Albert St Group Pty Ltd v Universal Real Estate Vic North Pty Ltd (No 2)

This judgment arose in the middle of a larger Australian Consumer Law dispute in the Federal Court. Albert St Group Pty Ltd had sued Universal Real Estate Vic North Pty Ltd and others. The reasons do not finally decide whether the alleged representations were misleading. Instead, they deal with a procedural application by the first respondent to bring another person, Riteshkumar Darji, into the case by cross-claim.

The factual point that drove the application was the alleged chain of communication. According to the reasons, the applicant’s statement of claim alleged that the relevant representations were made by the first respondent to Mr Darji and then passed on by Mr Darji to Mr Gupta, the sole director and shareholder of the applicant. That meant the first respondent wanted to argue that if the applicant suffered loss, responsibility might sit with Mr Darji rather than with the first and second respondents, or at least that Mr Darji should be treated as a concurrent wrongdoer.

The proposed cross-claim sought damages and or compensation under ss 236 or 237 of the ACL for alleged contraventions by Mr Darji of ss 18 and or 30, and contribution under Part IV of the Wrongs Act 1958 (Vic). The material facts pleaded in the proposed cross-claim were substantially adopted from the main claim. That overlap became important when the court considered whether the late cross-claim should still be allowed.

The court was dealing with an interlocutory application filed on 7 April 2026. The first respondent sought leave under r 15.05 of the Federal Court Rules 2011 (Cth) to file a notice of cross-claim against Mr Darji. The proposed notice and draft statement of cross-claim were annexed to an affidavit sworn by the first respondent’s solicitor, Kristy Cappellotto.

Three rules mattered. First, r 15.04 required any cross-claim to be filed and served on the date the defence was due. Secondly, because that did not happen, r 15.05 required the first respondent to apply for leave and support that application with an affidavit setting out the nature of the cross-claim, its relationship with the subject matter of the proceeding, and the reasons it was not filed on time. Thirdly, because the cross-claim would add Mr Darji as a new cross-respondent, the court also had to consider joinder principles under r 9.05.

The reasons explain that under r 9.05(1), a person may be joined if they ought to have been joined, if their cooperation might be required to enforce a judgment, if their joinder is necessary to ensure each issue in dispute can be heard and finally determined, or if they should be joined to enable determination of a related dispute and avoid multiplicity of proceedings. Bennett J referred to Aspect Safety Group Pty Limited v Swift for the proposition that where a late cross-claim also seeks joinder, those joinder principles must be considered alongside the leave application.

The judge also emphasised the overarching purpose in ss 37M and 37N of the Federal Court of Australia Act 1976 (Cth). In practical terms, that means the court expects parties and their lawyers to conduct litigation in a way that promotes the just, quick, inexpensive and efficient resolution of disputes.

The court was not deciding whether the first respondent would ultimately win against Mr Darji. The immediate question was whether leave should be granted to file the cross-claim out of time and join him to the proceeding. Bennett J adopted the usual discretionary factors for late cross-claims, drawn from authority including Rush v Nationwide News Pty Ltd (No 2).

Those factors included whether the proposed claim fell within the court’s jurisdiction, the extent of the delay, whether there was an acceptable explanation for the delay, any prejudice to other parties, the merits or strength of the proposed cross-claim, the degree of connection between the proposed cross-claim and the principal proceeding, and the desirability of having all connected disputes dealt with in the one trial.

Because the application also involved joinder, the court had to ask whether bringing Mr Darji into the case was necessary to ensure the issues could be heard and finally determined, or whether it would enable determination of a related dispute and avoid multiple proceedings. In a business dispute, that is often the practical question: is it better to resolve all responsibility issues in one case, or would adding another party create unfair delay and disruption?

Delay was the main issue. The first respondent’s defence had been filed on 23 July 2025, but the application for leave was not filed until 7 April 2026. Bennett J described that as a significant delay. The solicitor’s affidavit gave four main explanations.

First, on 22 April 2025 the applicant had indicated in correspondence that it intended to join Mr Darji, but on 31 July 2025, after the defence had been filed, it said it no longer sought to do so. Secondly, although the defence pleaded that Mr Darji was a concurrent wrongdoer, the first respondent’s legal team said that due to an oversight it did not consider until after reviewing the applicant’s reply filed on 6 August 2025 that a cross-claim would be necessary, because the applicant’s s 30 ACL claim might not be apportionable. Thirdly, after the court ordered mediation by 28 November 2025, the first respondent considered it appropriate to await the outcome of mediation before seeking joinder, to avoid the expense, inconvenience and complications of adding Mr Darji if the matter settled. Fourthly, after the mediation proved unsuccessful, the first respondent sought and obtained instructions to file the application.

The court accepted that this was the explanation advanced, but found it unsatisfactory in important respects. Bennett J said the explanation for the delay after the legal team realised in August 2025 that a cross-claim would be necessary was unsatisfactory. The judge referred to Swift, where Cheeseman J had criticised a deliberate decision to defer a cross-claim until after mediation as inconsistent with the overarching purpose in ss 37M and 37N. Bennett J said the rule requiring a cross-claim to be filed with the defence exists in part so that all issues bearing on the outcome are ventilated early. The judge also noted that even if waiting for mediation had some practical attraction, there was no explanation for the further delay between the conclusion of mediation in December 2025 and the filing of the application in April 2026.

Even so, the court accepted an important qualification. Bennett J accepted that the delay was not taken for tactical or forensic benefit. That mattered because it softened, but did not remove, the weight against granting leave.

On prejudice, the evidence was that the proposed cross-claim would not require amendments to the existing pleadings, additional discovery or additional evidence from the existing parties, and could be incorporated into the existing timetable. No party submitted that it would suffer prejudice from the joinder. The only real prejudice identified by the court was the possibility that the trial dates might be disturbed. After reviewing the proposed timetable, the judge was satisfied that the trial date could be retained.

The court then turned to the proposed cross-claim itself. Bennett J stressed that the merits assessment on an application like this is necessarily summary. The judge did not conduct a final analysis of liability. Instead, the question was whether the draft statement of cross-claim showed an arguable case and was not deficient on its face.

The court found that threshold was met. The draft cross-claim stated the facts relied on with clarity and was not facially deficient. That favoured the grant of leave.

The degree of connection to the main proceeding also strongly favoured leave. Bennett J said the proposed cross-claim was closely connected to the subject matter of the proceeding because the allegedly misleading representations were said to have been conveyed to Mr Darji and then passed on by him to Mr Gupta. For that reason, there was likely to be significant, if not complete, overlap in the facts relevant to the substantive proceeding and the cross-claim.

Balancing all factors, the court granted leave under r 15.05 to file the notice of cross-claim against Mr Darji and made consequential case management orders. The judge broadly adopted the proposed orders, but required the cross-claim to be filed and served more quickly than originally contemplated. The orders required filing and service by 18 May 2026, a defence by 19 June 2026, any reply by 26 June 2026, standard discovery by 3 July 2026, lay evidence in July 2026, objections in August 2026, and opening submissions by 15 September 2026. The earlier orders made on 18 August 2025 were otherwise confirmed, liberty to apply was granted, and costs were reserved.

The result can be stated simply. The first respondent was criticised for significant and inadequately explained delay, but still obtained leave because the proposed cross-claim was arguable, closely connected to the same factual controversy, and capable of being managed without moving the October 2026 trial.

For business owners, this is a procedure case with a very practical message. If a customer, investor or counterparty says they were misled, the legal analysis may depend on the full communication chain, not just the final statement they heard. A business may have received information from someone else, passed it on through an employee or agent, or relied on an intermediary to communicate with the claimant. Each step can matter when responsibility is later contested.

The case also shows that courts prefer connected disputes to be resolved together where possible. If another person may be liable for the same loss, or may need to contribute, there is a strong practical advantage in dealing with that issue in the same proceeding. But that does not mean a business can safely wait. The court expects parties to identify those issues early and comply with the rules about timing.

In operational terms, businesses should preserve records showing who originated each representation, who repeated it, whether the wording changed, and what documents supported it. In litigation terms, businesses should ask early whether there is a basis for joinder, contribution or a concurrent wrongdoer argument. If the answer may be yes, that issue should be considered before the defence is filed or as soon as possible afterwards.