Dimitrov v The Supreme Court of Victoria & Ors

[2017] HCATrans 197

[2017] HCATrans 197

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Sydney  No S204 of 2017

B e t w e e n -

PETER MICHAEL DIMITROV

Plaintiff

and

THE SUPREME COURT OF VICTORIA

First Defendant

JUSTICE CROFT OF THE SUPREME COURT OF VICTORIA

Second Defendant

BENDIGO AND ADELAIDE BANK LIMITED ACN 068 049 178

Third Defendant

ABL NOMINEES PTY LIMITED ACN 105 756 521

Fourth Defendant

GREAT SOUTHERN FINANCE PTY LIMITED (RECEIVERS AND MANAGERS APPOINTED) (IN LIQUIDATION) ABN 47 009 235 143

Fifth Defendant

PETER CLARKE, AS TRUSTEE OF THE CLARKE FAMILY TRUST

Sixth Defendant

SAMANTHA BARBARA MURRAY

Seventh Defendant

RAYMOND CARL DRUMMOND

Eighth Defendant

ABL CUSTODIAN SERVICES PTY LIMITED ACN 097 889 720

Ninth Defendant

PIRIE STREET HOLDINGS LIMITED ACN 061 461 559

Tenth Defendant

JAVELIN ASSET MANAGEMENT PTY LIMITED ACN 136 367 194

Eleventh Defendant

GREAT SOUTHERN MANAGERS AUSTRALIA LIMITED (RECEIVERS AND MANAGERS APPOINTED) (IN LIQUIDATION) ACN 083 825 405

Twelfth Defendant

JOHN CARLTON YOUNG

Thirteenth Defendant

CAMERON ARTHUR RHODES

Fourteenth Defendant

PHILLIP CHARLES BUTLIN

Fifteenth Defendant

JEFFREY ARTHUR SYDNEY MEWS

Sixteenth Defendant

PETER JOHN PATRIKEOS

Seventeenth Defendant

Directions hearing

EDELMAN J

TRANSCRIPT OF PROCEEDINGS

FROM BRISBANE BY VIDEO LINK TO SYDNEY

ON WEDNESDAY, 4 OCTOBER 2017, AT 10.16 AM

Copyright in the High Court of Australia

____________________

MR R.E. DUBLER, SC:   May it please the Court, I appear with MR Q.A. RARES for the plaintiff.  (instructed by Sasha Ivantsoff, Solicitor)

HIS HONOUR:   I have a submitting appearance for the first and second defendants.

MS F.I. GORDON:   May it please the Court, I appear for the third, fourth, ninth and tenth defendants.  (instructed by Allens Lawyers)

HIS HONOUR:   The solicitors for the fifth defendant have informed the Court they consider that in the absence of a grant of leave the proceedings against the fifth defendant are the subject of a statutory stay.  At this stage the Court does not require the presence of the fifth defendant.  There is no appearance for the sixth to eighth defendants, and a submitting appearance for the eleventh defendant.  The twelfth defendant has a submitting appearance and has consented to the making of certain orders granting leave to the plaintiff to proceed against it to the extent necessary.  Whether those orders should be made is a matter that I will consider if necessary.

MR B.K. LIM:   If your Honour pleases, I appear for the thirteenth to fifteenth defendants.  (instructed by Arnold Bloch Leibler)

HIS HONOUR:   There is no appearance for the sixteenth defendant.

MR T.W. MARSKELL:   May it please the Court, I appear for the seventeenth defendant.  (instructed by Moray & Agnew)

HIS HONOUR:   Yes, Mr Dubler.

MR DUBLER:   Should I briefly update your Honour as to service?

HIS HONOUR:   I have read through the affidavits that have been filed.  It seems now that all the relevant parties have been served, that is the relevant defendants.

MR DUBLER:   Yes, that is certainly what we say so I will not take up any more of your Honour’s time.  Does your Honour have the two sets of short minutes of order?

HIS HONOUR:   I do.  Your proposed orders are for the matter now to be referred to the Full Court.  Is that right?

MR DUBLER:   Yes, your Honour.

HIS HONOUR:   Is not the real difficulty with that – putting aside whether some of the substantive questions like the Timbercorp issue or questions relating to section 75 of the Constitution might be matters which would be appropriately referred to the Full Court, it seems at the moment that there may be four issues – there may be more, but four procedural questions that really need to be dealt with before the matter might be referred and it would help me if you could address those.

The first is that there may be questions concerning the fifth and twelfth defendants and that is whether if – and I say if – section 500(2) of the Corporations Act extends to actions that are commenced in this Court then there may be no power for this Court to give leave for those parties to appear. 

The second question is whether the matter should be referred in circumstances where there are on foot extant proceedings subject to an application to set aside a default judgment.  That could potentially render the whole of this proceeding unnecessary if default judgment were set aside and your client was successful.

The third question is whether this proceeding has been properly constituted in the absence of joinder of all of the group members and the fourth question is whether the plaintiff would have a right, with leave – or would arguably have a right with leave to appeal to the Court of Appeal in Victoria and, if so, why the plaintiff would not, more appropriately, pursue that course in which case, if leave were refused or if the appeal were unsuccessful with a grant of leave, the plaintiff then could bring an application for special leave at this stage, coupled if necessary with an originating proceeding.  I think they are, as I see it, the four procedural issues that are raised against you.  There may be others.

MR DUBLER:   Yes.  If I could take those in turn, your Honour.  Dealing with the first brief, as to the fifth defendant, we say leave is not required and we would refer your Honour to our submissions, paragraphs 50 to 52 of 13 September 2017.

HIS HONOUR:   Sorry, Mr Dubler, I do not need you at the moment to address me as to the merits of each of those points.  I think that the real issue at this stage is just whether or not each of those matters is not a matter that ought properly be dealt with prior to any referral which would therefore require this Court to consider the summary judgment applications, sitting as I am as a single Judge, prior to any question of referral.

MR DUBLER:   Yes.  Does your Honour wish me to address the other three points then?

HIS HONOUR:   It is more of a question, Mr Dubler, of why these are not matters that ought to be dealt with as procedural matters by a single Judge rather than referring all of these procedural questions, together with the underlying questions which might, if you are unsuccessful on any of the procedural questions, never arise.

MR DUBLER:   Yes.  We would say your Honour could deal with substantially those points now or refer them all as part of the matters to go to the Full Bench.  We have substantially dealt with all of those issues in written submissions, your Honour.

HIS HONOUR:   Yes, I do understand your position on those.  At the moment it does appear to me though that those issues are perhaps more appropriately dealt with as part of the applications for summary judgment before any question of referral arises.  I do not have any concluded view as to any of what I have described as the substantive matters, but it may be that if you were to overcome these four procedural obstacles that it would be quite appropriate for the matter to be referred to the Full Bench in relation to some of the larger questions like the Timbercorp question or issues relating to section 75 of the Constitution.

MR DUBLER:   Yes.  Your Honour, we have substantially dealt with all of those matters in the written submissions all round.

HIS HONOUR:   Yes.  Can I just ask, Mr Dubler, in relation to the fourth point, what I do not quite understand is why your client would not take the approach of applying for leave to appeal from the decision of Justice Croft.  I appreciate that you say that leave to appeal is precluded by the Supreme Court Act but you are in a curious situation where all of the respondents to the appeal – or at least most of them – are submitting that actually leave to appeal would be available. 

Why would not the more convenient course be for your client to bring an application for leave to appeal to the Court of Appeal in Victoria – presumably at that stage you would join with those of the defendants who submit that leave to appeal is available.  Even if that were decided against you, that could then form part of an application for special leave together with any originating proceeding at that stage.

The reason why I do not understand why your client has not pursued that more traditional route is because by commencing an originating application in this Court it seems to have multiplied a number of obstacles that your client needs to surmount.

MR DUBLER:   Well, the reasons we would say it is appropriate to go to the originating process of this Court are fivefold or sixfold.  Firstly, we say that if there is no right of appeal it is not really a matter that the defendants can consent to so that if there is no jurisdiction for an appeal that would be the end of the matter.

HIS HONOUR:   Has there ever been any decision in Victoria that says that there is no right of appeal?

MR DUBLER:   Not that we are aware of, your Honour.

HIS HONOUR:   If the construction that suggests that there is no right of appeal is correct, there would be at the very least a tension between the group action provisions of the Supreme Court Act and the general appellate provisions and potentially at the most there would be a gap in the scheme in the Supreme Court Act, a very substantial gap.

MR DUBLER:   Yes, that may be so but one of the reasons that that has come about is because of the peculiar nature of a class action and coupled with the fact that we say the provisions of the Supreme Court Act (Vic), particularly bearing in mind Timbercorp, does not deal with common issues – sorry, non‑common issues.  So this is a non‑common issue.  Because of that, that is where the problem arises with no appellate jurisdiction in the Supreme Court of Victoria.  The Court of Appeal does not have appellate jurisdiction.  It is fundamentally because the Act does not envisage any orders dealing with non‑common issues.

The other main reason why it is appropriate to have it dealt with in the original jurisdiction is that the Kable issue, that is we will have a potential insuperable hurdle because the orders may be effective even though invalid for want of jurisdiction or for want of constitutionality, if I could put it that way.

HIS HONOUR:   Why could that not be a ground of appeal to the Court of Appeal, subject to your first point as to whether or not there is jurisdiction for the Court of Appeal to entertain an appeal?

MR DUBLER:   Yes, I can see that is a possibility but we would say that the other reason is the Victorian Court of Appeal has already dealt with this and so to send it back to get the inevitable negative result would throw a disproportionate burden on the plaintiff ‑ ‑ ‑

HIS HONOUR:   Has the Victorian Court of Appeal dealt with the Kable issue?

MR DUBLER:   Yes.

HIS HONOUR:   That was in the Pekell Case, was it?

MR DUBLER:   Yes.  They have already held that that precludes the argument we wish to mount.  So any appeal would be entirely futile or nugatory or of no benefit.  Adding force to that is the Attorney‑General has granted moneys for this to be run as a test case and that funding is quite limited so either the Attorney‑General will be forced to pay more money or the plaintiff will have to fund it.  But the plaintiff does not have the money.  So if you like, your Honour, we are on quite a fragile path between all of these different matters and we are trying to find the quick, cheap method to doing so.  It is perhaps exceptional but those reasons make it appropriate to adopt a more exceptionable course.

HIS HONOUR:   As I understand your submissions, if you were successful in setting aside default judgment you say there are some grounds upon which you could resist the claim that is brought against you in the District Court and you could do that by construction of the settlement deed.

MR DUBLER:   Yes.

HIS HONOUR:   Why would that not be the simplest and cheapest way, rather than by multiplying the proceedings by bringing proceedings in this Court and if those proceedings were unsuccessful, either on a procedural ground or on one of the substantive grounds, then also to proceed to litigate the matter at the default judgment stage?

MR DUBLER:   Fundamentally because it is only this Court that can deal with all of the issues.  So the District Court cannot deal with the jurisdiction issue.  That is a matter for – because of the Kable issue.  So the District Court cannot, as it were, ignore the current order which sets in place the matters against which we want to also argue.

HIS HONOUR:   Your summons and notice to show cause, as I understand it, does not raise all of the construction issues such as which of the issues might survive the settlement deed if the settlement deed were to remain valid and extant.

MR DUBLER:   The problem is we would be forced to accept for part of the defence that Kable is a complete answer.  So it is a combination of - the decision in Kable decides that the orders are valid unless set aside.  Now, the District Court cannot set it aside ‑ ‑ ‑

HIS HONOUR:   No, I think – what I am asking, though, is that if you were unsuccessful in relation to the issues that you are raising in the summons and the application to show cause, there would still remain the questions that are potentially going to be litigated by your client in the application to set aside the default judgment, which is the construction questions.

MR DUBLER:   But that can be dealt with by the High Court as well, your Honour, so as your Honour would be aware section 32 of the Judiciary Act empowers this Court to deal with all issues that are in dispute so it can thereby deal with the construction issue and can thereby also deal with the jurisdiction issue.  Now, the District Court of New South Wales can only deal with the construction issue and we would be – if I could point out to your Honour that we are forced to accept that for the Contracts Review Act claim of the defence, the current orders of the class action would be a bar.

The other aspect which could be described as the lead creditor claim we would still argue that construction could be a remedy but we are faced with the possibility and, indeed, the high likelihood that the District Court would follow the Victorian Court of Appeal.  Indeed, at that stage it is binding and that would mean that the District Court action would very swiftly be converted into a dismissal of the proceedings and even the default judgment may not be set aside then we would go to the New South Wales Court of Appeal.  It is likely to show comity to Victoria and then we

would have to get special leave and the Court of Appeal also cannot quash order 2 of Justice Croft’s orders.  So we would be going through a very lengthy procedure and only getting half of the result.

HIS HONOUR:   Yes.

MR DUBLER:   The other route that your Honour points to suffers from not being able to deal with a construction issue.  So if your Honour posits that we should go to Victoria, seek leave out of time to disturb Justice Croft’s orders, that will only deal with the Kable issue and the Victorian Court of Appeal has already decided that the orders are within jurisdiction.  So if we went through that route we would be confronted with an obvious result and it becomes even more problematic if the Victorian Court of Appeal has to deal with the rights of appeal.  It is dealing with the rights of appeal when we already know the result.

HIS HONOUR:   Yes, all right.

MR DUBLER:   So it needs both actions and this is why, with respect, we took the view that it really has to be dealt with in the original jurisdiction so that we do not fall between the stools.  It also allows the most economic way of dealing with it and the Attorney‑General of the Commonwealth, with respect, is desirous of a test case and as quickly as possible and it should not have to, as it were, be put on a dilemma of having to fund all of these other disparate actions.

If the Attorney‑General decides - yes, that is the other point on the point of practicality, your Honour, there are something like 400 cases that this point potentially turns on for those other cases.  If we get sent away to the District Court some other case may come up anyway and it will suffer the problems that I have indicated, that they at the moment do not allow for a one‑stop shop, and they are currently, your Honour, awaiting the decision in this case so in terms of what your Honour says about who should be waiting for what and are we interfering with the District Court case the answer is no, the District Court when seized of all of these issues accepted that the High Court would be the best place, or at least should wait until the High Court decides it. 

Similarly, Justice Croft has in his Honour’s list about a dozen or more cases that he has decided should await these proceedings.  So, again it comes down to what is the quick, cheap and just way of dealing with this dilemma and we say it is in the original jurisdiction of the High Court because that is the only way.

HIS HONOUR:   Yes, thank you, Mr Dubler.  Ms Gordon.

MS GORDON:   Yes, your Honour.  You will have seen, your Honour, I hope, the orders proposed by my clients ‑ ‑ ‑

HIS HONOUR:   Yes.

MS GORDON:   ‑ ‑ ‑ setting out a timetable for summary dismissal and your Honour will be aware that my clients still press for a process to be put in place to permit the speedy determination of that application.

HIS HONOUR:   The summary dismissal that your client seeks, is it right to say that at least the second, third and fourth matters that I mentioned are matters upon which your client relies for summary dismissal?

MS GORDON:   Yes, your Honour.

HIS HONOUR:   I think the section 500 question of the Corporations Act is in a slightly different category but ‑ ‑ ‑

MS GORDON:   Yes, your Honour.

HIS HONOUR:   ‑ ‑ ‑ are there any other points that might be described as procedural bases upon which your client seeks summary dismissal?

MS GORDON:   Well, the other bases concern – I think delay would be another factor in the context of the importance of finality in this litigation and that is why, your Honour, we have suggested that the application for an order extending time for the application for certiorari should also be heard by a single Justice at the same time.

HIS HONOUR:   Yes.  But you do not suggest then, as I understand it, that it would be appropriate for me as a single Justice to dismiss or grant summary judgment upon the application on the basis of the underlying – of any of the underlying issues – any of the substantive issues?

MS GORDON:   No, your Honour.

HIS HONOUR:   Yes, all right.

MS GORDON:   No.  I mean, the prospects of success might weigh in your consideration but no.

HIS HONOUR:   Yes.  Can I also ask, Mr Dubler mentioned 400 other cases that are raising this point or similar points, are any of those cases before the Victorian Court of Appeal or the New South Wales Court of Appeal and is there any realistic prospect of special leave applications in any of those cases?

MS GORDON:   Your Honour, I will need to get some instructions about that.  I cannot answer that immediately; if I could get some instructions and give you an answer shortly?

HIS HONOUR:   The cases that have decided this point in the Victorian Court of Appeal, neither of those has sought special leave.  Is that right?

MS GORDON:   No, that is right; yes.

HIS HONOUR:   Yes, all right.  Is there anything ‑ ‑ ‑

MS GORDON:   Your Honour, there is nothing in the courts of appeal at present dealing with those issues.

HIS HONOUR:   I see.  Yes, is there anything else that you want to add?

MS GORDON:   I do not think I need to add anything else, other than in answer to the – the plaintiff’s submission that all this should be referred to the Full Court together based on the taking of time, et cetera, in our submission, it would be much more efficiently dealt with in the first instance by a single Justice.

HIS HONOUR:   Yes, all right.  Mr Lim and Mr Marskell, is there anything you want to add?

MR LIM:   Your Honour, not substantively.  Your Honour will have seen that my clients have filed an application for summary dismissal and submissions in support of that and I support the orders sought by Ms Gordon.  Could I just add by way of amplification of the fourth matter that your Honour raised about whether there is a right with leave to appeal to the Court of Appeal, there is a further aspect of that point.  If Mr Dubler is right that there is no right to appeal to the Court of Appeal there would be a right ‑ ‑ ‑

HIS HONOUR:   Well, there is a question whether he can seek special leave directly.

MR LIM:   Directly.

HIS HONOUR:   Yes.

MR LIM:   That is so, your Honour.  Yes, section 35 of the Judiciary Act.

HIS HONOUR:   Yes.

MR LIM:   So if the matter is to come to the High Court, by way of appeal there would be a special leave requirement and the ‑ ‑ ‑

HIS HONOUR:   That may be a “chicken and the egg” question because if there is a strongly arguable case that there was a right of appeal to the Victorian Court of Appeal that may be a reason why special leave would be inappropriate.

MR LIM:   That may be so but on no view should Mr Dubler’s ‑ ‑ ‑

HIS HONOUR:   Yes, I understand.

MR LIM:   ‑ ‑ ‑ process be referred directly.

HIS HONOUR:   I understand that, yes.

MR LIM:   Yes.  May it please your Honour.

HIS HONOUR:   Mr Marskell.

MR MARSKELL:   Your Honour, just one matter very briefly and it is to do with what has become known as the Kable issue is the answer to the difficulty posed by the default judgment application - the application to set aside in the District Court.  In my submission, if one looks at the plaintiff’s submissions, certainly the Kable issue is alluded to in various places, but it is put no higher that it may cause troubles in respect of that application. 

In my submission, your Honour, where this ultimately finishes is finding the appropriate vehicle for a Full Court to determine whatever substantive issues may underlie all of this, and it would follow from that that a single Justice dealing with this at a summary level would be the appropriate avenue by which it could be at least decided on an argument basis where Kable does in fact present the difficulties that it was submitted by the plaintiff that it will.

HIS HONOUR:   Yes.

MR MARSKELL:   May it please the Court.

HIS HONOUR:   Mr Dubler, unless there is anything further you want to say about the procedural matters, it is my view that these procedural issues would appropriately be dealt with by me as a single Judge before any question of referral to the Full Court, principally for the reasons that I outlined to you; that it would be efficient and effective to deal with the procedural matters and to get the case, if it is going to proceed to the Full Court, in an appropriate form so that the procedural matters do not then weigh down any substantive issues that might appropriately be referred to the Full Court.  In those circumstances, is there any reason why your submissions could not be filed according to the timetable that is proposed by the defendants?

MR DUBLER:   No, your Honour.

HIS HONOUR:   What I would envisage would be to work backwards from a hearing, which would hopefully be immediately after the November sittings of the Full Court – so it would be some time in the week of 20 to 23 November.  The parties will be contacted with that date by the Registry.  The dates then that might usefully be inserted in the minute of consent orders that is proposed by the defendants would be 6 October in order 1, 13 October in order 2, 27 October in order 3 and 10 November in order 4.

MR DUBLER:   Certainly suitable from our perspective.

HIS HONOUR:   Yes.  Again, subject to any issues the defendants have, the orders that I would make are as I have indicated with those dates, but to replace the reference to “serve any further submissions” with “serve a single consolidated submission” in order 2 and order 3.  There has been a multiplication of submissions in relation to various different applications.

MR DUBLER:   Yes.

HIS HONOUR:   It may be no more than a “cut and paste” exercise but it would be very useful if all of the parties simply consolidated any presently filed submissions into one submission in relation to the relevant application.

MR DUBLER:   Yes.

HIS HONOUR:   The orders then would be:

1.On 6 October 2017, the third, fourth, ninth and tenth defendants, and any other parties who wish to do so, file and serve any application for summary dismissal of the proceeding.

2.By 13 October 2017, the plaintiff file and serve a single consolidated submission in support of the plaintiff’s application pursuant to rule 4.02 of the High Court Rules 2004 (Cth) for an order extending time to file an application seeking an order to show cause why a writ of certiorari should not issue.

3.By 27 October 2017, a single consolidated submission of any party in support of the applications for summary dismissal of the proceedings and/or in response to the plaintiff’s application be filed and served.

4.By 10 November 2017, the plaintiff and any other parties who wish to do so file and serve submissions in response.

5.On a date to be fixed by Registry:

(a)the thirteenth, fourteenth and fifteenth defendants’ application for summary dismissal of the proceeding;

(b)the third, fourth, ninth and tenth defendants’ application for summary dismissal of the proceeding;

(c)any other application(s) for summary dismissal of the proceeding; and

(d)the plaintiff’s application,

be heard.

6.Costs be in the cause.

Ms Gordon, Mr Lim and Mr Marskell, are there any further matters?

MS GORDON:   No, your Honour.

MR LIM:   No, your Honour.

MR MARSKELL:   No, your Honour.

MR DUBLER:   Your Honour, could I just clarify – this hearing is only on what your Honour described as procedural matters so it would not cover, as it were, the substantive argument on the appeal if it was being heard?

HIS HONOUR:   Yes, as I understand Ms Gordon’s submission, which I take to be no different from the submissions that are likely to be made by the other defendants, the basis upon which they seek summary dismissal is each of the four matters that I had raised but with the addition of the matter of delay that Ms Gordon mentioned.  The relevance of the substantive questions simply feeds in to the strength of the case as a matter to be taken into account in considering summary dismissal on any of those grounds.

MR DUBLER:   Yes, may it please the Court.

HIS HONOUR:   All right ‑ ‑ ‑

MR LIM:   I am sorry to interrupt, your Honour.  The submissions filed on behalf of my clients in support of their application for summary dismissal do contend that one of the substantive propositions on which Mr Dubler’s case relies is unarguable for reasons given by the Court of Appeal in Pekell.  It is very much a subsidiary matter to the procedural matters that your Honour has identified but I did not want to sit silently ‑ ‑ ‑

HIS HONOUR:   If all of the procedural hurdles were overcome by the plaintiff, why would it be appropriate for me to grant summary dismissal on one related substantive point in relation to several other substantive matters?  In other words, what would be the point in referring most of the application to the Full Court and not one of the matters that is interrelated to the others?

MR LIM:   I am sorry, your Honour, I have not been clear.  The one point that we raise we say is critical to the entire application.

HIS HONOUR:   This is the Timbercorp point, the application of Timbercorp?

MR LIM:   The way we put it is that Mr Dubler’s application depends on the proposition that a group proceeding cannot be settled on terms that compromise non‑common claims.

HIS HONOUR:   Yes.

MR LIM:   We say that that has been addressed by the Court of Appeal and we embrace the reasoning of the Court of Appeal to submit to your Honour that that proposition is not reasonably arguable, and it is not just one of the points but it is a critical point.

HIS HONOUR:   Yes, all right.  I think that is helpful for Mr Dubler to be aware of in advance of the filing of your submissions.

MR LIM:   May it please.

HIS HONOUR:   The Court will adjourn.  The parties will be notified of a date to be fixed by Registry.

AT 10.57 AM THE MATTER WAS ADJOURNED