Tom Kerr (Subaru) Pty Ltd v Hanks [2018] NSWSC 1871

Supreme Court New South Wales

Medium Neutral Citation: Tom Kerr (Subaru) Pty Ltd v Hanks [2018] NSWSC 1871 Hearing dates: 2 November 2018 Date of orders: 07 December 2018 Decision date: 07 December 2018 Jurisdiction: Equity Before: Slattery J Decision: Leave granted to the applicant to file the Cross Claim out-of-time. The 2018 proceedings stayed. Costs of all the motions are the parties' costs in the cause. Catchwords: CIVIL PROCEDURE – Cross Claim – applicant seeks to file a Cross Claim out-of-time against respondent – applicant and respondent are co-defendants in proceedings – respondent/defendant settles other proceedings with the plaintiffs – applicant/defendant not involved in settlement negotiations between respondent/defendant and plaintiffs – settlement performed – applicant subsequently commences new parallel proceedings – whether the Court should grant leave under UCPR, r 9.1 for the applicant to file the Cross Claim out-of-time – whether the new parallel proceedings should be stayed. Legislation Cited: Civil Procedure Act 2005, ss 56-60 Uniform Civil Procedure Rules 2005, r 9.1 Cases Cited: ACCOM Finance Pty Ltd v Kowalczuk [2006] NSWSC 730 AON Risk Services Australia Limited v Australian National University (2009) 239 CLR 175; [2009] HCA 27 Barnes v Addy (1874) LR 9 Ch App 244 Bridge v Coles Supermarkets Australia Pty Ltd [2017] NSWSC 848 Concrete Constructions NSW Pty Ltd v Nelson (1999) 169 CLR 594; [1990] HCA 17 FAI General Insurance Co Ltd v Southern Cross Exploration NL (1988) 165 CLR 268; [1988] HCA 13 Fish Records Pty Ltd v Dylgolo Pty Ltd [2011] NSWSC 746 International Adviser Systems Pty Ltd v XYYX Pty Ltd & Anor (No. 3) [2008] NSWSC 430 Juul v Northey [2010] NSWCA 211 Papas v Co [2018] NSWSC 1404 Seltsam Pty Ltd v Energy Australia (1999) 17 NSWCCR 720; [1999] NSWCA 89 Category: Procedural and other rulings Parties: Applicant: Tom Kerr (Subaru) Pty Ltd Respondent: Matthew Gordon Hanks Representation: Counsel:

Applicant: C.O. Gleeson; J. Marel Respondent: J. Knackstredt

Solicitors:

Applicant: Matthew Harding, HWL Ebsworth Lawyers Respondent: Andrew Tiedt, Armstrong Legal File Number(s): 2018/172216; 2016/225871 Publication restriction: No

Judgment 1. The point at issue in this judgment is whether the applicant can file an out-of-time Cross Claim against the respondent, who is its co-defendant in the proceedings, in circumstances where the respondent/co-defendant has settled the proceedings with the plaintiffs, and where the applicant was not involved in the settlement negotiations between the respondent/co-defendant and the plaintiffs. The Court concludes that leave to file the Cross Claim should be granted, provided certain new proceedings making identical allegations to the Cross Claim are stayed. 2. This interlocutory contest involves a substantial number of pleadings and other documents. But it is possible to simplify both the uncontroversial background facts and the matters in issue.

Surf Life Saving NSW, Matthew Hanks and Tom Kerr (Subaru) Pty Ltd 1. In 2016, Surf Life Saving NSW, a company limited by guarantee, and Surf Life Saving Services Pty Limited (collectively "Surf Life Saving") commenced proceedings alleging fraud and other financial misconduct against the former Chief Executive Officer of Surf Life Saving, Mr Matthew Hanks ("the 2016 proceedings"). 2. The allegations against Mr Hanks were that when acting as the plaintiffs' CEO Mr Hanks would: make new purchases including from Tom Kerr; Tom Kerr would issue two invoices for differing amounts for the cars to Mr Hanks; Mr Hanks would have the plaintiffs pay the higher invoice and the difference between the invoices would be credited to a separate account; and Mr Hanks uses the separate account to purchase multiple other vehicles for his own benefit. Mr Hanks denied these allegations, which came in several related forms. 3. On 1 May 2017, Mr Hanks consented to judgment on liability in the 2016 proceedings. He then sought to stay the plaintiffs' further conduct of the 2016 proceedings, as by then he had come under police investigation. 4. On 9 May 2017, Surf Life Saving also joined Tom Kerr (Subaru) Pty Limited ("Tom Kerr") as a second defendant, alleging it was knowingly concerned in alleged misconduct against Mr Hanks and that it bore accessorial liability for that conduct. On 17 July 2017, Tom Kerr filed a Defence in the 2016 proceedings, denying liability and seeking to apportion any liability it had against Mr Hanks. 5. Subsequent to filing its Defence, Tom Kerr served its lay and expert evidence on the plaintiffs. But that evidence was not served on Mr Hanks. 6. In mid-2017, settlement negotiations commenced between Surf Life Saving and Mr Hanks. Tom Kerr was not invited to join and did not participate in any part of these negotiations. Tom Kerr seemed to be hoping through these negotiations that Surf Life Saving would not thereafter press its claim against Tom Kerr. But there was no indication from Surf Life Saving to any party that it would not press its claim against Tom Kerr once it had settled with Mr Hanks. 7. The negotiations had reached a degree of finality by September 2017. On 13 September 2017, the solicitors for Mr Hanks advised the Court that a "settlement in principle" had been reached between Surf Life Saving and Mr Hanks. The extent of the information provided by Mr Hanks' lawyers to the lawyers for Tom Kerr about this settlement is a matter in contest and will be analysed separately below. But for the present, it is sufficient to set out some commonly accepted facts about the progress of the negotiations. 8. On 9 November 2017, Surf Life Saving advised Tom Kerr that settlement negotiations were proceeding, with a view to disposing of the 2016 proceedings. In late November 2017, Tom Kerr was advised that a Deed of Settlement ("the Deed") had been entered into between Surf Life Saving and Mr Hanks that would see the proceedings against Mr Hanks dismissed, once his obligations under the Deed had been performed. 9. On 21 December 2017, Tom Kerr sought a copy of the Deed, but its request was refused. So Tom Kerr applied by motion ("the disclosure motion") for a copy on the grounds that the Deed's terms were relevant to the assessment of damages between Surf Life Saving and Tom Kerr. Orders were made on the disclosure motion on 16 March 2018 for disclosure of the Deed. Within days it was provided to Tom Kerr. 10. Two months after the Deed was disclosed to Tom Kerr, the issues presently before the Court came to a head. On 17 May 2018, Tom Kerr was advised of a joint proposal by the plaintiffs and Mr Hanks for consent orders to set aside the existing freezing orders and the judgment against Mr Hanks. A week later, on 23 May 2018, Tom Kerr advised the other parties that it intended to file a Cross Claim against Mr Hanks and that it did not agree to the proposed consent orders. 11. On 25 May 2018, Tom Kerr applied by motion ("the leave motion") for leave to file the proposed Cross Claim, which was by then substantially out-of-time. Uniform Civil Procedure Rules 2005 ("UCPR"), r 9.1 required Tom Kerr to file any Cross Claim within one month of its July 2017 defence. The Cross Claim re-pleaded the allegations in the Amended Statement of Claim and sought equitable compensation, damages under the Australian Consumer Law, interest and costs. 12. The leave motion was first returnable on 20 June 2018. Before the return date of the leave motion, an application was made by Surf Life Saving and Mr Hanks for the Consent Judgment against Mr Hanks to be set aside ("the set aside motion"). On 28 May 2018, orders setting aside that judgment were made over Tom Kerr's objections. By then, Mr Hanks had complied with the terms of the Deed but the proposed Cross Claim had not been filed. 13. In the course of the contest before Pembroke J on the set aside motion, Pembroke J commented about Tom Kerr's prospects of being able to obtain leave to file a Cross Claim at that stage of the proceedings. But on 28 May 2018, Pembroke J did not hear the leave motion. Pembroke J observed in the course of his ex tempore judgment, "there may be very good reasons why, at this very late stage, after the first defendant [Mr Hanks] has entered into binding commitments to settle the claim against him by the plaintiff [Surf Life Saving], that leave should not be given to the second defendant [Tom Kerr] to pursue its Cross Claim against him". 14. Pembroke J vacated Surf Life Saving's consent liability judgment in the 2016 proceedings against Mr Hanks, vacated the freezing orders against Mr Hanks and then dismissed the 2016 proceedings as against Mr Hanks. Those consent orders completed the implementation of the terms of the Deed, which had involved Mr Hanks paying approximately $1 million to Surf Life Saving. 15. Rather than press on with its leave motion in the 2016 proceedings, three days later, on 1 June 2018, Tom Kerr changed course and commenced separate proceedings by filing a Statement of Claim ("the 2018 proceedings"). These new proceedings pleaded a claim for contribution and indemnity from Mr Hanks in respect of Tom Kerr's liability to Surf Life Saving, in terms that were relevantly identical to the form of the Cross Claim sought to be filed in the 2016 proceedings. Tom Kerr did not seek to disguise that the 2018 proceedings were a reaction to Pembroke J's comments on 28 May 2018 and that the 2018 proceedings were, in reality, a Cross Claim that could have been brought in the 2016 proceedings. 16. These circumstances led to three contests between these parties. First, Tom Kerr pressed its leave motion in the 2016 proceedings, seeking leave to file its Cross Claim against Mr Hanks out-of-time. Second, by an Amended Notice of Motion in the 2018 proceedings, Mr Hanks sought to stay or dismiss the 2018 proceedings as an abuse of process ("the abuse of process motion"). Third, Tom Kerr filed a Notice of Motion in the 2018 proceedings seeking an order consolidating the 2016 proceedings with the 2018 proceedings (together "the motions"). 17. All these various contests came before the Court in the Equity Applications List on 2 November 2018. In substance, the Court had before it aspects of the 2016 proceedings and the 2018 proceedings. The Court has chosen to deal with the parties' contests by looking at the position that arises in the 2016 proceedings and then the 2018 proceedings. 18. Mr J. Knackstredt of counsel appeared for Mr Hanks on the various Motions. Ms C. Gleeson of counsel appeared for Tom Kerr on the motions. Surf Life Saving was not represented on the motions. 19. The motions were efficiently conducted in a hearing that took less than two hours. The parties were permitted subsequently to file short written submissions on supplementary issues raised during oral argument. 20. The motion to consolidate the 2016 and 2018 proceedings turned out not to be contentious. But there was a full contest on the other two matters which are dealt with in these reasons. 21. The parties' positions may be shortly summarised. On the leave motion, Mr Hanks contends that Tom Kerr should not have leave to file the proposed Cross Claim in the 2016 proceedings. And on the abuse of process motion. Mr Hanks seeks, and Tom Kerr resists, a permanent stay of the 2018 proceedings on the basis they are an abuse of process. 22. The abuse of process motion can be put to one side. If, on the leave motion, Tom Kerr is granted leave to file the proposed Cross Claim, Tom Kerr does not need to pursue the 2018 proceedings and the abuse of process motion would be resolved without a serious contest. On the other hand, if Tom Kerr fails on the leave motion, the remaining narrow issue on the abuse of process motion will be why Tom Kerr should be permitted to pursue the 2018 proceedings when it has failed to get leave to file identical pleadings in the 2016 proceedings. Those issues on the abuse of process motion can be deferred, while the Court focuses on the leave motion, to which these reasons now turn.

The Leave Motion in the 2016 Proceedings 1. Surf Life Saving commenced the 2016 proceedings by a Statement of Claim, which was amended in May 2017 to join Tom Kerr. In proceedings commenced by Statement of Claim, a cross claimant may bring a Cross Claim within the time limited for that party to file a Defence or "within such further time as the Court may allow": UCPR, r 9.1(1)(a). Tom Kerr seeks to invoke the Court's discretion to extend time under UCPR, r 9.1. 2. Whilst Tom Kerr is the moving party seeking to establish that the discretion to grant further time should be exercised in its favour, it is a convenient structure for present analysis to look at the principal arguments that Mr Hanks advanced as to why the discretion should not be exercised and then to consider what replies Tom Kerr attempted to deploy in answer. 3. Mr Hanks main arguments are that the leave motion should be refused on the grounds that: (a) Mr Hanks will suffer irretrievable prejudice from a grant of leave; (b) Tom Kerr is guilty of unexplained and lengthy delay in filing the proposed Cross Claim; (c) Tom Kerr took no steps to engage in the settlement discussions between Surf Life Saving and Mr Hanks; and (d) the Cross Claim is doomed to fail in any event. 4. Tom Kerr answers each of these contentions and raises other contentions to attempt to justify the grant of leave. 5. (a) Delay. Mr Hanks submits Tom Kerr is guilty of delay. Mr Hanks points out that the motion to stay the 2016 proceedings (until the conclusion of criminal proceedings against Mr Hanks) was planned to be heard on 13 September 2017. But that date was vacated because a settlement in principle was reached between Surf Life Saving and Mr Hanks. Tom Kerr was informed of this and of the fact that it had arisen from settlement discussions. Tom Kerr was made aware of the settlement discussions well prior to the execution of the Deed and chose to do nothing to become involved in those discussions. Rather, it sat back and let other parties negotiate a settlement. Tom Kerr's express motivation for not intervening in the negotiations was that "the plaintiffs need not, and ought not, press a claim against [Tom Kerr]": email on behalf of Tom Kerr at 10 November 2017. 6. Whilst Tom Kerr did nothing, Surf Life Saving and Mr Hanks entered the Deed on 4 December 2017. But some five months later on 23 May 2018 (and nearly one year after the filing of its Defence) Tom Kerr signalled its intention to file a Cross Claim against Mr Hanks. Mr Hanks says that this delay was so lengthy that leave should be refused. 7. Tom Kerr submits that there can be no real complaint in relation to delay. Tom Kerr says that delay should only be counted from when it received the Deed on 16 March 2018, three months after it was executed. Tom Kerr says that it was only then that it was in any position to know the terms of the Deed. And Tom Kerr submits there was only minimal delay between mid-March and late-May in it filing the Cross Claim. 8. Mr Hanks submits that Tom Kerr's extensive delay remains inadequately explained. Mr Hanks submits that Tom Kerr has not complied with its obligations to explain its delay in putting on a Cross Claim as is required by cases such as AON Risk Services Australia Limited v Australian National University (2009) 239 CLR 175; [2009] HCA 27 ("AON"). But Tom Kerr's answer to this contention is that it explained the delay in correspondence on 23 May 2018 which made two points: (1) Tom Kerr has only recently received the Deed from which the practical utility of the Cross Claim "has only just been realised" and before that Tom Kerr has not "kept abreast of the discussions" between Mr Hanks and the plaintiff; and (2) Surf Life Saving's recently served evidence has sharpened Tom Kerr's appreciation of its potential exposure to liability to the plaintiff. 9. (b) Prejudice. Mr Hanks says that if leave were granted now to file a Cross Claim, he would be gravely prejudiced by a number of circumstances which have occurred. He has paid money under the Deed. By 16 May 2018, Mr Hanks had paid to Surf Life Saving over $1 million under the terms of the Deed. Mr Hanks claims he did so in the belief that all the claims against him arising out of the subject matter of the 2016 proceedings were at an end. And Mr Hanks says that his lawyers dedicated significant time to negotiating the terms of the Deed. Mr Hanks says not only is its entry into the Deed in December 2017 is now irreversible, but so too is the Deed's implementation. 10. Tom Kerr says Mr Hanks is in no position to complain about prejudice. Tom Kerr says that its Cross Claim is neither novel nor unusual, and arises directly from the facts pleaded in the Further Amended Statement of Claim in the 2016 proceedings, facts which at one stage Mr Hanks admitted in a consent judgment. Moreover, Mr Hanks says that Tom Kerr's Defence pleaded that its liability was apportionable, so that a Cross Claim for Tom Kerr's costs in the proceedings is hardly surprising. It was clear from Tom Kerr's Defence that it was putting in issue the proportion of liability attributable as between it and Mr Hanks. 11. (c) Tom Kerr Deliberately Chose Not to Intervene. Mr Hanks submits Tom Kerr decided not to enter the settlement discussions of which it was well aware. Mr Hanks says that Tom Kerr had long been alerted to the existence of the settlement negotiations, never asked to participate in them, was never excluded from them and did not propose any settlement negotiations of its own. Mr Hanks says this was all part of Tom Kerr's deliberate strategy to take advantage of any settlement reached between Surf Life Saving and Mr Hanks. Mr Hanks says that this calculated forensic decision should not now be reversed by granting Tom Kerr leave to file a Cross Claim. 12. Tom Kerr puts a different complexion on its non-intervention. It contends that Surf Life Saving embarked on settlement negotiations without either informing or including Tom Kerr. Moreover, it says Mr Hanks, in substance, excluded Tom Kerr from the negotiations. Despite Tom Kerr's requests on more than one occasion to be included, it was shut out at Mr Hanks' choice. It is not now open, Tom Kerr says, for Mr Hanks to try and coerce Tom Kerr into Mr Hanks' settlement by denying Tom Kerr the right to Cross Claim. 13. (d) The Cross Claim is Doomed to Fail in Any Event. Mr Hanks contends that there is no point in granting leave to file a Cross Claim which will fail in any event. Several points are made against the ultimate success of the Cross Claim. First, Mr Hanks argues that the conduct which is alleged to have been engaged in "trade or commerce" only amounts to the private purchase of vehicles: Concrete Constructions NSW Pty Ltd v Nelson (1999) 169 CLR 594; [1990] HCA 17 at 602-3. Second, Mr Hanks argues that he should indemnify Tom Kerr for its own allegedly fraudulent conduct where he is already paid substantial sums to Surf Life Saving is highly unattractive. Third, Mr Hanks argues if Surf Life Saving does establish Tom Kerr was involved in the matters alleged against Mr Hanks, it would be impossible for the Court to conclude that it was misled by Mr Hanks. And fourth, Mr Hanks argues it is difficult to see how a derivate Barnes v Addy (1874) LR 9 Ch App 244 ("Barnes v Addy") claim could be maintained against Tom Kerr after Surf Life Saving has settled its principle claim against Mr Hanks. 14. Tom Kerr answers this by saying that these are all matters to be argued at final hearing and none of them was so decisive that it should be dealt with on this motion.

Applicable Legal Principles 1. UCPR, r 9.1(1) provides as follows: "9.1 Making of cross-claim (1) A party ("the cross-claimant" ) may make a cross-claim: (a) in proceedings commenced by statement of claim, within the time limited for the party to file a defence, or (b) in proceedings commenced by summons, before the return day specified in the summons, or within such further time as the court may allow." 1. The discretion to grant leave under UCPR, r 9.1 is to be exercised having regard to the case management considerations of Civil Procedure Act 2005, ss 56 to 60: Juul v Northey [2010] NSWCA 211 at [247] ("Juul"). Central considerations are the consequence of the grant of leave for the position of other parties and in the expeditious conduct of the proceedings: Fish Records Pty Ltd v Dylgolo Pty Ltd [2011] NSWSC 746 ("Fish") at [8]. In many respects a grant of leave under UCPR, r 9.1 engages similar considerations to those apply when an application is made to amend the pleadings: AON. 2. Civil Procedure Act 2005, s 22 provides a broad power to file Cross Claims as if they are separate proceedings. UCPR, r 9.10(1) makes clear entry of judgment in the main proceedings is no bar to a Cross Claim. It provides: "9.10 Cross-claim may be separately prosecuted (1) A cross-claim may proceed even if: (a) judgment has been entered on the originating process in the proceedings from which the cross-claim arises or any other cross-claim in the proceedings, or (b) the proceedings on the originating process or any other cross-claim have been stayed, dismissed, withdrawn or discontinued. (2) Proceedings on the originating process in the proceedings from which the cross-claim arises may proceed even if: (a) judgment has been entered on any cross-claim in the proceedings, or (b) the proceedings on any such cross-claim have been stayed, dismissed, withdrawn or discontinued." 1. It has been held that a predecessor of this rule applies to a cross claim filed after the resolution of the plaintiff's claim: see Seltsam Pty Ltd v Energy Australia (1999) 17 NSWCCR 720; [1999] NSWCA 89. The Court's power to extend time for filing a Cross Claim permits the Court to continue to act in the original proceedings: FAI General Insurance Co Ltd v Southern Cross Exploration NL (1988) 165 CLR 268; [1988] HCA 13. 2. On the basis that there is no difficulty with extending time in which a Cross Claim might be brought, notwithstanding that judgment has been given in the principal proceedings (see ACCOM Finance Pty Ltd v Kowalczuk [2006] NSWSC 730), the Court has even permitted a cross claim to be filed after judgment against a solicitor acting for one of the parties in the proceedings: International Adviser Systems Pty Ltd v XYYX Pty Ltd & Anor (No. 3) [2008] NSWSC 430.

Determination 1. Leave should be granted to Tom Kerr to file its Cross Claim. This is so for the following reasons. 2. (a) Delay. The delay here, properly measured, is not great. The proper construction of events from the correspondence is that Mr Hanks and his legal representatives were highly resistant to Tom Kerr having anything to do with the negotiations to settle the proceedings as between Mr Hanks and the plaintiffs. They maintained the confidentiality of those negotiations. They declined to show any of the documents to Tom Hanks. They resisted to the end an application for access to the Deed. They never invited participation in the negotiations. 3. It is important to focus on how events in late 2017 and early 2018 should be seen from Tom Kerr's perspective, given the communications it was receiving from the plaintiffs' solicitors, and Mr Hanks' solicitors. Between mid-July and mid-September 2017, the first two months of the delay in filing the Cross Claim, it should be inferred from the course of correspondence that Tom Kerr was unaware that any settlement negotiations were taking place between the plaintiffs and Mr Hanks. The solicitors for Mr Hanks announced to the Court by email on 13 September 2017, for the first time, "the entirety of the dispute between the plaintiffs and the first defendant, including the extant application that is listed for hearing this Friday has been settled in principle". At this stage, Tom Kerr had only been involved as the second defendant in the proceedings for four months. Tom Kerr was not told what the terms of the settlement in principle were. The Court was warned, "this settlement does not affect the claim as between the plaintiffs and the other defendants [Tom Kerr]". This communication was sent by Mr Hanks' solicitors in the form of an email to the judge's associate, not to Tom Kerr's legal representatives. 4. But Tom Kerr's legal representatives found out that the September listing had been adjourned. They asked to be copied into correspondence. The solicitors for Mr Hanks then explained to the solicitors for Tom Kerr that the hearing had been vacated for the following reasons, "the matter was put off as a result of settlement negotiations between the plaintiff and the first defendant. Naturally the details of those negotiations are confidential". 5. This email signals that Tom Kerr had no business with the negotiations and was not being invited to join them. No indication is given when the negotiations were expected to be perfected into a deed. In my view, the effect of this correspondence was to keep Tom Kerr at a distance and not to inform Tom Kerr as to the timing of any deed that might result from the settlement in principle. 6. Whilst it was theoretically open for Tom Kerr to file a Cross Claim at this point, it took the not unreasonable position that it would wait and see whether the outcome of the settlement negotiations between the plaintiffs and Mr Hanks meant that any further action on its part in the proceedings would be needed at all. It was equally open to Mr Hanks in this period, especially as Tom Kerr was only relatively new to the proceedings, to signal to Tom Kerr that the Deed was being perfected on the basis that there would be no Cross Claim from Tom Kerr. Mr Hanks now says that was his expectation but he did not communicate that to Tom Kerr. 7. The information given to Tom Kerr between September 2017 and early 2018 does not change this picture much. On 9 November 2017, the solicitors for the plaintiffs confirmed that they were in negotiations with Mr Hanks. The solicitors for Tom Kerr replied on 10 November, declaring "we have not been invited to participate in any such negotiations nor kept abreast of how close or otherwise the parties are from a resolution". This affirmed contemporaneously their perception that they were being kept at a distance from the negotiations. 8. In that same email on 10 November, the solicitors for Tom Kerr suggested the proceedings be stood over to mid-December with the objective that "the parties may [all] pursue a settlement before being put to the costs of obtaining further expert evidence". Tom Kerr was clearly suggesting the possibility of a three-way negotiation and settlement. 9. But the invitation was not taken up. Instead, on 12 December 2017, the plaintiffs' solicitors confirmed that a Deed had been entered into. Then by late December 2017, the solicitors for Tom Kerr began making enquiries about the contents of the Deed. This ultimately led to the contested motion for access to the Deed, which led to the Deed being provided to Tom Kerr. 10. In my view, Tom Kerr was being kept in a state of uncertainty and kept out of the negotiations, even though by 10 November it had expressed a view that it wanted to be involved. It now lies ill in the mouth of Mr Hanks to say that a Cross Claim should have been filed during this period. Had Mr Hanks engaged with Tom Kerr, it is not difficult to infer that the question of whether a Cross Claim was going to be filed would have emerged fairly quickly. The situation which has resulted, in my view, comes in no small part from the course which Mr Hanks chose to pursue, to isolate Tom Kerr from the settlement negotiations. 11. (b) Prejudice. A demonstrable prejudice to Mr Hanks is not established. Mr Hanks' claims of prejudice would have greater weight if they were supported by evidence which showed that, had Tom Kerr notified Mr Hanks of the Cross Claim before 4 December 2017, then Mr Hanks would not have signed the Deed, or that the settlement would have potentially taken some other form. But Mr Hanks has not adduced such evidence. 12. And its absence is not all that surprising. Had such evidence been adduced, it would only have led to the obvious next question: if a Cross Claim were really that important to Mr Hanks' negotiations, why did he not engage with Tom Kerr and involve it in the negotiations? In the absence of such evidence, it cannot be inferred that had the Cross Claim had gone on earlier, the Deed would not have been signed. If the Deed would have been signed anyway, it is difficult to see what prejudice Mr Hanks has suffered. 13. Mr Hanks asks rhetorically in submissions why would he make any attempt to settle with a person "who had not made a claim against him and given every indication that it would not be interested in making such a claim?". Mr Hanks contends that the inclusion of the proportionate liability defence in Tom Kerr's Defence and the lack of any attempt to become involved in the settlement discussions is a basis to infer that Tom Kerr was not interested in making a claim. 14. But, in my view, Tom Kerr's proportionate liability defence cannot be taken as an indication that there would not be a Cross Claim, for example with respect to the burden of costs. A proper analysis of the correspondence between the parties shows that Tom Kerr had really been told that the settlement negotiations had nothing to do with it, and so it is hardly surprising that it did not attempt further to become involved. It received a clear signal that its intervention in the settlement negotiations was regarded unwelcome. 15. (c) Deliberate Choice. Granting leave would not reward Tom Kerr's deliberate choice not to intervene in the negotiations. In my view, the above analysis shows it is not a correct characterisation of the correspondence exchanged between the parties in this case to say, as Mr Hanks does, that Tom Kerr was undertaking a calculated strategy for ten months not to intervene in the negotiations and then to take advantage of their outcome by filing a Cross Claim. An equally sound characterisation of the course of these events is that Mr Hanks undertook a strategy between September and December 2017 of deliberately excluding Tom Kerr from the negotiations. And then resisted Tom Kerr having any detailed knowledge of the terms of the Deed until mid-March 2018. Mr Hanks could reasonably assume during this period that the less information Tom Kerr had the less well it was equipped to decide whether to apply to bring any cross claim out-of-time. 16. (d) Doomed to Fail. The points Mr Hanks makes against the ultimate success of the Cross Claim can all be made at final hearing. None of them is so decisive that it would warrant refusal of leave to file the Cross Claim out-of-time. 17. Finally, general procedural considerations do not weigh heavily against the granting of leave. The application is made well before the hearing of the proceedings: Bridge v Coles Supermarkets Australia Pty Ltd [2017] NSWSC 848 ("Coles") at [25]-[26]. Tom Kerr never disavowed an intention to Cross Claim: Coles at [5]. Tom Kerr has explained why the Cross Claim was not commenced within the time allowed: see the 23 May 2018 email letter. The Cross Claim will not introduce a new party, new issues, or new evidence into the proceedings: Coles at [24]. Moreover, refusal of leave would prevent Tom Kerr from litigating a legitimate cause of action: Papas v Co [2018] NSWSC 1404 ("Papas") at [41]. And it is desirable to ventilate all issues the parties wish to raise in the one proceeding: Papas at [38]. 18. The cases that Mr Hanks cites as a basis for the Court not granting leave do not compel the conclusion that a grant of leave should be declined. Although leave to file a Cross Claim was refused on Appeal in Juul (at [247]) that was a case where the parties seeking to file a Cross Claim had stood by in far less explicable circumstances than here for a lengthy period. In Fish, Gzell J declined to grant leave where a matter set down for trial would be dislocated. In Coles, Lonergan J refused to grant leave where it would raise new issues and had previously been disallowed. Those are very different cases from the present case. 19. Now that the Court has granted leave to file a Cross Claim in the 2016 proceedings, it follows that Tom Kerr's further pursuit of the 2018 proceedings should be stayed, as they are duplicate proceedings. Tom Kerr consents to this course.

Conclusions and Orders 1. For these reasons the Court concludes that leave should be granted to Tom Kerr to file a Cross Claim. Once the Court grants that leave, Tom Kerr recognises there is no point in pursuing the 2018 proceedings and will consent to a stay. 2. Tom Kerr has been substantially successful on the motion. The appropriate order in my view is that Tom Kerr's costs of the motion will be its costs in the proceedings. 3. Accordingly, the Court makes the following orders and directions: 1. Grant leave to the applicant under Uniform Civil Procedure Rules 2005, r 9.1(1) to file a Cross Claim in the 2016/225871 proceedings ("in the 2016 proceedings") in the form attached to the Notice of Motion filed 25 May 2018 as Annexure A. 2. Stay the further conduct of the 2018/172216 proceedings. 3. The applicant's costs of this motion will be the applicant's costs in the 2016 proceedings.

********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 07 December 2018