J Aron Corporation v Newmont Yandal Operations - [2006] NSWSC 849

Reported Decision:
202 FLR 359

New South Wales

Supreme Court

CITATION: J Aron Corporation v Newmont Yandal Operations [2006] NSWSC 849

HEARING DATE(S): 27/07/06

JUDGMENT DATE :
24 August 2006

JURISDICTION: Equity Division

JUDGMENT OF: White J

DECISION: See paragraph 120 of judgment.

CATCHWORDS: PRACTICE & PROCEDURE – Judgments and orders – Setting aside – Plaintiffs made application to set aside order of Court entering judgment for defendant in proceedings 2407/04 – Application made because of contentions of defendant in related proceedings (4666/03) – Defendant contended that entry of judgment in proceedings 2407/04 afforded it defence in proceedings 4666/03 based on principles of res judicata, issue estoppel or Anshun estoppel – Jurisdiction of Court to set aside earlier judgment and orders – Where asserted consequences of earlier judgment does not reflect intention of Court – Inherent jurisdiction – Statutory jurisdiction under r 36.17 Uniform Civil Procedure Rules 2005 (NSW) (“slip rule”) – Whether jurisdiction to set aside confined to ancillary or consequential orders – Whether denial of substance of defendant’s estoppel-type defences precludes reliance by plaintiffs on slip rule – Whether jurisdiction to set aside available simply because the consequences of the judgment are contrary to judge’s intention – Where plaintiffs claim alternative forms of relief in notice of motion – Whether failure by plaintiffs to precisely identify order which should be made to correct error precludes reliance by plaintiffs on slip rule – Whether plaintiffs’ proposals to correct error relate to matter which was in issue or incidental to matter in issue – Whether Court should exercise discretion to set aside judgment – Order of Court entering judgment for defendant set aside – Declarations and stay ordered in lieu thereof.

LEGISLATION CITED: Corporations Act 2001 (Cth)
Uniform Civil Procedure Rules 2005 (NSW)
Testators’ Family Maintenance Act 1912 (Tas)
Trade Practices Act 1974 (Cth)
Contracts Review Act 1980 (NSW)
Federal Court Rules 1979 (Cth)

CASES CITED: Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589
J Aron Corporation v Newmont Yandal [2006] NSWSC 720
Gikas v Papanayiotou [1977] 2 NSWLR 944
Owston Nominees (No. 2) Pty Ltd v Branir Pty Ltd (2003) 129 FCR 558
J Aron Corporation v Newmont Yandal Operations (2004) 49 ACSR 97
J Aron Corporation v Newmont Yandal [2004] NSWSC 543
J Aron Corporation v Newmont Yandal [2004] NSWSC 544
J Aron Corporation v Newmont Yandal [2004] NSWSC 1145
J Aron Corporation v Newmont Yandal Operations Pty Ltd [2005] NSWSC 238
J Aron Corp & Anor v Newmont Yandal Operations Pty Ltd & Ors [2005] NSWSC 1159
Re Future Life Enterprises Pty Ltd (1994) 33 NSWLR 559
Storey & Keers Pty Ltd v Johnstone (1987) 9 NSWLR 446
L Shaddock & Associates Pty Ltd v Parramatta City Council (No. 2) (1983) 151 CLR 590
Bailey v Marinoff (1971) 125 CLR 529
Chessum & Sons v Gordon [1901] 1 KB 694
In re Inchcape (Earl) [1942] Ch 394
Tak Ming Co Ltd v Yee Sang Metal Suppliers Co [1973] 1 WLR 300
Elyard Corporation Pty Ltd v DDB Needham Sydney Pty Ltd (1995) 61 FCR 385
Akron Securities Ltd v Iliffe & Ors (No 3) (26 September 1997, unreported; BC9704809)
Hanave Pty Ltd v LFOT Pty Ltd (2004) 136 FCR 566
Coppins v Helmers; Brambles Constructions Pty Ltd (1969) 72 SR (NSW) 273
Re Hogarth’s Estate; Crisp v Hogarth [1962] Tas SR 17
Hatton v Harris [1892] AC 547
Blacker v National Australia Bank Ltd [2000] FCA 1011
Blacker v National Australia Bank Ltd [2000] FCA 681
Blacker v National Australia Bank Ltd (2000) 158 FLR 142
Gould v Vaggelas (1985) 157 CLR 215

PARTIES: J Aron Corporation & 1 Or
v
Newmont Yandal Operations Pty Ltd

FILE NUMBER(S): SC 2407/04

COUNSEL: Plaintiffs: B Walker SC & V Gray
Defendant: T F Bathurst QC & M Henry
2nd & 3rd Cross-Defendants: V Whittaker

SOLICITORS: Plaintiffs: Abbott Tout Lawyers
Defendant: Arnold Block Leibler

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

WHITE J

Thursday, 24 August 2006

2407/04 J Aron Corporation & 1 Or v Newmont Yandal Operations Pty Ltd

JUDGMENT

1 HIS HONOUR: This is an application by the plaintiffs to set aside an order made by Austin J on 7 April 2005 dismissing the amended cross-claim and entering judgment for the defendant in proceedings No. 2407/04. The plaintiffs contend that it is necessary to set aside that order so as to give effect to the intention of Austin J at the time the order was made.

2 The plaintiffs make this application because of contentions made by the defendant in related proceedings, No. 4666/03, in which it is the first defendant. The defendant says that as a result of judgment being entered for it in proceedings No. 2407/04, it has a defence based on principles of res judicata, issue estoppel, or estoppel on the principles of Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589, to most of the claims made by the plaintiffs against it in proceedings No. 4666/03. Without conceding that such a defence is available, the plaintiffs contend that it was not the intention of Austin J to make orders having, or arguably having, that consequence.

3 The questions which arise on this application are whether the Court has jurisdiction to alter the judgment which has been entered because the judgment may have such unintended consequences, and if so, whether such jurisdiction should be exercised.

4 Ordinarily, such an application would be made to the judge who made the order sought to be set aside. However, on 18 July 2006, Austin J disqualified himself from hearing this application (J Aron Corporation v Newmont Yandal [2006] NSWSC 720). It is not disputed that another judge at first instance can exercise whatever jurisdiction would otherwise have been available to his Honour (Gikas v Papanayiotou [1977] 2 NSWLR 944; Owston Nominees (No. 2) Pty Ltd v Branir Pty Ltd (2003) 129 FCR 558).

Background

5 The following description of the issues and progress of the litigation is either taken from the pleadings, or from summaries provided by Austin J in judgments in proceedings No. 4666/03, or No. 2407/04: ([2004] NSWSC 159, (2004) 49 ACSR 97; [2004] NSWSC 544; [2004] NSWSC 1145; or [2006] NSWSC 720). In some cases this is supplemented by references to the transcript of proceedings or written submissions before his Honour.

6 On 1 April 1998, Newmont Yandal Operations Pty Ltd (“NYOL”), the defendant in proceedings No. 2407/04, entered into a master hedge agreement with the plaintiffs pursuant to which the plaintiffs agreed to buy gold, and NYOL agreed to deliver gold, at specified future times. As a result of a material change in the financial circumstances of NYOL, the plaintiffs terminated that agreement on 20 May 2003, and designated an early termination date as the date on which all outstanding gold transactions would become due and payable. The plaintiffs claim that in consequence, the defendant became liable to pay them approximately US$57,000,000.

7 NYOL is the parent of a group of companies which conduct gold-mining operations in Western Australia. On 3 July 2003, the directors of NYOL appointed voluntary administrators pursuant to s 436A of the Corporations Act 2001 (Cth). On 29 August 2003, at a meeting purportedly convened under s 439A of the Corporations Act, the creditors of NYOL and its subsidiaries resolved to execute deeds of company arrangement. Deeds of company arrangement were executed on 8 September 2003. In his judgment of 12 March 2004 (J Aron Corporation v Newmont Yandal Operations (2004) 49 ACSR 97), Austin J described the deeds as follows:

9 There was a principal deed, for Newmont Yandal, and secondary deeds for each of the subsidiaries. The parties to the principal deed were Newmont Australia Limited, Clynton Court as administration company, the third defendants as voluntary administrators and as deed administrators, Newmont Yandal, and the 12 subsidiary companies that are the fourth defendants. The parties to each secondary deed were Newmont Australia, the third defendants as voluntary administrators and as deed administrators, and the relevant subsidiary company. Each of the deeds contained a provision (clause 3.1) to the effect that the deed was conditional on the execution of the principal deed and each secondary deed by each person named as a party to it, and a provision (clause 3.2) that if, as a result of clause 3.1, the deed had not come into full force and effect by 5pm on 22 September 2003, it would automatically terminate.

8 Under the deeds of company arrangement, the plaintiffs were entitled to receive approximately US$23,000,000 out of their claim of more than US$57,000,000.

9 The plaintiffs instituted proceedings No. 4666/03 (“the 2003 proceedings”) to challenge the various deeds of company arrangement. NYOL was the first defendant in those proceedings. The other parties to the deeds were also defendants. The plaintiffs’ claims in the 2003 proceedings were summarised by Austin J in a judgment delivered on 12 March 2004 on an application for an order for the determination of separate questions in the 2003 proceedings. In J Aron Corporation v Newmont Yandal Operations (2004) 49 ACSR 97, his Honour said (at [10]-[17]):

“10 By their amended statement of claim, the plaintiffs claim relief on several grounds. First, they contend that the resolutions to enter into the deeds of company arrangement constitute an abuse of Part 5.3A and a breach of the directors' fiduciary duties. They say that there was no reasonable basis for an opinion to be formed that on 3 July 2003 Newmont Yandal was insolvent or likely to become insolvent. They claim that the directors did not genuinely or in good faith form an opinion to that effect, instead acting for the sole or dominant purpose of facilitating the removal of the plaintiffs as a creditor at less than the termination amount due to them under the master hedging agreement.

11 The plaintiffs claim, on this ground, declarations that the resolutions, the instruments of appointment of the voluntary administrators, and the deeds of company arrangement, are void ab initio or voidable, either on the basis of abuse of Part 5.3A, or on the basis that they resulted from breaches of fiduciary duty by the directors.

12 Secondly, the plaintiffs contend that the third defendants, while purporting to act as voluntary administrators, were not independent of Newmont Yandal in various ways and did not discharge their duty to act, and be manifestly seen to act, impartially as between creditors. They claim an order under s 449B that the third defendants be removed as voluntary administrators and that a fit and proper person be appointed as voluntary administrator or liquidator of Newmont Yandal and its subsidiaries.

13 Thirdly, the plaintiffs contend that the third defendants as voluntary administrators failed to discharge their duty properly to investigate the business and affairs and financial circumstances of the Newmont Yandal group, and to form reasonable opinions with respect to the interests of creditors. They claim an order under s 445D terminating the deeds of company arrangement.

14 Fourthly, the plaintiffs say that the third defendants conducted the meeting on 29 August 2003 in a manner that was oppressive, discriminatory and prejudicial to them in various ways, for example by admitting votes by related creditors and failing to adjourn the meeting. They claim an order under s 445D terminating the deeds of company arrangement, and an order under s 600A(2) that the purported resolutions of the creditors be set aside.

15 Fifthly, the plaintiffs rely upon a "formal defect" in relation to the deeds of company arrangement. Their contention is that the third defendants, who chaired the meeting of creditors which took place on 29 August 2003, held proxies for each company in the Newmont Yandal group in respect of all inter-company indebtedness. They say that there was a single motion put to the meeting, that the Newmont Yandal companies execute the Newmont deed of company arrangement and that the third defendants be appointed administrators of the deed. The third defendants abstained from voting in respect of the inter-company indebtedness of the subsidiaries. According to the plaintiffs, the effect of putting the proposal as a single resolution without any voting in respect of inter-company indebtedness was that no resolution was passed by nine of the Newmont Yandal group companies. They say this is because, the third defendants not having cast votes in respect of inter-company indebtedness, there were no votes at all on the motion by the separate creditors of each of those companies.

16 The first four grounds for relief are what might be called, without lessening the gravity of the claims, typical complaints raised by creditors who wish to challenge a deed of company arrangement (see, for example,

(2003) 47 ACSR 351), invoking ss 445D, 449B, 600A and perhaps also ss 447C and 445G. To the extent that the plaintiffs rely on those statutory provisions, they have the standing to do so as a creditor by virtue of the terms of the provisions themselves.

17 The alleged "formal defect" raises issues of a different character. It is said to lead to the consequences that, as no resolutions were validly passed for the execution of secondary deeds of company arrangement by the nine subsidiaries, their subsequent execution of deeds cannot have been effective under Part 5.3A, and consequently the conditions stipulated in clause 3.1 of the principal and secondary deeds cannot have been satisfied, and therefore both the secondary deeds and the principal deed automatically terminated on 22 September 2003.”

10 In the 2003 proceedings, the plaintiffs applied for the separate determination of the “formal defect” issue. They contended that if they succeeded on that issue there would be a substantial saving in hearing time and costs. Part of the plaintiffs’ contentions on the “formal defect” issue was that, on the proper construction of the secondary deeds and the principal deed, the deeds automatically terminated on 22 September 2003 if valid resolutions were not passed for the execution of the secondary deeds by the subsidiaries. One of the defendants’ objections was that, as the plaintiffs were not a party to any of the deeds, they lacked standing to obtain relief in relation to the proper construction of the deeds.

11 The defendants also contended that any defects in relation to the entry into the deeds could be disregarded or cured, either under s 1322 of the Corporations Act (as a procedural irregularity in a proceeding), or under s 445G (where the Court may declare a deed to be valid despite a contravention of a provision in Pt 5.3A), or by making an order under s 447A as to how Pt 5.3A should operate in relation to the defendants.

12 Austin J refused to make an order for the separate determination of the “formal defect” issue in the 2003 proceedings. I shall repeat the summary of his Honour’s reasons, which his Honour has given in three subsequent judgments, most recently in J Aron Corporation v Newmont Yandal [2006] NSWSC 720:

5 The plaintiffs made an application, which was contested, for an order for the separate determination of the formal defect issue. I declined to make such an order, for reasons published on 12 March 2004 (

[2004] NSWSC 159; (2004) 49 ACSR 97). For convenience I shall repeat the summary of my reasons that I gave in two subsequent judgments ([2004] NSWSC 554, and [2004] NSWSC 1145 at [20]):

(1) either there is no deed of company arrangement for the purposes of Part 5.3A of the Corporations Act , or deeds of company arrangement have been executed to which Part 5.3A applies, but those deeds are arguably defective in ways entitling the plaintiffs to apply for relief under the statute;

(2) if there is no deed of company arrangement for the purposes of Part 5.3A, but only an instrument inter parties, then

(a) the plaintiffs, claiming to be creditors of Newmont Yandal, are not entitled to seek separate determination of a question concerning the proper construction of the instrument, because they are not parties to it

(b) even if the plaintiffs, as non-parties to the principal deed, were entitled to ascertain the proper construction of the instrument, it would be inappropriate to decide that question in the 2003 proceeding as presently constituted, because the decision would affect persons not parties to the proceeding, namely Newmont Australia (a party to the principal deed) and other unsecured creditors of Newmont Yandal;

(c) a separate determination, in favour of the plaintiffs, of the questions which were then proposed would not lead to a judgment disposing of the 2003 proceeding, because the deeds of company arrangement have been performed, employees and trade creditors have been paid, and complex questions would remain as to the appropriate orders in light of performance of the deeds;

(3) if the principal deed is effective under Part 5.3A (whether or not any formal defect exists), then

(a) the rights of the plaintiffs are those rights conferred by Part 5.3A and other parts of the

;

(b) if the plaintiffs make any application in reliance on their statutory rights to do so (such as s 445G, 447A or 1322), the statutory provisions give the court substantial discretion;

(c) the exercise of the court's discretion depends upon an understanding of all relevant facts and circumstances;

(d) therefore, in order to persuade the court to grant relief under such statutory provisions, it would be necessary to enter into proof of the whole or a substantial part of the facts that would be at issue in the final hearing, and little or nothing would be gained by having those matters considered in the context of a separate determination of questions.

13 In Austin J’s judgment of 9 March 2004 (J Aron Corporation v Newmont Yandal Operations (2004) 49 ACSR 97 at [24]), his Honour observed that if there were no deed of company arrangement for the purposes of Pt 5.3A, the plaintiffs would be entitled to take proceedings for recovery of whatever debt they were owed under the master hedge agreement.

14 On 14 April 2004, the plaintiffs commenced proceedings No. 2407/04 (“the 2004 proceedings”) by filing a summons claiming a declaration that NYOL was indebted to the plaintiffs in respect of gold hedge transactions entered into under the master hedge agreement. The summons also sought an order for an inquiry and report into the amount owing by the defendant, and an order that the plaintiffs be at liberty to sign judgment in the amount found to be owing. It also sought an order that evidence in the 2003 proceedings be evidence in the new 2004 proceedings. When the 2004 proceedings were first before Austin J for directions on 27 April 2004, counsel for the plaintiffs said:

The plaintiffs are claiming relief which, in substance, we say raises the existence of the failure of nine of the relevant companies in the Newmont group to [pass] resolutions that the respective company enter into a Deed of Company Arrangement. Your Honour knows the plaintiffs were not creditors of any of those nine companies, but the deeds of the group interrelate. The plaintiffs say of course that … by reason of that failure to pass resolutions, none of these deeds came into effective operation. If that is correct, the plaintiffs say their debt against the defendant is unaffected by anything that happened in August last year

and the relief they claim is to enable them to act on the understanding their debt remains as it was and to take steps as they see fit to recover it. The issue is going to arise, we anticipate whether as a matter of law the plaintiffs’ contentions on that issue are right. For our part, we either have filed, or are in a position to file the whole of our evidence …

15 It is not obvious why the plaintiffs thought that the issues in the 2004 proceedings would be confined to the resolution of the “formal defect” issue. However, it is plain that the plaintiffs saw the 2004 proceedings as being a vehicle for resolving that issue.

16 At the directions hearing of 27 April 2004 before Austin J, counsel for the defendant pointed out that the “formal defect” issue was pleaded as part of the amended statement of claim in the 2003 proceedings. In relation to that issue, counsel said that the defendants’ position was that the deeds were effective, or, if not, that the defendants could obtain orders under s 447A or s 1322 of the Corporations Act to cure any formal defect. He submitted that there should be one proceeding, and not two, and that the plaintiffs should be offered the opportunity to amend the 2003 proceedings to seek the relief claimed in the 2004 proceedings, or alternatively, that the two cases should be heard together. The plaintiffs responded that the defendant should plead its defence in the 2004 proceedings. The plaintiffs anticipated an application to strike out the defence, or a cross-claim, on the basis that the statutory requirements for the exercise of jurisdiction to cure any formal defects did not arise.

17 Austin J directed the service of submissions. The defendant repeated its submission that it was inappropriate for the matters raised by the plaintiffs in the 2004 proceedings to be heard and determined separately from the 2003 proceedings, which it described as “the substantive proceeding”. On 31 May 2004, the parties were ordered to file pleadings. Austin J said (J Aron Corporation v Newmont Yandal [2004] NSWSC 543 at [15]-[16]):

15 If, as counsel for the plaintiffs originally contended, the pleadings in the new proceeding are allowed to evolve, it is possible that the issues of law raised in the parties' submissions will arise for determination in a fashion that does not require full hearing of all of the contested factual matters. For example, the court may regard it as appropriate to make a determination of some or all of these matters in the context of an application for summary dismissal of the defendant's cross-claim, once it is filed. Moreover, it is not obvious to me that an application for the determination of separate questions in the new proceeding would necessarily encounter all of the obstacles that defeated the application in the old proceeding.

16 The "formal defect" issue, and the availability of statutory curial provisions, will inevitably arise in the present proceeding. The same issue is raised in paragraphs 83-86 of the statement of claim in the old proceeding. The defendant says that, subject to its filing an appropriate interlocutory process, the court should dismiss the new proceeding, because of this substantial overlap. Since, however, the constitution of the new proceeding gives the plaintiffs a chance of having their formal defect argument determined prior to the final hearing of the old proceeding, the bringing of the new proceeding is not necessarily repetitious or futile.

18 At a directions hearing on 15 June 2004, counsel for the defendant said that the defendant would consent to the determination of the questions as to the alleged defect regarding voting, and the question of the Court’s power to make orders under the Corporations Act, on the basis that discretionary questions be left for another day. Counsel for the defendant said that those questions could be dealt with separately, either in the 2003 proceedings, the 2004 proceedings, or as separate questions in the consolidated proceedings (if the 2003 and 2004 proceedings were consolidated). By this time, which was before pleadings had been filed, proposed questions for separate determination had been formulated.

19 In a judgment given on 22 June 2004, Austin J decided that an order for the separate determination of questions should not be made in the 2003 proceedings. His Honour noted that questions had been formulated which were designed to exclude the discretionary components of ss 445G, 447A and 1322, but also noted that in the 2003 proceedings, the other problems which had led to the refusal of the determination of the separate questions in those proceedings remained. His Honour also noted (J Aron Corporation v Newmont Yandal [2004] NSWSC 544 at [12]-[13]) that:

12 There is an important contrast with the 2003 proceeding, as to the outcome of separate determination of the questions. If the plaintiffs are able to show that their "formal defect" argument is correct, and that the court has no jurisdiction to intervene under the three curative provisions, they may well be entitled to judgment in the 2004 proceeding (depending on precisely what other questions are raised in the pleadings).

13 All things considered, my view is that there is probably a good case for making orders for the separate determination of questions, as drafted in the appendix, in the 2004 proceeding, whether or not other parties are joined (and therefore, whether or not the present defendant consents). But in my view it is premature to make that decision. I think it is necessary, first, for the precise issues in the 2004 proceeding to be defined by pleadings, and for any application that might be made for the joinder of parties to be heard and determined.

20 Austin J adjourned the application so far as it related to the 2004 proceedings for further consideration once the pleadings had been closed. The separate questions all related to the “formal defect” issue and the question of whether the Court had jurisdiction under any of the provisions of the Corporations Act to cure the alleged defect.

21 In their statement of claim, the plaintiffs pleaded the entry into the master hedge agreement and its terms. They alleged the occurrence of an event of default, the designation of an early termination date and their calculation of the amount due. They claimed the same relief as in the summons. The defence admitted that the plaintiffs had terminated the agreement based on the occurrence of an event of default and had designated an early termination date. It did not admit the amount alleged to be due under the agreement. The defendant pleaded that the plaintiffs’ debt was released and discharged by the deeds of company arrangement, and that in lieu of their debt, the plaintiffs became entitled to receive a distribution pursuant to those deeds.

22 On 31 August 2004, the plaintiffs filed a reply to the defence. The reply pleaded the “formal defect” issue. That is, the plaintiffs pleaded that the creditors of the defendant had resolved to execute the secondary deed of company arrangement. They pleaded that the secondary deed of company arrangement was conditional on execution of the other deeds of company arrangement, and required that resolutions be passed, in accordance with s 439C of the Corporations Act, of creditors of other companies in the group. The plaintiffs pleaded that the creditors of a number of the other group companies had failed to pass such resolutions. They pleaded that, as a result, conditions precedent to the secondary deed of company arrangement were not satisfied, and that that document never came into full force and effect, and was terminated in accordance with its own terms and by the operation of s 445C of the Corporations Act. They pleaded that by reason of these matters, the plaintiffs were not bound by any of the deeds of company arrangement and that their debt was not released, nor discharged.

23 The plaintiffs did not plead by way of reply, or by amendment to the statement of claim, the other grounds upon which they challenged the purported deeds of company arrangement in the 2003 proceedings.

24 The defendant and other companies in the Newmont group filed a cross-claim. They sought relief pursuant to ss 447A, 445G, or 1322 of the Corporations Act if it were found that the allegations in the reply were established. The defendant also filed a rejoinder to the reply asserting the due execution of the resolutions and of the deeds of company arrangement. The defendant also relied upon ss 444D, 445H, and 451C of the Corporations Act to assert the validity of the deeds of company arrangement.

25 In submissions filed on 8 October 2004 (that is, after the filing of pleadings), the plaintiffs submitted that the 2004 proceedings should be fixed for final hearing, or alternatively, that the questions formulated by the parties should be set down for separate determination. They submitted that the questions formulated by the parties did not in any way alter the precise issues defined by the pleadings in the 2004 proceedings. The plaintiffs noted that the statement of claim in the 2003 proceedings was being amended to remove the pleading of the “formal defect” issue in those proceedings. The plaintiffs submitted that because of this, there was no overlapping or similarity of evidence between the 2003 and 2004 proceedings, and hence, there should be no order for consolidation, or for the hearing of the two proceedings together.

26 It appears from the plaintiffs’ submissions of 8 October 2004 that the plaintiffs did not contemplate that, if they failed on their claim in the 2004 proceedings, they might be shut out from continuing the 2003 proceedings.

27 The defendants submitted that the two proceedings should be tried at the same time. One of the grounds for this submission was that the prayers for relief in the 2004 proceedings concerned precisely the same subject matter as several of the prayers for relief in the 2003 proceedings, namely, the validity of the deeds of company arrangement and actions taken pursuant to those documents. The defendants also now opposed the determination of the separate questions in the 2004 proceedings.

28 In their submissions in reply, the plaintiffs submitted that if they succeeded on the separate questions or at a final hearing, it would bring finality to the 2004 proceedings and remove the need for continuation of the 2003 proceedings. They did not submit that the same consequence would follow if they failed on the separate questions or at a final hearing in the 2004 proceedings.

29 There was oral argument before Austin J on 22 October 2004. In the course of his submissions, Mr Bathurst QC, who appeared for the defendant, said:

… If your Honour orders separate questions – I will come to why your Honour should not in a moment – they should be separate questions in each of the 2003 and 2004 proceedings because the issues are raised in each of the 2003 and 2004 proceedings.

That shows – again this is said irrespective of separate questions – the difficulty of these two cases in effect being run separately, whether on the legal issues postulated or on the discretionary issues, may ultimately come to be heard, if they are not heard – if the cases are not heard together or there is a danger of inconsistent verdicts – a difficulty if the 2004 proceedings for example are heard first, of what constituted a res in those proceedings so as to bind the parties in the 2003 proceedings and the difficulties in relation to Anshun on the basis that the whole of the case was not brought forward in the 2004 proceedings. Those very unsatisfactory consequences, in our submission, can be avoided if the two sets of proceedings are joined together. Once they are joined together consideration can then be given to the separate questions.

HIS HONOUR: Can I just think about one thing. Those submissions that you have just made are directed primarily, I think, to running the 2004 proceedings to final verdict before the hearing, the 2003 proceedings. I wonder to what extent you make the same submissions in the event that I make an order for determination of separate questions in only the 2004 proceedings?

BATHURST: If your Honour made an order for separate determination of questions in the 2004 proceedings it should be at the very least on the condition that the parties be bound by the answers to the questions in the 2003 proceedings. It can be overcome that way.

HIS HONOUR: What are the chances of getting that acknowledgement?

BATHURST: I would not see any difficulty of giving it for our part. We don’t want to cause any difficulties on this. If you have got two sets of proceedings with two sets of difficulties raised, one that has the acknowledgement you ordered the separate questions in both sets of proceedings, and order that they be heard together.

30 Mr Bathurst QC clearly identified the issue which has now arisen from the fact that the whole of the plaintiffs’ case in the 2003 proceedings was not raised in the 2004 proceedings. Austin J queried whether those concerns would arise only from “running the 2004 proceedings to final verdict before the hearing [of] the 2003 proceedings.” In his judgment of 18 July 2006 (J Aron Corporation v Newmont Yandal [2006] NSWSC 720), Austin J said (at [11]):

“11 At the time, I understood Mr Bathurst QC to be proposing a condition that would prevent either party from later making an argument based on res judicata or

or other estoppel, so as to treat the resolution of the questions for separate determination as having some greater significance than merely providing a separate answer to the formal defect issue.”

31 The condition proposed by Mr Bathurst QC may not have been necessary, but was appropriate for more abundant caution to ensure that, in both proceedings, the plaintiffs and the defendant would be bound by the answers to the separate questions. His proposal in this respect immediately followed Austin J’s query whether the determination of separate questions in only the 2004 proceedings might not result in a final verdict being given in the 2004 proceedings before the hearing of the 2003 proceedings. Mr Bathurst QC did not suggest that wider estoppel issues would not arise if orders were made for the determination of separate questions in only the 2004 proceedings, particularly if their determination resulted in final judgment. He did later observe that:

The procedure that my learned friend wants really boils down to this: Let us have … a separate trial on power in 2004 then let us have a separate trial on discretion in 2004, and if I lose on those, then let me have a third go in 2003

32 I infer that the defendant understood that the plaintiffs did not intend that, if they lost the issues raised in the 2004 proceedings, they could be shut out from litigating the remaining issues in the 2003 proceedings. On the other hand, the possibility of wider estoppels being raised had been clearly flagged.

33 On 29 November 2004, Austin J made an order for the determination of separate questions in the 2004 proceedings (J Aron Corporation v Newmont Yandal [2004] NSWSC 1145). In the course of his reasons, his Honour said (at [42] and [45]):

42 If the plaintiffs succeed in the 2004 proceeding and in the cross-claim, they will be entitled to orders along the lines of the orders sought in the statement of claim, such as a declaration of indebtedness and an order that the amount owing be referred to a Master or referee for inquiry and report, unless some discretionary reasons are advanced for not making the orders. Orders of that kind would finally resolve the 2004 proceeding.

…

45 If the plaintiffs are unsuccessful on the separate determination of questions, the cloud of uncertainty that presently hangs over these administrations, because arguable claims have been made as to their invalidity, will not necessarily have been lifted, but at least some useful progress will have been made towards clarifying the position. Either the court will have decided that there is no defect warranting curative attention, or that there is a defect which is capable of being cured on discretionary grounds under one or more of the statutory provisions. It is desirable to make a determination that could lead to that outcome, sooner rather than later.”

34 It is clear that Austin J did not contemplate that if the plaintiffs were unsuccessful on the determination of the separate questions, that would practically resolve the 2003 proceedings. It would only resolve, or go some way to resolving, the plaintiffs’ claim that the administrations were invalid because of the alleged formal defect. His Honour also said (at [53]):

53 It is not appropriate to make a final decision, at this stage, as to whether, if the plaintiffs fail in their Part 31 application, I should dismiss the 2004 proceeding or amalgamate

with the 2003 proceeding. There may be something to be said to the view that the correct course will be simply to order that the two proceedings be heard together, with evidence in one being evidence in the other. This would preserve for the plaintiffs whatever advantage they may have, in terms, perhaps, of the nature of final orders and questions of onus of proof, through commencing the 2004 proceeding. It is a course not opposed by the other parties. In the meantime, I shall list the two proceedings together for each directions hearing.

35 Finally, Austin J said (at [55]):

“55 I intend to adopt the suggestion put forward by senior counsel for the defendant, that I should make the order on the condition that the parties to the 2003 proceeding acknowledge that they will be bound by the answers to the questions given in the 2004 proceeding. This may not be necessary, but seems to me an appropriate way of avoiding any uncertainty with respect to estoppel and res judicata.”

36 In his judgment of 18 July 2006 (J Aron Corporation v Newmont Yandal [2006] NSWSC 720), Austin J said (at [15]):

“15 In making this order, my intention was to prevent any party from contending that any res judicata or estoppel would limit the contest in the 2003 proceeding of any of the issues other than the formal defect issue. I did not pay close attention to the drafting, which I borrowed from Mr Bathurst QC's submission, because I believed that all parties would attach to the words that I used the significance that I had understood Mr Bathurst to attribute to them. If I had detected any lack of consensus on this point, I would not have proceeded with the separate determination hearing until the question had been resolved so as to avoid any res judicata or estoppel issue remaining outstanding.

37 On 14, 15 and 16 March 2005, Austin J heard the evidence and argument on the separate questions. The first question was whether the creditors of each of the Newmont Yandal group companies passed resolutions that each of them execute deeds of company arrangement. His Honour answered that question “Yes”. It followed that the other questions did not require an answer as they were all predicated upon a negative answer to the first question. That is to say, the plaintiffs failed on whether there was a formal defect in the execution of the deeds of company arrangement. On 24 March 2005, his Honour published his reasons for judgment (J Aron Corporation v Newmont Yandal Operations Pty Ltd [2005] NSWSC 238). His Honour did not then make formal orders.

38 Following the delivery of Austin J’s reasons, the matter came again before his Honour on 7 April 2005 for the purpose of his Honour making formal orders. The 2003 proceedings were also listed before his Honour at that time for directions. The transcript records the following:

HIS HONOUR: Our main task this morning is in the 2004 matter, and that is to formally make orders with respect to the eight separate questions for determination and to deal with the question of costs in that matter. …

…

HIS HONOUR: Do you have any short minutes or anything else to help me?

GRAY

: Your Honour will be astonished to know that the parties haven’t actually agreed on what should happen. In order to indicate where we see the position, can I give to your Honour a short chronology of what happened some year or 18 months ago in the 2003 proceedings. So far as the 2004 proceedings are concerned, we accept that the outcome should be judgment for the defendant, and the costs issue that your Honour mentioned I thought was to be dealt with on 26 April.

…

GRAY: Subject to, that we see no issue between the parties.

…

GRAY: Mr Bathurst suggests we deal with the 2004 proceedings first and, as I’ve said, from our perspective we …

HIS HONOUR: I will make some orders then. First of all, formally answering the questions for separate determination, my order is that my answers to the eight questions for separate determination are as follows:

(1) Yes;

(2) – (8) In view of my answer to question 1, these questions do not arise.

Secondly, I suppose the correct way to deal with the proceedings is to dismiss the amended cross-claim and enter judgment for the defendants in the proceedings.

BATHURST: If your Honour pleases.

HIS HONOUR: I will do that. In this 2004 proceeding the amended cross-claim is dismissed and judgment is entered for the defendant in the proceeding. …

39 There was then debate which extends to over fifteen pages of transcript as to what should happen with the 2003 proceedings. The defendant proposed that those proceedings remain dormant until the plaintiffs decided whether they wished to appeal from the determination of the separate questions. Austin J determined that directions should be made for the further conduct of the 2003 proceedings. It would appear from the following exchanges that all parties at that time contemplated that all of the issues in the 2003 proceedings would still have to be decided on their merits, although of course the “formal defect” issue had been decided. It had been removed as an issue in the 2003 proceedings. There was the following exchange between his Honour and Mr Bathurst QC in relation to the evidence the plaintiffs had already filed in support of their challenges in the 2003 proceedings:

His Honour: … in other words, this has now become the usual kind of challenge to a deed case where there are arguments of improper purposes and oppression and all of that.

Bathurst: Yes. It may be, as I said, that’s all the plaintiff wants to put on it and that would seem surprising to us.

40 On 8 April 2005, a minute of judgment was entered which reads:

Judgment:

1. In this proceeding the amended cross-claim is dismissed and judgment is entered for the defendant as per order made on 7 April 2005 and entered on 8 April 2005.

41 On 21 April 2005, the plaintiffs filed a notice of appeal. The plaintiffs appealed from the judgment of Austin J of 24 March 2005 and his Honour’s orders of 7 April 2005.

42 On 10 May 2005, orders were made, inter alia, for the defendants in the 2003 proceedings to file amended defences by 27 June 2005. The first and fourth defendants in the 2003 proceedings did not file amended defences. (The fourth defendants in the 2003 proceedings are subsidiaries of NYOL). On 8 November 2005, the first and fourth defendants in the 2003 proceedings served a proposed amended defence in the 2003 proceedings. They pleaded that, by reason of the entry of judgment for the defendant in the 2004 proceedings (and the dismissal of the amended cross-claim in the 2004 proceedings), the plaintiffs in the 2003 proceedings were estopped from relying upon any acts or omissions of the defendants relating to the entry into administrations of the NYOL group companies, or the administrations of those companies, or the second meetings of creditors, or the entry into the deeds of company arrangement, or the performance of those deeds, because they were so relevant to the subject matter of the 2004 proceedings that it was unreasonable for the plaintiffs not to raise them in those proceedings. They also pleaded that the plaintiffs were estopped from claiming orders for the restoration of any assets to the companies which were transferred by them in implementation of the deeds of company arrangement, because those matters were so relevant to the subject matter of the 2004 proceedings it was unreasonable for the plaintiffs not to raise them in those proceedings. These defences therefore pleaded estoppels under the principles of Port of Melbourne Authority v Anshun Pty Ltd. The first and fourth defendants also pleaded that, by reason of the judgment being entered for the defendant in the 2004 proceedings, the question of whether NYOL owed a debt to the plaintiffs pursuant to the master hedge agreement was res judicata and the plaintiffs were precluded from contending otherwise. They also pleaded that there was an issue estoppel which precluded the plaintiffs from contending that the third defendants were not appointed as administrators of the companies.

43 The solicitor for the plaintiffs formed the view that these defences were purely opportunistic and not grounded in any reasonable view of the law and the facts.

44 On 11 November 2005, Palmer J dealt with an application for a stay of the 2003 proceedings, pending the outcome of the appeal. His Honour summarised the submissions made by the defendants as follows (J Aron Corp & Anor v Newmont Yandal Operations Pty Ltd & Ors [2005] NSWSC 1159 at [12]-[13]):

“12 The Defendants' submissions are essentially as follows. If the answer given by Austin J to question one of the separate questions is upheld in the Court of Appeal, the result will be that it will have been held that the resolutions referred to in that separate question were validly passed, the Deeds of Company Arrangement came into effect and the judgment consequentially entered for the Defendants in the 2004 Proceedings will stand. That the Defendants are not indebted to the Plaintiffs will be res judicata. Consequently there will be no point in agitating the questions which arise in the 2003 Proceedings, as those questions essentially concern whether or not the Deeds of Company Arrangement, having come into effect, should nevertheless be terminated or declared invalid for a number of different reasons. This is so, the Defendants say, because even if the Deeds are terminated, the judgment in the 2004 Proceedings in favour of the Defendants precludes the Plaintiffs from seeking to recover the alleged debt.

13 On the other hand, so the Defendants say, if the appeal is allowed and the first question identified by Austin J is answered in the negative, the result will be that the resolutions approving the Deeds of Company Arrangement will be held not to have been validly passed, there will be no valid Deeds of Company Arrangement in existence, and there will be no purpose in agitating the questions raised in the 2003 Proceedings as to whether those Deeds should be terminated. In other words, if the appeal is upheld, all of the questions as to termination of the Deed in the 2003 Proceedings will be otiose.”

45 Palmer J ordered that the 2003 proceedings be stayed, pending the hearing and determination of the appeal in the 2004 proceedings. In the course of his reasons, his Honour said:

17 However, as matters presently appear, it is difficult to see how dismissal of the appeal in the 2004 Proceedings, leaving the judgment which has been entered in those Proceedings intact, could do other than, at the very least, remove a very large part of the issues falling for determination in the 2003 Proceedings, even if all of those issues are not finally disposed of or become unnecessary to resolve.

18 If the appeal is allowed on the ground that the Court of Appeal concludes that no valid resolutions for the execution of the Deeds were passed, it is difficult to see the further utility of many of the issues in the 2003 Proceedings.”

46 On 25 November 2005, the plaintiffs filed an interlocutory process in the 2003 proceedings for an order that the first and fourth defendants comply with orders made on 29 July 2005 for the giving of discovery by the defendants. That application came before Austin J on 2 December 2005. During the course of argument, his Honour said:

“ … it does strike me as a first impression, that things might have developed in a manner that I hadn’t intended or expected they would in this respect: my understanding of the effect of the determination of the separate questions on 24 March and the consequent entry of judgment in the 2004 proceedings was to leave the 2003 proceedings standing, except in respect of the specific grounds of validity that have been alleged and dealt with in the separate questions, namely the procedural issues about the way in which the meetings were run.

In other words, it seemed to me what survived for determination was a substantial case as to whether the J Aron interests could establish any grounds for termination of the deed of company arrangement: the sort of grounds that are set out in the Act.

Now it seems to be argued on your side that the entry of judgment in the 2004 proceeding creates a res judicata that prevents those issues from being ventilated, or prevents them from being ventilated effectively, so that if the appeal against my judgment of 24 March 2005 fails, the argument seems to run, there’s no utility in the 2003 proceeding.

That was certainly not my intention. If I’ve inadvertently, as it were, or without intending to do so, achieved that res judicata outcome by the entry of judgment in the 2004 proceeding, I would want to do whatever I could to put paid to that argument.

47 Counsel for the defendants indicated that it was the defendants’ position that if the appeal failed, the plaintiffs would be precluded from proceeding with a large part of the 2003 proceedings based on principles of res judicata, issue estoppel, or Anshun estoppel. Counsel said that there was no application before Austin J for him to rescind or vary the order of 7 April 2005. His Honour invited the plaintiffs to consider whether an application should be made to vacate the entry of judgment in the 2004 proceedings so as to preserve the parties’ rights consequent upon the determination of the appeal. The plaintiffs’ solicitor indicated that the plaintiffs intended to agitate the issue if the stay were lifted, and the defendants sought leave to file the proposed amended defence raising those issues. His Honour repeated that:

“What I flagged was whether it would be appropriate for the Court to vacate the entry of judgment so as to minimise or remove arguments which allege that the orders made have produced a result which it was certainly not my intention to produce.”

48 In a judgment given on 7 December 2005, Austin J held that the effect of Palmer J’s orders was to stay the operation of the earlier orders for the giving of discovery. After making consequential orders, his Honour added the following:

21. I touched on another matter that is troubling me on 2 December 2005, and I shall make some further remarks now. The matter that concerns me arises out of the ex tempore reasons for judgment given by Palmer J on 11 November – in particular, the argument put to Palmer J and reflected in paragraph 12 of his reasons for judgment. The defendants contended that if the appeal on my determination of the separate questions is unsuccessful, there will nevertheless be little or no utility left in the 2003 proceeding. They submitted that it is res judicata, by virtue of judgment having been entered for the defendants in the 2004 proceeding, that the defendants are not indebted to the plaintiffs in any event (that is to say, even if one or more of the grounds for terminating the deeds of company arrangement which remain extant in the 2003 proceeding are successfully pressed).

22. My intention in making the orders that I made in the 2004 proceeding, consequent upon determination of the separate questions, was to leave for determination in the 2003 proceeding all of the issues that remained in the statement of claim in that proceeding as amended to that time (that is to say, excluding what has been called the formal defect argument). Though not articulated, my intention was that if the plaintiffs were able to establish any of the grounds for termination of the deeds, and were able to persuade the Court to exercise all appropriate discretions in favour of making orders to terminate the deeds, then it would be open to the plaintiffs to assert their claimed debt notwithstanding the entry of judgment in the 2004 proceeding.

23. I understand that the orders that I made on 7 April 2005, giving judgment for the defendants, have been entered. The court has an inherent power to vary an order or judgment that does not reflect the true intent of the judicial officer concerned: see

at [36.17.15]. If that power is available in the present circumstances, I would be disposed to exercise it so as to vary the orders previously made in the 2004 proceeding. I have in mind that the variation would be along the lines of an additional provision stating that the orders, including the entry of judgment, were made without affecting or limiting the rights of the plaintiffs to pursue the relief currently sought in the 2003 proceeding and to assert, if they succeed in obtaining such relief, that they are creditors of one or more of the defendant entities.

24. There is no application before me for any such variation to be made, although the Court could proceed of its own motion. Whether the Court has jurisdiction to make such an order, and whether if it has it would be appropriate for the Court to do so, are matters which I think will involve some complexity. The Court ought not to act without giving the parties the opportunity to consider what I have said and make appropriate submissions. Given that the hearing of the appeal against my orders is pending and the problem could be addressed by the Court of Appeal, it seems to me that the Court should not, of its own motion, pursue the matter further for the time being. But I have recorded my views in case they have any relevance to the appeal and in case any application on this subject matter is in contemplation. These are difficult matters but in view of my firm understanding of the intention lying behind the orders I have made, I have thought it appropriate to take the unusual step of recording my views.

49 The appeal was heard on 7 February 2006. No application was made to amend the grounds of appeal to seek any consequential order other than the entry of judgment for the defendant, if the answers to the separate questions were upheld. On 15 March 2006, the Court of Appeal dismissed the appeal.

50 The 2003 proceedings were again listed before Austin J on 13 April 2006. During the course of debate as to what direction should be made in the 2003 proceedings, counsel for the defendants submitted that:

“We see the prospects, when the pleadings are closed, that there will be raised a series of preclusions, or issue estoppels, and they will come in three ways. A short and less important way perhaps is res judicata. A second and more important way by issue estoppel, and the third one is by [

] preclusion. If we are correct on one or more of those preclusionary doctrines then a very large proportion of the case will be shut out, and if a large proportion of the case is precluded then, as a matter of proper case management, the defendant should not be compelled to prepare, by way of discovery or by way of evidence, for a case that may not occur.”

51 Austin J noted that no application had been made under the “slip rule”, or any other rule, to vary the orders of 7 April 2005. Senior counsel for the plaintiffs submitted that orders should be made for pleadings, discovery and the filing of evidence. Senior counsel then appearing for the plaintiffs described the various defences of Anshun estoppel, res judicata and issue estoppel as laughable.

52 There was no resistance to the first and fourth defendants’ amended defence being filed. They were ordered to file and serve any amended defences by 4 May 2006.

53 On 14 June 2006, the plaintiffs filed a notice of motion in the 2004 proceedings seeking the following orders:

1. The order made by Austin J dated 7 April 2005 and entered 8 April 2005 be varied to give effect to the intention of Austin J at the time when the Court’s order was made by adding to paragraph 1 the words

‘on condition that no party can rely upon issue estoppel, Anshun estoppel, estoppel by record or res judicata arising out of the order made and the judgment given, except that the Plaintiffs cannot assert in proceedings No. 4666 of 2003 or in any other proceedings that creditors did not vote in favour of a resolution on 29 August 2003 that each NYOL Group Company execute a deed of company arrangement.’;

2. In the alternative to 1, the order made by Austin J 7 April 2005 and entered on 8 April 2005 be vacated and replaced with the following so as to give effect to the intention of Austin J at the time when the Court’s order was made:

‘1. The Court declares that the answer to question 1 as set out in Appendix A to the judgment of Austin J of 29 November 2004 in these proceedings, and replicated below is “yes”:

“At the second meeting of creditors held on 29 August 2003 under s 439A of the Corporations Act, did the creditors of each of the following NYOL Group companies (‘Companies’) pass resolutions pursuant to s 439C that each of the Companies execute deeds of company arrangement’

Clynton Cout Pty Ltd (‘Clynton’)

Quotidian No 117 Pty Ltd

Australian Metals Corporations Pty Ltd

Great Central Holdings Pty Ltd

Great Central Investments Pty Ltd

Great Central Mines Pty Ltd

Matlock Castellano Pty Ltd

Matlock Mining Pty Ltd

Newmont Wiluna Metals Pty Ltd?”

2. The Court declares that by reason of its answer to Question 1, Questions 2 to 8 as set out in Appendix A to the judgment of Austin J of 29 November 2004 in these proceedings do not arise;

3. The Court orders that these proceedings be stayed until further order of the Court.”

54 The defendant objected to Austin J hearing the application. On 14 July 2006, his Honour decided that he should not do so (J Aron Corporation v Newmont Yandal [2006] NSWSC 720). In para [36] above, I referred to what Austin J said in para [15] of his reasons on 14 July 2006 as to his intention in making the orders of 3 December 2004 for the separate determination of questions. His Honour also said (at [33]):

33 It emerges from these materials that my intention, at the time of publication of my judgments of 29 November 2004 and 24 March 2005, and at the time that I made orders on 3 December 2004 and 7 April 2005, and subsequently, has been that the resolution of questions for separate determination, and consequently the disposition of the 2004 proceeding once that step had been taken, were to be on the basis that there would be no occasion for raising res judicata or estoppel arguments except with respect to the matters directly involved in the answering of the question. In raising a defence of res judicata, issue estoppel and

estoppel on the ground that entry of judgment against the plaintiffs in a proceeding in which they asserted a claim to relief as creditors prevents them from pursuing the bulk of their claims to relief in the 2003 proceeding, the Newmont Companies are seeking to derive consequences from my orders that are contrary to my intention. … “

55 The evidence in support of the plaintiffs’ application was an affidavit by the plaintiffs’ solicitor, Mr Ryckmans. There was no evidence expressly dealing with the circumstances in which the plaintiffs’ counsel came to propose, on 7 April 2005, that the appropriate order to be made consequential on the answering of the separate questions was that judgment be entered for the defendant. Mr Bathurst QC, who appeared with Mr Henry for the defendant, stated that because there was insufficient material to enable the defendant properly to do so, the defendant did not suggest that counsel for the plaintiffs, when he suggested judgment be entered for the defendant, gave any consideration, one way or the other, to what the effect of the judgment would be.

56 The view of the plaintiffs’ solicitor from the time the proposed defences were raised on 8 November 2005 was that they were “opportunistic and not grounded in any reasonable view of the law and the facts”. The plaintiffs’ solicitor deposed that he considered it to be premature to file an application to vary the orders of 7 April 2005 until an amended defence alleging res judicata and estoppel was filed. He remained of the view that the defences did not have a reasonable basis and were “opportunistic”. He also believed that the defendant would be dissuaded from raising the defences by Austin J’s articulation of his understanding and intentions at the time the orders were made. He also believed that the defences would in any event be moot if the appeal from his Honour’s orders succeeded.

Jurisdiction to Set Aside the Judgment and Orders of 7 April 2005

57 Once an order disposing of proceedings has been made and entered, the Court has no jurisdiction to re-open the proceedings to vary or set aside the order, except where the order does not correctly reflect the Court’s intention, but was made in error, or, where there is statutory authority to do so. The statutory authority relied on by the plaintiffs is the “slip rule”, now found in r 36.17 of the Uniform Civil Procedure Rules 2005 (NSW). The rule provides:

“If there is a clerical mistake, or an error arising from an accidental slip or omission, in a judgment or order, or in a certificate, the Court, on the application of any party or of its own motion, may, at any time, correct the mistake or error.”

58 There is no doubt that if the entry of judgment for the defendant has the result for which the defendant contends, that that consequence was not anticipated or intended by the Court. It would be more than an unintended consequence. It is contrary to Austin J’s intention that either party can contend that any res judicata or other estoppel, arising from the disposition of the 2004 proceedings, limits the issues to be contested in the 2003 proceedings, other than the “formal defect” issue. That is to say, his Honour intended that the 2004 proceedings would be disposed of on the basis that “there will be no occasion for raising res judicata or estoppel arguments except with respect to the matters directly involved in the answering of the question” (J Aron Corporation v Newmont Yandal [2006] NSWSC 720 at [15] and [33]).

59 The Court has an inherent jurisdiction to vary an order, even after it has been entered, if the order does not correctly express its intention (Gikas v Papanayiotou [1977] 2 NSWLR 944; Re Future Life Enterprises Pty Ltd (1994) 33 NSWLR 559 at 563; Storey & Keers Pty Ltd v Johnstone (1987) 9 NSWLR 446 at 449; L Shaddock & Associates Pty Ltd v Parramatta City Council (No. 2) (1983) 151 CLR 590 at 594). The slip rule in r 36.17, conferring power to correct a judgment or order if there is an error arising from an accidental slip or omission, or if there is a clerical mistake, reflects that inherent jurisdiction (Shaddock at 594; Storey & Keers Pty Ltd v Johnstone at 449).

60 Although the plaintiffs’ written submissions seemed to suggest that the Court’s inherent jurisdiction may not have survived the High Court’s judgment in Bailey v Marinoff (1971) 125 CLR 529, that was not the position finally taken by either of the parties. Bailey v Marinoff was not concerned with an order which did not reflect the intention of the court when it was made, or involved any error (see especially per Menzies J at 531 and per Walsh J at 534).

61 The jurisdiction exists even where the Court has acted deliberately and without error in framing its order on the basis of the case presented to it, but there is an omission resulting from the inadvertence of a party’s legal representative in not raising a point at the hearing (L Shaddock & Associates Pty Ltd v Parramatta City Council at 594-595; Storey & Keers Pty Ltd v Johnstone at 449). Examples of cases in which the jurisdiction has been exercised to rectify the consequences of mistakes of a party’s barrister or solicitor include: ordering costs of a notice of motion adjourned to the hearing which counsel omitted to call to the judge’s attention when he announced judgment (Fritz v Hobson (1879) 14 Ch D 542 at 561-562); the correction of a certificate of taxation where the solicitor omitted to include fees paid to a referee in his bill of costs (Chessum & Sons v Gordon [1901] 1 KB 694 at 698); the failure of counsel to apply for an order for costs incurred before the issue of a summons (In re Inchcape (Earl) [1942] Ch 394); the omission of counsel to ask for an order that interest be included in damages to be assessed (Tak Ming Co Ltd v Yee Sang Metal Suppliers Co [1973] 1 WLR 300 at 304); and the failure to include a claim for interest on damages from the date on which judgment was given in the Supreme Court and which would be payable if judgment for the defendant were overturned on appeal, coupled with the failure to mention the matter on the hearing of the appeal (L Shaddock & Associates Pty Ltd v Parramatta City Council (No. 2)). As Lockhart J said in Elyard Corporation Pty Ltd v DDB Needham Sydney Pty Ltd (1995) 61 FCR 385 at 391:

It is well settled that the application of the slip rule is not confined to giving effect to the intention of the judge at the time when the Court’s order was made, or judgment given. It extends to the intention which the Court would have had but for the failure that caused the accidental slip or omission:

(1987) 89 FLR 356. The rule also extends to permit the correction of an order or decree where the omission results from the inadvertence of the parties’ legal representative:

at 561-562;

[1901] 1 KB 694;

at 304;

at 594-595 per Mason ACJ, Wilson and Deane JJ; and

at 274-275

62 Lockhart J’s exposition of the scope of the slip rule was accepted by the Court of Appeal in Akron Securities Ltd v Iliffe & Ors (No 3) (26 September 1997, unreported; BC9704809 at 9). In Hanave Pty Ltd v LFOT Pty Ltd (2004) 136 FCR 566, the Full Court of the Federal Court held that an application under the slip rule should have been refused where a solicitor’s failure to claim interest was due to ignorance rather than inadvertence (at 568 and 576).

Defendant’s Submissions on Jurisdiction to Set Aside Order

63 The defendant submitted that the Court has no jurisdiction to set aside the order of 7 April 2005 on a number of grounds. First, it submitted that the slip rule is only available to correct ancillary or consequential matters (Coppins v Helmers; Brambles Constructions Pty Ltd (1969) 72 SR (NSW) 273 at 278). It submitted that entry of judgment for the defendant was not an ancillary or consequential matter.

64 Secondly, the defendant submitted that the plaintiffs made a deliberate decision to propose that judgment be entered for the defendant. It said there was no evidence of inadvertence on the part of the plaintiffs’ legal representatives on 7 April 2005, and that the slip rule did not apply to the consequences of a deliberate decision.

65 Thirdly, the defendant relied upon the fact that the plaintiffs continue to deny that the entry of judgment has the preclusionary effect which the defendant alleges it has. The defendant submitted that the plaintiffs could not obtain relief under the slip rule where they did not acknowledge there was any error in the entry of judgment for the defendant. It was submitted that the slip rule requires demonstration of an error, not a possible error, in a judgment or order.

66 Fourthly, the defendant submitted that the Court has no power to recall or set aside a judgment which is regularly entered merely because the judgment has unintended or unforeseen consequences.

67 Fifthly, the defendant submitted that there is no jurisdiction to vary the order unless it is clear what is the precise variation which should be made to correct the error. It pointed to the fact that the plaintiffs claim alternative forms of relief in their notice of motion. This, it was said, demonstrates that it cannot be clear what precise variation is required to correct the error. The defendant also submitted that it is not clear that Austin J would have made either of the orders sought in the notice of motion had he been informed by the plaintiffs on 7 April 2005 that they sought those orders. It submitted that, on the pleadings in the 2004 proceedings, the entry of judgment for the defendant was the proper order to make to dispose of the proceedings. Accordingly, there was no error in the entry of judgment for the defendant to be corrected. If the order made is arguably correct, it could not be clear that any other order would have been made if sought on 7 April 2005.

68 Sixthly, the defendant submitted that the proposed variation to the order must relate to a matter which was in issue before Austin J, or was incidental to a matter in issue (Storey & Keers Pty Ltd v Johnstone at 453). The defendant submitted that there was no issue before Austin J as to the preclusionary effect on the 2003 proceedings of the orders to be made in the 2004 proceedings.

69 The defendant did not submit that the Court lacked jurisdiction to set aside the order of 7 April 2005 because the appeal from the making of that order was dismissed by the Court of Appeal. The dismissal of the appeal did not mean that the order of 7 April 2005 acquired a new status, as if it were an order of the Court of Appeal which could not be interfered with by a single judge. The order remains susceptible to correction in the Court’s inherent jurisdiction or under the slip rule by a single judge. An example of orders of a single judge being corrected under the slip rule by another single judge, after those orders had been considered and varied on appeal, is to be found in Owston Nominees (No. 2) Pty Ltd v Branir Pty Ltd (2003) 129 FCR 558. The defendant did rely upon the conduct of the appeal in support of its contention that, in its discretion, the Court should not exercise jurisdiction to set aside the 7 April 2005 order, if that jurisdiction existed. However, it accepted that the dismissal of the appeal was not itself a jurisdictional bar to making the orders sought.

Whether Jurisdiction Confined to Ancillary or Consequential Orders

70 In Coppins v Helmers, the defendant had been found liable to the plaintiff in the sum of $60,000 plus costs at a separate hearing. In a third party action, the third party and the defendant were found equally liable and judgment was entered against the third party for $30,000. There was no order that the third party pay half the plaintiff’s costs for which the defendant was liable. The question of apportioning liability for the plaintiff’s costs was not raised before the trial judge. The trial judge gave no thought to it, but on the subsequent application said that had he considered the question, he would have awarded the defendant one half of the plaintiff’s taxed costs of the action in addition to one half of the verdict. The Court of Appeal held that neither the Court’s inherent jurisdiction, nor the slip rule, could be availed of to vary the order determining the substantial question in issue, as distinct from a merely ancillary or consequential matter. The Court said (at 278):

… It is sufficient to say of all the instances in which a court has corrected an order by including in the original order a provision concerning a matter which was not dealt with at the hearing, that they are cases in which the correction has related, not to the substantial issue between the parties which has been resolved by the original order, but to an ancillary or consequential matter. The researches of counsel have not brought to light any judicial decision in which a court has exercised its power to correct an order, once completed, by varying its determination or on the substantial question in issue in a respect which through inadvertence was not dealt with at the original hearing.

… when the purpose of the amendment is not to correct an ambiguity in the expression of the judgment or to give expression to the intention of the court at the time when the verdict was found, but to add to the amount of the verdict an item which, through the inadvertence of counsel, was not brought to the attention of the trial judge in circumstances in which the trial judge would have included the item in the verdict had his attention been directed to it.

71 In Storey & Keers Pty Ltd v Johnstone, McHugh JA held (at 451-452) that a more expansive view of the operation of the slip rule should be taken than that taken in Coppins v Helmers, having regard to the fact that certain decisions were not drawn to the Court’s attention in Coppins v Helmers, and having regard to the subsequent course of decision. Neither Priestley JA nor Clarke AJA found it necessary to express a view on this question. Clarke AJA said (at 456-457) that in Coppins v Helmers, the Full Court had not held that the slip rule was limited to corrections concerning subsidiary matters if the ground of correction was that the order was ambiguous, or that it failed to express correctly the intention of the Court at the time the judgment was pronounced. His Honour treated Coppins v Helmers as determining only that if the judgment is to be varied because of inadvertence, the variation could only apply to ancillary or subsidiary matters.

72 Cases decided in NSW since Coppins v Helmers where the slip rule has been applied to correct substantial and not subsidiary matters include: Gikas v Papanayiotou (where a declaration as to what assets were owned by the defendant was corrected); Storey & Keers Pty Ltd v Johnstone (where the quantum of an award of damages was corrected for mathematical error); and Akron Securities Ltd v Iliffe & Ors (No. 3) (where an order requiring the respondent to repay the difference between two amounts was corrected to provide for the repayment of the sum of the two amounts). There are many other examples of corrections of a substantive nature: e.g. Owston Nominees (No. 2) Pty Ltd v Branir Pty Ltd (identification of land subject of a declaration); Re Hogarth’s Estate; Crisp v Hogarth [1962] Tas SR 17 (addition of an order that provision under the Testators’ Family Maintenance Act 1912 (Tas) be free of estate and death duties); and Hatton v Harris [1892] AC 547 (amendment to provide that a charge on land for principal and interest should not extend beyond the amount of a penalty bond).

73 With the exception of Hatton v Harris, all of these cases could be characterised as ones where the original order did not correctly express the actual intention of the judge or court who made it, as distinct from being an order which did not reflect what the judge’s or court’s intention would have been had the issue been raised.

74 It follows from the reasons for judgment in Storey & Keers Pty Ltd v Johnstone that the Court of Appeal’s decision in Coppins v Helmers does not stand in the way of the Court’s correcting an order under the slip rule to address matters which are not merely ancillary or consequential if such correction is necessary to give expression to the actual intention of the Court, as distinct from giving effect to what the Court’s intention would have been but for the inadvertence of counsel or the judge. It is clear from paragraph [22] of Austin J’s judgment of 7 December 2005, and from paragraphs [15] and [33] of his judgment of 18 July 2006 (J Aron Corporation v Newmont Yandal [2006] NSWSC 720), that, not only was the raising of res judicata or other estoppels as a consequence of the order of 7 April 2005 something his Honour did not intend, it was contrary to his Honour’s actual intention that there would be no occasion for raising res judicata or estoppel arguments, except with respect to the matters directly involved in the answering of the separate questions. It follows that Coppins v Helmers does not stand in the way of varying the orders.

75 In any event, even if the jurisdiction were confined to making orders in respect of ancillary or consequential matters, it does not follow that these cannot include matters of substance. In Re Hogarth’s Estate; Crisp v Hogarth, Burberry CJ described the failure to make an adjustment for the burden of death and estate duties as a “consequential matter”, although it had the effect, unless corrected, of requiring the plaintiff to pay a sum of about £3,000 out of an order for provision of a lump sum of £4,000 and the income for life of a capital sum of £6,000. In L Shaddock & Associates Pty Ltd v Parramatta City Council (No. 2), the High Court (at 595) characterised the question of whether the Council should be ordered to pay interest on damages as being a subsidiary or consequential question, which only arose when the substantial issue between the parties as to liability and resulting damages had been determined. However, although these matters were consequential, they were also substantial. Thus, if there be a principle that the jurisdiction under the slip rule is confined to correcting ancillary or consequential matters, nonetheless, a matter can be subsidiary or consequential upon the substantial issue which has been determined, even though it has substantial monetary or other consequences for the parties.

76 The substantial issue argued and decided by Austin J was what answers should be given to the separate questions. The entry of judgment for the defendant, and the dismissal of the amended cross-claim, were consequential orders upon his Honour’s resolution of those questions. Even if the jurisdiction were limited to correcting ancillary or consequential matters, that would not preclude the plaintiffs from seeking the relief claimed.

Was the Entry of Judgment for the Defendant the Result of a Deliberate Decision of the Plaintiffs?

77 There are two answers to the defendant’s submission that the plaintiffs acted deliberately, or that they have not demonstrated that they acted inadvertently, in proposing the entry of judgment for the defendant.

78 The first answer is that, whatever the subjective state of mind of the plaintiffs or their legal representatives, the judge making the order did so without adverting to the possible consequence that entry of judgment in favour of the defendant might enable it to raise arguments based on principles of res judicata or estoppel extending beyond the matters directly involved in answering the separate questions. The inherent jurisdiction, and the jurisdiction under the slip rule, is available to correct errors where the order does not reflect the intention of the judge making it. (This may include errors to reflect what the judge’s intention would have been had the particular matter been addressed when the original orders were made, but were not addressed because of an accidental slip or omission). Subject to the other matters which were argued, the jurisdiction arises once it is demonstrated that the orders made did not reflect Austin J’s intentions. It is a different question whether, as a matter of discretion, the jurisdiction should not be exercised if, when they proposed the order for entry of judgment for the defendant, the plaintiffs acted deliberately, in the sense that they gave consideration to the possibility of estoppel defences arising from the entry of judgment, but dismissed them. The jurisdiction arises from the fact the order does not reflect the intention of Austin J, who did not consider that question.

79 The second answer to this submission is that, during the course of oral submissions, Mr Bathurst QC made it clear that the defendant did not suggest that counsel for the plaintiffs, when the latter suggested that judgment be entered for the defendant, had given consideration one way or the other as to what the effect of the judgment would be.

Must the Plaintiffs Admit the Substance of the Estoppel Defences?

80 The defendant submits that the plaintiffs have not sought to demonstrate an error, as distinct from a possible error, in the entry of judgment for it. To the contrary, the plaintiffs maintain that there is no substance to the new defences which their counsel, on a previous occasion, described as laughable. The defendant submits that the judgment cannot be corrected for error arising from an accidental slip or omission if the plaintiffs do not accept that any such error exists.

81 However, Austin J’s judgment of 18 July 2006 demonstrates that his Honour did not intend that the orders for the disposition of the 2004 proceedings would create any occasion for the raising of res judicata or other estoppel arguments. That was his Honour’s intention whether the arguments are well-founded or ill-founded. The relevant error, so far as his Honour is concerned, is not that the order for judgment for the defendant creates a res judicata or other estoppel (which has not been decided), but that the order should provide an occasion for that argument to be raised.

82 Moreover, as Mr Walker SC for the plaintiffs pointed out, an ambiguous order can be corrected under the slip rule without the Court’s first construing the order to determine whether, on its proper construction, the order has a different meaning from that which the Court intended. An ambiguous order can be corrected to make clear what was the judge’s intention and thereby avoid the necessity for such argument. In such a case, the error is in not making the Court’s intention clear.

83 There is no reason in principle that the order for entry of judgment in favour of the defendant cannot be set aside without first determining whether the defendant’s res judicata and other estoppel defences in the 2003 proceedings are well-founded.

Are Unintended Consequences Sufficient to Invoke the Jurisdiction?

84 The defendant was not able to cite authority to support the proposition that jurisdiction under the slip rule does not extend to correcting an order merely because the order has unintended or unforeseen consequences. In my view, it is not necessary to decide whether this proposition is correct or not. The consequence of the order entering judgment for the defendant is that the first and fourth defendants in the 2003 proceedings have raised res judicata and other estoppel defences. As noted earlier, that is not only an unintended or unforeseen consequence, but it was one which is contrary to Austin J’s actual intention. The defendant needs to go further, and demonstrate that there is no jurisdiction to correct an order if its consequences are contrary to those the Court intended.

85 Two cases in particular demonstrate that the Court’s jurisdiction under the slip rule does extend to varying an order which has consequences contrary to those the Court intended. As noted above, in Re Hogarth’s Estate; Crisp v Hogarth, the Supreme Court of Tasmania corrected an order made under the Testators’ Family Maintenance Act to provide that the burden of death and estate duties should not be borne by the applicant in whose favour the provision was made. The provision had been calculated on the net residuary estate after the payment of such duties. The Court’s error was as to the consequences of the order for provision being made without designating who should bear the burden of estate and death duties.

86 A case close to the present is Blacker v National Australia Bank Ltd [2000] FCA 1011. This followed from earlier proceedings decided by Katz J (Blacker v National Australia Bank Ltd [2000] FCA 681). The applicants had sued the bank under the Trade Practices Act 1974 (Cth) for misleading and deceptive conduct, and for negligence. The bank cross-claimed for its debt. The applicants wished to rely upon the Contracts Review Act 1980 (NSW). However, his Honour held that the Federal Court did not have jurisdiction to deal with the claim under that Act (Blacker v National Australia Bank Ltd [2000] FCA 681 at [29]). His Honour gave judgment for the applicants against the bank, but also gave judgment for the bank against the applicants on the bank’s cross-claim for the amount of the debt plus interest, with consequential relief. The bank’s debt far exceeded the damages which his Honour awarded (see Blacker v National Australia Bank Ltd (2001) ATPR 41-817; [2001] FCA 254 at [14]). The applicants pursued their claim under the Contracts Review Act in the Supreme Court of NSW. Shortly before the hearing in the Supreme Court, the bank gave notice of a submission that the applicants’ claim under the Contracts Review Act was precluded because all contractual claims of the bank against which relief was sought under the Contracts Review Act had merged in the judgment in the Federal Court.

87 In response to that submission, the applicants applied under order 35 r 7(2)(e) of the Federal Court Rules 1979 (Cth) for an order varying or setting aside the judgment in favour of the bank on the cross-claim on the ground that the order did not reflect the intention of the Court. Katz J treated the application as being one, in effect, to suspend, until the conclusion of the Supreme Court proceedings, the operation of the order giving judgment in favour of the bank on its cross-claim. His Honour noted (Blacker v National Australia Bank Ltd [2000] FCR 1011 at [2]) that in his earlier reasons for judgment, he:

“ … made plain my then understanding that the orders which I anticipated making on the claim and cross-claim would not prevent the Blackers from seeking to prosecute their claim under the

in, in particular, the Supreme Court of New South Wales, which had jurisdiction with respect to such claims.”

88 The defendant sought to distinguish this case on the ground that it did not involve setting aside a judgment, but suspending the time from which the judgment was to take effect. That distinction makes no difference. The case provides authority, in analogous circumstances, that the jurisdiction to correct an order on the ground that it does not reflect the intention of the Court extends to the consequences of the judgment.

89 Indeed, although Katz J did not say so, it would appear that suspending the operation of the judgment was made for the purpose, if the occasion should later arise, of varying or setting aside the judgment if the applicants succeeded on their claim in the Supreme Court under the Contracts Review Act. In the result, however, the applicants’ claim under the Contracts Review Act failed (Blacker v National Australia Bank Ltd (2000) 158 FLR 142).

90 Accordingly, I conclude that the jurisdiction extends to the correction of an order on the ground that the consequences of the order are contrary to those the Court intended.

Does the Court Lack Jurisdiction on the Ground that the Precise Order to be Made is not Clear?

91 In Elyard Corporation Pty Ltd v DDB Needham Sydney Pty Ltd, Lockhart J said (at 390-391):

“The slip rule applies where the proposed amendment is one upon which no real difference of opinion can exist. It does not apply where the amendment is a matter of controversy. …”

92 In Storey & Keers Pty Ltd v Johnstone, McHugh JA said (at 453):

The rationale of the slip rule also requires that an omission or mistake should not be treated as accidental if the proposed amendment requires the exercise of an independent discretion or is a matter upon which a real difference of opinion might exist. … In general the test of whether a mistake or omission is accidental is that applied by Lord Herschell in

(at 558) if the matter had been drawn to the court’s attention would the correction at once have been made?

93 In their notice of motion, the plaintiffs sought alternative orders under the slip rule, but they submitted that it was the second order which ought to be made: that is, declarations to give effect to the answers to the separate questions, and an order that the proceedings thereafter be stayed until further order.

94 It appears that the origin of the plaintiffs seeking the first order, i.e. by imposing a condition on the entry of judgment for the defendant limiting the right of the defendant to raise matters by way of res judicata or other estoppel in the 2003 proceedings, was paragraph [23] of Austin J’s ex-tempore reasons for judgment of 7 December 2005, quoted in paragraph [48] above. However, the plaintiffs did not seek to demonstrate what power the court would have to impose such a limitation.

95 If the matter had been drawn to the attention of Austin J when the order was made, and submissions had been made as to the appropriate form of order, I do not think that his Honour would have made an order in terms of paragraph 1 of the notice of motion. However, it is clear that his Honour would have “at once” made an appropriate order to ensure that no order was made for the disposition of the proceedings which created any wider estoppel than arose from the determination of the separate questions. The making of a declaration to reflect the answer to the first question, and a declaration that by reason of that answer the other questions for separate determination did not arise, and otherwise staying the 2004 proceedings until further order, is the appropriate means of achieving that outcome. It is the only appropriate order which the parties sought to identify to give effect to that intention, once order 1 in the notice of motion is left out of the picture.

96 I acknowledge that arguments are available as to whether it is appropriate to dispose of the 2004 proceedings on the basis that no wider estoppel is created. In the usual course, proceedings are expected to be brought to finality as soon as they can be, consistently with the just, quick and cheap resolution of the real issues in the proceedings. On the face of the pleadings, the appropriate order to be made in the 2004 proceedings was the order which was in fact made. It is only because the 2004 proceedings were seen by Austin J as a convenient vehicle for raising separate questions for determination which could not be raised in the 2003 proceedings, having regard to the way they were constituted, that a different order is necessary to give effect to his Honour’s intention.

97 However, I do not think that an order under the slip rule cannot be made if it is arguable whether the judge’s intention as to the orders he or she intended to make is correct. The test is whether the amendment is beyond controversy to give effect to the judge’s intention; not whether it is beyond controversy that the amendment proposed would be a proper order. A judgment does not have to be beyond the possibility of appeal before it is susceptible to correction under the slip rule. In my view, it is not for me as a single judge, standing in Austin J’s place, to express any view as to whether his Honour was correct or incorrect in forming the intention which he did. If I am satisfied, as I am, that if the matter had been properly raised on 7 April 2005, his Honour would “at once” have made the declarations and ordered a stay of the proceedings, then the jurisdiction exists to set aside the order of 7 April 2005 to give effect to his Honour’s intention. Whether that intention was correctly formed is a different issue which I should not entertain.

98 The defendant also submits that the plaintiffs should not be entitled, in the 2003 proceedings, to press their challenge to the validity of the administrator’s appointment, as Austin J made a finding in his judgment on the separate questions that Messrs Korda and Mentha were appointed as administrators of each of the companies in the NYOL group. That objection may well be an additional ground on which it is not appropriate to make the first order sought on the notice of motion. There may or may not be an issue estoppel, in relation to that matter, arising from the making of declarations giving effect to the answers to the separate questions for determination.

99 Austin J intended that the disposition of the 2004 proceedings should not have the consequence of providing the occasion for the raising of res judicata or other estoppel arguments, except with respect to matters directly involved with the answering of the separate questions. If an issue estoppel arises from his Honour’s answers, that is an intended consequence of the determination of the separate questions.

Does the Proposed Amendment not Relate to a Matter which was in Issue or was Incidental to a Matter in Issue?

100 In Storey & Keers Pty Ltd v Johnstone, McHugh JA said (at 453):

… if a claim is made in respect of a matter which does not relate to an issue in the original proceedings, there is no power under the slip rule to vary the order: cf

. …

The requirement that the proposed amendment must relate to a matter which was in issue in the proceedings or what was incidental thereto merely serves to emphasise that it is only omissions or mistakes which are accidental which can be rectified. It would be contrary to the rationale of the slip rule to allow judgments and orders to be amended to deal with matters which were not in issue in the proceedings. Such matters must be dealt with by way of appeal and in accordance with the principles which govern the raising of new matters on appeal: …

101 It is quite true that no issue is raised on the pleadings in the 2004 proceedings as to the effect which the resolution of those proceedings should have upon the 2003 proceedings. In that sense, the correction which is proposed to the order of 7 April 2005 is not a correction in respect of a matter which was in issue in the 2004 proceedings. However, the question of what orders should be made in consequence of the determination of the separate questions was an issue in the proceedings. In any event, the making of such orders is incidental to the determination of those questions. It is not a new matter which, if raised on appeal, could only be pursued with leave. I would therefore not uphold this objection to jurisdiction.

102 For these reasons, I conclude that the Court has jurisdiction under the slip rule, and in its inherent jurisdiction, to make the second order sought in the notice of motion.

Discretion

103 In Gould v Vaggelas (1985) 157 CLR 215 at 275, the High Court said that the jurisdiction was one “to be exercised sparingly, lest it encourage carelessness by a party’s legal representatives and expose to risk the public interest in finality of litigation.”

104 The plaintiffs were on notice that if they successfully persisted in their application for the determination of the separate questions in the 2004 proceedings, without the two sets of proceedings being joined together, the defendant would raise issues of res judicata and estoppel. Mr Bathurst QC made that plain during the course of submissions on 22 October 2004 (see para [29] above). The plaintiffs opposed the joinder of the proceedings, and no order for joinder was made. One might have thought that the plaintiffs would have pleaded by way of reply, or by amendment to their statement of claim in the 2004 proceedings, all of the grounds upon which they challenge the deeds of company arrangement, particularly having regard to the matters raised by Mr Bathurst QC in October 2004. Had they done so, the inappropriateness of entering judgment for the defendant following the answers to the separate questions would have been apparent.

105 Moreover, the avoidance of those consequences by not making an order for the final disposal of the 2004 proceedings was expressly adverted to by Austin J during the hearing on 22 October 2004, and in para [53] of his reasons for judgment of 29 November 2004 (see paras [29] and [34] above). This should have alerted the plaintiffs’ legal representatives to the possible consequences of judgment being entered for the defendant in the 2004 proceedings.

106 The plaintiffs’ legal representatives were subsequently dismissive of the defendant’s argument. It is not for me to say whether or not the defendant’s argument is likely to succeed, but it is plain from the observations of Palmer J in his reasons of 11 November 2005, quoted in para [45] above, that the defendant’s contentions cannot be so lightly dismissed.

107 Were I of the view that, when the order was made on 7 April 2005, the plaintiffs’ legal representatives had given consideration to the possible consequences for the 2003 proceedings of judgment being entered for the defendant in the 2004 proceedings, I would not exercise the discretion to set aside or vary the order, notwithstanding that its ramifications did not reflect the intentions of Austin J. The plaintiffs did not adduce evidence as to what consideration their legal representatives gave to that question prior to the hearing on 7 April 2005. However, I think it highly unlikely that if the matter had been considered, the plaintiffs’ legal representatives would have proposed the order they did. I bear in mind that more than six months had passed since the hearing of 22 October 2004. Mr Bathurst QC accepted before me that the evidence did not permit him to suggest that the plaintiffs’ counsel gave consideration, one way or the other, to what the effect of the judgment would be on the 2003 proceedings.

108 However, it is still necessary to take into account that the plaintiffs and their legal representatives were on notice of the point, and that they failed to take any steps to address it, but rather themselves proposed the order for judgment in favour of the defendant.

109 The defendant submitted that it suited the plaintiffs to have final judgment entered in favour of the defendant, as this gave the plaintiffs an appeal as of right from the judgment of Austin J. If the proceedings had not been finally disposed of, an appeal would only have lain with leave of the Court of Appeal.

110 There is no evidence that this was the reason that the plaintiffs proposed the order for the entry of judgment in favour of the defendants. Having regard to the concession to which I have referred, it would be wrong to find, and I do not find, that this was a fact which motivated the plaintiffs in proposing the order for entry of judgment.

111 The fact that the entry of judgment for the defendant gave the plaintiffs an appeal as of right is another relevant discretionary consideration. However, it is not a consideration which lies heavily in the scales. An appeal as of right would have lain ultimately in any event. No party has been prejudiced by the determination of the appeal. Rather, the determination of the appeal finally sets at rest one of the issues the plaintiffs raised. It is also likely that had leave to appeal been sought, it would have been given, so as to implement fully the process of case management undertaken by Austin J.

112 A further discretionary consideration is the delay in making the present application. The issue which has given rise to the application was made known to the plaintiffs by no later than 8 November 2005, following the service of the proposed amended defence. No application was made to Austin J prior to the hearing of the appeal for the order to be varied under the slip rule. Had such an application been made, if either party were dissatisfied with his determination, it might have been possible to deal with any appeal from an order disposing of such an application on the hearing of the appeal on 7 February 2006. It may even have been possible, as Austin J contemplated in his judgment of 7 December 2005, for the matter to have been raised in the Court of Appeal on the appeal from the orders made on 7 April 2005. The matters raised by Austin J in his judgment of 7 December 2005 were not adverted to on the hearing of the appeal.

113 Even after the appeal was disposed of, the initial position taken by the plaintiffs when the matter returned before Austin J was that there was no substance to the res judicata and other estoppel defences. It was not until 15 June 2006 that the present application was brought.

114 To a certain extent, this delay is explained by two related factors. The first is that the defence raising these issues was not filed until 4 May 2006. Part of the reason for the late filing of the defence was that the 2003 proceedings were stayed until the determination of the appeal in the 2004 proceedings as a result of Palmer J’s order of 11 November 2005. Secondly, the plaintiffs’ solicitor gave unchallenged evidence that, following Austin J’s remarks in his judgment of 7 December 2005, where his Honour expressed his intentions in relation to the orders, the solicitor considered it premature to bring an application along the lines suggested by Austin J to vary the orders under the slip rule until an amended defence alleging res judicata and estoppel was actually filed. He believed that Austin J’s reasons articulating his understanding at the time when the Court’s order was made would dissuade the defendants in the 2003 proceedings from filing an amended defence raising res judicata and estoppel-type defences. He also believed that such defences would be rendered moot if the appeal succeeded. This position was rational, but has led to an unfortunate delay. In waiting for the outcome of the appeal, the plaintiffs were not electing between alternative courses of action. In my view, the delay, although long, is not such as to warrant exercising my discretion against making the orders sought.

115 One of the reasons the High Court has enjoined that the jurisdiction under the slip rule be exercised sparingly is lest it expose to risk the public interest in the finality of litigation. I take that factor into account, but it has less weight in this case than in most. The 2003 proceedings will proceed in any event. Unless an order were made in those proceedings for the separate trial of the res judicata and estoppel defences, all of the issues in those proceedings will still be litigated. The defendant has foreshadowed applying for an order for the separate determination of those issues, but such application has yet to be heard. I do not predict the outcome of any such application. Nor would I predict what the outcome of a separate trial of such defences would be. Whatever the outcome of the present application, it will not bring the 2003 proceedings to finality. It is true that if order 2 in the notice of motion is made, it will mean that the 2004 proceedings have not been finally determined. However, no further litigation on any of the issues raised in the 2004 proceedings is to be expected.

116 Notwithstanding the discretionary reasons advanced for not making the order sought, and the need for caution in exercising the jurisdiction under the slip rule, I think the jurisdiction should be exercised in this case. Not to correct the order so as to give effect to Austin J’s intention would be to expose the plaintiffs to the risk that there would be no adjudication upon their substantive grounds for challenging the deeds of company arrangement. The amounts involved are very substantial. It was not only his Honour’s understanding, but also the plaintiffs’ intention, as made known to the defendant, that the 2004 proceedings were brought as a convenient vehicle for determining separate issues which could not be determined separately in the 2003 proceedings, and with the intention that if those questions were determined favourably to the defendant, the 2003 proceedings would proceed. That this was the limited purpose of the 2004 proceedings appears from the transcript of the directions hearing of 27 April 2004, referred to in para [14] above, and from subsequent exchanges referred to in paras [31] and [39] above. That was how his Honour viewed the matter.

117 In those circumstances, it is fair and just that the plaintiffs not face the risk of being shut out, by the nature of the orders made consequentially upon the determination of the separate questions, from litigating in the 2003 proceedings whatever of the grounds are properly open to them having regard to their conduct of the 2004 proceedings and the answers to the separate questions.

118 Carelessness of the plaintiffs’ legal representatives, whilst not to be encouraged, should not prevent the controversy from being determined in the way Austin J, who was case managing both proceedings, intended. The potential injustice to the plaintiffs if they are shut out from litigating such matters by the consequential order made on the answering of the separate questions outweighs the discretionary considerations advanced by the defendant.

119 For these reasons, I will make orders in accordance with paragraph 2 of the notice of motion filed on 14 June 2006, although deleting the unnecessary statement of reasons contained in that paragraph.

120 I make the following declarations and orders:

1. Order that the order made by Austin J on 7 April 2005, and entered on 8 April 2005 be vacated and the following declarations and order be made in lieu thereof.

Corporations Act

3. Declare that by reason of the answer to Question 1, Questions 2 to 8 as set out in Appendix A to the judgment of Austin J of 29 November 2004 in these proceedings do not arise.

4. Order that these proceedings be stayed until further order of the Court.

5. Further order that the plaintiffs’ notice of motion filed on 14 June 2006 be otherwise dismissed.

121 Although the plaintiffs have been successful on this application, the need for it arose as the result of the plaintiffs’ conduct of the 2004 proceedings, and notwithstanding the warning provided by Mr Bathurst QC during the course of submissions on 22 October 2004 as to what the consequences might be of final judgment being entered in the 2004 proceedings. My present inclination is that there be no order as to costs, with the intention that each party bear its own costs of the notice of motion. However, I will hear the parties on that question if either of them seeks an order for costs.

******

CITATION:	J Aron Corporation v Newmont Yandal Operations [2006] NSWSC 849
HEARING DATE(S):	27/07/06
JUDGMENT DATE :	24 August 2006
JURISDICTION:	Equity Division
JUDGMENT OF:	White J
DECISION:	See paragraph 120 of judgment.
CATCHWORDS:	PRACTICE & PROCEDURE – Judgments and orders – Setting aside – Plaintiffs made application to set aside order of Court entering judgment for defendant in proceedings 2407/04 – Application made because of contentions of defendant in related proceedings (4666/03) – Defendant contended that entry of judgment in proceedings 2407/04 afforded it defence in proceedings 4666/03 based on principles of res judicata, issue estoppel or Anshun estoppel – Jurisdiction of Court to set aside earlier judgment and orders – Where asserted consequences of earlier judgment does not reflect intention of Court – Inherent jurisdiction – Statutory jurisdiction under r 36.17 Uniform Civil Procedure Rules 2005 (NSW) (“slip rule”) – Whether jurisdiction to set aside confined to ancillary or consequential orders – Whether denial of substance of defendant’s estoppel-type defences precludes reliance by plaintiffs on slip rule – Whether jurisdiction to set aside available simply because the consequences of the judgment are contrary to judge’s intention – Where plaintiffs claim alternative forms of relief in notice of motion – Whether failure by plaintiffs to precisely identify order which should be made to correct error precludes reliance by plaintiffs on slip rule – Whether plaintiffs’ proposals to correct error relate to matter which was in issue or incidental to matter in issue – Whether Court should exercise discretion to set aside judgment – Order of Court entering judgment for defendant set aside – Declarations and stay ordered in lieu thereof.
LEGISLATION CITED:	Corporations Act 2001 (Cth) Uniform Civil Procedure Rules 2005 (NSW) Testators’ Family Maintenance Act 1912 (Tas) Trade Practices Act 1974 (Cth) Contracts Review Act 1980 (NSW) Federal Court Rules 1979 (Cth)
CASES CITED:	Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589 J Aron Corporation v Newmont Yandal [2006] NSWSC 720 Gikas v Papanayiotou [1977] 2 NSWLR 944 Owston Nominees (No. 2) Pty Ltd v Branir Pty Ltd (2003) 129 FCR 558 J Aron Corporation v Newmont Yandal Operations (2004) 49 ACSR 97 J Aron Corporation v Newmont Yandal [2004] NSWSC 543 J Aron Corporation v Newmont Yandal [2004] NSWSC 544 J Aron Corporation v Newmont Yandal [2004] NSWSC 1145 J Aron Corporation v Newmont Yandal Operations Pty Ltd [2005] NSWSC 238 J Aron Corp & Anor v Newmont Yandal Operations Pty Ltd & Ors [2005] NSWSC 1159 Re Future Life Enterprises Pty Ltd (1994) 33 NSWLR 559 Storey & Keers Pty Ltd v Johnstone (1987) 9 NSWLR 446 L Shaddock & Associates Pty Ltd v Parramatta City Council (No. 2) (1983) 151 CLR 590 Bailey v Marinoff (1971) 125 CLR 529 Chessum & Sons v Gordon [1901] 1 KB 694 In re Inchcape (Earl) [1942] Ch 394 Tak Ming Co Ltd v Yee Sang Metal Suppliers Co [1973] 1 WLR 300 Elyard Corporation Pty Ltd v DDB Needham Sydney Pty Ltd (1995) 61 FCR 385 Akron Securities Ltd v Iliffe & Ors (No 3) (26 September 1997, unreported; BC9704809) Hanave Pty Ltd v LFOT Pty Ltd (2004) 136 FCR 566 Coppins v Helmers; Brambles Constructions Pty Ltd (1969) 72 SR (NSW) 273 Re Hogarth’s Estate; Crisp v Hogarth [1962] Tas SR 17 Hatton v Harris [1892] AC 547 Blacker v National Australia Bank Ltd [2000] FCA 1011 Blacker v National Australia Bank Ltd [2000] FCA 681 Blacker v National Australia Bank Ltd (2000) 158 FLR 142 Gould v Vaggelas (1985) 157 CLR 215
PARTIES:	J Aron Corporation & 1 Or v Newmont Yandal Operations Pty Ltd
FILE NUMBER(S):	SC 2407/04
COUNSEL:	Plaintiffs: B Walker SC & V Gray Defendant: T F Bathurst QC & M Henry 2nd & 3rd Cross-Defendants: V Whittaker
SOLICITORS:	Plaintiffs: Abbott Tout Lawyers Defendant: Arnold Block Leibler