Malouf & Anor v Sterling Estate Development Corp

[2004] HCATrans 198

[2004] HCATrans 198

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Sydney  No S558 of 2003

B e t w e e n -

SAM JOHN MALOUF

First Applicant

CHRISTINE MALOUF

Second Applicant

and

STERLING ESTATES DEVELOPMENT CORPORATION PTY LIMITED

Respondent

Summons

GLEESON CJ

(In Chambers)

TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON TUESDAY, 8 JUNE 2004, AT 2.16 PM

Copyright in the High Court of Australia

MR R. ALKADAMANI:   May it please the Court, I appear with my learned friend, MR P.J. CASTLEY, for the applicants.  (instructed by CBD Legal) 

MR S.T. WHITE:   May it please the Court, I appear for the respondent.  (instructed by Kemp Strang) 

HIS HONOUR:   Yes, Mr Alkadamani. 

MR ALKADAMANI:   Your Honour, this is a summons for reinstatement of a matter that was deemed abandoned because of the operation and the effluxion of time. 

HIS HONOUR:   Do you also need an order extending time for filing of the notice of the application for special leave? 

MR ALKADAMANI:   Yes, your Honour – sorry, no, your Honour.  The application for special leave had been given a short extension of time and it was filed in November 2003. 

HIS HONOUR:   Time has already been extended for that, has it? 

MR ALKADAMANI:   Yes, time was extended for that. 

HIS HONOUR:   By order of the Court? 

MR ALKADAMANI:   That is what I understand, your Honour, because it was filed.  That is how I had understood it, because the application was filed; however, I did not understand that the application obtained the Registry stamp without an extension of time having been given at the Registry.  But my understanding is based on my instructions from Mr Malouf, who was acting on his own and without representation. 

HIS HONOUR:   How far out of time was it filed? 

MR ALKADAMANI:   Less than seven days, your Honour. 

HIS HONOUR:   Thank you.  Yes, go ahead. 

MR ALKADAMANI:   Your Honour, the affidavits that we rely on are one of Mr Sam Malouf, which was filed on 12 May; another of Mr Malouf, which was filed on 7 June; the one by Ms Malouf, which was filed on 7 June; and a psychiatrist’s report of 4 June. 

HIS HONOUR:   Do you object to any of those, Mr White? 

MR WHITE:   No, your Honour. 

HIS HONOUR:   I have read those.  Now, you have an affidavit, Mr White? 

MR WHITE:   Yes, I do, your Honour.  It is that of Mr John Baird, filed and sworn on 28 May 2004, and there is a second affidavit of Mr Mamfredas of 7 June 2004, filed on ‑ ‑ ‑

HIS HONOUR:   Do you object to either of those? 

MR ALKADAMANI:   I do not have the second affidavit, your Honour. 

HIS HONOUR:   I do.  It is one of six paragraphs. 

MR ALKADAMANI:   Your Honour, I understand this not to have been served.  I have not been able, obviously, to obtain any instructions about the matter. 

HIS HONOUR:   Has it been served, Mr White? 

MR WHITE:   Yes, your Honour.  I am told it was sent by way of facsimile to the solicitors for my friend before 5 o’clock last night. 

MR ALKADAMANI:   Your Honour, I do not object to that. 

HIS HONOUR:   All right.  I have read that affidavit.  Yes, that is the evidence.  Go ahead. 

MR ALKADAMANI:   Your Honour, the exceptional circumstance that we rely on is that Mr Malouf suffers a major depressive disorder.  That is in Dr Durrell’s report at page 5.  Can I take your Honour to that? 

HIS HONOUR:   I have read it. 

MR ALKADAMANI:   Your Honour, the effect of this is that it has significantly affected Mr Malouf’s cognitive abilities.  Dr Durrell records that it has led to impaired judgment, poor concentration, indecisiveness, impaired memory, lowered motivation or procrastination ‑ ‑ ‑

HIS HONOUR:   I thought the major problem was that he is short of money. 

MR ALKADAMANI:   Your Honour, at the time he was short of money and he was unable, in a sense, to get his act together because of his depression. 

HIS HONOUR:   And because of his shortage of money? 

MR ALKADAMANI:   Yes, certainly, your Honour, those two factors. 

HIS HONOUR:   Has that been remedied? 

MR ALKADAMANI:   His shortage of money – your Honour, we are acting on a speculative basis. 

HIS HONOUR:   I understand that, but is there any point in me restoring this matter to the list?  Are the funds going to be available to pursue it? 

MR ALKADAMANI:   Well, your Honour, other than ‑ ‑ ‑

HIS HONOUR:   Pleadings like this cause expense to the other side. 

MR ALKADAMANI:   Yes, your Honour. 

HIS HONOUR:   I presume this is accompanied by an offer to pay the costs of the other side of these proceedings, but whether it is or not, your client is obviously at risk of an order like that.  Proceeding, delay, the necessity to apply to have this matter restored to the list, all cost the other party money.  They have to pay lawyers to come along and deal with applications like this. 

MR ALKADAMANI:   We accept that, your Honour.  If your Honour is of the view that an appropriate order in relation to security for costs for the other side’s costs is a condition of the grant, then that is something that we would understand would be a proper exercise of discretion, your Honour, in respect of today’s application. 

HIS HONOUR:   All I am really trying to find out is two things, Mr Alkadamani.  First of all, if I make the order that you seek, will the application for special leave be pursued, or will your client just run out of money again, and what kind of assurance is there that your client would meet any order for costs that might be made against him in relation to this matter or in relation to the application for special leave to appeal? 

MR ALKADAMANI:   Your Honour, the only assurance that I presently have instructions in relation to meeting the other side’s costs is that such means as are available to Mr Malouf in the ordinary course after one obtains orders for costs and, if necessary, bankrupt somebody or what have you, is

all that is available.  I do not know that there is any other available.  But in terms of our costs, your Honour, we are not acting on a basis that we require funds from Mr Malouf.  As to the issue of disbursements, I am not exactly sure of the arrangement between the solicitor and Mr Malouf, but that is the issue ‑ ‑ ‑

HIS HONOUR:   Well, let me hear what Mr White has to say.  Yes, Mr White. 

MR WHITE:   Your Honour, the position we take is twofold.  Firstly, the prospects of this matter obtaining special leave are so low that your Honour would not reinstate the application. 

HIS HONOUR:   Well, you have a little difficulty there, have you not, Mr White, because the Court of Appeal actually reversed the decision of the Chief Judge in Equity, did they not?  It would not be a high compliment for me to pay to the Chief Judge in Equity to say that the prospects of reversing that decision are so low that we are all wasting our time. 

MR WHITE:   I would not want it to be inferred that that was the submission I was making, your Honour, but if one looks at the special leave questions said to arise in the draft summary of argument, with great respect, each of the seven so‑called special leave questions are either matters of orthodox application of principle which the Court of Appeal engaged in or are factual matters, none of which, we submit, give rise to any special leave question. 

HIS HONOUR:   Am I right in thinking that the essential question in the litigation was whether or not a certain defect constituted a particular kind of fault that triggered a certain clause in the contract? 

MR WHITE:   That is exactly right, and that required analysis of the factual circumstances in which that defect came about.  The Court of Appeal disagreed with the findings of the Chief Judge in relation to the nature of the defect and the consequences of that defect. 

HIS HONOUR:   Mr White, if this matter is restored to the list, I would not be minded to give Mr Malouf any choice about when it came on for hearing.  We could give it an expedited hearing and put it in the special leave list for 10 September.  Obviously, the matter has a degree of urgency from your client’s point of view, as evidenced by these affidavits. 

MR WHITE:   Can we point out one other matter, your Honour, which is relevant.  We have sent an assessment of our costs for both the trial and the Court of Appeal – well over $100,000 – in respect of which we have received no response from the applicant.  Now, that causes us great concern as to the ability of this applicant to pay any costs arising out of this application or in respect of the special leave application.  Your Honour has already pointed out, with respect, quite rightly, that every time we come before the Court it is expensive.  My friend has not put up any rational offer of security in respect of this application or the special leave application. 

HIS HONOUR:   Yes. 

MR WHITE:   Does your Honour wish me to deal in detail with the special leave questions?  I do not wish ‑ ‑ ‑

HIS HONOUR:   Whatever you want to put. 

MR WHITE:   Your Honour, the way in which I would like to approach it, very briefly – and I do not wish to turn this into a special leave application, but if one reads the Court of Appeal decision, it was, with respect, a very orthodox application of construction principles to a term in a contract.  Their Honours differed with the factual findings made by the trial judge and, as a consequence, they found that the relevant defect, which was a slope in the floor, did not constitute the type of defect as found by the trial judge. 

The special leave question in the draft summary of argument points to the so‑called application of the noscitur principle by the Court of Appeal, but, with respect, that ignores the detailed analysis of the terms that the Court of Appeal went through, and, in particular, her Honour Justice McColl, in paragraph [77] through [86] of the judgment, where her Honour deals with each of the subparagraphs of the relevant terms and, as I respectfully said previously, applied non‑controversial construction principles to that term.  It was only in relation to paragraph [88], after her Honour had made a finding in relation to each of the subparagraphs, that her Honour then made reference to the fact that she accepted the appellants’ submission that the subparagraphs took their colour from their surroundings, which, of course, is the noscitur principle. 

Now, in those circumstances, your Honour, it really is not in accordance with the reasoning of the Court of Appeal to say that the Court of Appeal took primary notice of the noscitur principle, but in any event we submit it was the correct application of the principle in the circumstances. 

The other matter, your Honour, which is in paragraph 3 of the special leave question, this suggestion that there was a destruction of evidence by my client, there is absolutely not a whit of evidence that that is the case.  It was never raised at the trial, nor in the Court of Appeal, and we submit it is quite inappropriate to raise it now in a special leave application. 

Finally, your Honour, in relation to the remaining paragraphs, the occupation certificate, again, the reasoning of the Court of Appeal did not depend upon the occupation certificate which was tendered by the defendant at the trial.  There is a reference to the fact that it was tendered by her Honour in the Court of Appeal, but if one looks at the reasoning of the Court of Appeal, the relevant paragraphs I indicated to your Honour, the occupation certificate plays no role in their Honours’ construction of the relevant term in the contract. 

Your Honour, we submit, with respect, that the prospects of success of this application on special leave application are remote at best.  Finally, your Honour, in relation to the failure to prosecute the application, can we simply make these three or four brief points.  Firstly, it is our understanding that the special leave application was filed out of time and there has not been any extension made in respect of that matter, although I do not take the point that no extension has been made.  The fact is it was filed out of time. 

Your Honour will see from the affidavit of Mr Baird that we actually wrote to the applicants on a number of occasions warning them of the consequences if they did not get their house in order.  We received no response to any of that communication.  It was only after the High Court Registry informed the applicants that their special leave application had been deemed abandoned that it took them a further two weeks before this application was made, without any explanation in the affidavit material. 

HIS HONOUR:   I presume Mr Hatsitouris is no longer acting for Mr Malouf, is that right? 

MR ALKADAMANI:   That is correct.  He has not been acting for some time, your Honour. 

HIS HONOUR:   Yes. 

MR WHITE:   Finally, in the affidavit that was filed yesterday of Mr Mamfredas, your Honour will see there that the conduct of the applicant, Mr Malouf, is not, we would submit, consistent with someone who is suffering from a manic depressive illness.  He attempted to negotiate the purchase of that property on terms which could not be agreed between the parties.  In those circumstances, and particularly where he did not make known to either the Court in his affidavit or the medical practitioner of those matters to give a full picture of his conduct over the last few months, we submit that, where they are seeking the indulgence of the Court, they must be completely frank and open in the affidavit material when seeking a reinstatement, which they have not done. 

For all those reasons, your Honour, we respectfully submit that the application to reinstate should be dismissed and that the applicants should pay our costs. 

HIS HONOUR:   Mr Alkadamani, can I tell you what I am minded to do at the moment and I will hear any argument that you want to raise as to why I should not do it, or what different course I should pursue.  I am minded to make the order that you seek restoring the application to the list, but on two bases.  The first I have already adverted to.  There is absolutely no reason why people in the position of your opponent’s clients in this matter should have to bear the costs occasioned by the default that has occurred on behalf of your client.  In other words, he should not only have to pay the costs of this application, but his payment of the costs of the application should be made a condition of restoring the matter to the list.  Is there anything you want to say about that? 

MR ALKADAMANI:   No, your Honour. 

HIS HONOUR:   The second thing that I have in mind doing is expediting the hearing of the special leave application so that it will be heard, ready or not, on 10 September. 

MR ALKADAMANI:   I have nothing to say about that either, your Honour. 

HIS HONOUR:   All right.  By the way, as far as the necessity for an extension of time for actually filing the original application is concerned, that can be dealt with on the application for special leave to appeal.  It is not uncommon on applications for special leave to appeal to have to deal with applications for extension of time, and that can be dealt with then.  That is usually dealt with in the light of a better appreciation of the merits of the special leave application than I have been able to make for the purposes of this application. 

MR ALKADAMANI:   Thank you, your Honour. 

HIS HONOUR:   Anything further you want to say, Mr White? 

MR WHITE:   Just to clarify one thing, your Honour.  When your Honour referred to application in the first proposed order, that is the application to reinstate? 

HIS HONOUR:   Yes. 

MR WHITE:   Thank you. 

HIS HONOUR:   I had better just get that form of order.  It is an order that the application for special leave dated 5 November 2003 be reinstated.  Having regard to the evidence, and, in particular, the evidence as to Mr Malouf’s psychiatric condition, I am prepared to make the order that the application for special leave dated 5 November 2003 be reinstated, but I make it on the following condition. 

The applicants must pay the costs of the respondent of this application, such costs to be agreed or, in default of agreement, to be assessed.  If the parties are unable to reach agreement on the amount of the costs within seven days of today, there is to be an expedited assessment of the costs by the Registry.  It is on condition that the costs agreed or assessed are actually paid by the applicants to the respondent that the matter is reinstated. 

I also order that the application be expedited.  I do that in the expectation that it will be able to be listed for hearing on 10 September.  At the hearing of the application for special leave on 10 September, the matter of an extension of the time for filing of the application can be dealt with. 

I certify for counsel.  Is there anything else I need to deal with? 

MR ALKADAMANI:   No, your Honour. 

MR WHITE:   No, your Honour. 

HIS HONOUR:   Very well.  The Court will adjourn. 

AT 2.36 PM THE MATTER WAS CONCLUDED