursuant to r 19.1 of the Uniform Civil Procedure Rules 2005 (NSW), the plaintiff is granted leave to file and serve an amended statement of claim in the proceedings.
    • (2) The matter is listed before the Common Law Registrar at 9AM on 5 July 2017.
    • (3) The costs of the proceedings before me are costs in the cause.

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