Asic v Adler and 4 Ors - [2002] NSWSC 401

NEW SOUTH WALES SUPREME COURT

CITATION: ASIC v Adler & 4 Ors [2002] NSWSC 401 revised - 08/05/2002

CURRENT JURISDICTION: Equity

FILE NUMBER(S): 2753/01

HEARING DATE{S): 6 May 2002

JUDGMENT DATE: 06/05/2002

PARTIES:
In the matter of HIH Insurance Limited (in provisional liquidation) ACN 008 636 575 and HIH Casualty and General Insurance Limited (in provisional liquidation) ACN 008 482 291

Australian Securities & Investments Commission (Plaintiff}
Rodney Stephen Adler (First Defendant)
Raymond Reginald Williams (Second Defendant)
Dominic Fodera (Third Defendant)
Adler Corporation Pty Ltd (ACN 054 924 373) (Fourth Defendant)
Lynda Sharon Adler (Fifth Defendant)

JUDGMENT OF: Santow J

LOWER COURT JURISDICTION: Not Applicable

LOWER COURT FILE NUMBER(S): Not Applicable

LOWER COURT JUDICIAL OFFICER: Not Applicable

COUNSEL:
R B S Macfarlan QC/ A Abadee (Plaintiff)
B W Walker, SC (First and Fourth Defendants)
P Crutchfield (Second Defendant)
J E Sexton, SC (Third Defendant)

SOLICITORS:
Jan Redfern, Solicitor for ASIC (Plaintiff)
Gilbert & Tobin (First and Fourth Defendant)
Arnold Bloch Leibler (agent: Sparke Helmore) (Second Defendant)
Dibbs Crowther & Osborne (Third Defendant)
Speed and Stracey (Fifth Defendant)

CATCHWORDS:
PROCEDURE - Late application to claim contribution or indemnity - Power and discretion of Court after liability determined when only relief to be argued.

ACTS CITED:
Corporations Act 2001; s1317H
Supreme Court Act Pt 6 r2; s78(1)

DECISION:
Application not permitted at present stage.

JUDGMENT:

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

SANTOW J

No. 2753/01

In the matter of HIH INSURANCE LIMITED (in provisional liquidation) ACN 008 636 575 and HIH CASUALTY AND GENERAL INSURANCE LIMITED (in provisional liquidation) ACN 008 482 291
AUSTRALIAN SECURITIES & INVESTMENTS COMMISSION
Plaintiff
RODNEY STEPHEN ADLER
First Defendant
RAYMOND REGINALD WILLIAMS
Second Defendant
DOMINIC FODERA
Third Defendant
ADLER CORPORATION PTY LTD (ACN 054 924 373)
Fourth Defendant
LYNDA SHARON ADLER
Fifth Defendant

JUDGMENT - ex tempore
6 May 2002 (Revised 8 May 2002)

The Second Defendant by a Notice of Motion seeks orders in the following terms:
“2.A declaration that matters of indemnity and/or contribution between the respective Defendants are to be considered as issues in these proceedings.”
This is sought for the first time in written submissions provided to the parties only on 24 April 2002, now the subject of a belated Notice of Motion sought to be filed only to-day. This is at a time when two days only have been set down for a hearing solely on relief, in accordance with directions made weeks earlier, such hearing commencing to-day. There is no way argument on contribution or indemnity could now be accommodated, insofar as further evidence is required.
Such orders are sought against the First Defendant and are essentially for indemnity and/or contribution between the respective Defendants. It will be apparent that the Notice of Motion includes in the alternative that leave be granted to file a cross-claim so that there is now an originating process.
The Second Defendant invokes s78(1) of the Supreme Court Act and Pt 6 r2 for that course of action.
The Second Defendant’s primary submission is that he does not need to file such a cross-claim. However, if it does need to do so, the cross-claim would be as contemplated by the Notice of Motion.
The First Defendant resists that course. The First Defendant states that with judgment now handed down in the proceedings which has determined liability, but not relief, such a course is:
(a)not within the power of the Court to sanction, or
(b)if within power, that any discretion the Court has in that regard should not be exercised in favour of the Second Defendant, by reason of irremediable forensic prejudice.
The Third Defendant, whilst stating that he does not oppose the course sought, made a brief submissions that an order under s1317H of the Corporations Act 2001 for compensation could be so framed as to do justice between the Defendants in such a manner as to obviate the need for any contribution order.
In broad terms, the Second Defendant does not dissent from that proposition, though expressing doubt that this could extend to cost orders.
It will be recalled that the proceedings extended over some twenty days, that none of the Defendants chose to give evidence (though in stating that I do not seek to draw any particular inference in the present context) and that each of the Defendants, but particularly the First Defendant and the Third Defendant, cross-examined the Plaintiff’s witnesses and generally played a substantial part in the testing of evidence before the Court.
The First Defendant in submitting that it would suffer irremediable prejudice were I to permit a further hearing in relation to contribution, being importantly a hearing where the Second Defendant proffers no amount for additional costs that thereby would be incurred, emphasises several matters. The first is that it could not be assumed that had contribution been sought at the outset of the trial, the First Defendant would not have then sought to have the Second Defendant appear as a witness, so as to have the opportunity of examining Mr Williams. Whether that in turn would have led to a reciprocal application by the Second Defendant for Mr Adler to appear as a witness also could not also be precluded as a possibility. Clearly that may have exposed each of those Defendants to cross-examination by the Plaintiff.
The First Defendant states that I should not draw any conclusion as to whether that latter consequence, or any other contingency, would have led to a different course of action than that the First Defendant claimed was denied him, by the failure to seek contribution earlier at trial. Irrespective of such contingencies, about which I must not speculate, I do consider it self-evident that the First Defendant would have necessarily had to consider taking a different forensic course and would likely have done so in terms of proffering or testing evidence bearing on contribution or indemnity.
The First Defendant presses upon me that this is not a case where the hearing has been conducted as if the contribution issue were before the Court, though without a formal pleading to that effect. In such a case the First Defendant readily concedes that a discretion might well be favourably exercised, and would certainly arise, whereby contribution for indemnity would be permitted to be argued with any further process such as a cross-claim. This would be simply to conform the process originally filed to the way the case had been argued. I agree that this is not such a case.
Accepting, for present purposes, that the Court has a discretion to permit late filing of a cross-claim in the terms contemplated by the Second Defendant’s Notice of Motion, I do not consider that such discretion should be exercised at the present stage in favour of permitting this course, or otherwise to permit contribution or indemnity to be argued at this stage. Applying the analogy of an application to amend and the principles laid down by the High Court in Queensland v JL Holdings Pty Limited (1997) 189 CLR 146, while cost orders may in some circumstances permit a dispensation where such cost orders adequately compensate the party otherwise prejudiced by the dispensation, the present case is rather one in which:
(a)no such cost orders are proffered;
(b)even if they were proffered, I am satisfied that the prejudice to the First Defendant is substantial and possibly irremediable depending on the nature and extent of the lost opportunity to cross-examine in relation to evidence bearing on contribution and indemnity; and (though this is not essential to my earlier conclusion)
(c)there may be scope under s1317H of the Corporations Act 2001 to fashion compensation orders which do justice between the parties (I express no concluded view on that) though in saying that I am not to be understood as having formed any view as to the appropriateness of such differentiation in the particular circumstances, this being a matter for the current proceedings for relief;
(d)the present stage of proceedings (two days only) could not accommodate lengthy argument on indemnity or contribution sought to be raised late in the day.
This judgment, interlocutory as it is, should not be taken as foreclosing the possibility of a future argument for contribution or indemnity, after judgment on relief has been handed down. The First Defendant may seek to argue to the contrary under the extended doctrine of res judicata; see in particular Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589, though frankly acknowledging the difficulty in so doing. That is a matter for future consideration.

ORDERS

Accordingly, I permit the First Defendant to file its Notice of Motion but only to dismiss it. That Notice of Motion is dismissed.

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LAST UPDATED: 08/05/2002