Rothmore Farms Pty Ltd (in Liquidation) v Belgravia Pty Ltd and Ors (No 2) No. Scciv-99-1032

ROTHMORE FARMS PTY LTD (IN LIQUIDATION)
v BELGRAVIA PTY LTD and ORS (No 2)
[2002] SASC 390
Civil

PERRY J. Originally the proceedings in this matter were instituted in the Federal Court of Australia. In the proceedings, the plaintiff Rothmore Farms Pty Ltd (In Liquidation) (“Rothmore Farms”) sued six defendants. It alleged that they had been instrumental in wrongfully transferring assets out of a family trust of which the plaintiff Rothmore Farms had been trustee, into the hands of one of the defendants, Mr Tennyson Turner, and a company which he controlled, being another of the defendants, namely Agri-Steel Pty Ltd (“Agri-Steel”).
The proceedings came to trial in the Federal Court before Mansfield J. He delivered judgment on 4 June 1999. In his judgment, Mansfield J found all six defendants liable to the plaintiff.
In particular, the learned trial judge held that Rothmore Farms was entitled to an equitable charge or a lien over the assets of the trust which it was entitled to enforce against such of the trust assets as were then held by Mr Turner or Agri-Steel. This was subject to any adjustment by reference to sums expended by Mr Turner or Agri-Steel in the conduct of farming and engineering businesses carried on by them in which they had utilised assets of the trust.
Mansfield J also ordered that an inquiry and account be conducted by the Registrar of the Federal Court to identify the assets of the trust; to identify the moneys received by Mr Turner or Agri-Steel in their conduct of the farming and engineering businesses; and to identify all moneys paid by Mr Turner and Agri-Steel in the conduct of the farming and engineering businesses from the date upon which one of the transactions pursuant to which the assets had been transferred out of the trust had been effected.
Shortly after the delivery of judgment by Mansfield J, the High Court delivered its decision in Re Wakim: ex parte McNally.[1] In consequence of that decision, the South Australian Parliament enacted the Federal Court (State Jurisdiction) Act 1999 which came into operation in August of that year.
[1] (1999) 198 CLR 511.
Pursuant to that Act, in August 1999, proceedings were instituted in this Court the practical effect of which was to continue in this Court the action which had been brought to trial in the Federal Court.
The hearing of the inquiry and account commenced before a Master of this Court in September 2001. Orders giving effect to the outcome of the inquiry and account were made by the Master on 2 November 2001. One of the orders made by the Master was that Agri-Steel and Mr Turner pay to Rothmore Farms $1,189,989.
Ordinarily, one might have anticipated that the working out of the inquiry and account and the orders pronounced in consequence of it would have brought the proceedings to a close. However, the plaintiff now asserts that this is not the case, and that it is entitled now to have litigated an unresolved aspect of its claim which it had advanced in the Federal Court.
In order to understand what the plaintiff now claims, it is necessary to refer to the terms of the amended application by which it instituted the proceedings in the Federal Court. In that document Rothmore Farms claimed various orders and declarations, on the grounds appearing in the accompanying statement of claim. The various orders and declarations sought were pleaded as follows:
“1.A declaration that the following transfers of assets formerly comprising the assets of the Jill Cooper Family Trust (“the Trust Assets”) were undertaken with an intention to defeat, delay or interfere with the rights of creditors of Rothmore Farms Pty Ltd and are void:
1.1    Transfer of trusteeship of the Jill Cooper Family Trust from Rothmore Farms Pty Ltd to Belgravia Pty Ltd.
1.2    Vesting of the Trust by Belgravia Pty Ltd and distribution by Belgravia Pty Ltd of the Trust Assets to Andrew Charles Cooper.
1.3    Transfer of the Trust Assets from Andrew Charles Cooper to Agri-Steel Pty Ltd and/or Tennyson Turner.
2.An order rescinding the transactions referred to in paragraphs 1.1 to 1.3 hereof.
3.A Declaration that the Trust Assets and all other assets and income which have accrued from the conduct of the farm and engineering businesses previously conducted by the applicant are held by the respondents on trust.
4.A Declaration that the applicant is entitled in equity to a charge or lien over the Trust Assets and all other assets and income which have accrued from the conduct of the farm and engineering businesses previously conducted by the applicant.
5.A Declaration that Rothmore Farms is entitled to satisfy its right of indemnity from the Trust Assets to the extent of its present indebtedness to the Commonwealth Bank of Australia and the Commonwealth Development Bank of Australia Limited.
6.An order that the respondents transfer to the applicant all Trust Assets that are in their possession and/or any consideration received in respect of transfers of the Trust Assets in order that it may satisfy its right of indemnity.
7.An order that each respondent is liable to account to the applicant for the full amount of the benefits obtained by all the respondents or in the alternative the benefits obtained by any one or more of them.
8.Damages and/or equitable compensation.
9.Costs.”
From my understanding of the course of the proceedings before Mansfield J, at trial Rothmore Farms sought all of the relief set out in its amended application, including that advanced in paragraph 8, namely “damages and/or equitable compensation”.
However, during the course of the proceedings it became obvious that Rothmore Farms was not in a position to adduce evidence upon the basis of which the quantum of any damages recoverable under that head might be assessed. So that the focus of the proceedings, apart from obtaining declarations as to the improprieties associated with the dealings by the defendants with the trust assets, was Rothmore Farms’ claim to be entitled to an inquiry and account to ascertain what had become of the trust assets and what profit had been derived by Mr Turner and Agri-Steel from their action in utilising those assets.
So it was that the formal order of Mansfield J, which is dated 4 June 1999, as amended on 7 and 11 June 1999, was in terms pursuant to which the court declared that Rothmore Farms was entitled to be indemnified from the assets of the trust to the extent of its indebtedness to certain banks, and that it was entitled to an equitable charge or lien over the assets from time to time of the trust to the full extent of that indemnity. The order then proceeds to direct that the necessary inquiry and account be conducted by the Registrar in terms the general effect of which I have already set out.
At the basis of the present application by Rothmore Farms to this Court is the fact that the formal sealed order of Mansfield J, which on the face of it was an order finally disposing of the proceedings before him, did not deal with one aspect of the claim of Rothmore Farms, namely that which finds expression in paragraph 8 of its amended claim:
“8.Damages and/or equitable compensation.”
Rothmore Farms now claims to be entitled to an order that the Federal Court order dated 4 June 1999, as amended (“the trial judgment”), be varied by adding a further paragraph as follows:
“13.Further consideration of paragraph 8 of the further amended application filed pursuant to leave granted on 25 March 1999 be adjourned to a date to be fixed, with liberty to the parties to apply.”
The reason why Rothmore Farms seeks to amend the trial judgment is because in the working out of the order for an inquiry and account, having regard to the limited recovery which it has been able to make from Mr Turner and Agri-Steel with respect to the amount which they were ordered to pay to Rothmore Farms, Rothmore Farms has been left with what it asserts to be a substantial residual loss. This is said to be in excess of $1 million. It seeks to recover that amount by way of damages from the defendants, including the defendants other than Agri-Steel and Mr Turner.
Through its counsel Mr White QC, Rothmore Farms intimated that if the application was to be granted, it would not seek to re-open the hearing in any way, in the sense that it would not seek to adduce any further evidence, save and except for proof of the outcome of the working out of the order of the Master consequent upon the taking of the inquiry and account. Rothmore Farms claims that the reasons for judgment of Mansfield J embody sufficient findings to establish a liability on the part of the defendants to pay damages which it ought to be entitled to assess now in the light of what has transpired since the entry of the formal judgment in the Federal Court.
On the hearing of the application before me, there was no appearance by the first defendant Belgravia Pty Ltd, or by the second defendant Andrew Charles Cooper.
Mr Turner appeared in person and on behalf of the company Agri-Steel Pty Ltd, and Mr Ross-Smith appeared for the fifth and sixth defendants, that is, Noelene Michelle Cooper and Robert John Mills.
Mr Ross-Smith and Mr Turner resisted the application.
So far as Mr Turner and Agri-Steel are concerned, I am unable to see that the practical effect of the amendment, if it was to be granted and if further proceedings resulted in a judgment for damages against them, would have any practical effect on them beyond the effect of the existing order made by the Master. That this is so would seem to follow from the fact that any damages will fall to be assessed by reference to the shortfall in Rothmore Farms’ recovery of the amount ordered by the Master to be paid by Mr Turner and Agri-Steel. Given that Mr Turner and Agri-Steel already owe them the money by reason of the obligation imposed by the existing order of the Master, it cannot have any material effect upon their situation that they might also be ordered to pay the same money by way of damages.
However, the position of the remaining defendants is to be distinguished from that of Mr Turner and Agri-Steel, in that at this stage of the proceedings there is no money judgment payable by the remaining defendants.
The present application was supported by several affidavits of Mr Glenn Davis, a partner in the firm of the solicitors for Rothmore Farms; an affidavit of Mr John Sheahan, the liquidator of Rothmore Farms; an affidavit of Mr John Golden, a member of the firm of solicitors acting for the sixth defendant Robert John Mills; and an affidavit of Robert John Mills himself.
Power to Vary the Judgment
I have no doubt that I have power to accede to the application if the case of favour of me doing so has been made out.
Pursuant to the Federal Courts (State Jurisdiction) Act 1999, the judgment sought to be varied takes effect as though it is a valid judgment of the Supreme Court constituted of a single judge.[2] It follows that any application to vary it stands to be governed by the relevant rules of this Court.
[2] Ibid s 6 and s 7.
There are several rules which provide a source of power to make the order sought on the application.
SCR r 84.12 provides that:
“The Court may vary or set aside a judgment or order at any time if the justice of the case so requires.”
SCR r 53.12(2) provides:
“Where a judgment or order requires amendment in any particular on which the court did not adjudicate, it may be amended in an application.”
Finally, reference may be made to the general power of the court conferred by SCR r 3.04. Relevantly, this provides:
“The court .... may in any case in which it thinks just to do so:
(a)...........
(f)Correct, revoke or vary any order by a subsequent order; .........”
Those rules to a substantial extent overlap. I do not pause to refer to authorities in which consideration has been given as to the amplitude of the power to amend or vary an order, which those rules confer. There is no serious suggestion in this case that I lack the power to accede to the application.
Relevant Circumstances
Mr Sheahan asserts in his affidavit that he instructed his solicitors to seek an order against all defendants for damages and/or equitable compensation, and at no time, including any time after judgment, did he instruct his solicitors to abandon any such claim. On the delivery of the reasons for judgment of Mansfield J on 4 June 1999, he left it to his solicitors to draft and enter appropriate orders “to reflect his Honour’s reasons for judgment and to preserve the plaintiff’s position”.
In the affidavit of Mr Davis sworn on 1 November 2002, he confirms that the nature of the instructions given to him on this aspect of the matter were as asserted by Mr Sheahan. Mr Davis further deposes as follows:
“5.On delivery of the reasons for judgment of Mansfield J herein on 4 June 1999 the plaintiff left it to me to draft and enter orders to reflect his Honour’s reasons for judgment and to preserve the plaintiff’s position. I did not at this time, or at any time, receive instructions from the plaintiff to abandon any aspect of its claim against any of the defendants.
6.After delivery of the reasons for judgment of Mansfield J on 4 June 1999 a solicitor under my supervision who had assisted in the running of the case before Mansfield J prepared draft minutes of order which I reviewed.
7.The draft orders did not grant liberty to apply as granted by his Honour on 7 June 1999. The omission of that order from the orders drafted was an oversight. I did not detect the omission on my review of the draft minutes.
8.The draft orders did not seek adjournment for further consideration of the question of damages pending the outcome of an inquiry and account as ordered by his Honour. This is despite this order being sought in paragraph 13 of a proposed Further Amended Application handed to Mansfield J on 7 May 1999 (his Honour refusing the application to amend). The omission of such an order from the orders drafted was an oversight. There was no decision made by me to exclude such an order from the orders of the Court.”
It will be seen that in paragraph 8 Mr Davis refers to a “proposed further amended application” handed to Mansfield J on 7 May 1999.
It was on that date that the parties made their final submissions to Mansfield J. Submissions were made in relation to all causes of action.
During the course of those submissions, Mr White QC, who appeared on behalf of Rothmore Farms, handed to Mansfield J a proposed further amended application and proposed further amended statement of claim.
Part of the proposed further amended application was as follows:
“10.An order for inquiry and account as to:
10.1 the existence of Trust Assets other than the Trust Assets identified by the applicant in the enclosed list marked ‘Annexure A’;
10.2 the disposal of any Trust Assets after 10 February 1993;
10.3 any benefits obtained by any of the respondents from the Trust Assets or their disposal and the use of those benefits;
10.4 the transfer, use and disposition of any of the Trust Assets.
11.An order that upon taking of the account, each of Andrew Charles Cooper, Tennyson Turner and Agri-Steel Pty Ltd pay to the first applicant by its solicitors such amount, if any, as may be certified on the taking of the account.
12.An order that upon taking of the account, any Trust Assets and/or benefits disclosed in the inquiry and account be delivered up to the first applicant.
13.An order adjourning the assessment of damages until after the completion of the inquiry and account to be conducted pursuant to paragraph 10 hereof.” (emphasis added)
Paragraphs 10 to 13 inclusive of the proposed amended application, which I have set out above, were new in the sense that they did not appear, at least in that form, in the application as it stood before the trial judge at that stage.
Paragraph 13 specifically sought an order adjourning the assessment of damages until after completion of the inquiry and account sought in paragraph 10.
Mansfield J dismissed the application to amend in the terms sought. He gave reasons for doing so which in part are as follows:
“In the course of final submissions, Mr Sheahan sought to be joined as an applicant. The proposed amendments to the Application consequent upon his joinder and to the Statement of Claim which were involved were minimal (para 185).
In the case of the proposed amended application, no relief was sought by Mr Sheahan which was not to be sought by Rothmore Farms in any event. The proposed further amended application added specific claims for relief which had been foreshadowed in the course of the hearing, and which the Court could grant in any event under O 35 r 1 of the Federal Court Rules were it appropriate to do so. These additional claims for relief were based upon causes of action already pleaded and upon the evidence already given. They were not such as to take the respondents by surprise, or to cause the respondents any prejudice. ..........
In those circumstances, I decline the application to join Mr Sheahan as an applicant. It is unnecessary to address further the application to amend the application and the statement of claim in the terms proposed. I am satisfied that the relief sought, as identified in that proposed further amended application, may be granted under O 35 r 1 without that amendment, if it is appropriate to grant it in the light of my findings.”[3] (emphasis added)
[3] Rothmore Farms Pty Ltd v Belgravia Pty Ltd and Ors [1999] FCA 745 para [185-[191].
Order 35 rule 1 of the Federal Court Rules provides:
“The Court may, at any stage of any proceedings, on the application of any party, pronounce such judgment or make such order as the nature of the case requires, notwithstanding that the applicant does not make a claim for relief extending to that order in any originating process.”
In fact, in the events which happened, in his judgment dated 4 June 1999, Mansfield J ordered the inquiry and account more or less in the terms which had been sought in the proposed amendment. That he did so confirms the view which he had earlier expressed that he had power to give the relief sought in the proposed amendment, if he thought it appropriate to do so, without the amendment being made as sought.
Following the delivery of reasons for judgment by Mansfield J on 4 June 1999, the solicitors for Rothmore Farms had the carriage of bringing in minutes to give formal expression to the necessary orders.
It is clear that at that stage, through inadvertence, whoever was responsible for drawing up the minutes did not include an order adjourning the assessment of damages until the completion of the inquiry and account.
I am in no doubt whatever that if minutes had been brought in which included such an order, they would have been approved by Mansfield J and ultimately sealed in the Federal Court.
The Defendants’ Arguments
Mr Ross-Smith on behalf of the defendants Noelene Cooper and Robert Mills, contended that the application sought an order which offended the principle that there should be finality in litigation, and further contended that Rothmore Farms was bound by the manner in which it had conducted the litigation.
Dealing with the second point first, it is clear from the manner in which the Federal Court proceedings were conducted by Rothmore Farms that it never abandoned the claim for damages. As late as the time at which final addresses were delivered before Mansfield J, it sought express amendments to its claim to preserve its right to damages.
By that stage it was obvious, as I have already remarked, that the main focus of the relief sought at that stage was the inquiry and account. I am satisfied that in drawing up minutes for an order which dealt with that and related matters, by oversight the question of adjourning the claim for damages was overlooked.

As to the first point, it is true that there are many authorities which support the proposition expressed in various contexts that the court should ensure finality in litigation and eschew attempts unreasonably to revive proceedings which should be regarded as at an end.
Furthermore, I accept that Mansfield J was probably of the view that upon his approval of the minutes which were submitted to him, the ensuing order would be in the nature of an order finally disposing of the proceedings. So much appears clear from the passing comment which he made in the course of reasons for decision delivered later on 15 September 1999 in response to an application to set aside the declarations and orders contained in the trial judgment, on the ground of lack of jurisdiction in the Federal Court.
In those reasons for decision, he remarked, inter alia:[4]
“The declarations and orders have been entered as final judgments and orders of the Court. They have been regularly entered. ....... In my judgment the orders which were made were final orders determining the rights as between the parties.”
[4] Rothmore Farms Pty Ltd v Belgravia Pty Ltd and Ors (No 2) (1999) ACLC 1676 para [6].
But for the reasons which I have given, in my view, both Mansfield J and the parties at that stage thought that the order as sealed following upon the pronouncement of judgment by Mansfield J were in the relevant sense “final orders”.
I accept that they were final in the sense that all questions of liability were determined by the order. But clearly the parties contemplated that further orders would be made consequent upon the carrying out of the inquiry and account, as indeed such further orders were made in this Court after that process had been completed.
A number of authorities have been cited by counsel on both sides which illustrate circumstances in which the court has been prepared to re-open decisions.
But I do not consider that this is, in the ordinary sense, an attempt to re-open a decision. Rather, it is an application which, if granted, will correct an order which was made so as to preserve the right of the plaintiff to pursue relief as to an aspect of its claim which was not finally disposed of, and was never intended to be finally disposed of in the order pronounced at the conclusion of the trial.
For completeness, I should say that I reject the contention that Robert Mills relied on a representation contained in a latter from the solicitors for Rothmore Farms, as a result of which, it is said, that he did not take part in the inquiry and account. The question of the proper construction to be placed upon that correspondence was dealt with by the judgment of the Full Court delivered on 5 September 2002.[5] It is unnecessary for me to say anything further as to that aspect of the matter beyond what appears in the reasons which I delivered in support of the order disposing of the appeal in that case.
[5] Mills and Anor v Rothmore Farms Pty Ltd (In Liquidation) [2002] SASC 265, 5 September 2002, unreported.
It is an important aspect of the view which I take of the matter, however, that the plaintiff should not be entitled to adduce further evidence beyond evidence as to the working out of the order made by the Master following the taking of the inquiry and account. I think that the principle that there should be finality in litigation would be infringed if the hearing was to be re-opened at large so as to allow the parties to adduce further evidence relevant to the question of damages.
Occasionally that would be permitted where the question of damages has been reserved for further consideration. But in the circumstances of this case, there is no suggestion that Mansfield J did not hear all relevant evidence, save for whatever evidence was to be put before the Master on the taking of the inquiry and account.
That process having been completed, the interests of justice compel me to the view that, in fairness to Rothmore Farms, if it is able to satisfy the court that residual loss has been suffered by it after allowing for the working out of the order made by the Master consequent upon the taking of the inquiry and account, it should be entitled to pursue whatever rights it may have to recover damages.
Standing back from the matter, it seems to me that where manifest breaches of fiduciary duties have been perpetrated by the defendants, as was found by Mansfield J with respect to their dealing with the trust assets, equity would take the view that such orders should be made, and if necessary more than one such order, so as to redress the loss suffered by the trustee, so far as is practicable.
I allow the application.
JUDGMENT CITATIONS
LISTED IN ORDER OF APPEARANCE IN JUDGMENT
1. (1999) 198 CLR 511.
2.    Ibid s 6 and s 7.
3.    Rothmore Farms Pty Ltd v Belgravia Pty Ltd and Ors [1999] FCA 745 para [185-[191].
4.    Rothmore Farms Pty Ltd v Belgravia Pty Ltd and Ors (No 2) (1999) ACLC 1676 para [6].
5.    Mills and Anor v Rothmore Farms Pty Ltd (In Liquidation) [2002] SASC 265, 5 September 2002, unreported.

[2002] SASC 390

21 November 2002