Hudson Investment Group Ltd v Australian Hardboards Ltd

[2005] NSWSC 931

CITATION:	Hudson Investment Group Limited v Australian Hardboards Limited & Ors [2005] NSWSC 931
HEARING DATE(S):	13/09/05
JUDGMENT DATE :	13 September 2005
JURISDICTION:	Equity Division Commercial List
JUDGMENT OF:	Einstein J
DECISION:	Orders made in the proceedings and as to costs. Leave refused to allow joinder of new party.

CATCHWORDS:	Practice and procedure - Equity - Orders for specific performance - Liberty to apply for the purpose of dealing with matters involved in or arising in the course of working out an order for specific performance - Indemnity costs - Plaintiff claims indemnity costs as equitable compensation for personal defendant's breaches of fiduciary duty - Principles - Requirement to show delinquency in the conduct of a party in order to visit that party with indemnity costs - Personal defendant against whom indemnity costs are sought called by corporate defendants - Inappropriate to visit indemnity costs upon personal defendant - No claim for indemnity costs pursued against corporate defendants who called the personal defendant - Application following delivery of reserved judgment to be joined as a new party in order to be heard in the proceedings, to reopen the hearing to adduce evidence in the proceedings and to present arguments as to the form of orders to be made - Uniform Civil Procedure Act 2005 - Overriding purpose rule - Need to ensure efficient disposal of the business of the court - Efficient use of available judicial resources - Timely disposal of proceedings - Application for joinder summarily dismissed
LEGISLATION CITED:	Uniform Civil Procedure Act 2005
CASES CITED:	Andrews v Barnes (1888) 39 Ch D 133 Chandless-Chandless v Nicholson [1942] 2 KB 321 F&G Sykes (Wessex) Ltd v Fine Fare Ltd [1967] 1 Lloyds Rep 53 Fountain Select Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd (1988) 81 ALR 397 Grosvenor Construction v Hunter [2005] NSWSC 497 Harrison & Anor v Schipp, Cameron & Anor v Schipp [2001] NSWCA 13 Ledgerwood v Perpetual Trustee Co (No 2) (unreported, 25 August 1997, Young J) Light v West & Sons Ltd [1926] 2 KB 238 Lukey v Corporate Investment Australia Funds Management Limited [2005] FCA 1074 Madden v Kevereski [1983] 1 NSWLR 305 Meehan v Glazier Holdings Pty Ltd (2002) 54 NSWLR 146 Muriti v Prendergast [2005] NSWSC 281 NRMA Insurance v FR Coyle (Unreported, 13 May 1994, Cole J) Oshlack v Richmond River Council (1998) 193 CLR 72 Penrice v Williams (1883) 23 Ch D 353 Phillips v Walsh (1990) 20 NSWLR 206 Re Porteous [1949] VLR 383 Re Wilcox; ex parte Venture Industries (1996) 141 ALR 727 Smith v Permanent Trustee Australia (Unreported, 24 June 1992, Young J) Todorovic v Moussa (2001) 53 NSWLR 463 Trawl Industries v Effem Foods (1992) 27 NSWLR 326 Wentworth v Wollahra Municipal Council (No. 2) (1982) 149 CLR 672
PARTIES:	Hudson Investment Group Limited (ACN 004 683 729) (Plaintiff) Australian Hardboards Limited (ACN 088 183 420) (First Defendant) Hudson Timber Products Limited (ACN 081 809 814) (Formerly called Hudson Timber & Hardware Limited) (Second Defendant) AH Bremer Park Pty Limited (ACN 098 657 188) (Third Defendant) Bruce William McLeod (Fourth Defendant) Peter Cecil Holland (Fifth Defendant)
FILE NUMBER(S):	SC 50066/04
COUNSEL:	Mr WG Muddle (Plaintiff) Mr CR Newlinds SC, Mr PT Newton (First to Third Defendants) Dr AS Bell (Fourth and Fifth Defendants)
SOLICITORS:	Deacons (Plaintiff) Coudert Brothers (First to Third Defendants) Ebsworth & Ebsworth (Fourth and Fifth Defendants)

LOWER COURT JURISDICTION:

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
COMMERCIAL LIST

Einstein J

Tuesday 13 September 2005 ex tempore
Revised 15 September 2005

50066/04 Hudson Investment Group Limited v Australian Hardboards Limited & Ors

JUDGMENT

Content of reserved judgment

1 Following the delivery of the reserved judgement [2005] NSWSC 716 the attention of the Court has been drawn by the plaintiff to the following matters be found in judgment:

· the reference made in paragraph 129 to Mr Johnson as having been put forward by the plaintiff as a computer specialist in support of the plaintiffs allegation that particular minutes of meetings were altered;

· the references in paragraphs 180, 190 and 191 to Mr Farey not having been required for cross-examination by the defendants and to his uncontested affidavit evidence

2 Additionally to these matters I have noticed a typographical error in the third line of paragraph 5 where Mr Holland is described as the first defendant: he was of course the fifth defendant.

Principles as to corrections

3 It is of course clear that prior to final orders being handed down the court may correct typographic errors and further may correct obvious inaccuracies as long as the substance of the reasons is not altered and no finding is interfered with. If authority for this proposition be required it is to be found in Todorovic v Moussa (2001) 53 NSWLR 463 at [46]-[48] per Beazley JA, with whose judgment Powell JA agreed and Sperling J substantially agreed.

4 In each circumstance it is clearly necessary for the Court to make clear precisely what corrections are being made so that, should there be some aspect in respect of which the court may not have had power to make the corrections, any appellate rights of either party in that regard will be preserved. I intend to proceed accordingly.

Third line of paragraph 5

5 Plainly enough the third line of paragraph 5 requires to be corrected to correct the typographic error.

References to Mr Johnson

6 Mr Johnson was in fact put forward by the defendants and not by the plaintiff and was put forward in support of the defendants denial of the proposition that the subject minutes had been altered by Mr McLeod. It seems to me appropriate within the above described principles to direct that in the place of paragraph 129 the following should be substituted:

"Before proceeding further it is appropriate to shortly deal with the evidence given by Mr Johnson put forward by the defendant as a computer specialist in denial of the plaintiffs allegation that particular minutes of meetings said to have been held many months earlier were altered by Mr McLeod on 27 August 2001."

References to Mr Farey

7 Clearly enough Mr Farey was shortly cross-examined [cf transcript 79-85]. It was incorrect to suggest that he had not been required to be cross-examined.

8 That having been said it is clear enough that:

· the defendants did not challenge Mr Farey’s evidence in relation to the controversy concerning whether or not Mr Meers had attended the 20 November 2001 meeting: cf [transcript 599.38/600.6/defendants final submissions paragraph 116];

· the defendants did not elect [cf transcript 84.29] to further cross-examine following the additional evidence adduced from Mr Farey [at transcript 84.50-85.50].

Remaining issues

9 The convenient course is to retain the mode of description of the defendants identified in the reserved judgement at [18].

Orders outside of costs orders

10 The draft orders sought to be propounded by HIG will be marked for identification HIG/13/9.

11 There is no issue with respect to the making of orders 1 to 6 as so propounded. The relevant defendants agree to orders 1 to 5 and have not put forward a submission opposing order 6. Those orders are appropriate and will be made.

12 Order 7, seeking equitable compensation, is opposed by the directors. The matter is dealt with below.

Specific performance

13 The defendants oppose the making of orders 8, 9, 10 and 11-17. The central proposition is that there is no basis arising from the issues litigated or from the reasons for judgement to order that the entitlement deed be specifically performed by the first defendant. The written submissions of the defendants include:

“Order 8

· This order is opposed.

· It is accepted that this question was the subject of a finding (para 382). However, subsequent events being the Orders now sought by the plaintiff, make it clear that such an order would be unworkable and as such should not be made.

· Except for the provision of the mortgage (clause 8) and the distribution of funds (clause 4), there is no relevant difference between the Entitlement Deed, as amended or in its original form.

· There was no issue before the Court to the effect that, apart from the non-provision of the mortgage, the first to third defendants were not otherwise acting in accordance with their obligations under the Entitlement Deed – albeit the amended version.

· Moreover, there is no finding to the effect that the First to third defendants have not or will not in the future perform their contractual obligations.

· Nor is there any finding that the plaintiff is ready, willing and able to perform its obligations pursuant to the contract.

· Importantly, it is now clear by reference to the proposed orders of the plaintiff that the Court, if it made such an order, would thereafter be required to supervise performance of what is a large, complex commercial contract which the courts traditionally have been very reluctant to do. As will appear later in this document, there are real and substantial disputes between the parties as to the manner of performance. An order in the broad terms proposed will do nothing to resolve such issues as may exist.

Order 9

· Not agreed. AH Bremer is now the registered proprietor of the land. Accordingly, the terms of the contract cannot be performed and it is not appropriate for an order to be made in such circumstances. The question of whether AH Bremer should provide such a mortgage was not an issue in the proceedings and is not the subject of any finding in the reasons. Moreover, and in any event, the form of the mortgage is not agreed. The contractual obligation is to do no more than provide a mortgage. Any question of the form of that mortgage will need to be addressed in subsequent litigation. “

14 Clearly the Summons sought orders that the Entitlement Deed be specifically performed (claims to relief [8]). The judgment (at [368 et seq]) dealt with the contentions that as a matter of discretion, specific performance of the Deed should not be ordered. Written submissions as well as submissions from the Bar table were taken in relation to this issue which was litigated.

15 I accept as correct the submissions advanced by the plaintiff as follows:

"The summons has contained the prayer for specific performance of the entitlement deed and a specific finding was made: judgement paragraph 382. The first to third defendants have contested those orders throughout the proceedings. The plaintiff is not shown to have failed to perform obligations under the entitlement deed. The factual chronology found by the court demonstrates that the first defendant has not taken steps to perform its obligations. Specifically, it has not provided the mortgage and through Mr McLeod has misconducted itself in attempting to justify the failure to provide the mortgage. Further, although the first defendant called evidence as to the course of dealings with the land since 2001, the only evidence was that it had disposed of the land in contravention of clause 5 of the entitlement deed."

16 It is, I accept, a reasonable and proper inference in the circumstances that the first defendant will not perform its obligations under the entitlement deed unless compelled to do so by order of the court.

17 The Court has found that the first defendant is obliged to grant to the plaintiff a mortgage over identified land and that the third defendant is a wholly owned subsidiary of the first defendant. It is trite law, that a court of equity will settle the terms of such conventional conveyancing instruments, if there is a genuine dispute: Trawl Industries v Effem Foods (1992) 27 NSWLR 326 at 332-3, 334. More particularly is this so where, as here, the contract is partly executed: F&G Sykes (Wessex) Ltd v Fine Fare Ltd [1967] 1 Lloyds Rep 53 at 57. The submission that “the form of that mortgage will need to be addressed in subsequent litigation” is obstructive. It would deprive the plaintiff of the entire benefit of the proceedings and spawn a multiplicity of suits in direct contravention of the statutory injunction to hear all disputes and avoid a multiplicity of proceedings. The purpose of directing service of the orders and allowing a lengthy period for written submissions, was to allow any genuine disputes as to form to be crystallised. Any genuine dispute might have been referred to a Master as contemplated by prayer 9 of the Summons. The first defendant’s submission supports the inference that it will not perform its obligations unless compelled by the Court.

18 In my view, the plaintiff is entitled to the orders propounded by it as orders 8, 9, 10 and 11.

19 Orders 9 and 10 of the orders sought by Mr Muddle were of course sought in paragraphs 9 and 10 of the summons.

Liberty to apply

20 It is further appropriate for the court to reserve liberty to apply to an Associate Justice for the purpose of dealing with a matter involved in or arising in the course of working out the order: Phillips v Walsh (1990) 20 NSWLR 206, per McLelland, J, at 209-210 who put the matter as follows:

“… . subsequent to a final order, application can be made in the proceedings for the purpose of dealing with a matter involved in, or arising in the course of, working out that order; for example, by making more specific provision for its implementation or by modifying its operation to take account of some subsequent change of circumstance or by enforcing it. This exception or qualification [to the principle of finality of orders] does not, however, extend to an application made for the purpose of giving substantive relief not sought in the statement of claim or which is substantially different to that given by the final order: [citation of authorities omitted]

In a final order, liberty to apply is often expressly reserved as authority to make a subsequent application for the purpose of dealing with a matter involved in or arising in the course of working out the order; but the absence of an express reservation of liberty to apply does not preclude such an application: see Penrice v Williams (1883) 23 Ch D 353; Light v West & Sons Ltd [1926] 2 KB 238; Chandless-Chandless v Nicholson [1942] 2 KB 321 and Re Porteous [1949] VLR 383 at 391; [1950] ALR 89.”

21 White J, in Muriti v Prendergast [2005] NSWSC 281 observed at 158:

“An order may be a final order for the disposition of proceedings, even though subsequent orders may need to be made finally to work out the rights of the parties under that final order ( Meehan v Glazier Holdings Pty Ltd (2002) 54 NSWLR 146 at 153), or to adjust the rights of the parties under the final order by reason of subsequent events… “

22 It is not necessary to presently go beyond those orders. The liberty to apply provides a mechanism to permit the parties to apply on any particular issues which may remain on any aspect of the order for specific performance of the Entitlement Deed.

23 Order 18 should also be made but should commence:

"An order reserving to an Associate Justice . . .".

24 With respect to proposed order 12, such an order should be made adding the words "to the extent not yet paid" after the word "forthwith".

25 It is inappropriate to make an order in terms of paragraph 17.

Costs

Orders to be made against the first three defendants

26 The plaintiff seeks [order 20] the following order:

"Order that the defendants other than the fourth defendant pay the plaintiff's costs of the proceedings, other than costs relating solely to paragraph C35-C38 of the summons, as to which no order as to costs is to be made."

[I deal below with the reason why the plaintiff has sought to include the first but to exclude the fourth defendant from the terms of this proposed order.]

27 The first three defendants do not oppose the making of order 20, provided that the words "against the first to third defendants" are inserted after the word "proceedings".

The Bremer sale agreement issue

28 Clearly the plaintiff was unsuccessful in relation to the issue concerned with the Bremer share sale agreement pleaded in paragraph C35-C38 of the summons.

29 The plaintiff has submitted in relation to this issue as follows:

“As to the remaining defendants, the successful plaintiff is entitled to its costs. Some slight issue arises as to the cost of paragraphs C35 to C38 of the Summons (the share sale agreement issues). The plaintiff was unsuccessful on these paragraphs, however those issues occupied a small part of the trial.

In Ledgerwood v Perpetual Trustee Co (No 2) (Unreported, 25 August 1997, Young J) the now Chief Judge observed:

There are some guidelines, which provide the start to the way to solve the problems in this case. One of the strongest guidelines is that successful plaintiffs almost never have an order for costs against them. The second is that successful plaintiffs usually are ordered to pay their own costs only where there has been conduct on the part of the plaintiffs which has induced the other parties to participate in the litigation to a greater extent than might otherwise have been the case.
Although those observations were made in a different context, they do express the Court’s reluctance to embark upon a dissection of costs in proceedings and the general policy that a successful plaintiff will have an order for his costs. In the present case, it may be conceded that the issues on paragraphs C35 to C38 concerned a distinct period of time and a distinct transaction – albeit with the same players. It is submitted that an appropriate balance is to order that the defendants pay the plaintiff’s cost but to carve out costs relating solely to those paragraphs of the Summons and make no order as to costs in relation thereto. Proposed order 20 is directed to this end. Of course the plaintiff is entitled to both order 19 and order 20 as it may recover from any defendant; but only once.”

30 In my view the Bremer Share Sale Agreement issue certainly occupied sufficient time during the hearing to require that, notwithstanding the Ledgerwood approach, the plaintiff pay the costs only of the first three defendants in relation to that issue. The Ledgerwood proposition is not of universal application. The principled exercise of the discretion must abide the particular facts litigated.

31 Reserving for the moment the question of the precise terms of the order propounded as order 20, the contention of the first three defendants to have included the words "against the first to third defendants" is rejected.

Claims to equitable compensation against the fourth defendant

32 The plaintiff’s contentions seek to bifurcate the approach said to be appropriate with respect to the findings concerning the fourth and fifth defendant’s. The submissions are as follows:

1. “The Court has found that both the fourth and fifth defendants acted in breach of their duties as directors in purporting to enter into the amendment deeds.

2. Save for the issues on paragraphs C35 to C38 of the Summons, the whole of the controversies in the proceedings stemmed from the purported valid execution of those amendment deeds and the fraudulent board minutes authorising the same. The defendants’ opposition to specific performance was founded in the purported amendment deeds and the veracity of the minutes.

3. The plaintiff was compelled to bring these proceedings to obtain declarations of invalidity in relation the amendment deeds. Its costs of so doing, in a real and direct sense, stem from the misconduct of the fourth defendant McLeod. The Court has found that the meetings purportedly authorising the amendment deeds simply never took place and that McLeod oversaw the preparation of fictional minutes: Jnt par. 120.

4. McLeod’s conduct in preparing and propounding (right through to judgment) the false minutes was simply dishonest and was the direct cause of the plaintiff’s expenditure of legal costs on the proceedings. Moreover the Court has found that McLeod deliberately altered, backdated and proffer the fraudulent minutes to the company’s auditor for the purposes of misleading him: Jnt par. 202.

5. Although the fifth defendant Holland was also guilty of breaches of duty, the Court found that he was merely doing McLeod’s bidding: Jnt par. 39. Though Holland’s conduct was improper, it is submitted that it did not have the same character of deliberate, premeditated fraud as that of McLeod.

6. The plaintiff submits that McLeod ought be ordered to pay equitable compensation for his breaches of duty and that the plaintiff’s actual costs of the proceedings are the measure of the plaintiffs direct consequential loss, assuming the other orders sought are made. Proposed order 7 is directed to this end.

7. Additionally, McLeod’s conduct is such as to warrant an order for costs on an indemnity basis. In Smith v Permanent Trustee Australia (Unreported, 24 June 1992, Young J) the now Chief Judge held:

“One of the most useful statements about the basis for indemnity costs is found in the judgment of Woodward J in Fountain Select Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd (1988) 81 ALR 397 at 401 where his Honour held:

“I believe it is appropriate to consider awarding ….indemnity costs, whenever it appears that an action has been commenced or continued in circumstances where the applicant, properly advised, should have known that he had no chance of success. In such cases the action must be presumed to have been commenced or continued for some ulterior motive, or because of some wilful disregard of known facts or the clearly established law…”

8. The Chief Judge’s observation is equally applicable to the defence of an action. In the present case the true facts were know to McLeod. He knew that the single agenda meetings did not occur. He knew that the minutes were fictitious. He knew that he had altered and backdated minutes to deceive the company auditor. His disgraceful conduct was not limited to pre-litigation events. He knowingly maintained the veracity of false documents and wilfully gave false evidence. His actions were clearly and deliberately in disregard of known facts and directly brought about the proceedings, and moreover, was responsible for their length.

9. In NRMA Insurance v FR Coyle (Unreported, 13 May 1994, Cole J) it was held that a recognised basis for awarding indemnity costs was that the conduct of a party or its advisors was deserving of criticism. Never was conduct more deserving of criticism that McLeod’s.

10. In Grosvenor Construction v Hunter [2005] NSWSC 497 at par. 25 Einstein J held:

It is appropriate as part of the judgment to include that indemnity costs will be ordered where there is before the Court evidence of material as described in Oshlack v Richmond River Council (1998) 193 CLR 72 of circumstances which justify the Court finding something so out of the usual in terms of litigation as to justify an indemnity costs order. An indemnity costs award presupposes some relevant and reasonable conduct in relation to the conduct of proceedings or some relevant delinquency by the party against whom the order is made.

11. To similar effect, in Lukey v Corporate Investment Australia Funds Management Limited [2005] FCA 1074, Emmett J held:

The circumstances that may warrant such departure arise as and when the justice of the case so requires, or where they may be some special or unusual feature in the case to justify the Court in departing from the usual course. While the circumstances in cases in which indemnity costs have been ordered offer a guide, the question must always be whether the particular facts and circumstances of the case in question warrant the making of an order for costs other than on a party and party basis (see Re Wilcox; ex parte Venture Industries (1996) 141 ALR 727 at 732).
Fortunately, conduct like McLeod’s is still unusual. The delinquency involved was not confined to the pre-litigation events, but continued into, and was the direct cause of the expense of, the litigation itself. Proposed order 19 is directed to this end.”

33 The plaintiff further submitted, inter alia, as follows:

“[C]ourts of chancery have since medieval times awarded equitable compensation including a plaintiff’s costs of the suit: McDermott, P.D., Equitable Damages (Sydney: Butterworths, 1994) p 6; Dal Pont, G.E., Law of Costs (Sydney: Butterworth, 2003) p 190; Holdsworth, W.S., History of English Law 7th Edn (London: Methuen, 1956) vol 1, p 255.

The ancient Year Books record the award of sums including specified sums for costs: see for example Vol XXV, 12 Edw II, 1319. In equity, the mediaeval notion that costs were part of the damage for which compensation was payable has survived to modern times: see Andrews v Barnes (1888) 39 Ch D 133 at 139 to 141 and the cases there cited. This power was supplemented by Lord Cairn’s Act and cognate provisions “to enable the court to do complete justice so far as equity considers it ought to be done”: Madden v Kevereski [1983] 1 NSWLR 305 at 307. The damages which may be awarded under section 68 are sui generis and not confined by common law notions: Wentworth v Wollahra Municipal Council (No. 2) (1982) 149 CLR 672 at 678.

Conversely, at common law, there was no ability to recover costs. That right was created by the Statute of Gloucester in 1278 (6 Edw I c 1): see Blackstone’s Commentaries on the Laws of England Book III Ch 24 p 399. However this statutory basis for the award of costs expressly distinguished between damages for the common law action and costs pursuant to the new statutory right. It did not alter the common law to recognise costs as part of the loss for which damages were recoverable at law.”

Decision

34 The hearing was litigated upon the basis that should HIG succeed in setting aside the first and second deeds of amendment any questions of equitable compensation in HIG's claims against it's directors fall away. So much was made plain at [33-35]. In my view, HIG should be prevented from moving away from this expressed stance. This in itself provides a complete answer to the plaintiff's claim to equitable compensation. However, there are other answers to this claim.

35 I accept as of substance and adopt the submission addressed on behalf of the fourth defendant by Dr Bell to the following extent as follows:

"There is a strong punitive tone to the plaintiff's submissions in support of its claim for equitable compensation. As Meagher, Gummow and Lehane point out (at 839), however, there is no element of penalty involved in the award of equitable compensation. "It needs also to be recalled that neither Messrs McLeod nor Holland called any witnesses in the proceedings; they were called by the corporate defendants. As such, they were not the or a cause of the incurring of the full costs of the eight-day trial.”

36 I note also that the summons specifically referred to determination of quantum of any compensation by [the Master, now an Associate Justice]. The matter was the subject of recognition early in the proceedings during the address by Mr Nell, then appearing for the fourth and fifth defendants.

Indemnity costs

37 In Harrison & Anor v Schipp, Cameron& Anor v Schipp [2001] NSWCA 13 Giles JA with whose judgment Handley JA agreed, made the point (at [132]-[133]) that notwithstanding the general width of the discretion to order indemnity costs, the cases generally required some form of delinquency in the conduct of the proceedings. That form of delinquency can be by reason of making false allegations in a defence or by prolixity and prevarication or other inappropriate conduct grossly prolonging the litigation. I would add that the inappropriate conduct must of course comprise the conduct of the party who is to be visited with the indemnity for costs order.

38 I accept as of substance the submission put by Dr Bell as follows:

"The plaintiff's submission in relation to the award of indemnity costs conflate disapprobation as to the manner in which a trial has been conducted by a plaintiff … with conduct of one or more parties anterior to the conduct of the trial …"

39 In the present circumstances, although the findings do amount to the propounding of non-authentic documents, to visit the fourth defendant with indemnity costs by reference to his conduct anterior to the hearing would not constitute an appropriate exercise of the court's discretion. As Mr McLeod called no evidence, but was himself called by the corporate defendants, the appropriate order is simply to be made on a party-party basis. There was no gross prolonging of the litigation by Mr McLeod. And there is no claim for indemnity costs pursued against the corporate defendants who called him.

Appropriate order

40 The appropriate costs orders are as follows:

“Order that the defendants pay the plaintiff's costs of the proceedings other than costs relating solely to the issues raised by paragraphs C35-C38 of the summons.

Order that the plaintiff pay the costs of the first three defendants relating to the issues raised by paragraphs C35-C38.
No order is to be made with respect to the costs of the fourth and fifth defendants relating to paragraphs C35-C38 of the summons.”

41 It is further appropriate to order that these orders be stayed up to and including 27 September 2005 at midnight.

42 It is inappropriate to restrict the costs to be paid by the defendants to the costs of the proceedings against them because the proceedings against the directors were so interwoven with the proceedings against the defendant as to make it impossible to achieve division for costs purposes.

43 The reason why it is inappropriate to make an order with respect to the costs of the fourth and fifth defendants relating to the issues raised by paragraphs C35 to C38 of the summons is that those sections of the summons were not pursued against the fourth and fifth defendants, whose course in relation to that portion of the litigation was a matter for them.

The application made by Wingate Properties Pty Limited

44 Mr McEwen SC sought leave to appear for Wingate Properties Pty Limited on an application to have that company joined as a party to the proceedings. Leave was sought to be heard in the proceedings and to reopen the hearing in order to adduce evidence in the proceedings and to present arguments as to the form of orders to be made. Mr McEwen identified the type of evidence which his client would seek to adduce. He sought leave to file and rely upon affidavit evidence in this regard. That leave was not given.

45 As the transcript will also record, Mr McEwen from the bar table sought to raise a number of matters in respect of which his submission was that if the further evidence was to be allowed, it would become apparent that the court had proceeded during this litigation upon a number of misconceived bases.

The Uniform Civil Procedure Act 2005

46 Section 57 of the Uniform Civil Procedure Act 2005 following the overriding purpose rule set out in section 56, provides inter alia, that:

"(1) For the purpose of furthering the overriding purpose referred to in section 56(1), proceedings in any court are to be managed having regard to the following objects:

(a) the just determination of the proceedings,

(b) the efficient disposal of the business of the court,

(c) the efficient use of available judicial and administrative resources,

(d) the timely disposal of the proceedings, and all other proceedings in the court, at a cost affordable by the respective parties.

47 Section 58 provides as follows:

(1) In deciding:

(a) whether to make any order or direction for the management of proceedings, including:

(i) any order for the amendment of a document, and

(ii) any order granting an adjournment or stay of proceedings, and
(iii) any other order of a procedural nature, and

(iv) any direction under Division 2, and

(b) the terms in which any such order or direction is to be made,

the court must seek to act in accordance with the dictates of justice.

(2) For the purpose of determining what are the dictates of justice in a particular case, the court:

(a) must have regard to the provisions of sections 56 and 57, and

(b) may have regard to the following matters to the extent to which it considers them relevant:

(i) the degree of difficulty or complexity to which the issues in the proceedings give rise,

(ii) the degree of expedition with which the respective parties have approached the proceedings, including the degree to which they have been timely in their interlocutory activities,

(iii) the degree to which any lack of expedition in approaching the proceedings has arisen from circumstances beyond the control of the respective parties,

(iv) the degree to which the respective parties have fulfilled their duties under section 56 (3),

(v) the use that any party has made, or could have made, of any opportunity that has been available to the party in the course of the proceedings, whether under rules of court, the practice of the court or any direction of a procedural nature given in the proceedings,

(vi) the degree of injustice that would be suffered by the respective parties as a consequence of any order or direction,

(vii) such other matters as the court considers relevant in the circumstances of the case."

48 There is, of course, it goes without saying, a public interest in the finality of litigation.

49 There is no issue but that Wingate had been made aware of the litigation. Mr McEwen made this plain from the Bar table indicating that his client was aware of the proceedings or the intention to commence proceedings in March of last year, was provided with some of the documents after the proceedings were commenced and was asked by some of the defendants to provide access to its documents which it did.

50 The orders which the court is to make concerning the execution of the subject mortgages and the ancillary orders in that regard and the order for payment are orders made inter partes and are not orders made in rem. If it be that Wingate has a material legal entitlement, it will presumably seek to vindicate its rights to that entitlement by commencing appropriate proceedings. The overriding purpose rule, the need to ensure the efficient disposal of the business of the court, the efficient use of available judicial resources and the timely disposal of proceedings, all speak against the court, following weeks of hearing and many, many months of preparation for hearing and following the handing down of a reserved judgment, acceding to the application at this very late stage to permit the new joinder and to permit the hearing to be reopened. Whilst clearly the public interest in the finality of litigation as between parties does 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, the dominant consideration is that the proceedings are conducted between the parties to those proceedings. The parties to the proceedings would suffer a grave injustice if the application was allowed at this stage.

51 I am satisfied that there is no substance to the application sought to be made by Wingate Properties Pty Limited to be joined as a party to the proceedings for the purposes which I have indicated. The application has therefore been summarily dismissed out of hand. Mr McEwen was unable to persuade the Court of an entitlement to adduce evidence in support of the application made. The transcript records in some detail his outline from the Bar table of the matters which he put forward to justify his client being entitled to adduce evidence in support of the application. Those matters were plainly insufficient to permit that course. The reasons are as given above.

52 It only then remains for the court to hand down final orders.

53 The Court makes the following orders:

1. A declaration that the Fourth Defendant did not have authority to execute or enter into the First Deed of Amendment dated 20 June 2001 on behalf of the Plaintiff.

2. A declaration that the First Deed of Amendment is and has at all times been void.

3. A declaration that in purporting to execute and enter into the First Deed of Amendment, the Fourth and Fifth Defendants contravened their duties as directors of the Plaintiff.

4. A declaration that the Fourth Defendant did not have authority to execute or enter into the Second Deed of Amendment dated 5 September 2001 on behalf of the Plaintiff.

5. A declaration that the Second Deed of Amendment is and has at all times been void.

6. A declaration that in purporting to execute and enter into the Second Deed of Amendment the Fourth and Fifth Defendants contravened their duties as directors of the Plaintiff.

7. Order that the Entitlement Deed dated 8 June 2001 between the Plaintiff and the First Defendant be specifically performed by the First Defendant.

8. Order that the Third Defendant execute and deliver to the Plaintiff within 7 days mortgages in favour of the Plaintiff in the form contained within Exhibit PX1 (the “Mortgages”.)

9. Order that the First Defendant exercise all of its powers in relation to the Third Defendant to cause the Third Defendant to execute the Mortgages in accordance with order 9 above.

10. Order that in the event of the Third Defendant failing to execute and deliver to the Plaintiff within 7 days the Mortgages, then the Principal Registrar of the Court is authorised and directed forthwith to execute and deliver the same in the name of and on behalf of the Third Defendant.

11. Order that the First Defendant forthwith to the extent not yet paid, pay to the Plaintiff the $3,500,000 deposit in accordance with the Entitlement Deed.

12. Reserve liability to apply to an Associate Justice for the purpose of dealing with a matter involved in or arising in the course of working out the order.

13. Order reserving to an Associate Justice for further consideration further orders to give effect to the above orders for specific performance.

14. Order that the Defendants pay the Plaintiff’s costs of the proceedings, other than costs relating solely to paragraphs C35 to C38 of the Summons, as to which there shall be no order as to costs.

15. Order that the plaintiff pay the costs of the First Three defendants relating to the issues raised by paragraphs C35-C38 of the summons.

16. No order with respect to the costs of the Fourth and Fifth defendants relating to the issues raised by paragraphs C35-C38 of the summons.

17. Order that these orders be stayed up to and including 27 September 2005 at midnight.

I certify that paragraphs 1 - 53
are a true copy of the reasons
for judgment herein of
the Hon. Justice Einstein
given on 13 September 2005 and
revised 15 September 2005

___________________
Susan Piggott
Associate

15 September 2005