Fairfield Pastoral Holdings No 1 Pty Ltd v van Niekerk, in the matter of van Niekerk
[2024] FedCFamC2G 658
•23 July 2024
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Fairfield Pastoral Holdings No 1 Pty Ltd v van Niekerk, in the matter of van Niekerk [2024] FedCFamC2G 658
File number(s): ADG 185 of 2022 Judgment of: JUDGE CAMERON Date of judgment: 23 July 2024 Catchwords: BANKRUPTCY – Creditor’s petition – Application for adjournment or stay pending determination of application for special leave to appeal to the High Court from debt proceedings – Relevant considerations.
PRACTICE & PROCEDURE – Whether debt proceeding determined by reference to matter not pleaded – Circumstances in which proceeding may be determined by reference to matter not pleaded.
Legislation: Bankruptcy Act 1966 (Cth), s 52
Judiciary Act 1903 (Cth), s 35A
Cases cited: Fairfield Pastoral Holdings Pty Ltd v Ridge Estate (No 4) [2022] FCA 1
Ridge Estate Pty Ltd v Fairfield Pastoral Holdings Pty Ltd [2024] FCAFC 17
Banque Commerciale SA (En Liqn) v Akhil Holdings Ltd (1990) 169 CLR 279
Betfair Pty Ltd v Racing New South Wales (2010) 189 FCR 356
Westpac Banking Corporation v Carver (2003) 126 FCR 113
Ahern v Deputy Commissioner of Taxation (Qld) (1987) 76 ALR 137
Gould v Mount Oxide Mines Ltd (In Liq) (1916) 22 CLR 490
Division: General Number of paragraphs: 40 Date of hearing: 3 July 2024 Place: Adelaide Counsel for the Applicant: Mr S. Ower Solicitor for the Applicant: 1878 Elix Lawyers Counsel for the Respondent: Mr T. P. Kentish Solicitor for the Respondent: HGV Legal ORDERS
ADG 185 of 2022 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
IN THE MATTER OF STEVEN VAN NIEKERK
BETWEEN: FAIRFIELD PASTORAL HOLDINGS NO 1 PTY LTD
Applicant
AND: STEVEN VAN NIEKERK
Respondent
ORDER MADE BY:
JUDGE CAMERON
DATE OF ORDER:
23 JULY 2024
THE COURT ORDERS THAT:
1.The respondent’s application for a stay or adjournment of the proceeding be refused.
2.A sequestration order be made against the estate of Steven van Niekerk.
3.The applicant creditor serve a copy of this order on the Official Receiver in Adelaide within two days.
THE COURT NOTES THAT:
1.The date of the act of bankruptcy is 22 July 2022.
2.A consent to act as trustee has been signed by Robert Naudi.
Note: The form of the order is subject to the entry in the Court’s records.
Note: The Court may vary or set aside a judgment or order to remedy minor typographical or grammatical errors (r 17.05(2)(g) Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 17.05 Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth).
REASONS FOR JUDGMENT
JUDGE CAMERON
INTRODUCTION
On 29 July 2022, the petitioning creditor, Fairfield Pastoral Holdings No 1 Pty Ltd (Fairfield Pastoral), presented a creditor’s petition following the failure of the debtor, Mr van Niekerk, to comply with a bankruptcy notice (Bankruptcy Notice) that had been served on him. On 10 May 2024, Mr van Niekerk filed a notice stating grounds of opposition to the creditor’s petition alleging that he did now owe the debt claimed by Fairfield Pastoral.
BACKGROUND
The debt underlying the Bankruptcy Notice and the creditor’s petition arises out of a 4 January 2022 Federal Court of Australia judgment for Fairfield Pastoral for $195,000 against Mr van Niekerk. The judgment relevantly concerned secret commissions found to have been received by Mr van Niekerk while acting as site project manager for Fairfield Pastoral when it was the project manager on a redevelopment at a property in Yennora (Yennora Property) owned as trustee by AusPods Property Pty Ltd (AusPods): Fairfield Pastoral Holdings Pty Ltd v Ridge Estate (No 4) [2022] FCA 1 (Primary Judgment) at [486]-[491] [528], [561]. There were other parties to that proceeding (Action) but they are not parties to this proceeding. The Bankruptcy Notice was served on Mr van Niekerk on 31 January 2022 and his application to set it aside was dismissed on 22 July 2022. As recorded earlier, the creditor’s petition was presented on 29 July 2022.
An appeal from the Primary Judgment was heard by the Full Court of the Federal Court on 4 August 2022 (Appeal) and dismissed on 23 February 2024. On 22 March 2024 Mr van Niekerk, and the other appellants in the Federal Court proceeding, sought special leave to appeal to the High Court. Fairfield Pastoral and Mr van Niekerk advise that they had hoped that the application for special leave would have been determined last month but it was not and is now expected to be considered by the High Court next month, after the creditor’s petition lapses with the effluxion of time on 29 July 2024.
Subject to the late filing, by leave, of final affidavit evidence of debt and of search, which occurred on 19 July 2024, the parties were not in dispute that all the statutory and procedural steps for the making of a sequestration order had been satisfied. Therefore, the question for decision in this proceeding is whether a sequestration order should be made notwithstanding that Mr van Niekerk’s application for special leave has not yet been determined. Given that it is now almost two years since the creditor’s petition was presented, an adjournment of the proceeding to await the High Court’s decision would have the same practical effect as an order dismissing that petition.
Fairfield Pastoral seeks a determination of the creditor’s petition before it lapses and, specifically, an order sequestrating Mr van Niekerk’s estate. Mr van Niekerk submits that the creditor’s petition should be stayed or adjourned pending the outcome of his application for special leave to appeal to the High Court.
For the reasons which follow the request for a stay or adjournment of this matter will be refused and a sequestration order made in relation to Mr van Niekerk’s estate.
HISTORY OF PROCEEDINGS
Trial
In the Action, Fairfield Pastoral relevantly alleged that Mr van Niekerk had received from businesses that had contracted with AusPods to perform work at the Yennora Property secret commissions totalling $175,000 and that he was obliged to account to Fairfield Pastoral for those payments. However, it was found that the relevant loss had been suffered by AusPods, not Fairfield Pastoral which had been its agent. On those facts, Fairfield Pastoral was not a proper claimant for the secret commissions. Nonetheless, on the basis that the chose in action that was the right of recovery had been assigned by AusPods to Fairfield Pastoral, White J upheld Fairfield Pastoral’s claim and also allowed a sum of $20,000 for interest.
As just noted, Fairfield Pastoral had alleged that Mr van Niekerk had to account to it for the secret commissions he had received. The original defence of the respondents to the Action said nothing about who the proper claimant for recovery of the secret commissions might have been but those respondents did raise that question in their written opening submissions filed on 25 May 2021. In those submissions it was said that, as the contractors who had paid the secret commissions had been retained by AusPods, any claim for the secret commissions had to be made by that company. The applicants in the Action answered that submission by a reply affidavit of a Dr Hamilton made on 2 August 2021. Dr Hamilton deposed in [141] of that affidavit that on 31 July 2021 AusPods and Fairfield Pastoral had “entered into a deed of assignment whereby AusPods assigned to [Fairfield Pastoral] any rights to recover against [Mr van Niekerk] or the other Respondents arising out of the secret commission” alleged by Fairfield Property. In their amended defence filed on 6 September 2021, eight days before the trial commenced, the respondents to the Action pleaded at [35] that:
if (which is denied) [Mr van Niekerk] had received any secret commissions, the proper plaintiff is AusPods, not [Fairfield Pastoral].
That is where the pleadings rested but the issue of Fairfield Pastoral’s standing remained alive. Justice White recorded:
576At the commencement of the trial on 14 September 2021, I announced my ruling dismissing the respondents' objection to [141] in Dr Hamilton's reply affidavit. That ruling was made in a summary way, after considering the parties' objections and responses in Chambers. Despite my indicating that the parties had an opportunity to seek to have a summary ruling revisited, the respondents did not seek a revised ruling. Counsel did, however, object to the admission into evidence of the deed of assignment itself. The contention was that the deed of assignment was not relevant to a pleaded issue, as the applicant had not pleaded the material facts relating to any claim by AusPods Property, nor the assignment itself. I overruled that objection, taking the view that if the document was relevant for one purpose, it should be received into evidence on the basis that the parties could make submissions as to its proper use as part of the final submissions. Amongst other things, I had in mind the potential relevance of the deed of assignment to [35] in the Amended Defence.
577Counsel for the respondents foreshadowed, when making the objection to the tender of the deed of assignment that, if it was received into evidence, he would need "immediately to go on a subpoena war" because he did not have discovery from AusPods. However, following the ruling admitting the deed of assignment, counsel did not seek leave to issue any subpoenas.
His Honour went on at [579] to reject the submission made later in addresses that:
… it was not open to [Fairfield Pastoral] to rely on the deed of assignment given that the applicants had not pleaded the material facts giving rise to the cause of action of AusPods and had not pleaded the assignment itself.
In the submissions in support of the application for special leave to appeal, the applicants submitted that at trial they had:
repeatedly maintained opposition to relief being granted on the basis of an unpleaded case.
After discussing particular reasons why he did not accept that submission, White J said:
582It is the case that there is no pleading of the assignment from AusPods Property to [Fairfield Pastoral]. If there was the prospect of prejudice to the respondents arising from the absence of such a pleading, that would be a significant matter especially as, in relation to other matters, I had told the parties that I would be determining the issues in accordance with the pleadings. However, the respondents had not embarked on the foreshadowed "subpoena war” and did not identify any particular evidence which they would have investigated or adduced had there been a plea of the assignment of AusPods Property's rights in respect of the secret commissions. Nor did the respondents challenge Dr Hamilton in his cross-examination in relation to the deed of assignment, although they must have known following the rejection of their objection to admissibility of the deed of assignment that it may be relied on. Nor did the respondents make any submissions impugning the validity or efficacy of the deed of assignment. Nor did they suggest that any denial of procedural fairness would be involved. It was open to them to do so if they wished.
583In the circumstances, I am not satisfied that there is any unfairness to Mr van Niekerk in upholding [Fairfield Pastoral]'s claim in respect of the secret commissions on the basis of the assignment by AusPods Property of its cause of action to it. The obligation imposed on the Court by s 22 of the Federal Court of Australia Act 1976 (Cth) is pertinent in this respect.
Appeal
In the judgment on the Appeal, Ridge Estate Pty Ltd v Fairfield Pastoral Holdings Pty Ltd [2024] FCAFC 17 (Appeal Judgment), Banks-Smith J summarised the relevant ground of appeal in the following terms:
9The secret commissions claim centres on an argument about procedural fairness. The appellants contend that the primary judge should not have relied upon an unpleaded deed of assignment, by which [Fairfield Pastoral] was found to have standing as assignee to pursue secret commissions received by [Mr van Niekerk] during his management of a project. But for the deed of assignment, the primary judge determined that [Fairfield Pastoral] would not have had standing, having regard to its position as agent rather than principal. The procedural fairness argument rests on the manner in which the existence of the deed of assignment was disclosed and utilised during the proceeding …
Justice Feutrill gave the principal judgment on the secret commissions question and said:
240For the reasons set out in more detail below, there was no unfairness to the appellants resulting from the primary judge permitting the respondents to rely on the unpleaded assignment. There are two main reasons for that conclusion. First, the deed of assignment was used to answer the point based on Powell & Thomas and Novoship [that the right of recovery belonged to the principal, not the agent]. That point was itself an unpleaded point of law the appellants raised for the first time in their oral closing submissions. It would have been unfair to the respondents to have allowed the appellants to raise that point and not allow the respondents to meet that point with evidence of the unpleaded assignment. The appellants made no clear submission to the effect that the respondents could not rely on the unpleaded assignment to meet that unpleaded point of law. Second, and in any event, from the context in which the ruling was made, after the primary judge ruled that the deed of assignment was admissible, the parties must be taken to have known, viewed objectively, that the primary judge was permitting the respondents to rely on the unpleaded assignment, at least, in support of the secret commissions claim as pleaded in the statement of claim. Ultimately, the unpleaded assignment was used for that purpose and no other. Therefore, the primary judge did not permit the respondents to rely on the assignment outside the scope of what had been contemplated when it was tendered into evidence. Otherwise, it was used fairly to answer a new unpleaded point of law raised after the evidence had closed.
His Honour also said:
248The material facts pleaded in a statement of claim should include all those necessary to prove, if traversed, to support the relief claimed. In general, the facts upon which an applicant's title to sue are founded are material. Therefore, in general, if an applicant's title to sue is derived from an assignment of the right to do so, the assignment must be alleged in the statement of claim and, if traversed, proved by evidence at trial: Re Kenneth Wright Distributors Pty Ltd; WJ Vine Pty Ltd v Hall [1973] VR 161 at 173 (Kaye J). It follows that, here, the fact of the assignment of the cause of action in respect of secret commission from AusPods to [Fairfield Pastoral] was a material fact relating to the [latter’s] title to sue on that cause of action. However, the purpose for which the respondents tendered the deed of assignment was, in effect, to support an allegation, in the nature of confession and avoidance, regarding the title to sue on the secret commissions cause of action pleaded in the statement of claim. That is, the respondents sought to advance a case that if AusPods was the proper claimant (which was denied), then the cause of action had been assigned to [Fairfield Pastoral]. Ordinarily, a plea by way of confession and avoidance by which it is alleged that a defence is not maintainable should be raised and pleaded in a reply: Hall v Eve (1876) 4 Ch D 341 at 345-346 (James LJ). Further, it is well-established that it is not appropriate to plead matters in a statement of claim in anticipation of the defence: see, e.g., Adelaide Steamship Co Ltd v Spalvins [1999] FCA 781 at [88] (O'Loughlin J), citing Hall v Eve at 348 (Bramwell .TA), and McEwan v Federal Commissioner of Taxation [2022] QSC 279 at [193] (Freeburn J).
249It follows that there could be debate as to whether it would have been more appropriate to amend the statement of claim so as to allege, in the alternative, that [Fairfield Pastoral] was entitled to relief on the pleaded cause of action because it had been assigned from AusPods to [Fairfield Pastoral] or raise the assignment in a reply by way of confession and avoidance. In any event, whatever may have been the most appropriate form of pleading, the assignment should, at least, have been pleaded in a reply to satisfy the requirements of r 16.08. However, those requirements were met, in substance, by the exchange of Dr Hamilton's affidavit before the trial, the respondents’ opening submissions and the respondents’ submission on the appellants’ objection to the tender of the deed of assignment. Therefore, it was clearly within the power and discretion of the primary judge to permit the respondents to advance an unpleaded case of assignment as a matter that made the allegations in [35] of the defence not maintainable without requiring the respondent to amend their statement of claim or file a reply.
250… The primary judge said: '[t]he deed of assignment goes to … or is, of itself, capable of being [probative] of the issue raised by [para 35 of the defence] as to who is the proper plaintiff to pursue the secret commissions claim'. That is consistent with the primary judge's summary of his reasons for admitting the deed of assignment into evidence in his reasons for judgment.
251In context, the only manner in which the deed of assignment could be said to ‘go to’ or be ‘probative’ of the allegation that AusPods was the proper claimant was if the deed were used as evidence of the title of [Fairfield Pastoral] to sue on the cause of action pleaded in [35] to [76] of the statement of claim in the event that AusPods were found to be the proper claimant in respect of that claim. Further, by the appellants' submissions in support of their objection (referred to earlier), they implicitly (if not explicitly) conveyed an understanding and acceptance that, if the deed of assignment were admitted into evidence, the assignment would form part of the case the appellants would have to meet... It is also evident that the primary judge also considered that to be the effect of the parties' submissions and his ruling on the admissibility of the deed.
(references omitted)
LEGISLATION AND RULES
The Bankruptcy Act 1966 (Cth) (Act) relevantly provided:
52 Proceedings and order on creditor’s petition
(1) At the hearing of a creditor’s petition, the Court shall require proof of:
(a)the matters stated in the petition (for which purpose the Court may accept the affidavit verifying the petition as sufficient);
(b) service of the petition; and
(c)the fact that the debt or debts on which the petitioning creditor relies is or are still owing;
and, if it is satisfied with the proof of those matters, may make a sequestration order against the estate of the debtor.
…
(2)If the Court is not satisfied with the proof of any of those matters, or is satisfied by the debtor:
(a) that he or she is able to pay his or her debts; or
(b)that for other sufficient cause a sequestration order ought not to be made;
it may dismiss the petition.
(3)The Court may, if it thinks fit, upon such terms and conditions as it thinks proper, stay all proceedings under a sequestration order for a period not exceeding 21 days.
…
EVIDENCE
On 8 April 2024, the solicitor for Mr van Niekerk, Mr Hagivassilis, filed an affidavit to which were annexed the application for special leave to appeal to the High Court filed by Mr van Niekerk and three other applicants, related submissions and copies of the Primary Judgment and the Appeal Judgment.
On 10 May 2024 Ms Arney, solicitor, also swore an affidavit in Mr van Niekerk’s case. It annexed:
(a)Fairfield Pastoral’s submissions in response to the application for special leave to appeal to the High Court; and
(b)the reply to those submissions.
SUBMISSIONS
Respondent debtor
Mr van Niekerk submitted that the Court could not be satisfied that the debt relied on by Fairfield Pastoral’s creditor’s petition was in fact due because his liability for it was subject to his pending application for special leave to appeal to the High Court from the Appeal Decision’s confirmation of the Primary Decision. On that basis, it was argued that the creditors’ petition should be stayed or adjourned to await the determination of his application for special leave.
Mr van Niekerk complains that the outcome of the Federal Court proceedings rested on a finding on an issue that had not been pleaded by Fairfield Pastoral, namely that Fairfield Pastoral had been assigned AusPods’s right of action against him for receipt of secret commissions. Referring to Banque Commerciale SA (En Liqn) v Akhil Holdings Ltd (1990) 169 CLR 279 at 286-287, he argues that a case may be decided on a basis different from that disclosed by the pleadings only if the parties have deliberately chosen some different basis for the determination of their respective rights and liabilities or where such a choice can be inferred from a party’s acquiescence in such a course adopted by the other. He submits that he had neither consented to nor acquiesced in the matter straying beyond the pleadings and in fact had expressly opposed that course.
Mr van Niekerk further submitted what he characterised as the test applied in the Appeal Judgment, that it had been sufficient that the issue of Fairfield Pastoral’s standing had been “in play”, was wrong on two bases. First, it misapplied Betfair Pty Ltd v Racing New South Wales (2010) 189 FCR 356, where that expression had been sourced, as the issue in that case had been “in play” because it had been sufficiently pleaded rather than because of the way the trial had been run. Secondly, the Full Court’s reasoning was contrary to Akhil Holdings because a test based on something being “in play” is quite different from the consent or acquiescence test of Akhil Holdings. He noted that the assignment had only been “in play” because it had been admitted into evidence, not because he had consented to or acquiesced in Fairfield Pastoral advancing any unpleaded case that relied on its status as assignee of AusPods.
Mr van Niekerk submitted that the Appeal Judgment relied on Betfair to create a new principle to the effect that a party may be granted relief on the basis of an unpleaded case even though the other party has neither consented to nor acquiesced in that course. He argued that this approach raised an issue of real, general importance which he expressed in the following terms:
The crisp question for the High Court to consider is in circumstances where that consistent resistance was maintained, nevertheless, is it appropriate to permit a party relief on the basis of an unpleaded case, in circumstances where all courts below have held that there was a need for that case to be pleaded?
That question recognised that both the Primary Judgment and the Appeal Judgment had said or implied that the assignment was a matter that ought to have been pleaded.
It was also submitted that it could not be said that no unfairness arose from the primary judge’s decision to rely on an issue that had not been pleaded. Mr van Niekerk submitted that, in addresses at the trial, his senior counsel had stated, after having objected to the tender of the deed of assignment:
… the exchange that passed between bar and bench was effectively the pleadings will be the pleadings, the case will be the case.
following which he indicated that he would make forensic choices in relation to the issue of standing. Mr van Niekerk submitted that he had cut his cloth accordingly and had advised the primary judge as much.
Petitioning creditor
Fairfield Pastoral submitted that the creditor’s petition should be determined by the making of a sequestration order and not further adjourned. Citing Westpac Banking Corporation v Carver (2003) 126 FCR 113, it argued that the Court needed to have a high degree of satisfaction that special leave will be granted by the High Court, amounting effectively to a clear case, before the determination of the creditor’s petition would be further delayed.
Fairfield Pastoral argued that there was no obvious or manifest error of law or fact in the Appeal Judgment and that the application for special leave did not raise an issue whose importance was sufficient to justify special leave being granted or this proceeding adjourned to await the High Court’s decision on that application. It submitted that no particular point of principle arose in relation to the way Akhil Holdings, as construed in Betfair, had been applied in the Appeal Judgment. Fairfield Pastoral argued that the Appeal Judgment had considered the way in which the trial had been conducted and found that there had effectively been acquiescence in or consent to the consideration of its standing to sue, even though it had not pleaded it and despite the statements by Mr van Niekerk to the effect that the parties had not subjectively agreed on it. It was further submitted that the Appeal Judgment recorded that there had been no clear oral submission to the primary judge to the effect that Fairfield Pastoral had not been able:
to rely on an unpleaded assignment to allege that the new point of law defence was not maintainable.
In their response to the application for special leave, Fairfield Pastoral submitted to the High Court that once the assignment had been admitted into evidence on the basis that it was relevant to its title to sue, which had been put into issue by Mr van Niekerk’s defence, the question whether it had standing arose on the pleadings and the assignment was an issue between the parties at the trial. Fairfield Pastoral further submitted in that connection that one party stating that it is holding the other to its pleadings does not determine the course of the case, it having been said in Betfair that:
An announcement of that kind [that the other party will be ‘held’ to its pleaded case] by a party misstates that party’s capacity to direct the course of the proceedings. The course of proceedings is in the control of the Court. That control is to be exercised for the attainment of a just outcome. (at 375 [55])
CONSIDERATION
In Ahern v Deputy Commissioner of Taxation (Qld) (1987) 76 ALR 137, Davies, Lockhart and Neaves JJ said at 148:
It is … well established that in general a court exercising jurisdiction in bankruptcy should not proceed to sequestrate the estate of a debtor where an appeal is pending against the judgment relied on as the foundation of the bankruptcy proceedings provided that the appeal is based on genuine and arguable grounds: Re Rhodes; Ex parte Heyworth (1884) 14 QBD 49; Bayne v Baillieu (1907) 5 CLR 64 and Re Verma; Ex parte DCT (1985) 4 FCR 181.
These cases rest on the broad principle that before a person can be made bankrupt the court must be satisfied that the debt on which the petitioning creditor relies is due by the debtor and that if any genuine dispute exists as to the liability of the debtor to the petitioning creditor it ought to be investigated before he is made bankrupt. Bankruptcy is not mere inter partes litigation. It involves change of status and has quasi-penal consequences.
However, relevantly for this case, Beaumont J said in Westpac Banking Corporation v Carver at 114 [8] and 115 [12] that it is not appropriate to describe special leave proceedings in the High Court as an appeal either as a matter of form or of substance, they being different in character from the situation where an appeal lies as a right. So much is indicated by s.35A of the Judiciary Act 1903 (Cth), which prescribes mandatory considerations relevant to the making of such a grant, stating:
35A Criteria for granting special leave to appeal
In considering whether to grant an application for special leave to appeal to the High Court under this Act or under any other Act, the High Court may have regard to any matters that it considers relevant but shall have regard to:
(a) whether the proceedings in which the judgment to which the application relates was pronounced involve a question of law:
(i) that is of public importance, whether because of its general application or otherwise; or
(ii) in respect of which a decision of the High Court, as the final appellate court, is required to resolve differences of opinion between different courts, or within the one court, as to the state of the law; and
(b) whether the interests of the administration of justice, either generally or in the particular case, require consideration by the High Court of the judgment to which the application relates.
Justice Beaumont cited in that connection the late David Jackson KC’s explanation of the general approach taken by the High Court in considering whether to grant special leave to appeal, namely whether:
(a)a sufficiently important legal issue is involved; or
(b)there has been a significant irregularity in the way in which the matter was dealt with in the courts below;
and whether
(c)the issue sought to be agitated is of sufficient importance to merit the grant of special leave;
(d)the case is a suitable vehicle for the resolution of that issue; and
(e)the contentions on the issue are sufficiently arguable.
His Honour continued:
… the question for this Court is not simply whether the appeal is genuine and that there is an obvious or manifest error of law or of fact in the judgment from which special leave is sought. The respondent debtor must go further and show not only that the application for special leave to appeal is genuine, but that there are arguable grounds for concluding that special leave to appeal will be granted, given not only the provisions of s 35A of the Judiciary Act but also the other considerations explained by Mr Jackson. (at 118 [18])
In this case, the application for special leave to appeal from the Appeal Judgment raised two issues of which only the second is relevant for present purposes:
Ground 2: The Full Court erred in concluding that the primary judge was correct in permitting the second respondent ([Fairfield Pastoral]) to obtain relief against the second applicant ([Mr van Niekerk]) for secret commissions on the basis of an unpleaded assignment of the right of action to [Fairfield Pastoral].
In Akhil Holdings Mason CJ and Gaudron J said:
The function of pleadings is to state with sufficient clarity the case that must be met: Gould and Birbeck and Bacon v. Mount Oxide Mines Ltd. (In liq.), per Isaacs and Rich JJ. In this way, pleadings serve to ensure the basic requirement of procedural fairness that a party should have the opportunity of meeting the case against him or her and, incidentally, to define the issues for decision. The rule that, in general, relief is confined to that available on the pleadings secures a party's right to this basic requirement of procedural fairness. Accordingly, the circumstances in which a case may be decided on a basis different from that disclosed by the pleadings are limited to those in which the parties have deliberately chosen some different basis for the determination of their respective rights and liabilities. See, e.g., Browne v. Dunn; Mount Oxide Mines.
Ordinarily, the question whether the parties have chosen some issue different from that disclosed in the pleadings as the basis for the determination of their respective rights and liabilities is to be answered by inference from the way in which the trial was conducted. It may be that, in a clear case, mere acquiescence by one party in a course adopted by the other will be sufficient to ground such an inference… (at 286-287)
Discussion
This Court would not normally presume to express a view on the potential outcome of an application for special leave to appeal to the High Court, on what the High Court might consider an issue whose importance was sufficient to merit the grant of special leave or on whether the case is a suitable vehicle for the resolution of that issue. But that is what is essentially expected by the parties to this litigation on this occasion.
As Akhil Holdings makes clear, pleadings do not exist for their own sake but to achieve a purpose, namely that a proceeding be procedurally fair, relevantly because the parties to it are put on notice of the case they have to meet. However, Akhil Holdings does not identify any particular manner by which pleadings might raise an issue or, as Mason CJ and Gaudron J said:
define the issues for decision (at 286)
or, as Brennan J said:
bring the parties to the issue. (at 288)
It was also said in Gould v Mount Oxide Mines Ltd (In Liq) (1916) 22 CLR 490, a case cited in Akhil Holdings, that:
… as a general rule of fair play, and one resting on the fundamental principle that no man ought to be put to loss without having a proper opportunity of meeting the case against him, pleadings should state with sufficient clearness the case of the party whose averments they are. That is their function. Their function is discharged when the case is presented with reasonable clearness. (per Isaacs and Rich JJ at 517)
It is true that in this case Fairfield Pastoral did not allege in its pleadings that it had been assigned AusPods Property’s right of action in relation to the secret commissions or that on that account it had standing to bring that claim. Rather, it was Mr van Niekerk who alleged in his amended defence that Fairfield Pastoral lacked such standing. In response, although Fairfield Pastoral might have filed a reply answering that allegation, it chose instead only to lead and rely on evidence which disproved it, admittedly over objection. It is this approach by Fairfield Pastoral that Mr van Niekerk relies on to support his argument that the Appeal Judgment was based on a claim that had not been pleaded.
Mr van Niekerk’s averment that Fairfield Pastoral lacked standing was unambiguous, leaving the latter company in no doubt about where he stood, and satisfying the requirement that his case on that point be stated with clarity. It is hard to accept that a party who pleads a matter with sufficient clarity can be heard to say that that was not something raised by the pleadings, particularly when evidence is led by their opponent in an obvious move to address the allegation. Further, given that the underlying purpose of pleadings is procedural fairness, it is also difficult to accept that failure to traverse such an allegation in a subsequent pleading is of any particular significance where contradicting evidence is adduced to address it, as in this case. In that regard, Akhil Holdings is silent on joinder of issues other than to say that one of the incidental functions of pleadings is to define the issues for decision. Mr van Niekerk could not have been unaware that Fairfield Pastoral contended, contrary to his allegation, that it had standing to claim the secret commissions and, so, the issue was sufficiently joined. As a consequence of those matters, arguments about consent or acquiescence are a distraction from the main point: that the parties did not depart from the pleadings as the basis for the determination of their respective rights and liabilities. Questions of consent, whether through acquiescence or otherwise, do not arise.
Further, in the circumstances, the argument that Fairfield Pastoral ought to be held to its pleadings sought to impose an artificial and inappropriate restraint on the conduct of the trial. Restricting a party to their pleadings is a mechanism to secure procedural fairness but that is not an issue here because the case proceeded on the pleadings and the relevant issues between the parties were clear and defined.
In any event, Mr van Niekerk has not suffered any practical disadvantage from the case running and concluding as it did. He has submitted that he cut his cloth to suit Fairfield Pastoral’s pleaded case and in his Appeal submissions argued that he had suffered prejudice by being:
… deprived of any opportunity to address a pleaded claim based on an assignment by Auspods
but has not particularised any opportunity lost to him to address, whether by evidence or submissions, the question whether Fairfield Pastoral had standing to sue him. His general statement in submissions in the Appeal that he had made a deliberate forensic decision not to take any additional steps because he had understood that the parties would be held to their pleadings is an insufficient basis to find that he had lost the realistic possibility of a different outcome. In that connection Banks-Smith J said:
174… 1 do not consider that failure to plead the deed of assignment denied the respondents the ability to rely upon it as they did: that is, in response to matters raised by the appellants. There was no denial of procedural fairness in the primary judge's decision to place reliance on the unpleaded deed of assignment. The appellants were not taken by surprise. There was no question as to the evidentiary value of the deed of assignment. The appellants had the opportunity to make whatever submissions they wished to make in relation to the deed and no practical prejudice was established.
Finally, nothing turns on the Appeal Judgment’s use of the term “in play”. It was used as a synonym for the joinder of issues and did not import any additional layer of meaning associated with the manner in which issue came to be joined. Specifically, it did not amount to or imply the creation of a new test for when a case may be decided on matters that are not pleaded.
CONCLUSION
Notwithstanding the arguments that have been advanced, the essence of the matter that Mr van Niekerk seeks to raise before the High Court is whether, in the Action, there had been a joinder of issue on the question of Fairfield Pastoral’s standing to sue him over the secret commissions. That question of mixed fact and law does not seem to me to be likely to meet the criteria for the grant of special leave to appeal to the High Court. With respect, the Appeal Judgment is not affected by an obvious or manifest error of law or fact and, because of its factual and procedural history, coupled with the findings of fact actually made, it does not seem arguable that Mr van Niekerk’s case would be a suitable vehicle for a review and consideration by the High Court of the principles discussed in Akhil Holdings.
In those circumstances the matter will not be further adjourned and there will be an order sequestrating Mr van Niekerk’s estate.
I certify that the preceding forty (40) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Cameron. Associate:
Dated: 23 July 2024
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