Federal Court of Australia

Haggarty v RX Plastics Pty Ltd [2025] FCA 536

ORDERS

THE COURT ORDERS THAT:

1.    The application for further discovery, dated 14 May 2025, is dismissed.

2.    The respondents’ application for leave to amend defence and leave to withdraw admissions, dated 15 May 2025, is allowed.

3.    Within 3 working days of the date of these orders, the parties are to provide to the court:

(a) a minute of agreed orders; or, as the case may be,

(b) competing minutes of orders together with supporting written submissions of no more than five pages,

that are, in either case, proposed to give effect to the court’s reasons for judgment.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

MEAGHER J

INTRODUCTION

1    This matter concerned two interlocutory applications.

2    The first interlocutory application was made pursuant to rr 20.13(1) and 20.20(1) of the Federal Court Rules 2011 (Cth) and sought discovery of further documents (discovery application).

3    It was brought by Mr Justin Haggarty, in his personal capacity and as trustee for the Justin Haggarty Bloodline Trust, Mr Darren Haggarty, in his personal capacity and as trustee for the Darren Haggarty Bloodline Trust, and Mr Campbell Craddock. These applicants are also the applicants for substantive final relief in this matter.

4    The second interlocutory application was made pursuant to rr 16.53(1) and 26.11(2)(b) of the Rules, and sought leave for the respondents to amend their defence and withdraw the admissions at [13A], [14], [15], [19] and [67] of the defence to the further amended statement of claim, filed 26 August 2024 (amendment application).

5    It was brought by the third to sixth respondents, who are:

    Mr Scott Haggarty in his personal capacity and as trustee for the Scott Haggarty Bloodline Trust (third respondent);

    Mrs Sandra Haggarty (fourth respondent);

    Haggarty Holdings Co Pty Ltd, in its own right and as trustee of the RX Trust (fifth respondent); and

    John Haggarty Co Pty Ltd, in its own right and as trustee of the J.P.J. Haggarty Family Trust (sixth respondent).

6    These respondents are also the third to sixth respondents to the applicants’ application for substantive final relief in this matter. Due to the number of members of the Haggarty family involved in this matter, and meaning no disrespect, I will refer to the natural person parties by their first names.

FACTUAL BACKGROUND

7    The brief factual background of the matter is as follows.

8    A scrap metal and Castrol oil business, the J. Haggarty & Co Pty Ltd, was a family-run business owned by Mr Jack Haggarty and Mrs Irene Haggarty. Jack and Irene were the parents of Mr John Haggarty. John worked with his parents from 1966 onwards.

9    In 1983, John and his wife, Sandra, purchased J. Haggarty & Co from Jack and Irene, renaming it John Haggarty & Co Pty Ltd. As the business expanded, John and Sandra created a new trading entity named the Haggarty Group Pty Ltd in 1994. In 2010, John and Sandra created the Haggarty Group Qld, which remains the relevant trading entity. In these reasons, the trading entity will be referred to as the Haggarty Group, irrespective of its iteration.

10    John and Sandra had three sons: Scott, Justin and Darren. They all worked at the Haggarty Group at various times, and to varying extents, but Scott was the most involved. John was diagnosed with cancer in 2013 and passed away in 2019.

11    In 1999, the Haggarty Group acquired R.X. Plastics Pty Ltd. Campbell was the general manager of R.X. Plastics, having been promoted to that role in 1993. R.X. Plastics is the first respondent to the applicants’ application for substantive final relief in this matter.

12    In 1993, Recyclers of Australia Pty Ltd bought 50% of R.X. Plastics. John had been involved with Recyclers of Australia, and was a shareholder in Recyclers of Queensland Pty Ltd, along with Sandra and Scott, since 1990. John appears to have held a directorship with Recyclers of Queensland, and began to run R.X. Plastics in 1993.

13    In 2000, John acquired Recyclers of Queensland Pty Ltd’s shares in R.X. Plastics. That same year, John, Scott and Campbell were appointed directors of R.X. Plastics.

14    On 3 July 2002, the RX Trust was established by deed. On 15 December 2022, Haggarty Holdings became the new trustee of the RX Trust, replacing R.X. Plastics. This occurred by way of a deed of change of trustee made by Sandra.

15    In their amended originating application, the applicants seek, amongst other things, an order pursuant to s 233(1)(d) or (e) of the Corporations Act 2001 (Cth), which would compel the first, and/or third, and/or fourth respondent to purchase the applicants’ shares in R.X. Plastics, given that:

the value of the shares include an amount to be determined by the Court to compensate or allow for the conduct of the first respondent’s affairs contrary to the interests of the members as a whole and/or oppressive to, unfairly prejudicial to, or unfairly discriminatory against the applicants …

PROCEDURAL BACKGROUND

16    On 18 December, Downes J made orders for discovery. By way of orders dated 5 April 2024 (April Orders), her Honour timetabled the matter to trial and set it down for a seven-day trial, commencing on 2 December 2024.

17    The parties corresponded with respect to discovery. The last correspondence occurred on 27 February 2024 by way of a letter from Piper Alderman, the solicitors for the third to sixth respondents, sent to Results Legal, the solicitors of the applicants. This letter is annexed to the affidavit of Ms Paris Galea, dated 8 May 2025. That letter was in response to the applicants’ correspondence of 8 February 2024. Relevantly, Piper Alderman’s letter addressed concerns raised by Results Legal with respect to documents in categories 5 – 10 of discovery and referred to “other discovery matters”. However, there is no further correspondence before the Court regarding discovery. Indeed, on 8 March 2024, the applicants filed affidavits attesting to discovery. On 15 March 2024, the respondents filed affidavits attesting to discovery.

18    Throughout the process of bringing the matter to trial, the parties have required extensions of time to comply with various of the April Orders.

19    As a result, on 8 November 2024, I made orders (November Orders) vacating the original trial dates. By the orders, I set down the matter for a seven-day trial, commencing 9 June 2025. The November Orders timetabled the matter to the new trial dates.

20    The parties also required extensions of time to comply with various of the November Orders.

21    On 5 May 2025, the respondents’ solicitors received a letter from Mr Michael McDonnell, the Principal of Results Legals, the applicants’ solicitors. The letter is annexed to the affidavit of Ms Paris Galea, dated 20 May 2025. Relevantly, that letter alleged that the respondents had failed to disclose:

    “an audited remuneration report of the directors of RX Plastics for the year ended 30 June 2024”;

    “an audited financial report and directors report of RX Plastics for the year ended 30 June 2024”; and

    “financial records of the JPJ Haggarty Trust”.

22    With respect to the financial records of the JPJ Haggarty Trust, the applicants suggested that:

We also note that financial records of the JPJ Haggarty Trust have not been provided to our clients. As you are aware, the Company loaned funds to the JPJ Haggarty Trust which our clients allege were onerous and are therefore an instance of your clients’ oppressive conduct. We would expect the financial records of the JPJ Haggarty Trust to show what the loans from the Company were used for, which would in turn be relevant to how those funds might have been put to use by the Company had the loans not been made.

Further, our clients hold concerns that the Division 7A loans may not be genuine, in that more money may have flowed through the Company then to the JPJ Haggarty Trust, which may be a breach of Division 7A. We expect the JPJ Haggarty financial records to shed light on this issue.

23    The letter stated “[f]or those reasons, our client intends to seek directions at the case management hearing on 8 May that a subpoena be issued on the JPJ Haggarty Trust to disclose relevant financial records”.

24    Annexed to the affidavit of Ms Galea, dated 8 May 2025, is the respondents’ response on 7 May 2025 to the applicants’ letter of 5 May 2025. The respondents’ solicitors affirmed that the respondents had provided a remuneration report for the year ended 30 June 2024 on 18 July 2024, and had provided the management accounts for R.X. Plastics. Further, the respondents’ stated:

We do not understand your complaint about non-disclosure arising from the request for remuneration reports and financial reports of RX Plastics. Discovery in this proceeding occurred by way of the Redfern Discovery Procedure provided for under the Court’s Commercial and Corporations Practice Note (C&C-1). As part of that procedure, the parties requested discovery of certain categories of documents. There is no order, rule or agreement that documents that came into existence after the dates within those categories would be disclosed.

25    With respect to the financial records for the JPJ Haggarty Trust, the respondents stated:

Those two stated issues are not part of your clients’ pleaded case (although we do not profess to understand issue 2, we consider that it has not been pleaded). There is no allegation that any particular opportunity was exploited by John Haggarty & Co Pty Ltd as trustee of the JPJ Haggarty Trust that could have been exploited by RX Plastics. Nor is there any allegation about breach of Division 7A and whether the loans were genuine.

John Haggarty & Co Pty Ltd as trustee of the JPJ Haggarty Trust is the sixth respondent to this proceeding. The Federal Court Rules 2011 prescribe a discovery regime by which parties may obtain documents from the opposing party to a proceeding. That process has been engaged in this proceeding, orders were made by Justice Downes in December 2023, categories were agreed, discovery was given more than a year ago and your firm has not raised any issue about alleged non-discovery until your letter received on Monday, 5 May 2025. In the circumstances, a subpoena is an impermissible attempt to achieve further discovery by circumventing the applicable discovery rules. A subpoena should not be issued on that basis and if it is, it is liable to be set aside.

26    In this letter the respondents raised their intention to seek orders at the case management hearing on 8 May 2025 allowing for the filing and service of an amended defence, and corresponding timetabling orders.

27    This occurred against the backdrop of a series of previous orders which granted the parties leave, at various times, to file such documents as amended originating processes, statements of claim, defences and replies. These documents included:

    An amended originating process, filed by the applicants, on 18 December 2023;

    An amended defence of the third, fourth, fifth and sixth respondents, filed by the respondents, on 22 December 2023;

    An amended reply, filed by the applicants, on 11 March 2024;

    An amended statement of claim, filed by the applicants, on 10 April 2024;

    A defence of the third, fourth, fifth and sixth respondents to the amended statement of claim, filed by the respondents, on 20 May 2024;

    A further amended reply, filed by the applicants, on 11 June 2024;

    A further amended statement of claim, filed by the applicants, on 7 August 2024;

    A defence of the third, fourth, fifth and sixth respondents to the further amended statement of claim, filed by the respondents, on 27 August 2024; and

    A second further amended reply, filed by the applicants, on 24 September 2024.

28    On 8 May 2025, a pre-trial case management hearing was held, at which time the disputes as to discovery and the amended defence were raised and, therefore, I made orders as follows:

Pleadings

1.     By 4:00pm AEST on 9 May 2025, the respondents deliver to the applicants a proposed amended defence to the further amended statement of claim.

2.     By 4:00pm AEST on 14 May 2025, the respondents file and serve any application and any supporting affidavit for leave to amend and leave to withdraw admissions to be heard on 21 May 2025 at 10:15am AEST.

3.     By 4:00pm AEST on 16 May 2025, the applicants file and serve any affidavit material upon which they intend to rely at the hearing of the application filed in accordance with paragraph 2 above.

…

Discovery

10.     By 4:00pm AEST on 14 May 2025, the applicants file any application and any supporting affidavit for discovery to be heard on 21 May 2025 at 10:15am AEST.

11.     By 4:00pm AEST on 16 May 2025, the respondents file and serve any affidavit material upon which they intend to rely at the hearing of the application filed in accordance with paragraph 10 above.

CONSIDERATION

29    It should be noted at the outset the parties were in agreement that the impending trial dates be preserved.

Amendment of Defence

30    By way of interlocutory application, filed on 15 May 2025, the respondents sought the following orders:

Interlocutory orders sought

1.     Pursuant to rule 16.53(1) of the Federal Court Rules 2011, leave is granted to the respondents to amend their defence substantially in the form of the proposed amended defence to the further amended statement of claim annexed to this application (amended defence);

2.     Within 1 business day of leave being granted, the respondents are to file and serve their amended defence;

3.     Pursuant to rule 26.11(2)(b) of the Federal Court Rules 2011, leave is granted to the respondents to withdraw the admissions contained in paragraphs 13A and 67 of the defence to the further amended statement of claim filed on 26 August 2024;

4.     To the extent necessary, pursuant to rule 26.11(2)(b) of the Federal Court Rules 2011, leave is granted to the respondents to withdraw the admissions contained in paragraphs 14, 15 and 19 of the defence to the further amended statement of claim filed on 26 August 2024;

5.     Within 1 business day of leave being granted, the respondents are to file and serve their form 47 notice of withdrawal;

6.     Costs in the cause; and

7.     Such further or other orders as the court considers appropriate.

(Emphasis in original.)

31    The applicants no longer oppose all the amendments sought by the respondents. Unless specified in the following paragraphs, the remaining proposed amendments were the subject of no submissions or submitted to be “uncontroversial” by the applicants at the interlocutory hearing on 21 May 2025.

32    The applicants relied upon:

    An outline of submissions, filed 20 May 2025.

33    As well as their written submissions, filed 20 May 2025, the respondents relied upon:

    The interlocutory application filed 15 May 2025;

    The affidavit of Mrs Sandra Haggarty, filed 6 September 2024;

    The affidavit of Mr Francis Allen, filed 20 September 2024;

    The affidavit of Mr Scott Haggarty, filed 1 October 2024;

    The second affidavit of Mr Scott Haggarty, filed 6 December 2024;

    The second affidavit of Mr Francis Allen, filed 10 December 2024;

    The affidavit of Ms Paris Galea, filed 8 May 2025;

    The second affidavit of Ms Paris Galea, filed 20 May 2025;

    The further amended statement of claim, filed 7 August 2024; and

    The defence to the further amended statement of claim, filed 27 August 2024.

34    Pursuant to r 16.53(1) of the Rules, which applies unless r 16.51 of the Rules applies, once pleadings have closed, a party must apply for leave to amend a pleading. As per s 37M of the Federal Court of Australia Act 1976 (Cth), the Court must consider the overarching principles of the just resolution of disputes, done according to law, as quickly, inexpensively and efficiently as possible. The onus lies with the party seeking the leave of the Court: Dye v Commonwealth Securities Ltd (No 2) (2010) 63 AILR 101-302; [2010] FCAFC 118 at [17].

35    The respondents submitted, with respect to the amendment of paragraph 6 of their defence:

12.     By paragraph 6(d) of the [further amended statement of claim or FASOC], the applicants allege that by John’s conduct and statements pleaded in 6(a) to (c), John represented to members of the Company that they would have an interest in the RX Trust in an equivalent proportion to their shareholding in the Company and members would not be prejudiced by transfers from the Company. It has always been included in the particulars of the Defence that Campbell signed financial statements for the RX Trust. The additional particulars are of other documents Campbell signed for the RX Trust which are included in the respondents’ lay evidence.

13.     The purpose of the additional particulars is to provide clarity as to the respondents’ case now that the trial evidence has been completed. It is not strictly necessary that the particulars be included in the amended defence, but that course has been taken for convenience to all the parties now and at trial.

36    However, the applicants submitted that the amendments to paragraph 6 of the respondents’ further amended defence would “effectively add a further substantive ground as to why the response alleged that Campbell approved or had knowledge of the distributions made from the R.X. Trust each financial year”. In that context, the applicants submitted that they would need to amend their reply, and provide further evidence from Campbell.

37    With respect to the amendments to 23(l) of the amended defence, the respondents submitted:

19.     The proposed (l) addresses the factual situation which follows from determination of the market rental, being that the directors of the Company have not reached any agreement or adjustment as to the market rent because there is disagreement amongst them. That is also addressed in the respondents’ trial affidavits.

20.     It is unclear how the applicants could be prejudiced by these amendments, given it is not a new defence, the facts were deposed to in trial affidavits and expert evidence, and it is not apparent that any significant amendment would be required to the applicants’ reply.

38    The applicants opposed this amendment on the basis that they were uncertain as to where this evidence arises in the respondents’ evidence, and that it is controversial because it conflicted with the applicants’ evidence that a review of the market rent had not been initiated, and because it went “to the quantification of the relevant loss”. The applicants submitted that a response with “further substantive evidence” would be required.

39    With respect to the amendments to paragraphs 25(l) to (n), 27(j) to (k), 28(f) to (g), 29(c) to (d) and 31(i) of the amended defence, the respondents submitted:

24.     The amendments in 25(l), 27(j), 28(f) and 29(c) that Campbell did not complain about the loans and transfer of assets prior to John’s death is consistent with all of the trial affidavits that have been filed (including the applicants’). It was already pleaded that Campbell approved or had knowledge of the conduct he is said to have acquiesced in. The additional allegations in 25(m), 27(k), 28(g), 29(d) and 31(i) that Campbell acquiesced in the conduct is a legal conclusion to be drawn from the material facts already pleaded. Although it might be considered a new defence, it is not a new factual allegation that requires any investigation by the applicants to put on any evidence. The applicants have been given one months’ notice of the amendments and have not indicated that it will prejudice them in any way for the amendment to be allowed.

25.     Conversely, the facts revealed by the parties’ trial evidence support the argument that Campbell acquiesced in the giving of the loans, transfer of assets and charging of hire fees. The respondents should be entitled to make the case that because of Campbell’s acquiescence; he cannot now allege oppression. That case will run alongside the arguments that the conduct was done with Campbell’s knowledge or approval.

26.     The amendment to 25(n) is to put beyond doubt what the respondents’ case will be at trial. It addresses the test for oppression. It is not a new defence and it is unclear on what basis the applicants oppose the amendment.

40    The applicants opposed the amendments to paragraphs 25(n), 27(k), 28(g), 29(d) and 31(i) on the basis that the respondents’ allegation that Campbell “acquiesced” is a legal defence which has not been pleaded, and would require further evidence to establish a need to amend the applicants’ reply.

41    In the circumstances, I am inclined to agree with the respondents’ submissions that the key intention behind these amendments is to align the defence with the evidence to be relied upon at trial. In this context, the respondents submitted that the amendments:

(a)    are minor;

(b)    could only be made after the finalisation of the parties’ evidence for trial;

(c)    were provided to the applicants one month before the commencement of the trial;

(d)    do not substantially change the existing defence; and

(e)    do not prejudice the applicants.

42    The respondents relied upon the well-known principles in Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175; [2009] HCA 27. However, they also relied upon Cement Australia Pty Ltd & Ors v Australian Competition and Consumer Commission (2010) 187 FCR 261; [2010] FCAFC 101 at [51]:

Aon Risk is not a one size fits all case. Whilst various factors are identified in the judgment as relevant to the exercise of discretion, the weight to be given to these factors, individually and in combination, and the outcome of that balancing process, may vary depending on the facts in the individual case. As the plurality in Aon Risk observed at [75], statements made in cases concerning amendment of pleadings are best understood by reference to the circumstances of those cases, even if they are stated in terms of general application.

43    The applicants relied upon the summary of principles by Stewart J in London City Equities Ltd v Excelsior Capital Ltd [2025] FCA 285 at [4], which identified the Aon Risk factors. In particular, the applicants emphasised the following at [4] of London City Equities, which cited Aon Risk at [112]:

Limits will be placed upon the ability of parties to effect changes to their pleadings, particularly if litigation is advanced and they have had a sufficient opportunity to identify the issues they seek to agitate.

(Citation omitted.)  

44    I agree with the respondents’ submissions that “mere factual corrections and adding facts to clarify the respondents’ case are generally permissible”, and the consequence of delay is lessened when one considers the “efficiency and rationality” of making an application for amendment which covers all required changes. See Kaplan v State of Victoria (No 2) [2022] FCA 679 at [2] – [3] and [6].

45    To the extent that the respondents will now plead acquiescence, I accept that the evidence in relation to that has been given in the context of the defence in its existing form and therefore will give rise only to legal argument.

46    Although there has been some delay in amending the defence, this must be considered within the procedural context of this matter, including the previous leave for amendments to pleadings and orders for extensions of time. Although this application has come before me quite close to the commencement of the trial, this is not fatal to the respondents’ application. The changes to their defence are minor, and are directed towards accurate reflecting the respondents’ case. This can only be to the benefit of the parties, and in the interests of justice. Any prejudice to the applicants can be remedied by granting them leave to file a third further amended reply.

47    Further, while the amendments to the defence will necessitate the filing of a third further amended reply, and the filing of further limited evidence, there is nothing before the Court suggesting that the applicants are unable to do that before the trial commences. By this any prejudice to the applicants is limited.

Withdrawal of Admissions

48    The respondents’ orders sought, by way of their interlocutory application of 15 May 2025, with respect to the withdrawal of admissions, is outlined above. The respondents sought to withdraw the express admissions of 13A and 67 of the applicants’ further amended statement of claim, and the deemed admissions of 14, 15 and 19 of the applicants’ further amended statement of claim to the extent required.

49    The respondents correctly submitted that r 26.11 of the Rules applies. This rule states that:

26.11 Withdrawal of defence etc

(1) A party may, at any time, withdraw a plea raised in the party’s pleading by filing a notice of withdrawal, in accordance with Form 47.

(2) However, a party must not withdraw an admission or any other plea that benefits another party, in a defence or subsequent pleading unless:

(a) the other party consents; or

(b) the Court gives leave.

(3) The notice of withdrawal must:

(a) state the extent of the withdrawal; and

(b) if the withdrawal is by consent—be signed by each consenting party.

50    The respondents’ relied upon the principle that admissions can indeed be withdrawn based upon the Court’s broad discretion to weigh up all matters to ensure a fair trial: Jeans v Commonwealth Bank of Australia Ltd (2003) 204 ALR 327; [2003] FCAFC 309 at [18].

51    The applicants relied upon Selvaratnam v St George – A Division of Westpac Banking Corporation (No 2) [2021] FCA 486, another decision of Stewart J, at [27] as follows:

The applicable principles with regard to whether leave to withdraw an admission or other pleading that benefits another party are, relevantly, the following, noting that for simplicity I will refer only to the withdrawal of an admission:

(1)    The court has a broad discretion to weigh up all matters with the overall question being to ensure that there is a fair trial: Jeans v Commonwealth Bank of Australia Ltd [2003] FCAFC 309; 204 ALR 327 at [18] and [23] per Hill, Madgwick and Conti JJ.

(2)    The court will require an explanation for the making of the admission which is now sought to be withdrawn; the explanation must be a sensible one based on evidence of a solid and substantial character: Celestino v Celestino [1990] FCA 449 at 8 [12] per Spender, Miles and von Doussa JJ (noting that the AustLII MNC for this case is [1990] FCA 299).

(3)    The object of the courts is to decide the rights of the parties, and not to punish them for mistakes they make in the conduct of their cases; if the mistake is not fraudulent or intended to overreach, can be corrected without injustice to the other party, and if not corrected will not lead to a decision on the real matters in controversy, it should generally be corrected: Celestino at 7 [10].

(4)    The overriding consideration is the interests of justice: Australian Competition and Consumer Commission v Construction, Forestry, Mining and Energy Union [2007] FCA 1390 at [4] per Finn J.

(5)    The court will not lightly permit a party to withdraw an admission where the other party has acted to its detriment on the admission or is otherwise prejudiced by the withdrawal; if the other party has in good faith relied on the admission to its detriment so as to give rise to an estoppel the court will not permit the admission to be withdrawn: Celestino at 10 [14].

(Emphasis in original.)

52    The respondents made submissions as follows:

The inadvertent express admissions

Paragraph 13B

36.     Paragraph 13A of the FASOC pleads facts relating to the removal of the trustee of the RX Trust. Paragraph 13B of the FASOC pleads:

In the premises of paragraph 13A, it should be inferred that the sole or dominant reason why Scott and Sandra caused RX Plastics to be removed as trustee of the RX Trust was to prefer their interests to that of RX Plastics.

37.     The defence pleaded at paragraph 13A only one paragraph in response to the allegations in paragraphs 13A and 13B as follows:

(a) say that the change of trustee occurred through an exercise of the power conferred by cl.9.4.2 of the Trust Deed;

(b) say that the exercise of the power occurred in circumstances where the three directors of RX Plastics Pty Ltd, as trustee of the RX Trust, were experiencing difficulty reaching agreement regarding matters concerning the Trust; and

(c) otherwise admit the allegations insofar as they are made against Sandra but deny the allegations insofar as they are made against Scott.

38.     The uncontroversial facts are that Sandra became the Principal under the RX Trust Deed upon John’s death and was solely empowered to change the trustee of the RX Trust (see the RX Trust Deed at exhibit SJH-12, Affidavit of Scott Haggarty filed 29 September 2024) and that Sandra did change the trustee. What is controversial is whether her conduct in doing so was to prefer her interests over that of the Company.

39.     The admission of the allegation in paragraph 13B of the FASOC arose out of a misunderstanding of the allegation, was inadvertent and the respondents did not intend to admit it. The true position the respondents wish to advance at trial is as deposed to in the affidavit of Sandra Haggarty sworn 5 September 2024 and the matters pleaded already at paragraph 13A (in substance).

40.     The applicants have not adduced any evidence of prejudice as a result of the withdrawal of this admission.

(Emphasis in original.)

53    The applicants opposed this withdrawal, on the basis that the respondents’ argument that the admission was based on a “misunderstanding”, and was thus “inadvertent”, was “inconsistent”. The applicants further submitted that the misunderstanding itself was not explained to a satisfactory level, nor was it expressly attributed to Sandra.

54    With respect to the express admission of 67 of the applicants’ further amended statement of claim, the respondents submitted:

Paragraph 67

41.     The allegation at paragraph 67 of the FASOC is:

The appointment of Mr Frank Allen as auditor occurred without notice to Campbell or his consent.

42.     The admission arose out of a misunderstanding of the allegation made at paragraph 67 of the FASOC. A request was made for Mr Allen to be appointed as auditor, and that is why the paragraph was admitted, however Mr Allen was not ultimately appointed as auditor for the Company. The admission was inadvertent and is inconsistent with the sworn evidence to be relied on at trial. The true position that the respondents wish to advance at trial is as deposed to by Mr Allen at paragraphs 91 to 101 of his affidavit sworn 20 September 2024 and Mr Scott Haggarty at paragraph 382-383 of his affidavit filed 29 September 2024.

(Emphasis in original and footnotes omitted.)

55    The applicants took the view that the misunderstanding which affected this admission was also unexplained, but did not press this point at the interlocutory hearing on 21 May 2025.

56    Finally, the respondents made submissions with respect to deemed admissions, as follows:

Alleged deemed admissions

Paragraph 14

43.     In preparation for trial, the respondents observed that the applicants intended to rely on “deemed” admissions in relation to paragraph 14 of the FASOC by reason of the statement pleaded in paragraph 6(a) of the amended reply. That deemed admission is apparently said to arise out of operation of rule 16.07(2) of the Rules which states that allegations that are not specifically denied are taken to be admitted.

44.     Accordingly, the proposed amendment at 14(d) seeks to put beyond doubt that the respondents deny the remainder of the allegations in paragraph 14 of the FASOC which are not expressly admitted. That should not be surprising to the applicants given the allegations at 14(b) and (c) are inconsistent with an admission of paragraph 14 of the FASOC. The applicants have already pleaded in their reply in response to each of the allegations in paragraph 14(b) and (c) of the defence. Accordingly, the amendment should not be controversial or prejudicial to the applicants.

45.     To the extent necessary, the respondents give evidence that they did not intend to admit the paragraph, they thought that it was denied and intend to advance a position at trial as pleaded in the amended defence at paragraph 14.

Paragraph 15

46.     The proposed amendment at 15(d) seeks to put beyond doubt that the respondents deny the remainder of the allegations in paragraph 15 of the FASOC which are not expressly admitted. That should not be surprising to the applicants given the respondents had specifically admitted parts of paragraph and pleaded a positive allegation at 15(c) which is inconsistent with the admission. The applicants have already pleaded in their reply in response to the allegations in paragraph 15 of the defence. Accordingly, the amendment should not be controversial or prejudicial to the applicants.

47.     To the extent necessary, the respondents give evidence that they did not intend to admit the paragraph, thought that it was denied and intend to advance a position at trial as pleaded in the amended defence at paragraph 15.

Paragraph 19

48.     In preparation for trial, the respondents observed that the applicants may intend to rely on “deemed” admissions in relation to paragraph 19 of the FASOC by reason of the statement pleaded in paragraph 7A(b) of the amended reply.

49.     The proposed amendment at 19(c) seeks to put beyond doubt that the respondents deny the remainder of the allegations in paragraph 19 of the FASOC which are not expressly admitted. That should not be surprising to the applicants given the respondents had specifically admitted parts of paragraph and denied another part. The applicants have already pleaded in their reply in response to each of the allegations in paragraph 19 of the defence. Accordingly, the amendment should not be controversial or prejudicial to the applicants.

50.     To the extent necessary, the respondents give evidence that they did not intend to admit the paragraph, thought that it was denied and intend to advance a position at trial as pleaded in the amended defence at paragraph 19.

Other alleged deemed admissions

51.     There are also statements in the reply that the applicants rely on deemed admissions in the defence at paragraphs 9(a), 11(aa), 13(aa), 13A(a) of the reply (relating to paragraphs 23, 25, 27 and 28 of the defence). The applicants’ complaint appears to be that although the respondents expressly pleaded a denial of the whole of paragraphs 23, 25, 27 and 28 of the FASOC and state the correct facts thereunder in the corresponding paragraphs of the defence, because the respondents did not state that they deny each subparagraph, that the consequence is somehow a deemed admission. The respondents do not accept that assertion. The respondents have not sought to amend their defence to address the applicants’ position because they do not consider that any deemed admission arises. If the applicants wish to press the point that deemed admissions arise, they should notify the respondents immediately, otherwise the respondents will continue to proceed on the basis that they do not.

(Emphasis in original and footnotes omitted.)

57    The applicants did not make specific submissions directed to alleged deemed admissions.

58    While it may be accepted that, as the applicants submitted, the explanation for the making of the admissions sought to be withdrawn were not as fulsome as they might have been, I do not accept their argument that a misunderstanding is necessarily inconsistent with inadvertence. It is clear that the respondents seek to withdraw the relevant express admissions and deemed admissions to better clarify the evidentiary basis upon which the respondents rest their defence, and upon which the applicants will reply. With respect to the admission sought to be withdrawn in paragraph 13, I am of the view that paragraphs 44 – 47 of Sandra’s affidavit, filed 6 September 2024, when read together, are capable of supporting an inference that is not consistent with the admission. I therefore consider it to be in the interests of justice that the respondents be granted leave to withdraw the admission.

59     The same principle applies with respect to paragraph 67.

60    The analysis with respect to delay, as at [46] above, is also useful here. The applicants are unlikely to suffer prejudice in the circumstances, as I intend to grant them leave to file a third further amended reply. Therefore, having regard to the interests of justice, leave is granted to the respondents to withdraw the admissions in accordance with their interlocutory application of 15 May 2025.

Further Discovery

61    On 14 May 2025, the applicants lodged an interlocutory application, which was accepted for filing on 15 May 2025, and sought orders in the following terms:

1.     The respondents make discovery of the categories of documents in Schedule B to this application.

2.     The respondents pay the applicants’ costs of the application.

62    The scope of relief was narrowed during the interlocutory hearing on 21 May 2025 in the applicants’ reply submissions. During reply, the applicant confined their application to the following documents listed in Schedule B to their interlocutory application:

In respect of the management accounts dated 30 June 2024 referred to at SJH-93 of the affidavit of Mr Scott Haggarty filed 1 May 2025, the applicants seek discovery of:

…

2.     All employment contracts of employees of RX Plastics Pty Ltd in the financial year ending 30 June 2024.

…

4.     All documents evidencing the direct wages payroll tax and Workcover premiums paid by RX Plastics Pty Ltd in the financial year ending 30 June 2024.

…

7.     All documents evidencing the occupancy expenses paid by RX Plastics in the financial year ending 30 June 2024.

63    With respect to the remaining documents, the applicants limited them “from 2019 to the present”.

64    The applicants relied upon the following material:

    The affidavit of Mr Joseph Box, filed 8 March 2025;

    The affidavit of Mr Scott Haggarty, filed 1 May 2025;

    The applicants’ interlocutory application for discovery, filed 15 May 2025; and

    The affidavit of Ms Rachel Wallen, filed 15 May 2025; and

    The applicants’ written submissions, filed 20 May 2025.

65    As well as their written submissions, filed on 20 May 2025, the respondents relied upon the following material:

    The order of 5 April 2024;

    The order of 8 November 2024;

    The expert report of Mr Paul Vincent, filed 5 December 2024;

    The expert report of Mr Joseph Box, filed 8 March 2025;

    The joint expert report of Mr Box and Mr Vincent, filed 4 April 2025;

    The affidavit of Mr Scott Haggarty, filed 1 May 2025;

    The affidavit of Ms Paris Galea, filed 8 May 2025; and

    The affidavit of Ms Paris Galea, filed 20 May 2025.

66    The applicants sought disclosure of the documents in order to “properly assess the veracity of the Management Accounts” such that they could “verify the matters on which Mr Box bases his expert opinion regarding valuation”. They also sought disclosure of the documents in order to “assess the use and effect of the onerous loans made by RX Plastics to the RX Trust and JPJ Trust”.

67    The applicants submitted that r 20.14 of the Rules provided for standard discovery. Rule 20.15 of the Rules provides for non-standard and more extensive discovery. As per r 20.20(1) of the Rules, parties which have been ordered to give discovery are subject to a continual obligation to disclose documents which were “not previously discovered” and “that would otherwise be necessary to be discovered to comply with the order”. This does not extend to documents created after the commencement of the proceeding, where the party has a valid claim of privilege over those documents: r 20.20(2) of the Rules.

68    The applicants argued that the disclosure of the documents would allow for the “just and expeditious resolution of the trial”. They submitted that it would allow the parties and the Court to be “sufficiently informed of the nature of the case”. The applicants contended that “the documents sought are relevant and important” and within “limited and targeted” categories of discovery. The applicants submitted that the documents were or would likely be of significant probative value.

69    However, the respondents opposed the application on the basis that it had been brought too late, considering the imminent commencement of the trial and the previous vacation of trial dates. They submitted that, if granted, the relief would require an adjournment of the current trial dates, and the relevance of the documents to the applicants’ case is unclear. They submitted, relying upon Bridging Capital Holdings Pty Ltd v Self Directed Super Funds Pty Ltd [2024] FCA 985 at [13], that discovery in these circumstances would be burdensome, of little utility, and disproportionate.

70    Indeed, the respondents made submissions based on Ms Galea’s affidavit of 20 May 2025 that the time required to make discovery of the documents would far exceed the limited time available before the commencement of the trial on 9 June 2025. Given that the applicants narrowed the scope of discovery sought during the interlocutory hearing, at the request of the Court, the respondents provided a further affidavit of Ms Galea, affirmed on 21 May 2025, which provided an estimate of the likely time required to provide the additional discovery now sought.

71    The respondents estimated that they would require approximately two weeks to provide discovery of the documents referred to in two, four and seven of Schedule B to the applicants’ discovery application. The respondents considered that the estimate of four weeks would only be reduced by two days with respect to the applicants’ narrowing of documents to those in existence between 2019 and the present, in relation to the RX Trust documents and JPJ Trust documents. Additionally, the respondents considered they would need seven weeks to discover documents related to RX Trust and JPJ Trust, with only a slight reduction based on the temporal limitation.

72    Considering the procedural history of this matter, the correspondence between the parties, the failure of the applicants to raise an application for discovery sooner, the imminent commencement of the trial and the unduly high burden upon the respondents, I am disinclined to grant the relief sought in the applicant’s discovery application. The utility of the documents does not outweigh these countervailing considerations.

CONCLUSION

73    The application for further discovery, dated 14 May 2025, is dismissed. The respondents’ application for leave to amend defence and leave to withdraw admissions is allowed.

74    As no submissions were made with respect to costs, I will make orders that costs follow the event.

Associate:

Dated:    23 May 2025

SCHEDULE OF PARTIES