Northern Aust Land & Agency Co Pty Ltd & Ors v Sheahan

[1995] HCATrans 69

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Adelaide  No A20 of 1994

B e t w e e n -

NORTHERN AUSTRALIA LAND & AGENCY CO PTY LTD, DEAN KIVERTON LE POIDEVIN and GLORIA DAWN LE POIDEVIN

Applicants

and

JOHN SHEAHAN and LE POIDEVIN INDUSTRIES PTY LTD (IN LIQUIDATION)

Respondents

Application for special leave to appeal

BRENNAN J
DEANE J
DAWSON J

TRANSCRIPT OF PROCEEDINGS

FROM ADELAIDE BY VIDEO LINK TO CANBERRA

ON THURSDAY, 30 MARCH 1995, AT 12.01 PM

Copyright in the High Court of Australia

MR D.K. LE POIDEVIN:   Your Honours, I appear for myself as applicant, and also for the other two applicants.  (instructed by D.K. Le Poidevin)

MR J.M. CUDMORE:   If the Court pleases, I appear with MR G.W. DART for the respondents.  (instructed by Ward & Partners)

BRENNAN J:   Yes, Mr Le Poidevin.

MR LE POIDEVIN:   A couple of minor matters initially, your Honours, if I can.  The question of my application for leave to appeal as a legal practitioner, I understood that previously such applications were made in writing.  I made a written application or set out the grounds of the application in writing and I received a letter stating that that matter would be heard with this matter.  So I understand that I can address the Court this morning on the question of order for costs made against myself and even though I am a legal practitioner, I appear to argue the question of costs or the order of costs against myself.

BRENNAN J:   We will allow you to appear to argue the question of the order for costs made against you and Ms Gloria Dawn Le Poidevin.

MR LE POIDEVIN:   That is the second director who is my mother, who is the second director of both of these companies.

BRENNAN J:   The order for costs were made against you and your mother, is that so?

MR LE POIDEVIN:   Personally, as well as against the company, Northern Australia Land & Agency Co.

BRENNAN J:   Yes.  You are appearing, as it were, shed of your professional capacity in relation to personal applicants, and you are appearing, are you, as counsel in relation to the company?

MR LE POIDEVIN:   Yes, your Honour.

BRENNAN J:   Are you appearing as counsel for your mother as well?

MR LE POIDEVIN:   Yes, your Honour.

BRENNAN J:   Very well.

MR LE POIDEVIN:   The other minor difficulty that I have is that I do not have a copy of the application book in front of me. My copy was taken home by the local council about six months ago and so what I have done is to try to reconstruct the file with the various documents.  I have got copies of virtually all the documents in the application book but I do not have an application book in front of me.  I have not been able to replace the one which was taken, but I should be able ‑ ‑ ‑

BRENNAN J:   Would it be convenient, in the first place, to deal with the application for special leave to appeal against the order made against the company, otherwise than in respect of costs, leaving the costs question to second.

MR LE POIDEVIN:   Yes, I think that is probably the best approach.  Your Honours, I believe, would have a summary of argument filed about a week ago.

BRENNAN J:   Yes, we have that.

MR LE POIDEVIN:   The summary of argument is very brief, in part because when I drafted the grounds of appeal I put a fairly large amount of detail into each ground of appeal and I did not want to simply retype all of the grounds of appeal in the summary of argument but if members of the Court have read the summary of argument, you will see that the original dispute relates to two small pieces of farmland not far from Adelaide.

These pieces of land were originally owned by a company called Le Poidevin Industries Pty Ltd.  They were then sold about five years ago to a company called Northern Australia Land & Agency Co.  Now, Le Poidevin Industries Pty Ltd subsequently went into liquidation in approximately November 1991 and following that, the liquidator, who is the first plaintiff or the first respondent, applied by issuing a summons in the Supreme Court to have those two pieces of land transferred back to the second respondent company.  Now, in the Supreme Court, Justice Perry made that order, with whatever reservations he stated in his judgment, that had there been evidence on behalf of the applicant company, Northern Australia Land, that an order would have been made validating those transfers.  But he said that in all of the evidence before him that he had to transfer the two pieces of land back to the plaintiff company, which is the second respondent company.  So the reason I am seeking leave to appeal now is to overturn his judgment, and his judgment in turn was confirmed by the Full Court in South Australia.

BRENNAN J:   Now what are the special leave points that you think justify a grant of special leave against the Full Court’s judgment?

MR LE POIDEVIN:   I have listed 25 grounds of appeal and I believe that if the Court considers all of those grounds of appeal, on one or more of those grounds of appeal there is sufficient reason why leave should be granted.  If the Court wishes, I would like to go through all of the 25 grounds of appeal, but if you have read them already, may simply rely on asking questions.

BRENNAN J:   The reading you can take for granted.  The time which you have available to you under the rules is limited.

MR LE POIDEVIN:   If I may, I will certainly use the time I have to go through as many of the grounds of appeal as I can.

BRENNAN J:   You might be better served by taking what you think are your strongest grounds.

MR LE POIDEVIN:   I believe that the grounds of appeal were probably typed in a sequence in which ground 1 becomes the strongest, ground 2 the second strongest, so that that purpose would be served by simply starting with ground No 1.

Rather than retype all of the grounds that were before the Full Court in South Australia I have attached that to the grounds of appeal to the High Court.  The additional grounds of appeal to the High Court, numbering 17 to 25, means that all of the grounds of appeal are numbered in sequence.  The additional grounds of appeal to the High Court were added as questions of law ‑ ‑ ‑

BRENNAN J:   Your first ground which you regard as your strongest ground is that there was insufficient evidence to support Justice Perry’s finding, is that right?

MR LE POIDEVIN:   Yes, that is ground 1.

BRENNAN J:   Now, ordinarily this Court does not grant special leave in order to review questions of fact.

MR LE POIDEVIN:   One of the difficulties - the first ground of appeal is very brief and perhaps best we move simply on to the second ground of appeal where we are getting into more of the substance or the nature of the appeal.  The second ground of appeal raises the question of whether or not I, as the managing director, was entitled to give evidence on behalf of the defendant company, Northern Australia Land.  Justice Perry held that I was not.  He held the belief that because I was appearing as counsel that I could not simply give evidence, even though I was the managing director of the defendant company.  I explained to him the difficulties involved in having separate counsel appear but, nonetheless, he still insisted that I either appear as counsel or that I give evidence, but not both.  I never made any strict election, simply allowed the matter to go, and I appeared as counsel but I never actually made any strict election as to whether I was to appear as counsel or as a witness, and I believed all along that I should have been allowed to appear as a witness.

The difficulty is that judgment has been given in this matter, both before Justice Perry and the Full Court, without any witness being called for the appellant company.  The basis of ground 2 is that this is simply wrong in law, and also there are some restrictions in the Supreme Court Rules in Adelaide that suggest that a legal practitioner, I believe, cannot appear on behalf of a company.  I think that ground of appeal is further down the list of grounds.

Ground of appeal No 3 relates to evidence that when I was told that I was not allowed to give evidence myself I actually tried to put in evidence which would assist the defendants.  This matter continued before Justice Perry as the plaintiffs versus Northern Australia Land & Agency Co.  He ruled that the two directors be kept separate, that if necessary a separate trial would be held some time in the future.  So the case proceeded on the basis of against one defendant only.  Now, the action that I took was to try to put before the court various documents which I believed would help the applicant’s case, namely contracts, land transfers, mortgages, caveats and things of this nature and I attempted to use various pieces of legislation which permit documents to be put before a court, not necessarily through a witness.

DAWSON J:   As business records?

MR LE POIDEVIN:   Yes, as business records.  Now, there is a provision in the Corporations Law and there are also provisions, I believe, in the Evidence Act in South Australia.  In both of these instances, as I recall, Justice Perry ruled these documents could not go in as evidence: for example, contracts for the sale of land, he held, were not business records.  Now, to me that is a complete nonsense, that if the Corporations Law provides that a document can be put in as evidence, that documents form part of book records, then a document should include a contract and it should go further and include transfers and copies of mortgages and so forth.

All of that was ruled against me.  It was ruled that any facilitating provision of the Corporations Law simply was not available to help.  He gave a very restricted meaning to business documents, that it really meant not much more than a ledger, perhaps an invoice book, perhaps a bankbook, something of this nature, but anything further away such as a contract or a mortgage or a transfer he felt was outside the scope of the Corporations Law.  To me that is a complete nonsense and the Court should rule that all documents in relation to the company’s affairs should be available and should be admitted in evidence.

Part also of the reason that he did not want these documents to be put in - I mean there were many aspects to these arguments - but one of the arguments was that the documents were under seal and the only way a document under seal could be put in evidence was if there was a witness available to identify his signature with the sealing of the document.  I can only submit that in South Australia there is a section called section 67A of the Evidence Act which does not necessarily require that documents under seal be strictly proved when put in evidence.

If I can move on to ground No 5. Justice Perry has refused to accept the accounting records including the general journal and general ledger as prima facie evidence of the matters stated or recorded therein. If he accepted the documents as prima facie records it would follow that he would have sufficient evidence to either accept that the transfers were valid initially or to validate those transfers. But he looked at such things as white ink used in writing up the books and to make corrections and said that if there was white ink on the ledger, that that threw sufficient doubt into the records that the records could not be accepted as prima facie evidence. To me that is a complete nonsense, that when all accounting records are written up, inevitably there will be some corrections, some mistakes and some corrections made, and the popular method today is simply to use white ink to make those corrections. So when the evidence was being given by the plaintiff, they called a person with some forensic knowledge to read figures underneath white ink. But what I submit is that reading those incorrect figures underneath white ink really has no meaning at all and should not affect the validity of those ledgers.

What I stated in the outline of argument was that if a person seriously wanted to.....at the accuracy of books of account, he could have a proper independent audit carried out.  The plaintiff could have audited the books himself.  Being a liquidator of a company, he would also be a licensed company auditor or he could have had a separate independent auditor carry out the audit of books and records and I am sure that had a separate independent audit been carried out, then there would have been no basis for suggesting that there was any inaccuracy in those books and records at all.  What I am submitting is the books and records should have been accepted as prima facie evidence as they were.  But once again, if they were, there was sufficient evidence for Justice Perry to decide the case in favour of the defendant.

He also made a great deal about the colour of the paper on which some of the entries were written up.  I believe it was a journal entry.  It was a loose leaf system so the pages were simply kept together either with a clip or in a ledger cover, and one of those pages was a different colour to most of the other pages.  He suggested, because there was a different coloured piece of paper used in a loose leaf system, that that in some way invalidated the accuracy or reliability of those records.  I can only submit that that is a complete nonsense, that with loose leaf records, it is quite possible for a ledger sheet of a slightly colour to be taken from anywhere when the books are being written up and really nothing turns on the colour of the paper.  But Justice Perry thought that important and, once again, for that reason he declined to accept the books and records of the company as prima facie evidence.

Appeal ground No 7, I have referred to the manner in which the case was conducted, which I believe was unfair.  The plaintiffs were allowed to conduct the case by simply putting in two transfers as evidence, then saying they closed their case, then leaving it up to the defendants to defend the action, and after that the plaintiffs were then allowed to virtually reopen their case and start the case afresh.  Now, I do not mind plaintiffs being allowed to call rebuttal evidence, but to virtually carry out the whole of your case or conduct the whole of your case after the defendant has finished its case, to me is completely wrong.

DAWSON J:   You had a counter claim, did you not?

MR LE POIDEVIN:   There was a counter claim, a defence and a counter claim on the file, yes.  But nonetheless, I still believe that the proper process would be for the plaintiff to conduct their case, the defendant then to conduct its case, and then if they wished to call rebuttal evidence, they should be allowed to do so.  But this matter really proceeded on the basis that the defendant had to call its evidence and then - although admittedly the plaintiff did put in two transfers in evidence - but then after the defendant’s case was closed, then the plaintiffs were allowed to virtually reopen their whole case virtually without restriction.  They called numerous witnesses and the whole case virtually went from scratch.

Justice Perry took into account such matters as ground No 9, where he made some reference to a dividend which had been credited to a shareholder in the company’s books in 1993.  That obviously, I would imagine, is an incorrect date, because the company went into liquidation in 1991 so obviously it was done - ground No 9, the second line - sorry, that is the date of the judgment.  I am confusing myself.  At the bottom of ground No 9, the dividend was paid in 1989.  Now, surely for a judge to take into account the payment of a dividend four years before the liquidation of the company and to say that that in some way influences the accuracy or the reliability of the books to me, once again, is a complete nonsense.  The defendant company should not have to explain dividends, and certainly not dividends paid four years before the liquidation of the company.

Ground of appeal No 11, which really goes to the heart of the whole question in dispute, is that Northern Australia Land had an interest in the land which it was entitled to keep.  It was entitled to keep the land, entitled to protect its interest.  Ground No 11 refers to two caveats being put on the title at the Lands Titles Office.  Now, from memory, they were put there 11 September 1991 is the date in ground of appeal No 11.  This was some time before the issue of the summons to wind up the company and it is certainly my submission that the putting of the caveats on these two titles was sufficient to protect the ownership of Northern Australia Land & Agency Co.  Those two caveats were only taken off when the document to transfer the title to Northern Australia Land was lodged at the Lands Titles Office.

The two transfers, of course, were dated 1990, 25 August 1990.  They had been held for some time because there were existing mortgages on the land and Northern Australia Land Co wished to make use of those two mortgages.  Subsequently, those two mortgages were paid out.  Two transfers were then registered on the title but, in any event, caveats were on the title to protect the interests of Northern Australia Land.  Now, my comment in ground of appeal No 11 is that Judge Perry took virtually no notice of those caveats.

Once again, in ground of appeal No 12, Justice Perry has referred to a document which is a transcript of evidence in a liquidator’s examination in which I did give evidence.  Now, his comment in his judgment was that the answers that I gave indicates consistent evasion.  Now, for him to make that finding, I feel that it is very unfair for him to say that I cannot give evidence and be cross-examined in the Supreme Court in this action but at the same time he can refer to a transcript book, and simply by reading the answers, many of which were yes or no or what do you mean, and saying that that indicates consistent evasion.  Surely that is extremely unfair against any person.

BRENNAN J:   Mr Le Poidevin, your time is quickly running out and you have not thus far given us the benefit of any argument that you wish to address on the question of costs.

MR LE POIDEVIN:   On the question of costs, your Honours, the order was made against all three defendants and it was made on the basis of a solicitor and client basis which, in this matter, was probably about $10,000 or $20,000 difference from a party and party basis.  Now firstly, because the trial proceeded against the defendant company only and not against the two directors, the submission is that they should not be liable for costs.

BRENNAN J:   What do you mean it did not proceed against the two directors?

MR LE POIDEVIN:   The judge simply decided to break the court case up into parts.  Initially the plaintiff was seeking orders to transfer the land owned by Northern Australia Land.  So he thought best to proceed on that question only, which has already been before the Supreme Court, and it was really what the Supreme Court has ruled on, and then presumably the plaintiff has the further option, if the plaintiff did not succeed on the question of transferring the land, they could then proceed against the directors of the company.  And when the summons was issued there were various allegations made of fraud or things of this nature or some sort of malpractice by the directors.  Now, that has not been before the Supreme Court yet and presumably, because it was broken up into parts, the plaintiff still has the option to go back to the Supreme Court and continue its action against the directors of the company.  But for the time being, the only matter which has been before the Supreme Court in Adelaide is against the company, Northern Australia Land.

DAWSON J:   But that seems to have effectively disposed of the whole action, does it not?

MR LE POIDEVIN:   I do not believe it has.  I believe that if the plaintiff went back to Justice Perry tomorrow - and they have been to Justice Perry on perhaps about ten different times in the last two years for interlocutory orders, ex parte applications and so forth - I do not doubt that if they went to Justice Perry tomorrow he would relist this matter as an action between the plaintiff and the two directors and this matter would then recommence all

over again on the question of any responsibility, liability, duty, malpractice, fraud or whatever that the plaintiff might be able to make out against the two individual directors.  But that part of the case still has not occurred.  Now, I do not know whether it will or not.  I do not know what the plaintiffs views on this, whether they intend to go back and virtually recommence action again or whether they intend to treat the action as complete. 

But certainly on the question of costs, because the action proceeded against the company only and not against the two individual directors who are named as defendants, then I do not believe that the defendants should be made liable for the whole of the costs and, in effect, each of the three defendants was liable for the whole of the costs involved.

BRENNAN J:   I think that probably sees your time out, Mr Le Poidevin.

MR LE POIDEVIN:   Can I have one minute, your Honour?

BRENNAN J:   Yes, you can have another minute.

MR LE POIDEVIN:   In one minute I would like to argue the question of whether or not this is a proper case for a court to order costs against all of the defendants on a solicitor and client basis.  In this case, the solicitor and client basis would mean that various costs incurred by the plaintiffs, which perhaps were not necessary, exaggerated costs of bringing in unnecessary witnesses and documents and so forth, I believe that the proper procedure, if costs are to be awarded against all of the defendants, would be on the basis of a solicitor and solicitor or a party and party basis, that that would be the proper basis to tax costs, and that costs should not be awarded against the defendants on the basis of a solicitor and client basis.  I am asking for the Court to consider that matter.

BRENNAN J:   Thank you, Mr Le Poidevin.  Mr Cudmore, we do not need to trouble you in relation to the first application for special leave, that is in relation to the substantive matter of the proposed appeal.  But the question of the disposition by the Full Court of the appeal on ground 16, the order for costs, is something on which we would invite you to address us.

MR CUDMORE:   Yes, if the Court pleases.  The Full Court was addressed on the question of costs on ground 16, although we acknowledge that the Full Court did not expressly deal with that in its reasons.  In particular at page 62 of the application book, the Full Court in its reasons in a general way disposed of the other grounds of appeal which were before it, without expressly traversing those grounds of appeal, if the Court pleases.

So while that does not appear to have been a matter which the Full Court expressly dealt with at page 62 of the application book, it was a matter which was argued before the Full Court.

BRENNAN J:   But having been argued before the Full Court, there were two problems that the Full Court had to address:  one was that if the issues that were litigated were joined only as against the company, why would the order for costs go against the personal applicants; the second was why should the order be made on a solicitor and client basis?

MR CUDMORE:   Yes, your Honour.  As to the first aspect, the application book at page 12 shows that what his Honour Justice Perry did at trial was rule that there be a trial:

with respect to the issues arising out of the claim under s.468 of the Corporations Law, and that the hearing of the other issues -

joined between the parties -

proceed after judgment had been given on the s.468 claims.

That is in fact what occurred, and my learned friend is right when he says that the trial as to the remaining issues has been stood over.  It was stood over on the application of my learned friend when we went before Justice Perry to reopen the question of costs, which judgment appears in the application book in particular at page 36, where his Honour deals with the discretion to make the order which his Honour did.  His Honour pronounced judgment on 29 October 1993 and an order for costs was made in the normal way.  His Honour reserved, in his reasons, liberty to the parties to speak to the minutes.  That is at page 30 of the application book and then his Honour gave short reasons on 4 November 1993 when the question of the application for costs on a solicitor/client basis was raised with his Honour.  At page 36, particularly at line 21, his Honour dealt with the question of costs and said, we respectfully submit quite rightly, that:

The question of costs is completely within the discretion of the Court.  I acknowledge that it is only in exceptional circumstances that costs to a successful party are awarded other than on a party and party basis.  In this case, however, the defence, including the prosecution of the counterclaim -

and, your Honours, if I could just pause there, your Honours will see because the counter claim is replicated in Justice Perry’s reasons for judgment in its entirety, that it was all defendants who prayed for the relief of the validation under section 468 and, in particular, your Honours, at page 22 of the application book, your Honours will see that it was the defendants, plural, meaning not just the company but the directors, who sought the validation order in paragraph 2 of the prayer for relief.

The order that was entered by the court is set out in paragraph 6 at page 39 of your Honours’ application book, namely an order:

That the defendants pay the plaintiffs their costs of and incidental to this action and the counter-claim on the issues joined between the parties and so far brought to trial -

So we submit that the question was properly before the trial judge as to the question of costs and as against the defendants, all of the defendants, not simply the company defendant.  Secondly, the issue was before the Full Court but the Full Court did not stay with the question and, in particular, as I have taken the Court to, did not traverse reasons for it.

But, your Honours, we submit that even if it were the case, which we submit it is not, it was only a trial at first instance between the plaintiffs and the company defendant.  Our Supreme Court does have power under the Supreme Court Act, and in particular section 40, which we have not included on our list, your Honours, to make costs orders against non parties.

BRENNAN J:   That may be so.  The concern, however, is whether or not the Full Court, having regard to the plethora of grounds that were advanced, simply overlooked this as a discrete question for their consideration.

MR CUDMORE:   I cannot really, in answer to your Honour Justice Brennan, say more than to say that all matters set out in the notice of appeal were argued before the Full Court.  The Full Court had an outline from the respondents, which addressed that issue which we do not have before this Court on this application, but it addressed that very issue and, indeed, it went to that issue, if the Court pleases, and in particular to this Court’s judgment in Knight v FP Special Pty Ltd which is a judgment of ‑ ‑ ‑

BRENNAN J:   Yes, we are familiar with the judgment.

MR CUDMORE:   Where the Court dealt with the question of whether a receiver might be held liable for a costs order when he was not a party to the action.

DEANE J:   But if the essential 468 issue was with the company, as it obviously was primarily, is not an order that Mrs Le Poidevin pay costs on a solicitor and client basis unusual in two respects:  one is that she should be ordered to pay the costs of that issue in any event, and second, that it should be on a solicitor and client basis?  If that is so, it would be quite wrong to say that the appeal against the order for costs was misconceived and it is not apparent to me that even though it might fail, it would lack any substance.

MR CUDMORE:   The comment made by Justice Olsson in his judgment that the ground of appeal was misconceived, we submit, is right.  The ground, as it appears in your Honours’ application book at page 84 is that the order “is totally unreasonable and contrary to law”.

As to the first point, your Honour, it is the fact that Mrs Le Poidevin’s hand has been shown in the transactions under attack and, in particular, the directors are the real parties to the transaction under attack and they were the parties who sought to uphold what is otherwise void at law, namely the lodgment of these memoranda of transfer.  The evidence was, if the Court pleases, that the common seal of both companies, both the plaintiff company and the defendant company, was affixed in the presence of and counter-signed by both Mrs Le Poidevin and Mr Le Poidevin.  So as to its reasonableness, we submit it was reasonable. 

As to it being contrary to law, we submit it is not, for the reasons which this Court has given in Knight v FP Services, because those are the real parties to this litigation and those are the parties who, in their own pleading, prayed for the counter claim, namely the validation, and they were wholly unsuccessful, if the Court pleases.  There was no explanation for Mrs Le Poidevin’s absence from the witness box in the giving of evidence at trail.  And while it is not before your Honours, she did make an affidavit in answer to the summary judgment application which is referred to in the reasons on the costs order of Justice Perry appearing at page 36 of the application book, line 9, where his Honour Justice Perry says: 

Mr Cudmore draws attention to the fact that there was a failed application by the plaintiffs for summary judgment limited to the s.468 claim, and that the basis upon which the matter came to trial on that issue was that there was at least an arguable case by the defendants either against the application on s.468 or for an order validating the relevant transaction pursuant to that section.

Now, his Honour had before him, and it does not appear in his reasons, when he made that costs order at page 36 an affidavit sworn by the solicitor which deposed to affidavits sworn by both the directors seeking to uphold the transaction. And yet neither of the directors gave evidence at trial on the section 468 issue when they were both directors of the company. So we submit that the ground for appeal, both in the way it is expressed and in the way in which it was argued, can correctly be interpreted as misconceived and is not, we submit, in any way contrary to law.

Your Honours, in general answer to that point of this application, we submit that there are very special circumstances to this case which are quite unusual.  We do not take the Court to all of them but, in essence, two companies controlled by the same directors lodged a transfer of land after the commencement of a winding up and failed entirely to explain that transaction, failed entirely to bring any evidence satisfactory to the court to justify that transaction.  And there is nothing unusual, in those circumstances, in those persons being held liable to a liquidator and a company in liquidation for the costs of putting the liquidator and the company in liquidation to proof on those matters at trial.  It was within the court’s discretion below and both within the discretion of the trial judge and the Full Court, and in particular the Full Court, not to interfere and not to be persuaded to interfere, and it is not, we respectfully submit, a matter which could entertain any appeal to this Court.

BRENNAN J:   If your argument did not convince us at this stage, Mr Cudmore, is there any reason why we should not, at this time, grant special leave, allow the appeal instanter, and remit the matter of costs to the Full Court for consideration?

MR CUDMORE:   All I would say is there is no reason why this Court could not do that, could not entertain an application in those terms, but we submit this is not a case, for the reasons which I have given to your Honours.

BRENNAN J:   Yes, I appreciate that, and I appreciate the force of what you have said about it, but if we were minded to grant special leave, it does not seem to be the sort of matter which would justify a full scale appeal in due course.  It seems to be far better to give the Full Court the opportunity of considering whether or not they wish to adhere to the decision, the actual decision that they made.

MR CUDMORE:   Yes, your Honours, and just so that I am not at cross purposes with your Honour Justice Brennan, would your Honour have in mind that there then not be an appeal but that that be a condition of leave.

BRENNAN J:   No.  It would be an appeal that would be remarkably speedy.  It would be disposed of forthwith.

MR CUDMORE:   Yes.  I am not in a position where I could seriously resist that, your Honour. 

DEANE J:   From your client’s point of view, if the only basis on which leave was to be granted was that there was an issue about costs that required to be dealt with by the Full Court with some reasons, the preferable course would obviously be, would it not, that leave restricted to that point be granted, that the appeal be upheld forthwith and go back to the Full Court of the Supreme Court, rather than embarking on a full appeal in this Court which, if leave were granted, would almost inevitably end up with the matter going back to the Full Court so their Honours could give reasons for their decision and reconsider their decision.

MR CUDMORE:   Your Honour, if those were the two options, with great respect the first is clearly the preferable one.  We had not, in the material, sought to put these matters before this Court on the application and to that extent ‑ ‑ ‑

DEANE J:   But, Mr Cudmore, your problem, if I might put it to you, is this:  what you are saying may be convincing and unanswerable in terms of why the appeal against the order for costs should have failed, but in the face of a very unusual order, it is arguable against you that the appellant was entitled to have some reasons given in the Full Court explaining the grounds on which the appeal against those orders had been dismissed.  Now, that is all that I am really putting against you when I was referring to misconceived and lacking in substance.

MR CUDMORE:   Your Honour, I cannot elevate those words in that finding by the Full Court above what they say, other than to say, as I have done, with the greatest of respect, that that was an appropriate answer to the ground of appeal, namely that it was both unreasonable and contrary to law, because we submit that it is misconceived and lacking in substance to say, first, that the costs order was unreasonable, and second, that it was contrary to law, and the court was taken, as I have said to this Court, to Knight v FP Services  on that very point in a detailed outline that the respondents filed before the Full Court.

BRENNAN J:   That raises perhaps one procedural problem.  If the Court were considering that abbreviated procedure that we have discussed, you are entitled, of course, to put whatever material you think appropriate before us in order to uphold the decision of the Full Court.  The question really is, on the material that is now before us, if it goes against you in terms of the sufficiency of what the Full Court has said, would you really wish to have

an appeal where you could put everything before us, running the risk that the matter nonetheless goes back to the Full Court at the end of that, or would you prefer to have the matter go back now and let the Full Court expose its reasons more fully?

MR CUDMORE:   We would prefer the latter, your Honour, other than to make the point, in answer to what I anticipate this Court is putting on this application, that leave is not justified on that ground in any event.

BRENNAN J:   Yes.

MR CUDMORE:   But your Honours having had that argument, if it were a choice between the two, we would seek the second course which your Honour Justice Brennan has suggested, namely that it be remitted now for the Full Court to give their reasons.  We would not wish this matter to be held up further, with great respect, by putting before this Court the material which was before the courts below.  But those are the only submissions I can made, if the Court pleases, unless there is something further that the Court ‑ ‑ ‑

BRENNAN J:   No.  Thank you, Mr Cudmore.

MR LE POIDEVIN:   Do I have a brief right of reply?

BRENNAN J:   Yes, Mr Le Poidevin.  You have got a right of reply in relation to the question of costs, not in relation to the other issue, because no other argument has been addressed against you on that.

MR LE POIDEVIN:   I accept that, your Honour.  I just want to clarify two statements made by my friend here.  He said that when the matter was before the trial judge that the matter against the two directors was stood over on my application.  Now, that is not strictly accurate because I made an application that the matter be struck out against the two directors and the judge made a ruling that the matter be carried over and perhaps available to be relisted in the future.  But I did not make an application that the matter be stood over, I made an application that it be struck out.

The second point was my friend said the matter was argued in full before the Full Court in South Australia.  Now, I argued all the grounds of appeal before the Full Court.  My friend was not called on to argue his case at all.  So when he says that the matter was argued before the Full Court, he is saying that I argued my grounds of appeal before the Full Court, he himself said nothing to the Full Court on the grounds of appeal.  He did make a statement about the sale of these two pieces of land but, in

substance, he made no argument about costs to the Full Court in South Australia at all, despite the statements that were just made.

BRENNAN J:   Thank you, Mr Le Poidevin.  The Court will adjourn briefly in order to consider what course it should take in this matter.

AT 12.48 AM SHORT ADJOURNMENT

UPON  RESUMING AT 1.01 P.M.:

BRENNAN J:   There is nothing appearing in the draft grounds of appeal, the applicant company’s summary of argument or in Mr Le Poidevin’s submissions which warrants a grant of special leave to appeal to this Court on any issue other than the question of costs. Justice Perry made an order that Mr Le Poidevin and Mrs Le Poidevin, his mother, together with the company, pay the respondents’ costs in the action to be taxed on a solicitor and client basis. His Honour expressly acknowledged that an order for costs in that form is made only “in exceptional circumstances”. This order was the subject of a discrete ground of appeal to the Full Court contending, inter alia, that the section 468 issues were not litigated between the respondents and the personal appellants and that it was unreasonable to order costs on a solicitor and client basis.

The Full Court may have overlooked this ground of appeal in disposing of the appeal.  Their Honours simply said, “In global terms, all of the other complaints voiced in the grounds of appeal are equally misconceived or lacking in substance.”  Having regard to the order for costs on a solicitor and client basis and the making of the order against the personal appellants, those reasons for dismissing the appeal on the question of costs are inapposite to dispose of that question.  It may be that the actual decision is correct but the reasons for disposing of unspecified issues either suggest an overlooking of the costs question or some error in considering it.

The appropriate order therefore is that special leave be granted, limited to the question of costs; that the appeal be allowed; that the order of the Full Court so far as it dismissed ground 16 of the grounds of appeal to that Court be set aside and that the matter be remitted to the Full Court of the Supreme Court of South Australia to hear and determine the appeal on ground 16.  There will be no order as to costs in this Court.

Adjourn the Court to a date to be fixed.

AT 1.04 PM THE MATTER WAS CONCLUDED