Coghlan v Pyoanee Pty Ltd

[2003] HCATrans 319

[2003] HCATrans 319

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Brisbane  No B29 of 2003

B e t w e e n -

PETER CHARLES COGHLAN

Applicant

and

PYOANEE PTY LTD

Respondent

Application for expedition

CALLINAN J

(In Chambers)

TRANSCRIPT OF PROCEEDINGS

AT BRISBANE ON MONDAY, 18 AUGUST 2003, AT 11.05 AM

Copyright in the High Court of Australia

MR S.S.W. COUPER, QC:   I appear for the applicant on the summons, if your Honour pleases.  (instructed by Colin Biggers & Paisley)

MR D.R. COOPER, SC:   I appear with MR C.L. FRANCIS for the respondent to the summons, your Honour.  (instructed by Porter Davies)

HIS HONOUR:   Mr Couper, his Honour Justice Byrne did not set any date for settlement of the transaction.

MR COUPER:   No, your Honour.  His Honour adjourned our application to have a date set on the basis that the special leave application was pending.

HIS HONOUR:   Normally you would bring in minutes of order, would you not?  You would discuss them between the two of you and in effect have a consent order as to the date of settlement if the matter were to go ahead, is that right?

MR COUPER:   That is so, your Honour.  The situation was this before his Honour, that we brought the matter on to have a date for settlement set.  The respondent submitted that because the special leave application was pending, the matter ought simply be adjourned, although no application for a stay was brought by the respondent before his Honour.  His Honour acceded to that view and adjourned our application to have a date set to a date to be fixed, leaving us in the position that we are in limbo, given his Honour’s order for adjournment. 

It is right to say, I should point out to the Court, that his Honour did make the order on the basis of his undertaking as to damages but, for the reasons which I had advanced based on our written outline, that is not really a satisfactory situation for the present applicant.

HIS HONOUR:   No.  Thank you.  Mr Cooper, what do you say about all this?  You are neutral about expedition, are you not?

MR COOPER:   Subject to one thing, your Honour.  Material has come to light by way of exhibits and other statements of fact in Jamieson’s affidavit to support this application which have put a completely different factual complexion on the evidence that should have come out at trial because a lot of these documents were not disclosed and at this point in time, because the matter only really arose between my junior and I on the weekend, I have not had a chance to really look at the implication for Mr Coghlan.

HIS HONOUR:   You may want to go back to the Court of Appeal to rely on fresh evidence, is that what you are saying?

MR COOPER:   Yes, your Honour, because his Honour made a finding of fact against us about a significant conversation which, if he had found the other way, would have probably led to a different result.  It is our contention that this sort of evidence is such that, had his Honour been able to consider this, it was highly relevant and highly material but just not disclosed at any stage in disclosure or during the evidence at trial.  I am reluctant to want to try and reopen the trial because Mr Coghlan is now about 82 years of age, but I do in fairness to him have to consider this, give him advice and take instructions from him.  That is the only thing which is really hamstringing us.

HIS HONOUR:   I suppose, Mr Cooper, though in a sense it is not an objection to an expedition of special leave because you can make that case equally well to a special leave court, I would have thought.

MR COOPER:   If your Honour wished to give us leave to supplement our submissions, because it may be that we have to ‑ ‑ ‑

HIS HONOUR:   Yes, quite.  As you know, you cannot get fresh evidence before us.

MR COOPER:   No.  I am mindful of all of that and that is why the point only arose really over the weekend.  I discussed it with my junior yesterday and I really have not had a chance to work out where we are going on this.  Certainly I have not had a chance to speak to my client and give him advice and find out what he wants to do.

HIS HONOUR:   I suppose if I expedited the matter, I could give some directions as to further submissions.

MR COOPER:   Yes, your Honour.

HIS HONOUR:   As you might have gathered, there is a special short list which is already full for Sydney on 16 September, but I can fit another matter in on that day.

MR COOPER:   In Sydney, your Honour?

HIS HONOUR:   Yes.  You can do it by video link if you want to, of course, or you can do it in person.  In a sense this matter is in competition with the other one.  I have two slots:  one on 16 September and the other on 14 November.

MR COOPER:   Can I just refer to one factual matter though about discretions between the two matters.  This is a matter which could have been addressed by the other side immediately after the Court of Appeal judgment by way of directions, but was not.  We have twice been back to Mr Justice Byrne this year on other issues and the last time we appeared, his Honour castigated the other side for not coming along with any evidence of any prejudice if he did not make directions for settlement because, as your Honour will have seen from the correspondence, he said to my opponent, “You must have realised what Mr Cooper would be taking today, yet you’ve in no way adduced any evidence to show that the matter shouldn’t be held in abeyance”.

That is against the background of the other side refusing continuously to comply with the Court’s directions about putting in their special leave material.  We had to write to the Registrar, we have had to write to the other side, and they have not been ‑ ‑ ‑

HIS HONOUR:   I must say, Mr Cooper, I am surprised at the course of events here.  Normally I would have expected, when a decree for specific performance is made, there would be orders as to dates of settlement and other matters and then, once they were made, it would be for you, I would have thought, to apply for a stay.

MR COOPER:   That is why we did not, your Honour, because there was, with respect, nothing for us to apply to stay because no direction had been made.

HIS HONOUR:   I just do not understand why Justice Byrne did not make orders.

MR COOPER:   In fairness to his Honour, one of the matters that arose is that there was a special provision in this contract which said that interest at a very, very high compound rate would be paid if, through the fault of the purchaser, the matter did not settle.  That was a matter about which his Honour was going to hear further argument, but the Court of Appeal held that that provision did not emerge in the settlement and therefore was a matter that could be heard subsequently at a later time. 

Given that, it was then open to the other side to go back to his Honour immediately and ask for the machinery orders to be made to effect settlement.  But they did not and the matter has just limped along this year.  It is true at one stage we said we were going to apply for a stay but, as I pointed out to your Honour, there was nothing for us to apply to stay because there was nothing to promote settlement of the matter.  That is why it has taken this very curious course.

HIS HONOUR:   What do you say about that, Mr Couper?

MR COUPER:   Your Honour, the sequence was that in May we applied to his Honour Mr Justice Byrne to have a timetable set because we apprehended that the issue was still live as to whether this interest was payable or not.  Our learned friends told the court on that day that that issue was not still live; it would be dealt with after settlement.  There was an indication after that time that an application for a stay would be made.  We held off for some time.  No application eventuated.

We then went back before his Honour taking what, in my submission, is the orthodox view that, absent an application for a stay, we had the decision of his Honour and the decision of the Court of Appeal saying we were entitled to specific performance.  We sought orders setting the date for settlement and purchase price.  There was still no application for a stay.  His Honour held that he would not make the orders, even though no application for a stay had been brought, and his Honour took the view that the applicant ought to have come before his Honour furnished with material as to prejudice to indicate why the orthodox course should have been taken.

The applicant – and I claim responsibility for this – took a different view; took the view that what ought to have happened was that the order should have been made and an application for a stay to the Court of Appeal should have been brought in the usual course.  As it was, my learned friend is right to say the applicant was castigated for seeking the orthodox order without having material going to prejudice.  The order having been made, the applicant comes before this Court with material as to prejudice to indicate the consequence which will flow if expedition is not granted.

As to the choice between September and November, your Honour, the applicant appreciates there is a competing claim for position.  In my respectful submission, the September date should go to this applicant really for this reason, that, as your Honour has seen from the material, the funding which is in place to complete the purchase, the facility expires on 30 September 2003 and, on the terms of the document itself, there is no assurance or obligation by St George Bank that the funding will be renewed after 30 September.

In addition – and these matters are linked - Mr Jamieson sold the shares in the company and received $2 million which enabled him to pay out other pressing financial commitments.  If he is unable to complete the conditions precedent by having title to the land by 30 September, there is a risk that he will have to find that $2 million and repay it.  So that in terms of the date being critical, 12 September is, with respect, critical to the applicant to give us the chance to salvage that position.  November means that those risks may well materialise before the applicant has a chance to, in our submission, have the application disposed of.

HIS HONOUR:   You say, I suppose, you have the benefit of two decisions, a decision of first instance on the question of prospects of success?

MR COUPER:   Yes, your Honour.

HIS HONOUR:   Was it a unanimous decision in the Court of Appeal?

MR COUPER:   It was, your Honour.  We would say, with respect, as to prospects that we are on strong ground – if I might…..summarise my submissions on that, your Honour.  The starting point was that the respondent’s case below was based on the notion that there had been a variation of the contract of sale which was void.  Both parties accepted that the variation agreement was void.  The respondent’s case was that the effect of that void variation was to discharge the contract of sale.  Both courts, in my submission not surprisingly, rejected that notion.

It was said in the alternative that the applicant had induced Mr Coghlan to enter into that void variation by misleading conduct.  That was found by the learned trial judge.  The consequence was said to be by the respondent that the September contract should be set aside with the Trade Practices Act or that the applicant should be refused specific performance because of lack of clean hands.  Both courts below held that there was not sufficient nexus between the conduct leading to the entry into the void variation agreement and the unconditional contract of sale.  So that a remedy with respect to clean hands under the Trade Practices Act was simply not available because of ‑ ‑ ‑

HIS HONOUR:   You do not really need to go into that.  You have the decision of four judges.  Is there anything more you want to say, Mr Cooper?

MR COOPER:   Just a couple of things, your Honour.  First of all, there is no evidence from the bank that the funding will not continue after 30 September.  The preponderance of evidence is that it will continue because, unbeknownst to my client at the trial, an associate of Mr Jamieson had arranged with Jamieson to buy the block next door.  These two companies, one of which is the wholly‑owned subsidiary of the applicant here, borrowed $13 million to buy the two blocks of land, largely funded by the same financier.  That facility does not expire on 30 September; it goes into next year.  So it is quite unlikely the bank will not keep the matter alive after 30 September.

HIS HONOUR:   That is taking a big chance on a bank, Mr Cooper.

MR COOPER:   Not St George Bank, your Honour.  They seem to be extremely robust in lending their money.

HIS HONOUR:   Perhaps they have done extremely well by being very hard.

MR COOPER:   It is very unusual to see lending at the loan to value ratios that this financier makes available.  The second matter, your Honour, is that Mr Jamieson has been the master of his problems at the moment.  We filed our special leave application on 1 May this year.  About five weeks later we then signed this contract to sell the shares in the applicant company, and by dint of that the subsidiary company, so that both parcels of land would be sold and settled by 30 September this year.  He undertook by that agreement to have title by 30 September.

HIS HONOUR:   It might have been because of his assessment of your application for special leave.

MR COOPER:   Your Honour, in fairness to the application, it does have some interesting points of equity simply because both the trial judge and the Court of Appeal took an extremely narrow view of what the doctrine of clean hands is all about, a view which is not accepted by the Privy Council, not accepted by the majority of the Canadian Supreme Court and not accepted by appellate courts in America.  The matter has only ever been considered once by this Court in an obiter remark in 1917.  So it is a matter that this Court has not had the opportunity to consider, so it is somewhat brusque or bullish to say that the matter has no prospects, as my friend would have your Honour believe.

HIS HONOUR:   I express no view, Mr Cooper.

MR COOPER:   No, I am not inviting your Honour to do, but the point I am making is that the matter does have some unusual features about it and it is not without significance that the trial judge and the Court of Appeal both held that Mr Jamieson’s conduct vis-à-vis my client was contemptible.  But, because of their interpretation of the law, they said that his outrageous behaviour did not defeat his company’s ‑ ‑ ‑

HIS HONOUR:   What was the outrageous behaviour?

MR COOPER:   He came to my client and said, “Look, I can’t buy the land unless you can give me a first mortgage of $3 million”.  He intended in fact to borrow $8.5 million and make us a second‑ranking mortgage behind this first mortgage for $8 million, so the risk that my client was undertaking was significant.  This was against the background where a year before he had been to see my client and wanted my client to put in the property as an

equity contribution to the development.  My client said he would not do it, he was too old to take on risks of that nature.  Yet by subterfuge he in effect was trying to pass on the same sort of risk to him again.

This is in a context where my instructing solicitor had met with Jamieson the day the contract was signed and told, “Don’t have anything to do with Mr Coghlan personally.  He is too old.  You’re not to discuss any aspects of this transaction with him”.  He went behind that warning, then the problems arose because of the agreement that was or was not known.

HIS HONOUR:   Thank you, Mr Cooper.  I would just like to hear from the parties in the other matters.

AT 11.21 AM SHORT ADJOURNMENT

UPON RESUMING AT 11.25 AM:

HIS HONOUR:   As you would have inferred from what I have just done, I am prepared to expedite this matter, and I so order, to 16 September.  That is a video link day involving Canberra, Brisbane and Darwin and it is sitting in Sydney.  As you know, you can appear in Court.  Mr Cooper, do you think I should make any orders, give any directions?

MR COOPER:   I would ask for a direction that we have leave to supplement our submissions and we may need leave to amend our draft notice of appeal, your Honour, depending on how the matters are evaluated.

HIS HONOUR:   Yes, of course.  I should make an order then, I think.  First of all, I do not like to make an order giving leave to amend the notice of appeal – well, it is only a proposed notice of appeal.

MR COOPER:   It is only a draft; that is why I asked for ‑ ‑ ‑

HIS HONOUR:   I will make an order that ‑ ‑ ‑

MR COOPER:   I am sorry to interrupt, but it could be dealt with in a way that we foreshadow in our supplemental outline, any amendment we would wish to make to the draft ‑ ‑ ‑

HIS HONOUR:   In fact, it would be much more convenient if you also articulate any new grounds specifically.  I think I will make an order, Mr Cooper. 

I order that the matter be expedited, the application to be heard on 16 September next.  I give leave to the applicant to make such amendments to his proposed notice of appeal and outline of submissions as he may be advised within 14 days from today.  I order and direct that the respondent to the application make such amendments as it may be advised within 10 days of the receipt of the applicant’s amendments and the applicant have leave to respond to those as he may be advised up until seven days before the date of hearing.  I certify for counsel in this matter.  Is there anything further?  I should make an order that the costs be costs in the application.

MR COOPER:   Thank you, your Honour.

MR COUPER:   Thank you, your Honour.

HIS HONOUR:   Nothing further?

MR COOPER:   Your Honour, my junior says we might not have as many days between now and 16 September as your Honour has allowed.

HIS HONOUR:   I see; I cannot count.  I had better put you on three days for your reply.  I know you are expeditious, Mr Cooper, and I am sure you will do that.

MR COOPER:   Thank you, your Honour.  Or does your Honour wish to truncate the first period and make it 10 days ‑ ‑ ‑

HIS HONOUR:   It might be more convenient, might it not?  Make it 10 days and seven days.  Is that convenient?

MR COOPER:   Yes, thank you.

HIS HONOUR:   That gives us enough time – only just.  Nothing further then?

MR COOPER:   No, thank you.

MR COUPER:   Thank you, your Honour.

AT 11.29 AM THE MATTER WAS CONCLUDED