National Australia Bank v Sayed (No. 6)

1. [1]

   On 27 May 2016 I dismissed the First Defendant’s Notice of Motion filed 4 March 2016 which sought leave to file a further amended cross-claim: National Australia Bank v Sayed (No. 5) [2016] NSWSC 669. I indicated that the First Defendant, Mr Sayed, would not be prevented from filing a further amended cross-claim provided that it was consistent with my judgment and properly pleaded. Mr Hall SC who then appeared for Mr Sayed asked for two weeks to serve the form of a further amended cross-claim that would be sought to be filed. Mr Lucarelli of counsel for the Plaintiff, NAB, was then to have two weeks in which to consider the form of the pleading and to indicate whether there would be objection to its being filed.

2. [2]

   When the matter returned to Court for directions on 24 June 2016 counsel for NAB said that NAB opposed the proposed further amended cross-claim being filed. Directions were given for the service of affidavits in respect of the further application by Mr Sayed to file the proposed further amended cross-claim and for the service of written submissions. The application was then adjourned to 5 September 2016 for hearing. It should be noted that I did not require Mr Sayed to file a further notice of motion. For clarity I note that Mr Sayed’s application was to file and serve the Further Amended First Cross-Claim that appears behind Tab 1 in the Court Book handed up at the hearing of the application on 5 September 2016.

3. [3]

   The issue on the proposed pleading concerned claims made in relation to part of the Corrimal land being landlocked. The background is set out in Sayed (No 5).

Landlocked land

1. [4]

   NAB entered into an Agreement for the Provision of Property Management Services with Mattisam Pty Ltd t/as Mortgage and Estate Realisation Company (MERC) on 22 October 2001. On 20 October 2009 MERC as Principal appointed MMJ North Corrimal on behalf of National Australia Bank as marketing agent for the Corrimal land.

2. [5]

   The Corrimal land over which NAB had taken a mortgage was sold pursuant to that mortgage on 19 February 2010 to Realta Enterprises Pty Ltd for $545,545.45. Settlement took place on 4 April 2010. The land was subdivided into lots 41 and 42. Lot 41 had street frontage to Rothery Street. The western boundary of both lots 41 and 42 abutted residential properties for its entire length. The eastern boundary of lot 42, which ran in a north easterly direction, abutted the Northern Distributor freeway. The only access to lot 42 was over a right of way from Rothery Street seven and half metres wide. It was necessary thereafter to traverse a natural water course running through lot 42 over which there was an old bridge.

3. [6]

   NAB does not dispute that from the point of view of legal title lot 42 was not landlocked. Rather, it says it was developmentally and effectively landlocked because its only access was the old bridge and that there was a DA, being DA 2005/1520 for remedial work on the watercourse (and the bridge), which expired 14 March 2011. NAB asserted that no work had been done pursuant to that DA within 12 months of its approval with the result that another DA dependent on DA 2005/1520 was at risk.

4. [7]

   An email from MMJ to MERC dated 10 December 2009 should be set out so that a full understanding of NAB’s position can be understood. It relevantly reads:

5. [8]

   Mr Sayed disputed that lot 42 was landlocked and pointed to the existing bridge over the watercourse which enabled access to lot 42 from Rothery Street. It is, of course, not necessary to determine on this application whether lot 42 was landlocked. It is enough to assume that it was not and to consider, having regard to the various dates upon which events occurred, whether Mr Sayed should be permitted to make the claim based on that assumption.

6. [9]

   The particular parts of the proposed pleading to which objection was taken were paragraphs 25, 26, 27 and particulars (i), (l) and (m) under paragraph 42. Those portions of the proposed pleading read as follows:

Submissions

1. [10]

   NAB’s opposition to those portions of the proposed pleading was based on the assertion by NAB that if it breached its duties as mortgagee by wrongly assuming lot 42 was landlocked, NAB had now lost the ability to cross-claim against those agents who gave NAB that allegedly wrong advice.

2. [11]

   NAB submitted that, as a matter of discretion, leave should not be given to Mr Sayed to include the landlocked land claim. Matters that informed the exercise of that discretion included the fact that Mr Sayed had had available to him since 2012 documents showing that it was NAB’s understanding that lot 42 was landlocked, that NAB had arguable claims against MERC and MMJ for breach of contract and negligence respectively and that by reason of the Limitation Act 1969 (NSW) NAB was now statute barred from making such claims.

3. [12]

   Mr Sayed submitted that NAB had no claim against MERC and that if it had any right to bring a cross-claim such cross-claim could only be brought against Dibbs Barker, its present solicitors who acted for NAB at the time of the sale of the Corrimal land. Mr Sayed submitted that from August 2012 until April 2015 NAB had blocked the cross-claim proceeding by Mr Sayed which caused any cross-claim NAB had to become statute barred. Mr Sayed submitted that Dibbs Barker has and has always had a conflict of interest in relation to representing NAB in these proceedings because it was Dibbs Barker who gave to NAB the legal advice about the landlocking.

4. [13]

   Mr Sayed submitted that there was no delay on his part in bringing forward the proposed pleading. It was he who had attempted to bring the matter back to Court on a number of occasions but NAB avoided doing so by taking the action it did to enforce the Deed of Settlement (referred to at [16]-[19] of Sayed (No. 5)) and thereafter sought specific performance of the In Principle Agreement (referred to at [20] of Sayed (No. 5)).

5. [14]

   Mr Sayed submitted that NAB may not be statute barred if the actions of MMJ were found to be fraudulent. In that regard Mr Sayed submitted that he wanted to bring a further cross-claim against MERC, MMJ, the buyer and the architect alleging fraud and collusion. Mr Sayed submitted that he relied on the MERC journal (Tab 8 to exhibit BS 11) which was obtained only in late January 2016. He said that he then moved with expedition to bring the matter back before the Court in the new law term in 2016.

Consideration

1. [15]

   I accept NAB’s submission that the three matters (referred to at [11]) are the matters which inform the discretion to allow the proposed pleading to be filed.

2. [16]

   The affidavit of Emma Jane Hodgman sworn 19 July 2016 identified documents produced by NAB in answer to a Notice to Produce dated 28 March 2012. A selection of those documents was identified in the affidavit, and the affidavit disclosed that Mr Sayed and/or his then solicitors Swaab Attorneys had these documents in April 2012. These documents demonstrate that NAB and its agents believed in 2009 and 2010 before the sale of the Corrimal land that lot 42 was landlocked. The documents discussed the need to sell the two lots together for that reason.

3. [17]

   Mr Sayed said that when Swaab Attorneys ceased to act for him they retained his documents. The inference was that these particular documents were amongst those retained although that was not expressly said. Nor did Mr Sayed submit that he had not seen these documents in 2012 after they were sent to Swaab Attorneys or at any time thereafter. Indeed, his written submissions say this:

4. [18]

   During oral submissions Mr Sayed said that the only time he got the documents referring to the landlocked land was just before the proceedings that were heard by Adams J in August 2012. He said, however, that landlocking “was not an issue at that point”. I do not understand what that means because it is Mr Sayed who has chosen to make it an issue in the proposed pleading. He could have made it an issue at any time from August 2012. He placed some significance on obtaining the MERC journal in January 2016 but the part he relied on when making submissions was the email from MERC to NAB dated 26 May 2009 (Tab 3 to the affidavit of Ms Hodgman).

5. [19]

   I am entirely satisfied that Mr Sayed was aware of the landlocking issue before late January 2016 when he obtained the MERC journal. There is no doubt that relevant documents and information were in the possession of Swaab Attorneys who were then acting for Mr Sayed. On his own admission he saw the documents by August 2012. He could have sought to amend his cross-claim at any time thereafter. His assertion that it was not until he saw the journal that he realised the landlocking issue was something of substance is not an adequate explanation for failing to make the claim earlier when the documents he had seen clearly identified the issue.

6. [20]

   Mr Sayed’s complaint about the Bank’s actions between August 2012 when the matter was before Adams J and October 2014 when NAB filed its Notice of Motion seeking specific performance of the In Principle Agreement provides no basis for suggesting that it was not available to him to seek to plead a cross-claim that included the landlocked land point at any time up to February 2016. The whole point of Mr Sayed’s resistance to what was sought by NAB before Rein J and subsequently in the Court of Appeal was to ensure that his rights under any cross-claim against the Bank relating to its sale of Corrimal were preserved outside the In Principle Agreement. I noted as much in Sayed (No. 5) at [21].

7. [21]

   However, even if there was a basis upon which it might have been inappropriate for Mr Sayed to put forward an amended cross-claim including the landlocked land point before the conclusion of either the Court of Appeal’s determination or the claim for specific performance (National Australia Bank Ltd v Sayed (No 4) [2015] NSWSC 420), all of those matters were concluded by the judgment of Harrison AsJ on 16 April 2015. Thereafter Mr Sayed did not make any claim in relation to the landlocked land point despite being given leave to file an amended cross-claim on 18 August 2015. Finally, his Notice of Motion to amend the cross-claim again was not filed at the earliest opportunity after January 2016 when he says that he first saw the MERC journal. Rather, the Motion was filed on 4 March 2016 being more than six years after the date of exchange of contracts to sell the Corrimal land.

8. [22]

   This matter tells in favour of NAB.

9. [23]

   Clause 2 of the Agreement between NAB and MERC relevantly provided:

10. [24]

    The “Services” were set out in Schedule B1. Clause 1.1 relevantly provided:

11. [25]

    If, as Mr Sayed asserts, he pleaded and established that the land was not landlocked NAB would have an arguable cause of action against MERC for breach of contract. Whether or not NAB would have, additionally, a cause of action in negligence against MERC is not clear: Brookfield Multiplex Ltd v Owners Corporation Strata Plan 61288 (2014) 254 CLR 185; [2014] HCA 36 at [127]-[130]. If NAB had such a claim in negligence the limitation period would ordinarily run from the date of the contract for sale of the Corrimal property on 19 February 2010. Any breach of contract by MERC may have occurred earlier, perhaps by 2 October 2009, when MERC submitted a marketing recommendation to NAB which referred to lot 42 being landlocked.

12. [26]

    NAB is unlikely to have a contractual claim against MMJ and would likely be confined to a cause of action in negligence. Again, the date of exchange of contracts for the Corrimal land is likely to be the date on which damage was first suffered by NAB.

13. [27]

    Whilst Mr Sayed asserts that the only cause of action NAB would have is one against its solicitors, he provides no basis for showing the absence of a claim against MERC or MMJ. Prima facie, and on the assumption lot 42 was not landlocked, an email from MERC to NAB dated 26 May 2009 and a letter from MERC to NAB dated 2 October 2009 (Tabs 3 and 5 to the affidavit of Ms Hodgman respectively) provide the basis for a claim against MERC, and a letter from MMJ to MERC dated 1 June 2009 (Tab 4 to the same affidavit) provides the basis for a claim against MMJ.

14. [28]

    The matter also tells in favour of NAB.

15. [29]

    Sections 26 and 74 of the Limitation Act are relevant to claims made by a defendant against third parties. Those sections provide:

16. [30]

    In the first instance s 14 of the Limitation Act prescribes a six year limitation period running from the date on which the cause of action first accrues to NAB for a claim on a cause of action founded in contract or tort.

17. [31]

    Section 26(1)(b) effectively provides for a ten year limitation period for an action on a cause of action for contribution under s 5(1) of the Law Reform (Miscellaneous Provisions) Act 1946 (NSW). However, any claim made by NAB against MERC or MMJ would not be such a claim because Mr Sayed would not himself have a claim against MERC or MMJ: Australia and New Zealand Banking Group Ltd v Pola [2013] NSWSC 1801 at [359] to [383].

18. [32]

    In Nelson v Wyong Shire Council (1989) 68 LGRA 164 Giles J considered the interrelationship between ss 26 and 74. His Honour said (at 168):

19. [33]

    In Creevey v Barrois [2005] NSWCA 264 the Court of Appeal at [47]:

20. [34]

    The effect of these decisions is that the limitation period did not stop running against MERC and MMJ with the result that any proceedings against them on a cross-claim needed to be commenced prior to 19 February 2016. That was not possible because Mr Sayed had not signalled any intention to make a claim based on the landlocked land point nor had he filed a motion seeking leave to amend the cross-claim to do so.

21. [35]

    Mr Sayed submitted that the actions may not be statute-barred if the actions of MMJ were found to be fraudulent or if MERC made mistakes. He made reference to ss 55 and 56 of the Limitation Act. Those sections provide:

22. [36]

    As far as fraud is concerned, NAB does not assert fraud on the part either of MERC or MMJ. If it has a claim the claim is for breach of contract and/or negligence. The only person who has raised fraud is Mr Sayed and he does not do so in his proposed pleading. He said in submissions that it is NAB’s responsibility to raise fraud and collusion. NAB does not wish to do so and probably has no basis to do so.

23. [37]

    Similarly, any claim by NAB does not rely on a mistake. It relies on a breach of contract and/or negligence. A negligent act cannot be equated with a mistake in s 56. In Hillebrand v Penrith Council [2000] NSWSC 1058 the claim against the council was one for negligence for the sale of the plaintiffs’ land for non-payment of rates. The land was conveyed in 1993 but the plaintiffs did not find out about the sale until 1997. The proceedings commenced in 2000. They were out of time unless 1997 was the time the cause of action first accrued. It was in those circumstances that the plaintiffs invoked s 56 of the Limitation Act.

24. [38]

    Justice Austin said:

25. [39]

    In Sinclair v Registrar-General [2010] NSWSC 173 Rein J considered the same issue. He made reference to Hillebrand and went on to say:

26. [40]

    I agree with Rein J’s analysis. If negligence could be characterised as mistake for the purposes of s 56 that section would have the effect of undercutting the limitation period provided in s 14 of the Act. The result would be, contrary to cases such as Scarcella v Lettice (2000) 51 NSWLR 302; [2000] NSWCA 289 and many others, that discoverability was the touchstone for determining when time begins to run.

27. [41]

    Sections 55 and 56 have no application here.

28. [42]

    This matter favours NAB.

The exercise of the discretion

1. [43]

   Section 58 of the Civil Procedure Act 2005 (NSW) provides:

2. [44]

   In the present case the two particular matters of significance in sub-s (2) are sub-paras (ii) and (vi).

3. [45]

   Further, in Aon Risk Services Australia Limited v Australian National University (2009) 239 CLR 175; [2009] HCA 27 the plurality judgment said of delay:

4. [46]

   In the present case there has been no satisfactory explanation for the delay by Mr Sayed in making the claim based on the landlocked land. Even if the proceedings in relation to the main claim were all-consuming and could be regarded as explaining why nothing was done from 2012 to early 2015, there was no explanation for the delay after delivery of judgment by Harrison AsJ on 16 April 2015, particularly in the light of the application to amend the cross-claim in August 2015.

5. [47]

   In Tekno Ceramics Pty Ltd v Zdenko Milat [2003] NSWCA 254 the plaintiff sought an extension of time pursuant to s 151D of the Workers Compensation Act 1987 (NSW) in which to bring an action for damages for personal injury occasioned to him in an accident. The defendant resisted the extension on the basis of actual prejudice, namely, consideration would have been given to joining another party who had some responsibility for the accident, and the limitation period had expired. The Court of Appeal reversed the decision of the primary judge who granted an extension and in doing so said this:

6. [48]

   The position in the present matter is relevantly identical to that in Tekno Ceramics. In my opinion, the fact that Mr Sayed had the material available to him to amend his cross-claim to bring a claim based on the landlocked land, the fact that there is no satisfactory explanation for not having done so prior to a date after the expiry of the Limitation Act for any cross-claim by NAB against potential tortfeasors, and the prejudice and injustice that will be suffered by NAB in those circumstances means that leave should not be given to Mr Sayed to include the portions in the proposed pleading which were objected to.

7. [49]

   There is one further matter. Paragraph 42 of the proposed pleading includes the words “(and Mrs Sayed’s interests)”. As I pointed out in Sayed (No 5) at [7] Mrs Sayed is not a party to these proceedings and she has no legal interest in the outcome of these proceedings. Although NAB did not raise this matter on the present application those words should not be permitted to remain in any pleading filed.

8. [50]

   I make these orders:

   1. (1)

      Leave is given to the First Defendant to file a Further Amended Cross-Claim in the form contained behind Tab 1 of the Court book omitting paragraphs 25, 26, 27, particulars (i), (l) and (m) under paragraph 42 and the words “(and Mrs Sayed’s interests)” in paragraph 42;

   2. (2)

      The Further Amended Cross-Claim is to be filed within 14 days;

   3. (3)

      The First Defendant is to pay the Plaintiff’s costs of the application and the costs thrown away by reason of the amendment.