Devine Real Estate v Agha

[2022] NSWSC 543

Supreme Court

New South Wales

Medium Neutral Citation:

Devine Real Estate v Agha & Anor [2022] NSWSC 543

Hearing dates:

2 May 2022

Date of orders:

3 May 2022

Decision date:

05 May 2022

Jurisdiction:

Equity - Expedition List

Before:

Sackar J

Decision:

Motion dismissed

Catchwords:

PROCEDURE – Motion to reopen following judgment and appeal – Application of UCPR r 36.16(3)

Legislation Cited:

Civil Procedure Act 2005 (NSW)

Corporations Act 2001 (Cth)

Uniform Civil Procedure Rules 2005 (NSW)

Cases Cited:

260 Oxford Street Pty Ltd & Ors v Premetis & Anor [2006] NSWCA 96

Agha v Devine Real Estate Concord Pty Ltd & Ors [2021] NSWCA 29

Autodesk v Dyason (No 2) (1993) 176 CLR 300

Bailey v Marinoff (1971) 125 CLR 529

Boateng v Dharamdas [2019] NSWCA 233

British American Tobacco Australia Services Ltd v Laurie (2011) 242 CLR 283

Burrell v The Queen (2008) 238 CLR 218

Deputy Commissioner of Taxation v Meredith (No 2) [2008] NSWCA 133

Devine Real Estate Concord Pty Ltd v Agha [2018] NSWSC 556

Devine Real Estate Concord Pty Ltd & Ors v Wajih Agha (aka Roger Agha) & Anor [2019] NSWSC 786

DJL v The Central Authority (2000) 201 CLR 226

Johnson v Johnson (2000) 201 CLR 488

Yuill v Spedley Securities Ltd (in liquidation) [1992] NSWCA 285

Category:

Procedural rulings

Parties:

Devine Real Estate Concord Pty Ltd (first plaintiff)
Devine Real Estate Drummoyne Pty Ltd (second plaintiff)
Steven Devine (third plaintiff)
EMC Just Holdings Pty Ltd (fourth plaintiff)
Wajih Agha (aka Roger Agha) (first defendant)
Lewis Coombe (second defendant)

Representation:

Counsel:
I M Neil SC, M Seck (plaintiffs)
P Doyle Gray, A Djurdjevic (defendants)

Solicitors:
Jemmeson & Fisher Solicitors (plaintiffs)
Summer Lawyers (defendants)

File Number(s):

2018/87652

Judgment

Introduction

1. By Notice of Motion filed 29 March 2022 the plaintiffs seek leave to reopen the hearing so that the Court may determine the claim pleaded at [99] and [101](1), (3), (4), and (10) of the Statement of Claim filed on 20 March 2018. The Motion further asks that the Court exercise its power under rr 36.16(1) and (3) of the Uniform Civil Procedure Rules 2005 (NSW) (‘UCPR’) in its inherent jurisdiction and s 14 of the Civil Procedure Act 2005 (NSW) to vary orders entered on 4 December 2019 that the second defendant, Mr Lewis Coombe, contravened s 182(1) of the Corporations Act 2001 (Cth) (‘Corporations Act’) by engaging in the conduct pleaded at paras 99 and 101(1), (3), (4), and (10) of the Statement of Claim.

procedural background

2. It is important prior to dealing with this application to understand the history of what has been prolonged and hard fought, and hence drawn out, litigation involving a dispute between business partners and a former employee and serious allegations arising out of what were asserted to be various breaches of contractual and other obligations.

3. Although the matter ultimately proceeded by way of pleadings, the plaintiffs’ case was initially commenced by way of summons with an affidavit in support when it came before Hallen J sitting as duty judge on 19 March 2018.

4. A Notice of Motion seeking interlocutory relief was stood over to the Registrar’s List on 22 March 2018.

5. As a result of certain undertakings being given by the two defendants (a Mr Agha, the erstwhile business partner and shareholder, and Mr Coombe, the former employee), the matter was shortly adjourned until it came before Parker J as duty judge on 4 April 2018.

6. An interlocutory hearing took place before his Honour across a further four days.

7. His Honour delivered reasons on 13 April 2018 in Devine Real Estate Concord Pty Ltd v Agha [2018] NSWSC 556. After a further hearing on 19 April 2018, four interlocutory injunctions were made on 4 May 2018 in favour of the plaintiffs and against Mr Agha and Mr Coombe.

8. His Honour identified the essential issues before the Court at [8].

9. His Honour also referenced serious allegations made against Mr Agha, in particular the fact that Mr Agha had filed no evidence before him at [22], [23], and [25] of the judgment.

10. The matter was then referred to the Expedition List. A detailed Statement of Claim was filed in May 2018. It made multiple and detailed allegations against each of the defendants, including breaches of contractual obligations and breaches of provisions of the Corporations Act.

11. The matter was ultimately heard by me over a number of days in August and November 2018, and again in March and May 2019, where extensive oral and documentary evidence was before me. Indeed, there were 22 witnesses plus thousands of pages of materials. The two defendants did not themselves file any affidavit evidence (see Devine Real Estate Concord Pty Ltd & Ors v Wajih Agha (aka Roger Agha) & Anor [2019] NSWSC 786 at [8] and [264]).

12. I gave judgment on 28 June 2019 in Devine Real Estate Concord Pty Ltd & Ors v Wajih Agha (aka Roger Agha) & Anor [2019] NSWSC 786, though it took until December 2019 for final orders to be made and entered. Earlier, on 4 May 2018, I made the following order:

Pursuant to UCPR rules 6.7 and 28.2, the question of liability on the plaintiff’s claims and on any cross claims, including the making of any final injunctions, be determined separately and before the plaintiff’s claims for the taking of accounts and any assessment of damages and compensation.

13. My judgment was therefore limited to liability, so at the end of the hearing before me I removed the issue of damages from the Expedition List, as explained at [16] of the judgment. That issue is yet to be determined.

14. There was delay in concluding the proceedings at trial due to the plaintiffs’ counsel taking ill. However, beyond that difficulty, there were other matters which had caused the inordinate delay including the mass of materials deployed by the plaintiffs. I set out the reasons for the delay and the prolix nature of the plaintiffs’ materials at [7]-[17] of my judgment.

15. There was also considerable delay in the parties agreeing on the precise orders. It is clear that the parties did, however, debate precisely what orders were appropriate (see affidavit of Mr Palmer of 26 April 2022 read by Mr Coombe on this application, at page 18 of his annexures).

16. In the course of my judgment, I made certain findings as to the liability of both defendants as to their contractual obligations and breaches thereof, and also as to breaches under provisions of the Corporations Act. I made declarations accordingly, including a specific declaration to the effect that Mr Coombe breached ss 181-183 of the Corporations Act.

17. The plaintiffs were largely, if not entirely, successful before me against both defendants.

18. The defendants appealed to the Court of Appeal. The precise procedural history of the matter in that Court is set out in the affidavit of Ms Jemmeson sworn 30 March 2022 at [15]-[19], read on this Motion. The appeal was heard on 23 and 24 July 2020 and the Court gave judgment on 9 March 2021.

19. It seems the parties in their submissions in the Court of Appeal did not specifically address my findings and or the declarations concerning the Corporations Act liability.

20. However, in the course of argument in the Court of Appeal, White and Payne JJA raised the question of whether there was any evidence to support my findings on the Corporations Act breaches.

21. The appeal of the first appellant (Mr Agha) was allowed in part only. However, the appeal of the second appellant (Mr Coombe) was successful. In allowing the appeal, the court set aside declaration 9 as it concerned Mr Coombe, and in particular observed I had made no or no adequate findings as it were to support the declaration: Agha v Devine Real Estate Concord Pty Ltd & Ors [2021] NSWCA 29 per White JA at [174], [176], [178], and [183].

22. Somewhat remarkably on one view, the plaintiffs in an email on 29 March 2021 indicated that as a result of comments made by the Court of Appeal they wished to amend their Statement of Claim (see Ms Jemmeson’s affidavit of 30 March 2022 at [22]-[23]). The email stated that the Amended Statement of Claim would deal with a case in damages “against both defendants”.

23. In any event, it became clear by 6 April 2021 that Mr Agha would be seeking special leave to appeal to the High Court (see Ms Jemmeson’s affidavit of 30 March 2022 at [27]).

24. Thereafter, the necessary procedural steps were taken to progress the special leave application which occurred between June and October 2021. In any event, on 7 October 2021 Gordon and Edelman JJ of the High Court dismissed the application for special leave with costs on the papers.

25. The plaintiffs then sought to progress their intention to proceed with their proposed Amended Statement of Claim (see Ms Jemmeson’s affidavit of 30 March 2022 at [40]-[44]).

26. On 24 November 2021, the new solicitors for Mr Agha and Mr Coombe indicated that they opposed the filing of the proposed pleading and more particularly stated that as Mr Coombe had been successful on the appeal and that therefore there could no longer be any relief sought against him (see Ms Jemmeson’s affidavit of 30 March 2022 at [45] and page 273 of her annexures).

the issue

27. The question raised by the Notice of Motion is not whether the plaintiffs should be permitted to be given leave to proceed with an amended pleading on the issues of damages, but rather whether they may be permitted to reopen their case on liability in accordance with existing paragraphs of the Statement of Claim filed back in 2018.

the principles

28. In general terms, a judgment or order is said to be perfected when it has been entered.

29. Again, in general terms, when a judge recognises or is informed his or her judgement is affected by serious error, he or she may, in certain limited circumstances, reopen the judgment or order prior to entry, though some authorities doubt the existence of jurisdiction to do so after entry has occurred. It may also be accepted that the procedure in Equity over many years has been that if it were to be submitted a judge had failed to deal with a point, he or she should be asked to make additional findings: 260 Oxford Street Pty Ltd & Ors v Premetis & Anor [2006] NSWCA 96, per Young CJ in Eq at [136] (where application was made before entry of judgment).

30. The general rule that a court lacks the requisite power to set aside or vary a final judgment which had been entered has been affirmed by the High Court: see, for example, DJL v Central Authority (2000) 201 CLR 226 (‘DJL’).

31. But there were some limited exceptions, such as when it could be said that the interest of justice or procedural justice required it.

32. Reopening a case before judgment or order of course raises different principles to those relevant here. The High Court in Autodesk v Dyason (No 2) (1993) 176 CLR 300 (‘Autodesk’) considered the inherent jurisdiction of a court to reopen a judgment which had not been entered. Mason CJ in that case described the jurisdiction in such circumstances as a wide jurisdiction: Autodesk, 301-302.

33. These examples indicate that the public interest in the finality of litigation will not preclude the exceptional step of reviewing or rehearing an issue when a court has good reason to consider that, in its earlier judgment, it has proceeded on a misapprehension as to the facts or the law.

34. The various members of the courts identified their own examples of instances where the jurisdiction could be invoked. Their Honours all referred to situations where the judge misunderstood the facts or the law.

35. However, a recurrent theme throughout each judgment was the obvious need to recognise the public interest in the finality of litigation in circumstances where there was no neglect or failure on the part of the applicant and no hearing had in fact occurred, as opposed to simply reagitating a point already put.

36. After a judgment or order had been entered, a very different set of limited considerations were thought to apply. Much will depend on whether the court is one with inherent jurisdiction (for example a superior court of record), or where there is some statute or rule of court which expressly amplifies or modifies the general position.

37. Those limited circumstances might, for example, arise in the case of a default judgment or interlocutory order, where for some reason the other party was absent, where a judgment was procured by a fraud, and where the slip rule applies to some error.

38. But in such circumstances, it was often said that the jurisdiction should not only be cautiously exercised, but that it should be rarely exercised. This was stated emphatically by Barwick CJ in Bailey v Marinoff (1971) 125 CLR 529, 539. His Honour was of the view that a court had no further power in relation to the proceeding once orders were entered. This is to be contrasted with Mason CJ’s views in Autodesk discussed above.

39. The High Court considered this notion in the context of a superior court of record in Burrell v The Queen (2008) 238 CLR 218 (‘Burrell’). In that case, the Court of Criminal Appeal in New South Wales, having given judgment and where orders had been entered, thought it had done so erroneously and purported to set aside its orders and make fresh ones. The High Court determined the Court of Criminal Appeal had no power to reopen even though it believed it had made serious errors of fact as the Court’s jurisdiction was essentially statutory, and, as such, did not have power to reopen the appeal as it had.

40. In the course of their judgment, the plurality said there were some general considerations that applied in such cases of purported reopening.

41. First, in the case of each court, any governing statute and any express or implied powers need to be considered as opposed to a court’s “entrenched jurisdiction”: Burrell at [14] citing DJL at [43].

42. Secondly, it was important to recognise the fundamental principles about finality of litigation and that controversies once resolved are not to be reopened except in limited and defined circumstances.

43. Thirdly, that the principle as to finality serves not only to protect parties to litigation from attempts to re-agitate what has been decided but has wider purposes. In particular, the principle of finality serves “as the sharpest spur to all participants in the judicial process, judge, parties, and lawyers alike, to get it right the first time. Later correction of error is not always possible. If it is possible it is often difficult and time-consuming and it is almost always costly”.

44. Here there are rules of court to cater for a variety of circumstances.

45. For example, a judgment or order may, even if entered, be set aside if it was made irregularly, illegally, or against good faith (UCPR r 36.15).

46. In certain instances, a judgment or order can be set aside before entry of that judgment or order (UCPR r 36.16(1)), or after entry in the case of a default judgment in the absence of a party, or in certain circumstances relating to the possession of land (UCPR r 36.16(2)).

47. There are limitations on setting aside judgment or order if there has been a determination any claim, or a claim has been dismissed (UCPR r 36.16(3)).

48. Either on the motion of a party or on its own motion a court can set aside any judgment or order even if entered as long as the motion is brought within 14 days of the entry (UCPR r 36.16(3A) and (3B)). But the court cannot extend that time limited by subrule (3A) or (3B).

49. The inherent jurisdiction of the court such as it may be is otherwise unaffected (UCPR r 36.16(4)).

50. The Court of Appeal in Deputy Commissioner of Taxation v Meredith (No 2) [2008] NSWCA 133 (‘Meredith’) considered these rules and expressed the view that, notwithstanding r 36(4), the court had no inherent power to reopen orders which had been entered as opposed to the express situations contemplated by the rules. The Court expressly applied Bailey v Marinoff (1971) 125 CLR 529 and stated that the clear purpose of the rules was to allow a window, for example of 14 days only, and that that reflected the need for judgments and orders to be final and certain in their operation.

51. Indeed, as a result of the decision of the High Court in Burrell and the Court of Appeal in Meredith, there is a need for careful attention to the statutory regime in which the superior court of record conducts its affairs in order to accurately detect the repository of inherent or “entrenched” powers available, see also Wong v Van Vlymen & Ors [2020] 1170 at [25]-[36].

the submissions of the parties

52. I received detailed written submissions initially from the plaintiffs dated 30 March 2022 and from the defendants dated 27 April 2022.

53. When the matter was called before me on Monday, 2 May 2022, and during the course of argument, Mr Neil, Senior Counsel for the plaintiffs, indicated that he had only recently come into the matter and as a result of exchanges between myself and himself he would like some additional time to put on a comprehensive written submission and some additional evidence (2 May 2022, T10/25, pp 6, 10-11).

54. Further written submissions of the plaintiffs were received in the afternoon of 3 May 2022. A further affidavit from Ms Jemmeson, dated 3 May 2022, was also filed, totalling 105 pages. In the end, after further argument, no objection was taken to this affidavit. Counsel for the defendant filed an additional written submission late on 3 May 2022.

55. The plaintiffs during oral argument on 2 May clarified, as I understood it, that as a result of being satisfied that the order resulting from my judgment in December 2019 was entered, relief would not be sought pursuant to r 36.16(1).

56. At the resumed hearing on 4 May 2022, a number of propositions were advanced, both in writing and orally. Essentially, as a foundational argument, it was submitted the orders made, confined as they were to the determination of the separate question referred to above, were not final orders for the purposes of the rules. Accordingly, the 2019 order made by me did not engage the principle of finality nor various other sub-rules of r 36.16. In effect, it was put that the question of liability as far as I could understand the argument had not been determined or there was no determination of matters of fact or law arising from the various paragraphs of the Statement of Claim referred to in the Notice of Motion substantially by reason of my failure (as observed by the Court of Appeal) to make sufficiently adequately findings to support the declarations I made.

57. In any event, I would also be invited, belatedly, pursuant to s 14 of the Civil Procedure Act 2005 (NSW), to dispense with any time limitation, for example it might be engaged by r 36.16(3A).

58. The defendant submitted in effect that no relief could be granted as a matter of law, nor should it be granted as a matter of the exercise of the Court’s discretion. Further, it was put that there had been a determination, relevantly for the purposes of r 36.16(3), that leave should not be granted because it would be unfair on Mr Coombe, he having succeeded entirely in the Court of Appeal.

consideration

59. Judges at the trial level and the intermediate appellate level sometimes make errors. Some of these errors can and should, if at all possible, be corrected as soon as possible.

60. It should be noted that in the adversarial system courts administer the parties’ chosen issues and decide the case with to very large extent on the evidence they decide to deploy.

61. Generally, the flow of the evidence, the emphasis placed on it, and the findings each side invites a judge to make are a matter for the respective legal representatives of the parties. Issues can be raised and then abandoned or not pressed. The court is entitled to expect that, consistent with the professional advocates’ paramount duty to the court, all relevant matters of law of fact are clearly and hopefully concisely articulated. It is incumbent upon legal representatives to ensure, in their clients’ interests, that the judge clearly understands what legal and factual outcomes are sought on party’s behalf.

59. Upon the delivery of the reasons for judgment, the Court is again entitled to expect that the reasons will promptly be read and if there is any perceived error of the sort susceptible of correction it will again promptly be brought to the judge’s attention so a decision can be made as to whether it can or should be corrected and, if so, how that is most fairly and efficiently done.

60. The circumstances giving rise to the Notice of Motion stem from remarks made by the Court of Appeal in its hearing of the appeal on 23 and 24 July 2020 about the absence of a finding or adequate findings on my part in my judgment back in June 2019 in relation to Mr Coombe the second defendant.

61. It would seem that the plaintiffs were untroubled, disinterested, or simply oblivious to the absence of such findings until the issue was raised by the Court of Appeal. They submit that, through no fault of their own, they simply never had the matter drawn to their attention by their opponents nor any court, and hence should be regarded as without fault in the relevant sense.

62. The objective of course of this Motion is to seek leave to reopen for the express purpose of having the Court make findings adverse to Mr Coombe (formerly the second defendant) so as to make him liable in damages.

63. The affidavit evidence filed for the plaintiffs on this Motion does not reveal precisely when, if at all, prior to debate in the Court of Appeal, that the inadequacy of my findings was brought to their attention. However, during debate before the Court of Appeal, the matter clearly emerged with clarity.

64. However, the evidence Mr Palmer, solicitor for the plaintiffs, puts before the Court does indicate that there was clearly some detailed discussion as to the form of the declaratory relief which appears resultant to the matter of consent. There is no explanation as to why it has taken so long to make this application. In neither affidavit of Ms Jemmeson’s does she indicate when she read the judgment at first instance or what steps she took precisely apart from alluding to the possibility of amending the Statement of Claim on the question of damages.

65. I accept that the plaintiffs did not file a notice of contention, but they were placed squarely on notice in the course of the hearing before the Court of Appeal that the Court was concerned about the existence or not of evidence to support my findings and declarations. The plaintiffs’ Counsel was, it seems, content to deal with that issue in the course of argument, and did not formally seek leave, even belatedly, to file a notice of contention to protect their position. Subject to any question of costs and given the way in which the point had arisen, in my view that course was clearly open.

66. For any number of reasons, I am of the view that this application should fail.

67. First, I do not consider UCPR r 36.16 is applicable.

68. UCPR rule 36.16(1) only applies where the Court is invited to set aside or vary a judgment or order before the entry of such. That did not occur here.

69. UCPR r 36.16(3) does not apply if what has occurred involves a determination of “any claim for relief, or… any question… arising on any claim for relief”. Here, there is no reason in my view on the authorities appropriately understood to describe my determination as it were of the separate question as falling outside r 36.16(3). I determined the question of liability which in turn was the subject of review by the Court of Appeal. As a matter of law, but for all practical purposes, the issue of liability has been determined, and is not, as the plaintiffs submit, at large. In my view, the very language of UCPR r 36.16(3) does not speak of final relief as such, as that concept is discussed in other contexts when the comparison is made between final and interlocutory relief. The subrule simply refers to the determination of any claim for relief or the determination of any question (my emphasis). The alternative, of course, concerns dismissal of proceedings, not relevant here. What I did precisely here was to determine a question of liability, corrected albeit by the Court of Appeal. But the question of liability has, in accordance with the language of that subrule, been determined. It is not to be trivialised, as plaintiffs’ Counsel suggested, as merely a step along the way. This construction is entirely consistent with the underlying policy of achieving finality in litigation. In my view, therefore, the plaintiffs’ attempt to call in aid subrule (3) is inappropriate.

70. This approach is entirely consistent with the approach of Macfarlan and Gleeson JJA in Boateng v Dharamdas [2019] NSWCA 233 at [18]-[19]. The plaintiffs therefore must rely upon the Court exercising a discretion to permit them to reopen the issue of liability against Mr Coombe.

71. As a fallback, the plaintiffs seek to invoke s 14 of the Civil Procedure Act 2005 (NSW), which permits a court, if appropriate in the circumstances, to order that any requirement of rules of the court to be dispensed. The argument was not extensively developed before me but in any event, given the history of this matter, I do not think it is appropriate to dispense with the rules as requested. The main reason is the extensive delay since I gave judgment and, in addition, a number of the considerations which I discuss below in the context of discretion.

72. The current state of play is that the plaintiffs have a right to compensation against Mr Agar (the first defendant) within the scope of that liability which the Court of Appeal has left open. Therefore, they have a defendant against whom they can recover damages. I did not make any separate findings in my judgment against Mr Coombe such that he would be separately responsible for any head of damage, for example as to any commercial opportunity lost by the plaintiffs as a result of his particular contractual or other breaches. However, to bring Mr Coombe back into the litigation now and make him personally liable (at least potentially) for losses would be obviously prejudicial to him.

73. I should note in passing that nowhere in Ms Jemmeson’s affidavits nor Senior Counsel’s submissions for the plaintiffs can there be detected any specificity as to the volume of evidence that would be sought to be deployed against Mr Coombe. Senior Counsel for the plaintiffs accepted that Mr Coombe would be entitled to give fresh consideration to how and to what extent he would conduct any defence. Given the volume of material I received during the trial, including evidence from many witnesses and voluminous documentation, it is any wonder that the scope of any new trial is impossible to determine at this stage. Nevertheless, the scope of any potential litigation, its costs, and any delay in it occurring are clearly relevant considerations on the exercise of discretion. Given the history of this litigation, my expectation is that the matter would continue to be hard-fought and hence expensive and lengthy for all concerned.

74. The delay in bringing this application is neither satisfactorily or adequately explained. Even assuming one could comfortably arrive at the opinion that the plaintiffs in all circumstances have acted without fault and are hence blameless, their application in my view is antithetical to the administration of justice. Whether or not a party can be properly described as being at fault in such circumstances is in any event only one of several relevant considerations. Modern courts cannot, and perhaps should not, indulge afterthoughts or reflections, especially those that occur many years after the relevant events. The choice in UCPR r 36.16 of a 14-day window to bring a motion is a salutary reminder that parties must promptly move if they are to move at all.

75. The moment the Court of Appeal showed an interest in the relevant issue should have signalled, if only out of self-preservation, a need for the plaintiffs to address the matter there and then or very soon thereafter in a meaningful way. Counsel for the plaintiffs chose to address the issue in oral argument, on the run, and that is a forensic choice counsel is sometimes called upon to make. Having made that forensic choice, in my view, as a matter of fairness, the plaintiff should be stuck with it.

76. I also observe that I in my 2019 judgment made serious findings about both defendants, in particular about the first defendant, for example at [281]-[289]. I also made findings about the second defendant’s complicity in the conduct of the first defendant, for example at [381]-[392].

77. In those circumstances, serious consideration would have to be given as to whether in the light of those findings I could conduct any rehearing (if it was ever ordered) concerning the matters in the relevant paragraphs of the plaintiffs’ pleadings: British American Tobacco Australia Services Ltd v Laurie (2011) 242 CLR 283 at [147]; Johnson v Johnson (2000) 201 CLR 488 at [10]-[13]. Senior Counsel for the plaintiffs conceded as much in his submissions.

conclusion

81. In all the circumstances, I would dismiss the Notice of Motion and order that the plaintiffs pay the second defendants’ costs.

Decision last updated: 06 May 2022