Cousens v Grayridge

[2000] HCATrans 493

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Melbourne  No M82 of 2000

B e t w e e n -

SHIRLEY YVONNE COUSENS

Applicant

and

GRAYRIDGE PTY LIMITED

Respondent

Application for a stay

HAYNE J

(In Chambers)

TRANSCRIPT OF PROCEEDINGS

AT MELBOURNE ON THURSDAY, 2 NOVEMBER 2000, AT 9.37 AM

Copyright in the High Court of Australia

MR D.C. FITZGIBBON:   I appear for the applicant, your Honour.  (instructed by Waters O’Brien)

MR R.E. COOK:   I appear on behalf of the respondent, your Honour  (instructed by S.V. Winter & Co)

HIS HONOUR:   Yes, Mr Fitzgibbon.

MR FITZGIBBON:   Yes, thank you, your Honour.  Might I have leave to hand to the Court a short set of submissions and authorities?

HIS HONOUR:   Yes, thank you.

MR FITZGIBBON:   I apologise they were not here before now, but my solicitor thought it was 10 o’clock as well and, hence, there has been a slight hiccough as such.

HIS HONOUR:   Yes.  Perhaps if I read these.  Yes, I have read that, Mr Fitzgibbon.

MR FITZGIBBON:   Yes, I am sorry, your Honour.  After having read the matters last night, I sought from my instructing solicitor one affidavit of my client, Gary John Lewer, which, in fact, really fleshes out the earlier affidavit, and I seek leave to produce that in Court and an affidavit of Kathryn Lewer as to service of documents and that really is simply ancillary to the major affidavit of my client, Mr Lewer.

HIS HONOUR:   Yes.  Have you seen this, Mr Cook?

MR COOK:   No, your Honour.

HIS HONOUR:   Yes, perhaps if Mr Cook is shown them first, Mr Fitzgibbon.

MR FITZGIBBON:   Yes, thank you, your Honour.  I have done that.

MR COOK:   I have just been handed copies.  I have not had a chance to read them.

MR FITZGIBBON:   Well, apparently ‑ ‑ ‑

HIS HONOUR:   Well, perhaps if you read them.  Just a moment, Mr Fitzgibbon.  This is really not the most efficient method of proceeding, is it, and it is, if I may say so, entirely unsatisfactory.

MR FITZGIBBON:   Yes.  I ‑ ‑ ‑

HIS HONOUR:   Just a moment.  Perhaps if Mr Cook has an opportunity to read them first.

MR COOK:   Yes.  I have read both the affidavits, your Honour.  They are only very short.

HIS HONOUR:   Do you object to their reception, Mr Cook?

MR COOK:   Your Honour, I do not think they take the matter any further.

HIS HONOUR:   I did not ask you that, Mr Cook.  My time is not well used if counsel will not attend to what I ask.  Do you object?

MR COOK:   Yes, your Honour.

HIS HONOUR:   Yes.

MR COOK:   They raise a number of matters that I think should be answered, if they are left to proceed.

HIS HONOUR:   What course do you propose then?

MR COOK:   I am loath to ask for an adjournment, but there are some matters raised which directly affect my instructing solicitor and we should be entitled to answer those, if my learned friend wishes to rely on the affidavits.  My submission would be that he should not be allowed to rely on the affidavits at this stage because he has had since this application was brought into existence, which I think was back on 31 August, to get his act into gear and he is now raising more points that ‑ ‑ ‑

HIS HONOUR:   I see from his outline of argument he wants to amend the application for special leave to raise, at least tangentially, perhaps directly, some of the matters which were the matters that divided the Court of Appeal and which might ordinarily have been expected to have formed the central focus of the application for leave.

MR COOK:   Yes, that is correct, your Honour.  In this affidavit there is further matters that go to those kinds of considerations.

HIS HONOUR:   All that being so, do you point to any prejudice if, as you say, there are matters there which you think may need answer if the matter were to go off?  As I say, I do not regard that, prima facie, as a very satisfactory means of proceeding at all, but if this case is to limp along, so be it.  What are we to do?

MR COOK:   I am in an unfortunate position, your Honour.  I was not told that there was further affidavit material this morning and I was handed it at 20 to 11 and there are some allegations made which concern Mr Winter, my instructing solicitor.  I do not believe that they will take my learned friend’s argument any further, but I believe that it is in the interests of Mr Winter that he should be able to read the affidavit and deny them, lest it be said that he does not.

HIS HONOUR:   Yes.  How long would you take to attend to that sort of matter?

MR COOK:   I suppose one could attend to it during the course of the morning.  I would have to do another affidavit and serve it on my learned friend and perhaps come back.  I do not know what your Honour’s plans for today were.

HIS HONOUR:   To do some of the real work of the Court, that is, to get on and write judgments, not to wait while counsel sort out their affairs.  Yes, if I were to stand the matter over until 2.15, what would you say as to that?

MR COOK:   I think we would be able to - - -

HIS HONOUR:   Yes.  Mr Fitzgibbon, what do you say about my adopting that course?

MR FITZGIBBON:   Your Honour, I have nothing to say.

HIS HONOUR:   Yes.  I will stand the matter over at 2.15 and, barring something quite extraordinary, I would expect counsel then to be in a position to proceed to present the matter in the ordinary fashion.  I will adjourn until 2.15.

MR COOK:   Before your Honour rises, could I mention one thing?

HIS HONOUR:   Yes.

MR COOK:   We did prepare a further affidavit yesterday afternoon which has not reached the Court file yet.  I am sorry, your Honour, it only came up late and I did not know whether it was best to file it this morning before Court or just file it now.  I would seek to file it now, your Honour.

HIS HONOUR:   Yes.  Has Mr Fitzgibbon seen these?

MR FITZGIBBON:   Your Honour, I have not seen it as yet.

HIS HONOUR:   I will receive it, if at all, at 2.15.  I would remind both counsel, they are not appearing in the Magistrates Court at Box Hill.  Do not treat this Court in that fashion.  2.15.

AT 9.48 AM THE MATTER WAS ADJOURNED
UNTIL LATER THE SAME DAY

UPON RESUMING AT 2.18 PM:

HIS HONOUR:   What is the position?

MR FITZGIBBON:   Yes, thank you, your Honour.  We have been able to, perhaps I will put it, resolve our differences, if there were any, and I seek to tender, without objection, Mr Lewer’s subsequent affidavit and annexures and also an affidavit of Kathryn Lewer and I have no objection to my friend’s affidavits, which, equally, have been the subject of no objection.

HIS HONOUR:   Yes.  They can be filed in Court and I will take a moment and read them, if I may.

MR FITZGIBBON:   Thank you.

HIS HONOUR:   Yes, I have looked at those.  Yes, Mr Fitzgibbon.

MR FITZGIBBON:   Yes, thank you, your Honour.  If I can perhaps deal with preliminary matters.  There would be two issues in the light of the decision in Jennings and, of course, Tait, which comes into it.  In other words, I must demonstrate extraordinary circumstances and, indeed, the onus is carried at the centre of the Bar table, and I accept that.  Indeed, the Court laid down a procedural rule in that case which has been followed, but I believe that I can demonstrate that, in fact, this case nevertheless is still within the bounds of the extraordinary.

Now, the first matter – and perhaps if I can raise it up.  I had indication, your Honour, yesterday just before I left for the airport that really I should address the question as to whether leave might be granted, so if I can approach the matter in that way with your Honour’s permission, I would have thought that would have been the best way of dealing with the matter in order to substantiate that there is the basis for the application.

HIS HONOUR:   Yes.

MR FITZGIBBON:   Thank you.  Your Honour, there are two matters that would concern your Honour.  The first matter raised by my friend in his submission is that there have been inordinate delays and that, in fact, the correct procedure has not been followed.  The affidavit of my client, Mr Lewer, deals with that in particular and that is the affidavit filed in the Court and at paragraph 10 he deals with the position of why the option was not taken up with the Court of Appeal and, indeed, it is probably a tragedy that the opportunity afforded by the court at that stage was not pursued with, but his answer to that is found within paragraphs 9 to 12 and he sets out ‑ ‑ ‑

HIS HONOUR:   To which affidavit are you referring in that regard?

MR FITZGIBBON:   It is the affidavit, your Honour, dated 1 November.  As I understand it, that was filed in Court.

HIS HONOUR:   Of Mr Lewer?

MR FITZGIBBON:   Of Gary John Lewer.

HIS HONOUR:   I have at the moment an affidavit of Ms Cousens sworn 31 August.  I have an affidavit of Mr Lewer sworn 2 November and I have an affidavit of Mrs Lewer also sworn 2 November and I have two affidavits of Mr Winter sworn respectively 1 and 2 November.  I do not believe I have an affidavit of Mr Lewer sworn on 1 November.

MR FITZGIBBON:   Your Honour, my understanding was it had been filed in Court, according to my instructions, but I do have a copy and my friend has been served.

HIS HONOUR:   Yes.

MR FITZGIBBON:   I apologise if that is not the case, but I have certainly proceeded on that basis.

HIS HONOUR:   Yes.

MR FITZGIBBON:   It is on the second page, your Honour, in paragraphs 10 and 11.

HIS HONOUR:   Yes, I will read that.

MR FITZGIBBON:   Thank you.

HIS HONOUR:   Yes.

MR FITZGIBBON:   Thank you.  Your Honour, that is the reasoning behind the position that Mr Lewer, of course, and Mrs Lewer who live in the house and who was, in fact, the director of Hillside and the guarantor to the loan.  He is not a joined party at this point in time but, of course, by virtue of the guarantee his position is a matter that, in fact, puts him in the position of having locus, in my submission, and your Honour would really need to read all of that affidavit because, in addition to that, your Honour would not understand the other affidavits, with respect, until you had read that.

HIS HONOUR:   Can I begin at another aspect of these matters.

MR FITZGIBBON:   Yes.

HIS HONOUR:   As the application for special leave presently stands, although the grounds are subdivided into paragraphs (a), (b) and (c), I read it as seeking to agitate one issue, an issue about the validity of incorporation of Grayridge Pty Limited.

MR FITZGIBBON:   I do not believe, your Honour, that should be pursued.

HIS HONOUR:   Yes.

MR FITZGIBBON:   In fact, I do not believe that is the basis for any application which would be made to the Court.

HIS HONOUR:   What then is the basis upon which special leave will be sought?

MR FITZGIBBON:   The basis of that special leave application, your Honour, comes in and that is why in the authorities I have cited a number of cases which deal with the power of the High Court to deal with matters involving the legal profession.  Now, what I say that for, your Honour, is this, that you will see in ground 3 and ground 5 of the summary I have placed in front of the Court that, in fact, what we are dealing with here is a situation where a legal practitioner is both the secretary to the company, that is, Grayridge Pty Limited, and he is also the solicitor dealing with all of the aspects of the mortgage.

Without going into detail, your Honour would have realised by now that, as the Court of Appeal says, the matter is one where two innocent parties, that is, Grayridge and, on the other hand, Mrs Cousens, it is where the loss shall fall between the two.  In fact, of course, his Honour Justice Batt took a view which is different from the other two judges, although all of them, your Honour, really, in fact, agree, having read each other’s judgments that, in fact, they agree on the facts as such.

It really comes down to an extremely narrow issue and that is why I say it is a tragedy that, in fact, the opportunity was not taken to seek a stay because the court – no, I cannot read behind the mind of the court.  I cannot go that far.  But it does seem that that was an offer that was made but my client, of course, was not in a position to, in fact, fund that.

HAYNE J:   But the basic question to which I would ask you to direct attention is, “Do you say that the order of the Court of Appeal should be set aside on appeal to this and, if so, what is the basis on which you contend that the order of the Court of Appeal should be set aside?”.

MR FITZGIBBON:   I contend that the order of the Court of Appeal should be set aside, your Honour, and I do so on the basis that what Justice Batt set out in his very, very full judgment is, indeed, the correct position in law, but I go beyond that, your Honour, and I do so in my summary, to say that, in fact, what is being dealt with here is a situation – and if your Honour looks at the submissions on stay application where I refer to section 43 and 44 and where it deals with the exception of fraud and says no party or privy to the fraud shall take any benefit from it.

HIS HONOUR:   But was a case made at trial or on appeal relying upon the contention that Grayridge was privy to some relevant fraud?

MR FITZGIBBON:   No.

HIS HONOUR:   How then could this Court, on appeal, address the questions of fraud that you seek to agitate?

MR FITZGIBBON:   On this basis, your Honour, that, in fact - I have listed two decisions, McCann (1954) 93 CLR, in particular, at pages 430 and 431.  That decision, in my submission, is authority where the Court – it is not as though there is any dispute over the factual issues.

HIS HONOUR:   I would have thought there was quite probably a real and lively dispute about whether Grayridge was privy to any fraud of Bulfin.

MR FITZGIBBON:   Yes, I could accept that part.

HIS HONOUR:   How is that issue to be resolved by this Court, there being no oral evidence called, for example?  How are we to decide whether it is privy to the - - -

MR FITZGIBBON:   I think there is very clear evidence, your Honour, and I intend to point your Honour to that, but it seems to me on the basis of McCann and on Schiller, which I have also referred to there, that there is power in the Court to, in fact – I have copies.

HIS HONOUR:   Yes, it is all right.  You hold onto yours.  I will send for them.  Yes.

MR FITZGIBBON:   Yes, thank you.  In effect, what I say is this, that although that legal argument was never put to either the first instance judge or to the Court of Appeal, nevertheless there is that power in the High Court to consider and, indeed, where they established that a miscarriage of justice, in fact, did take place, then there is power, of course, to order the matter back into the appropriate court.

Your Honour, I have also referred to the quite recent decision – and I know it is a Family Law decision – of CDJ v VAJ (1998), but that reviews quite extensively the authorities.  It is dealing with a statutory power but it does deal quite extensively with the common law position and the position in relation to statute.  Now, the Court, of course, held that under statute it was not bound by the common law rules but, in my submission, there is that power and, indeed, if your Honour looks at the position here, if one takes the Transfer of Land Act at sections 43 and 44 ‑ and I accept that on the face of it there is an allegation of Mr Winter.  It was denied in front of Mr Justice O’Bryan, but the difficulty with it is this, your Honour ‑ ‑ ‑

HIS HONOUR:   And did the trial judge make a finding about it?

MR FITZGIBBON:   He made a finding about one part of it, your Honour, and the difficulty is this, that – I have an unmarked copy of the evidence, if your Honour wishes.

HIS HONOUR:   Perhaps first if you would take me to the finding that his Honour made.

MR FITZGIBBON:   Yes.  Your Honour, my friend has pointed out to me, and it is correct, that in his submission to the Court it is quoted in full on page 7.

HIS HONOUR:   Yes, thank you.

MR FITZGIBBON:   I do not gainsay that.

HIS HONOUR:   Yes.  It is found at about point 5 on page 7.  I do have a copy for your Honour.  Too many years having a junior who could keep control of the papers has finally defeated me, Mr Fitzgibbon.  Here we are.  Paragraph?

MR FITZGIBBON:   Page 7, your Honour, at paragraph (b).

HIS HONOUR:   Yes.  Which is an acceptance by the trial judge that Mr Winter did not ‑ ‑ ‑

MR FITZGIBBON:   I do not have any difficulty with that, your Honour.  I do not gainsay that at all, but what I do point out is this, that in relation to the question of benefit, the evidence before the court at page 77 – and I have a copy of this and also an unmarked copy of the transcript.  Mr Winter was asked:

Was there a sum of $2000 paid to Mr Bulfin?‑‑‑Yes, I received an authority from him, which is not in the court book, but which is in my file, to pay $2000 to an existing mortgage that he had through my firm, which was currently then in arrears.

For what reason was Mr Bulfin owed $2000, are you able to say?‑‑‑Sorry?

Why was Mr Bulfin allowed $2000 settlement?‑‑‑For his brokerage fee.

There was a sum of $2,156 allowed too; is that correct?‑‑‑Can you remind me of the page?

You may need to have reference to page ‑ ‑ ‑?‑‑‑That is my account for legal costs.

And a figure of $2,850 was paid to SV Winter, what was that for?‑‑‑That is a procuration fee.

And a sum of $5,720?‑‑‑That was the mortgage insurance premium.

Now, the difficulty, of course, is this, that Mr Winter is both the solicitor and the secretary of Grayridge.  He is further examined, your Honour – and I will be as brief as I can – at page 93 ‑ ‑ ‑

HIS HONOUR:   Before you read me that passage of transcript, can I just understand the proposition that you read in aid of.  What do you say follows from this evidence?

MR FITZGIBBON:   What I say is this, that, in fact, although the matter was not put at either of the lower court hearings, the fact is there is within the terms of the statute itself a benefit, and I say that Mr Winter and Grayridge were, in fact, privy within the statute itself.  I will put it back to front.

HIS HONOUR:   Why were they privy?

MR FITZGIBBON:   They were privy because ‑ ‑ ‑

HIS HONOUR:   That is, privy to the fraud of Bulfin.  Why were they privy to that fraud?

MR FITZGIBBON:   Well, the section – and your Honour would know it far better than I – is framed in such a way that, in fact, it – I am suffering the same problem, your Honour, but the section itself ‑ ‑ ‑

HIS HONOUR:   Yes.

MR FITZGIBBON:   I am sorry.  It is framed in very precise terms.  Section 44(1)(a) says, “no party or privy to the fraud shall take any benefit from it”.  It is on that basis that I say here we have a situation – and I outline just some of the facts that are, in fact, established on the evidence as it stands.  Now, in effect, I say that, of course, that Mr Winter is the secretary to Grayridge.  It is a fact that Grayridge had specific mortgage insurance.

HIS HONOUR:   No doubt Grayridge got numbers of benefits from the entry of this transaction.  It was a commercial transaction in which it sought, and no doubt obtained, benefit.  The question that troubles – and at the moment I simply do not understand – is, “What is your contention that leads to the conclusion that Grayridge was privy to the fraud of Bulfin?”.

MR FITZGIBBON:   Right.  Your Honour, the position I take is this, that it is a fact that there had been money loaned to Bulfin by Mr Winter.  It is a fact that he was - and I use the actual words in the evidence - chasing him for mortgage repayments.  It is a fact that Mr Winter knew that Bulfin was facing the most serious charges of fraud and, indeed, I think the figure of $166 million was mentioned.  They had discussed that.  It is a fact that Mr Winter knew that Mr Bulfin was an undischarged bankrupt.  It is a fact that the newspaper article referred to was in the December prior to these transactions, which occurred in June and July of the following year.

It is a fact that Mr Winter and Mr Bulfin had discussed appropriate counsel, where he might be – I do not think the word “imprisoned” is used.  It is a fact that there is no contact at all between Mrs Cousens and the solicitor involved, Mr Winter.  Mr Winter, according to the evidence, knew that Mr Bulfin was coming up for sentence.  It is a fact that Mr Winter knew that Mr Bulfin wanted these matters in a hurry.  It is a fact, your Honour ‑ and I show your Honour exhibits 53 and 54, copies.

HIS HONOUR:   Yes.

MR FITZGIBBON:   It is a fact, your Honour, that when it came to paying these proceeds out, in fact, 53 is the genuine signature of Mrs Cousens – no one contends otherwise – but if your Honour places 54, that is the forged document by Bulfin, one of five forged documents, and ‑ ‑ ‑

HIS HONOUR:   We can begin from the premise that Mr Bulfin is not a nice man.  We can begin from the premise that Mr Bulfin is not only not a nice man, he was not an honest man.  I understand all that.

MR FITZGIBBON:   Yes.  What I am really saying is this:  Mr Winter, as a practising solicitor of many years standing, a person who is acquainted with all of these facts and even more – there are more than I have gone through – in fact, chooses, when hurried by Mr Bulfin, to pay out on the basis of that forged document and four other forged documents as well.

HIS HONOUR:   Now, that may or may not be sensible.  That may or may not be good conveyancing practice.  I simply just do not know.  But that, for the moment at least, seems to me to be a long way short of saying that Grayridge, through Mr Winter, was privy to the fraud.  Unless you go that far, the Transfer of Land Act provision, section 43 and 44, at least at the moment, seem to me not to bear upon the immediate question.

MR FITZGIBBON:   Yes.

HIS HONOUR:   It seems to me, Mr Fitzgibbon, that at the moment we have a divided Court of Appeal.  Ordinarily speaking, a division of that kind in the Court of Appeal might be thought by some to suggest that the case is not beyond argument.  Yet we seem to be seeking to embroider that proposition by constitutional questions, now, as I understand it, discarded, and by allegations of a very serious kind which would be ventilated for the first time in this Court.

Now, I must say that troubles me a little and I do not quite see why or where we are going with all this.  I can tell you now I think it unlikely that leave would be granted in a matter to agitate for the first time in this Court allegations of fraud.

MR FITZGIBBON:   I am aware of the onus I carry, your Honour, and I do not approach the matter lightly, as your Honour knows.

HIS HONOUR:   I understand that.  There are several difficulties in this, Mr Fitzgibbon.  First, the present application for special leave is filed out of time.  Second, the present application for special leave makes contentions in support of the application for grant which, as I understand it, are now wholly abandoned.  Third, you mention, but do not stay to examine, the fact that it either may or will be your position that the special leave would be promoted to agitate the issues which divided the court in the Court of Appeal.

The burden of your argument seems to be directed to this fraud case, which, as I say to you quite bluntly, I have great difficulty understanding and I have great difficulty seeing as being a matter likely to attract a grant of special leave.  Parties are meant to fight their cases out for the first time at trial and then, if needs be, in the intermediate court, not go and fight them for the first time in this Court.

MR FITZGIBBON:   Yes, that is true, except that – just so there is no doubt, your Honour, I believe that Justice Batt’s decision is right and ‑ ‑ ‑

HIS HONOUR:   But is that going to found the application for leave?

MR FITZGIBBON:   Yes.

HIS HONOUR:   It does not yet.

MR FITZGIBBON:   Yes.  Yes, that is the difficulty I face.  I accept that, but I do urge upon your Honour that, in fact, the totality of facts are such that that additional ground are such that the Court – I think it was in Ginnarelli v Wraith that the Court indicated it did have power to entertain was not has been put in the lower court, but I must, in fairness, say, of course, as I said, it is not to be taken as a precedent.

HIS HONOUR:   I would have thought that the more difficulty authority from your point of view is Coulton v Holcombe and the proposition that points are not to be raised for the first time if, by the leading of evidence, including, for example, the course taken in examination or cross‑examination of witnesses, the evidentiary base confronting the court might have altered and it would seem to me, in a case where allegations of fraud are framed for the first time in the ultimate Court, it would seem, if not unthinkable, well nigh unthinkable that the evidentiary base for their consideration would not have been much affected had they been made earlier.

MR FITZGIBBON:   Yes, I take your Honour’s point on the issue.

HIS HONOUR:   But what are we to do?  We have here a warrant of possession.  We have a position where, as I would understand some of the evidence, it seems that there is either no or little equity left to the beneficiaries of the trust of which Mrs Cousens either is or was at one time trustee.

MR FITZGIBBON:   Yes.

HIS HONOUR:   We have a divided Court of Appeal.  We have a period of, I would have thought, several months, well into next year, before we can get a leave application on.  In the meantime interest, presumably, is continuing to run, at least on the first secure that is registered on this property.  Now, at some point somebody has to do some hard commercial thinking.  Essentially the problem in this case, as in any mortgage possession case, invites attention to commercial questions.  The legal questions I happen to enjoy.  I get a great deal of fun out of looking at the legal questions.  I have never yet seen a client who enjoys it at all, let alone half as much as I do.

MR FITZGIBBON:   I can go along with that.

HIS HONOUR:   Now, what are we going to do?

MR FITZGIBBON:   Yes.

HIS HONOUR:   I will not use the line that the President of the Court of Appeal has been heard to use in Victoria in relation to people dealing with banks having security over their property.  That line is, “They will get you in the end”.  Bear that in mind.  I will not use that line, but there is a commercial problem underlying this.  That has to be addressed.

MR FITZGIBBON:   Yes, thank you, your Honour.

HIS HONOUR:   What are we going to do?

MR FITZGIBBON:   Your Honour, if I might have a very short adjournment and I really will ‑ ‑ ‑

HIS HONOUR:   Yes.  It is now 3 o’clock.  If I come back at 3.15?

MR FITZGIBBON:   Yes, thank you, your Honour.  I would be grateful to your Honour.

HIS HONOUR:   I will come back at 3.15, in the language of the schoolyard, ladies and gentlemen, “Ready or not”, 3.15.

MR FITZGIBBON:   I am grateful to your Honour, thank you.

AT 3.01 PM SHORT ADJOURNMENT

UPON RESUMING AT 3.16 PM:

MR FITZGIBBON:   Your Honour, I am grateful for the time.

HIS HONOUR:   Yes, Mr Fitzgibbon.

MR FITZGIBBON:   It has been well spent but my instructions remain that ‑ although slightly altered to this extent:  I do not believe your Honour has power to order the matter back, but I believe there is power within the Supreme Court procedure to seek a rehearing in the Court of Appeal.  Now, that is straight off the top of my head and I have looked for authority over the short distance ‑ ‑ ‑

HIS HONOUR:   Yes.  What is it that you say I should do?

MR FITZGIBBON:   If your Honour looks, and I will not prolong this, at paragraphs 17, 18 and 19 of his affidavit of yesterday ‑ ‑ ‑

HIS HONOUR:   Yes.

MR FITZGIBBON:   ‑ ‑ ‑ your Honour will see there that the other matter is not to be heard, the Salera matter ‑ ‑ ‑

HIS HONOUR:   That is the first mortgagee, yes.

MR FITZGIBBON:   That is the first mortgage.  I am somewhat acquainted with that and I think Mr Cook may be somewhat acquainted with that.  That is not to be heard until 14 March and the other problem is this, that that decision, of course, would change the position of the applicant and his sister as to – should they be successful, then that would change the position as to funds by way of first mortgage to satisfy the judgment and the other matters are, of course, matters of opinion, but he does aver in paragraph 19:

under a higher duty of care as a legal practitioner….given his actual knowledge of Bulfin and his legal status –

Now, that really is a question, your Honour, that stands outside 43 and 44 of the Land Transfer argument.  That is an additional argument.  No, your Honour was not one of the High Court in a case called Hill v Van Erp, but that was the duty of care case involving solicitors and proximity and economic loss and it is a matter where that Court said the relationship between a solicitor and the intended beneficiary – in this case it was a will – as a third party was one of proximity which did give rise to a duty of care.  In addition to that, the Court held that control is an important factor in determining proximity and the factors that give rise to a duty of an intended beneficiary under a will ‑ ‑ ‑

HIS HONOUR:   Assume all that to be so.  What is it immediately that you say I should do today?

MR FITZGIBBON:   What I would seek would be an interim stay until an application has been made to the Court of Appeal for a rehearing.

HIS HONOUR:   In the meantime would it be intended to prosecute the application for leave or not?

MR FITZGIBBON:   Yes, I would, your Honour.  I would intend to prosecute that because I believe there are questions of ‑ ‑ ‑

HIS HONOUR:   Would it be intended to amend the basis of that application for leave?

MR FITZGIBBON:   Yes, your Honour, most definitely and I can give that undertaking to the Court.  I would be the party concerned and that could be done with considerable diligence.  So it is really on that basis that I am instructed to seek that stay.

HIS HONOUR:   Yes.

MR FITZGIBBON:   As I say, the problem would seem to be that if the Salera Case is successful, there is nothing left in the property at all, which is a problem in itself.

HIS HONOUR:   Perhaps let me hear what Mr Cook has to say and see where we go from there.

MR FITZGIBBON:   Thank you, your Honour.

HIS HONOUR:   Mr Cook, following the most recent part of the debate, if application is made for stay, pending hearing and determination of the application for leave in this Court, leave aside what other process may or may not be instituted or capable of institution in the Court of Appeal of Victoria, I would be assisted by hearing your submissions directed to that aspect of the application, stay pending leave here.

MR COOK:   Your Honour, the first difficulty is that we just do not know yet what is to be said in this application for leave to appeal if the initial one has been abandoned and one might have thought if there were to be a new one we would have it brought along to Court today so we could analyse it in some depth, because my submission is that if one analyses the judgments, the two judgments, Mr Justice Batt’s judgment and the majority judgment, they differ merely on a question of fact and there is no point of law of any real significance that is debated.

Everyone has agreed on what all the law is.  The question is whether these four transactions can be looked at as one global transaction, in which case you can look at all the evidence, all four together, to decide what the single transaction was, or whether you take them singularly and say, “Can we look at the first three transactions and use them as similar fact evidence to find that the fourth transaction was the last one and we can use that as evidence in relation to that.”  Of course, Mr Justice Batt said that they were not sufficiently similar to use the similar fact rules and that he did not think it was all one transaction and the other two judges said it was one transaction.

Now, that is all just facts.  In fact, the Court of Appeal did say when they invited my learned friend, or who was appearing for Mrs Cousens at that stage, that, “There may, indeed, be some difficulty if you come back next week and ask for a stay because we would like you to reflect on the circumstances.  Really, although there is a 2:1 decision, it is only on this question of fact and there may not well be a significant point that the High Court would give leave on”.

HIS HONOUR:   Can I tell you two problems that trouble me that stem from the fact that there is a divided Court of Appeal?  Let us leave aside questions of, “Should there have been an application for stay made to that court rather than a single judge?”.  Leave aside the problem that they are six weeks out of time, or thereabouts.  Leave aside the fact that we have yet to see a formulated application.  I would say that is some leaving aside.  But if I refuse the stay today, does not everything happen instantly?  The sheriff has an order, has he not, against him from Mr Justice Beach and there is a warrant out there?

MR COOK:   Yes.

HIS HONOUR:   And once the warrant is executed, is the position changed irremediably?

MR COOK:   It is, your Honour, but your Honour really has to look at this case against the background as to how it has unfolded, and I have been to Mr Justice Beach ‑ ‑ ‑

HIS HONOUR:   I would need little persuasion that the manner in which the case has been conducted hitherto does not assist the application.  I need no persuasion of that fact.  Nor do I need persuasion of the fact that a security holder with a registered security, not set aside, should ordinarily be entitled to have the benefit of that security.  I suspect your answer then is, “Well, that is an end of it.  What more do you need to consider?”.  What troubles me then is, if I do not grant a stay, everything happens instantly, and the other aspect to which I want attention directed is, what is the consequence for your client that is adverse to your client if I grant a stay, perhaps conditioned in some way that would regularise the thoroughly irregular way in which this matter thus far has proceeded.

MR COOK:   Yes.  Your Honour, the problem is this, that we are losing, it has been estimated, $1,000 a day of equity in the property and, as your Honour said ‑ ‑ ‑

HIS HONOUR:   Is that on the basis that the property is now in a negative state, that is, that securities over top ‑ ‑ ‑

MR COOK:   No, it is not yet in a negative state.  I think the first mortgage is up to about six hundred and something thousand.  So we have the second mortgage.

HIS HONOUR:   Yes.

MR COOK:   There is still equity there today.  If we sold this property before Christmas time, we would get 100,000, 150,000, something like that, out of the significantly more than that, but at least we would get something.  Now, if we have to wait for another three months, six months, until the matter comes on before the Court and is heard, say, because it is Christmas, well, that is 90 days, that is $90,000.  Now, there is evidence before the Court about that.  That was Mr Winter’s late affidavit that we filed this morning.

HIS HONOUR:   Can I just replay that back to you to make sure that I understand it?  Is it your contention at the moment that as things now stand, if there were sale at the first available opportunity, the second mortgagee would not recover the whole amount owed to it?

MR COOK:   No, it would not recover the whole amount, but it would recover some.

HIS HONOUR:   I am sorry, it would or would not?

MR COOK:   It would not recover the whole amount owed to it.  It would recover, you know, something.

HIS HONOUR:   It would recover something but not the lot?

MR COOK:   Something significant, yes.

HIS HONOUR:   The second limb of that proposition then would be that delay for a second‑ranking security with interest running apparently regularly on the first‑ranking security leads to further diminution in the position of an already disadvantageous position occupied by the second mortgagee.  Is that right?

MR COOK:   Yes, your Honour.

HIS HONOUR:   Where that leaves me I think, Mr Cook, is this:  I would be minded to grant a stay for a very limited period ‑ I have in mind three, four, five days – to let the applicants attempt to get their house in order.  The prospect of bringing this back on does not enthral me, but do you point to any particular consequence that would follow from a stay until sometime next week?

MR COOK:   There is a minor problem, your Honour, well, it is probably a major problem because if the property is to be sold this year I am told that the last day for auctions is 9 December.

HIS HONOUR:   Yes.  What sort of marketing programme do you need?  What time do you need?

MR COOK:   I think we would need a month, I would have thought.

HIS HONOUR:   That is why I say I need submissions about whether, if we put it over until early‑ish next week – and I have just sent for my diary to see when I could give you a date – if that, for example, tipped you out of sale this year into sale next year, different considerations may then be thought to intrude.

MR COOK:   It is clearly very borderline.  I can only say – we have got no evidence before you, but obviously a property to be properly marketed needs at least, I would have thought, four weeks on the market.

HIS HONOUR:   That does not come to me as a shock, that four weeks is the sort of period commonly spoken of by agents seeking to market property, but, again, nothing more dangerous than a judge acting on what he thinks is proper commercial practice.  You will find authority in a case called Blue Star Lines v Rahcassi, somewhere in about the 60s Queens Bench, that says “Whatever the expression ‘a man of commerce’ may mean, it does not include a practising barrister”.

I would have thought that that could be applied with considerable force to those who once were and have then retreated to the monastery of the judiciary.  I could hear the matter at 9.30 on either the 7th, that is, the Tuesday – the 7th will not be very good, will it?  I could give you a hearing on the 7th but probably most of you would like it at Flemington.  I could give you 9.30 on the 8th, but I would need to conclude that hearing no later than 11.30.  I have a commitment at 12 noon which I simply cannot break.  So you can have 9.30 until 11.30.

MR COOK:   Your Honour is seized of the facts.  It would be largely a matter of analysing my learned friend’s notice of appeal to see whether it is ‑ ‑ ‑

HIS HONOUR:   Fact or law.

MR COOK:   Yes.

HIS HONOUR:   Now, that would involve the stay being granted until 4.15 Wednesday, 8 November or further order.  I would make no direction about what steps the applicant should take.  Those would be entirely matters for the applicant.

MR COOK:   Yes.

HIS HONOUR:   It would occur to me further that there may then be some question – I do not know whether there would be – about what terms, if any, should be exacted on the continuation of any stay.  Those are matters about which, of course, I have no view, but they would be matters for the parties.

MR COOK:   Yes.

HIS HONOUR:   What do you say to my adopting that kind of course?

MR COOK:   Your Honour, I would obviously prefer your Honour to dismiss the application today on the basis that it is not ready and before you and that kind of thing, but I think the practical reality is that it is probably the best way to proceed.

HIS HONOUR:   Again, can I be quite blunt about it, Mr Cook?  There are people who stand behind these transactions and that the application is not mounted in the best way is, at least sometimes, not attributable to their conduct.

MR COOK:   Yes, if it please the Court.

HIS HONOUR:   Now, Mr Fitzgibbon, if I were to give you a stay ‑ ‑ ‑

MR FITZGIBBON:   Yes, I do not wish to be heard, your Honour.  I agree entirely with what your Honour says, thank you.

HIS HONOUR:   Now, can I just invite the attention of counsel to the form in which this order may have to be framed?  If I were to make orders in this form, that until 4.15 pm on 8 November 2000 or further order the sheriff of the Supreme Court of Victoria not execute the warrant of possession of the property at 50 Warringa Road, Frankston issued in proceeding 7373 of 1997 in the Supreme Court of Victoria on behalf of Grayridge Pty Limited; to adjourn the further hearing of the application made by summons dated 31 August 2000 to 9.30 am 8 November 2000 at Melbourne; and reserve costs and certify, would counsel wish to be heard as to the form or substance of those orders?  Mr Cook?

MR COOK:   I would not wish to be heard.  I note that your Honour said he would not be intending to make any further orders in relation to what my learned friend should do.  I would simply say that I would have earnestly hoped that any documentation in the nature of a proposed amended application for special leave should be with me at some time on the Monday so I can contemplate it during the course of racing on Tuesday, your Honour.

HIS HONOUR:   You have heard the views I have expressed about the desirability of documents being handed along the Bar table.  I regard it as undesirable, and that is all I need say.  Mr Fitzgibbon, do you ‑ ‑ ‑

MR FITZGIBBON:   No, thank you, your Honour.

HIS HONOUR:   Very well.  There will be orders as follows:

(1)   Until 4.15 pm on 8 November 2000 or further order order that the sheriff of the Supreme Court of Victoria not execute the warrant of possession of the property at 50 Warringa Road, Frankston issued in proceeding No 7373 of 1997 in the Supreme Court of Victoria on behalf of Grayridge Pty Limited.

(2)   Adjourn the further hearing of the application made by summons dated 31 August 2000 to 9.30 am on 8 November 2000 at Melbourne.

(3)   Reserve costs and certify for the attendance of counsel.

I will adjourn.

AT 3.41 PM THE MATTER WAS ADJOURNED
UNTIL WEDNESDAY, 8 NOVEMBER 2000