Loder v Aysom & Ors; Denyllek Pty Limited v Aysom & Ors; Bertoli v Aysom
[1988] HCATrans 170
IN THE HIGH COURT OF AUSTRALIA Office of the Registry
Sydney No S9 of 1988 B e t w e e n -
STEPHEN JOHN LODER
Applicant
and
LORRAINE EVELYN AYSOM, ROBERT ERIC
AYSOM, SID MOORE RACING PTY LIMITED,SYDNEY VICTOR MOORE
Respondents
Office of the Registry
Sydney No Sl0 of 1988 B e t w e e n -
DENYLLEK PTY LIMITED
Applicant
and
LORRAINE EVELYN AYSOM, ROBERT ERIC
AYSOM, SID MOORE RACING PTY LIMITED,SYDNEY VICTOR MOORE
Respondents
Office of the Registry
Sydney No Sl5 of 1988
Loder 1 Between-
NEIL WILLIAM BERTOLI
Applicant
and
ROBERT ERIC AYSOM, LORRAINE EVELYN
AYSOM, STEPHEN JOHN LODER, SYDNEYVICTOR MOORE, SID MOORE RACING PTY
LIMITED, DENYLLEK INVESTMENTS PTY
LIMITED
Respondents
Applications for special leave to
appeal
SlT:3/1 /SDL 12/8/88 MASON CJ
BRENNAN JDEANE J
TRANSCRIPT OF PROCEEDINGS
AT SYDNEY ON FRIDAY, 12 AUGUST 1988, AT 10.03 AM
Copyright in the High Court of Australia
MR J. FOORD, QC: If Your Honours please, I appear with my
learned friend, MR J. HANLY, for the first two
applicants. (instructed by Maxwell Mi }.es & Co)
MR K. HANDLEY, QC: If the Court pleases, I appear with my
learned friend, MRS. O'RYAN, for the third applicant,
Bertoli. (instructed by Henry Davis York)
:MR. M. BROUN, QC: If the Court pleases, I appear with :MR. R. MATER for
the wife, who is a respondent in each of the !Ilcltters.
(instructed by ·Knudsen & Carroll)MR D.M.J. BENNETT, QC: If the Court pleases, I appear with
my learned friend, MR T.J. CLARKE, for the third
and fourth respondents in the first matter and
the third and fourth in the second matter and
the fourth and fifth in the third matter, being
Mr Moore and Sid Moore Racing Pty Ltd, the purchaser from the receivers. (instructed by Ronald J. Curry
& Company)
MASON CJ: Yes, Mr Foord. MR FOORD: May it please·Your Honours, in proceedings in
the Family Law Court for dissolution of marriage,
the marriage was dissolved leaving unresolved
various questions relating to property claims
by the wife. What happened was that she sought an order in relation to a house, which was the
former matrimonial home, and an order that she bepaid a lump sum by the husband a named amount, $250,000, various other order& and injunctions. The injunctions and other documents in this application have not been reproduced in the book
in their form as orders but it is apparently agreed
with the Registrar and certainly adopted by us
SlT3/2/SDL 2 12/8/88 Loder that they are correctly set out in the book.
The injunctions which she obtained are set out
at page 2 of the book and they are, in short,
that companies which are described by the primary
judge here, Mr Just ice Nygh, a·s the "a 1 ter ego
of the respondent husband to the divorce proceedings",
be restrained in respect of the two companies,Parts Master Pty Limited and Torumba Pty Limited,
from:
disposing of, charging ..... any of the assets
and undertakings of either of those two said
companies otherwise than in the normal course
of business.
entered on 13 June 1986.is described.
Those injunctions were granted on 30 July 1985. husband
It is described accurately and it is described
as being: ..
between Torumba as mortgagor, Denyllek
Investments~
the second applicant
as mortgagee, and the husband and Parts Master -
the second of the companies -
as guarantors in respect of a loan by
Denyllek to Torumba of $100,000 secured by
a charge over the assets of Torumba.
The deed also provided that in the event
of default by Torumba, Denyllek may appoint
in writing any person to be receiver and
manager of the business
and, Your Honours, the first and third applicants
were later appointed receivers and managers following
default by the borrower, Torumba, and purported
to sell the business. That transaction, involving that deed, and
two prior ones were challenged before Mr Justice Nygh
under a section of the FAMILY COURT ACT which
gives power to set aside transactions in certain
circumstances. Mr Justice Nygh held that all three transactions were a sham, sham transactions -
that appears from page 10 of the book-and set
them aside.
The Full Court held that His Honour was
in error in so holding - there not being evidence
to demonstrate that they were sham transactions -
and overturned the decision as to the first two
transactions so they are no longer relevant.
SIT3/3/SDL 3 12/8/88 Loder But in the third one, the challenge to this deed
of June 1986, Their Honours held that it was
not in the ordinary course of business, hence
in breach of the injunction and, in any event,
was likely to defeat an anticipated claim by
the wife in the matrimonial proceedings.
Your Honours, those findings are set out between pages 45 and 50 of the book, and the reasons
for them. At page 45, Their Honours say: that three issues arise in relation to the
1986 agreement, namely (a) was His Honour
correct in concluding that it was a "sham"
transaction -
they answered that in the negative.
(b) if not, was it in the normal course
of business?
Their Honours have said, in their view, yes; and, lastly:
(c) in any event, was it likely to defeat -
such a claim?
Your Honours, a combination of strange events led to the first and second applicants here taking
no part in the proceedings before Mr Justice Nygh.
They were served with some process late in the middle
of March 1987.
BRENNAN J: Mr Foord, before you go on, those three questions which are set out at page 45, are they the questions
which you seek to address on the special leaveapplication, or on appeal if special leave is
granted?
MR FOORD: Yes, Your Honour, the second and third. MASON CJ: The adverse findings on the answers to (b) and (c). MR FOORD: Firstly, Your Honour, we will want to say that we have been denied natural justice in beingdenied the opportunity to participate in the proceedings - that is the first thing; the second thing is that that, in combination with an undue restriction on discretion to lead further evidence on appeal, as combined with the first ground to deny natural justice in that we have not been heard and, thirdly, that on its true construction section 85 does not apply to the circumstances proved here and that section 85 requires, by reason of conflicting decisions, namely this one and another decision of the Full Bench of the Family Law Court, to have that difference resolved but, more importantly, the section to
SIT3/4/SDL 4 12/8/88 Loder be defined and confined within proper limits by
a judgment of this Court.
DEANE J: You will not like this question but could that last question be isolated from the messy factual
issues involved in - - -
MR FOORD: I certainly do not want to answer that in the affirmative, Your Honour, but I daresay it could
be. But not with proper - - - DEANE J: If it were a last resort you would do so?
MR FOORD: Indeed, but I respectfully submit, Your Honour,
not with a proper preservation of our rights.DEANE J: I see. MR FOORD: Your Honours, application is lodged in a form which is simply headed, "Application", seeking to have these transactions set aside. It was
supported by two affidavits. Could I h~nd Your Honours the materials, the statutory excerpts and authorities on which we propose to rely. MASON CJ: What is the application you are referring to?
The application to this Court or the application
to the Full Court of the -
MR FOORD: No, the application before Mr Justice Nygh, before all the trouble started, Your Honour. MASON CJ: Yes, I see. MR FOORD: Your Honours, while it is coming up, are well familiar, of course, with the mode of application in any court for intermediate or interlocutory
relief. In so many courts created by statute it is pursuant to a rule-making power in the
principal Acts. A rule is made, usually providing for people to apply on motion supported by affidavit or by summons supported by an affidavit setting · out the facts. MASON CJ: Why have we been favoured with all this material? There seem to be a number of authorities here. MR FOORD: You are only being favoured, Your Honour, with
a copy of Order 16 and, for some reason or other,
somebody has reproduced a lot more. I did want to show Your Honours Order 16. MASON CJ: We can cast aside all these authorities, can we? MR FOORD. You probably can, yes.
SIT3/5/SDL 5 12/8/88 Loder Your Honours, we have set out Order 16 in
detail, not that we want Your Honours to read
it through but rather to look at the form of
it and the plan setting it out. I will refer to one of the individual rules. But there, this Court is orovided by rules for the content of affidavits to be used in the various different applications. Litigation there is complex,
Your Honours, ranging over a wide variety of
subjects, and each one of the headings, the types
of proceedings in the Family Court, where interlocutory
applications are taken there, is made the subject
of a set of rules relating to the contents of
the affidavits that are to be filed in support
of such an application. They relate to all the matters that Your Honours know about dealing
with the different types of family law litigation
but, in Division 3 of Order 16, rule 5 appearswhich applies to this type of application - not
rule 5, I am sorry, Division 5, rather - applies
to other applications and I might just read that,
Your Honour. By rule 12 it is provided that: An affidavit to which this Divisicrn applies
being the affidavit filed with the application
..... shall specify concisely, insofar as
relevant, and be confined to the matters
necessary to support the application -
this is the important part, Your Honour -
and to enable the issues to be defined.
That application and the affidavits in support
of it on the evidence, were taken by the first
applicant to his solicitor, Mr Byrnes, of Drummoyne.
Mr Byrnes is proved - - -
BRENNAN J: We do not have that affidavit, do we, Mr Foord?
MR FOORD: No, they are not reproduced, Your Honour, and
they are most voluminous. The subsequent history
is set out at page 41 of the leave book. It starts at the middle of the page: He therefore advised his clients
not to appear and ..... he forwarded to the
wife's solicitors a letter of 1 April -
and it is set out fully in the book. Now, what he says in the letter, in short, is this: "You must allege that our client has entered into some improper transaction". "No such allegation is made in the affidavit
of the applicant"-
and he goes on to say:
SIT3/6/SDL 6 12/8/88 Loder "we advise that we do not intend to appear
at the proceedings tomorrow, but put you
on notice that if ..... for any reason"-
let us say, ..... one in the affidavit, "the
rules provide that if a stranger is to be brought
into this party, at least he ought to be told
why. There is nothing in those affidavits that justified bringing us here; we will not be there."
Against that background, Mr Justice Nygh made the orders I have described.
BRENNAN J: That does not describe the full background,
does it? One of the things is, I take it, that
the party on the other side thought that the
rules were complied with and your party was given
sufficient notice and there was communication
between the solicitors.
MR FOORD: That is apparently so, Your Honour, but it was a conscious decision on our part not to participate. BRENNAN J: Quite.
MR FOORD: I must tell Your Honours that because when we come to the fresh evidence point it is nearly always a disqualifying matter that you made a conscious decision to remain away - and we did.
We do not shrink from that. The Full Court go on, at page 42: A further matter was mentioned by
Mr Byrnes in his affidavit,-
they have now gone on to the fresh evidence side
of it and I am hooing to deal with the two together,
for brevity as they overlap so much:
namely that in any event Mr Loder was to
be at Court under subpoena -
that is the first applicant. He was, of course, sought to be drawn into litigation in which the
husband was the respondent. He had been subpoenaed himself; he had every reason to believe,
we would suggest, on the material, that the named
respondent would litigate the matter and, in
the events that happened, the named respondent,
the husband, withdrew and an order was made
without either Loder or Denyllek being heard.
In fact, as Their Honours recite, at page 42,Mr Byrnes thought that Mr Loder was to be at court and he expressed the view that;
SIT3/7/SDL 7 12/8/88 Loder Mr Loder, when called, would be able to
explain the relevant matters as a witness
in the proceedings. As it turned out, although Mr Loder was at Court under subpoena,
he was not in fact called and did not give
evidence.
Notwithstanding thit, he points out that he was
at court - the judges do not say "in court",
but:
As the transcript demonstrates, counsel
for the wife outlined her case with some
particularity including a clear description
of the nature of the case alleged against
Loder and Denyllek.
Of course, Loder and Denyllek were not represented.
As to that question of Loder not being called,
had he been called, of course, he would have
been in a position to deny that he had been a
party to any collusive dealings with tfris lady's
husband and, also, he could have given his own
account of his dealings.
When the appeal came on, affidavits were
produced to the Full Court - they being the affidavit
of Mr Byrnes, who is instructing us, and the
first applicant. Their Honours, at page 43,
refer to the usual authorities, MULHOLLAND V
MITCHELL being the most recent, and we take no
point there. That is accepted on this application
that the authorities have very short effect,
that where fresh evidence is sought to be ledit must be such that it could not, with reasonable
diligence, be produced below and probative of
some issue which will affect the fate of the
legislation.
The judges rely, at the bottom of page 43,
on this. They say: The appellants, fully aware of the nature of the proceedings, in consultation with
their solicitors, made a clear decision
that they would not appear and that the
applicant would be unable to establish
her case. The facts which they now desire to adduce are facts which were within their
knowledge at that time and were, as they
understood, significant to the determination
which was to take place on 2 April. The
appellants made a conscious and informed
decision to adopt a particular course.
As it now turns out they may have miscalculated.
That does not appear to us to be a reason -
et cetera.
SIT3/8/SDL 12/8/88 Loder Your Honours, a miscalculation of that order,
we submit, is not one which incidentally affected the li.tigation in any way; it led to the absence of a party and a denial, we say, of a fundamental
right.
BRENNAN J: How did your client become a party, Mr Foord? MR FOORD: By a process under the FAMILY COURT ACT of naming him. and calling him an intervener and then the judge, during the hearing of the interlocutory matter, orders that he be made a party. BRENNAN J: Who named him as an intervener? MR FOORD: The applicant, Mrs Aysom, I think. BRENNAN J: In what proceeding or document? MR FOORD: That is by that document called an "Application" which was filed supported by two affidavits and
I have it here, of 15 March 1987, which led tothe application to Mr Justice Nygh, which led to the proceedings before him. BRENNAN J: Was that served on your client?
MR FOORD: Yes. BRENNAN J: And, according to its terms, did it require your client to appear?
MR FOORD: No, merely notifying him - purely telling him of his right to appear, notifying him of the orders which would be sought. BRENNAN J: Against him?
MR FOORD: Yes. I will get one out. It is a rather unusual form, Your Honour.
BRENNAN J: Well, whatever the form is, if there was some citation from the court giving notice to your
client that an order was to be sought under someprovision of the Act and specifying the kind
of relief that was to be sought against him,
why does not your client thereby become a party?
And, if he chooses not to appear, so be it.
MR FOORD: He was advised, Your Honour, that he could not be made a party. BRENNAN J: Apart from whatever advice he was given by his
own solicitor, for which he must, I presume,
ultimately accept the responsibility, if he was
given notice of the order that was to be sought
against him and he chose not to appear, why are
we concerned to examine the reasons why he chose
not to appear?
SIT3/9/SDL 9 12/8/88 Loder
MR FOORD: Your Honour, I do not have the application at the
moment. I do not think he is named as a respondent in the application; the application is directed
to the husband. A copy of it was served on us. At some stage in these proceedings - we have
a chronology here - he was made a party. When he was made a party is obscure to me but - - - BRENNAN J: Is it too simplistic to approach it in this
way: either your client was made a party to
the proceedings by being given notice of an intention
to apply for a particular order against him or
he was not?
MR FOORD: Yes. BRENNAN J. If he was so advised and he was a party and
if he chose not to appear, so be it; if he was
not so served with notice, or made a party, then
the order was made without jurisdiction?
MR FOORD; Your Honour, he was certainly not a party when
he was served; the only named respondent is
the husband. At some stage of the hearing before Mr Justice Nygh, he has ordered that our client be made a party. MASON CJ:
Mr Foord, can I ask you this: I understand that your client and Mr Bertoli were the accountants for the husband? MR FOORD: Yes. MASON CJ: What order was sought against your client or Mr Bertoli in the interlocutory proceedings? Secondly, what orders were ultimately made against them or either of them, and where do we find them? MR FOORD: The orders sought are correctly set out on a
sheet of paper I have here and they were that: That the purported Deed of Charge - to which I referred earlier - be set aside .....
2. That the purported exercise by
Denyllek Investments Pty Limited of a purported
power of sale ..... be set aside .....
3. That Sidney Moore -
and the first and second applicants -
and the husband be restrained pending further
order from -
completing the sale.
SIT3/10/SDL 10 12/8/88 Loder
MASON CJ: Do you have three copies of that document? MR FOORD: The exhibits in the Family Court were sent over; it was exhibited - - - MASON CJ: Yes, but we can hardly be expected individually to plough through the exhibits. MR FOORD:
Of course, Your Honour. I will have it copied as a matter of urgency. The thrust of the orders are set out at page 35 of the book, I am reminded, Your Honours. There they are, that is exactly
what I would have had copied: page 35 point 6. MASON CJ: Page 35.
BRENNAN J: Against whom were those orders sought according
to the terms of the document?
MR FOORD: At that stage, when we were served with that document, we were not a party. BRENNAN J: When you say, "When we were served", for whom
are you now speaking?
MR FOORD: Loder and Denyllek. BRENNAN J: For both? MR FOORD: Applicants one and two.
BRENNAN J: Were those persons served with a document? MR FOORD: Yes. BRENNAN J: Was the document addressed to them? MR FOORD. No, Your Honour, it was addressed to the respondent husband.
MR HANDLEY: Your Honours, I only have one copy but it is from the Full Court appeal book and it shows that - I
believe it is accurate - the only respondent
is the husband.
MASON CJ: That seems to be so, Mr Handley.
MR FOORD: Perhaps it should be shown to Mr Broun? DEANE J: Mr Foord, the procedure, as Mr Justice Nygh saw
it, it set out in the two paragraphs quoted on
page 38 of the book.
MR FOORD: Yes, that is as he saw it. That is what I was
endeavouring to put without looking at the section
in answer to Your Honour Mr Justice Brennan a
while ago. At page 38 point 7·- - -
SIT3/l l /SDL 1 1 12/8/88 Loder
DEANE J: In other words, what His Honour says is that while a person is not a party to the main proceedings,
if an application in the property proceedings
is served upon him and seeks orders against him,
he becomes a party. I am not saying that is right, that is what His Honour says.
MR FOORD: That is what he says, yes. Although His Honour seems to think that the party served may thereafter choose to intervene and then, by that process only, he becomes a party. DEANE J: That is not what he says he says:
to which a third party becomes a party as
a result of service upon him of an application
seeking relief of service upon him -
I suppose you would put a full stop after "relief".
MR FOORD: Yes. So he has called him a party.
(Continued on page 13)
SIT3/l 2/SDL 12 12/8/88 Loder
DEANE J: Mr Foord, while you have been interrupted, what was the relationship, if any, between Denyllek and
the husband?
MR FOORD: Denyllek had been lendin~ money to the husband for some years and Denyllek ..... superannuation
funds and interest and he was a borrower from them.
DEANE J: Was he a shareholder or a - - - MR FOORD: No, Loder and Bertoli, the first and third applicants were the principal officers of Denyllek.
Now, then, to the fresh evidence points, if I may,
Your Honours. They begin at 39. The affidavits
sought to be produced were voluminous. They contained an explanation of their failure to appeal - well,
that is clear enough from what has been said - evidence
.referable to the 86 agreement and the sale in
87 and evidence as to the ways in which the money
received from Moore,-he being the ultimate purchaser -
had been dealt with.
Now, Your Honours, if that evidence had been
received and acted on, it was sought to make it
appear that there was no collusive relationship
with the husband, that the sale was in the ordinary
course of business and, of course, if that be so
there is no breach of the 1985 injunctions nor anything
there to attract the provisions of section 85, thatis the setting aside of sham transaction section,
in respect of any existing order. They sought to show in those affidavits that Denyllek and Loder
had been dealing with this man for years, the dealingwas in good faith and that the security taken by
Denyllek was a registered one, contrary to the
court's finding that it was something done in
secret without telling the wife and that interest
had been paid on the money borrowed, in other words,
it was a legitimate loan and, in fact, stamp duty
had been paid on the original document. Now that being so, it is submitted that the decision to which the court came in relation to the
application in circumstances where a party had not
been heard below· unduly restricts the wholeconcept of exercising discretion to allow fresh
evidence on appeal and restricts it to cases within
the more cormnon limit where evidence is discovered
after verdict or new material comes to light and
does deal adequately with the situation where even
a mistaken belief that he had no need to participate
in the litigation led to him not being there.
DEANE J: But if what Mr Justice Nygh is quoted as saying at page 38 is correct, is that not the end for you on natural justice and so on? If it is not correct, of course, the position is different, because His Honour says that your client had become a party to the relevant
S1T4/l/MB 13 12/8/88 Loder proceedings which can be treated as separate
proceedings?
'MR FOORD: Yes. DEANE J: Well, now, if that is so your client was served,
took legal advice and elected to play no part. different?
'MR FOORD: If technically, by some provision of this Act, he can be declared or called a party and he did not
understand that, the result would be different,
we would submit, Your Honour.
DEANE J: But assume that is so, that he is a party, against him orders are sought, and he stays away because his
solicitor takes the view that they are not going to
establish the basis of getting the orders, he is in
big trouble, is he not, if he then says, "I want
to lead fresh evidence on the appeal." .If he is not
a party the position, of course, is obviously different.
I do not know what the basis of what Mr Justice Nygh
says but is that not something that stands at the
threshold, whether what His Honour says is right
or wrong?
'MR FOORD: Your Honour, when the decision not to participate
was made he was certainly not then a party. It would require some order, one would think, to make him
a party.
DEANE J: Well, that may well be right but you have the Full Court of the Family Court quoting that statement
with obvious acceptance of it. I would be rather
reluctant to differ from them without knowing what the basis
on which they say it is.
'MR FOORD: Well, I know of nothing to justify the position that service of a document, particularly in the names
of different parties, would draw somebody in as a
party without a conscious decision on their part
to join in the litigation.
MASON CJ: Does the Act or the rules deal with the question of parties in circumstances such as this, and if
so what are the provisions?
'MR FOORD: I am not aware of any provision saying somebody can be made a party without being served and named.
Service alone - - -
BRENNAN J: Well, the document was served, was it not, whatever document it was, on both of your clients on 20 March
and on Mr Bertoli on some date after 2 April? The
question is, what was served?
SlT4/2/MB 14 12/8/88 Loder
MR FOORD: Yes. Just that document Mr Handley handed up, and the two affidavits, of course.
BRENNAN J:
Yes, and that was a document addressed to the respondent, the husband?
MR FOORD:
Yes, and the solicitor taking the view that they cannot be brought into that litigation unless the
rules are complied with advised them not to go. The rule is made under Order 14, Your Honour. MASON CJ: What page do we find it at in the book, the
Act and rules? I have got a mauve, somebody else has a green one. Tell us what page it is in the
green book?
MR FOORD: 86 998 in the book that Your Honour Mr Justice Deane
has. Yes, the section deals with intervenors and other parties, Your Honours. Now, if an outsider wishes to intervene he must apply. Rule 4 seems
to apply to this situation.
MASON CJ: Well, rule 4 seems a procedure designed to give notice to a person who is not a party for
the purpos.e of enabling that person to apply tointervene if that person wishes to do so.
MR FOORD: That is right, yes. I do not know of any procedure under this Act. There may be some family law experts
here who will tell Your Honours.
MASON CJ:
Mr Foord, you might excuse us if we interrupt you and I might ask Mr Broun if he can throw some light
on this question as he seems to be the procedural
expert in matters of this kind.MR BROUN: Your Honours, I will immediately concede that the practice and, indeed, the rules as to parties in
the family court are somewhat confusing and indeed
-- might be fairl.y said a bit of a mess. Your Honours, an example may be found, I think, at page 12 of the the heading confuses everyone because the heading -
appeal book. The heading to all documents in fu.e family court under the Family Court Rules does not deal with who the parties are but simply deals with
what marriage is the subject-matter of the litigation. So the heading in the family court is unfortunately quite misleading. We normally look to a heading to
see who the parties are. In the family court one
does not get that from the heading,one gets merely
what marriage is referred to. Sometimes, for example, that will be the heading even though neither the husband nor wife are parties to the proceedings ,
quite strangely;I had that happen once. The rules as to other parties refer really only to the question of a party who comes along to intervene out of a
desire of his own part to intervene in the proceedings.
SlT4/3/MB 15 12/8/88 Loder The practice in the Family Court has been that
if relief is sought against somebody other than the
husband or the wife, he is given notice of the relief
that is sought against him cormnonly by being served
with the application headed"In the marriage of'the
husband and the wife. In this case, of course,as appears I think from page 35 of the appeal papers,
there was in the document served upon Mr Loder and
Denyllek Pty Limited, at the second half of that page,
the list of orders sought, which made it quite clear
what was sought against Mr Loder and Denyllek and,
indeed, the orders clearly set out what was asked
for, but there was no formal citation in the documents
served warning those persons that they were liable
to have orders made against them if they did not
appear.
DEANE J: Well, now, what does it mean, Mr Broun, the next page:
The application on its face was directed to
the husband.
MR BROUN:
As Your Honours have seen on the first page of the formal part of the application, only the husband
was named as a respondent. DEANE J: Well, that is simply a reference to the heading, is it not?
MR BROUN: No, Your Honour. Underneath the heading - I think we may have another copy of it in Court but Mr Handley's
copy was handed to Your Honours - are the lines,
"to the respondent" and then his name is given as
the husband, and his address, and then there are
some printed words, or typewritten in this case,
signed by the registrar warning him that if he
does not come along he is liable to have orders
made against him; the usual sort of citation one
is familiar with in a writ or a writ of summons.
DEANE J: Well, then, should not Mr Loder and Denyllek have been included with the husband there?
MR BROUN: Your Honour, for my part I would certainly agree
with Your Honour they should, it is just that there
is no provision in the rules for doing it.DEANE J: I was not expressing a view, I was just asking you. MR BROUN: Well, Your,Honour, I would certainly submit that
they should but there is no provision in the rules
for doing so and, indeed, there is no mention in the
.rules anywhere of what you do with a respondent
against whom relief is sought who is, as it were,
a party to the proceedings in the sense that relief
is sought against him; he is notified or served
with the application; he is told what is going on
but none the less there is no provision in the
S1T4/4/MB 16 12/8/88 Loder rules of giving him something in the nature of a
citation.
DEANE J: Is it a practice that if you are named in one of the orders you can have an order for costs against
you?
:t-1:R BROUN: If you turn up and defend or oppose. DEANE J: What if you do not turn up? :t-1:R BROUN: I cannot bring one to mind where it has happened but I would imagine that would be possible,
Your Honour. But certainly, Your Honour, the practice is that in fact these third parties in
this situation are not given anything in the document
in the nature of a citation to appear. Now, in fact, in this case, of course, as Your Honours
have seen from the judgment, the position was a
little clearer in that not only was Mr Loder and
Denyllek served but they turned up on the first
mention date, 27 March. Mr Loder was actually in court when the whole nature of the application was opened and the relief sought against Denyllek
and Mr Loder was explained orally in court. So they had full notice in court in this case and
the Full Court refers to that in the course of their
judgment. And further, Your Honours, of course,
it appears from the letter my learned friend,
Mr Foord, has referred to that the advice given
by Mr Byrnes was not upon the basis that they were
not a party, it was on a·different basis.
MASON CJ: I think you seem to be trespassing on the
invitation that was issued to you, Mr Broun.
:t-1:R BROUN: I am. Yes, I apologize to Your Honours. BRENNAN J: Can I just ask one further question, Mr Broun?
:t-1:R BROUN: Yes, certainly. BRENNAN J: Was there any document of any kind given to Messrs Loder and Bertoli indicating an intention
to seek an order that they pay money?
:t-1:R BROUN: That they repay the money, as it were, to Mr Moore? BRENNAN J: Repay, yes? :t-1:R BROUN: No, Your Honour. That was referred to, I think, as one of the consequential things that might
follow in the oral opening on 27 March when Mr Loder
was in court, that is to say, the mention before
the hearding on 1 April and, indeed, that was oneof the points the Full Court have, I think, expressly
referred to in referring back to the trial judge
that question of the adjustment of finances
SlT4/5/MB 17 12/8/88 Loder between Loder, Bertoli and Denyllek on the other
hand and Sid Moore Racing on the other.
MASON CJ: Yes, Mr Foord, well we seem · to have circumnavigated that problem.
MR FOORD: Your Honours, as to the fresh evidence we say there was no reason whatever in the exercise of
discretion why that should not be looked at and
if it was, as seems to be agreed by the Full Court, likely to affect the issue then no harm would have
been done in looking at it particularly as any
subtraction from writing, anybody else could be
corrected by an order for costs in the same assumpsit
way. Your Honours, as to the last matter we wish to take up if leave 'be granted, special leave rather, there is only this submission, that if
this $100,000 was lent to Torumba pursuant to that
deed of June 1986, then it was not the charge
granted by that deed that was likely to defeatan anticipated order on behalf of the w~fe, if an order
be anticipated, but rather was it the handing over
of the money and the expenditure of that money by
or on behalf of Torumba.
To that effect, Your Honours, we submit, is
a decision of the Full Court of the Family Court
itself in AUSTRALIA AND NEW ZEALAND BANKING GROUP V
HARPER. That deals, firstly, with the question of
where the burden lies in these applications and
it is held, of course, to be on the moving party,
in this case, the wife. It there deals with a
similar problem where mortgage money was dissipated
via her husband, where a final order for monetary
provision had not been made and there it said of
that and prior cases that what the section requires
is an order to be anticipated, reasonably anticipated,
and that is to say an order, nor merely a claim.
Here, of course,there was a_cJ..aim ~ot vet defined for a sum of money, not yet ascertained. ·
The words which require debate,if special
leave be granted, may we submit, anticipate in the
sense of whether it is objective anticipation or
one of the parties anticipated it, whether an order
that was likely to be interferred with ought before
then have been subjected to some quantification
and just what likelihood is required to exist. Now, the word "likely" has been the subject of judicial
comment in many contexts; recently a federal court, of
which Your Honour Mr Justice Deane was a member,
in TILLMANS BUTCHERY AND OTHERS V AUSTRALIAN MEAT
INDUSTRY EMPLOYEES UNION, 27 ALR 367. At page 380
Your Honour Mr Justice Deane under the heading of
the word "likely" gave a couple of pages resume of
several of the contexts in which it has come up for
SlT4/6/MB 18 12/8/88 Loder
construction. We submit this section, when finally construed, would be given the meaning that that likelihood must be both proved and quantified
and if that is not done then any lending body dealing
with a borrower who currently has some matrimonial
problems is likely to be required to exercise a
degree of anticipation, which is quite unreasonable. She, for example, in relation to the charge of those Torumba shares - or a general charge rather over the property of the company - had not sought an order
that the business of that company be transferred to
her or the issue of shares and anticipation of any
likely final order would not readily go in that
direction. Therefore, we say, to resolve a conflict
which seems a real one between this and ANZ V HARPER,
and to have those matters debated, special leave
should be granted.
MASON CJ: Yes. Thank you, Mr Foord. Yes, Mr Handley. MR HANDLEY: May I hand up a chronology, Your Honours, dealing with the events so far as my client is c-0ncerned
and hand a copy down the bar table.
MASON CJ: Can you convert chaos into coherence? MR HANDLEY: I am not sure, Your Honour, but our position is different from that of our partner, Mr Loder, and
it is accepted by the Full Court that my client was neither rumed
as a party nor named in the relief at any time prior
to the final orders being made setting aside these
dispositions on 3 April. There is no dispute that
my client was neither notified nor served with any
process prior to 3 April 1987 and the Full Court
took the view that these orders did not prejudice
Mr Bertoli, did not sufficiently prejudice him
so as to attract any right to natural justice.
It is our submission that the orders clearly did prejudice Mr Bertoli. It is really self-evident,
we would submit, with respect, but in any event eloquent proof of that is to be found in the fact
that the orders were subsequently extended againsthim requiring him to pay, if my mathematics are
correct, a quarter of a million dollars, jointly
and severally with Mr Loder as set out in events
8 and 9 in our chronology. Your Honours, there is
a related - apart from the natural justice point,
which we submit does attract special leave because
of its fundamental nature and because of the
attitude of the Full Court of the Family Courtto orders setting aside transactions under section 85
so far as they effect third parties whose financial
and propriety interests are tied up with those
transactions - - -
SlT4/7/MB 19 12/8/88 Loder
MASON CJ: Now, these are covered in your grounds 4 and 5 on
page 89 in your draft notice of appeal.
MR HANDLEY: I trust so, Your Honour. Well, particularly, I think there is a "no" that has crept into prayer 6,
or ground 6; it should be "an order," not, "no
order." I am not sure that we would seek to press
the full width of grounds 4 and 5, Your Honour. They arenot necessarily raised by this particular case.
DEANE J: Mr Handley, is there a "not" left out of ground 4? MASON CJ: Yes, there is. DEANE J: "Are not a sham." MR HANDLEY: Yes. DEANE J: Well, while we are dealing with these niceties, on
point 8 of your submission - - -
MR HANDLEY: Of our chronology. .
DEANE J: Of your chronology, yes, should the second-last word be "nor"? Was he served with process or notified,
or was he - - -
MR HANDLEY: No, the'not''is intended to run on, Your Honour. DEANE J: I see , 1•J:?Ot named, not served"- - - MR HANDLEY: - "or notified". DEANE J: I see.
MR HANDLEY: Yes. It was probably a little late when I penned that. There is a related point, Your Honours, which
also, in our submission, might be thought to add to
the case for special leave, and that is that theFull Court of the Family Court seem to have taken
the view - although it is only perhaps an indication - that a section 85 order setting aside a transaction,
does not operate retrospectively and, in our submission,
it does 4)" If it is .set' aside it is aside fromi nception, and that
is the point of the subsection(3)which requires the
court to make orders for the protection of bona fide
purchasers and other persons interested.
Of course, if the order only operated prospectively,
a bona fide purchaser could not be prejudiced by any
such order. He would have acquired an interest prior to the court order being made. Can I just invite the Court to - - -
DEANE J: When you say in your chronology 10, '' Orders made against Bertoli," after 9, what opportunity did he have at
stage - or between 9 and 10 of disputing, so far as he was concerned, what had gone before?
SlTS/1/VH 20 12/8/88 Loder
MR HANDLEY: Your Honour, it does not - I cannot answer that question. But Mr Bertoli, for reasons,again,which
are the subject of fresh evidence but which were not
received by the Full Court, did not appear on the 29th,either in person, or by counsel or solicitor.
DEANE J: Well, I mean, if the proceedings had been somewhere
else, in an area that I am more familiar with, I would
have expected, if Mr Bertoli had come along between9 and 10 -
MR HANDLEY: Indeed, Your Honour. DEANE J: - - - sorrebody seeking an order against him he could make them go all the way back to square one.
MR HANDLEY: Yes, Your Honour. What was done by Mr Bertoli was not to take any steps between 9 and 10,but, when
served with the order made on 29 April to appeal to
the Family Full Court and it appears from this Court's decision in TAYLOR V TAYLOR,143 CLR 1, that
one is entitled to do that without necessarily going
back and seeking to vacate the order at first
instance.
DEANE J: It makes it a bit more difficult to fight something on natural justice grounds at first instance if you
take the approach that the solicitor seems to have
taken right from the beginning - - -
MR HANDLEY: A different solicitor, Your Honour. DEANE J: Well, the original solicitor seems to have taken; that is,
"If something goes wrong -we will appeal. "
MR HANDLEY: Yes .. ·W:11, Your Honour, as far as my client is concerned, in our submission, we were finally and
completely denied natural justice on 3 April 1987 and
we were not obliged to apply to the judge to set it
aside. We could appeal and that is what we have done. We may have misjudged our remedy but final orders
should not have been made, in our submission, setting aside these transactions under section 85 without us
being notified and given a reasonable opportunity
to appear and make representation, or make submissions,
and one does not comply with natural justice by
making final orders and then saying to a partyaffected by them, "Well, you could always apply to
set them aside."
DEANE J: Yes.
BRENNAN J: Mr Handley, the whole debate of natural justice in the context of a judicial proceeding of this kind,
seems to me to be a little odd.
MR HANDLEY: Indeed, Your Honour.
SlTS/2/VH 21 12/8/88 Loder
BRENNAN J:
You do not seem to raise, in your grounds of appeal, so far as I can see, any question as to whether the judicial power of the Commonwealth can
be exercised as against a party who has no citation. MR HANDLEY: Well, Your Honour, we did not think we had to go
as far as that. We were simply denied natural justice, ground 3. We were going to suggest that - ground 3 - is at the top of page 89.
BRENNAN J: For myself, I have difficulty in understanding how
a problem of natural justice arises in the case of
a party who might not be liable to have any order
made gainst him.
MR HANDLEY: Well, Your Honour, the fact is that in the
result final orders were made which seriously prejudiced our
proprietary and financial rights without any notification.
BRENNAN J: I appreciate that. MR HANDLEY: We did not deem it necessary to look at the constitutional considerations. It did occur to us
BRENNAN J; It may be that natural justice extends both to
the notice of any application as well as the evidence
that is adduced on it.
MR HANDLEY: I would so submit, Your Honour, but it did occur to us that perhaps one might construe a requirement
of natural justice into section 85, but that did seem to
us to be a task of supererogation. Parliament was not laying down natural justice for the Family Court in section 85 as a matter of a statutory duty. It assumed that the Court would comply with that as a
court, established as a superior court of record
established by, I think, at section 21 or whatever
it is, flows from that, not from the actual text of
section 85.
We would submit, Your Honour, that chapter 3
judicial power cannot be exercised in a final form against a party or a person without natural justice
being complied with, but we had not deemed it necessary
to go as far as that.
MA.SON CJ: Now, Mr Handley, in the light of the corrrrnents made by Justice Brennan, with reference to the possible
existence of a jurisdictional ground as an alternative
to ground 3, and also to your corrrrnents that
grounds 4 and 5 may be a little wide or not accurately
put what you want to put in relation to - - -
MR HANDLEY: They are ambit claims, Your Honour. MA.SON CJ: They are ambit claims.and, also the question of relation back in relation to the order made under
section 85, it may be opportune if you give
consideration to reframing the grounds stated in the
S1T5/3/VH 22 12/8/88 Loder draft notice of appeal between now and when the
Court resumes after lunch. In saying that, I am
not suggesting for one minute that the Court has
reached even a preliminary view about the outcome
of this application, but it would be more convenient
for us if we could see precisely what the grounds are that you would propose to argue in the event of
special leave being granted.
MR HANDLEY: Yes, Your Honour. I am not sure that anything will survive on grounds 4 and 5 other than the
reference to this question of relation back underthe section 85 order.
MASON CJ: Yes. Well, that is one thing I had in mind, but I think grounds 4 and 5 ought to be reformulated so
that they state quite precisely what it is that is
going to be argued.
MR HANDLEY: Yes. MASON CJ: Might I suggest that, in giving consideration to
the grounds of appeal in the draft notice, you
consult with Mr Foord, because it seems that there
is little difference in the two cases that wouldbe presented if special leave were granted.
MR HANDLEY: Yes, Your Honour. Your Honour was a party to the case of TAYLOR V TAYLOR which has not been drawn
the Court's attention in Mr Foord's matter, butthere the husband, Taylor, served with process,
took it to his solicitor; thought his solicitor was
going to look after it; the solicitor did not;
ex parte orders were made by the Supreme Court of
New South Wales. When he became aware of those orders he applied to have them set aside under the
FAMILY LAW ACT. The wife went to the wrong court on the return date of the husband's application, so
then Mr Justice Hogan of the Family Court set asi(le
the orders of Mr Justice Woodward in the supreme court in the absence of the wife through another miscarriage,
and this Court said that neither - both parties had
been denied natural justice without any fault of their
own, and sent the matter back for a rehearing.
There was an argument put - accepted in the
Full Court - that the order should not be set aside and both parties ought to be left to pursue their
remedies against their solicitors, but this Court
did not take that view, with the exception of
Mr Justice Murphy. But I have copies, if the
Court would be interest to glance at the headnote,
perhaps, of that case. ·
MASON CJ: Yes, you can hand them in, Mr Handley. MR HANDLEY:
Your Honours, we .would submit that the reasons given by the Family Court for not holding or for
denying an entitlement in our client to have the
SlT5/4/VH 23 12/8/88 Loder orders of 3 April set aside are not such as to
command immediate intellectual acceptance. At the bottom of page 54, at the start of the last
paragraph, the Full Court says that:
No order was made against him personally
on that day.
Then at the top of page 55, Mr Grieve contended
that:
Orders 1 and 2 setting aside the 1986 and
1987 transactions did have, or may have,an adverse effect upon Bertoli and ought
not to have been made without notice to him.
They say:
It is difficult to see how the first order
(setting aside the -
debenture -
.
could have that consequence since for
relevant purposes it set aside the agreement
entered into by Denyllek which had been
properly served.
To say that the mortgagee has been properly served,
in our submission, does not answer the thrust of
the complaint that Mr Bertoli makes. I will come to that in a moment: Order No. 2 purported to set aside the sale
by Loder and Bertoli as receivers -
and one would think it was crystal clear that that
order affected Mr Bertoli financially so far as
his proprietary interests were concerned:
had a relevant interest in that order It was Mr Grieve's submission that Bertoli
which required him to be given notice, and
this point is given emphasis by the
amendment which we have made to that order.
He submitted that the consequence may be that
Bertoli may be treated as a trespasser in
relation to the business or its property
and that the order may have a retrospective
effect so as to in some other way to prejudice
him. It is possible that an order setting
aside the transactions as shams may have the
potential to produce such a consequence.
Of course, Your Honours appreciate shams do not have
to be set aside:
We do consider, however, that the orders would
have -
S1T5/5/VH 24 12/8/88 Loder
I think there is a "not" been left out
We do not consider that the orders would have any such prejudicial effects so far
as Bertoli is concerned.
In our submission, Your Honours, with respect, that
is just wrong:
which had been served ..... Bertoli was acting
The parties to the deed had been served.
as the agent of Torumba in the sale and
Torumba had been served.
None of those considerations, in our submission,
meet the point, that Bertoli was entitled to be
served. Finally:
Mr Grieve further submitted that the
reservation of leave to apply for orders similar to those made against Loder also
prejudiced Bertoli. We do not think that that is so. Your Honours, if that reservation had not been
made, in our submission, Mr Bertoli would have had
an ANSHUN V PORT OF MELBOURNE AUTHORITY - anANSHUN point against any fresh application being made against him for a final order similar to the order already made against his partner. The wife, by
keeping alive her rights against Mr Bertoli in
this way, prevented such a result and, in our
submission, Mr Bertoli was prejudiced by that
reservation of leave.
DEANE J: Was Torumba Pty Limited served? MR HANDLEY: Yes, Your Honour. At least - sorry - I do not know, Your Honour, but the Full Court seemed
to think it was.
DEANE J: If it was, is not that relevant to what you say in
that if the company that appointed him was a receiver
and of which he is a director and apparently
co-proprietor, and the company to which he wasappointed receiver, were both served, it takes a
lot of the force away from discussions of natural
justice when,before the final orders against him
were made, he was served and had an opportunity of
challenging everything but elected not to do so.
MR HANDLEY: Well, Your Honour, he did not have an opportunity
to - he was not - I have the document here that he
was served with. He was not told he had an opportunity to move to set aside the orders of 3 April.
SlTS/6/VH 25 12/8/88 Loder
DEANE J: Yes, except if you get something that is seeking an order against you that you would be personally liable.
MR HANDLEY: He was told that he was facing orders of personal liabilty.
DEANE J: I would have thought he would get some advice and
be told that he could oppose it and, if he does not,is that not his problem, in terms of natural justice? MR HANDLEY: It is his problem so far as the fresh orders on 29 April are concerned. In my submission, it is the
other party's problem, so far as the orders of
3 April are concerned. I mean, what is being put to me now by Your Honour comes to this, in my
submission: that you do not deny natural justice to
a party, if you make final orders against him in
his absence, because he can always apply to you
to have them set aside. Now, that is not the way the common law has moved, Your Honours, and we have
statement from this Court in the DELTA.PROPERTIES
case which make it very clear that you are entitledto be heard before an opinion is formed and expressed.
That is the view taken in the United States under due
process, as well; that a right to go back and try
and change someone's mind after final orders have been
made does not accord due process and, in our submission, that would be a view which this Court
would think either was correct or sufficiently
arguable to warrant special leave.
DEANE J: But assume for the moment that he was fully informed and fully understood all these obscure procedures when he was served and he said, "There is no order
made against me; here is somebody who is applying
for an order against me. I am fully entitled to go along and resist that and make them go right back to have gone this far without me, I will just stand back
square one, but, because I do not think they should and let these·legal proceedures come to an end with orders against me and I will then appeal." It does not seem to me to be a very attractive approach to say, "Well, natural justice will then say that the orders that the Court made are hopelessly affected by a denial of natural justice." MR HANDLEY: Your Honour, in my submission, under the rules of natural justice, he should never have been put in
that position in the first place with regard to
the orders of 3 April and Your Honours do not know
what his fresh evidence was about what he did when
he got the application dated 21 April returnable on
29 April but, in our submission, TAYLOR V TAYLOR
demonstrates that he was not obliged to go back;
he was entitled to appeal if he so chose. It is not as if he comes here for prohibition; he had gone to
the Full Court to have matters set right.
SlTS/7/VH 26 12/8/88
BRENNAN J: Mr Handley, whose money was it that was paid
by Sid Moore Racing to the accountants? On whose behalf did they receive it?
MR HANDLEY: Your Honours, the receivers were appointed as private receivers under an equitable mortgage,
equitable charge debenture. Now they received it as agents for the mortgagor, which was, of course,
Torumba Pty Limited. They did not receive it as agents for the mortgagee because, as private
receivers, under the traditional - at least, if
there is not evidence of this, this would be the
inference that the Court would automatically draw,
that it would have been a conventional Australian
debenture under which receivers are appointed as
agents for the borrower.
BRENNAN J: And you say that Torumba was treated as a party to these proceedings.
MR HANDLEY:
Torumba was, apparently, treated as a party to these proceedings.
But that is the point I am about
to come to, Your Honours, that the fact ·that the
principal is prejudiced and is notified does notmean
that you do not have to serve the agent if he is · going to be ersonally and directed affected.
We point out that the setting aside of the equitablecharge by the orders made on 3 April, we submit, prejudiced Bertoli by retrospectively avoiding his appointment as receiver and manager, making him liable to Torumba Pty Limited and its election, either as an agent or as trespasser, just as you
can ratify a tort of conversion and sue for moneyh&d and received, Torumba could treat him as - waive the tort and treat the receivers as agents,
or they could treat the receivers as trespassers. -
..deprived of remuneration received or otherwise receivable and expose him to liability
under uncompleted contracts of the business with
other parties which bound him personally under
section 324(1) of the COMPANIES CODE. Your Honours are aware, of course, that for
many years - I think since 1936, ·but certainly
since 1961 - receivers, private receivers, are
personally liable on their engagenents by statute.
The consequential orders made by Mr Justice Nygh
on 3 April included the appointment of the wife as
court receiver of Torumba, able to exercise itsrights, enforce its rights against the former
receivers. Probably the setting aside of the equitable charge automatically brought down the
contract for the sale of thebusiness but, in anyevent, this ~ontract for the sale of the business was
expressly set aside. The setting aside of that contract with retrospective effect, we submit, also exposed Bertolito a liability to make restitution under the general law without any actual
orders of the Family Court being made to that effect.
SlTS/8/VH 27 12/8/88 Loder In any event, he was, of course, exposed to potential
future liability under the consequential orders made
against Loder should they be extended against himself.So, Your Honours, in our submssion, the applicant was directly and personally prejudiced by the orders without any
prior notice to him. They were, of course, final orders. He was not prejudiced merely in the sense that he was a servant of Torumba; a receiver appointed
as agent for the borrower is a very special sort of agent who has rights, obligations and duties of his
own; duties in regard to.-under his contracts and so
on, sometimes duties under tax laws, · nor was he affected merely as a shareholder of Denyllek. He was affected directly and personally. So it is not to the point, in our submission, that his principal was
served or that a company of which he was a shareholder
was served.
May we just remind Your Honours of what this Court
said in DELTA PROPERTIES about the entitlement to
prior notification before opinions are formed and
expressed. It is 95 CLR 1 at 18 and although
Their Honours were speaking of natural justice as
an incident of the administration of an administrativeprocess, the language applies, in our submission,
a fortiori.to chapter 3 courts. It is about point 5
on the page:
In such a situation the law insists, according
to long-established doctrine, that the step
which will have that prejudicial effect, namely
the formation and expression of the opinion,
requires for its efficacy the prior observance
of the fundamental principles of natural
justice. In particular it is essential that
the person whose property is in question must be
given a full and fair opportunity of placing
before the council his case against the formation
of the opinion.
I have not troubled Your Honours with United States authority, but it has been said there that an
opportunity to come back and seek to reverse a
decision already formed and expressed does not
accord with due process and, in our submission, the
cormnon law in this country would be the same.
Subject to tidying up the orders -the grounds of
appeal -they would he our submissions. May we hand
up copies of the application which I showed the
Court earlier, from the Full Court appeal book?
If the Court pleases.
MASON CJ: Thank you, Mr Handley. Yes, Mr Broun.
MR BROUN: Your Honours, may I refer firstly to this question
of the absence of a citation or the lack of notice of the kind that we are more used to in other
jurisdictions, the formally prescribed notice
required by the rules. This question, of course,
SlTS/9/VH 28 12/8/88 Loder
did not arise before the Full Court at all. The
reason, in substance, why it did not arise, is
because, in relation to the documents served, there
was something, as it were, to replace the absence
of a citation, namely, my instructing solicitor served
on Mr Loder and Torumba Pty Limited and on Denyllek
Pty Limited, and on the other company involved,
I think, Parts Master Pty Limited - served a covering
letter with the application in each case, the
covering letter giving some warning. Now, Your Honours, I do not have in court - my instructing solicitor has
gone to get copies of those affidavits which were
before the Full Court - but, in effect, as I recollect
it, the covering letter advised the person served
that there was a claim made against them and that the
clairr needed to be considered or advice taken about it. I have in court at the moment, for example, the
one served upon Mr Bertoli on 7 April, which sets out
that the application - it was listed on 10 April;
that it was for the hearing of such applications as
he may be advised to make in relation to the orders
and, in relation to additional orders "which will
be sought against you, as indicated in the orders
served herewith, may we respectfully suggest
that you communicate with your legal advisers as a
matter or urgency." Now, that was the typical sort
of covering letter served in each case.
MASON CJ: What were the orders indicated as sought against him?
MR BROUN: Well, the ooctma1ts- served on him on 10 April was a
sealed copy of the orders made by Mr Justice Nygh
on 3 April, which are in the appeal papers; those-indicating at the end of those orders that there
was liberty to make an application for orders in
similar terms against Mr Bertoli. So that the document served on Mr Bertoli says, "Here is the orders
m.de against Mr Loder and Denyllek; we draw your attention to the fact that the same orders are
sought against you. It is listed for 10 April.You have the opportunity of making any application
you wish and on that we suggest you should see your
legal advisers about it."
So that there was something to replace the
absence of a rule about the service of a formal
citation, namely, a covering letter saying, go and
get advice about this; orders are sought against you.
In respect of Mr Bertoli, that is to say, Mr Handley's
client, there was, in fact, two opportunities, not
one. It was listed on 10 April and he was served
with notice of that on the 7th. It was also then,
on 10 April, adjourned because the service had been
a little late and it was then adjourned to 29 April and, pursuant to Mr Justice Nygh's directions, he
was again served and again there was a covering letter
SlTS/10/VH 29 12/8/88 Loder telling him that the matter had been stood over
to 29 April and the details of what was going to be
dealt with on that day. It ended up, "In addition,
we advise you that the application for orders
against you personally, both as to the moneys paid
by Sid Moore Racing and costs, are listed for
29 April." So that, as to Mr Bertoli, he got served
not with one, but with two and warnings that he
should turn up on the two different return dates
and each time was specifically warned by the
covering letter of the orders that were sought
against him.
Now, Your Honour, my recollection is and
my instructing solicitor has gone to get it, that
the covering letter served upon each of the companies
originally before the first hearing, contained that
same warning; that"The orders are sought against
you, seek legal advice, this is the date it is on."
Indeed, the letter from Mr Byrnes to the court,
which has been referred to, the letter, .in effect,
sayin& "If the c,ourt is so ill-advised as to make
orders on this evidence, well, we will appeal, and
obviously our appeal will succeed." That letter
does not suggest that he was not aware that orders
were being sought against Mr Loder and Denyllek
but rather suggests that they had an answer to that
application, namely, the shortness of notice.
MASON CJ: But still, it is a revolutionary development, is it not, to equate solicitors' letters to originating
process for orders against a party?
MR BROUN: Your Honour, the absence of this provision about parties who are joined by the applicant, rather than
a party who intervenes in the Family Court rules has
been something that has been commented on many times,
but ;it has been the position now for 12~ 13 years.
It has never been seen fit to rectify it, presumably because the vast bulk of litigation of that court,
of_course,, is just between husband and wife, and the
applications where there are other parties involved
are relatively small in number.
MASON CJ: But that is where it becomes extremely important. MR BROUN:
Your Honour, yes. The rules, of course- since the occurrence of these events, the rules have changed
fairly materially because there is a whole new
_Fart VII now covering ex-nuptial children and,accordingly, the rules as to other parties have been
somewhat drastically modified and, indeed, the
headings are now different, so that the heading of
the citation now provides for notice to the other
people. So the rules have, in fact, been changed
quite recently, I think, from 1 July this year.So that it is not a continuing problem, but it
SlTS/11/VH 30 12/8/88 Loder certainly has been a serious problem and it was in
the rules as a serious problem for a considerable
time. The practice, in fact, Your Honours, has been largely that the trial judge sought to satisfy
himself in each case that the other party - if I
might call them that without wishing to seem to beg
any question - the person against whom relief was
sought who was not a party to the marriage had notice,
was aware that the order was sought against him and
was aware of the proceedings and what might occurin consequence.
(Continued on page 32)
SlTS/12/VH 31 12/8/88 Loder
MR BROUN (continuing): Now, Your Honours there were a number of other important factual matters before the
Full Court which, perhaps, explain why these problems
were not raised before the Full Court. One of them, and it is referred to briefly in the Full Court's
judgment, was that Mr Loder and Mr Bertoli were
themselves signatories to the relevant documents.
Mr Loder was secretary of the husband's companies,
Torumba and Parts Master; he was their accountant.
Mr Bertoli had, in fact, signed the original document
of charge, what has been referred to as the equitable
mortgage document. He signed that as witness to the husband's signature and also he was the director
of Denyllek who signed that document.Now, Mr Bertoli, Your Honours, was therefore in the odd position that although there may have
been not a letter addressed to him - and he personally
received the documents before the hearing, the first
hearing - he was a director of Denyllek and he received
notice that way. Further, Your Honours, we would
rely on section 16 of the New South W~les
PARTNERSHIP ACT which we drew the attention of the
Full Court to though it did not find favour with the Full Court. Section 16 of the New South Wales
PARTNERSHIP ACT is the common sort of provision
which says if you have partners who are carrying
on business and doing something in the course of their partnership then service on one is service
on both. If I may hand to Your Honours copies ofsection 16 of the New South Wales PARTNERSHIP ACT.
Now, the important point here perhaps,
Your Honours, is that it appears that the partnership
was the people appointed, the liquidators, not
Mr Bertoli in his personal capacity or Mr Loder
in his personal capacity because the letter in whichMr Loder informs for the first time of the appointment
refers to "our firm has been appointed". Now that
is at appeal book 33. The letter is set out on page 33 of the appeal book - that is the numbers
at the bottom of the page:
On 5 February Messrs. Loder and Bertoli
wrote to Sid Moore Racing a letter in the
following terms -
and it was a letter on the letterhead of the
partnership and it says:
"This letter is to advise that our firm has
been appointed manager and receiver"
and it does seem that throughout the firm of
Loder and Bertoli they were the only partners.
They were occupying the same office, indeed, as
I understand it they still do. And it is a little
SlT6/l/AC 32 12/8/88 Loder odd, perhaps, that two partners who are still in
partnership dealing with a partnership problem,
not between themselves, are here by separate
solicitors and separate counsel. But, none the less
they are partners. This acting for Mr Aysom and
his companies, Parts Master and Torumba, they did
as a partnership enterprise. Denyllek was a firm of which it seems they were the two directors and the two shareholders and it does, perhaps, seem
a little odd that there is any question about service
on one not being adequate notice to the other
particularly when section 16 of the PARTNERSHIP ACT
expressly says so. It says - - -
MASON CJ: We have managed to read it, Mr Broun. MR BROUN:
Thank you, Your Honour. Your Honours will see that where it is dealing with a partnership matter service
on one is adequate anyway. Your Honours, we would also submit that this is not a good case in which to raise the absence of any citation or formal
irregularities because this is a case where, on
the facts, the Full Court was satisfied, indeedit would seem that everybody was satisfied before the Full Court, but Your Honours would also, in
our submission, be satisfied when Your Honours see
the affidavits of service and the like that, in
fact, all of the relevant persons - using the worddistinct from parties - knew what orders were sought
against them, knew when the matter was listed, knewwhat the claim was and, indeed, had been served
with copies of all of the affidavits so that theyknew what the evidence was. DEANE J: Except the Full Court does not seem to have addressed the fact that the document that was served - this
one
MR BROUN: Yes - one of the documents served, Your Honour.
DEANE J: - - - was calculated to cause any lawyer without knowledge of Family Court in-house procedures, as
it were, to be absolutely misled as to what was
involved in that a non-family court lawyer consulted
about this document would tell his client he did
not have to worry because not being a party to theproceedings or named as a respondent no order could
be made against him. And he might even go further and say that in that court since they never make
orders tor costs, usually, you better stay away.
MR BROUN: Your Honour, I think the answer to that is, first of all, if one looks at the substance of the orders
sought then - - -
SlT6/2/AC 33 12/8/88 Loder
DEANE J: But that is the point. You see, if this was a procedure in the supreme court in e~uity and it
was taken to counsel he would say, 'Those orders
you do not have to worry about because you are not
a party and they cannot be made against you".
MR BROUN: With respect, Your Honours, I would doubt whether
that would be so. One would think that the advice would be that the cautious thing to do is to turn up and suggest that they ought to be joined. DEANE J: Maybe, but if the lawyer was giving advice as to
the legitimate possibilities in proceedings between
strangers in which his client was not named as a
party and not served as a respondent, that would
be the advice that he would give: that those orders
cannot properly be made against you.
MR BROUN:
Well, Your Honour, the question is, what really does the notion of being named as a party mean?
I would submit, Your Honours, that, essentially, being named as a party means that relief is sought against one and it is plain that one has a right to defend or oppose that relief sought against them. DEANE J: You see, look at this document, it says, "To the
respondent" and it then contains a number of warnings
and advices for things that can be done, all confined
to the respondent. It is only the respondent who
is told he can raise new issues, come along, defend,
file affidavits and so on.
MR BROUN: That is so, Your Honour. Yes. That printed part of the form does only direct -
DEANE J: Now, all I put to you, Mr Broun, is that this document
is of a kind which would almost certainly mislead
any lawyer without knowledge of the in-house
procedures of the Family Gourt.
MR BROUN: Well, Your Honour, I would submit not because the lawyer being cautious, wise and concerned to protect
his client's interests would turn to what orders
were sought and they are clearly directed against
the relevant parties, except Mr Bertoli was not
expressly named in them, so he is different. But his partner was and a company of which he is a director was and it is clearly set out what relief
is sought and further, of course, there was, in
fact in this case, a covering letter saying, "Here
is a document, orders are sought against you, get
advice". So that although, Your Honour, I would
for my part suggest that the Family Court Rules
ought to have made much clearer provision in the
forms for the warning to a person against whom relief
was sought, in fact in this case no injustice was
done because there was the factual warning done
S1T6/3/AC 34 12/8/88 Loder and all the right things were done to make sure that the person against whom relief was sought,
who in the ordinary sense, in my submission, is
a party is given notice that the relief is sought
against him and is given the opportunity to do
something about it.
DEANE J: I have probably been obscure but why I was directing your attention to that is that it seems to me that
apart from that point what is involved here in the
natural justice desired appeal is an invitation
to this Court to rehash all the facts that the
Full Court has dealt with and that it does not appear
to me that there is any great question of law
involved. But what I was suggesting to you was
that the problem with that approach is that the
Full Court seems to have ignored the problem raised
at the outset by the Family Court's own document.
Now, I was putting it to you in the context of a special leave application.
MR BROUN: Your Honour, that certainly was not dealt with by the Full Court expressly because it was never raised
before them.DEANE J: Well, that may be the answer.
MR BROUN: It was never the subject of any debate and, indeed,
it does - - -
DEANE J: The misleading nature of the document or a suggestion that people had been misled by procedures was never
mentioned in the Full Court?
MR BROUN: No. And, indeed, we would submit that it is clear why it was not ever raised because the affidavits
of service and, indeed, the very documents annexed
to the affidavits which were relied upon in supportof the application to lead fresh evidence included
were aware of what the proceedings were about. those covering letters and made it clear that they So that was, presumably, why it was never raised. Your Honours, we would also suggest to
Your Honours that this would be a very bad case
in which to raise that issue because of the way
in which both Mr Loder and Mr Bertoli chose to conduct
the matter at first instance. We would refer to the decision of this Court on a special leave
application called NOMINAL DEFENDANT V NILON on
which, I think, Your Honour the Chief Justice sat,
but the other members of the present Bench were
not engaged - it was merely published as a sort
of practice note, I think - but the point was made
that the conduct of the case in the courts below
may preclude the granting of special leave to appeal
S1T6/4/AC 35 12/8/88 Loder notwithstanding that an important question arises
or may be discerned. The matters we would point to in this case, of course, were the deliberate
decision of Mr Loder not to attend despite the fact
that he had been served with notice, he knew thatthe claim was being made, he was actually in court when the matter was opened initially in March and,
indeed, on that morning he had been represented
by a different solicitor, Mr Nicholas Loder, who
had withdrawn from the proceedings and arranged
for another solicitor to take over.
So, we would suggest, relying on that
NOMINAL DEFENDANT V NILON, that the mess that this
case has got into by reason of those decisions taken
by the present applicants for leave is a reason,
and a just reason, for refusing special leave even
if there was a substantial point.
Your Honours, some other matters we would refer to, particularly in answer to my learned friend
Mr Foord, is that we would submit that this is largely
a matter of fact and discretion and that really
as to the questions about section 85 there is not
really any substantial issue of fact to be developed
because the Full Court have held that the facts
of this case fitted within two limbs of section 85.
There were transactions which did, in fact, defeat
an existing order and section 85(1), if I may take
Your Honours to it, says that:
In proceedings under this Act, the court may
set aside or restrain the making of an instrument
or disposition by or on behalf of, or by direction
or in the interest of, a party, which is made
or proposed to be made to defeat an existingor anticipated order in the proceedings or
which, irrespective of intention, is likely
to defeat any such order.
Now, the Full Court put it under two headings.
They said it did defeat an existing order, namely,
the injunction restraining the husband from entering
into any such transaction as the instrument of loan
in 1986 and, secondly, irrespective of its intention
it was likely to defeat an anticipated order because
the evidence before the trial judge and the Full Court
was clear that really there were only two assets
that the husband and wife had. The main asset was this business conducted through these two companies
of which the husband was the shareholder and a small
equity in the ma:trim::mial home. And the wife's claim was particularly based upon her contributions to
that business. So that essentially the thrust of the section 79 case was that she had made over the years of marriage an important contribution to the development of that business by her years of work
SlT6/5/AC 36 12/8/88 Loder in it over the whole of the marriage - substantial
part of the marriage - and, secondly, the claimin respect of the much smaller asset, the small
equity in the home.
Now, obviously something which, in effect,
wiped out the business and removed it altogether
from the sphere of the court's interest would be
likely to defeat the wife's claim. So there wasno real issue about those factual matters because
of the simple factual situation which arose. I
can give Your Honours any of the documents that
Your Honours may require, I believe, for example
the transcript of 27 March when Mr Loder was in
court and heard an opening as to what the whole
case was about and what claim was being made against
Mr Loder and Mr Denyllek and the fact that he was
in court is actually noted in the transcript. But unless there is any other particular matters to which I may assist Your Honours on the facts, those
would be our submissions.
BRENNAN J: Mr Broun, under the order of the Full Court varying the order of Mr Justice Nygh, what are the present orders which affect Mr Loder and Mr Bertoli personally?
MR BROUN: Your Honour, there are not any at the moment because
the Full Court has sent back to the trial judge
the question of the financial adjustment betweenMr Loder and Mr Bertoli on the one hand and Sid Moore and Sid Moore Racing on the other. That is, in effect, not a matter that now arises because the Full Court has referred that back to the trial judge. So Mr Loder and Mr Bertoli are not, at the moment, the subject of anything that could put them
out of pocket though, no doubt, they see themselves as being at grave risk because of the setting aside of the transaction but one would have thought they
must have a right of indemnity from the party that
appointed them, Denyllek, and, presumably, they would have some claim against the funds that they
received from Mr Moore or Sid Moore Racing. So that, at the moment, in our submission, the only matter about which Mr Bertoli and Mr Loder really have a matter of concern is the risks that the situation has placed them in rather than any present order. MASON CJ:
Yes. Thank you, Mr Broun. Yes, Mr Bennett. MR BENNETT: May it please the Court, we oppose the grant of special leave. It is my submission that there are
a number of reasons why this case is not a
convenient vehicle for any point in relation to
natural justice to be tested in this Court. It
involves, first of all, an extraordinary combination
of circumstances both background and litigational
SlT6/6/AC 37 12/8/88 Loder and a large number of them are directly relevant
to natural justice which are unlikely to arise in
other cases. One is the question of the extent to which a covering letter deals with, or mitigates
against, any denial of natural justice caused by
the failure directly to refer to a matter in
originating process.
A second is, the application of the
PARTNERSHIP ACT and its provisions about service
in a situation where a partnership is appointed
as receivers and the question whether in that
situation service on one partner is sufficient as
against both. There is a question of agency; the
extent to which service on the principal of matters
can be treated as notice to the agent. Perhaps
over all those there is the more general one and
the more general one has two aspects. The first
is, does one apply the rules of natural justice
in any event to a court of this nature but assuming
one does, in my respectful submission, one would
look not merely to the particular document, not
merely to the specific event and occasion but to
the whole of the circumstances. And when one looks at the whole of the circumstances there is hardly
any substantial denial of natural justice here.
There is the relationship between the individuals
and the company which was the mortgagee which was
a party. This was, in substance, although by
receivers, a mortgagee sale and the company effecting that sale which was a party and was given full notice
was the party which appointed its two principals
as the receivers. So, again, as my learned friend Mr Broun has suggested, if one is talking of natural
justice in a totally abstract sense, the relevance
of that sort of consideration would have to be
considered.
There are questions arising under the
Federal Court Rules. There are also difficult
questions arising as to the extent to which the
events of 2 - and 3 April - there were also questions as to the extent to which whatever deficiencies
occured on 2 and 3 April could and would have been cured on 29 April had Mr Bertoli and the other
applicants put all the arguments which were available
to them and attended.
BRENNAN J: Mr Bennet, is there any reason why, the matter having to go back before a single judge again, that
single judge should not consider de novo any of
the questions against Mr Loder and Mr Bertoli?
MR BENNETT: Your Honour, the answer to that question would
involve arguing the whole of the appeal. We would submit that we now have orders which have been
SlT6/7/AC 38 12/8/88 Loder affirmed by the Full Court and which should stand.
My client now, because of what has happened - - -
BRENNAN J: What orders - this is in favour of your client
you are speaking of - what orders are there in favour
of your client?
MR BENNETT: The orders against my client setting aside the transaction in the events which have since happened
because the business, of course, does not exist any more,are now very much to the benefit of my client because he, of course, would wish to get
back his money and that is the only remedy that
he has available and, therefore, the last thing
he would now wish to see is the transaction being
affirmed. The effects of the interlocutory orders and the litigation was that he substantially ceased
to have any benefit from his purchase and he
therefore seeks to obtain orders against such partiesas may be available who were instrumental in selling
the business to him.
DEANE J: And did you say that the business has effectively disappeared?
MR BENNETT: Yes, Your Honour.
DEANE J: Which means the parties have had a great success
with all this litigation. They have destroyed part of what it was all about.
MR BENNETT: I should, perhaps, qualify that, Your Honour. I did not want to oversimplify it but part of what occurred was that the Commissioner of Taxation in
relation to sales tax took a large part of the moneys
and there were various things which occurred. But my client simply wants his money back from someone
and preferably as many people as possible.
the Family Court Regulations and Rules enabling Your Honour, there are very wide powers in the court to dispense with regulations and to dispense
with rules and requiring in the fairly standard
form with which courts are now familiar that
whatever be done be done in the interests of efficiency
and speed and the like and, in my respectful submission,
the practical situation is that had a few days after
the order Mr Loder or Mr Bertoli approached thecourt and said, "We are anxious now to be heard
on what occurred on 3 and 4. April'', the position might have been very different. There would have
been powers to dispense with rules and to say, "Well,
this may be a final order in one sense but it is
only a few days old, let us deal with it". But what they did was, in effect, to flout the authority
of the court to say, "We will refuse to have anything
to do with it, we will s1rnply see what happens and thenappeal" and this in a situation where in the varying
S1T6/8/AC 39 12/8/88 Loder degrees, of which Your Honours have heard and which
I will not take Your Honours to again, they and
each of them had varying degrees of notice of what
was occurring at different times.
We would submit that all these facts make the
case a highly inappropriate vehicle for the Court
to look at questions of natural justice or questions
of natural justice in the family Court~ And one must not neglect, of course, two other things:
Mr Loder's presence in court and there was criticism
made of the terms of the orders sought against
Mr Loder - may I simply point this out, that where
the way in which a party is affected by an order
is not that the order requires him to do something,or not to do something, but that the making of
an order has some indirect effect upon him, which
is the situation here, obviously he is not going
to be nam.eli:'. iri :t:he:.<ircler ~ One has to gather then, from
the document as a whole, how one is affected. And if one considers the situation in equity where someone is joined as a necessary party to anaction
of some sort the order in relation to the subject-
matter may not name him at all. The order may say
that a scheme be approved or that something be settled
cy-pres or it may say all sorts of things. It may not say that the defendant X be ordered to do
something or not to do something but nevertheless
the defendant must read the document as a whole
and form a view whether it affects him.
Now, in this Court the rules as to parties
are not as precise as they might be but the test cannot be, with respect, how an equity lawyer or a common lawyer would look at that document and
advise his client as to what he should do. Thetest must be what someone who has experience of
all courts, or at least of the Family Court, would
do. One cannot judge the standarj of the process of a court by how it is going to be looked at by someone not familiar with the processes of that
court. Indeed, there are ample ways in which a practitioner can advise himself about the processes
of a court with which he is unfamiliar if he is
asked by a client to do so. Apart from anything
else that is one of the matters that is always put
in support of a separate bar. And, in my respectful submission, it is simply no answer to say, "Well,
it is true that a family practitioner would be
familiar with what this document meant but looking at it on its face another lawyer might be misled". That, in my respectful submission, is not a matter which can go to natural justice or, indeed, affect
the force of the orders which were made. And when all those matters are put together we would submit not only is this case an inappropriate vehicle but
S1T6/9/AC 40 12/8/88 Loder it does not come under the other leg; there is no
serious suggestion of a miscarriage of justice.
This was a case where the two persons concerned
were partners and officers of a company, the company
was squarely before the court, one of them was
squarely before the court, the other became squarely
before the court on the second occasion and to
separate one out and say, "Yes, but one of themwas not specifically told at the early stage of
the consequences that might have flowed against
him", in my respectful submission, falls a long
way short of a substantial miscarriage of justice
sufficient to justify the intervention of the Court
particularly when all the other matters to which
I have referred are taken into account.
In relation to the issues under section 85,
I do not propose to deal with those in detail,
my learned friend Mr Broun has dealt with them,
but we would submit that those issues cannot be
dealt with without going into the whole of the factual
material. There is not shown, we woulc submit, any
direct conflict on a single proposition between
the decision in this Court and the decision in
HARPER's case, indeed, in both cases, the Court
seems to say, "Well, there are a number of approaches
to construction of this section but on any view
this result would follow." Certainly, that is what is said in HARPER and, in my respectful submission,
it is not shown that there are two views which would
produce opposite results in this case. The case is not a convenient vehicle, we would submit, for
testing any issue which arises under section 85.
For those reasons it is my submission that
the application - - -
MASON CJ: Thank you, Mr Bennett. Yes, Mr Foord.
BRENNAN J: I would like to ask Mr Bennett one question. Mr Bennett, section 85(3) of the Act requires the
court to:
have regard to the interests of, and shall
make an order proper for the protection of,
a bona fide purchaser or other person interested.
Now, I would be interested to know whether you have
any submissions as to the operation of that provision
with respect to the present proceedings for the
protection of your client, the business havingdisappeared and I presume the money having disappeared
also.
MR BENNETT: There is $100,000 in court, I am told which was
paid in I think by Mr Loder. I think I am correct in saying that - or $110,000 at one stage.
S1T6/10/AC 41 12/8/88 Loder And one does not know, of course, what assets
individual parties have and the phrase "disappeared"
may be a strong phrase - I was not intending to
be precise in my use of that word in the absenceof evidence.
But, Your Honour, we would submit that under
section 85 where a sale is set aside against a
the court to do whatever is necessary to put the
parties back, so far as possible, in the positions
they would have been in but for the events having
occurred. That invovles, in relation to a purchaser
such as my client, giving him his money back.purchaser who has paid for it that section empowers of that nature against the husband or the wife but
it is also possible, we would submit, where other parties have been instrumental in enabling a transaction which is set aside to go through, such as receivers, mortRagees, agents and the like, for
the court to say, Where does the justice lie in
seeing where the loss should fall of ~etting aside
this transaction". And that is necessarily incidental to a power to set aside transactions. When one sets aside transactions - when the equity court does - there are all sorts of consequential orders
which need to be made and they may often involve further parties being joined for the purpose of the court's order being worked out to the full.
And we would submit those matters are fairly incidental to the power and are, fairly, what is referred to in the language of section 85 which is, of course, very broad.
May it please the Court.
MASON CJ: Thank you, Mr Bennett. Yes, Mr Foord.
MR FOORD: Your Honours, only out of concern for the effect
of the submissions of Mr Broun and Mr Bennett about sitting,back and letting the court run on and then saying, "Well, we will come later with an appeal", the situation is this, Your Honour, the lawyer no
doubt being one of those not familiar with the
in-house procedures of the Family Court did whathe should have done in the given circumstances and
looked at those rules and that is why we handedthem up this morning because they show a most comprehensive set of rules designed not to bring a party not named in the proceeings into those
proceedings except under certain conditions. And this solicitor said, "Look, you have not got the conditions present and therefore we will not be
there".
SlT6/ll/AC 42 12/8/88 Loder
MR FOORD (continuing): Now, either he has been misled or he has misled himself. In either event, wherever
the fault of that lies, the course of the Full Bench,
we submit, was plainly - - -
MASON CJ: But did you ever raise before the Full Court the point that he had been misled by the form of the notice?
MR FOORD: No. Well, I was not there and I cannot answer Your Honour's question but I cannot see in their
reasons anything that would justify a man saying
yes.
Yes, those rules as to parties are imprecise.
We accept what counsel have said about that, not and they require, before we can be brought into
this litigation, that an issue be defined that
involves us and if my solicitor was right in saying
that it was not done, then he was right in absenting
himself and a verdict against him .should not be allowed to stand. What they have done apparently
is supplement the material at the hearing before
Mr Justice Nygh and go ahead and get a decree and
that, it says, is a denial of right to us, we submit,
Your Honour.
MASON CJ: Thank you, Mr Foord. Yes, Mr Handley.
MR HANDLEY: Two matters, Your Honour: my friend, Mr Broun, said that my client had received some form of notice
before the first hearing on 3 April. That is contraryto the sworn evidence of the applicant's solicitor.
At page 95 of the application book which has not been
contraverted by any sworn material filed in this Court,
paragraph 21 on page 95:
lam instructed by Mr Bertoli that at no
time prior to the orders on 3 April 1987
was Mr Bertoli served with the application filed on behalf of the wife pursuant to section 85 and the supporting affidavit, nor given any advice or notice that he may
be affected by the orders which were soughtand made on 3 April 1987.
The PARTNERSHIP ACT point, Your Honours, was rejected
by the Full Court at page 54, inter alia, because the
documents served on Mr Loder did not indicate that he
was being served as a partner - on behalf 0-F a firm:And Bertoli himself was not namecl. in the application or in the relief.
Page 54, lines 13 to 18.
SlT7/l/SH 43 12/8/88 Loder And, finally, Your Honours, it is clear from a number
of Full Court cases that where there has been, in
has been applying TAYLOR V TAYLOR and taking the view the Family Court, a denial of natural justice, the Full Court that a party affected is entitled to go to the
Full Court and, if that is a material consideration,I could have this reproduced but it is the case of
BARRO V BARRO, (1983) FLC before the then Chief Judge and Justices Fogarty and Treyvaud and, of course, there was not quarrel in the Full Court in this case that Mr-Bertoli had misconceived his remedy by going to the Full Court rather than going
back to Mr Justice Nygh.
DEANE J: Mr Handley, what would be your comment on the second and third line on page 55? MR HANDLEY:
Your Honour, Mr Grieve's concession related to the orders made on 29 April.
DEANE J: That they caught up what had happened·before?
MR HANDLEY: No, Your Honour. Well, I mean, they were financial orders, money orders, made against Mr Bertoli but they
were the only orders made against Mr Bertoli that day.
DEANE J: Yes, but if those orders are valid, is that not your
client's main complaint?
MR HANDLEY: Well, Your Honour, we submit that were denied
natural justice on 3 April.
DEANE J: Yes, I follow that.
MR HANDLEY: I mean, the fact that he was given natural justice with regard to a further order made against us on
29 April is neither here nor there. The further
orders, Your Honour, required to be maintained by
braces and if we can remove the braces, the further orders will fall.
DEANE J: I must have misread the previous sentence wrongly: He did not choose to take part in the proceedings of 29 April and we do not think the he can challenge the validity
of the order made against him on that
day on the ground of a denial of natural
justice.
MR HANDLEY: Yes, it is only a concession as to the actual order made on the 29th.
BRENNAN J:
Mr Handley, that order that was made on the 29th has now been set aside, has it not?
MR HANDLEY: Yes, Your Honour. S1T7/2/SH 12/8/88 Loder 44 BRENNAN J: And that the matter is going back to the single judge? MR HANDLEY: Yes, Your Honour.
MR BROUN: No, only in part, Your Honour. The order made on 29 April against Mr Bertoli was - the whole ambit of
the orders that had been previously made against
Loder - what has been sent back is only the question
of the financial adjustments between Loder, Bertoli,
Denyllek on the one hand and Sid Moore and Sid Moore
Racing on the other. So that a substantial part of the orders of 29 April still stand.
BRENNAN J:
Am I right in thinking that paragraph 3(3) of the orders that appear on page 18 are going back?
MR HANDLEY: Now, page 18, order 3 is going back, I believe. BRENNAN J: That is right.
MR HANDLEY: The orders made against Mr Bertoli on the 29th are set out in the application book at pages 23 and
following and the - - -
MR BROUN: It is order No 2 on page 24 of the a~peal book. MR HANDLEY: Yes, yes, it is. That is right. BRENNAN J: Order No 2 on page 24. Now, that is what is going back.
MR HANDLEY: That is going back, Your Honour.
BRENNAN J: So, the personal orders made against Bertoli and Loder are going back.
MR HANDLEY: Yes, Your Honour.
BRENNAN J:
Now, is it right to say that, pursuant to the order originally made, Mr Moore and his company
yielded up possession of the assets? MR HANDLEY: Your Honour, I was not - Your Honours will appreciate, I was not - - -
BRENNAN J: No.
MR HANDLEY: - - - in the matter in the Full Court or before
Mr Justice Nygh. I can give Your Honours my understanding of the matter but it might be more
appropriate if either - - -
BRENNAN J: Well, perhaps, I could just indicate the area of
my concern. If the original orders were given
sufficient effect to, .law interests yielded
up the assets for which they had paid and they have
SlT7/3/SH 45 12/8/88 Loder not got their money back, then they have to get
their money back, one would think, from somebody
or other. The matter is going back before the single judge to decide whether that order should
be extended to the individuals, Bertoli and Loder.
MR HANDLEY: Yes, Your Honour. BRENNAN J: Then there may be problems about whether an individual order should be made against them as
against the person to whom or on whose behalf the
purchase price was paid, namely, Torumba or Denyllek.
MR HANDLEY: Yes, Your Honour. BRENNAN J: But, ultimately, the court is under an injunction
under 85(3) to make orders for the interests of
other persons who are interested. How does that affect the question of whether we should not, at
this stage, say, "Let the matter go bac;k to the
single judge. Let him work out whether the personal
order should be made against these persons and ifthere is any problem then as between them and the
companies, that is, Denyllek and Torumba, then the
matter can come forward for further consideration
later."
MR HANDLEY:
Not back to this Court direct but through the Full Court.
BRENNAN J: No, through the Full Court. MR HANDLEY: Yes. Your Honours, I think my learned friend, Mr Bennett, may have, as he in fact confessed,
been a little.carried away when he said the business
hact disappeared because Mr Justice Nygh ordered a
stocktaking and with regard to the stock that had
been sold, of course, Mr Moore has received - that
is, sold in the ordinary course of business prior to the orders of the Family Court - Mr Moore, or
his company, received the purchase price for that
stock from the public in the ordinary course of
business and he was not ordered to retransfer thatstock which he had already disposed of.
With regard to stock which was still in existence
and able to be redelivered by Mr Moore to the vendor,
Torumba, Mrs Aysom was appointed court receiver with
respect to that stock, and to take possession of it and, asI understand it, she did so. So, the business has not
disappeared in that sense. Some of the stock has been sold in the ordinary course of business by
Mr Moore who has received the money. The rest of the stock came under the control of the court
through its receiver but I would accept, Your Honour,
that the court is under an obligation under 85(3)
SlT7/4/SH 12/8/88 Loder and that, in my respectful submission, would
rather support the grant of special leave but,
can I say, Your Honours, that what I just
said - - -
BRENNAN J: Well, I wonder whether it would or whether it
might be better not to grant special leave until
the proceedings are dealt with by the single judge again
and see how he has worked it all out.
MR HANDLEY: Well, Your Honour, in our submission, that would
fail to give proper effect to my client's rights
not to be prejudiced or affected in his property or
financial interests by orders of a chapter 3 court
without prior notification. What Your Honour says may be, perhaps, an answer to Mr Foord, subject to the deception point. It does not run to my client.
But, Your Honours, the extent to which what happened
in practice after Mr Justice Nygh's order of 3 April,
I think there are other people at the bar table who
could give Your Honour a more complete.account.
BRENNAN J: Yes.
MASON CJ: The Court will announce its decision in this matter after the adjournment.
AT 12.13 PM THE MATTER WAS ADJOURNED
| T7 | UNTIL LATER THE SAME DAY |
| UPON RESUMING AT 2.20 PM: | |
| MASON CJ: Having given consideration to these three applications, |
we have come to the conclusions that we need to give further consideration to them so that the matters will
stand - over until we announce a decision which we
hope will be in the forthcoming week.
MR HANDLEY:
Would it be appropriate, Your Honours, if I handed up amended notices of appeal with the ambit material
removed? MASON CJ: Yes.
MR HANDLEY: Sorry, amended drafts.
MASON CJ: Thank you, Mr Handley.
SlTll/1/SH 47 12/8/88 Loder
MR FOORD: And, perhaps, if I inform Your Honours that if special leave be granted, similar steps will be
taken in our case and so far as applicable to us, grounds of appeal corresponding to those, a draft
of which has been handed to Your Honours, would
be filed, certainly including grounds 4 and 5.
MASON CJ: Thank you, Mr Foord. AT 2.21 PM THE MATTER WAS ADJOURNED TO A DATE TO BE FIXED
SlTll/2/SH 48 12/8/88 Loder
Key Legal Topics
Areas of Law
-
Family Law
-
Commercial Law
-
Civil Procedure
Legal Concepts
-
Injunction
-
Appeal
-
Remedies
-
Jurisdiction
-
Procedural Fairness
0
0