E Co v Q (No 3)

[2018] NSWSC 646

Supreme Court

New South Wales

• Amendment notes

Medium Neutral Citation:	E Co v Q (No 3) [2018] NSWSC 646
Hearing dates:	1 and 7 May 2018
Date of orders:	14 May 2018
Decision date:	14 May 2018
Jurisdiction:	Equity
Before:	Ward CJ in Eq
Decision:	(1)   The hearing be re-opened to permit evidence (including expert evidence) to be adduced, and further submissions to be made, as to the final orders to be made in these proceedings including: as to the rent (market or otherwise) for the first defendant’s properties for the period from judgment to the balance of his life expectancy; as to the potential impact of a condition for payment of that rent on the relief proposed to be granted to the third, fourth and fifth plaintiffs by way of the acceleration of their interest or equity in the first defendant’s properties; as to the appropriate discount rate to be adopted for the calculation of the net present value of the notional future rent over the balance of the first defendant’s life expectancy; and as to the matters otherwise referred to at [64] of these reasons and the “variables” referred to in the first defendant’s submissions dated 27 April 2018. (2)   List the matter for further hearing as to final relief on 19-21 November 2018. (3)   Direct that the first defendant notify the plaintiffs within 28 days of provision by the plaintiffs to the first defendant of the last three years’ financial statements of the unlisted companies in which the second plaintiff holds shares as to whether the first defendant requires there to be a valuation of his shares in the first and second plaintiffs or agrees that those shares should be taken to have no or nominal value. (4) In the event that the first defendant requires there to be a valuation of his shares in the first and second plaintiffs, appoint Ms Fiona Bateman of Dolman Bateman pursuant to UCPR 31.46 to be the Court appointed expert in order to determine the value of the first defendant’s shares in the first and second plaintiffs in accordance with a letter of instruction in the form proposed by the first defendant but with: amendment to paragraph 7(b) to allow for alternative assumptions as to the rent to be payable for the subject properties in accordance with the expert evidence of the real estate valuers to be appointed by the respective parties in accordance with these orders; amendment to paragraph 7(c) to allow for the alternatives of a calculation by reference to forensic tables, as proposed by the first defendant or a calculation by reference to any expert actuarial evidence relied upon by the plaintiffs; and with the date for submission of the report a date [to be specified] after the timetable for expert evidence has been finalised. (5)   Direct the plaintiffs to file and serve any further evidence contemplated by order 1 above, including expert evidence, by [a date to be specified]. (6)   Direct the first defendant to file and serve any evidence, including expert evidence, in response to the plaintiffs’ further evidence by [a date to be specified]. (7)   Where there is expert evidence by more than one valuer on any particular issue, the experts are to meet in conclave by no later than [a dated to be specified] and to prepare a joint report identifying the matters the subject of agreement and disagreement between the experts; such report to be filed and served by [a date to be specified]. (8)   The matter be relisted for further directions on [a date to be specified]. (9)   Direct the parties through their legal representatives, to confer as to the timetable to be set in accordance with the above orders and to advise my associate by close of business on 18 May 2018 if there is any amendment or variation sought (by agreement or otherwise) in relation to these orders for the purpose of the further hearing of this matter in November this year. (10)   Costs in relation to the directions hearings on 1 and 7 May 2018, and the application by the plaintiffs to adduce further evidence and to make further submissions as to the final orders for relief, be reserved.
Catchwords:	CIVIL PROCEDURE – Whether leave is required to re-open to make further submissions as to relief and/or adduce further evidence after reasons published but before entry of final orders – whether, if leave is required such leave should be granted
Legislation Cited:	Civil Procedure Act 2005 (NSW), s 56 Uniform Civil Procedure Rules 2005 (NSW), rr 31.46, 36.16
Cases Cited:	ADM v FDGK [2018] NSWSC 442 Autodesk Inc v Dyason (1992) 173 CLR 330; [1992] HCA 2 Autodesk Inc v Dyason (No 2) (1993) 176 CLR 300; [1993] HCA 6 Bailey v Marinoff (1971) 125 CLR 529; [1971] HCA 49 Barnes v Addy (1874) LR 9 Ch App 244 Bosevski v Avopiling Pty Ltd (No 2) [2018] NSWSC 205 Citibank Ltd v Papandony [2002] NSWSC 678 Colin R Price & Associates Pty Ltd v Four Oakes Pty Ltd (2017) 251 FCR 404; [2017] FCAFC 75 Compagnie Noga D’Importation et D’Exportation SA v Abacha ([2001] 3 All ER 513 EIliott v R; Blessington v R (2007) 234 CLR 38; [2007] HCA 51 Giumelli v Giumelli (1999) 196 CLR 101; [1999] HCA 10 Ian Rodda Pty Ltd v Rodda (No 2) [2015] SASC 128 ICI Chemicals & Polymers Pty Ltd v Lubrizol Corp Inc [1999] FCA 662; 45 IPR 617 Inspector-General in Bankruptcy v Bradshaw [2006] FCA 22 New Cap Reinsurance Corporation Ltd v Grant [2009] NSWSC 950 Newmont Yandal Operations Pty Ltd v The J Aron Corporation (2007) 70 NSWLR 411; [2007] NSWCA 195 Papandony v Citibank Ltd (Supreme Court (NSW), Gzell J, 14 May 2002, unrep) Paul’s Retail Pty Ltd v Morgan [2009] NSWSC 1343 Permanent Custodians Ltd v Geagea (No 4) [2016] NSWSC 934 Rodda v Ian Rodda Pty Ltd [2015] SASC 95 S & E Promotions Pty Ltd v Tobin Brothers Pty Ltd [1994] FCA 331; 122 ALR 637 Safaro v Bonarrigo [2009] VSC 594 Smits v Buckworth (No 2) (Supreme Court (NSW), Young J, 14 November 1997, unrep) Spencer v The Commonwealth (1907) 5 CLR 418; [1907] HCA 82 State Rail Authority v Codelfa Construction Pty Ltd (1982) 150 CLR 29; [1982] HCA 51 The Silver Fox Company Pty Ltd v Lenard’s Pty Ltd (as trustee for the Baker Family Trust) (No 2) [2004] FCA 1310 Todorovic v Waller (1981) 150 CLR 402; [1981] HCA 72 Twenty-First Australia Inc v Shade [1998] NSWSC 325 Wentworth v Rogers (No 9) (1987) 8 NSWLR 388 Wentworth v Rogers [2002] NSWSC 921 Wentworth v Wentworth [1999] NSWSC 638
Texts Cited:	Professor McFarlane, The Law of Proprietary Estoppel (Oxford University Press, 2014)
Category:	Procedural and other rulings
Parties:	“E Co” (First Plaintiff) “EM Co” (Second Plaintiff) “A” (Third Plaintiff) “B” (Fourth Plaintiff) “C” (Fifth Plaintiff) “First Defendant” (First Defendant) “Second Defendant” (Second Defendant)
Representation:	Counsel: A McInerney SC with N Kabilafkas (Plaintiffs) J Priestley SC with B Lloyd (Defendants)   Solicitors: MJF Legal Pty Ltd (Plaintiffs) Second Defendant (Defendants)
File Number(s):	2014/00198212
Publication restriction:	Restriction on publication of anything that may identify the persons identified in the principal judgment in these proceedings as “X”, “Y” and “Z”

Judgment

1. HER HONOUR: On 13 April 2018 I published my reasons for judgment in this matter (ADM v FDGK [2018] NSWSC 442 – my principal judgment), which in essence involves a dispute between the first defendant and his three sons (and two companies in which each of the four family members is involved and through which the family members had engaged in a joint family business venture – extending both to farming and non-rural activities). In this judgment I will adopt the anonymised terms used in my principal judgment for the reasons set out therein.

Principal judgment

2. In the principal proceedings the plaintiffs had made a number of claims arising out of the same broad set of facts. In summary, I found that the plaintiffs’ respective claims in proprietary estoppel had been made good (see the summary at [45]-[81] of my principal judgment) as had a claim based on a joint endeavour constructive trust, though I considered that the relief on that basis would effectively be subsumed in the relief to be granted on the individual plaintiffs’ jointly made proprietary estoppel claim (see [46] of my principal judgment).

3. Relevantly, I found that each of the sons had the expectation, when entering into the new family business arrangement in the period after meetings that had taken place between one or more of them and their father on 18 and 25 September 2002, that the first defendant would make his farms available to them during his lifetime for the use of the farming business that was to be transferred to the new business entity (E Co) (and in that sense that the first defendant would “hold” – or perhaps more accurately hold onto or retain ownership of – the farms for his sons during his lifetime to be used for the purposes of that family business); and that the farms would be left to the sons on his death.

4. I was satisfied that the first defendant knew that each of his sons was entering into the new family business arrangement in that expectation and that, in doing so, each of his sons was making a life-changing decision. Further, the first defendant accepted that he understood it was his sons’ expectation, at the time that E Co entered into the lease agreement in respect of his farms, that E Co would be conducting business on the farms until the first defendant died (though the first defendant qualified this by reference to whether the sons made a success of the business); and I found that the first defendant encouraged this expectation in his sons (see [50] of my principal judgment).

5. I was satisfied that each of the sons had acted in reliance on the said expectation in performing work for the purposes of the new family business structure (through E Co in particular) and in not choosing to take steps to further his own career or interests elsewhere (see [59]; [60] of my principal judgment) and that this was to the detriment of each of the sons such that it would now be unconscionable for the first defendant to be permitted to act otherwise than in accordance with the expectation he created or encouraged in his sons (and of which he did not ever disabuse them) (see [61] of my principal judgment).

6. As to the separate proprietary estoppel claim made out by E Co, I considered that any relief in that regard would in effect be subsumed by the relief to be provided to the individual plaintiffs (see [62] of my principal judgment). (That, however, assumes that the relief to be granted involves an acceleration of the sons’ interest or equity in the farms, something which I considered to be appropriate but which, as I will explain shortly, has given rise to the present dispute.)

7. I made various findings in relation to the first defendant’s cross-claim but do not propose here to set them out. I also made findings as to an alternative proprietary estoppel claim by the third plaintiff but again it is not necessary here to set those out.

8. In my principal judgment, I set out my views (expressed at various points in conclusory terms) as to the appropriate relief to be granted to make good the expectation on which the sons’ jointly made proprietary estoppel claims were founded (see the summary from [75]ff in my principal judgment and in the conclusion section of my principal judgment from [1216]ff). By way of summary, at [77]-[81] of those reasons, I said:

[77]   In my opinion it is appropriate to accelerate the sons’ expectation of an interest in the farms but to do so subject to the condition that the first defendant receive the net present value of the market rent for the properties for a period that correlates to his now remaining life expectancy. I do not accept the proposition that such rent should be calculated on a fixed basis at the current reduced rate of $100,000 (as put forward in the calculations prepared by the plaintiffs) because, if the assumption is that the family business arrangement is now to be brought to an end, then there is no reason to assume that the first defendant would not in those circumstances (had he retained ownership of the farms) have sought a market rent for the properties. As an aspect of the relief on the proprietary estoppel claims, orders should also be made requiring the plaintiffs to procure releases of any guarantees provided by the first defendant in support of the financing of the sons’ existing business ventures – or an indemnity in lieu, to be appropriately secured over the properties, in the event that such releases cannot be procured from the relevant financier(s).

[78]   I have also considered in this context the first defendant’s existing shareholdings in E Co and EM Co. The intention of the first defendant was that, subject to the uncommunicated success condition, his sons (and by extension their families) would obtain the benefit of the farming business conducted on the farms during his lifetime (see T 808). It is less clear what expectation there was (or that the first defendant understood his sons to have) as to the ownership of his interest in the companies on his death. I am of the view that it is implicit in what was understood by the first defendant to be his sons’ expectations in entering into the new family business that they would have the benefit of that family business going forward after his death. On that basis an order that the first defendant’s shares in E Co and EM Co be acquired by the sons (at a price to be determined by an independent valuation of the shares) would similarly be appropriate.

[79]   Moreover, to effect a clean break between the parties it seems to me that it would be necessary for the sons to buy out their father’s interest in E Co/EM Co. I have thus concluded that it would be appropriate, as a term of the relief to be granted under which the sons’ interest in the farms is to be accelerated, for the sons to acquire the first defendant’s shares in the companies at a value that represents the present worth of those shares (independently valued) calculated on the assumption that E Co is in a position to continue its farming operations on the properties but having regard to the requirement (to which I turn below) for E Co to pay to the first defendant the book value of the cattle transferred to it in 2003 and the advances made to it over the years (without interest). However, relief in those terms was not canvassed in oral submissions at the close of the hearing. In those circumstances I propose to seek further submissions on this aspect of the relief to be granted. [my emphasis]

[80]   As adverted to above, if there were to be an order requiring the acquisition of the first defendant’s shares in the relevant companies then it would in my opinion be appropriate for there to be an order that E Co repay to the first defendant the sums advanced to it over the years and the book value of the cattle (on suitable terms but without interest), which would presumably have an impact on the value of the first defendant’s shares in E Co. In any event, terms would have to be crafted for the payment of any sums to the first defendant by E Co for the transferred cattle and repayment of the advances on a basis that does not interfere with the reasonable operation of E Co’s ongoing farming business. If there were not to be a buy-out of the first defendant’s shares then I would be inclined to the view that no order should be made for the repayment of the advances made to E Co or for the transferred cattle unless and until one of the properties is sold (or to the first defendant’s estate on his death) but I will hear submissions on this. [my emphasis]

[81]   Finally, to the extent feasible, there should be a set-off of sums owing from one side to the other, including as to costs, in order to minimise the opportunity for ongoing disputes. [my emphasis]

9. The power of the Court to impose conditions upon the grant of relief to give effect to the plaintiff’s equity in a proprietary estoppel case is a flexible one. The power should be viewed as an essential part of the exercise of the power to grant relief in light of “all the circumstances of the case”, as described in Giumelli v Giumelli (1999) 196 CLR 101 at 125; [1999] HCA 10:

Before making an order designed to bring about a conveyance of the Promised Lot to the respondent, the Full Court was obliged to consider all the circumstances of the case. … [In this case] qualification was necessary both to avoid injustice to others, particularly Steven and his family, and to avoid relief which went beyond what was required for conscientious conduct by Mr and Mrs Giumelli.

10. In his work on proprietary estoppel, Professor McFarlane observes (Ben McFarlane, The Law of Proprietary Estoppel (Oxford University Press, 2014) at [9.70]):

[T]he award of a particular remedy may be conditional on some action by B [the person entitled to the right]. … [In some cases,] the condition may be imposed to effect a clean break between the parties, or to clarify the position between them and to ensure that B does not gain an undue benefit. For example, in Gillett v Holt, B and his wife were required to give up their shareholding in a company controlled by A; in Mayor and Burgesses of the London Borough of Bexley v Maison Maurice Ltd [2006] EWHC 3192 (Ch), a declaration that B had a right to access its land over a new crossover was conditional on an undertaking by B to surrender any pre-existing right of way it might otherwise retain over A’s land.

11. In S & E Promotions Pty Ltd v Tobin Brothers Pty Ltd [1994] FCA 331; 122 ALR 637 the Court (Neaves, Gummow and Higgins JJ) said at 653:

The price of equitable relief may be the imposition of terms upon the successful party, on the footing that because it seeks equity it must be prepared to do equity.

12. In terms of the “clean break” to which I referred at [70] of my principal judgment, I was firmly of view (see [75] of those reasons) that a clean break was necessary:

[75]   That brings me to the question of relief on those proprietary estoppel claims. The prima facie relief is to make good the relevant expectation. In broad terms, the relevant expectation I have found (see [50]; [52] above) was that the sons would be able to carry on the farming operations on the first defendant’s farms, through E Co, during the first defendant’s lifetime and would then inherit the farms on the first defendant’s death. That expectation could be made good by imposing a remedial constructive trust over the properties in favour of the sons (and requiring the first defendant to account to the sons for three-quarters of the proceeds of sale of Property No 12). However, I am firmly of the view that this is a case where a clean break is necessary even though that will involve an acceleration of the sons’ interests in the properties in question. That is because it is apparent that the familial relationship between father and sons has irreparably broken down. ... [my emphasis]

13. I was not persuaded (as had been the thrust of submissions for the first defendant on this issue) that acceleration of the sons’ interest in the first defendant’s land would be unconscionable or out of all proportion to the equity established by the sons, provided that the first defendant were to be compensated for the loss of future rent from that land (see [76] of my principal judgment). The first defendant had argued, in the event that the sons’ estoppel claims succeeded, for relief in terms of a monetary sum (as had occurred in Giumelli v Giumelli) (see T 1421.25ff).

14. When I published my principal judgment on 13 April 2018, I indicated to Counsel the broad findings I had made and the ambit of the relief that I had in mind. I made no orders in that regard other than to direct the parties to prepare short minutes of order to reflect my reasons and to forward those, and any brief written submissions in relation to those orders, to my associate by 24 April 2018 (which I extended to 27 April 2018).

15. As is clear from [79] of my principal judgment, one matter in relation to which I contemplated the parties might wish to make submissions was the proposed order that, as a term of the relief to be granted under which the sons’ interest or equity in the farms would be accelerated, the sons should acquire the first defendant’s shares in the plaintiff companies (at a value representing the present worth of those shares, independently valued, calculated on the assumption that the first plaintiff was in a position to continue its farming operations on the properties but having regard to the requirement – which I also thought appropriate to impose in that context – that the first plaintiff pay to the first defendant the book value of the cattle transferred to it in 2003 and the advances made to it over the years (without interest)). The payment of those sums to the first defendant was part of the terms on which I considered it would be appropriate to accelerate the sons’ interest or equity in the first defendant’s farms. However, as is also clear from [80] of my principal judgment, I contemplated that there might not be a buy-out of the first defendant’s shares and indicated that I would hear submissions as to my view that in that event there should be no repayment of moneys advanced by the first defendant or for the transferred cattle until the first defendant’s death.

13. It should here be made clear (if there were any room for doubt) that the proposed imposition of a condition on the acceleration of the sons’ interest or equity in the farms (for the payment of a sum by way of a notional market rent for the balance of the first defendant’s life expectancy or by way of a repayment of loan advances or for a payment for the book value of the transferred cattle) was what might be described as a “constructed” element of the relief in order to ensure so far as possible that the acceleration of the sons’ interest or equity in the farms (which seemed to me strictly to go beyond making good their expectation, though I note that the plaintiffs argued against that proposition) did not unduly prejudice the first defendant or render the relief to be granted wholly disproportionate in all the circumstances.

14. The direction for the preparation of brief written submissions was perhaps unduly optimistic having regard to the volume of paper with which I had been deluged before and during the course of the hearing. In any event, to the extent that it was aspirational, that aspiration proved to be unfulfilled.

15. What transpired was a dispute as to the ambit of submissions that could properly be made by the plaintiffs in relation to the issue of the relief to be granted (including as to whether the plaintiffs should be permitted to adduce any further evidence) and as to whether leave was required (and, if so, ought to be given) for the re-opening of the hearing to deal with the matters sought to be raised in that context. That dispute arose in the following way.

Submissions as to Proposed Final Orders

19. Initial submissions as to the proposed final orders were forwarded on behalf of the plaintiffs, on the one hand, and the first defendant, on the other hand, on 27 April 2018 as had been directed.

20. (I interpose to note that, in the case of the defendants, although the submissions are couched as being from both defendants, the second defendant has not played any active role as a party – as opposed to his role as the first defendant’s solicitor – in the proceedings and I will therefore refer to the submissions throughout these reasons as the first defendant’s submissions.)

21. Accompanying the plaintiffs’ submissions were, among other things, draft letters of instruction to various proposed experts (the appointment of which was contemplated by the draft orders proposed by the plaintiffs). Both parties also forwarded material relating to the costs orders to be made though it was the first defendant’s submission that, until the determination of what were described as the “variables” (such as the future rent to be payable and matters not referred to in my principal judgment such as stamp duty and capital gains tax liabilities), the question of costs could not be determined. Senior Counsel for the first defendant maintained in oral submissions that no regard should be had to any of the material included with the respective submissions in relation to costs until after orders were made in relation to the relief to be granted. The affidavit of the second defendant (which had been provided to my associate in advance of the hearing on 1 May 2018 but which I had not by then had an opportunity to read) was therefore not sought to be read by the first defendant and I have put aside, for the purposes of the present judgment, those parts of the material forwarded to me by both sides in relation to costs (although I will say something in due course as to the plaintiffs’ proposal that an expert be appointed by the Court to assess the costs prior to the determination of final relief in order to enable final orders to be made in relation to the set-offs contemplated in my principal judgment).

22. In their written submissions dated 27 April 2018, the plaintiffs identified five issues arising in respect of the relief “as formulated in” my principal judgment: first, the need to calculate the quantum of the various set-offs there contemplated (as to the costs liability, the acceleration of future rent, and the value of the first defendant’s shares in the first plaintiff), in respect of which it was submitted that there was a need to appoint appropriate experts with relevant expertise; second, as to the party which should bear the liability for the acceleration of future rent (i.e., the first plaintiff, being the lessee, or the individual plaintiffs – I interpose that this may affect the resolution of the third issue identified by the plaintiffs); third, the assumptions on which the share value should be determined; fourth, the terms of a “reasonable payment regime which will not jeopardise [the first plaintiff’s] ongoing business and operations” (see [1235] of my principal judgment); and, fifth, the terms on which the orders should “make provision for a payment regime and for security to be provided for the payment of those amounts (over the properties) if payment of the said amounts is not made at the time of the transfer of the properties to the [individual] plaintiffs” (see [1243] of my principal judgment). A sixth issue identified was as to the implications of taxation in respect of the remedy to be granted by the Court.

23. The set of orders proposed by the plaintiffs made provision for the entry of judgment in their favour but contemplated that final orders not be made in respect of any one payment until all the various amounts had been quantified and that the final determination of matters of quantification be set down for a hearing estimated at up to one day to be held in three or four months’ time. The orders also contemplated (as adverted to above) the appointment by the Court of experts pursuant to r 31.46 of the Uniform Civil Procedure Rules 2005 (NSW) in order to quantify the various amounts to be payable as between the parties, namely: an expert costs consultant; an expert rural land valuer (to determine the market value and market rent of the first defendant’s farms); an expert actuary (to determine the net present value of the net future rent of the properties to the first defendant during his expected lifetime); and an expert forensic accountant (to determine the value of the first defendant’s shares in the first and second plaintiffs). The curriculum vitae of each of the proposed court-appointed experts was provided with the material prepared by the plaintiffs.

24. The first defendant proposed an alternative formulation of orders which it was said more closely reflected the reasons in my principal judgment and was said to be the more time and cost efficient. The variables identified by the first defendant in this regard (leaving aside the question of costs) were: the date by which transfers of the first defendant’s land should occur; the net present value of the market rent for the properties for the period from the date of judgment and calculated according to the period of the first defendant’s life expectancy; the time for payment of the future rent amount; stamp duty and capital gains tax liabilities on the transfer of the properties; the value of the first defendant’s shares in the first and second plaintiffs, and the basis for that valuation; the amount of past rent; the judgment sum; security for payments due to the first defendant; and interest.

25. Broadly speaking, the first defendant’s position (accepting that expert valuers should be appointed to value the market rent of the properties and the first defendant’s shares in the first and second plaintiffs – as indeed I had contemplated in my principal judgment) was that there was no need for debate as to the instructions to be given to the valuers (on the basis that such instructions could be incorporated into the terms of the order and that, should the valuers require any further information, the parties should provide such information on request). The first defendant did not agree that an actuarial determination was required for the purposes of determining the net present value of future rent payable (submitting that the 3% discount rate ought to be ordered in line with Todorovic v Waller (1981) 150 CLR 402 at 423-424; [1981] HCA 72); and did not agree that there should be an assessment of costs in advance of the making of final orders.

26. The issue which gave rise to the need for the present ruling was that foreshadowed at [33]-[34] of the plaintiffs’ submissions dated 27 April 2018, namely as to the import of the conditions that I had considered in my principal judgment should be attached to the acceleration of the sons’ interest or equity in the farms. Those submissions were as follows:

[33]   … it is conceivable that, following the Court receiving the further evidence on the Costs Liability, the Market Rent and the Share Value, the evidence could indicate that it would be financially ruinous for the plaintiffs for the Court to give effect to a “clean break” by ordering an inter vivos transfer of the Subject Properties on terms that millions of dollars are paid by them to the first defendant (on the assumption that such an amount was charged against the Subject Properties), with the attendant risk that default could result in a court ordered sale of the Subject properties, then leaving the plaintiffs in no different position than that which the first defendant ultimately intended, that is, that the third, fourth and fifth plaintiffs get “absolutely nothing” out of the farms. [emphasis as per submissions; footnote omitted]

[34]   In that event, there is a real prospect that plaintiffs’ preference would be the imposition of a constructive trust be imposed [sic] over the properties in favour of the third, fourth and fifth plaintiffs, with the first defendant to be restrained from terminating the lease to the first plaintiff, on terms that the first plaintiff to continue to make payments of rent, at an appropriate rate, to the first defendant.

27. Pausing there, it should be noted that the relief sought in the second further amended statement of claim (filed in court on 4 September 2017) included both orders for the transfer of the farms to the sons (see, for example, the prayers for relief at 4, 5, 27) or to the first plaintiff (see prayer 6), whether by way of specific performance of the claimed trust or the relevant family business agreement (neither of which I ultimately held to have been established and hence not the basis of the relief I considered to be appropriate) or otherwise, and an order, further or in the alternative to other claimed relief, that the first defendant during his lifetime be restrained from selling, transferring or otherwise disposing of his legal or beneficial interest in the farms (see prayer 11(a)).

28. The position of the plaintiffs in oral submissions (at T 4.6) on 1 May 2018 was that:

In our submissions we take the view that in certain respects in respect of the relief there are matters which are raised in your Honour’s reasons which, from the plaintiffs’ perspective, we do not consider were raised in the defendants’ pleadings or dealt with in their submissions or by the Court during the course of proper submissions. … what we have a concern about is that your Honour did not have at the relevant time any evidence about the market rent.

29. Senior Counsel for the plaintiffs foreshadowed (see T 4.18) the possibility of argument as to the scope of what could now be argued in terms of remedy and having noted that in these kinds of application about remedy the court might have “different views” as to what could be the subject of further submissions and further evidence, foreshadowed that the plaintiffs might be left in a position where they would make an application on the basis of unfairness (see T 7.15ff).

30. In essence, as I understood it, the position of the plaintiffs was that they were seeking to be heard in relation to the way in which I had considered that relief ought be granted in order for there to be a clean break between the parties (at least insofar as this involved a condition for the payment of a notional market rent); that this would involve the adducing of further evidence; and that a point might be reached where the plaintiffs would be put to an election between alternative remedies (acceleration of their interest or equity in the farms on the one hand or the imposition of a remedial constructive trust on the other). Senior Counsel for the plaintiffs made clear that the plaintiffs were not seeking to reopen any findings or order on any matter except remedy (see T 9.50) but did foreshadow submissions as to certain aspects of the relief (in particular the issue of market rent) in respect of which the plaintiffs did not consider that they had had an opportunity to be heard and about which they say there was no evidence to inform my judgment (as to the appropriateness of such a condition on the proposed relief) (see T 11.30ff).

31. Both sides embraced the need for finality (or a final “wash-up”) (see T 18.1; 20.2; 27.28) but there was debate as to how that could be achieved and whether it should include deciding the costs component in the equation (as part of the contemplated set-offs) at a stage prior to the making of final orders.

32. The first defendant “actively oppose[d]” the suggestion that there be any further hearing (and any further evidence). His position was that the plaintiffs were seeking in effect to re-ventilate my reasons (see T 33.45; T 34.9) in relation to the payment of a future rent; and that that issue had been canvassed in submissions at the hearing (referring in particular to paragraphs [32]-[47] of the plaintiffs’ supplementary submissions on relief of 10 October 2017) and should not be permitted to be re-canvassed (see T 39.16ff).

33. As I indicated in the course of the submissions on 1 May 2018 (which took place in the course of a rather busy duty list and therefore with some interruptions), I was of the view that if, in the course of submissions as to a particular aspect of the relief and the orders to be made to reflect my reasons, it became apparent that there was an argument that what I had thought to be the appropriate “pathway” for relief (to use the terminology of Nicholson J in Rodda v Ian Rodda Pty Ltd [2015] SASC 95) would not have the effect that I had considered to be appropriate then I should make sure that I was in a position to satisfy myself, in light of whatever the evidence would be in relation to that issue, that that was in fact the appropriate relief (see T 42.24ff). In discussion with Counsel I explained the way in which I understood the plaintiffs’ position as follows:

… I have in mind that in effect what I’m being told is that there is a real basis on which to think that the conditions imposed ‑ that I think would be appropriate to impose on the clean break mode of making good the expectation will have the opposite effect or will not have such an effect, such that if I had made it clear at the time of the hearing or the submissions that that was what I had in mind, there may have been a submission that there should at least be an ability for the plaintiffs to elect in those circumstances.

34. By the end of oral submissions on 1 May 2018, having indicated that I was proposing to accede to the plaintiffs’ submission that I should set the matter down for a further hearing on particular dates in November 2018, I made directions for the first defendant to serve on the plaintiffs any proposed amendments suggested to the orders proposed by the plaintiffs and to the proposed letters of instruction to the persons proposed to be appointed as court appointed experts and listed the matter before me for directions at 10am on 7 May 2018 (again, a duty list day for me).

35. What then occurred was that the first defendant forwarded to the plaintiffs and my associate on 4 May 2018 a marked up set of proposed orders and proposed amendments to certain of the letters to the proposed experts; followed, on 7 May 2018, by further submissions as to the proposed orders – in effect seeking further consideration of the course that had been proposed during the hearing on 1 May 2018 and to which I had indicated I was prepared to accede; and the plaintiffs forwarded supplementary submissions on the final orders, largely responding to the position they understood was being taken by the first defendant “that the Court is prevented from departing from their [the defendants’] interpretation of the reasons of the Court delivered on 13 April 2018”.

36. When the matter came before me on 7 May 2018, the plaintiffs sought to read two affidavits: an affidavit sworn 7 May 2018 by the solicitor for the plaintiffs (Mr Michael Fitzgerald) and an affidavit sworn 7 May 2018 by a registered real estate valuer (Mr Martin Tremain), being the valuer proposed by them to be appointed by the Court to value the market rent for the properties. No objection was taken by the first defendant to the former affidavit (provided it was read in substance as a submission – and, other than as to the fact and results of Mr Fitzgerald’s electronic search of my principal judgment for particular words, that is how I have read this affidavit). Objection was, however, taken to the latter affidavit on the basis that there was no leave given for such an affidavit and that the first defendant was prejudiced in that, if this issue were now to be dealt with, he would have sought to put on evidence of the valuer that he contends should be appointed. Mr Tremain’s affidavit broadly goes to his experience in rural valuation/agricultural leases and his office’s previous valuations of certain of the first defendant’s properties for mortgage purposes. It was sought to be relied upon by the plaintiffs to establish his independence and expertise. I indicated that I would read that affidavit on the basis that, before any appointment of a court-appointed expert to value the rural properties, I would permit the first defendant an opportunity to adduce evidence as to the valuer proposed by him. (As I have not yet had the benefit of any transcript of the directions hearing on 7 May 2018, it may be that this is not precisely how I framed this ruling but that was my intent and, in any event, in light of the course I now propose to take this issue does not arise.)

37. When the matter was before me (as I say, during the course of the duty list) on 7 May 2018, the bulk of the argument (which took about 2 hours), rather than being as to the respective versions of the proposed orders as amended following the debate on 1 May 2018 (as I had contemplated would occur), was as to whether an application to reopen the hearing was necessary for the plaintiffs to be able to raise the matters they now wish to raise on the market rent issue and, if so, whether such leave should be granted.

38. Senior Counsel for the first defendant emphasised the importance of identifying the nature and timing of any application that was being made by the plaintiffs and the basis on which that application was being brought. Senior Counsel for the plaintiffs confirmed that the plaintiffs’ position was that the Court should accept that on any question as to the form of relief the plaintiffs were at liberty to put on further evidence and submissions but that, if I were against them on that issue, then they would make an application to re-open the hearing. That “fallback” application was on the basis that the plaintiffs had put (at the hearing) a form of relief on one basis (as I understand it this was a reference to their submissions at the close of the hearing last year as to compensation for the loss of future rent on the acceleration scenario to which I have already referred) and that, in considering relief on a different basis (i.e., by reference to a market rent “divorced from the historical arrangements” as between the parties), I had proceeded with no evidence to inform that decision and without the benefit of submissions as to the effect of moulding relief by way of a rent condition on that basis.

39. At the close of the argument, I reserved my decision on those issues and indicated that I would list the matter for judgment at 10am on 14 May 2018 (the first defendant having sought confirmation as to the date of my ruling in order, as I apprehend it, to be clear as to the time frame within which any application for leave to appeal therefrom would need to be brought if the first defendant were so advised to make such an application).

Summary

40. By way of summary, I am not persuaded that leave to re-open is strictly necessary in order for the plaintiffs to be permitted now to make submissions as to the appropriate form of relief (or conditions to be attached thereto) that I had concluded in my principal judgment would be appropriate but I have concluded that leave is necessary if the plaintiffs wish to adduce further evidence going to the issue of relief since, in effect, that amounts to a re-opening of the evidence in the hearing. That said, to the extent that such leave is necessary, then for the reasons set out below I would grant it.

First defendant’s submissions as to the finalisation of these proceedings

41. The first defendant emphasises that the reasons for judgment published on 13 April 2018 were final and that directions were made for the parties to bring in short minutes reflecting those reasons. Attached to the first defendant’s submissions is a schedule of the passages in the judgment which the first defendant identifies as setting out the considered basis of the orders that were found to be appropriate (namely: the application of the “clean break” principle ([1225]); the transfer of properties/acceleration of expectations ([1216]); the payment of the present value of the future rent of the properties for the next 12 years ([1242]; [76]-[77], [1217]-[1222]); and that the parties be liable in respect of the payment of various sums, with those amounts to being subject to a set-off ([78]-[79]) (those being, any price for the shares in the first and second plaintiffs; the amount due under the W Deed [1236]; and the amount of the first defendant’s loan account with the first plaintiff [1233]-[1235]).

42. The first defendant’s schedule also identifies references in the reasons to this being the appropriate relief, namely: the headnote (by which I assume the first defendant means the catchwords on the coversheet of my principal judgment, which I interpose to note do not form part of the reasons and cannot in my opinion properly be called in aid of the first defendant’s submissions for that reason); and the following paragraphs: [77]; [78], [79]; [1216]; [1217]; [1222]; [1223]; [1225]; [1236]; and [1241].

43. The first defendant notes that, when this matter was before me on 1 May 2018, I made clear that the reasons for judgment would be published that day, which the first defendant says is consistent with the matter of relief having been decided (referring to what I said at T 1.22 and T 2.32). Pausing here, what I was there referring to was the uploading of my principal judgment on CaseLaw so that it was publicly accessible (there having been a delay in that occurring due to my concern to ensure that the reasons had been appropriately anonymised). Had it not been for the need to ensure proper anonymisation of the reasons, my principal judgment would have been uploaded to CaseLaw on 13 April 2018. Relevantly, the only orders I made on 13 April 2018 were procedural in nature. They were entered into the Court’s computerised record system on that date. No final orders have been made, let alone entered. In that sense, the relief that I considered appropriate as at the time of publication of my reasons remains simply the proposed relief – there has been no final decision or order in that regard.

44. In this regard, I note what was said by Santow J (as his Honour then was) in Wentworth v Wentworth [1999] NSWSC 638 at [8] as to “entry” of judgment:

“Entering” (or “authenticating” as it sometimes known in other jurisdictions) judgment in the case of a court of record is the formal process by which the judgment or orders of the court are “perfected” by being drawn up as a record of the court: see Bailey v Marinoff per Barwick CJ at 530. The judgments and orders of courts of record are not perfected until they have been formally passed and entered into the court’s records (R v Bellington [1980] VR 625). This is in contrast to a court not of record whose judgment is perfected by the pronouncement.

45. A judgment or order of this Court is now taken to be entered when it is recorded in the court’s computerised record system (UCPR 36.11(2)). In Bailey v Marinoff (1971) 125 CLR 529; [1971] HCA 49, Barwick CJ said (at 530):

Once an order disposing of a proceeding has been perfected by being drawn up as the record of a court, that proceeding is at an end and is in its substance, in my opinion, beyond recall by that court.

46. As noted, no orders were made on 13 April 2018 in respect of final relief. That aspect of the matter was not finally decided. Notwithstanding that my reasons for judgment set out the views and conclusions that I had reached as to the question of relief, it must have been clear that in a number of respects (not limited to the share value condition but including matters such as any payment regime or the like) the final orders still needed to be formulated. I am here drawing a distinction between the reasons I published in relation to my views (expressed, I accept, in places as conclusions) as to the appropriate relief to be granted and the entry of judgment or orders making provision for such relief. The latter has not occurred. (See the similar distinction drawn by Gzell J in Citibank Ltd v Papandony [2002] NSWSC 678 (at [1]).

47. The significance that the first defendant attaches to what he refers to as the “timing issue” is to emphasise that any application now by the plaintiffs (whether that be, for example, an application to adduce further evidence or to re-ventilate the decision encompassed in my principal judgment to accelerate the relief on a particular basis or for leave, if that be necessary, to re-open the hearing for that purpose) is one that is made after the giving of judgment (by which I take the first defendant to mean after the publication of reasons for judgment) and before the judgment has been entered (by which I take him to mean before the final orders have been entered) (see [7] of the first defendant’s further submissions dated 7 May 2018).

48. The first defendant notes that the submissions called for (at [79] and [1225]) of my principal judgment are limited to the question of relief in connection with the acquisition of the first defendant’s shares in the first and second plaintiffs. It is argued that the plaintiffs’ proposed short minutes of order do not “reflect” the principal judgment because the proposed orders envisage a further hearing at which (by proposed order 35(k)) submissions would be heard as to whether the properties are transferred inter vivos (in accordance, the first defendant says, with my principal judgment) or upon the death of the first defendant (which he says is not in accordance with my principal judgment). In this regard, the first defendant says that the plaintiffs’ submissions of 27 April 2018 (at [12]) seek to argue for an entitlement of the plaintiffs to elect whichever remedy they prefer when that matter has been decided. That certainly appears to be the import of what the plaintiffs are now seeking and it is true that in my principal judgment I did not frame the proposed relief as including such an election. However, I do not accept the proposition that the question of relief has been finally decided (in the absence of finalisation and entry of the orders).

49. The first defendant maintains that this is an application by the plaintiffs (of a kind ordinarily brought by way of notice of motion in accordance with UCPR 36.16) to re-open the judgment handed down on 13 April 2018 but which has not yet been formally entered. The first defendant accepts that there is power to do so (withdrawing a submission made at one stage that it was not open for me to do so – see T 38.40 on 1 May 2018) but argues that that power should not be exercised in the present case.

50. The first defendant emphasises that, to succeed on such an application, an applicant needs to show that “without fault on the part of that person [the applicant] has not had an opportunity to be heard as to why that judgment should not be pronounced” (citing Brennan J, as his Honour then was, in Autodesk Inc v Dyason (No 2) (1993) 176 CLR 300 at 308; [1993] HCA 6). The first defendant notes that Mason CJ (who dissented in the result in that case) observed 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” (see p 302). Autodesk (No 2) was an application to vacate a judgment earlier given by the High Court (reported in Autodesk Inc v Dyason (1992) 173 CLR 330; [1992] HCA 2), allowing the appellant’s appeal with costs. The application was made before that judgment had been perfected by the “entry” of the judgment.

51. The first defendant also points to the statements made in Autodesk Inc (No 2) that the jurisdiction to re-open is not to be exercised “for the purpose of re-agitating arguments already considered by the Court; nor is it to be exercised simply because the party seeking a rehearing has failed to present the argument in all its aspects or as well as it might have been put” (per Mason CJ at p 303) and that “a sufficient opportunity to argue a ground is given when the ground is logically involved in a proposition that has been raised in the course of argument before the court or is to be considered by the court as an unconceded step in determining the validity of a conclusion for which one of the parties contends” (per Brennan J at p 308).

52. The first defendant maintains that it cannot be said (contrary to the proposition put by the plaintiffs on 1 May 2018 at T 6.10) that the plaintiffs were not heard (in the sense described by Mason CJ and Brennan J in Autodesk Inc (No 2)) as to the payment of market rent, again pointing to the plaintiffs’ written submissions dated 10 October 2017 which addressed the question of what amount of rent should be payable by the plaintiffs at [32]-[47] (that submission being rejected by me at [77] of my principal judgment); and noting that this issue was the subject of oral submission for the first defendant on day 19 of the hearing (at T 1407.10 and T 1407.25 – see further below). The first defendant points to: the statement in my principal judgment (at [29]) that the rent initially struck in 2002/3 was “apparently considered to be a commercial rent”; the reference (at [247] of the principal judgment) to evidence in the fourth plaintiff’s notes indicating that the rent struck in 2003 was 5% of the value of the properties at that time; the reference (at [559] of the principal judgment) to the fourth defendant’s estimate as to the value of the land as at October 2009 as being $31.7m to $44.6m; and to the discussion and decision on this point at [1217]-[1222] of my principal judgment. The first defendant argues that this discussion shows that the plaintiffs have been heard on this issue.

53. Insofar as the plaintiffs complain that there was no evidence as to the market rate of rent, the first defendant maintains that such a submission fails at the outset because such evidence was clearly able to be obtained at the time of the hearing.

Plaintiffs’ submissions

54. The plaintiffs dispute the proposition that the question of rent as a condition of relief was fully argued at the hearing. They point to the absence of evidence of market rent before the Court and to the absence of evidence as to what impact a liability to pay market rent for the lifetime of the deceased would have on the plaintiffs individually or jointly. It is submitted that the lack of such evidence reflected the lack of any pleading by the defendants as to the equitable conditions of relief; and that there was no submission about such conditions by the first defendant in opening or in closing submissions in chief. The plaintiffs submit that the onus lay on the first defendant in this regard. They say that it is not for them to adduce evidence and make submissions on the full range of conditions that might be considered necessary if relief were to be granted to them. They say that they made submissions as to one set of appropriate conditions and that, if another set were to be pressed, then that set had to be the subject of evidence and submissions from the first defendant. (The first defendant, as I understand his position, does not accept that he bore any onus in this regard.)

55. The plaintiffs submit that this is a proper case for the Court to exercise the power of its own motion to re-open those parts of the reasons which relate to the terms of the relief to be granted, including the provision of an opportunity for the plaintiffs to elect for or against a “clean break”.

56. Reference is made to the approval, by the Full Court of the Federal Court (Rares, Murphy and Davies JJ), in Colin R Price & Associates Pty Ltd v Four Oakes Pty Ltd (2017) 251 FCR 404 at [168]; [2017] FCAFC 75 of the following passage by Kenny J in Inspector-General inBankruptcy v Bradshaw [2006] FCA 22 at [24]:

The authorities indicate that, broadly speaking, there are four recognised classes of case in which a court may grant leave to re-open, although these classes overlap and are not exhaustive. These four classes are (1) fresh evidence; (2) inadvertent error; (3) mistaken apprehension of the facts; and (4) mistaken apprehension of the law. In every case the overriding principle to be applied is whether the interests of justice are better served by allowing or rejecting the application for leave to re-open. [footnotes omitted; emphasis as per Full Court extract]

57. The plaintiffs point out that in Colin R Price, their Honours noted that examples where the Federal Court has permitted re-opening after reasons for judgment but before orders have been made or entered include The Silver Fox Company Pty Ltd v Lenard’s Pty Ltd (as trustee for the Baker Family Trust) (No 2) [2004] FCA 1310 at [22] per Mansfield J and ICI Chemicals & Polymers Pty Ltd v Lubrizol Corp Inc [1999] FCA 662 at [16]; 45 IPR 617 per Emmett J, his Honour then sitting in the Federal Court. (Both those cases were ones in which the re-opening involved only submissions and not further evidence; and were cases in which one of the counsel was under a misapprehension as to the case of the other party.)

58. In Colin R Price, the Full Court said (at [175]):

There were good reasons for his Honour’s decision to provide the parties with an opportunity to put on further evidence. Indeed, had the parties not been given that opportunity it would have been open to the parties to assert that there had been a lack of procedural fairness. The respondents may have been fixed with findings based on cross-examination of their witnesses on claims which had not been properly particularised, or the appellants may have been caught short in their evidence because important documents were adduced into evidence after their witnesses had been called and they had closed their case. Moreover, the respondents did not articulate any basis on which the course taken by his Honour caused them any prejudice or resulted in injustice. They had the opportunity to further cross-examine Mr Price and to lead any further evidence, but chose not to do so. [my emphasis]

59. The plaintiffs also point to what was said by Rothman J held in Bosevski v Avopiling Pty Ltd (No 2) [2018] NSWSC 205 at [18]-[19]:

More recently, in DJL v Central Authority, the High Court referred to superior courts of record, as this Court is, as having the full power to rehear or review a case until judgment was drawn up, passed and entered and otherwise expanded on the three bases upon which a judgment may be recalled and which are described above. …

As I understand the rather bold submission of the defendant, the Court possesses no power to alter its reasons for judgment, even before entry. Such a submission does not withstand scrutiny. The power to alter reasons must be at least as wide as the power to alter the judgment. In this case, the judgment had not issued and so it is the former which is in question. [citation omitted]

60. The plaintiffs also rely upon the consideration given by Rothman J to the relevant principles in Permanent Custodians Ltd v Geagea (No 4) [2016] NSWSC 934 at [15]-[19]. There, at [15], his Honour said:

Where, as here, the Court has not issued final judgment and judgment has not been entered, but the Court has issued reasons for judgment, the Court must determine, as a matter of discretion, whether to allow a party to re-open the proceedings and make further submissions. The discretion must be exercised judicially and such a discretion is governed, amongst other matters, by the provisions of s 56 of the Civil Procedure Act 2005 enjoining the Court, the parties and legal practitioners to “facilitate the just, quick, and cheap resolution of the real issues between the parties”.

61. Pausing there, the distinction drawn by Rothman J in Geagea (No 4) between the issue of “reasons for judgment” and “final judgment”, as I understand it, treats the issue of “final judgment” as being the entry of an order for judgment; but, in any event, what appears to be accepted by his Honour is that the making of further submissions after the issue of reasons but before the entry of judgment involves a re-opening of the hearing.

62. In Geagea (No 4), Rothman J considered the statements of the High Court in EIliott v R; Blessington v R (2007) 234 CLR 38; [2007] HCA 51 at [31]-[32] and in Autodesk Inc (No 2) at [2]-[4]. His Honour then observed (at [19]):

The principles that have been recited above have been expressed in the context of appeals. The overriding purpose prescribed by s 56 of the Civil Procedure Act and the notion of the finality of judgments may require a slightly more flexible approach when dealing with a matter at first instance. The principle, however, is the same.

63. The plaintiffs also note that this Court’s power to vary its own orders, even after entry of those orders, on the basis that those orders had “unintended consequences”, was upheld in Newmont Yandal Operations Pty Ltd v The J Aron Corporation (2007) 70 NSWLR 411; [2007] NSWCA 195 (at [60]; [79] per Spigelman CJ; Santow JA and Handley AJA agreeing); though that, I note, was a case in which the slip rule had also been invoked. Spigelman CJ observed (at [29]) that variation of an order of the Court after entry of judgment is an “exceptional” course.

64. The plaintiffs argue that in the present case the first defendant did not plead and did not submit (and, more relevantly, for present purposes, the Court did not raise with the plaintiffs):

1. any claim for re-payment of the first defendant’s advances other than the pleaded claim found in the cross-claim (the plaintiffs in this regard point to the finding at [66] and argue that, since equity follows the law, if there is no basis in law for the first defendant to recover the advance of $2.1 million during the first defendant’s lifetime, there is no basis in equity for him to recover that advance during the first defendant’s lifetime, whether formulated as a condition of relief, or otherwise);

2. any of the matters set out at [70] of my principal judgment, including any evidence from the plaintiffs as to: “a reasonable timeframe” (for the repayment of the sums the first defendant has made available to the first plaintiff company over the years and recovery of the book value of the cattle) “so as to not prejudice the ongoing business operations of [the first plaintiff]”; or as to “a reasonable repayment regime to permit [the repayment of those moneys] to occur without jeopardising [the first plaintiff’s] ongoing business farming operations”;

3. any of the matters set out at [77] and [1221]-[1222] of my principal judgment, including the observation (at [77]) that “if the assumption is that the family business arrangement is now to be brought to an end, then there is no reason to assume that the first defendant would not in those circumstances (had he retained ownership of the farms) have sought a market rent for the properties”;

1. the matters set out at [78] and [1225] as to the appropriateness of an order for the first defendant’s shares in the first and second plaintiffs to be acquired by the sons (at a price to be determined by an independent valuation of the shares); and

2. the matters set out at [79]-[80] and [1235] of my principal judgment.

65. As to (c) above, the plaintiffs maintain that the Court does not have any evidence of market rent, and that they have not been afforded an opportunity to be heard on whether the imposition of a term as to market rent is appropriate, in circumstances where the first plaintiff succeeded in its claim in proprietary estoppel but where, according to the first defendant’s submissions on orders, the current market rate could be 5 times (i.e. $500,000) to 10 times (i.e. $1,000,000) the past rent struck in 2014 (of $100,000 per annum). The plaintiffs then say that this could result in the plaintiffs being required to pay the first defendant somewhere between $3 million and $6 million for future rent. The plaintiffs argue that this figure bears no relationship to what the parties had agreed in the past and that such an approach is inconsistent with the findings made as to detriment at [1169]-[1172] of my principal judgment. It is submitted that it is unlikely such a result was in the contemplation of the Court.

66. Accordingly, the plaintiffs maintain that this is an appropriate case for the Court to exercise its inherent power, after reasons but before the entry of orders, to permit further evidence and submissions on the conditions for relief. As adverted to earlier, if that submission does not find favour with the Court then the plaintiffs seek leave to re-open the hearing to adduce such evidence and make such submissions.

Determination

67. There is no doubt that there is power for the Court to set aside or vary a judgment or order of the Court if a notice of motion for the setting aside or variation is filed before entry of the judgment or order (r 36.16(1) of the UCPR). The power to do so after the judgment or order is entered is more limited (see rr 36.16(3A) and (3B)), though nothing in r 36.16 affects any other power of the Court to set aside or vary a judgment or order (see r 36.16(4)).

68. In the present case, as I have now said more than once, no final orders have been entered. Reasons for judgment have been delivered but no judgment (in the sense of a verdict for one or other of the parties) has been entered. That is because, as I had thought was made plain by the reasons set out in my principal judgment, I contemplated that it would be necessary for input from the parties to formulate the precise terms of the relief that I proposed to order. So, for example, insofar as any complaint is now made by the plaintiffs that I did not raise with them at the hearing issues such as what would be a reasonable timeframe for repayment of advances that would not prejudice the ongoing business operations of the first defendant or what might be a reasonable repayment regime, that is precisely the kind of detail that I anticipated might be able to be agreed between the parties or, if not, would be the subject of submissions as to the appropriate orders to reflect those matters (and I thought I had indicated as much when publishing my reasons on 13 April 2018 insofar as I adverted to the possibility that it might be necessary to raise finance to make the payments on which acceleration of the sons’ interest or equity in the farms was to be conditioned).

69. Of some relevance in this context is the fact that, in the first defendant’s own submissions as to the proposed final orders, the view I expressed in my principal judgment as to the appropriate relief was subject to some challenge (that being in relation to interest on certain of the amounts in question); and both sides have referred to taxation considerations that were not identified in my principal judgment as a potential matter for submissions in relation to the final orders. As to the question of interest, for example, in oral submissions on 1 May 2018 (at T 53-54) the submission was made for the first defendant that the loan account ($2.1m) (which I had indicated at [79], [80] and [1225] should be repaid without interest) should be treated in the same way as the unused proceeds from the sale of Property No 12. (At [1223] of the judgment I had expressed the opinion that it was appropriate that the first defendant account for three-quarters of the sale proceeds (with interest from the date of settlement of the sale).) The first defendant in his written submissions took the position that the treatment of interest in this regard should be uniform and that interest should either apply or not apply to both amounts (see at [14]), but the ultimate submission was that no interest should accrue on either account ([14]). To my mind this highlights that the process contemplated in relation to the submissions as to final orders was one that was seemingly understood by both sides to encompass the possibility of some change to the views I had expressed in the reasons as to the appropriate relief to be granted or the terms in which that relief should be couched.

70. I specifically noted that the parties might wish to make submissions on the issue as to the proposed buy-out of the first defendant’s shares in the first and second plaintiffs because, as I noted in my principal judgment, I did not consider that this had been addressed in submissions. By contrast, the question of the rent that might be payable as a condition of relief accelerating the interest or equity of the sons in the first defendant’s farms was the subject of at least some submissions by the plaintiffs (after the issue of acceleration of relief had been raised in the course of the hearing of closing submissions) and the first defendant in closing submissions expressly challenged the assumption that the rent would have remained at the reduced ($100,000) figure. I certainly did not anticipate that the plaintiffs might wish to put any further submissions on the question of any notional rent (having put their case on that issue in the 10 October 2017 submissions).

71. At T 1407.2, in closing submissions at the trial, Senior Counsel for the first defendant said:

I’ll come to it with the relief but I don’t know if your Honour has had an opportunity to read my friend's submissions on the appropriate orders.  It’s a remarkable proposition in the sense that they’ve very meticulously calculated how rates and insurance costs might increase over time, but there doesn’t seem to be any movement in the level of rent that is paid by the tenant.  In this case in the period of 2002 to 2012, there were two ‑ if you want to adopt the phrase “rent reviews”, namely there was a decision agreed to in 2008 to have a rent free period due to drought conditions and then at the end of that period there was a decision to put the rent back to $100,000 instead of the $330,000 it had been previously.

What that shows is there is no rent set in stone forever and that there is nothing, if you’re willing to adopt the very commercial approach that my friends have adopted, to say that your Honour wouldn’t assume that now we’re out of a drought, should it, at the very least, go back to the $330,000 that it was when they initially agreed to it.  My friends no doubt will say that that is also artificial because out of that $330,000 [the first defendant] had agreed to make certain payments.

Perhaps what it demonstrates best of all is the totally unreliable and artificial way in which the plaintiffs have sought to arrive at a figure, that should be paid to [the first defendant] in order to effect the accelerated relief of getting the properties inter vivos rather than at death.  I’ll say more about that when I suggest what, in my submission, should occur if any relief is granted.

72. The first defendant’s own evidence provided a basis for scepticism as to whether, in light of the breakdown of the relationship between the first defendant and his sons, any agreed new rent going forward would have been at the reduced level – see his evidence at T 846.27 describing the reduction from $300,000 to $100,000 as a “hell of a change”.

73. At T 1418.28, Senior Counsel for the plaintiffs said:

The result, your Honour, is that if there needs to be some unconscionable circumstance arising that requires rectification, it can be achieved by payment being made by [the first defendant] to the sons.  I will finish, your Honour, by setting out what I suggest that should be and how it should be arrived at and the reasons that make it a compelling proposition.

74. There was then the following exchange in the course of submissions by Senior Counsel for the plaintiffs in reply (from T 1455.13):

That then ties into the acceleration point.  We’ve sought to address that in the note on relief as I've indicated by reference to Flinn and Rodda.  As we would see it, both those cases support the submission I was making to your Honour last week that the fact that there is acceleration, if one uses that label, because [the first defendant] ‑ because the expectation was he would hold and that the farms would pass on his death, and that has not occurred.  In both cases that was the situation in both cases, Flinn and Rodda, the Court granted the relief in the form of a constructive trust and it did so on terms.

As we would see it, the terms there don’t bear a great deal of similarity to the present case.  In Flinn v Flinn I think part of the way the relief was fashioned was to provide for an occupation fee ‑ sorry, was to provide for the maintenance of Mrs Flinn, Mary Flinn, but here as we see it the only relevant consideration going to acceleration is first the lease fee issue, and that can be accommodated in the way we’ve said.  My learned friends make some criticism of us because we haven’t increased the lease fee each year by reference to CPI or some other basis, but that’s not the agreement the parties had.

HER HONOUR: So that I understand the arithmetic of it, you say declaration of a constructive trust and orders requiring the transfer of the properties would operate as an acceleration of that which the sons expected because their expectation was that the properties would pass on their death, so you say one would take into account the acceleration of that interest by giving [the first defendant] the present value of lease payments over the balance of his expected term of life? [my emphasis]

MCINERNEY: Yes.  We don’t put it positively in the sense of that ‑ I think of the way your Honour put it to me ‑ it arises because your Honour I think raised with me last week that there was this concern, and as I labelled it by reference to Rodda, it’s described as acceleration so the idea that he’s holding the farm, that will pass on his death.  Of course it depends on the holding.  As we would see it, the holding of the farms is for a lawyer conceptually no difference to holding property on trust.  In the sense of, and this is the understanding of the plaintiffs, it unilaterally could not be used by [the first defendant] without their consent so you can’t sell it, you can’t mortgage it, you can’t charge it, et cetera.  That’s their understanding, but that was his understanding as well, that it be held for them.  If that’s right, that trust ‑ conceptually the trust analysis is correct, there is no acceleration because all that happens on death is the passing of the legal title.  That’s why I say I’m recognising that's something we need to address, and so

one way of addressing is the way we say and that’s we say then taking into account the defendants’ position and ensuring that the plaintiffs aren’t put in a position where they’re acting unconscionably or obtaining a form of relief which is unjust.

It seems to me the primary position is if [the first defendant] was holding the farms for them such that he was restricted in what he could do with the property, that is the farms in the way I’ve described, then the imposition of a constructive trust doesn’t accelerate the relief.  The only question there is, is this position between [sic; query before] his passing and continuing to receive the lease fee. [my emphasis]

HER HONOUR: Yes, but it accelerates it in the sense that if there had been an express trust and [the first defendant] was holding the property in trust for the sons but there was an entitlement on [the first defendant]’s part to remain in occupation of the properties or to have the benefits of ownership of the properties until his death, then the sons would not have been in a position to call for the transfer of the legal title, because it would not be a situation where they were presently entitled so that you couldn’t collapse a trust is what I'm saying.

MCINERNEY: No.

HER HONOUR: To that extent this is an acceleration, because it is effectively saying you hold it on trust and we can call it in now and not wait until your death so I can see why it is that you say, well then you look at what is [the first defendant] losing as a result of the beneficial interest being conveyed now or called in now, the legal title being called in now and that is if he was in occupation of the properties then he loses the benefit, you say his parole conditions don't allow him to occupy the properties until 2020 anyway, and the evidence was that he was at least back at the time of sending the notice of termination wanting to sell the properties or had put them up for sale in 2013 or whatever so as I understand it, the acceleration argument that you’re putting is, well one way to measure it is what benefit could he have obtained if he held the legal title but not the beneficial interest in the period until his death, and one could imagine that would be a lease arrangement.

MCINERNEY: We’d say it would have to be the lease arrangement.

HER HONOUR: The lease arrangement, or any modification of it with agreement between the sons, but if one assumes there’s unlikely to be any agreement between these parties, then the lease arrangement, because you can’t deal with it to prejudice their interests while he holds it in trust with him so that, as I understand it, is the basis on which you’re saying that some form of a lease fee is payable. [my emphasis]

MCINERNEY: Yes, your Honour.

75. At T 1468.28, Senior Counsel for the first defendant in effect had the last word on that issue:

PRIESTLEY: Lastly, your Honour, the criticisms that have been made in terms of what may or may or not have been pleaded, the submission about how you calculate the acceleration amounts, although there’s some references into various bits of evidence that would support the figures, it’s never been something that has been given notice of prior to today that that is the appropriate way to do it.  We would say to your Honour that it needs to be accepted as acknowledging that the relief being sought in the statement of claim does go too far, but just how your Honour is to deal with those difficulties that we’ve been talking about today isn’t assisted by looking at only one side of the ledger, namely the expenses that they anticipate occurring without looking at the fact that they’ve anchored the rent at the $100,000 figure when obviously it’s a matter that's been negotiated by the parties over the time.  There’s no basis in other words, your Honour, to suggest that going forward the rent was going to remain anchored, and it’s for those unknown factors, your Honour, that in my submission the more appropriate way to go forward is the way that we’ve suggested this morning. [i.e., payment of a monetary sum]

76. From the above, it can be seen that while the condition to be imposed on acceleration of relief (in terms of a notional rent payable for the term of the first defendant’s life expectancy) was a live issue in discussion in the course of closing submissions, the debate did not focus on what might have been a market rent for the properties (the plaintiffs in effect tying that issue to the reduced rental figure or at best the initial agreed figure of $300,000). Further, I accept that at the conclusion of the exchange extracted above at [74], the plaintiffs may have been left with the understanding that what was in contemplation was a rental based on the lease agreement (whether at the initial figure or the reduced figure), though I had not understood the question of future rent to be so confined. I certainly accept that I did not call for submissions (nor was there evidence) as to the proposition that a market (or commercial, to the extent that those terms may be interchangeable) rent might be more appropriate in the present context.

77. Pausing there, the term “commercial” rent came from the evidence to which I have referred in my principal judgment suggesting that the rent had been struck at a level that would satisfy the tax office that the arrangement was arms’ length or not uncommercial (see [254]] of my principal judgment; and in this context I note that the fourth plaintiff’s notes suggest the figure was determined as a percentage of the value of the properties – see [247] of my principal judgment). The notion of “market rent”, as used by me when referring to the proposed relief in my principal judgment, was intended to encapsulate the notion of rent payable by a willing but not anxious lessee to a willing but not anxious lessor along the lines of the test articulated in Spencer v The Commonwealth (1907) 5 CLR 418; [1907] HCA 82. That may or may not equate in any particular case to a rent accepted by the tax office as being not uncommercial – hence my doubt as to whether the terms “market” and “commercial” are necessarily interchangeable.

78. In circumstances where I considered at the time that I published my principal judgment (and thought I had indicated this at the time the reasons were handed down) that there would be a need for careful formulation of the final orders, and that there would likely be submissions in relation thereto, I am of the view that leave is not necessary for the submissions now sought to be made by the plaintiffs in relation to the final relief (at least insofar as the issue is as to the proposed “market rent” condition). I also consider that, by reference to the authorities I consider below, leave is either not necessary or should be granted to permit submissions as to whether the more appropriate order in all the circumstances would be to permit the plaintiffs an election between acceleration of the relief and the declaration of a constructive trust.

79. However, if the plaintiffs wish (as they clearly do) to adduce further evidence in relation to the rental position then in my opinion that would require leave to re-open the hearing. In this regard, I note that there is a distinction between the Court receiving further submissions after the close of a case, and receiving further evidence, as Gzell J observed in Citibank Ltd v Papandony at [8]:

Mr Wood also relies upon the practice in the Equity Division of receiving further submissions, uninvited, after the close of a case (Twenty-First Australia Inc v Shade [1998] NSWSC 325, Fexuto Pty Ltd v Bosnjak Holdings Pty Ltd (No 2) [1998] NSWSC 578). I do not think that practice should be encouraged. If it be an accepted feature of the Equity Division, however, it does not seem to me to bear upon the question of the reception of further evidence.

80. In the earlier reasons published by Gzell J on 14 May 2002 in that case (Papandony v Citibank Ltd (Supreme Court (NSW), Gzell J, 14 May 2002, unrep)) his Honour said (at [43]), that:

There will be judgment for the plaintiffs for $993,792 plus interest. The defendant should pay the plaintiffs’ costs. I direct the parties to bring in short minutes of orders to that effect.

81. On 27 June 2002, his Honour gave leave to the applicant to file in court a notice of motion seeking leave to re-open certain issues. His Honour approached the matter on the basis that, where reasons for judgment had been delivered but judgment had not been entered, it was appropriate, when considering whether to re-open the matter to admit new evidence, to take account of general considerations relating to the administration of justice; the degree of culpability of the successful party; any lack of due diligence on the part of the unsuccessful party; and any unlikelihood that the result would have been different if material had been made available as directed by the Court.

81. This is a case where, similarly, although reasons have been delivered, judgment has not yet been entered. The power to re-open a judgment before it has been entered is discretionary (see Wentworth v Rogers [2002] NSWSC 921 at [11] per Barrett J (as his Honour then was). After a judgment has been entered, the power to alter it is much more limited (see Smits v Buckworth (No 2) (Supreme Court (NSW), Young J, 14 November 1997, unrep) at 6-7). I have already referred to what is meant by the entry of judgment in this context.

82. Both parties referred to the High Court’s decision in Autodesk Inc (No 2), where the Court considered an application to re-open its own judgment (which had been pronounced but not entered).

83. Mason CJ (there in dissent as to the result) observed (with reference to the judgments in State Rail Authority v Codelfa Construction Pty Ltd (1982) 150 CLR 29; [1982] HCA 51) (at p 303) that:

However, it must be emphasized that the jurisdiction is not to be exercised for the purpose of re-agitating arguments already considered by the Court; nor is it to be exercised simply because the party seeking a rehearing has failed to present the argument in all its aspects or as well as it might have been put. What must emerge, in order to enliven the exercise of the jurisdiction, is that the Court has apparently proceeded according to some misapprehension of the facts or the relevant law and that this misapprehension cannot be attributed solely to the neglect or default of the party seeking the rehearing. The purpose of the jurisdiction is not to provide a backdoor method by which unsuccessful litigants can seek to re-argue their cases. [my emphasis].

85. Brennan J, as his Honour then was, in the majority at p 309, said:

It is one thing to reopen an appeal after judgment if the Court has reached a conclusion by adopting a proposition of fact or law which the unsuccessful party has not had an opportunity to argue. In that event, natural justice is denied and it can be said that the Court's jurisdiction to hear and determine the matter is not exhausted. But that is not the present case. Here the ground on which the appeal was determined had been argued in the Courts below and had been the subject of submissions in this Court. The appeal was determined after it was fully heard. That being so, I find no jurisdiction to set aside the judgment already pronounced merely because it is submitted by the unsuccessful party that, on further argument, the Court would be satisfied that it had reached the wrong conclusion in law {my emphasis}.

86. In considering Autodesk Inc (No 2), it should be borne in mind that the considerations affecting a final appellate court’s decision to re-open its own judgment may be different to those affecting a first-instance court asked to make the same decision (see Wentworth v Rogers [2002] NSWSC 921 at [7]). This may be because a final appellate court is responsible for disposing of a case upon the basis which appears to it to be correct (see Autodesk Inc (No 2) at 317), such that, on one view, more caution is required before permitting one party to re-open the case.

87. Kirby P, as his Honour then was, in Wentworth v Rogers (No 9) (1987) 8 NSWLR 388 said (at [394E-F]):

.. .the jurisdiction to set aside an order and to allow [the applicant] a hearing is not a right but an ‘indulgence’. The reason for this cautious attitude is obvious. It is stated by Mason and Wilson JJ in [State Rail Authority v Codelfa Construction Pty Ltd (1982) 150 CLR 29 at 38] to be the public interest in maintaining the finality of litigation. Otherwise a determined or wealthy litigant could postpone final judgment and exhaust the rights and funds of his opponent by continuously denying the finality of the judgment and seeking to reopen disputes which that judgment was designed to close, at least so far as the courts were concerned.

88. It is useful here to note that in Wentworth v Wentworth (at [16]), Santow J set out some examples of where a court of first instance has exercised the power:

(i)   Where the court’s reasons for judgment inadvertently did not deal with important matters argued by counsel at the hearing where an appeal to correct this would involve inevitable delay; Twenty-First Australia Inc v Shade (NSWSC, Young J, 31 July 1998, unreported) in Butterworths Unreported Judgments at 18.

(ii)   Where the court’s reasons involve “infelicity of expression and ambiguous statements” which may be corrected by the trial judge upon the bringing in of short minutes; Fexuto Pty Ltd v Bosnjak Holdings Pty Ltd (No 2) (1998) 29 ACSR 290.

(iii)   Where re-opening in respect of an order which was consequential upon a finding of error of law and the trial judge had no intention that the order have the effect that further evidence could be called on in the remittal to the tribunal below, and where the possible effect of the order had not been the subject of argument at hearing; AB v Federal Commissioner of Taxation (1998) 157 ALR 510. (While the order arising out of this decision to re-open the matter and the previous decision which found an error of law were overturned on appeal in Glennan v Commissioner of Taxation [1999] FCA 297, the decision to re-open was not itself canvassed in the appeal.)

(iv)   Where what was sought was further consideration of orders in respect of the nature and extent of equitable relief which had been earlier sought at trial (in the context of a complex litigation); Farrow Finance Company Ltd (in liquidation) v Farrow Properties Pty Ltd (in liquidation) and Ors (SC(Vic), Hansen J, 16 April 1998, unreported).

(v)   Where a party had misunderstood the basis of a pleading and failed to address the issue in its strike-out application; Hoad v Nationwide News (1996-1997) 37 IPR 407 [Anderson J SC(WA)].

(vi)   Where excision of a paragraph from a judgment was sought where the trial judge had mistakenly referred in his reasons to a situation which did not exist; Smits v Buckworth (No 2) (NSWSC, Young J, 14 November 1997, unreported) .

(vii)   Where the trial judge recalled his order after deciding it was wrong immediately after making it; Pittalis v Sherefettin [1986] 1 QB 868.

89. The decision referred to in (iv) above is instructive in this regard. There, the parties were corporate entities in the Farrow group of building societies and companies that collapsed in 1990 (see [165] of the judgment). All of the parties were in liquidation. Claims were made by the plaintiff against the defendants alleging security rights over certain land ranking in priority to, or pari passu with, the those of the defendants; and alleging that the first defendant held the land on trust for the plaintiff. The plaintiff also invoked a claim under the principles in Barnes v Addy (1874) LR 9 Ch App 244.

90. Hansen J, having heard the matter over a number of days in March 1997, gave judgment in December that year, concluding that a particular advance of moneys out of the plaintiff’s funds was made by or at the instigation of a director of each company for an improper purpose and not in the interests of the plaintiff but for the benefit of another entity in the group. Hansen J found that the directors concerned were acting in breach of their fiduciary duty and that each of the defendant companies knew of that breach of duty. His Honour described the issues in the case as numerous and complex. His Honour concluded that the plaintiff could trace its funds into a particular property and to the net proceeds of sale of that property and that this led to proprietary remedies against the first and second defendants. His Honour, at the conclusion of the judgment, raised an issue as to a claim for equitable compensation against the second defendant to the extent that the plaintiff did not recover the full value of its loan from the proceeds of sale of the property in question and went on to set out his view as to the orders that should be made, drawing counsels’ attention to the orders which his Honour proposed to make.

91. In this regard, his Honour later said:

I could have stood the matter over for the parties to submit minutes of orders and make submissions thereon for it was a heavy and complex case with difficult issues.

92. After adjourning the matter to 19 December 1997 and then to February 1998, by which time there had been oral and written submissions as to the form of the relief, and before the orders had been authenticated, his Honour considered a submission for the defendants that the plaintiff’s application for him to reconsider the conclusion and orders contained in the reasons for judgment should not be entertained. The defendants conceded that, the orders not having been authenticated, there was power to do so but it was submitted (among other things) that the plaintiff had had adequate opportunity to address the matter of equitable compensation at trial and chose not to do so (see [175]-[176]). There was no application to re-open the case to adduce further evidence. The only application was “that what [his Honour] said so briefly in the second last paragraph of [his] judgment and the third proposed order be further considered or reviewed in the light of submissions now so succinctly put by counsel” (see [175]). His Honour noted that the matter was to be dealt with in light of the facts as found and prior conclusions expressed in the judgment.

93. At [179], his Honour said:

In my view it is just that further consideration be given to the matter of relief by way of equitable compensation. This was heavy and complex litigation. The hearing time was compressed to accommodate the limited time I granted to the parties in which to conduct the trial. Perhaps in consequence counsel for the plaintiff did not give this aspect of relief proper – indeed, nothing more than a bare mention without development of argument – attention in their closing address. Yet it was an obvious aspect of relief.

94. His Honour did not accept the defendants’ submission that the plaintiff should in effect be “stuck” with the way it which it conducted its case or that the defendants should not be prejudiced by being exposed to a review of the case on that point. His Honour said that it could not be said that the conduct of the case by the plaintiff manifested an intention to abandon a claim for equitable compensation and said that:

As to prejudice, the defendants pointed to nothing. There is no prejudice in a further consideration of the matter except to lead to a possibly wider grant of equitable compensation than originally proposed and, if there be a wider grant, that can only be on the basis of the facts and conclusions already found and arrived at and on a correct application of principle.

95. His Honour considered that it was appropriate to consider further the judgment on whether equitable compensation should be ordered against the second defendant and ultimately made such an order.

96. There are some obvious parallels with the present case. Here, I made findings on factual matters and conclusions as to the application of the law to those factual findings in my principal judgment. I outlined the relief that I concluded would be appropriate in all the circumstances and ordered the parties to prepare short minutes (and any submissions) to reflect the reasons I had given. Those reasons included not just the expression of my views or conclusions as to the appropriate relief but also the basis on which such relief was to be granted. I invited submissions as to one matter on which I was concerned that the parties had not had an opportunity to be heard (the share value issues). I anticipated that there would be other issues that might affect how the orders were formulated. I did not have in mind that there was any aspect of the rent condition on which the plaintiffs might have wished further to be heard but I accept that, focussed as the plaintiffs no doubt were on the manner in which they considered their claimed entitlement should sound in relief (and having limited their submissions in that context to the rental payable under the existing lease agreement – as reduced or as originally provided for), they would not necessarily have contemplated an order of the kind that I ultimately considered would be appropriate.

97. But for the fact that the plaintiffs now seek to adduce further evidence, the position is akin to that in Farrow Finance (and, as already noted, Senior Counsel for the first defendant withdrew any submission that it was not open to me to permit the plaintiffs to make further submissions, though that course was actively opposed (T 38.40)). The only potential prejudice to the first defendant (apart from the question of delay in the final determination of the matter and I accept that that is a relevant consideration) is that on reviewing this matter I might reconsider the appropriateness of the market rent condition or might be persuaded that the plaintiffs should have the ability to elect between acceleration of the relief if such a condition were to be imposed and the imposition of a remedial constructive trust – and that the plaintiffs might then end up in a more favourable position than would be the case if the market rent condition were to be ordered as I had proposed in my principal judgment.

98. Nicholson J considered Farrow Finance in Ian Rodda Pty Ltd v Rodda (No 2) [2015] SASC 128. The circumstances before his Honour were similar to those presently before me. In his primary reasons, his Honour had sought further submissions in relation to certain issues, including relief. During the course of a further hearing of those submissions, the defendants made an application to re-open the primary judgment so as to make submissions with respect to the date upon which any constructive trust, or obligation to pay equitable compensation, arose (see Rodda (No 2) at [9]). The application was made before the primary judgment had been entered.

99. Nicholson J refused the application to re-open the judgment. His Honour distinguished Farrow Finance, saying (at [12]) (emphasis added):

In the present case, the imposition of a constructive trust over the Ocean Downs land or, indeed, over the Ocean Downs land and the Yaringa land and the alternative possibility of equitable compensation in lieu, were central to the relief sought and argued for by the plaintiffs at trial.  The timing of the imposition of any constructive trust (and, at the least by inference, any order for equitable compensation in lieu) was necessarily to be considered in the context of any relief, of this nature, allowed.

100. His Honour referred to the public interest in finalising litigation (at [21]), and then said (at [22]-[23]) (emphasis added):

[O]n a reading of my reasons as a whole, the date I have determined as the date on which the constructive trust arose and the entitlement to equitable compensation arose is, to a degree, inter-related with the nature and form of the relief I have granted. … I am troubled, that any change to the date might have consequences for other aspects of the relief to be ordered in favour of the plaintiffs and might require a revision of components of the relief presently determined. It is arguable that the question of the date should not be considered in isolation but is best considered as part of the nature of the appropriate relief more generally.

101. His Honour therefore refused leave to re-open the issue which the defendants had identified.

102. The considerations raised by Nicholson J are instructive when applied to the case before me. There are important differences between the present case and the application which was before his Honour. First, the question which the plaintiffs here seek to re-open, being whether an obligation to pay an amount representing the net present value of market rent to the first defendant for the remainder of the first defendant’s life as a condition for the acceleration of the sons’ interest or equity in the farms, did not assume a central significance at the hearing. Second, the question which the plaintiffs seek to re-open is not, as I see it, an inter-dependent one. That is, whether the rent payable to the first defendant is calculated on the basis of market rent or on some other basis is not interrelated with other issues in the case. These two considerations would weigh in favour of the grant of leave (if leave were necessary, as I consider it is for the adducing of further evidence).

103. I accept that, in considering an application to re-open in order to obtain particular relief, an important question is whether the party applying had an opportunity to address, or even chose not to pursue, that relief at the trial (see Safaro v Bonarrigo [2009] VSC 594 at [20] per Vickery J).

104. In oral submissions on 1 May 2018, Senior Counsel for the plaintiffs submitted that nobody had ever contemplated that the plaintiffs should pay market rent for the properties (T 4.26) (emphasis added):

Assuming using the 3% or 5% table, you are still looking at a very significant sum of money but also on an annual basis, which bears no relationship to what the parties had previously agreed between themselves.

105. Senior Counsel for the plaintiffs also submitted (T 7.47):

[I]f there was a proportion, some relevant proportion between what is a market rent and what had been paid in the past, then market rent might be fine as a means of saying, well, it should be higher than what it was in the past so that market rent is a fair reflection, but if it is entirely disproportionate and bears no relationship to what occurred in the past it becomes almost in the nature of a penalty.

106. The references to the history of the relationship between the parties can be seen as part of the plaintiffs’ broader submission that the plaintiffs were not heard on the issue as to market rent at the hearing, with the result (it is suggested) that now to deprive them of an opportunity to make those submissions would mean that procedural fairness was not afforded to the plaintiffs (T 7.13-7.18); and, second, that I did not have evidence before me to inform my judgment about the appropriateness of the market rent condition (T 11.33). However, references to the history between the parties need to be approached with caution. The proposed imposition of a condition to pay market rent has nothing to do with what the parties had previously agreed between themselves (though I accept that such an agreement might inform the nature of the condition to be imposed). Rather, this is a case where, although I considered that an immediate transfer of the properties to the plaintiffs was the most appropriate way to make good the plaintiffs’ expectation and give effect to the plaintiffs’ equity, I considered it also to be necessary that some condition be imposed upon that transfer in order to ensure that the plaintiffs did not gain an undue benefit at the expense of the first defendant by reason of the acceleration of their interest or equity in the first defendant’s land.

107. It has been said in a number of cases that the purpose of the jurisdiction to vary judgments is not to permit parties to re-agitate arguments or to have a rehearing, and that it is not to be utilised as an appellate process. I have already noted the observation by Kirby P in Wentworth v Rogers (No 9) (1987) 8 NSWLR 388 at [394E-F] (see [87] above).

108. In New Cap Reinsurance Corporation Ltd v Grant [2009] NSWSC 950, Barrett J (as his Honour then was) after referring to the decision in Wentworth v Wentworth to which I have referred above) said at [20]:

It seems to me that these principles, as they apply in a case such as the present, can be summarised in one basic proposition, namely, that a single judge whose decision is susceptible to appeal through readily available channels (with or without any preliminary need for leave to appeal) should allow re­opening after judgment where it is obvious to that judge that the decision has miscarried and that the miscarriage may be rectified and the situation retrieved by attention to the matter by that judge rather than by an appeal court. What is highly undesirable is that the first instance judge should be cast in the role of hearing what amounts to an appeal against his or her own decision. [my emphasis] I adopt, in that connection, the following observation of Rix LJ in Compagnie Noga D'Importation et D'Exportation SA v Abacha [2001] 3 All ER 513:

“I do not wish to say anything against the usefulness of the reconsideration jurisdiction, within its proper limits. I have made use of it myself. However, it is in the nature of the legal process that, once judgment has been rendered, analysis thereafter becomes clarified and refined, and citation of authority is applied to the findings made at first instance so as to illuminate that clarification and refinement of analysis of which I speak. But that is the function of the appeal process. In my judgment, to grant this application that I reconsider my judgment would subvert the appeal process itself. In doing so, it would not answer the interests of justice, but would be the antithesis of justice according to law. There are of course cases where an error of fact or law may be too clear for argument. The best test of that is perhaps — but not necessarily — where the judge himself identifies the error which concerns him. In such a case, it is better that the error is corrected without imposing on the parties the need for an appeal. But no parallel to Noga's application has been cited to me. It is in my judgment wrong for a judge to be treated to an exposition such as would be presented to a court of appeal. If in such circumstances a judge should be tempted to open up reconsideration of his judgment, an appeal would not be avoided, it would be made inevitable. Every case would become subject to an unending process of reconsideration, followed by appeal, both on the issue of reconsideration and on the merits?”

109. In Paul’s Retail Pty Ltd v Morgan [2009] NSWSC 1343, (at [5]) Barrett J referred to the above principles as well settled. They are certainly apposite in the present case.

110. In Compagnie Noga D’Importation et D’Exportation SA v Abacha ([2001] 3 All ER 513 at 526-527), in a passage preceding that cited by Barrett J in New Cap, Rix LJ said:

In the present case Noga asks the court to reconsider its judgment because of the submission that it has got the answer wrong. In every case where an appeal is allowed, the court below has, by definition, got it wrong. The solution is to appeal. What is special, what is exceptional about this case? What are the strong reasons? It is not a case of an ex tempore oral judgment. The judgment here, whatever its defects, has been reserved and is the product of substantial reflection. It is not a case where a new binding precedent has immediately reversed the previous law so as to make a judgment simply unsustainable, as in In re Harrison’s Share. It is not a case where a judge has of his own motion immediately come to the conclusion that he is wrong, as in Millensted, or Pittalis (not perhaps a good example of judicial second thoughts), or In Re Australian Direct Steam Navigation Company (1876) 3 Ch D 661, where Sir George Jessel MR realised, after giving an oral judgment, that he had not had his attention directed to the crucial article in the company's articles of incorporation.

If this case is like none of those, what is it then? It is a case where it is said that the judge has got it wrong, on points which have been argued. The very issue for reconsideration is in dispute.

111. In New Cap at [22], Barrett J distinguished between a case in which the application for leave to re-open was tantamount to an appeal and a case where it was not sought to disturb any of the court’s findings or reasoning “except to the extent that they have proceeded on a misapprehension” (there the misapprehension being about the absence of differentiation between the two groups of defendants and the need to attribute to the respective groups the debts and payments relevant to particular years). His Honour there held that the new evidence sought to be tendered should be received and taken into account so that, in making its decision, the court could proceed upon a correct basis as regards those matters “and thereby remedy the effects of the misapprehension which caused the original decision to miscarry”.

112. As adverted to earlier, in Wentworth v Rogers [2002] NSWSC 921 (at [7]) Barrett J noted three matters central to the jurisdiction to re-open: first, whether the party seeking to re-open has shown that, without accident or fault on the appellant’s part, he or she has not been heard on a relevant matter; second, whether there has been shown an error in the court’s reasoning because of a misapprehension of the facts; and, third, whether there has been an error in the court’s reasoning because of some misapprehension of the relevant law, noting also the further consideration identified by Young J (as his Honour then was) in Twenty-First Australia Inc v Shade [1998] NSWSC 325, as to where an appeal to correct an inadvertent failure to deal in the judgment with important matters raised by Counsel would involve inevitable delay.

Conclusion

113. In the present case, I am persuaded that the arguments put for the plaintiffs in the course of submissions as to the proposed final orders (on 1 and 7 May 2018) point to potential error in the proposed exercise of the discretion to impose, as a condition of relief, the obligation to pay a notional market rent – due to a misapprehension on my part as to the potential impact of such a condition on the plaintiffs (namely, as to their ability to retain ownership of the first defendant’s land). Whether such an order would necessarily have that effect, I do not know. It might be, as I had contemplated at the time the reasons were published, that finance could be obtained (secured over the properties) in order to enable the relevant payments to be made and the land to be retained. However, I am concerned that the plaintiffs have not addressed submissions or evidence in relation to that issue and, insofar as this was not raised directly by me as a potential outcome (even though the issue as to the amount of the notional future rent was the subject of some debate in the course of submissions), the plaintiffs might be said to have been denied procedural fairness if they were not now permitted to do so. In that regard, the present seems to me more closely to fall within the situation contemplated by Barrett J in New Cap at [20] as quoted at [108] above, namely that “a single judge whose decision is susceptible to appeal through readily available channels (with or without any preliminary need for leave to appeal) should allow re­opening after judgment where it is obvious to that judge that the decision has miscarried and that the miscarriage may be rectified and the situation retrieved by attention to the matter by that judge rather than by an appeal court”. The potential that I recognise there is for it to be argued that the decision I reached in relation to the proposed relief may have miscarried by reference to the matters now raised by the plaintiffs seems to me to point in favour of a re-opening of the hearing.

114. I have taken into account the public interest in the finality of litigation. In my opinion that is promoted in the present case by having the question of relief finally determined at this stage of the litigious process on the basis of the evidence and submissions that the plaintiffs now wish to put before the Court on the issue as to the market rent of the properties (and, of course, the first defendant’s response thereto). A course that left open a potential challenge (of the kind squarely foreshadowed in the course of submissions on 1 and 7 May 2018) based on a lack of procedural fairness at this stage would in my opinion be more likely to lead to delay in finalising the proceedings at first instance (particularly if the ultimate determination of a procedural fairness complaint were to result in the remittal of the matter for further hearing) than allowing the submissions (and evidence) to be put before the Court before final orders at first instance are made. (I say this conscious of the fact that Senior Counsel for the first defendant was clearly adverting to the possibility of an application for leave to appeal if the hearing were to be re-opened.)

115. As to the principles mandated by s 56 of the Civil Procedure Act 2005 (NSW), I accept that the inevitable delay in finalisation of the proceedings at first instance is not desirable. However, the same result would have been achieved had I taken an alternative course (of the kind that took place in Rodda) and indicated possible pathways for relief bringing the matter back for final submissions as to relief after the findings on the substantive issues in the proceedings without expressing the views that I did as to the appropriate relief (which was something I had contemplated at the time). The reality is that this is hard and long-fought litigation, in the context of which a delay from now until November this year is relatively short in the scheme of things. I am conscious of the fact that the overriding mandate for the conduct of litigation in this Court is not simply for the resolution of disputes to be quick and cheap but also that it be just.

116. In all the circumstances I have concluded that leave should be granted to the plaintiffs for the re-opening of the hearing to permit the plaintiffs (and the first defendant if he wishes) to adduce further evidence and make submissions on the market rent issue (including its potential impact on the ability of the plaintiffs to retain ownership of the properties) together with any further evidence or submissions on other aspects of the proposed relief (as identified in the respective parties’ submissions to date on the final orders).

Orders now to be made

117. In the circumstances, final orders in relation to the relief to be granted should be deferred until after the conclusion of the re-opened hearing. The debate as to the nature of the present application and whether what is being sought is a variation to a final decision as to relief as opposed to something encompassed within the contemplated submissions as to the final orders to give effect to the relief that I had considered was appropriate, makes it undesirable for there to be ongoing scope for debate as to the status of any orders made in advance of the further hearing that will now take place in November this year.

118. As to the procedural orders to be made in that regard, I am of the view that the appropriate course (particularly in light of the dispute as to the identity of the proposed real estate valuer) is not to make orders for the appointment of a court-appointed expert valuer but to make orders giving each side leave to adduce expert evidence from a real estate valuer of their choice and for there then to be an expert witness conclave to identify areas of agreement and areas of dispute between the experts, with a view to the preparation of a joint report; and then for any cross-examination of those experts to be conducted concurrently. As discussed with Counsel when the proposed orders were debated, I am of the view that the experts should be given a set of alternative assumptions that accommodate each side’s position as to the assumptions on which the valuation is to be based, so that a proper comparison can be made depending on which set of assumptions is ultimately accepted as being the relevant set to be adopted.

119. Insofar as the plaintiffs’ submission that evidence from an actuary is required in order to opine as to the applicable discount rate when determining the net present value of the notional future rent for the properties (whether that be a market rent or otherwise) having regard to the fact that they are rural properties, the leave to reopen will extend to permit the plaintiffs to adduce expert evidence of that kind if they wish to do so. It is a matter for the first defendant as to whether he wishes to adduce evidence to challenge that evidence. However, I am not proposing to order the appointment of a court-appointed expert for that purpose.

120. As to the proposal that there be a court-appointed expert to value the shares in the first and second plaintiffs, ultimately there was no dispute by the first defendant as to what was proposed (other than that it might not be necessary if the first defendant was provided with certain information that had been requested as to investments recorded in the books of one or both of the first and second plaintiffs) and I will make orders of the kind proposed by the first defendant in that regard but with some amendment to take into account the debate as to whether any notional rent should be on a market or other basis and dependent on any actuarial evidence.

121. I do not propose to make any order for a court-appointed expert to consider the question of costs at this stage. I accept the first defendant’s submission that the question of costs should await the determination of final orders, particularly if this may inform any later debate as to the basis on which orders for costs should be made. Any set-off (and I had contemplated in my principal judgment that amounts be set-off “to the extent feasible”) will have to be determined once all variables (and costs) have been determined.

122. I will direct the parties through their legal representatives to confer as to the timetable contemplated by the following orders and to advise my associate by close of business on 18 May 2018 of the agreed dates (or, if there be no agreement, the alternative proposed dates) and if there is any amendment or variation sought (by agreement or otherwise) in relation to these orders for the purpose of the further hearing of this matter in November this year. The orders I make are as follows:

1. The hearing be re-opened to permit evidence (including expert evidence) to be adduced, and further submissions to be made, as to the final orders to be made in these proceedings including: as to the rent (market or otherwise) for the first defendant’s properties for the period from judgment to the balance of his life expectancy; as to the potential impact of a condition for payment of that rent on the relief proposed to be granted to the third, fourth and fifth plaintiffs by way of the acceleration of their interest or equity in the first defendant’s properties; as to the appropriate discount rate to be adopted for the calculation of the net present value of the notional future rent over the balance of the first defendant’s life expectancy; and as to the matters otherwise referred to at [64] of these reasons and the “variables” referred to in the first defendant’s submissions dated 27 April 2018.

2. List the matter for further hearing as to final relief on 19-21 November 2018.

3. Direct that the first defendant notify the plaintiffs within 28 days of provision by the plaintiffs to the first defendant of the last three years’ financial statements of the unlisted companies in which the second plaintiff holds shares as to whether the first defendant requires there to be a valuation of his shares in the first and second plaintiffs or agrees that those shares should be taken to have no or nominal value.

4. In the event that the first defendant requires there to be a valuation of his shares in the first and second plaintiffs, appoint Ms Fiona Bateman of Dolman Bateman pursuant to UCPR 31.46 to be the Court appointed expert in order to determine the value of the first defendant’s shares in the first and second plaintiffs in accordance with a letter of instruction in the form proposed by the first defendant but with: amendment to paragraph 7(b) to allow for alternative assumptions as to the rent to be payable for the subject properties in accordance with the expert evidence of the real estate valuers to be appointed by the respective parties in accordance with these orders; amendment to paragraph 7(c) to allow for the alternatives of a calculation by reference to forensic tables, as proposed by the first defendant or a calculation by reference to any expert actuarial evidence relied upon by the plaintiffs; and with the date for submission of the report a date [to be specified] after the timetable for expert evidence has been finalised.

5. Direct the plaintiffs to file and serve any further evidence contemplated by order 1 above, including expert evidence, by [a date to be specified].

6. Direct the first defendant to file and serve any evidence, including expert evidence, in response to the plaintiffs’ further evidence by [a date to be specified].

7. Where there is expert evidence by more than one valuer on any particular issue, the experts are to meet in conclave by no later than [a dated to be specified] and to prepare a joint report identifying the matters the subject of agreement and disagreement between the experts; such report to be filed and served by [a date to be specified].

8. The matter be relisted for further directions on [a date to be specified].

9. Direct the parties through their legal representatives, to confer as to the timetable to be set in accordance with the above orders and to advise my associate by close of business on 18 May 2018 if there is any amendment or variation sought (by agreement or otherwise) in relation to these orders for the purpose of the further hearing of this matter in November this year.

10. Costs in relation to the directions hearings on 1 and 7 May 2018, and the application by the plaintiffs to adduce further evidence and to make further submissions as to the final orders for relief, be reserved.

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Amendments

16 May 2018 - 74 - anonymisation of first defendant

17 April 2019 - Title of judgment

Decision last updated: 17 April 2019