Clough Limited v Forge Group Limited (in Liquidation) (Receivers and Managers Appointed)

[2022] WASCA 179

JURISDICTION     :   SUPREME COURT OF WESTERN AUSTRALIA

TITLE OF COURT  :   THE COURT OF APPEAL (WA)

CITATION:   CLOUGH LIMITED -v- FORGE GROUP LIMITED (IN LIQUIDATION) (RECEIVERS AND MANAGERS APPOINTED) [2022] WASCA 179

CORAM:   BUSS P

MURPHY JA

MITCHELL JA

HEARD:   23 AUGUST 2022

DELIVERED          :   23 AUGUST 2022

PUBLISHED           :   31 JANUARY 2023

FILE NO/S:   CACV 37 of 2021

BETWEEN:   CLOUGH LIMITED

First Appellant

CLOUGH OPERATIONS PTY LTD

Second Appellant

KEVIN THOMAS GALLAGHER

Third Appellant

NEIL SIFORD

Fourth Appellant

AND

FORGE GROUP LIMITED (IN LIQUIDATION) (RECEIVERS AND MANAGERS APPOINTED)

Respondent

ON APPEAL FROM:

Jurisdiction              :   SUPREME COURT OF WESTERN AUSTRALIA

Coram:   LE MIERE J

Citation: FORGE GROUP LTD (IN LIQ) (RECEIVERS AND MANAGERS APPOINTED) -v- CLOUGH LTD [2021] WASC 136

File Number            :   COR 52 of 2019

Catchwords:

Practice and procedure - Pleadings - Amended statement of claim - Application for an order disallowing or striking out the whole or part of the amended statement of claim on the ground that the amendments advanced a new cause of action that was time barred - Primary judge dismissed the application - Leave to appeal

Legislation:

Corporations Act 2001 (Cth), s 1317K
Rules of the Supreme Court 1971 (WA), O 1 r 4A, O 1 r 4B
Supreme Court (Court of Appeal) Rules 2005 (WA), r 5
Supreme Court Act 1935 (WA), s 60(1)(f)

Result:

Leave to appeal refused

Category:    B

Representation:

Counsel:

First Appellant	:	Dr R C A Higgins SC & Mr A C Willinge
Second Appellant	:	Dr R C A Higgins SC & Mr A C Willinge
Third Appellant	:	Dr R C A Higgins SC & Mr A C Willinge
Fourth Appellant	:	Dr R C A Higgins SC & Mr A C Willinge
Respondent	:	Ms P E Cahill SC & Mr M Sims

Solicitors:

First Appellant	:	Ashurst Australia
Second Appellant	:	Ashurst Australia
Third Appellant	:	Ashurst Australia
Fourth Appellant	:	Ashurst Australia
Respondent	:	Chew & Matthews

Case(s) referred to in decision(s):

Adam P Brown Male Fashions Pty Ltd v Philip Morris Inc [1981] HCA 39; (1981) 148 CLR 170

Castillon v P & O Ports Ltd [2007] QCA 364; [2008] 2 Qd R 219

D A Christie Pty Ltd v Baker [1996] 2 VR 582

Gerlach v Clifton Bricks Pty Ltd [2002] HCA 22; (2002) 209 CLR 478

Hancock Prospecting Pty Ltd v Wright Prospecting Pty Ltd [2019] WASCA 141

In de Braekt v Powell [2007] WASCA 55; (2007) 33 WAR 389

Inasmuch Community Inc v Bright [2006] NSWCA 99; (2006) 45 MVR 234

Krishell Pty Ltd v Nilant [2006] WASCA 223; (2006) 32 WAR 540

Makhoul v Barnes (1995) 60 FCR 572

NRW Contracting Pty Ltd v Cliffs Asia Pacific Iron Ore Pty Ltd [2020] WASCA 107

Santos v Delhi Petroleum Pty Ltd [2002] SASC 272

The State of Western Australia v Bond Corporation Holdings Ltd (1991) 5 WAR 40

Wilson v Metaxas [1989] WAR 285

REASONS OF THE COURT:

1. In this interlocutory appeal, the appellants seek to raise questions as to the proper construction of s 1317K of the Corporations Act 2001 (Cth) (the Act) and as to the circumstances in which a claimed right to compensation under that provision will be extinguished in respect of alleged contraventions of the insider trading provisions of the Act.

2. The appeal is against an order by Le Miere J, made in pending proceedings in the General Division of the Supreme Court, dismissing the appellants' application filed on 5 March 2021 to disallow or, alternatively, strike out the whole or part of an amended statement of claim (ASOC) filed by the respondent (Forge).

3. After receiving submissions at the hearing of the appeal, this court ordered that leave to appeal be refused.  The court indicated that reasons for decision would be published at a later date.  These are our reasons.

The pending proceedings in the General Division

1. In the pending proceedings in the General Division, the respondent (as plaintiff) applied for orders against the appellants (as defendants) in respect of alleged contraventions, or alleged involvement in contraventions, of the insider trading provisions of the Act.  The respondent's case in the pending proceedings relates to the sale by the second appellant (COPL) of shares in Forge.  COPL is a wholly owned subsidiary of the first appellant (Clough).  The third appellant (Mr Gallagher) and the fourth appellant (Mr Siford) were directors of Forge, Clough and COPL.

2. In its originating process filed on 18 March 2019 in the General Division, Forge stated that:

   (a)the application by the originating process was made under s 1043A, s 1043L, s 1317HA and s 1317J(2) of the Act; and

   (b)the application was for orders that the appellants compensate Forge for damage suffered by Forge, within the meaning of s 1043L(5) of the Act, resulting from the appellants' contraventions, further or alternatively involvement in contraventions, of s 1043A(1) of the Act in respect of division 3 financial products issued by Forge.

3. The originating summons then stated that, on the facts set out in the supporting affidavit, Forge claimed specified relief.

4. The supporting affidavit was sworn on 18 March 2019 by Martin Bruce Jones, one of the liquidators of Forge.  Mr Jones annexed to his affidavit a draft statement of claim (DSOC).  Mr Jones deposed that the DSOC set out the material facts upon which Forge relied to establish its claims for compensation.

5. On 20 May 2019, a judge in the General Division ordered that the litigation commenced by Forge's originating process proceed on pleadings.

6. On 4 June 2019, Forge filed a statement of claim which was substantially in the same terms as the DSOC.  On 6 September 2019, the appellants filed a defence.  On 4 October 2019, Forge filed a reply.

7. On 4 February 2021, Forge filed the ASOC.

8. The appellants, by their application filed on 5 March 2021, applied to disallow or, alternatively, strike out the whole or part of the ASOC on the ground that the ASOC introduced new facts, including inconsistent facts, from those that underpinned the originating process.

9. The appellants' application to disallow or, alternatively, strike out was an interlocutory application.

10. The appellants submitted before the primary judge that the amendments they contested raised a new cause or causes of action based on new and inconsistent items of alleged inside information and were time barred by s 1317K of the Act, which specifies a six year limitation period in respect of proceedings for a compensation order.

The primary judge's reasons

1. The primary judge held that Forge's claim in the ASOC was a claim of the nature stated in Forge's originating process filed on 18 March 2019. The claim made in the ASOC was therefore a claim commenced by the originating process. Forge filed its originating process no later than six years after the alleged contraventions. Accordingly, the claim in the originating process was not time barred [23].

2. His Honour said that it was unnecessary to consider whether the causes of action pleaded in the ASOC were outside the scope of the originating process having regard to the material facts deposed to in Mr Jones' affidavit sworn 18 March 2019. His Honour added that, in any event, the causes of action pleaded in the ASOC were not outside the scope of the claims stated in the originating process and the facts deposed to in Mr Jones' affidavit. Consequently, the ASOC did not introduce a new cause or causes of action [24].

The primary judge's formal order

1. On 4 May 2021, the primary judge made a formal order that the appellants' application filed on 5 March 2021 be dismissed.

Our reasons for refusing leave to appeal

1. The appellants require leave to appeal from the primary judge's order. See s 60(1)(f) of the Supreme Court Act 1935 (WA).

2. It must be remembered, in dealing with an interlocutory civil appeal, that on appeal from a final judgment or order an appellate court can correct any interlocutory judgment or order which affected the final result.  See Gerlach v Clifton Bricks Pty Ltd.[1]

   [1] Gerlach v Clifton Bricks Pty Ltd [2002] HCA 22; (2002) 209 CLR 478 [5] ‑ [8] (Gaudron, McHugh & Hayne JJ).

3. This court's jurisdiction to hear an appeal in the civil jurisdiction, for which leave to appeal is required, is founded upon the grant of leave.  See Wilson v Metaxas.[2]  The requirement of leave is not a mere technicality.  It serves an important function in the administration of justice; for example, by discouraging unnecessary interlocutory appeals.  See Krishell Pty Ltd v Nilant.[3]

   [2] Wilson v Metaxas [1989] WAR 285, 294 (Malcolm CJ; Brinsden & Smith JJ agreeing).

   [3] Krishell Pty Ltd v Nilant [2006] WASCA 223; (2006) 32 WAR 540 [29] - [30] (Wheeler JA).

4. It is well established that this court has a broad discretion to grant or refuse leave to appeal in civil proceedings.

5. Ordinarily, leave to appeal from interlocutory orders will not be granted unless the primary decision is wrong or, at least, attended with sufficient doubt to justify the grant of leave, and, in addition, substantial injustice would be done by leaving the primary decision unreversed.  What constitutes substantial injustice will depend upon all of the circumstances of the case.  The dual requirements of apparent error in the primary decision and substantial injustice if the primary decision is left unreversed bear upon each other in deciding whether leave to appeal should be granted.  See NRW Contracting Pty Ltd v Cliffs Asia Pacific Iron Ore Pty Ltd.[4]  Ultimately, however, there are no rigid or exhaustive criteria and leave to appeal will be granted if it is in the interests of justice.  See TheState of Western Australia v Bond Corporation Holdings Ltd.[5]

   [4] NRW Contracting Pty Ltd v Cliffs Asia Pacific Iron Ore Pty Ltd [2020] WASCA 107 [117] (Beech & Vaughan JJA).

   [5] TheState of Western Australia v Bond Corporation Holdings Ltd (1991) 5 WAR 40, 55 ‑ 57 (Malcolm CJ; Rowland & Walsh JJ agreeing).

6. Interlocutory appeals are scrutinised to guard against the unnecessary fragmentation of primary proceedings.  The encouragement of appeals against interlocutory judgments or orders, before final judgment in the primary proceedings, would interfere with the orderly disposal of the primary proceedings and increase costs.  See Adam P Brown Male Fashions Pty Ltd v Philip Morris Inc;[6] Gerlach [4].

   [6] Adam P Brown Male Fashions Pty Ltd v Philip Morris Inc [1981] HCA 39; (1981) 148 CLR 170, 177 (Gibbs CJ, Aickin, Wilson & Brennan JJ).

7. In Western Australia, appellate restraint is exercised to avoid interfering with interlocutory procedural decisions, especially decisions by primary judges managing cases in the Commercial and Managed Cases List.  See Hancock Prospecting Pty Ltd v Wright Prospecting Pty Ltd;[7] NRW Contracting [117]. Consequently, by way of example, interlocutory appeals in relation to pleading disputes are, ordinarily, to be discouraged. See In de Braekt v Powell.[8] That general approach reflects the goal and objects in O 1 r 4A and O 1 r 4B of the Rules of the Supreme Court 1971 (WA) which are, in effect, adopted by r 5 of the Supreme Court (Court of Appeal) Rules 2005 (WA).

   [7] Hancock Prospecting Pty Ltd v Wright Prospecting Pty Ltd [2019] WASCA 141 [49] (Quinlan CJ & Vaughan JA).

   [8] In de Braekt v Powell [2007] WASCA 55; (2007) 33 WAR 389 [35] (Buss JA).

8. The fact that a judicial decision is made in the context of an interlocutory application is not conclusive of whether the decision gives rise to an issue estoppel.  Although the interlocutory context is relevant, the critical question is whether the decision can reasonably be regarded as a final determination of the issue between the parties.  See Castillon v P & O Ports Ltd;[9] Makhoul v Barnes;[10] Santos v Delhi Petroleum Pty Ltd;[11] Inasmuch Community Inc v Bright.[12]

   [9] Castillon v P & O Ports Ltd [2007] QCA 364; [2008] 2 Qd R 219 [49] ‑ [69] (Holmes JA; Wilson J agreeing).

   [10] Makhoul v Barnes (1995) 60 FCR 572, 583 (Hill, Cooper & Branson JJ).

   [11] Santos v Delhi Petroleum Pty Ltd [2002] SASC 272 [400] (Lander J).

   [12] Inasmuch Community Inc v Bright [2006] NSWCA 99; (2006) 45 MVR 234 [60] (Beazley JA; Mason P & McColl JA agreeing).

9. In D A Christie Pty Ltd v Baker,[13] Hayne JA held that an order dismissing an interlocutory application for an extension of time under s 23A of the Limitation of Actions Act 1958 (Vic) did not finally determine any matter between the parties and did not create an issue estoppel. Section 23A provided, relevantly, that the court, subject to specified statutory considerations, may, if it is 'just and reasonable so to do', order an extension of the limitation period.

   [13] D A Christie Pty Ltd v Baker [1996] 2 VR 582.

10. Hayne JA said that, to determine whether there is any issue estoppel, it is necessary to identify whether there has been a final determination as between the parties in the one case of a particular issue (599).  His Honour added (599):

    [T]he question whether there is any issue estoppel turns, in part, upon whether there has been a final determination of any issue between the parties. If all that the dismissal of the first application means is that the court has concluded that on the material then advanced no order for extension should be made, it is apparent that an order dismissing the application determines no issue between the parties that is raised on the second application for on that second application the issue would be different – whether any extension of time should be made on the new and different material then before the court. If, however, the true characterisation of the order dismissing the first application is that it is a determination of whether an extension of time should be granted to the applicant within which that applicant might bring an action complaining of a cause of action otherwise statute barred, it might perhaps be said that the dismissal of the application finally determined an issue which would arise in the course of the second application.

11. In the present case, senior counsel for the appellants submitted that:

    (a)there was no issue estoppel between the parties, arising from the primary judge's determination of the appellants' application filed on 5 March 2021, in relation to whether the whole or any part of the amendments introduced by the appellants in the ASOC were time barred; and

    (b)nothing precluded the appellants from pleading a limitation defence in relation to those amendments (appeal ts 3).

12. Senior counsel for the respondent conceded that it remained open for the appellants to plead a limitation defence to the amendments introduced by the appellants in the ASOC and that there was no relevant issue estoppel (appeal ts 7 ‑ 8, 10).

13. We are satisfied that the appellants' submission and the respondent's concession should be accepted.  The parties were agreed that the primary judge's dismissal of the appellants' application was not finally decisive between them in relation to the limitation issue.  In the circumstances, it would be unreasonable to regard the primary judge's dismissal of that application as finally determining the limitation issue and precluding the appellants from pleading the limitation defence.

14. In the present case, it was in the interests of justice, for the following reasons, to refuse leave to appeal.

15. First, in all the circumstances, there was no issue estoppel between the parties, arising from the primary judge's determination of the appellants' application filed on 5 March 2021, in relation to whether the whole or any part of the amendments introduced by the appellants in the ASOC were time barred.

16. Secondly, the appellants' application filed on 5 March 2021 involved, in essence, a pleading dispute.

17. Thirdly, the limitation issue is unsuitable for determination before the trial of the originating process filed on 18 March 2019.  It is preferable, first, to determine whether there were any relevant contraventions of the insider trading provisions of the Act and, if so, when each contravention occurred.  It may not be necessary at trial to decide the limitation point if the trial judge concludes that there was no relevant contravention of the insider trading provisions or if any contravention which is found to be proved was raised in the originating process filed on 18 March 2019 or in that originating process read with Mr Jones' supporting affidavit and the DSOC.  These considerations, in combination, decisively outweigh any saving of costs that may be realised by endeavouring to determine the limitation issue before trial.

18. Fourthly, in all the circumstances, no substantial injustice would be done by leaving the primary judge's decision unreversed.

    I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.

    YK

    Associate to the Honourable President Buss

    31 JANUARY 2023