IN THE SUPREME COURT OF VICTORIA	Not Restricted	
AT MELBOURNE
Common Law Division
Property List
S CI 2017 04815

JEANETTE DREW	Plaintiff/First Defendant by Counterclaim	
		
v  		
		
VICTOR DREW & ORS (according to the attached Schedule)	Defendants 	

	---	

JUDGE:	McMillan J	
WHERE HELD:	Melbourne	
DATE OF HEARING:	2 August 2021	
DATE OF JUDGMENT:	8 April 2022	
CASE MAY BE CITED AS:	Drew v Drew (No 2)	
MEDIUM NEUTRAL CITATION:	[2022] VSC 177	

---

COURT PRACTICE AND PROCEDURE – Appeal from decision refusing leave to file and serve amendments to amended statement of defence and counterclaim – Proposed amendment to include case based on assignment of equitable interest in property – Whether amendment raised a case that has no real prospects of success – No real prospects of success – Appeal dismissed. 

---

APPEARANCES:
	Counsel	Solicitors	
For the Plaintiff	Mr M Bearman with Mr S Fuller	Russell Kennedy Lawyers	
			
For the First Defendant	Mr J Evans QC	Sinisgalli Foster Legal	
			
For the Estate of Leslie Drew	Mr J Nixon	Pearce Webster Dugdales	

HER HONOUR:
1	By notice of appeal filed 12 March 2021, the first defendant and plaintiff by counterclaim, Victor Drew (‘Victor’) lodged an appeal from the decision of Associate Justice Efthim delivered 2 February 2021, refusing leave to Victor to file and serve certain proposed amendments to his amended statement of defence and counterclaim, and ords 1 and 9 of the orders made on 19 February 2021 giving effect to that decision. 
2	Jeanette Drew (‘Jeanette’) is the plaintiff and first defendant by counterclaim and is Victor’s sister.  She is the respondent in this appeal.  Until its sale, Jeanette was the registered proprietor of a property at 1 Mangalore Street, Travancore (‘the property’). 
3	Counsel for the estate of Leslie Drew appeared at the commencement of the appeal and was excused from any further appearance.
4	Jeanette commenced this proceeding alleging that Victor and the second defendant, Victor’s wife, Helen Drew (‘Helen’), wrongfully took possession of the property and made claims of trespass and nuisance in respect of the property.  The property has now been sold and Jeanette seeks compensatory or restitutionary damages, alternatively, exemplary or aggravated damages.
5	On 21 March 2018 Victor filed a defence.  Subsequently, on 11 October 2018 Victor filed an amended defence and counterclaim pursuant to orders of Matthews JR made 14 September 2018.  Therein he claims that he had a beneficial interest in the property by way of constructive, alternatively, resulting trust.  On 21 May 2019, Jeanette filed her reply and defence to Victor’s counterclaim.
Victor’s summons
6	By summons filed 4 November 2019, Victor sought to make amendments to his claims in respect to his alleged beneficial interest in the property.  The amendments relevantly included a case based on an assignment by Victor and Jeanette’s parents, Georgia Drew (‘Georgia’) and Leslie Drew (‘Leslie’) to Victor of their alleged equitable interests in the property based upon a document dated 13 November 1988 (‘the 13 November 1988 document’).
7	The 13 November 1988 document provides:
THIS TRANSFER AGREEMENT is made the 13th day of november one thousand nine hundred and eighty eight BETWEEN LESLIE VICTOR DREW AND GEORGIA DREW both of 9 gordon st Tullamarine (hereinafter called ‘the transferors’) of the one part and VICTOR JOHN DREW of 9 gordon st Tullamarine (hereinafter called ‘the transferee’) of the other part.
WHEREAS:
The transferors have agreed to transfer the ownership of the value of their interest in the property known as 1 MANGALORE ST ASCOT VALE being ONE HUNDRED AND EIGHTY THREE THOUSAND NINE HUNDRED AND SIXTY SIX DOLLARS AND FIFTEEN CENTS ($)183,966.15 as the cash value at this date but to be more accurately calculated and relied on as NINETY ONE PERCENT (91%) of its ongoing value.
NOW THIS AGREEMENT WITNESETH AS FOLLOWS:
1.	The property is to be held in name only by the transferee for the exclusive benefit of the transferors unless point 6 event occurs.
2.	this agreement is written with the intention to protect the transferors’ interest in the property from our daughter JEANETTE HELEN DREW (JHD) if not returned to us upon request at any time.
3.	if JHD signs the property back over to us as was our stipulation to her upon request within twelkve [sic] years (12) as verbally agreed before signing her ‘loan’ agreement, then no further action will be taken.
4.	If however there is any issue or failure to do so then this agreement will be relied on to severJHD from any claim over the property and the transferors are entitled to be the primary beneficiaries of at leastninety on [sic] percent (91%) of the ongoing market value once in their namesat settlement in addition to any amounts we have contributed to its purchase, maintenance, and any outgoings, costs, fees associated with the property to date settled.
5.	Any costs legal or otherwise outlaid or required to make sure this is achieved will in the 1st instance be taken from my personal funds and thereafter the total costs suffered to be deducted from my monies or other JHD may happen to claim or receive from my estate or other on my death.
6.	If for whatever reason either of us (LVD & GD) have been unsuccessful in having the property transferred back to us within twelve (12) years, then the transferee will be entitled instead to be the primary beneficiary of the property in full without exception to do so as he please.
7.	The transferee will be entitled to the same entitlements as us in points (4) and five (5) above. In summary; In addition to the tranferee’s [sic] own six (6%) percent equity in the property we are giving our ninety one percent (91%) ownership and any funds required to secure his interest be met at my expense initially and then deducted against JHD as listed above.
IN WITNESS WHEREOF:
The parties hereto have hereunto set their hands the day and year hereinbefore written except that of VICTOR JOHN DREW AS I don’t want him to know fully of my intentions to transfer to him the property unless the situation presents.
8	The document is signed by Leslie and Georgia and witnessed by George Showler.
9	On 25 November 2019 the application was heard by Lansdowne AsJ.  Further submissions were made on 3 December 2019.  On 11 March 2020 Lansdowne AsJ delivered written reasons refusing Victor’s application to file the proposed amended defence and counterclaim.  On 1 April 2020 Lansdowne AsJ made orders that Victor, and his wife, Helen, serve proposed amended defences and counterclaims revised as required to conform with her reasons delivered on 11 March 2020.  Relevantly, Landsdowne AsJ allowed Victor to re-plead the alleged assignment of Georgia and Leslie’s equitable interest. 
10	On 14 July 2020 Victor served a further iteration of his proposed amended defence and counterclaim.  However, after the receipt of submissions from Jeanette, Victor did not seek to file and serve the proposed amended defence and counterclaim.  On 26 August 2020 Efthim AsJ dismissed that application with costs.
11	On  6 November 2020 and 2 December 2020, Efthim AsJ heard a further application by Victor for leave to amend his defence and counterclaim pursuant to r 36.01(1) of the Supreme Court General Civil Procedure Rules 2015 (Vic) (‘the Rules’) to, relevantly, make claims based upon the 13 November 1988 document. 
12	In summary, the relevant amendments to the counterclaim pleaded that Jeanette held the property on trust as to 91 per cent for Leslie and Georgia and that, by operation of the 13 November 1988 document, Leslie and Georgia’s interest was either held on trust for Victor or had been assigned to Victor (‘the proposed counterclaim’).  
13	On 1 February 2021, Efthim AsJ published reasons disallowing the amendments to Victor’s defence and counterclaim based upon the 13 November 1988 document.
14	In his Honour’s reasons, Efthim AsJ identified that the test to be applied in determining whether an amendment is to be allowed is found in the decision of the Court of Appeal in Mandie v Memart Nominees Pty Ltd (‘Mandie’) stating that:
It is clear from Mandie v Memart Nominees Pty Ltd that it is now more difficult for a party to convince a court that an amendment should be allowed.  It must show that there is a real prospect of success.  The Court of Appeal has also made it clear that to grant leave in circumstances where the claim or defence has no prospects of success would be futile as the claim or defence would be susceptible to summary judgment.  The Court should not leave issues to be re-argued on a summary judgment application if those issues are relevant to whether an amendment should be allowed.
15	Efthim AsJ found that Victor’s claims based on the 13 November 1988 document had no reasonable prospect of success and accordingly held that the amendments to the pleading should not be allowed. 
16	In summary, Efthim AsJ accepted Jeanette’s submission that any rights Victor may have had under the 13 November 1988 document were lost by reason of orders made by the Family Court on 12 September 2017, dismissing a claim by Georgia that Jeanette held the property on constructive or resulting trust for her.  In particular, Efthim AsJ explained:
The Family Law proceeding has determined any claim of Leslie and Georgia to an equitable interest in the Property.  Leslie and Georgia have no claim against the plaintiff and as Victor’s claim against the plaintiff is through Leslie and Georgia, he too has no claim.
17	After identifying that Victor deposes that he found that 13 November 1988 document in or around July 2018, Efthim AsJ stated:
An assignment of an equitable chose in action, to be effective, requires the giving of a notice by the assignor to the assignee.  For the assignment to be effective, notice of the assignment must have been given by Leslie and Georgia to Victor.  There is no evidence of any communication by Leslie to Victor, or by Georgia to Victor, of any intention that the [13 November 1988 document] would ever take effect.
18	Efthim AsJ went on to consider a number of documents said to have been prepared by Leslie, and after noting that Jeanette submitted that the only basis on which Victor became aware of a purported assignment was by finding a copy of the 13 November 1988 document, his Honour ultimately concluded:
From those documents, there was no intention on the part of Leslie to give notice to Victor of the alleged assignment.  As there is no evidence of any assignment, and that the documentary evidence makes no reference whatsoever to any interest Victor had arising under this [13 November 1988 document], it would appear that the assignment cannot be effective.  There is no real prospect of success. 
19	On 19 February 2021, Efthim AsJ made orders giving effect to his decision.  Under ord 1, Victor was given leave to file and serve a further amended defence and amended counterclaim in the form attached to those orders and marked ‘A’.  That further amended defence and amended counterclaim contained amendments which had been agreed between the parties with the disallowed amendments subject to the present appeal struck through.  Order 9 of the orders dated 19 February 2021 also provided:
The first defendant pay the plaintiff’s costs of and incidental to his application to file an amended defence and amended counterclaim, made pursuant to paragraphs 3 and 4 of the orders of The Honourable Associate Justice Efthim made on 26 August 2020, and heard by The Honourable Associate Justice Efthim on 6 November and 2 December 2020 (‘the application’).
The appeal 
20	By notice of appeal dated 5 March 2021, Victor raised seven grounds of appeal, however, he pressed only the following three grounds:
1.	The learned Associate Justice erred in finding that the appellant had no real prospect of success in his revised proposed further amended defence and amended counterclaim (‘proposed amended claim’) filed and served on 1 December 2020.
2.	The learned Associate Justice erred by finding that the appellant was or would be estopped from succeeding in his claim under the principles stated in Port of Melbourne Authority v Anshun Pty Ltd (1981) 247 CLR 589 as explained in Tomlinson v Ramsey Food Processing Pty Ltd (2015) 256 CLR 507 in consequence of a final judgment of the Family Court of Australia between the second and third defendants by counterclaim (being the parents of the appellant and the plaintiff/first defendant by counterclaim (‘the respondent’)) to which the respondent was a party but the appellant was not (‘the prior proceeding’), and more specifically by:
(a)	treating an estoppel so arising at it were necessarily a bar to action and not a true estoppel;
(b)	so finding in an application to amend a pleading, which application proceeded or should have proceeded solely upon the assumption that the facts alleged by the proposed amended pleading taken at their highest were established;
(c)	so finding without proper consideration of evidence of the facts and circumstances either giving rise to the claimed estoppel, or in which the appellant should be or was entitled to take the benefit of the claimed estoppel;
(d)	so finding where the facts alleged by the appellant in the proposed amended pleading taken at their highest disclosed that (i) the parties to the prior proceeding had knowledge of the facts upon which the respondent seeks to rely in these proceedings, and (ii) appellant defendant did not know those facts at the time of the prior proceeding;
(e)	so finding without enquiry or proper consideration as to whether the respondent or her parents were obliged to disclose them to the appellant before final relief was granted in the prior proceeding but did not;
(f)	failing to consider whether the respondent’s claimed estoppel may have arisen in circumstances of an equitable fraud comprised by material non-disclosure by a party or parties with an obligation to disclose;
(g)	finding, in circumstances in which the first defendant claimed a beneficial interest in real property of which the plaintiff was at all relevant times the registered proprietor, that the first defendant was a privy of his parents who held only beneficial interests in the property and not of the defendant, or also of the defendant;
(h)	failing to consider whether the plaintiff would necessarily be entitled to claim the benefit of the claimed estoppel in those circumstances; and
(b)	failing to consider or weigh the requirements of justice, including the finality of litigation and the avoidance of potential conflicting judgments, against the competing injustice to the first applicant arising by the claimed estoppel in those circumstances.
…
7.	In lieu of orders 1 and 9 made 19 February 2021, the learned Associate Justice should have ordered that the appellant have leave to file and serve the proposed amended claim, and the respondent pay the appellant’s costs of and incidental to his application to file it made pursuant to his Honour’s orders of 26 August 2020, and of the hearing of the application before his Honour on 6 November 2020 and 2 December 2020. 
Victor’s submissions
21	Victor raised two arguments within ground 1, the first of which was characterised as the ‘procedural argument’ and the second the ‘substantive argument’.  As there was overlap between Victor’s substantive argument and his submissions on grounds 2 and 7, it is convenient to consider Victors submissions together.
22	Victor’s procedural argument was, in summary, that in the circumstances of his application to amend pursuant to r 36.01(1) of the Rules, Efthim AsJ erred in refusing leave on the basis that the amendments had no real prospects of success in consequence of responses Jeanette raised in anticipation of her being required to defend the allegations.
23	Victor submits that, in the absence of any application by Jeanette invoking s 63 of the Civil Procedure Act 2010 (Vic) (‘the CPA’) or r 22 of the Rules, the question whether the applicants have any real prospect of success is to be considered by reference to the allegations made by the proposed amended pleadings accepting the facts as alleged taken at their highest.  On that basis, Victor submits that the proposed amendments disclose causes of action that are not ‘fanciful’ but ‘real’ and thereby have ‘real prospects of success’.
24	In oral submissions, Victor’s counsel accepted that the Court is not shackled in the procedures which it adopts such that it would always be inappropriate for leave to amend to be refused because there is no prospect of success in light of a proposed defence, providing examples of where the allegations fall squarely within the scope of a settlement agreement or where a defendant puts on an affidavit raising a limitations point in relation to an obviously statute-barred debt claim.  The adoption of such a course would avoid the unnecessary process of the defences being pleaded.
25	However, Victor’s argument ultimately appeared to be that in the present case Efthim AsJ erred by considering the particular defences raised by Jeanette and that, in circumstances there was no other issue to be taken in respect of the form and substance of the pleading, the appropriate course was for a defence to be filed and summary judgment sought rather than for those matters to be raised on the pleading summons.
26	Victor emphasises that the ‘real focus’ should be upon ‘the amendments themselves’, submitting that to do otherwise risks reversing the onus upon an applicant from being required to establish that the proposed allegations have real prospects of success to being required to establish real prospects of success of rebutting each and every possible defence that might be raised against the applicant before it is known whether, and on what basis, any such defence might be raised.
27	In particular, Victor submits that claims of res judicata and issue estoppel are defensive in nature and are required to be pleaded with special particularity as pleas of estoppel are ‘regarded unfavourably by the courts, as having the effect of excluding the truth’.  Victor submits that whether or how a res judicata or other issue estoppel operates depends precisely upon the nature of the claim in the earlier proceeding and the findings thereupon, yet in the present case the Court did not require Jeanette to articulate with precision how her defences were to be framed.
28	While as to Efthim AsJ’s finding that the assignment allegations had no real prospects of success because, on the evidence before him, there was no intention to give notice of the alleged assignment and thereby no evidence of any assignment, Victor submits that this also invokes a case put in defence to Victor’s proposed allegations as a basis for finding the allegations had no real prospects of success.  Victor submits that properly decided by taking the alleged facts at their highest, he carried no evidentiary burden, nor, in the absence of an application for summary judgment and evidence filed in support thereof, was it for him to displace or dispute any evidence filed by Jeanette.  Furthermore, Victor submits that Efthim AsJ strayed beyond the bounds of even a summary judgment application in accepting untested hearsay evidence and in drawing inferences from him not giving evidence to make a factual finding that ‘there was no intention on the part of Leslie to give notice to Victor of the alleged assignment’.
29	Victor’s substantive argument, in summary, was that, even if it were to be accepted that Victor was a privy of Leslie and Georgia, Efthim AsJ erred in finding that any interest of Victor arising under the transfer agreement was lost by reason of a res judicata stemming from the Family Court orders in 2017. 
30	In this regard, Victor referred to the High Court’s consideration of res judicata, issue estoppel and Anshun estoppel in Tomlinson v Ramsey Food Processing (‘Tomlinson’).  In particular, Victor relied on the following statement of French CJ, Bell, Gageler and Keane JJ:
An exercise of judicial power, it has been held, involves ‘as a general rule, a decision settling for the future, as between defined persons or classes of persons, a question as to the existence of a right or obligation, so that an exercise of the power creates a new charter by reference to which that question is in future to be decided as between those persons or classes of persons’.  The rendering of a final judgment in that way ‘quells’ the controversy between those persons.  The rights and obligations in controversy, as between those persons, cease to have an independent existence: they ‘merge’ in that final judgment.  That merger has long been treated in Australia as equating to ‘res judicata’ in the strict sense.
31	Victor submits that the res judicata created as at the date of the judgment of the Family Court in 2017 was that Georgia and Leslie held no equitable interest in the property.  Victor emphasises that the dispute in the Family Court was about the allocation of matrimonial property with the relevant question being whether Jeanette held the property on resulting trust, alternatively, constructive trust for Georgia and Leslie.  Victor accepts that the consent order made by the Family Court was sought for the purpose of creating a res judicata against Georgia and Jeanette and the consequence is that as at 29 March 2017, or the date of the judgment, 2 September 2017, Georgia had no equitable interest in the property.
32	However, Victor submits that in his proposed counterclaim, it was pleaded that the transfer agreement took effect in accordance with its own terms such that if Jeanette did not transfer the registered title of the property to Leslie and Georgia within 12 years of 13 November 1988, the property was to be held by Jeanette absolutely for Victor.  As a result Jeanette held the property absolutely for him as of 13 November 2000.  In this regard, Victor emphasises that in the prayer for relief of the proposed counterclaim he sought a declaration that the trust funds arising from the sale of the property are held for him absolutely.
33	Victor therefore submits that by the proposed counterclaim he claimed that at all times since 13 December 2000 Jeanette held the property for him absolutely and that there is no necessary inconsistency between the claim and the Family Court orders as on 14 December 2000 any entitlement of Leslie and Georgia came to an end.  Victor accordingly submits that Efthim AsJ erred in finding there was a res judicata and refusing leave to file and serve the proposed counterclaim.  
34	Overlapping with his ground 2, Victor also submits that the Family Court orders did not create an issue estoppel or Anshun estoppel precluding the claims he raises in his proposed counterclaim. 
35	While under ground 7 Victor submits that the proposed pleadings taken at their highest disclose a cause of action with real prospects of success, that he should be allowed to file and serve them and that the appeal should be allowed with costs.  In this regard, Victor relies on the Court of Appeal’s decision in Lysaght Building Solutions Pty Ltd v Blanalko Pty Ltd and particularly the observations of Warren CJ and Nettle JA (Neave JA agreeing) that courts must exercise their power to terminate proceedings summarily with caution and only exercise the power if it is clear that there is no real question to be tried.  Victor emphasises that such a power must be exercised in accordance with the overarching purpose of the CPA and taking into account the fact that, if granted, a party will be deprived of the chance to pursue its claim.
Jeanette’s submissions
36	Jeanette submits that Efthim AsJ identified the correct test in refusing Victor leave to file and serve his proposed counterclaim and that in an application for leave to amend the Court may, in its discretion, consider evidence raised by an opponent to the proposed amendment — as it would on a summary dismissal application under s 63 of the CPA — as part of the evaluation as to whether the proposed amendments have ‘real prospects of success’.  Accordingly, she submits that Efthim AsJ did not err by considering the matters she raised and that summary dismissal applications have never required as a precondition to being made that the defendant files a defence which fully articulates all of the defences which may be taken by the defendant.
37	Jeanette submits that her written submissions clearly articulated the basis of her opposition to leave being granted and that Victor was given ample opportunity to file any evidence which he sought to rely upon in support of his application for leave to amend.  She submits that the scope of the Family Court proceeding, the documents filed in it, and the orders made by the Family Court were not disputed by Victor as a matter of fact and, indeed, his proposed counterclaim expressly pleaded the existence of the Family Court proceeding and its disposition.  It was also pleaded by Victor and the subject of evidence by him on the application that he knew nothing of the transfer document until he found it among his father’s items in July 2018.
38	Accordingly, Jeanette submits that Efthim AsJ’s finding that Victor’s claim had no real prospects of success did not rely on the Court accepting ‘untested hearsay evidence’, rather it relied upon uncontested evidence and the application of legal principles to that evidence.  Jeanette submits that once that task was undertaken, Efthim AsJ correctly determined that Victor’s claims based on rights arising out of the existence of the transfer document, and his discovery of it in July 2018, had no real prospects of success.
39	As to Victor’s substantive argument, Jeanette submits that the rights which Victor asserts to be derived under the transfer agreement could only have been derivative of rights which Leslie and Georgia had already obtained.  Jeanette emphasises that at para 11 of the proposed counterclaim it was pleaded that there was an agreement between Leslie, Georgia and Jeanette, not Victor, which was manifested through the transfer agreement. 
40	Jeanette submits that it is the causes of action pleaded within the counterclaim, not the prayer for relief, which are to be considered.  Any rights Victor derived through Leslie and Georgia must have been originally held by Jeanette for Leslie and Georgia and that such rights could only have been derived by Leslie and Georgia through a resulting trust or a constructive trust.  She submits that any claim that there had been an express trust would have no real prospects of success as such a trust would have to have been manifested in writing and signed by Jeanette under s 53 of the Property Law Act 1958 (Vic). 
41	Jeanette further submits that the only possible effect of the transfer agreement can either be a declaration of a sub-trust in favour of Victor or an equitable assignment by Leslie and Georgia to Victor.  
42	Jeanette submits that if Victor were to have obtained rights by equitable assignment this could not have occurred prior to the Family Court orders, Victor having no knowledge of the transfer agreement or of any purported assignment.  Accordingly, Jeanette submits any rights Victor was to derive through the transfer agreement, assuming it was genuine and represented a manifestation of intent by Leslie and Georgia, must have been held by Leslie and Georgia for Victor’s benefit in 2017 when the Family Court orders were made.  As the Family Court orders created a res judicata against Leslie and Georgia, Victor, being their privy in interest, cannot have derived any interest in the property through them.  Therefore, Jeanette submits that Efthim AsJ was correct to conclude that the claims based on the transfer agreement which Victor sought to make in the proposed counterclaim have no real prospects of success.
Consideration
43	As Efthim AsJ identified, in Mandie Kyrou J, Ferguson and McLeish JJA stated:
The CP Act has changed the litigation landscape.  One of the main purposes of that legislation is to reform practice and procedure in civil proceedings, including by reforming the law relating to summary judgment.  More than ever, the focus is now pointedly on efficiency and cost-effectiveness, albeit that they are not the only, nor the predominant, considerations.  One consequence is that amendments that might have been permitted previously may no longer be allowed.  As such, the older authorities that preceded the CP Act which set out when a pleading amendment will be allowed must be approached with caution.
The power conferred on the court by s 63(1) of the CP Act to dispose of claims before a trial facilitates one of the stated purposes of the Act.  Subject to limited exceptions, if a claim or defence has no real prospect of success, then summary judgment may be given.  It must follow that a proposed pleading amendment raising a claim or defence of that type should not be permitted.  To grant leave in that circumstance would be futile as the claim or defence would be susceptible to a summary judgment application.  This principle facilitates the administration of justice as it enables courts to prevent claims or defences being pleaded where they will inevitably fail and thus avoid the cost and inconvenience that would otherwise arise if those claims or defences were permitted to be made only to be the subject of summary judgment subsequently.
44	In Brendon Smith and Donamis Consultants (Vic) Pty Ltd v J Z Lee Interiors Pty Ltd (‘Brendon Smith’), cited by both Victor and Jeanette, the Court of Appeal considered an appeal from orders allowing the plaintiff to file and serve a second further statement of claim.  The applicants submitted that in granting leave to amend the judge had erred by failing to consider whether the plaintiff’s excessive remuneration claim was fraught with problems and had no real prospect of success.  In relation to that argument, Osborn JA (Tate JA agreeing) relevantly stated:
I would in any event be loath to hold that a Commercial Court judge could never determine the appropriate form of a pleading before going on to deal with the prospects of success.  It is plain that nothing said by the judge at any stage foreclosed the prospect of consideration of the substance of a summary judgment argument prior to trial.  The judge was entitled to proceed in the way that appeared most expedient and efficient to him in all the circumstances of the case including the time available to him.  The decision in Mandie v Memart Nominees Pty Ltd does not shackle the Court in the procedures which it adopts, but establishes a proper basis on which the Court may refuse to exercise its discretion to give leave to amend.
45	The Court of Appeal’s decision in Mandie establishes that the Court may, in an appropriate case,  refuse to grant leave to a pleading where the claims sought to be made would be futile or susceptible to a summary judgment application such that the claim has no real prospects of success.  So much was acknowledged by Victor’s counsel.
46	Whether it is appropriate for a Court to consider a defence to a claim sought to be raised by way of an amendment to a pleading will depend upon the particular circumstances of the case, having regard to the principles underlying the CPA and the Rules.  In many cases, the interests of justice and the just, efficient, timely and cost-effective resolution of the real issues in dispute may well favour an approach which defers the consideration of any defences to a claim sought to be pleaded to the point at which a summary judgment application is made, following the pleaded articulation of that defence.  However, as the Court of Appeal recognised in Mandie, in some cases such a course may be futile or productive of unnecessary delay and expense.
47	It is neither desirable nor possible to identify the precise circumstances in which a certain approach should be adopted.  However, where there is uncertainty created by a lack of a precise articulation of the asserted defence to the claim sought to be pleaded then this would favour the granting of leave, assuming that the claim is otherwise properly pleaded.
48	While some defences are of a nature that in most cases it would be appropriate for their consideration to be deferred to the point of a summary judgment application, the nature of a proposed defence is but one factor that a court may consider in determining the appropriate procedure to adopt in face of an application for leave to amend a pleading.  Contrary to Victor’s submission, the Court does not consider that the nature of a claim of res judicata is such that it would never be appropriate for a court to refuse leave to amend in light of it being raised.  As reflected in Osborn JA’s statement in Brendon Smith, the Court is not shackled in the procedures in which it adopts in order to facilitate the interests of justice and the purposes underlying the CPA and the Rules.
49	In the present case, there are a number of factors that support the approach taken by Eftihm AsJ.  In particular, it is of note that Jeanette’s reply and defence to counterclaim filed on 21 May 2019 already raised the defence of res judicata, with Jeanette pleading:
Further, by Family Court of Australia proceeding no. MLC1714/2015, to which Georgia and Leslie were each parties, Georgia sought orders against Jeanette, for the benefit of both Georgia and Leslie, to the effect that Jeanette held the Property subject to a trust, charge or lien in favour of Georgia and Leslie.  By orders of the Family Court made on 12 September 2017, the claim for those orders was dismissed.
By reason of the matters set out in paragraph 42C, the question of the existence of any beneficial entitlement of Georgia or Leslie in the Property is the subject of res judicata, alternatively issue estoppel, alternatively Anshun estoppel, and the Court may not make any orders recognising or giving effect to any such entitlement.
50	Jeanette had also filed detailed submissions as to why the Family Court orders and Victor’s lack of notice of any assignment meant that Victor’s proposed claims relying upon the 13 November 1988 document had no prospect of success.  It therefore could not be said that Jeanette had not articulated with precision how her defences were to be framed and the course adopted avoided the need for Jeanette to go to the cost and inconvenience of entirely re-pleading her defence to Victor’s counterclaim.
51	Further, the matters central to Efthim AsJ’s reasons for finding that Victor’s claims had no real prospect of success, namely, the Family Court orders and Victor’s lack of knowledge of the 13 November 1988 document prior to the time those orders were made, were also matters that were raised in Victor’s own pleadings.  In particular, Victor’s proposed amended counterclaim included:
28.	On 29 March 2017, Georgia filed a statement of claim in the [Family Court] proceedings seeking a declaration that Jeanette held the Property on trust in favour of her and Leslie, or alternatively that the Property was impressed with an equitable trust, charge or lien in their favour.
…
30.	On 12 September 2017, the Family Court made orders by consent of the parties, amongst other things, dismissing Georgia’s statement of claim.
…
32.	At no time from 13 November 1988 to in or about July 2018 did Victor have any knowledge of the existence of the 13 November 1988 document, nor, at any time, including on 11 September 2017 when Georgia purported to assign her interest in the Property to him as alleged at paragraph 29, did any person who knew or alternatively had prior knowledge of it tell him of its existence, namely, Leslie, Georgia, Jeanette, Angelique and George Showler.
In or about July 2018, Victor first acquired knowledge of the existence of the 13 November 1988 document and the terms thereof.
52	In any event, as the course which was adopted by Efthim AsJ was one that was open to him, in order for Victor to be successful on this appeal he must show error in the substance of his Honour’s decision to refuse leave to amend on the basis that Victor’s claim had no real prospects of success.  For the following reasons, the Court does not accept that Efthim AsJ did so err.
53	As Jeanette submits, any interest which Leslie and Georgia had in the property as at 13 November 2000 must have arisen from a resulting trust or a constructive trust.  As Jeanette also submits, any claim that there had been an express trust would have no real prospects of success as such a trust would have to have been manifested in writing and signed by Jeanette under s 53 of the Property Law Act 1958 (Vic).
54	In his reasons, Efthim AsJ held that the Family Court orders created a res judicata — in the sense described in Tomlinson — such that the question of whether Jeanette held the property on resulting or constructive trust for Georgia and Leslie was decided as between them.  In Chamberlain v Deputy Commissioner of Taxation, Deane, Toohey and Gaudron JJ explained the effect of a res judicata as follows:
[The respondent] obtained a judgment of the court in which the cause of action upon which he relied merged, thereby destroying its independent existence so long as that judgment stood.  And, so long as that judgment stands, it is not competent for the respondent to bring further proceedings in respect of the same cause of action.  It is no answer to say that the Court might, if appropriate, stay the second action as an abuse of process.  The impediment goes deeper than that …  The matter is not one for the discretion of the Court; by operation of law the cause of action relied upon by the respondent has ceased to exist.
55	Victor submits in his claim that the 13 November 1988 document took effect in accordance to its own terms such that Jeanette held the property absolutely for Victor as of 13 November 2000 is not inconsistent with the Family Court orders made in 2017. 
56	As Jeanette submits the terms of the 13 November 1988 document are difficult to construe.  Before Efthim AsJ, Victor contended that there were three methods by which he could have obtained rights to Leslie and Georgia’s interest in the property:
(a)	a declaration of trust;
(b)	an equitable assignment; or
(c)	a direction given to a third party. 
57	Each of these modes of disposition were discussed by Dixon J in Comptroller of Stamps (Vic) v Howard-Smith (‘Howard-Smith’) in the following passage:
A voluntary disposition of an equitable interest may take one of at least three forms.  It may consist of an expression or indication of intention on the part of the donor that he shall hold the equitable interest vested in him upon trust for the persons intended to benefit.  In that case he retains the title to the equitable interest, but constitutes himself trustee thereof, and, by his declaration, imposes upon himself an obligation to hold it for the benefit of others, namely, the donees.
In the second place, the disposition may consist of a sufficient expression of an immediate intention to make over to the persons intended to benefit the equitable interest vested in the donor, or some less interest carved out of it.  In that case communication to the trustee or person in whom the legal title to the property is vested is not required in order effectually to assign the equitable property.  Notice to the trustee may be important to bind him to respect the assignment and in order to preserve priorities.  But it is not a condition precedent to the operation of the expression of intention as an assignment.  Nor does it appear necessary that the intention to pass the equitable property shall be communicated to the assignee.  What is necessary is that there shall be an expression of intention then and there to set over the equitable interest, and, perhaps, it should be communicated to someone who does not receive the communication under confidence or in the capacity only of an agent for the donor.
In the third place, the intending donor for whom property is held upon trust may give to his trustee a direction requiring him thenceforth to hold the property upon trust for the intended donee.
A beneficiary who is sui juris and entitled to an equitable interest corresponding to the full legal interest in property vested in his trustee may require the transfer to him of the legal estate or interest.  He may then transfer the legal interest upon trust for others.  Without going through these steps he may simply direct the existing trustee to hold the trust property upon trust for the new beneficiaries.  He cannot without the trustee’s consent impose upon him new active duties.  But he may substitute a new object, at any rate in the case of any passive trust.  Accordingly, a voluntary disposition of an equitable interest may be effected by the communication to the trustee of a direction, intended to be binding on him, thenceforward to hold the trust property upon trust for the donee.  But it must be a direction, and not a mere authority revocable until acted upon.  Such an authority is not in itself an assignment.  It may, it is true, result in a transfer of an equitable interest.  For the trustee acting upon it may make an effectual appropriation of the trust property to the new beneficiary, or may acknowledge to him that he holds the trust property thenceforward on his behalf.  If the authority contemplates or allows such a method of imparting an equitable interest to the donee, the action of the trustee may be effectual to bring about the result.  But, in such a case, it is not the donor’s expression of intention which per se constitutes the assignment.  It is the dealing with the trust property under his authorization.  The distinction is, of course, of great importance in considering whether a document is itself an assignment, and, as such, liable to stamp duty.
58	As to the first of those forms of disposition, if the 13 November 1988 document were to operate as a declaration of a trust such that Leslie and Georgia held their interest in the property on a sub-trust for Victor, then such a trust would have subsisted beyond 13 November 2000 until the making of the Family Court orders in 2017. 
59	Victor did not articulate how the 13 November 1988 document could be seen as a declaration of trust such that Jeanette was to hold the property on trust for him directly, rather than through Leslie and Georgia.  The Court considers that aside from through the other two forms of disposition discussed below, the 13 November 1988 document could not operate as a declaration that Jeanette was to hold Leslie and Georgia’s interest in the property for Victor directly from 13 November 2000. 
60	Indeed, while Victor pleads at para 47 of the proposed counterclaim that ‘on or about 13 November 2000 … the 13 November 1988 document took operation and effect in accordance with it terms’ and at para 48 that ‘[b]y reason thereof, at all relevant times thereafter, Jeanette held the Property on trust: (a) for Victor absolutely’, at para 11(c) he pleads only the creation of a sub-trust or assignment. Paragraph 11 of the proposed counterclaim provides: 
On or about 13 November 1988, contrary to the expressed terms of the loan agreement but in accordance with the family agreement and further the agreed proportions, Jeanette acknowledged and agreed with Leslie and Georgia, amongst other things that:
(a)	she would be registered on the title of the Property as trustee only and would hold if for the benefit of Leslie and Georgia in the agreed proportions;
(b)	she would transfer the legal title to Leslie and Georgia after 12 years, or earlier if they so required; and
(c)	if she did not transfer the legal title of the Property to them within 12 years of being registered as its proprietor, and still owned the Property, Leslie and Georgia created or were to create a trust over their beneficial interests in the Property in favour of Victor absolutely, or alternatively assign their beneficial interests in the Property to him.
Particulars
The acknowledgement and agreement were express and partly oral and partly in writing.  To the extent that they were oral, the occurred during a conversation to the effect alleged to in or about early October 1988 between Leslie, Georgia and Jeanette in the presence of Angelique and of a neighbour, Mr George Showler in the lounge room of 9 Gordon Street Tullamarine.  During the conversation, Leslie produced a document (“the 13 November 1988 document”).  The 13 November 1988 document was given to Jeanette, who read it.  Leslie then read aloud the operative provisions of the document aloud clause by clause.  Jeanette then read aloud each operative clause and stated that she agreed with each.  To the extent that they were in writing, they were contained in the 13 November 1988 document.  A copy of the 13 November 1988 documents is in the possession of Victor’s solicitors and may be inspected by prior appointment during business hours.
61	In relation to the second method of disposition contemplated by Dixon J in Howard-Smith, Efthim AsJ held that the 13 November 1988 document could not have effected an equitable assignment on the basis that ‘[f]or the assignment to be effective, notice of the assignment must have been given by Leslie and Georgia to Victor’ and his finding that there was no evidence of any communication to Victor of any intention that the 13 November 1988 document would ever take effect.
62	In the grounds of appeal which he maintained, Victor did not assert any error in Efthim AsJ’s statement of law that ‘[a]n assignment of an equitable chose in action, to be effective, requires the giving of a notice by the assignor to the assignee’.  It may be doubted that an equitable assignment, at least where absolute, necessarily requires notice to be given to the assignee to be effective. 
63	In Yoo v Toppro Pty Ltd, Black J set out the principles applicable to an equitable assignment of equitable property as follows:
I turn now to the principles applicable to an equitable assignment of equitable property.  In Re Casey’s Patents; Stewart v Casey [1892] 1 Ch 104 at 118, Fry LJ observed that:
[A]n agreement which does not exhibit the intention of the parties that the property shall pass at once does not take effect as an equitable assignment at once, but only when, from the terms of the agreement, it can be gathered that the intention of the parties is that the equitable property shall pass.
In Re Williams; Williams v Ball [1917] 1 Ch 1 at 8, Warrington LJ observed that an equitable assignment could be effected by ‘any form of words which expressed a final and settled intention to transfer the property to the assignee’.
In Howard-Smith above, Starke J similarly observed at 619–620 that:
A man may voluntarily dispose of his equitable estates or interests if he chooses to do so.  No particular form of words is required for the purpose, but he must make clear his intention that he divests himself of the property and gives it over to another, or that he creates a trust in the property in favour of another.  A mere mandate from a principal to his agent gives no right or interest in the subject of the mandate.
In closing submissions, the Defendants relied primarily on the principles as stated by Dixon J in Howard-Smith above at 621–622.  Dixon J there observed that a voluntary disposition of an equitable interest may take one of at least three forms.  The first and third forms, which are not presently relevant, are a statement that the donor will hold the equitable interest upon trust for a beneficiary and a direction given to a trustee to hold equitable property upon trust for the intended donee.  The second form of disposition, which is relevant, was described by Dixon J as follows:
the disposition may consist of a sufficient expression of an immediate intention to make over to the persons intended to benefit the equitable interest vested in the donor, or some less interest carved out of it.  In that case communication to the trustee or person in whom the legal title to the property is vested is not required in order effectually to assign the equitable property … Nor does it appear necessary that the intention to pass the equitable property shall be communicated to the assignee.  What is necessary is that there shall be an expression of intention then and there to set over the equitable interest, and, perhaps, it should be communicated to someone who does not receive the communication under confidence or in the capacity only of an agent for the donor.
It is also necessary to have regard here to the distinction between an immediately effective assignment of property and a mandate or authority that has effect only unless and until it is revoked, to which Dixon J referred in Howard-Smith at 623–624, in identifying the question whether the instruction in that case was merely an ‘authorisation having no dispositive effect until the trustee acts upon it’.
In Re McArdle (dec’d) [1951] 1 Ch 669 at 673, Evershed MR approved the summary of the relevant principle in Snell’s Principles of Equity (22nd ed, pp 57–58) that:
[value] would seem to be unnecessary … for an assignment of an equitable [chose] in action … provided that the assignment is complete [and] perfect; there is no reason why a man should not be able to give away an equitable interest as freely as he can give away a legal interest (emphasis added).
The Master of the Rolls went on to observe that (at 674):
The sentence in that passage, ‘provided that the assignment is complete and perfect’, is important; also the further sentence, ‘there is no reason why a man should not be able to give away an equitable interest’.  What the writer is saying there, and I accept it, is this: if what is done amounts to a gift, complete and perfect, of a subject-matter which is an equitable chose in action, then there is no reason in principle or in authority why the donee should not take the benefit just as much as he will if the giver gives him a pound note and puts it in his hand.  Since the transaction is thus perfect, the question of consideration becomes irrelevant, for consideration is only necessary to support the assertion of a right to have made perfect something which is not yet perfect — for example, a contractual right.
Jenkins LJ similarly observed at (676–7) that:
I am further prepared to accept the proposition that an equitable assignment of an existing interest in property of a character capable of being assigned may be a valid and binding assignment notwithstanding that it is made voluntarily — that is to say, notwithstanding that it has no consideration to support it and is in the nature of a mere gift …
But I accept that last proposition with this reservation: a voluntary equitable assignment, to be valid, must be in all respects complete and perfect … with no further act on the part of the assignor remaining to be done to perfect the assignee’s title.  Failing these conditions, the voluntary assignment suffers the fate of other incomplete gifts: the donor has a locus poenitentiae and can change his mind at any time.
No question of conscience enters into the matter, for there is no consideration, and there is nothing dishonest on the part of an intending donor if he chooses to change his mind at any time before the gift is complete.
That decision is cited without criticism in the discussion of equitable assignment in ELG Tyler et al, Fisher & Lightwood’s Law of Mortgage, (3rd ed 2014, LexisNexis Butterworths) at 252.
In Norman v FCT (1963) 109 CLR 9 at 30, Windeyer J observed that all that was required for an assignment of equitable property was a ‘clear expression of an intention to make an immediate disposition’.
In Noonan v Martin (1987) 10 NSWLR 402, Bryson J in turn addressed the distinction between an assignment and a revocable mandate and held that the provision to a donee of a signed blank withdrawal form, together with permission to access money in an account whenever he needed it, was only an authorisation, not an assignment, and was capable of revocation by the donor’s death before it was acted on.
Professor Worthington in turn summarises the effect of the case law in Personal Property Law ((2000, Oxford) at 262) as follows:
Since promises to give cannot be enforced, if the donor acts before either legal or equitable title to the property has passed to the donee, then recall is possible.
In JD Heydon et al, Meagher, Gummow & Lehane’s Equity Doctrines and Remedies, (5th ed 2015, LexisNexis Butterworths) at [6.425] the learned authors also observe that, unless there is an intention to divest the assignor’s rights and vest them in the assignee, there is not an assignment and merely a revocable mandate or authority.
64	Here, it may be questioned whether the terms of the 13 November 1988 document can be seen as intending to effect an equitable assignment rather than an expression of an intention to, in the future, assign an interest in the property to Victor in the event that certain events come to pass. However, to the extent that it may be seen as an assignment of Leslie and Georgia’s interest in the property to Victor, it could not have been an absolute assignment taking immediate effect but rather a conditional assignment.  Such a conditional assignment remains revocable and, particularly in the absence of any consideration, could not be effective until notice is given by the assignor to the assignee.
65	There is no suggestion in the proposed counterclaim that Victor had notice of any assignment to him.  Indeed, in para 32 of the proposed pleading, set out above, Victor pleaded that he had no knowledge of the existence of the 13 November 1988 document until July 2018.  To that effect, Victor deposed in his affidavit dated 4 November 2019, filed in support of his pleading summons, that:
Some time after the filing of my current defence and counterclaim, I discovered a document which appears to have been signed by my parents and is dated 13 November 1988.  I was not previously aware of this document.  The document transfers their interest in the Property to me if a condition is met.  I rely on that document for the issues raised in the amended defence and counterclaim.
66	While Efthim AsJ went on to consider whether there was any evidence of an intention on the part of Leslie to give notice to Victor of the alleged assignment, it was strictly unnecessary to do so.  On his own case, Victor was not aware of the transfer agreement or any purported assignment it intended to effect until July 2018.  Thus, taking Victor’s pleading at its highest, Leslie and Georgia had not given Victor notice of any assignment of their interest in the property under the 13 November 1988 document such that it could have operated in accordance with its terms to assign any equitable interest of Leslie and Georgia in the property to Victor on 13 November 2000 or at any time prior to July 2018 when Victor found the 12 November 1988 document. 
67	The third possible manner which Victor posited that the 13 November 1988 document could operate was put before Efthim AsJ in the following manner:
The third possibility, which, I must say, in my principal submission and the reasons that I have given you in these extracts, Your Honour, is I had forgotten that there is an arguable third mode of transmission which in England, or UK at least, has been prescribed as a direction to a third party.  And that is it’s been held, or at least arguably held as the passage in the textbook explains, that an equitable interest may be directed to be held on trust by another party.
It is very difficult, Your Honour, and I have a lot of difficulty with it, seeing how that could ever be different to assignment.  But it’s a recognised characteristic at least for some purposes of our law, and there is, as far as I can tell, no Australian law on that question, which remains open.  Nothing turns on it for present purposes, except that it would have immediate equitable effect if that were to occur, and is a means of prescribing precisely what this document has done which, quite possible, is no different at all to an assignment of the present interests in equity.  But it seems to be an arguable recognised mode of the creation of (indistinct) trusts for which we contend.
So we say the existence of the present interests the subject of the contingency which ended in 2000 came into being with the signing of the documents and remained in place all the way throughout on the ending of the contingency.  And the land was held on the trust described.  There was, therefore, no subject matter to the claim by Georgia against Jeanette in the Family Court claiming inequitable interest in the land.
The fact that there’s a res judicata in favour of Jeanette against Georgia, and then my friend says and we’ve accepted, in favour of Leslie would have nothing to do with my client, subject only to my client being unable to argue in these proceedings that he’s the owner by means of an Anshun estoppel and abuse of process.
But we say those latter two matters have got nothing to do with my amended pleading, or proposed amended pleading that we’re seeking leave to file.  And they would become matters by which my learned friend could defend the claim if he chose to do so if and when Your Honour allows the pleading to progress.
68	It may well be doubted that there is any practical distinction between a direction to a trustee (or as it was described before Efthim AsJ a direction to a third party) and an equitable assignment, and it appears that Efthim AsJ proceeded on that basis.  However, so far as Dixon J’s statement in Howard-Smith and authorities in England suggest that it operates as a separate mode for disposition of an equitable interest, there is a requirement that Victor have notice of the direction before it could be effective.  As was explained in On Equity:
Where the assignment is effected by a direction to a debtor or to a trustee the assignment only becomes binding, and irrevocable by the assignor, where it is communicated to the assignee or, alternatively, if the assignment was made under a prior agreement with the assignee: see Re Hamilton, Fitzgeorge; Morrell v Wootten; and Rekstin v Severo etc and Bank for Russian Trade Ltd.
69	For the foregoing reasons, any interest of Leslie and Georgia’s — which necessarily was itself the result of a constructive, alternatively resulting, trust in their favour —— which Victor could have in the property by virtue of the 13 November 1988 document must have been held by Leslie and Georgia on a sub-trust for him or been the result of an assignment, either equitable or through a direction to Jeanette as trustee, when he obtained notice through the discovery of the 13 November 1988 document in 2018.
70	However, as Efthim AsJ held the Family Court orders created a res judicata — in the sense described in Tomlinson — such that the question of whether Jeanette held the property on resulting or constructive trust for Georgia and Leslie was decided as between them.  
71	After considering the relevant principles in relation to what is known as the ‘privity principle’ in Tomlinson and Commissioner of State Revenue v Mondous, Efthim AsJ found that if the 13 November 1988 document operated as a declaration of trust, Victor would have lost his rights by December 2017 by reason of res judicata.  Contrary to Victor’s submissions, a fair reading of Efthim AsJ’s decisions reveals that his Honour did not find that the res judicata operated directly upon Victor but rather precluded his claims as he was found to be Leslie and Georgia’s privy in interest.  Further, Efthim AsJ was not talking of the 13 November 1988 document operating as a trust with Jeanette as trustee with Victor as her direct beneficiary, but rather as pleaded by Victor, a sub-trust where Leslie and Georgia held any interest they had in the property for Victor.
72	Furthermore, the Family Court orders having resolved the question of Leslie and Georgia having any equitable interest in the property from at least December 2017, there was no interest which he could have obtained by way of assignment upon Victor’s discovery of the 13 November 1988 document in 2018. 
73	Accordingly, Efthim AsJ was correct to conclude Victor’s claims based on the 13 November 1988 document have no real prospect of success as a result of the res judicata created by those orders. Accordingly, it is unnecessary to consider Victor’s submissions predicated on an interpretation of Efthim AsJ’s reasons as finding that there was an issue estoppel or Anshun estoppel which prevented him from succeeding in his claim.
Conclusion
74	The Court will order that Victor’s appeal from the decision of Associate Justice Efthim given 2 February 2021, and the orders made on 19 February 2021 giving effect to that decision, be dismissed.

---

SCHEDULE OF PARTIES
	S CI 2017 04815	
		
BETWEEN:		
		
JEANETTE DREW	Plaintiff / First Defendant by Counterclaim	
		
- and -		
		
VICTOR DREW 	First Defendant / Plaintiff by Counterclaim	
		
HELEN DREW 
(also known as Helen Karras)	Second Defendant	
		
- and -		
		
GEORGIA DREW 	Second Defendant by Counterclaim	
		
Leslie victor drew (by his/her litigation guardian, TIMOTHY JOHN MULVANY)	Third Defendant by Counterclaim	
		
ANGELIQUE LESLEY DREW	Fourth Defendant by Counterclaim