Li v Kingland Estate Pty Ltd

The cross-claimants wish to amend their cross-claim. They have sought leave to do so by a notice of motion filed on 16 May 2023. The motion is supported by affidavits of Mr Frank Ngo dated 16 May 2023 and 26 September 2023, respectively.

There is an affidavit of Mr Craig Sadler dated 5 June 2023, filed on behalf of the plaintiff.

The defendants written submissions present the amendments as straightforward:

I note counsel appearing today were different to the counsel who had prepared the written submissions.

Mr Ngo, in his first affidavit, perhaps contrary to the defendants written submissions, says the reason for the amendment is that “it became apparent that the claim was greater than what was originally pleaded …”

The plaintiff’s submissions suggest deeper issues to the extent that the amendments are “defective”.

Even a cursory glance at the proposed amendments reveals a significantly greater complexity than suggested.

The background to the dispute, as alleged in the statement of claim, is as follows: the plaintiff and the second defendant entered into an investment agreement which centred on the purchase of a property in the seaside suburb of Avalon. The first defendant was incorporated for the purpose of owning the property which was bought, in February 2020, for the sum of $3.26m.

The whole of the funds were provided by the plaintiff and the purpose of the agreement was entirely for the benefit of the plaintiff. The agreement did not contemplate any monies being paid to, or retained by, the defendants.

The second and third defendants (husband-and-wife) are the directors and shareholders of the first defendant.

In October 2020, the plaintiff instructed the defendants to sell the property, which they did. The sale settled in February 2021. The purchase price was $3.77m. In March 2021 the first defendant paid the plaintiff $1.455m.

The intent of the statement of claim, which has alternative allegations of breach of agreement and breach of trust, is to recover the difference between the sale price of the Avalon property and the amount paid to the plaintiff in March 2021.

According to the original cross-claim the cross-claimants were entitled to recompense for architectural services provided to the plaintiff and also claims for rent payable to the first cross-claimant for periods during which the plaintiff resided at the Avalon property. The cross-claim also alleges a profit-sharing arrangement arising from the purchase and sale of the Avalon property.

In addition, another agreement is alleged in the cross-claim relating to the purchase of a property in Dural as well as a Ferrari motorcar.

The cross-claimants also allege the existence of a trust as well as the provision of, for want of a better term, real estate investigation services all of which entitle the cross-claimants to monies to be paid to them by the plaintiff.

The proposed amended cross-claim expands on the cross-claim and also brings in a fourth cross-claimant, a company owned by the second defendant, which is said to have provided some of the services.

The statement of claim was filed on 28 September 2023. A defence was filed on 1 June 2022. The original cross-claim was also filed on 1 June 2022. A hearing date has not yet been allocated.

The plaintiff’s written submissions include a table of complaints about the proposed pleading. A good number have merit. For example, paragraph 5a of the Relief Claimed states:

The plaintiff correctly observes that the above paragraph seems to be a mix of a quantum meruit claim and a contract claim. The defendants say that paragraph 5a is a claim “in contract and in the alternative on a quantum merit (sic) basis …” Unfortunately, that is not a logical reading of the paragraph.

Another example is paragraph 1a of the Pleadings and Particulars. The plaintiff says the paragraph is “nonsensical”. The defendants say that the contents of the paragraph are “the essential facts pleading a contract and a debt due for the performance of such contract”. That may well be the intention, but the clarity is absent.

I do not propose to go through all of the plaintiff’s complaints. Suffice to say most of them are accurate. It is not, as submitted, an easy answer to the complaints to simply state that the allegations can be denied. A pleading is supposed to be a clear statement of a claim, at least clear enough to be understandable so that a response can be crafted.

I think the best course is to allow the defendants to file an amended cross-claim within 28 days, giving leave to the plaintiff to take any further action should the new pleadings still remain an enigma. The defendants consented when I proposed this course.

The plaintiff raised a fresh point today, not included in the written submissions, submitting that a fourth cross-claimant could not be added because the proposed fourth cross-claimant was not already a defendant, or any other party, in the proceedings.

The submission was supported by the decision of Price J in Comin Enterprises Pty Ltd v Dayroll Pty Ltd [2007] NSWSC 1440 at [13]:

His Honours interpretation arises from a straightforward reading of s. 22 of the Civil Procedure Act 2005 (NSW). It is also a logical interpretation of a cross-claim, namely, a claim coming back from a party being sued by a plaintiff.

The defendants did not refer me to any authority to the contrary.

In relation to costs, the defendants agreed that the defendants should pay the costs of the motion, and costs thrown away by meeting the amendment.

In addition, the plaintiff also sought an order that the costs be payable forthwith, principally based on the delay that has been occasioned by the attempts to file a cross-claim.

While I agree that the defendants actions have caused some delay, perhaps to the extent of seven months, I do not think their conduct has been such to justify the making of an immediate costs order.

I make the following orders: