Fine, Mervyn Keith Stanley v Howell, Paul Roch

[1995] FCA 1066

CATCHWORDS

Practice and Procedure - ex parte application - duty of disclosure - failure to disclose clearly relevant material - failure to inform the Court of the nature and extent of proceedings in another court which were being heard at almost precisely the same time - legal representatives of the parties in communication - failure to notify the other party of an application with which that party was closely concerned in circumstances where that fact must have been realised.

Cleary's Pest & Weed Control Pty Ltd and the Companies Code, Young J, 30 May 1990, unreported, applied.

MERVYN KEITH STANLEY FINE and PATRICIA JOAN FINE & Anor v
PAUL ROCH HOWELL

NG 3641 of 1995

CORAM:Lehane J

PLACE:Sydney

DATE:       22 November 1995

IN THE FEDERAL COURT OF AUSTRALIA              )
NEW SOUTH WALES DISTRICT REGISTRY             )
GENERAL DIVISION  )    No. NG 3641 of 1995

IN THE MATTER OF
FINE REAL ESTATE NETWORK PTY LIMITED
(A.C.N. 000 390 143)

IN THE MATTER OF THE CORPORATIONS LAW

BETWEEN:MERVYN KEITH STANLEY FINE and

PATRICIA JOAN FINE

First Applicants

FINE REAL ESTATE NETWORK PTY LIMITED

(PROVISIONAL LIQUIDATOR APPOINTED)

Second Applicant

AND:PAUL ROCH HOWELL

Respondent

CORAM:Lehane J

PLACE:Sydney

DATE:22 November 1995

MINUTE OF ORDERS

THE COURT ORDERS:

1. THAT the Applicant in the proceedings, Paul Roch Howell, pay:

(a)the costs in these proceedings of:

(i)the Respondent in the proceedings;

(ii)the present applicants; and

(iii)Hugh Jenner Wiley,

on an indemnity basis; and

(b)all other costs and professional fees and charges of Hugh Jenner Wiley incurred or accrued in acting as provisional liquidator of the Respondent in the proceedings.

1. THAT the proceedings be dismissed.

NOTE:        Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA              )
NEW SOUTH WALES DISTRICT REGISTRY             )
GENERAL DIVISION  )    No. NG 3641 of 1995

IN THE MATTER OF
FINE REAL ESTATE NETWORK PTY LIMITED
(A.C.N. 000 390 143)

IN THE MATTER OF THE CORPORATIONS LAW

BETWEEN:MERVYN KEITH STANLEY FINE and

PATRICIA JOAN FINE

First Applicants

FINE REAL ESTATE NETWORK PTY LIMITED

(PROVISIONAL LIQUIDATOR APPOINTED)

Second Applicant

AND:PAUL ROCH HOWELL

Respondent

CORAM:Lehane J

PLACE:Sydney

DATE:22 November 1995

EXTEMPORE REASONS FOR JUDGMENT

LEHANE J:  There are before me for consideration this morning the orders numbered 7 and 4 in the notice of motion which first came on for hearing last Friday.  The orders sought relate first to costs and secondly to the question whether the proceedings commenced by Mr Howell's application of 14 November 1995 should be dismissed. 

Last Friday, in setting aside the orders which I had made ex parte on the previous Wednesday, I expressed the view that this was a clear case in which there was a duty on those making an ex parte application to disclose material which was known to the
party on whose behalf ex parte relief was claimed, that material being clearly relevant to my consideration whether the relief ought to be granted.

The matter of which I had not been informed on Wednesday concerned proceedings which had been on foot between the parties for many months in the Equity Division of the Supreme Court of New South Wales.  The proceedings involved substantial claims and counter-claims.  According to Fine Real Estate Network Pty Limited (to which I shall refer as the company) the respondent to Wednesday's application, the proceedings ought to result in a substantial indebtedness of Wednesday's applicant, Mr Howell, to the company.  On Mr Howell's view, the result ought - as I understand it - to be the reverse, that is that the result of the proceedings ought to be an order that the company is indebted to Mr Howell.

I have not considered in any detail the precise nature of those proceedings or the claims and counter-claims in it, but it is perfectly plain from the material before me that the proceedings are strongly contested, involve substantial claims made by both parties and clearly may be relevant to the question whether the company is solvent.

The proceedings are relevant in another sense as well.  It is evident from the material before me that applications in the Equity Division proceedings were being heard at almost precisely the same time as the time at which the ex parte application was made to me.  In particular, there was an application by Mr Howell for security for costs, which initially failed and in respect of which, as I understand it - and I believe
this to be common ground - a further application or an appeal was to be heard on the day following the ex parte application to me.

Mr Thomas, who appeared for Mr Howell this morning, put to me very strongly a submission to the effect that what occurred last Wednesday was to be regarded properly as a mistake by his client's legal advisers at the time which did not go to the substance of the ultimate position between his client and the company or to the substance of the company's own position or its likely fate.

Mr Thomas put to me, again in strong terms as he was entitled to, that Mr Howell ought not be made to bear the burden of the consequences of mistakes made by his solicitor or counsel.  He also urged on me the proposition that the case before me is quite different from a case such as that before Young J in Cleary's Pest & Weed Control Pty Ltd and the Companies Code, 30 May 1990, unreported, to which Mr  Drummond had earlier referred me, where his Honour made orders on the basis of his view that in that case a legal adviser had not met the highest standard of integrity required of solicitors appearing before the court.

In the end, my conclusion is that these proceedings cannot be characterised in the way for which Mr Thomas contends.  I do not have material before me which would enable me, and therefore I do not seek, to attribute or apportion blame for what occurred.

I think there is no need for me to do so in order to come to a conclusion on the matters which need to be decided.  One may perhaps, if this does not sound unduly sanctimonious, hope and expect that these proceedings will have taught one or two lessons.  If that is so, one can sympathise with Mr Thomas' point that it is unfortunate, if it is the case, that the person who bears the burden of it is somebody not himself responsible for what occurred.  Whether or not it is the case, again, I am in no position to decide and I do not do so.

As I said, I make no attempt and find no need to make an attempt to attribute or apportion responsibility for what occurred at all between any parties.  What remains, however, is that an application was made before me ex parte in circumstances where, in another court, related matters were hotly disputed between the parties concerned and where the legal representatives of the parties were in communication and were meeting, it is obvious, regularly and quite frequently - even though one may perhaps suspect, on the material before me, that in some respects communication between them was rather less than satisfactory.  Nevertheless, it is clear that it was known both to Mr Howell and to his advisers that in matters closely related to the application made to me the company was legally advised and would reasonably expect to be notified of any application of the sort that was made ex parte to me.

Those circumstances demonstrate, of course, why I thought it appropriate on Friday to set aside the ex parte orders which I had made.  I refer to them again now to demonstrate, as I believe they do, the further point that it is not appropriate to characterise this as a relatively minor case of failure to perceive what was required or of failure to notify another party of an application proposed to be made with which, it must have been realised, that party was closely concerned.  If ever there was a truism I suppose that is it.  It is undoubtedly a case that is in some respects different from the one considered by Young J in Cleary's Pest & Weed Control Pty Ltd but, try as I may, I am unable to regard it as being, different in some ways as it is, significantly less serious.

I think it follows that I ought to make an order in terms of that sought in the notice of motion of Mr and Mrs Fine and the company filed on Friday; that is, that the applicant in the proceedings - Paul Roch Howell - pay first the costs in these proceedings of (1) the respondent in the proceedings and the present applicants (being together Mr and Mrs Fine and the company) and (2) Hugh Jenner Wily, in each case on an indemnity basis and, secondly, all other costs and professional fees and charges of Hugh Jenner Wily incurred or accrued in acting as provisional liquidator of the company.  The question of what those costs and professional fees properly are ought, I believe, to be referred to the Registrar for determination. 

It was then submitted that rather than permit any further orders to be sought on the application in these proceedings, I should simply dismiss it.  Mr Chippindall submits that despite my observations in an exchange with Mr Stewart towards the close of proceedings last Friday, I have already effectively dismissed it by setting aside all the orders which I made.  Technically, I think that probably is not quite right.  The application had not formally been dismissed at the close of proceedings on Friday and one issue at least, that of costs which I have determined this morning, remained to be decided. 

It is also quite clear from the transcript, as is my recollection, that I took the view on Friday that I had not at that stage dismissed the proceedings.  I think that view was correct and being correct, would, if I left the proceedings on foot without dismissal, leave it open to Mr Howell to renew in the same proceedings applications of a similar kind to those which were made last Wednesday.

Mr Thomas has urged that I should not put his client to the trouble and expense of commencing proceedings again, a step that his client undoubtedly could take if so advised.  Mr Drummond has put to me that, having taken the view that I have of what occurred in the proceedings last week and in the interests of achieving finality in those proceedings, I ought to make an order dismissing the proceedings.  In a sense, perhaps this is the least significant issue for the parties in this matter, though as is sometimes the way with matters of this sort, it is the one over which I felt the greatest hesitation.

I have, in the end however, come to the conclusion that having taken the view I have taken of the way in which these proceedings were commenced and having had it pressed upon me, as is undoubtedly correct, that it was and remains open to
Mr Howell to make a similar application at any time, the only proper course is to dismiss the application and I so order.

I certify that this and the preceding 6 pages are a true copy of the Reasons for Judgment of the Honourable Justice Lehane.

Associate:

Dated:  11 December 1995

Heard:  22 November 1995

Place:  Sydney

Decision:  22 November 1995

Appearances:  Mr J S Drummond with Mr B Townsend of counsel instructed by Kalyk Nash Lawyers appeared for the applicant.

Mr G M Thomas of counsel instructed by John Rose & Co. appeared for the respondent.

Mr J K Chippendall of counsel instructed by M D Nikolaidis & Co. appeared for the former provisional liquidator.

Mr C J Bevan of counsel appeared in person with leave of the Court.