Overton Investment Pty Ltd v Murphy

[2001] NSWCA 183

CITATION:	OVERTON INVESTMENTS PTY LTD v MURPHY & ORS [2001] NSWCA 183
FILE NUMBER(S):	CA 40367/99
HEARING DATE(S):	26 and 27 February 2001
JUDGMENT DATE:	21 June 2001
PARTIES :	OVERTON INVESTMENTS PTY LTD v John MURPHY & 111 ORS
JUDGMENT OF:	Mason P at 1; Sheller JA at 96; Beazley JA at 97

LOWER COURT JURISDICTION :	Supreme Court
LOWER COURT FILE NUMBER(S) :	ED 1181/97
LOWER COURT JUDICIAL OFFICER :	Windeyer J

COUNSEL:	Appellant: J C Campbell QC/ A J McInerney Respondents: G A Moore
SOLICITORS:	Appellant: Gadens Lawyers Respondents: Wendy Fisher, The Aged Care Rights Service
CATCHWORDS:	Retirement village - Retirement Villages Act 1995 - lessor sues to recover share of outgoings - cross claim - referee determines most issues - judgment entered despite outstanding defences raising claims of misleading and deceptive conduct - intention that issue of misleading and deceptive conduct should be litigated in representative proceedings commenced by residents in Federal Court - lessees acquiesce in proposed procedure - lessees bound by conduct of counsel (ND)
DECISION:	Appeal dismissed with costs.

CA 40367/99

ED 1181/97

MASON P

SHELLER JA

BEAZLEY JA

OVERTON INVESTMENTS PTY LTD v JOHN MURPHY & ORS

JUDGMENT

1    MASON P: The appellant, Overton Investments Pty Ltd (Overton) developed the Heritage Retirement Village at Padstow. At all material times, and until June 2000, it was the owner and operator of the Village.

2    The respondents are most of the residents of the Village, occupying units under individual 99 year leases.

3    A dispute concerning recoupment of outgoings has spiralled out of control and hardened into destructive siege warfare on several fronts (only some of which are referred to below).

4    For several years Overton’s position has been that the residents’ leases obliged them to pay a proportion of actual outgoings. The residents disputed Overton’s primary contention that the rights of the parties depended exclusively on the contractual arrangements between them. There have also been prolonged disagreements as to quantum. There was a partial rent strike, with the residents withholding portion of the outgoings claimed.

5    On 10 January 1997 Overton started proceedings in the Local Court against 84 residents, seeking to recover the arrears of outgoings it then claimed.

Proceedings in equity division culminating in the orders under appeal

6    The residents commenced a single proceeding in the Equity Division of the Supreme Court on 28 January 1997 seeking to restrain the prosecution of the Local Court proceedings. They also sought declaratory relief to the effect that the Retirement Villages Act 1989 (the 1989 Act) applied, relief which was presumably designed to ensure that any proceedings to terminate the leases had to go before the Residential Tenancies Tribunal and to be determined within the protective framework of the 1989 Act. The residents also sought declarations that Overton had breached clauses of the Retirement Villages Industry Code of Practice 1995 (the Code).

7    On 27 February 1997 Simos J made consent orders designed to maintain the status quo pending an expedited hearing. These included an order restraining the further prosecution of the Local Court proceedings up to and including the determination at first instance of the Supreme Court proceedings. That order was made on various conditions, including the residents’ undertaking (a) to maintain their present contributions to outgoings plus 10%, (b) to consent to judgments being entered in the Local Court for such amounts, if any, that the Supreme Court at first instance determined, and (c) to do all things necessary to expedite the proceedings (CB 1-2).

8    Subsequently pleadings were ordered. 118 residents filed a statement of claim (Red 10). They invoked rights stemming from the Code, contending in effect that the Code overrode or qualified the contractual position of the parties. They alleged numerous breaches of the Code in relation to budgetary matters.

9    Overton filed a Defence and Cross Claim on 9 May 1997 (SAB 304). By its Defence, Overton denied the alleged breaches, denied the overriding legal effect of the Code, and asserted that the residents’ contracts entitled Overton to recoup its actual outgoings.

10    By its Cross Claim, Overton claimed judgment against the several lessees for the arrears of outgoings calculated in accordance with the respective leases, and other relief. By this stage there were 112 plaintiffs each of whom was made a cross-defendant. The amounts claimed in the Cross Claim varied from resident to resident.

11    On 30 May 1997 the residents filed a composite Reply and Defence to Cross Claim (SAB 146). The Reply raised detailed contentions concerning the standard of services provided at the Village and it reasserted the arguments that the Code governed and had been breached.

12    These pleadings have been amended from time to time.

13    On 10 December 1997 the residents were given leave to file an Amended Reply and Defence to Cross Claim (Red 96). In the Defence to Cross Claim most of the cross-defendants pleaded that Overton was estopped from claiming the money sought in the Cross Claim because Overton, by its servants or agents, had represented that contributions required to be paid would never exceed CPI increases, in consequence whereof the individual cross-defendant entered into his or her particular lease (Defence to Cross Claim, pars 4-65, Red 113-175). There were some variations as to the name of the agent said to have made the particular representation. I shall refer to these paragraphs as the individual estoppel defences.

14 The cross-defendants also pleaded that their contract was unjust within the meaning of s7 of the Contracts Review Act 1980 (Defence to Cross Claim, pars 66-67. Par 67 is pleaded in the alternative, by most but not all of the cross-defendants.) I shall refer to these paragraphs as the Contracts Review Act defences.

15    On 23 December 1997 Windeyer J held that the Code did not directly give rise to private rights enforceable in court (CB 52). An appeal from this decision was effectively dismissed by the Court of Appeal (Murphy & Ors v Overton Investments Pty Ltd & Anor, Court of Appeal unreported, 3 September 1998). In a judgment with which Priestley JA and Powell JA agreed, Fitzgerald AJA said (at 24-5):

In my opinion, the presently material legal effect of the Codes of Practice was, and is, to provide a basis for the imposition of restrictions on Overton and to give effect to the appellant-residents’ rights under the Codes by undertaking or order, as provided for by the Fair Trading Act . Until that occurs, Overton is entitled to enforce the residence contracts according to their terms.

16 On 26 March 1998 Windeyer J ordered that all of the issues on the Cross-Claim as to the amounts due be referred out for enquiry and report pursuant to Pt 71 r2(1) of the Supreme Court Rules.

17    The Defence to Cross-Claim was further amended in July 1998 (SB 222, Red 179). The individual estoppel defences and the Contracts Review Act defences were substantially unaffected.

18    The parties were before Windeyer J on 23 June 1998 discussing matters of procedure touching the reference. The transcript records that they were then agreed that:

… rather than the reference looking initially at all the matters raised in the defence and cross-claim that it was more appropriate for the referee to report on the generalised matter, leaving to the side for the present the individual contract review time [sic?] matters, being the compilation of what the referee might determine in this enquiry, and what the Court of Appeal might do when it hands down its judgment. (CB 87)

Orders were made directing the Referee to limit his report to the issues in the Cross Claim and the general defences to the Cross Claim (ie pars 1-3 of the Amended Defence to Cross Claim (CB 86)).

19    As indicated, the Overton judgment was handed down by the Court of Appeal in September 1998. The residents had lost their argument that the Code automatically modified their contracts.

20    The Referee (Peter Taylor SC) published his Report on 19 November 1998 (Red 274). He recorded that the report was confined to the general defences relied upon by the residents. The parties were agreed that none of the evidence relating to the individual circumstances of particular residents was likely to be material in the determination of the general questions raised by the cross-claim (Red 288 K-P).

21    The matter came back before Windeyer J for a contested hearing as to adoption of the report. Overton filed a notice of motion which, in its amended form, sought among several orders to strike out pars 66 and 67 of the Defence to Cross Claim (which raised the Contracts Review Act defences) (Red 260). Overton also sought to strike out most of the individual defences to cross claim (Red 260, 272). The supporting affidavits give few clues as to the grounds on which Overton was then seeking to challenge the individual defences beyond Overton’s solicitor complaining that he had been unaware of pars 66-67 of the Defence to Cross Claim when it had been filed (CB 320-1). There was certainly no foreshadowing of the technical pleading objections raised by Overton in this Court in its written submissions (ie inconvenience of joinder of multiple parties (cf Pt 8 r6), absence of verification (cf Pt 15 r23), tendency to prejudice, embarrass or delay (cf Pt 15 r26) and absence of particulars (cf Pt 16 r1)).

22    What becomes clear from the events of December 1998-April 1999 is that the reasoning which led to the formal orders on 23 April 1999 directing that all matters arising under pars 4 to 67 of the Cross Claim be brought to trial by separate actions by the residents had nothing to with any technical or formal deficiency of the residents' pleading. Each of the technical pleading points would have been remediable. It would therefore be unjust to permit Overton to seek to sustain Windeyer J's reasoning on such grounds.

23    On the other hand, it would be wrong to ignore the fact that all parties were aware of the need to dispose formally in some manner with pars 4-67 of the Defence to Cross Claim before judgment could be entered on the Cross Claim. There is no question of the residents being under some misapprehension. Overton’s Notice of Motion sought to have the individual defences struck out. The order ultimately made on 23 April 1999 was:

4. All matters arising under paragraphs 4 to 67 of the further amended defence to cross-claim be brought to trial by separate action by residents raising such defences, and that judgments be entered on the cross-claim without regard to such defences, but subject to any application for a stay.

Such an order was foreshadowed from 17 December 1998 onwards (see below).

24    On 10 December 1998 Windeyer J completed a series of hearings and judgments on Overton’s application to adopt the referee’s report. He concluded that the report should be adopted, subject to a re-working of the final figures which it was expected the parties would be able to agree upon (see Red 391F).

25    On 15 December 1998 Windeyer J dismissed an application by the residents for leave to amend par 66 of the Defence to Cross Claim (CB 181). This left pars 66 and 67 in their unamended form.

26    On 17 December 1998 the matter was mentioned. Agreement as to the figures had not been finalised. Overton’s motion to adopt the report and to enter judgment on its Cross Claim was stood over until 4 February 1999. The transcript and the Associate’s record of proceedings (CB 185-6) record that Windeyer J said the following:

I direct that if agreement is reached on figures then the matters can be relisted…. I indicate that any matters now raised as individual defences to the cross-claim will have to be pursued by separate actions. Acting on that basis, I direct the solicitor for the residents to be in a position to inform the Court by 4 February 1999 and to have informed Overton by 29 January 1999 of which residents intend to pursue these separate claims.

27    It is common ground that the “individual defences” referred to were the estoppel defences and the Contracts Review Act defences.

28    It is pertinent at this stage to note that the residents now accept that pars 66 and 67 were not proper defences to the Overton Cross Claim and that those paragraphs should always have been pleaded by way of a further Cross Claim or a statement of claim filed by the residents. In the highest tradition of the Bar, senior counsel for Overton has drawn the Court’s attention to Commercial Banking Company of Sydney Ltd v Pollard [1983] 1 NSWLR 74 which indicates that the Contracts Review Act defences may have been capable of being maintained as such. I propose to deal with them in that manner, with the result that there is no relevant distinction between them and the individual estoppel defences. This appears to reflect the way the parties viewed matters in 1998-1999.

29    The residents make no such concession as regards the estoppel defences, which Overton accepts were good defences that raised triable issues. The residents were entitled to rely upon those defences as individual shields to Overton’s Cross Claim, so long as the defences were pressed as such. As I have indicated, all parties were aware of this throughout December-April.

30    The residents responded to the direction made on 17 December 1998 by letter dated 29 January 1999 from the Aged Care Rights Service Inc (CB 190). The letter stated:

Pursuant to Justice Windeyer’s directions on the 17 December, 1998 please find attached a list of Cross Defendants who wish to bring Cross Claims to Overton’s cross claim.

There followed a list of cross-defendants identified by name and unit number, including a small group of people whose instructions were yet to be confirmed. The list was less than the totality of cross-defendants.

31    On 4 February 1999 there was a further hearing. Windeyer J was informed that agreement had not yet been reached as to the figures. Overton sought and obtained directions instituting a formal procedure which effectively required the residents to indicate their several contentions about the figures that Overton had proffered (CB 194-5, 188 F-M). In broad approach this was analogous to a Scott Schedule procedure. A wide range of factual and mathematical disputes were embraced, but they were not intended to address the issues tendered by the individual estoppel and Contracts Review Act defences. In Windeyer J’s contemplation from 17 December onwards, those issues were going to be addressed in “separate actions” to be commenced by those residents who still wanted to fight on that front.

32    It is the discussion on 4 February 1999 about the manner in which the residents would pursue their individual defences “by separate actions” that is of critical importance to this appeal. The words just quoted were those which had been used by Windeyer J on 17 December 1998 (CB 186) and which were ultimately to be embodied in the final orders he made on 23 April 1999. The short minutes of orders proffered by Overton and discussed in the exchange that is set out below relevantly provided (CB 188-9):

2. That each cross defendant, referred to in the attached list of Cross Defendants [and any other cross defendants] who wish to bring Cross Claims to Overton’s Cross Claim marked as Annexure “A” to these Short Minutes of Orders (“the outstanding claims”), file and serve by 5pm on Wednesday, 13 February 1999, a verified statement of claim, and a notice of motion seeking further directions returnable before Justice Windeyer on Thursday 18 February 1999.
3. That proceedings of 1997 be listed for further argument on [Wednesday 24 February] 1999, on the question of:
(a) the amount of the judgment being entered against each of the Cross Defendants pursuant to the referee’s report of 19 November 1999.
(b) costs in proceedings 1181 of 1997 being determined.
(c) whether the injunction in proceedings 1181 of 1997 might be dissolved.
(d) whether, and if so on what terms concerning payment of all or part of the judgment debt owed to the Cross Claimant, a stay of the judgment in proceedings 1181 of 1997 be granted to such of those Cross Defendants who have filed and served a verified statement of claim in respect of the outstanding claims.
(e) further directions to be made as to the conduct of each of the outstanding claims including:
. Expedition of the outstanding claims;
. Referral (if necessary) of any outstanding claims to the referee.

33    These were the directions made by Windeyer J at the conclusion of the discussion, save for two presently immaterial alterations indicated by the square brackets above (CB 203, 188M-189 G).

34    The discussion on this topic that took place on 4 February 1999 was as follows (emphasis added):

MR MOORE: I am happy with the general process set out here when, perhaps, with two differences: one of the differences relating to timing but if I could just direct you to paragraph 2. You will see what is suggested is that verified statements of claim be filed and served. We would wish to put forward the proposition that what is more appropriate here is individual cross claims to the Overton cross claim in these proceedings number 1181 of 1997. So that is one matter that we would seek by way of variation.
The other matter that we would seek by way of variation is a slightly longer period of time to do some of the steps, especially the verification of the amounts.
HIS HONOUR: Mr Moore, as I think everybody realised, I had come to the conclusion last time that this action having, in essence, been originally constituted on the basis that it was a representative action or ought to have been and I am not blaming anyone for this - it seems to have got lost in the mists of time. I do not think the defendants can complain because they did not pursue it either but I do not think that separate cross claims can be brought in this action and in fact I am sure they cannot be. I appreciate there are some financial problems but even if they were, they would all have to pay separate fees.
MOORE: My understanding is that with the cross claim you have to pay, effectively, the same filing fee for a claim subject to an application to the court for that to be waived.
HIS HONOUR: I do not know that you can. You cannot have a cross claim on a cross claim.
MOORE: I believe you can. I do not have my copy of the rules with me but my recollection of the Supreme Court Rules relating to cross claims is that a cross claim is properly brought against any process in the existing proceedings. If the Overton Cross Claim had itself been a statement of claim then, clearly, individual cross claims are appropriate and, therefore, we submit there should be no difference here. Wherever these proceedings are ultimately brought we would imagine that there would need to be orders that, although they are separate proceedings , that evidence in one be evidence in the other and so on and so forth. We would submit that at the end of the day the most appropriate approach is that they are actual cross claims to the cross claimant and that this division of the court would at least have supervision. It may involve some reference out.
HIS HONOUR: What we really need - procedurally, how we get to it I am not quite sure but we need to have the figures which you have just been given but those figures determined without having regard to any cross claim and somehow the referee’s report which I have already adopted except I have not come to the difficulty about adopting his report, so he did not finalise the figures. That can be formalised.

Then those figures would be the figures, subject to any rights which the residents might have or some of them might have to have those figures varied by cross claim. The appropriate course then, I would think, would have been to enter judgment for those amounts but staying the judgments in appropriate cases where there were to be cross claims to be brought within a certain period subject to some amounts presumably, being paid. That would then, as I see it, dispose of these proceedings . It would dispose of the proceedings in the Local Court because the judgments here would have been substituted for the judgment it was agreed would be entered in the Local Court and it would preserve the rights of the residents to bring their cross claims and any appeals because of the stay pending the hearing of those cross claims which are, presumably, subject to payment of whatever would be a reasonable amount.
That seemed to be the way forward when I was considering it last year and I am still inclined to think that is the way forward.
…
MOORE: Overton commenced the cross claim and, perhaps, in the light of what your Honour has just recited, perhaps, a statement of claim that might have been dealt with here in which case it would have been clearly appropriate to put a statement of claim on to the claim, a cross claim to the Overton cross claim.
HIS HONOUR: My clear view is that subject to entering judgment for the amounts, the lack of representative parity and the way these things have gone, makes it desirable to bring them to a conclusion and anybody who want to bring any cross claims ought to be allowed to do so and an appropriate stay ought to be put in place to enable that to happen. I do not think it is a procedurally good way to go ahead, to have forty different cross claims in this action.
CAMPBELL: We won’t try to do anything to talk your Honour out of your view.
HIS HONOUR: I propose to proceed on that basis . I have no idea what these figures are or what difference any rights under a cross claim might give rise to buy my wish to bring the cross claim and the defence, to bring that to an end subject to separate proceedings being started, the last defence to the cross claim which raised the Contract Review Act could not possibly apply equally to everybody. It just is not possible. You have the notice of motion on foot which I have not dealt with. I have dealt with Mr Moore’s notice of motion which was to amend the cross claim.
We are still dealing with the motion which was filed on 15 December which has not been finally dealt with and, in effect, was stood over until today. These orders are sought on the basis of that.
CAMPBELL: Indeed, there are two notices of motion. One relating to what needs to be done to tidy up the making of orders in 1181 of 97, the other one of which relates to the dissolving of the injunction and the making of an order for enquiry under the undertaking as to damages.
HIS HONOUR: Oh yes, I am sorry, that is 2 December. Both of those notices of motion were believed to be stood over. That is all right. I had envisaged that if the procedure that I just outlined was put in place that the Local Court proceedings could be subsumed by judgments on your cross claim in these proceedings. The alternative to that and maybe a better alternative would be to bring the cross claim in these proceedings to an end and enter judgment in the Local Court to order that execution be stayed on appropriate terms. It will have the same result.
CAMPBELL: There are several difficulties in that. Not all the cross defendants were further sued in the Local Court. Secondly, the amount is less.
HIS HONOUR: There are problems with the Local Court having jurisdiction under the Contract Review Act.
CAMPBELL: We say that the appropriate place for the judgments to be entered is here and for anyone to do anything more in the Local Court would be an abuse of process.
…
HIS HONOUR: If you are seeking to have judgment entered for amounts - I don’t know where they are brought up.
CAMPBELL: It is amounts owing in relation to invoices rendered up to 15 May 1998.
…
HIS HONOUR: So far as what might be described as the credit issue, it may be that there could be - it would be possible to make a declaration as long as it led to something, that as at 15 May 1990 each cross defendant owed on the invoices X amount. Then in respect of an overpayment, if the overpayment can be agreed then there can be a declaration that they are entitled to a credit for that amount as against it. I am not sure they should get any particular benefit for that. That would depend on what has been happening since that date and how their account would appear because in the long run as a result of this, there are going to have to be judgments entered and stayed on appropriate conditions to enable those who wish to bring cross claims to bring them but the other ones would not be stayed. If necessary, and if this cannot be done in some convenient way it will have to go back as the referee envisages it would for him to finish it off. I think everyone is trying to avoid that.
…
I will stand the notices of motion of 2nd of December and the 15th of December 1998 over to 24 February 1999.
I make orders in accordance with the short minutes of order initialled by me.
STOOD OVER TO WEDNESDAY 24 FEBRUARY 1999.

35    Despite the direction about filing individual verified statements of claim, no statements of claim were served by 13 February 1999 or at all. Nor did the residents file a notice of motion seeking further directions returnable on 18 February.

36    Instead, on 23 February 1999, one of the residents (Mr Murphy) commenced representative proceedings in the Federal Court. Mr Murphy was acting on behalf of most (but not all) cross-defendants in the Supreme Court proceedings (CB 587). The Application declared that the proceedings were representative proceedings within Part IVA of the Federal Court of Australia Act 1976. The accompanying statement of claim alleged against Overton misleading and deceptive conduct, negligent advice and estoppel by representation. There was also a claim for relief under the Contracts Review Act 1980(NSW). The allegations of misleading or deceptive conduct and estoppel by representation substantially overlapped the field occupied by pars 4-67 of the Defence to Cross Claim.

37    On 24 February 1999 the matter was back before Windeyer J (CB 223). The transcript records the following, which is obviously a precis of the submission of Overton’s senior counsel:

[HIS HONOUR] was informed no verified cross-claims [sic] had been served. Further, his Honour having given the direction about the service of cross-claims [sic] in the proceedings and that not having been complied with, that meant his Honour was free to enter judgments once the amounts were ascertained without any impediment from any cross-claims [sic] .

38    Short minutes of orders were proffered by Overton. The Orders proposed that the cross-defendants make interim payments by a date less than 28 days hence (cf CB 224E). The transcript records the following (CB 223-226) (emphasis added):

DISCUSSION ENSUED
SHORT DISCUSSION AS TO HIS HONOUR’S PREVIOUS ORDERS
(Mr Moore informed His Honour that proceedings were filed yesterday afternoon in the Federal Court under part 4A of the Federal Court of Australia Act; discussion ensued.
Mr Moore had no objection to the plaintiff’s figures being relied upon subject to the opportunity to argue there should be a stay on some part of those figures by reason of the estoppel and contract review claim; discussion ensued.
His Honour suggested that one possibility might be that the parties might be able to agree that judgment be entered in certain amounts but that there be a stay in excess of a certain amount until 18 March and a hearing date fixed in that week to determine that part of it.)
DISCUSSION ENSUED
MATTER STOOD IN LIST
HIS HONOUR: Mr Moore, leaving aside what you have done that’s something Mr Campbell will want to argue, is there any reason not to order an interim payment of an amount?
MOORE: I have instructions my people within 28 days would pay half of what the Murphy affidavit says is owed as an interim measure. We ask that it be within 28 days.
(His Honour informed Mr Moore that he intended on staying the plaintiff’s existing cross-claims)
DISCUSSION ENSUED AS TO SHORT MINUTES
HIS HONOUR: The question is those who are proposing to bring this claim should all get the same benefit and whether they ought to get any benefit when the agreed amount is less than the claim amount. The agreed amount comes from the referee’s report plus my determination in respect of the referee.
MOORE: We would be seeking to argue that the figures worked out on behalf of my client represent the proper interpretation of the referee and your Honour’s reasoning. There are a series of claims in the Overton’s figures which are not justifiable. In relation to whether we will all get a stay or a lesser number of people it is true that each person did raise a contract review defence however I am in a position to give affidavits on the part of three quarters of those people. If your Honour wishes my instructing solicitor and I to go through that exercise with my learned friend ---
HIS HONOUR: All I am concerned about is this - because your clients have decided they are not going to bring separate claims they are going to embark on a class action in the Federal Court, that on that basis I should not make an order for payment of the full amount.
MOORE: If there is sufficient time, I am in a position to put before you on an affidavit of my instructing solicitor that claim and if there is sufficient time have the ability to put before you the verification of the individual claims by a vast majority of my clients. I am appreciative of the time constraints this morning but I am in a position to do that. I am prepared to go into evidence of individual affidavits verifying what is at the moment described as cross-claims.
DISCUSSION ENSUED AS TO FEDERAL COURT PROCEEDINGS AND INTERIM ORDERS
(His Honour informed Counsel that the best course was to make an order in accordance with paragraph 1.)
AFFIDAVIT OF JOHN MURPHY AND EXHIBIT O FILED IN COURT
MOORE: I would be in a position by the end of the day to supplement those defendants except Charlton who is not a party.
HIS HONOUR: Subject to that what I propose to do is to make an order in respect of those cross-defendants who are not said to be raising any cross-claim if they pay the full amount, those who are said at this stage to have sworn documents which I didn’t allow to be filed, that they pay 50 percent but I dissolve the injunction on that undertaking and that I stand the matter over to some date when you are both available when we can have a day, if it’s going to take a day but I will give you a day any way.
DISCUSSION AS TO DATES
MATTER STOOD IN LIST
ON RESUMPTION
SHORT MINUTES OF ORDER HANDED UP
CAMPBELL: We have been able to work out the form of short minutes of order to give effect to the intention your Honour expressed this morning.
DISCUSSION ENSUED
HIS HONOUR: The only thing is I would be normally very hesitant to make the orders of substitution without some evidence, but I think I will make the orders. You are satisfied about that - Mr Moore and they are only liable in their respective capacity?
MOORE: Yes, everything my friend has said we concur with and that is how I would understand it, yes.
HIS HONOUR: By consent, I make orders in accordance with the document entitled Cross-Claimant’s Short Minutes of Order initialled by me and dated today.
I note that counsel for the persons listed in schedule 2 informed the Court that those persons have obtained the relevant grants of representation and I direct that evidence of this be provided to the Court on the next return date of 16 March.
CAMPBELL: The only other matter that emerges from the course of today is that, having seen these statements of claim which are verified, I would like to invite my learned friend in open court to file them in this Court. It is a matter for him as to what he does about that.
HIS HONOUR: Well, I don’t think I should express any view about that.
CAMPBELL: I don’t ask you Honour to do that.
HIS HONOUR: I heard what you said.

39    On 16 March 1999 there was a fairly lengthy hearing before Windeyer J. Issues of costs were debated, including the costs of Overton’s Cross Claim with its attendant and lengthy reference inquiry. Overton renewed its invitation or challenge to the residents to commence Supreme Court proceedings by verified statement of claim, presumably in lieu of the representative proceeding commenced in the Federal Court. The offer was declined by the residents. Several factual issues and issues of calculation and apportionment arising out of the referee's report were debated and ruled upon (CB 227-238).

40    The proceedings were again before Windeyer J on 23 March 1999 (CB 240-243). Counsel for the residents sought and obtained leave to reopen on one issue and he tendered an affidavit accordingly. Windeyer J announced that he would give judgment on the issues on the day he entered the formal judgment on the Cross Claim. He continued:

On that day, if I do grant a stay, I will need to have the agreed list of people who could be involved. I will need an agreed list of people to whom a stay may apply and I will need the figures.... I will stand the matter over for the purpose of entry of judgment on the final figures on the cross-claim and, if possible, judgments on the question of costs and the application for a stay.

41    On 30 March 1999 Windeyer J heard argument on several further questions relating to the determination of the amounts due on the Overton Cross Claim. He gave reasons for judgment on these matters. Directions were then given that Overton file and serve affidavits showing its final calculations to enable judgment to be entered on the Cross Claim on 23 April 1999 (CB 245). The cross-defendants were directed to file and serve a list setting out details of all cross-defendants “for which there is agreement as to the final calculations of the amounts for which judgment is to be entered against each respective cross-defendant”. Other detailed directions were given designed to ensure that the parties would come to agreement or at least join issue finally as to the mathematics involved in the entry of the various judgments proposed to be entered against the cross-defendants. Clause 4 of the directions stipulated that the parties would “consent to judgment” where there was agreement as to the final calculation.

42    A number of the original plaintiffs had died since the commencement of the proceedings. Directions were made substituting personal representatives to whom probate had been granted and permitting the proceedings to continue against deceased plaintiffs in the absence of representation of the estate in other cases.

43   

The concluding direction stood the proceedings over to 23 April 1999:

to enable:
(i) the entry of Judgment by consent against each respective Cross-Defendant, as set out on the List of Agreed Amounts;
(ii) further argument on the question of the amount of the judgment to be entered against each respective Cross-defendant in accordance with the List of Disputed Amounts;
(iii) ...;
(iv) such further orders as the court deems fit.

44    On 23 April 1999 the proceedings before Windeyer J commenced with counsel for Overton handing up a proposed set of short minutes of order. His Honour was informed that “as a result of the exercise that took place as a result of your Honour's directions, there has been an exchange of information in several directions which has resulted in the final figures....” (CB 263). There was discussion as to costs. Both counsel debated the terms of the mutually contemplated stay. The discussion makes it plain that the matter of a stay was still at large, although there was agreement in principle that those residents who paid 50% of the judgment sum should have the balance stayed (CB 268-9). Counsel for the residents sought in effect to extend the benefit of the stay to all the parties to the class action that had been commenced in the Federal Court (see CB 269 R-V).

45    During the discussion about the form of the final orders counsel for Overton referred to the fact that the cross-defendants’ pleadings still contained individual defences “which have not been disposed of by the determination of the common issues which your Honour has dealt with” (CB 270-1). The transcript continues:

HIS HONOUR: I appreciate that. I am proposing to make an order so that there can’t be doubt about this because I have said I was going to do it but the order I was going to make to bring the proceedings under control, that matters arising under paragraphs 4 to 67 under the amended cross-claim be brought by separate action. You say that they arise by defence as well --
SLATTERY: They are mainly in the defence to cross-claim. I believe some of them also are in the statement of claim.
MOORE: It may be in reply to the Overton’s defence to the Statement of Claim.
SLATTERY: It may be adequately dealt with by your Honour amending the order by describing the issue generally as the issue in the defence to cross-claim paragraphs whatever to whatever or any other pleading. The same matters are pleaded in substance.
DISCUSSION ENSUED
HIS HONOUR: I should say I propose to grant a stay. Therefore, we will need to identify anyone on that list who is not a party to the Federal Court list. I need you to get the names right and (b) identify those people by numbers who are not a party to the Federal Court. I think subject to that in 20 minutes I will be ready to finish my part.
SHORT ADJOURNMENT
FOR JUDGMENT SEE SEPARATE TRANSCRIPT

46    Windeyer J commenced his reasons for judgment by observing that the judgment concerned “the remaining issues on the cross claim, the question of costs in the proceedings and an application for a stay in respect of a judgment which it is agreed will be entered”. He referred to judgments given in early December on Overton's motion for adoption of the referee's report being judgments “as to the matters arising on the cross-claim, other than the defences specific to individual residents, or under the Contracts Review Act". He continued:

On 17 December 1998, when the matter was before me for that purpose, the figures were still under discussion. There was discussion as to the further conduct of the action and how this ought to be handled in the light of a notice of motion by Overton for entry of judgment on the cross- claims. By that time I had come to the conclusion that the particular defences to the cross-claim could not be allowed to proceed as constituted in this claim. It had clearly been envisaged by Simos J, when the residents' claim for injunction were before him over two years ago, that a person would be appointed to represent the residents on the claim made in the summons, and that once that claim, as to the rights to charge outgoings, was determined, judgment would be entered by consent on the action brought by Overton in the Local Court against individual residents.

The difficulties arose because the action was ordered to proceed on pleadings at which stage the cross-claim of Overton against the residents for individual amounts was filed, thus giving rise to particular defences by particular residents. All of this was quite inappropriate to an action intended to be a representative action, because the defences based upon representations, estoppel and the Contracts Review Act, could in no way be equally appropriate or applicable to each resident. Insofar as the estoppel by representation was concerned, it was not suggested that they were.

It therefore became necessary for the court to take some control and on 17 December 1998 I indicated that the proceedings on the existing cross- claim must be brought to an end and that individual claims made in the defences must be raised by separate actions. I therefore said that:

any matters now raised as individual defences to the cross-claim will have to be pursued by separate action and acting on that basis I direct the solicitor for the residents to be in a position to inform the court by 4 February 1999, and to inform Overton by 29 January 1999, which residents intend to pursue these separate claims.

The matter came before me on 4 February 1999. By that time, the list of residents intending to bring separate claims was more or less complete. I made various orders and gave certain directions including the following order:

2. That each cross-defendant referred to in the attached list of cross-defendants, or any other cross-defendants, who wish to bring cross-claims to Overton's cross-claim and marked [meaning listed] as annexure A to these Minutes of Orders (the outstanding claims) file and serve by 5.00 p.m. on Wednesday 13 February 1999, a verified statement of claim, and a notice of motion seeking further directions returnable before Justice Windeyer on Thursday 18 February 1999.


The next time the matter was before the court for any time was 24 February. Mr. Campbell QC, senior counsel for Overton, invited the residents who intended to bring claims to file the necessary documents, they having not done so in accordance with my order. Mr. Moore, who appeared for those residents, I think on that day, sought to file individual cross-claims by the residents as cross-claims to the cross- claim in this action. I took the view that this would only further confuse the matter, even if it were procedurally possible. I adhered to the view and direction I had given (albeit that I had used the word "cross-claim") that separate actions must be commenced, it being inappropriate to deal with at least 70 separate claims in one file.

On that day also some agreement having been reached as to amounts owing to the cross-claimant by individual residents, an order was made giving certain concessions to residents who paid one half of those initial amounts as then claimed.

On 16 March 1999, the notice of motion for entry of judgment and other orders was again before the court, on this day there being no competing business. Once again senior counsel for Overton, this time, Mr. Slattery QC, suggested to the claiming residents they should file their claims in court, or at least issued an open invitation for them to do so. Mr. Moore, counsel for the residents, said that various cross-claims had been available to file in this court, but in view of my refusal to allow that procedure, that had not been done, but that a representative action had been commenced in the Federal Court of Australia. On that day I dealt with a motion by Overton for a reference to the Master to assess damages pursuant to the undertaking as to damages given when the original injunction was obtained. I then dealt with outstanding issues between the parties on the motion for entry of judgment on the cross-claim. Some of these questions concerned apportionment of the claims for outgoings among residents, others arose from matters unresolved from the referee's report and my determinations on it, and others involved a revisiting of some of the claims before the referee. I allowed the revisitation because I thought it necessary in the interests of justice. It is fair to say that it is very difficult litigation and has required a great deal of patience and understanding; from everyone involved, and great credit must be given to counsel for their handling of the whole case. In the event I determined these outstanding issues and stood the matter over to 23 March to make orders for referral to the Master, to determine all questions of costs not determined up to date, to enter judgment and to determine any question of a stay. The question of a stay had been raised earlier and on 4 February 1999 it was accepted that one of the matters for determination on 24 February 1999 was on what terms concerning payment of all or part of the judgment debt a stay of judgment should be granted to those cross-defendants who had filed and served a verified statement of claim in respect of the outstanding claims.

On 23 March the matter was again before the court. I had hoped to deal with all those matters. Unfortunately the figures for judgment had not been calculated as there was disagreement or uncertainty about my intentions so far as what were described as some shortfall claims, which had been determined by the referee, were concerned. That matter was determined and I then heard argument on the question of costs and the application for a stay. It was, of course, accepted that I should not publish any judgment on these matters until judgments were entered against the individual cross-defendants.

There was a further hearing on 31 March 1999 when certain matters determined on 16 March were revisited as a result of an oral application made on that day.

The result of all of this is that it can be seen that it has been accepted or ordered that in one form or other, separate actions need to be brought by those residents for their claims which are set forth in their defence but really which require substantive orders if they are to be of any avail.

47    In a later portion of the judgment dealing with costs His Honour said:

Had the residents' claims based on misrepresentation and the Contracts Review Act proceeded as I had envisaged by separate action in this Court it would have been appropriate to defer making an order for costs on the cross-claim until those matters were determined. I do not think the same position arises now that a class action has been commenced in the Federal Court of Australia. That claim can no doubt encompass any loss by reason of the costs ordered on this cross-claim. It may be appropriate at some later stage to stay proceedings for enforcement of any judgment for costs on the cross-claim. I say no more about that now.

48    After dealing with various costs issues His Honour turned to the question of a stay. He said this:

By notice of motion filed 23 March l999 most of the residents seek a stay of proceedings on the judgment against them, which is accepted would be entered, upon payment of such amount as is determined by the court.

The basis claimed for such a stay is that a class action has been commenced in the Federal Court of Australia, on behalf of those residents seeking a stay, being a claim for relief based upon the two grounds originally pleaded by way of defence to the cross-claim in this action and some additional claims under s52 of the Trade Practices Act and for damages for negligent advice. If these class actions succeeded in full then it is likely that the damages awarded would exceed the amount of the judgments now being entered against the individual residents.

There is no evidence of hardship which would be occasioned in any resident if the judgment were paid in full, although as part of the claim it is established that a large number of the residents are on fixed incomes or are pensioners so that some hardship could be presumed. Without that evidence in normal circumstances the court would be reluctant to grant a stay as there is no compelling evidence that Overton would not be unlikely to be able to pay the amount of any judgment entered against it as a result of the Federal Court action. This was the argument of Overton.

The reason why I consider the position in this case to be different from the ordinary is that it is as a result of my conclusion that the residents' claims must be brought by separate action that judgments are not able to be entered. Had the Local Court claims continued then it is likely that if the defences or counter claims now raised were sought to be raised in those proceedings then they would either have been heard there to conclusion or those proceedings would have been stayed to allow the defences to be pursued in a court with the necessary jurisdiction. The matters now raised in the Federal Court, or at least two of the pendant claims, were always recognised, perhaps incorrectly, as being part of the matters for determination in the action in this court. I consider that this provides justification for a stay. I should say however that I have no way of determining the likelihood of success of those parties who are represented in the class action.

It is not possible to come to separate decisions as to what is an appropriate condition in respect of particular residents. No evidence was put before me to make that possible. It is obviously very desirable that the representative action be determined as quickly as possible, but that depends upon how long it takes to get ready and the state of business in the Federal Court. Counsel for the residents affected said that the condition of the stay could be payment of 50% of the judgment sum, in essence by which he meant and I mean 50% of the amount of which judgment will be entered added to the amount which has already been paid, as a term of some concessions granted by me in an earlier order. The amounts the residents have been paying to Overton for outgoings for the period after 15 May cannot be taken into account in considering this question.

It would be unfair to Overton not to require a substantial payment but for the reason I have given I consider that a stay should be ordered. I am unable to do better than fix a portion of 50%, although I accept this is quite arbitrary .The stay is to apply to judgments entered for the parties at this stage. It is not to apply to the costs orders unless those are subject to a further order after quantification by assessment or otherwise. The stay should operate until the conclusion of the Federal Court proceedings or earlier order of this Court as Overton should have the opportunity to apply to have the stay removed if circumstances, including delay in the pursuit of the representative action, justifies that course.

49    Further discussion ensued as to the form of the final orders. So far as presently relevant the orders made by Windeyer J were as follows (CB 274):

…
2. The report of the referee be adopted.
…
4. All matters arising under paragraphs 4 to 67 of the further amended defence to cross-claim be brought to trial by separate action by residents raising such defences, and that judgments be entered on the cross-claim without regard to such defences, but subject to any application for a stay.
5. The summons and statement of claim be dismissed.
6. Judgment be entered for the cross-claimant on the cross-claim against individual cross-defendants for the separate amounts set forth in the column “Equals Total Claimed for Judgment on 23 April 1999” on the document annexed to these orders.
7. Order that interest on such judgments accrue at the daily rate shown in the last column of such document.
8-11 [Inquiry as to damages stemming from interlocutory injunction and various costs orders]
12. Order that proceedings for enforcement of the judgments against the cross defendants other than Coxhead, Pegg, Johnston, Starck, Rourke, Deller, Hulschere, Wild, Lucas, Brown, Renaud and Baxter be stayed upon condition that the cross-defendants obtaining the benefit of such stay pay to the cross-claimant 50% of the amount shown against the name of such cross-defendant in the column headed “Total claim” in the document annexed (interim payments shown on such documents to be credited as part payment of the amount entered against any such cross-defendant) within 21 days of this date and further order that such stay continue until the conclusion of Federal Court Proceedings No 159 of 1999 or earlier order of this court.
Proceedings in the Federal Court and post-judgment proceedings in the equity division

50    As indicated, one of the residents (Mr Murphy) commenced representative proceedings in the Federal Court. The pendency of those proceedings became the basis upon which Windeyer J granted conditional stays of the judgments he entered on 23 April 1999.

51    With respect to Overton’s submissions, I do not think that events occurring after 23 April can be used to justify the orders made on that date if they are otherwise capable of being impugned. After all, they are final judgments. Questions of a stay are discretionary. Overton’s submission that a judgment stayed is the same as no judgment at all is quite untenable.

52    Nevertheless, I shall briefly set out the later progress of proceedings in the Federal Court and the impact of them upon the stay proceedings in the Supreme Court.

53    On 18 May 1999 Emmett J ordered the statement of claim to be struck out, but he gave leave to file an amended statement of claim. Portions of the amended statement of claim were ordered to be struck out on 30 June 1999.

54    On 17 August 1999 Emmett J ordered that the Federal Court proceeding no longer continue under Part IVA of the Federal Court of Australia Act 1976. The further amended statement of claim was struck out and the applicants other than Mr Murphy were removed as parties. Mr Murphy was given leave to file an amended Application and statement of claim (see Murphy v Overton Investments Pty Ltd [1999] FCA 1123).

55    In his reasons, Emmett J referred to the progress of the litigation in the Supreme Court (at [12ff]). He observed that, following 4 February 1999, the residents had prepared verified statements of claim for filing in the Supreme Court. Reference was made to the invitation made by counsel appearing for Overton before Windeyer J on 24 February 1999 and 16 March 1999 calling on the residents to file those statements of claim in the Equity Division. Emmett J observed that the substance of the claims made in those draft pleadings was much the same as those made in the pleading presently before him (at [25]).

56    Before Emmett J, Overton submitted that it was an abuse of process for the residents to commence proceedings in the Federal Court in light of the current state of what were described as the representative proceedings in the Equity Division of the Supreme Court. His Honour observed that the Supreme Court does not have available to it a procedure equivalent to Part IVA of the Federal Court Act. The proceedings in the Supreme Court had been taken as far as they could in resolving the issues raised between the parties as to the true liability of the lessees under their leases. His Honour held that the commencement of the proceedings in the Federal Court, with a view to taking advantage of the procedure under Part IVA, did not constitute an abuse of the process of that Court (see at [54-58]).

57    Emmett J then considered the issues tendered for determination in the representative proceedings. He concluded that the common issues that would arise could not properly be characterised as substantial within the meaning of s33C(1)(c) of the Federal Court of Australia Act (at [109]). He also held that it was not in the interests of justice that the proceeding continue under Part IVA (at [123]). Accordingly, orders were made to permit Mr Murphy’s proceeding to continue in its own right, but as a single claim.

58    On 30 and 31 August 1999 94 residents filed fresh Applications in the Federal Court. Each is accompanied by a statement of claim and it effectively replicated the claims for relief made in the Murphy proceedings. Those proceedings have marked time in the Federal Court while the Murphy claim has been prosecuted on its merits.

59    There is substantial overlap between the parties who were plaintiffs/cross-defendants in the Supreme Court proceedings and those who by this stage were applicants for relief in the Federal Court.

60    As indicated, the issues tendered by the residents in the Federal Court covered the matters that had been raised in pars 4-67 of the Defence to Cross Claim. Indeed they went further in alleging breaches of the Trade Practices Act, unconscionability and negligence.

61    There were however some parties to the Supreme Court proceedings who were not applicants in the Federal Court. And some of the applicants in the Federal Court were not parties to the Supreme Court proceedings. This said, the overlap of parties was substantial (see affidavit of R G Hiatt sworn 31 January 2001 annexure B). It is, I think, fair to assume that all of the cross-defendants who wished to press individual claims based upon estoppel, misleading or deceptive conduct, negligence etc have joined in the Federal Court proceedings, treating them as the means whereby Windeyer J’s original invitation to commence “separate actions” (in the Supreme Court) was to be taken up. The manner in which the stays of the Supreme Court judgments were moulded confirms this. The residents had common solicitors throughout.

62    On 7 March 2000 Emmett J commenced the hearing of Mr Murphy’s claim, together with the proceedings brought in the Federal Court by Mr Neville Carnegie and Mrs Rita Brasington. The intention of the parties was that the three proceedings would be treated as “test cases” although, there was no formal agreement to that effect. The hearing spanned 14 days in early 2000. At one stage Emmett J ordered that the further hearing of the Carnegie and Brasington proceedings be adjourned until after the completion of the Murphy proceedings.

63    On 15 June 2000 Emmett J dismissed the Murphy proceedings (see Murphy v Overton Investments Pty Ltd [2000] FCA 801). He held that Overton had engaged in conduct contravening s52 of the Trade Practices Act and in breach of its duty of care. However, any loss or damage suffered by Mr and Mrs Murphy was incurred at the time when they entered into their lease. There was no evidence that as at that date the lease was worth anything less than the consideration they paid to obtain it. Furthermore, the cause of action for recovery of any such loss was statute barred. The estoppel claim also failed because, at its highest, it would have precluded Overton from increasing maintenance fees except on reasonable notice: such notice was given at least as early as November 1994. The unconscionability claim failed on its merits. The claim for relief under the Contracts Review Act 1980 (NSW) failed in the Federal Court for want of jurisdiction.

64    Mr and Mrs Murphy appealed to the Full Court of the Federal Court. On 2 May 2001 the Full Court published reasons and directed that the appeal be stood over for the purpose of making orders (Murphy v Overton Investments Pty Ltd [2001] FCA 500). The majority of the Court propose to dismiss the appeal, except in relation to Emmett J’s conclusion that he did not have power to grant relief under s7 of the Contract Review Act. In light of the recent decision in Australian Securities and Investment Commission v Edensor [2001] HCA 1, the Full Court has concluded unanimously that the Federal Court has power to entertain the residents’ claims for relief based upon the Contracts Review Act.

65    On 27 July 2000 the residents returned to the Supreme Court, seeking to extend the stay ordered in par 12 of Windeyer J’s orders of 23 April 1999, which stay was to expire upon the formal conclusion of the proceedings in the Federal Court. Windeyer J refused this application on 2 and 9 August 2000.

66    On 10 August 2000 Emmett J varied the orders made by him on 16 June 2000 so as to exclude any order dismissing the claim for relief under the Contracts Review Act. That variation was related to constitutional issues and it was conditional upon an order being made that day by Windeyer J dissolving the stay referred to in order 12 made on 23 April 1999. Windeyer J made such an order by consent on 10 August 2000.

67    There was much debate before us about the effect of the various orders made by Windeyer J on 2, 9 and 10 August 2000. I reiterate that I cannot see the relevance of these events. The validity of the final judgments entered on 23 April 2000 cannot be affected by later discretionary orders made in connexion with a stay of those final orders. Were I, however, of the view that the appeal should be upheld then it would probably have been necessary to take steps to ensure that the residents effectively elected between the Supreme Court and the Federal Court as their preferred venue.

Proceedings in the Court of Appeal

68    The backing and filling in the Court of Appeal has been consistent with the way the litigation has proceeded generally.

69    It was Overton that first challenged (in part) the orders made on 23 April 1999. A holding appeal filed on 21 May 1999 was followed by a notice of appeal with grounds filed on 20 August 1999 (Red 238). Overton challenged the trial judge’s decision that all matters arising under pars 4-67 of the Amended Defence to Cross Claim be brought to trial by separate actions. Overton sought to have order 4 set aside; and that pars 4-67 of the Defence to Amended Cross Claim be struck out and/or dismissed.

70    The residents filed a Notice of Cross Appeal on 3 September 1999. They sought orders vacating pars 4, 6 and 7 of Windeyer J’s orders; and an order that the further hearing of the Overton cross claim be stayed pending the final resolution of the 94 proceedings then pending in the Federal Court of Australia (Red 250, 256-8).

71    Neither side sought expedition in the Court of Appeal. There was however case management. A timetable was set for the filing of submissions, first by Overton as appellant, then by the residents as respondents/cross appellants.

72    On 21 December 2000 Overton’s solicitor wrote to the Registrar notifying the Court that Overton no longer wished to pursue its notice of appeal filed on 20 August 1999. The formal orders will therefore include orders dismissing the appeal with costs.

73    In its submissions filed on 31 January 2001 in reply to the residents’ submissions on the cross appeal Overton submitted that the cross appeal was incompetent. No notice of motion to that effect was filed (cf Pt 51 r25), but the matter was fully argued. The residents correctly took the precaution of filing a summons seeking leave to cross appeal against the possibility that their cross appeal should be held incompetent (see Council of the Municipality of Woollahra v Sved, Court of Appeal, unreported 24 July 1998).

74    One argument advanced by Overton was that the notice of cross appeal was filed out of time. I disagree in light of Pt 51 r4(2)(a). Overton’s decision to keep its own appeal alive by filing a holding appeal followed by a notice of appeal with grounds had served to keep the Court of Appeal’s door wide open for the residents.

75 Overton’s other ground for challenging the competency of the cross appeal has more substance. The composite cross appeal was a challenge by the individual residents against their several judgments none of which exceeded $20,000. Leave to appeal was accordingly required by s101(2)(r) of the Supreme Court Act. Early in the hearing of the appeal the Court indicated its provisional view that the cross appeal was incompetent in light of s101(2)(r). I would confirm this ruling. However, I would grant leave to cross appeal, treating the timely notice of cross appeal as filed pursuant to such leave, nunc pro tunc.

At last, the issues in the appeal

76    The residents submit that Windeyer J erred when he ignored the individual defences, especially the estoppel defences. These raised triable issues of fact which constituted shields or defences to Overton’s several claims embodied in its composite Cross Claim. It is submitted that Windeyer J was not entitled to ignore these defences by the expedient of deciding that the issues tendered by them could only be raised in the context of “separate actions”.

77    An extension of this argument is that Windeyer J should have allowed the additional claims under the Trade Practices Act and based upon unconscionability and negligence to be raised as equitable set offs against the Overton Cross Claim. I see no merit in this extension, because leave to amend the Defence to Cross Claim was never sought in this regard.

78    There is a subsidiary complaint about his Honour’s decision that the “separate actions” proceed by way of statements of claim, as distinct from cross claims to Overton’s cross claim. There will be cases where a cross claim is a proper response to a cross claim (see Aurel Forras Pty Ltd v Graham Karp Development Pty Ltd [1975] VR 202). In light of the contrast between the composite claim tendered by the residents in the Statement of Claim and the individual issues tendered by less than all the residents in the proposed counter claim, this case was a prime candidate for cross claims to the cross claims, rather than an amendment of the statement of claim. But it does not follow that the discretion miscarried when Windeyer J ruled in favour of fresh verified statements of claim in lieu of cross claims as the preferred vehicle for the “separate actions”. In any event it is far too late to exercise the discretion afresh, now that the residents have gone off to the Federal Court. The subsidiary issue about cross claims does not assist the residents in attacking the judgments entered against them on Overton’s Cross Claim.

79    In very broad terms, the residents complain that Windeyer J effectively denied procedural fairness by disposing of Overton’s Cross Claim without hearing the individual defences on their merits. It is submitted that the fact that the defences were formally addressed in par 4 of the orders of 23 April 1999 as a prelude to the entry of judgment does not alter this situation.

80    I have already addressed some of Overton’s responses en passant. Its principal responses to the residents’ submission are that the point was never taken and that the residents (for what seemed a good reason at the time) consented to or at least acquiesced in a procedure devised to enable the individual defences to be pursued in an alternative appropriate manner by those cross defendants who still wished to do so. The procedure was further moulded to meet the residents’ decision to file a single representative proceeding in the Federal Court. This was commenced as the vehicle for an additional number of what I will neutrally term “counter claims”, including claims of misleading or deceptive conduct under the Trade Practices Act and claims of unconscionability and negligence.

81    A significant part of the residents’ argument is the contention that Windeyer J effectively shut the gate on 17 December 1998 when he “indicate[d]” that the matters then raised as individual defences “will have to be pursued by separate actions” and gave directions for those residents who wished to pursue such actions to inform Overton of their intentions by 29 January 1999. In support of this construction of the events of 17 December 1998, the residents point to his Honour’s remarks on 4 February 1999 and in his final judgment on 23 April 1999 (at [4]) when he referred to having previously “come to the conclusion” that this procedural course should be adopted.

82    On the other hand, Overton points to the fact that the defences were never formally dealt with until the final orders were made on 23 April 1999. The judicial language of 17 December is not peremptory and there is no evidence that it was perceived as such at the time. No reasons were sought or given for what is now advanced as a fundamental substantive and procedural injustice. Furthermore, the discourse on 4 February 1999 shows that even then his Honour was open to persuasion on the matter.

83    Overton’s submission as to what happened (or, more precisely, did not happen) prior to 23 April is to be preferred. It is not lightly to be inferred that a judge would deny procedural fairness or otherwise decline without reasons to give effect to an arguable defence, even unintentionally. Had his Honour been confronted with the submission that an injustice was about to be or had been inflicted upon the residents on 17 December 1998, then he would have addressed the issue squarely. The defences remained on the record. It was open for them to be invoked prior to final judgment, notwithstanding that things were moving down an alternative procedural path (but not irrevocably). Windeyer J’s remark on 4 February 1999 that “That seemed to be the way forward when I was considering it last year and I am still inclined to think that it is the way forward” further confirms that the die was not cast.

84    There may be a very fine line between a concluded judicial ruling expressed courteously and exposure of a position that is open to further persuasion. Conversely, the line between counsel accepting that a ruling has been made and counsel failing to advance an argument to which the putative ruling is addressed may also be a fine line that is difficult to detect. I have endeavoured to explain why I have concluded that the gate was not shut in December 1998. The fact that issues of procedure were being addressed reinforce my view.

85    I therefore conclude that the defences were not struck out, even notionally, prior to 23 April 1999. This is significant to the appeal, but it does not conclude the appeal. The propriety of ignoring or sidestepping the individual defences in the final orders made on 23 April 1999 still needs to be addressed.

86    An assertion in a pleading represents the case that a party proposes to rely upon (Banque Commerciale SA v Akhil Holdings Ltd (1990) 169 CLR 279, Laws v Australian Broadcasting Tribunal (1990) 170 CLR 70 at 85). Parties can and do depart from their pleadings by enlarging or contracting the issues pressed at or before trial. The right to rely upon a pleaded defence may even be qualified or lost, regardless of intention, in particular circumstances (Commonwealth v Verwayen (1990) 170 CLR 394).

87    The adversarial system leaves the parties in substantial control of their own destinies. Matters may ebb and flow before final judgment. Amendment of position is the order of the day. One consequence of these realities is that a party may (by the time of final judgment or even earlier) become estopped by the manner in which the litigation has or has not previously been conducted (see generally University of Wollongong v Metwally (No 2) (1985) 59 ALJR 481 at 493, Chilcotin Pty Ltd v Cenelage Pty Ltd [1999] NSWCA 11).

88    As a matter of law and of practical reality it was open to the residents to stand their ground and insist upon the defensive issues tendered in their Defence to Cross Claim. They did not do so. More importantly, they were not prevented from doing so. The range of issues debated on and after 4 February 1999 persuade me that, if they had chosen to do so, they would have been heard by Windeyer J. Another of a long stream of shortish reasoned judgments would have emerged. Instead, the residents debated whether a cross claim was preferable to individual verified statements of claim. And they debated and negotiated the terms of a stay dependent (in part) upon the combination of judgment being entered and appropriate proceedings being instituted by them, initially in the Supreme Court, latterly by representative proceedings in the Federal Court.

89    At a critical stage, counsel for the residents indicated that he was “happy with the general process” set out in Overton’s proposed procedural directions.

90    By February 1999 it appears that not all of the residents who were sued in Overton’s Cross Claim wished to continue fighting. Possibly there were costs considerations, possibly other personal reasons. For those who did want to bat on, Windeyer J discussed and accommodated their wishes (to a degree), moulding relief to accommodate the later switch from Supreme Court to Federal Court. The residents’ limited (defensive) claims were enlarged to encompass (offensive) Trade Practices Act, unconscionability and negligence claims. It is true that some at least of these new matters could have been invoked as shields as well as swords, but that required leave to amend pleadings at a very late stage of the proceedings on the Cross Claim. Windeyer J may have refused that leave if ever it had been sought. However, the important matter is that it was not sought, and it is possible to see a rational basis why the residents may not have wanted to press their (limited) defences too far in the February-April period, especially since an expanded, expedited, representative proceeding was then in contemplation, coupled with at least a partial stay of the judgments being proposed to be entered.

91    Such a stay was partial and discretionary. But it was nevertheless seen as something of value to the residents in the complex calculus of matters being debated, decided and determined in the run up to the final orders on 24 April.

92    I have not overlooked the fact that Windeyer J included in his final reasons on 23 April 1999 reference to the inappropriateness of individual defences being pressed in what started out as a representative claim (de facto) that raised Code issues. With respect to his Honour, I do not find that to be a very compelling reason. It would not have provided a legal justification for entering judgment in what had subsequently become a Cross Claim pointed at individual residents, seeking judgments for differing sums. But the critical fact is that the residents acquiesced in the effective transfer of their limited individual defences from the debit side of the Supreme Court Cross Claim ledger to the enhanced credit side of the Federal Court proceeding’s ledger.

93    I do not need to decide the case on the basis that the residents consented to the judgments entered against them, although Overton has argued this. I am inclined to read the references to consent orders in and after February 1999 as consents to matters of procedure and mathematics. It is in my view sufficient that the residents refrained from pressing their individual defences as impediments to the judgments which were otherwise appropriate to be entered in light of the referee’s report and the various decisions of Windeyer J in late 1998 concerning the adoption of the same.

94    The fate of the Federal Court proceedings lies in the future. There are factual and constitutional pitfalls confronting the residents at practically every turn. Limitation defences have been raised or foreshadowed by Overton. Without wishing to raise expectations or to lead the parties into a further minefield I would simply record that the very matters successfully relied upon by Overton in defence of this appeal may have a bearing upon Overton’s capacity to treat some at least of the claims propounded in the Federal Court as raised for the first time upon the filing of initiating process there in 1999. Mention of Verwayen’s Case should be sufficient to alert both parties of the issues involved and to caution against drawing too much comfort or concern from this paragraph.

Disposition

95    I propose the following orders:

1. Dismiss Overton’s appeal with costs.
2. Strike out the residents’ cross appeal as incompetent.
3. Grant leave to the residents to cross appeal.
4. Dismiss cross appeal with costs.

96    SHELLER JA: I agree with Mason P.

97    BEAZLEY JA: I have had the advantage of reading the judgment of Mason P in draft. He has dealt with the chronology of this matter in some detail and it is not necessary for me to repeat it.

98    I agree with the sentiment expressed in his judgment that the present state of this litigation is unfortunate to say the least. The question, however, for this Court is whether it can and should interfere with the orders which were made by Windeyer J on 23 April 1999.

99    As Mason P has stated (para 32) the events and discussion of 4 February 1999 are of critical importance to the issues on the appeal. A number of things are notable about what occurred on that day. First, his Honour had formed a “clear view” that the residents should not be permitted to maintain their individual defences to the individual cross claims and that he “proposed to proceed on that basis”. Secondly, there appears to have been a foreshadowing by counsel for the residents that proceedings might be brought elsewhere.

100    However, it must be observed that his Honour’s view that the defences should be brought by way of fresh statements of claim was erroneous as was his opinion that they could not be brought by way of cross-claim. The critical ‘error’, however, was the first, namely, that the residents ought not be permitted to defend the claims brought against them, but should be required to bring those claims forward offensively. I use the word ‘error’ advisedly. His Honour at that time had neither delivered any reasons on an application nor made any orders. Notwithstanding, counsel for the residents said in his submissions that the residents had taken his Honour’s comments as tantamount to a direction as to how he required the proceedings to be conducted. He submitted that the genesis of his Honour’s requirements was to be found in his comments during the course of the 17 December 1999 directions hearing. Counsel for the residents submitted that from that time, the residents felt constrained in their conduct of the proceedings by his Honour’s clearly expressed opinion as to how the proceedings were to be conducted.

101    If the matter was “frozen” at that point in early February 1999 and judgments entered for Overton at that time, it seems to me that the residents would have had good grounds for having the judgments set aside. That is because they would have been deprived of their right to defend the claims brought against them. It is not to the point, as was urged upon the Court by senior counsel for Overton, that his Honour granted (and in the hypothetical situation I am presently considering would have granted) a stay of the judgments. A judgment, albeit stayed, is a different juridical animal from a defended claim. A party to a stayed judgment is in a far less advantageous position than is the defending party to a claim.

102    However, the matter was not frozen in time as at 4 February. In brief, the following further events occurred.

103    First, the residents did not file the individual statements of claim as directed by his Honour. Nor did they appeal from the orders and directions made.

104    Secondly, and critically, the residents filed a representative action in the Federal Court. As Mason P has already pointed out (at para 36 of the judgment), the claims made in that action effectively occupied the legal territory covered by paragraphs 4-67 of the defence to the cross-claim.

105    It is of course an abuse of process to bring the same action against the same party in different courts. The effect of the residents’ action in pursuing their claim in the Federal Court amounted, in a practical sense, to them abandoning their rights to agitate their claims, including defensively as they were entitled to, in the Supreme Court. This appears to have been fully appreciated by the residents’ legal representatives as it finds expression in the terms of the direction made by Windeyer J on 30 March 1999. On that day, Windeyer J gave a direction standing the matter over until 23 April 1999, to enable, inter alia, “the entry of judgment by consent” against each of the residents. On 23 April 1999, the debate was directed to costs and the terms of the stay. There was no debate about the proposed order for judgment.

106    It seems to me that, notwithstanding that his Honour had been erroneously directing the residents along a procedural pathway whereby they were being forced into an offensive position rather than being left to defend the cross-claims brought against them, the fact is they made their own decision in early February to pursue a different litigious path. Presumably, there were perceived advantages in their doing so. However, it seems to me that by doing so, they acquiesced in the course proposed by Windeyer J.

107    The consequence, I think, is that any appeal to this Court from the orders made by Windeyer J on 23 April is without merit.

108    I agree with the reasons of Mason P and with the orders he proposes.

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